<SUBMISSION>
<ACCESSION-NUMBER>0001035398-02-000025
<TYPE>S-1
<PUBLIC-DOCUMENT-COUNT>11
<FILING-DATE>20020802
<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
<ACT>33
<FILE-NUMBER>333-97549
<FILM-NUMBER>02717726
</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>MEDIA ENTERTAINMENT INC
<DATE-CHANGED>19980729
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>INTERNET MEDIA CORP
<DATE-CHANGED>19980729
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>S-1
<SEQUENCE>1
<FILENAME>s1.htm
<TEXT>
<html>

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

7:

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<body>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>As filed with the Securities and Exchange Commission on August 1, 2002.</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>Registration No. 333-__________</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>SECURITIES AND EXCHANGE COMMISSION</p>
<p>Washington, D.C. 20549</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>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="23%" valign="top"><p>&#160;</p>
</td>
<td width="54%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>USURF America, Inc.</p>
</td>
<td width="23%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="54%" align="center" valign="top"><p>(Exact Name of Registrant as Specified in its Charter)</p>
</td>
<td width="23%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="33%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>NEVADA</p>
</td>
<td width="1%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="33%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>7375</p>
</td>
<td width="1%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="32%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>91-2117796</p>
</td>
</tr>
<tr>
<td width="33%" align="center" valign="top"><p>(State or Other Jurisdiction of
Incorporation or Organization)</p>
</td>
<td width="1%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="33%" align="center" valign="top"><p>(Primary Standard Industrial
Classification Code Number)</p>
</td>
<td width="1%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="32%" align="center" valign="top"><p>(IRS Employer Identification No.)</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="20%" valign="top"><p>&#160;</p>
</td>
<td width="60%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>3333 S. Bannock Street, Suite 790, Englewood, Colorado 80110
(303) 789-7100</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="20%" valign="top"><p>&#160;</p>
</td>
<td width="60%" align="center" valign="top"><p>(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Office)</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="20%" valign="top"><p>&#160;</p>
</td>
<td width="60%" align="center" valign="top"><p>Douglas O. McKinnon, President and CEO</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="20%" valign="top"><p>&#160;</p>
</td>
<td width="60%" align="center" valign="top"><p>USURF America, Inc.</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="20%" valign="top"><p>&#160;</p>
</td>
<td width="60%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>3333 S. Bannock Street, Suite 790, Englewood, Colorado 80110
(303) 789-7100</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="20%" valign="top"><p>&#160;</p>
</td>
<td width="60%" align="center" valign="top"><p>(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)</p>
</td>
<td width="20%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="38%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>Copies to:</p>
</td>
<td width="38%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>&#160;</p>
</td>
<td width="24%" align="center" valign="top"><p>Eric Newlan, Esq.
NEWLAN &amp; NEWLAN
819 Office Park Circle
Lewisville, Texas 75057
972-353-3880</p>
</td>
<td width="38%" valign="top"><p>&#160;</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>
<p style="text-align: center">CALCULATION OF REGISTRATION FEE</p>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="23%" style="background-color: #f2f2f2; border-top: 0.01in solid; border-bottom: 0.01in solid" align="center" valign="top"><br>
<p>Title of each class</p>
<p>of securities</p>
<p>to be registered</p>
</td>
<td width="19%" style="background-color: #f2f2f2; border-top: 0.01in solid; border-bottom: 0.01in solid" align="center" valign="top"><br>
<br>
<p>Amount to</p>
<p>be registered</p>
</td>
<td width="19%" style="background-color: #f2f2f2; border-top: 0.01in solid; border-bottom: 0.01in solid" align="center" valign="top"><br>
<p>Proposed
maximum offering
price per unit</p>
</td>
<td width="22%" style="background-color: #f2f2f2; border-top: 0.01in solid; border-bottom: 0.01in solid" align="center" valign="top"><br>
<p>Proposed maximum
aggregate</p>
<p>offering price</p>
</td>
<td width="17%" style="background-color: #f2f2f2; border-top: 0.01in solid; border-bottom: 0.01in solid" align="center" valign="top"><br>
<br>
<p>Amount of
registration fee</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>Common Stock, $.0001
par value</p>
</td>
<td width="19%" align="center" valign="top"><p>4,283,333</p>
<p>issued shares</p>
</td>
<td width="19%" align="center" valign="top"><p>$.06(3)</p>
</td>
<td width="22%" align="center" valign="top"><p>$256,999.98</p>
</td>
<td width="17%" align="center" valign="top"><p>$23.64</p>
</td>
</tr>
<tr>
<td width="23%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="19%" style="background-color: #f2f2f2" align="center" valign="top"><p>1,562,500</p>
<p>unissued shares</p>
</td>
<td width="19%" style="background-color: #f2f2f2" align="center" valign="top"><p>.15(4)</p>
</td>
<td width="22%" style="background-color: #f2f2f2" align="center" valign="top"><p>234,375</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>21.56</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>1,562,500</p>
<p>unissued shares</p>
</td>
<td width="19%" align="center" valign="top"><p>.30(5)</p>
</td>
<td width="22%" align="center" valign="top"><p>468,750</p>
</td>
<td width="17%" align="center" valign="top"><p>43.13</p>
</td>
</tr>
<tr>
<td width="23%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="19%" style="background-color: #f2f2f2" align="center" valign="top"><p>___________</p>
</td>
<td width="19%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="22%" style="background-color: #f2f2f2" align="center" valign="top"><p>___________</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>___________</p>
</td>
</tr>
<tr>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>Total</p>
</td>
<td width="19%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>7,408,333 shares</p>
</td>
<td width="19%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>&#160;</p>
</td>
<td width="22%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>$960,124.98</p>
</td>
<td width="17%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>$88.33</p>
</td>
</tr>
</table>
<p>(1)  Pursuant to Rule 416 under the Securities Act of 1933, as amended, this Registration Statement covers such
additional indeterminate shares of Common Stock as may be issued by reason of adjustments in the number of
shares of Common Stock pursuant to anti-dilution provisions contained in various Common Stock Purchase
Warrants. Because such additional shares of Common Stock will, if issued, be issued for no additional
consideration, no registration fee is required.</p>
<p>(2) All shares being registered will be offered and sold by selling shareholders.  All of the shares noted as being
"issued" have, as of the date hereof, been issued to the selling shareholders. All of the shares noted as being
"unissued" underlie currently outstanding and exercisable warrants.</p>
<p>(3)  Estimated in accordance with Rule 457(c) solely for the purpose of calculating the registration fee on the basis
of the closing price reported on the American Stock Exchange on July 31, 2002, $.06 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 $.15 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 $.30 per share.</p>
<br>
<p>Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its
effective date until Registrant shall file a  further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until
this Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a),
may determine.</p>
<br>
<br>
<p>&lt;PAGE&gt;</p>
<br>
<p style="text-align: center">SUBJECT TO COMPLETION, DATED JULY 31, 2002</p>
<br>
<p>The information in this prospectus is not complete and may be changed.  We may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is effective.  This prospectus is not an
offer to sell these securities in any state where the offer or sale is not permitted.</p>
<br>
<p>PROSPECTUS</p>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>Up to 7,408,333 Shares</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>USURF America, Inc.</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>Common Stock</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>$.0001 par value</p>
</td>
</tr>
</table>
<br>
<p>This prospectus relates to 7,408,333 shares our common stock offered for sale by persons other than USURF
America, who are referred to as the selling shareholders. 4,283,333 of these shares have been issued by us, and
3,125,000 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 July 31, 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>
<p>&lt;PAGE&gt;</p>
<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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="75%" align="center" valign="top"><p>TABLE OF CONTENTS</p>
</td>
<td width="8%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="9%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="75%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="8%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>Page</p>
</td>
<td width="9%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>SUMMARY</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>THE OFFERING</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>SUMMARY FINANCIAL DATA</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>RISK FACTORS</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>DILUTION</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>USE OF PROCEEDS</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>TRADING AND MARKET PRICES</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>DIVIDENDS</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>CAPITALIZATION</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>SELECTED FINANCIAL DATA</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>CHANGE OF INDEPENDENT AUDITOR</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>REGULATION</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>BUSINESS</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>THE FUSION CAPITAL TRANSACTION</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>MANAGEMENT</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>CERTAIN TRANSACTIONS</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>PRINCIPAL SHAREHOLDERS</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>LITIGATION</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>PLAN OF DISTRIBUTION</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>SELLING SHAREHOLDERS</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>DESCRIPTION OF SECURITIES</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>LEGAL MATTERS</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>EXPERTS</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>ABOUT THIS PROSPECTUS</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>WHERE YOU CAN FIND MORE INFORMATION</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="75%" valign="top"><p>INDEX TO FINANCIAL STATEMENTS</p>
</td>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="9%" 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-Cell(TM)&#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.In May 2002, we
entered into an Internet services provision agreement with SunWest Communications, Inc., a Colorado Springs,
Colorado-based competitive local telephone company.  Together with SunWest, we will market our Quick-Cell
wireless Internet access service to all 6,000 of SunWest&#8217;s customers, as well as throughout the Greater Colorado
Springs area.</p>
<br>
<p>The SunWest agreement represents the type of agreements that our new president is attempting to secure, as a
means of accelerating growth of our customer base.  We cannot assure you that we will be successful in this regard.</p>
<br>
<p>We intend to commit all available resources to the development and exploitation 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 (broadband), 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 June 14, 2002, we completed a securities purchase agreement with Evergreen Venture Partners, LLC, whereby
we issued 3,125,000 units of our securities for cash in the amount of $250,000, paid in two equal increments: on
April 15, 2002, and June 14, 2002.  Each unit We sold to Evergreen consists of one a total of 3,645,833 shares of
our common stock, one 3,125,000 common stock purchase warrants to purchase one a like number of shares at an
exercise price of $.15 per share and one 3,125,000 common stock purchase warrants to purchase one a like number
of shares 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 willhas the right to name two persons to become directors of USURF America.  To date,
Evergreen has not named any person as a director.</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 3333 S. Bannock, Suite 790, Englewood, Colorado 80110.  Our
telephone number is (303) 789-7100; our fax number is (303) 660-6784.  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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="58%" style="background-color: #f2f2f2" valign="top"><p>Common Stock offered by Selling Shareholders:</p>
</td>
<td width="34%" style="background-color: #f2f2f2" valign="top"><p>Up to 7,408,333 shares(1)</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="58%" valign="top"><p>Common Stock Outstanding Prior to Offering:</p>
</td>
<td width="34%" valign="top"><p>47,941,930 shares</p>
</td>
</tr>
<tr>
<td width="8%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="58%" style="background-color: #f2f2f2" valign="top"><p>Common Stock Outstanding After this Offering:</p>
</td>
<td width="34%" style="background-color: #f2f2f2" valign="top"><p>63,205,522 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) 4,283,333 of these shares are currently issued and outstanding and will be offered and sold by the
selling shareholders; and 3,125,000 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 12,403,727 outstanding warrants and the issuance of an additional
2,859,865 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, 2001,
2000 and 1999, as well as the three months ended March 31, 2002 and 2001 (unaudited).  Also set forth below is
our summary balance sheet data as of December 31, 2001 and 2000, as well as March 31, 2002 (unaudited).</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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="23%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-right: none; border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>Year Ended December 31,</p>
</td>
<td width="31%" style="border-left: none; border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>Three Months Ended March 31,</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="21%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>2001</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>2000</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>1999</p>
</td>
<td width="14%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>2002
(unaudited)</p>
</td>
<td width="16%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>2001
(unaudited)</p>
</td>
</tr>
<tr>
<td width="21%" style="border-right: none" valign="top"><p>Revenues</p>
</td>
<td width="15%" style="border-left: none" align="center" valign="top"><p>$7,446</p>
</td>
<td width="15%" align="center" valign="top"><p>$1,872,629</p>
</td>
<td width="19%" style="border-right: none" align="center" valign="top"><p>$2,547,225</p>
</td>
<td width="14%" style="border-left: none" align="center" valign="top"><p>$4,626</p>
</td>
<td width="16%" style="border-right: none" align="center" valign="top"><p>$384</p>
</td>
</tr>
<tr>
<td width="21%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>Internet access costs,
cost of goods sold</p>
</td>
<td width="15%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>(11,999)</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>(2,145,955)</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>(1,152,721)</p>
</td>
<td width="14%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>(8,482)</p>
</td>
<td width="16%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="21%" style="border-right: none" valign="top"><p>Operating Expenses</p>
</td>
<td width="15%" style="border-left: none" 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="19%" style="border-right: none" align="center" valign="top"><p>11,860,758</p>
</td>
<td width="14%" style="border-left: none" align="center" valign="top"><p>464,772</p>
</td>
<td width="16%" style="border-right: none" align="center" valign="top"><p>901,643</p>
</td>
</tr>
<tr>
<td width="21%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>Net loss</p>
</td>
<td width="15%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>(2,498,468)</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>(21,885,330)</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>(10,930,163)</p>
</td>
<td width="14%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>(468,811)</p>
</td>
<td width="16%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>(901,259)</p>
</td>
</tr>
<tr>
<td width="21%" style="border-right: none" valign="top"><p>Loss per share</p>
</td>
<td width="15%" style="border-left: none" align="center" valign="top"><p>(0.13)</p>
</td>
<td width="15%" align="center" valign="top"><p>(1.68)</p>
</td>
<td width="19%" style="border-right: none" align="center" valign="top"><p>(0.96)</p>
</td>
<td width="14%" style="border-left: none" align="center" valign="top"><p>(0.02)</p>
</td>
<td width="16%" style="border-right: none" align="center" valign="top"><p>(0.06)</p>
</td>
</tr>
<tr>
<td width="21%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>Weighted average
number of shares
outstanding</p>
</td>
<td width="15%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>18,616,434</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>13,00,0391</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>11,419,641</p>
</td>
<td width="14%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>25,503,752</p>
</td>
<td width="16%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>13,934,118</p>
</td>
</tr>
</table>
<br>
<p>BALANCE SHEET DATA:</p>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="42%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="38%" style="border-right: none; border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>As at December 31,</p>
</td>
<td width="20%" style="border-left: none; border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>As at March 31,</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="42%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="19%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>2001</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>2000</p>
</td>
<td width="20%" style="border-left: none; border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>2002</p>
<p>(unaudited)</p>
</td>
</tr>
<tr>
<td width="42%" style="border-right: none" valign="top"><p>Working Capital (Deficit)</p>
</td>
<td width="19%" style="border-left: none" align="center" valign="top"><p>$(1,254,897)</p>
</td>
<td width="19%" style="border-right: none" align="center" valign="top"><p>$(1,517,164)</p>
</td>
<td width="20%" style="border-left: none; border-right: none" align="center" valign="top"><p>$(1,240,582)</p>
</td>
</tr>
<tr>
<td width="42%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>Total Assets</p>
</td>
<td width="19%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>229,528</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>410,316</p>
</td>
<td width="20%" style="border-left: none; border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>222,768</p>
</td>
</tr>
<tr>
<td width="42%" style="border-right: none" valign="top"><p>Total Current Liabilities</p>
</td>
<td width="19%" style="border-left: none" align="center" valign="top"><p>1,389,653</p>
</td>
<td width="19%" style="border-right: none" align="center" valign="top"><p>1,764,973</p>
</td>
<td width="20%" style="border-left: none; border-right: none" align="center" valign="top"><p>1,374,366</p>
</td>
</tr>
<tr>
<td width="42%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>Total Liabilities</p>
</td>
<td width="19%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>1,389,653</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>1,764,973</p>
</td>
<td width="20%" style="border-left: none; border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>1,374,366</p>
</td>
</tr>
<tr>
<td width="42%" style="border-right: none" valign="top"><p>Total Redeemable Common Stock</p>
</td>
<td width="19%" style="border-left: none" align="center" valign="top"><p>1,192,700</p>
</td>
<td width="19%" style="border-right: none" align="center" valign="top"><p>3,323,552</p>
</td>
<td width="20%" style="border-left: none; border-right: none" align="center" valign="top"><p>220,998</p>
</td>
</tr>
<tr>
<td width="42%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>Stockholders&#8217; Equity (Deficit)</p>
</td>
<td width="19%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>(2,352,825)</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>(4,678,209)</p>
</td>
<td width="20%" style="border-left: none; border-right: none; background-color: #f2f2f2" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" align="right" 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="right" 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="right" 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="right" 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="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>recruit and train qualified employees.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" valign="top"><p>We cannot assure you that we will successfully address any of these risks and uncertainties.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>Our independent auditor has expressed substantial doubt about our ability to continue as a going concern.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>Unless we obtain $300,000 in new capital, we will be unable to remain in business.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>Some of our shareholders may have rights of rescission, due to potential violations by us of Section 5 of the
Securities Act.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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.  At June 30, 2002, none of these shares remained subject to
potential rescission claims.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>We have had substantial losses since our inception and our operating losses may continue in the future.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>You will suffer substantial dilution in the net tangible book value of the common stock you purchase.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>The market price of our common stock will continue to be extremely volatile, and it may drop unexpectedly.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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 $.04 per
share to $11.00 per share.  The closing price of our common stock on July 31, 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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" align="right" 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="right" 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 2002in the next year; and</p>
</td>
</tr>
<tr>
<td width="8%" align="right" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>Our common stock could be delisted from the American Stock Exchange, should we fail to regain continued
listing standards by the end of 2003.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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.  In July 2002, we were notified by AMEX that
we have fallen below the continued listing standards of AMEX.  We have 18 months in which to regain
compliance with AMEX&#8217;s continued listing standards.  We have fallen below certain of AMEX&#8217;s continued
listing standards: (1) losses from operations in its two most recent fiscal years with shareholders&#8217; equity
below $2 million; and (2) sustained losses so substantial in relation to the company&#8217;s overall operations or
its existing financial resources, or its financial condition in relation to its overall operations or its existing
financial resources, or its financial condition has become so impaired that it appears questionable, the
opinion of AMEX, as to whether the company will be able to continue operations and/or meet its obligations
as they mature.  After AMEX reviewed our plan for regaining compliance, we were granted an extension of
time (18 months) to regain compliance with the continued listing standards.  We will be subject to periodic
review by the AMEX staff during the extension period.  Failure to make progress consistent with the plan or
to regain compliance with the continued listing standards by the end of the extension period could result in
our being delisted from AMEX.  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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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
3,140,135 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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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 July 31, 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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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 July 31, 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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>The lower our stock price at the time Fusion Capital makes a purchase, the more shares of stock Fusion Capital
will receive.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>Fusion Capital may purchase more than 9.9% of our common stock.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>The existence of our agreement with Fusion Capital could cause downward pressure on the market price of our
common stock.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>We may be unable to obtain sufficient capital to sustain our business or pursue our growth strategy.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>We may not be able to secure enough Quick-Cell customer installation personnel to keep up with demand.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" align="right" 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%" align="right" 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%" align="right" 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%" align="right" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>potential competition from large, well-funded national telecommunications companies.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>Period-to-period comparisons of our results of operations will likely not provide reliable indications of our
future performance.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>Price fluctuations of our common stock could negatively impact our ability to obtain needed capital.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>Because we depend heavily on outside suppliers, our business may suffer, should our suppliers fail to perform in
a timely manner.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>We have not purchased insurance that covers our Quick-Cell wireless Internet access operations.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>Our failure to manage future growth would hinder our efforts in earning a profit.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>Our future success will depend on our ability to keep pace with the Internet industry&#8217;s  rapid technological
changes, evolving industry standards and changing customer needs.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>Our Quick-Cell wireless Internet access products are new and consumer acceptance may not be achieved.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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 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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>Our directors and executive officers own approximately 22% 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 15% 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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>Our business plan is not based on independent market studies, so we cannot assure you that our strategy will be
successful.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>We may not be able to protect our intellectual property rights, which could dramatically reduce our ability to earn
a profit.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-bottom: 0.01in solid" valign="top"><p>Nearly all of our shares are eligible for future sale, which could cause the market price for our common stock to
decline.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<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 $(0.048) per share.</p>
<br>
<p>A purchase of our common stock will result in substantial and immediate dilution in your investment.  Dilution is
the reduction of a purchaser&#8217;s investment measured by the difference between the price paid per share of common
stock and the net tangible book value per share at the time of purchase.</p>
<br>
<p>The following table depicts the potential dilution to purchasers of our common stock, without taking into account
any other changes in our net tangible book value since March 31, 2002, assuming various purchase prices:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" style="border-top: none; border-bottom: none; background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="42%" style="border-top: none; border-bottom: none; background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<p>Public Offering Price Per Share</p>
</td>
<td width="25%" style="border-top: none; border-bottom: none; background-color: #f2f2f2" align="center" valign="top"><p>Net Tangible Book</p>
<p>Value Per Share</p>
<p>At Time of Offering</p>
</td>
<td width="25%" style="border-top: none; border-bottom: none; background-color: #f2f2f2" align="center" valign="top"><br>
<p>Dilution per Share</p>
<p>to Purchasers</p>
</td>
</tr>
<tr>
<td width="8%" style="border-top: none" valign="top"><p>&#160;</p>
</td>
<td width="42%" style="border-top: none" align="center" valign="top"><p>$.06</p>
</td>
<td width="25%" style="border-top: none" align="center" valign="top"><p>$(0.048)</p>
</td>
<td width="25%" style="border-top: none" align="center" valign="top"><p>$.108</p>
</td>
</tr>
<tr>
<td width="8%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="42%" style="background-color: #f2f2f2" align="center" valign="top"><p>$.20</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>$(0.048)</p>
</td>
<td width="25%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="42%" style="background-color: #f2f2f2" align="center" valign="top"><p>$2.00</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>$(0.048)</p>
</td>
<td width="25%" style="background-color: #f2f2f2" 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%" style="border-bottom: none; background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="42%" style="border-bottom: none; background-color: #f2f2f2" align="center" valign="top"><p>$10.00</p>
</td>
<td width="25%" style="border-bottom: none; background-color: #f2f2f2" align="center" valign="top"><p>$(0.048)</p>
</td>
<td width="25%" style="border-bottom: none; background-color: #f2f2f2" 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%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>700,000</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 $3,981,501.
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>$2,500,000</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>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%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>481,501</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>$3,981,501</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="11%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="27%" style="background-color: #f2f2f2; border-bottom: 0.01in solid" align="center" valign="top"><p>Quarter/Period Ended</p>
</td>
<td width="5%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="background-color: #f2f2f2; border-bottom: 0.01in solid" align="center" valign="top"><p>High</p>
</td>
<td width="5%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="background-color: #f2f2f2; border-bottom: 0.01in solid" align="center" valign="top"><p>Low</p>
</td>
<td width="22%" style="background-color: #f2f2f2" align="center" 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="32%" style="border-bottom: 0.01in solid" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="32%" style="background-color: #f2f2f2" valign="top"><p>March 31, 2000</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>11.00</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>3.625</p>
</td>
<td width="20%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="32%" style="background-color: #f2f2f2" valign="top"><p>September 30, 2000</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>2.50</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>.875</p>
</td>
<td width="20%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" style="border-bottom: 0.01in solid" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="32%" style="background-color: #f2f2f2" valign="top"><p>March 31, 2001</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>.80</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>.22</p>
</td>
<td width="20%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="32%" style="background-color: #f2f2f2" valign="top"><p>September 30, 2001</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>.50</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>.17</p>
</td>
<td width="20%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" style="border-bottom: 0.01in solid" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="32%" style="background-color: #f2f2f2" valign="top"><p>March 31, 2002</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>.25</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>.08</p>
</td>
<td width="20%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="32%" style="border-bottom: 0.01in solid" valign="top"><p>June 30, 2002</p>
</td>
<td width="20%" align="center" valign="top"><p>.12</p>
</td>
<td width="20%" align="center" valign="top"><p>.04</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 July 31, 2002, the number of record holders of our common stock, excluding nominees and brokers, was 1,150
holding 47,941,930 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="background-color: #f2f2f2; border-bottom: 0.01in solid" align="center" valign="top"><p>As of March 31, 2002
(unaudited)</p>
</td>
<td width="16%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="background-color: #f2f2f2" valign="top"><p>Redeemable Common Stock</p>
</td>
<td width="23%" style="background-color: #f2f2f2" align="center" valign="top"><p>220,998</p>
</td>
<td width="16%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="background-color: #f2f2f2" valign="top"><p>Common Stock - $.0001 par value; 100,000,000
shares authorized, 28,919,306 shares issued</p>
</td>
<td width="23%" style="background-color: #f2f2f2" align="center" valign="top"><p>2,892</p>
</td>
<td width="16%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="background-color: #f2f2f2" valign="top"><p>Accumulated Deficit</p>
</td>
<td width="23%" style="background-color: #f2f2f2" align="center" valign="top"><p>(37,469,439)</p>
</td>
<td width="16%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="background-color: #f2f2f2" valign="top"><p>Deferred Consulting</p>
</td>
<td width="23%" style="background-color: #f2f2f2" align="center" valign="top"><p>(963,811)</p>
</td>
<td width="16%" style="background-color: #f2f2f2" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="23%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-right: none; border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>Year Ended December 31,</p>
</td>
<td width="31%" style="border-left: none; border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>Three Months Ended March 31,</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="21%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>2001</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>2000</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>1999</p>
</td>
<td width="14%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>2002
(unaudited)</p>
</td>
<td width="16%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>2001
(unaudited)</p>
</td>
</tr>
<tr>
<td width="21%" style="border-right: none" valign="top"><p>Revenues</p>
</td>
<td width="15%" style="border-left: none" align="center" valign="top"><p>$7,446</p>
</td>
<td width="15%" align="center" valign="top"><p>$1,872,629</p>
</td>
<td width="19%" style="border-right: none" align="center" valign="top"><p>$2,547,225</p>
</td>
<td width="14%" style="border-left: none" align="center" valign="top"><p>$4,626</p>
</td>
<td width="16%" style="border-right: none" align="center" valign="top"><p>$384</p>
</td>
</tr>
<tr>
<td width="21%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>Internet access costs,
cost of goods sold</p>
</td>
<td width="15%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>(11,999)</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>(2,145,955)</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>(1,152,721)</p>
</td>
<td width="14%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>(8,482)</p>
</td>
<td width="16%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="21%" style="border-right: none" valign="top"><p>Operating Expenses</p>
</td>
<td width="15%" style="border-left: none" 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="19%" style="border-right: none" align="center" valign="top"><p>11,860,758</p>
</td>
<td width="14%" style="border-left: none" align="center" valign="top"><p>464,772</p>
</td>
<td width="16%" style="border-right: none" align="center" valign="top"><p>901,643</p>
</td>
</tr>
<tr>
<td width="21%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>Net loss</p>
</td>
<td width="15%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>(2,498,468)</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>(21,885,330)</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>(10,930,163)</p>
</td>
<td width="14%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>(468,811)</p>
</td>
<td width="16%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>(901,259)</p>
</td>
</tr>
<tr>
<td width="21%" style="border-right: none" valign="top"><p>Loss per share</p>
</td>
<td width="15%" style="border-left: none" align="center" valign="top"><p>(0.13)</p>
</td>
<td width="15%" align="center" valign="top"><p>(1.68)</p>
</td>
<td width="19%" style="border-right: none" align="center" valign="top"><p>(0.96)</p>
</td>
<td width="14%" style="border-left: none" align="center" valign="top"><p>(0.02)</p>
</td>
<td width="16%" style="border-right: none" align="center" valign="top"><p>(0.06)</p>
</td>
</tr>
<tr>
<td width="21%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>Weighted average
number of shares
outstanding</p>
</td>
<td width="15%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>18,616,434</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>13,00,0391</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>11,419,641</p>
</td>
<td width="14%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>25,503,752</p>
</td>
<td width="16%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>13,934,118</p>
</td>
</tr>
</table>
<br>
<p>BALANCE SHEET DATA:</p>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="42%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="38%" style="border-right: none; border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>As at December 31,</p>
</td>
<td width="20%" style="border-left: none; border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>As at March 31,</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="42%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="19%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>2001</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>2000</p>
</td>
<td width="20%" style="border-left: none; border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>2002</p>
<p>(unaudited)</p>
</td>
</tr>
<tr>
<td width="42%" style="border-right: none" valign="top"><p>Working Capital (Deficit)</p>
</td>
<td width="19%" style="border-left: none" align="center" valign="top"><p>$(1,254,897)</p>
</td>
<td width="19%" style="border-right: none" align="center" valign="top"><p>$(1,517,164)</p>
</td>
<td width="20%" style="border-left: none; border-right: none" align="center" valign="top"><p>$(1,240,582)</p>
</td>
</tr>
<tr>
<td width="42%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>Total Assets</p>
</td>
<td width="19%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>229,528</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>410,316</p>
</td>
<td width="20%" style="border-left: none; border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>222,768</p>
</td>
</tr>
<tr>
<td width="42%" style="border-right: none" valign="top"><p>Total Current Liabilities</p>
</td>
<td width="19%" style="border-left: none" align="center" valign="top"><p>1,389,653</p>
</td>
<td width="19%" style="border-right: none" align="center" valign="top"><p>1,764,973</p>
</td>
<td width="20%" style="border-left: none; border-right: none" align="center" valign="top"><p>1,374,366</p>
</td>
</tr>
<tr>
<td width="42%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>Total Liabilities</p>
</td>
<td width="19%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>1,389,653</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>1,764,973</p>
</td>
<td width="20%" style="border-left: none; border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>1,374,366</p>
</td>
</tr>
<tr>
<td width="42%" style="border-right: none" valign="top"><p>Total Redeemable Common Stock</p>
</td>
<td width="19%" style="border-left: none" align="center" valign="top"><p>1,192,700</p>
</td>
<td width="19%" style="border-right: none" align="center" valign="top"><p>3,323,552</p>
</td>
<td width="20%" style="border-left: none; border-right: none" align="center" valign="top"><p>220,998</p>
</td>
</tr>
<tr>
<td width="42%" style="border-right: none; background-color: #f2f2f2" valign="top"><p>Stockholders&#8217; Equity (Deficit)</p>
</td>
<td width="19%" style="border-left: none; background-color: #f2f2f2" align="center" valign="top"><p>(2,352,825)</p>
</td>
<td width="19%" style="border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>(4,678,209)</p>
</td>
<td width="20%" style="border-left: none; border-right: none; background-color: #f2f2f2" align="center" valign="top"><p>(1,372,596)</p>
</td>
</tr>
</table>
<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 June 14, 2002, we completed a securities purchase agreement with Evergreen Venture Partners, LLC, whereby
we issued 3,125,000 units of our securities for cash in the amount of $250,000, paid in two equal increments: on
April 15, 2002, and June 14, 2002.  Each unit We sold to Evergreen consists of one a total of 3,645,833 shares of
our common stock, one 3,125,000 common stock purchase warrants to purchase one a like number of shares at an
exercise price of $.15 per share and one 3,125,000 common stock purchase warrants to purchase one a like number
of shares 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 has the right to name two persons to become directors of USURF America.  To date,
Evergreen has not named any person as a director.</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.With the $250,000 provided by the Evergreen agreement transaction, we
have been able to begin to implement our newly expanded business plan, our agreement with SunWest
Communications being the first positive result of these efforts.  We expect to have the first customer in Colorado
Springs on line during July 2002 and that our third quarter operating results will begin to reflect the implementation
of our agreement with SunWest.</p>
<br>
<p>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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>$240,000 ($115,000 plus a subscription of $10,000 in April and $125,000 in June) from the sale of
3,125,000 shares and a total of 6,250,000 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 completion of 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 full-scale 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 remainder 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>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.  At June 30, 2002, none of these shares remained subject to potential
rescission claims.</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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="42%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>First Quarter 2002
(unaudited)</p>
</td>
<td width="25%" style="background-color: #f2f2f2" 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>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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="42%" style="background-color: #f2f2f2" valign="top"><p>Internet Access Costs, Cost of Goods Sold</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>8,482</p>
</td>
<td width="25%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="42%" style="background-color: #f2f2f2" valign="top"><p>Operating Expenses</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>464,772</p>
</td>
<td width="25%" style="background-color: #f2f2f2" 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%" style="height: 0.2975in; background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="42%" style="height: 0.2975in; background-color: #f2f2f2" valign="top"><p>Net Loss</p>
</td>
<td width="25%" style="height: 0.2975in; background-color: #f2f2f2" align="center" valign="top"><p>(468,811)</p>
</td>
<td width="25%" style="height: 0.2975in; background-color: #f2f2f2" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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: 2,225,000 shares to consultants, valued at approximately $195,000, all of which
will be charged against our earnings during 2002; 1,400,000 shares to professional service providers, valued at
approximately $100,000, 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 charged 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="42%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>2001</p>
</td>
<td width="25%" style="background-color: #f2f2f2" 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>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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="42%" style="background-color: #f2f2f2" valign="top"><p>Internet Access Costs, Cost of Goods Sold</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>109,525</p>
</td>
<td width="25%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="42%" style="background-color: #f2f2f2" valign="top"><p>Operating Expenses</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>2,852,110</p>
</td>
<td width="25%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="42%" style="background-color: #f2f2f2" valign="top"><p>Other Income (Expense)</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>(34,184)</p>
</td>
<td width="25%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="42%" style="background-color: #f2f2f2" valign="top"><p>Income Tax Benefit</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>0</p>
</td>
<td width="25%" style="background-color: #f2f2f2" 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="10%" valign="top"><p style="text-align: right">-</p>
</td>
<td width="90%" 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="15%" align="right" valign="top"><p>-</p>
</td>
<td width="85%" 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="15%" align="right" valign="top"><p>-</p>
</td>
<td width="85%" 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="10%" valign="top"><p style="text-align: right">-</p>
</td>
<td width="90%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>&#160;-</p>
</td>
<td width="92%" 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 was
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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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 was
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="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" valign="top"><p>$97,526 is attributable to a write-down of the value of certain inventory items;</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" 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="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" 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="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" 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="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" 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="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" 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="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" 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="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" 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 obtained additional funds through sales of our securities, as follows:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" align="right" valign="top"><p>&#160;-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" 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="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" valign="top"><p>$240,000 ($115,000 plus a subscription of $10,000 in April and $125,000 in June) from the sale of
3,125,000 shares and a total of 6,250,000 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>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>In July 2002, we became aware of an existing default judgment against us, dated June 7, 2001, in the approximate
amount of $22,000.  The lawsuit went unchallenged as a result of administrative error.  We intend to seek to set
aside this judgment, as we have a valid defense to the underlying claims.  However, we cannot predict the outcome
of our efforts in this regard.  Should we fail to set aside this judgment, we will be required to pay this judgment
amount.</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="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" 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="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" valign="top"><p>Tower lease site - projected average cost: $500 per month;</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" 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="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" 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%" style="border-bottom: 0.01in solid" 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 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>
</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 $3,981,501.  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 remained 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="19%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="33%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>March 31, 2002</p>
<p>(unaudited)</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>December 31, 2001</p>
<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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="19%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="33%" style="background-color: #f2f2f2" valign="top"><p>Inventory</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>133,500</p>
</td>
<td width="20%" style="background-color: #f2f2f2" 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>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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="19%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="33%" style="background-color: #f2f2f2" valign="top"><p>Accounts Payable</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>1,042,150</p>
</td>
<td width="20%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="19%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="33%" style="background-color: #f2f2f2" valign="top"><p>Other Current Liabilities</p>
</td>
<td width="20%" style="background-color: #f2f2f2" align="center" valign="top"><p>59,396</p>
</td>
<td width="20%" style="background-color: #f2f2f2" 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%" align="right" valign="top"><p>&#160;-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" 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="10%" align="right" valign="top"><p>-</p>
</td>
<td width="90%" valign="top"><p>$240,000 ($115,000 plus a subscription of $10,000 in April and $125,000 in June) from the sale of
3,125,000 shares and a total of 6,250,000 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="34%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="19%" style="background-color: #f2f2f2" align="center" valign="top"><p>2001</p>
</td>
<td width="19%" style="background-color: #f2f2f2" align="center" valign="top"><p>2000</p>
</td>
</tr>
<tr>
<td width="28%" valign="top"><p>Current Assets</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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="34%" style="background-color: #f2f2f2" valign="top"><p>Inventory</p>
</td>
<td width="19%" style="background-color: #f2f2f2" align="center" valign="top"><p>134,756</p>
</td>
<td width="19%" style="background-color: #f2f2f2" 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>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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="34%" style="background-color: #f2f2f2" valign="top"><p>Accounts payable</p>
</td>
<td width="19%" style="background-color: #f2f2f2" align="center" valign="top"><p>1,034,619</p>
</td>
<td width="19%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="34%" style="background-color: #f2f2f2" valign="top"><p>Other current liabilities</p>
</td>
<td width="19%" style="background-color: #f2f2f2" align="center" valign="top"><p>54,996</p>
</td>
<td width="19%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="34%" style="background-color: #f2f2f2" valign="top"><p>Notes payable to stockholder</p>
</td>
<td width="19%" style="background-color: #f2f2f2" align="center" valign="top"><p>18,521</p>
</td>
<td width="19%" style="background-color: #f2f2f2" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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 were payable on demand, with interest accruing at 8% per annum.</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 July 31, 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%" align="right" 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="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" 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>
<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 June 14, 2002, we completed a securities purchase agreement with Evergreen Venture Partners, LLC, whereby
we issued 3,125,000 units of our securities for cash in the amount of $250,000, paid in two equal increments: on
April 15, 2002, and June 14, 2002.  Each unit We sold to Evergreen consists of one a total of 3,645,833 shares of
our common stock, one 3,125,000 common stock purchase warrants to purchase one a like number of shares at an
exercise price of $.15 per share and one 3,125,000 common stock purchase warrants to purchase one a like number
of shares 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 has the right to name two persons to become directors of USURF America.  To date,
Evergreen has not named any person as a director.</p>
<br>
<p>In May 2002, we 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.  This agreement with SunWest
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 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>the lowest sale price of our common stock on the purchase date; or</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<br>
<p>Assumed Per Share
Purchase Price</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>Total Shares Issuable
Upon Purchase of
Remaining Shares</p>
<p>Under the Fusion</p>
<p>Capital Agreement</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<br>
<br>
<p>Gross Proceeds</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>Percent of Our Common
Stock Outstanding</p>
<p>After Giving Effect</p>
<p>to the Issuance to</p>
<p>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(2)</p>
</td>
<td width="25%" align="center" valign="top"><p>$600,000(2)</p>
</td>
<td width="25%" align="center" valign="top"><p>12.07%</p>
</td>
</tr>
<tr>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>$1.50</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>6,000,000(2)</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>$4,500,000(2)</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>12.07%</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>12.07%</p>
</td>
</tr>
<tr>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>$5.00</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>4,500,000(2)</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>$10,000,000</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>9.05%</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>7.04%</p>
</td>
</tr>
</table>
<p>____________</p>
<p>(1) Closing price on July 31, 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>No wide-spread brand name recognition;</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>Professional installation usually required; and</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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>
<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 equipment, including office equipment, necessary to conduct our business.</p>
<br>
<p>In Baton Rouge, Louisiana, we lease approximately 1,600 square foot modem assembly facility, for a monthly rental
of approximately $720 (expiring October 2002).  In Englewood, Colorado, we lease a small office for our executive
offices, for a small monthly rental.</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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>the lowest sale price of our common stock on the purchase date; or</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<br>
<p>Assumed Per Share
Purchase Price</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>Total Shares Issuable
Upon Purchase of
Remaining Shares</p>
<p>Under the Fusion</p>
<p>Capital Agreement</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<br>
<br>
<p>Gross Proceeds</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>Percent of Our Common
Stock Outstanding</p>
<p>After Giving Effect</p>
<p>to the Issuance to</p>
<p>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(2)</p>
</td>
<td width="25%" align="center" valign="top"><p>$600,000(2)</p>
</td>
<td width="25%" align="center" valign="top"><p>12.07%</p>
</td>
</tr>
<tr>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>$1.50</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>6,000,000(2)</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>$4,500,000(2)</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>12.07%</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>12.07%</p>
</td>
</tr>
<tr>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>$5.00</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>4,500,000(2)</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>$10,000,000</p>
</td>
<td width="25%" style="background-color: #f2f2f2" align="center" valign="top"><p>9.05%</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>7.04%</p>
</td>
</tr>
</table>
<p>____________</p>
<p>(1) Closing price on July 31, 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="31%" style="background-color: #f2f2f2" align="center" valign="top"><p>Name</p>
</td>
<td width="8%" style="background-color: #f2f2f2" align="center" valign="top"><p>Age</p>
</td>
<td width="53%" style="background-color: #f2f2f2" align="center" 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%" align="center" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="31%" style="background-color: #f2f2f2" valign="top"><p>David M. Loflin(1)</p>
</td>
<td width="8%" style="background-color: #f2f2f2" align="center" valign="top"><p>45</p>
</td>
<td width="53%" style="background-color: #f2f2f2" 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%" align="center" valign="top"><p>52</p>
</td>
<td width="53%" valign="top"><p>Vice President, Secretary and Director</p>
</td>
</tr>
<tr>
<td width="8%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="31%" style="background-color: #f2f2f2" valign="top"><p>James Kaufman</p>
</td>
<td width="8%" style="background-color: #f2f2f2" align="center" valign="top"><p>37</p>
</td>
<td width="53%" style="background-color: #f2f2f2" 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%" align="center" valign="top"><p>43</p>
</td>
<td width="53%" valign="top"><p>Director</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>___________</p>
</td>
</tr>
<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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>Declare dividends;</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>Sell or otherwise dispose of all or substantially all of our assets;</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>Recommend to our shareholders any action requiring their approval; and</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<br>
<br>
<br>
<p>Name and</p>
<p>Principal Position</p>
</td>
<td width="8%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<br>
<br>
<br>
<br>
<p>Year</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<br>
<br>
<br>
<br>
<p>Salary $</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<br>
<br>
<br>
<br>
<p>Bonus $</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<br>
<p>Other
Annual
Com-pensation</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>Long-term
Compen-sation
Awards
of Stock
Options</p>
</td>
<td width="11%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<br>
<br>
<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%" style="background-color: #f2f2f2" valign="top"><p>President [Principal</p>
</td>
<td width="8%" style="background-color: #f2f2f2" align="center" valign="top"><p>2000</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>$150,000(2)</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>0</p>
</td>
<td width="11%" style="background-color: #f2f2f2" align="center" valign="top"><p>$-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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="8%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>[Vice President and</p>
</td>
<td width="8%" style="background-color: #f2f2f2" align="center" valign="top"><p>2000</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>$100,000(5)</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>$48,000(12)</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>0</p>
</td>
<td width="11%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="8%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>[President of Corporate</p>
</td>
<td width="8%" style="background-color: #f2f2f2" align="center" valign="top"><p>2000</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>$120,000(8)</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>$72,000(13)</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>0</p>
</td>
<td width="11%" style="background-color: #f2f2f2" align="center" valign="top"><p>$-0-</p>
</td>
</tr>
<tr>
<td width="26%" valign="top"><p>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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="8%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>[Former Chief</p>
</td>
<td width="8%" style="background-color: #f2f2f2" align="center" valign="top"><p>2000</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>$-0-</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>0</p>
</td>
<td width="11%" style="background-color: #f2f2f2" align="center" valign="top"><p>$-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%" style="background-color: #f2f2f2" valign="top"><p>&#160;</p>
</td>
<td width="8%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" style="background-color: #f2f2f2" 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%" style="background-color: #f2f2f2" valign="top"><p>[Vice President of</p>
</td>
<td width="8%" style="background-color: #f2f2f2" align="center" valign="top"><p>2000</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>$-0-</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>$750,000</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>$-0-</p>
</td>
<td width="12%" style="background-color: #f2f2f2" align="center" valign="top"><p>0</p>
</td>
<td width="11%" style="background-color: #f2f2f2" 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="22%" style="background-color: #f2f2f2" align="center" valign="top"><p>Name of Officer</p>
</td>
<td width="32%" style="background-color: #f2f2f2" align="center" valign="top"><p>Position(s)</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>Term</p>
</td>
<td width="18%" style="background-color: #f2f2f2" align="center" valign="top"><p>Salary</p>
</td>
<td width="13%" style="background-color: #f2f2f2" align="center" valign="top"><p>Date</p>
</td>
</tr>
<tr>
<td width="22%" valign="top"><p>Douglas O.
McKinnon</p>
</td>
<td width="32%" valign="top"><p>President and Chief</p>
<p>&#160;&#160;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="22%" style="background-color: #f2f2f2" valign="top"><p>David M. Loflin</p>
</td>
<td width="32%" style="background-color: #f2f2f2" valign="top"><p>Chairman of the Board</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>6 months(1)</p>
</td>
<td width="18%" style="background-color: #f2f2f2" align="center" valign="top"><p>$150,000</p>
</td>
<td width="13%" style="background-color: #f2f2f2" align="center" valign="top"><p>6/1/99,
amended
4/15/02</p>
</td>
</tr>
<tr>
<td width="22%" valign="top"><p>Waddell D. Loflin</p>
</td>
<td width="32%" 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="22%" style="background-color: #f2f2f2" valign="top"><p>James Kaufman</p>
</td>
<td width="32%" style="background-color: #f2f2f2" valign="top"><p>Vice President of Corporate</p>
<p>&#160;&#160;Development</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>6 months</p>
</td>
<td width="18%" style="background-color: #f2f2f2" align="center" valign="top"><p>$120,000</p>
</td>
<td width="13%" style="background-color: #f2f2f2" align="center" valign="top"><p>3/22/99,
amended
4/15/02</p>
</td>
</tr>
</table>
<p>____________</p>
<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 June 14, 2002, we completed a securities purchase agreement with Evergreen Venture Partners, LLC, whereby
we issued 3,125,000 units of our securities for cash in the amount of $250,000, paid in two equal increments: on
April 15, 2002, and June 14, 2002.  Each unit We sold to Evergreen consists of one a total of 3,645,833 shares of
our common stock, one 3,125,000 common stock purchase warrants to purchase one a like number of shares at an
exercise price of $.15 per share and one 3,125,000 common stock purchase warrants to purchase one a like number
of shares 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 has the right to name two persons to become directors of USURF America.  To date,
Evergreen has not named any person as a director.</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>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="22%" style="background-color: #f2f2f2" align="center" valign="top"><p>Name of Officer</p>
</td>
<td width="32%" style="background-color: #f2f2f2" align="center" valign="top"><p>Position(s)</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>Term</p>
</td>
<td width="18%" style="background-color: #f2f2f2" align="center" valign="top"><p>Salary</p>
</td>
<td width="13%" style="background-color: #f2f2f2" align="center" valign="top"><p>Date</p>
</td>
</tr>
<tr>
<td width="22%" valign="top"><p>Douglas O.
McKinnon</p>
</td>
<td width="32%" valign="top"><p>President and Chief</p>
<p>&#160;&#160;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="22%" style="background-color: #f2f2f2" valign="top"><p>David M. Loflin</p>
</td>
<td width="32%" style="background-color: #f2f2f2" valign="top"><p>Chairman of the Board</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>6 months(1)</p>
</td>
<td width="18%" style="background-color: #f2f2f2" align="center" valign="top"><p>$150,000</p>
</td>
<td width="13%" style="background-color: #f2f2f2" align="center" valign="top"><p>6/1/99,
amended
4/15/02</p>
</td>
</tr>
<tr>
<td width="22%" valign="top"><p>Waddell D. Loflin</p>
</td>
<td width="32%" 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="22%" style="background-color: #f2f2f2" valign="top"><p>James Kaufman</p>
</td>
<td width="32%" style="background-color: #f2f2f2" valign="top"><p>Vice President of Corporate</p>
<p>&#160;&#160;Development</p>
</td>
<td width="15%" style="background-color: #f2f2f2" align="center" valign="top"><p>6 months</p>
</td>
<td width="18%" style="background-color: #f2f2f2" align="center" valign="top"><p>$120,000</p>
</td>
<td width="13%" style="background-color: #f2f2f2" align="center" valign="top"><p>3/22/99,
amended
4/15/02</p>
</td>
</tr>
</table>
<p>____________</p>
<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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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 47,941,930 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 2,859,865 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 12,403,727 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 3333 S. Bannock, Suite 790, Englewood, Colorado 80110.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="31%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<p>Name and Address</p>
<p>of Beneficial Owner</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>Shares Owned
Beneficially
Before</p>
<p>This Offering</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<p>Percent Owned
Before</p>
<p>This Offering(1)</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>Shares Owned
Beneficially
After</p>
<p>This Offering</p>
</td>
<td width="18%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<p>Percent Owned</p>
<p>After</p>
<p>This Offering(1)</p>
</td>
</tr>
<tr>
<td width="31%" valign="top"><p>David M. Loflin(2)</p>
<p>8748 Quarters Lake Road</p>
<p>Baton Rouge, Louisiana 70809</p>
</td>
<td width="17%" align="center" valign="top"><p>5,950,960</p>
</td>
<td width="17%" align="center" valign="top"><p>9.41%</p>
</td>
<td width="17%" align="center" valign="top"><p>5,450,960(3)</p>
</td>
<td width="18%" align="center" valign="top"><p>8.62%</p>
</td>
</tr>
<tr>
<td width="31%" style="background-color: #f2f2f2" valign="top"><p>Waddell D. Loflin(2)</p>
<p>8748 Quarters Lake Road</p>
<p>Baton Rouge, Louisiana 70809</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>2,490,000</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>3.94%</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>2,290,000(3)</p>
</td>
<td width="18%" style="background-color: #f2f2f2" align="center" valign="top"><p>3.62%</p>
</td>
</tr>
<tr>
<td width="31%" 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>3.83%</p>
</td>
<td width="17%" align="center" valign="top"><p>2,425,000</p>
</td>
<td width="18%" align="center" valign="top"><p>3.83%</p>
</td>
</tr>
<tr>
<td width="31%" style="background-color: #f2f2f2" valign="top"><p>Douglas O. McKinnon(5)</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>3,000,000</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>4.74%</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>2,500,000(6)</p>
</td>
<td width="18%" style="background-color: #f2f2f2" align="center" valign="top"><p>3.83%</p>
</td>
</tr>
<tr>
<td width="31%" valign="top"><p>Ross S. Bravata</p>
<p>8748 Quarters Lake Road</p>
<p>Baton Rouge, LA 70809</p>
</td>
<td width="17%" align="center" valign="top"><p>144,500(7)</p>
</td>
<td width="17%" align="center" valign="top"><p>less than 1%</p>
</td>
<td width="17%" align="center" valign="top"><p>32,000</p>
</td>
<td width="18%" align="center" valign="top"><p>less than 1%</p>
</td>
</tr>
<tr>
<td width="31%" style="background-color: #f2f2f2" valign="top"><p>Fusion Capital Fund II, LLC</p>
<p>222 Merchandise Mart Plaza</p>
<p>Suite 9-112</p>
<p>Chicago, IL 60654</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>3,646,335(8)</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>5.77%</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>3,646,335</p>
</td>
<td width="18%" style="background-color: #f2f2f2" align="center" valign="top"><p>5.77%</p>
</td>
</tr>
<tr>
<td width="31%" valign="top"><p>Evergreen Venture</p>
<p>&#160;&#160;Partners, LLC(3)</p>
<p>2104 Ridge Plaza</p>
<p>Castle Rock, CO 80104</p>
</td>
<td width="17%" align="center" valign="top"><p>5,583,333(9)(10)</p>
</td>
<td width="17%" align="center" valign="top"><p>8.83%</p>
</td>
<td width="17%" align="center" valign="top"><p>0(10)</p>
</td>
<td width="18%" align="center" valign="top"><p>0%</p>
</td>
</tr>
<tr>
<td width="31%" style="background-color: #f2f2f2" valign="top"><p>All officers and directors as</p>
<p>&#160;&#160;a group (5 persons)</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>14,010,460(7)</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>22.17%</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>13,117,960</p>
</td>
<td width="18%" style="background-color: #f2f2f2" align="center" valign="top"><p>20.85%</p>
</td>
</tr>
</table>
<p>____________</p>
<p>(1)  Based on 63,205,522 shares outstanding, assuming the issuance of 2,859,865 shares reserved for issuance under
the Fusion Capital agreement and 12,403,727 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)  Assumes 500,000 shares owned by Mr. Loflin are sold pursuant to this prospectus.</p>
<p>(4)  Assumes 200,000 shares owned by Mr. Loflin are sold pursuant to this prospectus.</p>
<p>(5) 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>(6) Assumes 500,000 shares owned are sold by Mr. McKinnon, pursuant to a prospectus forming a part of an
effective registration statement (SEC File No. 333-87830).</p>
<p>(7) 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, pursuant to a prospectus forming a part of an effective registration statement (SEC File No. 333-87830).</p>
<p>(8) 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>(9) 2,208,333 of these shares have been issued; 3,375,000 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>(10) Of the 2,208,333 issued shares included in this ownership amount, 125,000 shares have been registered for sale
and, of the 3,375,000 unissued shares included in this ownership amount, 250,000 shares have been registered for
sale under a prospectus forming a part of an effective registration statement (SEC File No. 333-87830); the balance
of such shares are being offered pursuant to this prospectus.</p>
<p>(11) Assumes the sale of all shares being offered pursuant to this prospectus and the sale of all shares registered
pursuant the effective registration statement described above in footnote 9.</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>In July 2002, we became aware of an existing default judgment against us, dated June 7, 2001, in the approximate
amount of $22,000.  The lawsuit, filed by a law firm in Boise, Idaho, went unchallenged as a result of administrative
error.  We intend to seek to set aside this judgment, as we have a valid defense to the underlying claims.  However,
we cannot predict the outcome of our efforts in this regard.  Should we fail to set aside this judgment, we will be
required to pay this judgment amount.  This case is styled: Marcus, Merrick, Montgomery, Christian &amp; Hardee, LLP
vs. USURF America, Inc., District Court of the Fourth Judicial District of the State of Idaho, in and for the County
of Ada, Case No. CV OC 0101693D.  We have not yet retained legal counsel in this matter.</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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>ordinary brokers' transactions;</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>transactions involving cross or block trades or otherwise on the American Stock Exchange;</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>in privately negotiated transactions; or</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" 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 David M. Loflin,
our current Chairman of the Board and Waddell D. Loflin, our current vice president, secretary and director,
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%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;</p>
</td>
<td width="33%" style="background-color: #f2f2f2; border-bottom: 0.01in solid" align="center" valign="top"><p>Percentage Owned</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="35%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<br>
<p>Name of Beneficial Owner</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>Shares of
Common Stock
Beneficially
Owned</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<p>Shares of
Common Stock
Being Offered</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<p>Before
Offering(1)</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><br>
<br>
<p>After
Offering(1)</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Newlan &amp; Newlan</p>
</td>
<td width="16%" align="center" valign="top"><p>1,200,000</p>
</td>
<td width="16%" align="center" valign="top"><p>900,000</p>
</td>
<td width="16%" align="center" valign="top"><p>1.89%</p>
</td>
<td width="17%" align="center" valign="top"><p>less than 1%</p>
</td>
</tr>
<tr>
<td width="35%" style="background-color: #f2f2f2" valign="top"><p>Evergreen Venture Partners, LLC(2)</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>5,583,333(3)</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>5,208,333</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>8.83%</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>&#160;less than 1%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>David M. Loflin</p>
</td>
<td width="16%" align="center" valign="top"><p>5,950,960</p>
</td>
<td width="16%" align="center" valign="top"><p>500,000</p>
</td>
<td width="16%" align="center" valign="top"><p>9.41%</p>
</td>
<td width="17%" align="center" valign="top"><p>8.62%</p>
</td>
</tr>
<tr>
<td width="35%" style="background-color: #f2f2f2" valign="top"><p>Waddell D. Loflin</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>2,490,000</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>200,000</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>3.94%</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>3.62%</p>
</td>
</tr>
<tr>
<td width="35%" valign="top"><p>Peter Rochow</p>
</td>
<td width="16%" align="center" valign="top"><p>2,250,000</p>
</td>
<td width="16%" align="center" valign="top"><p>300,000</p>
</td>
<td width="16%" align="center" valign="top"><p>3.56%</p>
</td>
<td width="17%" align="center" valign="top"><p>3.08%</p>
</td>
</tr>
<tr>
<td width="35%" style="background-color: #f2f2f2" valign="top"><p>Regency Capital, LLC</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>300,000</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>300,000</p>
</td>
<td width="16%" style="background-color: #f2f2f2" align="center" valign="top"><p>less than 1%</p>
</td>
<td width="17%" style="background-color: #f2f2f2" align="center" valign="top"><p>0%</p>
</td>
</tr>
</table>
<p>____________</p>
<p>(1) Based on 63,205,522 shares outstanding, assuming the issuance of 2,859,865 shares reserved for issuance under
the Fusion Capital agreement and 12,403,727 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) Our president, Douglas O. McKinnon, is a manager of this entity.</p>
<p>(3) 2,208,333 of these shares have been issued; 3,375,000 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 47,941,930 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 12,403,727 shares of common stock have
been reserved for issuance pursuant to various warrants and up to additional 2,859,865 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 1,200,000 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 7,408,333 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>
<p style="text-align: center">Three Months Ended March 31, 2002 and 2001</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="23%" style="border-bottom: none" valign="top"><p>&#160;</p>
</td>
<td width="62%" style="border-bottom: none" valign="top"><p>&#160;</p>
</td>
<td width="8%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>Page</p>
</td>
<td width="7%" style="border-bottom: none" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="23%" style="border-top: none" valign="top"><p>&#160;</p>
</td>
<td width="62%" style="border-top: none" valign="top"><p>Consolidated Balance Sheets at March 31, 2002, and December 31,
2001 (audited)</p>
</td>
<td width="8%" align="center" valign="top"><p>F-1</p>
</td>
<td width="7%" style="border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="62%" valign="top"><p>Consolidated Statements of Operations for the Three Months Ended
March 31, 2002 and 2001</p>
</td>
<td width="8%" align="center" valign="top"><p>F-4</p>
</td>
<td width="7%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="62%" valign="top"><p>Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 2002 and 2001</p>
</td>
<td width="8%" align="center" valign="top"><p>F-6</p>
</td>
<td width="7%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="62%" valign="top"><p>Notes to Consolidated Financial Statements</p>
</td>
<td width="8%" align="center" valign="top"><p>F-9</p>
</td>
<td width="7%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p style="text-align: center">Years Ended December 31, 2001, 2000 and 1999</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="62%" valign="top"><p>Report of Independent Auditor</p>
</td>
<td width="8%" align="center" valign="top"><p>F-12</p>
</td>
<td width="7%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="62%" valign="top"><p>Consolidated Balance Sheets at December 31, 2001 and 2000</p>
</td>
<td width="8%" align="center" valign="top"><p>F-13</p>
</td>
<td width="7%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="62%" valign="top"><p>Consolidated Statements of Operations for the Years Ended
December 31, 2001, 2000 and 1999</p>
</td>
<td width="8%" align="center" valign="top"><p>F-16</p>
</td>
<td width="7%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="62%" 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="8%" align="center" valign="top"><p>F-18</p>
</td>
<td width="7%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="62%" valign="top"><p>Consolidated Statements of Cash Flows for the Years Ended
December 31, 2001, 2000 and 1999</p>
</td>
<td width="8%" align="center" valign="top"><p>F-23</p>
</td>
<td width="7%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="62%" valign="top"><p>Notes to Consolidated Financial Statements</p>
</td>
<td width="8%" align="center" valign="top"><p>F-25</p>
</td>
<td width="7%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<br>
<p>&lt;PAGE&gt;</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 BALANCE SHEETS</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>DECEMBER 31, 2001, AND MARCH 31, 2002 (UNAUDITED)</p>
</td>
</tr>
</table>
<br>
<p style="text-align: center">ASSETS</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>3/31/02</p>
<p>(unaudited)</p>
</td>
<td width="19%" align="center" valign="top"><p>12/31/01</p>
<p>(audited)</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>__________</p>
</td>
<td width="19%" align="center" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>CURRENT ASSETS</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Cash and cash equivalents</p>
</td>
<td width="19%" align="right" valign="top"><p>$284</p>
</td>
<td width="19%" align="right" valign="top"><p>$10</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Inventory</p>
</td>
<td width="19%" align="right" valign="top"><p>133,500</p>
</td>
<td width="19%" align="right" valign="top"><p>134,746</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>133,784</p>
</td>
<td width="19%" align="right" valign="top"><p>134,756</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>PROPERTY AND EQUIPMENT</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Cost</p>
</td>
<td width="19%" align="right" valign="top"><p>204,387</p>
</td>
<td width="19%" align="right" valign="top"><p>203,141</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Less: accumulated depreciation</p>
</td>
<td width="19%" align="right" valign="top"><p>(129,986)</p>
</td>
<td width="19%" align="right" valign="top"><p>(125,036)</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>74,401</p>
</td>
<td width="19%" align="right" valign="top"><p>78,105</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>OTHER ASSETS</p>
</td>
<td width="19%" align="right" valign="top"><p>14,583</p>
</td>
<td width="19%" align="right" valign="top"><p>16,667</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>TOTAL ASSETS</p>
</td>
<td width="19%" align="right" valign="top"><p>$222,768</p>
</td>
<td width="19%" align="right" valign="top"><p>$229,528</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>===========</p>
</td>
<td width="19%" align="right" valign="top"><p>===========</p>
</td>
</tr>
</table>
<br>
<p>The accompanying notes are an integral part of these statements.</p>
<br>
<p style="text-align: center">LIABILITIES AND STOCKHOLDERS&#8217; DEFICIT</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>3/31/02</p>
<p>(unaudited)</p>
</td>
<td width="19%" align="center" valign="top"><p>12/31/01</p>
<p>(audited)</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="center" valign="top"><p>__________</p>
</td>
<td width="19%" align="center" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>CURRENT LIABILITIES</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Disbursements in excess of cash balances</p>
</td>
<td width="19%" align="right" valign="top"><p>$0</p>
</td>
<td width="19%" align="right" valign="top"><p>$15,539</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Accounts payable</p>
</td>
<td width="19%" align="right" valign="top"><p>1,042,150</p>
</td>
<td width="19%" align="right" valign="top"><p>1,034,619</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Accrued payroll</p>
</td>
<td width="19%" align="right" valign="top"><p>272,820</p>
</td>
<td width="19%" align="right" valign="top"><p>265,978</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Other current liabilities</p>
</td>
<td width="19%" align="right" valign="top"><p>59,396</p>
</td>
<td width="19%" align="right" valign="top"><p>54,996</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;Notes payable to stockholder</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="19%" align="right" valign="top"><p>18,521</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>1,374,366</p>
</td>
<td width="19%" align="right" valign="top"><p>1,389,653</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>LONG-TERM LIABILITIES</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
<td width="19%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>1,374,366</p>
</td>
<td width="19%" align="right" valign="top"><p>1,389,653</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>REDEEMABLE COMMON STOCK</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Common stock subject to rescission, 2,138,726 shares outstanding
at December 31, 2001, and 524,564 shares outstanding at March 31,
2002, $.0001 par value per share</p>
</td>
<td width="19%" align="right" valign="top"><p>220,998</p>
</td>
<td width="19%" align="right" valign="top"><p>1,192,700</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>220,998</p>
</td>
<td width="19%" align="right" valign="top"><p>1,192,700</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>STOCKHOLDERS&#8217; DEFICIT</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Common stock, $.0001 par value; Authorized: 100,000,000 shares;
Issued and outstanding: 23,848,108 at December 31, 2001, and
28,919,306 at March 31, 2002</p>
</td>
<td width="19%" align="right" valign="top"><p>2,892</p>
</td>
<td width="19%" align="right" valign="top"><p>2,385</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Additional paid-in capital</p>
</td>
<td width="19%" align="right" valign="top"><p>36,891,262</p>
</td>
<td width="19%" align="right" valign="top"><p>35,642,817</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Accumulated deficit</p>
</td>
<td width="19%" align="right" valign="top"><p>(37,469,439)</p>
</td>
<td width="19%" align="right" valign="top"><p>(37,000,628)</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Subscriptions receivable</p>
</td>
<td width="19%" align="right" valign="top"><p>166,500</p>
</td>
<td width="19%" align="right" valign="top"><p>165,750</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>Deferred consulting</p>
</td>
<td width="19%" align="right" valign="top"><p>(963,811)</p>
</td>
<td width="19%" align="right" valign="top"><p>(1,163,149)</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>(1,372,596)</p>
</td>
<td width="19%" align="right" valign="top"><p>(2,352,825)</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
<td width="19%" align="right" valign="top"><p>_____________</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>TOTAL LIABILITIES AND STOCKHOLDERS&#8217; DEFICIT</p>
</td>
<td width="19%" align="right" valign="top"><p>$222,768</p>
</td>
<td width="19%" align="right" valign="top"><p>$229,528</p>
</td>
</tr>
<tr>
<td width="62%" valign="top"><p>&#160;</p>
</td>
<td width="19%" align="right" valign="top"><p>===========</p>
</td>
<td width="19%" align="right" valign="top"><p>===========</p>
</td>
</tr>
</table>
<br>
<p>The accompanying notes are an integral part of these statements.</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>USURF AMERICA, INC. AND SUBSIDIARIES</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>BATON ROUGE, LOUISIANA</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>CONSOLIDATED STATEMENTS OF OPERATIONS</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>THREE MONTHS ENDED MARCH 31, 2002 AND 2001</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="57%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="43%" align="center" valign="top"><p>Three Months Ended March 31,</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="center" valign="top"><p>2002</p>
<p>(unaudited)</p>
</td>
<td width="21%" align="center" valign="top"><p>2001</p>
<p>(unaudited)</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="center" valign="top"><p>__________</p>
</td>
<td width="21%" align="center" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>REVENUES</p>
</td>
<td width="22%" valign="top"><p>&#160;</p>
</td>
<td width="21%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>Revenues</p>
</td>
<td width="22%" align="right" valign="top"><p>$4,626</p>
</td>
<td width="21%" align="right" valign="top"><p>$384</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>Internet access costs, cost of goods sold</p>
</td>
<td width="22%" align="right" valign="top"><p>(8,482)</p>
</td>
<td width="21%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>__________</p>
</td>
<td width="21%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>Gross profit (loss)</p>
</td>
<td width="22%" align="right" valign="top"><p>(3,856)</p>
<p>_________</p>
</td>
<td width="21%" align="right" valign="top"><p>384</p>
<p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>OPERATING EXPENSES</p>
</td>
<td width="22%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="21%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;Depreciation and amortization</p>
</td>
<td width="22%" align="right" valign="top"><p>7,033</p>
</td>
<td width="21%" align="right" valign="top"><p>11,580</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;Professional fees</p>
</td>
<td width="22%" align="right" valign="top"><p>270,147</p>
</td>
<td width="21%" align="right" valign="top"><p>707,288</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;Rent</p>
</td>
<td width="22%" align="right" valign="top"><p>7,681</p>
</td>
<td width="21%" align="right" valign="top"><p>5,361</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;Salaries and commissions</p>
</td>
<td width="22%" align="right" valign="top"><p>103,168</p>
</td>
<td width="21%" align="right" valign="top"><p>160,746</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;Advertising</p>
</td>
<td width="22%" align="right" valign="top"><p>62,000</p>
</td>
<td width="21%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;Other</p>
</td>
<td width="22%" align="right" valign="top"><p>14,743</p>
</td>
<td width="21%" align="right" valign="top"><p>16,668</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>__________</p>
</td>
<td width="21%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>464,772</p>
</td>
<td width="21%" align="right" valign="top"><p>901,643</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>__________</p>
</td>
<td width="21%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>LOSS FROM OPERATIONS</p>
</td>
<td width="22%" align="right" valign="top"><p>(468,628)</p>
<p>__________</p>
</td>
<td width="21%" align="right" valign="top"><p>(901,259)</p>
<p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>OTHER INCOME (EXPENSE)</p>
</td>
<td width="22%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="21%" align="right" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;Interest expense</p>
</td>
<td width="22%" align="right" valign="top"><p>(183)</p>
</td>
<td width="21%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>__________</p>
</td>
<td width="21%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>(183)</p>
<p>__________</p>
</td>
<td width="21%" align="right" valign="top"><p>0</p>
<p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>LOSS BEFORE INCOME TAX</p>
</td>
<td width="22%" align="right" valign="top"><p>(468,811)</p>
</td>
<td width="21%" align="right" valign="top"><p>(901,259)</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>INCOME TAX BENEFIT</p>
</td>
<td width="22%" align="right" valign="top"><p>0</p>
</td>
<td width="21%" align="right" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>__________</p>
</td>
<td width="21%" align="right" valign="top"><p>__________</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>NET LOSS</p>
</td>
<td width="22%" align="right" valign="top"><p>$(468,811)</p>
</td>
<td width="21%" align="right" valign="top"><p>$(901,259)</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>=========</p>
</td>
<td width="21%" align="right" valign="top"><p>=========</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>Net loss per common share</p>
</td>
<td width="22%" align="right" valign="top"><p>$(0.02)</p>
</td>
<td width="21%" align="right" valign="top"><p>$(0.06)</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>=========</p>
</td>
<td width="21%" align="right" valign="top"><p>=========</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>Weighted average number of shares outstanding</p>
</td>
<td width="22%" align="right" valign="top"><p>25,503,752</p>
</td>
<td width="21%" align="right" valign="top"><p>13,934,118</p>
</td>
</tr>
<tr>
<td width="57%" valign="top"><p>&#160;</p>
</td>
<td width="22%" align="right" valign="top"><p>=========</p>
</td>
<td width="21%" align="right" valign="top"><p>=========</p>
</td>
</tr>
</table>
<br>
<p>The accompanying notes are an integral part of these statements.</p>
<br>
<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>
<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>
<br>
<p>/s/ POSTLETHWAITE &amp; NETTERVILLE</p>
<br>
<p>Postlethwaite &amp; Netterville</p>
<br>
<p>Baton Rouge, Louisiana</p>
<p>April 12, 2002</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 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>
<div align="left">
<table width="624px" 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>
</div>
<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>
<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>
<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>
<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>
<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>
<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>
<br>
<p>&lt;PAGE&gt;</p>
<br>
<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="67%" valign="top"><p>Registration Fee</p>
</td>
<td width="18%" align="right" valign="top"><p>$88.33</p>
</td>
<td width="4%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="67%" valign="top"><p>Underwriter&#8217;s unaccountable expense allowance</p>
</td>
<td width="18%" align="right" valign="top"><p>0.00</p>
</td>
<td width="4%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="67%" valign="top"><p>Printing and engraving expenses</p>
</td>
<td width="18%" align="right" valign="top"><p>500.00</p>
</td>
<td width="4%" align="center" valign="top"><p>* </p>
</td>
<td width="11%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="67%" valign="top"><p>Legal fees and expenses</p>
</td>
<td width="18%" align="right" valign="top"><p>10,000.00</p>
</td>
<td width="4%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="67%" valign="top"><p>Accounting fees and expenses</p>
</td>
<td width="18%" align="right" valign="top"><p>3,000.00</p>
</td>
<td width="4%" align="center" valign="top"><p>* </p>
</td>
<td width="11%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="67%" valign="top"><p>Blue Sky fees and expenses</p>
</td>
<td width="18%" align="right" valign="top"><p>0.00</p>
</td>
<td width="4%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="67%" valign="top"><p>Transfer agent and registrar fees and expenses</p>
</td>
<td width="18%" align="right" valign="top"><p>0.00</p>
</td>
<td width="4%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="11%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="67%" valign="top"><p>Miscellaneous</p>
</td>
<td width="18%" align="right" valign="top"><p>1,000.00</p>
</td>
<td width="4%" align="center" valign="top"><p>* </p>
</td>
<td width="11%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="67%" align="right" valign="top"><p>(* Estimate)Total</p>
</td>
<td width="18%" align="right" valign="top"><p>$14,588.33</p>
</td>
<td width="4%" align="center" valign="top"><p>* </p>
</td>
<td width="11%" align="center" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>1.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In July, 1999, a total of 155,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>2.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On February 5, 1999, 21,857 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Terry Lewis.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>3.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On August 11, 1999, 150,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Mark Bove.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>4.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On August 23, 1999, 250,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>5.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On August 30, 1999, 127,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>6.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On September 24, 1999, 11,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Alonzo B. See, III.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>7.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On November 12, 1999, 25,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Cyber Mountain,
Inc.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>8.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On December 9, 1999, a total of 340,000 shares of Company Common Stock were
sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>9.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On December 9, 1999, 30,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter Rochow.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>10.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On December 13, 1999, 30,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Nostas/Faesel
Group.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>11.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On December 13, 1999, 53,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to CyberHighway of
North Georgia, Inc.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>12.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On December 1, 1999, 60,000 common stock purchase warrants of the Company
were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to The Research Works, Inc.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued pursuant to a Consulting Agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>13.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On January 1, 2000, 60,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to The Humbolt
Corporation.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>14.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On January 1, 2000, 42,166 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan &amp;
Newlan, Attorneys at Law.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>15.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On January 1, 2000, 100,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan &amp;
Newlan, Attorneys at Law.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>16.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On February 1, 2000, 81,063 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to the owners of The
Spinning Wheel, Inc.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>17.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  On February 18, 2000, 50,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to the owners of
Internet Innovations, L.L.C.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>18.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In April 2000, 30,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter Rochow.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>19.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In April 2000, 30,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Nostas/Faesel
Group.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>20.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In April 2000, 100,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Fair Market, Inc.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>21.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In April 2000, a total of 65,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to ten individual
investors.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>22.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In April 2000, a total of 65,000 common stock purchase warrants of the Company
were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to ten individual investors.cise price
of the warrants is $7.50 per share and exercisable for a period of two years from issuance.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration as part of units of
securities in a private offering.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>23.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In May 2000, 250,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Robert A. Hart IV.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>24.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In July 2000, 250,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Gruntal &amp; Co.,
LLC.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>25.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In July 2000, 5,880 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Ryan G.
Campanile.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>26.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In July 2000, 5,880 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Ryan D.
Thibodeaux.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>27</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In August 2000, 774,162 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to David M. Lofin.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a letter agreement, at a price
of $1.25 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>28.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In September 2000, 450,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Centex Securities,
Inc.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreement, at a
price of $.875 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>29.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In October 2000, a total 250,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a settlement agreement, at a
price of $.875 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>30.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In October 2000, 2,282 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Ryan G.
Campanile.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>31.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In October 2000, 2.282 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Ryan D.
Thibodeaux.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>32.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In October 2000, 35,536 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to James Kaufman.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>33.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In November 2000, 10,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Slade S. Mauer.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to an employment agreement,
at a price of $.625 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>34.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In November 2000, 100,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to de Jong &amp;
Associates, Inc.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreement, at a
price of $.5625 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>35.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In November 2000, 35,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to de Jong &amp; Associates, Inc.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to a consulting
agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>36.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2000, 40,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Shelter Capital
Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a finder&#8217;s fee agreement, at
a price of $.20 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>37.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2000, 380,000 common stock purchase warrants of the Company
were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to a finder&#8217;s fee
agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>38.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2000, 100,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Gestalt
Corporation.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting services letter
agreement, at a price of $.3125 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>39.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2000, 300,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to James Kaufman.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued as a bonus, at a price of $.25 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>40.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2000, 200,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Waddell D. Loflin.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued as a bonus, at a price of $.25 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>41.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2000, 300,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter Rochow.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued for consulting services, at a price of
$.25 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>42.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2000, 100,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Patrick F.
McGrew.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued for legal services, at a price of $.25 per
share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>43.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2000, 500,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan &amp;
Newlan.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued for legal services, at a price of $.25 per
share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>44.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2000, 400,000 shares of Company Common Stock were sold.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Anchor House
Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were sold for cash, at a price of $.20 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>45.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In January 2001, 800,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Fusion Capital
Fund II, LLC.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>46.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In January 2001, 200,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Gruntal &amp; Co.,
LLC.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>47.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In January 2001, 200,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Fair Market, Inc.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a letter agreement, at a price
of $.375 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>48.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In January 2001, 20,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to CyberHighway of
North Georgia.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a letter agreement, at a price
of $.375 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>49.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In January 2001, 10,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Fusion Capital
Fund II, LLC.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a letter agreement, at a price
of $.375 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>50.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In February 2001, 840,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Claymore Asset
Management Group Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a securities purchase
agreement, at a price of $.15 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>51.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In February 2001, 840,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Claymore Asset Management
Group Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to a securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>52.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In February 2001, 84,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Shelter Capital
Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a finder&#8217;s fee agreement, at
a price of $.15 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>53.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In February 2001, 336,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to a finder&#8217;s fee
agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>54.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In March 2001, 500,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Atlas Securities
Inc.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a securities purchase
agreement, at a price of $.25 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>55.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In March 2001, 500,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Atlas Securities Inc.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to a securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>56.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2000, 50,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Shelter Capital
Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a finder&#8217;s fee agreement, at
a price of $.25 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="88%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>57.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2000, 200,000 common stock purchase warrants of the Company
were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to a finder&#8217;s fee
agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>58.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In April 2001, 300,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to IBC.TV, LLC.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreement, at a
price of $.50 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>59.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In May 2001, 60,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter Rochow.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreement, at a
price of $.44 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>60.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In June 2001, 205,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Anchor House,
Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a securities purchase
agreement, at a price of $.20 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>61.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In June 2001, 205,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Anchor House Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>62.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In June 2001, 20,500 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Shelter Capital
Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a finder&#8217;s fee agreement, at
a price of $.20 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>63.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In June 2001, 82,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to a finder&#8217;s fee
agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>64.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In October 2001, 300,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter Rochow.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreement, at a
price of $.20 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>65.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In October 2001, 700,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to David M. Loflin.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued as a bonus, at a price of $.19 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>66.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In October 2001, 460,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Euro-Swiss Group
Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreement, at a
price of $.20 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>67.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In November 2001, 165,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Anchor House,
Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a securities purchase
agreement, at a price of $.10 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>68.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In November 2001, 165,000 common stock purchase warrants of the Company
were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Anchor House Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>69.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In November 2001, 165,000 common stock purchase warrants of the Company
were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Anchor House Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>70.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2001, 200,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Claymore
Management Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a securities purchase
agreement, at a price of $.10 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>71.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2001, 200,000 common stock purchase warrants of the Company
were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Claymore Management Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>72.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2001, 200,000 common stock purchase warrants of the Company
were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Claymore Management Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>73.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2001, 37,500 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Ross S. Bravata.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a securities purchase
agreement, at a price of $.10 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>74.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2001, 37,500 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Ross S. Bravata.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>75.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2001, 37,500 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Ross S. Bravata.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>76.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2001, 75,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Michael Cohn.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a securities purchase
agreement, at a price of $.10 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>77.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2001, 75,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Michael Cohn.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>78.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2001, 75,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Michael Cohn.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>79.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2001, 100,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Darrell Glahn and
Blythe Glahn.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a securities purchase
agreement, at a price of $.10 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>80.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2001, 100,000 common stock purchase warrants of the Company
were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Darrell Glahn and Blythe Glahn.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>81.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2001, 100,000 common stock purchase warrants of the Company
were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Darrell Glahn and Blythe Glahn.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>82.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In December 2001, 200,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Waddell D. Loflin.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued as a bonus, at a price of $.09 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>83.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In January 2002, 120,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Fusion Capital
Fund II, LLC.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreement and
were valued at $12,000.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>84.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In February 2002, 86,500 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Shelter Capital
Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued as a finder&#8217;s fee.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>85.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In February 2002, 160,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>86.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In February 2002, 266,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>87.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In February 2002, 93,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In February 2002, 93,000 common stock purchase warrants of the Company were
issued.</p>
<p>Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>88.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In February 2002, 300,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter Rochow.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreement and
were value at $30,000.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>89.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In March 2002, 400,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter Rochow.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued as a finder&#8217;s fee.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>90.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In March 2002, 400,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Peter Rochow.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>91.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In March 2002, 400,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Peter Rochow.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>92.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In March 2002, 200,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>93.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In April 2002, 200,000 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>94.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In April 2002, 500,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan &amp;
Newlan.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued as a bonus, at a price of $.10 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>95.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In April 2002, 75,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Patrick F.
McGrew.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued as a bonus, at a price of $.10 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>96.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In April 2002, 500,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Heyer Capital
Fund.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued as a finder&#8217;s fee.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>97.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In April 2002, 200,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Employer Support
Services.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued in payment of a trade payable and were
valued at a price of $20,000.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>98.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In April 2002, a total of 9,000,000 shares of Company Common Stock were
issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" valign="top"><p>99.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="88%" valign="top"><p>Securities Sold.  In April 2002, 1,562,500 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="88%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Evergreen Venture
Partners, LLC.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="88%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a securities purchase
agreement, at a price of $.08 per share.</p>
</td>
</tr>
<tr>
<td width="6%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="88%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="7%" valign="top"><p>100.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="87%" valign="top"><p>Securities Sold.  In April 2002, 1,562,500 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="87%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Evergreen Venture Partners, LLC.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="87%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="7%" valign="top"><p>101.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="87%" valign="top"><p>Securities Sold.  In April 2002, 1,562,500 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="87%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Evergreen Venture Partners, LLC.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="87%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="7%" valign="top"><p>102.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="87%" valign="top"><p>Securities Sold.  In April 2002, 900,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="87%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Allen &amp;
Company Business Communications.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="87%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreement and
were valued at $90,000.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="7%" valign="top"><p>103.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="87%" valign="top"><p>Securities Sold.  In April 2002, 250,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="87%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to B. Edward Haun
&amp; Company.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="87%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreement and
were valued at $25,000.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="7%" valign="top"><p>104.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="87%" valign="top"><p>Securities Sold.  In April 2002, 250,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="87%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Summit Venture
Partners, LLC.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="87%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreement and
were valued at $25,000.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="7%" valign="top"><p>105.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="87%" valign="top"><p>Securities Sold.  In April 2002, 150,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="87%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Barker Design,
Inc.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="87%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreement and
were valued at $15,000.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="7%" valign="top"><p>106.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="87%" valign="top"><p>Securities Sold.  In May 2002, 900,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="87%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan &amp;
Newlan.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="87%" valign="top"><p>Consideration.  Such shares of Common Stock were issued in payment of legal services, at a price
of $.06 per share.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="7%" valign="top"><p>107.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="87%" valign="top"><p>Securities Sold.  In June 2002, 2,083,333 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="87%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Evergreen
Venture Partners, LLC.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="87%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a securities purchase
agreement, at a price of $.08 per share.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="7%" valign="top"><p>108.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="87%" valign="top"><p>Securities Sold.  In June 2002, 1,562,500 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="87%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Evergreen Venture Partners, LLC.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="87%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="7%" valign="top"><p>109.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="87%" valign="top"><p>Securities Sold.  In June 2002, 1,562,500 common stock purchase warrants of the Company were
issued.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="87%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Evergreen Venture Partners, LLC.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="87%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to securities
purchase agreement.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(e)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="7%" valign="top"><p>110.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="87%" valign="top"><p>Securities Sold.  In July 2002, 300,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="87%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Regency Capital,
LLC.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="87%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreement and
were valued at $15,000.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="7%" valign="top"><p>111.</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="87%" valign="top"><p>Securities Sold.  In July 2002, 300,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="87%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter Rochow.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(c)</p>
</td>
<td width="87%" valign="top"><p>Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreement and
were valued at $15,000.</p>
</td>
</tr>
<tr>
<td width="7%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(d)</p>
</td>
<td width="87%" valign="top"><p>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>
</td>
</tr>
</table>
<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="23%" valign="top"><p style="text-align: right">Exhibit No.</p>
</td>
<td width="77%" valign="top"><p style="text-align: center">Description</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>** </p>
</td>
<td width="13%" align="right" valign="top"><p>3.1</p>
</td>
<td width="77%" valign="top"><p>Articles of Incorporation of Registrant.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>* </p>
</td>
<td width="13%" align="right" valign="top"><p>3.2</p>
</td>
<td width="77%" valign="top"><p>Bylaws of Registrant, as amended.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>* </p>
</td>
<td width="13%" align="right" valign="top"><p>3.3</p>
</td>
<td width="77%" valign="top"><p>Bylaws of Executive Committee of the Board of Directors of Registrant.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>* </p>
</td>
<td width="13%" align="right" valign="top"><p>3.4</p>
</td>
<td width="77%" valign="top"><p>Bylaws of Audit Committee of the Board of Directors of Registrant.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>*** </p>
</td>
<td width="13%" align="right" valign="top"><p>3.5</p>
</td>
<td width="77%" valign="top"><p>Articles of Amendment to Articles of Incorporation of Registrant.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>**** </p>
</td>
<td width="13%" align="right" valign="top"><p>3.6</p>
</td>
<td width="77%" valign="top"><p>Articles of Amendment to Articles of Incorporation of Registrant.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>* </p>
</td>
<td width="13%" align="right" valign="top"><p>4.1</p>
</td>
<td width="77%" valign="top"><p>Specimen Common Stock Certificate.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>@ </p>
</td>
<td width="13%" align="right" valign="top"><p>5.1</p>
</td>
<td width="77%" valign="top"><p>Opinion of Newlan &amp; Newlan, Attorneys at Law, re: Legality.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>* </p>
</td>
<td width="13%" align="right" valign="top"><p>10.121</p>
</td>
<td width="77%" valign="top"><p>Amended and Restated Common Stock Purchase Agreement, dated May 9, 2001,
between Registrant and Fusion Capital Fund II, LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>* </p>
</td>
<td width="13%" align="right" valign="top"><p>10.122</p>
</td>
<td width="77%" valign="top"><p>Registration Rights Agreement, dated May 9, 2001, between Registrant and Fusion
Capital Fund II, LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>* </p>
</td>
<td width="13%" align="right" valign="top"><p>10.123</p>
</td>
<td width="77%" valign="top"><p>$.25 Warrant Agreement between Registrant and Fusion Capital Fund II, LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>* </p>
</td>
<td width="13%" align="right" valign="top"><p>10.124</p>
</td>
<td width="77%" valign="top"><p>$.35 Warrant Agreement between Registrant and Fusion Capital Fund II, LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>* </p>
</td>
<td width="13%" align="right" valign="top"><p>10.125</p>
</td>
<td width="77%" valign="top"><p>$.45 Warrant Agreement between Registrant and Fusion Capital Fund II, LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>* </p>
</td>
<td width="13%" align="right" valign="top"><p>10.126</p>
</td>
<td width="77%" valign="top"><p>$.25 Warrant Agreement between Registrant and Gruntal &amp; Co., L.L.C.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>* </p>
</td>
<td width="13%" align="right" valign="top"><p>10.127</p>
</td>
<td width="77%" valign="top"><p>$.35 Warrant Agreement between Registrant and Gruntal &amp; Co., L.L.C.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>* </p>
</td>
<td width="13%" align="right" valign="top"><p>10.128</p>
</td>
<td width="77%" valign="top"><p>$.45 Warrant Agreement between Registrant and Gruntal &amp; Co., L.L.C.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>*****</p>
</td>
<td width="13%" align="right" valign="top"><p>10.163</p>
</td>
<td width="77%" valign="top"><p>Securities Purchase Agreement, dated as of April 5, 2002, between Registrant and
Evergreen Venture Partners, LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>*****</p>
</td>
<td width="13%" align="right" valign="top"><p>10.164</p>
</td>
<td width="77%" valign="top"><p>Registration Rights Letter Agreement, dated as of April 15, 2002, between Registrant
and Evergreen Venture Partners, LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>*****</p>
</td>
<td width="13%" align="right" valign="top"><p>10.165</p>
</td>
<td width="77%" valign="top"><p>Employment Agreement, dated as of April 15, 2002, between Registrant and Douglas
O. McKinnon.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>*****</p>
</td>
<td width="13%" align="right" valign="top"><p>10.166</p>
</td>
<td width="77%" valign="top"><p>Confidentiality Agreement, dated as of April 15, 2002, between Registrant and
Douglas O. McKinnon.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>*****</p>
</td>
<td width="13%" align="right" valign="top"><p>10.167</p>
</td>
<td width="77%" valign="top"><p>Agreement Not to Compete, dated as of April 15, 2002, between Registrant and
Douglas O. McKinnon.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>*****</p>
</td>
<td width="13%" align="right" valign="top"><p>10.168</p>
</td>
<td width="77%" valign="top"><p>Amendment No. 1 to Employment Agreement of David M. Loflin, dated as of April 8,
2002, between Registrant and David M. Loflin.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>*****</p>
</td>
<td width="13%" align="right" valign="top"><p>10.169</p>
</td>
<td width="77%" valign="top"><p>Amendment No. 1 to Employment Agreement of Waddell D. Loflin, dated as of April
8, 2002, between Registrant and Waddell D. Loflin.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>*****</p>
</td>
<td width="13%" align="right" valign="top"><p>10.170</p>
</td>
<td width="77%" valign="top"><p>Amendment No. 1 to Employment Agreement of James Kaufman, dated as of April 8,
2002, between Registrant and James Kaufman.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>*****</p>
</td>
<td width="13%" align="right" valign="top"><p>10.171</p>
</td>
<td width="77%" valign="top"><p>Termination Agreement, dated as of April 8, 2002, between Registrant and Robert A.
Hart IV.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>*****</p>
</td>
<td width="13%" align="right" valign="top"><p>10.172</p>
</td>
<td width="77%" valign="top"><p>$.15 Warrant Agreement between Registrant and Evergreen Venture Partners, LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>*****</p>
</td>
<td width="13%" align="right" valign="top"><p>10.173</p>
</td>
<td width="77%" valign="top"><p>$.30 Warrant Agreement between Registrant and Evergreen Venture Partners, LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>@</p>
</td>
<td width="13%" align="right" valign="top"><p>10.174</p>
</td>
<td width="77%" valign="top"><p>Internet Services Provision Agreement, dated as of May 10, 2002, between Registrant
and SunWest Communications, Inc.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>@</p>
</td>
<td width="13%" align="right" valign="top"><p>10.175</p>
</td>
<td width="77%" valign="top"><p>Amendment No. 1 to Securities Purchase Agreement, dated as of June 12, 2002,
between Registrant and Evergreen Venture Partners, LLC,</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>@</p>
</td>
<td width="13%" align="right" valign="top"><p>10.176</p>
</td>
<td width="77%" valign="top"><p>$.15 Warrant Agreement, dated as of June 14, 2002, between Registrant and
Evergreen Venture Partners, LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>@</p>
</td>
<td width="13%" align="right" valign="top"><p>10.177</p>
</td>
<td width="77%" valign="top"><p>$.30 Warrant Agreement, dated as of June 14, 2002, between Registrant and
Evergreen Venture Partners, LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>@</p>
</td>
<td width="13%" align="right" valign="top"><p>10.178</p>
</td>
<td width="77%" valign="top"><p>Consulting Agreement, dated as of July 24, 2002, between Registrant and Regency
Capital, LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>@</p>
</td>
<td width="13%" align="right" valign="top"><p>22.1</p>
</td>
<td width="77%" valign="top"><p>Subsidiaries of Registrant.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>@</p>
</td>
<td width="13%" align="right" valign="top"><p>23.1</p>
</td>
<td width="77%" valign="top"><p>Consent of Postlethwaite &amp; Netterville, independent auditor. </p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>@</p>
</td>
<td width="13%" align="right" valign="top"><p>23.2</p>
</td>
<td width="77%" valign="top"><p>Consent of Newlan &amp; Newlan, Attorneys at Law.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>@</p>
</td>
<td width="13%" align="right" valign="top"><p>23.3</p>
</td>
<td width="77%" valign="top"><p>Consent of Patrick F. McGrew, Esquire.</p>
</td>
</tr>
</table>
<p>_______________________</p>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>@ </p>
</td>
<td width="90%" valign="top"><p>Filed herewith.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>* </p>
</td>
<td width="90%" valign="top"><p>Incorporated by reference from Registrant&#8217;s Registration Statement on Form S-1, Commission File
No. 333-96027.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>** </p>
</td>
<td width="90%" valign="top"><p>Incorporated by reference from Registrant&#8217;s Registration Statement on Form S-1, Commission File
No. 333-26385.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>*** </p>
</td>
<td width="90%" valign="top"><p>Incorporated by reference from Registrant&#8217;s Current Report on Form 8-K, date of event: July 21
1998.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>**** </p>
</td>
<td width="90%" valign="top"><p>Incorporated by reference from Registrant&#8217;s Current Report on Form 8-K, date of event: July 6, 1999.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>*****</p>
</td>
<td width="90%" valign="top"><p>Incorporated by reference from Registrant&#8217;s Current Report on Form 8-K, date of event: April 15,
2002.</p>
</td>
</tr>
</table>
<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 style="text-align: right">(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%" align="right" 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%" align="right" 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%" align="right" 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%" align="right" 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%" align="right" 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 Englewood, State of Colorado, on July 31, 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>&#160;</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>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="44%" valign="top"><p>&#160;</p>
</td>
<td width="56%" valign="top"><p>Douglas O. McKinnon</p>
</td>
</tr>
<tr>
<td width="44%" valign="top"><p>&#160;</p>
</td>
<td width="56%" 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%" valign="top"><br>
<br>
<p>/S/ DOUGLAS O. MCKINNON</p>
<p>Douglas O. McKinnon</p>
</td>
<td width="42%" valign="top"><br>
<br>
<p>President and Chief Executive Officer
(Principal Executive Officer) and Director</p>
</td>
<td width="20%" align="center" valign="top"><br>
<br>
<p>July 31, 2002</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>
<p>David M. Loflin</p>
</td>
<td width="42%" valign="top"><br>
<p>Chairman of the Board and Principal
Accounting Officer (Principal Financial
Officer)</p>
</td>
<td width="20%" align="center" valign="top"><br>
<p>July 31, 2002</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/ WADDELL D. LOFLIN</p>
<p>Waddell D. Loflin</p>
</td>
<td width="42%" valign="top"><br>
<p>Vice President, Secretary and Director</p>
</td>
<td width="20%" align="center" valign="top"><br>
<p>July 31, 2002</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>_____________________________</p>
<p>Ross S. Bravata</p>
</td>
<td width="42%" valign="top"><br>
<p>Director</p>
</td>
<td width="20%" align="center" valign="top"><br>
<p>July ___, 2002</p>
</td>
</tr>
</table>
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<p>_______________</p>
<br>
<p>EXHIBIT 5.1</p>
<p>_______________</p>
<br>
<br>
<p>July 31, 2002</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" valign="top"><p>The Board of Directors</p>
</td>
</tr>
<tr>
<td width="100%" valign="top"><p>USURF America, Inc.</p>
</td>
</tr>
<tr>
<td width="100%" valign="top"><p>3333 S. Bannock, Suite 790</p>
</td>
</tr>
<tr>
<td width="100%" valign="top"><p>Englewood, Colorado 80110</p>
</td>
</tr>
</table>
<br>
<p>Gentlemen:</p>
<br>
<p>We have acted as counsel to USURF America, Inc., a Nevada corporation (the &#8220;Company&#8221;), in connection with the
preparation and filing of a Registration Statement on Form S-1 (the &#8220;Registration Statement&#8221;) with the Securities
and Exchange Commission under the Securities Act of 1933, as amended.  The Registration Statement covers the
following securities of the Company:</p>
<br>
<p>A. Up to 4,283,333 shares of Company Common Stock, all of which are issued and outstanding, and all of which
are held by shareholders of the Company (these 4,283,333 shares being referred to herein as the &#8220;Selling
Shareholder Stock&#8221;); and</p>
<br>
<p>B. Up to 3,125,000 shares of Company Common Stock underlying issued and outstanding common stock purchase
warrants of the Company (these 3,125,000 shares being referred to herein as the &#8220;Warrant Stock&#8221;).</p>
<br>
<p>As counsel for the Company, we have examined the originals or copies, certified or otherwise authenticated to our
satisfaction, of the corporate records of the Company and such other documents or certificates of public officials as
we have deemed necessary for the opinions expressed herein.</p>
<br>
<p>In rendering the opinions set forth herein, we have assumed (i) the legal capacity of all natural persons, (ii) the
authenticity of all documents submitted to us as originals and (iii) the conformity to original documents of all
documents submitted to us as copies.</p>
<br>
<p>Based upon our examination of such documents, materials, certificates and information as we have deemed
appropriate or relevant for the purpose of delivering this opinion, but subject to the qualifications set forth herein,
we are of the following opinion:</p>
<br>
<p>1. The Company is a corporation duly organized and lawfully existing and in good standing under the laws of the
State of Nevada.</p>
<br>
<p>2. The 4,283,333 shares of the Selling Shareholder Stock owned by the various shareholders named in the
Prospectus filed as part of the Registration Statement are validly issued and were duly authorized for issuance by the
Board of Directors of the Company at valid meetings thereof, after due consideration by the Board of Directors of
the facts and circumstances surrounding such issuances, legally issued in accordance with the laws of the State of
Nevada, and appropriate stock certificates representing such shares of Selling Shareholder Stock have been issued;
the 4,283,333 shares of Selling Shareholder Stock are fully paid and non-assessable.</p>
<br>
<p>3. The 3,125,000 shares of Warrant Stock issuable upon exercise of certain outstanding common stock purchase
warrants of the Company, when paid for and issued in accordance with their respective terms, will be legally issued,
fully paid and non-assessable shares of Common Stock of the Company.</p>
<br>
<p>The foregoing is based solely on the facts stated herein.  No opinion contained herein shall be construed to infer an
opinion relating to any other situation, unless such opinion is stated expressly herein.</p>
<br>
<p>We hereby consent to the use of this opinion as an Exhibit to the Registration Statement and to the use of our name
under the&#8220;Legal Matters&#8221; heading in the Prospectus forming part of the Registration Statement.</p>
<br>
<p>Sincerely,</p>
<br>
<p>/s/ NEWLAN &amp; NEWLAN</p>
<br>
<p>NEWLAN &amp; NEWLAN</p>
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<p>_________________</p>
<br>
<p>EXHIBIT 10.174</p>
<p>_________________</p>
<br>
<br>
<p>INTERNET SERVICES PROVISION AGREEMENT</p>
<br>
<p>THIS AGREEMENT is entered into this ___ day of May, 2002, by and between USURF America, Inc. ("USURF"),
a Nevada corporation with its principal office located at 8748 Quarters Lake Road, Baton Rouge, LA 70809, and
SunWest Communications, Inc. ("SUNWEST"), a Colorado corporation with its offices located at 6189 Lehman
Drive, Suite 201, Colorado Springs, CO. 80918.</p>
<br>
<p>WHEREAS, SUNWEST is a facilities-based Competitive Local Exchange Carrier ("CLEC") that has all necessary
operating authority from the Colorado Public Utilities Commission and has a telecommunications network including
modern switching equipment and a system of fiber optic cables by which it provides telecommunications services to
its customers, and</p>
<br>
<p>WHEREAS, USURF is a provider of broad band, wireless, data internet services (hereinafter referred to as
"Services") to companies on a wholesale and retail basis, and</p>
<br>
<p>WHEREAS, the parties hereto wish to create a viable and mutually beneficial business relationship whereby
SUNWEST and USURF  will provide wireless internet access to existing and future  subscribers of SUNWEST,
employing certain internet equipment to be provided by the parties, in accordance with the equipment provision
terms contained herein.</p>
<br>
<p>NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:</p>
<br>
<p>1.  EQUIPMENT PURCHASE AND PROVISIONING:</p>
<p>SUNWEST shall provide and install, at its own expense, such data circuits (the "Pipe") as are necessary to connect
to the remainder of the equipment (hereinafter "Equipment"), which will be provided by USURF at its own expense
and installed by SUNWEST without charge to USURF. </p>
<br>
<p>2.  DUTIES OF USURF:</p>
<p>a) Once the Pipe and Equipment are connected, USURF will provide SUNWEST with a high quality internet
physical network (hereinafter "Network") that will enable SUNWEST  to offer its subscribers a full range of
high-speed Services, as defined above.</p>
<p>b) USURF will provide SUNWEST with sufficient technical training to enable SUNWEST technicians to employ
the Equipment, render the Network operational, and adequately maintain and repair said Equipment.</p>
<br>
<p>3.  DUTIES OF SUNWEST: </p>
<p>a) SUNWEST will exert its best marketing and sales efforts to promote the Services to its customers.</p>
<p>b) SUNWEST will provide, at SUNWEST's own expense, Billing, Collection,  and Customer Service functions to
customers that subscribe to the Services.</p>
<p>c) SUNWEST will provide, at SUNWEST's own expense, the Pipe (all trunking and electronic circuits) required to
make and keep the Network fully operational during the term of this Agreement..</p>
<br>
<p>4.  EXCLUSIVITY:  </p>
<p>During the term of this Agreement, USURF will be the sole provider of Services to SUNWEST's</p>
<p>subscribers. Further, USURF hereby grants SUNWEST the  right of first refusal to sell the Services in all areas in
which the Services utilize SUNWEST facilities. </p>
<br>
<p>5.  TIMING:  </p>
<p>SUNWEST may immediately begin marketing and signing up subscribers upon the execution of this Agreement and
begin the process of provisioning and scheduling the necessary facilities-based network to provide Services.</p>
<br>
<p>6. CUSTOMER OF RECORD:</p>
<p>All subscribers to the Service under this agreement shall be considered subscribers and customers of USURF,
unless mutually agreed to by the parties.</p>
<br>
<p>7.  COMPENSATION RATES:  </p>
<p>The parties hereto agree that all Net Profits (as further defined) from Services  shall be evenly split (50% to 50%)
by USURF and SUNWEST. Net Profits  for purposes of this Agreement, shall be defined as gross revenues actually
collected and cleared by SUNWEST for Services, less the following as further defined and set forth in Appendix A
attached hereto::  </p>
<p>a) Sales costs and commissions paid out by SUNWEST,</p>
<p>b) SUNWEST's cost of providing Technical and Repair Services and Installation, Customer Service Support,
Billing and Collections,</p>
<p>c) USURF's amortized cost of equipment, and</p>
<p>d) Other direct costs as mutually agree to by the parties.</p>
<br>
<p>Once the funds are collected and cleared, SUNWEST will remit a check to USURF for the USURF share of the
prior month's revenues actually collected by SUNWEST. Such remittance to USURF shall be made by SUNWEST
within fifteen (15) days after the end of each month, accompanied by an informal accounting of such revenues.</p>
<br>
<p>8.  TRAINING: </p>
<p>USURF will provide Network training to SUNWEST technical employees at no cost to SUNWEST.</p>
<br>
<p>9.  REGULATORY AND SUPPORT SERVICES:  </p>
<p>SUNWEST agrees to provide all necessary regulatory and support services in order to allow SUNWEST to render
the Services to the customers.</p>
<br>
<p>10.  TERM OF AGREEMENT: This Agreement shall remain in effect for a term of three years ("Initial Term")
from the effective date hereof. Thereafter, this Agreement shall automatically renew for successive one (1) year
terms unless either party gives to the other ninety (90) days advance written notice of termination prior to the
expiration of the Initial Term or any renewal thereof.</p>
<br>
<p>11.  NON-ASSIGNABILITY: </p>
<p>This Agreement, due to the highly technical nature of the  services to be rendered by the parties, shall not be
assignable to any third party without the prior written consent of the other party. </p>
<br>
<p>12.  DISPUTE RESOLUTION:   </p>
<p>All disputes arising out of this Agreement between the parties that are not resolvable by good faith negotiations
shall be submitted to binding arbitration under the Rule of the American Arbitration Association. In so agreeing, the
parties waive their right to a jury trial of any claims arising out of this Agreement and further agree that the
arbitrator's award shall be final and binding on them as though rendered by a court of law and said award shall be
enforceable in any court having jurisdiction over the same.</p>
<br>
<p>13.  OTHER PROVISIONS:</p>
<p>a) This Agreement constitutes the entire agreement between the parties concerning its subject matter. All additions
or modifications to this Agreement must be made in writing and must be signed by an authorized representative of
each party. Any action related to this Agreement shall be governed by the laws of the State of Colorado, without
regard to its conflict of laws principles.</p>
<p>b) Any failure by any party to insist upon the strict performance by the other party of any of the provisions of this
Agreement shall not be deemed a waiver of any of the provisions thereof and, notwithstanding such failure, no party
shall be released from any obligation under this Agreement.</p>
<p>c) This Agreement is binding on the heirs, representatives, permitted assigns, and successors of the respective
parties. </p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="50%" valign="top"><p>SUNWEST COMMUNICATIONS, INC.</p>
</td>
<td width="50%" valign="top"><p>USURF AMERICA, INC.</p>
</td>
</tr>
<tr>
<td width="50%" valign="top"><p>By: /s/</p>
</td>
<td width="50%" valign="top"><p>By: /s/ DOUGLAS O. MCKINNON</p>
</td>
</tr>
</table>
<br>
<br>
<br>
<p style="text-align: center">APPENDIX "A"</p>
<br>
<p>Net Profits Definition and Calculation</p>
<br>
<p>It is the intent of the parties that all Net Profits (as further defined herein) from Services shall be evenly split (50%
to 50%) by USURF and SUNWEST.  Net Profits for purposes of this Agreement, shall be defined as gross revenues
actually collected and cleared by SUNWEST for Services, less the following costs and expenses as further defined
and set forth below:</p>
<p>&#160;&#160;</p>
<p>Actual sales costs and commissions paid out by SUNWEST but limited to eight percent (8%) of gross revenue
unless agreed to by USURF and SUNWEST.</p>
<br>
<p>SUNWEST's cost of providing Technical and Repair Services and Installation, Customer Service Support, Billing
and Collections shall be set at $7.50 per subscriber per month or as periodically adjusted by mutual agreement of
USURF and SUNWEST.</p>
<br>
<p>SUNWEST&#8217;s cost of providing pipes and other related transport shall be set at $8.00 per subscriber per month or as
periodically adjusted by mutual agreement of USURF and SUNWEST.</p>
<br>
<p>USURF's amortized cost of equipment shall be set at $19.50 per subscriber per month or as periodically adjusted by
mutual agreement of USURF and SUNWEST.</p>
<br>
<p>Other costs and expenses as mutually agreed by USURF and SUNWEST.</p>
<br>
<p>It is agreed USURF and SUNWEST that the above costs and expenses represent standard costs and expenses for the
purpose of intraperiod payments and are subject to periodic review and adjustment by mutual agreement. It is
further agreed that the amounts reflected in a) through d) above may be adjusted for individual projects or defined
geographic areas. Payments to USURF under this agreement shall be made by SUNWEST within fifteen (15) days
after the end of each month, accompanied by an informal accounting of such revenues.  USURF will have the right,
at its expense, to an independent review or audit of the payments and related calculations.</p>
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<p>_________________</p>
<br>
<p>EXHIBIT 101.175</p>
<p>_________________</p>
<br>
<br>
<p style="text-align: center">AMENDMENT NO. 1</p>
<p style="text-align: center">TO</p>
<p style="text-align: center">SECURITIES PURCHASE AGREEMENT</p>
<br>
<p>This shall constitute Amendment No. 1 to that certain Securities Purchase Agreement (the &#8220;Purchase Agreement&#8221;),
dated as of April 5, 2002, by and between USURF America, Inc., a Nevada corporation (&#8220;USURF&#8221;), and Evergreen
Venture Partners, LLC (&#8220;Purchaser&#8221;).</p>
<br>
<p>WHEREAS, USURF and Purchaser have entered into the Purchase Agreement and have completed the Initial
Closing thereunder; and</p>
<br>
<p>WHEREAS, since the Initial Closing under the Purchase Agreement, the market price for the common stock of
USURF has fallen below the purchase price per share described therein; and</p>
<br>
<p>WHEREAS, the principals of USURF and Purchaser have agreed to certain changes in the terms of the purchase
and sale of the units of USURF&#8217;s securities pursuant to the Purchase Agreement; and</p>
<br>
<p>WHEREAS, the Board of Directors of USURF has determined that the changes to the Purchase Agreement are in
the best interests of USURF and its prospects;</p>
<br>
<p>NOW, THEREFORE, in consideration of valuable consideration, the receipt and adequacy of which is hereby
acknowledged, USURF and Purchaser hereby agree as follows:</p>
<br>
<p>A. Section III, &#8220;Purchase and Sale&#8221;, of the Purchase Agreement is deleted in its entirety and replaced with the
following:</p>
<br>
<p>&#8220;III. PURCHASE AND SALE </p>
<br>
<p>USURF hereby sells to Purchaser and Purchaser hereby buys from USURF the following securities:</p>
<br>
<p>&#160;(a) 3,645,833 shares of the $.0001 par value common stock of USURF;</p>
<p>&#160;(b) 3,125,000 warrants to purchase a like number of shares of common stock of USURF, at an exercise price of
$.15 per share, all as more fully set forth in the form of warrant attached hereto as Exhibit &#8216;C&#8217; and incorporated
herein by this reference; and</p>
<p>&#160;(c) 3,125,000 warrants to purchase a like number of shares of common stock of USURF, at an exercise price of
$.30 per share, all as more fully set forth in the form of warrant attached hereto as Exhibit &#8216;D&#8217; and incorporated
herein by this reference.</p>
<br>
<p>The securities shall be sold to Purchaser at the price and subject to all of the terms and conditions set forth herein.</p>
<br>
<p>It is agreed by the parties that none of the purchase price for the securities described herein shall be allocated to the
common stock purchase warrants.&#8221;</p>
<br>
<p>B. Section IV, &#8220;Purchase Price &#8211; Payment&#8221;, of the Purchase Agreement is deleted in its entirety and replaced with
the following:</p>
<br>
<p>&#8220;IV. PURCHASE PRICE - PAYMENT</p>
<br>
<p>Purchaser shall deliver to USURF the sum of $250,000 in payment of the 3,645,833 shares of USURF common
stock, the 3,125,000 $.15 common stock purchase warrants and the 3,125,000 $.30 common stock purchase
warrants purchased by Purchaser hereunder, which payment shall be delivered as provided in paragraphs VI and VII
hereinbelow.&#8221;</p>
<br>
<p>C. Section V, &#8220;Issuance of the Units&#8221;, of the Purchase Agreement is deleted in its entirety and replaced with the
following:</p>
<br>
<p>&#8220;V. ISSUANCE OF THE SECURITIES</p>
<br>
<p>USURF shall cause the 3,645,833 shares of its common stock, the 3,125,000 $.15 common stock purchase warrants
and the 3,125,000 $.30 common stock purchase warrants purchased and sold hereunder to be issued as provided in
paragraphs VI and VII hereinbelow.&#8221;</p>
<br>
<p>D. Section VII, &#8220;Final Closing&#8221;, of the Purchase Agreement is deleted in its entirety and replaced with the
following:</p>
<br>
<p>&#8220;VII. FINAL CLOSING</p>
<br>
<p>Subject to the conditions precedent set forth in Section X of this Agreement, and the other obligations of the parties
set forth in this Agreement, the Final Closing under this Agreement shall be at the then-corporate offices of USURF
America, Inc., on June 14, 2002, at the hour of 2:00 p.m., or at any other place and date as the parties fix by mutual
consent.</p>
<br>
<p>At the Final Closing, the following items shall be delivered:</p>
<br>
<p>&#160;(a) By USURF:</p>
<br>
<p>&#160;(1) a certificate representing 2,083,333 shares of the $.0001 par value common stock of USURF (a per share
purchase price of $.06);</p>
<br>
<p>&#160;(2) a duly executed common stock purchase warrant, in the form of Exhibit &#8216;C&#8217; attached hereto, representing
1,562,500 $.15 common stock purchase warrants; and</p>
<br>
<p>&#160;(3) a duly executed common stock purchase warrant, in the form of Exhibit &#8216;D&#8217; attached hereto, representing
1,562,500 $.30 common stock purchase warrants.</p>
<br>
<p>&#160;(b) By Purchaser:</p>
<br>
<p>&#160;(1) a cashier&#8217;s check in the amount of $125,000.00, payable to &#8216;USURF America, Inc.&#8217;&#8221;</p>
<br>
<p>In all other respects, the Securities Purchase Agreement is ratified and affirmed.</p>
<br>
<p>IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 to the Securities Purchase
Agreement between USURF and Purchaser as of the 12th day of June, 2002.</p>
<br>
<p>USURF:</p>
<br>
<p>USURF AMERICA, INC.</p>
<br>
<p>By: /s/ DAVID M. LOFLIN</p>
<p>Chairman of the Board</p>
<br>
<p>PURCHASER:</p>
<br>
<p>EVERGREEN VENTURE PARTNERS, LLC</p>
<br>
<br>
<p>By: /s/ DOUGLAS O. MCKINNON</p>
<p>Manager</p>
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<p>___________________</p>
<br>
<p>EXHIBIT 10.176</p>
<p>___________________</p>
<br>
<p>THE SECURITIES REPRESENTED BY THIS CERTIFICATE, AS WELL AS THE SECURITIES INTO
WHICH THESE SECURITIES MAY BE CONVERTED, HAVE BEEN ISSUED IN RELIANCE UPON THE
EXEMPTION FROM REGISTRATION AFFORDED BY SECTION 4(6) OF THE SECURITIES ACT OF 1933,
AS AMENDED. THESE SECURITIES MAY NOT BE TRANSFERRED WITHOUT REGISTRATION,
EXCEPT IN A TRANSACTION EXEMPT FROM REGISTRATION.</p>
<br>
<p style="text-align: center">USURF America, Inc.</p>
<p style="text-align: center">(Incorporated Under the Laws of the State of Nevada)</p>
<br>
<p style="text-align: center">1,562,500 COMMON STOCK PURCHASE WARRANTS</p>
<br>
<p style="text-align: center">(EACH WARRANT ENTITLES THE HOLDER TO PURCHASE ONE COMMON SHARE)</p>
<p style="text-align: center">INITIAL WARRANT EXERCISE PRICE $.15</p>
<br>
<p>THIS CERTIFIES THAT, for value received, EVERGREEN VENTURE PARTNERS, LLC (the &#8220;Holder&#8221;), as
registered owner of this Common Stock Purchase Warrant (a &#8220;Warrant&#8221; or the &#8220;Warrants&#8221;), is entitled at any time
or from time to time after issuance hereof at or before 5:00 p.m., Central Time, on the date that is three years from
the date hereof (the &#8220;Expiration Date&#8221;), to subscribe for, purchase and receive the above-specified, fully-paid and
non-assessable Common Shares, $.0001 par value per share (the &#8220;Common Shares&#8221;), of USURF America, Inc., a
Nevada corporation (the &#8220;Company&#8221;), at the purchase price of $.15 per share (the &#8220;Exercise Price&#8221;), upon
presentation and surrender of this Warrant and payment of the Exercise Price for such Common Shares of the
Company at the principal office of the Company, but only subject to the conditions set forth herein. The Exercise
Price and the number of Common Shares purchasable upon exercise of each Warrant are subject to adjustments
upon the occurrence of certain events described herein.</p>
<br>
<p>Upon due presentment for transfer of this Warrant at the principal office of the Company, a new Warrant of like
tenor and evidencing, in the aggregate, a like number of Warrants, subject to any adjustments made in accordance
with the provisions hereof, shall be issued to the transferee in exchange for this Warrant, subject to the limitations
provided herein, upon payment of any tax or governmental charge imposed in connection with such transfer.</p>
<br>
<p>The holder of the Warrants evidenced hereby may exercise all or any whole number of such Warrants during the
period and in the manner stated herein. The Exercise Price payable in lawful money of the United States of America
and in cash or by certified or bank cashier&#8217;s check or bank draft payable to the order of the Company. If, upon
exercise of any Warrants evidenced hereby, the number of Warrants exercised shall be less than the total number of
Warrants so evidenced, there shall be issued to the Warrantholder a new Warrant evidencing the number of
Warrants not so exercised.</p>
<br>
<p>No Warrant may be exercised after 5:00 p.m., Central Time, on the Expiration Date and any Warrant not exercised
by such time shall become void, unless extended by the Company.</p>
<br>
<p>The Company covenants that it will, at all times, reserve and have available from its authorized shares of Common
Stock such number of shares of Common Stock as shall then be issuable on exercise of all outstanding Warrants.
The Company covenants that all Warrant Shares, when issued, shall be duly and validly issued, fully paid and
non-assessable, and free from all taxes, liens and charges with respect to the issue thereof.</p>
<br>
<p>Adjustment of Exercise Price and Shares</p>
<br>
<p>A. In the event, prior to the expiration of the Warrants by exercise or by their terms, the Company shall issue any of
its Common Stock as a stock dividend or shall subdivide the number of outstanding shares of Common Stock into a
greater number of shares, then, in either of such events, the Exercise Price in effect at the time of such action shall
be reduced proportionately and the number of shares of Common Stock purchasable pursuant to the Warrants shall
be increased proportionately. Conversely, in the event the Company shall reduce the number of its outstanding
shares of Common Stock by combining such shares into a smaller number of shares, then, in such event, the
Exercise Price in effect at the time of such action shall be increased proportionately and the number of shares of
Common Stock at that time purchasable pursuant to the Warrants shall be decreased proportionately. Such stock
dividend paid or distributed on the Common Stock in shares of any other class of the Company or securities
convertible into shares of Common Stock shall be treated as a dividend paid or distributed in shares of Common
Stock to the extent shares of Common Stock are issuable on the payment or conversion thereof.</p>
<br>
<p>B. In the event, prior to the expiration of the Warrants by exercise or by their terms, the Company shall be
recapitalized by reclassifying its outstanding shares of Common Stock into shares with a different par value, or by
changing its outstanding Common Stock to shares without par value or in the event of any other material change of
the capital structure of the Company or of any successor corporation by reason of any reclassification,
recapitalization or conveyance, prompt, proportionate, equitable, lawful and adequate provision shall be made
whereby any holder of the Warrants shall thereafter have the right to purchase, on the basis and the terms and
conditions specified in this Agreement, in lieu of the shares of Common Stock of the Company theretofore
purchasable on the exercise of any Warrant, such securities or assets as may be issued or payable with respect to, or
in exchange for, the number of shares of Common Stock of the Company theretofore purchasable on exercise of the
Warrants had such reclassification, recapitalization or conveyance not taken place; and, in any such event, the rights
of any holder of a Warrant to any adjustment in the number of shares of Common Stock purchasable on exercise of
such Warrant, as set forth above, shall continue and be preserved in respect of any stock, securities or assets which
the holder becomes entitled to purchase; provided, however, that a merger, acquisition of a going business or a
portion thereof (whether for cash, stock, notes, other securities, or a combination of cash and securities), exchange
of stock for stock, exchange of stock for assets, or like transaction involving the Company, in which the Company is
the surviving entity, will not be considered a &#8220;material change&#8221; for purposes of this paragraph, and no adjustment
shall be made hereunder by reason of any such merger, acquisition, exchange of stock for stock, exchange of stock
for assets, or like transaction.</p>
<br>
<p>C. In the event the Company, at any time while the Warrants shall remain unexpired and unexercised, shall sell all
or substantially all of its property, or dissolves, liquidates or winds up its affairs, prompt, proportionate, equitable,
lawful and adequate provision shall be made as part of the terms of such sale, dissolution, liquidation or winding up
such that the holder of a Warrant may thereafter receive, on exercise of such Warrant, in lieu of each share of
Common Stock of the Company which such holder would have been entitled to receive upon exercise of such
Warrant, the same kind and amount of any stock, securities or assets as may be issuable, distributable or payable on
any such sale, dissolution, liquidation or winding up with respect to each share of Common Stock of the Company;
provided, however, that, in the event of any such sale, dissolution, liquidation or winding up, the right to exercise
the Warrants shall terminate on a date fixed by the Company, such date to be not earlier than 5:00 p.m., Central
Time, on the 30th day next succeeding the date on which notice of such termination of the right to exercise the
Warrants has been given by mail to the holders thereof at such addresses as may appear on the books of the
Company.</p>
<br>
<p>D. In the event, prior to the expiration of the Warrants by exercise or by their terms, the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to purchase shares of its Common
Stock at a price per share more than 10% below the then-current market price per share (as defined below) of its
Common Stock at the date of taking such record, then (i) the number of shares of Common Stock purchasable
pursuant to the Warrants shall be redetermined as follows: the number of shares of Common Stock purchasable
pursuant to a Warrant immediately prior to such adjustment (taking into account fractional interests to the nearest
1,000th of a share) shall be multiplied by a fraction, the numerator of which shall be the number of shares of
Common Stock of the Company then outstanding (excluding the Common Stock then owned by the Company)
immediately prior to the taking of such record, plus the number of additional shares offered for purchase, and the
denominator of which shall be the number of shares of Common Stock of the Company outstanding (excluding the
Common Stock owned by the Company) immediately prior to the taking of such record, plus the number of shares
which the aggregate offering price of the total number of additional shares so offered would purchase at such
current market price; and (ii) the Exercise Price per share of Common Stock purchasable pursuant to a Warrant shall
be redetermined as follows: the Exercise Price in effect immediately prior to the taking of such record shall be
multiplied by a fraction, the numerator of which is the number of shares of Common Stock purchasable immediately
prior to the taking of such record, and the denominator of which is the number of shares of Common Stock
purchasable immediately after the taking of such record as determined pursuant to clause (i) above. For the purpose
hereof, the current market price per share of Common Stock of the Company at any date shall be deemed to be the
average of the closing prices, as reported by the American Stock Exchange, for 20 consecutive business days
commencing 15 business days prior to the record date.</p>
<br>
<p>E. On exercise of the Warrants by the holders, the Company shall not be required to deliver fractions of shares of
Common Stock; provided, however, that prompt, proportionate, equitable, lawful and adequate adjustment in the
Exercise Price payable shall be made in respect of any such fraction of one share of Common Stock on the basis of
the Exercise Price per share.</p>
<br>
<p>F. In the event, prior to expiration of the Warrants by exercise or by their terms, the Company shall determine to
take a record of the holders of its Common Stock for the purpose of determining shareholders entitled to receive any
stock dividend, distribution or other right which will cause any change or adjustment in the number, amount, price
or nature of the Common Stock or other stock, securities or assets deliverable on exercise of the Warrants pursuant
to the foregoing provisions, the Company shall give to the Registered Holders of the Warrants at the addresses as
may appear on the books of the Company at least 15 days&#8217; prior written notice to the effect that it intends to take
such a record. Such notice shall specify the date as of which such record is to be taken; the purpose for which such
record is to be taken; and the number, amount, price and nature of the Common Stock or other stock, securities or
assets which will be deliverable on exercise of the Warrants after the action for which such record will be taken has
been completed. Without limiting the obligation of the Company to provide notice to the Registered Holders of the
Warrant Certificates of any corporate action hereunder, the failure of the Company to give notice shall not
invalidate such corporate action of the Company.</p>
<br>
<p>G. The Warrant shall not entitle the holder thereof to any of the rights of shareholders or to any dividend declared
on the Common Stock, unless the Warrant is exercised and the Warrant Shares purchased prior to the record date
fixed by the Board of Directors of the Company for the determination of holders of Common Stock entitled to such
dividend or other right.</p>
<br>
<p>H. No adjustment of the Exercise Price shall be made as a result of, or in connection with, (i) the establishment of
one or more employee stock option plans for employees of the Company, or the modification, renewal or extension
of any such plan, or the issuance of Common Stock on exercise of any options pursuant to any such plan, (ii) the
issuance of individual warrants or options to purchase Common Stock, the issuance of Common Stock upon
exercise of such warrants or options, or the issuance of Common Stock in connection with compensation
arrangements for directors, officers, employees, consultants or agents of the Company or any Subsidiary, and the
like, or (iii) the issuance of Common Stock in connection with a merger, acquisition of a going business or a portion
thereof (whether for cash, stock, notes, other securities, or a combination of cash and securities), exchange of stock
for stock, exchange of stock for assets, or like transaction.</p>
<br>
<p>IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its President and its Secretary,
each by a facsimile of his signature.</p>
<br>
<p>Dated: June 14, 2002.</p>
<br>
<p>USURF AMERICA, INC.</p>
<br>
<p>By: /s/ DOUGLAS O. MCKINNON</p>
<p>Douglas O. McKinnon</p>
<p>President and CEO</p>
<br>
<p>By: /s/ WADDELL D. LOFLIN</p>
<p>Waddell D. Loflin</p>
<p>Secretary</p>
<br>
<br>
<br>
<br>
<p style="text-align: center">FORM OF ASSIGNMENT</p>
<p style="text-align: center">To Be Executed by the Registered Holder if He</p>
<p style="text-align: center">Desires to Assign Warrants Evidenced Hereby</p>
<br>
<p>FOR VALUE RECEIVED____________________ hereby sells, assigns and transfers unto __________ Warrants,
evidenced hereby, and does hereby irrevocably constitute and appoint _________ Attorney to transfer the said
Warrants, evidenced hereby on the books of the Company, with full power of substitution.</p>
<br>
<p>Dated: __________</p>
<p>X _________________________</p>
<p>Signature</p>
<br>
<p>NOTICE: The above signature must correspond with the name as written upon the face of this Warrant in every
particular, without alteration or enlargement or any change whatsoever.</p>
<br>
<p>Signature Guaranteed:</p>
<br>
<p style="text-align: center">FORM OF ELECTION TO PURCHASE</p>
<p style="text-align: center">To be Executed by the Holder if He Desires</p>
<p style="text-align: center">to Exercise Warrants Evidenced Hereby</p>
<br>
<p>TO: USURF AMERICA, INC.</p>
<br>
<p>The undersigned hereby irrevocably elects to exercise ______________ Warrants evidenced hereby for, and to
purchase hereunder, __________________ full shares of Common Stock issuable upon exercise of said Warrants
and delivery of $_____________ and any applicable taxes. The undersigned requests that certificates for such
shares be issued in the name of:</p>
<br>
<p>_______________________________</p>
<p>(Please print name and address)</p>
<br>
<p>If said number of Warrants shall not be all the Warrants evidenced hereby, the undersigned requests that a new
Warrant Certificate evidencing the Warrants not so exercised be issued in the name of and delivered to:</p>
<br>
<p>_______________________________</p>
<p>(Please print name and address)</p>
<br>
<br>
<p>Dated: __________</p>
<p>X _________________________</p>
<p>Signature</p>
<br>
<p>NOTICE: The above signature must correspond with the name as written upon the face of the within Warrant
Certificate in every particular, without alteration or enlargement or any change whatsoever, or if signed by any other
person the Form of Assignment hereon must be duly executed and if the certificate representing the shares or any
Warrant Certificate representing Warrants not exercised is to be registered in a name other than in which the within
Warrant Certificate is registered, the signature of the holder hereof must be guaranteed.</p>
<br>
<p>Signature Guaranteed:</p>
<br>
<p>SIGNATURE MUST BE GUARANTEED BY A MEDALLION SIGNATURE GUARANTY.</p>
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<p>___________________</p>
<br>
<p>EXHIBIT 10.177</p>
<p>___________________</p>
<br>
<p>THE SECURITIES REPRESENTED BY THIS CERTIFICATE, AS WELL AS THE SECURITIES INTO
WHICH THESE SECURITIES MAY BE CONVERTED, HAVE BEEN ISSUED IN RELIANCE UPON THE
EXEMPTION FROM REGISTRATION AFFORDED BY SECTION 4(6) OF THE SECURITIES ACT OF 1933,
AS AMENDED. THESE SECURITIES MAY NOT BE TRANSFERRED WITHOUT REGISTRATION,
EXCEPT IN A TRANSACTION EXEMPT FROM REGISTRATION.</p>
<br>
<p style="text-align: center">USURF America, Inc.</p>
<p style="text-align: center">(Incorporated Under the Laws of the State of Nevada)</p>
<br>
<p style="text-align: center">1,562,500 COMMON STOCK PURCHASE WARRANTS</p>
<br>
<p style="text-align: center">(EACH WARRANT ENTITLES THE HOLDER TO PURCHASE ONE COMMON SHARE)</p>
<p style="text-align: center">INITIAL WARRANT EXERCISE PRICE $.30</p>
<br>
<p>THIS CERTIFIES THAT, for value received, EVERGREEN VENTURE PARTNERS, LLC (the &#8220;Holder&#8221;), as
registered owner of this Common Stock Purchase Warrant (a &#8220;Warrant&#8221; or the &#8220;Warrants&#8221;), is entitled at any time
or from time to time after issuance hereof at or before 5:00 p.m., Central Time, on the date that is three years from
the date hereof (the &#8220;Expiration Date&#8221;), to subscribe for, purchase and receive the above-specified, fully-paid and
non-assessable Common Shares, $.0001 par value per share (the &#8220;Common Shares&#8221;), of USURF America, Inc., a
Nevada corporation (the &#8220;Company&#8221;), at the purchase price of $.30 per share (the &#8220;Exercise Price&#8221;), upon
presentation and surrender of this Warrant and payment of the Exercise Price for such Common Shares of the
Company at the principal office of the Company, but only subject to the conditions set forth herein. The Exercise
Price and the number of Common Shares purchasable upon exercise of each Warrant are subject to adjustments
upon the occurrence of certain events described herein.</p>
<br>
<p>Upon due presentment for transfer of this Warrant at the principal office of the Company, a new Warrant of like
tenor and evidencing, in the aggregate, a like number of Warrants, subject to any adjustments made in accordance
with the provisions hereof, shall be issued to the transferee in exchange for this Warrant, subject to the limitations
provided herein, upon payment of any tax or governmental charge imposed in connection with such transfer.</p>
<br>
<p>The holder of the Warrants evidenced hereby may exercise all or any whole number of such Warrants during the
period and in the manner stated herein. The Exercise Price payable in lawful money of the United States of America
and in cash or by certified or bank cashier&#8217;s check or bank draft payable to the order of the Company. If, upon
exercise of any Warrants evidenced hereby, the number of Warrants exercised shall be less than the total number of
Warrants so evidenced, there shall be issued to the Warrantholder a new Warrant evidencing the number of
Warrants not so exercised.</p>
<br>
<p>No Warrant may be exercised after 5:00 p.m., Central Time, on the Expiration Date and any Warrant not exercised
by such time shall become void, unless extended by the Company.</p>
<br>
<p>The Company covenants that it will, at all times, reserve and have available from its authorized shares of Common
Stock such number of shares of Common Stock as shall then be issuable on exercise of all outstanding Warrants.
The Company covenants that all Warrant Shares, when issued, shall be duly and validly issued, fully paid and
non-assessable, and free from all taxes, liens and charges with respect to the issue thereof.</p>
<br>
<p>Adjustment of Exercise Price and Shares</p>
<br>
<p>A. In the event, prior to the expiration of the Warrants by exercise or by their terms, the Company shall issue any of
its Common Stock as a stock dividend or shall subdivide the number of outstanding shares of Common Stock into a
greater number of shares, then, in either of such events, the Exercise Price in effect at the time of such action shall
be reduced proportionately and the number of shares of Common Stock purchasable pursuant to the Warrants shall
be increased proportionately. Conversely, in the event the Company shall reduce the number of its outstanding
shares of Common Stock by combining such shares into a smaller number of shares, then, in such event, the
Exercise Price in effect at the time of such action shall be increased proportionately and the number of shares of
Common Stock at that time purchasable pursuant to the Warrants shall be decreased proportionately. Such stock
dividend paid or distributed on the Common Stock in shares of any other class of the Company or securities
convertible into shares of Common Stock shall be treated as a dividend paid or distributed in shares of Common
Stock to the extent shares of Common Stock are issuable on the payment or conversion thereof.</p>
<br>
<p>B. In the event, prior to the expiration of the Warrants by exercise or by their terms, the Company shall be
recapitalized by reclassifying its outstanding shares of Common Stock into shares with a different par value, or by
changing its outstanding Common Stock to shares without par value or in the event of any other material change of
the capital structure of the Company or of any successor corporation by reason of any reclassification,
recapitalization or conveyance, prompt, proportionate, equitable, lawful and adequate provision shall be made
whereby any holder of the Warrants shall thereafter have the right to purchase, on the basis and the terms and
conditions specified in this Agreement, in lieu of the shares of Common Stock of the Company theretofore
purchasable on the exercise of any Warrant, such securities or assets as may be issued or payable with respect to, or
in exchange for, the number of shares of Common Stock of the Company theretofore purchasable on exercise of the
Warrants had such reclassification, recapitalization or conveyance not taken place; and, in any such event, the rights
of any holder of a Warrant to any adjustment in the number of shares of Common Stock purchasable on exercise of
such Warrant, as set forth above, shall continue and be preserved in respect of any stock, securities or assets which
the holder becomes entitled to purchase; provided, however, that a merger, acquisition of a going business or a
portion thereof (whether for cash, stock, notes, other securities, or a combination of cash and securities), exchange
of stock for stock, exchange of stock for assets, or like transaction involving the Company, in which the Company is
the surviving entity, will not be considered a &#8220;material change&#8221; for purposes of this paragraph, and no adjustment
shall be made hereunder by reason of any such merger, acquisition, exchange of stock for stock, exchange of stock
for assets, or like transaction.</p>
<br>
<p>C. In the event the Company, at any time while the Warrants shall remain unexpired and unexercised, shall sell all
or substantially all of its property, or dissolves, liquidates or winds up its affairs, prompt, proportionate, equitable,
lawful and adequate provision shall be made as part of the terms of such sale, dissolution, liquidation or winding up
such that the holder of a Warrant may thereafter receive, on exercise of such Warrant, in lieu of each share of
Common Stock of the Company which such holder would have been entitled to receive upon exercise of such
Warrant, the same kind and amount of any stock, securities or assets as may be issuable, distributable or payable on
any such sale, dissolution, liquidation or winding up with respect to each share of Common Stock of the Company;
provided, however, that, in the event of any such sale, dissolution, liquidation or winding up, the right to exercise
the Warrants shall terminate on a date fixed by the Company, such date to be not earlier than 5:00 p.m., Central
Time, on the 30th day next succeeding the date on which notice of such termination of the right to exercise the
Warrants has been given by mail to the holders thereof at such addresses as may appear on the books of the
Company.</p>
<br>
<p>D. In the event, prior to the expiration of the Warrants by exercise or by their terms, the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to purchase shares of its Common
Stock at a price per share more than 10% below the then-current market price per share (as defined below) of its
Common Stock at the date of taking such record, then (i) the number of shares of Common Stock purchasable
pursuant to the Warrants shall be redetermined as follows: the number of shares of Common Stock purchasable
pursuant to a Warrant immediately prior to such adjustment (taking into account fractional interests to the nearest
1,000th of a share) shall be multiplied by a fraction, the numerator of which shall be the number of shares of
Common Stock of the Company then outstanding (excluding the Common Stock then owned by the Company)
immediately prior to the taking of such record, plus the number of additional shares offered for purchase, and the
denominator of which shall be the number of shares of Common Stock of the Company outstanding (excluding the
Common Stock owned by the Company) immediately prior to the taking of such record, plus the number of shares
which the aggregate offering price of the total number of additional shares so offered would purchase at such
current market price; and (ii) the Exercise Price per share of Common Stock purchasable pursuant to a Warrant shall
be redetermined as follows: the Exercise Price in effect immediately prior to the taking of such record shall be
multiplied by a fraction, the numerator of which is the number of shares of Common Stock purchasable immediately
prior to the taking of such record, and the denominator of which is the number of shares of Common Stock
purchasable immediately after the taking of such record as determined pursuant to clause (i) above. For the purpose
hereof, the current market price per share of Common Stock of the Company at any date shall be deemed to be the
average of the closing prices, as reported by the American Stock Exchange, for 20 consecutive business days
commencing 15 business days prior to the record date.</p>
<br>
<p>E. On exercise of the Warrants by the holders, the Company shall not be required to deliver fractions of shares of
Common Stock; provided, however, that prompt, proportionate, equitable, lawful and adequate adjustment in the
Exercise Price payable shall be made in respect of any such fraction of one share of Common Stock on the basis of
the Exercise Price per share.</p>
<br>
<p>F. In the event, prior to expiration of the Warrants by exercise or by their terms, the Company shall determine to
take a record of the holders of its Common Stock for the purpose of determining shareholders entitled to receive any
stock dividend, distribution or other right which will cause any change or adjustment in the number, amount, price
or nature of the Common Stock or other stock, securities or assets deliverable on exercise of the Warrants pursuant
to the foregoing provisions, the Company shall give to the Registered Holders of the Warrants at the addresses as
may appear on the books of the Company at least 15 days&#8217; prior written notice to the effect that it intends to take
such a record. Such notice shall specify the date as of which such record is to be taken; the purpose for which such
record is to be taken; and the number, amount, price and nature of the Common Stock or other stock, securities or
assets which will be deliverable on exercise of the Warrants after the action for which such record will be taken has
been completed. Without limiting the obligation of the Company to provide notice to the Registered Holders of the
Warrant Certificates of any corporate action hereunder, the failure of the Company to give notice shall not
invalidate such corporate action of the Company.</p>
<br>
<p>G. The Warrant shall not entitle the holder thereof to any of the rights of shareholders or to any dividend declared
on the Common Stock, unless the Warrant is exercised and the Warrant Shares purchased prior to the record date
fixed by the Board of Directors of the Company for the determination of holders of Common Stock entitled to such
dividend or other right.</p>
<br>
<p>H. No adjustment of the Exercise Price shall be made as a result of, or in connection with, (i) the establishment of
one or more employee stock option plans for employees of the Company, or the modification, renewal or extension
of any such plan, or the issuance of Common Stock on exercise of any options pursuant to any such plan, (ii) the
issuance of individual warrants or options to purchase Common Stock, the issuance of Common Stock upon
exercise of such warrants or options, or the issuance of Common Stock in connection with compensation
arrangements for directors, officers, employees, consultants or agents of the Company or any Subsidiary, and the
like, or (iii) the issuance of Common Stock in connection with a merger, acquisition of a going business or a portion
thereof (whether for cash, stock, notes, other securities, or a combination of cash and securities), exchange of stock
for stock, exchange of stock for assets, or like transaction.</p>
<br>
<p>IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its President and its Secretary,
each by a facsimile of his signature.</p>
<br>
<p>Dated: June 14, 2002.</p>
<br>
<p>USURF AMERICA, INC.</p>
<br>
<p>By: /s/ DOUGLAS O. MCKINNON</p>
<p>Douglas O. McKinnon</p>
<p>President and CEO</p>
<br>
<p>By: /s/ WADDELL D. LOFLIN</p>
<p>Waddell D. Loflin</p>
<p>Secretary</p>
<br>
<br>
<br>
<br>
<p style="text-align: center">FORM OF ASSIGNMENT</p>
<p style="text-align: center">To Be Executed by the Registered Holder if He</p>
<p style="text-align: center">Desires to Assign Warrants Evidenced Hereby</p>
<br>
<p>FOR VALUE RECEIVED ________________ hereby sells, assigns and transfers unto ____________ Warrants,
evidenced hereby, and does hereby irrevocably constitute and appoint ______________ Attorney to transfer the said
Warrants, evidenced hereby on the books of the Company, with full power of substitution.</p>
<br>
<p>Dated: ______________</p>
<p>X___________</p>
<p>Signature</p>
<br>
<p>NOTICE: The above signature must correspond with the name as written upon the face of this Warrant in every
particular, without alteration or enlargement or any change whatsoever.</p>
<br>
<p>Signature Guaranteed: &#160;</p>
<br>
<p style="text-align: center">FORM OF ELECTION TO PURCHASE</p>
<p style="text-align: center">To be Executed by the Holder if He Desires</p>
<p style="text-align: center">to Exercise Warrants Evidenced Hereby</p>
<br>
<p>TO: USURF AMERICA, INC.</p>
<br>
<p>The undersigned hereby irrevocably elects to exercise ______________ Warrants evidenced hereby for, and to
purchase hereunder, __________________ full shares of Common Stock issuable upon exercise of said Warrants
and delivery of $_____________ and any applicable taxes. The undersigned requests that certificates for such
shares be issued in the name of:</p>
<br>
<p>__________________________</p>
<p>(Please print name and address)</p>
<br>
<p>If said number of Warrants shall not be all the Warrants evidenced hereby, the undersigned requests that a new
Warrant Certificate evidencing the Warrants not so exercised be issued in the name of and delivered to:</p>
<br>
<p>__________________________</p>
<p>(Please print name and address)</p>
<br>
<br>
<p>Dated: ______________</p>
<p>X___________</p>
<br>
<p>NOTICE: The above signature must correspond with the name as written upon the face of the within Warrant
Certificate in every particular, without alteration or enlargement or any change whatsoever, or if signed by any other
person the Form of Assignment hereon must be duly executed and if the certificate representing the shares or any
Warrant Certificate representing Warrants not exercised is to be registered in a name other than in which the within
Warrant Certificate is registered, the signature of the holder hereof must be guaranteed.</p>
<br>
<br>
<p>Signature Guaranteed:</p>
<br>
<p>SIGNATURE MUST BE GUARANTEED BY A MEDALLION SIGNATURE GUARANTY.</p>
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<p>__________________</p>
<br>
<p>EXHIBIT 10.178</p>
<p>__________________</p>
<br>
<br>
<p>CONSULTING AGREEMENT</p>
<br>
<p>This Consulting Agreement ("Agreement") is entered into this 30th day of July, 2002 by and between Regency
Capital, LLC ("RC"), whose principal place of business is located at 7500 East Arapahoe Road, Suite 380,
Englewood, CO 80112 and USURF America Inc. ("UAX"), a Nevada corporation, whose principal place of
business is 3333 S. Bannock, Suite 790, Englewood, Colorado 80110.</p>
<br>
<p>RECITALS</p>
<br>
<p>WHEREAS, RC is in the business of providing public relations and general business consulting services to
privately held and publicly held corporations; and</p>
<br>
<p>WHEREAS, UAX is a public company trading on the American Stock Exchange, symbol ("UAX"), and wishes to
retain the services of RC on a non-exclusive basis.</p>
<br>
<p>AGREEMENT</p>
<br>
<p>IN CONSIDERATION of the mutual promises made by RC and UAX and the terms and conditions hereafter set
forth, the receipt and adequacy of such consideration being mutually acknowledged, RC and UAX therefore agree
to the following:</p>
<br>
<p>1. Term</p>
<br>
<p>The initial term of this Agreement shall commence upon the mutual execution of this Agreement and shall continue
for three months.  At the expiration date, this Agreement shall be renewed on a month-to-month basis, provided
neither party hereto submits a written notice of termination within ten (10) days prior to the termination of either the
initial term hereof or any renewal term.</p>
<br>
<p>II. Consulting Services</p>
<br>
<p>As a public relations company, which incorporates a variety of programs, techniques and tools at their client's
request, RC will provide general assistance to UAX in the area of public relations, subject to RC's review and
approval for compliance and disclosure purposes.  Such services include:</p>
<br>
<p>A. Preparing and disseminating financial press releases to various news wire organizations; RC, including each of
its affiliates, will not directly or indirectly buy or sell the securities of UAX at any time when it or they are privy to
non-public information.  RC agrees that it will not disseminate any printed matter relating to UAX, including,
without limitation, press releases, without prior written approval of UAX&#8217;s legal counsel.  RC agrees that it will
comply with all applicable securities laws, in performing on behalf of UAX hereunder.</p>
<br>
<p>B. Disseminating relevant approved corporate information to the general public and brokerage houses;</p>
<br>
<p>C. Assisting UAX in the promotion of the Corporation's day to day company activities;</p>
<br>
<p>D. Acting non-exclusively as a liaison on behalf of the Corporation with the general public and equity brokers;</p>
<br>
<p>E. Any other public relations activities that the parties herein agree upon in writing; and</p>
<br>
<p>F. There will also be a bi-weekly oral or written report by RC to UAX to accurately communicate all progress.</p>
<br>
<p>It is further agreed that RC shall have no authority to bind UAX to any contract or obligation or to transact any
business in UAX&#8217;s name or on behalf of UAX, in any manner.</p>
<br>
<p>III. Consideration</p>
<br>
<p>For services rendered by RC on behalf of UAX pursuant to the Agreement, UAX shall compensate RC as follows:</p>
<br>
<p>A. For each month during the initial term or any renewal term of this Agreement, UAX shall issue RC 100,000
shares of its fully paid and non-assessable common stock , in advance.</p>
<br>
<p>B. For each month during the initial term or any renewal term of this Agreement, UAX shall pay RC the sum of
$5,000 USD (Five Thousand US Dollars) on the first day of the month for that month's services.</p>
<br>
<p>IV. Expenses</p>
<br>
<p>RC is an independent contractor responsible for its own expenses and taxes.  Unless otherwise agreed to in writing,
each party shall be responsible for its own costs with regard to the terms and conditions set forth in this Agreement.</p>
<br>
<p>V. Official Notices</p>
<br>
<p>All official communications or legal notices shall be given in writing, be registered or certified mail, addressed to
the respective party at the postal address or other address(es) as each party may hereafter designate in writing, or
when sent by facsimile transmission, charges prepaid.  The present addresses of the parties are as follows:</p>
<br>
<p>Regency Capital</p>
<p>7500 E. Arapahoe Rd., Suite 380</p>
<p>Englewood, CO 80112</p>
<p>(303) 771-7300 (phone)</p>
<p>(303) 771-7310 (fax)</p>
<p>Attn: _________________</p>
<br>
<p>AND,</p>
<br>
<p>USURF America, Inc.</p>
<p>3333 S. Bannock, Suite 790</p>
<p>Englewood, CO 80110</p>
<p>(303) 808-6001 (phone)</p>
<p>(303) 660-6784 (fax)</p>
<p>Attn: Doug McKinnon</p>
<br>
<p>VI. Confidential Information</p>
<br>
<p>A. "Confidential Information" means any proprietary information, technical data or know-how disclosed to RC,
either directly or indirectly in writing, orally, by drawing, or by inspection or other tangible items.  Confidential
information shall include, without limitation, any working model of any of UAX&#8217;s Quick-Cell(TM) wireless
Internet access products, all business, product, research and financial plans or any and all other information UAX
disclosed to or discussed with RC.</p>
<br>
<p>B. UAX and RC acknowledge that nothing contained in this Agreement will be construed as granting any rights, by
license or otherwise, to either party.</p>
<br>
<p>C. RC agrees to be bound by all of the above terms contained in this Section concerning UAX's confidential and
proprietary information that may be obtained in the course of this Agreement.</p>
<br>
<p>VII. Unauthorized Use</p>
<br>
<p>Both parties agree that any unauthorized use of any proprietary information whether accidental or otherwise shall be
construed as intention and shall be considered a breach of this Agreement.</p>
<br>
<p>VIII. Termination of Agreement</p>
<br>
<p>This Agreement may be terminated forthwith upon either or both of the following events:</p>
<br>
<p>A. If, in UAX's sole opinion, RC has intentionally breached any of the terms or duties contained in the Agreement.</p>
<br>
<p>B. UAX fails to make any payment required to be made by it to RC.</p>
<br>
<p>Upon termination, each party shall, upon request, return all originals and copies of materials provided to the other
party.  RC agrees that any and all materials in any form whatsoever supplied to RC by UAX or any of its affiliates
or contractors are the sole and exclusive property of UAX.  These materials must be surrendered upon demand.
Any unwarranted use, duplication or disclosure without prior written consent of UAX is strictly prohibited.</p>
<br>
<p>IX. Best Efforts Basis</p>
<br>
<p>RC agrees that it will at all times faithfully, to the best of its experience, ability and talents, perform all the duties
that may be required of and from RC pursuant to the terms of the Agreement.  RC does not guarantee that its efforts
will have any impact on UAX's business or that any subsequent financial improvement will result from RC's efforts.</p>
<p>&#160;&#160;</p>
<p>X. Governing Law; Arbitration</p>
<br>
<p>This Agreement shall be subject to all valid applicable laws, rules and regulations of the State of Colorado and of
the United States.  In the event that this Agreement, any of its provisions, or its outlined operations are found to be
inconsistent with or contrary to any such laws, rules or regulations, the latter shall control.  Furthermore, if
commercially practicable, this Agreement shall be considered modified accordingly and shall continue in full force
and effect as so modified.</p>
<br>
<p>A. Both parties reserve the right to meet within a reasonable time and discuss any necessary amendments or
modifications should the modified Agreement not be commercially practicable in the opinion of either party's legal
counsel.</p>
<br>
<p>B. In the event of arbitration, the laws of the State of Colorado shall control this Agreement.</p>
<br>
<p>In the event of a dispute between the parties arising out of this Agreement, both RC and UAX agree to submit such
dispute to arbitration before the American Arbitration Association (the "Association") at its Denver, Colorado,
offices, in accordance with the then-current rules of the Association; the award given by the arbitrators shall be
binding and a judgment can be obtained on any such award in any court of competent jurisdiction.  It is expressly
agreed that the arbitrators, as part of their award, can award attorneys fees to the prevailing party.</p>
<br>
<p>XI. Entire Agreement</p>
<br>
<p>This Agreement shall constitute the entire Agreement between the parties unless modified by a written amendment
signed by all of the parties or their successors in interest.  There are no other agreements, undertakings, restrictions,
representations or warranties among the parties other than those described and provided for in this Agreement and
expressly signed the parties herein.</p>
<br>
<p>XII. Due Diligence</p>
<br>
<p>The parties herein agree to mutually cooperate with each other concerning any reasonable requests with respect to
pursuing proper and necessary due diligence.</p>
<br>
<p>XIII. Parties' Representation</p>
<br>
<p>UAX represents to RC and RC represents to UAX that both UAX and RC represent that there is no existing or
pending complaint or litigation between their respective companies and the SEC and NASD as of the date of this
Agreement.</p>
<br>
<p>XIV. Independent Contractor</p>
<br>
<p>RC is not an Agent or Employee of UAX:  RC's obligations under this Agreement shall consist solely of the
services previously described.  In no event shall RC be considered to act as an employee or agent of UAX or
otherwise represent or bind UAX.  For the purposes of this Agreement, RC is an independent contractor.  All final
decisions with respect to acts of UAX, whether or not made pursuant to or in reliance on information or advice
furnished by RC in this Agreement, shall be those of UAX.  RC's employees or agents shall under no circumstances
be liable for any expense incurred or loss suffered by UAX as a consequence of such action or decisions.</p>
<br>
<p>XV. Attorney Fees</p>
<br>
<p>In the event that any court proceeding or dispute resolution procedure is brought under or in connection with this
Agreement, the prevailing party in such proceeding (whether on trial or on appeal) shall be entitled to recover from
the other party all costs, expenses and reasonable attorneys' fees incidental to such legal action.  The term
"prevailing party" as defined in this Agreement shall mean the party in whose favor a final judgement or award on
the merits is entered.  The prevailing party may apply to the court or the person(s) or board in charge of the
proceeding, for an award of costs, expenses and reasonable attorneys' fees.</p>
<br>
<p>XVI. Facsimile Counterparts</p>
<br>
<p>If a party signs this Agreement and transmits an electronic facsimile of the signature page to the other party, the
party who receives the transmission may rely upon the electronic facsimile as a signed original of this Agreement.
Further, this Agreement may be executed in counterparts.</p>
<br>
<p>AGREED TO this 30th day of July, 2002.</p>
<br>
<p>Regency Capital</p>
<br>
<p>/s/ SCOTT F. GELBARD</p>
<p>Scott F. Gelbard</p>
<br>
<p>USURF America, Inc.</p>
<br>
<p>/s/ DOUG MCKINNON</p>
<p>Doug McKinnon, CEO</p>
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<p>_________________</p>
<br>
<p>EXHIBIT 22.1</p>
<p>_________________<br>
<br>
<br>
SUBSIDIARIES OF REGISTRANT</p>
<br>
<p>CyberHighway, Inc., an Idaho corporation</p>
<br>
<p>Santa Fe Wireless Internet, Inc., a New Mexico corporation</p>
<br>
<p>Missouri Cable TV, Inc., a Louisiana corporation</p>
<br>
<p>Quick-Cell Broadband Internet , Inc., a Louisiana corporation</p>
<br>
<p>USURF America Internet Design, Inc., a Louisiana corporation</p>
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<p>_________________</p>
<br>
<p>EXHIBIT 23.1</p>
<p>_________________</p>
<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>
<p>Baton Rouge, LA</p>
<p style="margin-top: 0.0691667in">July 31, 2002</p>
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<p>_________________</p>
<br>
<p>EXHIBIT 23.2</p>
<p>_________________</p>
<br>
<p>See Exhibit 5.1</p>
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<p>_______________</p>
<br>
<p>EXHIBIT 23.3</p>
<p>_______________</p>
<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>July 31, 2002</p>
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