| Nevada                                         |   | 000-27467                |   | 76-0196431                        |
|------------------------------------------------|--------|--------------------------|--------|-----------------------------------|
| (State or other jurisdiction of incorporation) |   | (Commission File Number) |   | (IRS Employer Identification No.) |

----

|                                                         |   | March 31,   |    |   | December 31, |   |
|--------------------------------------------------------------|--------|-------------|---------|--------|--------------|--------|
|                                                         |   | 2010        |    |   | 2009         |   |
|                                                         |   | (unaudited) |    |   |         |   |
| ASSETS                                                       |   |        |    |   |         |   |
| Current assets                                               |   |        |    |   |         |   |
| Cash and cash equivalents                                    |   | $           | 75      |   |         | $      | 228 |   |
| Accounts receivable, net                                     |   |        | 429     |   |         |   | 494 |   |
| Accounts receivable, other                                   |   |        | 85      |   |         |   | 78 |   |
| Inventories                                                  |   |        | 246     |   |         |   | 222 |   |
| Costs and profits in excess of billings                      |   |        | 18      |   |         |   | 17 |   |
| Prepaid expenses and other current assets                    |   |        | 191     |   |         |   | 242 |   |
| Total current assets                                         |   |        | 1,044   |   |         |   | 1,281 |   |
|                                                         |   |        |    |   |         |   |   |   |
| Property and equipment                                       |   |        |    |   |         |   |   |   |
| Property and equipment                                       |   |        | 9,718   |   |         |   | 9,347 |   |
| Less: accumulated depreciation                               |   |        | (4,300  | )      |         |   | (3,712 | ) |
| Net property and equipment                                   |   |        | 5,418   |   |         |   | 5,635 |   |
|                                                         |   |        |    |   |         |   |   |   |
| Goodwill                                                     |   |        | 1,255   |   |         |   | 1,255 |   |
| Intangible assets, net                                       |   |        | 533     |   |         |   | 701 |   |
| Other assets                                                 |   |        | 227     |   |         |   | 245 |   |
|                                                         |   |        |    |   |         |   |   |   |
| Total assets                                                 |   | $           | 8,477   |   |         | $      | 9,117 |   |
| LIABILITIES AND SHAREHOLDERS’ (DEFICIT)                |   |        |    |   |         |   |   |   |
| Current liabilities:                                         |   |        |    |   |         |   |   |   |
| Notes payable and current portion of long-term debt          |   | $           | 1,654   |   |         | $      | 1,881 |   |
| Current portion of long-term capital leases                  |   |        | 772     |   |         |   | 854 |   |
| Accounts payable                                             |   | $           | 777     |   |         | $      | 586 |   |
| Accrued expenses                                             |   |        | 687     |   |         |   | 486 |   |
| Derivative liabilities                                       |   |        | 322     |   |         |   | 269 |   |
| Deferred liability and revenue                               |   |        | 545     |   |         |   | 585 |   |
| Total current liabilities                                    |   |        | 4,757   |   |         |   | 4,661 |   |
|                                                         |   |        |    |   |         |   |   |   |
| Long-term debt of line of credit, net of current portion     |   |        | 6,200   |   |         |   | 5,449 |   |
| Long-term debt, net of current portion                       |   |        | 402     |   |         |   | 442 |   |
| Long-term capital leases, net of current portion             |   |        | 645     |   |         |   | 789 |   |
| Deferred liability and revenue, net of current portion       |   |        | 112     |   |         |   | 150 |   |
| Total liabilities                                            |   |        | 12,116  |   |         |   | 11,491 |   |
|                                                         |   |        |    |   |         |   |   |   |
| Commitments                                                  |   |        |    |   |         |   |   |   |
|                                                         |   |        |    |   |         |   |   |   |
| Shareholders’ (deficit):                               |   |        |    |   |         |   |   |   |
| Preferred stock  -  $.001 par value      |   |        |    |   |         |   |   |   |
| Series A authorized  25,000,000 shares             |   |        |    |   |         |   |   |   |
| Issued and outstanding at March 31, 2010, and                |   |        |    |   |         |   |   |   |
| December 31, 2009, 2,420,390 and 3,043,580, respectively     |   |        | 2       |   |         |   | 3 |   |
| Common stock  -  $.001 par value         |   |        |    |   |         |   |   |   |
| Authorized 475,000,000 shares                                |   |        |    |   |         |   |   |   |
| Issued and outstanding at March 31, 2010, and                |   |        |    |   |         |   |   |   |
| December 31, 2009, 162,805,742 and 145,575,735, respectively |   |        | 163     |   |         |   | 146 |   |
| Additional paid in capital                                   |   |        | 37,579  |   |         |   | 36,785 |   |
| Accumulated deficit                                          |   |        | (41,383 | )      |         |   | (39,308 | ) |
| Total shareholders’ (deficit)                          |   |        | (3,639  | )      |         |   | (2,374 | ) |
|                                                         |   |        |    |   |         |   |   |   |
| Total liabilities and shareholders' (deficit)                |   | $           | 8,477   |   |         | $      | 9,117 |   |

----

|                                    |   | 2010   |   |   | 2009   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|
|                                    |   |   |   |   |   |   |
| Sales:                                  |   |   |   |   |   |   |
| Products                                |   | $      | 17     |   |   | $      | 138 |   |
| Services                                |   |   | 1,462  |   |   |   | 1,185 |   |
| Total sales                             |   |   | 1,479  |   |   |   | 1,323 |   |
|                                    |   |   |   |   |   |   |   |   |
| Costs of goods sold:                    |   |   |   |   |   |   |   |   |
| Products and integration services       |   |   | 373    |   |   |   | 443 |   |
| Rent, repairs and maintenance           |   |   | 121    |   |   |   | 96 |   |
| Depreciation                            |   |   | 494    |   |   |   | 265 |   |
| Total costs of goods sold               |   |   | 988    |   |   |   | 804 |   |
|                                    |   |   |   |   |   |   |   |   |
| Gross profit                            |   |   | 491    |   |   |   | 519 |   |
|                                    |   |   |   |   |   |   |   |   |
| Operating expenses:                     |   |   |   |   |   |   |   |   |
| Selling, general and administrative     |   |   | 2,055  |   |   |   | 2,238 |   |
| Depreciation and amortization           |   |   | 262    |   |   |   | 353 |   |
| Total operating expenses                |   |   | 2,317  |   |   |   | 2,591 |   |
|                                    |   |   |   |   |   |   |   |   |
| Loss from operations                    |   |   | (1,826 | )      |   |   | (2,072 | ) |
|                                    |   |   |   |   |   |   |   |   |
| Other income (expenses):                |   |   |   |   |   |   |   |   |
| Interest expense, net                   |   |   | (421   | )      |   |   | (252 | ) |
| Gain on sale of assets and other income |   |   | 3      |   |   |   | - |   |
| Derivative income (expense)             |   |   | 169    |   |   |   | (36 | ) |
| Total other income (expense)            |   |   | (249   | )      |   |   | (288 | ) |
|                                    |   |   |   |   |   |   |   |   |
| Net loss                                |   | $      | (2,075 | )      |   | $      | (2,360 | ) |
|                                    |   |   |   |   |   |   |   |   |
| Net loss per common share:              |   |   |   |   |   |   |   |   |
| Basic                                   |   | $      | (0.01  | )      |   | $      | (0.02 | ) |
| Diluted                                 |   | $      | (0.01  | )      |   | $      | (0.02 | ) |

----

|                                                                    |   | 2010   |   |   | 2009   |   |
|-------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                    |   |   |   |   |   |   |
| Cash flows from operating activities                                    |   |   |   |   |   |   |
| Net loss                                                                |   | $      | (2,075 | )      |   | $      | (2,360 | ) |
|                                                                    |   |   |   |   |   |   |   |   |
| Adjustments to reconcile net loss to net cash                           |   |   |   |   |   |   |   |   |
|        used by operating activities: |   |   |   |   |   |   |   |   |
| Amortization of debt discount                                           |   |   | 82     |   |   |   | 39 |   |
| Depreciation and amortization                                           |   |   | 756    |   |   |   | 618 |   |
| Stock based compensation                                                |   |   | 13     |   |   |   | - |   |
| Stock issued for services rendered and interest                         |   |   | 421    |   |   |   | 825 |   |
| Derivative (income) expense                                        |   |   | (169   | )      |   |   | 36 |   |
| Bad debt expense                                                        |   |   | 32     |   |   |   | - |   |
| Changes in:                                                             |   |   |   |   |   |   |   |   |
| Accounts receivable, net                                                |   |   | 33     |   |   |   | (97 | ) |
| Accounts receivable, other                                              |   |   | (7     | )      |   |   | (10 | ) |
| Inventories                                                             |   |   | (24    | )      |   |   | (8 | ) |
| Prepaid expenses                                                        |   |   | 51     |   |   |   | 33 |   |
| Costs and profits in excess of billings                                 |   |   | (1     | )      |   |   | (131 | ) |
| Accounts payable                                                        |   |   | 191    |   |   |   | (128 | ) |
| Accrued expenses                                                        |   |   | 201    |   |   |   | 537 |   |
| Deferred liability and revenue                                          |   |   | (78    | )      |   |   | 212 |   |
| Total adjustment                                                        |   |   | 1,501  |   |   |   | 1,926 |   |
| Net cash used by operating activities                                   |   |   | (574   | )      |   |   | (434 | ) |
|                                                                    |   |   |   |   |   |   |   |   |
| Cash flows from investing activities                                    |   |   |   |   |   |   |   |   |
| Purchase of property and equipment                                      |   |   | (370   | )      |   |   | (153 | ) |
| Change in other assets                                                  |   |   | 18     |   |   |   | 12 |   |
| Net cash used by investing activities                                   |   |   | (352   | )      |   |   | (141 | ) |
|                                                                    |   |   |   |   |   |   |   |   |
| Cash flows from financing activities                                    |   |   |   |   |   |   |   |   |
| Net proceeds from line of credit                                        |   |   | 750    |   |   |   | 355 |   |
| Proceeds from notes payable                                             |   |   | -      |   |   |   | 150 |   |
| Proceeds from long-term debt obligations                                |   |   | 605    |   |   |   | 550 |   |
| Payment of long-term debt obligations                                   |   |   | (608   | )      |   |   | (131 | ) |
| Payment on capital lease obligations                                    |   |   | (226   | )      |   |   | (210 | ) |
| Proceeds from sale of common stock, net                                 |   |   | 252    |   |   |   | 169 |   |
| Net cash provided by financing activities                               |   |   | 773    |   |   |   | 883 |   |
|                                                                    |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash                                         |   |   | (153   | )      |   |   | 308 |   |
| Cash and cash equivalents at the beginning of the period                |   |   | 228    |   |   |   | 348 |   |
| Cash and cash equivalents at the end of the period                      |   | $      | 75     |   |   | $      | 656 |   |
|                                                                    |   |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                       |   |   |   |   |   |
| Net cash paid during the year for:                                      |   |   |   |   |   |   |   |   |
| Interest                                                                |   | $      | 91     |   |   | $      | 84 |   |
| Income taxes                                                            |   | $      | -      |   |   | $      | - |   |
|                                                                    |   |   |   |   |   |   |   |   |
| Supplemental non-cash investing and financing activities:               |   |   |   |   |   |
| Conversion of debt through issuance of common stock                     |   | $      | 124    |   |   | $      | 170 |   |
| Property acquired under capital lease                                   |   | $      | -      |   |   | $      | 68 |   |
|                                                                    |   |

----

|           |   | March 31, |   |   | December 31, |   |
|----------------|--------|-----------|--------|--------|--------------|--------|
|           |   | 2010      |   |   | 2009         |   |
| Raw material   |   | $         | 66     |   |         | $      | 63 |   |
| Finished goods |   |      | 180    |   |         |   | 159 |   |
|           |   | $         | 246    |   |         | $      | 222 |   |

----

| March 31, 2010                                                   |   | Supplemental Non-Cash Disclosure |   |
|------------------------------------------------------------------|--------|----------------------------------|--------|
| Professional fees                                                |   | $                                | 198    |   |
| Settlements                                                      |   |                             | 7      |   |
| Salary and compensation                                          |   |                             | 177    |   |
| Other services rendered                                          |   |                             | 39     |   |
|  Total for services, interest, liabilities and compensation |   | $                                | 421    |   |
|                                                             |   |                             |   |   |
| Notes payable                                                    |   | $                                | 124    |   |

----

| Warrants Outstanding |   |
|----------------------|--------|
| Exercise Price       |   | Expiration Date |   | December 31,2009 |   |   | Issued |   |   | Exercised |   |   | March 31,2010 |   |
|                 | 3.57   |   | Sep-10 |   |   | 389,999 |   |   |   | - |   |   |   | - |   |   |   | 389,999 |   |
|                 | 0.45   |   | Mar-12 |   |   | 1,558,297 |   |   |   | - |   |   |   | - |   |   |   | 1,558,297 |   |
|                 | 5.00   |   | August-11 thru May-14 |   |   | 4,889,248 |   |   |   | - |   |   |   | - |   |   |   | 4,889,248 |   |
|                 |   |   |   |   |   | 6,837,544 |   |   |   | - |   |   |   | - |   |   |   | 6,837,544 |   |

|                                                      |   | 2008   |       |
|-----------------------------------------------------------|--------|--------|------------|
|                                                      |   | Plan   |       |
| Shares initially reserved                                 |   |   | 15,000,000 |   |
|                                                      |   |   |       |   |
| Remaining shares January 1, 2010                          |   |   | 5,995,378  |   |
|                                                      |   |   |       |   |
| Shares issued during 2010                                 |   |   | 1,627,393  |   |
|                                                      |   |   |       |   |
| Remaining shares available to be issued at March 31, 2010 |   |   | 4,367,985  |   |
|                                                      |   |   |       |   |
| Shares issued and outstanding as of March 31, 2010        |   |   | 10,632,015 |   |

|                             |   | Shares |    |   | Weighted-Average Exercise Price |   |
|----------------------------------|--------|--------|---------|--------|---------------------------------|--------|
| Outstanding at beginning of year |   |   | 125,000 |   |                            | $      | 0.43 |   |
| Granted                          |   |   | 200,000 |   |                            |   | 0.17 |   |
| Exercised                        |   |   | -       |   |                            |   | - |   |
| Forfeited/cancelled              |   |   | -       |   |                            |   | - |   |
|                             |   |   |    |   |                            |   |   |   |
| Outstanding at the end of period |   |   | 325,000 |   |                            | $      | 0.27 |   |
|                             |   |   |    |   |                            |   |   |   |
| Exercisable at March 31, 2010    |   |   | 325,000 |   |                            | $      | 0.27 |   |

----

|                    |   | 3/31/2010 |   |
|-------------------------|--------|-----------|--------|
| Assumptions             |   | Options   |   |
| Dividend yield          |   |      | 0.00%  |   |
| Risk-free rate for term |   |      | 0.20%  |   |
| Volatility              |   |      | 84.00% |   |
| Expected life           |   |      | 5.0    |   |

|           |   |   |        |   |    | Remaining Weighted  |   |   |        |   |   | Remaining Weighted |    |
|----------------|--------|--------|-------------|--------|---------|---------------------|--------|--------|-------------|--------|--------|--------------------|---------|
| Class          |   |   | Number      |   |    | Average Contractual |   |   | Number      |   |   | Average Exercise   |    |
| Exercise Price |   |   | Outstanding |   |    | Life in Years       |   |   | Exercisable |   |   | Price              |    |
|           |   |   |        |   |    |                |   |   |        |   |   |               |    |
|           | $0.17  |   |        |   | 200,000 |                |   |   | 5.00        |   |   |               | 200,000 |   |   |   | $0.17 |   |
|           | $0.43  |   |        |   | 125,000 |                |   |   | 3.33        |   |   |               | 125,000 |   |   |   | $0.43 |   |
|           |   |   |        |   |    |                |   |   |        |   |   |               |    |   |   |   |   |   |
|           |   |   |        |   | 325,000 |                |   |   | 4.17        |   |   |               | 325,000 |   |   |   | $0.27 |   |

|                                                          |   | For the three months ended March 31, 2010 |   |
|---------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                          |   | Net loss                                  |   |   | Shares |   |   | Per-Share |   |
|                                                          |   | (Numerator)                               |   |   | (Denominator) |   |   | Amount |   |
| Basic EPS:                                                    |   |                                      |   |   |   |   |   |   |   |
| Loss available to common stockholders                         |   | $                                         | (2,075 | ) |   |   | 152,709 |   |   | $ | (0.01 | ) |
| Effect of dilutive securities                                 |   |                                      | -      |   |   |   | - |   |   |   | - |   |
| Diluted EPS:                                                  |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Loss available to common stockholders and assumed conversions |   | $                                         | (2,075 | ) |   |   | 152,709 |   |   | $ | (0.01 | ) |

|                                                          |   | For the three months ended March 31, 2009 |   |
|---------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                          |   | Net loss                                  |   |   | Shares |   |   | Per-Share |   |
|                                                          |   | (Numerator)                               |   |   | (Denominator) |   | Amount |   |
| Basic EPS:                                                    |   |                                      |   |   |   |   |   |   |   |
| Loss available to common stockholders                         |   | $                                         | (2,360 | ) |   |   | 105,980 |   |   | $ | (0.02 | ) |
| Effect of dilutive securities                                 |   |                                      | -      |   |   |   | - |   |   |   | - |   |
| Diluted EPS:                                                  |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Loss available to common stockholders and assumed conversions |   | $                                         | (2,360 | ) |   |   | 105,980 |   |   | $ | (0.02 | ) |

----

|                                      |   | Terms                                         |   | Maturity Date |   | Interest Rate |   | Gross Balance                                                                                                       |   | Debt Discount                                                                                                  |                                                                        | Net Balance                                                                                       |   |
|-------------------------------------------|--------|-----------------------------------------------|--------|---------------|--------|---------------|--------|---------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|--------|
| Bancleasing, Inc.                         |   | $10,660 / Month including interest            |   | October-14    |   | 11.62%        |   |  $            471                                  |   |  $               -             |                                                                        |  $         471                                  |   |
| Agility Capital Lease                     |   | $83,708 / Month including interest            |   | Various       |   | 18.82%        |   |                936                       |   |                   -  |                                                                        |             936                       |   |
| Balboa Lease                              |   | $225 / Month including interest               |   | August-10     |   | 27.74%        |   |                    1 |   |                   -  |                                                                        |                 1 |   |
| De Lage Landen Lease                      |   | $691 / Month including interest               |   | April-11      |   | 19.12%        |   |                    8 |   |                   -  |                                                                        |                 8 |   |
| Toyota                                    |   | $517 / Month including interest               |   | December-10   |   | 8.01%         |   |                    3 |   |                   -  |                                                                        |                 3 |   |
| Blanco National Bank                      |   | $3,913 / Month including interest             |   | August-10     |   | 9.50%         |   |                  12            |   |                   -  |                                                                        |               12            |   |
| Robert McClung, Momentum                  |   | $23,476 / Quarterly including interest        |   | October-10    |   | 7.50%         |   |                  68            |   |                   -  |                                                                        |               68            |   |
| George Kemper, TSTAR                      |   | $38,254 / Quarterly including interest        |   | April-10      |   | 7.50%         |   |                  42            |   |                   -  |                                                                        |               42            |   |
| Shane Griffths, Crosswind                 |   | $13,911 / Quarterly including interest        |   | December-10   |   | 7.50%         |   |                  55            |   |                   -  |                                                                        |               55            |   |
| Centramedia                               |   | $56,342 / Quarterly including interest        |   | December-11   |   | 7.50%         |   |                414                       |   |                   -  |                                                                        |             414                       |   |
| Frontier Internet LLC                     |   | $33,846 / Quarterly including interest        |   | May-12        |   | 6.00%         |   |                283                       |   |                   -  |                                                                        |             283                       |   |
| Ronnie D Franklin                         |   | $6,054 / Quarterly including interest         |   | May-12        |   | 6.00%         |   |                  51            |   |                   -  |                                                                        |               51            |   |
| Premium Assignment, Insurance notes       |   | $2,434 / Month including interest             |   | September-10  |   | 7.54%         |   |                    6 |   |                   -  |                                                                        |                 6 |   |
| Convertible Note                          |   |  1 year                                  |   | Demand        |   | 10.00%        |   |                540                       |   |                 217            |                                                                        |             323                       |   |
| Convertible Subordinated Financing        |   |  1 year                                  |   | Demand        |   | 10.00%        |   |                841                       |   |                   41 |                                                                        |             800                       |   |
| Line of credit                            |   |  2 years/ Quarterly interest (See below) |   | December-11   |   | 12.00%        |   |             6,200                                       |   |                   -  |                                                                        |          6,200                                       |   |
| Total debt                                |   |                                          |   |          |   |          |   |  $         9,931                                                  |   |  $             258                       |                                                                        |          9,673                                       |   |
| Less current maturities                   |   |                                          |   |          |   |          |   |                                                                                                                |   |                                                                                                           |                                                                        |         (2,426)                                           |   |
| Add back debt discount current maturities |   |                                          |   |          |   |          |   |                                                                                                                |   |                                                                                                           |             258 |                                                                                              |
| Long-term debt                            |   |                                          |   |          |   |          |   |                                                                                                                |   |                                                                                                           |                                                                        |  $      7,505                                                  |   |

----

| Description                               |   | Bridge Note |   |   | Warrant Liabilities |   |   | Total  |   |
|-------------------------------------------|--------|-------------|--------|--------|---------------------|--------|--------|--------|--------|
|                                      |   |        |   |   |                |   |   |   |   |
| Fair value at December 31, 2009           |   | $           | 1,273  |   |                | $      | 268    |   |   | $ | 1,541 |   |
| 01-01-10 to 03-31-10 change in fair value |   |        | 77     |   |                |   | (134   | )      |   |   | (57 | ) |
| Conversions during period                 |   |        | (550   | )      |                |   | -      |   |   |   | (550 | ) |
| Fair value at March 31, 2010              |   | $           | 800    |   |                | $      | 134    |   |   | $ | 934 |   |

| Description                               |   | Convertible Note |   |   | Compound Derivative Liability |   |   | Total  |   |
|-------------------------------------------|--------|------------------|--------|--------|-------------------------------|--------|--------|--------|--------|
|                                      |   |             |   |   |                          |   |   |   |   |
| Fair value issuance at inception          |   | $                | 355    |   |                          | $      | 250    |   |   | $ | 605 |   |
| 03-19-10 to 03-31-10 change in fair value |   |             | 33     |   |                          |   | (62    | )      |   |   | (29 | ) |
| Conversions during period                 |   |             | (65    | )      |                          |   | -      |   |   |   | (65 | ) |
| Fair value at March 31, 2010              |   | $                | 323    |   |                          | $      | 188    |   |   | $ | 511 |   |

----

| Year Ending  December 31,             |   |   |   |
|-------------------------------------------------|--------|--------|--------|
| 2010                                            |   | $      | 761    |   |
| 2011                                            |   |   | 524    |   |
| 2012                                            |   |   | 141    |   |
| 2013                                            |   |   | 128    |   |
| 2014                                            |   |   | 128    |   |
| Thereafter                                      |   |   | 11     |   |
| Total minimum lease payments                    |   |   | 1,693  |   |
| Less amount representing interest               |   |   | (276   | ) |
| Present value of net minimum lease payments     |   |   | 1,417  |   |
| Current maturities of capital lease obligations |   |   | (772   | ) |
| Long-term portion of capital lease obligations  |   | $      | 645    |   |

|                                    |   | March 31, |   |   | December 31, |   |
|-----------------------------------------|--------|-----------|--------|--------|--------------|--------|
|                                    |   | 2010      |   |   | 2009         |   |
| Costs incurred on uncompleted contracts |   | $         | 9      |   |         | $      | 9 |   |
| Estimated profit                        |   |      | 9      |   |         |   | 8 |   |
| Gross revenue                           |   |      | 18     |   |         |   | 17 |   |
| Less: billings to date                  |   |      | -      |   |         |   | - |   |
| Costs and profit in excess of billings  |   | $         | 18     |   |         | $      | 17 |   |

|                                                                        |   | March 31, |   |   | December 31, |   |
|-----------------------------------------------------------------------------|--------|-----------|--------|--------|--------------|--------|
|                                                                        |   | 2010      |   |   | 2009         |   |
| Cost and estimated earnings in excess of billings on uncompleted contracts  |   | $         | 18     |   |         | $      | 17 |   |
|                                                                        |   |      |   |   |         |   |   |   |
| Billings in excess of costs and estimated earnings on uncompleted contracts |   |      | -      |   |         |   | - |   |
|                                                                        |   |      |   |   |         |   |   |   |
|                                                                        |   | $         | 18     |   |         | $      | 17 |   |

----

| Period Ending December 31, |   | Amount |   |
|----------------------------|--------|--------|--------|
| 2010                       |   | $      | 459    |   |
| 2011                       |   |   | 416    |   |
| 2012                       |   |   | 62     |   |
| 2013                       |   |   | 20     |   |
| 2014                       |   |   | 10     |   |
| Thereafter                 |   |   | 24     |   |
| Total                      |   | $      | 991    |   |

----

|                          |   | WMS    |   |   | WBS    |   |   | O&G |   |   | ENS |   |   | Total  |   |
|-------------------------------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|-----|--------|--------|--------|--------|
| Revenue                       |   | $      | 22     |   |   | $      | 1,233  |    |   | $      | 172 |   |   | $      | 52     |   |   | $ | 1,479 |   |
| Segment (loss) income         |   |   | (46    | )      |   |   | (481   | )       |   |   | (96 | )      |   |   | (150   | ) |   |   | (773 | ) |
| Segment assets                |   |   | 33     |   |   |   | 6,082  |    |   |   | 644 |   |   |   | 1,505  |   |   |   | 8,264 |   |
| Capital expenditures          |   |   | -      |   |   |   | 93     |    |   |   | 275 |   |   |   | -      |   |   |   | 368 |   |
| Depreciation and amortization |   |   | 4      |   |   |   | 644    |    |   |   | 29  |   |   |   | 55     |   |   |   | 732 |   |

|                                                       |   | Three Months Ended |   |
|------------------------------------------------------------|--------|--------------------|--------|
| Reconciliation of Segment Loss from Operations to Net Loss |   | March 31, 2010     |   |
| Total segment loss from operations                         |   | $                  | (773   | ) |
| Total corporate overhead including other, net              |   |               | (1,302 | ) |
| Net loss                                                   |   | $                  | (2,075 | ) |

| Reconciliation of Segment Assets to Total Assets |   | March 31, 2010 |   |
|--------------------------------------------------|--------|----------------|--------|
| Total segment assets                             |   | $              | 8,264  |   |
| Total corporate assets                           |   |           | 213    |   |
| Consolidated  assets                   |   | $              | 8,477  |   |

----

| ·   | The Company’s Wireless Bundled Services division WBS experienced a $299,000 or 27% increase in revenues in the first quarter ended March 31, 2010 as compared to the same quarter a year ago Oil and Gas wireless broadband services contributed $172,000 during the first quarter ended March 31, 2010 as compared to $10,000 for the first quarter of 2009.  For additional comparison purposes, Oil and Gas wireless broadband services contributed a total of $72,000 in calendar year 2008 and $308,000 in calendar year 2009. We expect that the growth trend will continue for WBS and especially that revenue associated with Oil and Gas industry. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Following the completion of a BranchNet encrypted enterprise-class wireless banking network for West Texas State Bank located in the oil and gas rich Permian Basin including the Midland and Odessa, Texas markets, the Company initiated a WiNet marketing campaign and begun reselling digital wireless oilfield solutions off of this network to its oil and gas customers in this region. The network is comprised of FCC-licensed frequencies creating a 165Mbps backbone, delivering speeds in excess of 40Mbps to each branch bank location. The WiNet contract alone is expected to generate more than $6 million in recurring revenues over the next ten years after a two-year ramp-up period. The bank will receive a percentage of the gross subscriber revenues as part of the agreement. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The announcement of the immediate start of design, development and construction of a new wireless network in the oil and gas rich Haynesville Shale in northwestern Louisiana and northeastern Texas; covering hundreds of natural gas drilling rigs in one of the fastest growing gas shale developments in North America. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The submittal of second round applications for approximately $31 million of broadband stimulus funding in a two-state region under the Broadband Initiatives Program (“BIP”) for Louisiana and parts of East, Central and South Texas. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company announced that they have begun taking delivery of the initial shipments from the recently announced $4.7 million order of Mobile Broadband Trailers (MBTs) that will expedite the deployment of the company's high-speed wireless broadband digital oilfield solutions for oil and gas drilling operations throughout North America. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company has recently completed the initial deployments of part of its MBT fleet in support of oil and gas customer requirements for well workovers on certain existing oil and gas wells and for new well completions. Referred sometimes as "fracture stimulation" or "FRAC" jobs for existing mature wells, they require the same level of communications as existing new drilling operations. There are hundreds of thousands of existing wells throughout North America and ERF Wireless has already received substantial commitments for 2010 from its oil and gas customers for this new area of wireless business. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company announced that its Oil & Gas Services Division has recently completed the initial installations of its wireless broadband services to its first customer in the Horn River Basin of the Canadian Province of British Columbia. While ERF Wireless has previously reported that it has wireless broadband capabilities throughout much of the Canadian Province of Alberta through a Master Service Agreement with a Canadian public company, this is the first reported service entry into British Columbia and the first report of the deployment of its wireless broadband services in Canada. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | The Company announced that, because of the broad scope of oil and gas wireless communications products and services it is now providing, it has agreed with its exclusive resale marketing partner that it will also be allowed to market directly to the end customer as well as jointly under the existing resale contract to increase the overall combined scope of the marketing effort to the oil and gas industry. The details of this additional marketing thrust, as well as other modifications and clarifications, are intended to be defined in the near future in an addendum to the existing exclusive resale contract. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company announced that, as part of its initial independent marketing thrust under its modified exclusive contract with the world's largest oil and gas services company, its Oil & Gas Services Division exhibited and demonstrated the company's reliable, high-speed, wireless broadband communications system at a number of industry trade shows, including at the 2010 Offshore Technology Conference (OTC) recently held in Houston May 3rd through the May 6th. The ERF Wireless system dramatically reduces operating expenses for its oil and gas customers by streaming critical data from remote drilling, completion and production oil and gas sites to corporate offices for rapid analysis and decision making. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company announced that its Oil & Gas Services Division has recently taken delivery of the first unit in a family of new mobile broadband trailers that are proprietary to ERF Wireless and that are equipped with 100-foot deployable towers. These giant mobile broadband towers (MBTs) are unique to the industry as compared to the more common 50-foot MBTs currently being used across most ERF Wireless networks. These new 100-foot MBTs were specifically designed and developed for the tall forested regions of certain of the oil and gas drilling regions where even VSAT communications with much lower bandwidth have trouble transmitting beyond the 80- to 90-foot tree canopy surrounding the drilling rigs.  In particular, new ERF Wireless network coverage initiatives into areas such as recently announced in the Haynesville Shale region would not be possible without this new 100-foot MBT. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company announced that its ERF Enterprise Network Services subsidiary (ENS) has finished deploying a BranchNet(TM) and BankNet(TM) encrypted enterprise-class wireless banking network for First Federal Bank of Louisiana that spans almost the entire western region of Louisiana from Lake Charles in the south to Natchitoches in the north. This network provides more than 280 miles of continuous network coverage with the most disparate branch locations being approximately 140 miles apart encompassing some of the most difficult rain and foliage regions in the United States. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                   |   | Three Months Ended March 31, |   |
|------------------------|--------|------------------------------|--------|
|                   |   |                         |   |   |   |   |   |   |   |   |   |   |
| ($ in thousands)       |   | 2010                         |   |   | 2009 |   |   | $ Change |   |   | % Change |   |
| Total sales            |   | $                            | 1,479  |   |   | $ | 1,323 |   |   | $ | 156 |   |   |   | 12 | % |
| Cost of goods sold     |   |                         | 988    |   |   |   | 804 |   |   |   | 184 |   |   |   | 23 | % |
| Gross profit           |   |                         | 491    |   |   |   | 519 |   |   |   | (28 | ) |   |   | -5 | % |
| Gross margin %         |   |                         | 33%    |   |   |   | 39% |   |   |   |   |   |   |   |   |   |
| Operating expenses     |   |                         | 2,317  |   |   |   | 2,591 |   |   |   | (274 | ) |   |   | -11 | % |
| Loss from operations   |   |                         | (1,826 | ) |   |   | (2,072 | ) |   |   | 246 |   |   |   | -12 | % |
| Other income/(expense) |   |                         | (249   | ) |   |   | (288 | ) |   |   | 39 |   |   |   | -14 | % |
| Net loss               |   |                         | (2,075 | ) |   |   | (2,360 | ) |   |   | 285 |   |   |   | -12 | % |

| ($ in thousands)            |   |   |           |   |   |       |   |   |   |                                          |   |   |       |   |   |           |
|-----------------------------|--------|--------|----------------|--------|--------|------------|--------|--------|--------|-----------------------------------------------|--------|--------|------------|--------|--------|----------------|
| Business Segment            |   |   | 2010           |   |   | % of Total |   |   |   | 2009                                          |   |   | % of Total |   |   |  $ Change |   |   | % Change |   |
| Wireless Messaging Services |   | $      |   22 |   |   | 1%         |   |   | $      | 60                                            |   |   | 4%         |   |   | $         | (38 | )  |   | -63% |   |
| Wireless Bundled Services   |   |   | 1,405          |   |   | 95%        |   |   |   |     1,106                 |   |   | 84%        |   |   |           |        299 |   |   | 27% |   |
| Enterprise Network Services |   |   | 52             |   |   | 4%         |   |   |   |        157 |   |   | 12%        |   |   |           |      (105 | )  |   | -67% |   |
| Total Sales                 |   | $      | 1,479          |   |   | 100%       |   |   | $      | 1,323                                         |   |   | 100%       |   |   | $         | 156 |   |   | 12% |   |

----

| ($ in thousands)            |   |   |                                                     |   |   |       |   |   |   |                                                     |   |   |   |       |   |   |            |
|-----------------------------|--------|--------|----------------------------------------------------------|--------|--------|------------|--------|--------|--------|----------------------------------------------------------|--------|--------|--------|------------|--------|--------|-----------------|
| Business Segment            |   |   | 2010                                                     |   |   | % of Total |   |   |   | 2009                                                     |   |   |   | % of Total |   |   |   $ Change |   |   | % Change |   |
| Wireless Messaging Services |   | $      |          17 |   |   | 2%         |   |   | $      |          45 |   |   |   | 5%         |   |   | $               |              (28 | )  |   | -62% |   |
| Wireless Bundled Services   |   |   |        873            |   |   | 88%        |   |   |   |        625            |   |   |   | 78%        |   |   |            |             248 |   |   | 40% |   |
| Enterprise Network Services |   |   |          98 |   |   | 10%        |   |   |   |        134            |   |   |   | 17%        |   |   |            |              (36 | )  |   | -27% |   |
| Total cost of sales         |   | $      |        988            |   |   | 100%       |   |   | $      |        804            |   |   |   | 100%       |   |   | $               |             184 |   |   | 23% |   |

|                             |   | Three Months Ended March 31, |   |
|----------------------------------|--------|------------------------------|--------|
| ($ in thousands)                 |   | 2010                         |   |   | 2009 |   |   | $ Change |   |   | % Change |   |
|                             |   |                         |   |   |   |   |   |   |   |   |   |   |
| Employment expenses              |   | $                            | 1,188  |   |   | $ | 1,164 |   |   | $ | 24 |   |   |   | 2% |   |
| Professional services            |   |                         | 407    |   |   |   | 586 |   |   |   | (179 | ) |   |   | -31% |   |
| Rent and maintenance             |   |                         | 107    |   |   |   | 108 |   |   |   | (1 | ) |   |   | -1% |   |
| Depreciation and amortization    |   |                         | 262    |   |   |   | 352 |   |   |   | (90 | ) |   |   | -26% |   |
| Other general and administrative |   |                         | 353    |   |   |   | 381 |   |   |   | (28 | ) |   |   | -7% |   |
| Total operating expenses         |   | $                            | 2,317  |   |   | $ | 2,591 |   |   | $ | (274 | ) |   |   | -11% |   |

| ·     | A $24,000 increase in employment expense. The increase is primarily attributable to growth of the company through recent acquisitions; |
|---------------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·     | A $179,000 decreased in professional services. The decrease is primarily related to a reduction of outside consultants for investor relations and accounting expenses; |
|---------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·     | A $90,000 decreased in depreciation and amortization; and |
|---------------------------|-----------------------------------------------------------|

| ·     | A $28,000decrease in other general and administrative expense. |
|---------------------------|----------------------------------------------------------------|

----

----

|                          |   | Payments Due by Period |   |
|-------------------------------|--------|------------------------|--------|
|                          |   | Total                  |   |   | Less than 1 Year |   |   | 1-3 Years |   |   | 3-5 Years |   |   | More than 5 Years |   |
| Contractual obligations:      |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term debt obligations    |   | $                      | 9,716  |   |   | $ | 2,866 |   |   | $ | 6,850 |   |   | $ | - |   |   | $ | - |   |
| Capital lease obligations     |   |                   | 1,692  |   |   |   | 761 |   |   |   | 793 |   |   |   | 138 |   |   |   | - |   |
| Operating lease obligations   |   |                   | 991    |   |   |   | 459 |   |   |   | 478 |   |   |   | 30 |   |   |   | 24 |   |
| Total contractual obligations |   | $                      | 12,399 |   |   | $ | 4,086 |   |   | $ | 8,121 |   |   | $ | 168 |   |   | $ | 24 |   |

| ·     | a significant decrease in the market price of the asset; |
|---------------------------|----------------------------------------------------------|

| ·     | a significant change in the extent or manner in which the asset is being used; |
|---------------------------|--------------------------------------------------------------------------------|

| ·     | a significant change in the business climate that could affect the value of the asset; |
|---------------------------|----------------------------------------------------------------------------------------|

| ·     | a current period loss combined with projection of continuing loss associated with use of the asset; |
|---------------------------|-----------------------------------------------------------------------------------------------------|

| ·     | a current expectation that, more likely than not, the asset will be sold or otherwise disposed of before the end of its previously estimated useful life; |
|---------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

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----

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| Exhibit 31 | Certification of Chief Executive officer and Chief Financial officer pursuant to Rules 13a-14 (a) and 15d-14 (a), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002 |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Exhibit 32 | 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 |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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----