<SUBMISSION>
<ACCESSION-NUMBER>0001035398-02-000015
<TYPE>S-1/A
<PUBLIC-DOCUMENT-COUNT>4
<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>S-1/A
<ACT>33
<FILE-NUMBER>333-87830
<FILM-NUMBER>02663239
</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>S-1/A
<SEQUENCE>1
<FILENAME>s1a.htm
<TEXT>
<html>

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



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<body>
<p style="text-align: center">As filed with the Securities and Exchange Commission on May 28, 2002.</p>
<p style="text-align: center">Registration No. 333-87830</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>SECURITIES AND EXCHANGE COMMISSION</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>Washington, D.C. 20549</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>Pre-effective Amendment No. 1</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>to</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>FORM S-1</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>Registration Statement</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>under</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>The Securities Act of 1933</p>
</td>
</tr>
</table>
<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 Registrant as Specified in its Charter)</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="27%" align="center" valign="top"><p>NEVADA</p>
</td>
<td width="46%" align="center" valign="top"><p>7375</p>
</td>
<td width="27%" align="center" valign="top"><p>91-2117796</p>
</td>
</tr>
<tr>
<td width="27%" align="center" valign="top"><p>(State or Other
Jurisdiction of
Incorporation or
Organization)</p>
</td>
<td width="46%" align="center" valign="top"><p>(Primary Standard Industrial
Classification Code Number)</p>
</td>
<td width="27%" align="center" valign="top"><p>(IRS Employer
Identification No.)</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>(225) 922-7744</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's
Principal Executive Office)</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>Douglas O. McKinnon, President and CEO</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>USURF America, Inc.</p>
</td>
</tr>
<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>(225) 922-7744</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>(Name, Address, Including Zip Code, and Telephone Number,</p>
<p>Including Area Code, of Agent for Service)</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>Copies to:</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>Eric Newlan, Esq.</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>NEWLAN &amp; NEWLAN</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>819 Office Park Circle</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>Lewisville, Texas 75057</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>972-353-3880</p>
</td>
</tr>
</table>
<br>
<p>Approximate date of commencement of proposed sale to public:  As soon as practicable after this
Registration Statement is declared effective.</p>
<br>
<p>If any of the securities being registered on this Form are to be offered on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:  [X]</p>
<br>
<p>If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under
the Securities Act, please check the following box and list the Securities Act registration number
of the earlier effective registration statement for the same offering:  [     ]</p>
<br>
<p>If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act,
check the following box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering:  [     ]</p>
<br>
<p>If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the
following box:  [     ]</p>
<br>
<p>&lt;PAGE&gt;</p>
<br>
<br>
<p style="text-align: center">CALCULATION OF REGISTRATION FEE</p>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="23%" align="center" valign="top"><br>
<p>Title of each class
of securities to be
registered</p>
</td>
<td width="19%" align="center" valign="top"><br>
<br>
<p>Amount to be
registered</p>
</td>
<td width="19%" align="center" valign="top"><p>Proposed
maximum
offering price
per unit</p>
</td>
<td width="19%" align="center" valign="top"><p>Proposed
maximum
aggregate
offering price</p>
</td>
<td width="20%" align="center" valign="top"><br>
<br>
<p>Amount of
registration fee</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>___________</p>
</td>
<td width="19%" align="center" valign="top"><p>___________</p>
</td>
<td width="19%" align="center" valign="top"><p>___________</p>
</td>
<td width="19%" align="center" valign="top"><p>___________</p>
</td>
<td width="20%" align="center" valign="top"><p>___________</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>Common Stock,
$.0001 par value</p>
</td>
<td width="19%" align="center" valign="top"><p>7,382,000
issued shares</p>
</td>
<td width="19%" align="center" valign="top"><p>$.08(3)</p>
</td>
<td width="19%" align="center" valign="top"><p>$590,560</p>
</td>
<td width="20%" align="center" valign="top"><p>$54.33(9)</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>400,000
unissued shares</p>
</td>
<td width="19%" align="center" valign="top"><p>.049</p>
</td>
<td width="19%" align="center" valign="top"><p>19,600</p>
</td>
<td width="20%" align="center" valign="top"><p>1.80(9)</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>560,000
unissued shares</p>
</td>
<td width="19%" align="center" valign="top"><p>.10</p>
</td>
<td width="19%" align="center" valign="top"><p>56,000</p>
</td>
<td width="20%" align="center" valign="top"><p>5.15(9)</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>1,562,500
unissued shares</p>
</td>
<td width="19%" align="center" valign="top"><p>.15</p>
</td>
<td width="19%" align="center" valign="top"><p>234,375</p>
</td>
<td width="20%" align="center" valign="top"><p>21.56(9)</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>1,525,500
unissued shares</p>
</td>
<td width="19%" align="center" valign="top"><p>.20</p>
</td>
<td width="19%" align="center" valign="top"><p>305,100</p>
</td>
<td width="20%" align="center" valign="top"><p>28.07(9)</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>2,233,000
unissued shares</p>
</td>
<td width="19%" align="center" valign="top"><p>.30</p>
</td>
<td width="19%" align="center" valign="top"><p>669,900</p>
</td>
<td width="20%" align="center" valign="top"><p>61.63(9)</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>___________</p>
</td>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>___________</p>
</td>
<td width="20%" align="center" valign="top"><p>___________</p>
</td>
</tr>
<tr>
<td width="23%" align="center" valign="top"><p>Total</p>
</td>
<td width="19%" align="center" valign="top"><p>13,663,000
shares</p>
</td>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>$1,875,535</p>
</td>
<td width="20%" align="center" valign="top"><p>$172.54(9)</p>
</td>
</tr>
</table>
<p>__________________</p>
<p>(1)  Pursuant to Rule 416 under the Securities Act of 1933, as amended, this Registration
Statement covers such additional indeterminate shares of Common Stock as may be issued by
reason of adjustments in the number of shares of Common Stock pursuant to anti-dilution
provisions contained in various Common Stock Purchase Warrants. Because such additional
shares of Common Stock will, if issued, be issued for no additional consideration, no registration
fee is required.</p>
<p>(2) All shares being registered will be offered and sold by selling shareholders.  All of the shares
noted as being "issued" have, as of the date hereof, been issued to the selling shareholders. All of
the shares noted as being "unissued" underlie currently outstanding and exercisable warrants.</p>
<p>(3)  Estimated in accordance with Rule 457(c) solely for the purpose of calculating the
registration fee on the basis of the closing price reported on the American Stock Exchange on
May 6, 2002, $.08 per share.</p>
<p>(4)  Shares issuable upon exercise of common stock purchase warrants.  Pursuant to Rule 457(g)
the fee is based upon the Warrant exercise price of $.049 per share.</p>
<p>(5)  Shares issuable upon exercise of common stock purchase warrants.  Pursuant to Rule 457(g)
the fee is based upon the Warrant exercise price of $.10 per share.</p>
<p>(6)  Shares issuable upon exercise of common stock purchase warrants.  Pursuant to Rule 457(g)
the fee is based upon the Warrant exercise price of $.15 per share.</p>
<p>(7)  Shares issuable upon exercise of common stock purchase warrants.  Pursuant to Rule 457(g)
the fee is based upon the Warrant exercise price of $.20 per share.</p>
<p>(8)  Shares issuable upon exercise of common stock purchase warrants.  Pursuant to Rule 457(g)
the fee is based upon the Warrant exercise price of $.30 per share.</p>
<p>(9)  Paid previously.</p>
<br>
<p>Registrant hereby amends this Registration Statement on such date or dates as may be necessary
to delay its effective date until Registrant shall file a  further amendment which specifically
states that this Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may determine.</p>
<br>
<br>
<p>&lt;PAGE&gt;</p>
<br>
<p style="text-align: center">SUBJECT TO COMPLETION, DATED MAY 24, 2002</p>
<br>
<p>The information in this prospectus is not complete and may be changed.  We may not sell these
securities until the registration statement filed with the Securities and Exchange Commission is
effective.  This prospectus is not an offer to sell these securities in any state where the offer or
sale is not permitted.</p>
<br>
<p>PROSPECTUS</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>Up to 13,663,000 Shares</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>USURF America, Inc.</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>Common Stock</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>$.0001 par value</p>
</td>
</tr>
</table>
<br>
<p>This prospectus relates to 13,663,000 shares our common stock offered for sale by persons other
than USURF America, who are referred to as the selling shareholders. 7,382,000 of these shares
have been issued by us, and 6,281,000 of these shares will be issued by us upon exercise of
common stock purchase warrants.  We are paying nearly all of the expenses of this offering.</p>
<br>
<p>Our common stock is traded on the American Stock Exchange under the symbol &#8220;UAX&#8221;.  On
May 23, 2002, the last reported sale price of our common stock, as reported by AMEX, was $.06
per share.</p>
<br>
<p>Investing in our common stock involves risk. Please see &#8220;Risk Factors&#8221;, beginning on page 5, for
an explanation of some of these risks.</p>
<br>
<p>The selling shareholders are &#8220;underwriters&#8221; within the meaning of the Securities Act of 1933, as
amended.  Any broker executing sell orders on behalf of a selling shareholder may be deemed to
be an &#8220;underwriter&#8221; of this offering.</p>
<br>
<p>Neither the Securities and Exchange Commission nor any state securities regulator has approved
or disapproved these securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.</p>
<br>
<p style="text-align: center">The date of this Prospectus is _______________, 2002</p>
<br>
<p>&lt;PAGE&gt;</p>
<br>
<br>
<p>You should rely only on the information contained in this prospectus.  We have not authorized
anyone to provide you with information different from that contained in this prospectus.  The
information contained in this prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or of any sale of our common stock.</p>
<br>
<p style="text-align: center">TABLE OF CONTENTS</p>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="85%" valign="top"><p>&#160;</p>
</td>
<td width="15%" valign="top"><p style="text-align: center">Page</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>SUMMARY</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>THE OFFERING</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>SUMMARY FINANCIAL DATA</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>RISK FACTORS</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>DILUTION</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>USE OF PROCEEDS</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>TRADING AND MARKET PRICES</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>DIVIDENDS</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>CAPITALIZATION</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>SELECTED FINANCIAL DATA</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>CHANGE OF INDEPENDENT AUDITOR</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>REGULATION</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>BUSINESS</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>THE FUSION CAPITAL TRANSACTION</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>MANAGEMENT</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>CERTAIN TRANSACTIONS</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>PRINCIPAL SHAREHOLDERS</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>LITIGATION</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>PLAN OF DISTRIBUTION</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>SELLING SHAREHOLDERS</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>DESCRIPTION OF SECURITIES</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>LEGAL MATTERS</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>EXPERTS</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>ABOUT THIS PROSPECTUS</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>WHERE YOU CAN FIND MORE INFORMATION</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="85%" valign="top"><p>INDEX TO FINANCIAL STATEMENTS</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p style="text-align: center">SUMMARY</p>
<br>
<p>Our Business</p>
<br>
<p>We own a proprietary wireless Internet access system, known as &#8220;Quick-CellTM&#8221;, that permits
us to operate as an Internet service provider.  Our Quick-Cell system operates in unlicensed
spectra, does not require right-of-way permission from local municipalities and eliminates the
need for our customers to have a telephone line connection to the Internet.  A single Quick-Cell
cell can operate as a stand-alone system for a 3.5 mile radius coverage, or any number of Quick-Cell cells can be interfaced to serve a broader geographic area.  We charge our customers a
monthly fee for wireless Internet access.  To date, however, our wireless Internet business has
generated a very limited amount of revenues.</p>
<br>
<p>We operate Quick-Cell systems in Del Rio, Texas, and Santa Fe, New Mexico.  Our Del Rio
system has been operating since September 2001 and our Santa Fe system has been operating
since March 2000.  Currently, we provide wireless Internet access to approximately 50
customers.  We have lacked the capital needed to expand our business more rapidly.</p>
<br>
<p>In the middle of 2000, we sold three Quick-Cell systems to two independent telephone
companies and another telecommunications company.  Due to a lack of capital, we have
suspended this marketing effort.</p>
<br>
<p>We intend to commit all available resources to the development of our Quick-Cell wireless
Internet access products.</p>
<br>
<p>In September 2000, our CyberHighway subsidiary, a provider of dial-up Internet access, was
forced into involuntary bankruptcy.  CyberHighway has lost all of its customers.  We do not
intend to commit any capital to restore CyberHighway&#8217;s business.</p>
<br>
<p>We have had substantial losses since our inception in 1996.  At March 31, 2002, our accumulated
deficit was $37,469,439 (unaudited), our net loss for the three months ended March 31, 2002,
was $468,811 (unaudited), and our operating activities used $123,305 (unaudited) in cash for the
three months ended March 31, 2002.  At December 31, 2001, our accumulated deficit was
$37,000,628, our net loss for 2001 was $2,498,468 and our operating activities used $707,569 in
cash for all of 2001.  We have a limited operating history upon which to evaluate our prospects.</p>
<br>
<p>Our independent auditor has, in its opinion relating to our December 31, 2001, financial
statements, expressed substantial doubt about our ability to continue as a going concern.  This
means that our independent auditor, when issuing its opinion, could not be certain that we would
be able to continue as a going business concern.</p>
<br>
<p>You should read the risk factors, beginning on page 5, before you buy our common stock.</p>
<br>
<p>Our Market and Strategy</p>
<br>
<p>We designed our Quick-Cell wireless Internet access products to provide high-speed, high-quality wireless Internet access at prices below local market prices for comparable hard-wire
Internet access.</p>
<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.  Our strategy is not based on
any formal market survey, however.</p>
<br>
<p>Historically, we have lacked capital with which to pursue our full business plan and we continue
to be in that position.  We cannot assure you that we will ever possess sufficient capital to
accomplish our objectives.</p>
<br>
<p>Evergreen Agreement</p>
<br>
<p>On April 15, 2002, we consummated a securities purchase agreement with Evergreen Venture
Partners, LLC, whereby we are to issue 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 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>Fusion Capital Agreement</p>
<br>
<p>On May 9, 2001, we executed an amended and restated common stock purchase agreement with
Fusion Capital Fund II, LLC, which replaced a similar agreement dated October 9, 2000.  Under
this agreement, Fusion Capital may purchase up to $10 million of our common stock over a
period of up to 25 months.  Since the commencement of this agreement in July 2001, we have
obtained only approximately $395,000, which has impaired our ability to implement our full
business plan.  Please see &#8220;The Fusion Capital Transaction&#8221; below for a detailed description of
this agreement, as well as &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and
Results of Operations&#8221;.</p>
<br>
<p>Our Address</p>
<br>
<p>USURF America was organized as a Nevada corporation in November 1996, under the name
&#8220;Media Entertainment, Inc.&#8221;  In 1998, we changed our name to &#8220;Internet Media Corporation&#8221;,
then to our current name in June 1999.  Our principal office is located at 8748 Quarters Lake
Road, Baton Rouge, Louisiana 70809.  Our telephone number is (225) 922-7744; our fax number
is (225) 922-9123.  Our web site is located at www.usurf.com.  Information contained on our
web site is not to be considered a part of this prospectus.</p>
<br>
<p style="text-align: center">THE OFFERING</p>
<br>
<p>The selling shareholders are offering for sale their respective shares of selling shareholder stock,
as described under &#8220;Plan of Distribution&#8221; and &#8220;Selling Shareholders&#8221;, beginning on pages ___
and ___, respectively.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="58%" valign="top"><p>Common Stock offered by Selling Shareholders:</p>
</td>
<td width="34%" valign="top"><p>Up to 13,663,000 shares(1)</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="58%" valign="top"><p>Common Stock Outstanding After this Offering:</p>
</td>
<td width="34%" valign="top"><p>43,731,870 shares</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="58%" valign="top"><p>Common Stock Outstanding After this Offering:</p>
</td>
<td width="34%" valign="top"><p>61,198,097 shares(2)</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="58%" valign="top"><p>American Stock Exchange Trading Symbol:</p>
</td>
<td width="34%" valign="top"><p>UAX</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="58%" valign="top"><p>_______________</p>
</td>
<td width="34%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="92%" valign="top"><p>(1) 7,382,000 of these shares are currently issued and outstanding and will be offered
and sold by the selling shareholders; and 6,281,000 of these shares may be purchased
from us upon the exercise of outstanding warrants and thereafter offered and sold by
the selling shareholders.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="92%" valign="top"><p>(2) Assumes the exercise of all 9,278,727 outstanding warrants, the issuance of an
additional 3,500,000 shares under the Fusion Capital agreement, and the issuance of an
additional 1,562,500 shares to Evergreen under the Evergreen agreement, as well as an
additional 3,125,000 shares that underlie warrant to be issued to Evergreen under the
Evergreen agreement.</p>
</td>
</tr>
</table>
<br>
<p style="text-align: center">SUMMARY FINANCIAL DATA</p>
<br>
<p>Set forth below is our summary consolidated statements of operations data for the years ended
December 31, 1999, 2000 and 2001.  Also set forth below is our summary balance sheet data as
of December 31, 2000 and 2001.</p>
<br>
<p>This summary financial information should be read in conjunction with the consolidated
financial statements appearing elsewhere in this prospectus.</p>
<br>
<p>STATEMENT OF OPERATIONS DATA:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="46%" align="center" valign="top"><p>Year Ended December 31,</p>
</td>
<td width="31%" align="center" valign="top"><p>Three Months Ended
March 31,</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>2001</p>
</td>
<td width="15%" align="center" valign="top"><p>2000</p>
</td>
<td width="15%" align="center" valign="top"><p>1999</p>
</td>
<td width="15%" align="center" valign="top"><p>2002
(unaudited)</p>
</td>
<td width="17%" align="center" valign="top"><p>2001
(unaudited)</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>__________</p>
</td>
<td width="15%" align="center" valign="top"><p>__________</p>
</td>
<td width="15%" align="center" valign="top"><p>__________</p>
</td>
<td width="15%" align="center" valign="top"><p>__________</p>
</td>
<td width="17%" align="center" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>Revenues</p>
</td>
<td width="15%" align="center" valign="top"><p>$7,446</p>
</td>
<td width="15%" align="center" valign="top"><p>$1,872,629</p>
</td>
<td width="15%" align="center" valign="top"><p>$2,547,225</p>
</td>
<td width="15%" align="center" valign="top"><p>$4,626</p>
</td>
<td width="17%" align="center" valign="top"><p>$384</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>Internet access
costs, cost of goods
sold</p>
</td>
<td width="15%" align="center" valign="top"><p>(11,999)</p>
</td>
<td width="15%" align="center" valign="top"><p>(2,145,955)</p>
</td>
<td width="15%" align="center" valign="top"><p>(1,152,721)</p>
</td>
<td width="15%" align="center" valign="top"><p>(8,482)</p>
</td>
<td width="17%" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>Operating
Expenses</p>
</td>
<td width="15%" align="center" valign="top"><p>2,852,110</p>
</td>
<td width="15%" align="center" valign="top"><p>14,975,583</p>
</td>
<td width="15%" align="center" valign="top"><p>11,860,758</p>
</td>
<td width="15%" align="center" valign="top"><p>464,772</p>
</td>
<td width="17%" align="center" valign="top"><p>901,643</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>Net loss</p>
</td>
<td width="15%" align="center" valign="top"><p>(2,498,468)</p>
</td>
<td width="15%" align="center" valign="top"><p>(21,885,330)</p>
</td>
<td width="15%" align="center" valign="top"><p>(10,930,163)</p>
</td>
<td width="15%" align="center" valign="top"><p>(468,811)</p>
</td>
<td width="17%" align="center" valign="top"><p>(901,259)</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>Loss per share</p>
</td>
<td width="15%" align="center" valign="top"><p>(0.13)</p>
</td>
<td width="15%" align="center" valign="top"><p>(1.68)</p>
</td>
<td width="15%" align="center" valign="top"><p>(0.96)</p>
</td>
<td width="15%" align="center" valign="top"><p>(0.02)</p>
</td>
<td width="17%" align="center" valign="top"><p>(0.06)</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>Weighted average
number of shares
outstanding</p>
</td>
<td width="15%" align="center" valign="top"><p>18,616,434</p>
</td>
<td width="15%" align="center" valign="top"><p>13,00,0391</p>
</td>
<td width="15%" align="center" valign="top"><p>11,419,641</p>
</td>
<td width="15%" align="center" valign="top"><p>25,503,752</p>
</td>
<td width="17%" align="center" valign="top"><p>13,934,118</p>
</td>
</tr>
</table>
<br>
<p>BALANCE SHEET DATA:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="42%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="38%" align="center" valign="top"><p>As at December 31,</p>
</td>
<td width="20%" align="center" valign="top"><p>As at March 31,</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>2001</p>
</td>
<td width="19%" align="center" valign="top"><p>2000</p>
</td>
<td width="20%" align="center" valign="top"><p>2002</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="center" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>(unaudited)</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Working Capital (Deficit)</p>
</td>
<td width="19%" align="center" valign="top"><p>$(1,254,897)</p>
</td>
<td width="19%" align="center" valign="top"><p>$(1,517,164)</p>
</td>
<td width="20%" align="center" valign="top"><p>$(1,240,582)</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Total Assets</p>
</td>
<td width="19%" align="center" valign="top"><p>229,528</p>
</td>
<td width="19%" align="center" valign="top"><p>410,316</p>
</td>
<td width="20%" align="center" valign="top"><p>222,768</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Total Current Liabilities</p>
</td>
<td width="19%" align="center" valign="top"><p>1,389,653</p>
</td>
<td width="19%" align="center" valign="top"><p>1,764,973</p>
</td>
<td width="20%" align="center" valign="top"><p>1,374,366</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Total Liabilities</p>
</td>
<td width="19%" align="center" valign="top"><p>1,389,653</p>
</td>
<td width="19%" align="center" valign="top"><p>1,764,973</p>
</td>
<td width="20%" align="center" valign="top"><p>1,374,366</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Total Redeemable Common Stock</p>
</td>
<td width="19%" align="center" valign="top"><p>1,192,700</p>
</td>
<td width="19%" align="center" valign="top"><p>3,323,552</p>
</td>
<td width="20%" align="center" valign="top"><p>220,998</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Stockholders&#8217; Equity (Deficit)</p>
</td>
<td width="19%" align="center" valign="top"><p>(2,352,825)</p>
</td>
<td width="19%" align="center" valign="top"><p>(4,678,209)</p>
</td>
<td width="20%" align="center" valign="top"><p>(1,372,596)</p>
</td>
</tr>
</table>
<br>
<p style="text-align: center">RISK FACTORS</p>
<br>
<p>You should carefully consider the risks described below before you decide to buy our common
stock.  If any of the following risks actually occur, our business, financial condition or results of
operations would likely suffer.  In such case, the trading price of our common stock could
decline, and you could lose all or part of your investment.</p>
<br>
<p>Because we have a short operating history, there is a limited amount of information about us
upon which you can evaluate our business and potential for future success.</p>
<p>We were incorporated in 1996 and have only a limited operating history upon which you can
evaluate our business and prospects.  You must consider the risks and uncertainties frequently
encountered by early stage companies in new and rapidly evolving markets, such as the market
for wireless Internet access services.  Some of these risks and uncertainties relate to our ability
to:</p>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" align="center" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>gain access to sufficient capital with which to support anticipated growth;</p>
</td>
</tr>
<tr>
<td width="8%" align="center" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>achieve customer acceptance of our Quick-Cell wireless Internet access products;</p>
</td>
</tr>
<tr>
<td width="8%" align="center" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>expand our wireless Internet access subscriber base and subscriber-related revenues;</p>
</td>
</tr>
<tr>
<td width="8%" align="center" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>compete successfully in a highly competitive market; and</p>
</td>
</tr>
<tr>
<td width="8%" align="center" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>recruit and train qualified employees.</p>
</td>
</tr>
</table>
<br>
<p>We cannot assure you that we will successfully address any of these risks and uncertainties.</p>
<br>
<p>Our independent auditor has expressed substantial doubt about our ability to continue as a going
concern.</p>
<p>In its opinion on our financial statements for the year ended December 31, 2001, our independent
auditor, Postlethwaite &amp; Netterville, expressed substantial doubt about our ability to continue as
a going concern.  This means that, when issuing its opinion relating to our December 31, 2001,
financial statements, given our then-current and historical lack of capital, our independent auditor
had substantial doubt that we would be able to continue as a going business concern.  Please
review the Independent Auditor&#8217;s Report and Note 16 to the consolidated financial statements
appearing elsewhere in this prospectus.</p>
<br>
<p>Unless we obtain $300,000 in new capital, we will be unable to remain in business.</p>
<p>During the next twelve months, we will need approximately $300,000 just to continue our
operations at their current levels.  Absent this amount of funding, we will be unable to continue
our operations.</p>
<br>
<p>Some of our shareholders may have rights of rescission, due to potential violations by us of
Section 5 of the Securities Act.</p>
<p>Since January 2000, a total of 4,906,549 shares of our common stock with an aggregate assigned
value of $5,090,252 may have been issued in violation of Section 5 of the Securities Act.
4,751,985 of these shares were issued in payment of services or as bonuses to employees and
130,000 of these shares were issued for cash or underlie currently exercisable warrants, which
were sold or will be sold for at total of $650,000 in cash.  At December 31, 2001, 2,138,726
shares of our common stock with an aggregate assigned value of $1,192,700 were subject to
potential rescission claims.  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.</p>
<br>
<p>We had an accumulated deficit of $37,000,628 as of December 31, 2001, and an accumulated
deficit of $37,469,439 (unaudited) as of March 31, 2002, and we expect to continue to incur
losses for the foreseeable future.</p>
<p>We have had substantial losses since our inception and our operating losses may continue in the
future.</p>
<p>We had an operating loss for the three months ended March 31, 2002.  As a result, at March 31,
2002, we had an accumulated deficit of $37,469,439 (unaudited).  Our gross revenues for the
three month period were $4,626 (unaudited), with a loss from operations of $468,628 (unaudited)
and a net loss of $468,811 (unaudited).</p>
<p>We have incurred annual operating losses since our inception. As a result, at December 31, 2001,
we had an accumulated deficit of $37,000,628.  Our gross revenues for the years ended
December 31, 2001 and 2000, were $7,446 and $1,872,629, respectively, with losses from
operations of $2,954,189 and $15,248,909, respectively.  Our net losses for the years ended
December 31, 2001 and 2000, were $2,498,468 and $21,885,330, respectively.  We cannot assure
you that we will experience revenue growth, or that we will be profitable in the future.</p>
<p>As we pursue full-scale sales and installation of our Quick-Cell wireless Internet products, we
expect our operating expenses to increase significantly, especially in the areas of sales and
marketing.  As a result of these expected cost increases, we will need to generate increased
revenues to become profitable.  Accordingly, we cannot assure you that we will ever become or
remain profitable.  If our revenues fail to grow at anticipated rates or our operating expenses
increase without a commensurate increase in our revenues, our financial condition will be
adversely affected.  Our inability to become profitable on a quarterly or annual basis would have
a materially adverse effect on our business and financial condition.</p>
<br>
<p>You will suffer substantial dilution in the net tangible book value of the common stock you
purchase.</p>
<p>Because the selling shareholders expect to sell their shares of our common stock at market-level
prices, you will suffer substantial and immediate dilution, due to the lower book value per share
of our common stock compared to the purchase price per share of our common stock.  We cannot
predict your actual dilution, because dilution will depend on the price at which our common
stock is sold by the selling shareholders.</p>
<br>
<p>The market price of our common stock will continue to be extremely volatile, and it may drop
unexpectedly.</p>
<p>The market price of our common stock has fluctuated significantly in the past and we expect this
volatility to continue in the future.  Since January 2000, trading prices for our common stock
have ranged from $.06 per share to $11.00 per share.  The closing price of our common stock on
May 23, 2002, was $.06.  It is possible that the market price of our common stock could fall
below the price you paid for your shares of our common stock. </p>
<p>The stock prices for many high technology companies, especially those that base their businesses
on the Internet, recently have experienced wide fluctuations and extreme volatility.  This
volatility has often been unrelated to the operating performance of such companies, so our stock
price could decline even if our wireless Internet access business is successful.  Also, following
periods of volatility in the market price of a company&#8217;s securities, securities class action claims
frequently are brought against the subject company.  To the extent that the market price of our
shares falls dramatically in any period of time, shareholders may bring claims, with or without
merit, against us.  Such litigation would be expensive to defend and would divert management
attention and resources regardless of outcome.</p>
<br>
<p>To date, we have not obtained the maximum amount of funds under the Fusion Capital
agreement; we may not obtain enough funds under the Fusion Capital agreement to achieve our
primary business objectives.</p>
<p>Since the commencement of the Fusion Capital agreement in July 2001, we have not obtained
the maximum funding amount possible under this agreement.  To date, we have obtained only
$395,000 under the Fusion Capital agreement, which has significantly impeded our ability to
expand our Quick-Cell business operations.  We will remain in this position unless and until our
stock price increases significantly or we secure funding from a source other than Fusion Capital,
of which there is no assurance.</p>
<p>We must obtain approximately $1.2 million under the Fusion Capital agreement, or from other
sources, in order to achieve the primary objectives of our business plan:</p>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" align="center" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="center" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>placing at least 10,000 customers on our Quick-Cell systems by the end of 2002; and</p>
</td>
</tr>
<tr>
<td width="8%" align="center" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>proving the commercial viability of our Quick-Cell wireless Internet access service.</p>
</td>
</tr>
</table>
<p>It is a distinct possibility that we will not obtain the $1.2 million amount we need to achieve
these objectives.  Should this occur, it is possible that we would not be able to develop
successfully our wireless Internet access business.</p>
<br>
<p>Our common stock could be delisted from the American Stock Exchange.</p>
<p>Currently, we are not in compliance with the continued listing guidelines of AMEX.  During the
second quarter of 2001, AMEX inquired with respect to our plan for achieving compliance with
its continued listing guidelines.  Our response to AMEX included an explanation of our
anticipated future funding under the Fusion Capital agreement and the positive effects this
funding would likely have on our business and financial condition, particularly in increasing our
total assets and stockholders&#8217; equity.  We have not received further communication from AMEX
in this matter.  Should our common stock be delisted from AMEX, it is very likely that the
market price for our stock could drop dramatically.  We cannot assure you that we will be able to
maintain our listing on AMEX.</p>
<p>In addition, should our stock be delisted from AMEX, we would be in default under the Fusion
Capital agreement and unable to obtain funding thereunder.  In this circumstance, it is likely that
we would not have access to capital necessary to sustain our operations.</p>
<p>If we are unable to maintain our AMEX listing, our common stock would likely begin to trade on
the NASD&#8217;s OTC Bulletin Board and become a &#8220;penny stock&#8221;, as long as it trades below $5.00
per share.  Broker-dealer practices in connection with transactions in penny stocks are regulated
by penny stock rules adopted by the SEC.  The penny stock rules require a broker-dealer, prior to
a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure statement prepared by the SEC that provides information about penny stocks and the
nature and level of risks in the penny stock market.  The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, as well as the monthly account statements
showing the market value of each penny stock held in the customer&#8217;s account.  In addition, the
penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from
such rules, the broker-dealer must make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the purchaser&#8217;s written agreement to the
transaction.</p>
<p>These disclosure requirements may have the effect of reducing the level of trading activity in the
secondary market for a stock that becomes subject to the penny stock rules.  Should our common
stock return to trading on the OTC Bulletin Board, it can be expected that investors in our
common stock may find it more difficult to profit on their investments in our stock.</p>
<br>
<p>The sale of shares by the selling shareholders, as well as the resale of shares purchased by Fusion
Capital, could cause the price of our stock to decline, which could impair our ability to obtain
needed capital in the future.</p>
<p>All of the shares of our common stock issuable to Fusion Capital, up to 6,800,000 shares in total,
will be freely tradable, except that Fusion Capital has agreed that it will not sell or otherwise
transfer 800,000 shares issued to it as part of its commitment fee until the earlier of the
termination of the Fusion Capital agreement, our default under that agreement and approximately
July 31, 2003.  Fusion Capital may sell none, some or all of the shares of common stock
purchased from us at any time and from time to time.  Likewise, the selling shareholders in this
offering may sell none, some or all of their shares from time to time.</p>
<p>Depending upon the market liquidity for our common stock at the time, a sale of shares under
this offering at any given time could cause the trading price of our common stock to decline.  In
addition, the sale of a substantial number of shares of our common stock under this offering, or
the anticipation of such sales, could make it more difficult for us to sell equity or equity-related
securities in the future at a time and at a price that we might otherwise desire to effect sales.  This
circumstance could impair our ability to accomplish our Quick-Cell-related business objectives,
due to a potential lack of capital.</p>
<br>
<p>We are unable to calculate the exact number of shares that we will issue under the Fusion Capital
agreement, but you can expect significant dilution in your ownership interest as a result of the
Fusion Capital agreement.</p>
<p>We have registered 6,000,000 shares of our common stock for issuance under the Fusion Capital
agreement &#8211; SEC File No. 333-63846.  Since the commencement date of this agreement, July 10,
2001, we have issued 2,500,000 shares, and are to issued an additional 640,135 shares in the near
future, for a total proceeds of $395,000.  Should the market price of our common stock remain
depressed, you can expect that we would issue all 6,000,000 shares, due to our need for capital
with which to implement our plan of business.  However, due to the fact that the number of
shares to be issued under the Fusion Capital agreement depends on future market prices of our
stock, we are unable to calculate the exact number of shares that we will issue under that
agreement.</p>
<p>If Fusion Capital purchased the full amount of shares purchasable under the Fusion Capital
agreement on the date of this prospectus, the purchase price would have been $.06 per share and
Fusion Capital would have been able to purchase all of the remaining portion of the 6,000,000
shares of our common stock reserved for issuance under the Fusion Capital agreement.
Assuming Fusion Capital&#8217;s purchase of these remaining shares under the Fusion Capital
agreement on the date of this prospectus, these shares, along with the 800,000 shares issued to
Fusion Capital as part of its commitment fee and the 645,000 shares underlying the warrants
issued to Fusion Capital as part of its commitment fee, would represent, on a fully-diluted basis,
approximately 12% of our outstanding common stock as of May 23, 2002.  This would result in
significant dilution to the ownership interests of other holders of our common stock.  The
purchase under the Fusion Capital agreement of a significant percentage of our outstanding
common stock may result in substantial dilution to the ownership interests of other holders of our
common stock.</p>
<p>Although we have the right to prohibit Fusion Capital's purchases under the Fusion Capital
agreement, we may still elect to require Fusion Capital's purchase of shares under the agreement.
We can require Fusion Capital to purchase additional shares if the closing sale price is above
$5.00 for five trading days.  In the event that we decide to issue a number of shares that
represents greater than 20% of our outstanding shares of common stock, we would first seek
shareholder approval.  The purchase under the Fusion Capital agreement of a significant
percentage of our outstanding stock may result in substantial dilution to the ownership interests
of other holders of our common stock. Since we only plan to sell up to 6,000,000 shares to
Fusion Capital under the Fusion Capital agreement, the price at which we sell our common stock
to Fusion Capital will need to average at least $1.67 per share for us to receive the maximum
proceeds of $10 million under the Fusion Capital agreement.  Assuming a purchase price of $.06
per share, the closing sale price of the common stock on May 23, 2002, and the purchase by
Fusion Capital of the remaining portion of the 6,000,000 shares 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, but not the obligation, to do.</p>
<br>
<p>The lower our stock price at the time Fusion Capital makes a purchase, the more shares of stock
Fusion Capital will receive.</p>
<p>Fusion Capital will receive more shares at the time it makes a purchase, the lower the price of
our stock, since the shares covered under the Fusion Capital agreement are issuable at a floating
rate based on our stock price.</p>
<p>Given the low market price of our common stock since the commencement date of the Fusion
Capital agreement, it appears likely that we will be unable to obtain $10 million under that
agreement, unless we elect to issue more than the 6,000,000 shares reserved for issuance under
that agreement, which we have the right, but not the obligation, to do, or the market price of our
common stock increases significantly in the near future.  We cannot assure you that the market
price of our common stock will increase at all.</p>
<br>
<p>Fusion Capital may purchase more than 9.9% of our common stock.</p>
<p>Even though the Fusion Capital agreement restricts Fusion Capital from owning any more than
9.9% of our stock at any one time, this restriction does not prevent Fusion Capital from selling a
portion of its holdings and later purchasing additional shares.  Thus, it is possible that the total
number of shares purchased by Fusion Capital would be greater than 9.9% of the then-outstanding common stock.</p>
<br>
<p>The existence of our agreement with Fusion Capital could cause downward pressure on the
market price of our common stock.</p>
<p>Simply the existence of the Fusion Capital agreement could cause holders of our common stock
to sell their shares, which could cause the market price of our common stock to decline.  Also,
prospective investors anticipating future downward pressure on the price of our common stock
due to the shares that may be available for sale by Fusion Capital could refrain from purchases or
effect sales in anticipation of a decline of the market price.</p>
<br>
<p>We may be unable to obtain sufficient capital to sustain our business or pursue our growth
strategy.</p>
<p>Currently, we do not have sufficient financial resources to implement our business plan or grow
our operations. Therefore, excluding any funding that we might receive from Fusion Capital in
the future, we will need additional funds to continue our operations and to grow our business.
Assuming we do not receive any further funding from Fusion Capital, there is no assurance that
we will be able to generate revenues that are sufficient to sustain our operations and we would
require additional sources of financing in order to satisfy our working capital needs.  Should
needed financing be unavailable or prohibitively expensive when we require it, it is possible that
we would be forced to cease operations.</p>
<p>We have designed a very aggressive growth strategy for the commercial exploitation of our
Quick-Cell wireless Internet access products.  This strategy is expected to place a significant
strain on our managerial, operational and financial resources.  In particular, our planned wireless
Internet expansion will require significant capital with which to purchase equipment necessary
for the construction and implementation of systems.  If we are unable to secure enough capital,
we will be unable to achieve our growth objectives.  We cannot assure you that we will be able to
obtain enough capital for our growth needs.</p>
<p>Even if we are able to access significant funds under the Fusion Capital agreement, we will need
additional capital to implement fully our growth plans.</p>
<br>
<p>We may not be able to secure enough Quick-Cell customer installation personnel to keep up with
demand.</p>
<p>It is possible that we will be unable to secure Quick-Cell installation crews, either through
independent contractors or directly hiring personnel, in large enough numbers that will allow us
to install new Quick-Cell customers in a timely manner.  Any unreasonable delays in installation
can cause customers to cancel their orders.  We may not be able to overcome this potential
barrier to market penetration.  Our failure to do so would restrict our growth in revenues and
severely impair our ability to earn a profit.</p>
<br>
<p>Our future operating results may vary from period to period, and, as a result, we may fail to meet
the expectations of our investors and analysts, which could cause our stock price to fluctuate or
decline and continue to inhibit our ability to obtain funds under the Fusion Capital agreement or
otherwise.</p>
<p>Our revenues and results of operations have fluctuated in the past and can be expected to
fluctuate significantly in the future, as we make financial commitments to facilitate expected
growth.  The following factors will influence our operating results:</p>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>access to funds for expansion-related capital expenditures, including Quick-Cell
equipment purchases;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>market acceptance of our Quick-Cell wireless Internet access products;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>the rates of new wireless Internet access subscriber acquisition and retention;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>changes in our pricing policies or those of our competitors; and</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>potential competition from large, well-funded national telecommunications companies.</p>
</td>
</tr>
</table>
<p>Our future personnel costs, marketing programs and overhead cannot be adjusted quickly and
are, therefore, relatively fixed in the short term.  Our operating expense levels will be based, in
part, on our expectations of future revenue.  If actual revenues are below our expectations, our
results of operations will suffer and we could be forced to cease operations.</p>
<p>Period-to-period comparisons of our results of operations will likely not provide reliable
indications of our future performance.</p>
<p>Price fluctuations of our common stock could negatively impact our ability to obtain needed
capital.</p>
<br>
<p>Because we depend heavily on outside suppliers, our business may suffer, should our suppliers
fail to perform in a timely manner.</p>
<p>We depend on third-party suppliers of hardware components and telecommunications carriers to
provide equipment and communications capacity.  The failure of one or more of our suppliers to
perform in a timely manner could cause a significant disruption in our business.  In particular,
should our manufacturer of Quick-Cell modem circuit boards fail to deliver circuit boards when
needed, it is possible that we would be forced to suspend our wireless Internet business for an
indeterminate period of time.</p>
<br>
<p>We have not purchased insurance that covers our Quick-Cell wireless Internet access operations.</p>
<p>We have not purchased any insurance that would cover property loss or loss of income with
respect to any of our Quick-Cell operations.  Damage to our Quick-Cell equipment, or the towers
to which it is affixed, could cause an interruption in our Wireless Internet access service.  It is
possible that we would be unable to afford to repair any items of damaged equipment, due to our
extreme lack of capital.</p>
<br>
<p>Our failure to manage future growth would hinder our efforts in earning a profit.</p>
<p>Without additional capital, we will be unable to expand significantly our operations.  As we
obtain additional funds under the Fusion Capital agreement or from other sources, we will begin
to serve new geographic markets.  This expected expansion will place a significant strain on our
management and operating systems.  In order to accommodate this sort of growth, we will need
to hire and retain appropriate management personnel.  We may not be able to hire and retain
enough qualified managers.  This circumstance would likely hinder our growth and reduce our
chance of earning a profit.</p>
<p>If and when we experience our anticipated rapid growth, we may encounter difficulties in
developing and implementing needed internal systems, including our recruiting and management
systems.  Our failure to do so will reduce the likelihood that we will earn a profit.</p>
<br>
<p>Our future success will depend on our ability to keep pace with the Internet&#8217;s rapid technological
changes, evolving industry standards and changing customer needs.</p>
<p>The Internet access market is constantly evolving, due primarily to technological innovations, as
well as evolving industry standards, changes in subscriber needs and frequent new service and
product introductions.  New services and products based on new technologies or new industry
standards expose us to risks of equipment obsolescence.  We must use leading technologies
effectively, continue to develop our technical expertise and enhance our existing services on a
timely basis to remain competitive in this industry.  We cannot assure you that we will be able to
do so.</p>
<p>Our ability to compete successfully in our markets also depends on the continued compatibility
of our services with products and systems utilized and sold by various third parties.  Our failure
to do so could cause us to lose a competitive position in our markets, thereby causing us to
operate less profitably.</p>
<br>
<p>Our Quick-Cell wireless Internet access products are new and consumer acceptance may not be
achieved.</p>
<p>Our Quick-Cell wireless Internet access products are new and do not enjoy wide-spread name
recognition among consumers.  If we are unable to achieve consumer acceptance of our products,
it is unlikely that we would be able to earn a profit.</p>
<br>
<p>We could fail to overcome the severe competition for Internet access customers, which would
impair our ability to earn a profit and cause our overall financial condition to deteriorate.</p>
<p>The market for Internet access services is extremely competitive and highly fragmented.  As
there are no significant barriers to entry, we expect that competition will intensify over time.</p>
<p>Our competitors include many large, nationally-known companies, such as America Online and
Earthlink.  These and other companies possess greater resources, particularly access to capital
sources, market presence and brand name recognition than do we.  In addition, we will face
competition from other wireless Internet access providers and larger, national cellular telephone
service providers.  If we are unable to overcome this severe competition, we do not expect that
we would earn a profit and our overall financial condition would decline.</p>
<br>
<p>We depend on our key personnel; the loss of any key personnel could disrupt our operations,
adversely affect our business and result in reduced revenues.</p>
<p>Our future success will depend on the continued services and on the performance of our senior
management and other key employees.  While we have entered into an employment agreements
with each of our officers, the loss of their services for any reason could seriously impair our
ability to execute our business plan, which could reduce our revenues and have a materially
adverse effect on our business and results of operations.  We have not purchased any key-man
life insurance.</p>
<br>
<p>Our directors and executive officers own enough of our common stock effectively to control
directors&#8217; elections and thereby control our management policies.</p>
<p>Our directors and executive officers own approximately 32% of our currently outstanding
common stock.  Two of our directors, as well as three other persons, have entered into a voting
agreement relating to the voting in elections of directors.  Currently, approximately 20% of our
outstanding shares of common stock are subject to this voting agreement.  These shareholders
may be able effectively to control the outcome of corporate actions requiring shareholder
approval by majority action.  Their stock ownership may have the effect of delaying, deferring or
preventing a change in control of USURF America.  A more complete description of this voting
agreement may be found under the heading &#8220;Certain Transactions&#8221;, page ___.</p>
<br>
<p>Our business plan is not based on independent market studies, so we cannot assure you that our
strategy will be successful.</p>
<p>We have not commissioned any independent market studies concerning the extent to which
customers will utilize our services and products.  Rather, our plans for implementing our
business strategy and achieving profitability are based on the experience, judgment and
assumptions of our key management personnel, and upon other available information concerning
the communications industry.  If our management&#8217;s assumptions prove to be incorrect, we will
not be successful in establishing our wireless Internet access business.</p>
<br>
<p>We may not be able to protect our intellectual property rights, which could dramatically reduce
our ability to earn a profit.</p>
<p>We currently rely on common law principles for the protection of our copyrights and trademarks
and trade secret laws to protect our proprietary intellectual property rights.  We do not intend to
file patent applications relating to our Quick-Cell wireless Internet access products, until
completion of future generations of the products.  We have not filed trademark applications
relating to the &#8220;Quick-Cell&#8221;, &#8220;Quick-Cell Broadband Internet&#8221; and &#8220;USURF Wireless Internet&#8221;
brand names.</p>
<p>Without patent or trademark protection, the existing trade secret and copyright laws afford us
only limited protection.  Third parties may attempt to disclose, obtain or use our technologies.
Others may independently develop and obtain patents or copyrights for technologies that are
similar or superior to our technologies.  If that happens, we may need to license these
technologies and we may not be able to obtain licenses on reasonable terms, if at all, thereby
causing great harm to our business.</p>
<br>
<p>Nearly all of our shares are eligible for future sale, which could cause the market price for our
common stock to decline.</p>
<p>With the registration of the shares of stock included in this prospectus, nearly all of the
outstanding shares of our common stock owned by non-affiliates will be eligible for resale to the
public.  This amount of common stock represents a significant overhang on the market for our
common stock.  The sale of a significant amount of these shares at any given time could cause
the trading price of our common stock to decline and to be highly volatile.</p>
<br>
<p style="text-align: center">CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS</p>
<br>
<p>This prospectus contains forward-looking statements that involve risks and uncertainties.
Discussions containing forward-looking statements may be found in the material set forth under
&#8220;Risk Factors&#8221;, &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of
Operations&#8221; and &#8220;Business&#8221;, as well as in the prospectus generally.  We generally use words such
as &#8220;believes&#8221;, &#8220;intends&#8221;, &#8220;expects&#8221;, &#8220;anticipates&#8221;, &#8220;plans&#8221; and similar expressions to identify
forward-looking statements. You should not place undue reliance on these forward-looking
statements.  Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described above and elsewhere in this
prospectus.</p>
<br>
<p style="text-align: center">DILUTION</p>
<br>
<p>As of March 31, 2002, we had a total of 28,919,306 shares of common stock outstanding, in
addition to 524,564 shares that were subject to potential rescission claims, and a net tangible
book value of negative $(0.048) per share.</p>
<br>
<p>A purchase of our common stock will result in substantial and immediate dilution in your
investment.  Dilution is the reduction of a purchaser&#8217;s investment measured by the difference
between the price paid per share of common stock and the net tangible book value per share at
the time of purchase.</p>
<br>
<p>The following table depicts the potential dilution to purchasers of our common stock, without
taking into account any other changes in our net tangible book value since March 31, 2002,
assuming various purchase prices:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" align="center" valign="top"><br>
<br>
<p>Public Offering Price Per Share</p>
</td>
<td width="25%" align="center" valign="top"><p>Net Tangible Book
Value Per Share At
Time of Offering</p>
</td>
<td width="25%" align="center" valign="top"><br>
<p>Dilution per Share to
Purchasers</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" align="center" valign="top"><p>_________________________</p>
</td>
<td width="25%" align="center" valign="top"><p>______________</p>
</td>
<td width="25%" align="center" valign="top"><p>______________</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" align="center" valign="top"><p>$.06</p>
</td>
<td width="25%" align="center" valign="top"><p>$(0.048)</p>
</td>
<td width="25%" align="center" valign="top"><p>$.108</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" align="center" valign="top"><p>$.20</p>
</td>
<td width="25%" align="center" valign="top"><p>$(0.048)</p>
</td>
<td width="25%" align="center" valign="top"><p>$..248</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" align="center" valign="top"><p>$1.50</p>
</td>
<td width="25%" align="center" valign="top"><p>$(0.048)</p>
</td>
<td width="25%" align="center" valign="top"><p>$1.548</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" align="center" valign="top"><p>$2.00</p>
</td>
<td width="25%" align="center" valign="top"><p>$(0.048)</p>
</td>
<td width="25%" align="center" valign="top"><p>$2.048</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" align="center" valign="top"><p>$5.00</p>
</td>
<td width="25%" align="center" valign="top"><p>$(0.048)</p>
</td>
<td width="25%" align="center" valign="top"><p>$5.048</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" align="center" valign="top"><p>$10.00</p>
</td>
<td width="25%" align="center" valign="top"><p>$(0.048)</p>
</td>
<td width="25%" align="center" valign="top"><p>$10.048</p>
</td>
</tr>
</table>
<br>
<p>You will incur substantial dilution when you purchase our common stock.  However, because the
market price of our common stock fluctuates, we cannot predict the actual dilution you will
incur.</p>
<br>
<p style="text-align: center">USE OF PROCEEDS</p>
<br>
<p>We will not receive any of the proceeds of sales of stock by the selling shareholders.</p>
<br>
<p>However, we may receive up to $10 million under the Fusion Capital agreement.  Assuming we
receive this amount of funds, we anticipate that we will apply these funds as follows:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>Purchase of Quick-Cell Equipment</p>
</td>
<td width="27%" align="center" 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="42%" valign="top"><p>Construction of Quick-Cell Systems</p>
</td>
<td width="27%" align="center" 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="42%" valign="top"><p>Marketing</p>
</td>
<td width="27%" align="center" 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="42%" valign="top"><p>General and Administrative Expenses</p>
</td>
<td width="27%" align="center" 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="42%" valign="top"><p>Finder&#8217;s Fee</p>
</td>
<td width="27%" align="center" 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="42%" valign="top"><p>Working Capital</p>
</td>
<td width="27%" align="center" 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="42%" valign="top"><p>&#160;</p>
</td>
<td width="27%" align="center" valign="top"><p>_____________</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="42%" align="center" valign="top"><p>Total</p>
</td>
<td width="27%" align="center" valign="top"><p>$10,000,000</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p>Should all of our outstanding warrants be exercised, we would receive cash proceeds of
approximately $3,278,376.  The funds received from the exercise of warrants would be used as
follows:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>Purchase of Quick-Cell Equipment</p>
</td>
<td width="27%" align="center" valign="top"><p>$2,000,000</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>Construction of Quick-Cell Systems</p>
</td>
<td width="27%" align="center" valign="top"><p>500,000</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>Marketing</p>
</td>
<td width="27%" align="center" valign="top"><p>400,000</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>General and Administrative Expenses</p>
</td>
<td width="27%" align="center" valign="top"><p>100,000</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>Working Capital</p>
</td>
<td width="27%" align="center" valign="top"><p>278,376</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="27%" align="center" valign="top"><p>_____________</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="42%" align="center" valign="top"><p>Total</p>
</td>
<td width="27%" align="center" valign="top"><p>$3,278,376</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p style="text-align: center">TRADING AND MARKET PRICES</p>
<br>
<p>Beginning on October 15, 1999, our common stock began to be traded on the American Stock
Exchange, under the symbol &#8220;UAX&#8221;.  The table below sets forth, for the period indicated, the
high and low sales prices for our common stock, as reported by the American Stock Exchange:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" align="center" valign="top"><p>Quarter/Period Ended</p>
</td>
<td width="20%" align="center" valign="top"><p>High</p>
</td>
<td width="20%" align="center" valign="top"><p>Low</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" align="center" valign="top"><p>___________________</p>
</td>
<td width="20%" align="center" valign="top"><p>_________</p>
</td>
<td width="20%" align="center" valign="top"><p>_________</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" valign="top"><p>10/15/99 thru 12/31/99</p>
</td>
<td width="20%" align="center" valign="top"><p>5.875</p>
</td>
<td width="20%" align="center" valign="top"><p>2.50</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" 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>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" valign="top"><p>March 31, 2000</p>
</td>
<td width="20%" align="center" valign="top"><p>11.00</p>
</td>
<td width="20%" align="center" valign="top"><p>3.625</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" valign="top"><p>June 30, 2000</p>
</td>
<td width="20%" align="center" valign="top"><p>6.00</p>
</td>
<td width="20%" align="center" valign="top"><p>2.25</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" valign="top"><p>September 30, 2000</p>
</td>
<td width="20%" align="center" valign="top"><p>2.50</p>
</td>
<td width="20%" align="center" valign="top"><p>.875</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" valign="top"><p>December 31, 2000</p>
</td>
<td width="20%" align="center" valign="top"><p>1.25</p>
</td>
<td width="20%" align="center" valign="top"><p>.1875</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" 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>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" valign="top"><p>March 31, 2001</p>
</td>
<td width="20%" align="center" valign="top"><p>.80</p>
</td>
<td width="20%" align="center" valign="top"><p>.22</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" valign="top"><p>June 30, 2001</p>
</td>
<td width="20%" align="center" valign="top"><p>.78</p>
</td>
<td width="20%" align="center" valign="top"><p>.33</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" valign="top"><p>September 30, 2001</p>
</td>
<td width="20%" align="center" valign="top"><p>.50</p>
</td>
<td width="20%" align="center" valign="top"><p>.17</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" valign="top"><p>December 31, 2001</p>
</td>
<td width="20%" align="center" valign="top"><p>.27</p>
</td>
<td width="20%" align="center" valign="top"><p>.08</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" 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>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" valign="top"><p>March 31, 2002</p>
</td>
<td width="20%" align="center" valign="top"><p>.25</p>
</td>
<td width="20%" align="center" valign="top"><p>.08</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p>You should note that our common stock, like many newly-traded stocks, has experienced
significant fluctuations in its price and trading volume.  We cannot predict the future trading
patterns of our common stock.</p>
<br>
<p>On May 23, 2002, the number of record holders of our common stock, excluding nominees and
brokers, was 1,149 holding 43,731,870 shares.</p>
<br>
<p style="text-align: center">DIVIDENDS</p>
<br>
<p>We have never paid cash dividends on our common stock.  We intend to re-invest any future
earnings for the foreseeable future.</p>
<br>
<p>Our board of directors has declared property dividends, the values of which have been written-off
in our financial statements, comprised of common stock of three private companies acquired by
us.  These dividends of stock are: 1,500,000 shares of New Wave Media Corp., acquired by us in
exchange for all of our community-television-related assets; 400,000 shares of Argo Petroleum
Corporation, acquired by us in exchange for 10,000 shares of our common stock; and 800,000
shares of Woodcomm International, Inc., acquired by us in exchange for 7,500 shares of our
common stock.</p>
<br>
<p>None of the three dividend distributions will occur unless and until a registration statement
relating to each distribution transaction has been declared effective by the SEC.</p>
<br>
<p style="text-align: center">CAPITALIZATION</p>
<br>
<p>The following table sets forth our capitalization as of March 31, 2002.  This table should be read
in conjunction with our consolidated financial statements included elsewhere in this prospectus.</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>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>As of March 31,
2002 (unaudited)</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="center" 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>Long-Term Liabilities</p>
</td>
<td width="23%" align="center" valign="top"><p>$0</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>Redeemable Common Stock</p>
</td>
<td width="23%" align="center" valign="top"><p>220,998</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>Stockholders' Equity:</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</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>Common Stock - $.0001 par value;
100,000,000 shares authorized,
28,919,306 shares issued</p>
</td>
<td width="23%" align="center" valign="top"><p>2,892</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>Additional Paid-in Capital</p>
</td>
<td width="23%" align="center" valign="top"><p>36,891,262</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>Accumulated Deficit</p>
</td>
<td width="23%" align="center" valign="top"><p>(37,469,439)</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>Subscriptions Receivable</p>
</td>
<td width="23%" align="center" valign="top"><p>166,500</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>Deferred Consulting</p>
</td>
<td width="23%" align="center" valign="top"><p>(963,811)</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>Total Capitalization</p>
</td>
<td width="23%" align="center" valign="top"><p>(1,151,598)</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p style="text-align: center">SELECTED FINANCIAL DATA</p>
<br>
<p>The following selected financial data have been derived from our consolidated financial
statements, which appear elsewhere in this prospectus.  The selected financial data set forth
below should be read in conjunction with our financial statements, related notes and other
financial information included elsewhere in this prospectus.</p>
<br>
<p>This summary financial information should be read in conjunction with the consolidated
financial statements appearing elsewhere in this prospectus.</p>
<br>
<p>STATEMENT OF OPERATIONS DATA:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="46%" align="center" valign="top"><p>Year Ended December 31,</p>
</td>
<td width="31%" align="center" valign="top"><p>Three Months Ended
March 31,</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>2001</p>
</td>
<td width="15%" align="center" valign="top"><p>2000</p>
</td>
<td width="15%" align="center" valign="top"><p>1999</p>
</td>
<td width="15%" align="center" valign="top"><p>2002
(unaudited)</p>
</td>
<td width="17%" align="center" valign="top"><p>2001
(unaudited)</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>__________</p>
</td>
<td width="15%" align="center" valign="top"><p>__________</p>
</td>
<td width="15%" align="center" valign="top"><p>__________</p>
</td>
<td width="15%" align="center" valign="top"><p>__________</p>
</td>
<td width="17%" align="center" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>Revenues</p>
</td>
<td width="15%" align="center" valign="top"><p>$7,446</p>
</td>
<td width="15%" align="center" valign="top"><p>$1,872,629</p>
</td>
<td width="15%" align="center" valign="top"><p>$2,547,225</p>
</td>
<td width="15%" align="center" valign="top"><p>$4,626</p>
</td>
<td width="17%" align="center" valign="top"><p>$384</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>Internet access
costs, cost of goods
sold</p>
</td>
<td width="15%" align="center" valign="top"><p>(11,999)</p>
</td>
<td width="15%" align="center" valign="top"><p>(2,145,955)</p>
</td>
<td width="15%" align="center" valign="top"><p>(1,152,721)</p>
</td>
<td width="15%" align="center" valign="top"><p>(8,482)</p>
</td>
<td width="17%" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>Operating
Expenses</p>
</td>
<td width="15%" align="center" valign="top"><p>2,852,110</p>
</td>
<td width="15%" align="center" valign="top"><p>14,975,583</p>
</td>
<td width="15%" align="center" valign="top"><p>11,860,758</p>
</td>
<td width="15%" align="center" valign="top"><p>464,772</p>
</td>
<td width="17%" align="center" valign="top"><p>901,643</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>Net loss</p>
</td>
<td width="15%" align="center" valign="top"><p>(2,498,468)</p>
</td>
<td width="15%" align="center" valign="top"><p>(21,885,330)</p>
</td>
<td width="15%" align="center" valign="top"><p>(10,930,163)</p>
</td>
<td width="15%" align="center" valign="top"><p>(468,811)</p>
</td>
<td width="17%" align="center" valign="top"><p>(901,259)</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>Loss per share</p>
</td>
<td width="15%" align="center" valign="top"><p>(0.13)</p>
</td>
<td width="15%" align="center" valign="top"><p>(1.68)</p>
</td>
<td width="15%" align="center" valign="top"><p>(0.96)</p>
</td>
<td width="15%" align="center" valign="top"><p>(0.02)</p>
</td>
<td width="17%" align="center" valign="top"><p>(0.06)</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>Weighted average
number of shares
outstanding</p>
</td>
<td width="15%" align="center" valign="top"><p>18,616,434</p>
</td>
<td width="15%" align="center" valign="top"><p>13,00,0391</p>
</td>
<td width="15%" align="center" valign="top"><p>11,419,641</p>
</td>
<td width="15%" align="center" valign="top"><p>25,503,752</p>
</td>
<td width="17%" align="center" valign="top"><p>13,934,118</p>
</td>
</tr>
</table>
<br>
<p>BALANCE SHEET DATA:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="42%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="38%" align="center" valign="top"><p>As at December 31,</p>
</td>
<td width="20%" align="center" valign="top"><p>As at March 31,</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>2001</p>
</td>
<td width="19%" align="center" valign="top"><p>2000</p>
</td>
<td width="20%" align="center" valign="top"><p>2002</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="center" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>(unaudited)</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Working Capital (Deficit)</p>
</td>
<td width="19%" align="center" valign="top"><p>$(1,254,897)</p>
</td>
<td width="19%" align="center" valign="top"><p>$(1,517,164)</p>
</td>
<td width="20%" align="center" valign="top"><p>$(1,240,582)</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Total Assets</p>
</td>
<td width="19%" align="center" valign="top"><p>229,528</p>
</td>
<td width="19%" align="center" valign="top"><p>410,316</p>
</td>
<td width="20%" align="center" valign="top"><p>222,768</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Total Current Liabilities</p>
</td>
<td width="19%" align="center" valign="top"><p>1,389,653</p>
</td>
<td width="19%" align="center" valign="top"><p>1,764,973</p>
</td>
<td width="20%" align="center" valign="top"><p>1,374,366</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Total Liabilities</p>
</td>
<td width="19%" align="center" valign="top"><p>1,389,653</p>
</td>
<td width="19%" align="center" valign="top"><p>1,764,973</p>
</td>
<td width="20%" align="center" valign="top"><p>1,374,366</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Total Redeemable Common Stock</p>
</td>
<td width="19%" align="center" valign="top"><p>1,192,700</p>
</td>
<td width="19%" align="center" valign="top"><p>3,323,552</p>
</td>
<td width="20%" align="center" valign="top"><p>220,998</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Stockholders&#8217; Equity (Deficit)</p>
</td>
<td width="19%" align="center" valign="top"><p>(2,352,825)</p>
</td>
<td width="19%" align="center" valign="top"><p>(4,678,209)</p>
</td>
<td width="20%" align="center" valign="top"><p>(1,372,596)</p>
</td>
</tr>
</table>
<br>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF</p>
<p>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.
Due to this circumstance, our wireless-cable-related assets were impaired and their $188,091
book value was written off in 2000.</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>Since 1998, we have acquired seven dial-up Internet service providers, including CyberHighway,
the business of www.e-tail.com and a web design firm, none of which was an affiliated company
nor were any  acquired from an affiliate.  All but one of these acquisitions were made for shares
of our stock.  In making these acquisitions, we issued a total of 2,587,063 shares, which were
valued at $18,759,500, in the aggregate.  All of these acquisitions were accounted for as a
purchase, which means that we did not include past operations of the acquired businesses in our
historical statements of operations.  Also in connection with these acquisitions, we recorded large
amounts of amortizable customer base and goodwill values, approximately $25,764,000, as a
result of the acquisitions&#8217; valuations exceeding the values of the tangible net assets.  At
December 31, 2000, all of these values were written off, due to the demise of CyberHighway&#8217;s
business.  Please see the discussion under &#8220;CyberHighway Bankruptcy&#8221; below.</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>This sudden and permanent demise of CyberHighway&#8217;s customer base rendered our intangible
assets relating to those customers worthless.  The write-off of these intangible assets totalled
$4,814,272, net of deferred taxes, as reflected in our December 31, 2000, financial statements.
Due to this change in operating environment, monthly revenues decreased substantially, and,
accordingly, goodwill was impaired.  The write-down of goodwill totaled $4,425,037, as
reflected in our December 31, 2000, financial statements.  Please see the discussion below under
the heading &#8220;Liquidity and Capital Resources&#8221; for more information on this topic.</p>
<br>
<p>Shareholder Loans - Conversion to Equity</p>
<br>
<p>In August 2000, our former president, David M. Loflin, converted all loan amounts owed to him,
including accrued interest, into a total of 774,162 shares of our common stock.  The total amount
of indebtedness converted to common stock was $967,703.  Since August 2000, Mr. Loflin has
made small loans to us to ease periods of restricted cash flow.  At December 31, 2001, we owed
Mr. Loflin $18,521.  At March 31, 2002, as well as following the initial closing under the
Evergreen agreement and as of the date of this prospectus, we did not owe Mr. Loflin any
amount.</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>Until the involuntary bankruptcy was filed against CyberHighway in September 2000, our
revenues for 2000 were approximately 10% below 1999's nine-month results.  Our revenues for
the last three months of 2000 diminished rapidly.  Since January 2001, we have derived no
revenue from CyberHighway&#8217;s business.</p>
<br>
<p>For all of 2001, our small amount of revenues were derived from the operations of our Quick-Cell wireless Internet access systems in Del Rio, Texas, and Santa Fe, New Mexico. With the
demise of CyberHighway, any future revenues will be derived from sales of our Quick-Cell
wireless Internet access service.  We currently lack the capital necessary to pursue our Quick-Cell business plan, and we may never possess enough capital with which to exploit fully our
Quick-Cell products.  In this circumstance, it is likely that we would never earn a profit.</p>
<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, of which there is no assurance, we plan to construct
additional Quick-Cell systems throughout 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, and received approximately
200 additional indications of interest via e-mail and telephone from other telecommunications
companies and others, 25% of which our management considered to be of a serious nature.  Due
to a lack of capital, however, this marketing effort was suspended before we investigated the
nature of the other inquiring companies.  No paying customers use these systems, due to
circumstances involving these companies that are beyond our control.  For all of 2001, we
derived no significant revenues from customer modem sales to these Quick-Cell purchasers, and
we do not expect to do so during the first half of 2002.</p>
<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 have been 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 all of 2001 and for the first three months of 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.</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 December 31, 2001, 2,138,726 shares of our common stock
with an aggregate assigned value of $1,192,700 were subject to 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.  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>Year Ended December 31, 2001, versus Year Ended December 31, 2000.  During 2000, all of our
revenues were generated by CyberHighway&#8217;s dial-up Internet access operations.  We derived our
revenues from monthly customer payments for dial-up Internet access, which averaged
approximately $18 per customer.  Also, until September 2000, we derived revenue from per-customer royalty payments from our CyberHighway affiliate-ISPs, which averaged
approximately $1.75 per customer.  During 2001, our small amount of revenues were derived
from our Quick-Cell wireless Internet access operations.  We charge residential customers $50
and business customers $100 in monthly Internet access fees.</p>
<br>
<p>Due to the demise of CyberHighway, our revenues for 2001 were significantly below our
revenue levels of 2000.  Due to the uncertainty of our obtaining additional capital, we cannot
predict our revenues for all of 2002.</p>
<br>
<p>Our operating results for 2001 and 2000 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>2001</p>
</td>
<td width="25%" align="center" valign="top"><p>2000</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>$7,446</p>
</td>
<td width="25%" align="center" valign="top"><p>$1,872,629</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>109,525</p>
</td>
<td width="25%" align="center" valign="top"><p>2,145,955</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>(102,079)</p>
</td>
<td width="25%" align="center" valign="top"><p>(273,326)</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>2,852,110</p>
</td>
<td width="25%" align="center" valign="top"><p>14,975,583</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>(2,954,189)</p>
</td>
<td width="25%" align="center" valign="top"><p>(15,248,909)</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>Other Income (Expense)</p>
</td>
<td width="25%" align="center" valign="top"><p>(34,184)</p>
</td>
<td width="25%" align="center" valign="top"><p>(9,193,281)</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>Extraordinary Items</p>
</td>
<td width="25%" align="center" valign="top"><p>489,905</p>
</td>
<td width="25%" align="center" valign="top"><p>961,436</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>Income Tax Benefit</p>
</td>
<td width="25%" align="center" valign="top"><p>0</p>
</td>
<td width="25%" align="center" valign="top"><p>1,595,424</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>(2,498,468)</p>
</td>
<td width="25%" align="center" valign="top"><p>(21,855,330)</p>
</td>
</tr>
</table>
<br>
<p>In general, our 2001 statement of operations reflects the demise of the business of
CyberHighway.  It also reflects a $97,526 charge against our earnings, which is attributable to a
write-down of the value of certain inventory items.</p>
<br>
<p>In 2001, we recorded a gain on debt forgiveness of $489,905, which arose from a reduction in the
liabilities of CyberHighway, pursuant to the bankruptcy proceedings.  At December 31, 2001,
our balance sheet included $953,561 in &#8220;permitted claims&#8221; against CyberHighway, the total
claims submitted by creditors of CyberHighway during 2001, including the statutory notification
period.  This notification period began on December 6, 2001, and ended on March 6, 2002.  The
$489,905 reduction in CyberHighway&#8217;s liabilities from 2000 to 2001 is reflected in our
consolidated statements of operations as an extraordinary item.</p>
<br>
<p>Our 2000 statement of operations reflects the following significant charges against our earnings:</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>each of the following amounts relates to the demise of the business of
CyberHighway:</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>$4,814,272 - amount of intangible assets written off attributable to
acquired customers bases, net of deferred taxes; 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>$4,425,037 - amount of intangible assets written off attributable to
goodwill.</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>-</p>
</td>
<td width="84%" valign="top"><p>$875,000 - 750,000 shares of our common stock were issued to three vice
presidents, 250,000 shares as an employment agreement signing bonus valued
at $3.00 per share and 500,000 shares as employment bonuses valued at
$125,000 - this expense is included in the &#8220;Salary and Commissions&#8221; statement
of operations line item.</p>
</td>
</tr>
</table>
<br>
<p>Certain statements of operations line items changed significantly from 2000 to 2001.  These
changes are summarized below:</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>Revenues and Internet Access Costs, Cost of Goods Sold - our revenues
decreased from $1,872,629 in 2000 to $7,446 in 2001.  This decrease is due to
the demise of the business of CyberHighway.  Likewise, our substantially
reduced internet access costs and cost of goods sold is attributable to the demise
of the business of CyberHighway.</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>Inventory Write-down - as we determined that certain items of our inventory
had become impaired, we recorded a write-down of these items of inventory in
the amount of $97,526.</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>Depreciation and Amortization - the large reduction in this line item from 2000
to 2001 is due to the write-down of all intangible assets associated with
CyberHighway caused by the demise of the business of CyberHighway.</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>Professional Fees - the reduced total of professional fees, $1,803,751 in 2001
compared to $4,168,610 in 2000, is due to the lower market price of our stock,
inasmuch as substantially all of our professional fees were paid by issuing
shares of stock.</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>Rent - our substantially reduced rent expense for 2001 is attributable to the
demise of the business of CyberHighway and the abandonment of the
CyberHighway facilities in Boise, Idaho.</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>Salaries and Commissions - our salaries and commissions were substantially
reduced from 2000 to 2001 due to the dramatic reduction in staff caused by the
demise of the business of CyberHighway.</p>
</td>
</tr>
</table>
<br>
<p>Due to our severe lack of capital during 2000 and 2001, during both years, we issued a large
number of shares of our stock to consultants in payment of their services.  The fair value of the
shares issued to consultants is included in our statements of operations under the &#8220;Professional
Fees&#8221; line item.  Issuing 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>in 2001, we issued 3,539,500 shares of our common stock under consulting
agreements; these shares were valued for financial accounting purposes at
$892,360, in the aggregate.  This amount is being expensed in equal monthly
amounts over periods based on the terms of the consulting agreements.  Nearly
all of this total amount was expensed 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>in 2000, we issued 2,262,166 shares of our common stock under consulting
agreements; these shares were valued for financial accounting purposes at
$3,110,000, in the aggregate.  This amount is being expensed in equal monthly
amounts over periods ranging from four months to one year.  Nearly all of this
total amount was expensed during 2000.</p>
</td>
</tr>
</table>
<br>
<p>Our net loss for 2001 is attributable to several large non-standard items:</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>$97,526 is attributable to a write-down of the value of certain inventory items;</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>$1,803,751 in professional fees, substantially all of which is attributable to
stock issuances under various consulting agreements;</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>$856,124 in salary and commissions was expensed, $303,947 of which was
paid or is payable in shares of our common stock; 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>Offsetting a portion of our net loss was a $489,905 &#8220;Gain on debt forgiveness&#8221;,
which is the result of a reduction of CyberHighway liabilities determined
pursuant to the CyberHighway bankruptcy proceeding.</p>
</td>
</tr>
</table>
<br>
<p>Our net loss for 2000 is attributable to several large non-standard items:</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>the depreciation and amortization of acquired customer bases, goodwill and
other intangibles of $7,618,755;</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>$4,168,610 in professional fees, substantially all of which is attributable to
stock issuances under various consulting agreements;</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>$2,060,528 in salary and commissions was expensed, $875,000 of which is the
result of stock bonuses to three officers; 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>$9,239,310 in impairment loss relating to the demise of CyberHighway&#8217;s
business and the associated write off of all related intangible assets.</p>
</td>
</tr>
</table>
<br>
<p>In October 2000, the prior acquisition of Net 1, Inc. was rescinded.  Included in the terms of the
settlement agreement was the return to us of the 250,000 shares issued by us in the original
transaction. We then issued 250,000 shares of our stock in settlement of the arbitration.  The
settlement agreement also called for one of the former owners of Net 1 to assume a $50,000
liability, that was recorded by us upon the acquisition. The total gain on the rescission of the Net
1 transaction, $961,436, has been recorded in our statement of operations for 2000 under the
&#8220;Gain on Rescission&#8221; heading.</p>
<br>
<p>For 2000, our statement of operations reflects an income tax benefit of $1,595,424, resulting
from the difference in the bases of the acquired customer bases for book versus tax purposes.
Due to the demise of the business of CyberHighway, our statement of operations for 2001 does
not contain a similar tax benefit.</p>
<br>
<p>Wireless Cable Segment.  The wireless cable segment has had no operating activity since 1997.
As described above, we have ceased, for the foreseeable future, our wireless cable activities.</p>
<br>
<p>Liquidity and Capital Resources</p>
<br>
<p>General.  Since our inception, we have had a significant working capital deficit.  Prior to our
January 1999 acquisition of CyberHighway, we had no material revenues and we operated from a
severely illiquid position.  Following the CyberHighway acquisition and until the recent demise
of CyberHighway&#8217;s business, we generated significant monthly revenues, yet continued to have a
working capital deficit.  Currently, we are substantially illiquid, although we do possess enough
cash to continue our current level of business activities, 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 have 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>$12,500 (2002) from the exercise of outstanding warrants - 156,250 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 shortage 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 December 31, 2001, 2,138,726
shares of our common stock with an aggregate assigned value of $1,192,700 were subject to
potential rescission claims.  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.  At June 30, 2002, none of these shares will remain subject to any such claims for
rescission.</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>December 31, 2001.  At December 31, 2001, our working capital deficit was $1,254,897, which
is less than our deficit at December 31, 2000, of  $1,517,164.</p>
<br>
<p>The following table sets forth our current assets and current liabilities at December 31, 2001 and
2000:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="28%" valign="top"><p>&#160;</p>
</td>
<td width="34%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>2001</p>
</td>
<td width="19%" align="center" valign="top"><p>2000</p>
</td>
</tr>
<tr>
<td width="28%" valign="top"><p>&#160;</p>
</td>
<td width="34%" 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="28%" valign="top"><p>Current Assets</p>
</td>
<td width="34%" valign="top"><p>Disbursements in excess of
cash balances</p>
</td>
<td width="19%" align="center" valign="top"><p>$15,539</p>
</td>
<td width="19%" align="center" valign="top"><p>$42,469</p>
</td>
</tr>
<tr>
<td width="28%" valign="top"><p>&#160;</p>
</td>
<td width="34%" valign="top"><p>Cash</p>
</td>
<td width="19%" align="center" valign="top"><p>10</p>
</td>
<td width="19%" align="center" valign="top"><p>1,088</p>
</td>
</tr>
<tr>
<td width="28%" valign="top"><p>&#160;</p>
</td>
<td width="34%" valign="top"><p>Inventory</p>
</td>
<td width="19%" align="center" valign="top"><p>134,756</p>
</td>
<td width="19%" align="center" valign="top"><p>246,721</p>
</td>
</tr>
<tr>
<td width="28%" valign="top"><p>Current Liabilities</p>
</td>
<td width="34%" valign="top"><p>Accounts payable</p>
</td>
<td width="19%" align="center" valign="top"><p>1,034,619</p>
</td>
<td width="19%" align="center" valign="top"><p>1,472,030</p>
</td>
</tr>
<tr>
<td width="28%" valign="top"><p>&#160;</p>
</td>
<td width="34%" valign="top"><p>Accrued payroll</p>
</td>
<td width="19%" align="center" valign="top"><p>265,978</p>
</td>
<td width="19%" align="center" valign="top"><p>158,262</p>
</td>
</tr>
<tr>
<td width="28%" valign="top"><p>&#160;</p>
</td>
<td width="34%" valign="top"><p>Other current liabilities</p>
</td>
<td width="19%" align="center" valign="top"><p>54,996</p>
</td>
<td width="19%" align="center" valign="top"><p>41,824</p>
</td>
</tr>
<tr>
<td width="28%" valign="top"><p>&#160;</p>
</td>
<td width="34%" valign="top"><p>Property dividends payable</p>
</td>
<td width="19%" align="center" valign="top"><p>0</p>
</td>
<td width="19%" align="center" valign="top"><p>43,750</p>
</td>
</tr>
<tr>
<td width="28%" valign="top"><p>&#160;</p>
</td>
<td width="34%" valign="top"><p>Notes payable to stockholder</p>
</td>
<td width="19%" align="center" valign="top"><p>18,521</p>
</td>
<td width="19%" align="center" valign="top"><p>6,638</p>
</td>
</tr>
</table>
<br>
<p>Certain balance sheet line items changed significantly from 2000 to 2001.  These changes are
summarized below:</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>Liabilities - our liabilities decreased to $1,034,619 from $1,472,030 in 2000.
This decrease is due to a final determination in the CyberHighway bankruptcy
proceeding of allowed claims, which claims were $489,905 less than the
amount recorded for 2000.</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>Subscriptions Receivable - the 2001 amount of $165,750 arises from the fact
that shares issuable as of December 31, 2001, were not, in fact, issued until
January 2002; the 2000 amount of $933,514 arises from our president&#8217;s
converting his loans into shares of our stock; this entry appears due to the fact
that the shares issued in that transaction were not actually issued until after
December 31, 2000, due to an administrative oversight.</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>Stockholders&#8217; Equity (Deficit) - at December 31, 2001, we had a stockholders&#8217;
deficit of $2,352,825; at December 31, 2000, we had a stockholders&#8217; deficit of
$4,678,209.  This improvement is due to (1) the value of shares no longer
subject to potential rescission claims being moved from &#8220;Redeemable Common
Stock&#8221; and restored to &#8220;Shareholders&#8217; Equity&#8221; and (2) the reduction in
liabilities of CyberHighway, as determined pursuant to the CyberHighway
bankruptcy proceeding.</p>
</td>
</tr>
</table>
<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 to ever earn a
profit.</p>
<br>
<p>Our accrued payroll at December 31, 2001, as well as at December 31, 2000, is primarily
attributable to accrued salary of our president and two of our vice presidents.</p>
<br>
<p>In August 2000, our president, David M. Loflin, converted the entire amount owed to him,
including accrued interest, into a total of 774,162 shares of our common stock.  The total amount
of indebtedness converted to common stock was $967,703.  Mr. Loflin received one share for
each $1.25 owed him - $1.25 was the low sale price for our common stock on the American
Stock Exchange on August 18, 2000, the last trading day prior to the conversion.  Until
converted, all of the loans from Mr. Loflin were payable on demand, with interest accruing at 8%
per annum.  The funds loaned by Mr. Loflin were used primarily for operating expenses,
including expenses of CyberHighway, corporate overhead and the construction of our Quick-Cell
system in Santa Fe, New Mexico.  Subsequent to the conversion transaction, Mr. Loflin has
loaned us small sums.  At December 31, 2001, we owed Mr. Loflin $18,521.  All sums owed to
Mr. Loflin are payable on demand, with interest accruing at 8% per annum.   We cannot assure
you that Mr. Loflin will continue to loan us money when we need it.</p>
<br>
<p>During 2001, we obtained funds from private sales of our securities in the total amount of
$359,750.  In these transactions, we issued a total of 1,545,000 shares of our common stock and
3,318,000 common stock purchase warrants.</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 year ended December 31, 2001, our
operations used $707,569 in cash compared to cash used of $953,112 during 2000.  In both years,
the use of cash in operations was a direct result of the lack of revenues compared to our operating
expenses, particularly our Internet access costs and salary and commissions in 2000.  The demise
of the business of CyberHighway served to reduce substantially our ongoing operating expenses;
however, its demise also reduced our revenues to insubstantial amounts.  The effects of the
demise of CyberHighway became apparent in our financial statements for 2001.</p>
<br>
<p>For the year ended December 31, 2000, our operations would have used approximately $750,000
more in cash, had we not determined to defer payment of nearly all of our accounts payable for
most of the year, due to our lack of working capital.</p>
<br>
<p>Cash Flows from Investing Activities.  During the year ended December 31, 2001, our investing
activities used cash of $12,681 compared to $85,150 in 2000.  During 2000, in our investing
activities, purchases of equipment used cash.  We purchased a small amount of equipment during
2001.  Because we lack working capital, we cannot predict our cash flows from investing
activities for 2002.</p>
<br>
<p>Cash Flows from Financing Activities.  For 2001, our financing activities provided $719,172 in
cash, primarily from sales of securities, including receipt of subscriptions receivable of $359,750
and receipt of cash on sales of securities of $340,000.  For 2000, our financing activities
provided $964,037 in cash.  Of this amount, $568,571 is attributable to loans from our president
and $370,000 is attributable to sales of securities.  We continue to seek capital and cannot,
therefore, predict future levels of cash flows from financing activities.</p>
<br>
<p>Non-Cash Investing and Financing Activities.  During the year ended December 31, 2001, we
issued a total of 3,539,500 shares of common stock under consulting agreements; these shares
have been valued at $892,360 in the aggregate.</p>
<br>
<p>In December 2001, we awarded 200,000 shares of our common stock as a bonus to one of our
vice presidents, which were valued at $.09 per share, the last closing price of our common stock
prior to the award, a value of $18,000.</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 $.06 per share, the closing sale price of the common stock on May 23, 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 of 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, due to our limited
amount of capital.  It is likely that we will lack capital to make capital expenditures, unless and
until we begin to obtain funds under the Fusion Capital agreement or from some other source.
During 2001, we made minimal capital expenditures.  During 2000, we made approximately
$125,000 in equipment purchases, approximately 15% for wireless Internet equipment and
approximately 85% for needed equipment in our network operations center.  We currently have
no capital with which to make any significant capital expenditures.  Should we obtain funding
under the Fusion Capital agreement, we will be able to make major expenditures on Quick-Cell-related equipment.  However, without additional capital, we will make no capital expenditures.</p>
<br>
<p style="text-align: center">REGULATION</p>
<br>
<p>Quick-Cell Wireless Internet Access.  Our Quick-Cell wireless Internet access products operate
in unregulated spectra, the 900 MHz and 2400 MHz spectra (primarily the 2400 MHz spectrum),
and we expect that such spectra will remain unregulated.</p>
<br>
<p>Regulation of Internet Access Services.  We provide Internet access, in part, using
telecommunications services provided by third-party carriers. Terms, conditions and prices for
telecommunications services are subject to economic regulation by state and federal agencies.
As an Internet access provider, we are not currently subject to direct economic regulation by the
FCC or any state regulatory body, other than the type and scope of regulation that is applicable to
businesses generally.  In April 1998, the FCC reaffirmed that Internet access providers should be
classified as unregulated "information service providers" rather than regulated
"telecommunications providers" under the terms of the Federal Telecommunications Act of
1996.  As a result, we are not subject to federal regulations applicable to telephone companies
and similar carriers merely because we provide our services using telecommunications services
provided by third-party carriers.  To date, no state has attempted to exercise economic regulation
over Internet access providers.</p>
<br>
<p>Governmental regulatory approaches and policies to Internet access providers and others that use
the Internet to facilitate data and communication transmissions are continuing to develop and, in
the future, we could be exposed to regulation by the FCC or other federal agencies or by state
regulatory agencies or bodies.  In this regard, the FCC has expressed an intention to consider
whether to regulate providers of voice and fax services that employ the Internet, or IP, switching
as "telecommunications providers", even though Internet access itself would not be regulated.
The FCC is also considering whether providers of Internet-based telephone services should be
required to contribute to the universal service fund, which subsidizes telephone service for rural
and low income consumers, or should pay carrier access charges on the same basis as applicable
to regulated telecommunications providers. To the extent that we engage in the provision of
Internet or Internet protocol-based telephony or fax services, we may become subject to
regulations promulgated by the FCC or states with respect to such activities.  We cannot assure
you that these regulations, if adopted, would not adversely affect our ability to offer certain
enhanced business services in the future.</p>
<br>
<p>Regulation of the Internet.  Due to the increasing popularity and use of the Internet by broad
segments of the population, it is possible that laws and regulations may be adopted with respect
to the Internet pertaining to content of Web sites, privacy, pricing, encryption standards,
consumer protection, electronic commerce, taxation, and copyright infringement and other
intellectual property issues.  No one is able to predict the effect, if any, that any future regulatory
changes or developments may have on the demand for our Internet access or other Internet-related services.  Changes in the regulatory environment relating to the Internet access industry,
including the enactment of laws or promulgation of regulations that directly or indirectly affect
the costs of telecommunications access or that increase the likelihood or scope of competition
from national or regional telephone companies, could materially and adversely affect our
business, operating results and financial condition.</p>
<br>
<p style="text-align: center">BUSINESS</p>
<br>
<p>History</p>
<br>
<p>In July 1999, we changed our name to &#8220;USURF America, Inc.&#8221;, from &#8220;Internet Media
Corporation&#8221;.  We were incorporated on November 1, 1996, under the name &#8220;Media
Entertainment, Inc.&#8221;, to act as a holding company in the wireless cable and community (low
power) television industries.  Due to current market conditions in the wireless cable industry, we
have abandoned efforts to develop our wireless cable properties.  We now focus on the
exploitation of our Quick-Cell wireless Internet access products.  In furtherance of this plan, we
assigned all of our community (low power) television properties to New Wave Media Corp.</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>Our dial-up Internet access business has lost all of its customers and, for the foreseeable future,
we have abandoned development of our e-commerce business.</p>
<br>
<p>Recent Developments</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>In September 2001, we began Quick-Cell operations in Del Rio, Texas, and have agreements
with two resellers there.  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.
Currently, we are adding one or two customers per week.  With the funds derived from the
Evergreen agreement and, should we begin to derive greater funds under our agreement with
Fusion Capital (described below), of which there is no assurance, we plan to construct additional
Quick-Cell systems during the remainder of 2002.</p>
<br>
<p>We have also completed engineering efforts in four other South Texas towns, but will not begin
marketing our Quick-Cell service in these towns until we stabilize our working capital situation.
We cannot predict our future capital position.</p>
<br>
<p>On September 29, 2000, an involuntary bankruptcy petition was filed against CyberHighway, our
wholly-owned subsidiary, in the Idaho Federal Bankruptcy Court.  The petition was brought by
ProPeople Staffing, CTC Telecom, Inc. and Hawkins-Smith.  CyberHighway&#8217;s bankruptcy
proceeding was not dismissed upon such a motion, 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 represent CyberHighway&#8217;s most valuable assets.  These objecting
creditors desire that these claims be adjudicated in the bankruptcy court.  It is likely that, at some
time in the future, a final order of bankruptcy will be entered with respect to CyberHighway.  No
prediction of the timing of such an order can be made, although we believe that such an order
would come only after the final adjudication of the claims described above.</p>
<br>
<p>Due primarily to the involuntary bankruptcy proceeding, CyberHighway lost all of its customers.
We do not expect that CyberHighway will resume operations.</p>
<br>
<p>On May 9, 2001, we executed a common stock purchase agreement with Fusion Capital Fund II,
LLC, which replaced a similar agreement dated October 9, 2000.  Under this agreement, Fusion
Capital may purchase up to $10 million of our common stock over a period of up to 25 months.
We have not obtained the maximum funding amount possible under this agreement.   To date, we
had received only $395,000 under our agreement with Fusion Capital.  Fusion Capital has not
purchased the maximum shares possible under this agreement, which has significantly impeded
our ability to expand our Quick-Cell business operations..  We will remain in this position unless
and until our stock price increases significantly or we secure funding from a source other than
Fusion Capital, of which there is no assurance.</p>
<br>
<p>The Fusion Capital Transaction</p>
<br>
<p>General.  On May 9, 2001, we entered into an amended and restated common stock purchase
agreement with Fusion Capital, which replaced a similar agreement dated October 9, 2000, and
amended by letter agreement on December 27, 2000, pursuant to which Fusion Capital agreed to
purchase up to $10 million of our common stock. The selling price of the shares will be equal to
a price based upon the future market price of the common stock without any fixed discount to the
market price.</p>
<br>
<p>Purchase of Shares Under the Fusion Capital Agreement.  Under the Fusion Capital agreement,
on each trading day during the term of the agreement, Fusion Capital is obligated to purchase a
specified dollar amount of our common stock.  Subject to our right to suspend Fusion Capital&#8217;s
purchases at any time and our right to terminate the Fusion Capital agreement at any time, Fusion
Capital will purchase on each trading day during the term of the agreement $20,000 of our
common stock.  The daily purchase amount may be decreased by us at any time.  We also have
the right to increase the daily purchase amount of $20,000 any time the market price of our
common stock is above $5.00 per share for five consecutive trading days.  The selling price per
share is equal to the lesser of:</p>
<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>the lowest sale price of our common stock on the purchase date; or</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>the average of the three lowest closing sale prices of our common stock during
the 15 consecutive trading days prior to the date of submission of a purchase by
Fusion Capital.</p>
</td>
</tr>
</table>
<br>
<p>The selling price will be adjusted for any reorganization, recapitalization, non-cash dividend,
stock split or other similar transaction occurring during the fifteen (15) trading days in which the
closing bid price is used to compute the purchase price.  Even though the Fusion Capital
Agreement restricts Fusion Capital from owning more than 9.9% of our stock at any one time,
this restriction does not prevent Fusion Capital from selling a portion of its holdings and later
purchasing additional shares.  Thus, it is possible that the total number of shares purchased by
Fusion Capital would be greater than 9.9% of the then-outstanding common stock.  Because this
restriction on ownership may be waived by us and Fusion Capital, it is possible that Fusion
Capital could own more than 9.9% of our common stock at any one time.</p>
<br>
<p>The following table sets forth the number of shares of our common stock that would be sold to
Fusion Capital upon our sale of common stock under the Fusion Capital agreement at varying
purchase prices:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="25%" align="center" valign="top"><br>
<br>
<br>
<p>Assumed Per Share
Purchase Price</p>
</td>
<td width="25%" align="center" valign="top"><p>Total Shares Issuable
Upon Purchase of
Remaining Shares
Under the Fusion
Capital Agreement</p>
</td>
<td width="25%" align="center" valign="top"><br>
<br>
<br>
<br>
<p>Gross Proceeds</p>
</td>
<td width="25%" align="center" valign="top"><p>Percent of Our
Common Stock
Outstanding After
Giving Effect to the
Issuance to Fusion
Capital</p>
</td>
</tr>
<tr>
<td width="25%" align="center" valign="top"><p>________________</p>
</td>
<td width="25%" align="center" valign="top"><p>________________</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="25%" align="center" valign="top"><p>$.06(1)</p>
</td>
<td width="25%" align="center" valign="top"><p>6,000,000(2)</p>
</td>
<td width="25%" align="center" valign="top"><p>$600,000(2)</p>
</td>
<td width="25%" align="center" valign="top"><p>12.70%</p>
</td>
</tr>
<tr>
<td width="25%" align="center" valign="top"><p>$1.50</p>
</td>
<td width="25%" align="center" valign="top"><p>6,000,000(2)</p>
</td>
<td width="25%" align="center" valign="top"><p>$4,500,000(2)</p>
</td>
<td width="25%" align="center" valign="top"><p>12.70%</p>
</td>
</tr>
<tr>
<td width="25%" align="center" valign="top"><p>$2.00</p>
</td>
<td width="25%" align="center" valign="top"><p>6,000,000(2)</p>
</td>
<td width="25%" align="center" valign="top"><p>$6,500,000</p>
</td>
<td width="25%" align="center" valign="top"><p>12.70%</p>
</td>
</tr>
<tr>
<td width="25%" align="center" valign="top"><p>$5.00</p>
</td>
<td width="25%" align="center" valign="top"><p>4,500,000(2)</p>
</td>
<td width="25%" align="center" valign="top"><p>$10,000,000</p>
</td>
<td width="25%" align="center" valign="top"><p>9.84%</p>
</td>
</tr>
<tr>
<td width="25%" align="center" valign="top"><p>$10.00</p>
</td>
<td width="25%" align="center" valign="top"><p>3,500,000(2)</p>
</td>
<td width="25%" align="center" valign="top"><p>$10,000,000</p>
</td>
<td width="25%" align="center" valign="top"><p>7.82%</p>
</td>
</tr>
<tr>
<td width="25%" valign="top"><p>_________</p>
</td>
<td width="25%" valign="top"><p>&#160;</p>
</td>
<td width="25%" valign="top"><p>&#160;</p>
</td>
<td width="25%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p>(1) Closing price on May 23, 2002, as reported by AMEX.</p>
<p>(2) Estimate.</p>
<br>
<p>To date, under the Fusion Capital agreement, we had received only $395,000 in purchase of a
total of 3,140,135 shares, 640,135 of which shares are to be issued in the near future.  This does
not represent the maximum amount of funds under the Fusion Capital agreement, and has
significantly impeded our ability to expand our Quick-Cell business operations.  We may never
realize the maximum amount of proceeds under the Fusion Capital 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.  Given the
current and sustained depressed price for our common stock, it appears unlikely that we will
obtain $10 million under the Fusion Capital agreement, although we cannot predict the ultimate
amount that we will obtain under that agreement.  However, should our stock price remain at or
near its current level, we would be able to obtain only approximately $600,000, unless we choose
to issue more than 6,000,000 shares, which we have the right to do.</p>
<br>
<p>Our Right to Suspend Purchases.  At any time or from time to time, we have the unconditional
right to prevent any purchases by Fusion Capital effective upon one trading day&#8217;s prior notice.
Any suspension would remain in effect until our revocation of the suspension.  To the extent we
need to use the cash proceeds of the sales of common stock under the Fusion Capital agreement
for working capital or other business purposes, we do not intend to restrict purchases under the
Fusion Capital agreement.</p>
<br>
<p>Our Right to Increase and Decrease the Daily Purchase Amount.  We have the unconditional
right to decrease the daily amount to be purchased by Fusion Capital at any time for any reason,
effective upon one trading day&#8217;s notice.  We also have the right to increase the $20,000 daily
purchase amount any time the market price of our common stock is above $5.00 per share for
five consecutive trading days.  For any trading day that the market price of our common stock is
below $5.00, the daily purchase amount shall not be greater than $20,000.</p>
<br>
<p>To date, we have not obtained the maximum amount of funds under the Fusion Capital
agreement, which has significantly impeded our ability to expand our Quick-Cell business
operations.  We may never realize the maximum amount of proceeds under the Fusion Capital
agreement.</p>
<br>
<p>Our Termination Rights.  We have the unconditional right at any time for any reason to give
notice to Fusion Capital terminating the common stock purchase agreement.  Such notice shall be
effective one trading day after Fusion Capital receives such notice.</p>
<br>
<p>Effect of Performance of the Fusion Capital Agreement on our Shareholders.  All shares issued
to Fusion Capital have been registered for resale and will be freely tradable. It is anticipated that
these shares will be sold over a period of up to 25 months from July 2001. The sale of a
significant amount of these shares at any given time could cause the trading price of our common
stock to decline and to be highly volatile. Fusion Capital may ultimately purchase all of the
shares of common stock issuable under the Fusion Capital agreement, and it may resell some,
none or all of the shares of common stock it acquires upon purchase. Therefore, the purchases
under the Fusion Capital agreement may result in substantial dilution to the interests of other
holders of our common stock. However, we have the right at any time for any reason to: (1)
reduce the daily purchase amount, (2) suspend purchases of the common stock by Fusion Capital
and (3) terminate the Fusion Capital agreement.</p>
<br>
<p>No Short-Selling or Hedging by Fusion Capital.  Fusion Capital has agreed that neither it nor any
of its affiliates will engage in any direct or indirect short-selling or hedging of our common stock
during any time prior to the termination of the Fusion Capital agreement.</p>
<br>
<p>Events of Default.  Generally, Fusion Capital may terminate the Fusion Capital agreement
without any liability or payment to us upon the occurrence of any of the following events of
default:</p>
<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>if for any legal reason the shares purchased cannot be sold for a period of 10
consecutive trading days or for more than an aggregate of 30 trading days in
any 365-day period;</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>suspension by the American Stock Exchange of our common stock from
trading for a period of 10 consecutive trading days or for more than an
aggregate of 30 trading days in any 365-day period;</p>
</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>our failure to satisfy any listing criteria of the American Stock Exchange for a
period of 10 consecutive trading days or for more than an aggregate of 30
trading days in any 365-day period;</p>
</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>(1) notice from us or our transfer agent to the effect that we or the transfer agent
intends not to comply with a proper request for purchase of shares under the
Fusion Capital agreement; (2) our failure to promptly confirm to the transfer
agent Fusion Capital's purchase notice; or (3) the failure of the transfer agent to
issue shares of our common stock promptly upon delivery of a purchase notice
or upon delivery of a warrant exercise notice;</p>
</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>any material breach of the representations or warranties or covenants contained
in the Fusion Capital agreement or any related agreements which has or which
could have a material adverse affect on us, subject to a cure period of 10 trading
days;</p>
</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>if the number of shares to be issued to Fusion Capital reaches an aggregate
amount that would require shareholder approval under our principal market
regulations (to the extent not  previously obtained and then required) or
otherwise cause us to breach our principal market rules and regulations;</p>
</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>a default of any payment obligation of USURF America in excess of $1.0
million; or</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>commencement of insolvency or bankruptcy proceedings by or against USURF
America.</p>
</td>
</tr>
</table>
<br>
<p>Shares and Warrants Issued to Fusion Capital.  Under the Fusion Capital agreement, Fusion
Capital has received 800,000 shares as part of its commitment fee.  These shares may not be sold
by Fusion Capital until the earliest of termination of the Fusion Capital agreement, default under
the Fusion Capital agreement or approximately 25 months from July 2001. Under the Fusion
Capital agreement, we have issued to Fusion Capital, as part of its commitment fee, warrants to
purchase 215,000 shares of our common stock at an exercise price of $.25 per share, warrants to
purchase 215,000 shares of our common stock at an exercise price of $.35 per share and warrants
to purchase 215,000 shares of our common stock at an exercise price of $.45 per share.  These
warrants are exercisable by Fusion Capital for a period of five years from the date of their
issuance.</p>
<br>
<p>No Variable-Priced Financings.  Until the termination of the Fusion Capital agreement, we have
agreed not to issue, or enter into any agreement with respect to the issuance of, any variable-priced equity or variable-priced "equity-like" securities, unless we have obtained Fusion Capital's
prior written consent.</p>
<br>
<p>Holdings of Fusion Capital Upon Termination of the Offering.  Because Fusion Capital may sell
all, some or none of the common stock issued to it, no estimate can be given as to the amount of
common stock that will be held by Fusion Capital upon early termination of the offering.</p>
<br>
<p>Registration Rights Agreement.  In connection with the execution of the Fusion Capital
agreement, we executed a registration rights agreement with Fusion Capital, which relates to the
shares of our stock issued or to be issued under the Fusion Capital agreement.  We are required
under the registration rights agreement to register all such shares of our common stock pursuant
to a registration statement and to keep such registration statement current for purposes of Rule
424 under the Securities Act, for a period of up to five years.  We are currently in compliance
with this provision.</p>
<br>
<p>Finder&#8217;s Fee.  Pursuant to the transactions contemplated by the Fusion Capital agreement, we
have issued to our investment banker, Gruntal &amp; Co., L.L.C., as a finder&#8217;s fee, 200,000 shares of
our common stock and a total of 161,250 warrants.  All of the warrants issued to Gruntal &amp; Co.
are exercisable for a period of five years from the date of their issuance.</p>
<br>
<p>In addition to the shares and warrants to be issued to Gruntal &amp; Co., we are obligated to pay to
Gruntal &amp; Co., as a further finder&#8217;s fee, a sum of cash equal to 8% of the gross proceeds obtained
by us pursuant to the Fusion Capital agreement.</p>
<br>
<p>Industry Background</p>
<br>
<p>Growth of the Internet; the World Wide Web.  The Internet, commonly known as the World
Wide Web, or simply the Web, is a collection of connected computer systems and networks that
link millions of public and private computers to form, essentially, the largest computer network
in the world.  The Internet has experienced rapid growth in recent years and is expected to
continue its growth.</p>
<br>
<p>Internet Access.  Internet access services represent the means by which ISPs interconnect
business and consumer users to the Internet's resources.  Access services vary from dial-up
modem access, like that previously provided by our CyberHighway subsidiary, for individuals
and small businesses to high-speed dedicated transmission lines for broadband access by large
organizations to wireless Internet access systems, like our Quick-Cell wireless Internet access
system.</p>
<br>
<p>Wireless Internet Access</p>
<br>
<p>What is Wireless Internet?  &#8220;Wireless Internet&#8221; is a new type of communications spectrum
recently designated by the FCC.  Wireless Internet access requires a transmission facility
maintained by an ISP employing a wireless system and the user&#8217;s modem (a transmitter/receiver
modem) equipped with an antenna.  Wireless Internet capability allows users to access the
Internet from a stationary computer or, in some situations, from a mobile, lap-top computer.</p>
<br>
<p>What is Quick-Cell?  &#8220;Quick-Cell&#8221; is the brand name of our proprietary wireless Internet access
system.  Each Quick-Cell system is comprised of one or more server modems, or cells.  Server
modems, which are less than one cubic foot in size, are mounted on tall structures, towers, tall
buildings or billboards, for example.  The space needed for mounting the server modems can be
leased for an average monthly payment of about $500.  Each server modem relays transmitted
data directly into the Internet via a T1, or larger, telephone line.  The monthly charge for each T1
line ranges from $600 to $2,000, depending on the market.</p>
<br>
<p>Installed customer modems, which are slightly larger in size than a deck of playing cards,
transmit data to, and receive data from, a server modem.  Each customer modem is installed in
the customer&#8217;s computer and connected by a thin cable to a small antenna that is mounted on the
outside of the customer&#8217;s place of business or home, as the case may be.  The installation process
for customer modems is quite similar to that of cable television: the installation crew installs the
customer modem in the computer, mounts the antenna outside, connects the modem and antenna
with the cable and tests the connection.  Depending on the market, each customer installation is
expected to cost between $40 and $80.</p>
<br>
<p>The number of Quick-Cell server modems needed for a particular system depends on a few
factors:</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>the geographic size of the city to be served - each server modem&#8217;s signal covers
an area approximately seven miles in diameter;</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>the population density of the city to be served - since each server modem is
capable of handling up to approximately 4,000 customers, the greater the
population density, the greater the number of server modems required;</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>the terrain of the city to be served - the hillier the terrain, the greater the number
of server modems required; 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>&#160;the density of foliage of the city to be served - more densely foliated areas
require a greater number of server modems.</p>
</td>
</tr>
</table>
<br>
<p>Within a particular system, each additional server modem is configured to share transmitted data
with the other server modems, so as to provide an uninterrupted connection to the Internet.  In a
Quick-Cell system with multiple server modems, the server modems are geographically located
in a honeycomb fashion, for technical reasons.</p>
<br>
<p>Data transmission speeds remain constant within a Quick-Cell system&#8217;s transmission radius,
regardless of the distance from the server modem.  On the fringes of a Quick-Cell system&#8217;s
transmission radius, a customer&#8217;s connection may fade in and out, similar to the reception of
distant AM radio stations.  To avoid this circumstance, we will attempt to avoid installing a
customer modem within the fringe areas.</p>
<br>
<p>Quick-Cell Equipment and Facilities.  Until February 2001, all of our Quick-Cell modems were
manufactured for us by OTC Telecom, San Jose, California, using off-the-shelf circuit boards
and other parts.  These modems cost approximately $300 each, because we lacked capital to
purchase large quantities at a reduced per-modem cost.</p>
<br>
<p>In February 2001, we completed the design and testing of our own modem circuit board.  This
advancement has freed us from our dependence on OTC Telecom for modems.  We now are able
to solicit competitive bids from circuit board manufacturers and other parts suppliers, then
assemble the modems in our new facility located in Baton Rouge, Louisiana.  With these
changes, our future modem cost will be approximately $180 per modem.</p>
<br>
<p>In June 2001, we completed development of a new configuration of our Quick-Cell server
modem which will permit each server modem to serve approximately 4,000 users, or twice as
many users as earlier server modem configurations.  Because we will be required to construct
fewer server modem sites as we build-out a particular Quick-Cell market, this advancement is
expected to reduce our future Quick-Cell system build-out costs by approximately 20%.</p>
<br>
<p>We will not construct towers on which to mount server modems.  Instead, we will lease tower
spaces, rooftop spaces or spaces on other tall structures.  We have renegotiated our prior tower
lease arrangement with SBA Communications Corporation, a Boca Raton, Florida-based tower
company, reducing the number of single tower leases from 23 to three, two towers in Del Rio
and one tower in Santa Fe.  We are currently negotiating with other tower companies for similar
agreements in other cities.  Based on our management&#8217;s experience, securing adequate locations
to mount the server modems is not expected to impede Quick-Cell system construction in any
market.</p>
<br>
<p>In each market, we will obtain the necessary telephone line connections to the Internet from one
of the many telecommunications companies capable of providing an adequate Internet
connection.  Based on our past experience, we do not believe that we will encounter any
difficulty in obtaining needed connections to the Internet at acceptable prices.</p>
<br>
<p>Quick-Cell System Control Software.  We have developed software that enables us to control the
data transmission speed of each customer modem within each Quick-Cell system, all from a
single location.  With this software, we are able to increase or decrease a customer&#8217;s data
transmission speed in just a few minutes&#8217; time.  This software also permits us to monitor easily
each Quick-Cell server modem&#8217;s bandwidth usage, which will enable us to add a server modem
to a Quick-Cell system that is approaching maximum capacity prior to the time that system
becomes overloaded and its transmission speed slows.  This capability will enhance our ability to
provide our customers data transmission service at speeds for which they contracted.</p>
<br>
<p>Current Markets.  In September 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 customer response has been excellent, but our growth has been slowed
significantly by a 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.  In Del Rio, we charge residential customers
$50 per month and business customers $100 per month for our Quick-Cell service.</p>
<br>
<p>We have also completed engineering efforts in four other South Texas towns, but will not begin
marketing our Quick-Cell service in these towns, until we stabilize our working capital situation.
We cannot predict our future capital position.</p>
<br>
<p>We also have a Quick-Cell system in Santa Fe, New Mexico.  Because we have been unable to
complete a system upgrade there, our customer base diminished from approximately 120
customers to a few that remain.  We expect that, if and when capital becomes available, we will
complete the system upgrade and begin to increase our customer base there.</p>
<br>
<p>Quick-Cell Marketing Strategies.  In May 2002, we announced that we have entered into an
Internet services provision agreement with SunWest Communications, Inc., a Colorado Springs,
Colorado-based competitive local telephone company with approximately 6,000 customers.
Under our agreement with SunWest, together with SunWest, we will market our Quick-Cell
wireless Internet access service to SunWest&#8217;s customers, as well as throughout the Greater
Colorado Springs area.  We expect that our third quarter operating results will begin to reflect the
implementation of this agreement.</p>
<br>
<p>The SunWest agreement represents the type of agreements that our new president is attempting
to secure, as a means of accelerating the growth of our customer base.  There is no assurance,
however, that we will be successful in this regard.</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, we
have suspended this marketing effort.</p>
<br>
<p>These Quick-Cell systems were sold to companies located in Brownwood, Texas, Wheeling,
West Virginia, and San Juan, Puerto Rico.  No paying customers use these systems, due to
circumstances involving these companies that are beyond our control.  We are unsure if and
when the owners of these Quick-Cell systems will begin to offer service to the public.</p>
<br>
<p>In 1999, we licensed five small Internet service providers to operate our Quick-Cell system.
Three of these companies never acted on the granted licenses and they expired.  A licensed
Quick-Cell system in Casper, Wyoming, operated for three months, but was discontinued due to
the sale of the licensee&#8217;s business.  The Santa Fe, New Mexico, licensee was acquired by us in
June 1999.</p>
<br>
<p>Quick-Cell Sales and Marketing.  In cities in which we construct company-owned Quick-Cell
systems, we intend to employ telephone marketing as the initial means for acquiring customers,
primarily business customers.  As a particular market begins to mature, we will employ mass
media, including radio advertising.  In conjunction with our mass media advertising, we will
employ a sales force that will focus primarily on potential business customers.  This focus on
business customers is based on our management&#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.</p>
<br>
<p>Without additional capital, we will not be able to construct another company-owned Quick-Cell
system.</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>Reseller Agreements.  In April 2001, we entered into a Quick-Cell reseller agreement with
Wireless WebConnect!, Inc., a Florida-based wireless Internet access reseller.  Prior to the
demise of Metricom, Inc. of San Jose, California, formerly the purveyor of a nationally-known
wireless Internet access service, know as &#8220;RicochetTM&#8221;, WebConnect acted primarily as a
reseller of the &#8220;RicochetTM&#8221; service.  Our reseller agreement with WebConnect is for an initial
term of 10 years.   However, due to issues within WebConnect that were beyond our control, to
date, we have not derived any benefit from this agreement.  After recent discussions with
WebConnect, we expect to 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 or when such an
amendment would occur.</p>
<br>
<p>We have entered into reseller agreements with two entities in Del Rio, Texas.</p>
<br>
<p>Currently, our Del Rio resellers&#8217; sales efforts have been impeded significantly by our inability to
obtain needed equipment, including customer modems, due to our severe lack of capital, or
ability to hire and train qualified installation crews.  We may never be able to take full advantage
of our resellers&#8217; abilities, thereby limiting potential profits.</p>
<br>
<p>Competitive Features of Quick-Cell.  While we believe Quick-Cell possesses some competitive
advantages over other Internet access modes, it currently has three significant competitive
disadvantages:</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>No wide-spread brand name recognition;</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>Professional installation usually required; 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>Internet access only available locally, compared to dial-up Internet access that
is available from virtually any telephone in any geographic location.</p>
</td>
</tr>
</table>
<br>
<p>It is possible that we could overcome the first two listed disadvantages, after a lengthy period of
marketing and product research and development.  However, we currently lack capital to
overcome either disadvantage.  Further, it is likely that we will never overcome the third
disadvantage, due to the inherent broadcast limitations of wireless technologies.</p>
<br>
<p>We believe Quick-Cell offers the following competitive advantages:</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>Speed: our Quick-Cell system is capable of data transmission speeds of up to
10 Mbs; we expect that most of our customers&#8217; connections will transmit data
at the rate of 256 kbs, the wireless equivalent of the well-publicized digital
subscriber line (DSL) hard wire Internet access method; our Quick-Cell system
offers far greater data transmission speeds than cellular telephone-based
Internet access methods;</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>Lower Cost: we expect that our Quick-Cell service will be offered at costs
between 15% and 60% less than available hard-wire Internet access, depending
on the particular market, that is, less than the sum of monthly Internet service
provider charges and monthly telephone line charges; Quick-Cell will also be
priced competitively with cellular-telephone-based and other wireless Internet
access methods;</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>No Telephone Company Involvement: our Quick-Cell customers will not be
required to incur the expense of a hard-wire telephone line through which to
access the Internet;</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>Security/Encryption: our Quick-Cell system is capable of encrypting, or
scrambling, its broadcast signal, thereby offering a high degree of security to
customers; and</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>Mobility: our Quick-Cell system is able to permit service personnel of a
business to file contemporaneous reports, request and receive technical
assistance and perform other computer-based functions from a customer&#8217;s place
of business or from a service vehicle, as long as the personnel remain within the
Quick-Cell system&#8217;s coverage area.</p>
</td>
</tr>
</table>
<br>
<p>Dial-up Internet Access</p>
<br>
<p>As recently as September 2000, our CyberHighway subsidiary provided dial-up Internet service
to about 25,000 customers, approximately 8,500 directly and 16,500 through affiliate-Internet
service providers.  By the end of February 2001, we had lost all of our dial-up customers.  This
rapid demise of CyberHighway&#8217;s business was due primarily to three factors:</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>In September 2000, we sold our affiliate-ISP business, due to its lack of
profitability;</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>In September 2000, an involuntary bankruptcy petition was filed against
CyberHighway - we estimate that we lost at least 6,000 customers due to this
event; 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>Our November 2000 switch-over to a contracted Internet service company&#8217;s
network - we estimate that we lost at least 2,000 customers to due to this event.</p>
</td>
</tr>
</table>
<br>
<p>The remainder of lost customers is attributable to CyberHighway&#8217;s normal customer attrition
rate, in light of the fact that CyberHighway ceased to advertise its services following the
involuntary bankruptcy filing.</p>
<br>
<p>We do not intend to commit any resources towards the revitalization of the business of
CyberHighway.</p>
<br>
<p>Customers and Markets.  We have lost all of our dial-up Internet access customers.  We do not
expect that we will ever reclaim any dial-up customers.</p>
<br>
<p>Sales and Marketing.  CyberHighway has ceased all sales and marketing activities.  We do not
expect that these activities will be resumed.</p>
<br>
<p>Affiliate-ISP Program.  From its inception, CyberHighway employed an affiliate marketing
program, a technique designed to generate rapid expansion of CyberHighway&#8217;s subscriber base,
which it did. However, the affiliate-ISP program was terminated during 1999.  In September
2000, this business was sold, due to its continuing monthly losses.</p>
<br>
<br>
<p>Customer Service and Support</p>
<br>
<p>We are committed to the highest levels of customer satisfaction.  We believe that maintaining
high levels of customer satisfaction will remain as a key competitive factor.  Currently, we
provide wireless Internet access customer support during normal business hours.  Our customer
support operations can be expected to expand, if and when we obtain needed capital.</p>
<br>
<p>Competition</p>
<br>
<p>We believe that the primary competitive factors determining success as an Internet access
provider are: a reputation for reliability and high-quality service; effective customer support;
access speed; pricing; effective marketing techniques for customer acquisition; ease of use; and
scope of geographic coverage.  We believe that we will be able to address adequately all of these
factors, except that we will not be able to offer scope of geographic coverage for the foreseeable
future.  It is also possible that we will not address any of these competitive factors successfully.
Should we fail to do so, our business would likely never earn a profit.  We currently lack capital
necessary to compete effectively.</p>
<br>
<p>We face severe competition from other wireless Internet access providers, as well as large,
national providers of cellular telephone service providers.</p>
<br>
<p>The market for the provision of dial-up Internet access services, in which our Quick-Cell wireless
Internet access service will compete, is extremely competitive and highly fragmented.  Current
and prospective competitors include many large, nationally-known companies that possess
substantially greater resources, financial and otherwise, market presence and brand name
recognition than do we.  We currently compete, or expect to compete, for the foreseeable future,
with the following: national Internet service providers, numerous regional and local Internet
service providers, most of which have significant market share in their markets; established
on-line information service providers, such as America Online, which provide basic Internet
access, as well as proprietary information not available through public Internet access; providers
of web hosting, co-location and other Internet-based business services; computer hardware and
software and other technology companies that provide Internet connectivity with their products;
telecommunications companies, including global long distance carriers, regional Bell operating
companies and local telephone companies; operators that provide Internet access through
television cable lines; electric utility companies; communications companies; companies that
provide television or telecommunications through participation in satellite systems; and, to a
lesser extent, non-profit or educational Internet access providers.</p>
<br>
<p>With respect to potential competitors, we expect that manufacturers of computer hardware and
software products, as well as media and telecommunications companies will continue to enter the
Internet services market, which will serve to intensify competition.  In addition, as more
consumers and businesses increase their Internet usage, we expect existing competitors to
increase further their emphasis on Internet access and electronic commerce initiatives, resulting
in even greater competition.  The ability of competitors or others to enter into business
combinations, strategic alliances or joint ventures, or to bundle their services and products with
Internet access, could place us at a significant competitive disadvantage.  We currently lack
capital necessary to compete effectively and we may never obtain enough capital to permit us to
compete effectively in our markets.</p>
<br>
<p>Moreover, we expect to face competition in the future from companies that provide connections
to consumers' homes, such as telecommunications providers, cable companies and electrical
utility companies. For example, recent advances in technology have enabled cable television
operators to offer Internet access through their cable facilities at significantly higher speeds than
existing analog modem speeds. These types of companies could include Internet access in their
basic bundle of services or offer such access for a nominal additional charge.  Any such
developments could reduce our market share, thereby impairing our ability to earn a profit.</p>
<br>
<p>Properties</p>
<br>
<p>General.  We own all of the equipment necessary for the operation of a network operations
center.  We intend to utilize this equipment in facilitating the expected growth of our wireless
Internet access business.  In addition, we own office equipment necessary to conduct our
business.</p>
<br>
<p>In Baton Rouge, Louisiana, we lease approximately 1,250 square feet for our executive offices,
for a monthly rental of approximately $1,800, and a 1,600 square foot modem assembly facility,
for a monthly rental of approximately $720.</p>
<br>
<p>Wireless Cable Properties.  We own the rights to wireless cable channels in Poplar Bluff,
Missouri, Lebanon, Missouri, Port Angeles, Washington, The Dalles, Oregon, Sand Point, Idaho,
Fallon, Nevada, and Astoria, Oregon.  We have abandoned our efforts to develop these wireless
cable properties, due to current market conditions.  Rather, because our Quick-Cell system can be
adapted for use on the wireless cable frequencies, we intend to develop these properties into
operating wireless Internet systems, at such time as two-way data transmission on these
frequencies is permitted.  We cannot predict when this permission will be granted, if ever.</p>
<br>
<p>Intellectual Property.  We currently rely on common law principles for the protection of our
copyrights and trademarks and trade secret laws to protect our proprietary intellectual property
rights.  We do not intend to file patent applications relating to our Quick-Cell wireless Internet
access products, until completion of future generations of the products.  We have not filed
trademark applications relating to the &#8220;Quick-Cell&#8221;, &#8220;Quick-Cell Broadband Internet&#8221; and the
&#8220;USURF Wireless Internet&#8221; brand names.</p>
<br>
<p>We have received authorization to use the products of each manufacturer of software that is
bundled in its software for users with personal computers operating on the Windows or
Macintosh platforms. While certain of the applications included in our start-up kit for Internet
access services subscribers are shareware that we have obtained permission to distribute or that
are otherwise in the public domain and freely distributable, certain other applications included in
our start-up kit have been licensed where necessary.  We currently intend to maintain or
negotiate renewals of all existing software licenses and authorizations as necessary.  We may
also enter into licensing arrangements for other applications, in the future.</p>
<br>
<p>Employees</p>
<br>
<p>We have six employees, including four officers.  All of our officers have entered into
employment agreements.</p>
<br>
<p>None of our employees is covered by any collective bargaining agreement, nor have we ever
experienced a work stoppage.  Our management believes employee relations to be good.  Much
of our future success will depend, in large measure, upon our ability to continue to attract and
retain highly skilled technical, sales, marketing and customer support personnel.</p>
<br>
<p style="text-align: center">THE FUSION CAPITAL TRANSACTION</p>
<br>
<p>General</p>
<br>
<p>On May 9, 2001, we entered into an amended and restated common stock purchase agreement
with Fusion Capital, which replaced a similar agreement dated October 9, 2000, and amended by
letter agreement on December 27, 2000, pursuant to which Fusion Capital agreed to purchase up
to $10 million of our common stock. The selling price of the shares will be equal to a price based
upon the future market price of the common stock without any fixed discount to the market price.</p>
<br>
<p>Purchase of Shares Under the Fusion Capital Agreement</p>
<br>
<p>Under the Fusion Capital agreement, on each trading day during the term of the agreement,
Fusion Capital is obligated to purchase a specified dollar amount of our common stock.  Subject
to our right to suspend Fusion Capital&#8217;s purchases at any time and our right to terminate the
Fusion Capital agreement at any time, Fusion Capital will purchase on each trading day during
the term of the agreement $20,000 of our common stock.  The daily purchase amount may be
decreased by us at any time.  We also have the right to increase the daily purchase amount of
$20,000 any time the market price of our common stock is above $5.00 per share for five
consecutive trading days.  The selling price per share is equal to the lesser of:</p>
<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>the lowest sale price of our common stock on the purchase date; or</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>the average of the three lowest closing sale prices of our common stock during
the 15 consecutive trading days prior to the date of submission of a purchase by
Fusion Capital.</p>
</td>
</tr>
</table>
<br>
<p>The selling price will be adjusted for any reorganization, recapitalization, non-cash dividend,
stock split or other similar transaction occurring during the fifteen (15) trading days in which the
closing bid price is used to compute the purchase price.  Even though the Fusion Capital
Agreement restricts Fusion Capital from owning more than 9.9% of our stock at any one time,
this restriction does not prevent Fusion Capital from selling a portion of its holdings and later
purchasing additional shares.  Thus, it is possible that the total number of shares purchased by
Fusion Capital would be greater than 9.9% of the then-outstanding common stock.  Because this
restriction on ownership may be waived by us and Fusion Capital, it is possible that Fusion
Capital could own more than 9.9% of our common stock at any one time.</p>
<br>
<p>The following table sets forth the number of shares of our common stock that would be sold to
Fusion Capital upon our sale of common stock under the Fusion Capital agreement at varying
purchase prices:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="25%" align="center" valign="top"><p>Assumed Per Share
Purchase Price</p>
</td>
<td width="25%" align="center" valign="top"><p>Total Shares Issuable
Upon Purchase of
Remaining Shares
Under the Fusion
Capital Agreement</p>
</td>
<td width="25%" align="center" valign="top"><p>Gross Proceeds</p>
</td>
<td width="25%" align="center" valign="top"><p>Percent of Our
Common Stock
Outstanding After
Giving Effect to the
Issuance to Fusion
Capital</p>
</td>
</tr>
<tr>
<td width="25%" align="center" valign="top"><p>$.06(1)</p>
</td>
<td width="25%" align="center" valign="top"><p>6,000,000</p>
</td>
<td width="25%" align="center" valign="top"><p>$600,000(2)</p>
</td>
<td width="25%" align="center" valign="top"><p>12.70%</p>
</td>
</tr>
<tr>
<td width="25%" align="center" valign="top"><p>$1.50</p>
</td>
<td width="25%" align="center" valign="top"><p>6,000,000</p>
</td>
<td width="25%" align="center" valign="top"><p>$4,500,000(2)</p>
</td>
<td width="25%" align="center" valign="top"><p>12.70%</p>
</td>
</tr>
<tr>
<td width="25%" align="center" valign="top"><p>$2.00</p>
</td>
<td width="25%" align="center" valign="top"><p>6,000,000</p>
</td>
<td width="25%" align="center" valign="top"><p>$6,500,000</p>
</td>
<td width="25%" align="center" valign="top"><p>12.70%</p>
</td>
</tr>
<tr>
<td width="25%" align="center" valign="top"><p>$5.00</p>
</td>
<td width="25%" align="center" valign="top"><p>4,500,000</p>
</td>
<td width="25%" align="center" valign="top"><p>$10,000,000</p>
</td>
<td width="25%" align="center" valign="top"><p>9.84%</p>
</td>
</tr>
<tr>
<td width="25%" align="center" valign="top"><p>$10.00</p>
</td>
<td width="25%" align="center" valign="top"><p>3,500,000</p>
</td>
<td width="25%" align="center" valign="top"><p>$10,000,000</p>
</td>
<td width="25%" align="center" valign="top"><p>7.82%</p>
</td>
</tr>
<tr>
<td width="25%" valign="top"><p>_____________</p>
</td>
<td width="25%" valign="top"><p>&#160;</p>
</td>
<td width="25%" valign="top"><p>&#160;</p>
</td>
<td width="25%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<p>(1) Closing price on May 23, 2002, as reported by AMEX.</p>
<p>(2) Estimate.</p>
<br>
<p>To date, we have obtained only $395,000 under the Fusion Capital agreement in purchase of a
total of 3,140,135 shares, 640,135 of which shares are to be issued in the near future, which is
not the maximum amount of funds thereunder, which has significantly impeded our ability to
expand our Quick-Cell business operations.  We may never realize the maximum amount of
proceeds under the Fusion Capital 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.  Given the
current and sustained depressed price for our common stock, it appears unlikely that we will
obtain $10 million under the Fusion Capital agreement, although we cannot predict the ultimate
amount that we will obtain under that agreement.  However, should our stock price remain at or
near its current level, we would be able to obtain a total of only approximately $600,000, unless
we choose to issue more than 6,000,000 shares, which we have the right to do.</p>
<br>
<p>Our Right to Suspend Purchases</p>
<br>
<p>At any time or from time to time, we have the unconditional right to prevent any purchases by
Fusion Capital effective upon one trading day&#8217;s prior notice.  Any suspension would remain in
effect until our revocation of the suspension.  To the extent we need to use the cash proceeds of
the sales of common stock under the Fusion Capital agreement for working capital or other
business purposes, we do not intend to restrict purchases under the Fusion Capital agreement.</p>
<br>
<p>Our Right to Increase and Decrease the Daily Purchase Amount</p>
<br>
<p>We have the unconditional right to decrease the daily amount to be purchased by Fusion Capital
at any time for any reason, effective upon one trading day&#8217;s notice.  We also have the right to
increase the $20,000 daily purchase amount any time the market price of our common stock is
above $5.00 per share for five consecutive trading days.  For any trading day that the market
price of our common stock is below $5.00, the daily purchase amount shall not be greater than
$20,000.</p>
<br>
<p>To date, we have not obtained the maximum amount of funds under the Fusion Capital
agreement, which has significantly impeded our ability to expand our Quick-Cell business
operations.  We may never realize the maximum amount of proceeds under the Fusion Capital
agreement.</p>
<br>
<p>Our Termination Rights</p>
<br>
<p>We have the unconditional right at any time for any reason to give notice to Fusion Capital
terminating the common stock purchase agreement.  Such notice shall be effective one trading
day after Fusion Capital receives such notice.</p>
<br>
<p>Effect of Performance of the Fusion Capital Agreement on our Shareholders</p>
<br>
<p>All shares registered in this offering will be freely tradable. It is anticipated that shares registered
in this offering will be sold over a period of up to 25 months from the date of this prospectus.
The sale of a significant amount of shares registered in this offering at any given time could
cause the trading price of our common stock to decline and to be highly volatile. Fusion Capital
may ultimately purchase all of the shares of common stock issuable under the Fusion Capital
agreement, and it may resell some, none or all of the shares of common stock it acquires upon
purchase. Therefore, the purchases under the Fusion Capital agreement may result in substantial
dilution to the interests of other holders of our common stock. However, we have the right at any
time for any reason to: (1) reduce the daily purchase amount, (2) suspend purchases of the
common stock by Fusion Capital and (3) terminate the Fusion Capital agreement.</p>
<br>
<p>No Short-Selling or Hedging by Fusion Capital</p>
<br>
<p>Fusion Capital has agreed that neither it nor any of its affiliates will engage in any direct or
indirect short-selling or hedging of our common stock during any time prior to the termination of
the Fusion Capital agreement.</p>
<br>
<p>Events of Default</p>
<br>
<p>Generally, Fusion Capital may terminate the Fusion Capital agreement without any liability or
payment to us upon the occurrence of any of the following events of default:</p>
<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>if for any legal reason the shares purchased cannot be sold pursuant to this
prospectus for a period of 10 consecutive trading days or for more than an
aggregate of 30 trading days in any 365-day period;</p>
</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>suspension by the American Stock Exchange of our common stock from
trading for a period of 10 consecutive trading days or for more than an
aggregate of 30 trading days in any 365-day period;</p>
</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>our failure to satisfy any listing criteria of the American Stock Exchange for a
period of 10 consecutive trading days or for more than an aggregate of 30
trading days in any 365-day period;</p>
</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>(1) notice from us or our transfer agent to the effect that we or the transfer agent
intends not to comply with a proper request for purchase of shares under the
Fusion Capital agreement; (2) our failure to promptly confirm to the transfer
agent Fusion Capital's purchase notice; or (3) the failure of the transfer agent to
issue shares of our common stock promptly upon delivery of a purchase notice
or upon delivery of a warrant exercise notice;</p>
</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>any material breach of the representations or warranties or covenants contained
in the Fusion Capital agreement or any related agreements which has or which
could have a material adverse affect on us, subject to a cure period of 10 trading
days;</p>
</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>if the number of shares to be issued to Fusion Capital reaches an aggregate
amount that would require shareholder approval under our principal market
regulations (to the extent not  previously obtained and then required) or
otherwise cause us to breach our principal market rules and regulations;</p>
</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>a default of any payment obligation of USURF America in excess of $1.0
million; or</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>commencement of insolvency or bankruptcy proceedings by or against USURF
America.</p>
</td>
</tr>
</table>
<br>
<p>Shares and Warrants Issued to Fusion Capital</p>
<br>
<p>Under the Fusion Capital agreement, Fusion Capital has received 800,000 shares as part of its
commitment fee.  These shares may not be sold by Fusion Capital until the earliest of termination
of the Fusion Capital agreement, default under the Fusion Capital agreement or approximately 25
months from the date hereof. Under the Fusion Capital agreement, we have issued to Fusion
Capital, as part of its commitment fee, warrants to purchase 215,000 shares of our common stock
at an exercise price of $.25 per share, warrants to purchase 215,000 shares of our common stock
at an exercise price of $.35 per share and warrants to purchase 215,000 shares of our common
stock at an exercise price of $.45 per share.  These warrants are exercisable by Fusion Capital for
a period of five years from the date of their issuance.</p>
<br>
<p>No Variable-Priced Financings</p>
<br>
<p>Until the termination of the Fusion Capital agreement, we have agreed not to issue, or enter into
any agreement with respect to the issuance of, any variable-priced equity or variable-priced
"equity-like" securities, unless we have obtained Fusion Capital's prior written consent.</p>
<br>
<p>Holdings of Fusion Capital Upon Termination</p>
<br>
<p>Because Fusion Capital may sell all, some or none of the common stock issued to it, no estimate
can be given as to the amount of common stock that will be held by Fusion Capital upon early
termination of the Fusion Capital agreement</p>
<br>
<p>Registration Rights Agreement</p>
<br>
<p>In connection with the execution of the Fusion Capital agreement, we executed a registration
rights agreement with Fusion Capital, which relates to the shares of our stock issued or to be
issued under the Fusion Capital agreement.  We are required under the registration rights
agreement to register all such shares of our common stock pursuant to a registration statement
and to keep such registration statement current for purposes of Rule 424 under the Securities Act,
for a period of up to five years.  We are currently in compliance with this provision.</p>
<br>
<p>Finder&#8217;s Fee</p>
<br>
<p>Pursuant to the transactions contemplated by the Fusion Capital agreement, we have issued to
our investment banker, Gruntal &amp; Co., L.L.C., as a finder&#8217;s fee, 200,000 shares of our common
stock and a total of 161,250 warrants.  All of the warrants issued to Gruntal &amp; Co. are
exercisable for a period of five years from the date of their issuance.</p>
<br>
<p>In addition to the shares and warrants to be issued to Gruntal &amp; Co., we will be obligated to pay
to Gruntal &amp; Co., as a further finder&#8217;s fee, a sum of cash equal to 8% of the gross proceeds
obtained by us pursuant to the Fusion Capital agreement.</p>
<br>
<p style="text-align: center">MANAGEMENT</p>
<br>
<p>Directors and Officers</p>
<br>
<p>The following table sets forth the officers and directors of USURF America.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="31%" valign="top"><p>Name</p>
</td>
<td width="8%" valign="top"><p>Age</p>
</td>
<td width="53%" valign="top"><p>Position(s)</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="31%" valign="top"><p>Douglas O. McKinnon</p>
</td>
<td width="8%" valign="top"><p>52</p>
</td>
<td width="53%" valign="top"><p>President and Chief Executive Officer and
Director</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="31%" valign="top"><p>David M. Loflin(1)</p>
</td>
<td width="8%" valign="top"><p>44</p>
</td>
<td width="53%" valign="top"><p>Chairman of the Board and Principal Accounting
Officer</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="31%" valign="top"><p>Waddell D. Loflin(1)</p>
</td>
<td width="8%" valign="top"><p>52</p>
</td>
<td width="53%" valign="top"><p>Vice President, Secretary and Director</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="31%" valign="top"><p>James Kaufman</p>
</td>
<td width="8%" valign="top"><p>37</p>
</td>
<td width="53%" valign="top"><p>Vice President of Corporate Development</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="31%" valign="top"><p>Ross S. Bravata</p>
</td>
<td width="8%" valign="top"><p>43</p>
</td>
<td width="53%" valign="top"><p>Director</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="31%" valign="top"><p>____________</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="53%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="92%" valign="top"><p>(1)  David M. Loflin and Waddell D. Loflin are brothers.</p>
</td>
</tr>
</table>
<br>
<p>Our current officers and directors serve until the next annual meeting of our board of directors or
until their respective successors are elected and qualified.  All officers serve at the discretion of
our board of directors.  Family relationships between our officers and directors are noted above.
Certain information regarding the backgrounds of each of the officers and directors is set forth
below.</p>
<br>
<p>Douglas O. McKinnon, President and Chief Executive Officer, has, during the past five years,
served as chief executive officer of IP Services, Inc., a next-generation communications services
provider using broadband Internet Protocol (IP) and Asynchronous Transfer Mode (ATM) based
networks; executive vice president and chief financial officer of AVIRNEX Communications
Group, Inc., a provider of retail telecommunications service including domestic and international
long distance and enhanced services to small and medium-sized business customers; and vice-president of ICG Communications, Inc, one of the country&#8217;s largest competitive local exchange
carriers offering local, long distance, ATM and frame relay services with a nationwide fiber optic
infrastructure. Mr. McKinnon is a former practicing CPA with the SEC practice section of
Coopers &amp; Lybrand.</p>
<br>
<p>David M. Loflin, Chairman of the Board and Principal Accounting Officer, has, for more than
the past five years, owned and operated Gulf Atlantic Communications, Inc., a Baton Rouge,
Louisiana-based wireless technology firm specializing in development of wireless cable systems
and broadcast television stations.  Gulf Atlantic has designed, constructed and operated two
wireless cable systems: (1) Baton Rouge, Louisiana, and (2) Selma, Alabama.  Mr. Loflin
developed and currently operates one television station, WTVK-TV11, Inc. (a Warner Brothers
Network affiliate), Channel 11 in Baton Rouge, Louisiana.  Mr. Loflin is a member of the
Wireless Cable Association International and the Community Broadcasters Association.</p>
<br>
<p>Waddell D. Loflin, Vice President, Secretary and Director, has, for more than the past five years,
served as Vice President of Operations and Treasurer of Gulf Atlantic Communications, Inc. and
WTVK-TV11, Inc., both in Baton Rouge, Louisiana.  In addition, Mr. Loflin serves as
Production Manager and Film Director for WTVK-TV11, Inc.  Mr. Loflin served as General
Manager for Baton Rouge Television Company, Baton Rouge, Louisiana, a wireless cable
system, where he directed the development and launch of such wireless cable system.  Also, Mr.
Loflin has devoted over five years to demographic research relating to the wireless cable
industry.  Mr. Loflin is a member of the Wireless Cable Association International and the
Community Broadcasters Association.  Mr. Loflin holds a B.A. degree in Social Sciences from
Oglethorpe University, Atlanta, Georgia.</p>
<br>
<p>James Kaufman, Vice President &#8211; Corporate Development, received a B.S. degree in Journalism
from the University of Colorado, Boulder, Colorado. From 1994 to 1995, Mr. Kaufman was a
registered representative with D.E. Fry, a Denver, Colorado-based broker-dealer.  From 1995 to
1996, Mr. Kaufman was a registered representative with A.G. Edwards, a St. Louis, Missouri-based broker-dealer.  From 1997 to February 1999, Mr. Kaufman served as Director of Corporate
Development for B. Edward Haun &amp; Company, a Denver, Colorado-based investment banking
and research firm.</p>
<br>
<p>Ross S. Bravata, Director, has, since 1981, worked for Novartis (formerly Ciba Corporation), in
various positions, and currently serves as a Senior Control Systems Technician.  In such
capacity, Mr. Bravata supervises the service and maintenance of electronic instrumentation.
Since 1988, Mr. Bravata has served as a director and principal financial officer of CG Federal
Credit Union, Baton Rouge, Louisiana.  Also, Mr. Bravata has, since its inception in 1994,
served as a director of Trinity&#8217;s Restaurant, Inc., in Baton Rouge, Louisiana.</p>
<br>
<p>Executive Committee</p>
<br>
<p>Our board of directors created an Executive Committee to facilitate management between
meetings of the full board of directors.  David M. Loflin, Waddell D. Loflin and Ross S. Bravata
comprise the Executive Committee.</p>
<br>
<p>Our bylaws provide that the Executive Committee has the authority to exercise all powers of the
board of directors, except the power:</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>Declare dividends;</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>Sell or otherwise dispose of all or substantially all of our assets;</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>Recommend to our shareholders any action requiring their approval; 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>Change the membership of any committee, fill the vacancies thereon or
discharge any committee.</p>
</td>
</tr>
</table>
<br>
<p>The Executive Committee, in general, acts on all matters requiring approval of our board of
directors.</p>
<br>
<p>Audit Committee</p>
<br>
<p>In September 1999, our board of directors created an Audit Committee, consisting of three
members, the majority of whom must be outside directors.  There are two vacancies on this
committee, due to the recent resignations of Richard N. Gill and Michael Cohn as directors.  The
Audit Committee has the responsibility to review internal controls, accounting policies and
financial reporting practices, to review the financial statements, the arrangements for, and scope
of, the independent audit as well as the results of the audit arrangement and to review the
services and fees of the independent auditors, their independence and recommend to the board of
directors for its approval and for the ratification by our shareholders the engagement of the
independent auditors to serve the following year in examining our accounts.  The Audit
Committee has held two meetings.</p>
<br>
<p>Executive Compensation</p>
<br>
<p>The following table sets forth in summary form the compensation received during each of the
last three completed fiscal years by our Chief Executive Officer and each executive officer who
received total salary and bonus exceeding $100,000 during any of the last four fiscal years.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="26%" align="center" valign="top"><p>Name and Principal
Position</p>
</td>
<td width="8%" align="center" valign="top"><p>Year</p>
</td>
<td width="15%" align="center" valign="top"><p>Salary $</p>
</td>
<td width="16%" align="center" valign="top"><p>Bonus $</p>
</td>
<td width="12%" align="center" valign="top"><p>Other
Annual
Com-pensa-tion</p>
</td>
<td width="12%" align="center" valign="top"><p>Long-term
Compen-sation
Awards
of Stock
Options</p>
</td>
<td width="11%" align="center" valign="top"><p>All
other
compen-sation</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>David M. Loflin</p>
</td>
<td width="8%" align="center" valign="top"><p>2001</p>
</td>
<td width="15%" align="center" valign="top"><p>$150,000(1)</p>
</td>
<td width="16%" align="center" valign="top"><p>133,000(10)</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>President [Principal</p>
</td>
<td width="8%" align="center" valign="top"><p>2000</p>
</td>
<td width="15%" align="center" valign="top"><p>$150,000(2)</p>
</td>
<td width="16%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>Executive Officer]</p>
</td>
<td width="8%" align="center" valign="top"><p>1999</p>
</td>
<td width="15%" align="center" valign="top"><p>$150,000(3)</p>
</td>
<td width="16%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>&#160;</p>
</td>
<td width="8%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>Waddell D. Loflin</p>
</td>
<td width="8%" align="center" valign="top"><p>2001</p>
</td>
<td width="15%" align="center" valign="top"><p>$100,000(4)</p>
</td>
<td width="16%" align="center" valign="top"><p>$18,000(11)</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>[Vice President and</p>
</td>
<td width="8%" align="center" valign="top"><p>2000</p>
</td>
<td width="15%" align="center" valign="top"><p>$100,000(5)</p>
</td>
<td width="16%" align="center" valign="top"><p>$48,000(12)</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>Secretary]</p>
</td>
<td width="8%" align="center" valign="top"><p>1999</p>
</td>
<td width="15%" align="center" valign="top"><p>$100,000(6)</p>
</td>
<td width="16%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>&#160;</p>
</td>
<td width="8%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>James Kaufman [Vice</p>
</td>
<td width="8%" align="center" valign="top"><p>2001</p>
</td>
<td width="15%" align="center" valign="top"><p>$120,000(7)</p>
</td>
<td width="16%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>[President of Corpor-</p>
</td>
<td width="8%" align="center" valign="top"><p>2000</p>
</td>
<td width="15%" align="center" valign="top"><p>$120,000(8)</p>
</td>
<td width="16%" align="center" valign="top"><p>$72,000(13)</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>ate Development]</p>
</td>
<td width="8%" align="center" valign="top"><p>1999</p>
</td>
<td width="15%" align="center" valign="top"><p>$120,000(9)</p>
</td>
<td width="16%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>&#160;</p>
</td>
<td width="8%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>Julius W. Basham, II</p>
</td>
<td width="8%" align="center" valign="top"><p>2001</p>
</td>
<td width="15%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="16%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>[Former Chief</p>
</td>
<td width="8%" align="center" valign="top"><p>2000</p>
</td>
<td width="15%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="16%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>Operating Officer]</p>
</td>
<td width="8%" align="center" valign="top"><p>1999</p>
</td>
<td width="15%" align="center" valign="top"><p>$133,762</p>
</td>
<td width="16%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>&#160;</p>
</td>
<td width="8%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>Robert A. Hart, IV</p>
</td>
<td width="8%" align="center" valign="top"><p>2001</p>
</td>
<td width="15%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="16%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>[Vice President of</p>
</td>
<td width="8%" align="center" valign="top"><p>2000</p>
</td>
<td width="15%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="16%" align="center" valign="top"><p>$750,000</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>Technology]</p>
</td>
<td width="8%" align="center" valign="top"><p>1999</p>
</td>
<td width="15%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="16%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" align="center" valign="top"><p>0</p>
</td>
<td width="11%" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>_______________</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<p>(1) $53,612 of this amount was accrued; in connection with the Evergreen agreement, Mr. Loflin
waived payment of this amount.</p>
<p>(2) $34,083 of this amount was accrued; in connection with the Evergreen agreement, Mr. Loflin
waived payment of this amount.</p>
<p>(3) $27,083 of this amount was accrued; in connection with the Evergreen agreement, Mr. Loflin
waived payment of this amount.</p>
<p>(4) $24,423 of this amount was accrued; in connection with the Evergreen agreement, Mr. Loflin
waived payment of this amount.</p>
<p>(5) $35,417 of this amount was accrued; in connection with the Evergreen agreement, Mr. Loflin
waived payment of this amount.</p>
<p>(6) $10,412 of this amount was accrued; in connection with the Evergreen agreement, Mr. Loflin
waived payment of this amount.</p>
<p>(7) $106,270 of this amount was accrued; $96,000 of this amount was payable in shares of our
stock; was accrued; in connection with the Evergreen agreement, Mr. Kaufman waived payment
of this amount.</p>
<p>(8) $26,667 of this amount was accrued; $96,000 of this amount was payable in shares of our
stock; was accrued; in connection with the Evergreen agreement, Mr. Kaufman waived payment
of this amount.</p>
<p>(9) $26,667 of this amount was accrued; in connection with the Evergreen agreement, Mr.
Kaufman waived payment of this amount; $82,666 of this amount was paid in shares of our
stock.</p>
<p>(10) This bonus was paid by the issuance of 700,000 shares to Mr. Loflin, which were valued at
$.19 per share, the last closing price of our common stock prior to the issuance.</p>
<p>(11) This bonus was paid by the issuance of 200,000 shares to Mr. Loflin, which were valued at
$.09 per share, the last closing price of our common stock prior to the issuance.</p>
<p>(12) This bonus was paid by the issuance of 200,000 shares to Mr. Loflin, which were valued at
$.24 per share, the last closing price of our common stock prior to the issuance.</p>
<p>(13) This bonus was paid by the issuance of 300,000 shares to Mr. Kaufman, which were valued
at $.24 per share, the last closing price of our common stock prior to the issuance.</p>
<p>(14) Mr. Hart received 250,000 shares of our common stock as a signing bonus under the terms
of his employment agreement.  These shares were valued at $3.00 per share.</p>
<br>
<p>In May 2000, we issued 250,000 shares to Robert A. Hart IV, our vice president of technology,
as a bonus, upon the execution of his employment agreement.  These shares were valued at $3.00
per share, which was the closing price of our common stock on the day of Mr. Hart&#8217;s execution
of his employment agreement.</p>
<br>
<p>In December 2000, two of our vice presidents, Waddell D. Loflin and James Kaufman, were
issued shares of our common stock as a bonus.  Mr. Loflin was issued 200,000 shares and Mr.
Kaufman was issued 300,000 shares.  These shares were valued at $.24 per share, which was the
closing sale price of our common stock on the day immediately preceding their issuance.</p>
<br>
<p>In October 2001, our president, David M. Loflin, was issued 700,000 shares of our common
stock as a bonus.  These shares were valued at $.19 per share, which was the closing sale price of
our common stock on the day immediately preceding their issuance.</p>
<br>
<p>In December 2001, one of our vice presidents , Waddell D. Loflin, was issued 200,000 shares of
our common stock as a bonus.  These shares were valued at $.09 per share, which was the closing
sale price of our common stock on the day immediately preceding their issuance.</p>
<br>
<p>Compensation of Directors</p>
<br>
<p>During the past three years, no compensation was paid to any of our directors for their services as
directors.  It is possible that our management could begin to pay our directors for meetings
attended or grant a small number of stock options for their services.  However, no specific
determination in this regard has been made.</p>
<br>
<p>Employment Contracts and Termination of Employment and Change-in-Control Agreements</p>
<br>
<p>Each of our officers has entered into employment agreement, as well as confidentiality
agreements and agreements not to compete.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="21%" align="center" valign="top"><p>Name of Officer</p>
</td>
<td width="33%" align="center" valign="top"><p>Position(s)</p>
</td>
<td width="15%" align="center" valign="top"><p>Term</p>
</td>
<td width="18%" align="center" valign="top"><p>Salary</p>
</td>
<td width="13%" align="center" valign="top"><p>Date</p>
</td>
</tr>
<tr>
<td width="21%" align="center" valign="top"><p>_____________</p>
</td>
<td width="33%" align="center" valign="top"><p>_______________________</p>
</td>
<td width="15%" align="center" valign="top"><p>__________</p>
</td>
<td width="18%" align="center" valign="top"><p>___________</p>
</td>
<td width="13%" align="center" valign="top"><p>_______</p>
</td>
</tr>
<tr>
<td width="21%" align="center" valign="top"><p>Douglas O.
McKinnon</p>
</td>
<td width="33%" align="center" valign="top"><p>President and Chief
Executive Officer</p>
</td>
<td width="15%" align="center" valign="top"><p>3 years</p>
</td>
<td width="18%" align="center" valign="top"><p>$180,000</p>
</td>
<td width="13%" align="center" valign="top"><p>4/15/02</p>
</td>
</tr>
<tr>
<td width="21%" align="center" valign="top"><p>David M. Loflin</p>
</td>
<td width="33%" align="center" valign="top"><p>Chairman of the Board</p>
</td>
<td width="15%" align="center" valign="top"><p>6 months(1)</p>
</td>
<td width="18%" align="center" valign="top"><p>$150,000</p>
</td>
<td width="13%" align="center" valign="top"><p>6/1/99,
amended
4/15/02</p>
</td>
</tr>
<tr>
<td width="21%" align="center" valign="top"><p>Waddell D.
Loflin</p>
</td>
<td width="33%" align="center" valign="top"><p>Vice President and Secretary</p>
</td>
<td width="15%" align="center" valign="top"><p>6 months</p>
</td>
<td width="18%" align="center" valign="top"><p>$100,000</p>
</td>
<td width="13%" align="center" valign="top"><p>6/1/99,
amended
4/15/02</p>
</td>
</tr>
<tr>
<td width="21%" align="center" valign="top"><p>James Kaufman</p>
</td>
<td width="33%" align="center" valign="top"><p>Vice President of Corporate
Development</p>
</td>
<td width="15%" align="center" valign="top"><p>6 months</p>
</td>
<td width="18%" align="center" valign="top"><p>$120,000</p>
</td>
<td width="13%" align="center" valign="top"><p>3/22/99,
amended
4/15/02</p>
</td>
</tr>
<tr>
<td width="21%" valign="top"><p>_____________</p>
</td>
<td width="33%" valign="top"><p>&#160;</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="18%" valign="top"><p>&#160;</p>
</td>
<td width="13%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<p>(1) Renewable for an additional six months, at our sole discretion.</p>
<p>(2) 80% of Mr. Kaufman&#8217;s salary may be paid with shares of our common stock.</p>
<br>
<p>We have no compensatory plan or arrangement that results or will result from the resignation,
retirement or any other termination of an executive officer&#8217;s employment or from a change in
control or a change in an executive officer&#8217;s responsibilities following a change-in-control.</p>
<br>
<p>Option/SAR Grants in Last Fiscal Year</p>
<br>
<p>We did not grant any options to any person during the fiscal year ended December 31, 2001.  In
March 2002, we adopted a stock ownership plan for consultants and employees.  To date, we
have granted options to purchase up to $600,000 of our common stock to one consultant; this
consultant has exercised options to purchase 2,000,000 shares.  We have never granted any stock
appreciation rights (SARs), nor do we expect to grant any SARs in the foreseeable future.</p>
<br>
<p>Section 16(a) Beneficial Ownership Reporting Compliance</p>
<br>
<p>We became subject to the provisions of Sections 16(a) of the Securities Exchange Act of 1934 on
October 14, 1999.  Section 16(a) requires directors, executive officers and persons who own
more than 10% of our outstanding common stock to file with the SEC an Initial Statement of
Beneficial Ownership of Securities (Form 3) and Statements of Changes of Beneficial Ownership
of Securities (Form 4).  Directors, executive officers and greater-than-10% shareholders are
required by SEC regulation to furnish copies to us of all Section 16(a) forms they file.</p>
<br>
<p>Based on a review of copies of these reports furnished to us, we believe that all of our directors,
executive directors and greater-than-10% beneficial owners filed their respective Form 3 reports;
all of the Form 3 reports were filed late.  Form 5 reports for the past three years for all officers
and directors are due and have not yet been filed.  Form 4 reports for certain of our officers and
directors are due and have not yet been filed.  We have requested that all of these persons file the
required reports.</p>
<br>
<p>Based on a review of the copies of these reports furnished to us, it appears that Julius W.
Basham, II, a former officer, director and 10%-owner, is current in his filings of required Forms
4 and Form 5 and is no longer required to file ownership reports.  </p>
<br>
<p>Indemnification of Directors and Officers</p>
<br>
<p>Article X of the Articles of Incorporation of USURF America provides that no director or officer
shall be personally liable to USURF America or its shareholders for damages for breach of
fiduciary duty as a director or officer; provided, however, that such provision shall not eliminate
or limit the liability of a director or officer for (1) acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law or (2) the payment of dividends in violation of
law.  Any repeal or modification of Article X shall be prospective only and shall not adversely
affect any right or protection of a director or officer of USURF America existing at the time of
such repeal or modification for any breach covered by Article X which occurred prior to any such
repeal or modification.  The effect of Article X is that directors and officers will experience no
monetary loss for damages arising out of actions taken (or not taken) in such capacities, except
for damages arising out of intentional misconduct, fraud or a knowing violation of law, or the
payment of dividends in violation of law.</p>
<br>
<p>As permitted by Nevada law, our bylaws provide that we will indemnify our directors and
officers against expense and liabilities they incur to defend, settle or satisfy any civil, including
any action alleging negligence, or criminal action brought against them on account of their being
or having been directors or officers unless, in any such action, they are judged to have acted with
gross negligence or willful misconduct.  Insofar as indemnification for liabilities arising under
the Securities Act of 1933, as amended, may be permitted to directors, officers or control persons
pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC,
such indemnification is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.</p>
<br>
<p style="text-align: center">CERTAIN TRANSACTIONS</p>
<br>
<p>Evergreen Agreement</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>Our president, Douglas O. McKinnon, is a manager of Evergreen.</p>
<br>
<p>Conversion of Loans to Stock by Officer</p>
<br>
<p>As of August 21, 2000, we owed our former president, David M. Loflin, a total of $967,703
($916,045 in principal, $51,658 in interest), the result of cash loans made to us by Mr. Loflin
during the past approximately two years.  The proceeds of these loans were used primarily for
operating expenses and purchases of equipment.  On August 21, 2000, we entered into a letter
agreement with our president, David M. Loflin, whereby Mr. Loflin agreed to convert all sums
owed to him into shares of our common stock.</p>
<br>
<p>Pursuant to the letter agreement, Mr. Loflin received one share of common stock for every $1.25
of debt converted, for a total of 774,162 shares.  The $1.25 price was agreed upon as that price
was the low sale price for our common stock on Friday, August 18, 2000, as reported by AMEX.</p>
<br>
<p>Our board of directors, in authorizing the transaction described above, found the transaction to be
in the best interest of USURF America, as it would significantly improve our financial condition,
potentially making it more attractive to prospective investors.</p>
<br>
<p>Securities Purchases</p>
<br>
<p>In December 2001, Michael Cohn, a former director, purchased 75,000 units of our securities in a
private offering, at a purchase of $.10 per unit, or $7,500 in the aggregate.  Each unit purchased
by Mr. Cohn consisted of one share of our common stock, one common stock purchase warrant
to purchase one share of our common stock at an exercise price of $.20 per share and one
common stock purchase warrant to purchase one share of our common stock at an exercise price
of $.30 per share.  Mr. Cohn purchased units on the same terms and conditions as were offered to
unaffiliated investors.</p>
<br>
<p>In December 2001, Ross S. Bravata, a director, purchased 35,000 units of our securities in a
private offering, at a purchase of $.10 per unit, or $3,500 in the aggregate.  Each unit purchased
by Mr. Bravata consisted of one share of our common stock, one common stock purchase
warrant to purchase one share of our common stock at an exercise price of $.20 per share and one
common stock purchase warrant to purchase one share of our common stock at an exercise price
of $.30 per share.  Mr. Bravata purchased units on the same terms and conditions as were offered
to unaffiliated investors.</p>
<br>
<p>Stock Bonus - Officers</p>
<br>
<p>In May 2000, one of our vice presidents, Robert A. Hart IV, was issued 250,000 shares of our
common stock as an employment agreement signing bonus.  These shares were valued at
$750,000, or $3.00 per share, pursuant to the terms of the Mr. Hart&#8217;s employment agreement.</p>
<br>
<p>In December 2000, two of our vice presidents, Waddell D. Loflin and James Kaufman, were
issued shares of our common stock as a bonus.  Mr. Loflin was issued 200,000 shares and Mr.
Kaufman was issued 300,000 shares.  These shares were valued at $119,000, or $.24 per share,
which was the closing sale price of our common stock on the day immediately preceding their
issuance.</p>
<br>
<p>In October 2001, our President, David M. Loflin, was issued shares of our common stock as a
bonus.  Mr. Loflin was issued 700,000 shares.  These shares were valued at $133,000, or $.19 per
share, which was the closing sale price of our common stock on the date immediately preceding
their issuance.  When this issuance was approved by our board of directors, Mr. Loflin abstained
from the voting.</p>
<br>
<p>In December 2001, one of our vice president, Waddell D. Loflin, was awarded shares of our
common stock as a bonus.  Mr. Loflin was awarded 200,000 shares.  These shares were valued at
$18,000, or $.09 per share, which was the closing sale price of our common stock on the date
immediately preceding their award.  These shares were issued in January 2002.</p>
<br>
<p>Employment Agreements</p>
<br>
<p>Each of our officers have entered into employment agreement, as well as confidentiality
agreements and agreements not to compete.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="21%" align="center" valign="top"><p>Name of Officer</p>
</td>
<td width="33%" align="center" valign="top"><p>Position(s)</p>
</td>
<td width="15%" align="center" valign="top"><p>Term</p>
</td>
<td width="18%" align="center" valign="top"><p>Salary</p>
</td>
<td width="13%" align="center" valign="top"><p>Date</p>
</td>
</tr>
<tr>
<td width="21%" align="center" valign="top"><p>_____________</p>
</td>
<td width="33%" align="center" valign="top"><p>_______________________</p>
</td>
<td width="15%" align="center" valign="top"><p>__________</p>
</td>
<td width="18%" align="center" valign="top"><p>___________</p>
</td>
<td width="13%" align="center" valign="top"><p>_______</p>
</td>
</tr>
<tr>
<td width="21%" align="center" valign="top"><p>Douglas O.
McKinnon</p>
</td>
<td width="33%" align="center" valign="top"><p>President and Chief
Executive Officer</p>
</td>
<td width="15%" align="center" valign="top"><p>3 years</p>
</td>
<td width="18%" align="center" valign="top"><p>$180,000</p>
</td>
<td width="13%" align="center" valign="top"><p>4/15/02</p>
</td>
</tr>
<tr>
<td width="21%" align="center" valign="top"><p>David M. Loflin</p>
</td>
<td width="33%" align="center" valign="top"><p>Chairman of the Board</p>
</td>
<td width="15%" align="center" valign="top"><p>6 months(1)</p>
</td>
<td width="18%" align="center" valign="top"><p>$150,000</p>
</td>
<td width="13%" align="center" valign="top"><p>6/1/99,
amended
4/15/02</p>
</td>
</tr>
<tr>
<td width="21%" align="center" valign="top"><p>Waddell D.
Loflin</p>
</td>
<td width="33%" align="center" valign="top"><p>Vice President and Secretary</p>
</td>
<td width="15%" align="center" valign="top"><p>6 months</p>
</td>
<td width="18%" align="center" valign="top"><p>$100,000</p>
</td>
<td width="13%" align="center" valign="top"><p>6/1/99,
amended
4/15/02</p>
</td>
</tr>
<tr>
<td width="21%" align="center" valign="top"><p>James Kaufman</p>
</td>
<td width="33%" align="center" valign="top"><p>Vice President of Corporate
Development</p>
</td>
<td width="15%" align="center" valign="top"><p>6 months</p>
</td>
<td width="18%" align="center" valign="top"><p>$120,000</p>
</td>
<td width="13%" align="center" valign="top"><p>3/22/99,
amended
4/15/02</p>
</td>
</tr>
<tr>
<td width="21%" valign="top"><p>_____________</p>
</td>
<td width="33%" valign="top"><p>&#160;</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="18%" valign="top"><p>&#160;</p>
</td>
<td width="13%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<p>(1) Renewable for an additional six months, at our sole discretion.</p>
<p>(2) 80% of Mr. Kaufman&#8217;s salary may be paid with shares of our common stock.</p>
<br>
<p>Stock Issuances to Officers</p>
<br>
<p>Pursuant to the Evergreen agreement, on April 15, 2002, the following occurred:</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>We hired a new president and chief executive officer, Douglas O. McKinnon,
who also became a director.  In consideration of Mr. McKinnon&#8217;s executing his
employment agreement, we issued him 3,000,000 shares of our common stock.
These shares were valued at approximately $330,000, which amount will be
charged against our earnings during the second quarter of 2002.</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>Our former president, David M. Lofin, 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 Mr.
Loflin&#8217;s executing an amendment to his employment agreement that reflected
the foregoing provisions, we issued him 2,000,000 shares of our common stock.
These shares were valued at approximately $200,000, which amount will be
charged against our earnings during the second quarter of 2002.</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>Our vice president and secretary, Waddell D. Loflin, reduced the term of his
remaining term of employment from approximately 4 years to six months and
waived the payment of all accrued and unpaid salary.  In consideration of Mr.
Loflin&#8217;s executing an amendment to his employment agreement that reflected
the foregoing provisions, we issued him 2,000,000 shares of our common stock.
These shares were valued at approximately $200,000, which amount will be
charged against our earnings during the second quarter of 2002.</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>Our vice president of corporate development, James Kaufman, reduced the term
of his remaining term of employment from one year to six months and waived
the payment of all accrued and unpaid salary.  In consideration of Mr.
Kaufman&#8217;s executing an amendment to his employment agreement that
reflected the foregoing provisions, we issued him 2,000,000 shares of our
common stock.  These shares were valued at approximately $200,000, which
amount will be charged against our earnings during the second quarter of 2002.</p>
</td>
</tr>
</table>
<br>
<p>Voting Agreement</p>
<br>
<p>On January 29, 1999, David W. Loflin, Waddell D. Loflin, Julius W. Basham, David W. Brown
and Wm. Kim Stimpson entered into a voting agreement, whereby all of these persons are
required to vote all shares owned by them for David M. Loflin and Waddell D. Loflin in all
elections of directors of USURF America.  Currently, approximately 8,850,000 shares are subject
to this voting agreement.  This amount of stock represents approximately 20% of our currently
outstanding shares.</p>
<br>
<p>H + N Partners</p>
<br>
<p>During 1998, we issued a total of 187,000 shares of our common stock to H + N Partners, a
fictitious name division of B. Edward Haun &amp; Company, a Denver, Colorado-based investment
banking and research firm in which James Kaufman, our Vice President &#8211; Corporate
Development, was a partner.  Mr. Kaufman received a portion of the shares issued to H + N
Partners.  37,000 of the shares were valued at $2.00 per share and 150,000 of the shares were
valued at $2.50 per share.  All of the shares issued to H+N Partners were the subject of effective
registration statements filed with the SEC.  Mr. Kaufman was not an officer at the time of the
stock issuances to H + N Partners.</p>
<br>
<p>Also during 1998, in connection with a private offering of our securities, we issued  to H + N
Partners 56,667 warrants to purchase a like number of shares of our common stock at an exercise
price of $1.25 per share and 56,667 warrants to purchase a like number of shares of our common
stock at an exercise price of $1.50 per share.  H+N Partners is a selling shareholder under this
prospectus as to all of the shares underlying these warrants.  Mr. Kaufman was not an officer at
the time of the warrant issuances to H + N Partners.</p>
<br>
<p>Fusion Capital Consulting Agreements</p>
<br>
<p>In January 2001, we entered into a one-year consulting agreement with Fusion Capital, pursuant
to which Fusion Capital agreed to provide operational and strategic consulting services.  Fusion
Capital received a total of 120,000 shares of our common stock during the term of this agreement
and reimbursement for expenses.</p>
<br>
<p>In January 2002, we entered another into a one-year consulting agreement with Fusion Capital,
pursuant to which Fusion Capital agreed to provide operational and strategic consulting services.
Fusion Capital received 120,000 shares of our common stock pursuant to this agreement and is to
be reimbursed for expenses. </p>
<br>
<p style="text-align: center">PRINCIPAL SHAREHOLDERS</p>
<br>
<p>There are 43,731,870 shares of our common stock issued and outstanding.  The following table
sets forth certain information regarding the current beneficial ownership of our common stock,
after giving effect to the issuance of the remaining 3,500,000 shares of common stock reserved
for issuance under the Fusion Capital agreement, the remaining 1,562,500 shares and 3,125,000
shares of common stock underlying warrants to be issued to Evergreen pursuant to the Evergreen
agreement and all 9,278,727 shares of common stock underlying currently outstanding and
exercisable options and warrants by (i) persons known to be beneficial owners of more than 5%
of our common stock, (ii) each our officers and directors and (iii) our officers and directors, as a
group.  Unless otherwise noted, the address of the listed persons is 8748 Quarters Lake Road,
Baton Rouge, Louisiana 70809.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="34%" align="center" valign="top"><br>
<br>
<br>
<p>Name and Address of
Beneficial Owner</p>
</td>
<td width="17%" align="center" valign="top"><p>Shares
Owned
Beneficially
Before This
Offering</p>
</td>
<td width="17%" align="center" valign="top"><p>Percent
Owned
Before This
Offering(1)</p>
</td>
<td width="16%" align="center" valign="top"><p>Shares
Owned
Beneficially
After This
Offering</p>
</td>
<td width="16%" align="center" valign="top"><p>Percent
Owned
After This
Offering(1)</p>
</td>
</tr>
<tr>
<td width="34%" align="center" valign="top"><p>______________________</p>
</td>
<td width="17%" align="center" valign="top"><p>__________</p>
</td>
<td width="17%" align="center" valign="top"><p>__________</p>
</td>
<td width="16%" align="center" valign="top"><p>__________</p>
</td>
<td width="16%" align="center" valign="top"><p>_________</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>David M. Loflin(2)</p>
</td>
<td width="17%" align="center" valign="top"><p>5,950,960</p>
</td>
<td width="17%" align="center" valign="top"><p>9.73%</p>
</td>
<td width="16%" align="center" valign="top"><p>5,950,960</p>
</td>
<td width="16%" align="center" valign="top"><p>9.73%</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>Waddell D. Loflin(2)</p>
</td>
<td width="17%" align="center" valign="top"><p>2,490,000</p>
</td>
<td width="17%" align="center" valign="top"><p>4.07%</p>
</td>
<td width="16%" align="center" valign="top"><p>2,490,000</p>
</td>
<td width="16%" align="center" valign="top"><p>4.07%</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>James Kaufman</p>
</td>
<td width="17%" align="center" valign="top"><p>2,425,000</p>
</td>
<td width="17%" align="center" valign="top"><p>3.96%</p>
</td>
<td width="16%" align="center" valign="top"><p>2,425,000</p>
</td>
<td width="16%" align="center" valign="top"><p>3.96%</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>665 W. Velarde Drive</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>Thousand Oaks, CA 91360</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>Douglas O. McKinnon(3)</p>
</td>
<td width="17%" align="center" valign="top"><p>3,000,000</p>
</td>
<td width="17%" align="center" valign="top"><p>4.90%</p>
</td>
<td width="16%" align="center" valign="top"><p>2,500,000</p>
</td>
<td width="16%" align="center" valign="top"><p>4.09%</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>Ross S. Bravata</p>
</td>
<td width="17%" align="center" valign="top"><p>144,500(4)</p>
</td>
<td width="17%" align="center" valign="top"><p>less than 1%</p>
</td>
<td width="16%" align="center" valign="top"><p>32,000</p>
</td>
<td width="16%" align="center" valign="top"><p>less than
1%</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>Fusion Capital Fund II, LLC</p>
</td>
<td width="17%" align="center" valign="top"><p>3,006,200(4)</p>
</td>
<td width="17%" align="center" valign="top"><p>4.92%</p>
</td>
<td width="16%" align="center" valign="top"><p>3,006,200</p>
</td>
<td width="16%" align="center" valign="top"><p>4.92%</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>222 Merchandise Mart Plaza</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>Suite 9-112</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>Chicago, IL 60654</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>Evergreen Venture Partners,
LLC(3)</p>
</td>
<td width="17%" align="center" valign="top"><p>9,375,000(6)</p>
</td>
<td width="17%" align="center" valign="top"><p>15.32%</p>
</td>
<td width="16%" align="center" valign="top"><p>4,687,500(7)</p>
</td>
<td width="16%" align="center" valign="top"><p>7.66%</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>2104 Ridge Plaza</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>Castle Rock, CO 80104</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>All officers and directors as a
group (5 persons)</p>
</td>
<td width="17%" align="center" valign="top"><p>14,010,460(4)</p>
</td>
<td width="17%" align="center" valign="top"><p>22.91%</p>
</td>
<td width="16%" align="center" valign="top"><p>13,377,960</p>
</td>
<td width="16%" align="center" valign="top"><p>21.87%</p>
</td>
</tr>
<tr>
<td width="34%" valign="top"><p>______________</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<p>(1)  Based on 61,198,097 shares outstanding, assuming the issuance of 3,500,000 shares reserved
for issuance under the Fusion Capital agreement, 9,278,727 shares underlying currently
outstanding and exercisable warrants and the issuance of an additional 1,562,500 shares and
immediately exercisable warrants to purchase 3,125,000 shares, pursuant to the Evergreen
agreement.</p>
<p>(2)  All of the shares owned by this shareholder are subject to a voting agreement and must be
voted for David M. Loflin and Waddell D. Loflin, in all elections of directors.</p>
<p>(3) Douglas O. McKinnon is a manager of Evergreen and may be deemed to be a beneficial
owner of all of the shares owned by Evergreen.</p>
<p>(4) 75,000 of these shares have not been issued, but underlie currently exercisable warrants;
assumes 75,000 shares underlying warrants are purchased and sold and 37,500 shares currently
owned are sold by Mr. Bravata under this prospectus.</p>
<p>(5) 800,000 of these shares may not be sold by Fusion Capital until the earliest of the termination
of the Fusion Capital agreement, default under the Fusion Capital agreement or approximately 18
months from the date hereof.  645,000 of these shares have not been issued, but underlie
currently exercisable warrants.</p>
<p>(6) 1,562,500 of these shares have been issued; 3,125,000 of these shares have not been issued,
but underlie currently exercisable warrants; 1,562,500 of these shares have not been issued, but
are to be issued upon the final closing under the Evergreen agreement; 3,125,000 of these shares
underlie warrants that have not been issued, but are to be issued upon the final closing under the
Evergreen agreement.</p>
<p>(7) 1,562,500 of these shares have not been issued, but are to be issued upon the final closing
under the Evergreen agreement; 3,125,000 of these shares underlie warrants that have not been
issued, but are to be issued upon the final closing under the Evergreen agreement.</p>
<br>
<p style="text-align: center">LITIGATION</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.  Patrick F. McGrew, Esquire, is our counsel in this case.</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.  Patrick F. McGrew, Esquire, is our counsel in this case.</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 style="text-align: center">PLAN OF DISTRIBUTION</p>
<br>
<p>The shares of common stock offered by this prospectus are being offered by selling shareholders.
The common stock may be resold or distributed from time to time by the selling shareholders, or
by donees or transferees of, or other successors in interests to, the selling shareholders, directly to
one or more purchasers or through brokers, dealers or underwriters who may act solely as agents
or may acquire such common stock as principals, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices, at negotiated prices, or at fixed prices, which
may be changed. The sale of the common stock offered by this prospectus may be effected in one
or more of the following methods:</p>
<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>ordinary brokers' transactions;</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>transactions involving cross or block trades or otherwise on the American Stock
Exchange;</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>purchases by brokers, dealers or underwriters as principal and resale by such
purchasers for their own accounts pursuant to this prospectus;</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>"at the market" to or through market makers or into an existing market for the
common stock;</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>in other ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through agents;</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>in privately negotiated transactions; or</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>any combination of the foregoing.</p>
</td>
</tr>
</table>
<br>
<p>In order to comply with the securities laws of certain states, if applicable, the shares may be sold
only through registered or licensed brokers or dealers. In addition, in certain states, the shares
may not be sold unless they have been registered or qualified for sale in such state or an
exemption from such registration or qualification requirement is available and complied with.</p>
<br>
<p>Brokers, dealers, underwriters or agents participating in the distribution of the shares as agents
may receive compensation in the form of commissions, discounts or concessions from the selling
shareholder and/or purchasers of the common stock for whom such broker-dealers may act as
agent, or to whom they may sell as principal, or both. The compensation paid to a particular
broker-dealer may be less than or in excess of customary commissions. Commissions received by
any broker may be deemed to be underwriting commissions.</p>
<br>
<p>Each selling shareholder is an "underwriter" within the meaning of the Securities Act.  Any
broker-dealers who act in connection with the sale of the shares hereunder will be "underwriters"
within the meaning of the Securities Act, and any commissions they receive and proceeds of any
sale of the shares will be underwriting discounts and commissions under the Securities Act.</p>
<br>
<p>We know of no existing arrangements between any selling shareholder, any other shareholder,
broker, dealer, underwriter or agent relating to the sale or distribution of their respective shares.
Neither we nor any selling shareholder can presently estimate the amount of compensation that
any agent will receive.  At a time a particular offer of shares is made by a selling shareholder, a
prospectus supplement, if required, will be distributed that will set forth the names of any agents,
underwriters or dealers and any compensation from a selling shareholder and any other required
information.  We will pay all of the expenses incident to the registration, offering and sale of the
shares of stock to the public other than commissions or discounts of underwriters, broker-dealers
or agents.  USURF America has also agreed to indemnify other selling shareholders and related
persons against specified liabilities, including liabilities under the Securities Act.  Insofar as
indemnification for liabilities arising under the Securities Act may be permitted to directors,
officers and controlling persons of USURF America, we have been advised that, in the opinion
of the SEC, such indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.</p>
<br>
<p>We have advised the selling shareholders that while they are engaged in a distribution of shares
of our common stock included in this prospectus, they are required to comply with Regulation M
promulgated under the Exchange Act.  With certain exceptions, Regulation M precludes the
selling shareholders, any affiliated purchasers and any broker-dealer or other person who
participates in such distribution from bidding for or purchasing, or attempting to induce any
person to bid for or purchase any security which is the subject of the distribution until the entire
distribution is complete.  Regulation M also prohibits any bids or purchases made in order to
stabilize the price of a security in connection with the distribution of that security.  All of the
foregoing may affect the marketability of the shares of our common stock offered by this
prospectus.  This offering will terminate on the date on which all shares included in this
prospectus and offered hereby have been sold by the selling shareholders.</p>
<br>
<p style="text-align: center">SELLING SHAREHOLDERS</p>
<br>
<p>The following table assumes that each selling shareholder is offering for sale shares of common
stock previously issued or issuable by us.  We have agreed to pay all expenses in connection
therewith (other than brokerage commissions and fees and expenses of counsel of the respective
selling shareholders).  Except for Michael Cohn, a former director, Ross S. Bravata, a current
director, and Douglas O. McKinnon, our president and chief executive officer, none of the selling
shareholders has ever held any position with us or had any other material relationship with us.
The following table sets forth the beneficial ownership of the shares of the stock by each person
who is a selling shareholder.  We will not receive any proceeds from the sales of stock by the
selling shareholders.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="67%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="33%" align="center" valign="top"><p>Percentage Owned</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="35%" align="center" valign="top"><p>Name of Beneficial Owner</p>
</td>
<td width="16%" align="center" valign="top"><p>Shares of
Common
Stock
Beneficially
Owned</p>
</td>
<td width="16%" align="center" valign="top"><p>Shares of
Common
Stock Being
Offered</p>
</td>
<td width="16%" align="center" valign="top"><p>Before
Offering(1)</p>
</td>
<td width="17%" align="center" valign="top"><p>After
Offering(1)</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Darrell Glahn and Blythe
Glahn</p>
</td>
<td width="16%" valign="top"><p>300,000(2)</p>
</td>
<td width="16%" valign="top"><p>300,000</p>
</td>
<td width="16%" valign="top"><p>less than 1%</p>
</td>
<td width="17%" valign="top"><p>0%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Michael Cohn</p>
</td>
<td width="16%" valign="top"><p>434,000(3)</p>
</td>
<td width="16%" valign="top"><p>225,000</p>
</td>
<td width="16%" valign="top"><p>less than 1%</p>
</td>
<td width="17%" valign="top"><p>less than 1%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Ross S. Bravata</p>
</td>
<td width="16%" valign="top"><p>144,500(4)</p>
</td>
<td width="16%" valign="top"><p>112,500</p>
</td>
<td width="16%" valign="top"><p>less than 1%</p>
</td>
<td width="17%" valign="top"><p>less than 1%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Peter Rochow</p>
</td>
<td width="16%" valign="top"><p>1,950,000(5)</p>
</td>
<td width="16%" valign="top"><p>1,950,000</p>
</td>
<td width="16%" valign="top"><p>3.18%</p>
</td>
<td width="17%" valign="top"><p>0%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Shelter Capital Ltd.</p>
</td>
<td width="16%" valign="top"><p>1,108,000(6)</p>
</td>
<td width="16%" valign="top"><p>1,108,000</p>
</td>
<td width="16%" valign="top"><p>1.81%</p>
</td>
<td width="17%" valign="top"><p>0%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Euro-Swiss Group Ltd.</p>
</td>
<td width="16%" valign="top"><p>460,000</p>
</td>
<td width="16%" valign="top"><p>460,000</p>
</td>
<td width="16%" valign="top"><p>less than 1%</p>
</td>
<td width="17%" valign="top"><p>0%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Anchor House Ltd.</p>
</td>
<td width="16%" valign="top"><p>895,000(7)</p>
</td>
<td width="16%" valign="top"><p>895,000</p>
</td>
<td width="16%" valign="top"><p>1.46%</p>
</td>
<td width="17%" valign="top"><p>0%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Claymore Management Ltd.</p>
</td>
<td width="16%" valign="top"><p>2,280,000(8)</p>
</td>
<td width="16%" valign="top"><p>600,000</p>
</td>
<td width="16%" valign="top"><p>3.72%</p>
</td>
<td width="17%" valign="top"><p>2.74%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Newlan &amp; Newlan</p>
</td>
<td width="16%" valign="top"><p>700,000</p>
</td>
<td width="16%" valign="top"><p>500,000</p>
</td>
<td width="16%" valign="top"><p>1.14%</p>
</td>
<td width="17%" valign="top"><p>less than 1%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Evergreen Venture Partners,
LLC</p>
</td>
<td width="16%" valign="top"><p>4,687,500(9)</p>
</td>
<td width="16%" valign="top"><p>4,687,500</p>
</td>
<td width="16%" valign="top"><p>7.66%</p>
</td>
<td width="17%" valign="top"><p>0%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Employer Support Services</p>
</td>
<td width="16%" valign="top"><p>200,000</p>
</td>
<td width="16%" valign="top"><p>200,000</p>
</td>
<td width="16%" valign="top"><p>less than 1%</p>
</td>
<td width="17%" valign="top"><p>0%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Heyer Capital Fund</p>
</td>
<td width="16%" valign="top"><p>500,000</p>
</td>
<td width="16%" valign="top"><p>500,000</p>
</td>
<td width="16%" valign="top"><p>less than 1%</p>
</td>
<td width="17%" valign="top"><p>0%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Patrick F. McGrew</p>
</td>
<td width="16%" valign="top"><p>75,000</p>
</td>
<td width="16%" valign="top"><p>75,000</p>
</td>
<td width="16%" valign="top"><p>less than 1%</p>
</td>
<td width="17%" valign="top"><p>0%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Allen &amp; Co. Business
Communications</p>
</td>
<td width="16%" valign="top"><p>900,000</p>
</td>
<td width="16%" valign="top"><p>900,000</p>
</td>
<td width="16%" valign="top"><p>1.47%</p>
</td>
<td width="17%" valign="top"><p>0%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>B. Edward Haun &amp; Company</p>
</td>
<td width="16%" valign="top"><p>250,000</p>
</td>
<td width="16%" valign="top"><p>250,000</p>
</td>
<td width="16%" valign="top"><p>less than 1%</p>
</td>
<td width="17%" valign="top"><p>0%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Summit Venture Partners,
LLC</p>
</td>
<td width="16%" valign="top"><p>250,000</p>
</td>
<td width="16%" valign="top"><p>250,000</p>
</td>
<td width="16%" valign="top"><p>less than 1%</p>
</td>
<td width="17%" valign="top"><p>0%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Barker Design, Inc.</p>
</td>
<td width="16%" valign="top"><p>150,000</p>
</td>
<td width="16%" valign="top"><p>150,000</p>
</td>
<td width="16%" valign="top"><p>less than 1%</p>
</td>
<td width="17%" valign="top"><p>0%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Douglas O. McKinnon</p>
</td>
<td width="16%" valign="top"><p>3,000,000</p>
</td>
<td width="16%" valign="top"><p>500,000</p>
</td>
<td width="16%" valign="top"><p>4.90%</p>
</td>
<td width="17%" valign="top"><p>4.09%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>___________________</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
<td width="17%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<p>(1) Based on 61,198,097 shares outstanding, assuming the issuance of 3,500,000 shares reserved
for issuance under the Fusion Capital agreement, 9,278,727 shares underlying currently
outstanding and exercisable warrants and the issuance of an additional 1,562,500 shares and
immediately exercisable warrants to purchase 3,125,000 shares, pursuant to the Evergreen
agreement, all of which are deemed outstanding for the purpose of computing the percentage of
existing shares beneficially owned by each person listed.</p>
<p>(2) 100,000 of these shares have been issued; 200,000 of these shares underlie currently issued
and exercisable warrants.</p>
<p>(3) 204,000 of these shares have been issued; 230,000 of these shares underlie currently issued
and exercisable warrants.</p>
<p>(4) 69,500 of these shares have been issued; 75,000 of these shares underlie currently issued and
exercisable warrants.</p>
<p>(5) 1,150,000 of these shares have been issued; 800,000 of these shares underlie currently issued
and exercisable warrants.</p>
<p>(6) 107,000 of these shares have been issued; 1,001,000 of these shares underlie currently issued
and exercisable warrants.</p>
<p>(7) 365,000 of these shares have been issued; 530,000 of these shares underlie currently issued
and exercisable warrants.</p>
<p>(8) 1,040,000 of these shares have been issued; 1,240,000 of these shares underlie currently
issued and exercisable warrants.</p>
<p>(9) 1,562,500 of these shares have been issued; 3,125,000 of these shares underlie currently
issued and exercisable warrants.</p>
<br>
<p style="text-align: center">DESCRIPTION OF SECURITIES</p>
<br>
<p>Authorized Capital Stock</p>
<br>
<p>Our authorized capital stock consists of 100,000,000 shares of common stock, $.0001 par value
per share.  The following description of certain provisions of our common stock does not purport
to be complete and is subject to, and qualified in its entirety by, the provisions of the our Articles
of Incorporation, as amended.</p>
<br>
<p>Description of Common Stock</p>
<br>
<p>There are 43,731,870 shares of our common stock outstanding.  An additional 4,687,500 shares
are reserved for issuance pursuant to the terms of the Evergreen agreement, an additional
9,278,727 shares of common stock have been reserved for issuance pursuant to various warrants
and up to additional 3,500,000 shares of common stock have been reserved for issuance pursuant
the Fusion Capital agreement.  Each share of common stock is entitled to one vote at all meetings
of shareholders.  All shares of common stock are equal to each other with respect to liquidation
rights and dividend rights.  There are no preemptive rights to purchase any additional shares of
common stock, nor are there any subscription, conversion or redemption rights applicable to the
common stock.  Our Articles of Incorporation, as amended, prohibit cumulative voting in the
election of directors.  The absence of cumulative voting means that holders of more than 50% of
the shares voting for the election of directors can elect all directors if they choose to do so.  In
such event, the holders of the remaining shares of common stock will not be entitled to elect any
director.  A majority of the shares entitled to vote, represented in person or by proxy, constitutes
a quorum at a meeting of shareholders.  In the event of liquidation, dissolution or winding up,
holders of shares of common stock will be entitled to receive, on a pro rata basis, all assets
remaining after satisfaction of all liabilities.</p>
<br>
<p>Transfer Agent and Registrar</p>
<br>
<p>Securities Transfer Corporation, Frisco, Texas, is the transfer agent and registrar for our common
stock.</p>
<br>
<p style="text-align: center">LEGAL MATTERS</p>
<br>
<p>The law firm of Newlan &amp; Newlan, Lewisville, Texas, has acted as our legal counsel in
connection with the registration statement of which this prospectus forms a part and related
matters.  The partners of the firm of Newlan &amp; Newlan own a total of 700,000 shares of our
common stock.  Newlan &amp; Newlan is a selling shareholder pursuant to this prospectus.</p>
<br>
<p style="text-align: center">EXPERTS</p>
<br>
<p>Our financial statements for the years ended December 31, 1999, 2000 and 2001, as indicated in
the report thereon,  that appear in this prospectus have been audited by Postlethwaite &amp;
Netterville, independent auditor.  The financial statements audited by Postlethwaite &amp;
Netterville, have been included in reliance on its reports given as its authority as an expert in
accounting and auditing.</p>
<br>
<p style="text-align: center">ABOUT THIS PROSPECTUS</p>
<br>
<p>This prospectus is part of a registration statement that we filed with the SEC using a &#8220;shelf&#8221;
registration process.  Under this shelf process, the selling shareholders may sell up to an
aggregate of 13,663,000 shares of our common stock in one or more offerings.  This prospectus
and any applicable prospectus supplement provided to you should be considered together with
the additional information described under the heading &#8220;Where You Can Find More
Information&#8221;.  The registration statement that contains this prospectus (including exhibits to the
registration statement) contains additional information about our company and the securities
offered by this prospectus.  That registration statement can be read at the SEC web site or at the
SEC offices mentioned under the heading &#8220;Where You Can Find More Information&#8221;.</p>
<br>
<p style="text-align: center">WHERE YOU CAN FIND MORE INFORMATION</p>
<br>
<p>We have filed a registration statement on Form S-1 (including its exhibits and schedules) with
the SEC under the Securities Act with respect to our common stock to be sold in this offering.
This prospectus, which is part of the registration statement, does not contain all of the
information included in the registration statement.  Certain information is omitted and you
should refer to the registration statement and its exhibits.  With respect to references made in this
prospectus to any contract, agreement or other document of USURF America, such references
are not necessarily complete and you should refer to the exhibits attached to the registration
statement for copies of the actual contract, agreement or other document.  You may review a
copy of the registration statement, including exhibits, at the SEC&#8217;s public reference room at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the SEC located at Seven World Trade Center, Suite 1300, New York, New
York 10048, or at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661.  Please call 1-800-SEC-0330 for further information about the operation of the public
reference rooms.  The registration statement and our other SEC filings can also be reviewed by
accessing the SEC&#8217;s Internet site at http://www.sec.gov, which contains reports, proxy and
information statements and other information regarding registrants that file electronically with
the SEC.</p>
<br>
<p>We file annual, quarterly and current reports, proxy statements and other information with the
SEC.  You may read and copy any reports, statements or other information on file at the public
reference rooms.  You can also request copies of these documents, for a copying fee, by writing
to the SEC.</p>
<br>
<p>We will furnish our shareholders with annual reports containing financial statements audited by
our independent auditors and to make available to our shareholders quarterly reports containing
unaudited financial data for the first three quarters of each fiscal year.</p>
<br>
<p style="text-align: center">INDEX TO FINANCIAL STATEMENTS</p>
<br>
<p style="text-align: center">Three Months Ended March 31, 2002 and 2001</p>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="81%" valign="top"><p>&#160;</p>
</td>
<td width="11%" align="center" valign="top"><p>Page</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="81%" valign="top"><p>&#160;</p>
</td>
<td width="11%" align="center" valign="top"><p>______</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="81%" valign="top"><p>Consolidated Balance Sheets at March 31, 2002, and December 31, 2001
(audited)</p>
</td>
<td width="11%" align="center" valign="top"><p>F-1</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="81%" valign="top"><p>Consolidated Statements of Operations for the Three Months Ended March
31, 2002 and 2001</p>
</td>
<td width="11%" align="center" valign="top"><p>F-4</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="81%" valign="top"><p>Consolidated Statements of Cash Flows for the Three Months Ended March
31, 2002 and 2001</p>
</td>
<td width="11%" align="center" valign="top"><p>F-6</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="81%" valign="top"><p>Notes to Consolidated Financial Statements</p>
</td>
<td width="11%" align="center" valign="top"><p>F-9</p>
</td>
</tr>
</table>
<br>
<p style="text-align: center">Years Ended December 31, 2001, 2000 and 1999</p>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="81%" valign="top"><p>Report of Independent Auditor</p>
</td>
<td width="11%" align="center" valign="top"><p>F-12</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="81%" valign="top"><p>Consolidated Balance Sheets at December 31, 2001 and 2000</p>
</td>
<td width="11%" align="center" valign="top"><p>F-13</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="81%" valign="top"><p>Consolidated Statements of Operations for the Years Ended December 31,
2001, 2000 and 1999</p>
</td>
<td width="11%" align="center" valign="top"><p>F-16</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="81%" valign="top"><p>Consolidated Statements of Changes in Stockholders&#8217; Equity for the Years
Ended December 31, 2001, 2000 and 1999</p>
</td>
<td width="11%" align="center" valign="top"><p>F-18</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="81%" valign="top"><p>Consolidated Statements of Cash Flows for the Years Ended December 31,
2001, 2000 and 1999</p>
</td>
<td width="11%" align="center" valign="top"><p>F-23</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="81%" valign="top"><p>Notes to Consolidated Financial Statements</p>
</td>
<td width="11%" align="center" valign="top"><p>F-25</p>
</td>
</tr>
</table>
<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 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>
<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>
<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 - 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>
<p>INDEPENDENT AUDITORS' REPORT</p>
<br>
<p>To the Board of Directors and Stockholders</p>
<p>USURF America, Inc. and Subsidiaries</p>
<p>Baton Rouge, Louisiana</p>
<br>
<p>We have audited the accompanying consolidated balance sheets of USURF America, Inc. and
Subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of
operations, changes in stockholders&#8217; equity and cash flows for each of the three years ended
December 31, 2001.  These consolidated financial statements are the responsibility of the
Company&#8217;s management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.</p>
<br>
<p>We conducted our audits in accordance with auditing standards generally accepted in the United
States of America.  Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating
the overall consolidated financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.</p>
<br>
<p>In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of USURF America, Inc. and Subsidiaries as of December 31, 2001 and
2000, and the results of their operations and cash flows for each of the three years ended
December 31, 2001 in conformity with accounting principles generally accepted in the United
States of America.</p>
<br>
<p>As discussed more fully in Note 15, the Company is not in compliance with continued listing
guidelines of AMEX.  The ultimate outcome of this uncertainty is not determinable at this time,
but could have a significant impact on the Company.  </p>
<br>
<p>The accompanying financial statements have been prepared assuming that the Company will
continue as a going concern. As discussed in Note 18 to the consolidated financial statements,
the Company has significant operating losses.  In addition, the Company has excess current
liabilities over current assets of approximately $1.25 million. These conditions raise substantial
doubt about its ability to continue as a going concern.  Management&#8217;s plans regarding these
matters are also described in Note 18.  The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.</p>
<br>
<p>/s/ POSTLETHWAITE &amp; NETTERVILLE</p>
<p>Postlethwaite &amp; Netterville</p>
<p>Baton Rouge, Louisiana</p>
<p>April 12, 2002</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 BALANCE SHEETS</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>DECEMBER 31, 2001 AND 2000</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>2001</p>
</td>
<td width="19%" align="center" valign="top"><p>2000</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>$10</p>
</td>
<td width="19%" align="right" valign="top"><p>$1,088</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Inventory</p>
</td>
<td width="19%" align="right" valign="top"><p>134,746</p>
</td>
<td width="19%" align="right" valign="top"><p>246,721</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>134,756</p>
</td>
<td width="19%" align="right" valign="top"><p>247,809</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>203,141</p>
</td>
<td width="19%" align="right" valign="top"><p>138,954</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Less: accumulated depreciation</p>
</td>
<td width="19%" align="right" valign="top"><p>(125,036)</p>
</td>
<td width="19%" align="right" valign="top"><p>(69,476)</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>78,105</p>
</td>
<td width="19%" align="right" valign="top"><p>69,478</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>INVESTMENTS</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="19%" align="right" valign="top"><p>68,029</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>16,667</p>
</td>
<td width="19%" align="right" valign="top"><p>25,000</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>$229,528</p>
</td>
<td width="19%" align="right" valign="top"><p>$410,316</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>2001</p>
</td>
<td width="19%" align="center" valign="top"><p>2000</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>$15,539</p>
</td>
<td width="19%" align="right" valign="top"><p>$42,469</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Accounts payable</p>
</td>
<td width="19%" align="right" valign="top"><p>1,034,619</p>
</td>
<td width="19%" align="right" valign="top"><p>1,472,030</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Accrued payroll</p>
</td>
<td width="19%" align="right" valign="top"><p>265,978</p>
</td>
<td width="19%" align="right" valign="top"><p>158,262</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Other current liabilities</p>
</td>
<td width="19%" align="right" valign="top"><p>54,996</p>
</td>
<td width="19%" align="right" valign="top"><p>41,824</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Property dividends payable</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="19%" align="right" valign="top"><p>43,750</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>18,521</p>
</td>
<td width="19%" align="right" valign="top"><p>6,638</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>1,389,653</p>
</td>
<td width="19%" align="right" valign="top"><p>1,764,973</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>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Deferred income taxes</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>1,389,653</p>
</td>
<td width="19%" align="right" valign="top"><p>1,764,973</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 2,767,823 shares
outstanding at December 31, 2000, $.0001 par value per
share</p>
</td>
<td width="19%" align="right" valign="top"><p>1,192,700</p>
</td>
<td width="19%" align="right" valign="top"><p>3,897,552</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Deferred consulting</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="19%" align="right" valign="top"><p>(574,000)</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>1,192,700</p>
</td>
<td width="19%" align="right" valign="top"><p>3,323,552</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
in 2001 and 13,920,985 in 2000</p>
</td>
<td width="19%" align="right" valign="top"><p>2,385</p>
</td>
<td width="19%" align="right" valign="top"><p>1,392</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Additional paid-in capital</p>
</td>
<td width="19%" align="right" valign="top"><p>35,642,817</p>
</td>
<td width="19%" align="right" valign="top"><p>30,286,687</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Accumulated deficit</p>
</td>
<td width="19%" align="right" valign="top"><p>(37,000,628)</p>
</td>
<td width="19%" align="right" valign="top"><p>(34,502,160)</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Subscriptions receivable</p>
</td>
<td width="19%" align="right" valign="top"><p>165,750</p>
</td>
<td width="19%" align="right" valign="top"><p>933,514</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Deferred consulting</p>
</td>
<td width="19%" align="right" valign="top"><p>(1,163,149)</p>
</td>
<td width="19%" align="right" valign="top"><p>(1,397,642)</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>(2,352,825)</p>
</td>
<td width="19%" align="right" valign="top"><p>(4,678,209)</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>$229,528</p>
</td>
<td width="19%" align="right" valign="top"><p>$410,316</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>
<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>YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="center" valign="top"><p>2001</p>
</td>
<td width="17%" align="center" valign="top"><p>2000</p>
</td>
<td width="18%" align="center" valign="top"><p>1999</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="center" valign="top"><p>__________</p>
</td>
<td width="17%" align="center" valign="top"><p>__________</p>
</td>
<td width="18%" align="center" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>REVENUES</p>
</td>
<td width="18%" valign="top"><p>&#160;</p>
</td>
<td width="17%" valign="top"><p>&#160;</p>
</td>
<td width="18%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;Revenues</p>
</td>
<td width="18%" align="right" valign="top"><p>$7,446</p>
</td>
<td width="17%" align="right" valign="top"><p>$1,781,082</p>
</td>
<td width="18%" align="right" valign="top"><p>$2,268,511</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;Equipment sales</p>
</td>
<td width="18%" align="right" valign="top"><p>0</p>
</td>
<td width="17%" align="right" valign="top"><p>91,547</p>
</td>
<td width="18%" align="right" valign="top"><p>278,714</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>Internet access costs, cost of goods sold</p>
</td>
<td width="18%" align="right" valign="top"><p>(11,999)</p>
</td>
<td width="17%" align="right" valign="top"><p>(2,145,955)</p>
</td>
<td width="18%" align="right" valign="top"><p>(1,152,721)</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>Inventory write-down</p>
</td>
<td width="18%" align="right" valign="top"><p>(97,526)</p>
</td>
<td width="17%" align="right" valign="top"><p>0</p>
</td>
<td width="18%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>__________</p>
</td>
<td width="17%" align="right" valign="top"><p>__________</p>
</td>
<td width="18%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>Gross profit (loss)</p>
</td>
<td width="18%" align="right" valign="top"><p>(102,079)</p>
<p>_________</p>
</td>
<td width="17%" align="right" valign="top"><p>(273,326)</p>
<p>__________</p>
</td>
<td width="18%" align="right" valign="top"><p>1,394,504</p>
<p>__________</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>OPERATING EXPENSES</p>
</td>
<td width="18%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;Depreciation and amortization</p>
</td>
<td width="18%" align="right" valign="top"><p>70,105</p>
</td>
<td width="17%" align="right" valign="top"><p>7,618,755</p>
</td>
<td width="18%" align="right" valign="top"><p>7,653,924</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;Professional fees</p>
</td>
<td width="18%" align="right" valign="top"><p>1,803,751</p>
</td>
<td width="17%" align="right" valign="top"><p>4,168,610</p>
</td>
<td width="18%" align="right" valign="top"><p>1,945,935</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;Rent</p>
</td>
<td width="18%" align="right" valign="top"><p>28,528</p>
</td>
<td width="17%" align="right" valign="top"><p>216,416</p>
</td>
<td width="18%" align="right" valign="top"><p>132,395</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;Salaries and commissions</p>
</td>
<td width="18%" align="right" valign="top"><p>856,124</p>
</td>
<td width="17%" align="right" valign="top"><p>2,060,528</p>
</td>
<td width="18%" align="right" valign="top"><p>1,603,556</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;Advertising</p>
</td>
<td width="18%" align="right" valign="top"><p>0</p>
</td>
<td width="17%" align="right" valign="top"><p>24,583</p>
</td>
<td width="18%" align="right" valign="top"><p>125,034</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;Other</p>
</td>
<td width="18%" align="right" valign="top"><p>93,602</p>
</td>
<td width="17%" align="right" valign="top"><p>886,691</p>
</td>
<td width="18%" align="right" valign="top"><p>399,914</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>__________</p>
</td>
<td width="17%" align="right" valign="top"><p>__________</p>
</td>
<td width="18%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>2,852,110</p>
</td>
<td width="17%" align="right" valign="top"><p>14,975,583</p>
</td>
<td width="18%" align="right" valign="top"><p>11,860,758</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>__________</p>
</td>
<td width="17%" align="right" valign="top"><p>__________</p>
</td>
<td width="18%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>LOSS FROM OPERATIONS</p>
</td>
<td width="18%" align="right" valign="top"><p>(2,954,189)</p>
<p>__________</p>
</td>
<td width="17%" align="right" valign="top"><p>(15,248,909)</p>
<p>__________</p>
</td>
<td width="18%" align="right" valign="top"><p>(10,466,254)</p>
<p>__________</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>OTHER INCOME (EXPENSE)</p>
</td>
<td width="18%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;Other income</p>
<p>&#160;Litigation settlement</p>
</td>
<td width="18%" align="right" valign="top"><p>0</p>
<p>0</p>
</td>
<td width="17%" align="right" valign="top"><p>67,447</p>
<p>0</p>
</td>
<td width="18%" align="right" valign="top"><p>23,875</p>
<p>(957,075)</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;Impairment loss</p>
</td>
<td width="18%" align="right" valign="top"><p>(31,118)</p>
</td>
<td width="17%" align="right" valign="top"><p>(9,239,310)</p>
</td>
<td width="18%" align="right" valign="top"><p>(1,164,561)</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;Interest expense</p>
</td>
<td width="18%" align="right" valign="top"><p>(3,066)</p>
</td>
<td width="17%" align="right" valign="top"><p>(21,418)</p>
</td>
<td width="18%" align="right" valign="top"><p>(19,309)</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>__________</p>
</td>
<td width="17%" align="right" valign="top"><p>__________</p>
</td>
<td width="18%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>(34,184)</p>
<p>__________</p>
</td>
<td width="17%" align="right" valign="top"><p>(9,193,281)</p>
<p>___________</p>
</td>
<td width="18%" align="right" valign="top"><p>(2,117,070)</p>
<p>__________</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>LOSS BEFORE EXTRAORDINARY
ITEMS</p>
</td>
<td width="18%" align="right" valign="top"><p>(2,988,373)</p>
<p>__________</p>
</td>
<td width="17%" align="right" valign="top"><p>(24,442,190)</p>
<p>__________</p>
</td>
<td width="18%" align="right" valign="top"><p>(12,583,324)</p>
<p>__________</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>EXTRAORDINARY ITEMS</p>
</td>
<td width="18%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="17%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>Gain on debt forgiveness</p>
</td>
<td width="18%" align="right" valign="top"><p>489,905</p>
</td>
<td width="17%" align="right" valign="top"><p>0</p>
</td>
<td width="18%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>Gain on rescission</p>
</td>
<td width="18%" align="right" valign="top"><p>0</p>
</td>
<td width="17%" align="right" valign="top"><p>961,436</p>
</td>
<td width="18%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>__________</p>
</td>
<td width="17%" align="right" valign="top"><p>__________</p>
</td>
<td width="18%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>489,905</p>
</td>
<td width="17%" align="right" valign="top"><p>961,436</p>
</td>
<td width="18%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>__________</p>
</td>
<td width="17%" align="right" valign="top"><p>__________</p>
</td>
<td width="18%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>LOSS BEFORE INCOME TAX</p>
</td>
<td width="18%" align="right" valign="top"><p>(2,498,468)</p>
</td>
<td width="17%" align="right" valign="top"><p>(23,480,754)</p>
</td>
<td width="18%" align="right" valign="top"><p>(12,583,324)</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>INCOME TAX BENEFIT</p>
</td>
<td width="18%" align="right" valign="top"><p>0</p>
</td>
<td width="17%" align="right" valign="top"><p>1,595,424</p>
</td>
<td width="18%" align="right" valign="top"><p>1,653,161</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>__________</p>
</td>
<td width="17%" align="right" valign="top"><p>__________</p>
</td>
<td width="18%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>NET LOSS</p>
</td>
<td width="18%" align="right" valign="top"><p>$(2,498,468)</p>
</td>
<td width="17%" align="right" valign="top"><p>$(21,885,330)</p>
</td>
<td width="18%" align="right" valign="top"><p>$(10,930,163)</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>=========</p>
</td>
<td width="17%" align="right" valign="top"><p>=========</p>
</td>
<td width="18%" align="right" valign="top"><p>========</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>Net loss per common share</p>
</td>
<td width="18%" align="right" valign="top"><p>$(0.13)</p>
</td>
<td width="17%" align="right" valign="top"><p>$(1.68)</p>
</td>
<td width="18%" align="right" valign="top"><p>$(0.96)</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>=========</p>
</td>
<td width="17%" align="right" valign="top"><p>=========</p>
</td>
<td width="18%" align="right" valign="top"><p>========</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>Weighted average number of shares
outstanding</p>
</td>
<td width="18%" align="right" valign="top"><p>18,616,434</p>
</td>
<td width="17%" align="right" valign="top"><p>13,000,391</p>
</td>
<td width="18%" align="right" valign="top"><p>11,419,641</p>
</td>
</tr>
<tr>
<td width="47%" valign="top"><p>&#160;</p>
</td>
<td width="18%" align="right" valign="top"><p>=========</p>
</td>
<td width="17%" align="right" valign="top"><p>=========</p>
</td>
<td width="18%" align="right" valign="top"><p>========</p>
</td>
</tr>
</table>
<br>
<p>The accompanying notes are an integral part of these statements.</p>
<br>
<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 CHANGES IN STOCKHOLDERS&#8217; DEFICIT</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="13%" valign="top"><p>&#160;</p>
</td>
<td width="13%" align="center" valign="top"><p>Shares</p>
</td>
<td width="13%" align="center" valign="top"><p>Common
Stock</p>
</td>
<td width="13%" align="center" valign="top"><p>Paid-in
Capital</p>
</td>
<td width="13%" align="center" valign="top"><p>Accumulated
Deficit</p>
</td>
<td width="13%" align="center" valign="top"><p>Subscriptions
Receivable</p>
</td>
<td width="13%" align="center" valign="top"><p>Deferred
Consulting</p>
</td>
<td width="9%" align="center" valign="top"><p>Total</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>&#160;</p>
</td>
<td width="13%" align="center" valign="top"><p>___________</p>
</td>
<td width="13%" align="center" valign="top"><p>___________</p>
</td>
<td width="13%" align="center" valign="top"><p>___________</p>
</td>
<td width="13%" align="center" valign="top"><p>___________</p>
</td>
<td width="13%" align="center" valign="top"><p>___________</p>
</td>
<td width="13%" align="center" valign="top"><p>___________</p>
</td>
<td width="9%" align="center" valign="top"><p>___________</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Balance,
12/31/98</p>
</td>
<td width="13%" align="right" valign="top"><p>8,497,259</p>
</td>
<td width="13%" align="right" valign="top"><p>850</p>
</td>
<td width="13%" align="right" valign="top"><p>2,874,189</p>
</td>
<td width="13%" align="right" valign="top"><p>(1,686,667)</p>
</td>
<td width="13%" align="right" valign="top"><p>(860)</p>
</td>
<td width="13%" align="right" valign="top"><p>(1,102,924)</p>
</td>
<td width="9%" align="right" valign="top"><p>84,588</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Issuance
of
common
stock for
future
services</p>
</td>
<td width="13%" align="right" valign="top"><p>566,000</p>
</td>
<td width="13%" align="right" valign="top"><p>57</p>
</td>
<td width="13%" align="right" valign="top"><p>2,215,943</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>(2,216,000)</p>
</td>
<td width="9%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Issuance
of
common
stock for
acquisitions</p>
</td>
<td width="13%" align="right" valign="top"><p>3,030,000</p>
</td>
<td width="13%" align="right" valign="top"><p>303</p>
</td>
<td width="13%" align="right" valign="top"><p>21,586,726</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>21,587,029</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Issuance
of
common
stock for
cash</p>
</td>
<td width="13%" align="right" valign="top"><p>115,000</p>
</td>
<td width="13%" align="right" valign="top"><p>11</p>
</td>
<td width="13%" align="right" valign="top"><p>394,989</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>395,000</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Exercise
of
warrants</p>
</td>
<td width="13%" align="right" valign="top"><p>176,857</p>
</td>
<td width="13%" align="right" valign="top"><p>18</p>
</td>
<td width="13%" align="right" valign="top"><p>337,304</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>337,322</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Issuance
of
subscription
agreement</p>
</td>
<td width="13%" align="right" valign="top"><p>50,000</p>
</td>
<td width="13%" align="right" valign="top"><p>5</p>
</td>
<td width="13%" align="right" valign="top"><p>149,995</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>(150,000)</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Proceeds
on
subscription
receivable</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>150,000</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>150,000</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Issuance
of stock
per
employment
agreement</p>
</td>
<td width="13%" align="right" valign="top"><p>11,000</p>
</td>
<td width="13%" align="right" valign="top"><p>1</p>
</td>
<td width="13%" align="right" valign="top"><p>43,311</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>43,312</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Expenses
to be
paid by
issuance
of
common
stock</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>257,167</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>257,167</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Issuance
of
common
stock for
settlement</p>
</td>
<td width="13%" align="right" valign="top"><p>340,000</p>
</td>
<td width="13%" align="right" valign="top"><p>34</p>
</td>
<td width="13%" align="right" valign="top"><p>913,716</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>913,750</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Stock
warrants</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>145,298</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>145,298</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Amortization of
deferred
consulting</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>1,457,006</p>
</td>
<td width="9%" align="right" valign="top"><p>1,457,006</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Net loss</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>(10,930,163)</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>(10,930,163)</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>&#160;</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="9%" align="right" valign="top"><p>___________</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="13%" valign="top"><p>Balance,
12/31/99</p>
</td>
<td width="13%" align="right" valign="top"><p>12,786,116</p>
</td>
<td width="13%" align="right" valign="top"><p>1,279</p>
</td>
<td width="13%" align="right" valign="top"><p>28,918,638</p>
</td>
<td width="13%" align="right" valign="top"><p>(12,616,830)</p>
</td>
<td width="13%" align="right" valign="top"><p>(860)</p>
</td>
<td width="13%" align="right" valign="top"><p>(1,861,918)</p>
</td>
<td width="9%" align="right" valign="top"><p>14,440,309</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Issuance
of
common
stock for
future
services</p>
</td>
<td width="13%" align="right" valign="top"><p>425,227</p>
</td>
<td width="13%" align="right" valign="top"><p>42</p>
</td>
<td width="13%" align="right" valign="top"><p>958,138</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>(958,180)</p>
</td>
<td width="9%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Issuance
of
common
stock for
cash</p>
</td>
<td width="13%" align="right" valign="top"><p>400,000</p>
</td>
<td width="13%" align="right" valign="top"><p>40</p>
</td>
<td width="13%" align="right" valign="top"><p>79,960</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>(10,000)</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>70,000</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Issuance
of
subscription
agreement</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>(25,000)</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>(25,000)</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Issuance
of stock
per
employment
agreement</p>
</td>
<td width="13%" align="right" valign="top"><p>19,642</p>
</td>
<td width="13%" align="right" valign="top"><p>2</p>
</td>
<td width="13%" align="right" valign="top"><p>115,080</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>115,082</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Expenses
paid by
issuance
of
common
stock</p>
</td>
<td width="13%" align="right" valign="top"><p>290,000</p>
</td>
<td width="13%" align="right" valign="top"><p>29</p>
</td>
<td width="13%" align="right" valign="top"><p>214,871</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>214,900</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Conversion of
debt to
equity</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>969,374</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>969,374</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Amortization of
deferred
consulting</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>1,422,456</p>
</td>
<td width="9%" align="right" valign="top"><p>1,422,456</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Net loss</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>(21,885,330)</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>(21,885,330)</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>&#160;</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="9%" align="right" valign="top"><p>___________</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Balance,
12/31/2000</p>
</td>
<td width="13%" align="right" valign="top"><p>13,920,985</p>
</td>
<td width="13%" align="right" valign="top"><p>1,392</p>
</td>
<td width="13%" align="right" valign="top"><p>30,286,687</p>
</td>
<td width="13%" align="right" valign="top"><p>(34,502,160)</p>
</td>
<td width="13%" align="right" valign="top"><p>933,514</p>
</td>
<td width="13%" align="right" valign="top"><p>(1,397,642)</p>
</td>
<td width="9%" align="right" valign="top"><p>(4,678,209)</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Plus:
shares
subject to
rescission</p>
</td>
<td width="13%" align="right" valign="top"><p>2,767,826</p>
<p>__________</p>
</td>
<td width="13%" align="right" valign="top"><p>277</p>
<p>__________</p>
</td>
<td width="13%" align="right" valign="top"><p>3,897,275</p>
<p>__________</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
<p>__________</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
<p>__________</p>
</td>
<td width="13%" align="right" valign="top"><p>(574,000)</p>
<p>__________</p>
</td>
<td width="9%" align="right" valign="top"><p>3,323,552</p>
<p>__________</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Balance,
12/31/2000</p>
</td>
<td width="13%" align="right" valign="top"><p>16,688,811</p>
</td>
<td width="13%" align="right" valign="top"><p>1,669</p>
</td>
<td width="13%" align="right" valign="top"><p>34,183,962</p>
</td>
<td width="13%" align="right" valign="top"><p>(34,502,160)</p>
</td>
<td width="13%" align="right" valign="top"><p>933,514</p>
</td>
<td width="13%" align="right" valign="top"><p>(1,971,642)</p>
</td>
<td width="9%" align="right" valign="top"><p>(1,354,657)</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Issuance
of
common
stock for
future
services</p>
</td>
<td width="13%" align="right" valign="top"><p>2,005,000</p>
</td>
<td width="13%" align="right" valign="top"><p>201</p>
</td>
<td width="13%" align="right" valign="top"><p>365,049</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>(365,250)</p>
</td>
<td width="9%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Professional fees
paid by
issuance
of
common
stock</p>
</td>
<td width="13%" align="right" valign="top"><p>1,534,500</p>
</td>
<td width="13%" align="right" valign="top"><p>154</p>
</td>
<td width="13%" align="right" valign="top"><p>526,956</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>527,110</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Compensa-tion
paid/pay-able by
issuance
of
common
stock</p>
</td>
<td width="13%" align="right" valign="top"><p>819,361</p>
</td>
<td width="13%" align="right" valign="top"><p>82</p>
</td>
<td width="13%" align="right" valign="top"><p>180,865</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>96,000</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>276,947</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Issuance
of
common
stock for
cash</p>
</td>
<td width="13%" align="right" valign="top"><p>2,500,000</p>
</td>
<td width="13%" align="right" valign="top"><p>250</p>
</td>
<td width="13%" align="right" valign="top"><p>340,000</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>340,250</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Stock
issuance
costs</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>(19,200)</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>(19,200)</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Exercise
of
warrants</p>
</td>
<td width="13%" align="right" valign="top"><p>100,000</p>
</td>
<td width="13%" align="right" valign="top"><p>10</p>
</td>
<td width="13%" align="right" valign="top"><p>14,990</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>(15,000)</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Stock
issued
for debt
conversion</p>
</td>
<td width="13%" align="right" valign="top"><p>774,162</p>
</td>
<td width="13%" align="right" valign="top"><p>77</p>
</td>
<td width="13%" align="right" valign="top"><p>943,437</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>(943,514)</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Issuance
of
subscription
agreement</p>
</td>
<td width="13%" align="right" valign="top"><p>1,545,000</p>
</td>
<td width="13%" align="right" valign="top"><p>154</p>
</td>
<td width="13%" align="right" valign="top"><p>291,846</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>(292,000)</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Subscription
agreement for
stock
bonus</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>27,000</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>27,000</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Proceeds
on
subscription
receivable</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>359,750</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>359,750</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Issuance
of
common
stock for
settlement</p>
</td>
<td width="13%" align="right" valign="top"><p>20,000</p>
</td>
<td width="13%" align="right" valign="top"><p>2</p>
</td>
<td width="13%" align="right" valign="top"><p>7,398</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>7,400</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Amortization of
deferred
consulting</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>1,173,743</p>
</td>
<td width="9%" align="right" valign="top"><p>1,173,743</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Net loss</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>(2,498,468)</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="13%" align="right" valign="top"><p>0</p>
</td>
<td width="9%" align="right" valign="top"><p>(2,498,468)</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>&#160;</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="9%" align="right" valign="top"><p>___________</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Balance
at
December 31,
2001</p>
</td>
<td width="13%" align="right" valign="top"><p>25,986,834</p>
</td>
<td width="13%" align="right" valign="top"><p>$2,599</p>
</td>
<td width="13%" align="right" valign="top"><p>$36,835,303</p>
</td>
<td width="13%" align="right" valign="top"><p>$(37,000,628)</p>
</td>
<td width="13%" align="right" valign="top"><p>$165,750</p>
</td>
<td width="13%" align="right" valign="top"><p>(1,163,149)</p>
</td>
<td width="9%" align="right" valign="top"><p>$(1,160,125)</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>Less:
shares
subject to
rescission</p>
</td>
<td width="13%" align="right" valign="top"><p>(2,138,726)</p>
</td>
<td width="13%" align="right" valign="top"><p>(214)</p>
</td>
<td width="13%" align="right" valign="top"><p>(1,192,486)</p>
</td>
<td width="13%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="13%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="13%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="9%" align="right" valign="top"><p>(1,192,700)</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>&#160;</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="13%" align="right" valign="top"><p>___________</p>
</td>
<td width="9%" align="right" valign="top"><p>___________</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>&#160;</p>
</td>
<td width="13%" align="right" valign="top"><p>23,848,108</p>
</td>
<td width="13%" align="right" valign="top"><p>$2,385</p>
</td>
<td width="13%" align="right" valign="top"><p>$35,642,817</p>
</td>
<td width="13%" align="right" valign="top"><p>$(37,000,628)</p>
</td>
<td width="13%" align="right" valign="top"><p>$165,750</p>
</td>
<td width="13%" align="right" valign="top"><p>$(1,163,149)</p>
</td>
<td width="9%" align="right" valign="top"><p>$(2,352,825)</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>&#160;</p>
</td>
<td width="13%" align="right" valign="top"><p>==========</p>
</td>
<td width="13%" align="right" valign="top"><p>==========</p>
</td>
<td width="13%" align="right" valign="top"><p>==========</p>
</td>
<td width="13%" align="right" valign="top"><p>==========</p>
</td>
<td width="13%" align="right" valign="top"><p>==========</p>
</td>
<td width="13%" align="right" valign="top"><p>==========</p>
</td>
<td width="9%" align="right" valign="top"><p>==========</p>
</td>
</tr>
</table>
<br>
<p>The accompanying notes are an integral part of these statements.</p>
<br>
<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>YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>2001</p>
</td>
<td width="19%" align="center" valign="top"><p>2000</p>
</td>
<td width="20%" align="center" valign="top"><p>1999</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="center" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>CASH FLOWS FROM OPERATING
ACTIVITIES</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>___________________________</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Net loss</p>
</td>
<td width="19%" align="right" valign="top"><p>$(2,498,468)</p>
</td>
<td width="19%" align="right" valign="top"><p>$(21,885,330)</p>
</td>
<td width="20%" align="right" valign="top"><p>$(10,930,163)</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Adjustments to reconcile net loss to
net cash used in operating activities</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Depreciation and amortization</p>
</td>
<td width="19%" align="right" valign="top"><p>70,105</p>
</td>
<td width="19%" align="right" valign="top"><p>7,618,755</p>
</td>
<td width="20%" align="right" valign="top"><p>7,653,924</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Consulting fees paid with stock</p>
</td>
<td width="19%" align="right" valign="top"><p>1,623,903</p>
</td>
<td width="19%" align="right" valign="top"><p>3,000,276</p>
</td>
<td width="20%" align="right" valign="top"><p>1,457,006</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Litigation settlement</p>
</td>
<td width="19%" align="right" valign="top"><p>7,400</p>
</td>
<td width="19%" align="right" valign="top"><p>214,900</p>
</td>
<td width="20%" align="right" valign="top"><p>913,750</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Gain on rescission</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="19%" align="right" valign="top"><p>(961,436)</p>
</td>
<td width="20%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Impairment loss and write down of
assets</p>
</td>
<td width="19%" align="right" valign="top"><p>128,644</p>
</td>
<td width="19%" align="right" valign="top"><p>10,577,878</p>
</td>
<td width="20%" align="right" valign="top"><p>1,164,561</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Legal fees paid with stock</p>
</td>
<td width="19%" align="right" valign="top"><p>66,000</p>
</td>
<td width="19%" align="right" valign="top"><p>281,498</p>
</td>
<td width="20%" align="right" valign="top"><p>126,500</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Compensation expense paid with
stock</p>
</td>
<td width="19%" align="right" valign="top"><p>303,947</p>
</td>
<td width="19%" align="right" valign="top"><p>774,066</p>
</td>
<td width="20%" align="right" valign="top"><p>319,301</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Deferred income taxes</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="19%" align="right" valign="top"><p>(1,595,423)</p>
</td>
<td width="20%" align="right" valign="top"><p>(1,653,161)</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Loss on Disposal</p>
<p>Gain on debt forgiveness</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
<p>(489,905)</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
<p>0</p>
</td>
<td width="20%" align="right" valign="top"><p>280</p>
<p>0</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Changes in operating assets and
liabilities</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Accounts receivable</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="19%" align="right" valign="top"><p>59,098</p>
</td>
<td width="20%" align="right" valign="top"><p>35,537</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Inventory</p>
</td>
<td width="19%" align="right" valign="top"><p>1,398</p>
</td>
<td width="19%" align="right" valign="top"><p>71,000</p>
</td>
<td width="20%" align="right" valign="top"><p>49,518</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Prepaid expenses and other current
assets</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="19%" align="right" valign="top"><p>5,500</p>
</td>
<td width="20%" align="right" valign="top"><p>7,980</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Accounts payable</p>
</td>
<td width="19%" align="right" valign="top"><p>(41,481)</p>
</td>
<td width="19%" align="right" valign="top"><p>1,108,365</p>
</td>
<td width="20%" align="right" valign="top"><p>(36,857)</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Accrued payroll</p>
</td>
<td width="19%" align="right" valign="top"><p>107,716</p>
</td>
<td width="19%" align="right" valign="top"><p>40,105</p>
</td>
<td width="20%" align="right" valign="top"><p>118,157</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Other current liabilities</p>
</td>
<td width="19%" align="right" valign="top"><p>13,172</p>
</td>
<td width="19%" align="right" valign="top"><p>(174,826)</p>
</td>
<td width="20%" align="right" valign="top"><p>215,929</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Other assets and liabilities</p>
<p>&#160;Deferred revenue</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
<p>0</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
<p>(87,538)</p>
</td>
<td width="20%" align="right" valign="top"><p>(11,555)</p>
<p>23,196</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Net cash used in operating activities</p>
</td>
<td width="19%" align="right" valign="top"><p>(707,569)</p>
</td>
<td width="19%" align="right" valign="top"><p>(953,112)</p>
</td>
<td width="20%" align="right" valign="top"><p>(546,097)</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>CASH FLOWS FROM INVESTING
ACTIVITIES</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>_____________________________</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Proceeds on disposal of fixed assets</p>
</td>
<td width="19%" align="right" valign="top"><p>$0</p>
</td>
<td width="19%" align="right" valign="top"><p>$40,050</p>
</td>
<td width="20%" align="right" valign="top"><p>$15,090</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Cash acquired in acquisitions</p>
<p>Capital expenditures</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
<p>(12,681)</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
<p>(125,200)</p>
</td>
<td width="20%" align="right" valign="top"><p>186,318</p>
<p>(614,193)</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Net cash used in investing activities</p>
</td>
<td width="19%" align="right" valign="top"><p>(12,681)</p>
</td>
<td width="19%" align="right" valign="top"><p>(85,150)</p>
</td>
<td width="20%" align="right" valign="top"><p>(412,785)</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>CASH FLOWS FROM FINANCING
ACTIVITIES</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>____________________________</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Payments on notes payable</p>
</td>
<td width="19%" align="right" valign="top"><p>$0</p>
</td>
<td width="19%" align="right" valign="top"><p>$(5,910)</p>
</td>
<td width="20%" align="right" valign="top"><p>$(65,369)</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Disbursements in excess of cash
balances</p>
</td>
<td width="19%" align="right" valign="top"><p>15,539</p>
</td>
<td width="19%" align="right" valign="top"><p>42,469</p>
</td>
<td width="20%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Payments on notes payable -
stockholder</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="19%" align="right" valign="top"><p>(11,093)</p>
</td>
<td width="20%" align="right" valign="top"><p>(25,000)</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Payments on subscriptions receivable</p>
</td>
<td width="19%" align="right" valign="top"><p>359,750</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="20%" align="right" valign="top"><p>150,000</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Proceeds from note payable -
stockholder</p>
</td>
<td width="19%" align="right" valign="top"><p>11,883</p>
</td>
<td width="19%" align="right" valign="top"><p>568,571</p>
</td>
<td width="20%" align="right" valign="top"><p>235,010</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Issuance of common stock for cash</p>
<p>Warrants exercised</p>
</td>
<td width="19%" align="right" valign="top"><p>340,000</p>
<p>0</p>
</td>
<td width="19%" align="right" valign="top"><p>370,000</p>
<p>0</p>
</td>
<td width="20%" align="right" valign="top"><p>395,000</p>
<p>337,322</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Fee for stock issuances</p>
</td>
<td width="19%" align="right" valign="top"><p>(8,000)</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="20%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Net cash provided by financing
activities</p>
</td>
<td width="19%" align="right" valign="top"><p>719,172</p>
</td>
<td width="19%" align="right" valign="top"><p>964,037</p>
</td>
<td width="20%" align="right" valign="top"><p>1,026,963</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Net increase (decrease) in cash and
cash equivalents</p>
</td>
<td width="19%" align="right" valign="top"><p>(1,078)</p>
</td>
<td width="19%" align="right" valign="top"><p>(74,225)</p>
</td>
<td width="20%" align="right" valign="top"><p>68,081</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Cash and cash equivalents, Beginning
of period</p>
</td>
<td width="19%" align="right" valign="top"><p>1,088</p>
</td>
<td width="19%" align="right" valign="top"><p>75,313</p>
</td>
<td width="20%" align="right" valign="top"><p>7,232</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Cash and cash equivalents, End of
period</p>
</td>
<td width="19%" align="right" valign="top"><p>$10</p>
</td>
<td width="19%" align="right" valign="top"><p>$1,088</p>
</td>
<td width="20%" align="right" valign="top"><p>$75,313</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" 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>&#160;</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</p>
</td>
</tr>
</table>
<br>
<p>1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</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. Intercompany transactions and balances have been eliminated in the
consolidation.</p>
<br>
<p>Use of Estimates</p>
<br>
<p>The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period.  Actual results could differ from those estimates.</p>
<br>
<p>Cash Equivalents</p>
<br>
<p>The Company considers all highly liquid investments with original maturities of three months or
less from the date of purchase to be cash equivalents.</p>
<br>
<p>Inventory</p>
<br>
<p>Inventories are stated at the lower of cost or market, and represents modems purchased from
suppliers.  During 2001, the Company determined that certain items of its inventory had become
impaired and recorded a write-down of its inventory in the approximate amount of $98,000.</p>
<br>
<p>Property and Equipment</p>
<br>
<p>Property and equipment are stated at cost and are depreciated principally by the straight-line
method over the estimated useful lives (5 years) of the assets.</p>
<br>
<p>Revenue Recognition</p>
<br>
<p>Until September 2000, the Company maintained license agreements with affiliate ISP&#8217;s to
provide internet access to affiliates&#8217; customers. License fees were typically billed in the month
the services were provided. The Company charges direct customers (residential and business
subscribers) monthly access fees to the internet and recognizes the revenue in the month the
access is provided.  The Company has contracted with a reseller in Del Rio, Texas, with respect
to the marketing of its wireless Internet access service.  This reseller is paid, from the gross
receipts of the Company, a monthly per-customer commission.</p>
<br>
<p>Costs of Access Revenues</p>
<br>
<p>For 2000, costs of access revenues primarily consist of telecommunications expenses inherent in
the network infrastructure.  Costs of access expenses also include fees paid for lease of the
Company&#8217;s backbone, as well as license fees for Web browser software based on a per-user
charge, other license fees paid to third-party software vendors, product costs, and contractor fees
for distribution of software to new subscribers.</p>
<br>
<p>Income Taxes</p>
<br>
<p>Deferred income tax assets and liabilities are computed for differences between financial
statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in
the future based on enacted tax laws and rates applicable to the period in which the differences
are expected to affect taxable income. Valuation allowances are established when realization is
less than 50% probable. Income tax expense is the tax payable or refundable for the period
adjusted for the change during the period in deferred tax assets and liabilities.</p>
<br>
<p>Financial Instruments and Concentration of Credit Risk</p>
<br>
<p>Financial instruments, which potentially subject the Company to concentrations of credit risk,
consist principally of cash.  The Company maintains its cash in bank deposit accounts, which, at
times, may exceed federally insured limits.  The Company has not experienced any losses in such
accounts and believes it is not exposed to any significant credit risk on cash.</p>
<br>
<p>Fair Values of Financial Instruments</p>
<br>
<p>The carrying amounts of financial instruments including cash, trade receivables, accounts
payable and accrued expenses approximate fair value because of the immediate or short-term
maturities of these instruments. The difference between the carrying amount and fair value of the
Company&#8217;s rescission shares is not significant (see Note 20).</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>Goodwill and Other Intangible Assets</p>
<br>
<p>On January 29, 1999, the Company acquired all the stock of CyberHighway, Inc., a Boise, Idaho-based ISP, by issuing 2,000,000 shares of stock valued at approximately $15,940,000.  In
addition, 325,000 shares of common stock were issued in payment of a finder's fee arising out of
this acquisition. This acquisition was accounted for as a purchase business combination.  See
Note 13.</p>
<br>
<p>During 1999, the Company acquired two private companies and certain assets of two other
private companies.  In these acquisitions, the Company issued a total of 306,000 shares with an
assigned approximate value of $1,195,000.  During 2000, the Company acquired two private
companies.  In these acquisitions, the Company issued a total of 131,063 shares with an assigned
approximate value of $762,000.  All of these acquisitions were accounted for as purchase
business combinations.  None of these acquired companies had significant operations at the time
they were acquired by the Company.  Therefore, proforma disclosure of what operations would
have been as if the transactions had occurred at the beginning of the period are not shown, due to
the transactions&#8217; being immaterial to the financial statements taken as a whole.</p>
<br>
<p>Goodwill and other intangible assets, primarily acquired customer bases, were stated on the basis
of cost and were amortized, principally on a straight-line basis, over the estimated future periods
to be benefitted (generally 3 years).  Goodwill and other intangible assets were reviewed for
impairment to ensure they were appropriately valued.  A change in the operations of a subsidiary
in 2000 indicated the existence of an impairment issue.</p>
<br>
<p>Due to the demise of the dial-up Internet access business of the CyberHighway subsidiary,
associated goodwill and other intangibles were impaired at December 31, 2000, and were
expensed in the amounts of $4,425,037 and $4,814,272 (net of deferred taxes of $2,531,497),
respectively.</p>
<br>
<p>Advertising</p>
<br>
<p>The Company expenses advertising costs as incurred.  During the years ended December 31,
2000 and 1999, the Company incurred approximately $25,000 and $125,000 in advertising costs,
respectively.</p>
<br>
<p>Investments</p>
<br>
<p>Effective December 31, 1996, the Company acquired all of the outstanding common stock of
Winter Entertainment, Inc., a Delaware corporation (WEI), and Missouri Cable TV Corp., a
Louisiana corporation (MCTV).  Effective October 8, 1998, the Company formed Santa Fe
Wireless Internet, Inc. (Santa Fe), a New Mexico corporation, to hold the assets acquired from
Desert Rain Internet Services.  Santa Fe was organized to provide wireless internet access.  The
acquisition of WEI and MCTV by the Company was accounted for as a reorganization of
companies under common control.  The assets and liabilities acquired were recorded at historical
cost in a manner similar to a pooling of interests.  The acquisition of Desert Rain was accounted
for as a purchase whereby cost is allocated to the assets acquired.</p>
<br>
<p>Investments include minority interests held in three non-public companies.  All of these
investments were impaired at December 31, 2001, and were written-down in the total amount of
$24,279.  This impairment was caused by the uncertainty of the value of these non-public
companies.  The Company has ceased efforts to develop its wireless cable and low power
television businesses and the values of all of the assets associated with them have been written-down.</p>
<br>
<p>Stock for Services</p>
<br>
<p>The Company has issued stock pursuant to various consulting agreements. Deferred consulting
costs, which are valued at the stock price on the date of the agreements, are recorded as a
reduction of stockholders' equity and are amortized over the respective lives of the agreements.</p>
<br>
<p>2. NET 1, INC. ACQUISITION</p>
<br>
<p>In August 1999, the Company acquired Net 1, Inc. (Net 1) in a business combination accounted
for as a purchase.  Net 1 was primarily engaged as an ISP in Alabama.  In September 1999, the
Company tendered the shares of capital stock obtained in the acquisition of Net 1 for rescission
of the transaction.  However, legally the Company was still the owner of the outstanding shares
of Net 1 at December 31, 1999, and is required by U.S. generally accepted accounting principles
to record Net 1 as a wholly owned subsidiary from the date of acquisition.</p>
<br>
<p>It was discovered during arbitration proceedings that no activity occurred in the newly acquired
subsidiary, Net 1, after the acquisition.  The customer base was moved to an unrelated company
by a former owner, and all activity was transacted in the unrelated company.  Therefore, no
revenues or expenses were incurred by Net 1 from the date of acquisition, August 23, 1999
through December 31, 1999.</p>
<br>
<p>The total cost of the acquisition was $1,164,561, which exceeded fair value of the net assets of
Net 1 by $1,164,561.  The excess was deemed to be impaired at December 31, 1999 due to the
change in the operating environment and was recorded in the accompanying financial statements
as an impairment loss.</p>
<br>
<p>In October 2000, the acquisition of Net 1 was rescinded.  Included in the terms of the settlement
agreement was the return of  the 250,000 shares issued in the original transaction to the
Company. The Company then issued 250,000 shares of stock in settlement of the arbitration.
The agreement also called for one of the former owners to assume a $50,000 liability, that was
recorded by USURF upon the acquisition.  The total gain on the rescission of the transaction was
approximately $960,000.</p>
<br>
<p>3. PROPERTY AND EQUIPMENT</p>
<br>
<p>Classifications of property and equipment and accumulated depreciation were as follows at
December 31, 2001 and 2000:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>2001</p>
</td>
<td width="19%" align="center" valign="top"><p>2000</p>
</td>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Furniture, fixtures and equipment</p>
</td>
<td width="19%" align="right" valign="top"><p>203,141</p>
</td>
<td width="19%" align="right" valign="top"><p>138,954</p>
</td>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Accumulated depreciation</p>
</td>
<td width="19%" align="right" valign="top"><p>(125,036)</p>
</td>
<td width="19%" align="right" valign="top"><p>(69,476)</p>
</td>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Property and equipment, net</p>
</td>
<td width="19%" align="right" valign="top"><p>$78,105</p>
</td>
<td width="19%" align="right" valign="top"><p>$69,478</p>
</td>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p>4. INTANGIBLES</p>
<br>
<p>Classification of intangibles and accumulated amortization at December 31st were as follows:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>2001</p>
</td>
<td width="19%" align="center" valign="top"><p>2000</p>
</td>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Website</p>
</td>
<td width="19%" align="right" valign="top"><p>25,000</p>
</td>
<td width="19%" align="right" valign="top"><p>25,000</p>
</td>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Accumulated amortization</p>
</td>
<td width="19%" align="right" valign="top"><p>(8,333)</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>$16,667</p>
</td>
<td width="19%" align="right" valign="top"><p>$25,000</p>
</td>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p>5. WIRELESS CABLE ASSETS</p>
<br>
<p>Property and equipment includes wireless cable station equipment.  The equipment was
determined to be impaired at December 31, 2000 and its cost of approximately $188,000 was
written off.  In addition, the Company owns licenses in the wireless cable markets, which operate
on the same frequencies and are able to be used in the wireless Internet market.</p>
<br>
<p>6. LICENSES AND RIGHTS TO LEASES OF LICENSES</p>
<br>
<p>The Company owns licenses or rights to leases of licenses in the following wireless cable and
community television markets:</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>Wireless Cable Market</p>
</td>
<td width="31%" align="center" valign="top"><p>Expiration Date</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%" valign="top"><p>Poplar Bluff, Missouri</p>
</td>
<td width="31%" align="center" valign="top"><p>October 16, 2006</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%" valign="top"><p>Lebanon, Missouri</p>
</td>
<td width="31%" align="center" valign="top"><p>October 16, 2006</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%" valign="top"><p>Port Angeles, Washington</p>
</td>
<td width="31%" align="center" valign="top"><p>December 21, 2003</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%" valign="top"><p>Astoria, Oregon</p>
</td>
<td width="31%" align="center" valign="top"><p>December 21, 2003</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%" valign="top"><p>Sand Point, Idaho</p>
</td>
<td width="31%" align="center" valign="top"><p>August 09, 2006</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%" valign="top"><p>The Dalles, Oregon</p>
</td>
<td width="31%" align="center" valign="top"><p>August 09, 2006</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%" valign="top"><p>Fallon, Nevada</p>
</td>
<td width="31%" align="center" valign="top"><p>August 09, 2006</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p>Application for renewal of licenses must be filed within a certain period prior to expiration.</p>
<br>
<p>7. NOTE PAYABLE TO STOCKHOLDER</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>2001</p>
</td>
<td width="19%" align="center" valign="top"><p>2000</p>
</td>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Note payable to stockholder, interest
accrues at 8%, due on demand and
unsecured</p>
</td>
<td width="19%" align="center" valign="top"><p>$18,521</p>
</td>
<td width="19%" align="center" valign="top"><p>$ 6,638</p>
</td>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p>8. LOAN CONVERSION - STOCKHOLDER</p>
<br>
<p>As of August 21, 2000, the Company owed its president a total of $967,703 ($916,045 in
principal, $51,658 in interest), the result of cash loans made to the Company by this officer
during the previous approximately two years.  On August 21, 2000, the Company entered into a
letter of agreement with this officer, whereby this officer agreed to convert all sums owed to him
into shares of Company common stock.</p>
<br>
<p>Pursuant to the letter agreement, this officer received one share of common stock for every $1.25
of debt converted, for a total of 774,162 shares.  The $1.25 price was agreed upon as that price
was the low price for the Company's common stock on Friday, August 18, 2000, as reported by
the American Stock Exchange.  The Company's board of directors, in authorizing the transaction
described above, found the transaction to be in the best interest of USURF America.  The
issuance of shares was not complete until the first quarter of 2001, therefore, the substance of this
transaction was reflected as stock subscription, as of December 31, 2000, in the accompanying
financial statements.</p>
<br>
<p>9. INCOME TAXES</p>
<br>
<p>The significant components of deferred tax assets and liabilities were as follows at December
31st:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>2001</p>
</td>
<td width="19%" align="center" valign="top"><p>2000</p>
</td>
<td width="20%" align="center" valign="top"><p>1999</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="center" valign="top"><p>____________</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>Deferred tax liabilities</p>
<p>&#160;Amortization of intangibles</p>
<br>
<p>Deferred tax assets</p>
</td>
<td width="19%" align="right" valign="top"><br>
<p>$0</p>
</td>
<td width="19%" align="right" valign="top"><br>
<p>$0</p>
</td>
<td width="20%" align="right" valign="top"><br>
<p>$3,883,210</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Net operating loss carryforwards</p>
</td>
<td width="19%" align="right" valign="top"><p>$4,589,067</p>
</td>
<td width="19%" align="right" valign="top"><p>$3,739,588</p>
</td>
<td width="20%" align="right" valign="top"><p>$2,313,159</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;Less - valuation allowance</p>
</td>
<td width="19%" align="right" valign="top"><p>(4,589,067)</p>
</td>
<td width="19%" align="right" valign="top"><p>(3,739,588)</p>
</td>
<td width="20%" align="right" valign="top"><p>(2,313,159)</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="right" valign="top"><p>____________</p>
</td>
</tr>
<tr>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>$0</p>
</td>
<td width="19%" align="right" valign="top"><p>$0</p>
</td>
<td width="20%" align="right" valign="top"><p>$3,883,210</p>
</td>
</tr>
<tr>
<td width="42%" 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>
<td width="20%" align="right" valign="top"><p>===========</p>
</td>
</tr>
</table>
<br>
<p>The net change in the valuation allowance for the periods ended December 31, 2001, 2000 and
1999, was $849,479, $1,426,429 and $1,739,692, respectively.</p>
<br>
<p>The deferred tax liability results from the acquisitions of Cyberhighway, Inc., Santa Fe Trail
Internet Plus, Inc., and Premier Internet Services, Inc. in tax free reorganizations, in which there
is no tax basis in the acquired customer base.</p>
<br>
<p>The Company has a net operating loss carry forward available to offset future income for income
tax reporting purposes, which will begin to expire in 2011.</p>
<br>
<p>10. SOURCES OF SUPPLIES</p>
<br>
<p>The Company relies on local telephone companies and other companies to provide data
communications.  Although management believes alternative telecommunications facilities could
be found in a timely manner, any disruption of these services could have an adverse effect on
operating results.</p>
<br>
<p>During 2000, the Company purchased all of its network radios from one supplier.  Currently, the
Company is able to purchase modem components from numerous suppliers and assembles its
modems in its Baton Rouge, Louisiana, facility.</p>
<br>
<p>11. STOCK COMPENSATION</p>
<br>
<p>In December 2000, a total of 500,000 shares of common stock were issued to two officers as
bonuses for their services as officers.  Compensation expense of approximately $125,000 was
recorded based on the fair value of the common stock on the date of issue.</p>
<br>
<p>In October 2001, 700,000 shares were issued to an officer as a bonus for his services as an
officer.  Compensation expense of approximately $133,000 was recorded based on the fair value
of the common stock on the date of issue.</p>
<br>
<p>In December 2001, 200,000 shares were awarded to an officer as a bonus for his services as an
officer.  Compensation expense of approximately $18,000 was recorded based on the fair value
of the common stock on the date of issue.  These shares were authorized in 2001 and were issued
in 2002.</p>
<br>
<p>12. WARRANTS</p>
<br>
<p>During 2001, the Company issued warrants to purchase 4,124,250 shares of common stock at
various share prices.  Warrants outstanding at December 31, 2001, consist of the following:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>Number of Warrants</p>
</td>
<td width="27%" align="center" valign="top"><p>Exercise Price</p>
</td>
<td width="26%" align="center" valign="top"><p>Expiration Date</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>________________</p>
</td>
<td width="27%" align="center" valign="top"><p>________________</p>
</td>
<td width="26%" align="center" valign="top"><p>________________</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>56,667</p>
</td>
<td width="27%" align="center" valign="top"><p>$1.25</p>
</td>
<td width="26%" align="center" valign="top"><p>May 2003</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>56,667</p>
</td>
<td width="27%" align="center" valign="top"><p>$1.50</p>
</td>
<td width="26%" align="center" valign="top"><p>May 2003</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>12,143</p>
</td>
<td width="27%" align="center" valign="top"><p>$1.25</p>
</td>
<td width="26%" align="center" valign="top"><p>May 2004</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>60,000</p>
</td>
<td width="27%" align="center" valign="top"><p>$7.00</p>
</td>
<td width="26%" align="center" valign="top"><p>May 2002</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>35,000</p>
</td>
<td width="27%" align="center" valign="top"><p>$7.00</p>
</td>
<td width="26%" align="center" valign="top"><p>May 2002</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>60,000*</p>
</td>
<td width="27%" align="center" valign="top"><p>$3.50</p>
</td>
<td width="26%" align="center" valign="top"><p>December 2004</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>50,000</p>
</td>
<td width="27%" align="center" valign="top"><p>$6.00</p>
</td>
<td width="26%" align="center" valign="top"><p>September 2002</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>65,000</p>
</td>
<td width="27%" align="center" valign="top"><p>$7.50</p>
</td>
<td width="26%" align="center" valign="top"><p>March 2002</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>380,000</p>
</td>
<td width="27%" align="center" valign="top"><p>$.20</p>
</td>
<td width="26%" align="center" valign="top"><p>December 2003</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>840,000</p>
</td>
<td width="27%" align="center" valign="top"><p>$.15</p>
</td>
<td width="26%" align="center" valign="top"><p>February 2004</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>336,000</p>
</td>
<td width="27%" align="center" valign="top"><p>$.15</p>
</td>
<td width="26%" align="center" valign="top"><p>February 2004</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>500,000</p>
</td>
<td width="27%" align="center" valign="top"><p>$.25</p>
</td>
<td width="26%" align="center" valign="top"><p>March 2004</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>200,000</p>
</td>
<td width="27%" align="center" valign="top"><p>$.25</p>
</td>
<td width="26%" align="center" valign="top"><p>March 2004</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>268,750</p>
</td>
<td width="27%" align="center" valign="top"><p>$.25</p>
</td>
<td width="26%" align="center" valign="top"><p>May 2006</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>268,750</p>
</td>
<td width="27%" align="center" valign="top"><p>$.35</p>
</td>
<td width="26%" align="center" valign="top"><p>May 2006</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>268,750</p>
</td>
<td width="27%" align="center" valign="top"><p>$.45</p>
</td>
<td width="26%" align="center" valign="top"><p>May 2006</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>287,000</p>
</td>
<td width="27%" align="center" valign="top"><p>$.20</p>
</td>
<td width="26%" align="center" valign="top"><p>June 2004</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>577,500</p>
</td>
<td width="27%" align="center" valign="top"><p>$.20</p>
</td>
<td width="26%" align="center" valign="top"><p>December 2004</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>577,500</p>
</td>
<td width="27%" align="center" valign="top"><p>$.30</p>
</td>
<td width="26%" align="center" valign="top"><p>December 2004</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>____________</p>
</td>
<td width="27%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="26%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>Total</p>
</td>
<td width="24%" align="center" valign="top"><p>4,899,727</p>
</td>
<td width="27%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="26%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="12%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>===========</p>
</td>
<td width="27%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="26%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<br>
<br>
<p>*  The Company does apply SFAS No. 123, Accounting for Stock-Based Compensation, in
accounting for the stock warrants issued to non-employees in connection with the original stock
issuance.  The Company has recorded expense of $145,298 pursuant to the issuance of these
warrants.  The fair value of the warrants granted to non-employees is estimated on the date of the
grant using the assumption of an expected life of five years, and a risk-free interest rate of 5.0%.</p>
<br>
<p>13. SIGNIFICANT BUSINESS COMBINATION</p>
<br>
<p>On January 29, 1999, the Company acquired all of the capital stock of CyberHighway, Inc.
(CyberHighway), an Idaho corporation.</p>
<br>
<p>The acquisition was effected pursuant to a Plan and Agreement of Reorganization dated January
20, 1999 between the Company and CyberHighway. The Company paid the shareholders of
CyberHighway approximately $15,940,000 through the issuance of 2,000,000 shares of common
stock.  The purchase price was based upon the weighted average closing price of the Company&#8217;s
common stock for five days prior and subsequent to the acquisition date.</p>
<br>
<p>The transaction was accounted for as a purchase.  The purchase price was allocated to the
underlying assets purchased and liabilities assumed based on their fair market values at the
acquisition date.</p>
<br>
<p>The following table summarizes the net assets purchased in connection with the CyberHighway
acquisition and the amount attributable to cost in excess of net assets acquired:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="35%" valign="top"><p>Net assets acquired</p>
</td>
<td width="35%" align="center" valign="top"><p>$372,472</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="35%" valign="top"><p>Acquired customer base</p>
</td>
<td width="35%" align="center" valign="top"><p>15,566,787</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="35%" valign="top"><p>Other assets</p>
</td>
<td width="35%" align="center" valign="top"><p>5,260,690</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="15%" valign="top"><p>&#160;</p>
</td>
<td width="35%" valign="top"><p>Deferred tax liability</p>
</td>
<td width="35%" align="center" valign="top"><p>(5,260,690)</p>
</td>
<td width="15%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p>14.  SETTLEMENT AGREEMENT</p>
<br>
<p>On November 30, l999, the Company entered into a settlement agreement and mutual release,
which settled certain legal proceedings in which USURF and CyberHighway had been involved.
The parties to the settlement agreement were: USURF, CyberHighway, the former operating
officer and a former director, and two former owner-employees (collectively the plaintiffs) of
CyberHighway.</p>
<br>
<p>Pursuant to this settlement agreement, certain legal proceedings were settled in full by issuance
of 340,000 shares of USURF common stock to the plaintiffs.  The Company is paying the total
sum of $43,325 for reimbursement of attorneys&#8217; fees paid by the plaintiffs.</p>
<br>
<p>The 340,000 shares issued were valued at $2.6875 per share, or $913,750, in the aggregate.  The
price per share assigned to the issued shares was the closing price of the common stock, as
reported by the American Stock Exchange.  The total charge against earnings in 1999 resulting
from the settlement agreement was $957,075.</p>
<br>
<p>15. CONTINGENCIES</p>
<br>
<p>Involuntary Bankruptcy</p>
<br>
<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.  (See Note 16).</p>
<br>
<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.  The write-off of the intangible assets reflected in the Company's December 31, 2000,
statement of operations was $4,814,272 (net of deferred taxes).  Due to this change in operating
environment, the Company's revenues decreased substantially as well as a decrease in expenses
associated with the elimination of personnel previously required to operate the Company's
network operations center, and accordingly goodwill was impaired.  The write-down of goodwill
reflected in the Company's December 31, 2000, statement of operations was $4,425,037.</p>
<br>
<p>Potential Delisting from the American Stock Exchange</p>
<br>
<p>The Company is not in compliance with the continued listing guidelines of AMEX.  The
Company was in contact with AMEX during 2001 and has not received any additional
communication in 2002.  Should the common stock be delisted from AMEX, it is likely to have a
detrimental effect on the Company's ability to raise additional capital, which is critical to the
Company to continue as a going concern (see Note 18).  In addition, if the common stock is
delisted from AMEX, the Company would be in default under a financing agreement (see Note
19) and would be unable to obtain future funding under that agreement.<br>
</p>
<p>16. DEBT FORGIVENESS</p>
<br>
<p>At December 31, 2000, $1,400,997 and $42,469 of CyberHighway&#8217;s accounts payable and
disbursements in excess of bank accounts, respectively, were reflected on the Company&#8217;s balance
sheet.  At December 31, 2001, the Company&#8217;s balance sheet included $953,561 in &#8220;permitted
claims&#8221; against CyberHighway, the total claims submitted by creditors of CyberHighway during
2001, including the statutory notification period.  This notification period began on December 6,
2001, and ended on March 6, 2002.  A substantial amount of the claims were submitted by
December 31, 2001; therefore, a reduction in the liabilities at that date was deemed appropriate.
The $489,905 reduction in CyberHighway&#8217;s liabilities is reflected in the Company&#8217;s consolidated
statements of operations as an extraordinary item.</p>
<br>
<p>17. SEGMENT DISCLOSURE</p>
<br>
<p>The Company adopted SFAS No. 131 &#8220;Disclosures about Segments of an Enterprise and Related
Information,&#8221; during the fourth quarter of 2000.  SFAS No. 131 established standards for
reporting information about operating segments in annual financial statements and requires
selected information about operating segments in interim financial reports issued to stockholders.
It also established standards for related disclosures about products and services and geographic
areas.  Operating segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by chief operating decision makers
or decision making groups, in deciding how to allocate resources and in assessing performance.
The Company considers internet service providing and wireless internet service providing to be a
similar industry; as such, there are no individual segments that are required to be reported
pursuant to SFAS 131.</p>
<br>
<p>18. GOING CONCERN</p>
<br>
<p>These financial statements are presented on the basis that the Company is a going concern.
Going concern contemplates the realization of assets and the satisfaction of liabilities in the
normal course of business over a reasonable length of time.  The accompanying financial
statement shows that current liabilities exceed current assets by approximately $1.25 million at
December 31, 2001.  The Company&#8217;s president loaned the Company approximately $12,000
during fiscal 2001. The appropriateness of using the going concern basis is dependent upon
obtaining additional financing or equity capital and, ultimately, to achieve profitable operations.
The uncertainty about these conditions raises substantial doubt about its ability to continue as a
going concern. The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.</p>
<br>
<p>Management plans to raise capital by obtaining financing and eventually, through public
offerings. Management intends to use the proceeds from any borrowings to acquire and develop
markets to implement its Wireless Internet Access System and sell its service.  The Company
believes that these actions will enable it to carry out its business plan and ultimately to achieve
profitable operations.  (See Note 19).</p>
<br>
<p>19. 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. $340,000 in proceeds under
the purchase agreement was received by the Company during 2001.  At December 31, 2001, the
Company had advanced 1,321,200 shares in consideration of the buyer&#8217;s advance of $80,176, in
expectation that a settlement would take place in the near future, which settlement occurred in
April 2002.  The purchase agreement remains in effect.</p>
<br>
<p>20. POTENTIAL RESCISSION CLAIMS</p>
<br>
<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>
<br>
<p>At December 31, 2000, 2,767,823 of these shares have been reflected under the redeemable stock
caption on the accompanying balance sheet with an assigned value of $3,897,552.</p>
<br>
<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>
<br>
<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>
<br>
<p>The Company believes that it is unlikely that any of the remaining potential rescission claims
will be asserted against the Company.</p>
<br>
<p>21. SUBSEQUENT EVENTS</p>
<br>
<p>The following events occurred subsequent to December 31, 2001:</p>
<br>
<p>In January 2002, the Company issued 120,000 shares of its common stock under a one-year
consulting agreement with the third party with which the Company entered into the amended and
restated common stock purchase agreement described in Note 19.</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>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 and 60 days thereafter.  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>
<p style="text-align: center">PART II</p>
<br>
<p style="text-align: center">INFORMATION NOT REQUIRED IN PROSPECTUS</p>
<br>
<p>Item 13.  Other Expenses of Issuance and Distribution.</p>
<br>
<p>Estimated expenses payable by the Company in connection with the registration of Common
Stock covered hereby are as follows:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" valign="top"><p>Registration Fee</p>
</td>
<td width="35%" align="center" valign="top"><p>$172.54</p>
</td>
</tr>
<tr>
<td width="65%" valign="top"><p>Underwriter&#8217;s unaccountable expense allowance</p>
</td>
<td width="35%" align="center" valign="top"><p>0.00</p>
</td>
</tr>
<tr>
<td width="65%" valign="top"><p>Printing and engraving expenses</p>
</td>
<td width="35%" align="center" valign="top"><p>1,000.00*</p>
</td>
</tr>
<tr>
<td width="65%" valign="top"><p>Legal fees and expenses</p>
</td>
<td width="35%" align="center" valign="top"><p>5,000.00</p>
</td>
</tr>
<tr>
<td width="65%" valign="top"><p>Accounting fees and expenses</p>
</td>
<td width="35%" align="center" valign="top"><p>5,000.00*</p>
</td>
</tr>
<tr>
<td width="65%" valign="top"><p>Blue Sky fees and expenses</p>
</td>
<td width="35%" align="center" valign="top"><p>0.00</p>
</td>
</tr>
<tr>
<td width="65%" valign="top"><p>Transfer agent and registrar fees and expenses</p>
</td>
<td width="35%" align="center" valign="top"><p>0.00</p>
</td>
</tr>
<tr>
<td width="65%" valign="top"><p>Miscellaneous</p>
</td>
<td width="35%" align="center" valign="top"><p>1,000.00*</p>
</td>
</tr>
<tr>
<td width="65%" valign="top"><p>_________________</p>
</td>
<td width="35%" align="center" valign="top"><p>_________</p>
</td>
</tr>
<tr>
<td width="65%" align="center" valign="top"><p>Total</p>
</td>
<td width="35%" align="center" valign="top"><p>$12,172.54*</p>
</td>
</tr>
<tr>
<td width="65%" valign="top"><p>(* Estimate)</p>
</td>
<td width="35%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p>Item 14.  Indemnification of Directors and Officers.</p>
<br>
<p>Registrant is a Nevada corporation.  Section 78.751 of Nevada Revised Statutes (the &#8220;Nevada
Act&#8221;) empowers a corporation to indemnify its directors and officers and to purchase insurance
with respect to liability arising out of their capacity as directors and officers.  The Nevada Act
further provides that the indemnification permitted thereunder shall not be deemed exclusive of
any other rights to which the directors and officers may be entitled under the corporation's
bylaws, any agreement, vote of the shareholders or otherwise.</p>
<br>
<p>Section VIII of Registrant&#8217;s Bylaws, included as Exhibit 3.2 filed herewith, which provides for
the indemnification of directors and officers, is incorporated herein by reference.</p>
<br>
<p>Registrant has purchased no insurance for indemnification of its officers and directors, agents,
etc., nor has there been any specific agreement for indemnification made between Registrant and
any of its officers and directors, or others, with respect to indemnification for them arising out of
their duties to Registrant.</p>
<br>
<p>Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934 or the Rules and Regulations of the Securities and Exchange
Commission thereunder may be permitted under said indemnification provisions of the law, or
otherwise, Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, any such indemnification is against public policy and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Nevada Act and will be
governed by the final adjudication of such issue.</p>
<br>
<p>Item 15.  Recent Sales of Unregistered Securities.</p>
<br>
<p>&#160;&#160;1. (a)  Securities Sold.  On June 2, 1999, a total of 100,000 shares of Company Common Stock
were sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Darrell
Davis and Deanna Davis (74,000 shares) and Roger Davis and Gloria C. Davis (26,000).</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an Agreement and
Plan of Reorganization, at a price of $4.00 per share, or $400,000, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;2. (a)  Securities Sold.  On June 4, 1999, a total of 35,000 shares of Company Common Stock
were sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Walter
Engler (10,000 shares) and Shelter Capital Ltd. (25,000 shares).</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were sold for cash pursuant to a private
offering, at a price of $3.00 per share, or $105,000, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;3. (a)  Securities Sold.  On June 4, 1999, a total of 35,000 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 Walter Engler (10,000
warrants) and Shelter Capital Ltd. (35000 warrants).</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued for no additional consideration as part of units
of securities in a private offering.</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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<p>&#160;&#160;&#160;&#160;&#160;&#160;(e) Terms of Conversion or Exercise.  Exercise price of the warrants is $7.00 per share and
exercisable for a period of one year from issuance.  Warrants are redeemable by the Company at
any time the bid price of the Company&#8217;s Common Stock has been at or above $10.00 per share
for five consecutive trading days.</p>
<br>
<p>&#160;&#160;4. (a)  Securities Sold.  On June 4, 1999, 500,000 shares of Company Common Stock were sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to
Interactive Business Channel.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $4.00 per share, or $2,000,000, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;5. (a)  Securities Sold.  In July, 1999, a total of 155,000 shares of Company Common Stock
were sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Dennis
A. Faker (50,000 shares), Barbara V. Schiller (30,000 shares), Jeanne M. Rowzee (10,000
shares), Alvin Gottlieb (10,000 shares), Rogers Family Trust (15,000 shares), Delaware Charter
Guarantee &amp; Trust Company f/b/o Clarence Yim (20,000 shares) and Delaware Charter
Guarantee &amp; Trust Company f/b/o R. Logan Kock (20,000 shares).</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued upon the exercise of warrants,
at a price of $2.00 per share, or $310,000, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;6. (a)  Securities Sold.  On February 5, 1999, 21,857 shares of Company Common Stock were
sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Terry
Lewis.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued upon the exercise of warrants,
at a price of $1.25 per share, or $27,321, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;7. (a)  Securities Sold.  On August 11, 1999, 150,000 shares of Company Common Stock were
sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Mark
Bove.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an Business
Acquisition Agreement, at a price of $4.00 per share, or $600,000, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;8. (a)  Securities Sold.  On August 23, 1999, 250,000 shares of Company Common Stock were
sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Knud
Nielsen, III (127,500 shares) and Gary Stanley (122,500 shares).</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an Agreement and
Plan of Reorganization, at a price of $4.00 per share, or $1,000,000, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;9. (a)  Securities Sold.  On August 30, 1999, 127,000 shares of Company Common Stock were
sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Alan L.
Taylor (122,405 shares), Brent Bates (518 shares), Kim Jorgensen (475 shares), Chris Allison
(472 shares), Robert Carlson (1,423 shares) and Lane Virgin (1,707 shares).</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an Agreement and
Plan of Reorganization, at a price of $4.00 per share, or $508,000, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;10. (a)  Securities Sold.  On September 24, 1999, 11,000 shares of Company Common Stock
were sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Alonzo
B. See, III.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an Employment
Agreement, at a price of $5.00 per share, or $40,000, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;11. (a)  Securities Sold.  On November 12, 1999, 25,000 shares of Company Common Stock
were sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Cyber
Mountain, Inc.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a Letter
Agreement, at a price of $4.00 per share, or $100,000, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;12. (a)  Securities Sold.  On December 9, 1999, a total of 340,000 shares of Company Common
Stock were sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Julius
W. Basham, II (215,000 shares), Wm. Kim Stimpson (34,000 shares) and David W. Brown
(91,000 shares).</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a Settlement
Agreement and Mutual Release, at a price of $2.6875 per share, or $913,750, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;13. (a)  Securities Sold.  On December 9, 1999, 30,000 shares of Company Common Stock
were sold.</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, at a price of $3.00 per share, or $90,000, in the aggregate.</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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;14. (a)  Securities Sold.  On December 13, 1999, 30,000 shares of Company Common Stock
were sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to
Nostas/Faesel Group.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $3.00 per share, or $90,000, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;15. (a)  Securities Sold.  On December 13, 1999, 53,000 shares of Company Common Stock
were sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to
CyberHighway of North Georgia, Inc.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an Asset
Acquisition Agreement, at a price of $4.00 per share, or $212,000, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;16. (a)  Securities Sold.  On December 1, 1999, 60,000 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 The Research Works, Inc.</p>
<p>&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued pursuant to a Consulting Agreement.</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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<p>&#160;&#160;&#160;&#160;&#160;&#160;(e) Terms of Conversion or Exercise.  Exercise price of the warrants is $3.50 per share and
the warrants are exercisable for a period of two years from issuance.</p>
<br>
<p>&#160;&#160;17. (a)  Securities Sold.  On January 1, 2000, 60,000 shares of Company Common Stock were
sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to The
Humbolt Corporation.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a Business and
Communications Consulting Services Agreement, at a price of $3.00 per share, or $180,000, in
the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;18. (a)  Securities Sold.  On January 1, 2000, 42,166 shares of Company Common Stock were
sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan
&amp; Newlan, Attorneys at Law.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued for services rendered, at a
price of $3.00 per share, or $126,500, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;19. (a)  Securities Sold.  On January 1, 2000, 100,000 shares of Company Common Stock were
sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan
&amp; Newlan, Attorneys at Law.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a Legal and
Consulting Services Agreement, at a price of $3.00 per share, or $300,000, in the aggregate.</p>
<p>&#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 Section 4(2) thereof,
as a transaction not involving a public offering.</p>
<br>
<p>&#160;&#160;20. (a)  Securities Sold.  On February 1, 2000, 81,063 shares of Company Common Stock were
sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to the
owners of The Spinning Wheel, Inc.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an Agreement and
Plan of Reorganization, at a price of $4.00 per share, or $324,252, in the aggregate.</p>
<p>&#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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;21. (a)  Securities Sold.  On February 18, 2000, 50,000 shares of Company Common Stock
were sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to the
owners of Internet Innovations, L.L.C.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an Agreement and
Plan of Reorganization, at a price of $4.00 per share, or $200,000, in the aggregate.</p>
<p>&#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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;22. (a)  Securities Sold.  In April 2000, 30,000 shares of Company Common Stock were sold.</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, at a price of $3.00 per share, or $90,000, in the aggregate.</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;23. (a)  Securities Sold.  In April 2000, 30,000 shares of Company Common Stock were sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to
Nostas/Faesel Group.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $3.00 per share, or $90,000, in the aggregate.</p>
<p>&#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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;24. (a)  Securities Sold.  In April 2000, 100,000 shares of Company Common Stock were sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Fair
Market, Inc.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a Consulting
Agreement, at a price of $7.125 per share, or $712,500, in the aggregate.</p>
<p>&#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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;&#160;25. (a)  Securities Sold.  In April 2000, a total of 65,000 shares of Company Common Stock
were sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to ten
individual investors.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were sold for cash pursuant to a private
offering, at a price of $5.00 per share, or $325,000, in the aggregate.</p>
<p>&#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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;26. (a)  Securities Sold.  In April 2000, a total of 65,000 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 ten individual investors.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued for no additional consideration as part of units
of securities in a private offering.</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, but this
exemption may not have been available.</p>
<p>&#160;&#160;&#160;&#160;&#160;&#160;(e) Terms of Conversion or Exercise.  Exercise price of the warrants is $7.50 per share and
exercisable for a period of two years from issuance.</p>
<br>
<p>&#160;&#160;27. (a)  Securities Sold.  In May 2000, 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 Robert
A. Hart IV.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an Employment
Agreement, at a price of $3.00 per share, or $750,000, in the aggregate.</p>
<p>&#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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;28. (a)  Securities Sold.  In July 2000, 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 Gruntal
&amp; Co., LLC.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an investment
banking agreement, at a price of $1.50 per share, or $375,000, in the aggregate.</p>
<p>&#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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;29. (a)  Securities Sold.  In July 2000, 5,880 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 Ryan G.
Campanile.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an Employment
Agreement, at prices ranging rom $9.44 per share to $2.06 per share.</p>
<p>&#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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;30. (a)  Securities Sold.  In July 2000, 5,880 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 Ryan D.
Thibodeaux.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an Employment
Agreement, at prices ranging rom $9.44 per share to $2.06 per share.</p>
<p>&#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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;31. (a)  Securities Sold.  In August 2000, 774,162 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 David
M. Lofin.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a letter
agreement, at a price of $1.25 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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;32. (a)  Securities Sold.  In September 2000, 450,000 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 Centex
Securities, Inc.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
agreement, at a price of $.875 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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;33. (a)  Securities Sold.  In October 2000, a total 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 Knud
Nielsen, III (202,500 shares) and Gary Stanley (47,500 shares).</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a settlement
agreement, at a price of $.875 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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;34. (a)  Securities Sold.  In October 2000, 2,282 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 Ryan G.
Campanile.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an Employment
Agreement, at prices ranging rom $2.00 per share to $1.56 per share.</p>
<p>&#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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;35. (a)  Securities Sold.  In October 2000, 2.282 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 Ryan D.
Thibodeaux.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an Employment
Agreement, at prices ranging rom $2.00 per share to $1.56 per share.</p>
<p>&#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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;36. (a)  Securities Sold.  In October 2000, 35,536 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 James
Kaufman.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an employment
agreement, at prices ranging from $9.36 to $2.25 per share.</p>
<p>&#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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;37. (a)  Securities Sold.  In November 2000, 10,000 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 Slade S.
Mauer.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to an employment
agreement, at a price of $.625 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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;38. (a)  Securities Sold.  In November 2000, 100,000 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 de Jong
&amp; Associates, Inc.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
agreement, at a price of $.5625 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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;39. (a)  Securities Sold.  In November 2000, 35,000 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 de Jong &amp; Associates,
Inc.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued for no additional consideration pursuant to a
consulting 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, but this
exemption may not have been available.</p>
<p>&#160;&#160;&#160;&#160;&#160;&#160;(e) Terms of Conversion or Exercise.  Exercise price of the warrants is $1.00 per share and
exercisable for a period of three years from issuance.</p>
<br>
<p>&#160;&#160;40. (a)  Securities Sold.  In December 2000, 40,000 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 Shelter
Capital Ltd.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a finder&#8217;s fee
agreement, at a price of $.20 per share.</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;41. (a)  Securities Sold.  In December 2000, 380,000 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 for no additional consideration pursuant to a
finder&#8217;s fee agreement.</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;42. (a)  Securities Sold.  In December 2000, 100,000 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 Gestalt
Corporation.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
services letter agreement, at a price of $.3125 per share.</p>
<p>&#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;43. (a)  Securities Sold.  In December 2000, 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 James
Kaufman.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued as a bonus, at a price of $.25
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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;44. (a)  Securities Sold.  In December 2000, 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 Waddell
D. Loflin.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued as a bonus, at a price of $.25
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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;45. (a)  Securities Sold.  In December 2000, 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 for consulting services, at a
price of $.25 per share.</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;46. (a)  Securities Sold.  In December 2000, 100,000 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 for legal services, at a price
of $.25 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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;47. (a)  Securities Sold.  In December 2000, 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 for legal services, at a price
of $.25 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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;48. (a)  Securities Sold.  In December 2000, 400,000 shares of Company Common Stock were
sold.</p>
<p>&#160;&#160;&#160;&#160;&#160;(b)  Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Anchor
House Ltd.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were sold for cash, at a price of $.20 per
share.</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;49. (a)  Securities Sold.  In January 2001, 800,000 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 as a commitment fee under a
common stock purchase agreement, at a price of $.25 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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;50. (a)  Securities Sold.  In January 2001, 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 Gruntal
&amp; Co., LLC.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued as a finder&#8217;s fee pursuant to
an investment banking agreement, at a price of $.25 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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;51. (a)  Securities Sold.  In January 2001, 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 Fair
Market, Inc.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a letter
agreement, at a price of $.375 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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;52. (a)  Securities Sold.  In January 2001, 20,000 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
CyberHighway of North Georgia.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a letter
agreement, at a price of $.375 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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;53. (a)  Securities Sold.  In January 2001, 10,000 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 letter
agreement, at a price of $.375 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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;54. (a)  Securities Sold.  In February 2001, 840,000 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
Claymore Asset Management Group Ltd.</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 $.15 per share.</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;55. (a)  Securities Sold.  In February 2001, 840,000 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 Claymore Asset
Management Group Ltd.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued for no additional consideration pursuant to a
securities purchase agreement.</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 $.15 per share and
exercisable for a period of three years from issuance.</p>
<br>
<p>&#160;&#160;56. (a)  Securities Sold.  In February 2001, 84,000 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 Shelter
Capital Ltd.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a finder&#8217;s fee
agreement, at a price of $.15 per share.</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;57. (a)  Securities Sold.  In February 2001, 336,000 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 for no additional consideration pursuant to a
finder&#8217;s fee agreement.</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 $.15 per share and
exercisable for a period of three years from issuance.</p>
<br>
<p>&#160;&#160;58. (a)  Securities Sold.  In March 2001, 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 Atlas
Securities Inc.</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 $.25 per share.</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;59. (a)  Securities Sold.  In March 2001, 500,000 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 Atlas Securities Inc.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such warrants were issued for no additional consideration pursuant to a
securities purchase agreement.</p>
<br>
<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 $.25 per share and
exercisable for a period of three years from issuance.</p>
<br>
<p>&#160;&#160;60. (a)  Securities Sold.  In December 2000, 50,000 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 Shelter
Capital Ltd.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a finder&#8217;s fee
agreement, at a price of $.25 per share.</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;61. (a)  Securities Sold.  In December 2000, 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 for no additional consideration pursuant to a
finder&#8217;s fee agreement.</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 $.25 per share and
exercisable for a period of three years from issuance.</p>
<br>
<p>&#160;&#160;62. (a)  Securities Sold.  In April 2001, 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 IBC.TV,
LLC.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
agreement, at a price of $.50 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, but this
exemption may not have been available.</p>
<br>
<p>&#160;&#160;63. (a)  Securities Sold.  In May 2001, 60,000 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, at a price of $.44 per share.</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;64. (a)  Securities Sold.  In June 2001, 205,000 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 Anchor
House, Ltd.</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 $.20 per share.</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;65. (a)  Securities Sold.  In June 2001, 205,000 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 Anchor House Ltd.</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.  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>
<br>
<p>&#160;&#160;66. (a)  Securities Sold.  In June 2001, 20,500 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 pursuant to a finder&#8217;s fee
agreement, at a price of $.20 per share.</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;67. (a)  Securities Sold.  In June 2001, 82,000 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 for no additional consideration pursuant to a
finder&#8217;s fee agreement.</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;68. (a)  Securities Sold.  In October 2001, 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, at a price of $.20 per share.</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;69. (a)  Securities Sold.  In October 2001, 700,000 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 David
M. Loflin.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued as a bonus, at a price of $.19
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;70. (a)  Securities Sold.  In October 2001, 460,000 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 Euro-Swiss Group Ltd.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued pursuant to a consulting
agreement, at a price of $.20 per share.</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;71. (a)  Securities Sold.  In November 2001, 165,000 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 Anchor
House, Ltd.</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 $.10 per share.</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;72. (a)  Securities Sold.  In November 2001, 165,000 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 Anchor House Ltd.</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.  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;73. (a)  Securities Sold.  In November 2001, 165,000 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 Anchor House Ltd.</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.  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;74. (a)  Securities Sold.  In December 2001, 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
Claymore Management Ltd.</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 $.10 per share.</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;75. (a)  Securities Sold.  In December 2001, 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 Claymore Management
Ltd.</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.  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;76. (a)  Securities Sold.  In December 2001, 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 Claymore Management
Ltd.</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.  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;77. (a)  Securities Sold.  In December 2001, 37,500 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 Ross S.
Bravata.</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 $.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;78. (a)  Securities Sold.  In December 2001, 37,500 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 Ross S. Bravata.</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 $.20 per share and
exercisable for a period of three years from issuance.</p>
<br>
<p>&#160;&#160;79. (a)  Securities Sold.  In December 2001, 37,500 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 Ross S. Bravata.</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;80. (a)  Securities Sold.  In December 2001, 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 Michael
Cohn.</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 $.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;81. (a)  Securities Sold.  In December 2001, 75,000 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 Michael Cohn.</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 $.20 per share and
exercisable for a period of three years from issuance.</p>
<br>
<p>&#160;&#160;82. (a)  Securities Sold.  In December 2001, 75,000 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 Michael Cohn.</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;83. (a)  Securities Sold.  In December 2001, 100,000 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 Darrell
Glahn and Blythe Glahn.</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 $.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;84. (a)  Securities Sold.  In December 2001, 100,000 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 Darrell Glahn and Blythe
Glahn.</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 $.20 per share and
exercisable for a period of three years from issuance.</p>
<br>
<br>
<p>&#160;&#160;85. (a)  Securities Sold.  In December 2001, 100,000 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 Darrell Glahn and Blythe
Glahn.</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;86. (a)  Securities Sold.  In December 2001, 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 Waddell
D. Loflin.</p>
<p>&#160;&#160;&#160;&#160;&#160;(c)   Consideration.  Such shares of Common Stock were issued as a bonus, at a price of $.09
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;87. (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;88. (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;89. (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;90. (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;91. (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;92. (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;93. (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;94. (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;95. (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;96. (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>&#160;&#160;97. (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;98. (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;99. (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;100. (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;101. (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;102. (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;103. (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;104. (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;105. (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;106. (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;107. (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;108. (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;109. (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 16.  Exhibits and Financial Statements Schedules.</p>
<br>
<p>1. Exhibits.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="15%" valign="top"><p>Exhibit No.</p>
</td>
<td width="85%" valign="top"><p>Description</p>
</td>
</tr>
</table>
<br>
<p>**  3.1 Articles of Incorporation of Registrant.</p>
<p>*   3.2 Bylaws of Registrant, as amended.</p>
<p>*   3.3 Bylaws of Executive Committee of the Board of Directors of Registrant.</p>
<p>*   3.4 Bylaws of Audit Committee of the Board of Directors of Registrant.</p>
<p>***    3.5 Articles of Amendment to Articles of Incorporation of Registrant.</p>
<p>****   3.6 Articles of Amendment to Articles of Incorporation of Registrant.</p>
<p>*   4.1 Specimen Common Stock Certificate.</p>
<p>#  5.1 Opinion of Newlan &amp; Newlan, Attorneys at Law, re: Legality.</p>
<p>* 10.121 Amended and Restated Common Stock Purchase Agreement, dated May 9, 2001,
between Registrant and Fusion Capital Fund II, LLC.</p>
<p>* 10.122 Registration Rights Agreement, dated May 9, 2001, between Registrant and Fusion
Capital Fund II, LLC.</p>
<p>* 10.123 $.25 Warrant Agreement between Registrant and Fusion Capital Fund II, LLC.</p>
<p>* 10.124 $.35 Warrant Agreement between Registrant and Fusion Capital Fund II, LLC.</p>
<p>* 10.125 $.45 Warrant Agreement between Registrant and Fusion Capital Fund II, LLC.</p>
<p>* 10.126 $.25 Warrant Agreement between Registrant and Gruntal &amp; Co., L.L.C.</p>
<p>* 10.127 $.35 Warrant Agreement between Registrant and Gruntal &amp; Co., L.L.C.</p>
<p>* 10.128 $.45 Warrant Agreement between Registrant and Gruntal &amp; Co., L.L.C.</p>
<p># 10.129 Securities Purchase Agreement, dated December 24, 2001, between Registrant and
Darrell Glahn and Blythe Glahn.</p>
<p># 10.130 $.20 Warrant Agreement between Registrant and Darrell Glahn and Blythe Glahn.</p>
<p># 10.131 $.30 Warrant Agreement between Registrant and Darrell Glahn and Blythe Glahn.</p>
<p># 10.132 Securities Purchase Agreement, dated December 1, 2001, between Registrant and
Anchor House Ltd.</p>
<p># 10.133 $.20 Warrant Agreement between Registrant and Anchor House Ltd.</p>
<p># 10.134 $.30 Warrant Agreement between Registrant and Anchor House Ltd.</p>
<p># 10.135 Securities Purchase Agreement, dated December 1, 2001, between Registrant and Ross
S. Bravata.</p>
<p># 10.136 $.20 Warrant Agreement between Registrant and Ross S. Bravata.</p>
<p># 10.137 $.30 Warrant Agreement between Registrant and Ross S. Bravata.</p>
<p># 10.138 Securities Purchase Agreement, dated December 1, 2001, between Registrant and
Claymore Management Ltd.</p>
<p># 10.139 $.20 Warrant Agreement between Registrant and Claymore Management Ltd.</p>
<p># 10.140 $.30 Warrant Agreement between Registrant and Claymore Management Ltd.</p>
<p># 10.141 Securities Purchase Agreement, dated December 18, 2001, between Registrant and
Michael Cohn.</p>
<p># 10.142 $.20 Warrant Agreement between Registrant and Michael Cohn.</p>
<p># 10.143 $.30 Warrant Agreement between Registrant and Michael Cohn.</p>
<p># 10.144 Securities Purchase Agreement, dated June 27, 2001, between Registrant and Anchor
House Ltd.</p>
<p># 10.145 $.20 Warrant Agreement between Registrant and Anchor House Ltd.</p>
<p># 10.146 Consulting Agreement, dated October 19, 2001, between Registrant and Euro-Swiss
Group Ltd.</p>
<p># 10.147 $.20 Warrant Agreement between Registrant and Shelter Capital Ltd.</p>
<p># 10.148 Letter Agreement, dated January 28, 2002, between Registrant and Fusion Capital Fund
II, LLC.</p>
<p># 10.149 $.10 Warrant Agreement between Registrant and Shelter Capital Ltd.</p>
<p># 10.150 $.20 Warrant Agreement between Registrant and Shelter Capital Ltd.</p>
<p># 10.151 $.30 Warrant Agreement between Registrant and Shelter Capital Ltd.</p>
<p># 10.152 2002 Stock Ownership Plan of Registrant.</p>
<p># 10.153 Consulting and Marketing License Agreement, dated March 7, 2002, between
Registrant and Mark Neuhaus.</p>
<p># 10.154 $.049 Warrant Agreement between Registrant and Shelter Capital Ltd.</p>
<p># 10.155 $.049 Warrant Agreement between Registrant and Shelter Capital Ltd.</p>
<p># 10.156 $.10 Warrant Agreement between Registrant and Peter Rochow.</p>
<p># 10.157 $.20 Warrant Agreement between Registrant and Peter Rochow.</p>
<p># 10.158 Consulting Agreement for Financial Public Relations, dated April 20, 2002, between
Registrant and Allen &amp; Company Business Communications.</p>
<p># 10.159 Consulting Services Agreement, dated April 22, 2002, between Registrant and B.
Edward Haun &amp; Company.</p>
<p># 10.160 Agreement for Consulting Services, dated April 23, 2002, between Registrant and
Summit Venture Partners, LLC.</p>
<p># 10.161 Letter Agreement, dated April 23, 2002, between Registrant and Barker Design, Inc.</p>
<p># 10.162 Letter Agreement, dated as of February 26, 2002, between Registrant and Employer
Support Services.</p>
<p>***** 10.163 Securities Purchase Agreement, dated as of April 5, 2002, between Registrant and
Evergreen Venture Partners, LLC.</p>
<p>***** 10.164 Registration Rights Letter Agreement, dated as of April 15, 2002, between
Registrant and Evergreen Venture Partners, LLC.</p>
<p>***** 10.165 Employment Agreement, dated as of April 15, 2002, between Registrant and
Douglas O. McKinnon.</p>
<p>***** 10.166 Confidentiality Agreement, dated as of April 15, 2002, between Registrant and
Douglas O. McKinnon.</p>
<p>***** 10.167 Agreement Not to Compete, dated as of April 15, 2002, between Registrant and
Douglas O. McKinnon.</p>
<p>***** 10.168 Amendment No. 1 to Employment Agreement of David M. Loflin, dated as of
April 8, 2002, between Registrant and David M. Loflin.</p>
<p>***** 10.169 Amendment No. 1 to Employment Agreement of Waddell D. Loflin, dated as of
April 8, 2002, between Registrant and Waddell D. Loflin.</p>
<p>***** 10.170 Amendment No. 1 to Employment Agreement of James Kaufman, dated as of
April 8, 2002, between Registrant and James Kaufman.</p>
<p>***** 10.171 Termination Agreement, dated as of April 8, 2002, between Registrant and Robert
A. Hart IV.</p>
<p>***** 10.172 $.15 Warrant Agreement between Registrant and Evergreen Venture Partners,
LLC.</p>
<p>***** 10.173 $.30 Warrant Agreement between Registrant and Evergreen Venture Partners,
LLC.</p>
<p>#  22.1 Subsidiaries of Registrant.</p>
<p>@  23.1 Consent of Postlethwaite &amp; Netterville, independent auditor</p>
<p>#  23.2 Consent of Newlan &amp; Newlan, Attorneys at Law.</p>
<p>@  23.3 Consent of Patrick F. McGrew, Esquire.</p>
<p>_______________________</p>
<p>@ Filed herewith.</p>
<p># Filed previously.</p>
<p>* Incorporated by reference from Registrant&#8217;s Registration Statement on Form S-1, Commission
File No. 333-96027.</p>
<p>** Incorporated by reference from Registrant&#8217;s Registration Statement on Form S-1,
Commission File No. 333-26385.</p>
<p>*** Incorporated by reference from Registrant&#8217;s Current Report on Form 8-K, date of event: July
21 1998.</p>
<p>**** Incorporated by reference from Registrant&#8217;s Current Report on Form 8-K, date of event:
July 6, 1999.</p>
<p>***** Incorporated by reference from Registrant&#8217;s Current Report on Form 8-K, date of event:
April 15, 2002.</p>
<br>
<p>2. Financial Statement Schedules.</p>
<br>
<p>All schedules are omitted since they are furnished elsewhere in the Prospectus.</p>
<br>
<p>Item 17.  Undertakings.</p>
<br>
<p>The undersigned Registrant hereby undertakes:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>(1)</p>
</td>
<td width="92%" valign="top"><p>To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:</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>(i)</p>
</td>
<td width="84%" valign="top"><p>To included any prospectus required by Section 10(a)(3) of the Securities Act
of 1933, as amended (the "Act);</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>(ii)</p>
</td>
<td width="84%" valign="top"><p>To reflect in the prospectus any facts or events arising after the effective date of
the registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement; and</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="8%" valign="top"><p>(iii)</p>
</td>
<td width="84%" valign="top"><p>To include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>(2)</p>
</td>
<td width="92%" valign="top"><p>That, for the purpose of determining any liability under the Act, each such
post-effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>(3)</p>
</td>
<td width="92%" valign="top"><p>To remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the offering.</p>
</td>
</tr>
</table>
<br>
<p>Insofar as indemnification for liabilities arising under the Act may be permitted to directors,
officers and controlling persons of the registrant  pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.  In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.</p>
<br>
<p style="text-align: center">SIGNATURES</p>
<br>
<p>Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly
caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Castle Rock, State of Colorado, on May 24, 2002.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="38%" valign="top"><p>&#160;</p>
</td>
<td width="62%" valign="top"><p>USURF AMERICA, INC.</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>&#160;</p>
</td>
<td width="62%" valign="top"><p>By: /s/ DOUGLAS O. MCKINNON</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>&#160;</p>
</td>
<td width="62%" valign="top"><p>Douglas O. McKinnon</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>&#160;</p>
</td>
<td width="62%" valign="top"><p>President and Chief Executive Officer</p>
</td>
</tr>
</table>
<br>
<p>Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form
S-1 has been signed by the following persons in the capacities and on the dates indicated:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="38%" align="center" valign="top"><p>Signatures</p>
</td>
<td width="42%" align="center" valign="top"><p>Title</p>
</td>
<td width="20%" align="center" valign="top"><p>Date</p>
</td>
</tr>
<tr>
<td width="38%" align="center" valign="top"><p>___________________________</p>
</td>
<td width="42%" align="center" valign="top"><p>____________________________</p>
</td>
<td width="20%" align="center" valign="top"><p>____________</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><br>
<p>/s/ DOUGLAS O. MCKINNON</p>
</td>
<td width="42%" valign="top"><p>President and Chief Executive Officer
(Principal Executive Officer) and
Director</p>
</td>
<td width="20%" align="center" valign="top"><p>May 24, 2002</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>Douglas O. McKinnon</p>
</td>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><br>
<p>/s/ DAVID M. LOFLIN</p>
</td>
<td width="42%" valign="top"><p>Chairman of the Board and Principal
Accounting Officer</p>
</td>
<td width="20%" align="center" valign="top"><p>May 24, 2002</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>David M. Loflin</p>
</td>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>/s/ WADDELL D. LOFLIN</p>
</td>
<td width="42%" valign="top"><p>Vice President, Secretary and Director</p>
</td>
<td width="20%" align="center" valign="top"><p>May 24, 2002</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>Waddell D. Loflin</p>
</td>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>&#160;</p>
</td>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>______________________</p>
</td>
<td width="42%" valign="top"><p>Director</p>
</td>
<td width="20%" align="center" valign="top"><p>May __, 2002</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>Ross S. Bravata</p>
</td>
<td width="42%" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
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<p>_______________</p>
<br>
<p>EXHIBIT 23.1</p>
<p>_______________</p>
<br>
<br>
<p>CONSENT AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT</p>
<br>
<p>We hereby consent to the use in the Registration Statement of our report dated April 12, 2002,
relating to the consolidated financial statements of USURF America, Inc. and Subsidiaries, and
to the reference to our Firm under the caption &#8220;Experts&#8221; in the Prospectus.</p>
<br>
<p>/s/ POSTLETHWAITE &amp; NETTERVILLE, CPAs</p>
<br>
<p>Postlethwaite &amp; Netterville, CPAs</p>
<br>
<p>Baton Rouge, LA</p>
<p>May 24, 2002</p>
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<p>________________</p>
<br>
<p>EXHIBIT 23.2</p>
<p>________________</p>
<br>
<br>
<p>CONSENT OF COUNSEL</p>
<br>
<p>The undersigned hereby consents to the use of his name in the Prospectus forming a part of the
Registration Statement on Form S-1 to which this consent is an exhibit.</p>
<br>
<p>/s/ NEWLAN &amp; NEWLAN</p>
<br>
<p>Newlan &amp; Newlan, Attorneys at Law</p>
<p>May 24, 2002</p>
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<p>_________________</p>
<br>
<p>EXHIBIT 23.3</p>
<p>_________________</p>
<br>
<br>
<p>CONSENT OF COUNSEL</p>
<br>
<p>The undersigned hereby consents to the use of his name in the Prospectus forming a part of the
Registration Statement on Form S-1 to which this consent is an exhibit.</p>
<br>
<p>/s/ PATRICK F. MCGREW</p>
<br>
<p>Patrick F. McGrew</p>
<p>May 24, 2002</p>
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