<SUBMISSION>
<ACCESSION-NUMBER>0001035398-02-000027
<TYPE>10QSB
<PUBLIC-DOCUMENT-COUNT>3
<PERIOD>20020630
<FILING-DATE>20020819
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>USURF AMERICA INC
<CIK>0001035398
<ASSIGNED-SIC>7370
<IRS-NUMBER>721346591
<STATE-OF-INCORPORATION>NV
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10QSB
<ACT>34
<FILE-NUMBER>001-15383
<FILM-NUMBER>02742216
</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>10QSB
<SEQUENCE>1
<FILENAME>qsb630.htm
<TEXT>
<html>

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



</head>

<body>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="33%" style="border-right: none" align="center" valign="top"><p>&#160;</p>
</td>
<td width="33%" style="border-left: none; border-right: none; border-top: 0.0133333in solid; border-bottom: 0.0133333in solid" align="center" valign="top"><p>Form 10-QSB</p>
</td>
<td width="34%" style="border-left: none" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>SECURITIES AND EXCHANGE COMMISSION</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>Washington, D.C.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" align="center" valign="top"><p>[ X ]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>For the quarterly period ended June 30, 2002</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>OR</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>[   ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>For the transition period from _________ to _________.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="33%" style="border-right: none" align="center" valign="top"><p>&#160;</p>
</td>
<td width="33%" style="border-left: none; border-right: none; border-top: 0.0133333in solid; border-bottom: 0.0133333in solid" align="center" valign="top"><p>Commission File No. 1-15383</p>
</td>
<td width="34%" style="border-left: none" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="62%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>USURF America, Inc.</p>
</td>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="62%" align="center" valign="top"><p>(Exact Name of Small Business Issuer as Specified in its Charter)</p>
</td>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="30%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>NEVADA</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="30%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>91-2117796</p>
</td>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="30%" align="center" valign="top"><p>(State or Other Jurisdiction of
incorporation or organization)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="30%" align="center" valign="top"><p>(I.R.S. Employer Identification
Number)</p>
</td>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="62%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>3333 S. Bannock Street, Suite 790, Englewood, Colorado 80110</p>
</td>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="62%" align="center" valign="top"><p>(Address of Principal Executive Offices, including Zip Code)</p>
</td>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="27%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(303) 789-7100</p>
</td>
<td width="27%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="27%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="46%" align="center" valign="top"><p>(Issuer&#8217;s telephone number, including area code)</p>
</td>
<td width="27%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" valign="top"><p>Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that Registrant
as required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="38%" valign="top"><p>&#160;</p>
</td>
<td width="15%" valign="top"><p>Yes [X]</p>
</td>
<td width="47%" valign="top"><p>No [ ]</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" valign="top"><p>Indicate the number of shares outstanding of each of the issuer&#8217;s classes of common stock as of the latest
practicable date:</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="13%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="35%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>Class</p>
</td>
<td width="4%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="35%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>Outstanding as of 8-16-02</p>
</td>
<td width="13%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="13%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="35%" align="center" valign="top"><p>Common Stock, $.0001 par value</p>
</td>
<td width="4%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="35%" align="center" valign="top"><p>47,941,930</p>
</td>
<td width="13%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-top: 0.0266667in solid; border-bottom: 0.0266667in solid" align="center" valign="top"><p>PART I - FINANCIAL INFORMATION</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="88%" style="border-bottom: 0.01in solid" valign="top"><p>Item 1.  Financial Statements.</p>
</td>
<td width="12%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-top: none; border-bottom: none" align="center" valign="top"><p>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="31%" valign="top"><p>&#160;</p>
</td>
<td width="38%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>USURF America, Inc. and Subsidiaries</p>
</td>
<td width="31%" 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="85%" valign="top"><p>&#160;</p>
</td>
<td width="7%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>Page</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="85%" valign="top"><p>Consolidated Balance Sheets as of June 30, 2002 (unaudited), and December 31, 2001</p>
</td>
<td width="7%" align="center" valign="top"><p>3</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="85%" valign="top"><p>Consolidated Statements of Operations for the Three Months Ended June 30, 2002 and 2001
(unaudited), and the Six Months Ended June 30, 2002 and 2001 (unaudited)</p>
</td>
<td width="7%" align="center" valign="top"><p>6</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="85%" valign="top"><p>Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2002 and 2001
(unaudited)</p>
</td>
<td width="7%" align="center" valign="top"><p>8</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="85%" valign="top"><p>Notes to Consolidated Statements</p>
</td>
<td width="7%" align="center" valign="top"><p>11</p>
</td>
</tr>
</table>
<br>
<br>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-top: 0.0266667in solid" align="center" valign="top"><p>USURF AMERICA, INC. AND SUBSIDIARIES</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>ENGLEWOOD, COLORADO</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>CONSOLIDATED BALANCE SHEETS</p>
</td>
</tr>
<tr>
<td width="100%" style="border-bottom: 0.0266667in solid" align="center" valign="top"><p>JUNE 30, 2002 (UNAUDITED), AND DECEMBER 31, 2001</p>
</td>
</tr>
</table>
<br>
<p style="text-align: center">ASSETS</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>June 30, 2002
(unaudited)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>December 31, 2001
(audited)</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>CURRENT ASSETS</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Cash and cash equivalents</p>
</td>
<td width="23%" align="center" valign="top"><p>$71,409</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>$10</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Inventory</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>99,057</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>134,746</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>170,466</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>134,756</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>PROPERTY AND EQUIPMENT</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Cost</p>
</td>
<td width="23%" align="center" valign="top"><p>204,387</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>203,141</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Less: accumulated depreciation</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(134,936)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(125,036)</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>69,451</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>78,105</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>OTHER ASSETS</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>12,500</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>16,667</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>TOTAL ASSETS</p>
</td>
<td width="23%" style="border-bottom: 0.04in double" align="center" valign="top"><p>$252,417</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.04in double" align="center" valign="top"><p>$229,528</p>
</td>
</tr>
</table>
<br>
<p style="text-align: center">LIABILITIES AND STOCKHOLDERS&#8217; DEFICIT</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>June 30, 2002
(unaudited)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>December 31, 2001
(audited)</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>CURRENT LIABILITIES</p>
</td>
<td width="23%" valign="top"><p>&#160;</p>
</td>
<td width="2%" valign="top"><p>&#160;</p>
</td>
<td width="23%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Disbursements in excess of cash balances</p>
</td>
<td width="23%" align="center" valign="top"><p>$0</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>$15,539</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Accounts payable</p>
</td>
<td width="23%" align="center" valign="top"><p>1,016,635</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>1,034,619</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Accrued payroll</p>
</td>
<td width="23%" align="center" valign="top"><p>20,734</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>265,978</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Other current liabilities</p>
</td>
<td width="23%" align="center" valign="top"><p>59,396</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>54,996</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;Notes payable to stockholder</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>0</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>18,521</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>1,096,765</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>1,389,653</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>LONG-TERM LIABILITIES</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>0</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>TOTAL LIABILITIES</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>1,096,765</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>1,389,653</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>REDEEMABLE COMMON STOCK</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Common stock subject to rescission: no shares
outstanding at June 30, 2002, $.0001 par value per share,
and 2,138,726 shares outstanding at December 31, 2001</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>0</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>1,192,700</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>0</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>1,192,700</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>STOCKHOLDERS&#8217; DEFICIT</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Common stock, $.0001 par value; Authorized:
100,000,000 shares; Issued and outstanding: 45,258,005
shares at June 30, 2002, and 23,848,108 at December 31,
2001</p>
</td>
<td width="23%" align="center" valign="top"><p>4,526</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>2,385</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Additional paid-in capital</p>
</td>
<td width="23%" align="center" valign="top"><p>38,623,626</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>35,642,817</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Accumulated deficit</p>
</td>
<td width="23%" align="center" valign="top"><p>(38,676,519)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>(37,000,628)</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Subscriptions receivable</p>
</td>
<td width="23%" align="center" valign="top"><p>120,000</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>165,750</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>Deferred consulting</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(915,981)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(1,163,149)</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(844,348)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(2,352,825)</p>
</td>
</tr>
<tr>
<td width="52%" valign="top"><p>TOTAL LIABILITIES AND STOCKHOLDERS&#8217;
DEFICIT</p>
</td>
<td width="23%" style="border-bottom: 0.04in double" align="center" valign="top"><p>$252,417</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.04in double" align="center" valign="top"><p>&#160;$229,528</p>
</td>
</tr>
</table>
<br>
<p>The accompanying notes are an integral part of these statements.</p>
<br>
<br>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="19%" style="border-top: 0.0266667in solid" align="center" valign="top"><p>&#160;</p>
</td>
<td width="62%" style="border-top: 0.0266667in solid" align="center" valign="top"><p>USURF AMERICA, INC. AND SUBSIDIARIES</p>
</td>
<td width="19%" style="border-top: 0.0266667in solid" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="62%" align="center" valign="top"><p>ENGLEWOOD, COLORADO</p>
</td>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="62%" align="center" valign="top"><p>CONSOLIDATED STATEMENTS OF OPERATIONS</p>
</td>
<td width="19%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="19%" style="border-bottom: 0.0266667in solid" align="center" valign="top"><p>&#160;</p>
</td>
<td width="62%" style="border-bottom: 0.0266667in solid" align="center" valign="top"><p>FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001,
AND THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001</p>
</td>
<td width="19%" style="border-bottom: 0.0266667in solid" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="33%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="33%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>Three Months Ended June 30,</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="32%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>Six Months Ended June 30,</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="33%" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>2002
(unaudited)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>2001
(unaudited)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>2002
(unaudited)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>2001
(unaudited)</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>REVENUES</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;Revenues</p>
</td>
<td width="15%" align="center" valign="top"><p>$4,676</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>$15,507</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>$9,302</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>$15,891</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;Internet access costs, cost of
goods sold</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(8,669)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(5,343)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(17,151)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(5,343)</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;Gross profit (loss)</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(3,993)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>10,164</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(7,849)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>10,548</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>OPERATING EXPENSES</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;Depreciation and amortization</p>
</td>
<td width="15%" align="center" valign="top"><p>7,034</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>7,713</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>14,067</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>19,293</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;Professional fees</p>
</td>
<td width="15%" align="center" valign="top"><p>422,910</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>432,318</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>693,057</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>1,139,606</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;Rent</p>
</td>
<td width="15%" align="center" valign="top"><p>7,682</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>7,131</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>15,363</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>12,492</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;Salaries and commissions</p>
</td>
<td width="15%" align="center" valign="top"><p>711,995</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>215,822</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>815,163</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>376,568</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;Advertising</p>
</td>
<td width="15%" align="center" valign="top"><p>2,845</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>0</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>64,845</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;Other</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>50,628</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>31,327</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>65,371</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>47,995</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>1,203,094</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>694,311</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>1,667,866</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>1,595,954</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>LOSS FROM OPERATIONS</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(1,207,087)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(684,147)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(1,675,715)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(1,585,406)</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>OTHER INCOME (EXPENSE)</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;Interest income</p>
</td>
<td width="15%" align="center" valign="top"><p>7</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>0</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>7</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;Interest expense</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>0</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>0</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(183)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>LOSS BEFORE INCOME TAX</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(1,207,080)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(684,147)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(1,675,891)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>(1,585,406)</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>INCOME TAX BENEFIT</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>0</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>0</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>0</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>0 </p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: none" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>NET LOSS</p>
</td>
<td width="15%" style="border-top: none; border-bottom: 0.04in double" align="center" valign="top"><p>$(1,207,080)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.04in double" align="center" valign="top"><p>$(684,147)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.04in double" align="center" valign="top"><p>$(1,675,891)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="border-bottom: 0.04in double" align="center" valign="top"><p>$(1,585,406)</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>Net loss per common share</p>
</td>
<td width="15%" style="border-bottom: 0.04in double" align="center" valign="top"><p>$(.03)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.04in double" align="center" valign="top"><p>$(.05)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.04in double" align="center" valign="top"><p>$(.05)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="border-bottom: 0.04in double" align="center" valign="top"><p>$(.11)</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="33%" valign="top"><p>Weighted average number of
shares outstanding</p>
</td>
<td width="15%" style="border-bottom: 0.04in double" align="center" valign="top"><p>41,190,086</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.04in double" align="center" valign="top"><p>15,188,697</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="15%" style="border-bottom: 0.04in double" align="center" valign="top"><p>35,044,692</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="16%" style="border-bottom: 0.04in double" align="center" valign="top"><p>14,564,873</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%" style="border-top: 0.0266667in solid" 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%" style="border-bottom: 0.0266667in solid" align="center" valign="top"><p>SIX MONTHS ENDED JUNE 30, 2002 AND 2001</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="54%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="21%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>Six Months Ended
June 30, 2002
(unaudited)</p>
</td>
<td width="4%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="21%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>Six Months Ended
June 30, 2001
(unaudited)</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>CASH FLOWS FROM OPERATING ACTIVITIES</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>Net loss</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>$(1,675,891)</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>$(1,585,406)</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>Adjustment to reconcile net loss to net cash used in
operating activities</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Depreciation and amortization</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>14,067</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>19,293</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Consulting fees paid with stock</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>509,993</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>1,053,110</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Legal fees paid with stock</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>101,000</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Compensation expense paid with stock</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>864,880</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>47,947</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Advertising expense paid with stock</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>62,000</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>Changes in operating assets and liabilities</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Accounts receivable</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>0</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Inventory</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>(4,100)</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>5,343</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Other current liabilities</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>0</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>20,000</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Other assets and liabilities</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>0</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>7,400</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Deferred revenue</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>0</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Accounts payable</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>25,164</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>4,658</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Prepaid expenses and other current assets</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>0</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Accrued payroll</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-left: none; border-top: none; border-bottom: 0.01in solid" align="center" valign="top"><p>(241,293)</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-left: none; border-right: none; border-top: none; border-bottom: 0.01in solid" align="center" valign="top"><p>97,470</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>Net cash used in operating activities</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-left: none; border-top: none; border-bottom: 0.01in solid" align="center" valign="top"><p>(344,180)</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-left: none; border-right: none; border-top: none; border-bottom: 0.01in solid" align="center" valign="top"><p>(330,185)</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>CASH FLOWS FROM INVESTING ACTIVITIES </p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Cash acquired in acquisitions</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>$0</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>$0</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Capital expenditures</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-left: none; border-top: none; border-bottom: 0.01in solid" align="center" valign="top"><p>0</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-left: none; border-right: none; border-top: none; border-bottom: 0.01in solid" align="center" valign="top"><p>(1,600)</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>Net cash used in investing activities</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-left: none; border-top: none; border-bottom: 0.01in solid" align="center" valign="top"><p>0</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-left: none; border-right: none; border-top: none; border-bottom: 0.01in solid" align="center" valign="top"><p>(1,600)</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>CASH FLOWS FROM FINANCING ACTIVITIES</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Payments on notes payable and capital lease obligations</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>$0</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>$0</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Proceeds from subscriptions receivable</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>237,000</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>302,000</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Proceeds from notes payable to stockholder</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>0</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>48,290</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Issuance of common stock for cash</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>189,000</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Payment on note payable to stockholder</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>(18,521)</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Warrants exercised</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>13,000</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>&#160;Fee for stock issuances</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-left: none; border-top: none; border-bottom: 0.01in solid" align="center" valign="top"><p>(4,900)</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-left: none; border-right: none; border-top: none; border-bottom: 0.01in solid" align="center" valign="top"><p>0</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>Net cash provided by financing activities</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-left: none; border-top: none; border-bottom: 0.01in solid" align="center" valign="top"><p>415,579</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-left: none; border-right: none; border-top: none; border-bottom: 0.01in solid" align="center" valign="top"><p>350,290</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>Net increase (decrease) in cash and cash equivalents</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>71,399</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-bottom: none; border-left: none; border-right: none; border-top: none" align="center" valign="top"><p>18,505</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" valign="top"><p>Cash and cash equivalents, beginning of period</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-left: none; border-top: none; border-bottom: 0.01in solid" align="center" valign="top"><p>10</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-bottom: none; border-left: none; border-top: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-left: none; border-right: none; border-top: none; border-bottom: 0.01in solid" align="center" valign="top"><p>1,088</p>
</td>
</tr>
<tr>
<td class="table26column1" width="54%" style="border-right: none; border-left: none; border-top: none; border-bottom: none" valign="top"><p>Cash and cash equivalents, end of period</p>
</td>
<td class="table26column2" width="21%" style="border-right: none; border-left: none; border-top: none; border-bottom: 0.04in double" align="center" valign="top"><p>$71,409</p>
</td>
<td class="table26column3" width="4%" style="border-right: none; border-left: none; border-top: none; border-bottom: none" align="center" valign="top"><p>&#160;</p>
</td>
<td class="table26column4" width="21%" style="border-left: none; border-right: none; border-top: none; border-bottom: 0.04in double" align="center" valign="top"><p>$19,593</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="58%" style="border-bottom: 0.01in solid" valign="top"><p>SUPPLEMENTAL DISCLOSURE OF NON-CASH</p>
<p>INVESTING AND OTHER CASH FLOW INFORMATION</p>
</td>
<td width="42%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="33%" style="border-bottom: 0.01in solid" valign="top"><p>Six Months Ended June 30, 2002:</p>
</td>
<td width="67%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><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>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In February 2002, the Company entered into a four-month consulting agreement, by issuing 300,000
shares of stock valued at $30,000.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><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>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><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>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In April 2002, the Company entered into a one-month consulting agreement, by issuing 75,000 shares of
stock valued at $6,000.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In April 2002, the Company issued 500,000 shares in payment of legal services, which shares of stock
were valued at $35,000.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In April 2002, the Company issued 500,000 shares of stock to a consultant valued at $35,000.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In April 2002, the Company issued a total of 9,000,000 shares to certain officers, in connection with their
respective employment agreements, which shares were valued at $960,000.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In April 2002, the Company issued 200,000 in payment of a $20,000 account payable.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In April 2002, the Company entered into a six-month consulting agreement, by issuing 900,000 shares of
stock valued at $99,000.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In April 2002, the Company entered into a six-month consulting agreement, by issuing 250,000 shares of
stock valued at $27,500.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In April 2002, the Company entered into a six-month consulting agreement, by issuing 250,000 shares of
stock valued at $27,500.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In April 2002, the Company entered into a six-month consulting agreement, by issuing 150,000 shares of
stock valued at $15,000.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In May 2002, the Company issued 900,000 shares in payment of legal services, which shares of stock
were valued at $60,000.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In May 2002, the Company entered into a one-month consulting agreement, by issuing 75,000 shares of
stock valued at $4,500.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="33%" style="border-bottom: 0.01in solid" valign="top"><p>Six Months Ended June 30, 2001:</p>
</td>
<td width="67%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><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>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><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>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In January 2001, 774,162 shares were issued to the Company's president, pursuant to a debt conversion
agreement, which shares were not issued in 2000, due to an administrative error.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In April 2001, the Company issued 300,000 shares of stock valued at $183,000, under a consulting
agreement.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In May 2001, the Company issued 200,000 shares of stock valued at $62,000, in payment of a finder&#8217;s fee
arising out of a common stock purchase agreement.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In May 2001, the Company issued 60,000 shares of stock valued at $24,000, under a consulting
agreement.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>In June 2001, the Company issued 20,000 shares of stock valued at $7,400, pursuant to a settlement
agreement.</p>
</td>
</tr>
<tr>
<td width="6%" align="right" valign="top"><p>-</p>
</td>
<td width="94%" valign="top"><p>During the six months ended June 30, 2001, the Company issued a total of 70,000 shares of stock to a
consultant, which shares were issued under a consulting agreement at prices based on then-current market
price of the Company&#8217;s common stock.</p>
</td>
</tr>
</table>
<br>
<p>The accompanying notes are an integral part of these statements.</p>
<br>
<br>
<br>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-top: 0.0266667in solid" align="center" valign="top"><p>USURF AMERICA, INC. AND SUBSIDIARIES</p>
</td>
</tr>
<tr>
<td width="100%" align="center" valign="top"><p>ENGLEWOOD, COLORADO</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>SIX MONTHS ENDED JUNE 30, 2002</p>
</td>
</tr>
<tr>
<td width="100%" style="border-bottom: 0.0266667in solid" align="center" valign="top"><p>(Unaudited)</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Note 1.  Nature of Business, Organization and Basis of Presentation</p>
</td>
<td width="35%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="38%" style="border-bottom: 0.01in solid" valign="top"><p>Basis of Presentation</p>
</td>
<td width="62%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="38%" style="border-bottom: 0.01in solid" valign="top"><p>Principles of Consolidation</p>
</td>
<td width="62%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" valign="top"><p>The accompanying consolidated financial statements include all the accounts of the Company and all wholly
owned subsidiaries. Inter-company transactions and balances have been eliminated in the consolidation.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="38%" style="border-bottom: 0.01in solid" valign="top"><p>Loss Per Common Share</p>
</td>
<td width="62%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Note 2. Interim Consolidated Financial Statements</p>
</td>
<td width="35%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" valign="top"><p>In the opinion of management, the accompanying consolidated financial statements for the six months ended
June 30, 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 the Company, including
subsidiaries, and include the accounts of the Company and all of its subsidiaries.  All material inter-company
transactions and balances are eliminated.</p>
</td>
</tr>
<tr>
<td width="100%" valign="top"><p>The financial statements included herein have been prepared by the Company, 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 the Company&#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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Note 3. Notes Payable to Shareholder</p>
</td>
<td width="35%" 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="44%" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>June 30, 2002
(unaudited)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>December 31, 2001</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="44%" 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="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="23%" align="center" valign="top"><p>$18,521</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Note 4. Stock and Warrant Issuances</p>
</td>
<td width="35%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" valign="top"><p>During the six months ended June 30, 2002, the Company issued shares of common stock and common stock
purchase warrants, as follows:</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>486,500 shares as finder&#8217;s fees.</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>4,170,000 shares in payment of consulting and professional fees.</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>7,369,600 warrants (400,000 warrants, exercise price $.049 per share; 560,000 warrants, exercise price
$.10 per share; 3,125,000 warrants, exercise price of $.15 per share; 666,000 warrants, exercise price of
$.20 per share; 3,218,000 warrants, exercise price of $.30 per share) were issued in payment of
consulting fees.</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>9,000,000 shares issued to officers pursuant to employment agreements.</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>3,645,833 shares sold for cash.</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>1,200,000 shares issued in payment of accounts payable and advertising expenses.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Note 5. Contingencies</p>
</td>
<td width="35%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="38%" style="border-bottom: 0.01in solid" valign="top"><p>A. Bankruptcy</p>
</td>
<td width="62%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" 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="100%" 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>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="38%" style="border-bottom: 0.01in solid" valign="top"><p>B. Potential Rescission Claims</p>
</td>
<td width="62%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" 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 had a potential claim for rescission of their respective issuance transactions.</p>
</td>
</tr>
<tr>
<td width="100%" 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="100%" valign="top"><p>At June 30, 2002, none of these shares remained subject to potential rescission claims.</p>
</td>
</tr>
<tr>
<td width="100%" 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="100%" valign="top"><p>None of these potential rescission claims was ever asserted against the Company.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Note 6. Financing Transaction</p>
</td>
<td width="35%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" valign="top"><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 six
months of 2002.  The purchase agreement remains in effect.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Note 7. Stock Ownership Plan</p>
</td>
<td width="35%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" valign="top"><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>
</td>
</tr>
<tr>
<td width="100%" valign="top"><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>
</td>
</tr>
<tr>
<td width="100%" valign="top"><p>In May 2002, the Company issued to a consultant 75,000 shares of stock valued at $4,500, under its 2002 Stock
Ownership Plan.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Note 8. AMEX Listing</p>
</td>
<td width="35%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" valign="top"><p>Currently, we are not in compliance with the continued listing guidelines of AMEX.  During the second quarter
of 2001, AMEX first 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.  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>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Note 9. Significant Equity Purchase</p>
</td>
<td width="35%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" valign="top"><p>On June 14, 2002, the Company completed a securities purchase agreement with Evergreen Venture Partners,
LLC, whereby the Company issued units of its securities for cash in the amount of $240,000 ($115,000 plus a
subscription of $10,000 in April and $125,000 in June).  The Company sold to Evergreen a total of 3,645,833
shares of common stock, 3,125,000 common stock purchase warrants to purchase one a like number of shares at
an exercise price of $.15 per share and 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, the Company hired a
new president and chief executive officer, who received, as a signing bonus, 3,000,000 shares of common stock;
the Company&#8217;s former president, became 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 the Company, in consideration of 2,000,000 shares of common
stock; two of the Company&#8217;s 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 common stock; and the Company&#8217;s other vice
president terminated his employment with the Company.  Also, under this agreement, Evergreen has the right to
name two persons to become directors of the Company.  Evergreen has not yet named any person as a director.</p>
</td>
</tr>
<tr>
<td width="100%" valign="top"><p>As a result of the transactions with these four officers arising out of the Evergreen agreement, the Company
incurred a charge against earnings during the second quarter of 2002 of $567,180.</p>
</td>
</tr>
</table>
<br>
<br>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="88%" style="border-bottom: 0.01in solid" valign="top"><p>Item 2. Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations.</p>
</td>
<td width="12%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Background</p>
</td>
<td width="35%" valign="top"><p>&#160;</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 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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>We were organized to operate in the wireless cable and community (low power) television industries.  Due
to existing market conditions, we have abandoned our wireless cable business.  Because our Quick-Cell
wireless Internet access system can be adapted for use on the wireless cable frequencies, we believe our
frequencies possess future value.  However, these frequencies will not be of value to us, unless and until the
FCC approves two-way communications on them.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Current Overview</p>
</td>
<td width="35%" valign="top"><p>&#160;</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 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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>On June 14, 2002, we completed a securities purchase agreement with Evergreen Venture Partners, LLC,
whereby we issued securities for cash in the amount of $250,000 (including a $10,000 stock subscription
receivable).  We sold to Evergreen a total of 3,645,833 shares of our common stock, 3,125,000 common
stock purchase warrants to purchase one a like number of shares at an exercise price of $.15 per share and
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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>As a result of the transactions with these four officers arising out of the Evergreen agreement, we incurred a
charge against our earnings during the second quarter of 2002 of $567,180.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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 funds 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 August 2002 and that our third quarter operating results will begin to reflect the implementation
of our agreement with SunWest.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>As the level of funding under the Fusion Capital agreement has been lower than we had earlier anticipated,
$55,000 during the first half of 2002, we obtained additional funds through sales of our securities, as
follows:</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>$57,500 (last quarter of 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 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 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>$98,000 from the exercise of options - 2,000,000 shares at $.049 per share (a 38.75% 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>$240,000 ($115,000 plus a subscription of $10,000 in April and $125,000 in June) from the sale of
3,645,833 shares and a total of 6,250,000 warrants, pursuant to the Evergreen transaction.</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 majority of these funds were used for operating expenses.  Approximately $100,000 of these funds has
been applied toward the expansion of our wireless Internet access 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>We will need further capital, as we continue to expand our wireless Internet access business.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>CyberHighway Bankruptcy</p>
</td>
<td width="35%" valign="top"><p>&#160;</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 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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Results of Operations</p>
</td>
<td width="35%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>General.</p>
</td>
<td width="50%" valign="top"><p>&#160;</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>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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>During the first half of 2001, we derived no revenue from CyberHighway&#8217;s business.  For the first six
months of 2001 and 2002, our small amounts of revenues were dervied from our Quick-Cell wireless
Internet access operations.  We currently lack the capital necessary to pursue our complete Quick-Cell
business plan, and we may never possess enough capital with which to exploit fully our Quick-Cell products.
In this circumstance, it is likely that we would never earn a profit.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>In September 2001, we began Quick-Cell operations in Del Rio, Texas.  We have approximately 50
customers online, but our growth there has been slowed significantly due to our lack of capital.  We cannot
predict the number of customers we will secure in any specific time frame, due to our lack of capital.  In Del
Rio, we have chosen to make sustained slow progress in customer acquisition, rather than to have begun full-scale marketing activities only to suspend them soon after their start due to our lack of capital.  Should we
begin to derive greater amounts of funds under the Fusion Capital agreement or from another source, of
which there is no assurance, we plan to construct additional Quick-Cell systems throughout the remainder of
2002.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>In the middle of 2000, we began marketing our Quick-Cell systems to local exchange telephone companies,
independent telephone companies, digital subscriber line resellers and Internet service providers.  We sold
three Quick-Cell systems in a short time.  Due to a lack of capital, however, this marketing effort was
suspended before we investigated the nature of the other inquiring companies.  No paying customers use
these systems, due to circumstances involving these companies that are beyond our control.  During the first
six months of 2001 and 2002, we derived no significant revenues from customer modem sales to these
Quick-Cell purchasers, and we do not expect to do so during 2002.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>In cities in which we construct company-owned Quick-Cell systems, we intend to employ telephone
marketing as the initial means for acquiring customers and, later, mass media.  We will employ a sales force
that will focus primarily on potential business customers.  This focus on business customers is based on our
management&#8217;s informal study of Internet usage by businesses versus home users that revealed businesses&#8217;
higher demand for high-speed Internet access.  Our management&#8217;s decision may prove to have been
incorrect, which would significantly impair our ability to earn a profit.  Our management believes, based on
its collective business experience, that effective marketing techniques can overcome Quick-Cell&#8217;s lack of
name recognition, although this belief may also prove to be incorrect.  Our Quick-Cell business will not be
able to succeed without additional capital.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>Our revenues for the first six months of 2001 and 2002 were significantly below those of the comparable
2000 period, since we no longer derive revenues from the operations of CyberHighway and we have lacked
capital with which to commence a full-scale implementation of our Quick-Cell business plan.  In 2002, we
will produce significant revenues only if we are able to be successful in placing Quick-Cell service
customers online, of which there is no assurance, due to the uncertainty surrounding our level of
capitalization to be derived under the Fusion Capital agreement or any other sources.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>Potential Rescission Claims.</p>
</td>
<td width="50%" valign="top"><p>&#160;</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>At June 30, 2001, 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.  Our balance sheet reflects a
Redeemable Common Stock line item with this assigned value, since each of the issuees of these shares may
have had a potential claim for rescission of their respective issuance transactions.  None of these issuees
made such a claim within the various statute of limitations periods and, consequently, at June 30, 2002, none
of our shares remained subject to potential rescission claims, which circumstance is reflected in the
Redeemable Common Stock line item of our balance sheet.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>Six Months Ended June 30, 2002, versus Six
Months Ended June 30, 2001.</p>
</td>
<td width="50%" valign="top"><p>&#160;</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 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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>Our operating results for the first six months of 2002 and 2001 are summarized in the following table:</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="40%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="25%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>First Six Months of 2002
(unaudited)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="25%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>First Six Months of 2001
(unaudited)</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="40%" valign="top"><p>Revenues</p>
</td>
<td width="25%" align="center" valign="top"><p>$9,302</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="25%" align="center" valign="top"><p>$15,891</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="40%" valign="top"><p>Internet Access Costs, Cost of Goods Sold</p>
</td>
<td width="25%" align="center" valign="top"><p>(17,151)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="25%" align="center" valign="top"><p>(5,343)</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="40%" valign="top"><p>Gross Profit (Loss)</p>
</td>
<td width="25%" align="center" valign="top"><p>(7,849)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="25%" align="center" valign="top"><p>10,548</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="40%" valign="top"><p>Operating Expenses</p>
</td>
<td width="25%" align="center" valign="top"><p>1,667,866</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="25%" align="center" valign="top"><p>1,595,954</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="40%" valign="top"><p>Loss from Operations</p>
</td>
<td width="25%" align="center" valign="top"><p>(1,675,715)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="25%" align="center" valign="top"><p>(1,585,406)</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="40%" valign="top"><p>Net Loss</p>
</td>
<td width="25%" align="center" valign="top"><p>(1,675,891)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="25%" align="center" valign="top"><p>(1,585,406)</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>Our net loss of $1,675,891 (unaudited) for the first six months of 2002 was slightly higher than our net loss
for the 2001 period of $1,585,406 (unaudited).  Certain line items in our statements of operations changed
materially from the 2001 period to the 2002 period.</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>Professional fees decreased from $1,139,606 in the 2001 period to $693,057 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.  However, during the 2002 period, we
incurred advertising expenses of $68,845.  Substantially 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 38.75% 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 increased from $376,568 in the 2001 period to $815,163 in the 2002 period.
This increase in salaries and commissions is attributable to issuances of shares of our common stock to
our officers under their employment agreements, in connection with the Evergreen transaction, as
described in the following paragraph.</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>As a result of the Evergreen transaction, we incurred a one-time charge against our earnings during the
second quarter of 2002 in the amount of $567,180 (net of forgiven accrued and unpaid salaries and unpaid
loans to certain of our officers), due to the following stock issuances:</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>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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>We expect that our results of operations for the third quarter of 2002 will be similar to those of the first tow
quarters of 2002.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</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>during the first six months of 2001, we issued 630,000 shares of our common stock under consulting
agreements; these shares were valued for financial accounting purposes at approximately $300,000, in
the aggregate.  This amount was expensed in 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 six months of 2002, we issued 4,170,000 shares of our common stock under consulting
agreements and in payment of professional fees; these shares were valued for financial accounting
purposes at approximately $610,000, in the aggregate.  This amount is being expensed in equal monthly
amounts over periods ranging from one month to one year.  Nearly all of this total amount will be
expensed during 2002.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Liquidity and Capital Resources</p>
</td>
<td width="35%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>General.</p>
</td>
<td width="50%" valign="top"><p>&#160;</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 our inception, we have had a significant working capital deficit.  Currently, we are substantially
illiquid, although we do possess enough cash to continue our current level of business activities, through the
result of recent securities sales.  As the level of funding under the Fusion Capital agreement has been lower
than we had earlier anticipated, $55,000 during the first half of 2002, we obtained additional funds through
sales of our securities, as follows:</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>$57,500 (last quarter of 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 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 from the exercise of outstanding warrants - 162,500 shares at $.08 per share;</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>$98,000 from the exercise of options - 2,000,000 shares at $.049 per share (a 38.75% 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>$240,000 ($115,000 plus a subscription of $10,000 in April and $125,000 in June) from the sale of
3,645,833 shares and a total of 6,250,000 warrants, pursuant to the Evergreen transaction.</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 majority of these funds were used for operating expenses.  Approximately $100,000 of these funds has
been applied toward the expansion of our wireless Internet access 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>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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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.  In August 2002, an arbitrator ruled against us in an arbitration
proceeding against our former chief financial officer, in the amount of $75,000.  It is likely that we will be
required to pay this amount; however, the terms of this payment have not yet been determined.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>Our Capital Needs.</p>
</td>
<td width="50%" valign="top"><p>&#160;</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>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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</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>A single Quick-Cell cell site, including a Quick-Cell server modem, parts and configuration - projected
average cost: $25,000;</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>Tower lease site - projected average cost: $500 per month;</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>Direct T1 telephone line connection to the Internet - projected average cost: $2,000 per month; and</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>Initial inventory of customer modems - approximate cost: $70,000.</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>However, in Del Rio, due to our lack of large sums of capital, we were able to re-design our Quick-Cell
system to achieve significant cost savings and built the first portion of that system, which included two
server cells - the original plan having called for one server cell - for approximately $18,000, and we have
added a third server cell to this system, in response to consumer demand.  However, we continue to lack
capital with which to market our Quick-Cell service aggressively.  Rather, in Del Rio, we have chosen to
make sustained slow progress in customer acquisition, rather than to have begun full-scale marketing
activities only to suspend them soon after their start due to our lack of capital.  Should we begin to derive
greater amounts of funds under the Fusion Capital agreement, of which there is no assurance, we plan to
construct additional Quick-Cell systems throughout 2002.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>Proceeds from the Fusion Capital Agreement.</p>
</td>
<td width="50%" valign="top"><p>&#160;</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>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>
</td>
</tr>
</table>
<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="13%" align="right" valign="top"><p>$6,000,000</p>
</td>
<td width="26%" 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="13%" align="right" valign="top"><p>1,300,000</p>
</td>
<td width="26%" 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="13%" align="right" valign="top"><p>1,000,000</p>
</td>
<td width="26%" 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="13%" align="right" valign="top"><p>200,000</p>
</td>
<td width="26%" 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="13%" align="right" valign="top"><p>800,000</p>
</td>
<td width="26%" 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="13%" style="border-bottom: 0.01in solid" align="right" valign="top"><p>700,000</p>
</td>
<td width="26%" 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="13%" style="border-bottom: 0.04in double" align="right" valign="top"><p style="text-align: right">$10,000,000</p>
</td>
<td width="26%" valign="top"><p>&#160;</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>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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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 $3,203,487.
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.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>Potential Rescission Claims.</p>
</td>
<td width="50%" valign="top"><p>&#160;</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>At June 30, 2001, 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.  Our balance sheet reflects a
Redeemable Common Stock line item with this assigned value, since each of the issuees of these shares may
have had a potential claim for rescission of their respective issuance transactions.  None of these issuees
made such a claim within the various statute of limitations periods and, consequently, at June 30, 2002, none
of our shares remained subject to potential rescission claims, which circumstance is reflected in the
Redeemable Common Stock line item of our balance sheet.</p>
</td>
</tr>
</table>
<br>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>June 30, 2002.</p>
</td>
<td width="50%" valign="top"><p>&#160;</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>Historically, we have had a significant working capital deficit.  At June 30, 2002, our working capital deficit
was $926,299 (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 six months of 2002 permitted us to
improve moderately our working capital deficit by the end of the period.  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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>The following table sets forth our current assets and current liabilities at March 31, 2002, and December 31,
2001:</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="31%" valign="top"><p>&#160;</p>
</td>
<td width="20%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>June 30, 2002
(unaudited)</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="20%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>December 31, 2001
(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="31%" valign="top"><p>Cash</p>
</td>
<td width="20%" align="center" valign="top"><p>$71,409</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>$10</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="31%" valign="top"><p>Inventory</p>
</td>
<td width="20%" align="center" valign="top"><p>99,057</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>134,756</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="31%" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>Current Liabilities</p>
</td>
<td width="31%" valign="top"><p>Disbursements in Excess of
Cash Balances</p>
</td>
<td width="20%" align="center" valign="top"><p>$0</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>$15,539</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="31%" valign="top"><p>Accounts Payable</p>
</td>
<td width="20%" align="center" valign="top"><p>1,016,635</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>1,034,619</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="31%" valign="top"><p>Accrued Payroll</p>
</td>
<td width="20%" align="center" valign="top"><p>20,734</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>265,978</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="31%" valign="top"><p>Other Current Liabilities</p>
</td>
<td width="20%" align="center" valign="top"><p>59,396</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>54,996</p>
</td>
</tr>
<tr>
<td width="8%" valign="top"><p>&#160;</p>
</td>
<td width="19%" valign="top"><p>&#160;</p>
</td>
<td width="31%" valign="top"><p>Notes Payable to Stockholder</p>
</td>
<td width="20%" align="center" valign="top"><p>0</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="20%" align="center" valign="top"><p>18,521</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 accrued payroll at June 30, 2002, as well as at December 31, 2001, is attributable to accrued salary of
our officers.  In connection with the Evergreen transaction described above, three of our officers waived
payment of all of their accrued salaries, in the approximate amount of $225,000, which is reflected on our
June 30, 2002, balance sheet.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>We reduced our note payable to stockholder during the first quarter of 2002 by $18,521, and owed this
shareholder no amount at June 30, 2002.  We do not expect that we will again borrow funds from this
shareholder.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>As the level of funding under the Fusion Capital agreement has been lower than we had earlier anticipated,
$55,000 during the first half of 2002, we obtained additional funds through sales of our securities, as
follows:</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>$57,500 (last quarter of 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 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 from the exercise of outstanding warrants - 162,500 shares at $.08 per share;</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>-</p>
</td>
<td width="92%" valign="top"><p>$98,000 from the exercise of options - 2,000,000 shares at $.049 per share (a 38.75% 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>$240,000 ($115,000 plus a subscription of $10,000 in April and $125,000 in June) from the sale of
3,645,833 shares and a total of 6,250,000 warrants, pursuant to the Evergreen transaction.</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 majority of these funds were used for operating expenses.  Approximately $100,000 of these funds has
been applied toward the expansion of our wireless Internet access business.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>If we are unable to obtain significant additional capital, it is possible that we would be forced to cease
operations.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>Cash Flows from Operating Activities.</p>
</td>
<td width="50%" valign="top"><p>&#160;</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 first half of 2002, our operations used $344,180 (unaudited) in cash compared to cash used of
$330,185 (unaudited) during the first half 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 in 2001 and greater business development activities in 2002.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>Cash Flows from Investing Activities.</p>
</td>
<td width="50%" valign="top"><p>&#160;</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 investing activities neither provided nor used cash in the first half of 2002 and used $1,600 in cash
during the first half of 2001.  Because we lack working capital, we cannot predict our cash flows from
investing activities for the remainder of 2002.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>Cash Flows from Financing Activities.</p>
</td>
<td width="50%" valign="top"><p>&#160;</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>For the first half of 2002, our financing activities provided $415,579 (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 $237,000, $189,000 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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Management's Plans Relating to Future Liquidity</p>
</td>
<td width="35%" valign="top"><p>&#160;</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>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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>Since we only plan to sell up to 6,000,000 shares to Fusion Capital under the Fusion Capital agreement, the
selling price of our stock sold to Fusion Capital will need to average $1.67 per share for us to receive the
maximum proceeds of $10 million under that agreement.  Assuming a selling price of $.08 per share, the
closing sale price of the common stock on May 16, 2002, and the purchase by Fusion Capital of the full
amount of shares purchasable under the Fusion Capital agreement, total proceeds to us would only be
approximately $600,000, unless we choose to issue more than 6,000,000 shares, which we have the right to
do.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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>
</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 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>We cannot assure you that we will accomplish these objectives.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>Currently, we have no other sources for funding on the scale contemplated by the Fusion Capital transaction.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>If we do not obtain the necessary funding, we would be forced to cease operations.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="65%" style="border-bottom: 0.01in solid" valign="top"><p>Capital Expenditures</p>
</td>
<td width="35%" valign="top"><p>&#160;</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 first three months of 2002, we made no capital expenditures and we currently have no capital
with which to make any significant capital expenditures.  Should we obtain significant funding, of which
there is no assurance, we would be able to make major expenditures on Quick-Cell-related equipment.
However, without additional capital, we will make no capital expenditures.</p>
</td>
</tr>
</table>
<br>
<p>CERTAIN STATEMENTS CONTAINED IN THIS &#8220;MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS&#8221; ARE &#8220;FORWARD-LOOKING
STATEMENTS&#8221; WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995 AND ARE, THUS, PROSPECTIVE.  THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM FUTURE RESULTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.  THE MOST SIGNIFICANT OF SUCH RISKS, UNCERTAINTIES AND OTHER
FACTORS IS OUR ABILITY TO OBTAIN CAPITAL IN AMOUNTS NECESSARY FOR US TO
ACCOMPLISH OUR PLAN FOR THE EXPLOITATION OF OUR QUICK-CELL WIRELESS INTERNET
ACCESS PRODUCTS, AS WELL AS CONSUMER ACCEPTANCE OF THESE PRODUCTS.</p>
<br>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-top: 0.0266667in solid; border-bottom: 0.0266667in solid" align="center" valign="top"><p>PART II - OTHER INFORMATION</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="88%" style="border-bottom: 0.01in solid" valign="top"><p>Item 1. Legal Proceedings.</p>
</td>
<td width="12%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>CyberHighway Involuntary Bankruptcy</p>
</td>
<td width="50%" valign="top"><p>&#160;</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>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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>Other Litigation</p>
</td>
<td width="50%" valign="top"><p>&#160;</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 November 2000, CyberHighway requested and received a temporary restraining order against Darrell
Davis, formerly one of our officers, and his wife, Deanna Davis.  We have alleged that the Davises have
diverted dial-up customers from CyberHighway to a company controlled by him, all while he was an
employee of USURF America.  We expect that a hearing for our motion for a permanent injunction will
occur in the future.  In addition, we are seeking monetary damages in this action.  No prediction as to its
final outcome can be made.  This case is styled: CyberHighway, Inc. versus Deanna Davis, individually and
d/b/a Cyber-Trail, Inc., and Darrell D. Davis, 19th Judicial District Court, Parish of East Baton Rouge, State
of Louisiana, Case No. 478320.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><p>In January 2000, we instituted arbitration proceedings against Christopher L. Wiebelt, our former vice
president of finance and chief financial officer.  At the recent hearing, we alleged that Mr. Wiebelt violated
certain terms of his employment agreement and sought damages resulting from those violations, while Mr.
Wiebelt claimed wrongful termination under his employment agreement.  The arbitrator has awarded Mr.
Wiebelt $75,000.  We expect to negotiate payment terms in the near future. This case is styled: USURF
America, Inc. versus Christopher L. Wiebelt, American Arbitration Association, Case No. 71-160-00087-01.</p>
</td>
</tr>
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="96%" valign="top"><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.  This case is styled Marcus, Merrick, Montgomery, Christianson &amp;
Hardee, LLP, vs. USURF America, Inc., District Court of the Fourth Judicial District, Ada County, State of
Idaho, Case No. CV-OC-0101693D.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>Possible Claim</p>
</td>
<td width="50%" valign="top"><p>&#160;</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>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>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="46%" style="border-bottom: 0.01in solid" valign="top"><p>Potential Legal Proceeding</p>
</td>
<td width="50%" valign="top"><p>&#160;</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 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>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="88%" style="border-bottom: 0.01in solid" valign="top"><p>Item 2. Changes in Securities.</p>
</td>
<td width="12%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="73%" style="border-bottom: 0.01in solid" valign="top"><p>During the three months ended June 30, 2002, we issued securities as follows:</p>
</td>
<td width="23%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>1.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Shelter Capital Ltd.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" valign="top"><p>Consideration.  Such warrants were issued as a finder&#8217;s fee.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(e)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>2.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" valign="top"><p>Securities Sold.  In April 2002, 500,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan &amp;
Newlan.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>3.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" valign="top"><p>Securities Sold.  In April 2002, 75,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Patrick F.
McGrew.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>4.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" valign="top"><p>Securities Sold.  In April 2002, 500,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Heyer Capital
Fund.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" valign="top"><p>Consideration.  Such shares of Common Stock were issued as a finder&#8217;s fee.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>5.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" valign="top"><p>Securities Sold.  In April 2002, 200,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Employer
Support Services.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>6.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>7.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" valign="top"><p>Securities Sold.  In April 2002, 1,562,500 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>8.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Evergreen Venture Partners,
LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to
securities purchase agreement.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(e)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>9.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Evergreen Venture Partners,
LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to
securities purchase agreement.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(e)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>10.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" valign="top"><p>Securities Sold.  In April 2002, 900,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>11.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" valign="top"><p>Securities Sold.  In April 2002, 250,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>12.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" valign="top"><p>Securities Sold.  In April 2002, 250,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>13.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" valign="top"><p>Securities Sold.  In April 2002, 150,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Barker
Design, Inc.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>14.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" valign="top"><p>Securities Sold.  In May 2002, 900,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan &amp;
Newlan.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>15.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" valign="top"><p>Securities Sold.  In June 2002, 2,083,333 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>16.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Evergreen Venture Partners,
LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to
securities purchase agreement.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(e)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>17.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" valign="top"><p>Underwriter or Other Purchasers.  Such warrants were issued to Evergreen Venture Partners,
LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" valign="top"><p>Consideration.  Such warrants were issued for no additional consideration pursuant to
securities purchase agreement.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(e)</p>
</td>
<td width="84%" 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="4%" valign="top"><p>&#160;</p>
</td>
<td width="73%" style="border-bottom: 0.01in solid" valign="top"><p>Subsequent to June 30, 2002, we have issued securities as follows:</p>
</td>
<td width="23%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>1.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" valign="top"><p>Securities Sold.  In July 2002, 300,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Regency
Capital, LLC.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="10%" align="right" valign="top"><p>2.</p>
</td>
<td width="6%" align="right" valign="top"><p>(a)</p>
</td>
<td width="84%" valign="top"><p>Securities Sold.  In July 2002, 300,000 shares of Company Common Stock were issued.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(b)</p>
</td>
<td width="84%" valign="top"><p>Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Peter
Rochow.</p>
</td>
</tr>
<tr>
<td width="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(c)</p>
</td>
<td width="84%" 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="10%" align="right" valign="top"><p>&#160;</p>
</td>
<td width="6%" align="right" valign="top"><p>(d)</p>
</td>
<td width="84%" 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="88%" style="border-bottom: 0.01in solid" valign="top"><p>Item 3. Defaults upon Senior Securities.</p>
</td>
<td width="12%" valign="top"><p>&#160;</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>None.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="88%" style="border-bottom: 0.01in solid" valign="top"><p>Item 4.Submission of Matters to a Vote of Security Holders.</p>
</td>
<td width="12%" valign="top"><p>&#160;</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>None.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="88%" style="border-bottom: 0.01in solid" valign="top"><p>Item 5. Other Information.</p>
</td>
<td width="12%" valign="top"><p>&#160;</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>None.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="88%" style="border-bottom: 0.01in solid" valign="top"><p>Item 6. Exhibits and Reports on Form 8-K.</p>
</td>
<td width="12%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(a)</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" valign="top"><p>Exhibits.</p>
</td>
<td width="67%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="13%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="13%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>Exhibit No.</p>
</td>
<td width="2%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="72%" style="border-bottom: 0.01in solid" align="center" valign="top"><p>Description</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>&#160;</p>
</td>
<td width="13%" align="center" valign="top"><p>99.1</p>
</td>
<td width="2%" valign="top"><p>&#160;</p>
</td>
<td width="72%" valign="top"><p>Certification Pursuant to 18 U.S.C. Section 1350 of President and CEO</p>
</td>
</tr>
<tr>
<td width="13%" valign="top"><p>&#160;</p>
</td>
<td width="13%" align="center" valign="top"><p>99.2</p>
</td>
<td width="2%" valign="top"><p>&#160;</p>
</td>
<td width="72%" valign="top"><p>Certification Pursuant to 18 U.S.C. Section 1350 of Principal Accounting
Officer</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="4%" valign="top"><p>&#160;</p>
</td>
<td width="6%" valign="top"><p>(b)</p>
</td>
<td width="23%" style="border-bottom: 0.01in solid" valign="top"><p>Reports on From 8-K.</p>
</td>
<td width="67%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="13%" valign="top"><p>&#160;</p>
</td>
<td width="87%" valign="top"><p>During the three months ended June 30, 2002, we filed one Current Report on Form 8-K, as
follows:</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="19%" align="right" valign="top"><p>-</p>
</td>
<td width="81%" valign="top"><p>Date of event: April 5, 2002, wherein we reported information pursuant to Regulation FD;</p>
</td>
</tr>
<tr>
<td width="19%" align="right" valign="top"><p>-</p>
</td>
<td width="81%" valign="top"><p>Date of event: April 15, 2002, wherein we reported a material securities sale transaction
and the hiring of a new president and chief executive officer.</p>
</td>
</tr>
<tr>
<td width="19%" align="right" valign="top"><p>-</p>
</td>
<td width="81%" valign="top"><p>Date of event: June 6, 2002, wherein we reported information pursuant to Regulation FD;
and</p>
</td>
</tr>
<tr>
<td width="19%" align="right" valign="top"><p>-</p>
</td>
<td width="81%" valign="top"><p>Date of event: June 14, 2002, wherein we reported a change in control.</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="13%" valign="top"><p>&#160;</p>
</td>
<td width="87%" valign="top"><p>Since June 30, 2002, we have not filed a Current Report on Form 8-K.</p>
</td>
</tr>
</table>
<br>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" style="border-top: 0.0266667in solid; border-bottom: 0.0266667in solid" align="center" valign="top"><p>SIGNATURES</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="100%" valign="top"><p>In accordance with the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.</p>
</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>Dated: August 19, 2002.</p>
</td>
</tr>
</table>
<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/ DAVID M. LOFLIN</p>
</td>
</tr>
</table>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="46%" valign="top"><p>&#160;</p>
</td>
<td width="54%" valign="top"><p>David M. Loflin</p>
</td>
</tr>
<tr>
<td width="46%" valign="top"><p>&#160;</p>
</td>
<td width="54%" valign="top"><p>Chairman of the Board and Principal Accounting Officer</p>
</td>
</tr>
</table>
</body>

</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>exh991.htm
<TEXT>
<html>

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



</head>

<body>
<br>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="16%" style="border-left: none; border-top: 0.0133333in solid; border-bottom: 0.0133333in solid" align="center" valign="top"><p>EXHIBIT 99.1</p>
</td>
<td width="84%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="54%" align="center" valign="top"><p>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION
1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p>In connection with the Quarterly Report of USURF America, Inc. (the "Company") on Form 10-QSB for the period
ending June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I,
Douglas O. McKinnon, President and CEO of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" align="right" valign="top"><p>(1)</p>
</td>
<td width="92%" valign="top"><p>The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>(2)</p>
</td>
<td width="92%" valign="top"><p>The information contained in the Report fairly presents, in all material respects, the financial condition
and result of operations of the Company.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="38%" style="border-bottom: none" valign="top"><p>Dated: August 19, 2002</p>
</td>
<td width="46%" style="border-bottom: 0.0133333in solid" valign="top"><p>/s/ DOUGLAS O. MCKINNON</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="38%" style="border-top: none" valign="top"><p>&#160;</p>
</td>
<td width="46%" valign="top"><p>Douglas O. McKinnon</p>
<p>President and CEO</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>&#160;</p>
</td>
<td width="46%" valign="top"><p>&#160;</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
</body>

</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>4
<FILENAME>exh992.htm
<TEXT>
<html>

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



</head>

<body>
<br>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="17%" style="border-left: none; border-top: 0.0133333in solid; border-bottom: 0.0133333in solid" align="center" valign="top"><p>EXHIBIT 99.2</p>
</td>
<td width="83%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
<td width="54%" align="center" valign="top"><p>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION
1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002</p>
</td>
<td width="23%" align="center" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
<p>In connection with the Quarterly Report of USURF America, Inc. (the "Company") on Form 10-QSB for the period
ending June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I,
David M. Loflin, Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:</p>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="8%" align="right" valign="top"><p>(1)</p>
</td>
<td width="92%" valign="top"><p>The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and</p>
</td>
</tr>
<tr>
<td width="8%" align="right" valign="top"><p>(2)</p>
</td>
<td width="92%" valign="top"><p>The information contained in the Report fairly presents, in all material respects, the financial condition
and result of operations of the Company.</p>
</td>
</tr>
</table>
<br>
<table width="100%" cellpadding="6" cellspacing="0">
<tr>
<td width="38%" style="border-bottom: none" valign="top"><p>Dated: August 19, 2002</p>
</td>
<td width="46%" style="border-bottom: 0.0133333in solid" valign="top"><p>/S/ DAVID M. LOFLIN</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="38%" style="border-top: none" valign="top"><p>&#160;</p>
</td>
<td width="46%" valign="top"><p>David M. Loflin</p>
<p>Principal Accounting Officer</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
<tr>
<td width="38%" valign="top"><p>&#160;</p>
</td>
<td width="46%" valign="top"><p>&#160;</p>
</td>
<td width="16%" valign="top"><p>&#160;</p>
</td>
</tr>
</table>
<br>
</body>

</html>

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