----

----

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

|   | Large accelerated filer o | Accelerated filer o         |   |
|--------|---------------------------|-----------------------------|--------|
|   | Non-accelerated filer o   | Smaller reporting company x |   |

----

----

|                                                               |   | June 30,    |    |   | December 31, |   |
|--------------------------------------------------------------------|--------|-------------|---------|--------|--------------|--------|
|                                                               |   | 2010        |    |   | 2009         |   |
|                                                               |   | (unaudited) |    |   |         |   |
| ASSETS                                                             |   |        |    |   |         |   |
| Current assets                                                     |   |        |    |   |         |   |
| Cash and cash equivalents                                          |   | $           | 208     |   |         | $      | 228 |   |
| Accounts receivable, net                                           |   |        | 488     |   |         |   | 494 |   |
| Accounts receivable, other                                         |   |        | 85      |   |         |   | 78 |   |
| Inventories                                                        |   |        | 240     |   |         |   | 222 |   |
| Costs and profits in excess of billings                            |   |        | 18      |   |         |   | 17 |   |
| Prepaid expenses and other current assets                          |   |        | 148     |   |         |   | 242 |   |
| Total current assets                                               |   |        | 1,187   |   |         |   | 1,281 |   |
|                                                               |   |        |    |   |         |   |   |   |
| Property and equipment                                             |   |        |    |   |         |   |   |   |
| Property and equipment                                             |   |        | 9,839   |   |         |   | 9,347 |   |
| Less: accumulated depreciation                                     |   |        | (4,917  | )      |         |   | (3,712 | ) |
| Net property and equipment                                         |   |        | 4,922   |   |         |   | 5,635 |   |
|                                                               |   |        |    |   |         |   |   |   |
| Goodwill                                                           |   |        | 1,255   |   |         |   | 1,255 |   |
| Intangible assets, net                                             |   |        | 365     |   |         |   | 701 |   |
| Other assets                                                       |   |        | 216     |   |         |   | 245 |   |
|                                                               |   |        |    |   |         |   |   |   |
| Total assets                                                       |   | $           | 7,945   |   |         | $      | 9,117 |   |
|                                                               |   |        |    |   |         |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ (DEFICIT)                      |   |        |    |   |         |
| Current liabilities:                                               |   |        |    |   |         |   |   |   |
| Notes payable and current portion of long-term debt                |   | $           | 1,204   |   |         | $      | 1,881 |   |
| Current portion of long-term capital leases                        |   |        | 664     |   |         |   | 854 |   |
| Accounts payable                                                   |   |        | 785     |   |         |   | 586 |   |
| Accrued expenses                                                   |   |        | 848     |   |         |   | 486 |   |
| Derivative liabilities                                             |   |        | 83      |   |         |   | 269 |   |
| Deferred liability and revenue                                     |   |        | 568     |   |         |   | 585 |   |
| Total current liabilities                                          |   |        | 4,152   |   |         |   | 4,661 |   |
|                                                               |   |        |    |   |         |   |   |   |
| Line of credit                                                     |   |        | 6,197   |   |         |   | 5,449 |   |
| Long-term debt, net of current portion                             |   |        | 442     |   |         |   | 442 |   |
| Long-term capital leases, net of current portion                   |   |        | 523     |   |         |   | 789 |   |
| Deferred liability and revenue, net of current portion             |   |        | 75      |   |         |   | 150 |   |
| Total liabilities                                                  |   |        | 11,389  |   |         |   | 11,491 |   |
|                                                               |   |        |    |   |         |   |   |   |
| Commitments                                                        |   |        |    |   |         |   |   |   |
|                                                               |   |        |    |   |         |   |   |   |
| Shareholders’ (deficit):                                     |   |        |    |   |         |   |   |   |
| Preferred stock - $.001 par value, Authorized 25,000,000 |   |
| Series A authorized 5,000,000 shares; issued and              |   |        |    |   |         |
| Outstanding at June 30, 2010, and December 31, 2009,               |   |
| 2,516,799 and 3,043,580, respectively                              |   |        | 3       |   |         |   | 3 |   |
| Common stock  -  $.001 par value               |   |        |    |   |         |   |   |   |
| Authorized 475,000,000 shares                                      |   |        |    |   |         |   |   |   |
| Issued and outstanding at June 30, 2010, and                       |   |        |    |   |         |
| December 31, 2009, 205,419,310 and 145,575,735, respectively       |   |        | 205     |   |         |   | 146 |   |
| Additional paid in capital                                         |   |        | 39,590  |   |         |   | 36,785 |   |
| Accumulated deficit                                                |   |        | (43,242 | )      |         |   | (39,308 | ) |
| Total shareholders’ (deficit)                                |   |        | (3,444  | )      |         |   | (2,374 | ) |
|                                                               |   |        |    |   |         |   |   |   |
| Total liabilities and shareholders' (deficit)                      |   | $           | 7,945   |   |         | $      | 9,117 |   |

----

|                                 |   | For the Three Months |   |   | For the Six Months |   |
|--------------------------------------|--------|----------------------|--------|--------|--------------------|--------|
|                                 |   | Ended June 30,       |   |   | Ended June 30,     |   |
|                                 |   | 2010                 |   |   | 2009               |   |   | 2010 |   |   | 2009 |   |
|                                 |   |                 |   |   |               |   |   |   |   |   |   |   |
| Sales:                               |   |                 |   |   |               |   |   |   |   |   |   |   |
| Products                             |   | $                    | 82     |   |               | $      | 17 |   |   | $ | 100 |   |   | $ | 154 |   |
| Services                             |   |                 | 1,494  |   |               |   | 1,261 |   |   |   | 2,955 |   |   |   | 2,447 |   |
| Total sales                          |   |                 | 1,576  |   |               |   | 1,278 |   |   |   | 3,055 |   |   |   | 2,601 |   |
|                                 |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Costs of goods sold:                 |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Products and integration services    |   |                 | 377    |   |               |   | 295 |   |   |   | 751 |   |   |   | 737 |   |
| Rent, repairs and maintenance        |   |                 | 148    |   |               |   | 110 |   |   |   | 269 |   |   |   | 206 |   |
| Depreciation                         |   |                 | 506    |   |               |   | 296 |   |   |   | 999 |   |   |   | 561 |   |
| Total costs of goods sold            |   |                 | 1,031  |   |               |   | 701 |   |   |   | 2,019 |   |   |   | 1,504 |   |
|                                 |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                         |   |                 | 545    |   |               |   | 577 |   |   |   | 1,036 |   |   |   | 1,097 |   |
| Operating expenses:                  |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative  |   |                 | 1,884  |   |               |   | 2,100 |   |   |   | 3,940 |   |   |   | 4,340 |   |
| Depreciation and amortization        |   |                 | 286    |   |               |   | 370 |   |   |   | 548 |   |   |   | 722 |   |
| Total operating expenses             |   |                 | 2,170  |   |               |   | 2,470 |   |   |   | 4,488 |   |   |   | 5,062 |   |
| Loss from operations                 |   |                 | (1,625 | )      |               |   | (1,893 | ) |   |   | (3,452 | ) |   |   | (3,965 | ) |
| Other income (expense):              |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense, net                |   |                 | (395   | )      |               |   | (288 | ) |   |   | (815 | ) |   |   | (543 | ) |
| Sale of assets, net and other income |   |                 | 4      |   |               |   | 2 |   |   |   | 7 |   |   |   | 5 |   |
| Derivative income                    |   |                 | 157    |   |               |   | 80 |   |   |   | 326 |   |   |   | 45 |   |
| Total other income (expense)         |   |                 | (234   | )      |               |   | (206 | ) |   |   | (482 | ) |   |   | (493 | ) |
|                                 |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                             |   | $                    | (1,859 | )      |               | $      | (2,099 | ) |   | $ | (3,934 | ) |   | $ | (4,458 | ) |
| Net loss per common share:           |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                |   | $                    | (0.01  | )      |               | $      | (0.02 | ) |   | $ | (0.02 | ) |   | $ | (0.04 | ) |
| Diluted                              |   | $                    | (0.01  | )      |               | $      | (0.02 | ) |   | $ | (0.02 | ) |   | $ | (0.04 | ) |

----

|                                                                        |   | 2010   |   |   | 2009   |   |
|-----------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                        |   |   |   |   |   |   |
| Cash flows from operating activities                                        |   |   |   |   |   |   |
| Net loss                                                                    |   | $      | (3,934 | )      |   | $      | (4,458 | ) |
|                                                                        |   |   |   |   |   |   |   |   |
| Adjustments to reconcile net loss to net cash used by operating activities: |   |   |   |   |   |   |   |   |
| Loss on sale of assets                                                      |   |   | 1      |   |   |   | - |   |
| Amortization of debt discount                                               |   |   | 145    |   |   |   | 89 |   |
| Depreciation and amortization                                               |   |   | 1,547  |   |   |   | 1,283 |   |
| Stock based compensation                                                    |   |   | 13     |   |   |   | - |   |
| Stock issued for services rendered and interest                             |   |   | 818    |   |   |   | 1,375 |   |
| Derivative (income)                                                         |   |   | (326   | )      |   |   | (45 | ) |
| Bad debt expense                                                            |   |   | 82     |   |   |   | 37 |   |
| Changes in:                                                                 |   |   |   |   |   |   |   |   |
| Accounts receivable, net                                                    |   |   | (76    | )      |   |   | (39 | ) |
| Accounts receivable, other                                                  |   |   | (7     | )      |   |   | (70 | ) |
| Inventories                                                                 |   |   | (18    | )      |   |   | (48 | ) |
| Prepaid expenses                                                            |   |   | 94     |   |   |   | 133 |   |
| Costs and profits in excess of billings                                     |   |   | (1     | )      |   |   | 267 |   |
| Accounts payable                                                            |   |   | 199    |   |   |   | (292 | ) |
| Accrued expenses                                                            |   |   | 705    |   |   |   | 282 |   |
| Deferred liability and revenue                                              |   |   | (92    | )      |   |   | 203 |   |
| Total adjustment                                                            |   |   | 3,084  |   |   |   | 3,175 |   |
| Net cash used by operating activities                                       |   |   | (850   | )      |   |   | (1,283 | ) |
|                                                                        |   |   |   |   |   |   |   |   |
| Cash flows from investing activities                                        |   |   |   |   |   |   |   |   |
| Proceeds from sale of assets                                                |   |   | 8      |   |   |   | - |   |
| Purchase of property and equipment                                          |   |   | (507   | )      |   |   | (394 | ) |
| Business acquisitions, net of cash acquired                                 |   |   | -      |   |   |   | (167 | ) |
| Change in other assets                                                      |   |   | 29     |   |   |   | 14 |   |
| Net cash used by investing activities                                       |   |   | (470   | )      |   |   | (547 | ) |
|                                                                        |   |   |   |   |   |   |   |   |
| Cash flows from financing activities                                        |   |   |   |   |   |   |   |   |
| Net proceeds from line of credit                                            |   |   | 1,512  |   |   |   | 818 |   |
| Proceeds from notes payable                                                 |   |   | -      |   |   |   | 150 |   |
| Proceeds from long-term debt obligations                                    |   |   | 759    |   |   |   | 990 |   |
| Payment of long-term debt obligations                                       |   |   | (767   | )      |   |   | (200 | ) |
| Payment on capital lease obligations                                        |   |   | (456   | )      |   |   | (430 | ) |
| Proceeds from sale of common stock, net                                     |   |   | 252    |   |   |   | 334 |   |
| Net cash provided by financing activities                                   |   |   | 1,300  |   |   |   | 1,662 |   |
|                                                                        |   |   |   |   |   |   |   |   |
| Net change in cash                                                          |   |   | (20    | )      |   |   | (168 | ) |
| Cash and cash equivalents at the beginning of the period                    |   |   | 228    |   |   |   | 348 |   |
| Cash and cash equivalents at the end of the period                          |   | $      | 208    |   |   | $      | 180 |   |
|                                                                        |   |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                           |   |   |   |   |   |
| Net cash paid during the year for:                                          |   |   |   |   |   |   |   |   |
| Interest                                                                    |   | $      | 151    |   |   | $      | 166 |   |
| Income taxes                                                                |   | $      | -      |   |   | $      | - |   |
|                                                                        |   |   |   |   |   |   |   |   |
| Supplemental non-cash investing and financing activities:                   |   |   |   |   |   |
| Conversion of debt through issuance of common stock                         |   | $      | 674    |   |   | $      | 320 |   |
| Conversion of debt through issuance of preferred stock                      |   | $      | 1,104  |   |   | $      | - |   |
| Issuance of shares for asset acquisition                                    |   | $      | -      |   |   | $      | 884 |   |
| Property acquired under capital lease                                       |   | $      | -      |   |   | $      | 68 |   |
| Note payable for acquisition                                                |   | $      | -      |   |   | $      | 444 |   |

----

|           |   | June 30, |   |   | December 31, |   |
|----------------|--------|----------|--------|--------|--------------|--------|
|           |   | 2010     |   |   | 2009         |   |
| Raw material   |   | $        | 64     |   |         | $      | 63 |   |
| Finished goods |   |     | 176    |   |         |   | 159 |   |
|           |   | $        | 240    |   |         | $      | 222 |   |

----

| June 30, 2010                                              |   | Supplemental Non-Cash Disclosure |   |
|------------------------------------------------------------|--------|----------------------------------|--------|
| Professional fees                                          |   | $                                | 370    |   |
| Settlements                                                |   |                             | 26     |   |
| Salary and compensation                                    |   |                             | 359    |   |
| Other services rendered                                    |   |                             | 63     |   |
| Total for services, interest, liabilities and compensation |   | $                                | 818    |   |
|                                                       |   |                             |   |   |
| Notes payable                                              |   | $                                | 674    |   |

----

|                                                     |   | 2008   |       |
|----------------------------------------------------------|--------|--------|------------|
|                                                     |   | Plan   |       |
| Shares initially reserved                                |   |   | 15,000,000 |   |
|                                                     |   |   |       |   |
| Remaining shares January 1, 2010                         |   |   | 5,995,378  |   |
|                                                     |   |   |       |   |
| Shares issued during 2010                                |   |   | 5,453,353  |   |
|                                                     |   |   |       |   |
| Remaining shares available to be issued at June 30, 2010 |   |   | 542,025    |   |
|                                                     |   |   |       |   |
| Shares issued and outstanding as of June 30, 2010        |   |   | 14,457,975 |   |
|                                                     |   |   |       |   |
|                                                     |   |   |       |   |
|                                                     |   | 2010   |       |
|                                                     |   | Plan   |       |
| Shares initially reserved                                |   |   | 25,000,000 |   |
|                                                     |   |   |       |   |
| Remaining shares June 30, 2010                           |   |   | 25,000,000 |   |
|                                                     |   |   |       |   |
| Shares issued during 2010                                |   |   | -          |   |
|                                                     |   |   |       |   |
| Remaining shares available to be issued at June 30, 2010 |   |   | 25,000,000 |   |
|                                                     |   |   |       |   |
| Shares issued and outstanding as of June 30, 2010        |   |   | -          |   |

----

|                             | Shares  |   | Weighted-Average Exercise Price |
|----------------------------------|---------|--------|---------------------------------|
|                             |    |   |                            |   |   |
| Outstanding at beginning of year | 125,000 |   | $                               | 0.43 |   |
| Granted                          | 200,000 |   |                            | 0.17 |   |
| Exercised                        | -       |   |                            | - |   |
| Forfeited/cancelled              | -       |   |                            | - |   |
|                             |    |   |                            |   |   |
| Outstanding at the end of period | 325,000 |   | $                               | 0.27 |   |
|                             |    |   |                            |   |   |
| Exercisable at June 30, 2010     | 325,000 |   | $                               | 0.27 |   |

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

|           |   |   |        |    |    | Remaining Weighted  |   |   |        |   |    | Remaining Weighted |   |
|----------------|--------|--------|-------------|---------|---------|---------------------|--------|--------|-------------|--------|---------|--------------------|--------|
| Class          |   |   | Number      |    |    | Average Contractual |   |   | Number      |   |    | Average Exercise   |   |
| Exercise Price |   |   | Outstanding |    |    | Life in Years       |   |   | Exercisable |   |    | Price              |   |
|           |   |   |        |    |    |                |   |   |        |   |    |               |   |
| $0.17          |   |   |        | 200,000 |    |                | 4.75   |   |        |   | 200,000 |               |   | $ | 0.17 |   |
| $0.43          |   |   |        | 125,000 |    |                | 3.08   |   |        |   | 125,000 |               |   | $ | 0.43 |   |
|           |   |   |        |    |    |                |   |   |        |   |    |               |   |   |   |   |   |   |
|           |   |   |        |    | 325,000 |                |   | 3.92   |        |   |    | 325,000            |   |   | $ | 0.27 |   |

|                                                          |   | For the six months ended June 30, 2010 |   |
|---------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                          |   | Net loss                               |   |   | Shares |   |   | Per-Share |   |
|                                                          |   | (Numerator)                            |   |   | (Denominator) |   | Amount |   |
| Basic EPS:                                                    |   |                                   |   |   |   |   |   |   |   |
| Loss available to common stockholders                         |   | $                                      | (3,934 | ) |   |   | 167,302 |   |   | $ | (0.02 | ) |
| Effect of dilutive securities                                 |   |                                   | -      |   |   |   | - |   |   |   | - |   |
| Diluted EPS:                                                  |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Loss available to common stockholders and assumed conversions |   | $                                      | (3,934 | ) |   |   | 167,302 |   |   | $ | (0.02 | ) |
|                                                          |   |                                   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |                                   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   | For the six months ended June 30, 2009 |   |
|                                                          |   | Net loss                               |   |   | Shares |   |   | Per-Share |   |
|                                                          |   | (Numerator)                            |   |   | (Denominator) |   | Amount |   |
| Basic EPS:                                                    |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Loss available to common stockholders                         |   | $                                      | (4,458 | ) |   |   | 106,905 |   |   | $ | (0.04 | ) |
| Effect of dilutive securities                                 |   |                                   | -      |   |   |   | - |   |   |   | - |   |
| Diluted EPS:                                                  |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Loss available to common stockholders and assumed conversions |   | $                                      | (4,458 | ) |   |   | 106,905 |   |   | $ | (0.04 | ) |

----

|                                                               |   | For the three months ended June 30, 2010 |   |
|--------------------------------------------------------------------|--------|------------------------------------------|--------|
|                                                               |   | Income                                   |   |   | Shares |   |   | Per-Share |   |
|                                                               |   | (Numerator)                              |   |   | (Denominator) |   | Amount |   |
| Basic EPS:                                                         |   |                                     |   |   |   |   |   |   |   |
| Loss available to common stockholders                              |   | $                                        | (1,859 | ) |   |   | 181,896 |   |   | $ | (0.01 | ) |
| Effect of dilutive securities                                      |   |                                     | -      |   |   |   |   |   |   |   | - |   |
| Diluted EPS:                                                       |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Loss available to common stockholders and assumed conversions |   | $                                        | (1,859 | ) |   |   | 181,896 |   |   | $ | (0.01 | ) |
|                                                               |   |                                     |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |                                     |   |   |   |   |   |   |   |   |   |   |
|                                                               |   | For the three months ended June 30, 2009 |   |
|                                                               |   | Income                                   |   |   | Shares |   |   | Per-Share |   |
|                                                               |   | (Numerator)                              |   |   | (Denominator) |   | Amount |   |
| Basic EPS:                                                         |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Loss available to common stockholders                              |   | $                                        | (2,099 | ) |   |   | 107,830 |   |   | $ | (0.02 | ) |
| Effect of dilutive securities                                      |   |                                     | -      |   |   |   |   |   |   |   | - |   |
| Diluted EPS:                                                       |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Loss available to common stockholders and assumed conversions      |   | $                                        | (2,099 | ) |   |   | 107,830 |   |   | $ | (0.02 | ) |

|                                |   | Terms                                         |   | Maturity Date |   | Interest Rate |   | Gross Balance |                                                                                                                | Debt Discount |   | Net Balance                                                                                                    |
|-------------------------------------|--------|-----------------------------------------------|--------|---------------|--------|---------------|--------|---------------|---------------------------------------------------------------------------------------------------------------------|---------------|--------|----------------------------------------------------------------------------------------------------------------|
| Bancleasing, Inc.                   |   | $10,660 / Month including interest            |   | October-14    |   | 11.62%        |   | $             | 453                                                                                                                 |          | $      | -                                                                                                              |   | $ | 453 |
| Agility Capital Lease               |   | $77,369 / Month including interest            |   | Various       |   | 18.82%        |   |          |                728                       |          |   |                   -  |   |   |             728 |
| De Lage Landen Lease                |   | $691 / Month including interest               |   | April-11      |   | 19.12%        |   |          |                    6 |          |   |                   -  |   |   |                 6 |
| Toyota                              |   | $517 / Month including interest               |   | December-10   |   | 8.01%         |   |          |                    1 |          |   |                   -  |   |   |                 1 |
| Blanco National Bank                |   | $3,913 / Month including interest             |   | August-10     |   | 9.50%         |   |          |                    1 |          |   |                   -  |   |   |                 1 |
| Robert McClung, Momentum            |   | $23,476 / Quarterly including interest        |   | October-10    |   | 7.50%         |   |          |                  46            |          |   |                   -  |   |   |               46 |
| Shane Griffths, Crosswind           |   | $13,911 / Quarterly including interest        |   | December-10   |   | 7.50%         |   |          |                  42            |          |   |                   -  |   |   |               42 |
| Centramedia                         |   | $56,342 / Quarterly including interest        |   | December-11   |   | 7.50%         |   |          |                366                       |          |   |                   -  |   |   |             366 |
| Frontier Internet LLC               |   | $33,846 / Quarterly including interest        |   | May-12        |   | 6.00%         |   |          |                253                       |          |   |                   -  |   |   |             253 |
| Ronnie D Franklin                   |   | $6,054 / Quarterly including interest         |   | May-12        |   | 6.00%         |   |          |                  45            |          |   |                   -  |   |   |               45 |
| Premium Assignment, Insurance notes |   | $2,434 / Month including interest             |   | September-10  |   | 7.54%         |   |          |                    1 |          |   |                   -  |   |   |                 1 |
| Convertible Note                    |   |  1 year                                  |   | Demand        |   | 10.00%        |   |          |                305                       |          |   |                   97 |   |   |             208 |
| Bridge Financing                    |   |  1 year                                  |   | Demand        |   | 10.00%        |   |          |                701                       |          |   |                   18 |   |   |             683 |
| Line of credit                      |   |  2 years/ Quarterly interest (See below) |   | December-11   |   | 12.00%        |   |          |             6,197                                       |          |   |                   -  |   |   |          6,197 |
| Total debt                          |   |                                          |   |          |   |          |   | $             | 9,145                                                                                                               |          | $      | 115                                                                                                            |   |   |          9,030 |
| Less current maturities             |   |                                          |   |          |   |          |   |          |                                                                                                                |          |   |                                                                                                           |   |   |         (1,868) |
| Long-term debt                      |   |                                          |   |          |   |          |   |          |                                                                                                                |          |   |                                                                                                           |   | $ | 7,162 |

----

| Description                               |   | Bridge Note |   |   | Warrant Liabilities |   |   | Total  |   |
|-------------------------------------------|--------|-------------|--------|--------|---------------------|--------|--------|--------|--------|
| Fair value at December 31, 2009           |   | $           | 1,273  |   |                | $      | 268    |   |   | $ | 1,541 |   |
| 01-01-10 to 03-31-10 change in fair value |   |        | 77     |   |                |   | (134   | )      |   |   | (57 | ) |
| 04-01-10 to 06-30-10 change in fair value |   |        | 23     |   |                |   | (85    | )      |   |   | (62 | ) |
| Conversions during period                 |   |        | (690   | )      |                |   | -      |   |   |   | (690 | ) |
| Fair value at June 30, 2010               |   | $           | 683    |   |                | $      | 49     |   |   | $ | 732 |   |

----

| Description                               |   | Convertible Note |   |   | Compound Derivative Liability |   |   | Total  |   |
|-------------------------------------------|--------|------------------|--------|--------|-------------------------------|--------|--------|--------|--------|
| Fair value issuance at inception          |   | $                | 355    |   |                          | $      | 250    |   |   | $ | 605 |   |
| 03-19-10 to 03-31-10 change in fair value |   |             | 33     |   |                          |   | (62    | )      |   |   | (29 | ) |
| 04-01-10 to 06-30-10 change in fair value |   |             | 120    |   |                          |   | (154   | )      |   |   | (34 | ) |
| Conversions during period                 |   |             | (300   | )      |                          |   | -      |   |   |   | (300 | ) |
| Fair value at June 30, 2010               |   | $                | 208    |   |                          | $      | 34     |   |   | $ | 242 |   |

| Year Ending  December 31,             |   |   |   |
|-------------------------------------------------|--------|--------|--------|
| 2010                                            |   | $      | 477    |   |
| 2011                                            |   |   | 524    |   |
| 2012                                            |   |   | 141    |   |
| 2013                                            |   |   | 128    |   |
| 2014                                            |   |   | 128    |   |
| Thereafter                                      |   |   | 11     |   |
| Total minimum lease payments                    |   |   | 1,409  |   |
| Less amount representing interest               |   |   | (222   | ) |
| Present value of net minimum lease payments     |   |   | 1,187  |   |
| Current maturities of capital lease obligations |   |   | (664   | ) |
| Long-term portion of capital lease obligations  |   | $      | 523    |   |

----

| Period EndingDecember 31, |   | Amount |   |
|---------------------------|--------|--------|--------|
| 2010                      |   | $      | 305    |   |
| 2011                      |   |   | 424    |   |
| 2012                      |   |   | 71     |   |
| 2013                      |   |   | 25     |   |
| 2014                      |   |   | 12     |   |
| Thereafter                |   |   | 25     |   |
| Total                     |   | $      | 862    |   |

----

| Three Months Ended June 30, 2010 |   | WMS    |   |   | WBS    |   |   | EBI    |   |   | ENS    |   |   | Total  |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Revenue                          |   | $      | 63     |   |   | $      | 1,172  |   |   | $      | 206    |   |   | $      | 135    |   |   | $ | 1,576 |   |
| Segment (loss) income            |   |   | 5      |   |   |   | (499   | )      |   |   | (61    | )      |   |   | (94    | ) |   |   | (649 | ) |
| Segment assets                   |   |   | 66     |   |   |   | 4,907  |   |   |   | 1,168  |   |   |   | 1,485  |   |   |   | 7,626 |   |
| Capital expenditures             |   |   | -      |   |   |   | 83     |   |   |   | 51     |   |   |   | -      |   |   |   | 134 |   |
| Depreciation and amortization    |   |   | 4      |   |   |   | 677    |   |   |   | 34     |   |   |   | 55     |   |   |   | 770 |   |
|                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Three Months Ended June 30, 2009 |   | WMS    |   |   | WBS    |   |   | EBI    |   |   | ENS    |   |   | Total  |   |
| Revenue                          |   | $      | 31     |   |   | $      | 1,145  |   |   | $      | 16     |   |   | $      | 86     |   |   | $ | 1,278 |   |
| Segment (loss) income            |   |   | (56    | )      |   |   | (631   | )      |   |   | (66    | )      |   |   | (165   | ) |   |   | (918 | ) |
| Segment assets                   |   |   | (21    | )      |   |   | 7,404  |   |   |   | 284    |   |   |   | 1,837  |   |   |   | 9,504 |   |
| Capital expenditures             |   |   | -      |   |   |   | 485    |   |   |   | 12     |   |   |   | 105    |   |   |   | 602 |   |
| Depreciation and amortization    |   |   | 4      |   |   |   | 611    |   |   |   | 26     |   |   |   | 3      |   |   |   | 644 |   |

| Reconciliation of Segment Loss from Operations |   | Three Months EndedJune 30, 2010 |   |   | Three Months EndedJune 30, 2009 |   |
|------------------------------------------------|--------|---------------------------------|--------|--------|---------------------------------|--------|
| Total segment loss from operations             |   | $                               | (649   | )      |                            | $      | (918 | ) |
|                                           |   |                            |   |   |                            |   |   |   |
| Total corporate overhead                       |   |                            | (976   | )      |                            |   | (975 | ) |
| Net loss                                       |   | $                               | (1,625 | )      |                            | $      | (1,893 | ) |

| Six Months Ended June 30, 2010 |   | WMS    |   |   | WBS    |   |   | EBI    |   |   | ENS    |   |   | Total  |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Revenue                        |   | $      | 85     |   |   | $      | 2,405  |   |   | $      | 378    |   |   | $      | 187    |   |   | $ | 3,055 |   |
| Segment (loss) income          |   |   | (40    | )      |   |   | (981   | )      |   |   | (156   | )      |   |   | (244   | ) |   |   | (1,421 | ) |
| Segment assets                 |   |   | 66     |   |   |   | 4,907  |   |   |   | 1,168  |   |   |   | 1,485  |   |   |   | 7,626 |   |
| Capital expenditures           |   |   | -      |   |   |   | 175    |   |   |   | 326    |   |   |   | -      |   |   |   | 501 |   |
| Depreciation and amortization  |   |   | 7      |   |   |   | 1,321  |   |   |   | 63     |   |   |   | 111    |   |   |   | 1,502 |   |
|                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Six Months Ended June 30, 2009 |   | WMS    |   |   | WBS    |   |   | EBI    |   |   | ENS    |   |   | Total  |   |
| Revenue                        |   | $      | 91     |   |   | $      | 2,247  |   |   | $      | 20     |   |   | $      | 243    |   |   | $ | 2,601 |   |
| Segment (loss) income          |   |   | (70    | )      |   |   | (1,307 | )      |   |   | (80    | )      |   |   | (379   | ) |   |   | (1,836 | ) |
| Segment assets                 |   |   | (21    | )      |   |   | 7,404  |   |   |   | 284    |   |   |   | 1,837  |   |   |   | 9,504 |   |
| Capital expenditures           |   |   | -      |   |   |   | 602    |   |   |   | 12     |   |   |   | 154    |   |   |   | 768 |   |
| Depreciation and amortization  |   |   | 8      |   |   |   | 1,198  |   |   |   | 29     |   |   |   | 7      |   |   |   | 1,242 |   |

| Reconciliation of Segment Loss from Operations |   | Six Months EndedJune 30, 2010 |   |   | Six Months EndedJune 30, 2009 |   |
|------------------------------------------------|--------|-------------------------------|--------|--------|-------------------------------|--------|
| Total segment loss from operations             |   | $                             | (1,421 | )      |                          | $      | (1,836 | ) |
|                                           |   |                          |   |   |                          |   |   |   |
| Total corporate overhead                       |   |                          | (2,031 | )      |                          |   | (2,129 | ) |
| Net loss                                       |   | $                             | (3,452 | )      |                          | $      | (3,965 | ) |

----

| Reconciliation of Segment Assets to Total Assets |   | June 30, 2010 |   |   | December 31, 2009 |   |
|--------------------------------------------------|--------|---------------|--------|--------|-------------------|--------|
| Total segment assets                             |   | $             | 7,626  |   |              | $      | 8,745 |   |
| Total corporate assets                           |   |          | 319    |   |              |   | 372 |   |
| Consolidated  assets                   |   | $             | 7,945  |   |              | $      | 9,117 |   |

----

| ● | The Company announced that it received Second Round Review letters from the United States Department of Agriculture’s Rural Utilities Service (RUS) regarding their broadband stimulus applications. These letters pertained to three separate applications that ERF Wireless had previously submitted to the RUS in response to the Administration's stated objective to award approximately $7 billion in grants and low interest loans to companies, private and public entities, and other parties to enable the creation of jobs and the development of broadband access to all American citizens. These letters allowed for the submittal of supplemental information to address specific and limited adjustments to all three of the company's Round Two Broadband Initiatives Program (BIP) Infrastructure applications. ERF Wireless submitted separate applications for each of these "last-mile" projects that total approximately $31 million in loan and grant funding. These projects include: |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 1.      | Eagle Ford Shale Broadband Project.   The agricultural area of Texas south of San Antonio has long lagged behind the rest of the state in access to technology. This is a significant barrier to the development in the region. The recent expansion in natural gas exploration in the region has created opportunity for change. The community can only reach the outside world at high speed if they live in close proximity to a telephone company end office, and even then access is not economical. |
|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.      | Texas Educational Broadband Network.   ERF Wireless has developed an open partnership with several Texas Independent School Districts as anchor tenants. A WiMax access network will be implemented for this area west of Houston, Texas, covering some 600 square miles. Wireless access will be provided to schools and other community anchors in this coverage area, and otherwise unavailable broadband Internet access will be provided at competitive rates to businesses and homes. |
|-----------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.      | Central Louisiana WiMax Project .  This project proposes to blanket 900 square miles of rural and economically-distressed communities with the latest in WiMax broadband service. The project will offer a Broadband Lifeline Program that will enable low income families who qualify to receive discounted broadband services. This project will create hundreds of long-term job opportunities and will offer service to all critical community facilities. |
|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | The Company announced that it has settled in stock all of its outstanding convertible debt as of close of business August 4, 2010. As reported in its 10-Q for the first quarter of 2010, the company received approximately $605,000 USD in financing through convertible debentures with several institutional investors during the first quarter of 2010. Since that time, the company has worked to repay that debt, while continuing to execute its business plan for overall revenue growth. In particular, Energy Broadband, Inc., the company's oil and gas services division, continues to gain substantial sales momentum and is currently working to finalize contracts with multiple customers, including some high-profile Fortune 500 companies. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ● | The Company announced that it has entered into a contract with the world's leading oil and gas service’s company in support of BP and the U.S. Coast Guard. ERF Wireless was selected to provide its world-class integrated communications systems to provide bandwidth to the U.S. Coast Guard's Incident Command Center recently set up on Galveston Island to search for and respond to all reports of oil affecting the Texas Gulf Coast that may be associated with the BP Deepwater Horizon spill off the coast of Louisiana. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | The Company announced it continues to sign multiple new contracts to provide communications service, equipment, and infrastructure with a number of oil and gas sector companies for products and services to be provided in the United States as well as several foreign countries. While the size of these recent contracts is typically hundreds of thousands of dollars over multiple-year periods, it further validates that the momentum the company has been realizing in Energy Broadband, Inc., should continue to grow into the future. In addition, the company is in late-stage negotiations with several very large, global energy companies to provide comprehensive communications services to help support a substantial augmentation in communications capabilities for exploration and production activities. The company expects to complete at least one of these large contracts in the short term and will keep shareholders abreast of any new developments regarding signing of any additional contracts. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | The Company announced that it continues to grasp significantly more oil and gas business along with expanding its overall recurring revenue base from broadband to drilling operations, oil and gas well rework, frac operation support, SCADA wireless connectivity, pipeline wireless surveillance and connectivity support, customer wireless network design and construction, new bank customer contracts, and NOC support. All of this new business, which has largely materialized since the start of 2010, is mostly as a result of the increased ERF Wireless sales and marketing efforts starting in the latter half of 2009 and has continued to move the company forward toward its goal of cash flow positive operations in the next few quarters. In view of all of this increased business activity by ERF Wireless, the company finds it ironic that its market capitalization has also seen a steady decline over recent months coupled with the receipt of a large number of shareholder inquiries regarding this decline in market capitalization of the company and the related causes. ERF Wireless has assured all of these inquiring shareholders that the company is continuing to effectively execute its business plan and is currently on track to meet its objective of near-term positive cash flow. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                   |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
| ($ in thousands)       |   | 2010                        |   |   | 2009                      |   |   | $ Change |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | $ Change |   |   | % Change |   |
| Total sales            |   | $                           | 1,576  |   |                      | $      | 1,278 |   |   | $ | 298 |   |   |   | 23% |   |   | $ | 3,055 |   |   | $ | 2,601 |   |   | $ | 454 |   |   |   | 17% |   |
| Cost of goods sold     |   |                        | 1,031  |   |                      |   | 701 |   |   |   | 330 |   |   |   | 47% |   |   |   | 2,019 |   |   |   | 1,504 |   |   |   | 515 |   |   |   | 34% |   |
| Gross profit           |   |                        | 545    |   |                      |   | 577 |   |   |   | (32 | ) |   |   | -6% |   |   |   | 1,036 |   |   |   | 1,097 |   |   |   | (61 | ) |   |   | -6% |   |
| Percent of total sales |   |                        | 35%    |   |                      |   | 45% |   |   |   |   |   |   |   |   |   |   |   | 34% |   |   |   | 42% |   |   |   |   |   |   |   |   |   |
| Operating expenses     |   |                        | 2,170  |   |                      |   | 2,470 |   |   |   | (300 | ) |   |   | -12% |   |   |   | 4,488 |   |   |   | 5,062 |   |   |   | (574 | ) |   |   | -11% |   |
| Loss from operations   |   |                        | (1,625 | )      |                      |   | (1,893 | ) |   |   | 268 |   |   |   | -14% |   |   |   | (3,452 | ) |   |   | (3,965 | ) |   |   | 513 |   |   |   | -13% |   |
| Other income/(expense) |   |                        | (234   | )      |                      |   | (206 | ) |   |   | (28 | ) |   |   | 14% |   |   |   | (482 | ) |   |   | (493 | ) |   |   | 11 |   |   |   | -2% |   |
| Net loss               |   | $                           | (1,859 | )      |                      | $      | (2,099 | ) |   | $ | 240 |   |   |   | -11% |   |   | $ | (3,934 | ) |   | $ | (4,458 | ) |   | $ | 524 |   |   |   | -12% |   |

----

| ($ in thousands)            |   |   |                                                     |       |   | Three Months Ended June 30, |   |                                                     |   |     |
|-----------------------------|--------|--------|----------------------------------------------------------|------------|--------|-----------------------------|--------|----------------------------------------------------------|--------|----------|
| Business Segment            |   | 2010   |                                                     | % of Total |   | 2009                        |   | % of Total                                               |   | $ Change |   | % Change |
| Wireless Messaging Services |   | $      |          63 |       | 4%     |                        | $      |          31 |   | 2%       |   | $ |          32 |   | 103% |
| Wireless Bundled Services   |   |   |     1,172                            |       | 74%    |                        |   |     1,145                            |   | 90%      |   |   |          27 |   | 2% |
| Enterprise Network Services |   |   |        135            |       | 9%     |                        |   |          86 |   | 7%       |   |   |          49 |   | 57% |
| Energy Broadband, Inc.      |   |   |        206            |       | 13%    |                        |   |          16 |   | 1%       |   |   |        190 |   | 1188% |
| Total Sales                 |   | $      |     1,576                            |       | 100%   |                        | $      |     1,278                            |   | 100%     |   | $ |        298 |   | 23% |

| ($ in thousands)            |   |   |                                                     | Six Months Ended June 30, |   |   |   |                                                     |   |
|-----------------------------|--------|--------|----------------------------------------------------------|---------------------------|--------|--------|--------|----------------------------------------------------------|--------|
| Business Segment            |   | 2010   |                                                     | % of Total                |   | 2009   |   | % of Total                                               |   | $ Change |   | % Change |
| Wireless Messaging Services |   | $      |          85 |                      | 3%     |   | $      |          91 |   | 4% |   | $ |          (6) |   | -7% |
| Wireless Bundled Services   |   |   |     2,405                            |                      | 79%    |   |   |     2,247                            |   | 86% |   |   |        158 |   | 7% |
| Enterprise Network Services |   |   |        187            |                      | 6%     |   |   |        243            |   | 9% |   |   |        (56) |   | -23% |
| Energy Broadband, Inc.      |   |   |        378            |                      | 12%    |   |   |          20 |   | 1% |   |   |        358 |   | 1790% |
| Total Sales                 |   | $      |     3,055                            |                      | 100%   |   | $      |     2,601                            |   | 100% |   | $ |        454 |   | 17% |

| ($ in thousands)            |   |   | Three Months Ended June 30,                              |       |   |   |   |                                                     |
|-----------------------------|--------|--------|----------------------------------------------------------|------------|--------|--------|--------|----------------------------------------------------------|
| Business Segment            |   | 2010   |                                                     | % of Total |   | 2009   |   | % of Total                                               |   | $ Change |   | % Change |
| Wireless Messaging Services |   | $      |          19 |       | 2%     |   | $      |          55 |   | 8% |   | $ |              (36) |   | -65% |
| Wireless Bundled Services   |   |   |        783            |       | 76%    |   |   |        594            |   | 85% |   |   |             189 |   | 32% |
| Enterprise Network Services |   |   |        140            |       | 13%    |   |   |          30 |   | 4% |   |   |             110 |   | 367% |
| Energy Broadband, Inc.      |   |   |          89 |       | 9%     |   |   |          22 |   | 3% |   |   |               67 |   | 305% |
| Total cost of sales         |   | $      |     1,031                            |       | 100%   |   | $      |        701            |   | 100% |   | $ |             330 |   | 47% |

----

|                             |   | Three Months Ended June 30, |   |   |   |   |   |     |   |
|----------------------------------|--------|-----------------------------|--------|--------|--------|--------|--------|----------|--------|
| ($ in thousands)                 |   | 2010                        |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|                             |   |                        |   |   |   |   |   |     |   |   |   |   |
| Products and integration service |   | $                           | 377    |   |   | $      | 295    |     |   | $ | 82 |   |   |   | 28% |   |
| Rent and maintenance             |   |                        | 148    |   |   |   | 110    |     |   |   | 38 |   |   |   | 35% |   |
| Depreciation                     |   |                        | 506    |   |   |   | 296    |     |   |   | 210 |   |   |   | 71% |   |
| Total cost of sales              |   | $                           | 1,031  |   |   | $      | 701    |     |   | $ | 330 |   |   |   | 47% |   |

| ($ in thousands)            |   |   |                                                     | Six Months Ended June 30, |   |   |   |                                                     |   |
|-----------------------------|--------|--------|----------------------------------------------------------|---------------------------|--------|--------|--------|----------------------------------------------------------|--------|
| Business Segment            |   | 2010   |                                                     | % of Total                |   | 2009   |   | % of Total                                               |   | $ Change |   | % Change |
| Wireless Messaging Services |   | $      |          36 |                      | 2%     |   | $      |          99 |   | 7% |   | $ |              (63) |   | -64% |
| Wireless Bundled Services   |   |   |     1,568                            |                      | 78%    |   |   |     1,212                            |   | 80% |   |   |             356 |   | 29% |
| Enterprise Network Services |   |   |        238            |                      | 12%    |   |   |        164            |   | 11% |   |   |               74 |   | 45% |
| Energy Broadband, Inc.      |   |   |        177            |                      | 8%     |   |   |          29 |   | 2% |   |   |             148 |   | 510% |
| Total Cost of Goods         |   | $      |     2,019                            |                      | 100%   |   | $      |     1,504                            |   | 100% |   | $ |             515 |   | 34% |

|                             |   | Six Months Ended June 30, |   |   |   |   |   |     |   |
|----------------------------------|--------|---------------------------|--------|--------|--------|--------|--------|----------|--------|
| ($ in thousands)                 |   | 2010                      |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|                             |   |                      |   |   |   |   |   |     |   |   |   |   |
| Products and integration service |   | $                         | 751    |   |   | $      | 737    |     |   | $ | 14 |   |   |   | 2% |   |
| Rent and maintenance             |   |                      | 269    |   |   |   | 206    |     |   |   | 63 |   |   |   | 31% |   |
| Depreciation                     |   |                      | 999    |   |   |   | 561    |     |   |   | 438 |   |   |   | 78% |   |
| Total Operating Expenses         |   | $                         | 2,019  |   |   | $      | 1,504  |     |   | $ | 515 |   |   |   | 34% |   |

|                             |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|----------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
| ($ in thousands)                 |   | 2010                        |   |   | 2009                      |   |   | $ Change |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | $ Change |   |   | % Change |   |
|                             |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Employment expenses              |   | $                           | 1,108  |   |                      | $      | 1,169 |   |   | $ | (61 | ) |   |   | -5% |   |   | $ | 2,295 |   |   | $ | 2,333 |   |   | $ | (38 | ) |   |   | -2% |   |
| Professional services            |   |                        | 303    |   |                      |   | 368 |   |   |   | (65 | ) |   |   | -18% |   |   |   | 711 |   |   |   | 955 |   |   |   | (244 | ) |   |   | -26% |   |
| Rent and maintenance             |   |                        | 102    |   |                      |   | 116 |   |   |   | (14 | ) |   |   | -12% |   |   |   | 209 |   |   |   | 224 |   |   |   | (15 | ) |   |   | -7% |   |
| Depreciation and amortization    |   |                        | 286    |   |                      |   | 370 |   |   |   | (84 | ) |   |   | -23% |   |   |   | 548 |   |   |   | 722 |   |   |   | (174 | ) |   |   | -24% |   |
| Other general and administrative |   |                        | 371    |   |                      |   | 447 |   |   |   | (76 | ) |   |   | -17% |   |   |   | 725 |   |   |   | 828 |   |   |   | (103 | ) |   |   | -12% |   |
| Total operating expenses         |   | $                           | 2,170  |   |                      | $      | 2,470 |   |   | $ | (300 | ) |   |   | -12% |   |   | $ | 4,488 |   |   | $ | 5,062 |   |   | $ | (574 | ) |   |   | -11% |   |

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|   | ● | A $61,000 decrease in employment expense. The decrease is primarily attributable to the centralization of our operations;                                            |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                 |
|   | ● | A $65,000 decrease in professional services. The decrease is primarily related to a reduction of outside consultants for investor relations and accounting expenses; |
|   |    |                                                                                                                                                                 |
|   | ● | A $84,000 decrease in depreciation and amortization; and                                                                                                             |
|   |    |                                                                                                                                                                 |
|   | ● | A $76,000decrease in other general and administrative expense.                                                                                                       |

|   | ● | A $38,000 decrease in employment expense. The decrease is primarily attributable to the centralization of our operations;                                             |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                  |
|   | ● | A $244,000 decrease in professional services. The decrease is primarily related to a reduction of outside consultants for investor relations and accounting expenses; |
|   |    |                                                                                                                                                                  |
|   | ● | A $174,000 decrease in depreciation and amortization; and                                                                                                             |
|   |    |                                                                                                                                                                  |
|   | ● | A $103,000decrease in other general and administrative expense.                                                                                                       |

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|   | ● | a significant decrease in the market price of the asset;                                                                                                  |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                      |
|   | ● | a significant change in the extent or manner in which the asset is being used;                                                                            |
|   |    |                                                                                                                                                      |
|   | ● | a significant change in the business climate that could affect the value of the asset;                                                                    |
|   |    |                                                                                                                                                      |
|   | ● | a current period loss combined with projection of continuing loss associated with use of the asset;                                                       |
|   |    |                                                                                                                                                      |
|   | ● | a current expectation that, more likely than not, the asset will be sold or otherwise disposed of before the end of its previously estimated useful life; |

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

| Exhibit 32 | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | ERF Wireless, Inc. |                    |
|--------|--------------------|-------------------------|
|   |               |                    |   |
|   | By:                | /s/ H. Dean Cubley |   |
|   |               | H. Dean Cubley          |   |
|   |               | Chief Executive Officer |   |
|   | Date:              | August 23, 2010         |   |

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