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<P STYLE="text-align: CENTER">As filed with the Securities and Exchange Commission on June 26, 2001.</P>

<P STYLE="text-align: CENTER">Registration No. ________________</P>

<P STYLE="text-align: CENTER">SECURITIES  AND  EXCHANGE  COMMISSION</P>

<P STYLE="text-align: CENTER">Washington, D.C. 20549</P>

<P STYLE="text-align: CENTER">_________________________</P>

<P STYLE="text-align: CENTER">FORM S-1</P>

<P STYLE="text-align: CENTER">Registration Statement</P>

<P STYLE="text-align: CENTER">under</P>

<P STYLE="text-align: CENTER">The Securities Act of 1933<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%">
<TR><TD STYLE="text-align: CENTER">USURF America, Inc.</TD></TR>
<TR><TD STYLE="text-align: CENTER">(Exact Name of Registrant as Specified in its Charter)</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%">
<TR><TD STYLE="text-align: CENTER">NEVADA</TD>
<TD STYLE="text-align: CENTER">7375</TD>
<TD STYLE="text-align: CENTER">91-2117796</TD></TR>
<TR><TD STYLE="text-align: CENTER">(State or Other Jurisdiction of </TD>
<TD STYLE="text-align: CENTER">(Standard Industrial</TD>
<TD STYLE="text-align: CENTER">(IRS Employer</TD></TR>
<TR><TD STYLE="text-align: CENTER">Incorporation or Organization)</TD>
<TD STYLE="text-align: CENTER">Classification Code Number)</TD>
<TD STYLE="text-align: CENTER">Identification No.)</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%">
<TR><TD STYLE="text-align: CENTER">8748 Quarters Lake Road, Baton Rouge, Louisiana 70809</TD></TR>
<TR><TD STYLE="text-align: CENTER">(225) 922-7744</TD></TR>
<TR><TD STYLE="text-align: CENTER">(Address, including Zip Code, and Telephone Number, including area code, of Registrant's
Principal Executive Office)</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%">
<TR><TD STYLE="text-align: CENTER">David M. Loflin, President</TD></TR>
<TR><TD STYLE="text-align: CENTER">USURF America, Inc.</TD></TR>
<TR><TD STYLE="text-align: CENTER">8748 Quarters Lake Road, Baton Rouge, Louisiana 70809</TD></TR>
<TR><TD STYLE="text-align: CENTER">(225) 922-7744</TD></TR>
<TR><TD STYLE="text-align: CENTER">(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent
for Service)</TD></TR></TABLE>
<BR>

<TABLE BORDER="1" WIDTH="100%">
<TR><TD STYLE="text-align: CENTER">Copies to:</TD></TR>
<TR><TD STYLE="text-align: CENTER">Eric Newlan, Esq.</TD></TR>
<TR><TD STYLE="text-align: CENTER">NEWLAN &amp; NEWLAN</TD></TR>
<TR><TD STYLE="text-align: CENTER">819 Office Park Circle</TD></TR>
<TR><TD STYLE="text-align: CENTER">Lewisville, Texas 75057</TD></TR></TABLE>

<P>Approximate date of commencement of proposed sale to public:  As soon as practicable after this
Registration Statement is declared effective. </P>

<P>If any of the securities being registered on this Form are to be offered on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:  [X]</P>

<P>If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under
the Securities Act, please check the following box and list the Securities Act registration number
of the earlier effective registration statement for the same offering:  [     ]</P>

<P>If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act,
check the following box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [  ]</P>

<P>If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the
following box:  [     ]<BR>
<BR>
<BR>
<BR>
</P>

<P STYLE="text-align: CENTER">CALCULATION OF REGISTRATION FEE<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%">
<TR><TD>Title of each class
of securities to be
registered</TD>
<TD>Amount to be
registered(1)(2)</TD>
<TD>Proposed
maximum offering
price per unit</TD>
<TD>Proposed
maximum
aggregate offering
price</TD>
<TD>Amount of
registration fee</TD></TR>
<TR><TD>Common Stock,</TD>
<TD>6,000,000
unissued shares</TD>
<TD>$.40(3)</TD>
<TD>$2,400,000</TD>
<TD>$633.60</TD></TR>
<TR><TD>$.0001 par value</TD>
<TD>1,250,000 issued
shares</TD>
<TD>$.40(3)</TD>
<TD>$500,000</TD>
<TD>$132.00</TD></TR>
<TR><TD>per share</TD>
<TD>268,750 unissued
shares</TD>
<TD>$.25(4)</TD>
<TD>$67,187.50</TD>
<TD>$17.74</TD></TR>
<TR><TD></TD>
<TD>268,750 unissued
shares</TD>
<TD>$.35(5)</TD>
<TD>$94,062.50</TD>
<TD>$24.83</TD></TR>
<TR><TD></TD>
<TD>268,750 unissued
shares</TD>
<TD>$.45(6)</TD>
<TD>$120,937.50</TD>
<TD>$31.93</TD></TR>
<TR><TD>Total</TD>
<TD>8,056,250 shares</TD>
<TD></TD>
<TD>$3,182,187.50</TD>
<TD>$840.10</TD></TR></TABLE>

<P>(1)  Pursuant to Rule 416 under the Securities Act of 1933, as amended, this Registration
Statement covers such additional indeterminate shares of Common Stock as may be issued by
reason of adjustments in the number of shares of Common Stock pursuant to anti-dilution
provisions contained in various Common Stock Purchase Warrants. Because such additional
shares of Common Stock will, if issued, be issued for no additional consideration, no registration
fee is required.</P>

<P>(2) All shares being registered will be offered and sold by selling shareholders.  All of the shares
noted as being "issued" have, as of the date hereof, been issued to the selling shareholders. All of
the shares noted as being "unissued" underlie currently outstanding and exercisable warrants.</P>

<P>(3)  Estimated in accordance with Rule 457(c) solely for the purpose of calculating the registration
fee on the basis of the average of the bid and ask prices reported on the American Stock Exchange
on June 22, 2001, $.40 per share.</P>

<P>(4)  Shares issuable upon exercise of common stock purchase warrants.  Pursuant to Rule 457(g)
the fee is based upon the Warrant exercise price of $.25 per share.</P>

<P>(5)  Shares issuable upon exercise of common stock purchase warrants.  Pursuant to Rule 457(g)
the fee is based upon the Warrant exercise price of $.35 per share.</P>

<P>(6)  Shares issuable upon exercise of common stock purchase warrants.  Pursuant to Rule 457(g)
the fee is based upon the Warrant exercise price of $.45 per share.</P>

<P>Registrant hereby amends this Registration Statement on such date or dates as may be necessary
to delay its effective date until Registrant shall file a  further amendment which specifically states
that this Registration Statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, or until this Registration Statement shall become effective on such
date as the Commission, acting pursuant to Section 8(a), may determine.<BR>
<BR>
<BR>
<BR>
</P>

<P>Information contained herein is subject to completion or amendment.  A Registration Statement
relating to these securities has been filed with the SEC.  These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes effective. This
Prospectus shall not constitute an offer to sell or the solicitation of an offer to sell or an offer to
buy nor shall there be any sale of these securities in any state in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the securities laws of any such state.<BR>
<BR>
</P>

<P STYLE="text-align: CENTER"><STRONG>SUBJECT TO COMPLETION, DATED JUNE 22, 2001</STRONG></P>

<P>The information in this prospectus is not complete and may be changed.  We may not sell these
securities until the registration statement filed with the Securities and Exchange Commission is
effective.  This prospectus is not an offer to sell these securities in any state where the offer or sale
is not permitted.</P>

<P><STRONG>PROSPECTUS</STRONG><BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD STYLE="text-align: CENTER">Up to 8,056,250 Shares</TD></TR>
<TR><TD STYLE="text-align: CENTER">USURF America, Inc.</TD></TR>
<TR><TD STYLE="text-align: CENTER">Common Stock</TD></TR>
<TR><TD STYLE="text-align: CENTER">$.0001 par value</TD></TR></TABLE>

<P>This prospectus relates to the resale of up to 7,445,000 shares of our common stock, which we
have issued or may sell to Fusion Capital Fund II, LLC under a common stock purchase
agreement.  This prospectus also relates to the resale of up to 611,250 shares of our common
stock which we have issued or may issue to Gruntal &amp; Co., L.L.C.</P>

<P>Our common stock is traded on the American Stock Exchange under the symbol "UAX".  On
June 22, 2001, the last reported sale price of our common stock, as reported by AMEX, was $.40
per share.  We have applied to have the shares of common stock offered pursuant to this
prospectus approved for trading on the AMEX.</P>

<P><STRONG>Investing in our common stock involves risk. Please see "Risk Factors", beginning on page
5, for an explanation of some of these risks.</STRONG><BR>
</P>

<P><STRONG>Fusion Capital is a selling shareholder and is an "underwriter" within the meaning of the
Securities Act of 1933, as amended.  Any broker executing sell orders on behalf of Fusion
Capital may be deemed to be an "underwriter" within the meaning of the Securities Act of
1933, as amended.</STRONG></P>

<P><STRONG>Neither the Securities and Exchange Commission nor any state securities regulator has
approved or disapproved these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.</STRONG></P>

<P STYLE="text-align: CENTER">The date of this Prospectus is _______________, 2001<BR>
<BR>
<BR>
<BR>
<BR>
</P>

<P> You should rely only on the information contained in this prospectus.  We have not authorized
anyone to provide you with information different from that contained in this prospectus.  The
information contained in this prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or of any sale of our common stock.</P>

<P STYLE="text-align: CENTER"><STRONG>TABLE OF CONTENTS</STRONG><BR>
<BR>

<TABLE BORDER="1" WIDTH="100%">
<TR><TD>
<P STYLE="text-align: RIGHT">Page</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%">
<TR><TD>SUMMARY</TD>
<TD></TD></TR>
<TR><TD>THE OFFERING</TD>
<TD></TD></TR>
<TR><TD>SUMMARY FINANCIAL DATA</TD>
<TD></TD></TR>
<TR><TD>RISK FACTORS</TD>
<TD></TD></TR>
<TR><TD>CAUTIONARY NOTE REGARDING
FORWARD LOOKING STATEMENTS</TD>
<TD></TD></TR>
<TR><TD>DILUTION</TD>
<TD></TD></TR>
<TR><TD>USE OF PROCEEDS</TD>
<TD></TD></TR>
<TR><TD>TRADING AND MARKET PRICES</TD>
<TD></TD></TR>
<TR><TD>DIVIDENDS</TD>
<TD></TD></TR>
<TR><TD>CAPITALIZATION</TD>
<TD></TD></TR>
<TR><TD>SELECTED FINANCIAL DATA</TD>
<TD></TD></TR>
<TR><TD>CHANGE OF INDEPENDENT AUDITOR</TD>
<TD></TD></TR>
<TR><TD>MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS</TD>
<TD></TD></TR>
<TR><TD>REGULATION</TD>
<TD></TD></TR>
<TR><TD>BUSINESS</TD>
<TD></TD></TR>
<TR><TD>THE FUSION CAPITAL TRANSACTION</TD>
<TD></TD></TR>
<TR><TD>MANAGEMENT</TD>
<TD></TD></TR>
<TR><TD>CERTAIN TRANSACTIONS</TD>
<TD></TD></TR>
<TR><TD>PRINCIPAL SHAREHOLDERS</TD>
<TD></TD></TR>
<TR><TD>LITIGATION</TD>
<TD></TD></TR>
<TR><TD>PLAN OF DISTRIBUTION</TD>
<TD></TD></TR>
<TR><TD>SELLING SHAREHOLDERS</TD>
<TD></TD></TR>
<TR><TD>DESCRIPTION OF SECURITIES</TD>
<TD></TD></TR>
<TR><TD>LEGAL MATTERS</TD>
<TD></TD></TR>
<TR><TD>EXPERTS</TD>
<TD></TD></TR>
<TR><TD>ABOUT THIS PROSPECTUS</TD>
<TD></TD></TR>
<TR><TD>WHERE YOU CAN FIND MORE
INFORMATION</TD>
<TD></TD></TR>
<TR><TD>INDEX TO FINANCIAL STATEMENTS</TD>
<TD></TD></TR></TABLE>

<P STYLE="text-align: CENTER"><STRONG>SUMMARY</STRONG></P>

<P><STRONG>Our Business</STRONG></P>

<P> We own a proprietary wireless Internet access system, known as "Quick-CellTM", that permits us
to operate as an Internet service provider.  Our Quick-Cell system operates in unlicensed spectra,
does not require right-of-way permission from local municipalities and eliminates the need for our
customers to have a telephone line connection to the Internet.  A single Quick-Cell cell can
operate as a stand-alone system for a 3.5 mile radius coverage, or any number of Quick-Cell cells
can be interfaced to serve a broader geographic area.  We charge our customers a monthly fee for
wireless Internet access.  To date, however, our wireless Internet business has generated a very
limited amount of revenues.</P>

<P> In the middle of 2000, we sold three Quick-Cell systems to two independent telephone companies
and another telecommunications company.  Due to a lack of capital, we have suspended this
marketing effort.</P>

<P> We intend to commit all available resources to the development of our Quick-Cell wireless
Internet access products.</P>

<P> In September 2000, our CyberHighway subsidiary, a provider of dial-up Internet access, was
forced into involuntary bankruptcy.  As of the end of February 2001, CyberHighway had lost
nearly all of its customers.  We do not intend to commit any capital to restore CyberHighway's
business.</P>

<P> We have had substantial losses since our inception in 1996.  At December 31, 2000, our
accumulated deficit was $34,502,160, our net loss for 2000 was $21,885,330 and we used
$1,038,262 in cash for all of 2000.  We have a limited operating history upon which to evaluate
our prospects.</P>

<P> Our independent auditor has, in its opinion, expressed substantial doubt about our ability to
continue as a going concern, which means that our independent auditor cannot be certain that we
will be in business on December 31, 2001.</P>

<P> You should read the risk factors, beginning on page 5, before you buy our common stock.</P>

<P><STRONG>Our Market and Strategy</STRONG></P>

<P> We designed our Quick-Cell wireless Internet access products to provide high-speed, high-quality
wireless Internet access at prices below local market prices for comparable hard-wire Internet
access.</P>

<P> We have recently contracted with Wireless WebConnect!, Inc., a national wireless Internet
service reseller, to resell our Quick-Cell products.  The selection of the first city to be exploited by
the reseller will be chosen in the very near future.  It is the stated intention of the reseller to
establish Quick-Cell systems in multiple cities during the remainder of 2001.  We continue to
pursue other resellers for our Quick-Cell service.</P>

<P> When marketing company-owned Quick-Cell systems, we intend to offer free customer-premises
modems, free installation and free first-month's service.  To date, we have established a
company-owned Quick-Cell system only in Santa Fe, New Mexico, which serves approximately
120 customers.  A lack of capital has prevented us from further activities in Santa Fe, as well as
prevented us from establishing Quick-Cell systems in other cities</P>

<P><STRONG>Fusion Capital Agreement</STRONG></P>

<P> On May 9, 2001, we executed an amended and restated common stock purchase agreement with
Fusion Capital Fund II, LLC, which replaced a similar agreement dated October 9, 2000.  Under
this agreement, Fusion Capital may purchase up to $10 million of our common stock over a
period of up to 25 months.  Please see "The Fusion Capital Transaction" below for a detailed
description of this agreement.</P>

<P><STRONG>Our Address</STRONG></P>

<P> USURF America was organized as a Nevada corporation in November 1996, under the name
"Media Entertainment, Inc." In 1998, we changed our name to "Internet Media Corporation", then
to our current name in June 1999.  Our principal office is located at 8748 Quarters Lake Road,
Baton Rouge, Louisiana 70809.  Our telephone number is (225) 922-7744; our fax number is
(225) 922-9123.  Our web site is located at www.usurf.com.  Information contained on our web
site is not to be considered a part of this prospectus.</P>

<P><STRONG>THE OFFERING</STRONG></P>

<P> The selling shareholders are offering for sale their respective shares of our common stock, as
described under "Plan of Distribution" and "Selling Shareholders", beginning on pages __ and __,
respectively.
<TABLE BORDER="1" WIDTH="100%">
<TR><TD>Common stock offered by the selling
shareholders:</TD>
<TD>8,056,250 shares(1)</TD></TR>
<TR><TD>Common Stock Outstanding Prior to this
Offering:</TD>
<TD>20,086,770 shares</TD></TR>
<TR><TD>Common Stock Outstanding After this
Offering:</TD>
<TD>29,534,497 shares(2)</TD></TR>
<TR><TD>American Stock Exchange Trading Symbol:</TD>
<TD>UAX</TD></TR>
<TR><TD>___________</TD>
<TD></TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%">
<TR><TD>(1) Up to 6,000,000 of these shares are issuable under the Fusion Capital agreement; an
additional 800,000 have been issued to Fusion Capital as part of its commitment fee; 645,000 of
these shares may be purchased from us by Fusion Capital upon the exercise of warrants issued to
Fusion Capital as part of its commitment fee; 450,000 of these shares have been issued to
Gruntal &amp; Co. for services rendered on our behalf; and 161,250 of these shares may be
purchased from us by Gruntal &amp; Co. upon the exercise of warrants issued to Gruntal &amp; Co. as a
finder's fee.</TD></TR>
<TR><TD>(2) Assumes: (A) the issuance of an additional 6,000,000 shares to Fusion Capital under the
Fusion Capital agreement and (B) the exercise of all 3,447,727 outstanding warrants.</TD></TR></TABLE>

<P><STRONG>SUMMARY FINANCIAL DATA</STRONG></P>

<P> Set forth below is our summary consolidated statements of operations data for the years ended
December 31, 1998, 1999 and 2000, as well as for the three months ended March 31, 2001 and
2000.  Also set forth below is our summary balance sheet data as of December 31, 1999 and
2000, and as of March 31, 2001.</P>

<P> This summary financial information should be read in conjunction with the consolidated financial
statements appearing elsewhere in this prospectus.</P>

<P>STATEMENT OF OPERATIONS DATA:
<TABLE BORDER="1" WIDTH="100%">
<TR><TD></TD>
<TD>Year Ended
December 31,
2000</TD>
<TD>Year Ended
December 31,
1999</TD>
<TD>Year Ended
December 31,
1998</TD>
<TD>Three Months
Ended March
31, 2001</TD>
<TD>Three Months
Ended March
31, 2000</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD>(unaudited)</TD>
<TD>(unaudited)</TD></TR>
<TR><TD>Revenues</TD>
<TD>$ 1,872,629</TD>
<TD>$ 2,547,225</TD>
<TD>$5,440</TD>
<TD>$384</TD>
<TD>$597,392</TD></TR>
<TR><TD>Internet access
costs and cost
of goods sold</TD>
<TD>2,145,955</TD>
<TD>1,152,721</TD>
<TD>0</TD>
<TD>0</TD>
<TD>269,136</TD></TR>
<TR><TD>Operating
expenses</TD>
<TD>14,975,583</TD>
<TD>11,860,758</TD>
<TD>1,034,464</TD>
<TD>901,643</TD>
<TD>3,354,219</TD></TR>
<TR><TD>Net loss</TD>
<TD>21,885,330</TD>
<TD>10,930,163</TD>
<TD>1,037,626</TD>
<TD>901,259</TD>
<TD>2,557,596</TD></TR>
<TR><TD>Loss per share</TD>
<TD>(1.68)</TD>
<TD>(0.96)</TD>
<TD>(0.14)</TD>
<TD>(0.06)</TD>
<TD>(0.20)</TD></TR>
<TR><TD>Weighted
average
number of
shares
outstanding</TD>
<TD>13,000,391</TD>
<TD>11,419,641</TD>
<TD>7,361,275</TD>
<TD>13,934,118</TD>
<TD>12,937,499</TD></TR></TABLE>

<P>BALANCE SHEET DATA:
<TABLE BORDER="1" WIDTH="100%">
<TR><TD></TD>
<TD>Year Ended December
31, 2000</TD>
<TD>Year Ended December
31, 1999</TD>
<TD>March 31, 2001 </TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD>(unaudited)</TD></TR>
<TR><TD>Working Capital
(Deficit)</TD>
<TD>$(1,517,164)</TD>
<TD>$(694,937)</TD>
<TD>$(1,472,144)</TD></TR>
<TR><TD>Total Assets</TD>
<TD>410,316</TD>
<TD>19,545,169</TD>
<TD>523,526</TD></TR>
<TR><TD>Total Current
Liabilities</TD>
<TD>1,764,973</TD>
<TD>1,221,650</TD>
<TD>1,844,743</TD></TR>
<TR><TD>Total Liabilities</TD>
<TD>1,764,973</TD>
<TD>5,104,860</TD>
<TD>1,844,743</TD></TR>
<TR><TD>Total Redeemable
Common Stock</P>

<P>Shareholders' Equity
(Deficit)</TD>
<TD>3,323,552</P>

<P>(4,678,209)</TD>
<TD>0</P>

<P>14,440,309</TD>
<TD>4,869,255</P>

<P>(6,190,472)</TD></TR></TABLE>

<P><STRONG>RISK FACTORS</STRONG></P>

<P>You should carefully consider the risks described below before you decide to buy our common
stock.  If any of the following risks actually occur, our business, financial condition or results of
operations would likely suffer.  In such case, the trading price of our common stock could decline,
and you could lose all or part of your investment.</P>

<P>BECAUSE WE HAVE A SHORT OPERATING HISTORY, THERE IS A LIMITED
AMOUNT OF INFORMATION ABOUT US UPON WHICH YOU CAN EVALUATE OUR
BUSINESS AND POTENTIAL FOR FUTURE SUCCESS.</P>

<P>We were incorporated in 1996 and have only a limited operating history upon which you can
evaluate our business and prospects.  You must consider the risks and uncertainties frequently
encountered by early stage companies in new and rapidly evolving markets, such as the market for
wireless Internet access services.  Some of these risks and uncertainties relate to our ability to:</P>

<P>- gain access to sufficient capital with which to support anticipated growth;</P>

<P>- achieve customer acceptance of our Quick-Cell wireless Internet access products;</P>

<P>- expand our wireless Internet access subscriber base and subscriber-related revenues;</P>

<P>- compete successfully in a highly competitive market; and</P>

<P>- recruit and train qualified employees.</P>

<P>We cannot assure you that we will successfully address any of these risks and uncertainties.</P>

<P>OUR INDEPENDENT AUDITOR EXPRESSED SUBSTANTIAL DOUBT ABOUT OUR
ABILITY TO CONTINUE AS A GOING CONCERN.</P>

<P>In its opinion on our financial statements for the year ended December 31, 2000, our independent
auditor, Postlethwaite &amp; Netterville, expressed substantial doubt about our ability to continue as a
going concern.  This means that, given our current lack of capital, our independent auditor has
substantial doubt that we will be in business on December 31, 2001.  Please review the
Independent Auditor's Report and Note 18 to the consolidated financial statements appearing
elsewhere in this prospectus.</P>

<P>UNLESS WE OBTAIN $300,000 IN NEW CAPITAL, WE WILL BE UNABLE TO REMAIN
IN BUSINESS.</P>

<P>During the next twelve months, we will need approximately $300,000 just to continue our
operations at their current levels.  Absent this amount of funding, we will be unable to continue
our operations.</P>

<P>SOME OF OUR SHAREHOLDERS MAY HAVE RIGHTS OF RESCISSION, DUE TO
POTENTIAL VIOLATIONS BY US OF SECTION 5 OF THE SECURITIES ACT.</P>

<P>Since January 2000, a total of 4,881,985 shares of our common stock with an aggregate assigned
value of $5,081,255 may have been issued in violation of Section 5 of the Securities Act.
4,751,985 of these shares were issued in payment of services or as bonuses to employees and
130,000 of these shares were issued for cash or underlie currently exercisable warrants, which
were sold or will be sold for at total of $650,000 in cash.  At December 31, 2000, a total of
2,767,823 of these shares valued at $3,897,552 had been issued and at March 31, 2001, a total of
4,381,985 of these shares valued at $4,869,255 had been issued, with an additional 500,000 shares
valued at $212,000 having been issued since March 31, 2001.  It is possible that each of the
issuees of these shares has a potential claim for rescission of their respective issuance transactions.
We do not possess capital with which to pay any such claims, if asserted.<BR>
</P>

<P>WE HAD AN ACCUMULATED DEFICIT OF $34,502,160 AS OF DECEMBER 31, 2000,
AND AN ACCUMULATED DEFICIT OF $35,403,419 (UNAUDITED) AS OF MARCH 31,
2001, AND WE EXPECT TO CONTINUE TO INCUR LOSSES FOR THE FORESEEABLE
FUTURE.</P>

<P>We have had substantial losses since our inception and our operating losses may continue in the
future.</P>

<P>We had an operating loss of $901,259 (unaudited) for the three months ended March 31, 2001.
As a result, at March 31, 2001, we had an accumulated deficit of $35,403,419 (unaudited).  Our
gross revenues for the three month period were $384 (unaudited), with a loss from operations and
a net loss of $901,259 (unaudited).</P>

<P>We have incurred annual operating losses since our inception. As a result, at December 31, 2000,
we had an accumulated deficit of $34,502,160.  Our gross revenues for the years ended December
31, 2000, 1999 and 1998, were $1,872,629, $2,547,225, and $5,440, respectively, with losses
from operations of $15,248,909, $10,466,254 and $1,029,024, respectively.  Our net losses for
the years ended December 31, 2000, 1999 and 1998, were $21,885,330, $10,930,163 and
$1,037,626, respectively.  We cannot assure you that we will experience revenue growth, or that
we will be profitable in the future.</P>

<P>As we pursue full-scale sales and installation of our Quick-Cell wireless Internet products, we
expect our operating expenses to increase significantly, especially in the areas of sales and
marketing.  As a result of these expected cost increases, we will need to generate increased
revenues to become profitable.  Accordingly, we cannot assure you that we will ever become or
remain profitable.  If our revenues fail to grow at anticipated rates or our operating expenses
increase without a commensurate increase in our revenues, our financial condition will be
adversely affected.  Our inability to become profitable on a quarterly or annual basis would have a
materially adverse effect on our business and financial condition.  Also, the market price for our
stock could fall.</P>

<P>YOU WILL SUFFER SUBSTANTIAL DILUTION IN THE NET TANGIBLE BOOK VALUE
OF THE COMMON STOCK YOU PURCHASE.</P>

<P>Because the selling shareholders expect to sell their shares of our common stock at market-level
prices, you will suffer substantial and immediate dilution, due to the lower book value per share of
our common stock compared to the purchase price per share of our common stock.  We cannot
predict your actual dilution, because dilution will depend on the price at which our common stock
is sold by the selling shareholders.</P>

<P>THE MARKET PRICE OF OUR COMMON STOCK WILL CONTINUE TO BE
EXTREMELY VOLATILE, AND IT MAY DROP UNEXPECTEDLY.</P>

<P>The market price of our common stock has fluctuated significantly in the past and we expect this
volatility to continue in the future.  Since January 2000, trading prices for our common stock have
ranged from $.1875 per share to $11.00 per share.  The closing price of our common stock on
June 20, 2001, was $.33.  It is possible that the market price of our common stock could fall
below the price you paid for your shares of our common stock. </P>

<P>The stock prices for many high technology companies, especially those that base their businesses
on the Internet, recently have experienced wide fluctuations and extreme volatility.  This volatility
has often been unrelated to the operating performance of such companies, so our stock price
could decline even if our wireless Internet access business is successful.  Also, following periods
of volatility in the market price of a company's securities, securities class action claims frequently
are brought against the subject company.  To the extent that the market price of our shares falls
dramatically in any period of time, shareholders may bring claims, with or without merit, against
us.  Such litigation would be expensive to defend and would divert management attention and
resources regardless of outcome.</P>

<P>WE MAY NOT OBTAIN ENOUGH FUNDS UNDER THE FUSION CAPITAL AGREEMENT
TO ACHIEVE TWO OF OUR BUSINESS OBJECTIVES.</P>

<P>We must obtain approximately $2.0 million under the Fusion Capital agreement, in order to
achieve the first two objectives of our business plan:</P>

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

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

<P>Because of the current low price of our common stock, it is a distinct possibility that we will not
obtain even the $2.0 million amount we need to achieve these objectives.  Should this occur, it is
possible that we would not be able to develop successfully our wireless Internet access business.</P>

<P>OUR COMMON STOCK COULD BE DELISTED FROM THE AMERICAN STOCK
EXCHANGE.</P>

<P>Currently, we are not in compliance with the continued listing guidelines of AMEX.  AMEX
recently inquired with respect to our plan for achieving compliance with its continued listing
guidelines.  Our response to AMEX included an explanation of our anticipated future funding
under the Fusion Capital agreement and the positive effects this funding would likely have on our
business and financial condition, particularly in increasing our total assets and shareholders' equity.
We have not received further communication from AMEX in this matter.  Should our common
stock be delisted from AMEX, it is very likely that the market price for our stock could drop
dramatically.  We cannot assure you that we will be able to maintain our listing on AMEX.</P>

<P>In addition, should our stock be delisted from AMEX, we would be in default under the Fusion
Capital agreement and unable to obtain funding thereunder.  In this circumstance, it is likely that
we would not have access to capital necessary to sustain our operations.</P>

<P>If we are unable to maintain our AMEX listing, our common stock would likely begin to trade on
the NASD's OTC Bulletin Board and become a "penny stock", as long as it trades below $5.00
per share.  Broker-dealer practices in connection with transactions in penny stocks are regulated
by penny stock rules adopted by the SEC.  The penny stock rules require a broker-dealer, prior to
a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure statement prepared by the SEC that provides information about penny stocks and the
nature and level of risks in the penny stock market.  The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, as well as the monthly account statements
showing the market value of each penny stock held in the customer's account.  In addition, the
penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from
such rules, the broker-dealer must make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the purchaser's written agreement to the
transaction.</P>

<P>These disclosure requirements may have the effect of reducing the level of trading activity in the
secondary market for a stock that becomes subject to the penny stock rules.  Should our common
stock return to trading on the OTC Bulletin Board, it can be expected that investors in our
common stock may find it more difficult to profit on their investments in our stock.</P>

<P>THE RESALE OF SHARES PURCHASED BY FUSION CAPITAL COULD CAUSE THE
PRICE OF OUR COMMON STOCK TO DECLINE, WHICH COULD IMPAIR OUR
ABILITY TO OBTAIN NEEDED CAPITAL IN THE FUTURE.</P>

<P>All of the shares of our common stock offered in this offering will be freely tradable, except that
Fusion Capital has agreed that it will not sell or otherwise transfer 800,000 shares issued to it as
part of its commitment fee until the earlier of the termination of the Fusion Capital agreement, our
default under that agreement and a date that is approximately 25 months from the date of this
prospectus.</P>

<P>Fusion Capital may sell none, some or all of the shares of common stock purchased from us at any
time and from time to time.  We expect that the shares registered in this offering will be offered by
the selling shareholders over a period of up to 25 months from the date of this prospectus.</P>

<P>Depending upon the market liquidity for our common stock at the time, a sale of shares under this
offering at any given time could cause the trading price of our common stock to decline.  In
addition, the sale of a substantial number of shares of our common stock under this offering, or
the anticipation of such sales, could make it more difficult for us to sell equity or equity-related
securities in the future at a time and at a price that we might otherwise desire to effect sales.  This
circumstance could impair our ability to accomplish our Quick-Cell-related business objectives,
due to a potential lack of capital.</P>

<P>WE ARE UNABLE TO CALCULATE THE EXACT NUMBER OF SHARES THAT WE
WILL ISSUE UNDER THE FUSION CAPITAL AGREEMENT, BUT YOU CAN EXPECT
SIGNIFICANT DILUTION IN YOUR OWNERSHIP INTEREST AS A RESULT OF THE
FUSION CAPITAL AGREEMENT.</P>

<P>This prospectus relates to up to 6,000,000 shares of our common stock that may be issued under
the Fusion Capital agreement.  However, due to the fact that the number of shares to be issued
under the Fusion Capital agreement depends on future market prices of our stock, we are unable
to calculate the exact number of shares that we will issue under that agreement.</P>

<P>If Fusion Capital purchased the full amount of shares purchasable under the Fusion Capital
agreement on the date of this prospectus, the purchase price would have been $.40 per share and
Fusion Capital would have been able to purchase all 6,000,000 shares of our common stock
reserved for issuance under the Fusion Capital agreement.  Assuming Fusion Capital's purchase
under the Fusion Capital agreement on the date of this prospectus, these shares, along with the
800,000 shares issued to Fusion Capital as part of its commitment fee and the 645,000 shares
underlying the warrants issued to Fusion Capital as part of its commitment fee, would represent,
on a fully-diluted basis, approximately 25% of our outstanding common stock as of June 22,
2001.  This would result in significant dilution to the ownership interests of other holders of our
common stock.  Such dilution could be more significant if the trading price of our common stock
is lower than the current trading price of our common stock at the time Fusion Capital purchases
shares of our common stock under the Fusion Capital agreement, as a lower trading price would
cause more shares of our common stock to be issuable to Fusion Capital.  The purchase under the
Fusion Capital agreement of a significant percentage of our outstanding common stock may result
in substantial dilution to the ownership interests of other holders of our common stock.</P>

<P>Although we have the right to prohibit Fusion Capital's purchases under the Fusion Capital
agreement, we may still elect to require Fusion Capital's purchase of shares under the agreement.
We can require Fusion Capital to purchase additional shares if the closing sale price is above
$5.00 for five trading days.  In the event that we decide to issue a number of shares that represents
greater than 20% of our outstanding shares of common stock, we would first seek shareholder
approval.  The purchase under the Fusion Capital agreement of a significant percentage of our
outstanding stock may result in substantial dilution to the ownership interests of other holders of
our common stock. Since we only plan to sell up to 6,000,000 shares to Fusion Capital under the
Fusion Capital agreement, the price at which we sell our common stock to Fusion Capital will
need to average at least $1.67 per share for us to receive the maximum proceeds of $10 million
under the Fusion Capital agreement. Assuming a purchase price of $.40 per share, the closing sale
price of the common stock on June 22, 2001, and the purchase by Fusion Capital of 6,000,000
shares under the Fusion Capital agreement, proceeds to us would only be $2,400,000, unless we
choose to issue more than 6,000,000 shares, which we have the right, but not the obligation, to
do.</P>

<P>THE LOWER OUR STOCK PRICE AT THE TIME FUSION CAPITAL MAKES A
PURCHASE, THE MORE SHARES OF STOCK FUSION CAPITAL WILL RECEIVE.</P>

<P>Fusion Capital will receive more shares at the time it makes a purchase, the lower the price of our
stock, since the shares covered under the Fusion Capital agreement are issuable at a floating rate
based on our stock price. The following table sets forth the number of shares issuable to Fusion
Capital at varying purchase prices:
<TABLE BORDER="1" WIDTH="100%">
<TR><TD>Assumed Per Share
Purchase Price</TD>
<TD>Total Shares Issuable
Upon a Full Purchase
Under the Fusion
Capital Agreement (1)</TD>
<TD>Gross Proceeds</TD>
<TD>Percent of Our
Common Stock
Outstanding After
Giving Effect to the
Issuance to Fusion
Capital</TD></TR>
<TR><TD>$.40(2)</TD>
<TD>6,000,000</TD>
<TD>$2,400,000</TD>
<TD>23.00%</TD></TR>
<TR><TD>$1.50</TD>
<TD>6,000,000</TD>
<TD>$9,000,000</TD>
<TD>23.00%</TD></TR>
<TR><TD>$2.00</TD>
<TD>5,000,000</TD>
<TD>$10,000,000</TD>
<TD>19.93%</TD></TR>
<TR><TD>$5.00</TD>
<TD>2,000,000</TD>
<TD>$10,000,000</TD>
<TD>9.06%</TD></TR>
<TR><TD>$10.00</TD>
<TD>1,000,000</TD>
<TD>$10,000,000</TD>
<TD>4.74%</TD></TR>
<TR><TD>__________</TD>
<TD></TD>
<TD></TD>
<TD></TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%">
<TR><TD>(1) Closing price on June 22, 2001, as reported by AMEX.</TD></TR>
<TR><TD></TD></TR></TABLE>

<P>FUSION CAPITAL MAY PURCHASE MORE THAN 9.9% OF OUR COMMON STOCK.</P>

<P>Even though the Fusion Capital agreement restricts Fusion Capital from owning any more than
9.9% of our stock at any one time, this restriction does not prevent Fusion Capital from selling a
portion of its holdings and later purchasing additional shares.  Thus, it is possible that the total
number of shares purchased by Fusion Capital would be greater than 9.9% of the then-outstanding
common stock.</P>

<P>THE EXISTENCE OF OUR AGREEMENT WITH FUSION CAPITAL COULD CAUSE
DOWNWARD PRESSURE ON THE MARKET PRICE OF OUR COMMON STOCK.</P>

<P>Simply the existence of the Fusion Capital agreement could cause holders of our common stock to
sell their shares, which could cause the market price of our common stock to decline.  Also,
prospective investors anticipating future downward pressure on the price of our common stock
due to the shares that may be available for sale by Fusion Capital could refrain from purchases or
effect sales in anticipation of a decline of the market price.</P>

<P>WE MAY BE UNABLE TO OBTAIN SUFFICIENT CAPITAL TO SUSTAIN OUR
BUSINESS OR PURSUE OUR GROWTH STRATEGY.</P>

<P>Currently, we do not have sufficient financial resources to implement our business plan or grow
our operations. Therefore, excluding any funding that we might receive from Fusion Capital in the
future, we will need additional funds to continue our operations and to grow our business.
Assuming we do not receive any funding from Fusion Capital, there is no assurance that we will
be able to generate revenues that are sufficient to sustain our operations and we would require
additional sources of financing in order to satisfy our working capital needs.  Should needed
financing be unavailable or prohibitively expensive when we require it, it is possible that we would
be forced to cease operations.</P>

<P>We have designed a very aggressive growth strategy for the commercial exploitation of our
Quick-Cell wireless Internet access products.  This strategy is expected to place a significant strain
on our managerial, operational and financial resources.  In particular, our planned wireless
Internet expansion will require significant capital with which to purchase equipment necessary for
the construction and implementation of systems.  If we are unable to secure enough capital, we
will be unable to achieve our growth objectives.  We cannot assure you that we will be able to
obtain enough capital for our growth needs.</P>

<P>Even if we are able to access funds under the Fusion Capital agreement, we will need additional
capital to implement fully our growth plans.</P>

<P>WE MAY NOT BE ABLE TO SECURE ENOUGH QUICK-CELL CUSTOMER
INSTALLATION PERSONNEL TO KEEP UP WITH DEMAND.</P>

<P>It is possible that we will be unable to secure Quick-Cell installation crews, either through
independent contractors or directly hiring personnel, in large enough numbers that will allow us to
install new Quick-Cell customers in a timely manner.  Any unreasonable delays in installation can
cause customers to cancel their orders.  We may not be able to overcome this potential barrier to
market penetration.  Our failure to do so would restrict our growth in revenues and severely
impair our ability to earn a profit.</P>

<P>OUR FUTURE OPERATING RESULTS MAY VARY FROM PERIOD TO PERIOD, AND,
AS A RESULT, WE MAY FAIL TO MEET THE EXPECTATIONS OF OUR INVESTORS
AND ANALYSTS, WHICH COULD CAUSE OUR STOCK PRICE TO FLUCTUATE OR
DECLINE AND INHIBIT OUR ABILITY TO OBTAIN FUNDS UNDER THE FUSION
CAPITAL AGREEMENT OR OTHERWISE.</P>

<P>Our revenues and results of operations have fluctuated in the past and can be expected to fluctuate
significantly in the future, as we make financial commitments to facilitate expected growth.  The
following factors will influence our operating results:</P>

<P>- access to funds for expansion-related capital expenditures, including Quick-Cell equipment
purchases;</P>

<P>- market acceptance of our Quick-Cell wireless Internet access products;</P>

<P>- the rates of new wireless Internet access subscriber acquisition and retention;</P>

<P>- changes in our pricing policies or those of our competitors; and</P>

<P>- potential competition from large, well-funded national telecommunications companies.</P>

<P>Our future personnel costs, marketing programs and overhead cannot be adjusted quickly and are,
therefore, relatively fixed in the short term.  To the extent, if ever, that we begin to derive funding
pursuant to the Fusion Capital agreement, our operating expense levels will be based, in part, on
our expectations of future revenue.  If actual revenues are below our expectations, our results of
operations will suffer and we could be forced to cease operations.</P>

<P>Period-to-period comparisons of our results of operations will likely not provide reliable
indications of our future performance.</P>

<P>Price fluctuations of our common stock could negatively impact our ability to obtain needed
capital.</P>

<P>BECAUSE WE DEPEND HEAVILY ON OUTSIDE SUPPLIERS, OUR BUSINESS MAY
SUFFER, SHOULD OUR SUPPLIERS FAIL TO PERFORM IN A TIMELY MANNER.</P>

<P>We depend on third-party suppliers of hardware components and telecommunications carriers to
provide equipment and communications capacity.  The failure of one or more of our suppliers to
perform in a timely manner could cause a significant disruption in our business.  In particular,
should our manufacturer of Quick-Cell modem circuit boards fail to deliver circuit boards when
needed, it is possible that we would be forced to suspend our wireless Internet business for an
indeterminate period of time.</P>

<P>OUR FAILURE TO MANAGE FUTURE GROWTH WOULD HINDER OUR EFFORTS IN
EARNING A PROFIT.</P>

<P>Without additional capital, we will be unable to expand significantly our operations.  However,
should we ever begin to obtain funds under the Fusion Capital agreement, we will begin to serve
new geographic markets.  This expected expansion will place a significant strain on our
management and operating systems.  In order to accommodate this sort of growth, we will need
to hire and retain appropriate management personnel.  We may not be able to hire and retain
enough qualified managers.  This circumstance would likely hinder our growth and reduce our
chance of earning a profit.</P>

<P>If and when we experience our anticipated rapid growth, we may encounter difficulties in
developing and implementing needed internal systems, including our recruiting and management
systems.  Our failure to do so will reduce the likelihood that we will earn a profit.</P>

<P>OUR FUTURE SUCCESS WILL DEPEND ON OUR ABILITY TO KEEP PACE WITH THE
INTERNET'S RAPID TECHNOLOGICAL CHANGES, EVOLVING INDUSTRY
STANDARDS AND CHANGING CUSTOMER NEEDS.</P>

<P>The Internet access market is constantly evolving, due primarily to technological innovations, as
well as evolving industry standards, changes in subscriber needs and frequent new service and
product introductions.  New services and products based on new technologies or new industry
standards expose us to risks of equipment obsolescence.  We must use leading technologies
effectively, continue to develop our technical expertise and enhance our existing services on a
timely basis to remain competitive in this industry.  We cannot assure you that we will be able to
do so.</P>

<P>Our ability to compete successfully in our markets also depends on the continued compatibility of
our services with products and systems utilized and sold by various third parties.  Our failure to do
so could cause us to lose a competitive position in our markets, thereby causing us to operate less
profitably.</P>

<P>OUR GROWTH PLANS DEPEND ON THE CONTINUED GROWTH IN THE DEMAND
FOR HIGH-SPEED INTERNET ACCESS.<BR>
<BR>
</P>

<P>As Internet usage has become a common part of Americans' lives, a growing number of
consumers have begun to demand higher Internet-access speed than can be provided by hard wire
dial-up methods.  If our wireless Internet access products are unable to address changes in
consumers' preferences, we would become less likely ever to earn a profit.</P>

<P>OUR QUICK-CELL WIRELESS INTERNET ACCESS PRODUCTS ARE NEW AND
CONSUMER ACCEPTANCE MAY NOT BE ACHIEVED.</P>

<P>Our Quick-Cell wireless Internet access products are new and do not enjoy wide-spread name
recognition among consumers.  If we are unable to achieve consumer acceptance of our products,
it is unlikely that we would be able to earn a profit.</P>

<P>WE COULD FAIL TO OVERCOME THE SEVERE COMPETITION FOR INTERNET
ACCESS CUSTOMERS, WHICH WOULD IMPAIR OUR ABILITY TO EARN A PROFIT
AND CAUSE OUR OVERALL FINANCIAL CONDITION TO DETERIORATE.</P>

<P>The market for Internet access services is extremely competitive and highly fragmented.  As there
are no significant barriers to entry, we expect that competition will intensify over time.</P>

<P>Our competitors include many large, nationally-known companies, such as America Online and
Earthlink.  These and other companies possess greater resources, particularly access to capital
sources, market presence and brand name recognition than do we.  In addition, we will face
competition from other wireless Internet access providers, such as Metricom, and larger, national
cellular telephone service providers.  If we are unable to overcome this severe competition, we do
not expect that we would earn a profit and our overall financial condition would decline.</P>

<P>WE DEPEND ON OUR KEY PERSONNEL; THE LOSS OF ANY KEY PERSONNEL
COULD DISRUPT OUR OPERATIONS, ADVERSELY AFFECT OUR BUSINESS AND
RESULT IN REDUCED REVENUES.</P>

<P>Our future success will depend on the continued services and on the performance of our senior
management and other key employees.  In particular, we depend on our president, David M.
Loflin.  While we have entered into an employment agreement with Mr. Loflin, the loss of his
services for any reason could seriously impair our ability to execute our business plan, which
could reduce our revenues and have a materially adverse effect on our business and results of
operations.  We have not purchased any key-man life insurance.</P>

<P>OUR DIRECTORS AND EXECUTIVE OFFICERS OWN ENOUGH OF OUR COMMON
STOCK EFFECTIVELY TO CONTROL DIRECTORS' ELECTIONS AND THEREBY
CONTROL OUR MANAGEMENT POLICIES.</P>

<P>Our directors and executive officers own approximately 20% of our currently outstanding
common stock.  Two of our directors, as well as three other persons, have entered into a voting
agreement relating to the voting in elections of directors.  Currently, approximately 21% of our
outstanding shares of common stock are subject to this voting agreement.  These shareholders
may be able effectively to control the outcome of corporate actions requiring shareholder approval
by majority action.  Their stock ownership may have the effect of delaying, deferring or preventing
a change in control of USURF America.  A more complete description of this voting agreement
may be found under the heading "Certain Transactions", page ___.</P>

<P>OUR BUSINESS PLAN IS NOT BASED ON INDEPENDENT MARKET STUDIES, SO WE
CANNOT ASSURE YOU THAT OUR STRATEGY WILL BE SUCCESSFUL.</P>

<P>We have not commissioned any independent market studies concerning the extent to which
customers will utilize our services and products.  Rather, our plans for implementing our business
strategy and achieving profitability are based on the experience, judgment and assumptions of our
key management personnel, and upon other available information concerning the communications
industry.  If our management's assumptions prove to be incorrect, we will not be successful in
establishing our wireless Internet access business.</P>

<P>WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS,
WHICH COULD DRAMATICALLY REDUCE OUR ABILITY TO EARN A PROFIT.</P>

<P>We currently rely on common law principles for the protection of our copyrights and trademarks
and trade secret laws to protect our proprietary intellectual property rights.  We do not intend to
file patent applications relating to our Quick-Cell wireless Internet access products, until
completion of future generations of the products.  We have not filed trademark applications
relating to the "Quick-Cell" and "USURF Wireless Internet" brand names.</P>

<P>Without patent or trademark protection, the existing trade secret and copyright laws afford us
only limited protection.  Third parties may attempt to disclose, obtain or use our technologies.
Others may independently develop and obtain patents or copyrights for technologies that are
similar or superior to our technologies.  If that happens, we may need to license these
technologies and we may not be able to obtain licenses on reasonable terms, if at all, thereby
causing great harm to our business.</P>

<P>NEARLY ALL OF OUR SHARES ARE ELIGIBLE FOR FUTURE SALE, WHICH COULD
CAUSE THE MARKET PRICE FOR OUR COMMON STOCK TO DECLINE.</P>

<P>With the registration of the shares of stock included in this prospectus, nearly all of the
outstanding shares of our common stock owned by non-affiliates will be eligible for resale to the
public.  This amount of common stock represents a significant overhang on the market for our
common stock.  The sale of a significant amount of these shares at any given time could cause the
trading price of our common stock to decline and to be highly volatile.</P>

<P><STRONG>CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS</STRONG></P>

<P> This prospectus contains forward-looking statements that involve risks and uncertainties.
Discussions containing forward-looking statements may be found in the material set forth under
"Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business", as well as in the prospectus generally.  We generally use words such
as "believes", "intends", "expects", "anticipates", "plans" and similar expressions to identify
forward-looking statements. You should not place undue reliance on these forward-looking
statements.  Our actual results could differ materially from those anticipated in the
forward-looking statements for many reasons, including the risks described above and elsewhere
in this prospectus.</P>

<P><STRONG>DILUTION</STRONG></P>

<P>As of March 31, 2001, we had a total of 18,172,770 shares of common stock outstanding, of
which 4,381,985 are subject to potential rescission claims, and a net tangible book value of
negative $.45 per share.</P>

<P>A purchase of our common stock will result in substantial and immediate dilution in your
investment.  Dilution is the reduction of a purchaser's investment measured by the difference
between the price paid per share of common stock and the net tangible book value per share at the
time of purchase.</P>

<P>The following table depicts the potential dilution to purchasers of our common stock, without
taking into account any other changes in our net tangible book value since March 31, 2001, other
than to assume all outstanding warrants are exercised and to assume various purchase prices:
<TABLE BORDER="1" WIDTH="100%">
<TR><TD>Public Offering Price Per Share</TD>
<TD>Net Tangible Book Value Per
Share at Time of Offering</TD>
<TD>Dilution Per Share to
Purchasers</TD></TR>
<TR><TD>$.50</TD>
<TD>$(0.21)</TD>
<TD>$.71</TD></TR>
<TR><TD>$1.50</TD>
<TD>$(0.21)</TD>
<TD>$1.71</TD></TR>
<TR><TD>$2.00</TD>
<TD>$(0.21)</TD>
<TD>$2.21</TD></TR>
<TR><TD>$5.00</TD>
<TD>$(0.21)</TD>
<TD>$5.21</TD></TR>
<TR><TD>$10.00</TD>
<TD>$(0.21)</TD>
<TD>$10.21</TD></TR></TABLE>

<P>You will incur substantial dilution when you purchase our common stock.  However, because the
market price of our common stock fluctuates, we cannot predict the actual dilution you will incur.</P>

<P><STRONG>USE OF PROCEEDS</STRONG></P>

<P>We will not receive any of the proceeds of sales of stock by the selling shareholders.</P>

<P> However, we may receive up to $10 million under the Fusion Capital agreement.  Assuming we
receive this amount of funds, we anticipate that we will apply these funds as follows:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Purchase of Quick-Cell Equipment</TD>
<TD>$6,000,000</TD></TR>
<TR><TD>Construction of Quick-Cell Systems</TD>
<TD>1,300,000</TD></TR>
<TR><TD>Marketing</TD>
<TD>1,000,000</TD></TR>
<TR><TD>General and Administrative Expenses</TD>
<TD>200,000</TD></TR>
<TR><TD>Finder's Fee</TD>
<TD>800,000</TD></TR>
<TR><TD>Working Capital</TD>
<TD>700,000</TD></TR>
<TR><TD>Total</TD>
<TD>$10,000,000</TD></TR></TABLE>

<P>Should all of our outstanding warrants be exercised, we would receive cash proceeds of
approximately $2,540,000.  The funds received from the exercise of warrants would be used as
follows:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Purchase of Quick-Cell Equipment</TD>
<TD>$1,600,000</TD></TR>
<TR><TD>Construction of Quick-Cell Systems</TD>
<TD>350,000</TD></TR>
<TR><TD>Marketing</TD>
<TD>275,000</TD></TR>
<TR><TD>General and Administrative Expenses</TD>
<TD>50,000</TD></TR>
<TR><TD>Working Capital</TD>
<TD>265,000</TD></TR>
<TR><TD>Total</TD>
<TD>$2,540,000</TD></TR></TABLE>

<P><STRONG>TRADING AND MARKET PRICES</STRONG></P>

<P>From 1997 through October 14, 1999, our common stock was traded on the NASD's OTC
Bulletin Board, first under the symbol "MEME", then under the symbol "USRF".  The table below
sets forth, for the periods indicated, the high and low bid and asked prices for our common stock,
as reported by the OTCBB:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Quarter/Period
Ended</TD>
<TD>High Bid</TD>
<TD>High Ask</TD>
<TD>Low Bid</TD>
<TD>Low Ask</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="762" CELLPADDING="1" CELLSPACING="1">
<TR><TD>December 31, 1997</TD>
<TD>$.75</TD>
<TD>$1.625</TD>
<TD>$.0625</TD>
<TD>$.21875</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>March 31, 1998</TD>
<TD>$2.00</TD>
<TD>$3.00</TD>
<TD>$.03125</TD>
<TD>$.08</TD></TR>
<TR><TD>June 30, 1998</TD>
<TD>$2.00</TD>
<TD>$2.0625</TD>
<TD>$.8175</TD>
<TD>$.875</TD></TR>
<TR><TD>September 30, 1998</TD>
<TD>$1.50</TD>
<TD>$1.625</TD>
<TD>$.75</TD>
<TD>$.84375</TD></TR>
<TR><TD>December 31, 1998</TD>
<TD>$5.3125</TD>
<TD>$5.50</TD>
<TD>$.50</TD>
<TD>$.53125</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>March 31, 1999</TD>
<TD>$13.50</TD>
<TD>$13.75</TD>
<TD>$3.34375</TD>
<TD>$2.00</TD></TR>
<TR><TD>June 30, 1999</TD>
<TD>$7.375</TD>
<TD>$5.6875</TD>
<TD>$3.5625</TD>
<TD>$3.60</TD></TR>
<TR><TD>September 30, 1999</TD>
<TD>$8.8125</TD>
<TD>$8.875</TD>
<TD>$3.28125</TD>
<TD>$3.4375</TD></TR>
<TR><TD>10/1/99 thru 10/14/99</TD>
<TD>$3.8125</TD>
<TD>$3.9375</TD>
<TD>$2.875</TD>
<TD>$3.00</TD></TR></TABLE>

<P>These prices represented quotations between dealers without adjustment for retail mark-ups,
mark-downs or commissions, and may not have necessarily represented actual transactions.</P>

<P>Beginning on October 15, 1999, our common stock began to be traded on the American Stock
Exchange, under the symbol "UAX".  The table below sets forth, for the period indicated, the high
and low sales prices for our common stock, as reported by the American Stock Exchange:
<TABLE BORDER="1" WIDTH="762" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Quarter/Period Ended:</TD>
<TD>High</TD>
<TD>Low</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>10/15/99 thru 12/31/99</TD>
<TD>$5.875</TD>
<TD>$2.50</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>March 31, 2000</TD>
<TD>$11.00</TD>
<TD>$3.625</TD></TR>
<TR><TD>June 30, 2000</TD>
<TD>$6.00</TD>
<TD>$2.25</TD></TR>
<TR><TD>September 30, 2000</TD>
<TD>$2.50</TD>
<TD>$.875</TD></TR>
<TR><TD>December 31, 2000</TD>
<TD>$1.25</TD>
<TD>$.1875</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>March 31, 2001</TD>
<TD>$.80</TD>
<TD>$.22</TD></TR></TABLE>

<P>You should note that our common stock, like many newly-traded stocks, has experienced
significant fluctuations in its price and trading volume.  We cannot predict the future trading
patterns of our common stock.</P>

<P>On June 22, 2001, the number of record holders of our common stock, excluding nominees and
brokers, was 1,121, holding 20,086,770 shares.</P>

<P><STRONG>DIVIDENDS</STRONG></P>

<P>We have never paid cash dividends on our common stock.  We intend to re-invest any future
earnings for the foreseeable future.</P>

<P>Our board of directors has declared property dividends comprised of common stock of three
private companies acquired by us.  These dividends of stock are: 1,500,000 shares of New Wave
Media Corp., in exchange for all of our community-television-related assets; 400,000 shares of
Argo Petroleum Corporation, in exchange for 10,000 shares of our common stock; and 800,000
shares of Woodcomm International, Inc., in exchange for 7,500 shares of our common stock. The
combined value of these dividends is $43,750.</P>

<P>None of the three dividend distributions will occur unless and until a registration statement
relating to each distribution transaction has been declared effective by the SEC.</P>

<P><STRONG>CAPITALIZATION</STRONG></P>

<P>The following table sets forth our capitalization as of March 31, 2001.  This table should be read
in conjunction with our consolidated financial statements included elsewhere in this prospectus.
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>As of</TD></TR>
<TR><TD></TD>
<TD>3/31/01</TD></TR>
<TR><TD></TD>
<TD>(unaudited)</TD></TR>
<TR><TD></TD>
<TD></TD></TR>
<TR><TD>Long-Term Liabilities</TD>
<TD>$0</TD></TR>
<TR><TD>Shareholders' Equity:</TD>
<TD></TD></TR>
<TR><TD>Common Stock - $.0001 par value;
100,000,000 shares authorized, 13,7670,985
shares issued</TD>
<TD>1,367</TD></TR>
<TR><TD>Additional Paid-in Capital</TD>
<TD>30,262,522</TD></TR>
<TR><TD>Accumulated Deficit</TD>
<TD>(35,403,419)</TD></TR>
<TR><TD>Stock Subscriptions</TD>
<TD>313,000</TD></TR>
<TR><TD>Deferred Consulting</TD>
<TD>(1,363,942)</TD></TR>
<TR><TD></TD>
<TD></TD></TR>
<TR><TD>Total Capitalization</TD>
<TD>(6,190,472)</TD></TR></TABLE>

<P><STRONG>SELECTED FINANCIAL DATA</STRONG></P>

<P>The following selected financial data have been derived from our consolidated financial
statements, which appear elsewhere in this prospectus.  The selected financial data set forth below
should be read in conjunction with our financial statements, related notes and other financial
information included elsewhere in this prospectus.</P>

<P>STATEMENT OF OPERATIONS DATA:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>Year Ended
December 31,
2000</TD>
<TD>Year Ended
December 31,
1999</TD>
<TD>Year Ended
December 31,
1998</TD>
<TD>Three Months
Ended March
31, 2001</TD>
<TD>Three Months
Ended March
31, 2000</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD>(unaudited)</TD>
<TD>(unaudited)</TD></TR>
<TR><TD>Revenues</TD>
<TD>$1,872,629</TD>
<TD>$2,547,225</TD>
<TD>$5,440</TD>
<TD>$384</TD>
<TD>$597,392</TD></TR>
<TR><TD>Internet
access costs
and cost of
goods sold</TD>
<TD>2,145,955</TD>
<TD>1,152,721</TD>
<TD>0</TD>
<TD>0</TD>
<TD>269,136</TD></TR>
<TR><TD>Operating
expenses</TD>
<TD>14,975,583</TD>
<TD>11,860,758</TD>
<TD>1,034,464</TD>
<TD>901,643</TD>
<TD>3,354,219</TD></TR>
<TR><TD>Net loss</TD>
<TD>21,885,330</TD>
<TD>10,930,163</TD>
<TD>1,037,626</TD>
<TD>901,259</TD>
<TD>2,557,596</TD></TR>
<TR><TD>Loss per share</TD>
<TD>(1.68)</TD>
<TD>(0.96)</TD>
<TD>(0.14)</TD>
<TD>(0.06)</TD>
<TD>(0.20)</TD></TR>
<TR><TD>Weighted
average
number of
shares
outstanding</TD>
<TD>13,000,391</TD>
<TD>11,419,641</TD>
<TD>7,361,275</TD>
<TD>13,934,118</TD>
<TD>12,937,499</TD></TR></TABLE>

<P>BALANCE SHEET DATA:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>Year Ended December
31, 2000</TD>
<TD>Year Ended December
31, 1999</TD>
<TD>March 31, 2001</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD>(unaudited)</TD></TR>
<TR><TD>Working Capital
(Deficit)</TD>
<TD>$(1,517,164)</TD>
<TD>$(694,937)</TD>
<TD>$(1,472,144)</TD></TR>
<TR><TD>Total Assets</TD>
<TD>410,316</TD>
<TD>19,545,169</TD>
<TD>523,526</TD></TR>
<TR><TD>Total Current
Liabilities</TD>
<TD>1,764,973</TD>
<TD>1,221,650</TD>
<TD>1,844,743</TD></TR>
<TR><TD>Total Liabilities</TD>
<TD>1,764,973</TD>
<TD>5,104,860</TD>
<TD>1,844,743</TD></TR>
<TR><TD>Total Redeemable
Common Stock</P>

<P>Shareholders' Equity
(Deficit)</TD>
<TD>3,323,552</P>

<P>(4,678,209)</TD>
<TD>0</P>

<P>14,440,309</TD>
<TD>4,869,255</P>

<P>(6,190,472)</TD></TR></TABLE>

<P><STRONG>CHANGE OF INDEPENDENT AUDITOR</STRONG></P>

<P>On January 11, 2000, we dismissed Weaver and Tidwell, L.L.P. as our independent auditor.  At
the time of the dismissal, there was no disagreement with respect to any matter of accounting
principles or practices, financial statement disclosure or auditing scope or procedure.  On January
24, 2000, we engaged Postlethwaite &amp; Netterville as our new independent auditor, which firm
audited our financial statements for the years ended December 31, 1999 and 2000. The audit
committee of our board of directors recommended this change in auditors and the full board
approved the change.</P>

<P><STRONG>MANAGEMENT'S DISCUSSION AND ANALYSIS OF  FINANCIAL CONDITION AND
RESULTS OF OPERATIONS</STRONG></P>

<P><STRONG>Background</STRONG></P>

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

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

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

<P>Since 1998, we have acquired seven dial-up Internet service providers, including CyberHighway,
the business of www.e-tail.com and a web design firm, none of which was an affiliated company
nor were any  acquired from an affiliate.  All but one of these acquisitions were made for shares of
our stock.  In making these acquisitions, we issued a total of 2,587,063 shares, which were valued
at $18,759,500, in the aggregate.  All of these acquisitions were accounted for as a purchase,
which means that we did not include past operations of the acquired businesses in our historical
statements of operations.  Also in connection with these acquisitions, we recorded large amounts
of amortizable customer base and goodwill values, approximately $25,764,000, as a result of the
acquisitions' valuations exceeding the values of the tangible net assets.  At December 31, 2000, all
of these values were written off, due to the demise of CyberHighway's business.  Please see the
discussion under "CyberHighway Bankruptcy" below.</P>

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

<P><STRONG>Current Overview</STRONG></P>

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

<P>As CyberHighway's business has dwindled to near nothing while in bankruptcy, we have
determined not to attempt to revive our dial-up Internet access business and, for the foreseeable
future, we have abandoned development of our e-commerce business.</P>

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

<P><STRONG>CyberHighway Bankruptcy</STRONG></P>

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

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

<P>As a means to achieve immediate cost savings at CyberHighway, in September 2000, the
following actions were taken:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- CyberHighway sold its affiliate-ISP business for $40,500, in cash; and</TD></TR>
<TR><TD>- CyberHighway contracted with Dialup USA for all "backroom" and customer support
services, which took effect at the end of October 2000.</TD></TR></TABLE>

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

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

<P>This sudden and permanent demise of CyberHighway's customer base has rendered our intangible
assets relating to those customers to become worthless.  The write-off of these intangible assets
totalled $4,814,272, net of deferred taxes, as reflected in our December 31, 2000, financial
statements.  Due to this change in operating environment, monthly revenues have decreased
substantially, and, accordingly, goodwill has been impaired.  The write-down of goodwill totalled
$4,425,037, as reflected in our December 31, 2000, financial statements. Please see the discussion
below under the heading "Liquidity and Capital Resources" for more information on this topic.</P>

<P><STRONG>Shareholder Loans - Conversion to Equity</STRONG></P>

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

<P><STRONG>Results of Operations</STRONG></P>

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

<P>Until the involuntary bankruptcy was filed against CyberHighway in September 2000, our
revenues for 2000 were approximately 10% below 1999's nine-month results.  Our revenues for
the last three months of 2000 diminished rapidly month to month.  During the first quarter of 2001
and currently, we derive no revenue from CyberHighway's business.</P>

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

<P>Prior to 1999, nearly all of our revenues were generated by our now-defunct community television
segment.  During 1999 and 2000, all of our revenues were generated by our Internet segment.
Before the demise of CyberHighway, our revenues were derived primarily from monthly customer
payments for dial-up access and from per-customer royalty payments from our CyberHighway
affiliate-ISPs.  Now, all revenues are derived from monthly customer payments for wireless
Internet access, which payments average about $30.00 per customer.</P>

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

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

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

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

<P>Under our Quick-Cell reseller agreement with WebConnect, we expect to derive revenues as
follows:</P>

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

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

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

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

<P>The results of operations for 1999 and 2000, when compared to those expected for 2001, will not
be similar.  We expect our revenues for 2001 to be significantly below those of 1999 and 2000,
since we no longer will derive revenues from the operations of CyberHighway.  In 2001, we will
produce significant revenues only if:</P>

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

<P>- we are able to obtain at least $3,000,000 under the Fusion Capital agreement.</P>

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

<P>Potential Rescission Claims.  Since January 2000, a total of 4,881,985 shares of our common
stock with an aggregate assigned value of $5,081,255 may have been issued in violation of
Section 5 of the Securities Act.  4,751,985 of these shares were issued in payment of services or
as bonuses to employees and 130,000 of these shares were issued for cash or underlie currently
exercisable warrants, which were sold or will be sold for at total of $650,000 in cash.  At
December 31, 2000, a total of 2,767,823 of these shares valued at $3,897,552 had been issued and
at March 31, 2001, a total of 4,381,985 of these shares valued at $4,869,255 had been issued,
with an additional 500,000 shares valued at $212,000 having been issued since March 31, 2001. It
is possible that each of the issuees of these shares has a potential claim for rescission of their
respective issuance transactions. We do not possess capital with which to pay any such claims, if
asserted, and, if such claims are asserted, it is possible that our then-available capital would
become impaired and our future operating results would likely suffer.</P>

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

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

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

<P>Our operating results for the first quarters of 2001 and 2000 are summarized in the following
table:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>First Quarter</TD>
<TD>First Quarter</TD></TR>
<TR><TD></TD>
<TD>2001</TD>
<TD>2000</TD></TR>
<TR><TD>Revenues</TD>
<TD>$384</TD>
<TD>$  597,392</TD></TR>
<TR><TD>Internet access costs and cost
of goods sold</TD>
<TD>0</TD>
<TD>269,136</TD></TR>
<TR><TD>Gross profit</TD>
<TD>384</TD>
<TD>328,256</TD></TR>
<TR><TD>Operating expenses</TD>
<TD>901,643</TD>
<TD>3,354,219</TD></TR>
<TR><TD>Loss from operations</TD>
<TD>901,259</TD>
<TD>3,025,963</TD></TR>
<TR><TD>Net loss</TD>
<TD>901,259</TD>
<TD>2,557,596</TD></TR></TABLE>

<P>Our net loss of $901,259 for the first quarter of 2001 was significantly less than our net loss for
the 2000 period of $2,557,596.  This reduced net loss is attributable primarily to:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- Depreciation and amortization decreasing from $2,238,544 for the 2000 period to $11,580 for
the 2001 period.  This reduction is due to the demise of CyberHighway's business and the
write-off of all of our intangible assets associated with that business, which occurred during
December 2000.  We no longer amortize those intangible assets.</TD></TR>
<TR><TD>- Professional fees increased from $390,038 in the 2000 period to $707,288 in the 2001 period.
This increase is due to the issuance of 800,000 shares as a commitment fee under a common
stock purchase agreement, which shares were valued at $248,000, as well as the monthly
amortization of various consulting agreements under which we issued stock for services during
2000 and 2001.</TD></TR>
<TR><TD>- Salary and commissions fell from $399,358 in 2000 to $160,746 in 2001.  Our lower salary
and commissions during 2001 is attributable to CyberHighway's demise, its personnel having
been reduced from about 30 during the first quarter of 2000 to none, now.</TD></TR>
<TR><TD>- Rent expense decreased from $61,570 during the first quarter of 2000 to $5,361 during the
2001 period.  This large decrease is the result of our abandoning all leased premises of
CyberHighway, following the filing of the involuntary bankruptcy proceeding.  Our monthly
lease expense for the remainder of 2001 will be higher, due to our recent leasing of a small
assembly facility in Baton Rouge, Louisiana.</TD></TR>
<TR><TD>- Other expenses fell from $249,530 in 2000 to $16,668 in 2001.  The reduction in this line item
is attributable to the demise of CyberHighway's business, as well as our severe lack of capital
during the last half of 2000 and most of the first quarter of 2001.</TD></TR></TABLE>

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

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

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

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

<P>Year Ended December 31, 2000, versus Year Ended December 31, 1999.  During 1999 and 2000,
nearly all of our revenues were generated by CyberHighway's dial-up Internet access operations.
We derived our revenues from monthly customer payments for dial-up Internet access, which
averaged approximately $18.00 per customer.  Also, until September 2000, we derived revenue
from per-customer royalty payments from our CyberHighway affiliate-ISPs, which averaged
approximately $1.75 per customer.</P>

<P>Due to the recent demise of CyberHighway, our revenues for most of 2001 can be expected to
continue to be significantly below our revenue levels of 1999 and 2000.  However, due to
uncertainties relating to the timing of receipt of expected funds under the Fusion Capital
agreement, we can make no prediction of our actual revenues.</P>

<P>Our operating results for 2000 and 1999 are summarized in the following table:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>2000</TD>
<TD>1999</TD></TR>
<TR><TD>Revenues</TD>
<TD>$1,872,629</TD>
<TD>$2,547,225</TD></TR>
<TR><TD>Internet Access Costs and
Costs of Goods Sold</TD>
<TD>2,145,955</TD>
<TD>1,152,721</TD></TR>
<TR><TD>Gross Profit (Loss)</TD>
<TD>(273,326)</TD>
<TD>1,394,504</TD></TR>
<TR><TD>Operating Expenses</TD>
<TD>14,975,583</TD>
<TD>11,860,758</TD></TR>
<TR><TD>Loss from Operations</TD>
<TD>15,248,909</TD>
<TD>10,466,254</TD></TR>
<TR><TD>Other Expense</TD>
<TD>9,193,281</TD>
<TD>2,117,070</TD></TR>
<TR><TD>Net Loss</TD>
<TD>21,885,330</TD>
<TD>10,930,163</TD></TR></TABLE>

<P>Our 2000 statement of operations reflect the following significant charges against our earnings:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- each of the following amounts relates to the demise of the business of CyberHighway:</TD></TR>
<TR><TD>- $4,814,272 - amount of intangible assets written off attributable to acquired customers bases,
net of deferred taxes; and</TD></TR>
<TR><TD>- $4,425,037 - amount of intangible assets written off attributable to goodwill.</TD></TR>
<TR><TD>- $619,000 - 750,000 shares of our common stock were issued to three vice presidents, 250,000
shares as an employment agreement signing bonus valued at $2.00 per share and 500,000 shares
as employment bonuses valued at $119,000 - this expense is included in the "Salary and
Commissions" statement of operations line item.</TD></TR></TABLE>

<P>In our 1999 financial statements, we incurred two significant charges against our earnings, which
appear in our statement of operations under the "Other Income (Expense)" heading:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- As described above, we incurred a charge of $1,164,561 arising out of our acquisition, and
subsequent tender for rescission, of Net 1.</TD></TR>
<TR><TD>- We incurred a charge of $957,075 arising out of a settlement agreement and mutual release,
which settled legal proceedings in which USURF America and CyberHighway were involved.
These legal proceedings were settled in full by the issuance of 340,000 shares of our common
stock to the adverse parties and we paid $43,325 for reimbursement of their respective
attorneys' fees.  The 340,000 shares were valued at $2.6875 per share, or $913,750, in the
aggregate.  The price per share assigned to these shares was the closing price of our common
stock on November 30, 1999, as reported by AMEX.</TD></TR></TABLE>

<P>Due to our severe lack of capital during 1999 and 2000, during both years, we issued a large
number of shares of our stock to consultants in payment of their services.  The fair value of the
shares issued to consultants is included in our statements of operations under the "Professional
Fees" line item.  Issuing stock was the only means by which we could obtain the consultants'
services.  The value of the consulting services received by us under each agreement has been
expensed in equal monthly amounts over their respective terms:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- in 2000, we issued 2,262,166 shares of our common stock under consulting agreements; these
shares were valued for financial accounting purposes at $3,110,000, in the aggregate. This
amount is being expensed in equal monthly amounts over periods ranging from four months to
one year.  Approximately 75% of this total amount was expensed during 2000.</TD></TR>
<TR><TD>- in 1999, we issued 566,000 shares of common stock under consulting agreements; these shares
were valued for financial accounting purposes at $2,216,000, in the aggregate. $2,000,000 of
this amount is being expensed in equal monthly amounts over five years, while the remaining
$216,000 of this amount was expensed in equal monthly amounts over periods ranging from
three to six months.</TD></TR></TABLE>

<P>Our net loss for 2000 is attributable to several large non-standard items:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- the depreciation and amortization of acquired customer bases, goodwill and other intangibles
of $7,618,755;</TD></TR>
<TR><TD>- $4,168,610 in professional fees, substantially all of which is attributable to stock issuances
under various consulting agreements;</TD></TR>
<TR><TD>- $2,060,528 in salary and commissions was expensed, $619,000 of which is the result of stock
bonuses to three officers; and</TD></TR>
<TR><TD>- $9,239,310 in impairment loss relating to the demise of CyberHighway's business and the
associated write off of all related intangible assets.</TD></TR></TABLE>

<P>For 1999, our net loss is attributable in large measure to the following expense items:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- $7,653,924 in depreciation and amortization of acquired customer bases, goodwill and other
intangibles;</TD></TR>
<TR><TD>- $1,945,935 in professional fees, substantially all of which is attributable to stock issuances
under various consulting agreements; and</TD></TR>
<TR><TD>- $1,603,556 in salary and commissions.</TD></TR></TABLE>

<P>Our acquisition and subsequent rescission of the acquisition of Net 1, Inc. affected our 1999 and
2000 statements of operations in different ways, as follows:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- On August 23, 1999, we acquired Net 1, Inc.  Net 1 is primarily engaged as an Internet service
provider in Alabama.  In September 1999, we tendered the shares of capital stock obtained in
the acquisition of Net 1 for rescission of the transaction.  This rescission was based on perceived
material misstatements made by one of the principals of Net 1. However, legally, we were still
the owner of the outstanding shares of Net 1 at December 31, 1999, and were required by
generally accepted accounting principles to record Net 1 as a wholly-owned subsidiary from the
date of acquisition.</TD></TR>
<TR><TD>- It was discovered during the arbitration proceedings between us and the former owners of Net
1 that no activity had occurred in Net 1 after the acquisition.  The customer base was moved to
an unrelated company by a former owner, and all activity was transacted in the unrelated
company.  Therefore, no revenues or expenses were incurred by Net 1 from the date of
acquisition, August 23, 1999, through December 31, 1999.</TD></TR>
<TR><TD>- The total cost of the acquisition was $1,164,561, which exceeded fair value of the net assets of
Net 1 by $1,164,561. The excess was deemed to be impaired at December 31, 1999, due to the
change in the operating environment and was recorded as an impairment loss in our statement of
operations for 1999 under the "Impairment Loss" heading.</TD></TR>
<TR><TD>- On October 12, 2000, the acquisition of Net 1 was rescinded.  Included in the terms of the
settlement agreement was the return to us of the 250,000 shares issued by us in the original
transaction. We then issued 250,000 shares of our stock in settlement of the arbitration.  The
settlement agreement also called for one of the former owners of Net 1 to assume a $50,000
liability, that was recorded by us upon the acquisition. The total gain on the recission of the Net
1 transaction, $961,436, has been recorded in our statement of operations for 2000 under the
"Gain on Rescission" heading.</TD></TR></TABLE>

<P>For 1999 and 2000, our statements of operations reflect an income tax benefit of $1,595,424 and
$1,653,161, respectively, resulting from the difference in the bases of the acquired customer bases
for book versus tax purposes.  Due to the demise of the business of CyberHighway, our statement
of operations for 2001 will not contain a similar tax benefit.</P>

<P>Community Television Segment.  During 1999, this segment had no revenues and incurred a
nominal loss from operations. As discussed above, effective July 1, 1999, we assigned all of our
community television properties to New Wave Media Corp. and is now defunct.  This segment
was discontinued as of that date and will not generate any revenues in the future.</P>

<P>Wireless Cable Segment.  The wireless cable segment has had no operating activity since 1997. As
described above, we have ceased, for the foreseeable future, our wireless cable activities.</P>

<P><STRONG>Liquidity and Capital Resources</STRONG></P>

<P>General.  Since our inception, we have had a significant working capital deficit.  Prior to our
January 1999 acquisition of CyberHighway, we had no material revenues and we operated from a
severely illiquid position.  Following the CyberHighway acquisition and until the recent demise of
CyberHighway's business, we generated significant monthly revenues, yet continued to have a
working capital deficit.  Currently, we are substantially illiquid, although we do possess
approximately $150,000 in cash, the result of recent securities sales to private investors.  Without
additional capital, it is possible that we would be forced to cease operations.</P>

<P>Our Capital Needs.  To sustain our current level of operations for the next twelve months, we will
require additional capital of approximately $300,000.  To accomplish our goals of expanding our
Quick-Cell business, we will require at least $2.0 million.  If we are unable to obtain this needed
capital, we could be forced to cease our operations.</P>

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

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

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

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

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

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

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

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

<P>Expected Proceeds from the Fusion Capital Agreement.  Beginning soon after the end of the
second quarter of 2001, we expect to being to receive the first funds of up to $10 million under
our agreement with Fusion Capital.  Assuming we receive the entire $10 million under that
agreement, of which there is no assurance, we anticipate that we will apply these funds as follows:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Purchase of Quick-Cell Equipment</TD>
<TD>$ 6,000,000</TD></TR>
<TR><TD>Construction of Quick-Cell Systems</TD>
<TD>1,300,000</TD></TR>
<TR><TD>Marketing</TD>
<TD>1,000,000</TD></TR>
<TR><TD>General and Administrative Expenses</TD>
<TD>200,000</TD></TR>
<TR><TD>Finder's Fee</TD>
<TD>800,000</TD></TR>
<TR><TD>Working Capital</TD>
<TD>700,000</TD></TR>
<TR><TD>Total</TD>
<TD>$10,000,000</TD></TR></TABLE>

<P>You should note, however, that we may not realize $10 million under the Fusion Capital
agreement, due to the current low market price of our common stock.  In addition, under the
Fusion Capital agreement, we must maintain compliance with certain criteria in order to avoid an
event of default.  These events of default are described on page ___, under the heading "Events of
Default".  Currently, we are in compliance with these criteria and expect to remain in compliance
for the foreseeable future.  Also, the Fusion Capital agreement expires on June 30, 2001, should
all of the circumstances necessary to effect the transaction not have occurred, including
completion of the registration statement of which this prospectus forms a part.  We cannot assure
you that we will complete this registration proceeding prior to the June 30, 2001, deadline and
Fusion Capital is under no obligation to grant an extension of the deadline.  In this regard, you
should review the "Risk Factors" section above.</P>

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

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

<P>Potential Rescission Claims.  Because we lack the capital to pay any potential claims for rescission
that may be asserted by some of our shareholders, any such claim made against us could
negatively impact our ability to continue in business.  At December 31, 2000, a total of 2,767,823
of these shares valued at $3,897,552 had been issued and at March 31, 2001, a total of 4,381,985
of these shares valued at $4,869,255 had been issued, with an additional 500,000 shares valued at
$212,000 having been issued since March 31, 2001.  We do not possess capital with which to pay
any such claims, if asserted, and, if such claims are asserted, it is possible that we would be forced
to cease operations, as our then-available capital could become severely impaired.</P>

<P>Nevertheless, all of the shares that may be subject to these claims have been reclassified on our
balance sheet, that is, at December 31, 2000, and March 31, 2001, these shares were removed
from our "permanent" equity and reclassified as "Redeemable Common Stock".  This
reclassification caused us to have large shareholders' deficits at December 31, 2000, and March
31, 2001.  These shares and their associated values will return to our "permanent" equity either by
passage of time for the timely assertion of the rescission claims or at such time as these shares are
sold or otherwise transferred by their holders, which ever occurs earlier.</P>

<P>March 31, 2001.  Historically, we have had a significant working capital deficit.  At March 31,
2001, our working capital deficit was $1,472,144, which is slightly lower than our $1,517,164
deficit at December 31, 2000.  Although we had slightly higher accounts payable, accrued payroll
and notes payable to a shareholder at March 31, 2001, compared to December 31, 2000, these
increases were offset by our receipt of cash pursuant to private sales of securities of $261,000
during the first quarter of 2001.  Most of our accounts payable are accounts payable of
CyberHighway.  Without additional capital, our working capital deficit can be expected to become
larger each quarter.</P>

<P>The following table sets forth our current assets and current liabilities at March 31, 2001, and
December 31, 2000:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD></TD>
<TD>3/31/01</TD>
<TD>12/31/00</TD></TR>
<TR><TD>Current Assets</TD>
<TD>Cash</TD>
<TD>$125,494</TD>
<TD>$1,088</TD></TR>
<TR><TD></TD>
<TD>Accounts Receivable</TD>
<TD>384</TD>
<TD>0</TD></TR>
<TR><TD></TD>
<TD>Inventory</TD>
<TD>246,721</TD>
<TD>246,721</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Current Liabilities</TD>
<TD>Disbursements in
excess of cash balances</TD>
<TD>$42,469</TD>
<TD>$42,469</TD></TR>
<TR><TD></TD>
<TD>Accounts payable</TD>
<TD>1,473,817</TD>
<TD>1,472,030</TD></TR>
<TR><TD></TD>
<TD>Accrued payroll</TD>
<TD>200,155</TD>
<TD>158,262</TD></TR>
<TR><TD></TD>
<TD>Other current liabilities</TD>
<TD>51,824</TD>
<TD>41,824</TD></TR>
<TR><TD></TD>
<TD>Property dividends
payable</TD>
<TD>43,750</TD>
<TD>43,750</TD></TR>
<TR><TD></TD>
<TD>Notes payable to
stockholder</TD>
<TD>32,728</TD>
<TD>6,638</TD></TR></TABLE>

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

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

<P>In addition to Mr. Loflin's loans, during the first quarter of 2001, we obtained a total of $261,000
in cash from private sales of our securities:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- In February 2001, we sold 840,000 units of securities, each unit being comprised of one share
of our stock and one warrant with an exercise price of $.15 per share, to a private investor for
$126,000 in cash.  The warrants are exercisable for a period of three years.  The proceeds from
this sale of securities will be applied to the payment of approximately $50,000 in professional
fees and the balance will be used for working capital.  In connection with this sale of securities,
we issued to a finder 84,000 shares of our common stock and a warrant to purchase 336,000
shares of our common stock at an exercise price of $.15 per share.  These warrants are
exercisable for a period of three years.  The 84,000 shares issued to the finder were valued at
$.15 per share, a total value of $12,600.  No value was placed on the warrants issued. </TD></TR>
<TR><TD>- In March 2001, we sold 500,000 units of securities, each unit being comprised of one share of
our stock and one warrant with an exercise price of $.25 per share, to a private investor for
$125,000 in cash.  The warrants are exercisable for a period of three years.  Approximately 60%
of the proceeds from this sale of securities will be applied to the construction of a Quick-Cell
system and the balance will be used for working capital.  In connection with this sale of
securities, we issued to a finder 50,000 shares of our common stock and a warrant to purchase
200,000 shares of our common stock at an exercise price of $.25 per share.  These warrants are
exercisable for a period of three years.  The 50,000 shares issued to the finder were valued at
$.25 per share, a total value of $12,500.  No value was placed on the warrants issued.</TD></TR></TABLE>

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

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

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

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

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

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

<P>December 31, 2000.  At December 31, 2000, our working capital deficit was $1,517,164, which is
greater than our working capital deficit at December 31, 1999, of $694,937.  Our deficit would
have been significantly larger, if not for our president's converting $967,000 of our indebtedness
to him (including interest) into shares of our stock.  This conversion of debt into stock was more
than offset by an increase in accounts payable, accrued salary and other current liabilities.</P>

<P>The following table sets forth our current assets and current liabilities at December 31, 2000 and
1999:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD></TD>
<TD>2000</TD>
<TD>1999</TD></TR>
<TR><TD>Current Assets</TD>
<TD>Cash</TD>
<TD>$1,088</TD>
<TD>$75,313</TD></TR>
<TR><TD></TD>
<TD>Accounts Receivable</TD>
<TD>0</TD>
<TD>59,098</TD></TR>
<TR><TD></TD>
<TD>Inventory</TD>
<TD>246,721</TD>
<TD>386,802</TD></TR>
<TR><TD></TD>
<TD>Prepaids</TD>
<TD>0</TD>
<TD>5,500</TD></TR>
<TR><TD>Current Liabilities</TD>
<TD>Disbursements in
excess of cash balances</P>

<P>Notes payable -
current portion</TD>
<TD>42,469</P>

<P>0</TD>
<TD>0</P>

<P>5,910</TD></TR>
<TR><TD></TD>
<TD>Accounts payable</TD>
<TD>1,472,030</TD>
<TD>363,665</TD></TR>
<TR><TD></TD>
<TD>Accrued payroll</TD>
<TD>158,262</TD>
<TD>118,157</TD></TR>
<TR><TD></TD>
<TD>Other current liabilities</TD>
<TD>41,824</TD>
<TD>216,650</TD></TR>
<TR><TD></TD>
<TD>Property dividends
payable</TD>
<TD>43,750</TD>
<TD>43,750</TD></TR>
<TR><TD></TD>
<TD>Accrued interest to
stockholder</TD>
<TD>0</TD>
<TD>29,741</TD></TR>
<TR><TD></TD>
<TD>Notes payable to
stockholder</TD>
<TD>6,638</TD>
<TD>356,239</TD></TR>
<TR><TD></TD>
<TD>Deferred revenue</TD>
<TD>0</TD>
<TD>87,538</TD></TR></TABLE>

<P>Many balance sheet line items changed significantly from 1999 to 2000.  These changes are
summarized below:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- Accounts Payable - our accounts payable increased to $1,472,030 in 2000, from $363,665 in
1999.  This increase is due to our lack of capital throughout 2000, compounded by our decision
to suspend payment of most of our accounts, beginning in April 2000.  Approximately 80% of
our accounts payable are accounts payable of CyberHighway.  Currently, CyberHighway's
creditors must pursue their claims through the bankruptcy proceeding. USURF America is not
responsible for the payment of any of CyberHighway's accounts payable.  We expect that the
debts embodied in the accounts payable of CyberHighway will, ultimately, be discharged
pursuant to the bankruptcy proceeding.  At that as-yet unidentified time, CyberHighway's
accounts payable will no longer appear on our balance sheet.  During the first quarter of 2001,
USURF America paid some of its accounts payable.  No creditor has taken adverse action
against USURF America as a result of its past accounts payable payment policy and none is
expected.</TD></TR>
<TR><TD>- Other Current Liabilities - our other current liabilities decreased from 1999 to 2000, from
$216,650 to $41,824.  This change resulted from the rescission of the Net 1 acquisition
transaction, as Net 1's liabilities were removed.</TD></TR>
<TR><TD>- Accrued Interest to Stockholder - at December 31, 2000, we owed our president only $6,638,
because of his converting approximately $967,000 that we owed him into shares of our stock in
August 2000.</TD></TR>
<TR><TD>- Deferred Revenue - we had no deferred revenue for 2000, due to the sudden demise of
CyberHighway during the last quarter of 2000.</TD></TR>
<TR><TD>- Long-term Liabilities - at December 31, 2000, we had no long-term liabilities.  Our 1999
long-term liabilities consisted primarily of deferred taxes relating to our acquired customer
bases.  However, deferred taxes are no longer applicable, since our intangible assets have been
written off.</TD></TR>
<TR><TD>- Subscriptions Receivable - this amount of $933,514 arises from our president's converting his
loans into shares of our stock. This entry appears due to the fact that the shares issued in that
transaction were not actually issued until after December 31, 2000, due to an administrative
oversight.</TD></TR>
<TR><TD>- Stockholders' Equity (Deficit) - at December 31, 2000, we had a stockholders' deficit of
$4,678,209, the result of the write off of all of our intangible assets and the reclassification of
the shares of common stock subject to potential rescission claims.  This is compared to our
stockholders' equity of $14,440,309 at December 31, 1999.</TD></TR></TABLE>

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

<P>Our accrued payroll at December 31, 2000, as well as at December 31, 1999, is primarily
attributable to accrued salary of our president and two of our vice presidents.</P>

<P>In August 2000, our president, David M. Loflin, converted the entire amount owed to him,
including accrued interest, into a total of 774,162 shares of our common stock.  The total amount
of indebtedness converted to common stock was $967,703. Mr. Loflin received one share for each
$1.25 owed him - $1.25 was the low sale price for our common stock on the American Stock
Exchange on August 18, 2000, the last trading day prior to the conversion. Until converted, all of
the loans from Mr. Loflin were payable on demand, with interest accruing at 8% per annum.  The
funds loaned by Mr. Loflin were used primarily for operating expenses, including expenses of
CyberHighway, corporate overhead and the construction of our Quick-Cell system in Santa Fe,
New Mexico.  Subsequent to the conversion transaction, Mr. Loflin has loaned us small sums.  At
December 31, 2000, we owed Mr. Loflin $6,638.  All sums owed to Mr. Loflin are payable on
demand, with interest accruing at 8% per annum.   We cannot assure you that Mr. Loflin will
continue to loan us money when we need it.</P>

<P>During 2000, we obtained funds from sales of our securities on two occasions:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- In March and April 2000, we sold a total of 60,000 units of securities to private investors,
each unit being comprised of one share of our stock and one warrant with an exercise price of
$7.50 per share.  The warrants are exercisable for a period of two years.  Each unit was sold for
$5.00 in cash, for total proceeds of $300,000.  These proceeds were used to pay approximately
$275,000 in operating expenses, including operating expenses of CyberHighway, and to
purchase about $50,000 of equipment.</TD></TR>
<TR><TD>- In December 2000, we sold 400,000 shares of our common stock to a private investor for
$80,000 in cash, $70,000 of which was received in December 2000 and $10,000 of which was
received in 2001.  The proceeds from this sale of stock were used to pay accounting expenses
and for working capital.  In connection with this sale of stock, we issued to a finder 40,000
shares of our common stock and a warrant to purchase 380,000 shares of our common stock at
an exercise price of $.20 per share.  These warrants are exercisable for a period of three years.
The 40,000 shares issued to the finder were valued at $.20 per share, a total value of $8,000. No
value was placed on the warrants issued.</TD></TR></TABLE>

<P>As described above, subsequent to 2000, we have sold securities for cash in the total amount of
$251,000 for use in payment of professional fees, construction of a Quick-Cell system and for
working capital.  </P>

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

<P>Community Television Stations. In furtherance of our plan to focus on the implementation of our
Quick-Cell business plan, effective July 1, 1999, we assigned all of our community (low power)
television properties to New Wave Media Corp., in exchange for 1,500,000 shares of New Wave
common stock.  Our board of directors declared a dividend with respect to all 1,500,000 New
Wave shares.</P>

<P>Cash Flows from Operating Activities.  During the year ended December 31, 2000, our operations
used $953,112 in cash compared to cash used of $546,097 during 1999.  In both years, the use of
cash in operations was a direct result of the lack of revenues compared to our operating expenses,
particularly our Internet access costs and salary and commissions.  The recent demise of the
business of CyberHighway has served to reduce substantially our ongoing operating expenses;
however, its demise also reduced our revenues to insubstantial amounts.  The effects of the demise
of CyberHighway will not be readily apparent from our financial statements until the first quarter
of 2001.</P>

<P>For the year ended December 31, 2000, our operations would have used approximately $750,000
more in cash, had we not determined to defer payment of nearly all of our accounts payable for
most of the year, due to our lack of working capital.</P>

<P>Cash Flows from Investing Activities.  During the year ended December 31, 2000, our investing
activities used cash of $85,150 compared to $412,785 in 1999.  During 2000, in our investing
activities, purchases of equipment used cash, though to a lesser extent than during 1999; in 1999,
our equipment purchases of $614,193 were offset, to some degree, by cash acquired in
acquisitions of $186,318.  Because we lack working capital, we cannot predict our cash flows
from investing activities for 2001.</P>

<P>Cash Flows from Financing Activities.  For 2000, our financing activities provided $964,037 in
cash.  Of this amount, $568,571 is attributable to loans from our president and $370,000 is
attributable to sales of securities.  For 1999, our financing activities provided $1,026,963 in cash,
$235,010 of which is attributable to loans from our president and $545,000 of which is
attributable to private sales of our securities.  We continue to seek capital and cannot, therefore,
predict future levels of cash flows from financing activities. However, we expect that financing
activities will provide significant sums of cash, as a result of sales of our common stock expected
under the agreement with Fusion Capital.</P>

<P>Non-Cash Investing and Financing Activities.  During the year ended December 31, 2000, we
issued a total of 2,262,166 shares of common stock under consulting agreements; these shares
have been valued at $3,110,000, in the aggregate.  Also during 2000, we issued a total of 131,063
shares of common stock in acquisitions, which shares were valued at $761,751, in the aggregate.</P>

<P>In August 2000, we issued 250,000 shares of our common stock to a vice president as a signing
bonus under his employment agreement, which were valued at $500,000, in the aggregate.</P>

<P>In July 2000, we  we entered into an investment banking agreement with Gruntal &amp; Co., L.L.C.,
under which we issued 250,000 shares of our common stock, valued at $470,000, in the
aggregate.</P>

<P>In December 2000, we issued a total of 500,000 shares of our common stock as bonuses to two
of our vice presidents, which were valued at $.24 per share, the last closing price of our common
stock prior to the issuances, a total value of $119,000.</P>

<P>During 1999, non-cash investing and financing activities included the issuance of shares for the
acquisition of several businesses. By far the largest of these transactions was the acquisition of
CyberHighway.  We issued 2,325,000 shares of our common stock in connection with this
acquisition.  These shares were valued at approximately $18,530,250.  Each of the four other
Internet service providers acquired by us were assimilated into the operations of CyberHighway.
Now, with the involuntary bankruptcy of CyberHighway, none of these Internet service providers
represents a portion of our continuing operations.  Our historical balance sheets have reflected
these acquisition values, less accumulated amortization.  However, due to the recent demise of
CyberHighway, the unamortized portion of this value was written-off on our December 31, 2000
balance sheet.  We have suspended, for the foreseeable future, the development of the acquired
business known as www.usurf.com, due to a lack of capital, the acquisition of which was valued
at $863,000, and we have determined not to pursue the development of www.e-tail.com.</P>

<P><STRONG>Management's Plans Relating to Future Liquidity</STRONG></P>

<P>To sustain our current level of operations for the next twelve months, we will require additional
capital of approximately $300,000.  To accomplish our goals of expanding our Quick-Cell
business, we will require at least $2.0 million.</P>

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

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

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

<P>- We have the right to require Fusion Capital to purchase up to $400,000 each month during the
agreement;</P>

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

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

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

<P>Should we obtain at least $2.0 million under the Fusion Capital agreement, we expect that we will
be able to accomplish our two primary objectives:</P>

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

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

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

<P>Due to the current low market price for our common stock, it is a distinct possibility that we will
not receive all $2.0 million needed to achieve the two primary objectives described above.  This
circumstance could make it extremely difficult for us to obtain additional capital with which to
expand our business.  In this regard, you should read the "Risk Factors" section above.</P>

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

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

<P><STRONG>Capital Expenditures</STRONG></P>

<P>During 2000, we made approximately $195,000 in equipment purchases, approximately 40% for
wireless Internet equipment and approximately 60% for needed equipment in our network
operations center.  We currently have no capital with which to make any significant capital
expenditures.  Should we obtain funding under the Fusion Capital agreement, we will be able to
make major expenditures on Quick-Cell-related equipment, as described above.  However,
without additional capital, we will make no capital expenditures.  During Fiscal 1999, we made
$614,193 in equipment purchases.  During the first quarter of 2001, we made no capital
expenditures, due to our limited amount of capital.  It is likely that we will lack capital to make
capital expenditures, unless and until we begin to obtain funds under the Fusion Capital
agreement.</P>

<P><STRONG>Year 2000 Issues</STRONG></P>

<P>We experienced no problems related to Year 2000 issues.  During our efforts to become
completely Year 2000 compliant, we incurred expenses of approximately $75,000.</P>

<P><STRONG>REGULATION</STRONG></P>

<P>Quick-Cell Wireless Internet Access.  Our Quick-Cell wireless Internet access products operate in
unregulated spectra, the 900 MHz and 2400 MHz spectra (primarily the 2400 MHz spectrum),
and we expect that such spectra will remain unregulated.</P>

<P>Regulation of Internet Access Services.  We provide Internet access, in part, using
telecommunications services provided by third-party carriers. Terms, conditions and prices for
telecommunications services are subject to economic regulation by state and federal agencies. As
an Internet access provider, we are not currently subject to direct economic regulation by the FCC
or any state regulatory body, other than the type and scope of regulation that is applicable to
businesses generally.  In April 1998, the FCC reaffirmed that Internet access providers should be
classified as unregulated "information service providers" rather than regulated
"telecommunications providers" under the terms of the Federal Telecommunications Act of 1996.
As a result, we are not subject to federal regulations applicable to telephone companies and similar
carriers merely because we provide our services using telecommunications services provided by
third-party carriers.  To date, no state has attempted to exercise economic regulation over Internet
access providers.</P>

<P>Governmental regulatory approaches and policies to Internet access providers and others that use
the Internet to facilitate data and communication transmissions are continuing to develop and, in
the future, we could be exposed to regulation by the FCC or other federal agencies or by state
regulatory agencies or bodies.  In this regard, the FCC has expressed an intention to consider
whether to regulate providers of voice and fax services that employ the Internet, or IP, switching
as "telecommunications providers", even though Internet access itself would not be regulated. The
FCC is also considering whether providers of Internet-based telephone services should be required
to contribute to the universal service fund, which subsidizes telephone service for rural and low
income consumers, or should pay carrier access charges on the same basis as applicable to
regulated telecommunications providers. To the extent that we engage in the provision of Internet
or Internet protocol-based telephony or fax services, we may become subject to regulations
promulgated by the FCC or states with respect to such activities.  We cannot assure you that these
regulations, if adopted, would not adversely affect our ability to offer certain enhanced business
services in the future.</P>

<P>Regulation of the Internet.  Due to the increasing popularity and use of the Internet by broad
segments of the population, it is possible that laws and regulations may be adopted with respect to
the Internet pertaining to content of Web sites, privacy, pricing, encryption standards, consumer
protection, electronic commerce, taxation, and copyright infringement and other intellectual
property issues.  No one is able to predict the effect, if any, that any future regulatory changes or
developments may have on the demand for our Internet access or other Internet-related services.
Changes in the regulatory environment relating to the Internet access industry, including the
enactment of laws or promulgation of regulations that directly or indirectly affect the costs of
telecommunications access or that increase the likelihood or scope of competition from national or
regional telephone companies, could materially and adversely affect our business, operating results
and financial condition.</P>

<P><STRONG>BUSINESS</STRONG></P>

<P><STRONG>History</STRONG></P>

<P>In July 1999, we changed our name to "USURF America, Inc.", from "Internet Media
Corporation".  We were incorporated on November 1, 1996, under the name "Media
Entertainment, Inc.", to act as a holding company in the wireless cable and community (low
power) television industries.  Due to current market conditions in the wireless cable industry, we
have abandoned efforts to develop our wireless cable properties.  In furtherance of our plan to
focus on the exploitation of our Quick-Cell wireless Internet access products, we assigned all of
our community (low power) television properties to New Wave Media Corp.</P>

<P>Since September 1998, we have acquired seven dial-up ISPs, the business of www.e-tail.com and
a web design firm.</P>

<P><STRONG>Current Overview</STRONG></P>

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

<P>Our dial-up Internet access business has lost nearly all of its customers and, for the foreseeable
future, we have abandoned development of our e-commerce business.<BR>
<BR>
</P>

<P><STRONG>Recent Developments</STRONG></P>

<P>On September 29, 2000, an involuntary bankruptcy petition was filed against CyberHighway, our
wholly-owned subsidiary, in the Idaho Federal Bankruptcy Court.  The petition was brought by
ProPeople Staffing, CTC Telecom, Inc. and Hawkins-Smith.  In December 2000, a settlement was
reached and the petitioning creditors and CyberHighway filed a joint motion to dismiss this
involuntary proceeding.  The joint motion to dismiss requires the approval of CyberHighway's
creditors.  However, some of CyberHighway's creditors have objected to the dismissal of the
proceeding.  The basis of the creditors' objection is their belief that CyberHighway's as-yet
unasserted damage claims against the original petitioning creditors and their law firm represent
CyberHighway's most valuable assets.  These objecting creditors desire that these claims be
adjudicated in the bankruptcy court.  It is likely that, at some time in the future, a final order of
bankruptcy will be entered with respect to CyberHighway.  No prediction of the timing of such an
order can be made, although we believe that such an order would come only after the final
adjudication of the claims described above.</P>

<P>Due primarily to the involuntary bankruptcy proceeding, CyberHighway has lost nearly all of its
customers.  We do not expect that CyberHighway will resume operations.</P>

<P>On May 9, 2001, we executed the Fusion Capital agreement, which replaced a similar agreement
dated October 9, 2001.  Under this agreement, Fusion Capital may purchase up to $10 million of
our common stock over a period of up to 25 months. (See "The Fusion Capital Transaction", page
___).  This prospectus relates to the resale of the shares issued and to be issued pursuant to the
Fusion Capital agreement.</P>

<P>With the recent merger between Qwest Communications and US West, we do not expect to
execute final agreements that embody our previously announced letter of intent.  This change in
circumstance will not hinder our Quick-Cell business plan.</P>

<P>We have abandoned our plan to establish ourselves as a national dial-up Internet service provider.
Because of this change, we terminated our contracts with two companies that serve as Internet
backbone providers, NaviNet, Inc. and ioNET, Inc., a subsidiary of PSINet, Inc., with no liability
accruing to us.</P>

<P>In April 2001, we entered into a Quick-Cell reseller agreement with Wireless WebConnect!, Inc.,
a Florida-based national reseller of wireless Internet access services.</P>

<P><STRONG>Industry Background</STRONG></P>

<P>Growth of the Internet; the World Wide Web.  The Internet, commonly known as the World Wide
Web, or simply the Web, is a collection of connected computer systems and networks that link
millions of public and private computers to form, essentially, the largest computer network in the
world.  The Internet has experienced rapid growth in recent years and is expected to continue its
growth.</P>

<P>Internet Access.  Internet access services represent the means by which ISPs interconnect business
and consumer users to the Internet's resources.  Access services vary from dial-up modem access,
like that provided by our CyberHighway subsidiary, for individuals and small businesses to
high-speed dedicated transmission lines for broadband access by large organizations to wireless
Internet access systems, like our Quick-Cell wireless Internet access system.</P>

<P><STRONG>Strategic Relationships</STRONG></P>

<P>Financial Relationships.  We view our investment banking relationship with Gruntal &amp; Co., L.LC.,
New York, New York, and our recently established relationship with Fusion Capital as valuable
strategic relationships as we move ahead with efforts to exploit our wireless Internet access
products.  Our efforts will require significant capital and we expect that these relationships will
assist in obtaining some of the needed capital.  However, we cannot assure you that this will be
the case.</P>

<P>Business Relationship.  We recently entered into a reseller agreement relating to our Quick-Cell
wireless Internet access products with Wireless WebConnect!, Inc., a Florida-based subsidiary of
Intellicall, Inc., a publicly-held company. WebConnect is a nationally-known reseller of wireless
Internet access services.  Based on statements made by WebConnect personnel, we anticipate that
this strategic alliance will provide us a relatively rapid means of increasing the number of
Quick-Cell customers.  However, because activities under this agreement have only recently
begun, there is no actual sales data available upon which you can judge WebConnect's ability to
resell our Quick-Cell products.</P>

<P><STRONG>Wireless Internet Access</STRONG></P>

<P>What is Wireless Internet?  "Wireless Internet" is a new type of communications spectrum recently
designated by the FCC. Wireless Internet access requires a transmission facility maintained by an
ISP employing a wireless system and the user's modem (a transmitter/receiver modem) equipped
with an antenna.  Wireless Internet capability allows users to access the Internet from a stationary
computer or, in some situations, from a mobile, lap-top computer.</P>

<P>What is Quick-Cell?  "Quick-Cell" is the brand name of our proprietary wireless Internet access
system.  Each Quick-Cell system is comprised of one or more server modems, or cells.  Server
modems, which are less than one cubic foot in size, are mounted on tall structures, towers, tall
buildings or billboards, for example.  The space needed for mounting the server modems can be
leased for an average monthly payment of about $500.  Each server modem relays transmitted
data directly into the Internet via a T1, or larger, telephone line.  The monthly charge for each T1
line ranges from $600 to $1,500, depending on the market.</P>

<P>Installed customer modems, which are slightly larger in size than a deck of playing cards, transmit
data to, and receive data from, a server modem.  Each customer modem is installed in the
customer's computer and connected by a thin cable to a small antenna that is mounted on the
outside of the customer's place of business or home, as the case may be.  The installation process
for customer modems is quite similar to that of cable television: the installation crew installs the
customer modem in the computer, mounts the antenna outside, connects the modem and antenna
with the cable and tests the connection.  Depending on the market, each customer installation is
expected to cost between $40 and $80.</P>

<P>The number of Quick-Cell server modems needed for a particular system depends on a few
factors:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- the geographic size of the city to be served - each server modem's signal covers an area
approximately seven miles in diameter;</TD></TR>
<TR><TD>- the population density of the city to be served - since each server modem is capable of
handling up to approximately 4,000 customers, the greater the population density, the greater
the number of server modems required;</TD></TR>
<TR><TD>- the terrain of the city to be served - the hillier the terrain, the greater the number of server
modems required; and</TD></TR>
<TR><TD>- the density of foliage of the city to be served - more densely foliated areas require a greater
number of server modems.</TD></TR></TABLE>

<P>Within a particular system, each additional server modem is configured to share transmitted data
with the other server modems, so as to provide an uninterrupted connection to the Internet.  In a
Quick-Cell system with multiple server modems, the server modems are geographically located in
a honeycomb fashion, for technical reasons.</P>

<P>Data transmission speeds remain constant within a Quick-Cell system's transmission radius,
regardless of the distance from the server modem.  On the fringes of a Quick-Cell system's
transmission radius, a customer's connection may fade in and out, similar to the reception of
distant AM radio stations.  To avoid this circumstance, we will attempt to avoid installing a
customer modem within the fringe areas.</P>

<P>Quick-Cell Equipment and Facilities.  Until February 2001, all of our Quick-Cell modems were
manufactured for us by OTC Telecom, San Jose, California, using off-the-shelf circuit boards and
other parts.  These modems cost approximately $300 each, because we lacked capital to purchase
large quantities at a reduced per-modem cost.</P>

<P>In February 2001, we completed the design and testing of our own modem circuit board.  This
advancement has freed us from our dependence on OTC Telecom for modems.  We now are able
to solicit competitive bids from circuit board manufacturers and other parts suppliers, then
assemble the modems in our new facility located in Baton Rouge, Louisiana. Our first assembly
run in this facility began in May 2001.  With these changes, the modems will cost approximately
$250.</P>

<P> In June 2001, we completed development of a new configuration of our Quick-Cell server
modem which will permit each server modem to serve approximately 4,000 users, or twice as
many users as earlier server modem configurations.  Because we will be required to construct
fewer server modem sites as we build-out a particular Quick-Cell market, this advancement is
expected to reduce our future Quick-Cell system build-out costs by approximately 20%.</P>

<P>We will not construct towers on which to mount server modems.  Instead, we will lease tower
spaces, rooftop spaces or spaces on other tall structures.  We have recently signed 23 individual,
single-city tower leases with SBA Communications Corporation, a Boca Raton, Florida-based
tower company.  We are currently negotiating with other tower companies for similar agreements
in other cities.  Based on our management's experience, securing adequate locations to mount the
server modems is not expected to impede Quick-Cell system construction in any market.</P>

<P>In each market, we will obtain the necessary fiber-optic telephone line connections to the Internet
from one of the many telecommunications companies capable of providing an adequate Internet
connection.  Based on our past experience, we do not believe that we will encounter any difficulty
in obtaining needed connections to the Internet at acceptable prices.</P>

<P>Quick-Cell System Control Software.  We have developed software that enables us to control the
data transmission speed of each customer modem within each Quick-Cell system, all from a single
location.  With this software, we are able to increase or decrease a customer's data transmission
speed in just a few minutes' time.  This software also permits us to monitor easily each Quick-Cell
server modem's bandwidth usage, which will enable us to add a server modem to a Quick-Cell
system that is approaching maximum capacity prior to the time that system becomes overloaded
and its transmission speed slows.  This capability will enhance our ability to provide our customers
data transmission service at speeds for which they contracted.</P>

<P>Current Market.  We have one Quick-Cell system operating in Santa Fe, New Mexico, where we
serve approximately 120 customers.  We have been unable to acquire more customers in Santa Fe,
because we have lacked capital for advertising and customer installation expenses.</P>

<P>Reseller Agreement.  In April 2001, we entered into a Quick-Cell reseller agreement with Wireless
WebConnect!, Inc., a Florida-based wireless Internet access reseller.  Prior to this time,
WebConnect has acted primarily as a reseller of a nationally-known wireless Internet access
service, known as "Ricochet<SUP>TM</SUP>", which is offered by Metricom, Inc., San Jose, California.  Our
reseller agreement with WebConnect is for an initial term of 10 years.</P>

<P>Under the reseller agreement, WebConnect will select markets in which it desires to market our
Quick-Cell service and begin to pre-sell the service.  When 200 customers have subscribed to the
service, we will construct the Quick-Cell system for that market, at WebConnect's expense, paid
in advance.  WebConnect will also purchase all customer modems from us.  We will provide all
customer installation services, at WebConnect's expense.  WebConnect will provide all first level
customer support services, services that do not require a visit to the customer's location.  We will
provide all second level customer support services, services that require technical expertise and/or
a visit to the customer's location, at WebConnect's expense. In addition, WebConnect will pay us
a monthly per-customer royalty that we expect to average about $12. However, because
WebConnect has not yet begun selling our Quick-Cell service in any market, we cannot state with
certainty the actual average monthly per-customer royalties that we will be paid by WebConnect.</P>

<P>While WebConnect has achieved a high level of success in reselling Metricom's
Ricochet<SUP>TM</SUP>wireless Internet service, we cannot assure you that WebConnect will be successful in
reselling our Quick-Cell service.</P>

<P>It is possible that WebConnect's rate of sales will outstrip our ability to obtain needed equipment,
including customer modems, due to our lack of capital, or ability to hire and train qualified
installation crews.  In these circumstances, we would be unable to take full advantage of
WebConnect's abilities, thereby limiting potential profits.</P>

<P>Other Quick-Cell Marketing Strategies.  In the middle of 2000, we began marketing our
Quick-Cell systems to local exchange telephone companies, independent telephone companies,
digital subscriber line resellers and Internet service providers.  We sold three Quick-Cell systems
in a short time.  Due to a lack of capital, we have suspended this marketing effort.</P>

<P>These Quick-Cell systems were sold to companies located in Brownwood, Texas, Wheeling, West
Virginia, and San Juan, Puerto Rico.  No paying customers use these systems, due to
circumstances involving these companies that are beyond our control.  We are unsure if and when
the owners of these Quick-Cell systems will begin to offer service to the public.</P>

<P>In 1999, we licensed five small Internet service providers to operate our Quick-Cell system. Three
of these companies never acted on the granted licenses and they expired.  A licensed Quick-Cell
system in Casper, Wyoming, operated for three months, but was discontinued due to the sale of
the licensee's business.  The Santa Fe, New Mexico, licensee was acquired by us in June 1999.</P>

<P>Quick-Cell Sales and Marketing.  In cities in which we construct company-owned Quick-Cell
systems, we intend to employ telephone marketing as the initial means for acquiring customers,
primarily business customers.  As a particular market begins to mature, we will employ mass
media, including radio advertising.  In conjunction with our mass media advertising, we will
employ a sales force that will focus primarily on potential business customers.  This focus on
business customers is based on our management's informal study of Internet usage by businesses
versus home users that revealed businesses' higher demand for high-speed Internet access.  Our
management's decision may prove to have been incorrect, which would significantly impair our
ability to earn a profit.</P>

<P>Without additional capital, we will not be able to construct another company-owned Quick-Cell
system.</P>

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

<P>Competitive Features of Quick-Cell.  While we believe Quick-Cell possesses some competitive
advantages over other Internet access modes, it currently has three significant competitive
disadvantages:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- No wide-spread brand name recognition;</TD></TR>
<TR><TD>- Professional installation usually required; and</TD></TR>
<TR><TD>- Internet access only available locally, compared to dial-up Internet access that is available from
virtually any telephone in any geographic location.</TD></TR></TABLE>

<P>It is possible that we could overcome the first two listed disadvantages, after a lengthy period of
marketing and product research and development.  However, we currently lack capital to
overcome either disadvantage.  Further, it is likely that we will never overcome the third
disadvantage, due to the inherent broadcast limitations of wireless technologies.</P>

<P>We believe Quick-Cell offers the following competitive advantages:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- Speed: our Quick-Cell system is capable of data transmission speeds of up to 10 Mbs; we
expect that most of our customers' connections will transmit data at the rate of 256 kbs, the
wireless equivalent of the well-publicized digital subscriber line (DSL) hard wire Internet access
method; our Quick-Cell system offers far greater data transmission speeds than cellular
telephone-based Internet access methods;</TD></TR>
<TR><TD>- Lower Cost: we expect that our Quick-Cell service will be offered at costs between 15% and
60% less than available hard-wire Internet access, depending on the particular market, that is,
less than the sum of monthly Internet service provider charges and monthly telephone line
charges; Quick-Cell will also be priced competitively with cellular-telephone-based and other
wireless Internet access methods;</TD></TR>
<TR><TD>- No Telephone Company Involvement: our Quick-Cell customers will not be required to incur
the expense of a hard-wire telephone line through which to access the Internet;</TD></TR>
<TR><TD>- Security/Encryption: our Quick-Cell system is capable of encrypting, or scrambling, its
broadcast signal, thereby offering a high degree of security to customers; and</TD></TR>
<TR><TD>- Mobility: our Quick-Cell system is able to permit service personnel of a business to file
contemporaneous reports, request and receive technical assistance and perform other
computer-based functions from a customer's place of business or from a service vehicle, as long
as the personnel remain within the Quick-Cell system's coverage area.</TD></TR></TABLE>

<P>Other Wireless Product.  In January 1998, we delivered our first proprietary wireless DataLink
system.  This DataLink system was delivered to the Baton Rouge refinery of one of the largest
international oil companies, the refinery being the second largest in the U.S.  The DataLink system
was purchased to replace an existing hard-wire (T1 telephone line) data transmission system.  The
wireless DataLink system transfers data at the rate of 2 megabytes per second.  Due to a lack of
capital for marketing and equipment, our management suspended DataLink-related activities.  It
was determined that our Quick-Cell products provided us the greater opportunity of achieving
short-term market share and profitability.  We cannot assume you that our management's decision
in the regard will prove to have been correct or that we will ever earn a profit.</P>

<P><STRONG>Dial-up Internet Access</STRONG></P>

<P>As recently as September 2000, our CyberHighway subsidiary provided dial-up Internet service to
about 25,000 customers, approximately 8,500 directly and 16,500 through affiliate-Internet
service providers.  As of the end of February 2001, we had lost nearly all of our dial-up
customers.  This rapid demise of CyberHighway's business is due primarily to three factors:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- In September 2000, we sold our affiliate-ISP business, due to its lack of profitability;</TD></TR>
<TR><TD>- In September 2000, an involuntary bankruptcy petition was filed against CyberHighway - we
estimate that we lost at least 6,000 customers due to this event;</TD></TR>
<TR><TD>- Our November 2000 switch-over to our contracted Internet service company's network - we
estimate that we lost at least 2,000 customers to due to this event.</TD></TR></TABLE>

<P>The remainder of lost customers is attributable to CyberHighway's normal customer attrition rate,
in light of the fact that CyberHighway ceased to advertise its services following the involuntary
bankruptcy filing.</P>

<P>We do not intend to commit any resources towards the revitalization of the business of
CyberHighway.</P>

<P>Customers and Markets.  We have lost nearly all of our dial-up Internet access customers.  We do
not expect that we will ever reclaim any dial-up customers.</P>

<P>Sales and Marketing.  CyberHighway has ceased all sales and marketing activities.  We do not
expect that these activities will be resumed.</P>

<P>Affiliate-ISP Program.  From its inception, CyberHighway employed an affiliate marketing
program, a technique designed to generate rapid expansion of CyberHighway's subscriber base,
which it did. However, the affiliate-ISP program was terminated during 1999.  In September
2000, this business was sold, due to its continuing monthly losses.</P>

<P><STRONG>Customer Service and Support</STRONG></P>

<P>We are committed to the highest levels of customer satisfaction.  We believe that maintaining high
levels of customer satisfaction will remain as a key competitive factor.  Currently, we provide
wireless Internet access customer support during normal business hours.  Our customer support
operations can be expected to expand, if and when we obtain needed capital.</P>

<P><STRONG>Competition</STRONG></P>

<P>We believe that the primary competitive factors determining success as an Internet access provider
are: a reputation for reliability and high-quality service; effective customer support; access speed;
pricing; effective marketing techniques for customer acquisition; ease of use; and scope of
geographic coverage.  We believe that we will be able to address adequately all of these factors,
except that we will not be able to offer scope of geographic coverage for the foreseeable future. It
is also possible that we will not address any of these competitive factors successfully. Should we
fail to do so, our business would likely never earn a profit.  We currently lack capital necessary to
compete effectively.</P>

<P>We face severe competition from other wireless Internet access providers, such as from
Metricom's Ricochet<SUP>TM</SUP> product, as well as large, national providers of cellular telephone service
providers.</P>

<P>The market for the provision of dial-up Internet access services, in which our Quick-Cell wireless
Internet access service will compete, is extremely competitive and highly fragmented.  Current and
prospective competitors include many large, nationally-known companies that possess
substantially greater resources, financial and otherwise, market presence and brand name
recognition than do we.  We currently compete, or expect to compete, for the foreseeable future,
with the following: national Internet service providers, numerous regional and local Internet
service providers, most of which have significant market share in their markets; established on-line
information service providers, such as America Online, which provide basic Internet access, as
well as proprietary information not available through public Internet access; providers of web
hosting, co-location and other Internet-based business services; computer hardware and software
and other technology companies that provide Internet connectivity with their products;
telecommunications companies, including global long distance carriers, regional Bell operating
companies and local telephone companies; operators that provide Internet access through
television cable lines; electric utility companies; communications companies; companies that
provide television or telecommunications through participation in satellite systems; and, to a lesser
extent, non-profit or educational Internet access providers.</P>

<P>With respect to potential competitors, we expect that manufacturers of computer hardware and
software products, as well as media and telecommunications companies will continue to enter the
Internet services market, which will serve to intensify competition.  In addition, as more
consumers and businesses increase their Internet usage, we expect existing competitors to increase
further their emphasis on Internet access and electronic commerce initiatives, resulting in even
greater competition. The ability of competitors or others to enter into business combinations,
strategic alliances or joint ventures, or to bundle their services and products with Internet access,
could place us at a significant competitive disadvantage.  We currently lack capital necessary to
compete effectively and we may never obtain enough capital to permit us to compete effectively in
our markets.</P>

<P>Moreover, we expect to face competition in the future from companies that provide connections
to consumers' homes, such as telecommunications providers, cable companies and electrical utility
companies. For example, recent advances in technology have enabled cable television operators to
offer Internet access through their cable facilities at significantly higher speeds than existing
analog modem speeds. These types of companies could include Internet access in their basic
bundle of services or offer such access for a nominal additional charge.  Any such developments
could reduce our market share, thereby impairing our ability to earn a profit.</P>

<P><STRONG>Properties</STRONG></P>

<P>General.  We own all of the equipment necessary for the operation of a state-of-the-art network
operations center. However, because of our agreement with Dialup USA, we no longer maintain
this center.  We intend to utilize this equipment in facilitating the expected growth of our wireless
Internet access business.  In addition, we own office equipment necessary to conduct our business.</P>

<P>In Baton Rouge, Louisiana, we lease approximately 650 square feet for our executive offices, for
a monthly rental of approximately $800, and a 1,600 square foot modem assembly facility, for a
monthly rental of approximately $1500.  We lease approximately 500 square feet in Santa Fe,
New Mexico, for a monthly rental of approximately $800.  CyberHighway has given up our leased
premises.</P>

<P>Wireless Cable Properties.  We own the rights to wireless cable channels in Poplar Bluff,
Missouri, Lebanon, Missouri, Port Angeles, Washington, The Dalles, Oregon, Sand Point, Idaho,
Fallon, Nevada, and Astoria, Oregon.  We have abandoned our efforts to develop these wireless
cable properties, due to current market conditions.  Rather, because our Quick-Cell system can be
adapted for use on the wireless cable frequencies, we intend to develop these properties into
operating wireless Internet systems, at such time as two-way data transmission on these
frequencies is permitted.  We cannot predict when this permission will be granted, if ever.</P>

<P>Intellectual Property.  We currently rely on common law principles for the protection of our
copyrights and trademarks and trade secret laws to protect our proprietary intellectual property
rights.  We do not intend to file patent applications relating to our Quick-Cell wireless Internet
access products, until completion of future generations of the products.  We have not filed
trademark applications relating to the "Quick-Cell" and the "USURF Wireless Internet" brand
names.</P>

<P>We have received authorization to use the products of each manufacturer of software that is
bundled in its software for users with personal computers operating on the Windows or Macintosh
platforms. While certain of the applications included in our start-up kit for Internet access services
subscribers are shareware that we have obtained permission to distribute or that are otherwise in
the public domain and freely distributable, certain other applications included in our start-up kit
have been licensed where necessary.  We currently intend to maintain or negotiate renewals of all
existing software licenses and authorizations as necessary.  We may also enter into licensing
arrangements for other applications, in the future.</P>

<P><STRONG>Employees</STRONG></P>

<P>We have eight employees, including four officers.  All of our officers have entered into
employment agreements.</P>

<P>None of our employees is covered by any collective bargaining agreement, nor have we ever
experienced a work stoppage. Our management believes employee relations to be good.  Much of
our future success will depend, in large measure, upon our ability to continue to attract and retain
highly skilled technical, sales, marketing and customer support personnel.</P>

<P><STRONG>THE FUSION CAPITAL TRANSACTION</STRONG></P>

<P><STRONG>General</STRONG></P>

<P>Under the Fusion Capital agreement, on each trading day during the term of the agreement,
Fusion Capital is obligated to purchase a specified dollar amount of our common stock.  Subject
to our right to suspend Fusion Capital's purchases at any time and our right to terminate the
Fusion Capital agreement at any time, Fusion Capital will purchase on each trading day during the
term of the agreement $20,000 of our common stock.  The daily purchase amount may be
decreased by us at any time.  We also have the right to increase the daily purchase amount of
$20,000 any time the market price of our common stock is above $5.00 per share for five
consecutive trading days.  The selling price per share is equal to the lesser of:</P>

<P>- the lowest sale price of our common stock on the purchase date; or</P>

<P>- the average of the three lowest closing sale prices of our common stock during the 15
consecutive trading days prior to the date of submission of a purchase by Fusion Capital.</P>

<P>The selling price will be adjusted for any reorganization, recapitalization, non-cash dividend, stock
split or other similar transaction occurring during the fifteen (15) trading days in which the closing
bid price is used to compute the purchase price.  Even though the Fusion Capital Agreement
restricts Fusion Capital from owning more than 9.9% of our stock at any one time, this restriction
does not prevent Fusion Capital from selling a portion of its holdings and later purchasing
additional shares.  Thus, it is possible that the total number of shares purchased by Fusion Capital
would be greater than 9.9% of the then-outstanding common stock.  Because this restriction on
ownership may be waived by us and Fusion Capital, it is possible that Fusion Capital could own
more than 9.9% of our common stock at any one time.</P>

<P>The following table sets forth the number of shares of our common stock that would be sold to
Fusion Capital upon our sale of common stock under the Fusion Capital agreement at varying
purchase prices:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Assumed Per Share
Purchase Price</TD>
<TD>Total Shares Issuable
Upon a Full Purchase
Under the Fusion
Capital Agreement</TD>
<TD>Gross Proceeds</TD>
<TD>Percent of Our
Common Stock
Outstanding After
Giving Effect to the
Issuance to Fusion
Capital</TD></TR>
<TR><TD>$.40(1)</TD>
<TD>6,000,000</TD>
<TD>$2,400,000</TD>
<TD>23.00%</TD></TR>
<TR><TD>$1.50</TD>
<TD>6,000,000</TD>
<TD>$9,000,000</TD>
<TD>23.00%</TD></TR>
<TR><TD>$2.00</TD>
<TD>5,000,000</TD>
<TD>$10,000,000</TD>
<TD>19.93%</TD></TR>
<TR><TD>$5.00</TD>
<TD>2,000,000</TD>
<TD>$10,000,000</TD>
<TD>9.06%</TD></TR>
<TR><TD>$10.00</TD>
<TD>1,000,000</TD>
<TD>$10,000,000</TD>
<TD>4.74%</TD></TR>
<TR><TD>____________</TD>
<TD></TD>
<TD></TD>
<TD></TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>(1) Closing price on June 22, 2001, as reported by AMEX. </TD></TR>
<TR><TD></TD></TR></TABLE>

<P>Since we only plan to sell up to 6,000,000 shares to Fusion Capital under the Fusion Capital
agreement, the selling price of our stock sold to Fusion Capital will need to average $1.67 per
share for us to receive the maximum proceeds of $10 million under that agreement.  Assuming a
selling price of $.40 per share, the closing sale price of the common stock on June 22, 2001, and
the purchase by Fusion Capital of the full amount of shares purchasable under the Fusion Capital
agreement, proceeds to us would only be approximately $2,400,000, unless we choose to issue
more than 6,000,000 shares, which we have the right to do.</P>

<P><STRONG>Our Right to Suspend Purchases</STRONG></P>

<P>At any time or from time to time, we have the unconditional right to prevent any purchases by
Fusion Capital effective upon one trading day's prior notice.  Any suspension would remain in
effect until our revocation of the suspension.  To the extent we need to use the cash proceeds of
the sales of common stock under the Fusion Capital agreement for working capital or other
business purposes, we do not intend to restrict purchases under the Fusion Capital agreement.</P>

<P><STRONG>Our Right to Increase and Decrease the Daily Purchase Amount</STRONG></P>

<P>We have the unconditional right to decrease the daily amount to be purchased by Fusion Capital at
any time for any reason, effective upon one trading day's notice.  We also have the right to
increase the $20,000 daily purchase amount any time the market price of our common stock is
above $5.00 per share for five consecutive trading days.  For any trading day that the market price
of our common stock is below $5.00, the daily purchase amount shall not be greater than $20,000.</P>

<P><STRONG>Our Termination Rights</STRONG></P>

<P>We have the unconditional right at any time for any reason to give notice to Fusion Capital
terminating the common stock purchase agreement.  Such notice shall be effective one trading day
after Fusion Capital receives such notice.</P>

<P><STRONG>Effect of Performance of the Fusion Capital Agreement on our Shareholders</STRONG></P>

<P>All shares registered in this offering will be freely tradable. It is anticipated that shares registered
in this offering will be sold over a period of up to 25 months from the date of this prospectus. The
sale of a significant amount of shares registered in this offering at any given time could cause the
trading price of our common stock to decline and to be highly volatile. Fusion Capital may
ultimately purchase all of the shares of common stock issuable under the Fusion Capital
agreement, and it may resell some, none or all of the shares of common stock it acquires upon
purchase. Therefore, the purchases under the Fusion Capital agreement may result in substantial
dilution to the interests of other holders of our common stock. However, we have the right at any
time for any reason to: (1) reduce the daily purchase amount, (2) suspend purchases of the
common stock by Fusion Capital and (3) terminate the Fusion Capital agreement.</P>

<P><STRONG>No Short-Selling or Hedging by Fusion Capital</STRONG></P>

<P>Fusion Capital has agreed that neither it nor any of its affiliates will engage in any direct or
indirect short-selling or hedging of our common stock during any time prior to the termination of
the Fusion Capital agreement.</P>

<P><STRONG>Events of Default</STRONG></P>

<P>Generally, Fusion Capital may terminate the Fusion Capital agreement without any liability or
payment to us upon the occurrence of any of the following events of default:</P>

<P>- if for any legal reason the shares purchased cannot be sold pursuant to this prospectus for a
period of 10 consecutive trading days or for more than an aggregate of 30 trading days in any
365-day period;</P>

<P>- suspension by the American Stock Exchange of our common stock from trading for a period of
10 consecutive trading days or for more than an aggregate of 30 trading days in any 365-day
period;</P>

<P>- our failure to satisfy any listing criteria of the American Stock Exchange for a period of 10
consecutive trading days or for more than an aggregate of 30 trading days in any 365-day period;</P>

<P>- (1) notice from us or our transfer agent to the effect that we or the transfer agent intends not to
comply with a proper request for purchase of shares under the Fusion Capital agreement; (2) our
failure to promptly confirm to the transfer agent Fusion Capital's purchase notice; or (3) the failure
of the transfer agent to issue shares of our common stock promptly upon delivery of a purchase
notice or upon delivery of a warrant exercise notice;</P>

<P>- any material breach of the representations or warranties or covenants contained in the Fusion
Capital agreement or any related agreements which has or which could have a material adverse
affect on us, subject to a cure period of 10 trading days;</P>

<P>- if the number of shares to be issued to Fusion Capital reaches an aggregate amount that would
require shareholder approval under our principal market regulations (to the extent not  previously
obtained and then required) or otherwise cause us to breach our principal market rules and
regulations;</P>

<P>- a default of any payment obligation of USURF America in excess of $1.0 million; or</P>

<P>- commencement of insolvency or bankruptcy proceedings by or against USURF America.</P>

<P><STRONG>Shares and Warrants Issued to Fusion Capital</STRONG></P>

<P>Under the Fusion Capital agreement, Fusion Capital has received 800,000 shares as part of its
commitment fee.  These shares may not be sold by Fusion Capital until the earliest of termination
of the Fusion Capital agreement, default under the Fusion Capital agreement or approximately 25
months from the date hereof. Under the Fusion Capital agreement, we have issued to Fusion
Capital, as part of its commitment fee, warrants to purchase 215,000 shares of our common stock
at an exercise price of $.25 per share, warrants to purchase 215,000 shares of our common stock
at an exercise price of $.35 per share and warrants to purchase 215,000 shares of our common
stock at an exercise price of $.45 per share.  These warrants are exercisable by Fusion Capital for
a period of five years from the date of their issuance.</P>

<P><STRONG>No Variable-Priced Financings</STRONG></P>

<P>Until the termination of the Fusion Capital agreement, we have agreed not to issue, or enter into
any agreement with respect to the issuance of, any variable-priced equity or variable-priced
"equity-like" securities, unless we have obtained Fusion Capital's prior written consent.</P>

<P><STRONG>Holdings of Fusion Capital Upon Termination of the Offering</STRONG></P>

<P>Because Fusion Capital may sell all, some or none of the common stock offered by this
prospectus, no estimate can be given as to the amount of common stock that will be held by
Fusion Capital upon early termination of the offering.</P>

<P><STRONG>Registration Rights Agreement</STRONG></P>

<P>In connection with the execution of the Fusion Capital agreement, we executed a registration
rights agreement with Fusion Capital, which relates to the shares of our stock issued or to be
issued under the Fusion Capital agreement.  We are required under the registration rights
agreement to register all such shares of our common stock pursuant to a registration statement
and to keep such registration statement current for purposes of Rule 424 under the Securities Act,
for a period of up to five years.  In keeping with our obligations under this agreement, we intend
to file, in the near future, with the SEC a registration statement that relates to the resale by Fusion
Capital of the shares issued and to be issued pursuant to the Fusion Capital agreement.</P>

<P><STRONG>Finder's Fee</STRONG></P>

<P>Pursuant to the transactions contemplated by the Fusion Capital agreement, we have issued to our
investment banker, Gruntal &amp; Co., L.L.C., as a finder's fee, 200,000 shares of our common stock
and a total of 161,250 warrants.  All of the warrants issued to Gruntal &amp; Co. are exercisable for a
period of five years from the date of their issuance.</P>

<P>In addition to the shares and warrants to be issued to Gruntal &amp; Co., we will be obligated to pay
to Gruntal &amp; Co., as a further finder's fee, a sum of cash equal to 8% of the gross proceeds
obtained by us pursuant to the Fusion Capital agreement.</P>

<P><STRONG>MANAGEMENT</STRONG></P>

<P><STRONG>Directors and Officers</STRONG></P>

<P>The following table sets forth the officers and directors of USURF America.
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Name</TD>
<TD>Age</TD>
<TD>Position</TD></TR>
<TR><TD>David M. Loflin</TD>
<TD>43</TD>
<TD>President, Acting Chief
Financial Officer and Director</TD></TR>
<TR><TD>Waddell D. Loflin</TD>
<TD>51</TD>
<TD>Vice President, Secretary and
Director</TD></TR>
<TR><TD>Robert A. Hart IV</TD>
<TD>53</TD>
<TD>Vice President of Technology</TD></TR>
<TR><TD>James Kaufman</TD>
<TD>36</TD>
<TD>Vice President - Corporate
Development</TD></TR>
<TR><TD>Ross S. Bravata</TD>
<TD>42</TD>
<TD>Director</TD></TR>
<TR><TD>Micheal Cohn</TD>
<TD>43</TD>
<TD>Director</TD></TR>
<TR><TD>____________</TD>
<TD></TD>
<TD></TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>(1)  David M. Loflin and Waddell D. Loflin are brothers.</TD></TR></TABLE>

<P>Our current officers and directors serve until the next annual meeting of our board of directors or
until their respective successors are elected and qualified.  All officers serve at the discretion of
our board of directors.  Family relationships between our officers and directors are noted above.
Certain information regarding the backgrounds of each of the officers and directors is set forth
below.</P>

<P>David M. Loflin, President and Director, has, for more than the past five years, owned and
operated Gulf Atlantic Communications, Inc., a Baton Rouge, Louisiana-based wireless
technology firm specializing in development of wireless cable systems and broadcast television
stations.  Gulf Atlantic has designed, constructed and operated two wireless cable systems: (1)
Baton Rouge, Louisiana, and (2) Selma, Alabama.  Mr. Loflin developed and currently operates
one television station, WTVK-TV11, Inc. (a Warner Brothers Network affiliate), Channel 11 in
Baton Rouge, Louisiana.  For over ten years, Mr. Loflin has served as a consultant for Wireless
One, one of the largest wireless communications firms in the United States.  Mr. Loflin is a
member of the Wireless Cable Association International and the Community Broadcasters
Association.</P>

<P>Waddell D. Loflin, Vice President, Secretary and Director, has, for more than the past five years,
served as Vice President of Operations and Treasurer of Gulf Atlantic Communications, Inc. and
WTVK-TV11, Inc., both in Baton Rouge, Louisiana. In addition, Mr. Loflin serves as Production
Manager and Film Director for WTVK-TV11, Inc.  Mr. Loflin served as General Manager for
Baton Rouge Television Company, Baton Rouge, Louisiana, a wireless cable system, where he
directed the development and launch of such wireless cable system.  Also, Mr. Loflin has devoted
over five years to demographic research relating to the wireless cable industry.  Mr. Loflin is a
member of the Wireless Cable Association International and the Community Broadcasters
Association.  Mr. Loflin holds a B.A. degree in Social Sciences from Oglethorpe University,
Atlanta, Georgia.</P>

<P>Robert A. Hart, IV, Vice President of Technology, is a 30-year veteran of the telecommunications
industry as proprietor of Hart Engineers, which provides engineering and consulting services to
BellSouth, numerous independent telephone companies and other communications service
providers.  Mr. Hart is a graduate of Louisiana State University with a B.S. degree in Electrical
Engineering and is a Registered Professional Engineer.  Mr. Hart has served on the board of the
Small Business Personal Communications Services (PCS) Association, a national trade association
focused on small business applications and opportunities for PCs technology (a universal wireless
communications technology), and also served this organization as chairman of the lobbying
committee.  He is also a past board member and current member of the Association of
Communication Engineers, and current member of the Institute of Electrical and Electronics
Engineers, National Society of Professional Engineers and the Louisiana Engineering Society.</P>

<P>James Kaufman, Vice President - Corporate Development, received a B.S. degree in Journalism
from the University of Colorado, Boulder, Colorado. From 1994 to 1995, Mr. Kaufman was a
registered representative with D.E. Fry, a Denver, Colorado-based broker-dealer.  From 1995 to
1996, Mr. Kaufman was a registered representative with A.G. Edwards, a St. Louis,
Missouri-based broker-dealer.  From 1997 to February 1999, Mr. Kaufman served as Director of
Corporate Development for B. Edward Haun &amp; Company, a Denver, Colorado-based investment
banking and research firm.</P>

<P>Ross S. Bravata, Director, has, since 1981, worked for Novartis (formerly Ciba Corporation), in
various positions, and currently serves as a Senior Control Systems Technician.  In such capacity,
Mr. Bravata supervises the service and maintenance of electronic instrumentation. Since 1988,
Mr. Bravata has served as a director and principal financial officer of CG Federal Credit Union,
Baton Rouge, Louisiana.  Also, Mr. Bravata has, since its inception in 1994, served as a director
of Trinity's Restaurant, Inc., in Baton Rouge, Louisiana.</P>

<P>Michael Cohn, Director, has, for over 20 years, owned and operated Arrow Pest Control, Inc.,
Baton Rouge, Louisiana.  In addition, Mr. Cohn owns Arrow Pest Control of New Orleans,
Wilson and Sons Exterminating in Mobile, Alabama, and Premier Termite and Pest Control in
Florida.</P>

<P><STRONG>Executive Committee</STRONG></P>

<P>Our board of directors created an Executive Committee to facilitate management between
meetings of the full board of directors.  David M. Loflin, Waddell D. Loflin and Ross S. Bravata
comprise the Executive Committee.</P>

<P>Our bylaws provide that the Executive Committee has the authority to exercise all powers of the
board of directors, except the power:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- Declare dividends;</TD></TR>
<TR><TD>- Sell or otherwise dispose of all or substantially all of our assets;</TD></TR>
<TR><TD>- Recommend to our shareholders any action requiring their approval; and</TD></TR>
<TR><TD>- Change the membership of any committee, fill the vacancies thereon or discharge any
committee.</TD></TR></TABLE>

<P>The Executive Committee, in general, acts on all matters requiring approval of our board of
directors.</P>

<P><STRONG>Audit Committee</STRONG></P>

<P>In September 1999, our board of directors created an Audit Committee, consisting of three
members, the majority of whom must be outside directors.  The initial members of the Audit
Committee are David M. Loflin and Michael Cohn.  There is one vacancy on this committee, due
to the recent resignation of Richard N. Gill as a director.  The Audit Committee has the
responsibility to review internal controls, accounting policies and financial reporting practices, to
review the financial statements, the arrangements for, and scope of, the independent audit as well
as the results of the audit arrangement and to review the services and fees of the independent
auditors, their independence and recommend to the board of directors for its approval and for the
ratification by our shareholders the engagement of the independent auditors to serve the following
year in examining our accounts.  The Audit Committee has held two meetings.</P>

<P>The Audit Committee recommended the change in our auditors to the full board of directors.</P>

<P><STRONG>Executive Compensation</STRONG></P>

<P>The following table sets forth in summary form the compensation received during each of the last
three completed fiscal years by our Chief Executive Officer and each executive officer who
received total salary and bonus exceeding $100,000 during any of the last three fiscal years.
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Name and
Principal
Position</TD>
<TD>Year</TD>
<TD>Salary $</TD>
<TD>Bonus $</TD>
<TD>Other
Annual
Compensation $</TD>
<TD>Long-term
Compensation Awards
of Stock
Options #</TD>
<TD>All other
Compensation $</TD></TR>
<TR><TD>David M.
LoflinPresident
[Principal
Executive
Officer]</TD>
<TD>2000</TD>
<TD>$62,500(1)</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD></TD>
<TD>1999</TD>
<TD>$62,500(2)</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD></TD>
<TD>1998</TD>
<TD>$55,000</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Waddell D.
Loflin [Vice
President
and
Secretary]</TD>
<TD>2000</TD>
<TD>$41,667(3)</TD>
<TD>$48,000(7)</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD></TD>
<TD>1999</TD>
<TD>$41,667(4)</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD></TD>
<TD>1998</TD>
<TD>$48,000</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>James
Kaufman[Vice President
- Corporate
Development]</TD>
<TD>2000</TD>
<TD>$103,000(5)</TD>
<TD>$71,000(8)</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD></TD>
<TD>1999</TD>
<TD>$103,000(6)</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD></TD>
<TD>1998</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Julius W.
Basham,
II[Former
Chief
Operating
Officer]</TD>
<TD>2000</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD></TD>
<TD>1999</TD>
<TD>$133,762</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD></TD>
<TD>1998</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Robert A.
Hart IV
[Vice
President -
Technology]</TD>
<TD>2000</TD>
<TD>$500,000(9)</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD></TD>
<TD>1999</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD></TD>
<TD>1998</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>$-0-</TD>
<TD>0</TD>
<TD>$-0-</TD></TR>
<TR><TD>________</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>(1) $27,083 of this amount has been accrued.</TD></TR>
<TR><TD>(2) $27,083 of this amount has been accrued.</TD></TR>
<TR><TD>(3) $10,417 of this amount has been accrued.</TD></TR>
<TR><TD>(4) $10,417 of this amount has been accrued.</TD></TR>
<TR><TD>(5) $20,667 of this amount has been accrued.</TD></TR>
<TR><TD>(6) $20,667 of this amount has been accrued; $82,666 of this amount was paid in shares of our
stock.</TD></TR>
<TR><TD>(7) This bonus was paid by the issuance of 200,000 shares to Mr. Loflin, which were valued at
$.24 per share, the last closing price of our common stock prior to the issuance.</TD></TR>
<TR><TD>(8) This bonus was paid by the issuance of 300,000 shares to Mr. Kaufman, which were valued
at $.24 per share, the last closing price of our common stock prior to the issuance.</TD></TR>
<TR><TD>(9) Mr. Hart received 250,000 shares of our common stock as a signing bonus under the terms
of his employment agreement.  These shares were valued at $2.00 per share.</TD></TR></TABLE>

<P>In May 2000, we issued 250,000 shares to Robert A. Hart IV, our vice president of technology, as
a bonus, upon the execution of his employment agreement.  These shares were valued at $2.00 per
share, which was the closing price of our common stock on the day of Mr. Hart's execution of his
employment agreement.</P>

<P>In December 2000, two of our vice presidents, Waddell D. Loflin and James Kaufman, were
issued shares of our common stock as a bonus.  Mr. Loflin was issued 200,000 shares and Mr.
Kaufman was issued 300,000 shares.  These shares were valued at $.24 per share, which was the
closing sale price of our common stock on the day immediately preceding their issuance.</P>

<P><STRONG>Compensation of Directors</STRONG></P>

<P>In March 1998, four of our directors, Waddell Loflin, Ross S. Bravata, Richard N. Gill and
Michael Cohn, were issued 20,000 shares each of our common stock as a bonus for their services
as directors.  These shares were valued at $.80 per share by the board of directors; however, for
financial reporting purposes, these shares were valued at $.56 per share, the last closing bid price
for our common stock prior to issuance.</P>

<P>No other compensation has been paid to any of our directors for their services as directors.  It is
possible that our management could begin to pay our directors for meetings attended or grant a
small number of stock options for their services.  However, no specific determination in this
regard has been made.</P>

<P><STRONG>Employment Contracts and Termination of Employment and Change-in-Control
Agreements</STRONG></P>

<P>Each of our officers have entered into employment agreement, as well as confidentiality
agreements and agreements not to compete.
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Name of Officer</TD>
<TD>Position(s)</TD>
<TD>Term</TD>
<TD>Salary</TD>
<TD>Date</TD></TR>
<TR><TD>David M. Loflin</TD>
<TD>President</TD>
<TD>7 years</TD>
<TD>$150,000(1)</TD>
<TD>6/1/99</TD></TR>
<TR><TD>Waddell D. Loflin</TD>
<TD>Vice President
and Secretary</TD>
<TD>7 years</TD>
<TD>$100,000(2)</TD>
<TD>6/1/99</TD></TR>
<TR><TD>Robert A. Hart
IV</TD>
<TD>Vice President of
Technology</TD>
<TD>3 years</TD>
<TD>$90,000(3)</TD>
<TD>5/25/00</TD></TR>
<TR><TD>James Kaufman</TD>
<TD>Vice President,
Corporate
Development</TD>
<TD>1 year</TD>
<TD>$120,000(4)</TD>
<TD>3/22/99</TD></TR>
<TR><TD>____________</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>(1) Mr. Loflin has agreed to defer payment of a portion of his salary until we are able to pay it.
As at December 31, 2000, we owed Mr. Loflin deferred salary in the amount of $54,166.</TD></TR>
<TR><TD>(2) Mr. Loflin has agreed to defer payment of a portion of his salary until we are able to pay it.
As at December 31, 2000, we owed Mr. Loflin deferred salary in the amount of $20,834.</TD></TR>
<TR><TD>(3) Mr. Hart will begin to receive salary payments at such time as we obtain a significant capital
investment.  Mr. Hart received 250,000 shares of our stock as a signing bonus, which shares
were valued at $500,000.  The value of these shares was derived from the closing price for our
stock on the date of execution of his employment agreement.</TD></TR>
<TR><TD>(4) Mr. Kaufman has agreed to defer payment of a portion of his salary until we are able to pay
it.  As at December 31, 2000, we owed Mr. Kaufman deferred salary in the amount of $41,334,
80% of which is payable in shares of our stock.  In 2000, we issued Mr. Kaufman a total of
34,536 shares of our stock valued at $154,667 in payment of the stock portion of his salary.</TD></TR></TABLE>

<P>In January 1999, we entered into an employment agreement with Julius W. Basham, II, formerly a
director and our former chief operating officer.  Pursuant to the terms of a settlement agreement,
Mr. Basham resigned as chief operating officer on January 4, 2000.</P>

<P>In November 2000, we terminated the employment of Darrell Davis, formerly Vice President of
U.S. Internet Operations, based on violations of his employment agreement.  (See "Litigation" for
a discussion of Mr. Davis' termination).</P>

<P>In December 2000, we terminated the employment of Christopher L. Wiebelt, formerly Vice
President of Finance and Chief Financial Officer, based on violations of his employment
agreement.  (See "Litigation" for a discussion of Mr. Wiebelt's termination).</P>

<P>We have no compensatory plan or arrangement that results or will result from the resignation,
retirement or any other termination of an executive officer's employment or from a change in
control or a change in an executive officer's responsibilities following a change-in-control.</P>

<P><STRONG>Option/SAR Grants in Last Fiscal Year</STRONG></P>

<P>We have never granted any stock appreciation rights (SARs), nor do we expect to grant any SARs
in the foreseeable future.</P>

<P><STRONG>Section 16(a) Beneficial Ownership Reporting Compliance</STRONG></P>

<P>We became subject to the provisions of Sections 16(a) of the Securities Exchange Act of 1934 on
October 14, 1999. Section 16(a) requires directors, executive officers and persons who own more
than 10% of our outstanding common stock to file with the SEC an Initial Statement of Beneficial
Ownership of Securities (Form 3) and Statements of Changes of Beneficial Ownership of
Securities (Form 4).  Directors, executive officers and greater-than-10% shareholders are required
by SEC regulation to furnish copies to us of all Section 16(a) forms they file.</P>

<P>Based on a review of copies of these reports furnished to us, we believe that all of our directors,
executive directors and greater-than-10% beneficial owners filed their respective Form 3 reports;
all of the Form 3 reports were filed late.  Form 5 reports for 1999 and 2000 for all officers and
directors are due and have not yet been filed.  Form 4 reports for certain of our officers and
directors are due and have not yet been filed.  We have requested that all of these persons file the
required reports.</P>

<P>Based on a review of the copies of these reports furnished to us, it appears that Julius W. Basham,
II, a former officer, director and 10%-owner, is current in his filings of required Forms 4 and
Form 5 and is no longer required to file ownership reports.  </P>

<P><STRONG>Indemnification of Directors and Officers</STRONG></P>

<P>Article X of the Articles of Incorporation of USURF America provides that no director or officer
shall be personally liable to USURF America or its shareholders for damages for breach of
fiduciary duty as a director or officer; provided, however, that such provision shall not eliminate
or limit the liability of a director or officer for (1) acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law or (2) the payment of dividends in violation of
law.  Any repeal or modification of Article X shall be prospective only and shall not adversely
affect any right or protection of a director or officer of USURF America existing at the time of
such repeal or modification for any breach covered by Article X which occurred prior to any such
repeal or modification.  The effect of Article X is that directors and officers will experience no
monetary loss for damages arising out of actions taken (or not taken) in such capacities, except
for damages arising out of intentional misconduct, fraud or a knowing violation of law, or the
payment of dividends in violation of law.</P>

<P>As permitted by Nevada law, our bylaws provide that we will indemnify our directors and officers
against expense and liabilities they incur to defend, settle or satisfy any civil, including any action
alleging negligence, or criminal action brought against them on account of their being or having
been directors or officers unless, in any such action, they are judged to have acted with gross
negligence or willful misconduct.  Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers or control persons
pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such
indemnification is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.</P>

<P><STRONG>CERTAIN TRANSACTIONS</STRONG></P>

<P><STRONG>Founders</STRONG></P>

<P>In November 1996, David M. Loflin purchased 1,600,000 shares of our common stock for $1,600
and Waddell D. Loflin, purchased 200,000 shares of our common stock for $200.</P>

<P><STRONG>Conversion of Loans to Stock by Officer</STRONG></P>

<P>As of August 21, 2000, we owed Mr. Loflin a total of $967,703 ($916,045 in principal, $51,658
in interest), the result of cash loans made to us by Mr. Loflin during the past approximately two
years.  The proceeds of these loans were used primarily for operating expenses and purchases of
equipment.  On August 21, 2000, we entered into a letter agreement with our president, David M.
Loflin, whereby Mr. Loflin agreed to convert all sums owed to him into shares of our common
stock.</P>

<P>Pursuant to the letter agreement, Mr. Loflin received one share of common stock for every $1.25
of debt converted, for a total of 774,162 shares.  The $1.25 price was agreed upon as that price
was the low sale price for our common stock on Friday, August 18, 2000, as reported by AMEX.</P>

<P>Our board of directors, in authorizing the transaction described above, found the transaction to be
in the best interest of USURF America, as it would significantly improve our financial condition,
potentially making it more attractive to prospective investors.</P>

<P><STRONG>Subscription Agreements</STRONG></P>

<P>In December 1996, we entered into a subscription agreement with David M. Loflin, whereby we
issued 1,578,512 shares of our common stock to Mr. Loflin in exchange for assignments of
licenses and leases of licenses of television channels and wireless cable television channels and
options to acquire these assets.</P>

<P>These assets were valued at $1,826,873, which was determined pursuant to a market report and
appraisal prepared by Broadcast Services International, Inc., Sacramento, California.  A more
complete description of this appraisal appears below, under the heading "Appraisal".  Mr. Loflin's
total acquisition costs of these assets are unknown.  Accordingly, our financial statements
attribute no value to these assets.</P>

<P>Also in December 1996, we entered into a subscription agreement with Waddell D. Loflin,
whereby we issued 104,249 shares of our common stock to Mr. Loflin in exchange for an
assignment of the license of a television channel.</P>

<P>These assets were valued at $120,652, which was determined pursuant to the appraisal described
above.  Mr. Loflin's acquisition costs of these assets are unknown.  Accordingly, our financial
statements attribute no value to these assets.</P>

<P><STRONG>Reorganizations</STRONG></P>

<P>Effective December 31, 1996, we entered into an agreement and plan of reorganization, whereby
we purchased television station K13VE Channel 13 in Baton Rouge, Louisiana.  In this
transaction, David M. Loflin received 227,336 shares of our common stock for his ownership in
this television station.  The television station was valued at $263,106, which was determined
pursuant to the appraisal described above.  Mr. Loflin's acquisition costs relating to the rights to
K13VE Channel 13 were $6,750.  An additional $10,587 in costs was capitalized.</P>

<P>Effective December 31, 1996, we entered into an agreement and plan of reorganization, whereby
we purchased licenses and leases of licenses of wireless cable television channels in Poplar Bluff,
Missouri, and Lebanon, Missouri.  In this transaction, David M. Loflin received 1,179,389 shares
of our common stock valued at $1,364,553; Ross S. Bravata, one of our directors, received
42,887 shares of our common stock valued at $49,620; and Michael Cohn, one of our directors,
received 53,608 shares of our common stock valued at $62,024.  The values assigned to the assets
acquired from Messrs. Loflin, Bravata and Cohn were determined pursuant to the appraisal
described above.  The acquisition cost of these assets was $179,611, which is reflected in our
financial statements.  At the time of this transaction, Messrs. Bravata and Cohn were not
directors.</P>

<P><STRONG>Securities Purchases</STRONG></P>

<P>In March 1997, Michael Cohn purchased 20,000 shares of our common stock for $50,000 in cash.
At the time of this transaction, Mr. Cohn was not a director.</P>

<P>In January 1999, Mr. Cohn purchased 30,000 units of our securities in a private offering, at a
purchase of $4.50 per unit, or $135,000 in the aggregate.  Each unit purchased by Mr. Cohn
consisted of one share of our common stock and one common stock purchase warrant to purchase
one share of our common stock at an exercise price of $7.00 per share.  Mr. Cohn purchased units
on the same terms and conditions as were offered to unaffiliated persons.</P>

<P>In November 1999, Mr. Cohn purchased 50,000 units of our securities in a private offering, at a
purchase of $3.00 per unit, or $150,000 in the aggregate.  Each unit purchased by Mr. Cohn
consisted of one share of our common stock and one common stock purchase warrant to purchase
one share of our common stock at an exercise price of $7.00 per share.  Mr. Cohn purchased units
on the same terms and conditions as were offered to unaffiliated investors.</P>

<P><STRONG>Stock Bonus - Officers</STRONG></P>

<P>In May 2000, one of our vice presidents, Robert A. Hart IV, was issued 250,000 shares of our
common stock as an employment agreement signing bonus.  These shares were valued at
$500,000, or $2.00 per share, pursuant to the terms of the Mr. Hart's employment agreement.</P>

<P>In December 2000, two of our vice presidents, Waddell D. Loflin and James Kaufman, were
issued shares of our common stock as a bonus.  Mr. Loflin was issued 200,000 shares and Mr.
Kaufman was issued 300,000 shares.  These shares were valued at $119,000, or $.24 per share,
which was the closing sale price of our common stock on the day immediately preceding their
issuance.</P>

<P><STRONG>Stock Bonus - Directors</STRONG></P>

<P>In March 1998, four of our directors, Waddell Loflin, Ross S. Bravata, Richard N. Gill and
Michael Cohn, were issued 20,000 shares each of our common stock as a bonus for their services
as directors.  These shares were valued by the board of directors at $.80 per share. However, for
financial reporting purposes, these shares were valued at $.56 per share, the last closing bid price
for our common stock prior to issuance.</P>

<P><STRONG>Employment Agreements</STRONG></P>

<P>Each of our officers have entered into employment agreement, as well as confidentiality
agreements and agreements not to compete.
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Name of Officer</TD>
<TD>Position(s)</TD>
<TD>Term</TD>
<TD>Salary</TD>
<TD>Date</TD></TR>
<TR><TD>David M. Loflin</TD>
<TD>President</TD>
<TD>7 years</TD>
<TD>$150,00(1)</TD>
<TD>6/1/99</TD></TR>
<TR><TD>Waddell D. Loflin</TD>
<TD>Vice President
and Secretary</TD>
<TD>7 years</TD>
<TD>$100,000(2)</TD>
<TD>6/1/99</TD></TR>
<TR><TD>Robert A. Hart
IV</TD>
<TD>Vice President of
Technology</TD>
<TD>3 years</TD>
<TD>$90,000(3)</TD>
<TD>5/25/00</TD></TR>
<TR><TD>James Kaufman</TD>
<TD>Vice President,
Corporate
Development</TD>
<TD>1 year</TD>
<TD>$120,000(4)</TD>
<TD>3/22/99</TD></TR>
<TR><TD>____________</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>(1) Mr. Loflin has agreed to defer payment of a portion of his salary until we are able to pay it.
As at December 31, 2000, we owed Mr. Loflin deferred salary in the amount of $54,166.</TD></TR>
<TR><TD>(2) Mr. Loflin has agreed to defer payment of a portion of his salary until we are able to pay it.
As at December 31, 2000, we owed Mr. Loflin deferred salary in the amount of $20,834.</TD></TR>
<TR><TD>(3) Mr. Hart will begin to receive salary payments at such time as we obtain a significant capital
investment.  Mr. Hart received 250,000 shares of our stock as a signing bonus, which shares
were valued at $500,000.  The value of these shares was derived from the closing price for our
stock on the date of execution of his employment agreement.</TD></TR>
<TR><TD>(4) Mr. Kaufman has agreed to defer payment of a portion of his salary until we are able to pay
it.  As at December 31, 2000, we owed Mr. Kaufman deferred salary in the amount of $41,334,
80% of which is payable in shares of our stock.  In 2000, we issued Mr. Kaufman a total of
34,536 shares of our stock valued at $154,667 in payment of the stock portion of his salary.</TD></TR></TABLE>

<P>In January 1999, we entered into an employment agreement with Julius W. Basham, II, formerly a
director and our former chief operating officer.  Pursuant to the terms of a settlement agreement,
Mr. Basham resigned as chief operating officer on January 4, 2000.</P>

<P>In May 2000, we issued 250,000 shares to Robert A. Hart IV, our vice president of technology, as
a bonus, upon the execution of his employment agreement.  These shares were valued at $2.00 per
share, which was the closing price of our common stock on the day of Mr. Hart's execution of his
employment agreement.</P>

<P>In November 2000, we terminated the employment of Darrell Davis, formerly Vice President of
U.S. Internet Operations, based on violations of his employment agreement.  (See "Litigation" for
a discussion of Mr. Davis' termination).</P>

<P>In December 2000, we terminated the employment of Christopher L. Wiebelt, formerly Vice
President of Finance and Chief Financial Officer, based on violations of his employment
agreement.  (See "Litigation" for a discussion of Mr. Wiebelt's termination).</P>

<P><STRONG>Voting Agreement</STRONG></P>

<P>On January 29, 1999, David W. Loflin, Waddell D. Loflin, Julius W. Basham, David W. Brown
and Wm. Kim Stimpson entered into a voting agreement, whereby all of these persons are
required to vote all shares owned by them for David M. Loflin and Waddell D. Loflin in all
elections of directors of USURF America.  Currently, approximately 4,100,000 shares are subject
to this voting agreement.  This amount of stock represents approximately 21% of our currently
outstanding shares.</P>

<P><STRONG>Settlement Agreement</STRONG></P>

<P>On November 30, 1999, we entered into a settlement agreement and mutual release, which settled
certain legal proceedings in which USURF America and CyberHighway, had been involved.  The
parties to the settlement agreement were: USURF America, CyberHighway, Julius W. Basham, II,
William Kim Stimpson and David W. Brown.</P>

<P>Under the settlement agreement, the following legal proceedings have been settled in full:  (1)
David W. Brown, Plaintiff v. USURF America, Inc. and Cyberhighway, Inc., Defendants, in the
District Court of the Fourth Judicial District of the State of Idaho, in and for the County of Ada,
Civil Case No. CV OC 9904230D; (2) Julius W. Basham, II, Individual Plaintiff, David W.
Brown, William Kim Stimpson, Individuals, Involuntary Party Plaintiffs v. USURF America, Inc.,
formerly known as Internet Media, Inc., in the District Court of the Fourth Judicial District of the
State of Idaho, in and for the County of Ada, Civil Case No. CVOC 9904382D; and (3) David W.
Brown, Claimant v. Cyberhighway, Inc., Respondent, Industrial Commission, State of Idaho,
IDOL 3362-1999.</P>

<P>Other material terms of the settlement agreement include:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- each and every of the claims made in the legal proceedings described above by Basham,
Stimpson and Brown were dismissed with prejudice and any other potential claims of Basham,
Stimpson and Brown against USURF America and/or CyberHIghway released;</TD></TR>
<TR><TD>- USURF America and CyberHighway released any and all claims against Basham, Stimpson
and Brown;</TD></TR>
<TR><TD>- Basham, Stimpson and Brown each reaffirmed their existing agreements not to compete, with
the exception that Brown is now able to seek any employment opportunity, except that Brown
remains prohibited from working for any person or entity engaged in the 2.4 GHz wireless
Internet access industry;</TD></TR>
<TR><TD>- Basham, Stimpson and Brown each reaffirmed their existing confidentiality agreements in their
entirety;</TD></TR>
<TR><TD>- USURF America delivered a total of 340,000 shares of common stock, as follows: 215,000
shares to Basham; 34,000 shares to Stimpson; and 91,000 shares to Brown; these shares were
valued at $2.6875 per share, $913,750 in the aggregate;</TD></TR>
<TR><TD>- Basham resigned as chief operating officer of USURF America;</TD></TR>
<TR><TD>- USURF America paid, as reimbursement for attorneys fees incurred by Basham, Stimpson and
Brown, the total sum of $43,325 to the law firm of Givens Pursley, Boise, Idaho;</TD></TR>
<TR><TD>- each of Basham, Stimpson and Brown acknowledged that the voting agreement among
Basham, Stimpson, Brown, David M. Loflin and Waddell D. Loflin remained in full force and
effect; and</TD></TR>
<TR><TD>- nothing contained in the settlement agreement is construed as an admission of liability by any
party to the settlement agreement.</TD></TR></TABLE>

<P>For a discussion on the financial impact of the settlement agreement, please see "Management's
Discussion and Analysis of Financial Condition and Results of Operations".</P>

<P>The board of directors determined that entering into the settlement agreement was in the best
interest of USURF America.</P>

<P><STRONG>H + N Partners</STRONG></P>

<P>During 1998, we issued a total of 187,000 shares of our common stock to H + N Partners, a
fictitious name division of B. Edward Haun &amp; Company, a Denver, Colorado-based investment
banking and research firm in which James Kaufman, our Vice President - Corporate Development,
was a partner.  Mr. Kaufman received a portion of the shares issued to H + N Partners.  37,000 of
the shares were valued at $2.00 per share and 150,000 of the shares were valued at $2.50 per
share.  All of the shares issued to H+N Partners were the subject of effective registration
statements filed with the SEC.  Mr. Kaufman was not an officer at the time of the stock issuances
to H + N Partners.</P>

<P>Also during 1998, in connection with a private offering of our securities, we issued  to H + N
Partners 56,667 warrants to purchase a like number of shares of our common stock at an exercise
price of $1.25 per share and 56,667 warrants to purchase a like number of shares of our common
stock at an exercise price of $1.50 per share.  H+N Partners is a selling shareholder under this
prospectus as to all of the shares underlying these warrants.  Mr. Kaufman was not an officer at
the time of the warrant issuances to H + N Partners.</P>

<P><STRONG>Fusion Capital Consulting Agreement</STRONG></P>

<P>On January 12, 2001, we entered into a one-year consulting agreement with Fusion Capital,
pursuant to which Fusion Capital agreed to provide operational and strategic consulting services.
Fusion Capital will receive 10,000 shares of our common stock during each month of this
agreement and reimbursement for expenses. </P>

<P><STRONG>Appraisal</STRONG></P>

<P>Background.  The appraisal referred to above was prepared by Broadcast Services International,
Inc., a now-defunct Sacramento, California-based communications appraisal firm.  The report of
Broadcast Services was based on 1990 Census Data.  With respect to the wireless cable markets,
the engineering studies relied upon by Broadcast Services indicate the number of households
within the broadcast radius using the 1200 MHZ frequency.  The 1200 MHZ frequency was
assumed, due to Broadcast Service's experience that, given all of the variables that may be present
in a market-by-market system build-out, the actual benchmark performance is more truly reflected
by using the higher (1200 MHZ) frequency, such that the signal attenuation is not over-stated.
Valuation formulas for the wireless cable markets were based on initial public offerings within the
wireless cable industry during the past three years.  The formulas used in evaluation of the
broadcast channels were based on recent sales and market evaluation techniques employed by the
Community Broadcasters Association, among others.</P>

<P>Use of Appraisal.  At our inception, the board of directors adopted a plan that provided that our
initial capitalization be 6,000,000 shares.  1,800,000 of these shares were sold as founders' stock
and 360,000 shares were sold to a public company for distribution as a dividend.  The balance of
these shares, 3,840,000 shares, were to be utilized to acquire assets, which were acquired
pursuant to the subscription agreements  and the reorganization agreements described above. The
board of directors utilized the appraisal as a means to allocate the 3,840,000 shares among the
assets acquired, as follows:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Transaction</TD>
<TD>Appraised Value
of Assets
Acquired</TD>
<TD>Shares of
Common Stock
Issued</TD>
<TD>Current
Percentage of
Outstanding
Shares</TD>
<TD>Historical Cost of
Assets</TD></TR>
<TR><TD>Subscription
Agreement with
David M. Loflin</TD>
<TD>$1,826,873</TD>
<TD>1,578,512</TD>
<TD>8.08%</TD>
<TD>Unknown(1)</TD></TR>
<TR><TD>Subscription
Agreement with
Waddell D. Loflin</TD>
<TD>120,652</TD>
<TD>104,249</TD>
<TD>less than 1%</TD>
<TD>Unknown(1)</TD></TR>
<TR><TD>First
Reorganization</TD>
<TD>263,106</TD>
<TD>227,336</TD>
<TD>1.16%</TD>
<TD>$17,337</TD></TR>
<TR><TD>Second
Reorganization</TD>
<TD>2,233,555</TD>
<TD>1,929,903</TD>
<TD>9.88%</TD>
<TD>$179,611</TD></TR>
<TR><TD>____________</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>(1) These historical costs could not be determined by our original independent auditor, due to
the lack of reliable cost records associated with the underlying assets.  Consequently, no value
was assigned to these assets, for financial statement purposes.</TD></TR></TABLE>

<P>The apparent $1.157 per share value was determined by dividing the 3,840,000 shares of our
common stock allocated by the board of directors for asset acquisition into the $4,444,186 total
appraised value of the assets acquired.  The board of directors utilized this apparent per share
value for corporate purposes, that is, the determination of consideration received for the issuance
of shares of our common stock.  However, the independent appraiser did not value the shares of
our common stock issued in consideration of the assets acquired.  Rather, the independent
appraiser valued only the assets acquired by us in the various transactions.  The $1.157 per share
figure was utilized by the board of directors primarily as a means of allocating the 3,840,000
shares among the four asset acquisition transactions consummated in completing its plan for our
initial capitalization.  Thus, the $1.157 figure, while utilized in two ways by the board of directors,
was determined arbitrarily by the board of directors and is not based on any accounting or other
financial criteria.</P>

<P>The appraised value of the assets described above bears no relationship to the costs of the assets
to the affiliates from whom they were acquired.</P>

<P><STRONG>PRINCIPAL SHAREHOLDERS</STRONG></P>

<P>There are 20,086,770 shares of our common stock issued and outstanding.  The following table
sets forth certain information regarding the current beneficial ownership of our common stock,
and after giving effect to the issuance of all 3,447,727 shares of common stock underlying
currently outstanding and exercisable options and warrants by (i) persons known to be beneficial
owners of more than 5% of our common stock, (ii) each our officers and directors and (iii) our
officers and directors, as a group.  Unless otherwise noted, the address of the listed persons is
8748 Quarters Lake Road, Baton Rouge, Louisiana 70809.
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Name and
Address of
Beneficial Owner</TD>
<TD>Shares Owned
Beneficially</TD>
<TD>Percent Owned(1)</TD>
<TD>Shares Owned
Beneficially</TD>
<TD>Percent
Owned(1)</TD></TR>
<TR><TD>David M.
Loflin(2)</TD>
<TD>3,250,960</TD>
<TD>13.81%</TD>
<TD>3,250,960</TD>
<TD>13.81%</TD></TR>
<TR><TD>Waddell D.
Loflin(2)</TD>
<TD>290,000</TD>
<TD>1.23%</TD>
<TD>290,000</TD>
<TD>1.23%</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>James Kaufman</TD>
<TD>575,000</TD>
<TD>2.44%</TD>
<TD>575,000</TD>
<TD>2.44%</TD></TR>
<TR><TD>665 W. Velarde
Drive</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Thousand Oaks,
CA 91360</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Robert A. Hart
IV</TD>
<TD>250,000</TD>
<TD>1.06%</TD>
<TD>250,000</TD>
<TD>1.06%</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Ross S. Bravata</TD>
<TD>32,000</TD>
<TD>less than 1%</TD>
<TD>32,000</TD>
<TD>less than 1%</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Michael Cohn</TD>
<TD>209,000(3)</TD>
<TD>less than 1%</TD>
<TD>79,000(4)</TD>
<TD>less than 1%</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Fusion Capital
Fund II, LLC</TD>
<TD>1,445,000(5)</TD>
<TD>6.14%</TD>
<TD>1,445,000</TD>
<TD>6.14%</TD></TR>
<TR><TD>222 Merchandise
Mart Plaza</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Suite 9-112</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Chicago, IL
60654</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Shelter Capital
Ltd.</TD>
<TD>1,328,000(6)</TD>
<TD>5.64%</TD>
<TD>25,000(7)</TD>
<TD>less than 1%</TD></TR>
<TR><TD>P.O. Box 635</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Providenciales</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Turks and Caicos
Islands</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>British West
Indies</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Claymore Asset
Management Ltd.</TD>
<TD>1,680,000(8)</TD>
<TD>7.13%</TD>
<TD>0</TD>
<TD>0%</TD></TR>
<TR><TD>P.O. Box 64</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Providenciales</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Turks and Caicos
Islands</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>British West
Indies</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>All officers and
directors as a
group (6 persons)</TD>
<TD>4,606,960(4)</TD>
<TD>19.57%</TD>
<TD>4,476,960</TD>
<TD>19.02%</TD></TR>
<TR><TD>____________</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>(1)  Based on 23,534,497 shares outstanding, assuming the issuance of all 3,447,727 shares
underlying currently outstanding and exercisable warrants.</TD></TR>
<TR><TD>(2)  All of the shares owned by this shareholder are subject to a voting agreement and must be
voted for David M. Loflin and Waddell D. Loflin, in all elections of directors; approximately
4,100,000 shares are currently subject to this voting agreement.</TD></TR>
<TR><TD>(3) 80,000 of these shares have not been issued, but underlie currently exercisable warrants.</TD></TR>
<TR><TD>(4) Assumes 80,000 shares underlying warrants are purchased and sold and 50,000 shares
currently owned are sold by Mr. Cohn under this prospectus.</TD></TR>
<TR><TD>(5) 800,000 of these shares may not be sold by Fusion Capital until the earliest of the
termination of the Fusion Capital agreement, default under the Fusion Capital agreement or
approximately 25 months from the date hereof.  645,000 of these shares have not been issued,
but underlie currently exercisable warrants.</TD></TR>
<TR><TD>(6) 960,000 of these shares have not been issued, but underlie currently exercisable warrants.</TD></TR>
<TR><TD>(7) Assumes 960,000 shares underlying warrants are purchased and sold and 343,000 shares
currently owned are sold by Shelter Capital Ltd. under this prospectus.</TD></TR>
<TR><TD>(8) 840,000 of these shares have not been issued, but underlie currently exercisable warrants.</TD></TR>
<TR><TD>(9) Assumes 840,000 shares underlying warrants are purchased and sold and 840,000 shares
currently owned are sold by Claymore Asset Management Ltd. under this prospectus.</TD></TR></TABLE>

<P><STRONG>LITIGATION</STRONG></P>

<P><STRONG>Net 1 Acquisition Transaction</STRONG></P>

<P>In September 1999, we tendered the acquired shares of capital stock of Net 1, Inc. for rescission.
We had intended to commence arbitration to pursue our rescission claim.  However, one of the
former owners of Net 1, Knud Nielsen, III, instituted arbitration, through the American
Arbitration Association, and sought to enforce certain registration rights associated with a portion
of the shares of our common stock received by him in the acquisition transaction.  We presented
the rescission claim as a counterclaim in the arbitration proceeding.  In October 2000, this
litigation was settled, with the acquisition being rescinded in its entirety.  We issued 250,000
shares of our common stock to the former owners of Net 1 in settlement of certain claims. These
shares were valued at $961,436.</P>

<P><STRONG>CyberHighway Involuntary Bankruptcy</STRONG></P>

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

<P><STRONG>Other Litigation</STRONG></P>

<P>In November 2000, CyberHighway requested and received a temporary restraining order against
Darrell Davis, formerly one of our officers, and his wife, Deanna Davis.  We have alleged that the
Davises have diverted dial-up customers from CyberHighway to a company controlled by him, all
while he was an employee of USURF America.  We expect that a hearing for our motion for a
permanent injunction will occur in the very near future.  In addition, we are seeking monetary
damages in this action.  This case is in its early stages and no prediction as to its final outcome can
be made.  This case is styled: CyberHighway, Inc. versus Deanna Davis, individually and d/b/a
Cyber-Trail, Inc., and Darrell D. Davis, 19th Judicial District Court, Parish of East Baton Rouge,
State of Louisiana.  Patrick F. McGrew, Esquire, is our counsel in this case.</P>

<P>In January 2000, we instituted arbitration proceedings against Christopher L. Wiebelt, our former
vice president of finance and chief financial officer.  We have alleged that Mr. Wiebelt violated
certain terms of his employment agreement and are seeking damages resulting from those
violations.  This case is in its early stages and no prediction as to its outcome can be made. This
case is styled: USURF America, Inc. versus Christopher L. Wiebelt, American Arbitration
Association, Case No. 71-160-00087-01.  The law firm of Newlan &amp; Newlan is our counsel in this
proceeding.</P>

<P><STRONG>Possible Claim</STRONG></P>

<P>Some time in the future, it is possible that we will enter into arbitration proceedings with
Commonwealth Associates.  The dispute revolves around Commonwealth's claim that we owe it
approximately 127,000 shares of our common stock.  It is our position that Commonwealth is
entitled to any shares and will vigorously defend our position in arbitration.  We cannot predict the
outcome of this arbitration proceeding.</P>

<P><STRONG>Potential Legal Proceeding</STRONG></P>

<P>In addition to CyberHighway's cause of action against Dialup USA, it is the intention of USURF
America to pursue damage claims against Dialup USA for tortiously interfering with the beneficial
business relationships between CyberHighway and its customers.  These claims arise out of Dialup
USA's actions on behalf of one of our former officers, which were designed to divert customers to
a company controlled by him.  Our claim against Dialup USA will be for approximately $2 million.
We have not established a date by which we intend to commence this legal proceeding. </P>

<P><STRONG>PLAN OF DISTRIBUTION</STRONG></P>

<P><STRONG>General</STRONG></P>

<P>The shares of common stock offered by this prospectus are being offered by the selling
shareholders, Fusion Capital Fund II, LLC and Gruntal &amp; Co., L.L.C.  The common stock may be
resold or distributed from time to time by the selling shareholders directly to one or more
purchasers or through brokers, dealers or underwriters who may act solely as agents or may
acquire such common stock as principals, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, at negotiated prices, or at fixed prices, which may be
changed. The sale of the common stock offered by this prospectus may be effected in one or more
of the following methods:</P>

<P>- ordinary brokers' transactions;</P>

<P>- transactions involving cross or block trades or otherwise on the American Stock Exchange;</P>

<P>- purchases by brokers, dealers or underwriters as principal and resale by such purchasers for their
own accounts pursuant to this prospectus;</P>

<P>- "at the market" to or through market makers or into an existing market for the common stock;</P>

<P>- in other ways not involving market makers or established trading markets, including direct sales
to purchasers or sales effected through agents;</P>

<P>- in privately negotiated transactions; or</P>

<P>- any combination of the foregoing.</P>

<P>Please see the table on page ___ for the number of shares of our common stock that Fusion
Capital would be offering hereunder, based on purchases under the Fusion Capital agreement at
varying purchase prices.</P>

<P>In order to comply with the securities laws of certain states, if applicable, the shares may be sold
only through registered or licensed brokers or dealers. In addition, in certain states, the shares may
not be sold unless they have been registered or qualified for sale in such state or an exemption
from such registration or qualification requirement is available and complied with.<BR>
<BR>
</P>

<P>Brokers, dealers, underwriters or agents participating in the distribution of the shares as agents
may receive compensation in the form of commissions, discounts or concessions from the selling
shareholder and/or purchasers of the common stock for whom such broker-dealers may act as
agent, or to whom they may sell as principal, or both. The compensation paid to a particular
broker-dealer may be less than or in excess of customary commissions. Commissions received by
any broker may be deemed to be underwriting commissions.</P>

<P>Fusion Capital is an "underwriter" within the meaning of the Securities Act.  Any broker-dealers
who act in connection with the sale of the shares hereunder may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commissions they receive and proceeds of any
sale of the shares may be deemed to be underwriting discounts and commissions under the
Securities Act.</P>

<P>Neither we nor the selling shareholders can presently estimate the amount of compensation that
any agent will receive. We know of no existing arrangements between the selling shareholders,
any other shareholder, broker, dealer, underwriter or agent relating to the sale or distribution of
the shares.  At a time a particular offer of shares is made, a prospectus supplement, if required,
will be distributed that will set forth the names of any agents, underwriters or dealers and any
compensation from the selling shareholder and any other required information.</P>

<P>We will pay all of the expenses incident to the registration, offering and sale of the shares to the
public other than commissions or discounts of underwriters, broker-dealers or agents. We have
also agreed to indemnify Fusion Capital and related persons against specified liabilities, including
liabilities under the Securities Act.</P>

<P>Insofar as indemnification for liabilities arising under the Securities Act may be permitted to
directors, officers and controlling persons of USURF America, we have been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in the Securities Act
and is therefore, unenforceable.</P>

<P>Fusion Capital and its affiliates have agreed not to engage in any direct or indirect short selling or
hedging of our common stock during the term of the Fusion Capital agreement.</P>

<P>We have advised the selling shareholders that, while they are engaged in a distribution of the
shares included in this prospectus, they are required to comply with Regulation M promulgated
under the Securities Exchange Act of 1934, as amended. With certain exceptions, Regulation M
precludes the selling shareholders, any affiliated purchasers, and any broker-dealer or other person
who participates in such distribution from bidding for or purchasing, or attempting to induce any
person to bid for or purchase any security which is the subject of the distribution until the entire
distribution is complete. Regulation M also prohibits any bids or purchases made in order to
stabilize the price of a security in connection with the distribution of that security. All of the
foregoing may affect the marketability of the shares offered hereby this prospectus.</P>

<P>This offering will terminate on the date on which all shares offered by this prospectus have been
sold by the selling shareholders.</P>

<P><STRONG>Fusion Capital</STRONG></P>

<P>Up to 7,445,000 shares of our common stock are being offered for sale by Fusion Capital, a
selling shareholder.  Under the Fusion Capital agreement, Fusion Capital agreed to purchase up to
$10 million of our common stock. The purchase price of our common stock is based upon the
future market price of our common stock. We will implement the Fusion Capital agreement, after
the registration statement of which this prospectus is a part is effective. </P>

<P>We estimate that the maximum number of shares we will sell to Fusion Capital under the Fusion
Capital agreement will be 6,000,000. We have the right under certain conditions to suspend and/or
terminate that agreement without any payment or liability to Fusion Capital.  The Fusion Capital
agreement is described above in detail under the heading "The Fusion Capital Transaction".</P>

<P><STRONG>Gruntal &amp; Co.</STRONG></P>

<P>Gruntal &amp; Co. is also offering for sale the shares of our common stock, as listed below under the
heading "Selling Shareholders".  Gruntal &amp; Co. will receive the proceeds from the sales of its
shares of stock.  These shares of stock may be sold by Gruntal &amp; Co., from time to time, in the
same manner or manner as shares offered and sold by Fusion Capital, in the discretion of Gruntal
&amp; Co.  At the time a particular offer of shares is made by or on the behalf of Gruntal &amp; Co., a
prospectus and, to the extent required, a prospectus supplement, is required to be distributed.</P>

<P>Gruntal &amp; Co. has advised us that it will not, in any manner, participate or otherwise be involved
in the distribution of our shares of common stock to be made by Fusion Capital pursuant to this
prospectus.</P>

<P><STRONG>SELLING SHAREHOLDERS</STRONG></P>

<P>The following table assumes that each selling shareholder is offering for sale shares of common
stock previously issued or issuable by us.  We have agreed to pay all expenses in connection
therewith (other than brokerage commissions and fees and expenses of counsel of the respective
selling shareholders).  None of the selling shareholders has ever held any position with us or had
any other material relationship with us.  The following table sets forth the beneficial ownership of
the shares of the stock by each person who is a selling shareholder.  We will not receive any
proceeds from the sales of stock by the selling shareholders.
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Name of
Beneficial Owner</TD>
<TD>Shares of
Common Stock
Beneficially
Owned</TD>
<TD>Shares of
Common Stock
Being Offered</TD>
<TD>Percentage
Owned Before
Offering(1)</TD>
<TD>Percentage
Owned After
Offering(2)</TD></TR>
<TR><TD>Fusion Capital
Fund II, LLC</TD>
<TD>7,445,000(3)(4)</TD>
<TD>7,445,000</TD>
<TD>31.63%</TD>
<TD>0%</TD></TR>
<TR><TD>Gruntal &amp; Co.,
L.L.C.</TD>
<TD>611,250(5)</TD>
<TD>611,250</TD>
<TD>2.60%</TD>
<TD>0%</TD></TR>
<TR><TD>____________</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>(1) Based on 23,534,497 shares outstanding, assuming the issuance of a total of 3,447,727
shares of common stock that can be acquired by any person pursuant to any option, warrant or
other right within 60 days of the date of this prospectus, all of which are deemed outstanding for
the purpose of computing the percentage of existing shares beneficially owned by each person
listed.</TD></TR>
<TR><TD>(2)  Based on 29,534,497 shares outstanding, assuming the issuance of (A) 6,000,000 shares of
common stock under the Fusion Capital agreement and (B) all 3,447,727 shares of common
stock that can be acquired by any person pursuant to any option, warrant or other right within
60 days of the date of this prospectus, all of which are deemed outstanding for the purpose of
computing the percentage of existing shares beneficially owned by each person listed.</TD></TR>
<TR><TD>(3) Only 800,000 of these shares have been issued; 645,000 of these shares underlie currently
issued and exercisable warrants; 6,000,000 of these shares have been reserved for issuance
under the Fusion Capital agreement and have not yet been issued.</TD></TR>
<TR><TD>(4) 800,000 of these shares may not be sold by Fusion Capital until the earliest of termination of
the Fusion Capital agreement, default under the Fusion Capital agreement or approximately 25
months from the date hereof.</TD></TR>
<TR><TD>(5) 450,000 of these shares have been issued; 161,250 of these shares underlie currently issued
and exercisable warrants.</TD></TR></TABLE>

<P><STRONG>DESCRIPTION OF SECURITIES</STRONG></P>

<P><STRONG>Authorized Capital Stock</STRONG></P>

<P>Our authorized capital stock consists of 100,000,000 shares of common stock, $.0001 par value
per share.  The following description of certain provisions of our common stock does not purport
to be complete and is subject to, and qualified in its entirety by, the provisions of the our Articles
of Incorporation, as amended.</P>

<P><STRONG>Description of Common Stock</STRONG></P>

<P>There are 20,086,770 shares of our common stock outstanding.  An additional 3,447,727 shares
of common stock have been reserved for issuance pursuant to various warrants and an additional
6,000,000 shares of common stock have been reserved for issuance pursuant to the Fusion Capital
agreement.  Each share of common stock is entitled to one vote at all meetings of shareholders.
All shares of common stock are equal to each other with respect to liquidation rights and dividend
rights. There are no preemptive rights to purchase any additional shares of common stock, nor are
there any subscription, conversion or redemption rights applicable to the common stock.  Our
Articles of Incorporation, as amended, prohibit cumulative voting in the election of directors.  The
absence of cumulative voting means that holders of more than 50% of the shares voting for the
election of directors can elect all directors if they choose to do so.  In such event, the holders of
the remaining shares of common stock will not be entitled to elect any director.  A majority of the
shares entitled to vote, represented in person or by proxy, constitutes a quorum at a meeting of
shareholders.  In the event of liquidation, dissolution or winding up, holders of shares of common
stock will be entitled to receive, on a pro rata basis, all assets remaining after satisfaction of all
liabilities.</P>

<P><STRONG>Transfer Agent and Registrar</STRONG></P>

<P>Securities Transfer Corporation, Frisco, Texas, is the transfer agent and registrar for our common
stock.</P>

<P><STRONG>LEGAL MATTERS</STRONG></P>

<P>The law firm of Newlan &amp; Newlan, Lewisville, Texas, has acted as our legal counsel in connection
with the registration statement of which this prospectus forms a part and related matters.  The
partners of the firm of Newlan &amp; Newlan own a total of 668,500 shares of our common stock.</P>

<P><STRONG>EXPERTS</STRONG></P>

<P>Our financial statements for the years ended December 31, 1999 and 2000, as indicated in the
report thereon,  that appear in this prospectus have been audited by Postlethwaite &amp; Netterville,
independent auditor.  The financial statements audited by Postlethwaite &amp; Netterville, have been
included in reliance on its reports given as its authority as an expert in accounting and auditing.</P>

<P>Our financial statements for the year ended December 31, 1998, as indicated in the report thereon,
that appear in this prospectus have been audited by Weaver and Tidwell, L.L.P., independent
auditor.  The financial statements audited by Weaver and Tidwell, L.L.P., have been included in
reliance on its reports given as its authority as an expert in accounting and auditing.</P>

<P>On January 11, 2000, Weaver and Tidwell, L.L.P. was dismissed as our independent auditor.</P>

<P><STRONG>ABOUT THIS PROSPECTUS</STRONG></P>

<P>This prospectus is part of a registration statement that we filed with the SEC using a "shelf"
registration process.  Under this shelf process, the selling shareholders may sell up to an aggregate
of 7,288,864 shares of our common stock in one or more offerings.  This prospectus and any
applicable prospectus supplement provided to you should be considered together with the
additional information described under the heading "Where You Can Find More Information".
The registration statement that contains this prospectus (including exhibits to the registration
statement) contains additional information about our company and the securities offered by this
prospectus.  That registration statement can be read at the SEC web site or at the SEC offices
mentioned under the heading "Where You Can Find More Information".</P>

<P><STRONG>WHERE YOU CAN FIND MORE INFORMATION</STRONG></P>

<P>We have filed a registration statement on Form S-1 (including its exhibits and schedules) with the
SEC under the Securities Act with respect to our common stock to be sold in this offering.  This
prospectus, which is part of the registration statement, does not contain all of the information
included in the registration statement.  Certain information is omitted and you should refer to the
registration statement and its exhibits.  With respect to references made in this prospectus to any
contract, agreement or other document of USURF America, such references are not necessarily
complete and you should refer to the exhibits attached to the registration statement for copies of
the actual contract, agreement or other document. You may review a copy of the registration
statement, including exhibits, at the SEC's public reference room at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the SEC located at
Seven World Trade Center, Suite 1300, New York, New York 10048, or at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661.  Please call 1-800-SEC-0330 for
further information about the operation of the public reference rooms.  The registration statement
and our other SEC filings can also be reviewed by accessing the SEC's Internet site at
http://www.sec.gov, which contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC.</P>

<P>We file annual, quarterly and current reports, proxy statements and other information with the
SEC.  You may read and copy any reports, statements or other information on file at the public
reference rooms.  You can also request copies of these documents, for a copying fee, by writing
to the SEC.</P>

<P>We will furnish our shareholders with annual reports containing financial statements audited by
our independent auditors and to make available to our shareholders quarterly reports containing
unaudited financial data for the first three quarters of each fiscal year.</P>

<P><STRONG>INDEX TO FINANCIAL STATEMENTS</STRONG>
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Three Months Ended March 31, 2001 and 2000</TD></TR>
<TR><TD>(unaudited)</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Consolidated Balance Sheets at March 31,
2001, and December 31, 2000 (audited)</TD>
<TD>F-1</TD></TR>
<TR><TD>Consolidated Statements of Operations for the
Three Months Ended March 31, 2001 and
2000</TD>
<TD>F-3</TD></TR>
<TR><TD>Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2001 and
2000</TD>
<TD>F-4</TD></TR>
<TR><TD>Notes to Consolidated Financial Statements</TD>
<TD>F-6</TD></TR></TABLE>
<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Years Ended December 31, 2000, 1999 and 1998</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Report of Independent Auditor</TD>
<TD>F-11</TD></TR>
<TR><TD>Report of Independent Auditor</TD>
<TD>F-12</TD></TR>
<TR><TD>Consolidated Balance Sheets at December 31,
2000 and 1999</TD>
<TD>F-13</TD></TR>
<TR><TD>Consolidated Statements of Operations for the
Years Ended December 31, 2000, 1999 and
1998</TD>
<TD>F-15</TD></TR>
<TR><TD>Consolidated Statements of Changes in
Stockholders' Equity for the Years Ended
December 31, 2000, 1999 and 1998</TD>
<TD>F-16</TD></TR>
<TR><TD>Consolidated Statements of Cash Flows for the
Years Ended December 31, 2000, 1999 and
1998</TD>
<TD>F-18</TD></TR>
<TR><TD>Notes to Consolidated Financial Statements</TD>
<TD>F-20</TD></TR></TABLE>
<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>USURF AMERICA, INC. AND SUBSIDIARIES</TD></TR>
<TR><TD>CONSOLIDATED BALANCE SHEETS</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>3/31/01</TD>
<TD>12/31/00</TD></TR>
<TR><TD></TD>
<TD>(unaudited)</TD>
<TD>(audited)</TD></TR>
<TR><TD>ASSETS</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>CURRENT ASSETS</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Cash and cash equivalents</TD>
<TD>$125,494</TD>
<TD>$1,088</TD></TR>
<TR><TD>Accounts receivable - net</TD>
<TD>384</TD>
<TD>0</TD></TR>
<TR><TD>Inventory</TD>
<TD>246,721</TD>
<TD>246,721</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>Total current assets</TD>
<TD>372,599</TD>
<TD>247,809</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>PROPERTY AND
EQUIPMENT,</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Cost</TD>
<TD>138,954</TD>
<TD>138,954</TD></TR>
<TR><TD>Less: accumulated
depreciation</TD>
<TD>(81,056)</TD>
<TD>(69,476)</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD></TD>
<TD>57,898</TD>
<TD>69,478</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>INVESTMENTS</TD>
<TD>68,029</TD>
<TD>68,029</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>OTHER ASSETS</TD>
<TD>25,000</TD>
<TD>25,000</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD></TD>
<TD>25,000</TD>
<TD>25,000</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>Total assets</TD>
<TD>$523,526</TD>
<TD>$410,316</TD></TR></TABLE>

<P>F-1
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>LIABILITIES AND
STOCKHOLDERS' EQUITY</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>CURRENT LIABILITIES</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Disbursements in excess of
cash balances</TD>
<TD>42,469</TD>
<TD>42,469</TD></TR>
<TR><TD>Accounts payable</TD>
<TD>1,473,817</TD>
<TD>1,472,030</TD></TR>
<TR><TD>Accrued payroll</TD>
<TD>200,155</TD>
<TD>158,262</TD></TR>
<TR><TD>Other current liabilities</TD>
<TD>51,824</TD>
<TD>41,824</TD></TR>
<TR><TD>Property dividends payable</TD>
<TD>43,750</TD>
<TD>43,750</TD></TR>
<TR><TD>Notes payable to stockholder</TD>
<TD>32,728</TD>
<TD>6,638 </TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>Total current liabilities</TD>
<TD>1,844,743</TD>
<TD>1,764,973</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>LONG-TERM LIABILITIES</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Deferred income tax</TD>
<TD>0</TD>
<TD>0</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>Total liabilities</TD>
<TD>1,844,743</TD>
<TD>1,764,973</TD></TR>
<TR><TD>REDEEMABLE COMMON
STOCK</P>

<P>Common stock subject to
rescission, $.0001 par value,
Outstanding: 4,381,985 shares
at March 31, 2001 and
2,767,823 shares at December
31, 2000</P>

<P>Deferred consulting</TD>
<TD><BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
4,869,255 </P>

<P>0</P>

<P>----------</P>

<P>4,869,255</P>

<P>----------</TD>
<TD><BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
3,897,552 </P>

<P>(574,000)</P>

<P>---------</P>

<P>3,323,552</P>

<P>---------</TD></TR>
<TR><TD>STOCKHOLDERS' EQUITY</TD>
<TD><BR>
<BR>
</TD>
<TD></TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Common stock, $.0001 par
value; Authorized:
100,000,000; Issued and
Outstanding: 13,670,785
shares at March 31, 2001 and
13,920,985 shares at
December 31, 2000</TD>
<TD>1,367</TD>
<TD>1,392</TD></TR>
<TR><TD>Additional paid-in capital</TD>
<TD>30,262,522</TD>
<TD>30,286,687</TD></TR>
<TR><TD>Accumulated deficit</TD>
<TD>(35,403,419)</TD>
<TD>(34,502,160)</TD></TR>
<TR><TD>Subscriptions receivable</TD>
<TD>313,000</TD>
<TD>933,514</TD></TR>
<TR><TD>Deferred consulting</TD>
<TD>(1,363,942)</TD>
<TD>(1,397,642)</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD></TD>
<TD>(6,190,472)</TD>
<TD>(4,678,209)</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY</TD>
<TD>$523,526</TD>
<TD>$410,316</TD></TR></TABLE>

<P>F-2<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>USURF AMERICA, INC. AND SUBSIDIARIES</TD></TR>
<TR><TD>CONSOLIDATED STATEMENTS OF OPERATIONS</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>Three Months Ended March
31, 2001</TD>
<TD>Three Months Ended March
31, 2000</TD></TR>
<TR><TD></TD>
<TD>(unaudited)</TD>
<TD>(unaudited)</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>REVENUES</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Internet access revenues</TD>
<TD>$384</TD>
<TD>$597,392</TD></TR>
<TR><TD>Internet access costs and cost
of goods sold</TD>
<TD>0</TD>
<TD>(269,136)</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>Gross profit</TD>
<TD>384</TD>
<TD>328,256</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>OPERATING EXPENSES</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Depreciation and amortization</TD>
<TD>11,580</TD>
<TD>2,238,544</TD></TR>
<TR><TD>Professional fees</TD>
<TD>707,288</TD>
<TD>390,038</TD></TR>
<TR><TD>Rent</TD>
<TD>5,361</TD>
<TD>61,570</TD></TR>
<TR><TD>Salary and commissions</TD>
<TD>160,746</TD>
<TD>399,358</TD></TR>
<TR><TD>Advertising</TD>
<TD>0</TD>
<TD>15,179</TD></TR>
<TR><TD>Other</TD>
<TD>16,668</TD>
<TD>249,530</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>Total Operating Expenses</TD>
<TD>901,643</TD>
<TD>3,354,219</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>LOSS FROM OPERATIONS</TD>
<TD>(901,259)</TD>
<TD>(3,025,963)</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>OTHER
INCOME(EXPENSE)</TD>
<TD>0</TD>
<TD>6,618</TD></TR>
<TR><TD>Interest expense</TD>
<TD>0</TD>
<TD>(9,770)</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>LOSS BEFORE INCOME
TAX</TD>
<TD>(901,259)</TD>
<TD>(3,029,115)</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>INCOME TAX BENEFIT</TD>
<TD>0</TD>
<TD>471,519</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>NET LOSS</TD>
<TD>(901,259)</TD>
<TD>(2,557,596)</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Net loss per common share</TD>
<TD>(.06)</TD>
<TD>(0.20)</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Weighted average number of
shares outstanding</TD>
<TD>13,934,118</TD>
<TD>12,937,499</TD></TR></TABLE>

<P>F-3<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>USURF AMERICA, INC. AND SUBSIDIARIES</TD></TR>
<TR><TD>CONSOLIDATED STATEMENTS OF CASH FLOWS</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>Three Months Ended March
31, 2001</TD>
<TD>Three Months Ended March
31, 2000</TD></TR>
<TR><TD></TD>
<TD>(unaudited)</TD>
<TD>(unaudited)</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>CASH FLOWS FROM
OPERATING ACTIVITIES</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Net loss</TD>
<TD>$(901,259)</TD>
<TD>$(2,557,596)</TD></TR>
<TR><TD>Adjustment to reconcile net
loss to net cash used in
operating activities</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Depreciation and amortization</TD>
<TD>11,580</TD>
<TD>2,238,544</TD></TR>
<TR><TD>Consulting fees recognized</TD>
<TD>670,400</TD>
<TD>311,750</TD></TR>
<TR><TD>Compensation expense</TD>
<TD>3,300</TD>
<TD>24,000</TD></TR>
<TR><TD>Deferred income taxes</TD>
<TD>0</TD>
<TD>(471,519)</TD></TR>
<TR><TD>Accounts receivable</TD>
<TD>(384)</TD>
<TD>633</TD></TR>
<TR><TD>Inventory</TD>
<TD>0</TD>
<TD>6,301</TD></TR>
<TR><TD>Other current liabilities</TD>
<TD>10,000</TD>
<TD>(16,823)</TD></TR>
<TR><TD>Other assets and liabilities</TD>
<TD>0</TD>
<TD>9,276</TD></TR>
<TR><TD>Deferred revenue</TD>
<TD>0</TD>
<TD>68,051</TD></TR>
<TR><TD>Accounts payable</TD>
<TD>1,786</TD>
<TD>49,464</TD></TR>
<TR><TD>Prepaid expenses and other
current assets</TD>
<TD>0</TD>
<TD>(3,381)</TD></TR>
<TR><TD>Accrued payroll</TD>
<TD>41,893</TD>
<TD>35,521</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>Net cash used in operating
activities</TD>
<TD>(162,684)</TD>
<TD>(305,779)</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR></TABLE>

<P>F-4<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>CASH FLOWS FROM
INVESTING ACTIVITIES</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Cash acquired in acquisitions</TD>
<TD>0</TD>
<TD>7,704</TD></TR>
<TR><TD>Capital expenditures</TD>
<TD>0</TD>
<TD>(102,612)</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>Net cash used in investing
activities</TD>
<TD>0</TD>
<TD>(94,908)</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>CASH FLOWS FROM
FINANCING ACTIVITIES</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Payments on notes payable and
capital lease obligations</TD>
<TD>0</TD>
<TD>(5,910)</TD></TR>
<TR><TD>Proceeds from subscriptions
receivable</TD>
<TD>261,000</TD>
<TD>115,000</TD></TR>
<TR><TD>Proceeds from note payable to
stockholder</TD>
<TD>26,090</TD>
<TD>286,400</TD></TR>
<TR><TD>Issuance of common stock for
cash</TD>
<TD>0</TD>
<TD>0</TD></TR>
<TR><TD>Payment on note payable to
stockholder</TD>
<TD>0</TD>
<TD>(11,093)</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>Net cash provided by financing
activities</TD>
<TD>287,090</TD>
<TD>384,397</TD></TR>
<TR><TD></TD>
<TD>----------</TD>
<TD>----------</TD></TR>
<TR><TD>Net increase (decrease) in cash
and cash equivalents</TD>
<TD>124,406</TD>
<TD>(16,290)</TD></TR>
<TR><TD>Cash and cash equivalents,
beginning of period</TD>
<TD>1,088</TD>
<TD>75,313</TD></TR>
<TR><TD>Cash and cash equivalents, end
of period</TD>
<TD>125,494</TD>
<TD>59,023</TD></TR></TABLE>

<P>F-5<BR>
<BR>
<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING</TD></TR>
<TR><TD>AND OTHER CASH FLOW INFORMATION</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Three Months March 31, 2001:</TD></TR>
<TR><TD>-  In January 2001, the Company entered into a one-year consulting agreement, by issuing
200,000 shares of stock valued at $62,000.</TD></TR>
<TR><TD>-  In January 2001, the Company issued 800,000 shares of stock valued at $248,000, in payment
of a commitment fee under a common stock purchase agreement.</TD></TR>
<TR><TD>-  In January 2001, 774,162 shares were issued to the Company's president, pursuant to a debt
conversion agreement, which shares were not issued in 2000, due to an administrative error.</TD></TR>
<TR><TD></TD></TR>
<TR><TD>Three Months March 31, 2000:</TD></TR>
<TR><TD>-  In January 2000, the Company entered into a one-year legal and business consulting services
agreement, by issuing 100,000 shares of stock valued at $300,000.</TD></TR>
<TR><TD>-  In January 2000, the Company entered into a one-year business and communications
consulting services agreement, by issuing 60,000 shares of stock valued at $180,000.</TD></TR>
<TR><TD>-  In February 2000, the Company acquired all of the stock of The Spinning Wheel, Inc., by
issuing 81,063 shares of stock valued at $324,252.  This acquisition was accounted for as a
purchase business combination.</TD></TR>
<TR><TD>-  In February 2000, the Company acquired all of the ownership interests of Internet
Innovations, L.L.C., by issuing 50,000 shares of stock valued at $437,500. This acquisition was
accounted for as a purchase business combination.</TD></TR></TABLE>

<P>F-6<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>USURF AMERICA, INC.</TD></TR>
<TR><TD>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</TD></TR>
<TR><TD>Three Months Ended March 31, 2001</TD></TR>
<TR><TD>(Unaudited)</TD></TR></TABLE>

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

<P>Basis of Presentation</P>

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

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

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

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

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

<P>F-7</P>

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

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

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

<P>Principles of Consolidation</P>

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

<P>Loss Per Common Share</P>

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

<P>Note 2. Interim Consolidated Financial Statements</P>

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

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

<P>F-8</P>

<P>Note 3. Notes Payable to Shareholder
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>March 31, 2001</TD></TR>
<TR><TD></TD>
<TD>(unaudited)</TD></TR>
<TR><TD>Notes payable to majority stockholder, interest
accrues at 8%, due on demand and unsecured</TD>
<TD>$32,728</TD></TR></TABLE>

<P>Note 4. Stock Sales</P>

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

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

<P>Note 5. Other Material Stock Issuances</P>

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

<P>Note 6. Contingencies</P>

<P>A. Bankruptcy</P>

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

<P>F-9</P>

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

<P>B. Potential Rescission Claims</P>

<P>Since January 2000, a total of 4,881,985 shares of the common stock of the Company may have
been issued in violation of Section 5 of the Securities Act of 1933, as amended. The aggregate
value assigned to these shares upon their issuance totaled $5,081,255.  It is possible that each of
the issues of these shares has a potential claim for rescission of their respective issuance
transactions.</P>

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

<P>Note 7. Financing Transaction</P>

<P>On October 9, 2000, the Company signed a common stock purchase agreement with an unrelated
company to sell up to $10,000,000 of its common stock. This agreement was replaced by a similar
agreement on April 25, 2001, as amended and restated May 9, 2001. The purchase price of the
shares under this agreement will vary, based on future market prices of the Company's common
stock. The agreement calls for the Company to meet certain requirements and maintain certain
criteria with respect to its common stock in order to avoid an event of default, which includes:
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>- if for any legal reason the shares purchased cannot be sold pursuant to this prospectus for a
period of 10 consecutive trading days or for more than an aggregate of 30 trading days in any
365-day period;</TD></TR>
<TR><TD>- suspension by the American Stock Exchange of Company common stock from trading for a
period of 10 consecutive trading days or for more than an aggregate of 30 trading days in any
365-day period;</TD></TR>
<TR><TD>- the Company's failure to satisfy any listing criteria of the American Stock Exchange for a
period of 10 consecutive trading days or for more than an aggregate of 30 trading days in any
365-day period;</TD></TR>
<TR><TD>- (1) notice from the Company's transfer agent to the effect that the Company or the transfer
agent intends not to comply with a proper request for purchase of shares under the purchase
agreement; (2) the Company's failure to promptly confirm to the transfer agent the buyer's
purchase notice; or (3) the failure of the transfer agent to issue shares of common stock
promptly upon delivery of a purchase notice or upon delivery of a warrant exercise notice;</TD></TR>
<TR><TD>- any material breach of the representations or warranties or covenants contained in the purchase
agreement or any related agreements which has or which could have a material adverse affect on
the Company, subject to a cure period of 10 trading days;</TD></TR>
<TR><TD>- if the number of shares to be issued to the buyer reaches an aggregate amount that would
require shareholder approval under the principal market regulations (to the extent not previously
obtained and then required) or otherwise cause us to breach the principal market rules and
regulations;</TD></TR>
<TR><TD>- a default of any payment obligation of the Company in excess of $1.0 million; or</TD></TR>
<TR><TD>- commencement of insolvency or bankruptcy proceedings by or against the Company.</TD></TR>
<TR><TD></TD></TR></TABLE>

<P>F-10</P>

<P>Upon the occurrence of the event of default, the buyer would no longer be obligated to purchase
any additional shares of stock.  The Company is currently in compliance with these criteria and
expects to continue to comply in the future.  Also, this agreement will expire on June 30, 2001, if
all of the circumstances necessary to effect the transaction have not occurred by that date,
including completion of a registration statement with respect thereto. This registration statement is
to be filed in the near future, but may not be completed prior to the June 30, 2001, deadline. The
buyer is under no obligation to grant an extension.</P>

<P>F-11</P>

<P>INDEPENDENT AUDITORS' REPORT</P>

<P>To the Board of Directors and Stockholders</P>

<P>USURF America, Inc. and Subsidiaries</P>

<P>Baton Rouge, Louisiana</P>

<P>We have audited the accompanying consolidated balance sheets of USURF America, Inc. and
Subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of
operations, changes in stockholders' equity and cash flows for the years then ended.  These
consolidated financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial statements based on our
audits.</P>

<P>We conducted our audits in accordance with generally accepted auditing standards.  Those
standards require that we plan and perform the audits to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements.  An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall consolidated financial
statement presentation.  We believe that our audits provide a reasonable basis for our opinion.</P>

<P>In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of USURF America, Inc. and Subsidiaries as of December 31,2000 and 1999,
and the results of its operations and cash flows for the years then ended in conformity with
generally accepted accounting principles.</P>

<P>The accompanying financial statements have been prepared assuming that the Company will
continue as a going concern. As discussed in Note 18 to the consolidated financial statements, the
Company has significant operating losses.  In addition, the Company has excess current liabilities
over current assets of approximately $1.5 million. These conditions raise substantial doubt about
its ability to continue as a going concern.  Management's plans regarding these matters are also
described in Note 18.  The financial statements do not include any adjustments that might result
from the outcome of this uncertainty. </P>

<P>/s/ POSTLETHWAITE &amp; NETTERVILLE</P>

<P>Baton Rouge, Louisiana</P>

<P>April 16, 2001, except as to Note 21 which is dated May 30, 2001</P>

<P>F-12</P>

<P>INDEPENDENT AUDITOR'S REPORT</P>

<P>To the Board of Director's and Stockholders</P>

<P>USURF America, Inc.</P>

<P>We have audited the accompanying consolidated statements of operations, changes in
stockholders' equity and cash flows for the year ended December 31, 1998 of USURF America,
Inc. (formerly Internet Media Corporation) and Subsidiaries. These consolidated financial
statements are the responsibility of the company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.</P>

<P>We conducted our audit in accordance with generally accepted auditing standards.  Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements.  An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall consolidated financial
statement presentation.  We believe that our audit provides a reasonable basis for our opinion.</P>

<P>In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated results of operations and cash flows for the year ended December 31,
1998 of USURF America, Inc. (formerly Internet Media Corporation) and Subsidiaries, in
conformity with generally accepted accounting principles.</P>

<P>The accompanying consolidated financial statements have been prepared assuming that the
Company will continue as a going concern.  As discussed in Note 18 to the financial statements,
the Company has insignificant operating revenue.  In addition, the Company has limited capital
resources and a loss from operations since inception, all of which raise substantial doubt about its
ability to continue as a going concern.  Management's plans in regard to these matters are also
discussed in Note 18.  The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.</P>

<P>/s/</P>

<P>WEAVER AND TIDWELL, L.L.P.</P>

<P>Fort Worth, Texas</P>

<P>April 9, 1999</P>

<P>F-13<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>USURF AMERICA, INC. AND SUBSIDIARIES</TD></TR>
<TR><TD>BATON ROUGE, LOUISIANA</TD></TR>
<TR><TD>CONSOLIDATED BALANCE SHEETS</TD></TR>
<TR><TD>DECEMBER 31, 2000 AND 1999</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>2000</TD>
<TD>1999</TD></TR>
<TR><TD>ASSETS</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>CURRENT ASSETS</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Cash and cash equivalents</TD>
<TD>$1,088</TD>
<TD>$75,313</TD></TR>
<TR><TD>Accounts receivable - net</TD>
<TD>0</TD>
<TD>59,098</TD></TR>
<TR><TD>Inventory</TD>
<TD>246,721</TD>
<TD>386,802</TD></TR>
<TR><TD>Prepaid expenses and other
current assets</TD>
<TD>0</TD>
<TD>5,500</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD></TD>
<TD>247,809</TD>
<TD>526,713</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>PROPERTY AND
EQUIPMENT</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Cost</TD>
<TD>138,954</TD>
<TD>1,135,638</TD></TR>
<TR><TD>Less: accumulated
depreciation</TD>
<TD>(69,476)</TD>
<TD>(421,786)</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD></TD>
<TD>69,478</TD>
<TD>713,852</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>INVESTMENTS</TD>
<TD>68,029</TD>
<TD>68,029</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>OTHER ASSETS</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Acquired customer base - net</TD>
<TD>0</TD>
<TD>11,764,650</TD></TR>
<TR><TD>Goodwill - net</TD>
<TD>0</TD>
<TD>5,681,992</TD></TR>
<TR><TD>Other intangibles - net</TD>
<TD>0</TD>
<TD>782,580</TD></TR>
<TR><TD>Other assets</TD>
<TD>25,000</TD>
<TD>7,353</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD></TD>
<TD>25,000</TD>
<TD>18,236,575</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD>TOTAL ASSETS</TD>
<TD>$410,316</TD>
<TD>$19,545,169</TD></TR>
<TR><TD></TD>
<TD>======</TD>
<TD>======</TD></TR></TABLE>

<P>F-14<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>LIABILITIES AND
STOCKHOLDER'S EQUITY</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Disbursements in Excess of
Cash Balances</TD>
<TD>$42,469</TD>
<TD>$0</TD></TR>
<TR><TD>Notes payable - current
portion</TD>
<TD>0</TD>
<TD>5,910</TD></TR>
<TR><TD>Accounts payable</TD>
<TD>1,472,030</TD>
<TD>363,665</TD></TR>
<TR><TD>Accrued payroll</TD>
<TD>158,262</TD>
<TD>118,157</TD></TR>
<TR><TD>Other current liabilities</TD>
<TD>41,824</TD>
<TD>216,650</TD></TR>
<TR><TD>Property dividends payable</TD>
<TD>43,750</TD>
<TD>43,750</TD></TR>
<TR><TD>Accrued interest to
stockholder</TD>
<TD>0</TD>
<TD>29,741</TD></TR>
<TR><TD>Notes payable to stockholder</TD>
<TD>6,638</TD>
<TD>356,239</TD></TR>
<TR><TD>Deferred revenue</TD>
<TD>0</TD>
<TD>87,538</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD></TD>
<TD>1,764,973</TD>
<TD>1,221,650</TD></TR>
<TR><TD>LONG-TERM LIABILITIES</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Deferred income taxes</TD>
<TD>0</TD>
<TD>3,883,210</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD></TD>
<TD>1,764,973</TD>
<TD>5,104,860</TD></TR>
<TR><TD>REDEEMABLE COMMON
STOCK</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Common Stock subject to
rescission, 2,767,823 shares
outstanding at December 31,
2000, $.0001 par value </P>

<P>Deferred consulting</TD>
<TD>3,897,552<BR>
<BR>
</P>

<P>(574,000)</TD>
<TD>0<BR>
<BR>
</P>

<P>0</TD></TR>
<TR><TD></TD>
<TD>3,323,552</TD>
<TD>0</TD></TR>
<TR><TD>STOCKHOLDERS' EQUITY</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Common stock, $.0001 par
value Authorized: 100,000,000
shares Issued and outstanding:
13,920,985 in 2000;
12,786,116 in 1999</TD>
<TD>1,392</TD>
<TD>1,279</TD></TR>
<TR><TD>Additional paid-in capital</TD>
<TD>30,286,687</TD>
<TD>28,918,638</TD></TR>
<TR><TD>Accumulated deficit</TD>
<TD>(34,502,160)</TD>
<TD>(12,616,830)</TD></TR>
<TR><TD>Subscriptions receivable</TD>
<TD>933,514</TD>
<TD>(860)</TD></TR>
<TR><TD>Deferred consulting</TD>
<TD>(1,397,642)</TD>
<TD>(1,861,918)</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD></TD>
<TD>(4,678,209)</TD>
<TD>14,440,309</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD>TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY</TD>
<TD>$410,316</TD>
<TD>$19,545,169</TD></TR></TABLE>

<P>The accompanying notes are an integral part of these statements.</P>

<P>F-15<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>USURF AMERICA, INC. AND SUBSIDIARIES</TD></TR>
<TR><TD>BATON ROUGE, LOUISIANA</TD></TR>
<TR><TD>CONSOLIDATED STATEMENTS OF OPERATIONS</TD></TR>
<TR><TD>YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>2000</TD>
<TD>1999</TD>
<TD>1998</TD></TR>
<TR><TD>REVENUES</TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Internet access
revenues</TD>
<TD>$1,781,082</TD>
<TD>$2,268,511</TD>
<TD>$5,440</TD></TR>
<TR><TD>Equipment sales</TD>
<TD>91,547</TD>
<TD>278,714</TD>
<TD>0</TD></TR>
<TR><TD>Internet access costs
and cost of goods sold</TD>
<TD>(2,145,955)</TD>
<TD>(1,152,721)</TD>
<TD>0</TD></TR>
<TR><TD></TD>
<TD>-----------</TD>
<TD>-----------</TD>
<TD>-----------</TD></TR>
<TR><TD>Gross profit (loss)</TD>
<TD>(273,326)</TD>
<TD>1,394,504</TD>
<TD>5,440</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>OPERATING
EXPENSES</TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Depreciation and
amortization</TD>
<TD>7,618,755</TD>
<TD>7,653,924</TD>
<TD>4,394</TD></TR>
<TR><TD>Professional fees</TD>
<TD>4,168,610</TD>
<TD>1,945,935</TD>
<TD>813,517</TD></TR>
<TR><TD>Rent</TD>
<TD>216,416</TD>
<TD>132,395</TD>
<TD>15,823</TD></TR>
<TR><TD>Salaries and
commissions</TD>
<TD>2,060,528</TD>
<TD>1,603,556</TD>
<TD>154,924</TD></TR>
<TR><TD>Advertising</TD>
<TD>24,583</TD>
<TD>125,034</TD>
<TD>0</TD></TR>
<TR><TD>Other</TD>
<TD>886,691</TD>
<TD>399,914</TD>
<TD>45,806</TD></TR>
<TR><TD></TD>
<TD>-----------</TD>
<TD>-----------</TD>
<TD>-----------</TD></TR>
<TR><TD></TD>
<TD>14,975,583</TD>
<TD>11,860,758</TD>
<TD>1,034,464</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>LOSS FROM
OPERATIONS</TD>
<TD>(15,248,909)</TD>
<TD>(10,466,254)</TD>
<TD>(1,029,024)</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>OTHER INCOME
(EXPENSE)</TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Other income</TD>
<TD>67,447</TD>
<TD>23,875</TD>
<TD>0</TD></TR>
<TR><TD>Litigation settlement</TD>
<TD>0</TD>
<TD>(957,075)</TD>
<TD>0</TD></TR>
<TR><TD>Impairment loss</TD>
<TD>(9,239,310)</TD>
<TD>(1,164,561)</TD>
<TD>0</TD></TR>
<TR><TD>Interest expense</TD>
<TD>(21,418)</TD>
<TD>(19,309)</TD>
<TD>(8,602)</TD></TR>
<TR><TD></TD>
<TD>-----------</TD>
<TD>-----------</TD>
<TD>-----------</TD></TR>
<TR><TD></TD>
<TD>(9,193,281)</TD>
<TD>(2,117,070)</TD>
<TD>(8,602)</TD></TR>
<TR><TD></TD>
<TD>-----------</TD>
<TD>-----------</TD>
<TD>-----------</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>GAIN ON
RESCISSION</TD>
<TD>961,436</TD>
<TD>0</TD>
<TD>0</TD></TR>
<TR><TD></TD>
<TD>-----------</TD>
<TD>-----------</TD>
<TD>-----------</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>LOSS BEFORE
INCOME TAX</TD>
<TD>(23,480,754)</TD>
<TD>(12,583,324)</TD>
<TD>(1,037,626)</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>INCOME TAX
BENEFIT</TD>
<TD>1,595,424</TD>
<TD>1,653,161</TD>
<TD>0</TD></TR>
<TR><TD></TD>
<TD>-----------</TD>
<TD>-----------</TD>
<TD>-----------</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>NET LOSS</TD>
<TD>$(21,885,330)</TD>
<TD>$(10,930,163)</TD>
<TD>$(1,037,626)</TD></TR>
<TR><TD></TD>
<TD>=======</TD>
<TD>=======</TD>
<TD>=======</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Net loss per common
share</TD>
<TD>(1.68)</TD>
<TD>(0.96)</TD>
<TD>(0.14)</TD></TR>
<TR><TD></TD>
<TD>=======</TD>
<TD>=======</TD>
<TD>=======</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Weighted average
number of shares
outstanding</TD>
<TD>13,000,391</TD>
<TD>11,419,641</TD>
<TD>7,361,275</TD></TR>
<TR><TD></TD>
<TD>=======</TD>
<TD>=======</TD>
<TD>=======</TD></TR></TABLE>

<P>The accompanying notes are an integral part of these statements.</P>

<P>F-16<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>USURF AMERICA, INC. AND SUBSIDIARIES</TD></TR>
<TR><TD>BATON ROUGE, LOUISIANA</TD></TR>
<TR><TD>CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY</TD></TR>
<TR><TD>YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>Shares</TD>
<TD>Common
Stock</TD>
<TD>Paid-in
Capital</TD>
<TD>Accumulated Deficit</TD>
<TD>Subscriptions
Receivable</TD>
<TD>Deferred
Consulting</TD>
<TD>Total</TD></TR>
<TR><TD>Balance,
December
31, 1997</TD>
<TD>6,424,000</TD>
<TD>642</TD>
<TD>998,466</TD>
<TD>(649,041)</TD>
<TD>(860)</TD>
<TD>(311,889)</TD>
<TD>37,318</TD></TR>
<TR><TD>Issuance
of
common
stock for
future
services</TD>
<TD>1,655,759</TD>
<TD>166</TD>
<TD>1,556,734</TD>
<TD>0</TD>
<TD>0</TD>
<TD>(1,556,900)</TD>
<TD>0</TD></TR>
<TR><TD>Issuance
of
common
stock for
cash</TD>
<TD>400,000</TD>
<TD>40</TD>
<TD>332,760</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>332,800</TD></TR>
<TR><TD>Issuance
of
common
stock for
investments</TD>
<TD>17,500</TD>
<TD>2</TD>
<TD>43,748</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>43,750</TD></TR>
<TR><TD>Declared
dividends</TD>
<TD>0</TD>
<TD>0</TD>
<TD>(57,519)</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>(57,519)</TD></TR>
<TR><TD>Amortization of
deferred
consulting</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>765,865</TD>
<TD>765,865</TD></TR>
<TR><TD>Net loss</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>(1,037,626)</TD>
<TD>0</TD>
<TD>0</TD>
<TD>(1,037,626)</TD></TR></TABLE>

<P>F-17<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Balance,
December
31, 1998</TD>
<TD>8,497,259</TD>
<TD>850</TD>
<TD>2,874,189</TD>
<TD>(1,686,667)</TD>
<TD>(860)</TD>
<TD>(1,102,924)</TD>
<TD>84,588</TD></TR>
<TR><TD>Issuance
of
common
stock for
future
services</TD>
<TD>566,000</TD>
<TD>57</TD>
<TD>2,215,943</TD>
<TD>0</TD>
<TD>0</TD>
<TD>(2,216,000)</TD>
<TD>0</TD></TR>
<TR><TD>Issuance
of
common
stock for
acquisitions</TD>
<TD>3,030,000</TD>
<TD>303</TD>
<TD>21,586,726</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>21,587,029</TD></TR>
<TR><TD>Issuance
of
common
stock for
cash</TD>
<TD>115,000</TD>
<TD>11</TD>
<TD>394,989</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>395,000</TD></TR>
<TR><TD>Exercise
of
warrants</TD>
<TD>176,857</TD>
<TD>18</TD>
<TD>337,304</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>337,322</TD></TR>
<TR><TD>Issuance
of
subscription
agreement</TD>
<TD>50,000</TD>
<TD>5</TD>
<TD>149,995</TD>
<TD>0</TD>
<TD>(150,000)</TD>
<TD>0</TD>
<TD>0</TD></TR>
<TR><TD>Proceeds
on
subscription
receivable</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>150,000</TD>
<TD>0</TD>
<TD>150,000</TD></TR>
<TR><TD>Issuance
of stock
per
employment
agreement</TD>
<TD>11,000</TD>
<TD>1</TD>
<TD>43,311</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>43,312</TD></TR></TABLE>

<P>F-18<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Expenses
to be paid
by
issuance
of
common
stock</TD>
<TD>0</TD>
<TD>0</TD>
<TD>257,167</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>257,167</TD></TR>
<TR><TD>Issuance
of
common
stock for
settlement</TD>
<TD>340,000</TD>
<TD>34</TD>
<TD>913,716</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>913,750</TD></TR>
<TR><TD>Stock
warrants</TD>
<TD>0</TD>
<TD>0</TD>
<TD>145,298</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>145,298</TD></TR>
<TR><TD>Amortization of
deferred
consulting</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>1,457,006</TD>
<TD>1,457,006</TD></TR>
<TR><TD>Net loss</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>(10,930,163)</TD>
<TD>0</TD>
<TD>0</TD>
<TD>(10,930,163)</TD></TR>
<TR><TD>Balance,
December
31, 1999</TD>
<TD>12,786,116</TD>
<TD>1,279</TD>
<TD>28,918,638</TD>
<TD>(12,616,830)</TD>
<TD>(860)</TD>
<TD>(1,861,918)</TD>
<TD>14,440,309</TD></TR></TABLE>

<P>F-19<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Issuance
of
common
stock for
future
services</TD>
<TD>425,227</TD>
<TD>42</TD>
<TD>958,138</TD>
<TD>0</TD>
<TD>0</TD>
<TD>(958,180)</TD>
<TD>0</TD></TR>
<TR><TD>Issuance
of
common
stock for
cash</TD>
<TD>400,000</TD>
<TD>40</TD>
<TD>79,960</TD>
<TD>0</TD>
<TD>(10,000)</TD>
<TD>0</TD>
<TD>70,000</TD></TR>
<TR><TD>Issuance
of
subscription
agreement</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>(25,000)</TD>
<TD>0</TD>
<TD>(25,000)</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Issuance
of stock
per
employment
agreement</TD>
<TD>19,642</TD>
<TD>2</TD>
<TD>115,080</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>115,082<BR>
<BR>
<BR>
<BR>
</P>

<P>0</TD></TR>
<TR><TD>Expenses
paid by
issuance
of
common
stock</TD>
<TD>290,000</TD>
<TD>29</TD>
<TD>214,871</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>214,900</TD></TR>
<TR><TD>Conversion of debt
to equity</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>969,374</TD>
<TD>0</TD>
<TD>969,374</TD></TR>
<TR><TD>Amortization of
deferred
consulting</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>1,422,456</TD>
<TD>1,422,456</TD></TR>
<TR><TD>Net loss</TD>
<TD>0</TD>
<TD>0</TD>
<TD>0</TD>
<TD>(21,885,330)</TD>
<TD>0</TD>
<TD>0</TD>
<TD>(21,885,330)</TD></TR>
<TR><TD>Balance,
December
31, 2000</TD>
<TD>13,920,985</TD>
<TD>1,392</TD>
<TD>30,286,687</TD>
<TD>(34,502,160)</TD>
<TD>933,514</TD>
<TD>(1,397,642)</TD>
<TD>(4,678,209)</TD></TR></TABLE>

<P>F-20<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>USURF AMERICA, INC. AND SUBSIDIARIES</TD></TR>
<TR><TD>BATON ROUGE, LOUISIANA</TD></TR>
<TR><TD>CONSOLIDATED STATEMENTS OF CASH FLOWS</TD></TR>
<TR><TD>YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998</TD></TR></TABLE>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>2000</TD>
<TD>1999</TD>
<TD>1998</TD></TR>
<TR><TD>CASH FLOWS
FROM OPERATING
ACTIVITIES</TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Net loss</TD>
<TD>$(21,885,330)</TD>
<TD>$(10,930,163)</TD>
<TD>$(1,037,626)</TD></TR>
<TR><TD>Adjustment to
reconcile net loss to
net cash used in
operating activities</TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Depreciation and
amortization</TD>
<TD>7,618,755</TD>
<TD>7,653,924</TD>
<TD>4,394</TD></TR>
<TR><TD>Consulting fees paid
with stock</TD>
<TD>3,000,276</TD>
<TD>1,457,006</TD>
<TD>765,865</TD></TR>
<TR><TD>Litigation settlement</TD>
<TD>214,900</TD>
<TD>913,750</TD>
<TD>0</TD></TR>
<TR><TD>Gain on rescission</TD>
<TD>(961,436)</TD>
<TD>0</TD>
<TD>0</TD></TR>
<TR><TD>Impairment loss and
write down of assets</TD>
<TD>10,577,878</TD>
<TD>1,164,561</TD>
<TD>0</TD></TR>
<TR><TD>Legal fees paid with
stock</TD>
<TD>281,498</TD>
<TD>126,500</TD>
<TD>0</TD></TR>
<TR><TD>Compensation expense
paid with stock</TD>
<TD>774,066</TD>
<TD>319,301</TD>
<TD>0</TD></TR>
<TR><TD>Deferred income taxes</TD>
<TD>(1,595,423)</TD>
<TD>(1,653,161)</TD>
<TD>0</TD></TR>
<TR><TD>Loss on disposal</TD>
<TD>0</TD>
<TD>280</TD>
<TD>0</TD></TR>
<TR><TD>Changes in operating
assets and liabilities</TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Accounts receivable</TD>
<TD>59,098</TD>
<TD>35,537</TD>
<TD>(809)</TD></TR>
<TR><TD>Inventory</TD>
<TD>71,000</TD>
<TD>49,518</TD>
<TD>0</TD></TR>
<TR><TD>Prepaid expenses and
other current assets</TD>
<TD>5,500</TD>
<TD>7,980</TD>
<TD>0</TD></TR>
<TR><TD>Accounts payable</TD>
<TD>1,108,365</TD>
<TD>(36,857)</TD>
<TD>1,787</TD></TR>
<TR><TD>Accrued payroll</TD>
<TD>40,105</TD>
<TD>118,157</TD>
<TD>(39,310)</TD></TR>
<TR><TD>Other current liabilities</TD>
<TD>(174,826)</TD>
<TD>215,929</TD>
<TD>0</TD></TR>
<TR><TD>Other assets and
liabilities</TD>
<TD>0</TD>
<TD>(11,555)</TD>
<TD>(300)</TD></TR>
<TR><TD>Deferred revenue</TD>
<TD>(87,538)</TD>
<TD>23,196</TD>
<TD>0</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD>Net cash used in
operating activities</TD>
<TD>(953,112)</TD>
<TD>(546,097)</TD>
<TD>(305,999)</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD>
<TD>---------</TD></TR></TABLE>

<P>F-21<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>CASH FLOWS
FROM INVESTING
ACTIVITIES</TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Proceeds on disposal
of fixed assets</TD>
<TD>$ 40,050</TD>
<TD>$15,090</TD>
<TD>$0</TD></TR>
<TR><TD>Cash acquired in
acquisitions</TD>
<TD>0</TD>
<TD>186,318</TD>
<TD>(24,666)</TD></TR>
<TR><TD>Payment of
organization costs</TD>
<TD>0</TD>
<TD>0</TD>
<TD>569</TD></TR>
<TR><TD>Capital expenditures</TD>
<TD>(125,200)</TD>
<TD>(614,193)</TD>
<TD>(25,605)</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD>Net cash used in
investing activities</TD>
<TD>(85,150)</TD>
<TD>(412,785)         </TD>
<TD>(49,702)</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD>CASH FLOWS
FROM FINANCING
ACTIVITIES</TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Payments on notes
payable</TD>
<TD>$ (5,910)</TD>
<TD>$(65,369)</TD>
<TD>0</TD></TR>
<TR><TD>Disbursements in
excess of cash
balances</TD>
<TD>42,469</TD>
<TD>0</TD>
<TD>0</TD></TR>
<TR><TD>Payments on notes
payable - stockholder</TD>
<TD>(11,093)</TD>
<TD>(25,000)</TD>
<TD>0</TD></TR>
<TR><TD>Payments on
subscriptions
receivable</TD>
<TD>0</TD>
<TD>150,000</TD>
<TD>0</TD></TR>
<TR><TD>Proceeds from note
payable - stockholder</TD>
<TD>568,571</TD>
<TD>235,010</TD>
<TD>30,133</TD></TR>
<TR><TD>Issuance of common
stock for cash</TD>
<TD>370,000</TD>
<TD>395,000</TD>
<TD>332,800</TD></TR>
<TR><TD>Warrants exercised</TD>
<TD>0</TD>
<TD>337,322</TD>
<TD>0</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD>Net cash provided by
financing activities</TD>
<TD>964,037</TD>
<TD>1,026,963</TD>
<TD>362,933</TD></TR>
<TR><TD></TD>
<TD>---------</TD>
<TD>---------</TD>
<TD>---------</TD></TR>
<TR><TD>Net increase
(decrease) in cash and
cash equivalents</TD>
<TD>(74,225)</TD>
<TD>68,081</TD>
<TD>7,232</TD></TR>
<TR><TD>Cash and cash
equivalents, Beginning
of period</TD>
<TD>75,313</TD>
<TD>7,232</TD>
<TD>0</TD></TR>
<TR><TD>Cash and cash
equivalents, End of
period</TD>
<TD>$1,088</TD>
<TD>$75,313</TD>
<TD>$7,232</TD></TR>
<TR><TD></TD>
<TD>=======</TD>
<TD>========</TD>
<TD>========</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR></TABLE>

<P>The accompanying notes are an integral part of these statements.</P>

<P>F-22<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>USURF AMERICA, INC. AND SUBSIDIARIES</TD></TR>
<TR><TD>BATON ROUGE, LOUISIANA</TD></TR>
<TR><TD>NOTES TO CONSOLIDATED STATEMENTS</TD></TR></TABLE>
<BR>
<BR>

<P>1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</P>

<P>Basis of Presentation</P>

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

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

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

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

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

<P>In November 1999, the Company acquired the customer base of Cyber Mountain, Inc. a Denver,
Colorado-based ISP, for 25,000 shares of stock valued at approximately $75,000.</P>

<P>In December 1999, USURF acquired a portion of the ISP-related equipment and customer base of
Cyber Highway of North Georgia, Inc., a Demorest, Georgia-based ISP for 54,000 shares of
stock valued at approximately $212,000.</P>

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

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

<P>None of the acquisitions described above, with the exception of Cyberhighway which was near the
beginning of 1999, had significant operations at the time they were acquired by the Company.
Therefore, proforma disclosure of what operations would have been as if the transactions had
occurred at the beginning of the period are not shown due to the transactions being immaterial to
the financial statements taken as a whole.</P>

<P>Principles of Consolidation</P>

<P>The accompanying consolidated financial statements include all the accounts of USURF and all
wholly owned subsidiaries. Intercompany transactions and balances have been eliminated in the
consolidation.  </P>

<P>Use of Estimates</P>

<P>The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those estimates.</P>

<P>A material estimate that is particularly susceptible to significant change is the amortization of
intangibles.  In estimating the period over which to amortize the acquired customer bases,
management obtains information from industry data.</P>

<P>Cash Equivalents</P>

<P>The Company considers all highly liquid investments with original maturities of three months or
less from the date of purchase to be cash equivalents.</P>

<P>Inventory</P>

<P>Inventories are stated at the lower of cost or market, and represents modems purchased from
suppliers.</P>

<P>Property and Equipment</P>

<P>Property and equipment are stated at cost and are depreciated principally by the straight-line
method over the estimated useful lives of the assets, ranging from 3 to 15 years.</P>

<P>Revenue Recognition</P>

<P>Until September 2000, the Company maintained license agreements with affiliate ISP's to provide
internet access to affiliates' customers. License fees were typically billed in the month the services
were provided. The Company charges direct customers (residential and business subscribers)
monthly access fees to the internet and recognizes the revenue in the month the access is provided.
For certain subscribers billed in advance, the Company recognizes the revenue over the period the
billing covers.  Revenue for other services provided, including set-up fees charged to customers
and affiliates, and equipment sales are recognized as the service is performed or the equipment is
delivered.</P>

<P>Costs of Access Revenues</P>

<P>Costs of access revenues primarily consist of telecommunications expenses inherent in the
network infrastructure.  Costs of access expenses also include fees paid for lease of the Company's
backbone, as well as license fees for Web browser software based on a per-user charge, other
license fees paid to third-party software vendors, product costs, and contractor fees for
distribution of software to new subscribers.</P>

<P>Income Taxes<BR>
<BR>
</P>

<P>Deferred income tax assets and liabilities are computed for differences between financial statement
and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the period in which the differences are expected
to affect taxable income. Valuation allowances are established when realization is less than 50%
probable. Income tax expense is the tax payable or refundable for the period plus or minus the
change during the period in deferred tax assets and liabilities.</P>

<P>Financial Instruments and Concentration of Credit Risk</P>

<P>Financial instruments, which potentially subject the Company to concentrations of credit risk,
consist principally of cash and trade receivables.  The Company maintains its cash in bank deposit
accounts, which, at times, may exceed federally insured limits.  The Company has not experienced
any losses in such accounts and believes it is not exposed to any significant credit risk on cash.</P>

<P>Fair Values of Financial Instruments</P>

<P>The carrying amounts of financial instruments including cash, trade receivables, accounts payable
and accrued expenses approximate fair value because of the immediate or short-term maturities of
these instruments. The difference between the carrying amount and fair value of the Company's
long-term debt is not significant. </P>

<P>Loss Per Common Share</P>

<P>Basic loss per common share has been computed by dividing the net loss by the weighted average
number of shares of common stock outstanding throughout the period.  Calculation of diluted loss
per common share is not presented because the effects of potential common stock issuable upon
exercise of stock options and contingently issuable or redeemable shares would be antidilutive.</P>

<P>Goodwill and Other Intangible Assets</P>

<P>Goodwill and other intangible assets, primarily acquired customer bases, are stated on the basis of
cost and are amortized, principally on a straight-line basis, over the estimated future periods to be
benefited (generally 3 years).  Goodwill and other intangible assets are periodically reviewed for
impairment to ensure they are appropriately valued. Conditions which may indicate an impairment
issue exists include a negative economic downturn or a change in the assessment of future
operations. In the event that a condition is identified which may indicate an impairment issue
exists, an assessment is performed using a variety of methodologies, including cash flow analysis,
estimates of sales proceeds and independent appraisals.  Where applicable, an appropriate interest
rate is utilized, based on location specific economic factors.</P>

<P>Due to the demise of the business of the dial-up Internet access business of the CyberHighway
subsidiary, associated goodwill and other intangibles were impaired at December 31, 2000, and
were written-down in the amounts of $4,425,037 and $4,814,272 (net of deferred taxes of
$2,531,497), respectively.</P>

<P>Advertising</P>

<P>The Company expenses advertising costs as incurred.  During the years ended December 31, 2000
and 1999, the Company incurred approximately $25,000 and $125,000, in advertising costs,
respectively.</P>

<P>Investments</P>

<P>Investments include minority interests held in three non-public companies recorded at cost, which
approximates fair value.</P>

<P>Stock for Services</P>

<P>The Company has issued stock pursuant to various consulting agreements. Deferred consulting
costs, which are valued at the stock price on the date of the agreements, are recorded as a
reduction of stockholders' equity and will be amortized over the respective lives of the
agreements. </P>

<P>2.  NET 1, INC. ACQUISITION</P>

<P>On August 23, 1999, the Company acquired Net 1, Inc. (Net 1) in a business combination
accounted for as a purchase.  Net 1 was primarily engaged as an ISP in Alabama.  In September,
1999 the Company tendered the shares of capital stock obtained in the acquisition of Net 1 for
rescission of the transaction.  However, legally the Company was still the owner of the
outstanding shares of Net 1 at December 31, 1999, and is required by generally accepted
accounting principles to record Net 1 as a wholly owned subsidiary from the date of acquisition.</P>

<P>It was discovered during arbitration proceedings that no activity occurred in the newly acquired
subsidiary, Net 1, after the acquisition.  The customer base was moved to an unrelated company
by a former owner, and all activity was transacted in the unrelated company.  Therefore, no
revenues or expenses were incurred by Net 1 from the date of acquisition, August 23, 1999
through December 31, 1999.</P>

<P>The total cost of the acquisition was $1,164,561, which exceeded fair value of the net assets of
Net 1 by $1,164,561.  The excess was deemed to be impaired at December 31, 1999 due to the
change in the operating environment and was recorded in the accompanying financial statements
as an impairment loss.</P>

<P>On October 12, 2000 the acquisition of Net 1 was rescinded.  Included in the terms of the
settlement agreement was the return of  the 250,000 shares issued in the original transaction to the
Company. The Company then issued 250,000 shares of stock in settlement of the arbitration. The
agreement also called for one of the former owners to assume a $50,000 liability, that was
recorded by USURF upon the acquisition.  The total gain on the recission of the transaction was
approximately $960,000. </P>

<P>3.  PROPERTY AND EQUIPMENT</P>

<P>Classifications of property and equipment and accumulated depreciation were as follows at
December 31, 2000 and 1999:<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>2000</TD>
<TD>1999</TD></TR>
<TR><TD>Wireless cable equipment</TD>
<TD>$0</TD>
<TD>$188,091</TD></TR>
<TR><TD>Equipment</TD>
<TD>138,954</TD>
<TD>540,452</TD></TR>
<TR><TD>Furniture and fixtures</TD>
<TD>0</TD>
<TD>37,487</TD></TR>
<TR><TD>Office equipment</TD>
<TD>0</TD>
<TD>338,531</TD></TR>
<TR><TD>Leasehold improvements</TD>
<TD>0</TD>
<TD>31,077</TD></TR>
<TR><TD></TD>
<TD>-----------</TD>
<TD>-----------</TD></TR>
<TR><TD></TD>
<TD>138,954</TD>
<TD>1,135,638</TD></TR>
<TR><TD>Accumulated depreciation</TD>
<TD>(69,476)</TD>
<TD>(421,786)</TD></TR>
<TR><TD></TD>
<TD>-----------</TD>
<TD>-----------</TD></TR>
<TR><TD>Property and equipment, net</TD>
<TD>$69,478</TD>
<TD>$713,852</TD></TR></TABLE>

<P>4.  INTANGIBLES</P>

<P>Classification of intangibles and accumulated amortization at December 31st were as follows:<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>2000</TD>
<TD>1999</TD></TR>
<TR><TD>Acquired customer base</TD>
<TD>$0</TD>
<TD>$16,676,433</TD></TR>
<TR><TD>Goodwill</TD>
<TD>0</TD>
<TD>8,126,616</TD></TR>
<TR><TD>Other</TD>
<TD>0</TD>
<TD>940,186</TD></TR>
<TR><TD></TD>
<TD>-----------</TD>
<TD>-----------</TD></TR>
<TR><TD></TD>
<TD>0</TD>
<TD>25,743,235</TD></TR>
<TR><TD></TD>
<TD>(0)</TD>
<TD>(7,514,013)</TD></TR>
<TR><TD></TD>
<TD>-----------</TD>
<TD>-----------</TD></TR>
<TR><TD></TD>
<TD>$0</TD>
<TD>$18,229,222</TD></TR></TABLE>

<P>5.  WIRELESS CABLE ASSETS</P>

<P>Property and equipment includes wireless cable station equipment, which is operational but has
not been put into use.  The equipment was determined to be impaired at December 31, 2000 and
its cost of approximately $188,000 was written off.  In addition, the Company owns licenses in the
wireless cable markets, which operate on the same frequencies and will be used in the wireless
Internet market.</P>

<P>6.  LICENSES AND RIGHTS TO LEASES OF LICENSES</P>

<P>The Company owns licenses or rights to leases of licenses in the following wireless cable and
community television markets:<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Wireless Cable Market</TD>
<TD>Expiration Date</TD></TR>
<TR><TD>Poplar Bluff, Missouri</TD>
<TD>October 16, 2006</TD></TR>
<TR><TD>Lebanon, Missouri</TD>
<TD>October 16, 2006</TD></TR>
<TR><TD>Port Angeles, Washington</TD>
<TD>December 21, 2003</TD></TR>
<TR><TD>Astoria, Oregon</TD>
<TD>December 21, 2003</TD></TR>
<TR><TD>Sand Point, Idaho</TD>
<TD>August 09, 2006</TD></TR>
<TR><TD>The Dalles, Oregon</TD>
<TD>August 09, 2006</TD></TR>
<TR><TD>Fallon, Nevada</TD>
<TD>August 09, 2006</TD></TR></TABLE>

<P>Application for renewal of licenses must be filed within a certain period prior to expiration.</P>

<P>7.  NOTE PAYABLE TO STOCKHOLDER
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>2000</TD>
<TD>1999</TD></TR>
<TR><TD>Note payable to stockholder,
interest accrues at 8%, due on
demand and unsecured.</TD>
<TD>$6,638</TD>
<TD>$356,239</TD></TR></TABLE>

<P>8.  LOAN CONVERSION - STOCKHOLDER</P>

<P>As of August 21, 2000, the Company owed its president, David M. Loflin, a total of $967,703
($916,045 in principal, $51,658 in interest), the result of cash loans made to the Company by Mr.
Loflin during the previous approximately two years.  On August 21, 2000, the Company entered
into a letter of agreement with Mr. Loflin, whereby Mr. Loflin agreed to convert all sums owed to
him into shares of Company common stock.</P>

<P>Pursuant to the letter agreement, Mr. Loflin received one share of common stock for every $1.25
of debt converted, for a total of 774,162 shares. The $1.25 price was agreed upon as that price
was the low price for the Company's common stock on Friday, August 18, 2000, as reported by
the American Stock Exchange.  The Company's board of directors, in authorizing the transaction
described above, found the transaction to be in the best interest of USURF America.  The issuance
of shares was not complete until the first quarter of 2001, therefore, the substance of this
transaction has been reflected as stock subscription in the accompanying financial statements.</P>

<P>9.  NOTE PAYABLE</P>

<P>The note payable of $5,910 at December 31, 1999, consists of a note payable to a bank with
interest at 9.25%, due in monthly payments of $2,887, with final payment due February 25, 2000,
secured by accounts receivable, inventory and equipment.</P>

<P>10.  INCOME TAXES</P>

<P>The significant components of deferred tax assets and liabilities were as follows at December 31:<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>2000</TD>
<TD>1999</TD></TR>
<TR><TD>Deferred tax liabilities</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Amortization of intangibles</TD>
<TD>$0</TD>
<TD>$3,883,210</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Deferred tax assets</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Net operating loss
carryforwards</TD>
<TD>3,739,588</TD>
<TD>2,313,159</TD></TR>
<TR><TD>Less - valuation allowance</TD>
<TD>(3,739,588)</TD>
<TD>(2,313,159)</TD></TR>
<TR><TD></TD>
<TD>-----------</TD>
<TD>-----------</TD></TR>
<TR><TD></TD>
<TD>0</TD>
<TD>0</TD></TR>
<TR><TD>Net deferred tax liability</TD>
<TD>$0 </TD>
<TD>$3,883,210</TD></TR></TABLE>

<P>The net changes in the valuation allowance for the periods ended December 31, 2000 and 1999
were $1,426,429 and $1,739,692, respectively.</P>

<P>The deferred tax liability results from the acquisitions of Cyberhighway, Inc., Santa Fe Trail
Internet Plus, Inc., and Premier Internet Services, Inc. in tax free reorganizations, in which there is
no tax basis in the acquired customer base.<BR>
<BR>
</P>

<P>The Company has a net operating loss carry forward of approximately $11,000,000 available to
offset future income for income tax reporting purposes, which will ultimately expire between 2011
and 2014 if not utilized.</P>

<P>11.  SOURCES OF SUPPLIES</P>

<P>The Company relies on local telephone companies and other companies to provide data
communications.  Although management believes alternative telecommunications facilities could
be found in a timely manner, any disruption of these services could have an adverse effect on
operating results.</P>

<P>The Company maintains various vendors for required products, such as modems, terminal services
and high-performance routers, which are important components of its network.  Some of the
Company's suppliers have limited resources and production capacity.  If the suppliers are unable to
meet the Company's needs as it is building out its network infrastructure, then delays and
increased costs in the expansion of the Company's network infrastructure could result, having an
adverse effect on operating results.</P>

<P>During 2000, the Company purchased all of its network radios from one supplier.  Additionally,
the Company has purchased its modems principally from two suppliers.  Additional changes in
suppliers could cause a delay in manufacturing which would affect operation results adversely.</P>

<P>12.  COMMITMENTS</P>

<P>The Company has contracts with various telephone companies and other companies to provide
data communication services. The terms on these agreements range from month-to-month to five
years.  Future obligations under these agreements as of December 31, 2000 are as follows for the
years ending December 31:<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>2001</TD>
<TD>$540,000</TD></TR>
<TR><TD>2002</TD>
<TD>330,000</TD></TR>
<TR><TD>2003</TD>
<TD>140,000</TD></TR>
<TR><TD>2004</TD>
<TD>100,000</TD></TR></TABLE>
<BR>
<BR>

<P>13.  RELATED PARTY</P>

<P>In December 2000, a total of 500,000 shares of common stock were issued to two officers as
bonuses for their services as officers.  Compensation expense of approximately $125,000 was
recorded based on the fair value of the common stock on the date of issue.</P>

<P>14.  WARRANTS</P>

<P>During 2000, the Company issued warrants to purchase 480,000 shares of common stock at
various share prices.  The remaining warrants expire between 2001 and 2004.  Warrants at
December 31, 2000 consist of the following:</P>

<P>  56,667 issued on May 18, 1999, pursuant to an Investment Banking Agreement, with an exercise
price of $1.25, exercisable for a period of four years from issuance.</P>

<P>  56,667 issued on May 18, 1999, pursuant to an Investment Banking Agreement, with an exercise
price of $1.50, exercisable for a period of four years from issuance.</P>

<P>  34,000 issued on May 18, 1999, pursuant to a Selling Agreement, with an exercise price of
$1.25, exercisable for a period of five years from issuance, of which 21,857 were exercised during
1999.</P>

<P>  60,000 issued on January 20, 1999, pursuant to a private offering, with an exercise price of
$7.00, exercisable for a period of three years from issuance, redeemable by the Company at any
time the bid price of the Company's common stock has been at or above $8.50 per share for five
consecutive trading days.</P>

<P>  35,000 issued on June 4, 1999, pursuant to a private offering, with an exercise price of $7.00,
exercisable for a period of two years from issuance, redeemable by the Company at any time the
bid price of the Company's common stock has been at or above $10.00 per share for five
consecutive trading days.</P>

<P>  60,000 issued on December 1, 1999, pursuant to a Consulting Agreement, with an exercise price
of $3.50, exercisable for a period of five years from issuance.  The Company does apply SFAS
No. 123, Accounting for Stock-Based Compensation, in accounting for the stock warrants issued
to non-employees in connection with the original stock issuance.  The Company has recorded
expense of $145,298 pursuant to the issuance of these warrants.  The fair value of the warrants
granted to non-employees is estimated on the date of the grant using the assumption of an
expected life of five years, and a risk-free interest rate of 5.0%.</P>

<P>  50,000 issued on August 27, 1999, pursuant to a Subscription Agreement, with an exercise price
of $6.00, exercisable for a period of three years from issuance.</P>

<P>  65,000 issued in April 2000, pursuant to a private offering, with an exercise price of $7.50,
exercisable for a period of two years from issuance.</P>

<P>  35,000 issued in November 2000, pursuant to a Consulting Agreement, with an exercise price of
$1.00, exercisable for a period of three years from issuance.</P>

<P>  380,000 issued in December 2000, as a finder's fee, an exercise price of $.20, exercisable for a
period of three years from issuance.</P>

<P>15.  SETTLEMENT AGREEMENT</P>

<P>On November 30, l999, the Company entered into a settlement agreement and mutual release,
which settled certain legal proceedings in which USURF and CyberHighway had been involved.
The parties to the settlement agreement were: USURF, CyberHighway, the former operating
officer and a former director, and two former owner-employees (collectively the plaintiffs) of
CyberHighway.</P>

<P>Pursuant to this settlement agreement, certain legal proceedings were settled in full by issuance of
340,000 shares of USURF common stock to the plaintiffs.  The Company is paying the total sum
of $43,325 for reimbursement of attorneys' fees paid by the plaintiffs.</P>

<P>The 340,000 shares issued were valued at $2.6875 per share, or $913,750, in the aggregate.  The
price per share assigned to the issued shares was the closing price of the common stock, as
reported by the American Stock Exchange.  The total charge against earnings in 1999 resulting
from the settlement agreement was $957,075.</P>

<P>16.  CONTINGENCIES<BR>
<BR>
On September 29, 2000, three creditors of CyberHighway filed an involuntary petition in the
Idaho Federal Bankruptcy Court, styled In Re:CyberHighway, Inc., Case No. 00-02454.  In
December 2000, CyberHighway and the petitioning creditors filed a joint motion to dismiss this
proceeding.  The joint motion to dismiss requires the approval of CyberHighway's creditors.
However, some of CyberHighway's creditors objected to the dismissal of the proceeding.  The
objecting creditors desire that all claims be adjudicated in the bankruptcy court.  The Company
believes it is likely that, at some time in the future, a final order of bankruptcy will be entered with
respect to CyberHighway.</P>

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

<P>17.  SEGMENT DISCLOSURE</P>

<P>The Company adopted SFAS No. 131 "Disclosures about Segments of an Enterprise and Related
Information," during the fourth quarter of 2000. SFAS No. 131 established standards for
reporting information about operating segments in annual financial statements and requires
selected information about operating segments in interim financial reports issued to stockholders.
It also established standards for related disclosures about products and services and geographic
areas. Operating segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by chief operating decision makers or
decision making groups, in deciding how to allocate resources and in assessing performance. The
Company considers internet service providing and wireless internet service providing to be a
similar industry; as such, there are no individual segments that are required to be reported
pursuant to SFAS 131.</P>

<P>18.  GOING CONCERN</P>

<P>These financial statements are presented on the basis that the Company is a going concern. Going
concern contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business over a reasonable length of time.  The accompanying financial statement shows
that current liabilities exceed current assets by approximately $1.5 million at December 31, 2000.
The Company's president loaned the Company approximately $568,571 during fiscal 2000 and
loaned an additional $26,590 subsequent to year-end. The appropriateness of using the going
concern basis is dependent upon continued funding by the Company's president, obtaining
additional financing or equity capital and, ultimately, to achieve profitable operations. The
uncertainty about these conditions raises substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that might result from the
outcome of this uncertainty.</P>

<P>Management plans to raise capital by obtaining financing and eventually, through public offerings.
Management intends to use the proceeds from any borrowings to acquire and develop markets to
implement its Wireless Internet Access System and sell its service.  The Company believes that
these actions will enable it to carry out its business plan and ultimately to achieve profitable
operations.</P>

<P>19.  FINANCING TRANSACTION</P>

<P>On October 9, 2000, the Company signed a common stock purchase agreement with an unrelated
company to sell up to 6,000,000 shares of common stock and 645,000 common warrants for up to
$10,000,000.  The purchase price of the shares under this agreement will vary, based on future
market prices of the Company's common stock.  The agreement calls for the Company to meet
certain requirements and maintain certain criteria with respect to its common stock in order to
avoid an event of default.  Upon the occurrence of the event of default the buyer is no longer
obligated to purchase any additional shares of stock.  The agreement will terminate on April 30,
2001, if all of the circumstances necessary to effect the transaction have not occurred by that date,
including completion of a registration statement with respect thereto.</P>

<P>20.  SIGNIFICANT BUSINESS COMBINATION</P>

<P>On January 29, 1999, the Company acquired all of the capital stock of CyberHighway, Inc.
(CyberHighway), an Idaho corporation.</P>

<P>The acquisition was effected pursuant to a Plan and Agreement of Reorganization dated January
20, 1999 between the Company and CyberHighway. The Company paid the shareholders of
CyberHighway approximately $15,940,000 through the issuance of 2,000,000 shares of common
stock.  The purchase price was based upon the weighted average closing price of the Company's
common stock for five days prior and subsequent to the acquisition date.</P>

<P>The transaction was accounted for as a purchase.  The purchase price was allocated to the
underlying assets purchased and liabilities assumed based on their fair market values at the
acquisition date.</P>

<P>The following table summarizes the net assets purchased in connection with the CyberHighway
acquisition and the amount attributable to cost in excess of net assets acquired:<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Net assets acquired</TD>
<TD>$372,472</TD></TR>
<TR><TD>Acquired customer base</TD>
<TD>15,566,787</TD></TR>
<TR><TD>Other assets</TD>
<TD>5,260,690</TD></TR>
<TR><TD>Deferred tax liability</TD>
<TD>(5,260,690)</TD></TR></TABLE>

<P>The following unaudited pro forma condensed statements of operations assumes the
CyberHighway acquisition occurred on January 1, 1998.  In the opinion of management, all
adjustements necessary to present fairly such unaudited pro forma condensed statements of
operations have been made.
<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD></TD>
<TD>Historical</TD>
<TD>Historical</TD>
<TD>Proforma</TD>
<TD>Proforma</TD></TR>
<TR><TD></TD>
<TD>USURF</TD>
<TD>CyberHighway</TD>
<TD>Adjustments</TD>
<TD>Consolidated</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Revenues</TD>
<TD>$5,440</TD>
<TD>$2,449,156</TD>
<TD>$0</TD>
<TD>$2,454,596</TD></TR>
<TR><TD>Expenses</TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Internet access
cost</TD>
<TD>0</TD>
<TD>510,036</TD>
<TD>0</TD>
<TD>510,036</TD></TR>
<TR><TD>Equipment cost</TD>
<TD>0</TD>
<TD>326,488</TD>
<TD>0</TD>
<TD>326,488</TD></TR>
<TR><TD>Depreciation and
amortization</TD>
<TD>4,394</TD>
<TD>138,674</TD>
<TD>6,918,262</TD>
<TD>7,061,330</TD></TR>
<TR><TD>General and
administrative</TD>
<TD>1030070</TD>
<TD>1,292,526</TD>
<TD>0</TD>
<TD>2,322,596</TD></TR>
<TR><TD>Selling</TD>
<TD>0</TD>
<TD>110,397</TD>
<TD>0</TD>
<TD>110,397</TD></TR>
<TR><TD></TD>
<TD>-------------</TD>
<TD>-------------</TD>
<TD>-------------</TD>
<TD>-------------</TD></TR>
<TR><TD>Total operating
expense</TD>
<TD>1,034,464</TD>
<TD>2,378,121</TD>
<TD>6,918,262</TD>
<TD>10,330,847</TD></TR>
<TR><TD></TD>
<TD>-------------</TD>
<TD>-------------</TD>
<TD>-------------</TD>
<TD>-------------</TD></TR>
<TR><TD>Operating income
(loss) </P>

<P>Other income
(expense)</TD>
<TD>(1,019,024)</P>

<P>(8,602)</TD>
<TD>71,035</P>

<P>6,960</TD>
<TD>(6,918,262)</P>

<P>0</TD>
<TD>(7,876,251)</P>

<P>(1,642)</TD></TR>
<TR><TD></TD>
<TD>-------------</TD>
<TD>-------------</TD>
<TD>-------------</TD>
<TD>-------------</TD></TR>
<TR><TD>Income (loss)
before taxes</TD>
<TD>(1,037,626)</TD>
<TD>77,995</TD>
<TD>(6,918,262)</TD>
<TD>(7,877,893)</TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>Income tax
benefit</TD>
<TD>0</TD>
<TD>0</TD>
<TD>(1,753,563)</TD>
<TD>(1,753,563)</TD></TR>
<TR><TD></TD>
<TD>-------------</TD>
<TD>-------------</TD>
<TD>-------------</TD>
<TD>-------------</TD></TR>
<TR><TD>Net income (loss)</TD>
<TD>($1,037,626)</TD>
<TD>$77,995</TD>
<TD>($5,164,699)</TD>
<TD>($6,124,330)</TD></TR>
<TR><TD></TD>
<TD>========</TD>
<TD>========</TD>
<TD>========</TD>
<TD>========</TD></TR>
<TR><TD>Net income (loss)
per share</TD>
<TD>($0.14)</TD>
<TD>$31.51</TD>
<TD></TD>
<TD>($0.65)</TD></TR>
<TR><TD></TD>
<TD>========</TD>
<TD>========</TD>
<TD></TD>
<TD>========</TD></TR>
<TR><TD>Weighted average
number of shares
outstanding</TD>
<TD>7,361,275</TD>
<TD>2,475</TD>
<TD></TD>
<TD>9,361,275</TD></TR>
<TR><TD></TD>
<TD>========</TD>
<TD>========</TD>
<TD></TD>
<TD>========</TD></TR></TABLE>

<P>21.  POTENTIAL RESCISSION CLAIMS</P>

<P>From January 24, 2000, to December 31, 2000, a total of 2,767,823 shares of the common stock
of the Company may have been issued in violation of Section 5 of the Securities Act of 1933, as
amended. The aggregate value assigned to these shares upon their issuance totaled $3,897,552. It
is possible that each of the issuees of these shares has a potential claim for rescission of their
respective issuance transactions.  These shares have been reflected under the redeemable stock
caption on the accompanying balance sheet.  Additionally 2,114,162 shares valued at $1,183,703
were issued subsequent to year-end, that may also be subject to rescission.</P>

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

<P>22.  SUBSEQUENT EVENTS</P>

<P>The following events occurred subsequent to December 31, 2000:</P>

<P>In January 2001, the Company issued 80,000 shares of its common stock as a commitment fee
under the common stock purchase agreement to the unrelated company.<BR>
<BR>
In February 2001, the Company sold, pursuant to a Securities Purchase Agreement, 840,000
shares of common stock and 840,000 warrants with an exercise price of $.15, exercisable for a
period of three years from issuance.  These securities were sold for $126,000 in cash, with no
portion of the purchase price having been allocated to these warrants.</P>

<P>In February 2001, the Company issued, as a finder's fee, 84,000 shares of common stock and
336,000 warrants with an exercise price of $.15 per share, exercisable for a period of three years
from issuance.</P>

<P>In March 2001, the Company sold, pursuant a Securities Purchase Agreement, 500,000 shares of
common stock and 500,000 warrants with an exercise price of $.25, exercisable for a period of
three years from issuance.  These securities were sold for $125,000 in cash, with no portion of the
purchase price having been allocated to the warrants.</P>

<P>In March 2001, the Company issued, as a finder's fee, 50,000 shares of common stock and
200,000 warrants with an exercise price of $.25 per share, exercisable for a period of three years
from issuance.<BR>
<BR>
</P>

<P>PART II</P>

<P>INFORMATION NOT REQUIRED IN PROSPECTUS<BR>
<BR>
</P>

<P><STRONG>Item 13.  Other Expenses of Issuance and Distribution.</STRONG></P>

<P>Estimated expenses payable by the Company in connection with the registration of Common
Stock covered hereby are as follows:<BR>
<BR>
</P>

<P>Registration fee                                                                                    $     840.10</P>

<P>Underwriter's unaccountable expense allowance                                             0.00</P>

<P>Printing and engraving expenses                                                              5,000.00  *</P>

<P>Legal fees and expenses                                                                          5,000.00</P>

<P>Accounting fees and expenses                                                               10,000.00  *</P>

<P>Blue Sky fees and expenses                                                                           0.00</P>

<P>Transfer agent and registrar fees and expenses                                              0.00</P>

<P>Miscellaneous                                                                                           1,000.00  *</P>

<P>---------------                                                                                            ----------------</P>

<P>(* estimate)                         Total                                                          $21,840.10  *<BR>
<BR>
<STRONG>Item 14.  Indemnification of Directors and Officers.</STRONG><BR>
</P>

<P>Registrant is a Nevada corporation.  Section 78.751 of Nevada Revised Statutes (the "Nevada
Act") empowers a corporation to indemnify its directors and officers and to purchase insurance
with respect to liability arising out of their capacity as directors and officers.  The Nevada Act
further provides that the indemnification permitted thereunder shall not be deemed exclusive of
any other rights to which the directors and officers may be entitled under the corporation's bylaws,
any agreement, vote of the shareholders or otherwise.</P>

<P>Section VIII of Registrant's Bylaws, included as Exhibit 3.2 filed herewith, which provides for the
indemnification of directors and officers, is incorporated herein by reference.</P>

<P>Registrant has purchased no insurance for indemnification of its officers and directors, agents,
etc., nor has there been any specific agreement for indemnification made between Registrant and
any of its officers and directors, or others, with respect to indemnification for them arising out of
their duties to Registrant.</P>

<P>Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934 or the Rules and Regulations of the Securities and Exchange
Commission thereunder may be permitted under said indemnification provisions of the law, or
otherwise, Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, any such indemnification is against public policy and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Nevada Act and will be governed by the final adjudication of such issue.</P>

<P><STRONG>Item 15.  Recent Sales of Unregistered Securities.</STRONG></P>

<P>  1. (a)  Securities Sold.  On February 17, 1998, 400,000 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan
&amp; Newlan, Attorneys at Law.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting and
Legal Services Agreement, at a price of $.10 per share, or $40,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  2. (a)  Securities Sold.  On February 17, 1998, 36,092 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Langley
Downey Entertainment, Inc.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $1.25 per share, or $45,115, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.<BR>
<BR>
</P>

<P>  3. (a)  Securities Sold.  On March 20, 1998, 22,667 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Geoff
Newlan, d/b/a jara.com productions.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $.375 per share, or $8,500, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  4. (a)  Securities Sold.  On March 21, 1998, a total of 80,000 shares of Company Common
Stock were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Waddell
D. Loflin (20,000 shares), Ross S. Bravata (20,000 shares), Michael Cohn (20,000 shares) and
Richard N. Gill (20,000 shares).</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued as a bonus for services
rendered, at a price of $.80 per share, or $64,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  5. (a)  Securities Sold.  On June 22, 1998, a total of 300,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Dennis
A. Faker (100,000 shares), Barbara V. Schiller (60,000 shares), Jeanne M. Rowzee (20,000
shares), Alvin Gottlieb (20,000 shares), Rogers Family Trust (60,000 shares), Delaware Charter
Guarantee &amp; Trust Company f/b/o  Clarence Yim (20,000 shares) and Delaware Charter
Guarantee &amp; Trust Company f/b/o R. Logan Kock (20,000 shares).</P>

<P>     (c)   Consideration.  Such shares of Common Stock were sold for cash pursuant to a private
offering, at a price of $1.00 per share, or $300,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  6. (a)  Securities Sold.  On June 22, 1998, a total of 150,000 common stock purchase warrants
of the Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to Dennis A. Faker (50,000
warrants), Barbara V. Schiller (30,000 warrants), Jeanne M. Rowzee (10,000 warrants), Alvin
Gottlieb (10,000 warrants), Rogers Family Trust (30,000 warrants), Delaware Charter Guarantee
&amp; Trust Company f/b/o  Clarence Yim (10,000 warrants) and Delaware Charter Guarantee &amp;
Trust Company f/b/o R. Logan Kock (10,000 warrants).</P>

<P>     (c)   Consideration.  Such warrants were issued for no additional consideration as part of units
of securities in a private offering.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $2.00 per share and
exercisable for a period of two years from issuance.  The warrants are redeemable by the
Company at any time the bid price of the Company's Common Stock has been at or above $4.00
per share for five consecutive trading days.</P>

<P>  7. (a)  Securities Sold.  On May 18, 1999, 56,667 common stock purchase warrants of the
Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to H+N Partners.</P>

<P>    (c)   Consideration.  Such warrants were issued pursuant to an Investment Banking Agreement.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $1.25 per share and
exercisable for a period of four years from issuance.</P>

<P>  8. (a)  Securities Sold.  On May 18, 1999, 56,667 common stock purchase warrants of the
Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to H+N Partners.</P>

<P>    (c)   Consideration.  Such warrants were issued pursuant to an Investment Banking Agreement.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $1.50 per share and
exercisable for a period of four years from issuance.</P>

<P>  9. (a)  Securities Sold.  On May 18, 1999, 34,000 common stock purchase warrants of the
Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to Centex Securities, Inc.</P>

<P>    (c)   Consideration.  Such warrants were issued pursuant to a Selling Agreement.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $1.25 per share and
exercisable for a period of five years from issuance.</P>

<P>  10. (a)  Securities Sold.  On June 15, 1998, 37,000 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to H+N
Partners.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant a Consulting
Agreement, at a price of $2.00 per share, or $74,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  11. (a)  Securities Sold.  On July 31, 1998, 10,000 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Craig
Boothe.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued as a signing bonus pursuant a
Business Acquisition Agreement, at a price of $1.00 per share, or $10,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  12. (a)  Securities Sold.  On August 26, 1998, a total of 40,000 shares of Company Common
Stock were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to
Delaware Charter Guarantee &amp; Trust Company f/b/o Clarence Yim (20,000 shares) and Delaware
Charter Guarantee &amp; Trust Company f/b/o R. Logan Kock (20,000 shares).</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued in a private offering, at a price
of $1.00 per share, or $40,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  13. (a)  Securities Sold.  On August 26, 1998, a total of 20,000 common stock purchase
warrants of the Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to Delaware Charter
Guarantee &amp; Trust Company f/b/o  Clarence Yim (10,000 warrants) and Delaware Charter
Guarantee &amp; Trust Company f/b/o R. Logan Kock (10,000 warrants).</P>

<P>     (c)   Consideration.  Such warrants were issued for no additional consideration as part of units
of securities in a private offering.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $2.00 per share and
exercisable for a period of two years from issuance.  The warrants are redeemable by the
Company at any time the bid price of the Company's Common Stock has been at or above $4.00
per share for five consecutive trading days.</P>

<P>  14. (a)  Securities Sold.  On September 9, 1998, 300,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Capital
Financial Consultants, Inc.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $1.10 per share, or $330,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  15. (a)  Securities Sold.  On September 1, 1998, 400,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan
&amp; Newlan, Attorneys at Law.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting and
Legal Services Consulting Agreement, at a price of $1.00 per share, or $400,000, in the
aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  16. (a)  Securities Sold.  On October 14, 1998, 100,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter
Rochow.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $.70 per share, or $70,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  17. (a)  Securities Sold.  On August 14, 1998, 5,000 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Darrell
Davis.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued as a signing bonus pursuant to
an Agreement and Plan of Reorganization, at a price of $1.00 per share, or $5,000, in the
aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  18. (a)  Securities Sold.  On November 3, 1998, 150,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Fair
Market Value, LLC.<BR>
<BR>
</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $.50 per share, or $75,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  19. (a)  Securities Sold.  On December 30, 1998, 150,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to H+N
Partners.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $2.50 per share, or $375,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  20. (a)  Securities Sold.  On December 30, 1998, 60,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to The
Humbolt Corporation.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $2.50 per share, or $150,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  21. (a)  Securities Sold.  On January 29, 1999, a total of 2,000,000 shares of Company Common
Stock were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Julius W.
Basham, II (1,394,000 shares), Wm. Kim Stimpson (303,000 shares) and David W. Brown
(303,000 shares).</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an Agreement and
Plan of Reorganization, at a price of $7.97 per share, or $15,940,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  22. (a)  Securities Sold.  On January 20, 1999, a total of 60,000 shares of Company Common
Stock were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Michael
Cohn (30,000 shares), Walter C. Schiller (10,000 shares), Michael R. Van Geons (10,000 shares),
Harry P. Kunecki Trust (5,000 shares) and Frank L. Leyba (5,000 shares).</P>

<P>     (c)   Consideration.  Such shares of Common Stock were sold for cash pursuant to a private
offering, at a price of $4.50 per share, or $270,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  23. (a)  Securities Sold.  On January 20, 1999, a total of 60,000 common stock purchase
warrants of the Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to Michael Cohn (30,000
warrants), Walter C. Schiller (10,000 warrants), Michael R. Van Geons (10,000 warrants), Harry
P. Kunecki Trust (5,000 warrants) and Frank L. Leyba (5,000 warrants).</P>

<P>     (c)   Consideration.  Such warrants were issued for no additional consideration as part of units
of securities in a private offering.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $7.00 per share and
exercisable for a period of two years from issuance.  The warrants are redeemable by the
Company at any time the bid price of the Company's Common Stock has been at or above $8.50
per share for five consecutive trading days.</P>

<P>  24. (a)  Securities Sold.  On February 5, 1999, 325,000 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to James
Kaufman.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued as a finder's fee, at a price of
$7.97 per share, or $2,590,250, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  25. (a)  Securities Sold.  On June 2, 1999, a total of 100,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Darrell
Davis and Deanna Davis (74,000 shares) and Roger Davis and Gloria C. Davis (26,000).</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an Agreement and
Plan of Reorganization, at a price of $4.00 per share, or $400,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  26. (a)  Securities Sold.  On June 4, 1999, a total of 35,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Walter
Engler (10,000 shares) and Shelter Capital Ltd. (25,000 shares).</P>

<P>     (c)   Consideration.  Such shares of Common Stock were sold for cash pursuant to a private
offering, at a price of $3.00 per share, or $105,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  27. (a)  Securities Sold.  On June 4, 1999, a total of 35,000 common stock purchase warrants of
the Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to Walter Engler (10,000
warrants) and Shelter Capital Ltd. (35000 warrants).</P>

<P>     (c)   Consideration.  Such warrants were issued for no additional consideration as part of units
of securities in a private offering.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $7.00 per share and
exercisable for a period of one year from issuance.  Warrants are redeemable by the Company at
any time the bid price of the Company's Common Stock has been at or above $10.00 per share for
five consecutive trading days.</P>

<P>  28. (a)  Securities Sold.  On June 4, 1999, 500,000 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to
Interactive Business Channel.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $4.00 per share, or $2,000,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  29. (a)  Securities Sold.  In July, 1999, a total of 155,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Dennis
A. Faker (50,000 shares), Barbara V. Schiller (30,000 shares), Jeanne M. Rowzee (10,000
shares), Alvin Gottlieb (10,000 shares), Rogers Family Trust (15,000 shares), Delaware Charter
Guarantee &amp; Trust Company f/b/o Clarence Yim (20,000 shares) and Delaware Charter
Guarantee &amp; Trust Company f/b/o R. Logan Kock (20,000 shares).</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued upon the exercise of warrants,
at a price of $2.00 per share, or $310,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  30. (a)  Securities Sold.  On February 5, 1999, 21,857 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Terry
Lewis.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued upon the exercise of warrants,
at a price of $1.25 per share, or $27,321, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  31. (a)  Securities Sold.  On August 11, 1999, 150,000 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Mark
Bove.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an Business
Acquisition Agreement, at a price of $4.00 per share, or $600,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  32. (a)  Securities Sold.  On August 23, 1999, 250,000 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Knud
Nielsen, III (127,500 shares) and Gary Stanley (122,500 shares).</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an Agreement and
Plan of Reorganization, at a price of $4.00 per share, or $1,000,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  33. (a)  Securities Sold.  On August 30, 1999, 127,000 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Alan L.
Taylor (122,405 shares), Brent Bates (518 shares), Kim Jorgensen (475 shares), Chris Allison
(472 shares), Robert Carlson (1,423 shares) and Lane Virgin (1,707 shares).</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an Agreement and
Plan of Reorganization, at a price of $4.00 per share, or $508,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  34. (a)  Securities Sold.  On September 24, 1999, 11,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Alonzo
B. See, III.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an Employment
Agreement, at a price of $5.00 per share, or $40,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  35. (a)  Securities Sold.  On November 12, 1999, 25,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Cyber
Mountain, Inc.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Letter
Agreement, at a price of $4.00 per share, or $100,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  36. (a)  Securities Sold.  On December 9, 1999, a total of 340,000 shares of Company Common
Stock were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Julius W.
Basham, II (215,000 shares), Wm. Kim Stimpson (34,000 shares) and David W. Brown (91,000
shares).</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Settlement
Agreement and Mutual Release, at a price of $2.6875 per share, or $913,750, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  37. (a)  Securities Sold.  On December 9, 1999, 30,000 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter
Rochow.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $3.00 per share, or $90,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  38. (a)  Securities Sold.  On December 13, 1999, 30,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to
Nostas/Faesel Group.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $3.00 per share, or $90,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.<BR>
<BR>
</P>

<P>  39. (a)  Securities Sold.  On December 13, 1999, 53,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to
CyberHighway of North Georgia, Inc.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an Asset
Acquisition Agreement, at a price of $4.00 per share, or $212,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  40. (a)  Securities Sold.  On December 1, 1999, 60,000 common stock purchase warrants of the
Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to The Research Works,
Inc.</P>

<P>    (c)   Consideration.  Such warrants were issued pursuant to a Consulting Agreement.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $3.50 per share and
the warrants are exercisable for a period of two years from issuance.</P>

<P>  41. (a)  Securities Sold.  On January 1, 2000, 60,000 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to The
Humbolt Corporation.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Business and
Communications Consulting Services Agreement, at a price of $3.00 per share, or $180,000, in
the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  42. (a)  Securities Sold.  On January 1, 2000, 42,166 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan
&amp; Newlan, Attorneys at Law.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued for services rendered, at a
price of $3.00 per share, or $126,500, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  43. (a)  Securities Sold.  On January 1, 2000, 100,000 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan
&amp; Newlan, Attorneys at Law.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Legal and
Consulting Services Agreement, at a price of $3.00 per share, or $300,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof,
as a transaction not involving a public offering.</P>

<P>  44. (a)  Securities Sold.  On February 1, 2000, 81,063 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to the
owners of The Spinning Wheel, Inc.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an Agreement and
Plan of Reorganization, at a price of $4.00 per share, or $324,252, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  45. (a)  Securities Sold.  On February 18, 2000, 50,000 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to the
owners of Internet Innovations, L.L.C.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an Agreement and
Plan of Reorganization, at a price of $4.00 per share, or $200,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  46. (a)  Securities Sold.  In April 2000, 30,000 shares of Company Common Stock were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter
Rochow.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $3.00 per share, or $90,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S
thereunder.</P>

<P>  47. (a)  Securities Sold.  In April 2000, 30,000 shares of Company Common Stock were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to
Nostas/Faesel Group.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $3.00 per share, or $90,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  48. (a)  Securities Sold.  In April 2000, 100,000 shares of Company Common Stock were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Fair
Market, Inc.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $7.125 per share, or $712,500, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>   49. (a)  Securities Sold.  In April 2000, a total of 65,000 shares of Company Common Stock
were sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to ten
individual investors.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were sold for cash pursuant to a private
offering, at a price of $5.00 per share, or $325,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  50. (a)  Securities Sold.  In April 2000, a total of 65,000 common stock purchase warrants of the
Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to ten individual investors.</P>

<P>     (c)   Consideration.  Such warrants were issued for no additional consideration as part of units
of securities in a private offering.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $7.50 per share and
exercisable for a period of two years from issuance.</P>

<P>  51. (a)  Securities Sold.  In May 2000, 250,000 shares of Company Common Stock were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Robert
A. Hart IV.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an Employment
Agreement, at a price of $3.00 per share, or $750,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  52. (a)  Securities Sold.  In July 2000, 250,000 shares of Company Common Stock were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Gruntal
&amp; Co., LLC.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an investment
banking agreement, at a price of $1.50 per share, or $375,000, in the aggregate.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  53. (a)  Securities Sold.  In July 2000, 5,880 shares of Company Common Stock were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Ryan G.
Campanile.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an Employment
Agreement, at prices ranging rom $9.44 per share to $2.06 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  54. (a)  Securities Sold.  In July 2000, 5,880 shares of Company Common Stock were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Ryan D.
Thibodeaux.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an Employment
Agreement, at prices ranging rom $9.44 per share to $2.06 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  55. (a)  Securities Sold.  In August 2000, 774,162 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to David
M. Lofin.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a letter
agreement, at a price of $1.25 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  56. (a)  Securities Sold.  In September 2000, 450,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Centex
Securities, Inc.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
agreement, at a price of $.875 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.<BR>
<BR>
</P>

<P>  57. (a)  Securities Sold.  In October 2000, a total 250,000 shares of Company Common Stock
were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Knud
Nielsen, III (202,500 shares) and Gary Stanley (47,500 shares).</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a settlement
agreement, at a price of $.875 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  58. (a)  Securities Sold.  In October 2000, 2,282 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Ryan G.
Campanile.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an Employment
Agreement, at prices ranging rom $2.00 per share to $1.56 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  59. (a)  Securities Sold.  In October 2000, 2.282 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Ryan D.
Thibodeaux.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an Employment
Agreement, at prices ranging rom $2.00 per share to $1.56 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  60. (a)  Securities Sold.  In October 2000, 35,536 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to James
Kaufman.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an employment
agreement, at prices ranging from $9.36 to $2.25 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  61. (a)  Securities Sold.  In November 2000, 10,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Slade S.
Mauer.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to an employment
agreement, at a price of $.625 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  62. (a)  Securities Sold.  In November 2000, 100,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to de Jong
&amp; Associates, Inc.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
agreement, at a price of $.5625 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  63. (a)  Securities Sold.  In November 2000, 35,000 common stock purchase warrants of the
Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to de Jong &amp; Associates,
Inc.</P>

<P>     (c)   Consideration.  Such warrants were issued for no additional consideration pursuant to a
consulting agreement.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $1.00 per share and
exercisable for a period of three years from issuance.</P>

<P>  64. (a)  Securities Sold.  In December 2000, 40,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Shelter
Capital Ltd.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a finder's fee
agreement, at a price of $.20 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S
thereunder.</P>

<P>  65. (a)  Securities Sold.  In December 2000, 380,000 common stock purchase warrants of the
Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</P>

<P>     (c)   Consideration.  Such warrants were issued for no additional consideration pursuant to a
finder's fee agreement.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S
thereunder.</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.20 per share and
exercisable for a period of three years from issuance.</P>

<P>  66. (a)  Securities Sold.  In December 2000, 100,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Gestalt
Corporation.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
services letter agreement, at a price of $.3125 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S thereunder.<BR>
<BR>
</P>

<P>  67. (a)  Securities Sold.  In December 2000, 300,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to James
Kaufman.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued as a bonus, at a price of $.25
per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  68. (a)  Securities Sold.  In December 2000, 200,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Waddell
D. Loflin.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued as a bonus, at a price of $.25
per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  69. (a)  Securities Sold.  In December 2000, 300,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter
Rochow.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued for consulting services, at a
price of $.25 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S
thereunder.</P>

<P>  70. (a)  Securities Sold.  In December 2000, 100,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Patrick
F. McGrew.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued for legal services, at a price of
$.25 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  71. (a)  Securities Sold.  In December 2000, 500,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan
&amp; Newlan.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued for legal services, at a price of
$.25 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  72. (a)  Securities Sold.  In December 2000, 400,000 shares of Company Common Stock were
sold.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Anchor
House Ltd.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were sold for cash, at a price of $.20 per
share.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S
thereunder.</P>

<P>  73. (a)  Securities Sold.  In January 2001, 800,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Fusion
Capital Fund II, LLC.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued as a commitment fee under a
common stock purchase agreement, at a price of $.25 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  74. (a)  Securities Sold.  In January 2001, 200,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Gruntal
&amp; Co., LLC.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued as a finder's fee pursuant to an
investment banking agreement, at a price of $.25 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  75. (a)  Securities Sold.  In January 2001, 200,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Fair
Market, Inc.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a letter
agreement, at a price of $.375 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  76. (a)  Securities Sold.  In January 2001, 20,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to
CyberHighway of North Georgia.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a letter
agreement, at a price of $.375 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.<BR>
<BR>
</P>

<P>  77. (a)  Securities Sold.  In January 2001, 10,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Fusion
Capital Fund II, LLC.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a letter
agreement, at a price of $.375 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  78. (a)  Securities Sold.  In February 2001, 840,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to
Claymore Asset Management Group Ltd.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a securities
purchase agreement, at a price of $.15 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S
thereunder.</P>

<P>  79. (a)  Securities Sold.  In February 2001, 840,000 common stock purchase warrants of the
Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to Claymore Asset
Management Group Ltd.</P>

<P>     (c)   Consideration.  Such warrants were issued for no additional consideration pursuant to a
securities purchase agreement.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S
thereunder.</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.15 per share and
exercisable for a period of three years from issuance.</P>

<P>  80. (a)  Securities Sold.  In February 2001, 84,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Shelter
Capital Ltd.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a finder's fee
agreement, at a price of $.15 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S
thereunder.</P>

<P>  81. (a)  Securities Sold.  In February 2001, 336,000 common stock purchase warrants of the
Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</P>

<P>     (c)   Consideration.  Such warrants were issued for no additional consideration pursuant to a
finder's fee agreement.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S
thereunder.</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.15 per share and
exercisable for a period of three years from issuance.</P>

<P>  82. (a)  Securities Sold.  In March 2001, 500,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Atlas
Securities Inc.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a securities
purchase agreement, at a price of $.25 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S
thereunder.</P>

<P>  83. (a)  Securities Sold.  In March 2001, 500,000 common stock purchase warrants of the
Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to Atlas Securities Inc.</P>

<P>     (c)   Consideration.  Such warrants were issued for no additional consideration pursuant to a
securities purchase agreement.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S
thereunder.</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.25 per share and
exercisable for a period of three years from issuance.</P>

<P>  84. (a)  Securities Sold.  In December 2000, 50,000 shares of Company Common Stock were
issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Shelter
Capital Ltd.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a finder's fee
agreement, at a price of $.25 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S
thereunder.</P>

<P>  85. (a)  Securities Sold.  In December 2000, 200,000 common stock purchase warrants of the
Company were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</P>

<P>     (c)   Consideration.  Such warrants were issued for no additional consideration pursuant to a
finder's fee agreement.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S thereunder.<BR>
<BR>
</P>

<P>      (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.25 per share and
exercisable for a period of three years from issuance.</P>

<P>  86. (a)  Securities Sold.  In April 2001, 300,000 shares of Company Common Stock were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to IBC.TV,
LLC.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
agreement, at a price of $.50 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  The Company relied upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended, but this
exemption may not have been available.</P>

<P>  87. (a)  Securities Sold.  In May 2001, 60,000 shares of Company Common Stock were issued.</P>

<P>     (b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter
Rochow.</P>

<P>     (c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
agreement, at a price of $.44 per share.</P>

<P>     (d)  Exemption from Registration Claimed.  These securities are exempt from registration
under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S
thereunder.</P>

<P><STRONG>Item 16.  Exhibits and Financial Statements Schedules.</STRONG></P>

<P>1. Exhibits.</P>

<P>Exhibit No. Description<BR>
<BR>
</P>

<P>#   3.1  Articles of Incorporation of Registrant.</P>

<P>+   3.2  Bylaws of Registrant, as amended.</P>

<P>+   3.3  Bylaws of Executive Committee of the Board of Directors of Registrant.</P>

<P>+   3.4  Bylaws of Audit Committee of the Board of Directors of Registrant.</P>

<P>*    3.5  Articles of Amendment to Articles of Incorporation of Registrant.</P>

<P>**   3.6  Articles of Amendment to Articles of Incorporation of Registrant.</P>

<P>+   4.1  Specimen Common Stock Certificate.</P>

<P>@  5.1  Opinion of Newlan &amp; Newlan, Attorneys at Law, re: Legality.</P>

<P>+ 10.1  Registration Rights Letter Agreement between Registrant and Centex Securities, Inc.,
dated May 20, 1998.</P>

<P>+ 10.2  Finder's Fee Letter between Registrant and H+N Partners, dated March 27, 1998.</P>

<P>+ 10.3  Registration Rights Letter Agreement between Registrant and Dennis A. Faker, dated
June 19, 1998.</P>

<P>+ 10.4  Registration Rights Letter Agreement between Registrant and Delaware Charter Guaranty
and Trust Company, f/b/o R. Logan Kock IRA, dated June 19, 1998.</P>

<P>+ 10.5  Registration Rights Letter Agreement between Registrant and Alvin Gottlieb, dated June
19, 1998.</P>

<P>+ 10.6  Registration Rights Letter Agreement between Registrant and Rogers Family Trust, dated
June 19, 1998.</P>

<P>+ 10.7  Registration Rights Letter Agreement between Registrant and Jeanne Rowzee, dated June
19, 1998.</P>

<P>+ 10.8  Registration Rights Letter Agreement between Registrant and Barbara V. Schiller, dated
June 19, 1998.</P>

<P>+ 10.9  Registration Rights Letter Agreement between Registrant and Delaware Charter
Guarantee  and Trust Company f/b/o Clarence Yim IRA, dated June 19, 1998.</P>

<P>+ 10.9.1 Warrant Agreement between Registrant and Securities Transfer Corporation, dated May
18, 1998.</P>

<P>+ 10.10  Warrant Agreement between Registrant and Securities Transfer Corporation, dated May
20, 1998.</P>

<P>+ 10.11  Warrant Agreement between Registrant and Securities Transfer Corporation, dated May
20, 1998.</P>

<P>+ 10.12  Warrant Agreement between Registrant and Securities Transfer Corporation dated
January 19, 1999.</P>

<P>+ 10.13  Registration Rights Letter Agreement between Registrant and Michael Cohn, dated
January 19, 1999.</P>

<P>+ 10.14  Registration Rights Letter Agreement between Registrant and Walter C. Schiller, dated
January 19, 1999.</P>

<P>+ 10.15  Registration Rights Letter Agreement between Registrant and Michael R. Van Geons,
dated January 19, 1999.</P>

<P>+ 10.16  Registration Rights Letter Agreement between Registrant and Harry P. Kunecki Trust,
dated January 19, 1999.</P>

<P>+ 10.17  Registration Rights Letter Agreement between Registrant and Frank L. Leyba, dated
January 19, 1999.</P>

<P>+ 10.18  Warrant Agreement between Registrant and Securities Transfer Corporation, dated May
3, 1999.</P>

<P>+ 10.19  Registration Rights Letter Agreement between Registrant and Shelter Capital, Ltd.,
dated May 28, 1999.</P>

<P>+ 10.20  Registration Rights Letter Agreement between Registrant and Walter Engler, dated May
28, 1999.</P>

<P>+ 10.21  Agreement and Plan of Reorganization, dated April 28, 1999, among Registrant, Santa
Fe Wireless Internet, Inc., Santa Fe Trail Internet Plus, Inc., and Darrell Davis.</P>

<P>+ 10.21.1 Agreement of Merger, dated June 2, 1999, among Registrant, Santa Fe Wireless
Internet, Inc. and Santa Fe Trail Internet Plus, Inc.</P>

<P>+ 10.22  Registration Rights Letter Agreement between Registrant and Darrell Davis and Deanna
Davis, dated June 2, 1999.</P>

<P>+ 10.23  Registration Rights Letter Agreement between Registrant and Roger Davis and Gloria C.
Davis, dated June 2, 1999.</P>

<P>+ 10.24  Business Acquisition Agreement between Registrant and Mark Bove, dated July 14,
1999.</P>

<P>+ 10.25  Registration Rights Letter Agreement between Registrant and Mark Bove, dated August
11, 1999.</P>

<P>+ 10.26  Agreement and Plan of Reorganization, dated August 24, 1999, among Registrant,
CyberHighway, Inc., Premier Internet Services, Inc. and Alan Taylor.</P>

<P>+ 10.27  Agreement of Merger among Registrant, CyberHighway, Inc. and Premier Internet
Services, Inc., dated August 30, 1999.</P>

<P>+ 10.28  Confidentiality Agreement between Registrant and Alan Taylor, dated August 30, 1999.</P>

<P>+ 10.29  Agreement Not to Compete between Registrant and Alan Taylor, dated August 30,
1999.</P>

<P>+ 10.30  Registration Rights Letter Agreement between Registrant and Alan Taylor, dated August
30, 1999.</P>

<P>+ 10.31  Asset Purchase Agreement between Registrant and CyberHighway of North Georgia,
Inc., dated October 29, 1999.</P>

<P>+ 10.32  Confidentiality Agreement among Registrant, CyberHighway of North Georgia, Inc.,
Grady E. Brooks, Jr. and Anthony Woodall, dated December 20, 1999.</P>

<P>+ 10.33  Agreement Not to Compete among Registrant, CyberHighway of North Georgia, Inc.,
Grady E. Brooks, Jr., and Anthony Woodall, dated December 20, 1999.</P>

<P>+ 10.34  Registration Rights Letter Agreement between Registrant and CyberHighway of North
Georgia, Inc., dated December 20, 1999.</P>

<P>+ 10.35  Employment Agreement between Registrant and James Kaufman, dated March 22, 1999.</P>

<P>+ 10.36  Confidentiality Agreement between Registrant and James Kaufman, dated March 22,
1999.</P>

<P>+ 10.37  Agreement Not to Compete between Registrant and James Kaufman, dated March 22,
1999.</P>

<P>+ 10.38  Employment Agreement between Registrant and Darrell Davis, dated October 4, 1999.</P>

<P>+ 10.39  Confidentiality Agreement between Registrant and Darrell Davis, dated October 4, 1999.</P>

<P>+ 10.40  Agreement Not to Compete between Registrant and Darrell Davis, dated October 4,
1999.</P>

<P>+ 10.41  Employment Agreement between Registrant and David M. Loflin, dated August 1, 1999.</P>

<P>+ 10.42  Confidentiality Agreement between Registrant and David M. Loflin, dated August 1,
1999.</P>

<P>+ 10.43  Agreement Not to Compete between Registrant and David M. Loflin, dated August 1,
1999.</P>

<P>+ 10.44  Employment Agreement between Registrant and Waddell D. Loflin, dated August 1,
1999.</P>

<P>+ 10.45  Confidentiality Agreement between Registrant and Waddell D. Loflin, dated August 1,
1999.</P>

<P>+ 10.46  Agreement Not to Compete between Registrant and Waddell D. Loflin, dated August 1,
1999.</P>

<P>*** 10.47 Settlement Agreement and Mutual Release, dated November 30, 1999, among
Registrant, CyberHighway, Inc., Julius W. Basham, II, Wm. Kim Stimpson and David W. Brown.</P>

<P>+ 10.48  Wholesale Customer - Dial Access Agreement between Registrant and ioNET, Inc. (a
division of PSINet, Inc.), dated July 21, 1999.</P>

<P>+ 10.49  ISP Agreement between Registrant and NaviNet, Inc., dated August 2, 1999.</P>

<P>+ 10.50  Warrant Agreement between Registrant and Securities Transfer Corporation, dated
November 1, 1999.</P>

<P>+ 10.50.1 Registration Rights Letter Agreement between Registrant and Michael Cohn, dated
November 1, 1999.</P>

<P>+ 10.51  Letter Agreement between Registrant and The Research Works, Inc., dated December 1,
1999.</P>

<P>+ 10.51.1 Warrant Agreement between Registrant and Securities Transfer Corporation, dated
December 1, 1999.</P>

<P>+ 10.52  Financial Public Relations and Investor Relations Services Agreement between
Registrant and Peter Rochow, dated October 27, 1999.</P>

<P>+ 10.53  Consultation Agreement - Investor Relations between Registrant and Nostas/Faessel
Group, dated October 23, 1999.</P>

<P>+ 10.54  Corporate Communications Services Agreement between Registrant and JFMills/
Worldwide, dated November 1, 1999.</P>

<P>+ 10.55  Agreement and Plan of Reorganization, dated July 23, 1999, among Registrant, USURF
America (Alabama), Inc., Net 1, Inc. and Gary Stanley.</P>

<P>+ 10.56  Agreement of Merger, dated August 23, 1999, among Registrant, USURF America
(Alabama), Inc. and Net 1, Inc.</P>

<P>+ 10.57  Registration Rights Letter Agreement between Registrant and Kund Nielsen, III, dated
August 23, 1999.</P>

<P>+ 10.58  Registration Rights Letter Agreement between Registrant and Gary Stanley, dated
August 23, 1999.</P>

<P>+ 10.59  Confidentiality Agreement between Registrant and Kund Nielsen, III, dated August 23,
1999.</P>

<P>+ 10.60  Agreement Not to Compete between Registrant and Kund Nielsen, III, dated August 23,
1999.</P>

<P>+ 10.61  Agreement and Plan of Reorganization, dated February 1, 2000, among Registrant,
USURF America Internet Design, Inc., Internet Innovations, L.L.C., Ryan D. Thibodeaux and
Ryan G. Campanile.</P>

<P>+ 10.62  Agreement of Merger, dated February 16, 2000, among Registrant, USURF America
Internet Design, Inc. and Internet Innovations, L.L.C.</P>

<P>+ 10.63  Registration Rights Letter Agreement, dated February 16, 2000, between Registrant and
Ryan D. Thibodeaux.</P>

<P>+ 10.64  Registration Rights Letter Agreement, dated February 16, 2000, between Registrant and
Ryan G. Campanile.</P>

<P>+ 10.65  Employment Agreement, dated February 16, 2000, between Registrant, USURF America
Internet Design, Inc. and Ryan D. Thibodeaux.</P>

<P>+ 10.66  Employment Agreement, dated February 16, 2000, between Registrant, USURF America
Internet Design, Inc. and Ryan G. Campanile.</P>

<P>+ 10.67  Business and Communications Consulting Services Agreement, dated as of January 1,
2000, between Registrant and The Humbolt Corporation.</P>

<P>+ 10.68  Legal and Consulting Services Agreement, dated as of January 1, 2000, between
Registrant and Newlan &amp; Newlan, Attorneys at Law.</P>

<P>+ 10.69  Agreement and Plan of Reorganization, dated October 26, 1999, among Registrant,
CyberHighway, Inc., The Spinning Wheel, Inc. and Diggs W. Lewis, Jr.</P>

<P>+ 10.70  Agreement of Merger, dated February 1, 2000, among Registrant, CyberHighway, Inc.
and The Spinning Wheel, Inc.</P>

<P>+ 10.71  Registration Rights Letter Agreement, dated February 1, 2000, between Registrant and
Diggs W. Lewis, Jr.</P>

<P>+ 10.72  Agreement Not to Compete, dated February 1, 2000, between Registrant and Diggs W.
Lewis, Jr.</P>

<P>+ 10.73  Confidentiality Agreement, dated February 1, 2000, between Registrant and Diggs W.
Lewis, Jr.</P>

<P>+ 10.74  Warrant Agreement between Registrant and Securities Transfer Corporation, dated as of
March 29, 2000.</P>

<P>+ 10.75  Employment Agreement between Registrant and Christopher L. Wiebelt, dated February
15, 2000.</P>

<P>+ 10.76  Confidentiality Agreement between Registrant and Christopher L. Wiebelt, dated
February 15, 2000.</P>

<P>+ 10.77  Agreement Not to Compete between Registrant and Christopher L. Wiebelt, dated
February 15, 2000.</P>

<P>+ 10.78  Management/Financial Consulting Agreement between Registrant and Fair Market, Inc.,
dated March 15, 2000.</P>

<P>+ 10.79  Registration Rights Letter Agreement, dated March 29, 2000, between Registrant and
Shelter Capital Ltd.</P>

<P>+ 10.80  Registration Rights Letter Agreement, dated March 29, 2000, between Registrant and
Gordon Engler.</P>

<P>+ 10.81  Registration Rights Letter Agreement, dated March 29, 2000, between Registrant and
Annie Rochow.</P>

<P>+ 10.82  Registration Rights Letter Agreement, dated March 29, 2000, between Registrant and
Eden Park Homes Ltd.</P>

<P>+ 10.83  Registration Rights Letter Agreement, dated March 29, 2000, between Registrant and G.
Paul Dumas.</P>

<P>+ 10.84  Registration Rights Letter Agreement, dated March 29, 2000, between Registrant and
Daniel E. Pisenti.</P>

<P>+ 10.85  Registration Rights Letter Agreement, dated March 29, 2000, between Registrant and
Wolfgang and Helga Rochow.</P>

<P>+ 10.86  Registration Rights Letter Agreement, dated March 29, 2000, between Registrant and
Geoffrey Page Flett.</P>

<P>+ 10.87  Registration Rights Letter Agreement, dated March 29, 2000, between Registrant and
Donald Rayburn.</P>

<P>+ 10.88  Employment Agreement, dated May 25, 2000, between Registrant and Robert A. Hart
IV.</P>

<P>+ 10.89  Confidentiality Agreement, dated May 25, 2000, between Registrant and Robert A. Hart
IV.</P>

<P>+ 10.90  Agreement Not to Compete, dated May 25, 2000, between Registrant and Robert A.
Hart IV.</P>

<P>+ 10.91  Investment Banking Letter Agreement, dated July 19, 2000, between Registrant and
Gruntal &amp; Co., LLC.</P>

<P>+ 10.92  Letter Agreement, dated August 21, 2000, between Registrant and David M. Loflin.</P>

<P>+ 10.93  Consulting Agreement, dated September 21, 2000, between Registrant and Centex
Securities, Inc.</P>

<P>+ 10.94  Settlement Agreement, dated October 13, 2000, among Registrant, Knud Nielsen, III
and Gary Stanley.</P>

<P>+ 10.95  Employment Agreement, dated November 6, 2000, between Registrant and Slade S.
Maurer.</P>

<P>+ 10.96  Confidentiality Agreement, dated November 6, 2000, between Registrant and Slade S.
Maurer.</P>

<P>+ 10.97  Agreement Not to Compete, dated November 6, 2000, between Registrant and Slade S.
Maurer</P>

<P>+ 10.98  Consulting Agreement, dated November 8, 2000, between Registrant and de Jong &amp;
Associates, Inc.</P>

<P>+ 10.99  Warrant Agreement, dated November 8, 2000, between Registrant and de Jong &amp;
Associates, Inc.</P>

<P>+ 10.100 Settlement Agreement, dated November 29, 2000, among Registrant, CyberHighway,
Inc., and CTC Telecom, Inc.</P>

<P>+ 10.101 Consulting Services Agreement, dated December 12, 2000, between Registrant and
Gestalt Corporation.</P>

<P>+ 10.102 Stock Purchase Agreement, dated December 12, 2000, between Registrant and Anchor
House Ltd.</P>

<P>+ 10.103 Warrant Agreement, dated December 12, 2000, between Registrant and Shelter Capital
Ltd.</P>

<P>+ 10.104 REPLACED BY EXHIBIT 10.121 (Common Stock Purchase Agreement, dated
October 9, 2000, between Registrant and Fusion Capital Fund II, LLC).</P>

<P>+ 10.105 REPLACED BY EXHIBIT 10.121 (Letter Agreement, dated December 27, 2000,
between Registrant and Fusion Capital Fund II, LLC).</P>

<P>+ 10.106 REPLACED BY EXHIBIT 10.122 (Registration Rights Agreement, dated October 9,
2000, between Registrant and Fusion Capital Fund II, LLC).</P>

<P>+ 10.107 REMOVED - Form of Warrant Agreement never executed.</P>

<P>+ 10.108 REMOVED - Form of Warrant never executed.</P>

<P>+ 10.109 REMOVED - Form of Warrant never executed</P>

<P>+ 10.110 REMOVED - Form of Warrant never executed.</P>

<P>+ 10.111 Letter Agreement, dated January 8, 2001, between Registrant and Fair Market, Inc.</P>

<P>+ 10.112 Letter Agreement, dated as of January 5, 2001, between Registrant and Fusion Capital
Fund II, LLC.</P>

<P>+ 10.113 Securities Purchase Agreement, dated February 20, 2001, between Registrant and
Claymore Asset Management Group Ltd.</P>

<P>+ 10.114 Warrant Agreement, dated February 20, 2001, between Registrant and Claymore Asset
Management Group Ltd.</P>

<P>+ 10.115 Warrant Agreement, dated February 20, 2001, between Registrant and Shelter Capital
Ltd.</P>

<P>+ 10.116 Securities Purchase Agreement, dated March 20, 2001, between Registrant and Atlas
Securities Inc.</P>

<P>+ 10.117 Warrant Agreement, dated March 20, 2001, between Registrant and Atlas Securities
Inc.</P>

<P>+ 10.118 Warrant Agreement, dated March 20, 2001, between Registrant and Shelter Capital Ltd.</P>

<P>+ 10.119 USURF America Reseller License Agreement, dated April 4, 2001, between Registrant
and Wireless WebConnect!, Inc.</P>

<P>+ 10.120 Consulting Agreement, dated April 10, 2001, between Registrant and IBC.TV, LLC.</P>

<P>+ 10.121 Amended and Restated Common Stock Purchase Agreement, dated May 9, 2001,
between Registrant and Fusion Capital Fund II, LLC.</P>

<P>+ 10.122 Registration Rights Agreement, dated May 9, 2001, between Registrant and Fusion
Capital Fund II, LLC.</P>

<P>+ 10.123 $.25 Warrant Agreement between Registrant and Fusion Capital Fund II, LLC.</P>

<P>+ 10.124 $.35 Warrant Agreement between Registrant and Fusion Capital Fund II, LLC.</P>

<P>+ 10.125 $.45 Warrant Agreement between Registrant and Fusion Capital Fund II, LLC.</P>

<P>+ 10.126 $.25 Warrant Agreement between Registrant and Gruntal &amp; Co., L.L.C.</P>

<P>+ 10.127 $.35 Warrant Agreement between Registrant and Gruntal &amp; Co., L.L.C.</P>

<P>+ 10.128 $.45 Warrant Agreement between Registrant and Gruntal &amp; Co., L.L.C.</P>

<P>+  22.1  Subsidiaries of Registrant.</P>

<P>@  23.1  Consent of Weaver and Tidwell, L.L.P., independent auditor.</P>

<P>@  23.2  Consent of Postlethwaite &amp; Netterville, independent auditor.</P>

<P>@  23.3  Consent of Newlan &amp; Newlan, Attorneys at Law.</P>

<P>@  23.4  Consent of Patrick F. McGrew, Esquire.</P>

<P>_______________________</P>

<P>    @ Filed herewith.</P>

<P>    + Incorporated by reference from Registrant's Registration Statement on Form S-1,
Commission File No. 333-96027.</P>

<P>    # Incorporated by reference from Registrant's Registration Statement on Form S-1,
Commission File No. 333-26385.</P>

<P>    * Incorporated by reference from Registrant's Current Report on Form 8-K, date of event: July
21 1998.</P>

<P>    ** Incorporated by reference from Registrant's Current Report on Form 8-K, date of event:
July 6, 1999.</P>

<P>    *** Incorporated by reference from Registrant's Current Report on Form 8-K, date of event:
November 30, 1999.</P>

<P>2. Financial Statement Schedules.</P>

<P>All schedules are omitted since they are furnished elsewhere in the Prospectus.</P>

<P><STRONG>Item 17.  Undertakings.</STRONG></P>

<P>The undersigned Registrant hereby undertakes:</P>

<P>(1) To file, during any period in which offers or sales are being made, a post-effective amendment
to this registration statement:</P>

<P>(i) To included any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as
amended (the "Act); </P>

<P>(ii)  To reflect in the prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the information set forth in the registration
statement; and</P>

<P>(iii) To include any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such information in the
registration statement.</P>

<P>(2) That, for the purpose of determining any liability under the Act, each such post-effective
amendment shall be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof.</P>

<P>(3) To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.</P>

<P>Insofar as indemnification for liabilities arising under the Act may be permitted to directors,
officers and controlling persons of the registrant  pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act and is, therefore,
unenforceable.  In the event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or controlling person
of the registrant in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be governed by the final adjudication
of such issue.</P>

<P><STRONG>SIGNATURES</STRONG></P>

<P>Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly
caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Baton Rouge, State of Louisiana, on June 22, 2001.</P>

<P>USURF AMERICA, INC.</P>

<P>By: /s/ David M. Loflin</P>

<P>David M. Loflin</P>

<P>President<BR>
<BR>
</P>

<P>Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form
S-1 has been signed by the following persons in the capacities and on the dates indicated:<BR>
<BR>

<TABLE BORDER="1" WIDTH="100%" CELLPADDING="1" CELLSPACING="1">
<TR><TD>Signatures</TD>
<TD>Title</TD>
<TD>Date</TD></TR>
<TR><TD>/s/ David M. Loflin</TD>
<TD>President (Principal Executive
Officer and Acting Principal
Financial Officer) and Director</TD>
<TD>June 22, 2001</TD></TR>
<TR><TD>David M. Loflin</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>/s/ Waddell D. Loflin</TD>
<TD>Vice President, Secretary and
Director</TD>
<TD>June 22, 2001</TD></TR>
<TR><TD>Waddell D. Loflin</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>/s/ Ross S. Bravata</TD>
<TD>Director</TD>
<TD>June 22, 2001</TD></TR>
<TR><TD>Ross S. Bravata</TD>
<TD></TD>
<TD></TD></TR>
<TR><TD></TD>
<TD></TD>
<TD></TD></TR>
<TR><TD>/s/ Michael Cohn</TD>
<TD>Director</TD>
<TD>June 22, 2001</TD></TR>
<TR><TD>Michael Cohn</TD>
<TD></TD>
<TD></TD></TR></TABLE>
</P>

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<P>________________</P>

<P>EXHIBIT 5.1</P>

<P>________________<BR>
<BR>
</P>

<P>June 25, 2001<BR>
<BR>
</P>

<P>The Board of Directors</P>

<P>USURF America, Inc.</P>

<P>8748 Quarters Lake Road</P>

<P>Baton Rouge, Louisiana 70809<BR>
<BR>
</P>

<P>Gentlemen:<BR>
<BR>
</P>

<P>We have acted as counsel to USURF America, Inc., a Nevada corporation (the "Company"), in
connection with the preparation and filing of a Registration Statement on Form S-1 (the
"Registration Statement") with the Securities and Exchange Commission under the Securities Act
of 1933, as amended.  The Registration Statement covers the following securities of the
Company:</P>

<P>  A.  Up to 6,000,000 shares of Company Common Stock, $.0001 par value per share (the
"Common Stock"), to be sold pursuant to an Amended and Restated Common Stock Purchase
Agreement, dated as of May 9, 2001 (these 6,000,000 shares being referred to herein as the
"Purchase Stock");</P>

<P>  B.  Up to 1,250,000 shares of Company Common Stock, all of which are issued and outstanding,
and all of which are held by shareholders of the Company (these 1,250,000 shares being referred
to herein as the "Selling Shareholder Stock"); and</P>

<P>  C.  Up to 806,250 shares of Company Common Stock underlying issued and outstanding
common stock purchase warrants of the Company (these 806,250 shares being referred to herein
as the "Warrant Stock").</P>

<P>As counsel for the Company, we have examined the originals or copies, certified or otherwise
authenticated to our satisfaction, of the corporate records of the Company and such other
documents or certificates of public officials as we have deemed necessary for the opinions
expressed herein.</P>

<P>In rendering the opinions set forth herein, we have assumed (i) the legal capacity of all natural
persons, (ii) the authenticity of all documents submitted to us as originals and (iii) the conformity
to original documents of all documents submitted to us as copies.</P>

<P>Based upon our examination of such documents, materials, certificates and information as we have
deemed appropriate or relevant for the purpose of delivering this opinion, but subject to the
qualifications set forth herein, we are of the following opinion:</P>

<P> 1. The Company is a corporation duly organized and lawfully existing and in good standing under
the laws of the State of Nevada.</P>

<P> 2. The 6,000,000 shares of the Purchase Stock, when issued and delivered in accordance with the
Amended and Restated Common Stock Purchase Agreement, dated as of May 9, 2001, as set
forth in the Prospectus filed as part of the Registration Statement, will be legally issued, fully paid
and non-assessable shares of Common Stock of the Company.</P>

<P> 3. The 1,250,000 shares of the Selling Shareholder Stock owned by the various shareholders
named in the Prospectus filed as part of the Registration Statement are validly issued and were
duly authorized for issuance by the Board of Directors of the Company at valid meetings thereof,
after due consideration by the Board of Directors of the facts and circumstances surrounding such
issuances, legally issued in accordance with the laws of the State of Nevada, and appropriate stock
certificates representing such shares of Selling Shareholder Stock have been issued; the 1,250,000
shares of Selling Shareholder Stock are fully paid and non-assessable.</P>

<P>4. The 806,250 shares of Warrant Stock issuable upon exercise of certain outstanding common
stock purchase warrants of the Company, when paid for and issued in accordance with their
respective terms, will be legally issued, fully paid and non-assessable shares of Common Stock of
the Company.</P>

<P>The foregoing is based solely on the facts stated herein.  No opinion contained herein shall be
construed to infer an opinion relating to any other situation, unless such opinion is stated expressly
herein.</P>

<P>Sincerely,<BR>
<BR>
</P>

<P>/s/<BR>
<BR>
</P>

<P>NEWLAN &amp; NEWLAN</P>

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<P>_______________</P>

<P>EXHIBIT 23.1</P>

<P>_______________</P>

<BR WP="BR1"><BR WP="BR2">
<P>CONSENT OF INDEPENDENT AUDITOR</P>

<BR WP="BR1"><BR WP="BR2">
<P>As independent auditors, we hereby consent to the use in this Form S-1 Registration Statement of
USURF America, Inc. and subsidiaries (formally Internet Media Corporation) of our report dated
April 9, 1999 appearing in the prospectus, which is a part of such Registration Statement, and to
the reference to this firm under the heading "Experts" in this Registration Statement. </P>

<BR WP="BR1"><BR WP="BR2">
<P>/s/</P>

<BR WP="BR1"><BR WP="BR2">
<P>WEAVER AND TIDWELL, L.L.P.</P>

<P>Fort Worth, Texas</P>

<P>June 25, 2001</P>

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<P>______________</P>

<P>EXHIBIT 23.2</P>

<P>______________</P>

<BR WP="BR1"><BR WP="BR2">
<P>CONSENT AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT</P>

<BR WP="BR1"><BR WP="BR2">
<P>We hereby consent to the use in this Registration Statement of our report dated April 16, 2001,
except as to Note 21 which is dated May 30, 2001 relating to the consolidated financial
statements of USURF America, Inc. and Subsidiaries, and to the reference to our Firm under the
caption "Experts" in the Prospectus.</P>

<P>/s/POSTLETHWAITE &amp; NETTERVILLE, CPAs</P>

<P>Baton Rouge, LA</P>

<P>June 25, 2001</P>

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<P>________________</P>

<P>EXHIBIT 23.3</P>

<P>________________<BR>
<BR>
</P>

<P>CONSENT OF COUNSEL<BR>
<BR>
</P>

<P>The undersigned law firm hereby consents to the use of its name in the Prospectus forming a part
of the Registration Statement on Form S-1 to which this consent is an exhibit.<BR>
<BR>
</P>

<P>/s/</P>

<P>NEWLAN &amp; NEWLAN</P>

<P>Attorneys at Law</P>

<P>Lewisville, Texas</P>

<P>June 25, 2001</P>

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<P>_______________</P>

<P>EXHIBIT 23.4</P>

<P>_______________</P>

<BR WP="BR1"><BR WP="BR2">
<P>CONSENT OF COUNSEL</P>

<BR WP="BR1"><BR WP="BR2">
<P>The undersigned hereby consents to the use of his name in the Prospectus forming a part of the
Registration Statement on Form S-1 to which this consent is an exhibit.</P>

<BR WP="BR1"><BR WP="BR2">
<P>/s/</P>

<P>Patrick F. McGrew, Esquire</P>

<BR WP="BR1"><BR WP="BR2">
<P>Baton Rouge, Louisiana</P>

<P>June 25, 2001</P>

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