<PAGE>


                 UNITED STATES SECURITIES AND EXCHANGE COMISSION
                             Washington, D.C. 20549



                                   FORM 10-QSB



        [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2005

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


                        COMMISSION FILE NUMBER: 000-27467


                               ERF WIRELESS, INC.

              Exact name of Registrant as specified in its charter


        NEVADA                                            76-0196431
State of Incorporation                        IRS Employer Identification Number


                      2911 South Shore Boulevard, Suite 100
                            League City, Texas 77573
                                  281-538-2101
           Address and telephone number of principal executive offices


Indicate by check mark whether the 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 the Registrant
was required to file such reports), and (2) has been subject to filing
requirements for the past 90 days.

Yes |X|  No | |.

As of July 31, 2005, the Company had outstanding 5,997,701 shares of its $.001
par value common stock.


                                       1


<PAGE>
<TABLE>
<S>     <C>
                              PART I - FINANCIAL INFORMATION
                               ITEM 1. FINANCIAL STATEMENTS

                                    ERF WIRELESS, INC.
                               CONSOLIDATED BALANCE SHEETS
                           JUNE 30, 2005 AND DECEMBER 31, 2004
                                       (Unaudited)
                            ($ in thousands except share data)


                                                                 JUNE 30,    DECEMBER 31,
                                                                   2005          2004
                                                                 --------      --------

                                          ASSETS

CURRENT ASSETS
  Cash and cash equivalents                                      $    39       $     6
  Securities available for sale                                        8             7
  Accounts receivable, net                                            13            --
  Inventories                                                         31            34
  Prepaid expenses                                                    31             8
                                                                 --------      --------
      TOTAL CURRENT ASSETS                                           122            55
                                                                 --------      --------

PROPERTY AND EQUIPMENT
  Operating equipment                                                235            91
  Less accumulated depreciation                                      (29)          (14)
                                                                 --------      --------
      TOTAL PROPERTY AND EQUIPMENT                                   206            77
                                                                 --------      --------


                                                                 --------      --------
TOTAL ASSETS                                                     $   328       $   132
                                                                 ========      ========

                           LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                               $    72       $    76
  Accrued expenses                                                    49            24
  Deferred revenue                                                    11            12
                                                                 --------      --------
      TOTAL CURRENT LIABILITIES                                      132           112
                                                                 --------      --------

COMMITMENTS AND CONTINGENT LIABILITIES

  Long-Term notes payable                                             --             2
  Deferred revenue                                                    26            --
                                                                 --------      --------
      TOTAL LONG TERM  LIABILITIES                                    26             2

SHAREHOLDERS' EQUITY:
  Preferred stock - $.001 par value
    Authorized  25,000,000 shares
    Issued and Outstanding at June 30, 2005 and                        4             2
    December 31, 2004, 3,583,083 and 2,331,241 respectively
  Common stock - $.001 par value
    Authorized 475,000,000 shares
    Issued and outstanding at June 30, 2005, and
    December 31, 2004, 4,686,618 and 4,486,551 respectively            5             5
  Additional paid in capital                                       3,256         1,523
  Accumulated deficit                                             (3,096)       (1,512)
  Accumulated comprehensive income (loss)                              1            --
                                                                 --------      --------
      TOTAL SHAREHOLDERS' EQUITY                                     170            18
                                                                 --------      --------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                       $   328       $   132
                                                                 ========      ========


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                            2


<PAGE>

                                        ERF WIRELESS, INC.
                               CONSOLIDATED STATEMENTS OF OPERATIONS
                           FOR THE PERIODS ENDED JUNE 30, 2005 AND 2004
                                            (Unaudited)
                       ($ in thousands except share data and loss per share)


                                                    FOR THE THREE               FOR THE SIX
                                                 MONTHS ENDED JUNE 30,      MONTHS ENDED JUNE 30,
                                                ----------------------      ----------------------
                                                  2005          2004          2005          2004
                                                --------      --------      --------      --------
SALES:
  Sales                                         $    92       $    80       $   201       $   152
                                                --------      --------      --------      --------
TOTAL SALES                                          92            80           201           152
                                                --------      --------      --------      --------

COSTS OF GOODS SOLD:
  Cost of goods sold                                 46            26            79            42
                                                --------      --------      --------      --------
TOTAL COSTS OF GOODS SOLD                            46            26            79            42
                                                --------      --------      --------      --------
GROSS PROFIT                                         46            54           122           110
                                                --------      --------      --------      --------

OPERATING EXPENSES:
    Selling, general and administrative             527           140         1,065           278
    Depreciation and amortization                    10             3            15             6
                                                --------      --------      --------      --------
TOTAL OPERATING EXPENSES                            537           143         1,080           284
                                                --------      --------      --------      --------

LOSS FROM OPERATIONS                               (491)          (89)         (958)         (174)
                                                --------      --------      --------      --------

NET LOSS                                           (491)          (89)         (958)         (174)
                                                --------      --------      --------      --------

OTHER COMPREHENSIVE LOSS:
  Unrealized holding gain (loss)                      1            (1)            1            --
                                                --------      --------      --------      --------
TOTAL OTHER COMPREHENSIVE LOSS                     (490)          (90)         (957)         (174)
                                                ========      ========      ========      ========

Deemed dividend related to beneficial
     conversion feature of preferred stock         (389)                       (626)
                                                ========      ========      ========      ========
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS      $  (879)      $   (90)      $(1,583)      $  (174)
                                                ========      ========      ========      ========

NET LOSS PER COMMON SHARE:
  Basic                                         $ (0.11)      $ (0.09)      $ (0.21)      $ (0.17)
  Diluted                                       $ (0.11)      $ (0.09)      $ (0.21)      $ (0.17)


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                                 3


<PAGE>

                                                         ERF WIRELESS, INC.
                                          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                     FOR THE PERIODS ENDED JUNE 30, 2005 AND DECEMBER 31, 2004
                                                            (Unaudited)
                                                         ($ in thousands)


                                            COMMON STOCK            PREFERRED      ADDITIONAL            ACCUMULATED     TOTAL
                                       --------------------   -------------------   PAID IN    RETAINED COMPREHENSIVE SHAREHOLDERS'
                                        SHARES      VALUE       STOCK      VALUE    CAPITAL    EARNINGS     INCOME      EQUITY
                                       --------   --------    --------   --------   --------   --------    --------    --------
TOTAL SHAREHOLDERS' EQUITY
   AS OF DECEMBER 31, 2003               1,000    $     1       1,000    $     1    $    --    $   (43)    $    (2)    $   (43)
                                       --------   --------    --------   --------   --------   --------    --------    --------
Activity                                 3,487          4       1,331          1      1,523     (1,469)          2          61

TOTAL SHAREHOLDERS' EQUITY
   AS OF DECEMBER 31, 2004               4,487          5       2,331          2      1,523     (1,512)         --          18
                                       --------   --------    --------   --------   --------   --------    --------    --------

Net loss                                    --         --          --         --         --       (958)         --        (958)

New stock issued to shareholders:
For services, compensation and
      liabilities                           75         --          --         --        314         --          --         314
For retirement of debt                                 --       1,252          2        625         --         --          627
Conversion value of convertible
      preferred stock                                                                   626       (626)
Proceeds from sale of common stock, net    125         --          --         --        168         --          --         168
Unrealized holding loss                     --         --          --         --         --                      1           1
                                       --------   --------    --------   --------   --------   --------    --------    --------
TOTAL SHAREHOLDERS' EQUITY
    AS OF JUNE 30,  2005                 4,687    $     5       3,583    $     4    $ 3,256    $(3,096)    $     1     $   170
                                       ========   ========    ========   ========   ========   ========    ========    ========


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                                                 4


<PAGE>

                               ERF WIRELESS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  FOR THE PERIODS ENDED JUNE 30, 2005 AND 2004,
                                   (Unaudited)
                                ($ in thousands)


                                                        FOR THE SIX MONTHS ENDED
                                                        ------------------------
                                                           JUNE 30,   JUNE 30,
                                                            2005        2004
                                                           ------      ------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                   $(958)      $(169)
                                                           ------      ------

Adjustments to reconcile net loss to net cash
Used by operating activities:
  Depreciation and amortization                               15           6
  Stock issued for services rendered                         314
  (Increase)/decrease in accounts receivable, net            (13)         (2)
  (Increase)/decrease in inventories                           3         (28)
  (Increase)/decrease in prepaid expenses                    (23)          2
  Increase/(decrease) in accounts payable                     (4)          4
  Increase/(decrease) in accrued expenses                     25         (43)
                                                           ------      ------
    Total Adjustment                                         317         (61)
                                                           ------      ------
NET CASH USED BY OPERATING ACTIVITIES                       (641)       (230)
                                                           ------      ------

CASH FLOWS FROM INVESTING ACTIVITIES
  (Purchase)/disposal of property and equipment             (111)        (15)
  Increase/(decrease) in marketable securities                (1)         --
                                                           ------      ------
NET CASH USED BY INVESTING ACTIVITIES                       (112)        (15)
                                                           ------      ------

CASH FLOWS FROM FINANCING ACTIVITIES
  Increase/(decrease) in notes payable and long-term debt     (2)        270
  Increase/(decrease) in deferred revenue                     (7)         --
  Proceeds from preferred stock convertible debenture        627          --
  Proceeds from sale of common stock, net                    168          --
                                                           ------      ------
NET CASH PROVIDED BY FINANCING ACTIVITIES                    786         270
                                                           ------      ------

NET INCREASE IN CASH                                          33          25
CASH AT THE BEGINNING OF THE PERIOD                            6           8
                                                           ------      ------
CASH AT THE END OF THE PERIOD                              $  39       $  33
                                                           ======      ======


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                        5
</TABLE>


<PAGE>

                               ERF WIRELESS, INC.
                        NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

NATURE OF THE COMPANY

ERF Wireless, Inc. (the Company), a fully reporting public company trading on
the Nasdaq OTC Electronic Bulletin Board under the symbol "ERFW.OB", provides
wireless communications products and services on a nationwide basis; including
the Company's core focus of providing reliable, high-speed wireless broadband
Internet services. The Company has formed four operating divisions to provide
solutions and services to different segments of the wireless industry. The
Company's Enterprise Networks Division was formed to serve enterprise customers,
private entities, cities, unincorporated municipalities and the general public.
The Company's Bundled Wireless Services Division was formed to provide wireless
broadband products and services, including Internet, voice, data, security and
video services, and is in the early stages of building or acquiring a seamless
wireless broadband network throughout North America to serve private entities,
cities, municipalities and the general public. The Company's Wireless Messaging
Division provides wireless broadband system design and implementation,
manufacturers and supplies high-power infrastructure equipment to the paging and
mobile industry and owns and operates a wide-area messaging service (one- and
two-way cellular and paging retail). The Company's Network Operations Division
provides the overall day-to-day operations, maintenance, upgrading, 24/7
monitoring and expansion of all wireless broadband networks that the Company
constructs, acquires, maintains and administers.

BASIS OF ACCOUNTING

The Company maintains its accounts on the accrual method of accounting in
accordance with accounting principles generally accepted in the United States of
America. The accompanying financial statements of ERF Wireless, Inc. have been
prepared in accordance with accounting principles generally accepted in the
United States of America and the rules of the Securities and Exchange Commission
("SEC). In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of financial position
and the results of operations for the interim periods presented have been
reflected herein. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full year.

PRINCIPLES OF CONSOLIDATION

All significant inter-company accounts and transactions have been eliminated in
consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the balance sheet. Actual results could differ from
those estimates.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash and all highly liquid financial
instruments with purchased maturities of three months or less.

SECURITIES HELD FOR RESALE

Investments in public companies are classified as available-for-sale and are
adjusted to their fair market value with unrealized gains and losses, net of
tax, recorded as a component of accumulated comprehensive income. Upon
disposition of these investments, the specific identification method is used to
determine the cost basis in computing realized gains or losses, which are
reported in other income and expense. Declines in value that are judged to be
other than temporary are reported in other comprehensive income and expense.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Earnings are charged with a provision for doubtful accounts based on a current
review of collectibility of accounts receivable. Accounts deemed uncollectible
are applied against the allowance for doubtful accounts.

DEFERRED REVENUES

Revenues that are billed in advance of services being completed are deferred
until the conclusion of the period of the service for which the advance billing
relates. Deferred revenues are included on the balance sheet as a current
liability until the service is performed and then recognized in the period in
which the service is completed. The Company's deferred revenues consist of
billings in advance of services being rendered for its wireless broadband and
paging customers and, accordingly, are deferred and recognized monthly as
earned. The Company had deferred revenues of $37,000 as of June 30, 2005.

                                        6


<PAGE>

INVENTORIES

Inventories are valued at the lower of cost or market. The cost is determined by
using the Average Cost method. Inventories consist of the following items, in
thousands:

                                               2005
                                            ----------
          Paging wholesale                  $       3
          Wireless broadband wholesale             11
          Retail location                          17
                                            ----------
          Total                             $      31
                                            ==========

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation. Major
renewals and improvements are capitalized; minor replacements, maintenance and
repairs are charged to current operations. Depreciation is computed by applying
the straight-line method over the estimated useful lives which are generally
three to seven years.

Impairment losses are recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. No
impairment losses have been recorded since inception.

REVENUE RECOGNITION

The Company's revenue is generated primarily from the sale of wireless
communications products and services on a nationwide basis; including providing
reliable, high-speed wireless broadband internet services. The Company
recognizes revenue when persuasive evidence of an arrangement exists, delivery
has occurred, the sales price is fixed or determinable, and collectibility is
probable.

The Company recognizes product sales generally at the time the product is
shipped. Concurrent with the recognition of revenue, the Company provides for
the estimated cost of product warranties and reduces revenue for estimated
product returns. Sales incentives are generally classified as a reduction of
revenue and are recognized at the later of when revenue is recognized or when
the incentive is offered. Shipping and handling costs are included in cost of
goods sold.

The Company's suppliers generally warrant the products distributed by the
Company and allow returns of defective products, including those that have been
returned to the Company by its customers. The Company does not independently
warrant the products that it distributes, but it does provide warranty services
on behalf of the supplier.

INCOME TAXES

Income taxes are computed using the asset and liability method. Under the asset
and liability method, deferred income tax assets and liabilities are determined
based on the differences between the financial reporting and tax bases of assets
and liabilities and are measured using the currently enacted tax rates and laws.
A valuation allowance is provided for the amount of deferred tax assets that,
based on available evidence, are not expected to be realized.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist of cash and cash equivalents,
inventory and debt. The carrying amount of these financial instruments
approximates fair value due either to length of maturity or interest rates that
approximate prevailing market rates unless otherwise disclosed in these
consolidated financial statements.

COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) is defined as all changes in shareholders' equity,
exclusive of transactions with owners, such as capital instruments.
Comprehensive income (loss) includes net income or loss, changes in certain
assets and liabilities that are reported directly in equity such as translation
adjustments on investments in foreign subsidiaries, changes in market value of
certain investments in securities and certain changes in minimum pension
liabilities.

BENEFICIAL CONVERSION

Equity instruments that contain a beneficial conversion feature are recorded as
a deemed dividend to the holders of the convertible equity instruments. The
deemed dividend associated with the beneficial conversion is calculated as the
difference between the fair value of the underlying common stock less the
proceeds that have been received for the equity instrument; limited to the value
received. The beneficial conversion amount is recorded as a reduction on the
carrying value of the equity instrument and an increase to additional
paid-in-capital.

                                       7


<PAGE>

BASIC LOSS PER SHARE

The Company is required to provide basic and dilutive earnings (loss) per common
share information.

The basic net loss per common share is computed by dividing the net loss
applicable to common stockholders by the weighted average number of common
shares outstanding.

Diluted net loss per common share is computed by dividing the net loss
applicable to common stockholders, adjusted on an "as if converted" basis, by
the weighted average number of common shares outstanding plus potential dilutive
securities. For the periods ended June 2004 and 2005, potential dilutive
securities had an anti-dilutive effect and were not included in the calculation
of diluted net loss per common share.

RECENT ACCOUNTING PRONOUNCEMENTS:

In March 2004, the FASB issued a proposed Statement, "Share-Based Payment, an
amendment of FASB Statements Nos. 123 and 95," that addresses the accounting for
share-based payment transactions in which a Company receives employee services
in exchange for either equity instruments of the Company or liabilities that are
based on the fair value of the Company's equity instruments or that may be
settled by the issuance of such equity instruments. The proposed statement would
eliminate the ability to account for share-based compensation transactions using
the intrinsic method that the Company currently uses and generally would require
that such transactions be accounted for using a fair-value-based method and
recognized as expense in the consolidated statement of operations. The effective
date of the proposed standard is for periods beginning after December 15, 2005.
It is expected that the final standard will be issued before December 31, 2004
and should it be finalized in its current form, it will have a significant
impact on the consolidated statement of operations as the Company will be
required to expense the fair value of stock option grants and stock purchases
under employee stock purchase plan.

In December 2004, the FASB, issued a revision to SFAS 123, also known as SFAS
123R, that amends existing accounting pronouncements for share-based payment
transactions in which an enterprise receives employee and certain non-employee
services in exchange for (a) equity instruments of the enterprise or (b)
liabilities that are based on the fair value of the enterprise's equity
instruments or that may be settled by the issuance of such equity instruments.
SFAS 123R eliminates the ability to account for share-based compensation
transactions using APB 25 and generally requires such transactions be accounted
for using a fair-value-based method. SFAS 123R's effective date would be
applicable for awards that are granted, modified, become vested, or settled in
cash in interim or annual periods beginning after December 15, 2005. SFAS 123R
includes three transition methods: one that provides for prospective application
and two that provide for retrospective application. The Company intends to adopt
SFAS 123R prospectively commencing in the third quarter of the fiscal year
ending December 31, 2005. It is expected that the adoption of SFAS 123R will
cause the Company to record, as expense each quarter, a non-cash accounting
charge approximating the fair value of such share based compensation meeting the
criteria outlined in the provisions of SFAS 123R.

In April 2004, the Emerging Issues Task Force ("EITF") issued Statement No.
03-06 "Participating Securities and the Two-Class Method Under FASB Statement
No. 128, Earnings Per Share" ("EITF 03-06"). EITF 03-06 addresses a number of
questions regarding the computation of earnings per share by companies that have
issued securities other than common stock that contractually entitle the holder
to participate in dividends and earnings of the company when, and if, it
declares dividends on its common stock. The issue also provides further guidance
in applying the two-class method of calculating earnings per share, clarifying
what constitutes a participating security and how to apply the two-class method
of computing earnings per share once it is determined that a security is
participating, including how to allocate undistributed earnings to such a
security. EITF 03-06 became effective during the quarter ended June 30, 2004,
the adoption of which did not have an impact on the calculation of earnings per
share of the Company.

In July 2004, the EITF issued a draft abstract for EITF Issue No. 04-08, "The
Effect of Contingently Convertible Debt on Diluted Earnings per Share" ("EITF
04-08"). EITF 04-08 reflects the Task Force's tentative conclusion that
contingently convertible debt should be included in diluted earnings per share
computations regardless of whether the market price trigger has been met. If
adopted, the consensus reached by the Task Force in this Issue will be effective
for reporting periods ending after December 15, 2004. Prior period earnings per
share amounts presented for comparative purposes would be required to be
restated to conform to this consensus and the Company would be required to
include the shares issuable upon the conversion of the Notes in the diluted
earnings per share computation for all periods during which the Notes are
outstanding. Since the first quarter of 2004, the Company has included the
shares issuable upon conversion of the Notes in its computation of diluted
earnings per share.

In September 2004, the EITF delayed the effective date for the recognition and
measurement guidance previously discussed under EITF Issue No. 03-01, "The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments" ("EITF 03-01") as included in paragraphs 10-20 of the proposed
statement. The proposed statement will clarify the meaning of
other-than-temporary impairment and its application to investments in debt and

                                       8


<PAGE>

equity securities, in particular investments within the scope of FASB Statement
No. 115, "Accounting for Certain Investments in Debt and Equity Securities," and
investments accounted for under the cost method. Currently, there would be no
effect of this proposed statement on its financial position and results of
operations.


NOTE 2 - ACCOUNTS RECEIVABLE

Accounts Receivable consists of the following (in thousands):

                                           June 30,             December 31,
                                            2005                    2004
                                        --------------         -------------
Accounts receivable                     $          14          $         43
Allowance for doubtful accounts                    (1)                  (43)
                                        --------------         -------------
Accounts receivable, net                $          13          $          -
                                        ==============         =============

Allowance for doubtful accounts
 percentage of accounts receivable                 7%                   100%

NOTE 3 - PROPERTY AND EQUIPMENT:

Components of property, plant, and equipment, consist of the following items, in
thousands:

                                                  June 30,   December 31,
                                                    2005        2004
                                                   ------      ------
          Automobile                               $   1       $   1
          Operating equipment                        101          63
          Office furniture and equipment              60           8
          Leasehold improvements                      15          15
          Computer equipment                          58           4
                                                   ------      ------
          Total property, plant and equipment        235          91
          Less accumulated depreciation              (29)        (14)
                                                   ------      ------
          Net property, plant and equipment        $ 206       $  77
                                                   ======      ======

Depreciation and amortization expense was approximately $15,000 and $6,000 for
the six months ended June 30, 2005 and 2004, respectively.

NOTE 4 - DEBT CONVERSION

To date the Company has been funded by various Investors under the terms of a
Debt Conversion and Funding Agreement dated September 30, 2004 and an Addendum
to Debt Conversion and Funding Agreement dated December 31, 2004. During the six
months ended June 30, 2005, the Company was obligated to issue 1,251,842 shares
of its Series A for the conversion of $625,921 in debt owed to these same
Investors. The Company recorded a deemed dividend on the beneficial conversion
of the 1,251,842 shares of Series A Preferred Stock that was limited to the
amount of consideration received totaling $625,921 in the six months ended June
30, 2005.

NOTE 5 - INCOME TAXES

The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes". Implementation of SFAS
109 did not have a material cumulative effect on prior periods nor did it result
in a change to the current year's provision.

The effective tax rate for the Company is reconcilable to statutory tax rates as
follows:

                                      June 30, 2005        December 31, 2004
                                           (%)                    (%)
                                    ------------------     -----------------
U. S. Federal statutory tax rate                   34                   34
U.S. valuation difference                         (34)                 (34)
Effective U. S. tax rate                            0                    0
Foreign tax valuation                               0                    0
Effective tax rate                                  0                    0


Income tax expense (benefit) attributable to income from continuing operations
differed from the amounts computed by applying the U.S. Federal income tax of
34% to pretax income from continuing operations as a result of the following (in
thousands):

                                       9


<PAGE>

                                              June 30,   December 31,
                                                2005        2004
                                               ------      ------
          Computed expected tax benefit        $(326)      $(240)
          Increase in valuation allowance        326         240
                                               -----       -----
          Income tax expense                   $  --       $  --
                                               =====       =====


The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at June 30, 2005, and
December 31, 2004, are presented below (in thousands) and include the balances
of the merged Fleetclean Systems, Inc.

                                              June 30,   December 31,
                                                2005        2004
                                               ------      ------
          Deferred tax assets:
          Net operating loss carry forwards    $ 586       $ 260
          Less valuation allowance              (586)       (260)
                                               ------      ------
          Net deferred tax assets              $  --       $  --
                                               ======      ======

The valuation allowance for deferred tax assets as of June 30, 2005 and December
31, 2004, was $586,000 and $260,000, respectively. As of June 30, 2005, the
Company has a net operating loss carry-forward of $1,708,000, which is available
to offset future federal taxable income, if any, with expiration beginning 2019.


NOTE 6 - EARNINGS PER SHARE:

The following table sets forth the computation of basic and diluted earnings per
share (in thousands, except per share amount):

                                                         For the six
                                                  months ended June 30, 2005
                                              ----------------------------------
                                                 Income      Shares    Per-Share
                                              (Numerator)(Denominator)  Amount
                                               ---------  ----------- ---------
Net loss                                       $(958)         --      $   --
Basic EPS:
  Income available to common stockholders       (958)      4,595       (0.21)
  Effect of dilutive securities warrants          --          --          --
Diluted EPS:
                                               ------      ------     ------
  Income available to common stockholders
    and assumed conversions                    $(958)      4,595      $(0.21)
                                               ======      ======     ======

                                                         For the six
                                                  months ended June 30, 2004
                                              ----------------------------------
                                                 Income      Shares    Per-Share
                                              (Numerator)(Denominator)  Amount
                                               ---------  ----------- ---------
Net loss                                       $ (174)      $   --     $   --
Basic EPS:
  Income available to common stockholders        (174)       1,000       (0.17)
  Effect of dilutive securities warrants           --           --         --
Diluted EPS:
                                               -------      -------    -------
  Income available to common stockholders
    and assumed conversions                    $ (174)      $1,000     $(0.17)
                                               =======      =======    =======

NOTE 7 - MAJOR CUSTOMERS

The Company had gross sales of $32,000 and 0 for the six months ended June 30,
2005 and June 30, 2004, respectively. The Company had one customer that
represented approximately 16% of the gross sales in the six months ended June
30, 2005.

                                       10


<PAGE>

NOTE 8 - COMMITMENTS AND CONTINGENT LIABILITIES:

LEASES AND LICENSE AGREEMENTS

For the six months ended June 30, 2005 and June 30, 2004, rental expenses of
approximately $80,000 and $57,000, respectively, were incurred.

The Company leases approximately 11,137 square feet of office space consisting
of 8,860 square feet at 103 Courageous Drive as its primary operations and 2,277
square feet at 2911 South Shore Blvd. as its primary corporate headquarters
office lease space in League City, Texas. The office space lease is with South
Shore Harbor Development, Ltd., with initial base rent monthly payments during
month 1 - 36 of $8,464, escalating to $9,145 for months 37 - 60. The lease
commenced on October 18, 2004 and expires on August 31, 2009.

The Company leases approximately 1,552 square feet of office space at 8521-1
Blanco Road, San Antonio, Texas for its initial Contact Wireless Division retail
outlet. The office space lease is with Weingarten Realty Investors with initial
base rent monthly payments during year one of $1,940, escalating to $1,998 for
year 2 and then to $2,056 for year 3. The lease commenced on February 24, 2004
and expires in February 2007.

The Company leases approximately 408 square feet of office space at 100 Taylor
Street, San Antonio, Texas for its Contact Wireless Division. The office space
lease is with Taylor Street Ventures, LP with initial base rent monthly payments
of $535. The lease commenced on June 1, 2002 and expired on May 31, 2005. The
Company is in the process of negotiating the terms of a lease extension on
similar terms and conditions and continues to incur monthly rent payments of
$535.

The Company has a transmitter sharing agreement with Metrocall for use of shared
sites in Boerne, Devine, Hondo, New Braunfels and San Antonio, Texas. The
agreement requires monthly payments of $1,665.

The Company has a license agreement with American Towers for use of their Sequin
(Geronimo), TX tower site. The license agreement expires on May 31, 2007 and
requires monthly payments of $575.00.

The Company has a license agreement with Pinnacle Towers for use of their New
Braunfels, Texas FM 306 tower site. The license agreement expires on October 31,
2006 and requires monthly payments of $650.00.

Future obligations under the non-cancelable lease terms are as follows:

              Period Ending
               December 31,                  Amount
              -------------               -------------
                   2005                   $     92,522
                   2006                        132,633
                   2007                        108,410
                   2008                        109,745
                   2009                        109,745
                                          -------------
                   Total                  $    553,055
                                          =============

EMPLOYMENT AGREEMENT

On August 1, 2004, we entered into an Executive Employment Agreement with R.
Greg Smith, our CEO and CFO. Mr. Smith is paid a base salary of $180,000 per
year and is eligible to receive a bonus equal to 1% of the revenues for the most
recent 12 month period of each acquisition made by the Company during his
employment period. Mr. Smith also is entitled to receive 63,827 shares of our
Series A Convertible Preferred Stock par value $0.01 per share, as consideration
for a sign-on bonus at a price of $0.50 per share for total consideration of
$31,913.50. The preferred stock is convertible at holders' option at one
preferred share for 18.676347 shares common stock and has a 2:1 liquidation
preference and each preferred share has 20 votes. Mr. Smith is also entitled to
receive up to 1,000,000 stock options under the Company's 2004 Non-Qualified
Stock Option Plan for attainment of certain future cumulative revenue milestone
achievements. These options, if any are earned, will have an exercise price of
the lowest five day average closing price existing for the Company's common
stock during the twelve month period immediately preceding the date of the
vesting event. Mr. Smith is subject to a lock-up agreement, which prohibits Mr.
Smith from selling shares until August 1, 2006 unless agreed to by the Company
in writing.

                                       11


<PAGE>

NOTE 9 - RELATED PARTY

On March 1, 2005, the Company entered into a one-year professional services
agreement with Synchton Incorporated. The agreement requires Synchton to provide
one or more consultants for a total of 100 hours per month. The Company is
obligated to pay Synchton $12,000 per month in cash or registered, unrestricted
stock. Synchton's President is Scott A. Cubley, an adult son of Dr. H. Dean
Cubley, the Company's Chairman of the Board of Directors.

NOTE 10 - SUBSEQUENT EVENTS

On July 1, 2005, the Company amended the Debt Conversion and Funding Agreement
to provide up to $750,000 in additional funding at $1.50 per share of Series A
preferred stock.

On August 4, 2005, the Company executed a letter agreement with an investment
fund to purchase securities of the Company, structured as a private placement of
convertible Notes under Sections 4(2) and 4(6) of the Securities Act of 1933, as
amended (the "Act") and Rule 506 of Regulation D promulgated thereunder. The
letter agreement provides for an aggregate of $3.75 million in principal amount
of Convertible two-year Notes and warrants to purchase common shares of the
Company. The funding is scheduled in three tranches. The Company is currently
negotiating the definitive agreements associated with this transaction.

On August 8, 2005, ERF Wireless, Inc. ("ERFW") entered into an Asset Purchase
Agreement to purchase assets from Skyvue USA East Central Texas Inc., a Texas
corporation ("Skyvue USA"). The assets will be used to operate an
enterprise-class encrypted wireless banking network business. ERFW will pay
Skyvue USA $600,000 plus earn-out payments based upon a multiples of Adjusted
EBITDA of the assets contributed to ERFW's newly created wholly owned
subsidiary, ERF Enterprise Network Services, Inc., a Texas corporation. The
formal closing on this transaction occurred on August 12, 2005.

                                       12


<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

This discussion and analysis as of March 31, 2005 and for the three-month
periods ended March 31, 2005 and 2004 should be read in conjunction with the
unaudited condensed consolidated financial statements and notes thereto set
forth in Item 1 of this report.

Some of the statements contained in this report discuss future expectations,
contain projections of results of operations or financial conditions, or state
other forward looking information. Such statements are based upon current
expectations that involve risks and uncertainties. Any statements contained
herein that are not statements of historical facts may be deemed to be
forward-looking statements. For example, words such as, "may," "will," "should,"
"estimates," "predicts," "potential," "continue," "strategy," "believes,"
"anticipates," "plans," "expects," "intends," and similar expressions are
intended to identify forward-looking statements. Our actual results and the
timing of certain events may differ significantly from the results discussed in
the forward-looking statement. Factors that might cause or contribute to such a
discrepancy include, but are not limited to the risks discussed in our other SEC
filings, including those in our annual report on Form 10-KSB for the year ended
December 31, 2004. These forward-looking statements speak only as of the date
hereof. We expressly disclaim any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements contained herein to
reflect any change in our expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based.

BUSINESS STRATEGY

The Company was restructured in 2004 for the purpose of providing wireless
communications products and services on a nationwide basis; including the
Company's core focus of providing reliable, high-speed wireless broadband
internet services. The Company has formed four operating divisions to provide
solutions and services to different segments of the wireless industry. The
Company's Enterprise Networks Division was formed to serve enterprise customers,
private entities, cities, unincorporated municipalities and the general public.
The Company's Bundled Wireless Services Division was formed to provide wireless
broadband products and services, including Internet, voice, data, security and
video services, and is in the early stages of building or acquiring a seamless
wireless broadband network throughout North America to serve private entities,
cities, municipalities and the general public. The Company's Wireless Messaging
Division provides wireless broadband system design and implementation,
manufacturers and supplies high-power infrastructure equipment to the paging and
mobile industry and owns and operates a wide-area messaging service (one- and
two-way cellular and paging retail). The Company's Network Operations Division
provides the overall day-to-day operations, maintenance, upgrading, 24/7
monitoring and expansion of all wireless broadband networks that the Company
constructs, acquires, maintains and administers. Hereinafter, all references to
the Company include the operations and financial condition of the Company and
its operating divisions.

The Company operates a retail outlet in San Antonio, Texas and has a customer
base of several thousand wireless customers in Texas, Oklahoma and Louisiana.
The customer base consists of both narrowband and broadband wireless
subscribers.

The Company's business strategy is composed of three major components. The first
component is to assemble a first class public company with both the business and
technical expertise and experience to manage a large broadband wireless network
and recurring revenue customer base on a nationwide basis. The second component
of this business strategy is to identify well positioned existing broadband
wireless networks in North America and to acquire controlling interest in some
of the more advantageous of these networks through the leverage of the liquidity
of the public company. The third component of this business strategy is to link
all of these diverse networks together with industry standard hardware and
software to provide a seamless wireless broadband coverage over a large part of
if not all of the North American market.

EMPLOYEES

As of June 30, 2005, we employed 16 full-time employees and 6 consultants. We
have no collective bargaining agreements with our employees.

SECURITIES AND EXCHANGE COMMISSION

The Company is required to file reports with the Securities and Exchange
Commission, "SEC", pursuant to Section 13 or 15(d) of The Securities and
Exchange Act of 1934. The Company routinely files reports with the SEC. The
public may read and copy any materials filed to the SEC by the Company at the
SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The Company's filings are submitted
electronically and can be accessed via the SEC's website at
(http://www.sec.gov).

                                       13


<PAGE>

COMPANY WEBSITE

Information about the Company can be obtained by accessing the Company's website
at (http://www.erfwireless.com).

RESULTS OF OPERATIONS

Three Months Ended June 30, 2005, Compared to the Three Months Ended June 30,
2004

The following tables set forth summarized consolidated financial information for
the three and six months ended June 30, 2005, and June 30, 2004:

Condensed Financial Information:
<TABLE>
                                                    Three Months Ended June 30,              Six Months Ended June 30,
                                            ----------------------------------------  ----------------------------------------
           ($ IN THOUSANDS)                   2005       2004     $ Change  % Change    2005       2004    $ Change   % Change
                                            --------   --------   --------  --------  --------   --------   --------  --------
<S>                                         <C>        <C>        <C>            <C>  <C>        <C>        <C>            <C>
Total sales                                 $    92    $    80    $    12        15%  $   201    $   152    $    49        32%
Cost of goods sold                               46         26         20        77%       79         42         37        88%
                                            --------   --------   --------  --------  --------   --------   --------  --------
Gross profit                                     46         54         (8)     -15%       122        110         12        11%
                                            --------   --------   --------  --------  --------   --------   --------  --------
Percent of total sales                           50%        68%      -18%      -26%        61%        72%      -12%      -16%
Operating expenses                              537        143        394       276%    1,080        284        796       280%
                                            --------   --------   --------  --------  --------   --------   --------  --------
Loss from operations                           (491)       (89)      (402)      452%     (958)      (174)      (784)      451%
                                            --------   --------   --------  --------  --------   --------   --------  --------
Net loss                                       (491)       (89)      (402)      452%     (958)      (174)      (784)      451%
Unrealized holding gain/(loss)                    1         (1)         2     -200%         1         --          1         0%
Deemed dividend related to beneficial
     conversion feature of preferred stock     (389)        --       (389)        0%     (626)        --
                                            --------   --------   --------  --------  --------   --------   --------  --------
Net loss attritubable
  to common shareholders                    $  (879)   $   (90)   $  (789)      877%  $(1,583)   $  (174)   $  (783)      450%
                                            ========   ========   ========  ========  ========   ========   ========  ========

Operating Expenses:

                                              Three Months Ended June 30,                  Six Months Ended June 30,
                                     ------------------------------------------    -----------------------------------------
           ($ IN THOUSANDS)           2005       2004      $ Change    % Change     2005       2004      $ Change   % Change
                                     -------    -------    -------     -------     -------    -------    -------    -------

Employment expenses                  $  256     $   78     $  178         228%     $  585     $  157     $  428        273%
Professional services                   182          7        175        2500%        282         20        262       1310%
Depreciation and amortization            10          3          7         233%         15          6          9        150%
Rent and maintenance                     57         15         42         280%         80         33         47        142%
Other general and administrative         32         40         (8)       -20%         118         68         50         74%
                                     -------    -------    -------     -------     -------    -------    -------    -------
Total operating expenses             $  537     $  143     $  394         276%     $1,080     $  284     $  796        280%
                                     =======    =======    =======     =======     =======    =======    =======    =======
</TABLE>

During the six months ended June 30, 2005, the Company's operating expenses
increased significantly over prior periods as the Company began building its
corporate, information systems and operations infrastructures to accommodate
several acquisitions that are currently in various stages of due diligence and
negotiations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

GENERAL

The Company's revenue is generated primarily from the sale of wireless
communications products and services ; including providing reliable, high-speed
wireless broadband internet services. The Company recognizes revenue when
persuasive evidence of an arrangement exists, delivery has occurred, the sales
price is fixed or determinable, and collectibility is probable.

The Company recognizes product sales generally at the time the product is
shipped. Concurrent with the recognition of revenue, the Company provides for
the estimated cost of product warranties and reduces revenue for estimated
product returns. Sales incentives are generally classified as a reduction of
revenue and are recognized at the later of when revenue is recognized or when
the incentive is offered. Shipping and handling costs are included in cost of
goods sold.

The Company's suppliers generally warrant the products distributed by the
Company and allow returns of defective products, including those that have been
returned to the Company by its customers. The Company does not independently
warrant the products that it distributes, but it does provide warranty services
on behalf of the supplier.

                                       14


<PAGE>

Management's Discussion and Analysis of Financial Condition and Results of
Operations are based upon our Financial Statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses, and related disclosure of contingent assets
and liabilities. Management bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.

THREE AND SIX MONTHS ENDED JUNE 30, 2005 COMPARED TO THE THREE AND SIX MONTHS
ENDED JUNE 30, 2004

REVENUES

The Company had revenues of $92,000 and $201,000 from operations for the three
and six month period ended June 30, 2005 as compared to $80,000 and $152,000 for
the three and six month period ended June 30, 2004. The increase in revenues for
these respective period comparisons was primarily attributable to the completion
of a broadband wireless network in a master planned development.

COST OF GOODS SOLD

The Company had cost of goods sold of $46,000 and $79,000 from operations for
the three and six month period ended June 30, 2005 as compared to $26,000 and
$42,000 for the three and six month period ended June 30, 2004. The increase in
cost of goods sold for this respective period comparison was primarily
attributable to the completion of the broadband wireless network in a master
planned development.

OPERATING EXPENSES

With respect to the Company's consolidated operations, the Company reported
operating expenses totaling $537,000 and $1,080,000 for the three and six months
ended June 30, 2005 as compared to $143,000 and $284,000 for the three and six
months ended June 30, 2004. The increase in operating expenses for this
respective period comparison was primarily attributable to increases related to
the expansion of the Company's corporate, information systems and operations
infrastructures to accommodate several acquisitions that are currently in
various stages of due diligence and negotiations.

The Company's operating expenses for the three month period ended June 30, 2005
were primarily attributable to selling, general and administrative costs
including personnel related costs, legal, accounting, information systems and
other professional costs incurred in connection with the Company's acquisition
targets that are currently in various stages of due diligence and negotiations.

NET LOSS

For the three and six months ended June 30, 2005, our net loss was $491,000 and
$958,000 compared to a net loss of $89,000 and $174,000 for the three and six
months ended June 30, 2004. The increase in loss for the three and six months
ended June 30, 2005 as compared to the three and six months ended June 30, 2004
was attributable to the factors discussed immediately above.

NET LOSS APPLICABLE TO COMMON SHAREHOLDERS

For the three and six months ended June 30, 2005, our net loss applicable to
common shareholders was $879,000 and $1,583,000 compared to a net loss of
$90,000 and $174,000 for the three and six months ended June 30, 2004. The
Company's Net Loss Applicable to Common Shareholders included a deemed dividend
on the beneficial conversion of debt which resulted in the issuance of $779,000
and $473,000 of Series A Preferred Stock. The beneficial conversion deemed
dividend was limited to the amount of consideration received totaling $388,000
and $237,000 in the three and six months ended June 30, 2005.

CASH FLOWS

Our operating activities for ongoing operations used net cash of $641,000 in the
six months ended June 30, 2005 as compared to using $230,000 in the six month
period ended June 30, 2004. Net cash used by operating activities in the six
months ended June 30, 2005 resulted primarily from the net operating loss of
$958,000 for the operating period; reduced by common stock that was issued for
services rendered.

                                       15


<PAGE>

Our investing activities used net cash of $112,000 in the six months ended June
30, 2005 compared to $15,000 of cash used in the six months ended June 30, 2004.
The cash used is attributable to the acquisition of operating assets during the
six months ended June 30, 2005.

Our financing activities provided net cash of $786,000 in the six months ended
June 30, 2005 compared to $270,000 of cash provided in the six months ended June
30, 2004. The cash provided in the six months ended June 30, 2005 was primarily
associated with the Investor Advances discussed in Note 4 herein that were
converted to equity on March 31, 2005 and proceeds received from the Company's
Private Placement Memorandum dated June 25, 2005.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2005, we had cash and securities available for sale of $47,000
and a working capital deficit of $10,000. The Company's current cash and cash
equivalents, including net proceeds received during the quarter ended June 30,
2005, will not be sufficient to fund operations and planned acquisitions for the
next twelve months. As a component of the restructuring initiated in the fourth
quarter of 2004, the Company signed a Debt Conversion and Funding Agreement with
certain investors. The Investors converted their existing debt and provided the
Company with additional cash during the year ended December 31, 2004 in exchange
for 1,500,000 shares of Series A Convertible Preferred Stock (the "Series A").
These same investors have continued to fund the Company's working capital needs
pursuant to an Addendum to the Debt Conversion and Funding Agreement whereby
certain investors have agreed to provide the Company with up to $750,000 in
additional cash during the period beginning January 1, 2005 in exchange for up
to 1,500,000 shares of Series A Convertible Preferred Stock. The Company
received $627,000 against this amended Debt Conversion and Funding Agreement in
the six months ended June 30, 2005. Subsequent to the period ended June 30,
2005, the Company amended the Debt Conversion and Funding Agreement to provide
up to $750,000 in additional funding at $1.50 per share of Series A preferred
stock.

The Company initiated financing efforts under a Confidential Private Placement
Memorandum with an effective date of June 25 2005. The Confidential Private
Placement pertains to the offer and sale by the Company of shares of its common
stock to Accredited Investors who are deemed acceptable by the Company. The
Confidential Private Placement Memorandum is intended to raise up to $7.5
million on a best efforts basis. We can provide no assurance that we will be
successful in raising capital from this private placement. The Company has also
held discussions with certain Investment Banking firms regarding expanding the
Confidential Private Placement to $10.0 million and has exchanged a term sheet
with one such firm; although we can provide no assurance that we will be
successful in reaching an acceptable arrangement for such services. Subsequent
to the period ended June 30, 2005, the Company engaged an investment banking
firm with offices in 35 states to begin selling the private placement under a
fee agreement arrangement. Additionally, subsequent to the period ended June 30,
2005, the Company entered into a term sheet for financing on a two-year
convertible note. The term sheet provides for financing in three tranches of
which the first tranche of financing is expected to yield $1.3 million in cash
proceeds. The overall financing provides for $3.75 million on two year
convertible notes. The Company is currently negotiating the definitive
agreements associated with this transaction. We anticipate that we will be
successful at closing the transaction although we can provide no assurance that
we will be able to reach an acceptable arrangement for such a closing.

We do not have any significant credit facilities available with financial
institutions or other third parties and as such we must rely upon best efforts
third-party funding from individual accredited investors. Though we recently
completed the Subscription Agreement for Series A Convertible Preferred Stock
discussed herein and anticipate that we will be successful at raising additional
capital through private placements on a best efforts basis, we can provide no
assurance that we will be successful in any future best efforts financing
efforts. If we are unable to either obtain financing from external sources or
generate internal liquidity from anticipated future operations, we may need to
curtail acquisition plans and operations.

Although we have the Debt Conversion and Funding Agreement, anticipated funding
from two year convertible notes and potential proceeds from our private
placement efforts available, it is possible that we may need and not be able to
obtain additional sources of financing. The Company may need additional
financing, from time to time, for the following:

         o        Acquisitions of one or more companies, networks or other
                  assets
         o        Investment in towers, radios, customer premise equipment and
                  other related equipment associated with wireless broadband
                  expansion plans
         o        Investment in back office systems and related infrastructure
                  to support the Company's wireless broadband expansion plans
         o        Investment in laboratory facilities including test and
                  simulation equipment
         o        Investment or licensing of certain intellectual property
                  related to the Company's wireless broadband expansion plans
         o        General working capital purposes

INFLATION

The Company's results of operations have not been affected by inflation and
management does not expect inflation to have a significant effect on its
operations in the future.

                                       16


<PAGE>
<TABLE>

CONTRACTUAL OBLIGATIONS

                                                          Payments Due by Period
                                      ------------------------------------------------------------------
                                                     Less                                       More
                                        Total     than 1 Year    1-3 Years     3-5 Years    than 5 Years
                                      --------    -----------    ---------     ---------    ------------
CONTRACTUAL OBLIGATIONS:
<S>                                    <C>           <C>           <C>           <C>           <C>
  Long-term debt obligations           $ --          $ --          $ --          $ --          $ --
  Operating lease obligations           553            93           351           109            --
                                       ----          ----          ----          ----          ----
TOTAL CONTRACTUAL OBLIGATIONS          $553          $ 93          $351          $109          $--
                                       ====          ====          ====          ====          ====
</TABLE>

                                       17


<PAGE>


The Company's contractual obligations consist of certain obligations for office
space operating leases requiring future minimal commitments under non-cancelable
leases. Please see non-cancelable leases as described in Note 6 to the Company's
financial statements under the heading Commitments.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT:

With the exception of historical information, the matters discussed in this
report are "forward looking statements" as that term is defined in Section 21E
of the Securities Act of 1934.

RISK FACTORS

The most significant risks and uncertainties associated with our business are
described below; however, they are not the only risks we face. If any of the
following risks actually occur, our business, financial condition, or results or
operations could be materially adversely affected, the trading of our common
stock could decline, and an investor may lose all or part of their investment.

WE HAVE A LIMITED OPERATING HISTORY WITH SIGNIFICANT LOSSES AND EXPECT LOSSES TO
CONTINUE FOR THE FORESEEABLE FUTURE

We have incurred annual operating losses since our inception. As a result, at
June 30, 2005, we had an accumulated deficit of $3,096,000. Our gross revenues
for the six months ended June 30, 2004, were $201,000, with a loss from
operations of $958,000 and a net loss applicable to common shareholders of
$1,583,000.

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

WE HAVE A LIMITED CASH AND LIQUIDITY POSITION AND WILL NEED TO RAISE ADDITIONAL
FUNDS TO FUND OPERATIONS

Our current cash position and expected cash flow from operations will not be
sufficient to fund operations during the current fiscal year. We will need to
raise additional funding to fund operations. Historically, we have relied upon
best efforts third-party funding from individual accredited investors. Though we
have been successful at raising additional capital on a best efforts basis in
the past, we may not be successful in any future best efforts financing efforts.
We do not have any significant credit facilities or firm financial commitments
established as of the date hereof. If we are unable to either obtain financing
from external sources or generate internal liquidity from operations, we may
need to curtail operations or sell assets.

THE MARKET PRICE OF OUR COMMON STOCK IS VERY VOLATILE AND THE VALUE OF YOUR
INVESTMENT MAY BE SUBJECT TO SUDDEN DECREASES

The trading price for our common stock has been, and we expect it to continue to
be, volatile. For example, the closing bid price of our stock has fluctuated
between $2.00 per share and $11.75 per share since the reverse split on
September 20, 2004. The price at which our common stock trades depends upon a
number of factors, including our historical and anticipated operating results
and general market and economic conditions, which are beyond our control.
Factors such as fluctuations in our financial and operating results,
technological innovations or new commercial products and services by us or our
competitors, could also cause the market price of our common stock to fluctuate
substantially. In addition, the stock market has, from time to time, experienced
extreme price and volume fluctuations. These broad market fluctuations may lower
the market price of our common stock. Moreover, during periods of stock market
price volatility, share prices of many companies have often fluctuated in a
manner not necessarily related to their operating performance. Accordingly, our
common stock may be subject to greater price volatility than the stock market as
a whole.

                                       18


<PAGE>

A LOW MARKET PRICE MAY SEVERELY LIMIT THE POTENTIAL MARKET FOR OUR COMMON STOCK

Our common stock is currently trading at a price below $5.00 per share,
subjecting trading in the stock to certain SEC rules requiring additional
disclosures by broker-dealers. These rules generally apply to any non-NASDAQ
equity security that has a market price of less than $5.00 per share, subject to
certain exceptions (a "penny stock"). Such rules require the delivery, prior to
any penny stock transaction, of a disclosure schedule explaining the penny stock
market and the risks associated therewith and impose various sales practice
requirements on broker-dealers who sell penny stocks to persons other than
established customers and institutional or wealthy investors. For these types of
transactions, the broker-dealer must make a special suitability determination
for the purchaser and have received the purchaser's written consent to the
transaction prior to the sale. The broker-dealer also must disclose the
commissions payable to the broker-dealer, current bid and offer quotations for
the penny stock and, if the broker- dealer is the sole market maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Such information must be provided to the customer orally or in
writing before or with the written confirmation of trade sent to the customer.
Monthly statements must be sent disclosing recent price information for the
penny stock held in the account and information on the limited market in penny
stocks. The additional burdens imposed upon broker-dealers by such requirements
could discourage broker-dealers from effecting transactions in our common stock.

THE COMPANY'S REVENUE AND OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY FROM
QUARTER TO QUARTER, AND FLUCTUATIONS IN OPERATING RESULTS COULD CAUSE ITS STOCK
PRICE TO DECLINE.

The Company's revenue and operating results may vary significantly from
quarter-to-quarter due to a number of factors. In future quarters, operating
results may be below the expectations of public market analysis or investors,
and the price of its common stock may decline. Factors that could cause
quarterly fluctuations include:

         o        the ability to secure new customers comprising recurring
                  revenues during a quarter; and

         o        the ability to raise the necessary capital to execute mergers,
                  acquisitions and asset purchases.

WE COMPETE WITH MANY COMPANIES THAT ARE LARGER AND BETTER FINANCED THAN US, AND
OUR GROWTH AND PROFITABILITY ARE DEPENDENT ON OUR ABILITY TO COMPETE WITH THESE
ENTITIES.

We face competition from many entities with significantly greater financial
resources, well-established brand names, and larger customer bases. We may
become subject to severe price competition for our products and services as
companies seek to enter our industry or current competitors attempt to gain
market share. We expect competition to intensify in the future and expect
significant competition from traditional and new telecommunications companies
including, local, long distance, cable modem, Internet, digital subscriber line,
microwave, mobile and satellite data providers. If we are unable to make or keep
our products competitively priced and attain a larger market share in the
markets in which our products compete, our levels of sales and our ability to
achieve profitability may suffer.

A SYSTEM FAILURE COULD DELAY OR INTERRUPT OUR ABILITY TO PROVIDE PRODUCTS OR
SERVICES AND COULD INCREASE OUR COSTS AND REDUCE OUR REVENUES.

Our operations are dependant upon our ability to support a highly complex
network infrastructure. Many of our customers are particularly dependent on an
uninterrupted supply of services. Any damage or failure that causes
interruptions in our operations could result in loss of these customers. To
date, we have not experienced any significant interruptions or delays which have
affected our ability to provide products and services to our clients. Because
our headquarters and infrastructure are located in the Texas Gulf Coast area,
there is a likelihood that our operations may be effected by hurricanes or
tropical storms, tornados, or flooding. The occurrence of a natural disaster,
operational disruption or other unanticipated problem could cause interruptions
in the services we provide and significantly impair our ability to generate
revenue and achieve profitability.

                                       19


<PAGE>

THE COMPANY MUST CONTINUALLY ENHANCE ITS SERVICES TO MEET THE CHANGING NEEDS OF
ITS CUSTOMERS OR FACE THE POSSIBILITY OF LOSING FUTURE BUSINESS TO COMPETITORS.

Future success will depend upon the Company's ability to enhance existing
services and to introduce new services to meet the requirements of customers in
a rapidly developing and evolving market. Present or future services may not
satisfy the needs of the market. If the Company is unable to anticipate or
respond adequately to its customers' needs, lost business may result and
financial performance will suffer.

ITEM 3. CONTROLS AND PROCEDURES.

We maintain controls and procedures designed to ensure that information required
to be disclosed in the reports that we file or submit under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the Securities and Exchange
Commission. Based upon their evaluation of those controls and procedures
performed as of the end of the period covered by this report, our chief
executive officer and principal financial officer concluded that our disclosure
controls and procedures were adequate.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.


                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 2. CHANGES IN SECURITIES.

From April 8, 2005 through June 1, 2005, the Company issued 125,003 shares of
its $.001 par value common stock for $187,500 in funds sold during the six
months ended June 30, 2005 against the Company's Private Placement Memorandum
dated January 1, 2005 and updated on June 25, 2005. In addition to the shares of
common stock, the investor will receive a Class A Warrant and a Class B Warrant
for each share of common stock purchased. The Class A Warrant has an exercise
price of $5.00 per share and the Class B Warrant has an exercise price of $7.50
per share. Each warrant allows the holder to purchase one share of common stock
at the exercise price. The Company is relying upon the following facts in its
determination that the issuance of shares under the Stock Purchase Agreement is
an exempt transaction under Section 4(2) of the Securities Act for "transactions
by an issuer not involving any public offering." There was no general
solicitation or general advertising. There were four purchasers. There was an
opportunity for all purchasers to ask questions and receive answers concerning
the terms and conditions of the offering. The purchasers were accredited
investors and all have such knowledge and experience in financial and business
matters as to be capable of evaluating alone the merits and risks of the
prospective investment. All certificates for shares contained a Rule 144
legend."

Except as otherwise noted, the securities described in this Item were issued
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act of 1933. Each such issuance was made pursuant to individual
contracts which are discrete from one another and are made only with persons who
were sophisticated in such transactions and who had knowledge of and access to
sufficient information about the Company to make an informed investment
decision. Among this information was the fact that the securities were
restricted securities.

ITEM 3. DEFAULT IN SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM 5. OTHER INFORMATION

None

                                       20


<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) EXHIBITS

EXHIBIT NO.                IDENTIFICATION OF EXHIBIT
   Exhibit 2.1             Agreement and Plan of Merger between Fleetclean
                           Systems, Inc., and ERF Wireless, Inc. (1)
   Exhibit 2.2             Articles of Merger (1)
   Exhibit 3.1             Articles of incorporation of ERF Wireless, Inc. (1)
   Exhibit 3.1.1           Certificate of Amendment to Articles of incorporation
                           of ERF Wireless, Inc. (1)
   Exhibit 3.2             Bylaws of ERF Wireless, Inc. (1)
   Exhibit 4.1             Designation of Preferences (1)
   Exhibit 4.2             Amendment to Certificate of Designation of Series A
                           Convertible Preferred Stock (6)
   Exhibit 10.1            R. Greg Smith Amended and Restated Employment
                           Agreement (5)
   Exhibit 10.2            Asset and Liability Contribution Agreement dated
                           March 31, 2004 between Fleetclean Systems, Inc. and
                           Fleetclean Chemicals, Inc. (2)
   Exhibit 10.3            Stock Purchase Agreement dated May 15, 2004 between
                           Systom Trust Joint Venture and Kenneth A. Phillips
                           et. al. (3)
   Exhibit 10.4            Subscription Agreement dated May 11, 2004 between
                           Fleetclean Systems, Inc. and Systom Trust Joint
                           Venture (3)
   Exhibit 10.5            Acquisition Agreement dated May 15, 2004 between
                           Kenneth A. Phillips and Fleetclean Systems, Inc. (3)
   Exhibit 10.6            2004 Non-Qualified Stock Compensation Plan (4)
   Exhibit 31.1            Certification of Chief Executive Officer
   Exhibit 31.2            Certification of Chief Financial Officer
   Exhibit 32.1            Certification of Chief Executive Officer and Chief
                           Financial Officer Pursuant to 18 U.S.C. Section 1350,
                           as Adopted Pursuant to Section 906 of the
                           Sarbanes-Oxley Act of 2002

   (1) incorporated by reference from the Form 10-QSB for September 30, 2004;
       Accession number 1019687-4-2624.
   (2) incorporated by reference from the Form 10-QSB for June 30, 2004;
       Accession number 1157523-4-4889.
   (3) incorporated by reference from the Form 8-K for May 28, 2004; Accession
       number 1019687-4-1225.
   (4) incorporated by reference from the Form S-8 filed December 29, 2004;
       Accession number 1019687-4-2940.
   (5) incorporated by reference from the Form 10-KSB for December 31, 2004;
       Accession number 1019687-1-1049.
   (6) incorporated by reference from the Form 10-QSB for March 31, 2005;
       Accession number 1019687-05-001417

(B) REPORTS ON FORM 8-K

    The following current reports on Form 8-K were filed during the three months
ended June 30, 2005:

      NONE.


                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

ERF Wireless, Inc.

Date:  August 15, 2005

By:    /s/ R. Greg Smith
       -----------------
       R. Greg Smith,
       Chief Executive Officer and Chief Financial Officer
       (Principal Executive Officer and Principal Financial
       and Accounting Officer)


                                       21