UNITED
STATES SECURITIES AND EXCHANGE COMMISSION



Washington, D.C. 20549



FORM 10-Q



xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934



For the quarterly period ended September
30, 2014



OR



oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934



ERF WIRELESS, INC.
(Exact name of registrant as specified in its charter)



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



2911 SOUTH SHORE BOULEVARD, SUITE
100, LEAGUE CITY, TEXAS 77573
(Address of principal executive offices) (Zip Code)



Registrant's telephone number, including
area code: (281) 538-2101



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.

YesxNoo



Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files)

YesxNoo



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, non-accelerated filer, or a smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer”, and “smaller reporting company” in Rule
12b-2 of the Exchange Act. (Check one):



| | Large accelerated filero | Accelerated filero        
| | ------------------------ | --------------------------
| | Non-accelerated filero   | Smaller reporting companyx





Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

YesoNox





Indicate the number of shares outstanding
of each of the issuer’s classes of common stock, as of the latest practicable date. 36,320,832 common shares issued and
outstanding as of November 19, 2014.















PART I – FINANCIAL INFORMATION



ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS



ERF WIRELESS, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 2014, AND DECEMBER 31, 2013
($ in thousands except share data)

Unaudited







|                                                                                                                                                                                                                 |  | September 30 |         |   | December 31, |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ------------ | -
|                                                                                                                                                                                                                 |  | 2014         |         |   | 2013         |  
|                                                                                                                                                                                                                 |  |              |         |   |              |  
|ASSETS                                                                                                                                                                                                           |  |              |         |   |              |  
|Current assets                                                                                                                                                                                                   |  |              |         |   |              |  
|Cash and cash equivalents                                                                                                                                                                                        |  | $            | 179     |   |              | $
|Accounts receivable, net                                                                                                                                                                                         |  |              | 455     |   |              |  
|Accounts receivable, other                                                                                                                                                                                       |  |              | 1,046   |   |              |  
|Inventories                                                                                                                                                                                                      |  |              | 269     |   |              |  
|Prepaid expenses and other current assets                                                                                                                                                                        |  |              | 142     |   |              |  
|Total current assets                                                                                                                                                                                             |  |              | 2,091   |   |              |  
|                                                                                                                                                                                                                 |  |              |         |   |              |  
|Property and equipment                                                                                                                                                                                           |  |              |         |   |              |  
|Property and equipment                                                                                                                                                                                           |  |              | 7,635   |   |              |  
|Less: accumulated depreciation                                                                                                                                                                                   |  |              | (6,196  | ) |              |  
|Net property and equipment                                                                                                                                                                                       |  |              | 1,439   |   |              |  
|                                                                                                                                                                                                                 |  |              |         |   |              |  
|Goodwill                                                                                                                                                                                                         |  |              | –       |   |              |  
|Other assets                                                                                                                                                                                                     |  |              | 63      |   |              |  
|                                                                                                                                                                                                                 |  |              |         |   |              |  
|Total assets                                                                                                                                                                                                     |  | $            | 3,593   |   |              | $
|                                                                                                                                                                                                                 |  |              |         |   |              |  
|LIABILITIES AND SHAREHOLDERS’ DEFICIT                                                                                                                                                                            |  |              |         |   |              |  
|Current liabilities:                                                                                                                                                                                             |  |              |         |   |              |  
|Notes payable and current portion of long-term debt                                                                                                                                                              |  | $            | 2,953   |   |              | $
|Current portion of long-term capital leases                                                                                                                                                                      |  |              | 92      |   |              |  
|Accounts payable                                                                                                                                                                                                 |  |              | 1,218   |   |              |  
|Accrued expenses                                                                                                                                                                                                 |  |              | 1,107   |   |              |  
|Derivative liabilities                                                                                                                                                                                           |  |              | 216     |   |              |  
|Deferred revenue                                                                                                                                                                                                 |  |              | 23      |   |              |  
|Total current liabilities                                                                                                                                                                                        |  |              | 5,609   |   |              |  
|                                                                                                                                                                                                                 |  |              |         |   |              |  
|Line of credit (LOC)                                                                                                                                                                                             |  |              | –       |   |              |  
|Long-term debt, net of current portion                                                                                                                                                                           |  |              | 4,683   |   |              |  
|Long-term capital leases, net of current portion                                                                                                                                                                 |  |              | 141     |   |              |  
|Total liabilities                                                                                                                                                                                                |  |              | 10,433  |   |              |  
|                                                                                                                                                                                                                 |  |              |         |   |              |  
|Commitments                                                                                                                                                                                                      |  |              |         |   |              |  
|                                                                                                                                                                                                                 |  |              |         |   |              |  
|Shareholders’ deficit:                                                                                                                                                                                           |  |              |         |   |              |  
|Preferred stock - $0.001 par value, 25,000,000 authorized Series A designated 10,000,000 shares issued and outstanding at September 30, 2014 and December 31, 2013, 9,215,129 and 9,930,982 shares, respectively |  |              | 9       |   |              |  
|Common stock - $0.001 par value authorized 975,000,000 shares issued and outstanding at September 30, 2014 and December 31,  2013, 14,520,177 and 111,633 shares, respectively                                   |  |              | 15      |   |              |  
|Additional paid in capital                                                                                                                                                                                       |  |              | 57,695  |   |              |  
|Accumulated deficit                                                                                                                                                                                              |  |              | (64,659 | ) |              |  
|Accumulated other comprehensive loss                                                                                                                                                                             |  |              | (32     | ) |              |  
|Total ERF Wireless, Inc. shareholders’ deficit                                                                                                                                                                   |  |              | (6,972  | ) |              |  
|Non-controlling interest                                                                                                                                                                                         |  |              | 132     |   |              |  
|Total shareholders’ deficit                                                                                                                                                                                      |  |              | (6,840  | ) |              |  
|                                                                                                                                                                                                                 |  |              |         |   |              |  
|Total liabilities and shareholders' deficit                                                                                                                                                                      |  | $            | 3,593   |   |              | $





See accompanying notes to consolidated financial statements.





2







ERF WIRELESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE AND NINE MONTHS ENDED September 30, 2014 AND 2013

(Unaudited)
($ in thousands except loss per share)





|                                                           |  | For the Three Months |       |   | For the Nine Months |  
|---------------------------------------------------------- |  | -------------------- | ----- | - | ------------------- | -
|                                                           |  | Ended September 30,  |       |   | Ended September 30, |  
|                                                           |  | 2014                 |       |   | 2013                |  
|                                                           |  |                      |       |   |                     |  
|Sales:                                                     |  |                      |       |   |                     |  
|Products                                                   |  | $                    | 1     |   |                     | $
|Services                                                   |  |                      | 1,361 |   |                     |  
|Total sales                                                |  |                      | 1,362 |   |                     |  
|                                                           |  |                      |       |   |                     |  
|Cost of goods sold:                                        |  |                      |       |   |                     |  
|Products and integration services                          |  |                      | 397   |   |                     |  
|Rent, repairs and maintenance                              |  |                      | 237   |   |                     |  
|Depreciation                                               |  |                      | 376   |   |                     |  
|Total cost of goods sold                                   |  |                      | 1,009 |   |                     |  
|Gross profit                                               |  |                      | 353   |   |                     |  
|Operating expenses:                                        |  |                      |       |   |                     |  
|Selling, general and administrative                        |  |                      | 1,247 |   |                     |  
|Depreciation                                               |  |                      | 22    |   |                     |  
|Total operating expenses                                   |  |                      | 1,268 |   |                     |  
|Loss from operations                                       |  |                      | (916  | ) |                     |  
|Other income (expenses):                                   |  |                      |       |   |                     |  
|Interest expense, net                                      |  |                      | (554  | ) |                     |  
|Derivative income                                          |  |                      | 119   |   |                     |  
|Loss on extinguishment of debt                             |  |                      | –     |   |                     |  
|Gain on sale of assets                                     |  |                      | 2,006 |   |                     |  
|Total other (expens) income                                |  |                      | 1,571 |   |                     |  
|Consolidated net loss                                      |  |                      | 655   |   |                     |  
|                                                           |  |                      |       |   |                     |  
|Net income (loss) attributable to non-controlling interest |  |                      | 0     |   |                     |  
|Net loss attributable to ERF Wireless, Inc.                |  |                      | 655   |   |                     |  
|Basic income (loss) per common share:                      |  |                      |       |   |                     |  
|Net income (loss)                                          |  | $                    | 0.25  |   |                     | $
|Net loss attributable to ERF Wireless, Inc.                |  | $                    | 0.25  |   |                     | $
|                                                           |  |                      |       |   |                     |  
|Fully diluted income (loss) per common share:              |  |                      |       |   |                     |  
|Net income (loss)                                          |  | $                    | 0.01  |   |                     | $
|Net loss attributable to ERF Wireless, Inc.                |  | $                    | 0.01  |   |                     | $



See accompanying notes to consolidated
financial statements.





3







ERF WIRELESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

(Unaudited)
($ in thousands)





|                                                                            |  | 2014 |        |   | 2013 |  
|--------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | -
|                                                                            |  |      |        |   |      |  
|Cash flows from operating activities                                        |  |      |        |   |      |  
|Net loss                                                                    |  | $    | (1,383 | ) |      | $
|                                                                            |  |      |        |   |      |  
|Adjustments to reconcile net loss to net cash used by operating activities: |  |      |        |   |      |  
|Gain on sale of assets                                                      |  |      | (2,006 | ) |      |  
|Loss on extinguishment of debt                                              |  |      | 108    |   |      |  
|Amortization of debt discount                                               |  |      | 597    |   |      |  
|Depreciation                                                                |  |      | 1,258  |   |      |  
|Stock issued for services rendered, interest  and compensation              |  |      | 133    |   |      |  
|Derivative income                                                           |  |      | (244   | ) |      |  
|Bad debt expense                                                            |  |      | 75     |   |      |  
|Changes in:                                                                 |  |      | –      |   |      |  
|Accounts receivable, net                                                    |  |      | 471    |   |      |  
|Accounts receivable, other                                                  |  |      | (82    | ) |      |  
|Inventories                                                                 |  |      | (5     | ) |      |  
|Prepaid expenses and other current assets                                   |  |      | 144    |   |      |  
|Costs and profits in excess of billings                                     |  |      | –      |   |      |  
|Accounts payable                                                            |  |      | 89     |   |      |  
|Accrued expenses                                                            |  |      | 162    |   |      |  
|Deferred revenue                                                            |  |      | 10     |   |      |  
|Total adjustments                                                           |  |      | 710    |   |      |  
|Net cash (used) by operating activities                                     |  |      | (673   | ) |      |  
|                                                                            |  |      |        |   |      |  
|Cash flows from investing activities                                        |  |      |        |   |      |  
|Purchase of property and equipment                                          |  |      | (115   | ) |      |  
|Proceeds from sale of operations                                            |  |      | 522    |   |      |  
|Proceeds from sale of assets                                                |  |      | –      |   |      |  
|Change in other assets                                                      |  |      | (26    | ) |      |  
|Net cash used by investing activities                                       |  |      | 381    |   |      |  
|                                                                            |  |      |        |   |      |  
|Cash flows from financing activities                                        |  |      |        |   |      |  
|Net proceeds from line of credit                                            |  |      | 540    |   |      |  
|Proceeds from long-term debt obligations                                    |  |      | 267    |   |      |  
|Payment of long-term debt obligations                                       |  |      | (185   | ) |      |  
|Payment on capital lease obligations                                        |  |      | (193   | ) |      |  
|Net cash provided by financing activities                                   |  |      | 429    |   |      |  
|                                                                            |  |      |        |   |      |  
|Net change in cash and cash equivalents                                     |  |      | 137    |   |      |  
|Cash and cash equivalents at the beginning of the period                    |  |      | 42     |   |      |  
|Cash and cash equivalents at the end of the period                          |  | $    | 179    |   |      | $
|                                                                            |  |      |        |   |      |  
|Supplemental disclosure of cash flow information:                           |  |      |        |   |      |  
|Net cash paid during the period for:                                        |  |      |        |   |      |  
|Interest                                                                    |  | $    | 113    |   |      | $
|Income taxes                                                                |  | $    | –      |   |      | $
|                                                                            |  |      |        |   |      |  
|Supplemental non-cash investing and financing activities:                   |  |      |        |   |      |  
|Conversion of debt through issuance of common stock                         |  | $    | 309    |   |      | $
|Conversion of preferred stock to common stock                               |  | $    | –      |   |      | $
|Conversion of LOC and interest through issuance of common stock             |  | $    | 717    |   |      | $
|Property and equipment financed with debt and capital leases                |  | $    | –      |   |      | $



See accompanying notes to consolidated financial statements.





4









ERF WIRELESS., INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)



NOTE 1 – BASIS OF PRESENTATION



Nature of the Company



ERF Wireless, Inc. (“Company”
or “ERF Wireless”) provides critical infrastructure wireless broadband communications products and services to a broad
spectrum of customers in primarily rural oil and gas exploration areas of North America. We also provide high quality broadband
services and critical communications services to residential, oil and gas, educational, health care, and regional banks in rural
areas utilizing our Company owned and operated wireless networks. As a total comprehensive solutions provider we offer a wide array
of critical communications services including high speed broadband, voice over Internet Protocol (VOIP) telephone and facsimile
service, and video security.



Historically, our revenues have been generated
primarily from wireless internet and network construction services. Our Internet revenues have resulted from our offering of broadband
and basic communications services to residential and enterprise customers. Our construction revenues typically have consisted of
revenues generated from the construction of bank, educational, and healthcare networks and other services associated with providing
wireless products and services to the regional banking, educational and healthcare industries.



Our internet revenues are recorded in “ERF
Wireless Bundled Services, Inc. (WBS)”, revenues from construction of bank, healthcare and educational networks in our “ERF
Enterprise Network Services, Inc. (ENS)” and wireless broadband products and services to rural oil and gas locations are
recorded in “Energy Broadband, Inc. (EBI)”. Please refer to segment footnote 9 for additional information regarding
segment operations.



Basis of Accounting



The accompanying unaudited interim consolidated
financial statements of the Company 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") and should be read in conjunction with
the audited consolidated financial statements and notes thereto contained in the Company's annual report for the year ended December
31, 2013 filed with the SEC on Form 10-K. 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. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the
audited consolidated financial statements for the most recent fiscal year ended December 31, 2013 as reported in form 10-K have
been omitted.



Non-controlling Interest



Non-controlling interest in our majority
owned subsidiary EBI, is included in the equity section of the consolidated balance sheets. Non-controlling interest represents
3.63% of the equity of EBI and any transfer of value from ERF to non-controlling interest holders. Non-controlling interest is
adjusted for the non-controlling interest holders’ proportionate share of the earnings or losses of EBI. Any excess losses
applicable to the non-controlling interests have been and are borne by the Company as there is no obligation of the non-controlling
interests to fund any losses in excess of their original investment. There is also no obligation or commitment on the part of the
Company to fund operating losses of any subsidiary whether wholly-owned or majority-owned.



Reclassification



Certain amounts in the 2013 financial statements
have been reclassified to conform to the 2014 financial presentation. These reclassifications have no impact on net loss.



Recent Accounting Pronouncements



Management does not anticipate that the
recently issued but not yet effective accounting pronouncements will materially impact the Company’s financial condition.



NOTE 2 – DEBT CONVERSION



(a) LINE OF CREDIT



During the nine months ended September
30, 2014, the Company issued 7,952,487 shares of its common stock for the settlement of $761,689.05 of principal owed to Angus
Capital Partners. The Company issued common stock at an average price of $.096 per share calculated based on the closing price
the day the debt was settled. Of the 7,952,487shares of common stock issued a total of 4,226,487 were issued to third parties
that had acquired a portion of the Angus Capital Partners debt in private transactions. [I show a total of 10,185,062 shares in
just the third quarter.]



(b) Other Debt



During the nine months ended September
30, 2014, the Company issued 624,845 and 424,369 shares of its Common Stock for the settlement of principal amount of $127,512
and $98,518.00 of accrued interest, respectively, for a total of $226,030. The Company issued Common Stock at an average price
of $.22 per share calculated based on the closing price the day the debt was settled.





5









ERF WIRELESS., INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)



NOTE 3 – COMMON STOCK, PREFERRED
STOCK AND WARRANTS



The total number of shares of stock of
all classes which the Company shall have the authority to issue is 1,000,000,000, of which 25,000,000 shall be shares of preferred
stock with a par value of $0.001 per share ("Preferred Stock"), and 975,000,000 shall be shares of common stock with
a par value of $0.001 per share ("Common Stock").



Common Stock



As of September 30, 2014 and December 31,
2013, there were 14,520,177 and 111,633 net shares of its Common Stock issued and outstanding, respectively.



During the nine months ended September
30, 2014, the Company issued 14,408,544 net shares of Common Stock, which was valued at the closing market price on the date of
issuance of such shares, which were issued in lieu of cash.



Preferred Stock



The Company has 25,000,000 shares of Preferred
Stock authorized of which 10,000,000 shares had been designated as Series A Preferred Stock (“Series A Preferred Stock”).
There were 9,215,129 shares of Series A Preferred Shares issued and outstanding at September 30, 2014 and 9,930,982 at December
31, 2013. With respect to the Series A Preferred Stock outstanding at September 30, 2014, the Company would be required to issue
9,215,129 shares of its Common Stock upon conversion.



ERF Wireless, Inc Distribution of EBI
Equities to Non-controlling Interest



As of September 30, 2014, the Company had
issued 725,611 shares of EBI as a stock dividend and three year warrant expiring December 31, 2014, to purchase 725,611 shares
of EBI Common Stock at an exercise price of $4.00 per share and three year warrant expiring December 31, 2014, to purchase 725,611
shares of EBI Common Stock at an exercise price of $6.00; such issuances are valued at $107,000. The Company expects to issue the
remaining stock dividends during calendar year 2014. No stock dividends were issued during the nine months ended September 30,
2014.





6







ERF WIRELESS., INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)





NOTE 4 – EARNINGS PER SHARE: [we will update ourselves.
We will update this page ourselves. We will need entire page.]



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





|                                              |  | For the three months ended September 30, 2014 |    
|--------------------------------------------- |  | --------------------------------------------- | ---
|                                              |  | Net loss                                      |    
|                                              |  | (Numerator)                                   |    
|Basic EPS:                                    |  |                                               |    
|Net income                                    |  | $                                             | 655
|Net income attributable to ERF Wireless, Inc. |  | $                                             | 655
|Diluted EPS:                                  |  |                                               |    
|Effect of dilutive securities                 |  |                                               |    
|Net income                                    |  |                                               | 655
|Net income attributable to ERF Wireless, Inc. |  | $                                             | 655



|                                            |  | For the three months ended September 30, 2013 |       
|------------------------------------------- |  | --------------------------------------------- | ------
|                                            |  | Net loss                                      |       
|                                            |  | (Numerator)                                   |       
|Basic EPS:                                  |  |                                               |       
|Net loss                                    |  | $                                             | (2,619
|Net loss attributable to ERF Wireless, Inc. |  | $                                             | (2,621





|                                            |  | For the nine months ended September 30, 2014 |       
|------------------------------------------- |  | -------------------------------------------- | ------
|                                            |  | Net loss                                     |       
|                                            |  | (Numerator)                                  |       
|Basic and diluted EPS:                      |  |                                              |       
|Net loss                                    |  | $                                            | (1,383
|Net loss attributable to ERF Wireless, Inc. |  | $                                            | (1,383



|                                            |  | For the nine months ended September 30, 2013 |       
|------------------------------------------- |  | -------------------------------------------- | ------
|                                            |  | Net loss                                     |       
|                                            |  | (Numerator)                                  |       
|Basic and diluted EPS:                      |  |                                              |       
|Net loss                                    |  | $                                            | (6,532
|Net loss attributable to ERF Wireless, Inc. |  | $                                            | (6,533





NOTE 5 – MAJOR CUSTOMERS





The Company had gross sales of $4,587,833
and 5,279,181 for the nine months ended September 30, 2014 and 2013, respectively. The Company had two customers that met the
required disclosure of 10% that represented 28% and 12% of the gross sales during the nine months ended September 30, 2014. Additionally,
the Company had two customers that met the required disclosure of 10% that represented 28% and 12% of the gross sales during the
nine months ended September 30, 2013.





7









ERF WIRELESS., INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)



NOTE 6 – NOTES PAYABLE, LONG-TERM DEBT AND CAPITAL
LEASES



Notes payable, long-term debts and capital leases consist of
the following as of September 30, 2014 (in thousands):





|                                   |  | Terms                                          |  | Maturity Date               |  | Interest Rate |         |  | Gross Balance |   |       | Debt Discount |  |   | Balance | 
|---------------------------------- |  | ---------------------------------------------- |  | --------------------------- |  | ------------- | ------- |  | ------------- | - | ----- | ------------- |  | - | ------- | 
|Banc leasing, Inc.                 |  | $10,660 / Month including interest             |  | January-15                  |  |               | 11.62%  |  |               | $ | 42    |               |  | $ | –       | 
|Advantage leasing associates       |  | $8,269 / Month including interest              |  | Various                     |  |               | Various |  |               |   | 47    |               |  |   | –       | 
|Legacy laser services Dallas, LLC  |  | $9,947 / Month including interest              |  | May-16                      |  |               | 42.00%  |  |               |   | 144   |               |  |   | –       | 
|KBM World Wide, Inc.               |  | $103,500 / Month including interest            |  | March-15                    |  |               | 8.00%   |  |               |   | 189   |               |  |   | 159     | 
|Tonaquint                          |  | $950,400 / Lump sum payment including interest |  | Immediately due and payable |  |               | 12.00%  |  |               |   | 734   |               |  |   | –       | 
|JMJ Financial                      |  | $330,000 / Lump sum payment including interest |  | March-14                    |  |               | 12.00%  |  |               |   | 142   |               |  |   | –       | 
|Vista capital                      |  | $72,600 / Lump sum payment including interest  |  | Immediately due and payable |  |               | 12.00%  |  |               |   | 40    |               |  |   | –       | 
|Willow creek capital               |  | $293,040 / Lump sum payment including interest |  | Immediately due and payable |  |               | 12.00%  |  |               |   | 202   |               |  |   | –       | 
|TCA global line of credit          |  | $149,609 / Month including interest            |  | July-14                     |  |               | 12.00%  |  |               |   | –     |               |  |   | –       | 
|Group 10                           |  | $157,500 / Month including interest            |  | July-14                     |  |               | 12.00%  |  |               |   | 94    |               |  |   | –       | 
|Investor financing                 |  | $495,000 / Lump sum payment including interest |  | April-14                    |  |               | 12.00%  |  |               |   | 548   |               |  |   | –       | 
|Premium assignment                 |  | $2,063 / Month including interest              |  | September-14                |  |               | 5.68%   |  |               |   | –     |               |  |   | –       | 
|Dakota capital equipment financing |  | $178,031 / Quarterly including interest        |  | March-16                    |  |               | 12.00%  |  |               |   | 1,518 |               |  |   | 2       | 
|Union Capital/Adar Bays            |  | $100,000 / Lump Sum including interest         |  | July-15                     |  |               | 10.00%  |  |               |   | 100   |               |  |   | 100     | 
|E-bond investor notes              |  | 3 years/ Semiannual interest (See below)       |  | Various                     |  |               | 7.50%   |  |               |   | 311   |               |  |   | 36      | 
|Line of credit                     |  | 2 years/ Quarterly interest (See below)        |  | December-16                 |  |               | 3.00%   |  |               |   | 4,049 |               |  |   | –       | 
|Total debt                         |  |                                                |  |                             |  |               |         |  |               | $ | 8,160 |               |  | $ | 297     | 
|Less current maturities            |  |                                                |  |                             |  |               |         |  |               |   |       |               |  |   |         | 
|Long-term debt                     |  |                                                |  |                             |  |               |         |  |               |   |       |               |  |   |         | 







8









ERF WIRELESS., INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)



Notes payable, long-term debts and capital leases consist of
the following as of December 31, 2013 (in thousands):



|                                   |  | Terms                                          |  | Maturity Date |                             |  | Interest Rate |         | Gross Balance |   |       | Debt Discount |  |   | Balance | 
|---------------------------------- |  | ---------------------------------------------- |  | ------------- | --------------------------- |  | ------------- | ------- | ------------- | - | ----- | ------------- |  | - | ------- | 
|Banc leasing, Inc.                 |  | $10,660 / Month including interest             |  |               | January-15                  |  |               | 11.62%  |               | $ | 130   |               |  |   | $–      | 
|Advantage leasing associates       |  | $8,269 / Month including interest              |  |               | Various                     |  |               | Various |               |   | 115   |               |  |   | –       | 
|Legacy laser services Dallas, LLC  |  | $9,947 / Month including interest              |  |               | May-16                      |  |               | 42.00%  |               |   | 181   |               |  |   | –       | 
|MP Nexlevel LLC                    |  | $7,043 / Month including interest              |  |               | May-14                      |  |               | 10.00%  |               |   | 34    |               |  |   | –       | 
|Tonaquint                          |  | $950,400 / Lump sum payment including interest |  |               | Immediately due and payable |  |               | 12.00%  |               |   | 793   |               |  |   | –       | 
|JMJ Financial                      |  | $330,000 / Lump sum payment including interest |  |               | March-14                    |  |               | 12.00%  |               |   | 232   |               |  |   | 174     | 
|Vista capital                      |  | $72,600 / Lump sum payment including interest  |  |               | Immediately due and payable |  |               | 12.00%  |               |   | 51    |               |  |   | –       | 
|Willow creek capital               |  | $293,040 / Lump sum payment including interest |  |               | Immediately due and payable |  |               | 12.00%  |               |   | 228   |               |  |   | –       | 
|TCA global line of credit          |  | $139,523 / Month including interest            |  |               | July-14                     |  |               | 12.00%  |               |   | 1,019 |               |  |   | 104     | 
|Group 10                           |  | $157,500 / Month including interest            |  |               | July-14                     |  |               | 12.00%  |               |   | 157   |               |  |   | 143     | 
|Investor financing                 |  | $495,000 / Lump sum payment including interest |  |               | April-14                    |  |               | 12.00%  |               |   | 473   |               |  |   | –       | 
|Premium assignment                 |  | $2,063 / Month including interest              |  |               | September-14                |  |               | 5.68%   |               |   | 18    |               |  |   | –       | 
|Dakota capital equipment financing |  | $178,031 / Quarterly including interest        |  |               | March-16                    |  |               | 12.00%  |               |   | 1,519 |               |  |   | 25      | 
|E-bond investor notes              |  | 3 years/ Semiannual interest (See below)       |  |               | Various                     |  |               | 7.50%   |               |   | 311   |               |  |   | 182     | 
|Line of credit                     |  | 2 years/ Quarterly interest (See below)        |  |               | December-16                 |  |               | 3.00%   |               |   | 4,281 |               |  |   | –       | 
|Total debt                         |  |                                                |  |               |                             |  |               |         |               | $ | 9,542 |               |  | $ | 628     | 
|Less current maturities            |  |                                                |  |               |                             |  |               |         |               |   |       |               |  |   |         | 
|Long-term debt                     |  |                                                |  |               |                             |  |               |         |               |   |       |               |  |   |         | 





Line of Credit



In December 2013, the maturity date of
the $12.0 million unsecured revolving credit facility with Angus Capital Partners, a related party, was extended from December
31, 2015 to December 31, 2017. The Company also renegotiated the interest rate from 12% per annum to 3% per annum retroactive to
January 1, 2013. The Company in consideration has accepted the return and cancellation of 36,784 common shares (post-split) of
Company common stock issued for the Line of Credit conversions during 2013. The Company has accordingly reversed the payment of
principal and interest of $2,158,000 in December 2013 and subsequently received the canceled shares in February 2014. The terms
of the unsecured revolving credit facility allow the Company to draw upon the facility as financing requirements dictate and provide
for quarterly interest payments at a 3% rate per annum. The payment of principal may be paid in cash, common shares or preferred
shares at the Lender’s election. The payment of interest may only be paid in cash. At September 30, 2014, the outstanding
balance on the line of credit totaled $4,049,397.80 leaving a remaining line of credit available of $7,950,602.20. Under the terms
of the Angus Capital Partners credit facility all or a portion of the master note may be used by Angus Capital Partners as collateral
or may be sold to third parties in a private transaction with the consent of the Company. Such private sales among third parties
have previously been concluded by Angus Capital Partners between IBC and CP US and reported by the Company. The Company has subsequently
repurchased and cancelled the remaining balances of these two resold notes.



During the nine months ended
September 30, 2014, the Company issued 7,952,487 shares of its common stock for the settlement of $761,689.05 of principal
owed to Angus Capital Partners. The Company issued common stock at an average price of $.096 per share calculated based on
the closing price the day the debt was settled. Of the 7,952,487 shares of common stock issued, a total of 4,226,487 were
issued to third parties that had acquired a portion of the Angus Capital Partners debt in private transactions.





9









ERF WIRELESS., INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)



E-Series Bond Investor Note



During the nine months ended September
30, 2014, the outstanding principal balance of the Bonds totaled $311,000. The Bonds are due and payable upon maturity, a three-year
period from the issuance date. Interest on the Bonds is payable at the rate of 7.5% per annum, and is payable semiannually. The
Bondholder may require the Company to convert the Bond (including any unpaid interest) into shares of Common Stock at any time
only during the first year. If the Bonds are converted under this option, the Company will issue shares representing 100% of the
Bond principal and unpaid interest calculated through maturity. The Common Stock issued under this option will be valued at the
average closing price of the common shares for the five days prior to the notification. If the Bond is converted within the first
year the Company will issue a three-year warrant to purchase one share of EBI Common Stock at a price of $4.00 for every $2.00
of Bond principal.



At the Company's discretion at any time
after the first year, the Bonds, including the interest payments calculated through the date of conversion may be redeemed in cash
or in shares of our Common Stock, valued at the average last sales price over the 20-trading-day period preceding any payment date.
If the Company chooses to issue Common Stock as redemption of the Bond principal, we will issue shares representing a value equal
to 125% of the Bond principal and shares representing a value equal to 100% of the Bond interest through redemption date.



The Bonds were determined to include various
embedded derivative liabilities. The derivative liabilities are the conversion feature and the redemption option (compound embedded
derivative liability). At the date of issuance of the Bond, compound embedded derivative liabilities were measured at fair value
using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. These derivative
liabilities will be marked-to-market each quarter with the change in fair value recorded in the statement of operations. The Company
uses the effective interest method to record interest expense from the accretion of the debt discount and from the accretion of
unamortized discount upon conversion, which totaled $146,174 for the nine months ended September 30, 2014.



The following table summarizes the Bond
debt activity for the period from January 1, 2014 through September 30, 2014:





|Description                      |  | Bonds |         |  | Compound Derivative Liability |   |         | Total | 
|-------------------------------- |  | ----- | ------- |  | ----------------------------- | - | ------- | ----- | 
|                                 |  |       |         |  |                               |   |         |      
|Fair value at December 31, 2013  |  | $     | 128,762 |  |                               | $ | 39,730  |       | 
|Change in fair value             |  |       | 146,238 |  |                               |   | (36,484 | )     | 
|Conversions                      |  |       | –       |  |                               |   | –       |       | 
|Fair value at September 30, 2014 |  | $     | 275,000 |  |                               | $ | 3,246   |       | 



The Company recorded derivative income of $36,484 for the nine
months ended September 30, 2014.





10











ERF WIRELESS., INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)



Dakota Capital Fund LLC Equipment Financing



In November 2011, the Company entered into
debt financing agreement with Dakota Capital Fund LLC, for financing of up to $3,000,000. During the fourth quarter of 2011, the
Company received proceeds of $2,000,000 and had the option of additional funding of $1,000,000 for equipment purchases. This debt
facility is secured by certain ERF Wireless assets and there is no prepayment penalty. At September 30, 2014, the outstanding balance
on the debt financing agreement totaled $1,518,000 and the Company has elected not to request any additional funds under this credit
facility. The payment terms are $178,031 per quarter including interest, at an annual rate of 18% per annum plus 10% of positive
operational cash flow as determined on a quarterly basis for repayment of additional principal beginning July 1, 2012. The funding
was utilized to purchase equipment to build out networks in oil and gas exploration regions of North America.



The Company issued 30,000 shares of Common
Stock for the consummation of the initial $2,000,000 debt financing agreement from Dakota Capital Fund LLC resulting in a debt
discount of $93,600. The Company uses the effective interest method to record interest expense from the accretion of the debt discount
and accretes the unamortized discount upon conversion which totaled $22,459 for the nine months ended September 30, 2014. The estimated
debt accretion for the remainder of 2014 is $2,152.





Investor Financing Loan



On July 13, 2012, the Company entered into
a three-month secured debt financing agreement with certain individuals for $1,000,000 with an interest rate of 12% per annum.
Under a subsequent modified agreement dated April 2014, as amended, the maturity date has been extended from April 15, 2014 to
October 15, 2014. Both parties under the amendment agreed to apply the Dakota Capital Fund payment of $181,235 including interest
as a subset to the bridge note. The Company has also renegotiated the subset interest rate from .5% interest per day on a 360 day
calendar year to 12% rate per annum retroactive to March 23, 2013. The Company in consideration has accepted the return and cancellation
of 796 common shares (post-split) of Company common stock issued during the third quarter of 2013 for interest. The Company also
agreed to additional consideration of 5,000 of preferred A shares to be issued as long as the note remains unpaid and to be remitted
once the note is paid in full. The Company has agreed to add a $50,000 penalty to principal in January 2014 for the consideration
of the extension of the note. The Company has accordingly reversed the payment of interest of $159,259 in December 2013. The Company
has agreed to add an additional $25,000 penalty to principal in April 2014 for the extension of the note to October 2015. In addition,
the Company will pay $1,500 toward the bridge loan interest on the 1st and 15th of each month beginning May 15, 2014 until loan
is fully paid. At September 30, 2014, the outstanding principal balance totaled $548,000.





Tonaquint Convertible Promissory Note



On March 5, 2013, the Company entered into
a six-month secured convertible promissory note secured debt financing agreement with Tonaquint, Inc. (“holder”), for
$791,500, bearing interest at a rate of 12% per annum and matured on September 5, 2013. At September 30, 2014, the outstanding
principal balance of the Tonaquint convertible promissory note totaled $734,000. The note includes an original issue discount (“OID”)
of $65,000 based on the consideration funded, prepaid interest of $71,500 and $5,000 in legal and other expense. The Company also
paid holder an origination fee in the amount of $227,500 in 144 Stock (711 post-split shares) at the closing bid price on March
5, 2013, plus 125 post-split shares (valued at $40,000) of the Company’s common stock. The holder may require the Company
to convert the outstanding principal balance (including any unpaid interest) into shares of restricted common stock at any time
after the six-month term of the note. The common stock issued will be valued using a conversion factor of 80% of the average of
the lowest two (2) trading prices for common shares during the twenty (20) trading day period ending on the latest complete trading
day prior to the conversion date. If the average two (2) lowest trading prices is less than $0.33, then the conversion factor will
be reduced to 70%. The holder received the option to purchase five-year warrants expiring March 5, 2018 to purchase 371 shares
of ERF common stock at an exercise price of $320.00 or the per-share price at which the common stock is sold in an underwritten
public offering that closes on or before the date that is six (6) months from the issue date, as may be adjusted from time to time
pursuant to the terms and conditions of this warrant. The Company is not in compliance with all the provisions of the note causing
an automatic acceleration of the outstanding balance of $791,500 to $949,800. The note will accrue interest at a rate of 12% from
September 5, 2013 until March 4, 2014 and thereafter at a rate of 18% per annum. The note is recorded as a current liability.





11









ERF WIRELESS., INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)



The Tonaquint promissory note was determined
to include various embedded derivative liabilities. The derivative liabilities are the conversion feature, conversion price reset
feature and the redemption option (compound embedded derivative liability). At the date of issuance of the Tonaquint note, compound
embedded derivative liabilities were measured at fair value using either quoted market prices of financial instruments with similar
characteristics or other valuation techniques. These derivative liabilities will be marked-to-market each quarter with the change
in fair value recorded in the statement of operations. The Company used the effective interest method to record interest expense
from the accretion of the debt discount.



The following table summarizes the convertible
debt activity for the period from January 1, 2014 through September 30, 2014:





|Description                      |  | Tonaquint |         |   | Warrant Compound Derivative Liability |   |     | Compound Derivative Liability |  |   | Total   |  
|-------------------------------- |  | --------- | ------- | - | ------------------------------------- | - | --- | ----------------------------- |  | - | ------- | -
|Fair value at December 31, 2013  |  | $         | 793,368 |   |                                       | $ | 96  |                               |  | $ | 80,569  |  
|Change in fair value             |  |           | –       |   |                                       |   | (96 | )                             |  |   | (45,500 | )
|Conversions                      |  |           | (59,343 | ) |                                       |   | –   |                               |  |   | –       |  
|Fair value at September 30, 2014 |  | $         | 734,025 |   |                                       | $ | –   |                               |  | $ | 35,069  |  





The Company recorded derivative income
of $17,391 for the nine months ended September 30, 2014.



JMJ Financial Convertible Promissory
Note



On March 20, 2013, the Company entered
into a one year unsecured promissory note debt financing agreement with JMJ Financial for (“JMJ”) up to $500,000 at
the sole discretion of additional consideration with the Lender. The note includes a 10% original issue discount that is prorated
based on the consideration funded. The Company also paid holder an origination fee in the amount of $40,500 in 144 Stock (125 post-split
shares) at the closing bid price of the Company’s common stock. As of September 30, 2014 the Company has received funding
of $300,000, bearing interest at a rate of 12% per annum and maturing in one year from the effective date of each payment. At September
30, 2014, the outstanding principal balance of the JMJ Financial convertible promissory note totaled $142,281. The conversion price
is the lesser of $0.59 or 60% of the lowest trade price in the 25 trading days previous to the conversion. The note is recorded
as a current liability.



The JMJ promissory note was determined
to include various embedded derivative liabilities. The derivative liabilities are the conversion feature, conversion price reset
feature and the redemption option (compound embedded derivative liability). At the date of issuance of the JMJ note, compound embedded
derivative liabilities were measured at fair value using either quoted market prices of financial instruments with similar characteristics
or other valuation techniques. These derivative liabilities will be marked-to-market each quarter with the change in fair value
recorded in the statement of operations. The Company uses the effective interest method to record interest expense from the accretion
of the debt discount and from the accretion of unamortized discount upon conversion, which totaled $179,451 for the nine months
ended September 30, 2014.



The following table summarizes the convertible
debt activity for the period from January 1, 2014 through September 30, 2014:





|Description                      |  | JMJ |         |   | Compound Derivative Liability |   |          | Total | 
|-------------------------------- |  | --- | ------- | - | ----------------------------- | - | -------- | ----- | 
|                                 |  |     |         |   |                               |   |          |      
|Fair value at December 31, 2013  |  | $   | 58,363  |   |                               | $ | 134,113  |       | 
|Change in fair value             |  |     | 174,009 |   |                               |   | (131,383 | )     | 
|Conversions                      |  |     | (90,091 | ) |                               |   | –        |       | 
|Fair value at September 30, 2014 |  | $   | 142,281 |   |                               | $ | 2,730    |       | 



The Company recorded derivative income
of $99,783 for the nine months ended September 30, 2014.



12









ERF WIRELESS., INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)



Willow Creek Capital Convertible Promissory
Note



On April 2, 2013, the Company entered into
a nine-month secured convertible promissory note debt financing agreement with Willow Creek Capital, LLC, for $244,200, bearing
interest at a rate of 12% per annum and matured on October 1, 2013. At September 30, 2014, the outstanding principal balance of the
Willow Creek convertible promissory note totaled $182,000. The note also includes a 10% OID of $20,000 based on the consideration
funded, prepaid interest of $22,200 and $2,000 in legal and other expense. The Company also paid holder an origination fee in the
amount of $109,890 in 144 Stock (366 post-split shares) at the closing bid price of the Company’s common stock. The holder
may require the Company to convert the outstanding principal balance (including any unpaid interest) into shares of restricted
common stock at any time after the six months term of the note. The common stock issued will be valued using a conversion factor
of 80% the average of the lowest two (2) trading prices common shares during the twenty (20) trading day period ending on the latest
complete trading day prior to the conversion date. If the average two (2) lowest trading prices is less than $0.33, then the conversion
factor will be reduced to 70%. The holder will be entitled to purchase from the Company five year warrants expiring April 2, 2018
to purchase 122 post-split shares of ERF common stock at an exercise price of $300.00 or the per-share price at which the common
stock is sold in an underwritten public offering that closes on or before the date that is six (6) months from the issue date,
as may be adjusted from time to time pursuant to the terms and conditions of this Warrant.





The Willow Creek promissory note was determined
to include various embedded derivative liabilities. The derivative liabilities are the conversion feature; conversion price full
ratchet reset feature and the redemption option (compound embedded derivative liability). At the date of issuance of the Willow
Creek note, compound embedded derivative liabilities were measured at fair value using either quoted market prices of financial
instruments with similar characteristics or other valuation techniques. These derivative liabilities will be marked-to-market each
quarter with the change in fair value recorded in the statement of operations. The Company used the effective interest method to
record interest expense from the accretion of the debt discount and from the accretion of unamortized discount upon conversion.
The Company is not in compliance with all the provisions of the note causing an automatic acceleration of the outstanding balance
of $244,200 to $293,040. At September 30, 2014, the outstanding principal balance of the JMJ Financial convertible promissory note
totaled $142,281. The note will accrue interest at a rate of 12% from October 1, 2013 until April 1, 2014 and thereafter at a rate
of 18% per annum. The note is recorded as a current liability.



The following table summarizes the convertible
debt activity for the period from January 1, 2014 through September 30, 2014:





|Description                      |  | Willowcreek |         |   | Compound Derivative Liability |   |         | Total | 
|-------------------------------- |  | ----------- | ------- | - | ----------------------------- | - | ------- | ----- | 
|                                 |  |             |         |   |                               |   |         |      
|Fair value at December 31, 2013  |  | $           | 227,800 |   |                               | $ | 51,276  |       | 
|Change in fair value             |  |             | –       |   |                               |   | (40,943 | )     | 
|Conversions                      |  |             | (26,183 | ) |                               |   | –       |       | 
|Fair value at September 30, 2014 |  | $           | 201,617 |   |                               | $ | 10,333  |       | 



The Company recorded derivative expense
of $13,824 for the nine months ended September 30, 2014.



Vista Capital Convertible Promissory Note



On April 4, 2013, the Company entered into
a six-month secured convertible promissory note debt financing agreement with Vista Capital Investments, LLC, for $60,500, bearing
interest at a rate of 12% per annum and matured on October 4, 2013. The note also includes a 10% OID of $5,000 based on the consideration
funded and prepaid interest of $5,500. The Company also paid holder an origination fee in the amount of $21,175 in 144 Stock (84
post-split shares) at the closing bid price of the Company’s common stock. The holder may require the Company to convert
the outstanding principal balance (including any unpaid interest) into shares of restricted common stock at any time after the
six months term of the note. The common stock issued will be valued using a conversion factor of 80% the average of the lowest
two (2) trading prices common shares during the twenty (20) trading day period ending on the latest complete trading day prior
to the conversion date. If the average two (2) lowest trading prices is less than $0.33, then the conversion factor will be reduced
to 70%. The holder will be entitled to purchase from the Company five year warrants expiring April 4, 2018 to purchase 36 post-split
shares of ERF common stock at an exercise price of $320.00 or the per-share price at which the common stock is sold in an underwritten
public offering that closes on or before the date that is six (6) months from the issue date, as may be adjusted from time to time
pursuant to the terms and conditions of this Warrant.



The Vista promissory note was determined
to include various embedded derivative liabilities. The derivative liabilities are the conversion feature; conversion price full
ratchet reset feature and the redemption option (compound embedded derivative liability). At the date of issuance of the Vista
note, compound embedded derivative liabilities were measured at fair value using either quoted market prices of financial instruments
with similar characteristics or other valuation techniques. These derivative liabilities will be marked-to-market each quarter
with the change in fair value recorded in the statement of operations. The Company used the effective interest method to record
interest expense from the accretion of the debt discount and from the accretion of unamortized discount upon conversion. The Company
is not in compliance with all the provisions of the note causing an automatic acceleration of the outstanding balance of $60,500
to $72,600. The note will accrue interest at a rate of 12% from October 4, 2013 until April 3, 2014 and thereafter at a rate of
18% per annum. At September 30, 2014, the outstanding principal balance of the Vista Capital convertible promissory note totaled
$40,343.





13









ERF WIRELESS., INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)



The following table summarizes the convertible
debt activity for the period from January 1, 2014 through September 30, 2014:





|Description                      |  | Vista |         |   | Compound Derivative Liability |   |         | Total | 
|-------------------------------- |  | ----- | ------- | - | ----------------------------- | - | ------- | ----- | 
|                                 |  |       |         |   |                               |   |         |      
|Fair value at December 31, 2013  |  | $     | 50,558  |   |                               | $ | 37,516  |       | 
|Change in fair value             |  |       | –       |   |                               |   | (34,505 | )     | 
|Conversions                      |  |       | (10,215 | ) |                               |   | –       |       | 
|Fair value at September 30, 2014 |  | $     | 40,343  |   |                               | $ | 3,011   |       | 



The Company recorded derivative income
of $31,825 for the nine months ended September 30, 2014.



TCA Global Convertible Promissory Note



On June 28, 2013, the Company entered into
a twelve-month secured convertible promissory note debt financing agreement with TCA Global Credit Master Fund (TCA) for $1,500,000,
bearing interest at a rate of 12% per annum and maturing July 28, 2014. Under a subsequent modified agreement dated March 25, 2014,
TCA has agreed to restructure the agreement and extend the maturity date to November 15, 2014. The Company in consideration has
agreed to a $75,000 and a $50,000 restructuring and advisory fee to be added to the sum of the principal balance including a $40,791
interest charge to be paid and nominal legal fees. The monthly principal and interest payments will be $149,609 per month. At September
30, 2014, the outstanding principal balance of the TCA Global convertible promissory note totaled $1,007,000. The note also includes
$153,300 in commitment fees; due diligence fees; document review fees; service fees; legal; and other expense. The holder may require
the Company to convert the outstanding principal balance (including any unpaid interest) into shares of restricted common stock
at any time during the twelve months term of the note or thereafter. The common stock issued will be valued using a conversion
factor of 85% the average VWAP trading price during the five (5) trading day period ending on the latest complete trading day prior
to the conversion date. Due to the restructuring of the note the Company incurred $108,000 loss on extinguishment of debt.



The TCA Global promissory note was
determined to include various embedded derivative liabilities. The derivative liabilities are the conversion feature and the
redemption option (compound embedded derivative liability). At the date of issuance of the TCA Global note, compound embedded
derivative liabilities were measured at fair value using either quoted market prices of financial instruments with similar
characteristics or other valuation techniques. These derivative liabilities will be marked-to-market each quarter with the
change in fair value recorded in the statement of operations. The Company used the effective interest method to record
interest expense from the accretion of the debt discount and from the accretion of unamortized discount upon conversion that
totaled $43,416 for the nine  months ended September 30, 2014. On September 16, 2014 the TCA Global note was completely paid
off by the Company at a price of $1,165,222.



The following table summarizes the convertible
debt activity for the period from January 1, 2014 through September 30, 2014:





|Description                       |  | TCA Global |            |   | Compound Derivative Liability |   |         | Total | 
|--------------------------------- |  | ---------- | ---------- | - | ----------------------------- | - | ------- | ----- | 
|                                  |  |            |            |   |                               |   |         |      
|Fair value at December 31, 2013   |  | $          | 915,440    |   |                               | $ | 28,716  |       | 
|Fair value issuances at inception |  |            | 161,713    |   |                               |   | (28,716 | )     | 
|Change in fair value              |  |            | (70,153    | ) |                               |   | –       |       | 
|Conversions                       |  |            | (1,007,000 | ) |                               |   | –       |       | 
|Fair value at September 30, 2014  |  | $          | –          |   |                               | $ | –       |       | 



The Company recorded derivative expense
of $49,937 for the nine months ended September 30, 2014.



Group 10 Holdings Convertible Promissory
Note



On October 3, 2013, the Company entered
into a twelve-month unsecured convertible promissory note debt financing agreement with Group 10 Holdings, LLC, for $157,500, bearing
interest at a rate of 12% per annum and maturing October 2, 2014. The note also includes a 5% OID of $7,500 based on the consideration
funded. The Company also paid holder a commitment fee in the amount of $45,000 in 144 Stock (1,125 post-split shares) at the closing
bid price of the Company’s common stock. The holder may require the Company to convert the outstanding principal balance
(including any unpaid interest) into shares of restricted common stock at any time after the twelve months term of the note. The
common stock issued will be valued using a conversion factor of 55% multiplied by the lowest closing bid price of the (20) trading
days prior to the conversions, which represents a discount rate of 45%.



The Group 10 Holdings promissory note was
determined to include various embedded derivative liabilities. The derivative liabilities are the conversion feature; conversion
price full ratchet reset feature and the redemption option (compound embedded derivative liability). At the date of issuance of
the Group 10 note, compound embedded derivative liabilities were measured at fair value using either quoted market prices of financial
instruments with similar characteristics or other valuation techniques. These derivative liabilities will be marked-to-market each
quarter with the change in fair value recorded in the statement of operations. The Company uses the effective interest method to
record interest expense from the accretion of the debt discount and from the accretion of unamortized discount upon conversion
that totaled $143,497 for the nine months ended September 30, 2014. The note will accrue interest at a rate of 12% from October
3, 2013 until October 2, 2014 and thereafter at a rate of 18% per annum. At September 30, 2014, the outstanding principal balance
of the Group 10 convertible promissory note totaled $94,000. Subsequent to September 30, 2014 the Group 10 Note was completely
paid at a price of $85,290.





14











ERF WIRELESS., INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)



The following table summarizes the convertible
debt activity for the period from January 1, 2014 through September 30, 2014:



|Description                      |  | Group 10 |         |   | Compound Derivative Liability |   |          | Total | 
|-------------------------------- |  | -------- | ------- | - | ----------------------------- | - | -------- | ----- | 
|Fair value at December 31, 2013  |  | $        | 14,155  |   |                               | $ | 304,519  |       | 
|Change in fair value             |  |          | 143,497 |   |                               |   | (301,081 | )     | 
|Conversions                      |  |          | (63,944 | ) |                               |   | –        |       | 
|Fair value at September 30, 2014 |  | $        | 93,708  |   |                               | $ | 3,438    |       | 





The Company recorded derivative income
of $135,120 for the nine months ended September 30, 2014.



KBM World Wide Inc. Convertible Promissory
Note



On June 26, 2014, the Company entered into
a nine-month unsecured convertible promissory note debt financing agreement with KBM World Wide Inc. for $103,500, bearing interest
at a rate of 8% per annum and maturing March 27, 2015. On August 18 and August 28, 2014, the Company expanded the initial relationship
with KBM in non-material amounts by entering into a nine-month unsecured convertible promissory note debt financing agreement with
KBM World Wide Inc. for $53,000, bearing interest at a rate of 8% per annum and maturing May 18, 2015 and a nine-month unsecured
convertible promissory note debt financing agreement with KBM World Wide Inc. for $32,500, bearing interest at a rate of 8% per
annum and maturing May 28, 2015. The holder may require the Company to convert the outstanding principal balance (including any
unpaid interest) into shares of restricted common stock at any time after 180 days following the date of this note and ending on
final payment of the convertible note. The common stock issued will be valued using a conversion factor of 61% multiplied by the
lowest three trading prices of the (10) trading days prior to the conversion date, which represents a discount rate of 39%.



The KBM World Wide Inc. promissory notes
were determined to include various embedded derivative liabilities. The derivative liabilities are the conversion feature; conversion
price full ratchet reset feature and the redemption option (compound embedded derivative liability). At the date of issuance of
the KBM World Wide Inc. notes, compound embedded derivative liabilities were measured at fair value using either quoted market
prices of financial instruments with similar characteristics or other valuation techniques. These derivative liabilities will be
marked-to-market each quarter with the change in fair value recorded in the statement of operations. The Company uses the effective
interest method to record interest expense from the accretion of the debt discount and from the accretion of unamortized discount
upon conversion that totaled $19,516 for the nine months ended September 30, 2014. The estimated debt accretion for subsequent
years is $46,500 and $106,593 for years ending December 31, 2014, and 2015, respectively. The notes will accrue interest at a rate
of 8% from their inception until nine months later and thereafter at a rate of 22% per annum. At September 30, 2014, the outstanding
principal balance of the KBM World Wide Inc. convertible promissory notes totaled $189,000.



The following table summarizes the convertible
debt activity for the period from January 1, 2014 through September 30, 2014:



|Description                                      |  | KBM World Wide |         |   | Compound Derivative Liability |   |         | Total | 
|------------------------------------------------ |  | -------------- | ------- | - | ----------------------------- | - | ------- | ----- | 
|Fair value issuances at inception                |  | $              | 103,500 |   |                               | $ | 91,277  |       | 
|Fair value issuances during 2014 (debt discount) |  |                | (91,277 | ) |                               |   | –       |       | 
|Change in fair value                             |  |                | 13,683  |   |                               |   | (52,834 | )     | 
|Conversions                                      |  |                | –       |   |                               |   | –       |       | 
|Fair value at September 30, 2014                 |  | $              | 25,906  |   |                               | $ | 38,443  |       | 





The Company recorded derivative income
of $72,053 for the nine months ended September 30, 2014.



Union Capital/Adar Bays Convertible
Promissory Note



On August 4, 2014, the Company entered
into two twelve-month unsecured $50,000 convertible promissory notes totaling $100,000 for a dual debt financing agreement with
the combination of Union capital LLC and Adar Bays LLC bearing interest at a rate of 10% per annum and maturing August 15, 2015.
The Company will pay principal and interest due on the notes before or on the maturity date. The holders may require the Company
to convert the outstanding principal balance (including any unpaid interest) into shares of common stock without a legend at any
time after 180 days following the date of these notes. The common stock issued will be valued using a conversion factor of 55%
multiplied by the lowest daily closing bid price for the (15) trading days prior to the conversion date.



The notes were determined to include various
embedded derivative liabilities. The derivative liabilities are the conversion feature and the redemption option (compound embedded
derivative liability). At the date of issuance of the notes, compound embedded derivative liabilities were measured at fair value
using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. These derivative
liabilities will be marked-to-market each quarter with the change in fair value recorded in the statement of operations. The Company
used the effective interest method to record interest expense from the accretion of the debt discount and from the accretion of
unamortized discount upon conversion that totaled $0 for the nine months ended September 30, 2014. The estimated debt accretion
for the remainder of 2014 is $5, and $99,995 for 2015.





15









ERF WIRELESS., INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)



The following table summarizes the convertible
debt activity for the period from January 1, 2014 through September 30, 2014:



|Description                                      |  | KBM World Wide |         |   | Compound Derivative Liability |   |         | Total | 
|------------------------------------------------ |  | -------------- | ------- | - | ----------------------------- | - | ------- | ----- | 
|Fair value issuances at inception                |  | $              | 87,000  |   |                               | $ | 87,000  |       | 
|Fair value issuances during 2014 (debt discount) |  |                | (87,000 | ) |                               |   | –       |       | 
|Change in fair value                             |  |                | –       |   |                               |   | (21,128 | )     | 
|Fair value at September 30, 2014                 |  | $              | –       |   |                               | $ | 65,872  |       | 





The Company recorded derivative expense
of $34,129 for the nine months ended September 30, 2014.



Capital Leases



Banc Leasing Inc. Included in property
and equipment at September 30, 2014, the cost of the equipment was $610,900. Amortization of assets under capital leases is included
in depreciation expense. The equipment is the primary collateral securing the financing.



Advantage Leasing Inc. Included
in vehicles at September 30, 2014, the cost of the vehicles was $273,443. Amortization of assets under capital leases is included
in depreciation expense. The vehicles are the primary collateral securing the financing.



Legacy Laser Services Dallas, LLC
Included in property and equipment at September 30, 2014, the cost of the equipment was $155,349. Amortization of assets under
capital leases is included in depreciation expense. The equipment is the primary collateral securing the financing.



The following is a schedule by years of
future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of September
30, 2014 (in thousands):



|Year Ending December 31,                        |  |  |    
|----------------------------------------------- |  |  | ---
|2014                                            |  |  | 92 
|2015                                            |  |  | 142
|2016                                            |  |  | 63 
|2017                                            |  |  | 0  
|Thereafter                                      |  |  | –  
|Total minimum lease payments                    |  |  | 297
|Less amount representing interest               |  |  | -64
|Present value of net minimum lease payments     |  |  | 233
|Current maturities of capital lease obligations |  |  | -92
|Long-term portion of capital lease obligations  |  |  | 141





NOTE 7 – COMMITMENTS



Leases and License Agreements



For the nine months ended September 30,
2014 and 2013, rental expenses of approximately $652,000 and $605,000, respectively, were incurred. The Company accounts for rent
expense under leases that provide for escalating rentals over the related lease term on a straight-line method. The Company occupies
office and tower facilities under several non-cancelable operating lease agreements expiring at various dates through December
2018, and requiring payment of property taxes, insurance, maintenance and utilities.



Future minimum lease payments under non-cancelable operating
leases as of December 31, 2014 were as follows (in thousands):











|Year Ending December 31, |  | Amount |      
|------------------------ |  | ------ | -----
|2014                     |  | $      | 372  
|2015                     |  |        | 707  
|2016                     |  |        | 610  
|2017                     |  |        | 116  
|Thereafter               |  |        | 9    
|Total                    |  | $      | 1,814







16









ERF WIRELESS., INC.

NOES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)



Banc Leasing Inc.



During August 2007, the Company entered
into a contract with Banc Leasing Inc. to fund the Company’s US-BankNet System. Each funding is collateralize by the equipment
and normally is repaid over a seven year period with interest established at the date of the inception of the lease. Each lease
has a $1 buyout provision. The details of the capital lease are included in Note 6.



NOTE 8 – RELATED PARTY TRANSACTIONS



In May 2013, the Company entered into a
capital lease agreement with Legacy Laser Services Dallas, LLC and (Affiliate). Manny M. Carter is a Managing Member of Legacy
Laser Services and a current Board Member of ERF Wireless Inc. At September 30, 2014, the outstanding balance on the capital leases
totaled $144,000. The payment terms are $9,947 per month including interest, at an annual rate of 42% per annum. The capital leased
equipment is to be utilized in our networks in oil and gas exploration regions. The equipment is the primary collateral securing
the financing.



NOTE 9 – INDUSTRY SEGMENTS



This summary reflects the Company's current
segments, as described below.



Energy Broadband, Inc. (EBI)



EBI provides wireless connectivity to rural
oil and gas locations primarily via Mobile Broadband Trailers (“MBTs”). EBI provides wireless broadband products and
services focusing primarily on commercial customers providing high speed bandwidth to rural North America to serve the oil and
gas sector. All sales from external customers are located within the United States.



Wireless Bundled Services Division (WBS)



WBS provides wireless broadband products
and services to commercial and individual customers throughout the wireless industry. The company is in the early stages of building
and acquiring a seamless wireless broadband network in certain regions of North America to serve private entities, cities, municipalities
and the general public. All sales from external customers are located within the United States.



Enterprise Network Services (ENS)



ENS provides product and service to operate
an enterprise-class encrypted wireless banking network business. Also, ENS provides the CryptoVue System consisting of software,
site-based hardware devices and servers to perform network encryption; contracts for the construction, operation, monitoring and
maintenance of fixed wireless networks for banking, healthcare and educational customers; trade names, equipment and software,
including the software architecture and design. All sales from external customers are located within the United States.



Disposition of Certain Assets:



On September 15, 2014, ERF Wireless, Inc.
entered into an Asset Purchase Agreement (the “Agreement”) that was effective as of September 1, 2014 with Rhino Communications,
Inc. The agreement is between ERF Wireless, Inc., a Nevada corporation and ERF Wireless Bundled Services, Inc., a Texas corporation
(collectively with ERF Wireless, Inc., the “Company”) and Rhino Communications, Inc., a Colorado corporation (he “Purchaser”)
and involves certain obligations of JAB Wireless, Inc., a Colorado corporation (“JAB”). The Agreement is for the purchase
of certain of the Company’s WISP (Wireless Internet Service Provider) assets required for operating the Company’s WISP
services in certain geographical areas which were not associated with the Company’s oil and gas sector communications operations
..The purchase price of $2,377,000, is payable in cash (including a holdback amount of $475,400 to be placed in an interest bearing
account for a period of 90 days pending determination of any required price adjustment).



In conjunction with this disposition of
certain assets, the Company recorded a one-time gain on sale of $2,006,000 in the three-months ended September 30, 2014.





17









ERF WIRELESS., INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)



For the three and nine months ended September
30, 2014 and 2013 (in thousands):







|Three Months Ended September 30, 2014 |  | EBI |       |   | WBS |   |       | ENS |  |   | Total Segment |   |  | ERF Corporate |       |   | Total Consolidated |  
|------------------------------------- |  | --- | ----- | - | --- | - | ----- | --- |  | - | ------------- | - |  | ------------- | ----- | - | ------------------ | -
|Revenue                               |  | $   | 831   |   |     | $ | 466   |     |  | $ | 64            |   |  | $             | 1,361 |   |                    | $
|Segment income (loss) from operations |  |     | (66   | ) |     |   | (328  | )   |  |   | (40           | ) |  |               | (434  | ) |                    |  
|Total assets                          |  |     | 1,950 |   |     |   | 1,045 |     |  |   | 259           |   |  |               | 3,254 |   |                    |  
|Capital expenditures                  |  |     | 24    |   |     |   | 5     |     |  |   | –             |   |  |               | 29    |   |                    |  
|Depreciation                          |  |     | 186   |   |     |   | 149   |     |  |   | 58            |   |  |               | 393   |   |                    |  



|Three Months Ended September 30, 2013 |  | EBI |       |  | WBS |   |       | ENS |  |   | Total Segment |   |  | ERF Corporate |       |   | Total Consolidated |  
|------------------------------------- |  | --- | ----- |  | --- | - | ----- | --- |  | - | ------------- | - |  | ------------- | ----- | - | ------------------ | -
|Revenue                               |  | $   | 1,121 |  |     | $ | 610   |     |  | $ | 72            |   |  | $             | 1,803 |   |                    | $
|Segment income (loss) from operations |  |     | 82    |  |     |   | (360  | )   |  |   | (26           | ) |  |               | (304  | ) |                    |  
|Total assets                          |  |     | 3,006 |  |     |   | 1,580 |     |  |   | 435           |   |  |               | 5,021 |   |                    |  
|Capital expenditures                  |  |     | 74    |  |     |   | 69    |     |  |   | –             |   |  |               | 143   |   |                    |  
|Depreciation                          |  |     | 215   |  |     |   | 204   |     |  |   | 58            |   |  |               | 477   |   |                    |  





|Nine Months Ended September 30, 2014  |  | EBI |       |  | WBS |   |       | ENS |  |   | Total Segment |   |  | ERF Corporate |       |   | Total Consolidated |  
|------------------------------------- |  | --- | ----- |  | --- | - | ----- | --- |  | - | ------------- | - |  | ------------- | ----- | - | ------------------ | -
|Revenue                               |  | $   | 2,585 |  |     | $ | 1,725 |     |  | $ | 278           |   |  | $             | 4,588 |   |                    | $
|Segment income (loss) from operations |  |     | 6     |  |     |   | (557  | )   |  |   | (24           | ) |  |               | (575  | ) |                    |  
|Total assets                          |  |     | 1,950 |  |     |   | 1,045 |     |  |   | 259           |   |  |               | 3,254 |   |                    |  
|Capital expenditures                  |  |     | 26    |  |     |   | 32    |     |  |   | –             |   |  |               | 58    |   |                    |  
|Depreciation                          |  |     | 574   |  |     |   | 491   |     |  |   | 175           |   |  |               | 1,240 |   |                    |  



|                                      |  |     |       |  |     |   |        |     |  |   |               |   |  |               |       |   |                    |  
|------------------------------------- |  | --- | ----- |  | --- | - | ------ | --- |  | - | ------------- | - |  | ------------- | ----- | - | ------------------ | -
|Nine Months Ended September 30, 2013  |  | EBI |       |  | WBS |   |        | ENS |  |   | Total Segment |   |  | ERF Corporate |       |   | Total Consolidated |  
|Revenue                               |  | $   | 3,134 |  |     | $ | 1,818  |     |  | $ | 327           |   |  | $             | 5,279 |   |                    | $
|Segment income (loss) from operations |  |     | 64    |  |     |   | (1,032 | )   |  |   | (21           | ) |  |               | (989  | ) |                    |  
|Total assets                          |  |     | 3,006 |  |     |   | 1,580  |     |  |   | 435           |   |  |               | 5,021 |   |                    |  
|Capital expenditures                  |  |     | 270   |  |     |   | 174    |     |  |   | –             |   |  |               | 444   |   |                    |  
|Depreciation                          |  |     | 645   |  |     |   | 616    |     |  |   | 176           |   |  |               | 1,437 |   |                    |  





|Reconciliation of Segment Assets to Total Assets |  | September 30, 2014 |       |  | December 31, 2013 |  
|------------------------------------------------ |  | ------------------ | ----- |  | ----------------- | -
|Total segment assets                             |  | $                  | 3,254 |  |                   | $
|Total corporate assets                           |  |                    | 339   |  |                   |  
|Total assets                                     |  | $                  | 3,593 |  |                   | $



The Company evaluates the performance of
its operating segments based on income before net interest expense, income taxes, depreciation expense, accounting changes and
non-recurring items.





For the nine months ended September 30,
2014, two customers accounted for $1,297,219 and $545,270 of EBI revenues each.



NOTE 10 – SUBSEQUENT EVENTS





Subsequent to September 30, 2014, the
Company issued 21,800,655 shares of common stock valued at a value of $289,395 for services rendered, and conversion of debt.





18











ERF WIRELESS., INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

September 30, 2014

(Unaudited)



Subsequent to September 30, 2014 the Company
entered into negotiations and concluded a $2,500,000 Master Lease Finance Agreement on October 30, 2014 with WISPer Ventures Leasing
LLC an Arizona limited liability company for the purpose of debt restructuring and operational capital. The funding to be provided
under the Master Lease finance Agreement will be provided in the form of one or more lease schedules. The basis terms of the agreement
are structured as a true lease with a 10% repurchase option by Company at the end of the lease. The initial $403,000 portion Schedule
001 of this Master Lease Finance Agreement was funded on October 30, 2014 for the specific purpose of repayment and retirement
of certain convertible debentures of the Company. Additional Schedules under the Master Lease Finance Agreement will be utilized
to consolidate other debt and for working capital. For the Schedule 001 funding WISPer Ventures Leasing has required the Company
to provide additional collateral and assurances beyond the basic Company assets required for all Schedules in order to fund the
$403,000 for specific purpose of repaying convertible debentures. The additional collateral that was required consisted of three
residential rental properties owned by the HC1 Trust and managed for the HC1 Trust by the management company of Angus Capital Partners.
Angus Capital Partners also manages the Line of Credit to the Company and is a related party to Dr. H. Dean Cubley the CEO of the
Company. Neither Angus Capital Partners nor the HC1 Trust are affiliates of the Company. In addition to the additional collateral
being provided WISPer Ventures Leasing for funding Schedule 001 of the lease Whisper Venture Leasing has also required Dr. Cubley
to enter into a personal guarantee for the $403,000 to be utilized to repay Company convertible debentures. In return for supplying
the additional $403,000 of collateral, Angus Capital Partners has required, and the Company has agreed, to not object to the pledge
or sale of a portion of the Angus Capital Partners Line of Credit debt up to the actual value of the collateral should such a request
be made. One such request has been made for the sale of $100,000 of the Line of Credit debt to WHC Capital LLC. Dr. Cubley has
received no consideration for providing his personal guarantee other than the agreement among WISPer Ventures and Company that
the personal guarantee and additional collateral requirement will both be released as soon as the Company has made a composite
total of $403,000 in payments under all schedules under the $2,500,000 Sale Leaseback transaction.



Following the initial $403,000
funding of the WISPer Ventures Sale Leaseback Transaction the Company has begun negotiations with a number of the Company convertible
debenture funds to begin to effect repayment.



On November 3, 2014, we terminated
our April 24, 2014, Settlement Agreements and Stipulation with IBC Fund, LLC (“IBC”) previously disclosed and documented
in our September 5, 2014, 8-K filing and simultaneously repaid the remaining balance of that convertible debenture as well as the
associated prepayment penalty.



On November 3, 2014, we terminated
our January 29, 2014, Settlement Agreements and Stipulation with CP US Income Group, LLC (“CP”) previously disclosed
and documented in our September 5, 2014, 8-K filing, and simultaneously repaid the remaining balance of that convertible debenture
as well as the associated prepayment penalty.



On November 3, 2014, we terminated
our October 23, 2013, Convertible debenture with Group 10 Holdings LLC (“Group 10”) and simultaneously repaid the remaining
balance of that convertible debenture as well as the associated prepayment penalty.



As of the filing date of this
September 30, 2014 10Q the company is in negotiations with most of the remaining companies with which it has convertible debentures
and will continue to consolidate and repay these as available funds permit.





19







ERF Wireless, Inc. is referred to hereafter
as “we”, “our” or “us”.



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



This Management's Discussion and Analysis
of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the other sections of this quarterly
report on Form 10-Q, including the financial statements and footnotes.



OUR MARKETS AND BUSINESS STRATEGY



We provide critical infrastructure wireless
broadband communication products and services to a broad spectrum of customers in primarily rural oil and gas exploration areas
of North America. We plan to devote a majority of our financial and personnel resources to develop a long-term, internet solution
for the energy industry in North America and Canada.



Disposition of Certain Assets:



On September 15, 2014, ERF Wireless, Inc.
entered into an Asset Purchase Agreement (the “Agreement”) that was effective as of September 1, 2014 with Rhino Communications,
Inc. The agreement is between ERF Wireless, Inc., a Nevada corporation and ERF Wireless Bundled Services, Inc., a Texas corporation
(collectively with ERF Wireless, Inc., the “Company”) and Rhino Communications, Inc., a Colorado corporation (he “Purchaser”)
and involves certain obligations of JAB Wireless, Inc., a Colorado corporation (“JAB”). The Agreement is for the purchase
of certain of the Company’s WISP (Wireless Internet Service Provider) assets required for operating the Company’s WISP
services in certain geographical areas which were not associated with the Company’s oil and gas sector communications operations
..The purchase price of $2,377,000, is payable in cash (including a holdback amount of $475,400 to be placed in an interest bearing
account for a period of 90 days pending determination of any required price adjustment).



In conjunction with this disposition of
certain assets, the Company recorded a one-time gain on sale of $2,006,000 in the three-months ended September 30, 2014.



Our recent financial results reflect our
focus on providing turnkey communications services to the oil and gas industry. These results include but are not limited to the
following attributes:



| | · | We reported revenues of $1,362,000 for the quarter ended September 30, 2014 as compared to $1,803,000 for the same prior year quarter ended September 30, 2013; a decrease of $441,000 or 24%.  This decrease reflects lower rig count for the Company’s communications solutions in our oil and gas vertical market and lower residential wireless ISP services from our divestiture of certain residential WISP networks and operations that are non-core to our oil and gas communications solutions.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | We reported gross profit of $352,000 for the quarter ended September 30, 2014 as compared to $744,000 for the same prior year quarter ended September 30, 2013; a decrease of $392,000 or 53%. This decrease reflects lower rig count for the Company’s communications solutions in our oil and gas vertical market and lower residential wireless ISP services from our divestiture of certain residential WISP networks and operations that are non-core to our oil and gas communications solutions.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | We reported a total comprehensive income of $653,000 for the quarter ended September 30, 2014 as compared to a comprehensive loss of $2,621,000 for the same prior year quarter ended September 30, 2013; an improvement of $3,274,000.  This improvement included a one-time gain on sale of assets of $2,006,000 recorded on the divestiture of certain residential WISP networks and operations that are non-core to our oil and gas communications solutions.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Our subsidiary, Energy Broadband, Inc., reported revenues of $831,000 for the three months ended September 30, 2014 as compared to revenues of $1,121,000 for the same prior year quarter ended September 30, 2013, representing a decrease of $290,000 or 26%.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | We reported a decrease of $623,000 or 33% in operating expenses for the three months ended September 30, 2014 as compared to the same prior year quarter ended September 30, 2013 and a decrease of $2,153,000 or 37% in operating expenses for the nine months ended September 30, 2014 as compared to the same prior year quarter ended September 30, 2013. The $2,153,000 decrease is primarily related to lower employment expenses of $1,289,000 associated with a headcount decrease of employees and approximately $660,000 in lower legal, accounting and professional fees associated with the concluded arbitration proceedings with Schlumberger pertaining to disputes to resolve certain financial issues contained in the 2009 exclusive reseller agreement.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our revenue is generated primarily from
the sale of wireless communications products and services, including providing reliable enterprise-class wireless broadband services.
We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable,
and the ability to collect is probable.



We record revenues from its fixed-price,
long-term contracts using the percentage-of-completion method. Revenues are recorded based on construction costs incurred to date
as a percentage of estimated total cost at completion. The percentage-of-completion, determined by using total costs incurred to
date as a percentage of estimated total costs at completion, reflects the actual physical completion of the project. This method
of revenue recognition is used because management considers total cost to be the best available measure of progress on the contracts.





20









We recognize product sales generally at
the time the product is shipped. Concurrent with the recognition of revenue, we provide for the estimated cost of product warranties
and revenue reduction 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.



Service revenue is principally derived
from wireless broadband services, including internet, voice, and data and monitoring service. Subscriber fees are recorded as revenues
in the period during which the service is provided.





RESULTS OF OPERATIONS



THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2014, COMPARED TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013



The following table sets forth summarized
consolidated financial information for the three and nine months ended September 30, 2014 and 2013:





|                                                               |  | Three Months Ended September 30, |       |   | Nine Months Ended September 30, |  
|-------------------------------------------------------------- |  | -------------------------------- | ----- | - | ------------------------------- | -
|($ in thousands)                                               |  | 2014                             |       |   | 2013                            |  
|Total sales                                                    |  | $                                | 1,362 |   |                                 | $
|Total Cost of goods sold                                       |  |                                  | 1,009 |   |                                 |  
|Gross profit                                                   |  |                                  | 353   |   |                                 |  
|Percent of total sales                                         |  |                                  | 26    | % |                                 |  
|Total operating expenses                                       |  |                                  | 1,268 |   |                                 |  
|Loss from operations                                           |  |                                  | (916  | ) |                                 |  
|Total other income/(expense)                                   |  |                                  | 1,571 |   |                                 |  
|Consolidated net income (loss)                                 |  |                                  | 655   |   |                                 |  
|Net income (loss) attributable to non-controlling
    interest |  |                                  | 0     |   |                                 |  
|Total comprehensive income (loss)                              |  | $                                | 655   |   |                                 | $







For the three months ended September 30,
2014, our business operations reflected a decrease in sales for EBI, WBS and ENS subsidiaries. For the three months ended September
30, 2014, our consolidated operations generated total sales of $1,362,000 compared to prior-year period total sales of $1,803,000.
The $441,000 decrease in total sales is primarily attributable to $290,000 decreased sales in EBI from lower deployment of our
Mobile Broadband Trailers (MBT’s) in the oil and gas regions and $144,000 decrease in WBS revenues from our divestiture of
certain residential WISP networks and operations that are non-core to our oil and gas communications solutions. We reported a total
comprehensive income of $653,000 for the quarter ended September 30, 2014 as compared to a comprehensive loss of $2,621,000 for
the same prior year quarter ended September 30, 2013; an improvement of $3,272,000. This improvement included a one-time gain on
sale of assets of $2,006,000 recorded on the divestiture of certain residential WISP networks and operations that are non-core
to our oil and gas communications solutions.



For the nine months ended September 30,
2014, our business operations reflected a decrease in sales for its EBI, WBS and ENS subsidiaries. For the nine months ended September
30, 2014, our consolidated operations generated total sales of $4,588,000 compared to prior-year period total sales of $5,279,000.
The $691,000 decrease in total sales is primarily attributable to $549,000 decreased sales in EBI from overall declining deployment
of our Mobile Broadband Trailers (MBT’s) in the oil and gas regions and a 93,000 decline in WBS revenues associated with
the divestiture of certain residential WISP networks and operations that are non-core to our oil and gas communications solutions.
We reported a total comprehensive loss of $739,000 for the nine months ended September 30, 2014 as compared to a comprehensive
loss of $6,533,000 for the same prior year nine month period ended September 30, 2013; an improvement of $5,794,000. This improvement
included a one-time gain on sale of assets of $2,006,000 recorded on the divestiture of certain residential WISP networks and operations
that are non-core to our oil and gas communications solutions. \



SALES INFORMATION



Set forth below are tables presenting summarized
sales information for our business segments for the three and none months ended September 30, 2014 and 2013:





21









|($ in thousands)            |  | Three Months Ended September 30, |      
|--------------------------- |  | -------------------------------- | -----
|Business Segment            |  | 2014                             |      
|Energy Broadband, Inc.      |  | $                                | 831  
|Wireless Bundled Services   |  |                                  | 466  
|Enterprise Network Services |  |                                  | 64   
|Total Sales                 |  | $                                | 1,361







|                            |  |   |                                                                          | 
|--------------------------- |  | - | ------------------------------------------------------------------------ | 
|($ in thousands)            |  |   | Nine Months
                                         Ended September 30, | 
|Business Segment            |  |   | 2014                                                                     | 
|Energy Broadband, Inc.      |  | $ | 2,585                                                                    | 
|Wireless Bundled Services   |  |   | 1,725                                                                    | 
|Enterprise Network Services |  |   | 278                                                                      | 
|Total Sales                 |  | $ | 4,588                                                                    | 







For the three months ended September 30,
2014, total sales decreased to $1,361,000 from $1,803,000 for the three months ended September 30, 2013. The $442,000 decrease
in total sales is primarily attributable to $290,000 decreased sales in EBI from lower deployment of our Mobile Broadband Trailers
(MBT’s) in the oil and gas regions and $144,000 decrease in WBS revenues from our divestiture of certain residential WISP
networks and operations that are non-core to our oil and gas communications solutions.



For the nine months ended September 30,
2014, total sales decreased to $4,588,000 from $5,279,000 for the nine months ended September 30, 2013. The $691,000 decrease
in total sales is primarily attributable to $549,000 decreased sales in EBI from overall declining deployment of our Mobile Broadband
Trailers (MBT’s) in the oil and gas regions and a 93,000 decline in WBS revenues associated with the divestiture of certain
residential WISP networks and operations that are non-core to our oil and gas communications solutions. .



COST OF GOODS SOLD



The following tables set forth summarized
cost of goods sold information for the three and nine months ended September 30, 2014 and 2013:



|($ in thousands)            |  | Three Months Ended September 30, |      
|--------------------------- |  | -------------------------------- | -----
|Business Segment            |  | 2014                             |      
|Energy Broadband, Inc.      |  | $                                | 577  
|Wireless Bundled Services   |  |                                  | 327  
|Enterprise Network Services |  |                                  | 105  
|Total cost of sales         |  | $                                | 1,009







|($ in thousands)            |  | Nine Months Ended September 30, |      
|--------------------------- |  | ------------------------------- | -----
|Business Segment            |  | 2014                            |      
|Energy Broadband, Inc.      |  | $                               | 1,597
|Wireless Bundled Services   |  |                                 | 983  
|Enterprise Network Services |  |                                 | 299  
|Total cost of sales         |  | $                               | 2,879









For the three months ended September 30,
2014, cost of goods sold decreased by $50,000 to $1,009,000 from $1,059,000 as compared to the three months ended September 30,
2013. The decrease of $50,000 in cost of goods sold is primarily attributable to a decreased cost of $48,000 in WBS due to decreased
sales affecting a reduction in our third-party services during the quarter associated with the divestiture.





22







The following tables set forth summarized
cost of goods sold information for the  nine months ended September 30, 2014 and 2013:





|                                 |  | Three Months Ended September 30, |       |  |      |  
|-------------------------------- |  | -------------------------------- | ----- |  | ---- | -
|($ in thousands)                 |  | 2014                             |       |  | 2013 |  
|                                 |  |                                  |       |  |      |  
|Products and integration service |  | $                                | 397   |  |      | $
|Rent and maintenance             |  |                                  | 237   |  |      |  
|Depreciation                     |  |                                  | 376   |  |      |  
|Total cost of sales              |  | $                                | 1,009 |  |      | $





|                                 |  | Nine Months Ended September 30, |       |  |      |  
|-------------------------------- |  | ------------------------------- | ----- |  | ---- | -
|($ in thousands)                 |  | 2014                            |       |  | 2013 |  
|                                 |  |                                 |       |  |      |  
|Products and integration service |  | $                               | 1,037 |  |      | $
|Rent and maintenance             |  |                                 | 652   |  |      |  
|Depreciation                     |  |                                 | 1,190 |  |      |  
|Total cost of sales              |  | $                               | 2,879 |  |      | $





For the nine months ended September 30,
2014, cost of goods sold decreased by $203,000, to $2,879,000 from $3,082,000 as compared to the nine months ended September 30,
2013. The decrease of $203,000 in cost of goods sold is primarily attributable to a decreased cost of $89,000 in EBI due to decreased
sales affecting a reduction in our third party services in the oil and gas regions, decreased cost in WBS of $66,000 due to the
decreased depreciation and decreased cost in ENS of $48,000 due to decline in banking network construction project.



OPERATING EXPENSES



The following table sets forth summarized
operating expense information for the three and nine months ended September 30, 2014 and 2013:





|                                 |  | Three Months Ended September 30, |       |  | Niine Months Ended September 30, |  
|-------------------------------- |  | -------------------------------- | ----- |  | -------------------------------- | -
|($ in thousands)                 |  | 2014                             |       |  | 2013                             |  
|                                 |  |                                  |       |  |                                  |  
|Employment expenses              |  | $                                | 619   |  |                                  | $
|Professional services            |  |                                  | 202   |  |                                  |  
|Rent and maintenance             |  |                                  | 134   |  |                                  |  
|Depreciation                     |  |                                  | 22    |  |                                  |  
|Other general and administrative |  |                                  | 291   |  |                                  |  
|Total operating expenses         |  | $                                | 1,268 |  |                                  | $





For the three months ended September 30,
2014, operating expenses decreased by $623,000 or 33% to $1,269,000, as compared to $1,892,000 for the three months ended September
30, 2013, resulting from:



| | · | A $450,000 decrease in employment expense ; primarily attributable to decreased in employee headcount to 34 at September 30, 2014 from 64 at September 30, 2013;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | A $154,000 decrease in professional services - primarily attributable to a decrease in legal, accounting and consulting services compared to last year associated with our arbitration proceedings with Schlumberger pertaining to disputes to resolve certain financial issues contained in the 2009 exclusive reseller agreement;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | A $28,000 increase in rent and maintenance;
| | - | -------------------------------------------



| | · | A $29,000 decrease in depreciation; and
| | - | ---------------------------------------



| | · | A $19,000 decrease in other general and administrative.
| | - | -------------------------------------------------------





For the nine months ended September 30,
2014, operating expenses decreased by $1,945,000 or 33% to $3887,000, as compared to $5,832,000 for the nine months ended September
30, 2013, resulting from:



| | · | A $1,268,000 decrease in employment expense
- primarily attributable to decreased employee headcount to 34 at September 30, 2014 from 64 at September 30, 2013;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | A $660,000 decrease in professional services
- primarily attributable to decrease in legal, accounting and consulting services compared to last year associated with our arbitration
proceedings with Schlumberger pertaining to disputes to resolve certain financial issues contained in the 2009 exclusive reseller
agreement;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





23







| |  
| | -
| |  
| | ·



| | · | A $87,000 decrease in depreciation; and
| | - | ---------------------------------------



| | · | A $109,000 increase in other general and administrative.
| | - | --------------------------------------------------------



OTHER INCOME (EXPENSE), NET



For the three months ended September 30,
2014, other income, net increase to $1,570,000 from $1,471,000 in other expense, net as compared to three months ended September
30, 2013. The increase in other income, net of $3,041,000 from the prior year period is primarily attributable to the gain on sale
recorded with the divestiture totaling $2,006,000 and a decrease in our interest expense, net on debt obligations totaling $924,000.
The derivative expense/income represents the net unrealized (non-cash) charge during the three months ended September 30, 2014
and 2013, in the fair value of our derivative instrument liabilities related to warrants and embedded derivatives in our debt instruments
that have been bifurcated and accounted for separately.



For the nine months ended September 30,
2014, other income, net increased to $1,231,000 from $2,897,000 in other expense, net as compared to nine months ended September
30, 2013. The increase in other income, net of $4,128,000 from the prior year period is primarily attributable to the gain on
sale recorded with the divestiture totaling $2,006,000 and a decrease in our interest expense, net on debt obligations totaling
$2,357,000. The derivative expense/income represents the net unrealized (non-cash) charge during the nine months ended September
30, 2014 and 2013, in the fair value of our derivative instrument liabilities related to warrants and embedded derivatives in
our debt instruments that have been bifurcated and accounted for separately.



CASH FLOWS



Our operating activities decreased net
cash used by operating activities to $676,000 in the nine months ended September 30, 2014, compared to net cash used of $2,434,000
in the nine months ended September 30, 2013. The decreased net cash used by operating activities was primarily attributable to
accounts payable, accounts receivables and reduction of employee headcount and professional services as compared to September 30,
2013.



Our investing activities provided net cash
of $381,000 in the nine months ended September 30, 2014, compared to net cash used of $187,000 in the nine months ended September
30, 2013. The increase in cash from investing activities is primarily attributable to the initial proceeds from the divestiture.



Our financing activities provided net cash
of $429,000 in the nine months ended September 30, 2014, compared to $2,613,000 of cash used in the nine months ended September
30, 2013. The cash provided in the nine months ended September 30, 2014, was primarily associated with proceeds from debt financings.



LIQUIDITY AND CAPITAL RESOURCES





At September 30, 2014, ours current assets
totaled $2,091,000 (including cash and cash equivalents of $179,000); and total current liabilities were $5,609,000, resulting
in negative working capital of $3,518,000. We funded our operations during the last nine months primarily through borrowings.
These borrowings during the nine months ended September 30, 2014 were from our line of credit, net totaling $503,830 and convertible
debt financing of $285,500.



ISSUANCE OF COMMON STOCK



During the nine months ended September
30, 2014, we issued to various accredited investors 14,408,544 shares for interest, services rendered and debt conversions. We
relied on Section 4(2) of the Securities Act in effecting these transactions. There was not a registration statement for Form
S-8.



USE OF WORKING CAPITAL



We believe our cash and available credit
facilities afford us adequate liquidity through September 30, 2015. We anticipate that we will need additional capital in the future
to continue to expand our business operations. We have historically financed our operations through private equity and debt financings.
We do not have any commitments for equity or debt funding at this time, and additional funding may not be available to us on favorable
terms, if at all. As such, there is no assurance that we can raise additional capital from external sources, the failure of which
could cause us to curtail operations.



OFF-BALANCE SHEET ARRANGEMENTS



As of September 30, 2014, the Company did
not have any significant off-balance-sheet arrangements other than certain office and tower facility operating leases requiring
minimal commitments under non-cancelable leases disclosed in the Form 10-K.





24







CRITICAL ACCOUNTING POLICIES AND ESTIMATES



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 that
are generally three to seven years.



Long-Lived Assets



We review our long-lived assets, to include
intangible assets subject to amortization, for recoverability whenever events or changes in circumstances indicate that the carrying
amount of such long-lived asset or group of long-lived assets (collectively referred to as "the asset") may not be recoverable.
Such circumstances include, but are not limited to:



| | · | 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; and
| | - | ------------------------------------------------------------------------------------------



| | · | 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.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



We continually evaluate whether such events
and circumstances have occurred. When such events or circumstances exist, the recoverability of the asset's carrying value shall
be determined by estimating the undiscounted future cash flows (cash inflows less associated cash outflows) that are directly associated
with and that are expected to arise as a direct result of the use and eventual disposition of the asset. To date, no such impairment
has occurred. To the extent such events or circumstances occur that could affect the recoverability of our long-lived assets, we
may incur charges for impairment in the future.



Derivative Instruments



In connection with the sale
of debt or equity instruments, the Company may sell options or warrants to purchase our common stock. In certain circumstances,
these options or warrants may be classified as derivative liabilities, rather than as equity. Additionally, the debt or equity
instruments may contain embedded derivative instruments, such as embedded derivative features, which in certain circumstances may
be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.



Our derivative instrument liabilities
are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges
or credits to income in the period in which the changes occur. For options, warrants and bifurcated embedded derivative features
that are accounted for as derivative instrument liabilities, the Company estimates fair value using either quoted market prices
of financial instruments with similar characteristics or other valuation techniques. The valuation techniques require assumptions
related to the remaining term of the instruments and risk-free rates of return, our current common stock price and expected dividend
yield, and the expected volatility of our common stock price over the life of the option. Because of the limited trading history
for our common stock, the Company estimates the future volatility of its common stock price based on not only the history of its
stock price but also the experience of other entities considered comparable to the Company.



Recent Accounting Pronouncements



Management does not anticipate that the
recently issued but not yet effective accounting pronouncements will materially impact the Company’s financial condition.



ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK



As a smaller reporting company, as defined
in rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are not required to provide
the information mandated by this item.



ITEM 4. CONTROLS AND PROCEDURES



We maintain disclosure controls and procedures
that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such
information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls
and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating
the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures were designed to provide
reasonable assurance that the controls and procedures would meet their objectives.



As required by SEC Rule 13a-15(b), we carried
out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end
of the period covered by this report. Following the review, the Chief Executive Officer and Chief Financial Officer added upgrades
to the disclosure controls and procedures. Based on the foregoing, and after the upgrades, our Chief Executive Officer and Chief
Financial Officer concluded that as of September 30, 2014, our disclosure controls and procedures were effective at the reasonable
assurance level.





25











PART II – OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



We are not a party to any material legal proceedings.



ITEM 1A. RISK FACTORS



There have been no material changes to the
risk factors previously disclosed under Item 1 of the Company’s Form 10-K for the fiscal year ended December 31, 2013 filed
with the SEC on April 15, 2014. Additionally, as a Smaller Reporting Company, we are not required to provide risk factors in our
periodic reports.



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS



The following transactions were completed pursuant
to either Section 4(2) of the Securities Act or Regulation D of the Securities Act. With respect to issuances made pursuant to
Section 4(2) of the Securities Act, the transactions did not involve any public offering and were sold to a limited group of persons.
Each recipient either received adequate information about ERF Wireless or had access, through employment or other relationships,
to such information, and ERF Wireless determined that each recipient had such knowledge and experience in financial and business
matters that they were able to evaluate the merits and risks of an investment in the Company.



With respect to issuances made pursuant to
Regulation D of the Securities Act, we determined that each purchaser was an "accredited investor" as defined in Rule
501(a) under the Securities Act, or if such investor was not an accredited investor, that such investor received the information
required by Regulation D.



All sales of the Company's securities were
made by our officers who received no commission or other remuneration for the solicitation of any person in connection with the
respective sales of securities described above. The recipients of securities represented their intention to acquire the securities
for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were
affixed to the share certificates and other instruments issued in such transactions.



Common Stock Issued for Interest, Services
and Debt Conversions



In July 2014, we issued 2,257,299 shares of
our Common Stock at an average price of $.070 for interest and debt conversions.



In August 2014, we issued 1,984,109 shares
of our Common Stock at an average price of $.047 for interest and debt conversions.



In September 2014, we issued 5,943,654 shares
of common stock at an average price of $.038 for interest, services and debt conversions.



Common Stock Issued Upon Conversion of Series
A Preferred Stock



For the three-month period ended September
30, 2014 no shares of common stock were issued pursuant to Preferred A Conversions.



ITEM 3. DEFAULT IN SENIOR SECURITIES



None.



ITEM 4. MINE SAFETY DISCLOSURES



Not applicable.



ITEM 5. OTHER INFORMATION



None.





26







ITEM 6. EXHIBITS



|Exhibit 31.1 | Certification of Chief Executive 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 31.2 | Certification of 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 32.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002         
|Exhibit 32.2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002         
|99.1         | Temporary Hardship Exemption                                                                                                                              
|101.INS*     | XBRL Instance Document                                                                                                                                    
|101.SCH*     | XBRL Taxonomy Extension Schema Document                                                                                                                   
|101.CAL*     | XBRL Taxonomy Extension Calculation Linkbase Document                                                                                                     
|101.LAB*     | XBRL Taxonomy Extension Label Linkbase Document                                                                                                           
|101.PRE*     | XBRL Taxonomy Extension Presentation Linkbase Document                                                                                                    
|101.DEF*     | XBRL Taxonomy Extension Definition Linkbase Document                                                                                                      

_______________

|* | To be furnished by amendment per Temporary Hardship Exemption under Regulation S-T.
|- | -----------------------------------------------------------------------------------

























27







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.

By:      /s/H.
Dean Cubley
            H. Dean Cubley
            Chief Executive Officer
Date:    November 19, 2014



By:      /s/,
R. Greg Smith
            R. Greg Smith
           Chief Financial Officer
Date:    November 19, 2014





































28