<SUBMISSION>
<ACCESSION-NUMBER>0001035398-02-000016
<TYPE>10QSB/A
<PUBLIC-DOCUMENT-COUNT>1
<PERIOD>20020331
<FILING-DATE>20020528
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>USURF AMERICA INC
<CIK>0001035398
<ASSIGNED-SIC>4841
<IRS-NUMBER>721346591
<STATE-OF-INCORPORATION>NV
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10QSB/A
<ACT>34
<FILE-NUMBER>001-15383
<FILM-NUMBER>02663313
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>8748 QUARTERS LAKE RD
<CITY>BATON ROUGE
<STATE>LA
<ZIP>70809
<PHONE>2259227744
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>8748 QUARTERS LAKE RD
<CITY>BATON ROGUE
<STATE>LA
<ZIP>70809
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>INTERNET MEDIA CORP
<DATE-CHANGED>19980729
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>MEDIA ENTERTAINMENT INC
<DATE-CHANGED>19980729
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10QSB/A
<SEQUENCE>1
<FILENAME>qsba33102.htm
<TEXT>
<html>

<head>
<meta name="generator" content="Corel WordPerfect 10">
<meta ="content-Type" content="text/html; charset=utf-8">



</head>

<body>
<p style="text-align: center">Form 10-QSB/A</p>
<br>
<p style="text-align: center">SECURITIES AND EXCHANGE COMMISSION</p>
<p style="text-align: center">Washington, D.C.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>[ X ]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>For the quarterly period ended March 31, 2002</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>OR</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>[   ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>For the transition period from     to       .</p>
</td>
</tr>
</table>
<br>
<p style="text-align: center">Commission File No. 1-15383</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>USURF America, Inc.</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>(Exact Name of Small Business Issuer as Specified in its Charter)</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="31%" align="center" valign="top"><p>NEVADA</p>
</td>
<td width="31%" align="center" valign="top"><p>91-2117796</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="31%" align="center" valign="top"><p>(State or Other Jurisdiction
of incorporation or
organization)</p>
</td>
<td width="31%" align="center" valign="top"><p>(I.R.S. Employer
Identification Number)</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>8748 Quarters Lake Road, Baton Rouge, Louisiana 70809</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>(Address of Principal Executive Offices, including Zip Code)</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>(225) 922-7744</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>(Issuer&#8217;s telephone number, including area code)</p>
</td>
</tr>
</table>
<br>
<p>Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that Registrant as required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes [ X ]     No [   ]</p>
<br>
<p>Indicate the number of shares outstanding of each of the issuer&#8217;s classes of common stock as of
the latest practicable date:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="31%" align="center" valign="top"><p>Class</p>
</td>
<td width="31%" align="center" valign="top"><p>Outstanding as of 5-17-02</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="31%" align="center" valign="top"><p>___________________</p>
</td>
<td width="31%" align="center" valign="top"><p>___________________</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="31%" align="center" valign="top"><p>Common Stock, $.0001
par value</p>
</td>
<td width="31%" align="center" valign="top"><p>43,731,870</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p style="text-align: center">PART I - FINANCIAL INFORMATION</p>
<br>
<p>Item 1.  Financial Statements.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>USURF America, Inc.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="54%" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>Page</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="54%" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>____</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="54%" valign="top"><p>Consolidated Balance Sheets as of March 31,
2002 (unaudited), and December 31, 2001</p>
</td>
<td width="23%" align="center" valign="top"><p>3</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="54%" valign="top"><p>Consolidated Statements of Operations for the
Three Months Ended March 31, 2002 and 2001
(unaudited)</p>
</td>
<td width="23%" align="center" valign="top"><p>6</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="54%" valign="top"><p>Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2002 and 2001
(unaudited)</p>
</td>
<td width="23%" align="center" valign="top"><p>8</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="54%" valign="top"><p>Notes to Consolidated Statements</p>
</td>
<td width="23%" align="center" valign="top"><p>11</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>USURF AMERICA, INC. AND SUBSIDIARIES</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>BATON ROUGE, LOUISIANA</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>CONSOLIDATED BALANCE SHEETS</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>DECEMBER 31, 2001, AND MARCH 31, 2002 (UNAUDITED)</p>
</td>
</tr>
</table>
<br>
<p style="text-align: center">ASSETS</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>3/31/02</p>
<p>(unaudited)</p>
</td>
<td width="19%" align="center" valign="top"><p>12/31/01</p>
<p>(audited)</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>__________</p>
</td>
<td width="19%" align="center" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>CURRENT ASSETS</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Cash and cash equivalents</p>
</td>
<td width="19%" align="right" valign="top"><p>$284</p>
</td>
<td width="19%" align="right" valign="top"><p>$10</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Inventory</p>
</td>
<td width="19%" align="right" valign="top"><p>133,500</p>
</td>
<td width="19%" align="right" valign="top"><p>134,746</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>133,784</p>
</td>
<td width="19%" align="right" valign="top"><p>134,756</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>PROPERTY AND EQUIPMENT</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Cost</p>
</td>
<td width="19%" align="right" valign="top"><p>204,387</p>
</td>
<td width="19%" align="right" valign="top"><p>203,141</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Less: accumulated depreciation</p>
</td>
<td width="19%" align="right" valign="top"><p>(129,986)</p>
</td>
<td width="19%" align="right" valign="top"><p>(125,036)</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>74,401</p>
</td>
<td width="19%" align="right" valign="top"><p>78,105</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>OTHER ASSETS</p>
</td>
<td width="19%" align="right" valign="top"><p>14,583</p>
</td>
<td width="19%" align="right" valign="top"><p>16,667</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>TOTAL ASSETS</p>
</td>
<td width="19%" align="right" valign="top"><p>$222,768</p>
</td>
<td width="19%" align="right" valign="top"><p>$229,528</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>===========</p>
</td>
<td width="19%" align="right" valign="top"><p>===========</p>
</td>
</tr>
</table>
<br>
<p>The accompanying notes are an integral part of these statements.</p>
<br>
<p style="text-align: center">LIABILITIES AND STOCKHOLDERS&#8217; DEFICIT</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>3/31/02</p>
<p>(unaudited)</p>
</td>
<td width="19%" align="center" valign="top"><p>12/31/01</p>
<p>(audited)</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>__________</p>
</td>
<td width="19%" align="center" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>CURRENT LIABILITIES</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Disbursements in excess of cash balances</p>
</td>
<td width="19%" align="right" valign="top"><p>$0</p>
</td>
<td width="19%" align="right" valign="top"><p>$15,539</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Accounts payable</p>
</td>
<td width="19%" align="right" valign="top"><p>1,042,150</p>
</td>
<td width="19%" align="right" valign="top"><p>1,034,619</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Accrued payroll</p>
</td>
<td width="19%" align="right" valign="top"><p>272,820</p>
</td>
<td width="19%" align="right" valign="top"><p>265,978</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Other current liabilities</p>
</td>
<td width="19%" align="right" valign="top"><p>59,396</p>
</td>
<td width="19%" align="right" valign="top"><p>54,996</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Notes payable to stockholder</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="19%" align="right" valign="top"><p>18,521</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>1,374,366</p>
</td>
<td width="19%" align="right" valign="top"><p>1,389,653</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>LONG-TERM LIABILITIES</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>1,374,366</p>
</td>
<td width="19%" align="right" valign="top"><p>1,389,653</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>REDEEMABLE COMMON STOCK</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Common stock subject to rescission, 2,138,726 shares
outstanding at December 31, 2001, and 524,564 shares
outstanding at March 31, 2002, $.0001 par value per
share</p>
</td>
<td width="19%" align="right" valign="top"><p>220,998</p>
</td>
<td width="19%" align="right" valign="top"><p>1,192,700</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>220,998</p>
</td>
<td width="19%" align="right" valign="top"><p>1,192,700</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>STOCKHOLDERS&#8217; DEFICIT</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Common stock, $.0001 par value; Authorized:
100,000,000 shares; Issued and outstanding: 23,848,108
at December 31, 2001, and 28,919,306 at March 31,
2002</p>
</td>
<td width="19%" align="right" valign="top"><p>2,892</p>
</td>
<td width="19%" align="right" valign="top"><p>2,385</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Additional paid-in capital</p>
</td>
<td width="19%" align="right" valign="top"><p>36,891,262</p>
</td>
<td width="19%" align="right" valign="top"><p>35,642,817</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Accumulated deficit</p>
</td>
<td width="19%" align="right" valign="top"><p>(37,469,439)</p>
</td>
<td width="19%" align="right" valign="top"><p>(37,000,628)</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Subscriptions receivable</p>
</td>
<td width="19%" align="right" valign="top"><p>166,500</p>
</td>
<td width="19%" align="right" valign="top"><p>165,750</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Deferred consulting</p>
</td>
<td width="19%" align="right" valign="top"><p>(963,811)</p>
</td>
<td width="19%" align="right" valign="top"><p>(1,163,149)</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>(1,372,596)</p>
</td>
<td width="19%" align="right" valign="top"><p>(2,352,825)</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>TOTAL LIABILITIES AND STOCKHOLDERS&#8217;
DEFICIT</p>
</td>
<td width="19%" align="right" valign="top"><p>$222,768</p>
</td>
<td width="19%" align="right" valign="top"><p>$229,528</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>===========</p>
</td>
<td width="19%" align="right" valign="top"><p>===========</p>
</td>
</tr>
</table>
<br>
<p>The accompanying notes are an integral part of these statements.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>USURF AMERICA, INC. AND SUBSIDIARIES</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>BATON ROUGE, LOUISIANA</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>CONSOLIDATED STATEMENTS OF OPERATIONS</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>THREE MONTHS ENDED MARCH 31, 2002 AND 2001</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="57%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="43%" align="center" valign="top"><p>Three Months Ended March 31,</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="center" valign="top"><p>2002</p>
<p>(unaudited)</p>
</td>
<td width="21%" align="center" valign="top"><p>2001</p>
<p>(unaudited)</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="center" valign="top"><p>__________</p>
</td>
<td width="21%" align="center" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>REVENUES</p>
</td>
<td width="22%" valign="top"><p>&#160;</p>
</td>
<td width="21%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>Revenues</p>
</td>
<td width="22%" align="right" valign="top"><p>$4,626</p>
</td>
<td width="21%" align="right" valign="top"><p>$384</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>Internet access costs, cost of goods sold</p>
</td>
<td width="22%" align="right" valign="top"><p>(8,482)</p>
</td>
<td width="21%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>__________</p>
</td>
<td width="21%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>Gross profit (loss)</p>
</td>
<td width="22%" align="right" valign="top"><p>(3,856)</p>
<p>_________</p>
</td>
<td width="21%" align="right" valign="top"><p>384</p>
<p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>OPERATING EXPENSES</p>
</td>
<td width="22%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="21%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;Depreciation and amortization</p>
</td>
<td width="22%" align="right" valign="top"><p>7,033</p>
</td>
<td width="21%" align="right" valign="top"><p>11,580</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;Professional fees</p>
</td>
<td width="22%" align="right" valign="top"><p>270,147</p>
</td>
<td width="21%" align="right" valign="top"><p>707,288</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;Rent</p>
</td>
<td width="22%" align="right" valign="top"><p>7,681</p>
</td>
<td width="21%" align="right" valign="top"><p>5,361</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;Salaries and commissions</p>
</td>
<td width="22%" align="right" valign="top"><p>103,168</p>
</td>
<td width="21%" align="right" valign="top"><p>160,746</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;Advertising</p>
</td>
<td width="22%" align="right" valign="top"><p>62,000</p>
</td>
<td width="21%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;Other</p>
</td>
<td width="22%" align="right" valign="top"><p>14,743</p>
</td>
<td width="21%" align="right" valign="top"><p>16,668</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>__________</p>
</td>
<td width="21%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>464,772</p>
</td>
<td width="21%" align="right" valign="top"><p>901,643</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>__________</p>
</td>
<td width="21%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>LOSS FROM OPERATIONS</p>
</td>
<td width="22%" align="right" valign="top"><p>(468,628)</p>
<p>__________</p>
</td>
<td width="21%" align="right" valign="top"><p>(901,259)</p>
<p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>OTHER INCOME (EXPENSE)</p>
</td>
<td width="22%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="21%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;Interest expense</p>
</td>
<td width="22%" align="right" valign="top"><p>(183)</p>
</td>
<td width="21%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>__________</p>
</td>
<td width="21%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>(183)</p>
<p>__________</p>
</td>
<td width="21%" align="right" valign="top"><p>0</p>
<p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>LOSS BEFORE INCOME TAX</p>
</td>
<td width="22%" align="right" valign="top"><p>(468,811)</p>
</td>
<td width="21%" align="right" valign="top"><p>(901,259)</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>INCOME TAX BENEFIT</p>
</td>
<td width="22%" align="right" valign="top"><p>0</p>
</td>
<td width="21%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>__________</p>
</td>
<td width="21%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>NET LOSS</p>
</td>
<td width="22%" align="right" valign="top"><p>$(468,811)</p>
</td>
<td width="21%" align="right" valign="top"><p>$(901,259)</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>=========</p>
</td>
<td width="21%" align="right" valign="top"><p>=========</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>Net loss per common share</p>
</td>
<td width="22%" align="right" valign="top"><p>$(0.02)</p>
</td>
<td width="21%" align="right" valign="top"><p>$(0.06)</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>=========</p>
</td>
<td width="21%" align="right" valign="top"><p>=========</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>Weighted average number of shares outstanding</p>
</td>
<td width="22%" align="right" valign="top"><p>25,503,752</p>
</td>
<td width="21%" align="right" valign="top"><p>13,934,118</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>=========</p>
</td>
<td width="21%" align="right" valign="top"><p>=========</p>
</td>
</tr>
</table>
<br>
<p>The accompanying notes are an integral part of these statements.</p>
<br>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>USURF AMERICA, INC. AND SUBSIDIARIES</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>BATON ROUGE, LOUISIANA</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>CONSOLIDATED STATEMENTS OF CASH FLOWS</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>THREE MONTHS ENDED MARCH 31, 2002 AND 2001</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="52%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="48%" align="center" valign="top"><p>Three Months Ended March 31,</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>2002</p>
<p>(unaudited)</p>
</td>
<td width="24%" align="center" valign="top"><p>2001</p>
<p>(unaudited)</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>__________</p>
</td>
<td width="24%" align="center" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>CASH FLOWS FROM OPERATING
ACTIVITIES</p>
</td>
<td width="24%" valign="top"><p>&#160;</p>
</td>
<td width="24%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>___________________________</p>
</td>
<td width="24%" valign="top"><p>&#160;</p>
</td>
<td width="24%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Net loss</p>
</td>
<td width="24%" align="right" valign="top"><p>$(468,811)</p>
</td>
<td width="24%" align="right" valign="top"><p>$(901,259)</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Adjustments to reconcile net loss to net cash
used in operating activities</p>
</td>
<td width="24%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Depreciation and amortization</p>
</td>
<td width="24%" align="right" valign="top"><p>7,033</p>
</td>
<td width="24%" align="right" valign="top"><p>11,580</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Consulting fees paid with stock</p>
</td>
<td width="24%" align="right" valign="top"><p>247,663</p>
</td>
<td width="24%" align="right" valign="top"><p>670,400</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Legal fees paid with stock</p>
</td>
<td width="24%" align="right" valign="top"><p>6,000</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Compensation expense paid with stock</p>
</td>
<td width="24%" align="right" valign="top"><p>24,000</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Advertising expense paid with stock</p>
</td>
<td width="24%" align="right" valign="top"><p>62,000</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Compensation expense</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
<td width="24%" align="right" valign="top"><p>3,300</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Changes in operating assets and liabilities</p>
</td>
<td width="24%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Accounts receivable</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
<td width="24%" align="right" valign="top"><p>(384)</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Inventory</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Accounts payable</p>
</td>
<td width="24%" align="right" valign="top"><p>(8,032)</p>
</td>
<td width="24%" align="right" valign="top"><p>1,786</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Accrued payroll</p>
</td>
<td width="24%" align="right" valign="top"><p>6,842</p>
</td>
<td width="24%" align="right" valign="top"><p>41,893</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Other current liabilities</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
<td width="24%" align="right" valign="top"><p>10,000</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="right" valign="top"><p>_____________</p>
</td>
<td width="24%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Net cash used in operating activities</p>
</td>
<td width="24%" align="right" valign="top"><p>(123,305)</p>
</td>
<td width="24%" align="right" valign="top"><p>(162,684)</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="right" valign="top"><p>_____________</p>
</td>
<td width="24%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>CASH FLOWS FROM INVESTING
ACTIVITIES</p>
</td>
<td width="24%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>_____________________________</p>
</td>
<td width="24%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Proceeds on disposal of fixed assets</p>
</td>
<td width="24%" align="right" valign="top"><p>$0</p>
</td>
<td width="24%" align="right" valign="top"><p>$0</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Capital expenditures</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="right" valign="top"><p>_____________</p>
</td>
<td width="24%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Net cash used in investing activities</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="right" valign="top"><p>_____________</p>
</td>
<td width="24%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>CASH FLOWS FROM FINANCING
ACTIVITIES</p>
</td>
<td width="24%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>____________________________</p>
</td>
<td width="24%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Payments on notes payable</p>
</td>
<td width="24%" align="right" valign="top"><p>$0</p>
</td>
<td width="24%" align="right" valign="top"><p>$0</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Disbursements in excess of cash balances</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Payments on notes payable - stockholder</p>
</td>
<td width="24%" align="right" valign="top"><p>(18,521)</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Payments on subscriptions receivable</p>
</td>
<td width="24%" align="right" valign="top"><p>70,000</p>
</td>
<td width="24%" align="right" valign="top"><p>261,000</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Proceeds from note payable - stockholder</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
<td width="24%" align="right" valign="top"><p>26,090</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Issuance of common stock for cash</p>
<p>Warrants exercised</p>
</td>
<td width="24%" align="right" valign="top"><p>64,000</p>
<p>13,000</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
<p>0</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Fee for stock issuances</p>
</td>
<td width="24%" align="right" valign="top"><p>(4,900)</p>
</td>
<td width="24%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="right" valign="top"><p>_____________</p>
</td>
<td width="24%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Net cash provided by financing activities</p>
</td>
<td width="24%" align="right" valign="top"><p>123,579</p>
</td>
<td width="24%" align="right" valign="top"><p>287,090</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="right" valign="top"><p>_____________</p>
</td>
<td width="24%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Net increase in cash and cash equivalents</p>
</td>
<td width="24%" align="right" valign="top"><p>274</p>
</td>
<td width="24%" align="right" valign="top"><p>124,406</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Cash and cash equivalents, Beginning of period</p>
</td>
<td width="24%" align="right" valign="top"><p>10</p>
</td>
<td width="24%" align="right" valign="top"><p>1,088</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Cash and cash equivalents, End of period</p>
</td>
<td width="24%" align="right" valign="top"><p>$284</p>
</td>
<td width="24%" align="right" valign="top"><p>$125,494</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="right" valign="top"><p>===========</p>
</td>
<td width="24%" align="right" valign="top"><p>===========</p>
</td>
</tr>
</table>
<br>
<p>The accompanying notes are an integral part of these statements.</p>
<br>
<p>SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING</p>
<p>AND OTHER CASH FLOW INFORMATION</p>
<br>
<p>Three Months March 31, 2002:</p>
<br>
<p>- In January 2002, the Company entered into a one-year consulting agreement, by issuing
120,000 shares of stock valued at $10,800.</p>
<br>
<p>- In February 2002, the Company issued 300,000 under a four month consulting agreement,
which shares of stock were valued at $30,000.</p>
<br>
<p>- In March 2002, the Company entered into a one-month consulting agreement, by issuing 75,000
shares of stock valued at $7,500.</p>
<br>
<p>- In March 2002, the Company issued 75,000 shares in payment of legal services, which shares of
stock were valued at $6,000.</p>
<br>
<p>Three Months March 31, 2001:</p>
<br>
<p>- In January 2001, the Company entered into a one-year consulting agreement, by issuing
200,000 shares of stock valued at $62,000.</p>
<br>
<p>- 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.</p>
<br>
<p>- In January 2001, 774,162 shares were issued to the Company&#8217;s president, pursuant to a debt
conversion agreement, which shares were not issued in 2000, due to an administrative error.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>USURF AMERICA, INC. AND SUBSIDIARIES</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>BATON ROUGE, LOUISIANA</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>THREE MONTHS ENDED MARCH 31, 2002</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>(Unaudited)</p>
</td>
</tr>
</table>
<br>
<p>Note 1.  Nature of Business, Organization and Basis of Presentation</p>
<br>
<p>Basis of Presentation</p>
<br>
<p>USURF America, Inc. (the &#8220;Company&#8221;), formerly Internet Media Corporation, was incorporated
as Media Entertainment, Inc. in the State of Nevada on November 1, 1996.  The Company
currently provides wireless Internet access services to a small number of customers in Del Rio,
Texas, and Santa Fe, New Mexico.</p>
<br>
<p>Principles of Consolidation</p>
<br>
<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>
<br>
<p>Loss Per Common Share</p>
<br>
<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
anti-dilutive.</p>
<br>
<p>Note 2.  Interim Consolidated Financial Statements</p>
<br>
<p>In the opinion of management, the accompanying consolidated financial statements for the three
months ended March 31, 2002 and 2001, 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>
<br>
<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 U.S. 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&#8217;s Annual Report on Form 10-KSB for the year ended
December 31, 2001, 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>
<br>
<p>Note 3.  Notes Payable to Shareholder</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="35%" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>March 31, 2002</p>
</td>
<td width="23%" align="center" valign="top"><p>December 31, 2001</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="35%" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>(unaudited)</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="35%" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>______________</p>
</td>
<td width="23%" align="center" valign="top"><p>______________</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="35%" valign="top"><p>Notes payable to majority
stockholder, interest accrues at
8%, due on demand and
unsecured</p>
</td>
<td width="23%" align="center" valign="top"><p>$0</p>
</td>
<td width="23%" align="center" valign="top"><p>$18,521</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p>Note 4.  Stock and Warrant Issuances</p>
<br>
<p>During the three months ended March 31, 2002, the Company issued (or became obligated to
issue) shares of common stock and common stock purchase warrants, as follows:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" align="center" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>486,500 shares as finder&#8217;s fees.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" align="center" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>570,000 shares in payment of consulting fees.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" align="center" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>1,519,000 warrants (200,000 warrants, exercise price $.049 per share; 560,000
warrants, exercise price $.10 per share; 666,000 warrants, exercise price of $.20
per share; 93,000 warrants, exercise price of $.30 per share) were issued in
payment of consulting fees.</p>
</td>
</tr>
</table>
<br>
<p>Note 5.  Contingencies</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>A.</p>
</td>
<td width="84%" valign="top"><p>Bankruptcy</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="84%" valign="top"><p>On September 29, 2000, three creditors of CyberHighway filed an involuntary
petition in the Idaho Federal Bankruptcy Court, styled In Re:CyberHighway,
Inc..  In December 2000, CyberHighway and the petitioning creditors filed a
joint motion to dismiss this proceeding.  However, some of CyberHighway&#8217;s
creditors objected to the joint motion to dismiss and the motion failed.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="84%" valign="top"><p>Subsequent to the involuntary bankruptcy, CyberHighway lost all of its
customers.  Due to this loss of customer base, the Company's intangible assets
relating to those customers became worthless and were written off in 2000.
Due to this change in operating environment, goodwill was impaired and,
consequently, the goodwill associated with these operations was written off in
the 2000 statement of operations.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>B.</p>
</td>
<td width="84%" valign="top"><p>Potential Rescission Claims</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="84%" valign="top"><p>From January 2000 through June 2001, a total of 4,906,549 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 $5,090,252.  For a period of one year
from issuance, the issuees of these shares have or had, as the case may be, a
potential claim for rescission of their respective issuance transactions.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="84%" valign="top"><p>At December 31, 2001, 2,138,726 of these shares have been reflected under the
redeemable stock caption on the accompanying balance sheet with an assigned
value of $1,192,700.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="84%" valign="top"><p>At March 31, 2002, 524,564 of these shares have been reflected under the
redeemable stock caption on the accompanying balance sheet with an assigned
value of $220,998</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="84%" valign="top"><p>The diminishing number of shares subject to potential rescission claims was
caused either by the expiration of the respective statute of limitations periods or
by the transfer of the subject shares by the original issuees.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="84%" valign="top"><p>The Company believes that it is unlikely that any of these potential rescission
claims will be asserted against the Company.</p>
</td>
</tr>
</table>
<br>
<p>Note 6.  Financing Transaction</p>
<br>
<p>On May 9, 2001, the Company signed an amended and restated common stock purchase
agreement with an unrelated company to sell up to 6,000,000 shares of common stock for up to
$10,000,000.  The purchase price of the shares under this purchase agreement varies, based on
market prices of the Company's common stock.  The purchase 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 common stock.  The registration statement
filed with respect to this financing transaction became effective on June 29, 2001.  The
commencement date of the purchase agreement was July 10, 2001. To date, the Company has
received approximately $395,000 in proceeds under the purchase agreement, approximately
$55,000 of which was received by the Company during the first three months of 2002.  The
purchase agreement remains in effect.</p>
<br>
<p>Note 7.  Stock Ownership Plan</p>
<br>
<p>In March 2002, the Company adopted a 2002 Stock Ownership Plan for employees and
consultants, reserving 3,000,000 shares of its common stock for issuance thereunder.</p>
<br>
<p>In March 2002, the Company entered into a consulting and marketing license agreement with a
third party, under which agreement the Company granted the consultant options, under its 2002
Stock Ownership Plan, to purchase up to $600,000 of its common stock, up to $50,000 per
month for ten years, the per share exercise price being based on future market prices, with a
38.75% discount to the market price on the date of exercise.  In March and April 2002, the
consultant exercised options to purchase $98,000 of Company common stock.  2,000,000 shares
of common stock were issued pursuant to this option exercise.</p>
<br>
<p>Note 8. Subsequent Events</p>
<br>
<p>Significant Equity Purchase</p>
<br>
<p>In April 2002, the Company entered into a securities purchase agreement with a third party,
whereby the Company is to issue 3,125,000 units of its securities, each unit consisting of one
share of common stock, one common stock purchase warrant to purchase one share at an exercise
price of $.15 per share and one common stock purchase warrant to purchase one share at an
exercise price of $.30 per share, for cash in the amount of $250,000 payable in two equal
increments at the initial closing (held April 15, 2002) and June 14, 2002.  Also pursuant to this
agreement, the Company hired a new president and chief executive officer, who became a
director of the Company, and, as a signing bonus, issued him 3,000,000 shares of common stock;
the current president became Chairman of the Board, reduced the term of his remaining term of
employment from approximately four years to six months, waived the payment of all accrued and
unpaid salary and waived the repayment of all loans made by him to the Company, in
consideration of 2,000,000 shares of common stock being issued to him; two of the Company&#8217;s
vice presidents reduced the terms of their remaining terms of employment from approximately
four years to six months and one year to six months, respectively, and waived the payment of all
accrued and unpaid salary, in consideration of 2,000,000 shares of common stock being issued to
each of them; and the other vice president of the Company terminated his employment with the
Company.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="11%" valign="top"><p>Item 2.</p>
</td>
<td width="89%" valign="top"><p>Management&#8217;s Discussion and Analysis of Financial Condition and Results of
Operations.</p>
</td>
</tr>
</table>
<br>
<p>Background</p>
<br>
<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>
<br>
<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.</p>
<br>
<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&#8217;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>
<br>
<p>Current Overview</p>
<br>
<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>
<br>
<p>Our new president has expanded the scope of our original Quick-Cell business plan, which called
for the construction of Quick-Cell systems in small and medium-sized cities.  In addition to our
original plan, we are now attempting to develop working partnerships with companies who need
to create or extend broadband Internet connectivity for their customers, employees and partners.
The companies with which we seek to do business operate in the following market segments,
among others: hospitality, education, aviation, multiple dwelling unit, planned community
development, independent local exchange, utility and municipality.</p>
<br>
<p>On April 15, 2002, we consummated a securities purchase agreement with Evergreen Venture
Partners, LLC.  Under this agreement, we are to issue a total of 3,125,000 units of our securities
for cash in the amount of $250,000, payable in two equal increments: on April 15, 2002, and
June 14, 2002.  Each unit sold to Evergreen consists of one share of our common stock, one
common stock purchase warrant to purchase one share at an exercise price of $.15 per share and
one common stock purchase warrant to purchase one share at an exercise price of $.30 per share.
Also pursuant to this agreement, we hired a new president and chief executive officer, Douglas
O. McKinnon, who also became a director, and who received, as a signing bonus, 3,000,000
shares of our common stock; David M. Lofin, our former president, became our Chairman of the
Board, reduced the term of his remaining term of employment from approximately 4 years to six
months, waived the payment of all accrued and unpaid salary and waived the repayment of all
loans made by him to us, in consideration of 2,000,000 shares of our common stock; two of our
vice presidents reduced the terms of their remaining terms of employment from approximately 4
years to six months and one year to six months, respectively, and waived the payment of all
accrued and unpaid salary, in consideration of 2,000,000 shares of our common stock; and our
other vice president terminated his employment with us.  Also, under this agreement, upon the
final closing scheduled for June 14, 2002, Evergreen will name two persons to become directors
of USURF America.</p>
<br>
<p>As a result of the transactions with these four officers arising out of the Evergreen agreement, we
will incur a charge against our earnings during the second quarter of 2002 of approximately
$600,000. </p>
<br>
<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.
The shares of our common stock being issued under this agreement are the subject of an effective
registration statement.  To date, we have received only $395,000 under our agreement with
Fusion Capital.  Fusion Capital has not purchased the maximum shares possible under this
agreement.  This lack of significant funding has impeded our ability to expand our Quick-Cell
business operations.  We will remain in this position unless and until (1) our stock price increases
significantly or (2) we secure funding from a source other than Fusion Capital, of which there is
no assurance.  Please see the discussion under the heading &#8220;Management&#8217;s Plans Relating to
Future Liquidity&#8221;, for a more thorough explanation of the impact this agreement could have on
our business.  Should we obtain more substantial funding, we would be able to begin to pursue
our wireless Internet business plan.  In October 2001, we began company-owned Quick-Cell
operations in Del Rio, Texas, and have agreements with two resellers there.  We have
approximately 50 customers in Del Rio, and consumer response has been excellent.  However,
our customer growth will continue to be slowed by a lack of capital.  We have also completed
engineering efforts in four other South Texas towns.  We will not begin marketing our Quick-Cell service in these towns, until we stabilize our working capital situation.</p>
<br>
<p>As the level of funding under the Fusion Capital agreement has been lower than we had earlier
anticipated, $55,000 during the first three months of 2002, from November 2001 through March
31, 2002, we obtained additional funds through sales of our securities, as follows:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$57,500 (2001) from the sale of 575,000 shares of our common stock and a
total of 1,150,000 warrants;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$30,000 (2002) from the exercise of outstanding warrants - 200,000 shares at
$.15 per share;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$13,000 (2002) from the exercise of outstanding warrants - 162,500 shares at
$.08 per share; and</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$49,000 (2002) from the exercise of options - 1,000,000 shares at $.049 per
share (a 38.75% discount to the market price on the date of exercise).</p>
</td>
</tr>
</table>
<br>
<p>These funds were used for operating expenses and not for the expansion of our wireless Internet
access business.</p>
<br>
<p>Subsequent to March 31, 2002, in April 2002, we obtained funds through sales of our securities,
as follows:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$49,000 from the exercise of options - 1,000,000 shares at $.049 per share (a
38.75% discount to the market price on the date of exercise).  These funds were
applied exclusively to operating expenses.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$125,000 from the sale of 1,562,500 shares and a total of 3,125,000 warrants,
pursuant to the Evergreen transaction.  A portion of these funds are to be used
for operating expenses, while the balance is to be utilized in our efforts to
expand our wireless Internet access business.</p>
</td>
</tr>
</table>
<br>
<p>Pursuant to the Evergreen agreement, we are to receive an additional $125,000, in June 2002,
which funds we expect will enable us to pursue our business plan more aggressively.  However,
we cannot assure you that we will ever earn a profit.</p>
<br>
<p>We will need further capital, as we continue to expand our wireless Internet access business.</p>
<br>
<p>CyberHighway Bankruptcy</p>
<br>
<p>In September 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.  A joint motion to dismiss the
bankruptcy proceeding was unsuccessful because some of CyberHighway&#8217;s creditors believe that
CyberHighway&#8217;s as-yet unasserted damage claims against the original petitioning creditors and
their law firm and a claim against Dialup USA, Inc. represent CyberHighway&#8217;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.  These
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>
<br>
<p>The January 1999 acquisition of CyberHighway fundamentally altered our company.  Our annual
revenues went from nearly zero to about $2.5 million.  However, the involuntary bankruptcy
proceeding caused the demise of CyberHighway&#8217;s business.  CyberHighway&#8217;s company-owned
dial-up customer base went from approximately 8,500 to none.  The filing of the involuntary
bankruptcy and CyberHighway&#8217;s switch-over to the network of Dialup USA were the primary
causes of CyberHighway&#8217;s customer base demise.  We will not apply any available future capital
to the revitalization of our dial-up Internet access business.</p>
<br>
<p>Results of Operations</p>
<br>
<p>General.  By the end of February 2001, CyberHighway had lost all of its dial-up Internet access
customers and we do not foresee the revitalization of CyberHighway&#8217;s business.  You should not
purchase our common stock expecting that CyberHighway&#8217;s business will assist in making us
profitable.</p>
<br>
<p>During the first quarter of 2001, we derived no revenue from CyberHighway&#8217;s business.  For the
first three months of 2001 and 2002, our small amounts of revenues were dervied from our
Quick-Cell wireless Internet access operations.  We currently lack the capital necessary to pursue
our complete 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>
<br>
<p>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.</p>
<br>
<p>Beginning in March 2000, we began initial Quick-Cell wireless Internet access operations in
Santa Fe, New Mexico.  Throughout 2000, our customers in Santa Fe were in their one-year
&#8220;free-use&#8221; period.  During most of 2001, we did not charge our Santa Fe customers for service,
due to our commencing an upgrade to the system.  We were forced to suspend the upgrade of the
system and have only a few customers remaining.  We have yet to derive significant revenue
from our Santa Fe market.  In the last quarter of 2001, we began to derive revenues from the first
customers in Del Rio, Texas.  We have lacked capital with which to expand either of these
markets.</p>
<br>
<p>In September 2001, we began Quick-Cell operations in Del Rio, Texas.  We have approximately
50 customers online, but our growth there has been slowed significantly due to our lack of
capital.  We cannot predict the number of customers we will secure in any specific time frame,
due to our lack of capital.  In Del Rio, we have chosen to make sustained slow progress in
customer acquisition, rather than to have begun full-scale marketing activities only to suspend
them soon after their start due to our lack of capital.  Should we begin to derive greater amounts
of funds under the Fusion Capital agreement or from another source, of which there is no
assurance, we plan to construct additional Quick-Cell systems throughout the remainder of 2002.</p>
<br>
<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.  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 the first three months of 2001 and 2002, we
derived no significant revenues from customer modem sales to these Quick-Cell purchasers, and
we do not expect to do so during 2002.</p>
<br>
<br>
<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&#8217;s informal study of Internet usage by businesses
versus home users that revealed businesses&#8217; higher demand for high-speed Internet access.  Our
management&#8217;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&#8217;s lack of name recognition,
although this belief may also prove to be incorrect.  Our Quick-Cell business will not be able to
succeed without additional capital.</p>
<br>
<p>In cities where a Quick-Cell reseller operates, we will not have final approval of the reseller&#8217;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>
<br>
<p>We have entered into a Quick-Cell reseller agreement with Wireless WebConnect!, Inc.  Due to
issues within WebConnect that were out of our control, to date, we have not derived any benefit
from this agreement.  However, after recent discussions with WebConnect, it is possible that we
will begin to implement our agreement during 2002, as it appears that WebConnect&#8217;s internal
issues have been resolved to a point that it is now in a position to participate as a Quick-Cell
reseller.  It is possible that the terms of our agreement with WebConnect might be amended in
the future, but we cannot predict if and when an amendment would be executed.</p>
<br>
<p>Our revenues for the first three months of 2001 and 2002 were significantly below those of 2000,
since we no longer derive revenues from the operations of CyberHighway and we have lacked
capital with which to implement a full-scale implementation of our Quick-Cell business plan.  In
2002, we will produce significant revenues only if we are able to be successful in placing Quick-Cell service customers online, of which there is no assurance, due to the uncertainty surrounding
our level of capitalization to be derived under the Fusion Capital agreement or any other sources.</p>
<br>
<p>We have taken steps towards the preparation of tax returns for all years since our inception,
though none has been filed.  Because we have never earned a profit, there is no tax liability that
would arise from this circumstance.</p>
<br>
<p>Potential Rescission Claims.  At March 31, 2002, 524,564 shares of our common stock with an
aggregate assigned value of $220,998 may have been issued in violation of Section 5 of the
Securities Act.  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>
<br>
<p>Three Months Ended March 31, 2002, versus Three Months Ended March 31, 2001.  During both
periods, our small amounts of revenues were derived from our wireless Internet access business.
Without additional capital, our revenues will remain at these levels.</p>
<br>
<p>Our operating results for the first quarters of 2002 and 2001 are summarized in the following
table:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="25%" align="center" valign="top"><p>First Quarter 2002
(unaudited)</p>
</td>
<td width="25%" align="center" valign="top"><p>First Quarter 2001
(unaudited)</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="25%" align="center" valign="top"><p>________________</p>
</td>
<td width="25%" align="center" valign="top"><p>________________</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>Revenues</p>
</td>
<td width="25%" align="center" valign="top"><p>$4,626</p>
</td>
<td width="25%" align="center" valign="top"><p>$384</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>Internet Access Costs, Cost of Goods
Sold</p>
</td>
<td width="25%" align="center" valign="top"><p>8,482</p>
</td>
<td width="25%" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>Gross Profit (Loss)</p>
</td>
<td width="25%" align="center" valign="top"><p>(3,856)</p>
</td>
<td width="25%" align="center" valign="top"><p>384</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>Operating Expenses</p>
</td>
<td width="25%" align="center" valign="top"><p>464,772</p>
</td>
<td width="25%" align="center" valign="top"><p>901,643</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>Loss from Operations</p>
</td>
<td width="25%" align="center" valign="top"><p>(468,628)</p>
</td>
<td width="25%" align="center" valign="top"><p>(901,259)</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>Net Loss</p>
</td>
<td width="25%" align="center" valign="top"><p>(468,811)</p>
</td>
<td width="25%" align="center" valign="top"><p>(901,259)</p>
</td>
</tr>
</table>
<br>
<p>Our net loss of $468,811 (unaudited) for the first quarter of 2002 was significantly less than our
net loss for the 2001 period of $901,259 (unaudited).  Certain line items in our statements of
operations changed materially from the 2001 period to the 2002 period, which contributed to the
reduction in our net loss for the current period, as follows:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" align="center" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>Professional fees decreased from $707,288 in the 2001 period to $270,147 in
the 2002 period.  This decrease is a result of our not having required
professional services during the 2002 period at the levels required during the
2001 period.  Also, during the 2002, we did not have a charge against our
earnings similar to the $248,000 amount that occurred during the 2001 period,
the result of the issuance of 800,000 shares as a commitment fee under a
common stock purchase agreement.  Should we continue to lack cash reserves,
it is likely that, during the remainder of 2002, we would issue shares of our
common stock in payment of certain professional fees.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" align="center" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>During the 2001 period, we incurred no advertising expense.  However, during
the 2002 period, we incurred advertising expenses of $62,000.  All of our
advertising expenses during the current period are attributable to the exercise of
options to acquire shares of our common stock by a consultant at a 31.75%
discount to the market price on the date of exercise.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" align="center" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>Salaries and commissions decreased from $160,746 in the 2001 period to
$103,168 in the 2002 period.  This decrease in salaries and commissions is
attributable to our reductions in personnel during the last quarter of 2001 and
the first quarter of 2002.</p>
</td>
</tr>
</table>
<br>
<p>As a result of the Evergreen transaction, we will incur a one-time charge against our earnings for
the second quarter of 2002 in the approximate amount of $600,000, due to the following stock
issuances:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>3,000,000 shares issued to our new president and chief executive officer as a
signing bonus under his employment agreement.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>2,000,000 shares to our former president (current Chairman of the Board) in
consideration of his agreeing to reduce the term of his employment agreement,
waive the payment of accrued salary and waive the repayment of unpaid loans
made by him to us.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>2,000,000 shares to one of our vice presidents in consideration of his agreeing
to reduce the term of his employment agreement and waive the payment of
accrued salary.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>2,000,000 shares to our vice president of corporate development in
consideration of his agreeing to reduce the term of his employment agreement
and waive the payment of accrued salary.</p>
</td>
</tr>
</table>
<br>
<p>We expect that our results of operations for the second quarter of 2002 will be similar to those of
the first quarter of 2002.</p>
<br>
<p>Due to our severe lack of capital during the 2001 and 2002 periods, we issued 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 &#8220;Professional Fees&#8221; line item.  Issuing shares
of our common stock was the only means by which we could obtain the consultants&#8217; services.
The value of the consulting services received by us under each agreement has been expensed in
equal monthly amounts over their respective terms:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>during the first three months of 2001, we issued 320,000 shares of our common
stock under two consulting agreements; these shares were valued for financial
accounting purposes at $99,200, in the aggregate.  This amount was expensed
in equal monthly amounts during 2001.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>during the first three months of 2002, we issued 570,000 shares of our common
stock under consulting agreements; these shares were valued for financial
accounting purposes at $61,500, in the aggregate.  This amount is being
expensed in equal monthly amounts over periods ranging from four months to
one year.  All of this total amount will be expensed during 2002.</p>
</td>
</tr>
</table>
<br>
<p>Subsequent to March 31, 2002, we have issued shares to consultants, professional service
providers and to certain of our officers, the value of most of which will be charged against our
earnings, beginning in the second quarter of 2002.  Specifically, we have issued: 1,625,000
shares to consultants, valued at approximately $165,000, all of which will be charged against our
earnings during 2002; 500,000 shares to professional service providers, valued at approximately
$40,000, all of which will be charged against our earnings in the second quarter of 2002; and
9,000,000 shares to certain of our officers pursuant to the Evergreen transaction, valued at
approximately $930,000, approximately $600,000 of which value will be charged against our
earnings in the second quarter of 2002.</p>
<br>
<p>Liquidity and Capital Resources</p>
<br>
<p>General.  Since our inception, we have had a significant working capital deficit.  Currently, we
are substantially illiquid, although we do possess enough cash to continue our current level of
business activities, through the result of recent securities sales.  As the level of funding under the
Fusion Capital agreement has been lower than we had earlier anticipated, $55,000 during the first
three months of 2002, during the last two months of 2001 and the first three months of 2002, we
obtained additional funds through sales of our common stock, as follows:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$57,500 (2001) from the sale of 575,000 shares of our common stock and a
total of 1,150,000 warrants;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$30,000 (2002) from the exercise of outstanding warrants - 200,000 shares at
$.15 per share;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$13,000 (2002) from the exercise of outstanding warrants - 162,500 shares at
$.08 per share; and</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$49,000 (2002) from the exercise of options - 1,000,000 shares at $.049 per
share (a 38.75% discount to the market price on the date of exercise).</p>
</td>
</tr>
</table>
<br>
<p>These funds were used for operating expenses and not for the expansion of our wireless Internet
access business.</p>
<br>
<p>Subsequent to March 31, 2002, in April 2002, we obtained funds through sales of our securities,
as follows:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$49,000 from the exercise of options - 1,000,000 shares at $.049 per share (a
38.75% discount to the market price on the date of exercise).  These funds were
applied exclusively to operating expenses.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$125,000 from the sale of 1,562,500 shares and a total of 3,125,000 warrants,
pursuant to the Evergreen transaction.  A portion of these funds are to be used
for operating expenses, while the balance is to be utilized in our efforts to
expand our wireless Internet access business.</p>
</td>
</tr>
</table>
<br>
<p>Pursuant to the Evergreen agreement, we are to receive an additional $125,000, in June 2002,
which funds we expect will enable us to pursue our business plan more aggressively.  However,
we cannot assure you that we will ever earn a profit.</p>
<br>
<p>We will need further capital, as we continue to expand our wireless Internet access business.  It is
possible that we will not be able to secure adequate capital as we need it.  Also, without
additional capital, it is possible that we would be forced to cease operations.</p>
<br>
<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 $1.2 million.  If we are unable to obtain this
needed capital, we could be forced to cease our operations.</p>
<br>
<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>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>A single Quick-Cell cell site, including a Quick-Cell server modem, parts and
configuration - projected average cost: $25,000;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>Tower lease site - projected average cost: $500 per month;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>Direct T1 telephone line connection to the Internet - projected average cost:
$2,000 per month; and</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>Initial inventory of customer modems - approximate cost: $70,000.</p>
</td>
</tr>
</table>
<br>
<p>However, in Del Rio, due to our lack of large sums of capital, we were able to re-design our
Quick-Cell system to achieve significant cost savings and built the first portion of that system,
which included two server cells - the original plan having called for one server cell - for
approximately $18,000, and we have added a third server cell to this system, in response to
consumer demand.  However, we continue to lack capital with which to market our Quick-Cell
service aggressively.  Rather, in Del Rio, we have chosen to make sustained slow progress in
customer acquisition, rather than to have begun full-scale marketing activities only to suspend
them soon after their start due to our lack of capital.  Should we begin to derive greater amounts
of funds under the Fusion Capital agreement, of which there is no assurance, we plan to construct
additional Quick-Cell systems throughout 2002.</p>
<br>
<p>If and when we begin to obtain the maximum amount of funds available pursuant to the Fusion
Capital agreement, we expect, then, to 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 or that we will ever possess adequate capital
with which to engage in this level of activities.</p>
<br>
<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 30 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>
<br>
<p>Proceeds from the Fusion Capital Agreement.  Beginning in July 2001, we began to receive the
first funds of up to $10 million under our agreement with Fusion Capital.  Since then, we have
received only $395,000 in payment of a total of 3,100,000 shares under this agreement.  Fusion
Capital has not purchased the maximum funding amount possible under this agreement.  This
lack of significant funding has impeded our ability to expand our Quick-Cell business operations.
We will remain in this position unless and until (1) our stock price increases significantly or (2)
we secure funding from a source other than Fusion Capital, of which there is no assurance.
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:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="46%" valign="top"><p>Purchase of Quick-Cell Equipment</p>
</td>
<td width="23%" align="right" valign="top"><p>$6,000,000</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="46%" valign="top"><p>Construction of Quick-Cell Systems</p>
</td>
<td width="23%" align="right" valign="top"><p>1,300,000</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="46%" valign="top"><p>Marketing</p>
</td>
<td width="23%" align="right" valign="top"><p>1,000,000</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="46%" valign="top"><p>General and Administrative Expenses</p>
</td>
<td width="23%" align="right" valign="top"><p>200,000</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="46%" valign="top"><p>Finder&#8217;s Fee</p>
</td>
<td width="23%" align="right" valign="top"><p>800,000</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="46%" valign="top"><p>Working Capital</p>
</td>
<td width="23%" align="right" valign="top"><p>700,000</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="46%" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="right" valign="top"><p>___________</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="46%" valign="top"><p style="text-align: center">Total</p>
</td>
<td width="23%" align="right" valign="top"><p style="text-align: right">$10,000,000</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="46%" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="right" valign="top"><p>==========</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<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.  Currently, we are in compliance with these criteria and expect to remain in
compliance for the foreseeable future. </p>
<br>
<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 $3,278,376.  Upon the final closing under the Evergreen agreement, we will issue
warrants that could yield $703,125 if exercised.  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 &#8220;Use of Proceeds&#8221;.</p>
<br>
<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>
<br>
<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 March 31, 2002, 524,564 of these
shares, with an aggregate value of $220,998, remain subject to potential claims for rescission.
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>
<br>
<p>March 31, 2002.  Historically, we have had a significant working capital deficit.  At March 31,
2002, our working capital deficit was $1,240,582 (unaudited) which is only slightly lower than
our $1,254,897 deficit at December 31, 2001.  Our receipt of funds through sales of our securities
during the first three months of 2002 permitted us to maintain a constant working capital deficit
throughout the quarter.  Approximately 85% of our accounts payable are accounts payable of
CyberHighway and are subject to the pending Chapter 7 bankruptcy proceeding of
CyberHighway.  Without additional capital, our working capital deficit can be expected to
become larger each quarter.</p>
<br>
<p>The following table sets forth our current assets and current liabilities at March 31, 2002, and
December 31, 2001:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="33%" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>March 31, 2002</p>
</td>
<td width="20%" align="center" valign="top"><p>December 31,
2001</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="33%" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>_______________</p>
</td>
<td width="20%" align="center" valign="top"><p>_______________</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="33%" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>(unaudited)</p>
</td>
<td width="20%" align="center" valign="top"><p>(audited)</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>Current Assets</p>
</td>
<td width="33%" valign="top"><p>Cash</p>
</td>
<td width="20%" align="center" valign="top"><p>$284</p>
</td>
<td width="20%" align="center" valign="top"><p>$10</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="33%" valign="top"><p>Inventory</p>
</td>
<td width="20%" align="center" valign="top"><p>133,500</p>
</td>
<td width="20%" align="center" valign="top"><p>134,756</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="33%" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>Current
Liabilities</p>
</td>
<td width="33%" valign="top"><p>Disbursements in Excess of
Cash Balances</p>
</td>
<td width="20%" align="center" valign="top"><p>$0</p>
</td>
<td width="20%" align="center" valign="top"><p>$15,539</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="33%" valign="top"><p>Accounts Payable</p>
</td>
<td width="20%" align="center" valign="top"><p>1,042,150</p>
</td>
<td width="20%" align="center" valign="top"><p>1,034,619</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="33%" valign="top"><p>Accrued Payroll</p>
</td>
<td width="20%" align="center" valign="top"><p>272,820</p>
</td>
<td width="20%" align="center" valign="top"><p>265,978</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="33%" valign="top"><p>Other Current Liabilities</p>
</td>
<td width="20%" align="center" valign="top"><p>59,396</p>
</td>
<td width="20%" align="center" valign="top"><p>54,996</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="33%" valign="top"><p>Notes Payable to Stockholder</p>
</td>
<td width="20%" align="center" valign="top"><p>0</p>
</td>
<td width="20%" align="center" valign="top"><p>18,521</p>
</td>
</tr>
</table>
<br>
<p>Our accrued payroll at March 31, 2002, as well as at December 31, 2001, is attributable to
accrued salary of three of our officers.  In connection with the Evergreen transaction described
above, these officers waived payment of all of their accrued salaries, which will be reflected on
our June 30, 2002, balance sheet.</p>
<br>
<p>We reduced our note payable to stockholder during the first quarter of 2002 by $18,521, and
owed this shareholder no amount at March 31, 2002.  We do not expect that we will again
borrow funds from this shareholder.</p>
<br>
<p>As the level of funding under the Fusion Capital agreement has been lower than we had earlier
anticipated, $55,000 during the first three months of 2002, from November 2001 through March
31, 2002, we obtained a total of $149,500 in cash from sales of our securities, as follows:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$57,500 (2001) from the sale of 575,000 shares of our common stock and a
total of 1,150,000 warrants;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$30,000 (2002) from the exercise of outstanding warrants - 200,000 shares at
$.15 per share;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$13,000 (2002) from the exercise of outstanding warrants - 162,500 shares at
$.08 per share; and</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$49,000 (2002) from the exercise of options - 1,000,000 shares at $.049 per
share (a 38.75% discount to the market price on the date of exercise).</p>
</td>
</tr>
</table>
<br>
<p>The funds received were applied primarily to operating expenses.</p>
<br>
<p>Subsequent to March 31, 2002, in April 2002, we obtained funds through sales of our securities,
as follows:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$49,000 from the exercise of options - 1,000,000 shares at $.049 per share (a
38.75% discount to the market price on the date of exercise).  These funds were
applied exclusively to operating expenses.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>$125,000 from the sale of 1,562,500 shares and a total of 3,125,000 warrants,
pursuant to the Evergreen transaction.  A portion of these funds are to be used
for operating expenses, while the balance is to be utilized in our efforts to
expand our wireless Internet access business.</p>
</td>
</tr>
</table>
<br>
<p>Pursuant to the Evergreen agreement, we are to receive an additional $125,000, in June 2002,
which funds we expect will enable us to pursue our business plan more aggressively.  However,
we cannot assure you that we will ever earn a profit.</p>
<br>
<p>Without obtaining at least $1,200,000 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>
<br>
<p>If we are unable to obtain significant additional capital, it is possible that we would be forced to
cease operations.</p>
<br>
<p>Cash Flows from Operating Activities.  During the first quarter of 2002, our operations used
$123,305 (unaudited) in cash compared to cash used of $162,684 (unaudited) during the first
quarter of 2001.  In both periods, the use of cash in operations was a direct result of the lack of
revenues compared to our operating expenses, particularly salaries and commissions.</p>
<br>
<p>Cash Flows from Investing Activities.  During the first quarters of 2001 and 2002, our investing
activities neither provided nor used cash.  Because we lack working capital, we cannot predict
our cash flows from investing activities for the remainder of 2002.</p>
<br>
<p>Cash Flows from Financing Activities.  For the first quarter of 2002, our financing activities
provided $123,579 (unaudited) in cash.  Our payments on notes payable to stockholder of
$18,521 and $4,900 in finder&#8217;s fees were offset by payments received on subscriptions receivable
of $70,000, $64,000 in cash from sales of our common stock and $13,000 in cash obtained by the
exercise of certain warrants.  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.  We continue to seek capital and cannot,
therefore, predict future levels of cash flows from financing activities.</p>
<br>
<p>Management&#8217;s Plans Relating to Future Liquidity</p>
<br>
<p>To sustain our current level of operations for the next twelve months, we will require additional
capital of approximately $300,000.  Our recent securities purchase agreement with Evergreen
will provide a significant portion of this capital requirement.  To accomplish our goals of
expanding our Quick-Cell business, we will require at least $1.2 million.</p>
<br>
<p>Our best opportunity for obtaining needed funds is pursuant to the Fusion Capital agreement.
However, to date, we have received only $395,000 under our agreement with Fusion Capital.
Fusion Capital has not purchased the maximum shares possible under this agreement.</p>
<br>
<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 $.08 per share, the closing sale price of the common stock on May 16, 2002, and
the purchase by Fusion Capital of the full amount of shares purchasable under the Fusion Capital
agreement, total proceeds to us would only be approximately $600,000, unless we choose to
issue more than 6,000,000 shares, which we have the right to do.</p>
<br>
<p>Should we obtain at least $1.2 million under the Fusion Capital agreement, we believe that we
will be able to have accomplished our primary objectives:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>entering into several working partnerships with companies who need to create
or extend broadband Internet connectivity for their customers, employees and
partners;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>placing at least 10,000 customers on our Quick-Cell systems during the next
year; and</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="84%" valign="top"><p>proving the commercial viability of our Quick-Cell wireless Internet access
service.</p>
</td>
</tr>
</table>
<br>
<p>We cannot assure you that we will accomplish these objectives.</p>
<br>
<p>Currently, we have no other sources for funding on the scale contemplated by the Fusion Capital
transaction.</p>
<br>
<p>If we do not obtain the necessary funding, we would be forced to cease operations.</p>
<br>
<p>Capital Expenditures</p>
<br>
<p>During the first three months of 2002, we made no capital expenditures and we currently have no
capital with which to make any significant capital expenditures.  Should we obtain significant
funding, of which there is no assurance, we would be able to make major expenditures on Quick-Cell-related equipment.  However, without additional capital, we will make no capital
expenditures.</p>
<br>
<p>CERTAIN STATEMENTS CONTAINED IN THIS &#8220;MANAGEMENT&#8217;S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS&#8221; ARE
&#8220;FORWARD-LOOKING STATEMENTS&#8221; WITHIN THE MEANING OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995 AND ARE, THUS, PROSPECTIVE.
THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM FUTURE RESULTS EXPRESSED OR IMPLIED BY
SUCH FORWARD-LOOKING STATEMENTS.  THE MOST SIGNIFICANT OF SUCH
RISKS, UNCERTAINTIES AND OTHER FACTORS IS OUR ABILITY TO OBTAIN
CAPITAL IN AMOUNTS NECESSARY FOR US TO ACCOMPLISH OUR PLAN FOR THE
EXPLOITATION OF OUR QUICK-CELL WIRELESS INTERNET ACCESS PRODUCTS, AS
WELL AS CONSUMER ACCEPTANCE OF THESE PRODUCTS.</p>
<br>
<p style="text-align: center">PART II - OTHER INFORMATION</p>
<br>
<p>Item 1.  Legal Proceedings.</p>
<br>
<p>CyberHighway Involuntary Bankruptcy</p>
<br>
<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 was denied because the creditors believe that
CyberHighway&#8217;s as-yet unasserted damage claims against the original petitioning creditors and
their law firm and a claim against Dialup USA, Inc. represent CyberHighway&#8217;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.  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>
<br>
<p>Other Litigation</p>
<br>
<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 future.  In addition, we are seeking monetary
damages in this action.  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, Case No.
478320.</p>
<br>
<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 styled: USURF America, Inc. versus Christopher L. Wiebelt, American
Arbitration Association, Case No. 71-160-00087-01.  We expect this arbitration proceeding to be
settled in the near future.</p>
<br>
<p>Possible Claim</p>
<br>
<p>Some time in the future, it is possible that we will enter into arbitration proceedings with
Commonwealth Associates.  The dispute revolves around Commonwealth&#8217;s claim that we owe it
approximately 127,000 shares of our common stock.  We do not believe Commonwealth is
entitled to any shares and will vigorously defend our position in arbitration.  We cannot predict
the outcome of this arbitration proceeding.</p>
<br>
<p>Potential Legal Proceeding</p>
<br>
<p>In addition to CyberHighway&#8217;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&#8217;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>
<br>
<p>Item 2.  Changes in Securities.</p>
<br>
<p>During the three months ended March 31, 2002, we issued securities as follows:</p>
<br>
<p>&#160;&#160;1. (a)  Securities Sold.  In January 2002, 120,000 shares of Company Common Stock were
issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Fusion
Capital Fund II, LLC.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
agreement and were valued at $12,000.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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.</p>
<br>
<p>&#160;&#160;2. (a)  Securities Sold.  In February 2002, 86,500 shares of Company Common Stock were
issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Shelter
Capital Ltd.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued as a finder&#8217;s fee.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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>
<br>
<p>&#160;&#160;3. (a)  Securities Sold.  In February 2002, 160,000 common stock purchase warrants of the
Company were issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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>&#160;&#160;&#160;&#160;&#160;&#160;(e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.10 per share and
exercisable for a period of three years from issuance.</p>
<br>
<p>&#160;&#160;4. (a)  Securities Sold.  In February 2002, 266,000 common stock purchase warrants of the
Company were issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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>&#160;&#160;&#160;&#160;&#160;&#160;(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>
<br>
<p>&#160;&#160;5. (a)  Securities Sold.  In February 2002, 93,000 common stock purchase warrants of the
Company were issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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>&#160;&#160;&#160;&#160;&#160;&#160;(e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.30 per share and
exercisable for a period of three years from issuance.</p>
<br>
<p>&#160;&#160;6. (a)  Securities Sold.  In February 2002, 300,000 shares of Company Common Stock were
issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter
Rochow.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
agreement and were value at $30,000.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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>
<br>
<p>&#160;&#160;7. (a)  Securities Sold.  In March 2002, 400,000 shares of Company Common Stock were
issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter
Rochow.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued as a finder&#8217;s fee.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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>
<br>
<p>&#160;&#160;8. (a)  Securities Sold.  In March 2002, 400,000 common stock purchase warrants of the
Company were issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such warrants were issued to Peter Rochow.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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>&#160;&#160;&#160;&#160;&#160;&#160;(e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.10 per share and
exercisable for a period of three years from issuance.</p>
<br>
<p>&#160;&#160;9. (a)  Securities Sold.  In March 2002, 400,000 common stock purchase warrants of the
Company were issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such warrants were issued to Peter Rochow.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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>&#160;&#160;&#160;&#160;&#160;&#160;(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>
<br>
<p>&#160;&#160;10. (a)  Securities Sold.  In March 2002, 200,000 common stock purchase warrants of the
Company were issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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>&#160;&#160;&#160;&#160;&#160;&#160;(e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.049 per share and
exercisable for a period of three years from issuance.</p>
<br>
<p>Subsequent to March 31, 2002, we have issued unregistered securities, as follows:</p>
<br>
<p>&#160;&#160;1. (a)  Securities Sold.  In April 2002, 200,000 common stock purchase warrants of the
Company were issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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>&#160;&#160;&#160;&#160;&#160;&#160;(e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.049 per share and
exercisable for a period of three years from issuance.</p>
<br>
<p>&#160;&#160;2. (a)  Securities Sold.  In April 2002, 500,000 shares of Company Common Stock were issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan
&amp; Newlan.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued as a bonus, at a price of $.10
per share.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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.</p>
<br>
<p>&#160;&#160;3. (a)  Securities Sold.  In April 2002, 75,000 shares of Company Common Stock were issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Patrick
F. McGrew.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued as a bonus, at a price of $.10
per share.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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.</p>
<br>
<p>&#160;&#160;4. (a)  Securities Sold.  In April 2002, 500,000 shares of Company Common Stock were issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Heyer
Capital Fund.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued as a finder&#8217;s fee.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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>
<br>
<p>&#160;&#160;5. (a)  Securities Sold.  In April 2002, 200,000 shares of Company Common Stock were issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to
Employer Support Services.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued in payment of a trade payable
and were valued at a price of $20,000.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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.</p>
<br>
<p>&#160;&#160;6. (a)  Securities Sold.  In April 2002, a total of 9,000,000 shares of Company Common Stock
were issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Douglas
O. McKinnon (3,000,000 shares), David M. Loflin (2,000,000 shares), Waddell D. Loflin
(2,000,000 shares) and James Kaufman (2,000,000 shares).</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued in pursuant to the terms of
employment-related agreements and were valued at approximately $930,000, in the aggregate.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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.</p>
<br>
<p>&#160;&#160;7. (a)  Securities Sold.  In April 2002, 1,562,500 shares of Company Common Stock were
issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to
Evergreen Venture Partners, LLC.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a securities
purchase agreement, at a price of $.08 per share.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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.</p>
<br>
<p>&#160;&#160;8. (a)  Securities Sold.  In April 2002, 1,562,500 common stock purchase warrants of the
Company were issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such warrants were issued to Evergreen Venture
Partners, LLC.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued for no additional consideration pursuant to
securities purchase agreement.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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.</p>
<p>&#160;&#160;&#160;&#160;&#160;&#160;(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>
<br>
<p>&#160;&#160;9. (a)  Securities Sold.  In April 2002, 1,562,500 common stock purchase warrants of the
Company were issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such warrants were issued to Evergreen Venture
Partners, LLC.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued for no additional consideration pursuant to
securities purchase agreement.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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.</p>
<p>&#160;&#160;&#160;&#160;&#160;&#160;(e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.30 per share and
exercisable for a period of three years from issuance.</p>
<br>
<p>&#160;&#160;10. (a)  Securities Sold.  In April 2002, 900,000 shares of Company Common Stock were
issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Allen &amp;
Company Business Communications.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
agreement and were valued at $90,000.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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.</p>
<br>
<p>&#160;&#160;11. (a)  Securities Sold.  In April 2002, 250,000 shares of Company Common Stock were
issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to B.
Edward Haun &amp; Company.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
agreement and were valued at $25,000.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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.</p>
<br>
<p>&#160;&#160;12. (a)  Securities Sold.  In April 2002, 250,000 shares of Company Common Stock were
issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Summit
Venture Partners, LLC.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
agreement and were valued at $25,000.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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.</p>
<br>
<p>&#160;&#160;13. (a)  Securities Sold.  In April 2002, 150,000 shares of Company Common Stock were
issued.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Barker
Design, Inc.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
agreement and were valued at $15,000.</p>
<p>&#160;&#160;&#160;&#160;&#160;(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.</p>
<br>
<p>Item 3.  Defaults upon Senior Securities.</p>
<br>
<p>None.</p>
<br>
<p>Item 4.  Submission of Matters to a Vote of Security Holders.</p>
<br>
<p>None.</p>
<br>
<p>Item 5.  Other Information.</p>
<br>
<p>None.</p>
<br>
<p>Item 6.  Exhibits and Reports on Form 8-K.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>(a)</p>
</td>
<td width="84%" valign="top"><p>Exhibits.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="84%" valign="top"><p>None.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>(b)</p>
</td>
<td width="84%" valign="top"><p>Reports on From 8-K.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="84%" valign="top"><p>During the three months ended March 31, 2002, we filed one Current Report on
Form 8-K, as follows:</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="77%" valign="top"><p>Date of event: February 6, 2002, wherein we reported the resignation of
one of our directors.  This Current Report on Form 8-K is incorporated
herein by this reference.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="84%" valign="top"><p>Subsequent to March 31, 2002, we have filed two Current Reports on Form 8-K, as follows:</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="76%" valign="top"><p>Date of event: April 5, 2002, wherein we reported information pursuant
to Regulation FD; and</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="76%" valign="top"><p>Date of event: April 15, 2002, wherein we reported a material securities
sale transaction and the hiring of a new president and chief executive
officer.</p>
</td>
</tr>
</table>
<br>
<p style="text-align: center">SIGNATURES</p>
<br>
<p>In accordance with the requirements of the Securities Exchange Act of 1934, Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</p>
<br>
<p>Dated: May 24, 2002.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="46%" valign="top"><p>&#160;</p>
</td>
<td width="36%" valign="top"><p>USURF AMERICA, INC.</p>
</td>
<td width="18%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="46%" valign="top"><p>&#160;</p>
</td>
<td width="36%" valign="top"><p>By: /s/ DAVID M. LOFLIN</p>
</td>
<td width="18%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="46%" valign="top"><p>&#160;</p>
</td>
<td width="36%" valign="top"><p>David M. Loflin</p>
</td>
<td width="18%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="46%" valign="top"><p>&#160;</p>
</td>
<td width="36%" valign="top"><p>Chairman of the Board and</p>
</td>
<td width="18%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="46%" valign="top"><p>&#160;</p>
</td>
<td width="36%" valign="top"><p>Principal Accounting Officer</p>
</td>
<td width="18%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
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