================================================================================


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

                                 ---------------

                                   Form 10-QSB

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

                  For the quarterly period ended March 31, 2000

                                       OR

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

                        For the transition period from to

                                 ---------------

                         Commission File Number 01-14271

                                 ---------------

                               USOL Holdings, Inc.
             (Exact name of Registrant as specified in its charter)

             Oregon                                               93-1197477
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

                             10300 Metric Boulevard
                               Austin, Texas 78758

                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (512) 651-3767

                                 Not Applicable
              (Former name, former address and former fiscal year,
                          if changed since last report)

     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  periods  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past (90) days. YES [X] NO [ ]

     As of May 8, 2000 the Registrant  had 7,641,049  shares of its no par value
Common Stock outstanding.

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<PAGE>
<TABLE>
<CAPTION>

                                      INDEX

                                                                                                                 Page
                                                                                                                 ----
<S>               <C>    <C>     <C>                                                                             <C>
                  PART I                    FINANCIAL INFORMATION

                         Item 1. Financial Statements--USOL Holdings, Inc.
                                 Condensed Consolidated Balance Sheets as of
                                 March 31, 2000 and December 31, 1999..............................                 3
                                 Condensed Consolidated Statement of Operations for the
                                 Three Months Ended March 31, 2000.................................                 4
                                 Condensed Consolidated Statement of Cash Flows for the
                                 Three Months Ended March 31, 2000.................................                 5
                                 Notes to Condensed Consolidated Financial Statements..............                 6

                                 Financial Statements--U.S. OnLine Communications, Inc.
                                 Condensed Consolidated Statement of Operations for the
                                 Three Months Ended March 31, 1999.................................                 9
                                 Condensed Consolidated Statement of Cash Flows for the
                                 Three Months Ended March 31, 1999.................................                10
                                 Notes to Condensed Consolidated Financial Statements..............                11

                         Item 2. Management's Discussion and Analysis of Financial
                                 Condition and Results of Operations................................               12
                                 Forward-Looking Statements.........................................               12
                                 General............................................................               12
                                 Overview...........................................................               12
                                 Three Months Ended March 31, 2000 Compared to
                                 Three Months Ended March 31, 1999..................................               12
                                 Liquidity and Capital Resources....................................               13

                         Item 3. Quantitative and Qualitative Disclosures about
                                 Market Risk........................................................               14

                  PART II        OTHER INFORMATION

                         Item 1. Legal Proceedings..................................................               14

                         Item 2. Changes in Securities..............................................               14

                         Item 3. Defaults Upon Senior Securities....................................               14

                         Item 4. Submission of Matters to a Vote of Security Holders................               14

                         Item 5. Other Information..................................................               14

                         Item 6. Exhibits and Reports on Form 8-K...................................               14

                         Signatures.................................................................               15

</TABLE>

                                       2
<PAGE>

<TABLE>
<CAPTION>

                               USOL HOLDINGS, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                      March 31, 2000 and December 31, 1999

                                                                                             March 31,         December 31,
                                                 ASSETS                                        2000                1999
                                                                                            -----------        ------------
                                                                                            (Unaudited)
<S>              <C>                                                                         <C>               <C>
                 Current assets:
                   Cash and cash equivalents......................................           $  8,039,240      $  13,637,511
                   Accounts receivable, net of allowance for doubtful
                     accounts of $297,898 and $146,721 at March 31, 2000
                     and December 31, 1999, respectively..........................                712,150            535,262
                   Note receivable, related party.................................                150,000            102,742
                   Supply inventory...............................................              1,124,506            818,837
                   Other current assets...........................................                355,010            221,609
                                                                                             ------------      -------------
                           Total current assets...................................             10,380,906         15,315,961

                 Property and equipment, net......................................             18,665,833         16,458,736

                 GOODWILL AND OTHER INTANGIBLES, net                                           36,642,589         35,159,285

                 DEFERRED LOAN COSTS, net                                                       1,728,258          1,780,903

                 Other assets.....................................................                333,996          4,210,588
                                                                                             ------------      -------------

                           Total assets...........................................           $ 67,751,582      $  72,925,473
                                                                                             ============      =============

                                  LIABILITIES AND STOCKHOLDERS' EQUITY

                 Current liabilities:
                   Accounts payable...............................................           $  1,403,667      $   1,369,636
                   Accrued liabilities............................................              1,518,057          2,416,239
                   Current portion of capital lease obligations...................                525,359            601,784
                   Preferred dividends payable....................................              1,110,000          1,973,333
                   Deferred revenue...............................................                549,111            419,262
                   Related-party payable..........................................                294,857            294,857
                                                                                             ------------      -------------
                           Total current liabilities..............................              5,401,051          7,075,111
                                                                                             ------------      -------------

                 CAPITAL LEASE OBLIGATIONS, less current portion..................              1,631,402          1,749,818
                                                                                             ------------      -------------

                 OTHER LONG-TERM LIABILITIES......................................                 50,630             48,666
                                                                                             ------------      -------------

                 COMMITMENTS AND CONTINGENCIES

                 MINORITY INTEREST................................................                 66,519             58,504
                                                                                             ------------      -------------

                 STOCKHOLDERS' EQUITY:
                   Preferred stock, no par value;  5,000,000 shares authorized--
                     Series A, 1,325,000 shares issued and outstanding;
                        liquidation preference of $33,125,000.....................             30,675,361         30,675,361
                     Series B, 155,000 shares issued and outstanding;
                        liquidation preference of $3,875,000......................              3,588,439          3,588,439
                   Common stock, no par value; 50,000,000 shares authorized,
                        7,516,520 and 6,892,668 shares issued and outstanding
                        at March 31, 2000 and December 31, 1999, respectively.....             40,097,711         36,735,911
                   Deferred compensation..........................................               (816,773)          (344,201)
                   Accumulated deficit............................................            (12,942,758)        (6,662,136)
                                                                                             ------------      -------------
                           Total stockholders' equity.............................             60,601,980         63,993,374
                                                                                             ------------      -------------
                           Total liabilities and stockholders' equity.............           $ 67,751,582      $  72,925,473
                                                                                             ============      =============

</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>


<TABLE>
<CAPTION>

                               USOL HOLDINGS, INC.

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)

                           For the Three Months Ended
                                 March 31, 2000
                                    (Note 2)

<S>           <C>                                                            <C>
              REVENUE....................................................    $   2,261,513
                                                                             -------------

              EXPENSES:
                Operating................................................        1,723,834
                Selling, general and administrative......................        2,099,594
                Depreciation and amortization............................        1,567,928
                Stock compensation expense...............................          202,428
                Write-down of capitalized software costs.................        1,870,551
                                                                             -------------
                        Total operating expenses.........................        7,464,335
                                                                             -------------
                        Loss from operations.............................       (5,202,822)
                                                                             -------------

              OTHER INCOME:
                Interest, net............................................           45,174
                                                                             -------------

              LOSS BEFORE MINORITY INTEREST..............................       (5,157,648)

              MINORITY INTEREST IN INCOME OF
                SUBSIDIARY...............................................          (12,975)
                                                                             -------------

                        Net loss.........................................    $  (5,170,623)
                                                                             =============-

              PREFERRED STOCK DIVIDENDS..................................       (1,110,000)
                                                                             -------------

              LOSS ATTRIBUTABLE TO COMMON
                SHAREHOLDERS.............................................    $  (6,280,623)
                                                                             =============

              PER SHARE AMOUNTS:.........................................
                Basic and diluted loss per common share..................    $        (.86)
                                                                             =============
                Basic and diluted weighted average
                  common shares..........................................        7,342,218
                                                                             =============

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>


<TABLE>
<CAPTION>

                               USOL HOLDINGS, INC.

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)

                           For the Three Months Ended
                                 March 31, 2000
                                    (Note 2)

<S>                  <C>                                                                     <C>
                     CASH FLOWS FROM OPERATING ACTIVITIES:
                       Net loss.........................................................     $  (5,170,623)
                       Adjustments to reconcile net loss to net cash used in
                         operating activities--
                         Depreciation and amortization..................................         1,567,928
                         Stock compensation expense.....................................           202,428
                         Write-down of capitalized software costs.......................         1,870,551
                         Minority interest..............................................            12,975
                         Changes in assets and liabilities--
                            Accounts receivable.........................................          (176,888)
                            Other assets................................................          (446,666)
                            Accounts payable and accrued liabilities....................          (864,150)
                            Deferred revenue and other..................................           131,814
                                                                                             -------------
                               Net cash used in operating activities....................        (2,872,631)
                                                                                             -------------

                     CASH FLOWS FROM INVESTING ACTIVITIES:
                       Purchases of property, equipment and other.......................        (3,185,956)
                       Loans to related parties, net....................................           (47,258)
                                                                                             -------------
                               Net cash used in investing activities....................        (3,233,214)
                                                                                             -------------

                     CASH FLOWS FROM FINANCING ACTIVITIES:
                       Principal payments under capital leases..........................          (194,841)
                       Proceeds from the exercise of stock options
                         and warrants...................................................           713,467
                       Deferred loan costs..............................................           (11,052)
                                                                                             -------------
                               Net cash provided by financing activities................           507,574
                                                                                             -------------
                               Net decrease in cash and cash equivalents................        (5,598,271)
                     CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.....................        13,637,511
                                                                                             -------------
                     CASH AND CASH EQUIVALENTS, END OF PERIOD...........................     $   8,039,240
                                                                                             =============
                     SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
                       Cash paid for interest...........................................     $     257,989
                       Deferred compensation............................................           540,000
                       Accretion of dividends on preferred stock........................         1,110,000
                       Issuance of common stock as payment of preferred
                         stock dividends................................................         1,973,333

</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                      5
<PAGE>



                               USOL HOLDINGS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2000

(1)  unaudited condensed financial Statements

     The  financial  statements  included  herein  have  been  prepared  by USOL
Holdings,  Inc. (the  "Company")  pursuant to the rules and  regulations  of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial  statements prepared in accordance with generally
accepted  accounting  principles have been condensed or omitted pursuant to such
rules and  regulations,  although  the  Company  believes  that the  disclosures
included herein are adequate to make the information presented not misleading. A
description of the Company's accounting policies and other financial information
is included in the audited financial statements as filed with the Securities and
Exchange Commission in the Company's Annual Report on Form 10-KSB.

     The financial  statements  and related notes as of March 31, 2000,  and for
the three  months  ended  March 31,  2000 are  unaudited  but, in the opinion of
management,  include  all  adjustments  (consisting  only  of  normal  recurring
adjustments)  which  are  necessary  for a fair  presentation  of the  financial
condition and results of operations and cash flows of the Company. The operating
results for the three months ended March 31, 2000 are not necessarily indicative
of the results that may be expected for the year ended December 31, 2000.

(2)  Business Organization and Basis of Presentation

     USOL Holdings,  Inc. ("Holdings")(formerly FirstLink Communications, Inc.),
an Oregon  corporation,  together with its wholly owned  subsidiary  USOL,  Inc.
("USOL") and USOL's 50 percent owned  subsidiary,  U.S. Austin Cable Association
I, Ltd.  ("USAC")  (collectively  referred  to herein as the  Company),  provide
integrated  telecommunications services including local telephone, long distance
telephone,  enhanced calling features,  cable television and high-speed Internet
access  to  residents  of  multi-family  apartment  complexes  and  condominiums
("MDUs") in Texas, Oregon,  Virginia and Colorado.  The services are provided to
the  tenants in  accordance  with  long-term  operating  agreements  between the
Company  and the  property  owners  under  which  the  property  owners  receive
royalties from the  telecommunication  revenues generated from their properties.
The agreements  provide the tenants with the option to use either the Company or
the local  telephone  and long  distance  carriers  for  telephone  services and
Internet access. Tenants desiring to subscribe to cable television are generally
required to subscribe to the Company's services.

     TheResidentClub.com,  Inc. ("TRC"), also a wholly owned subsidiary of USOL,
a business that provides a range of move-in and lifestyle  enhancement  services
for the  residential  real estate  industry and other  related  affinity  groups
utilizing the Internet.

     On December 15, 1999, the  shareholders of FirstLink  Communications,  Inc.
("FirstLink")  approved  a merger  (the  "Merger")  with  Holdings,  a  Delaware
corporation,  in a  stock-for-stock  transaction  with  FirstLink  as the  legal
survivor.  Concurrent with the Merger (completed  December 22, 1999),  FirstLink
changed its name to USOL Holdings, Inc. The Merger was completed on December 22,
1999.

     The Merger was accounted for as a reverse merger under the purchase  method
of accounting.  Accordingly,  the legal form of the transaction has been ignored
and Holdings has been treated as the accounting acquirer. The excess of purchase
price over the fair market value of FirstLink's  net assets has been recorded as
goodwill and is being  amortized  over a 10-year  period.  The purchase price of
$32,051,611 was allocated as follows:

          Current assets..........       $   2,466,584
          Fixed assets............           1,648,060
          Current liabilities.....            (803,968)
          Capital leases..........            (177,277)
          Other liabilities.......             (50,700)
          Goodwill................          29,057,912
                                         -------------
                                         $  32,051,611
                                         =============

                                       6

<PAGE>

     Holdings was formed on May 12, 1999 for the purpose of  acquiring  entities
providing  telecommunications,  cable  television,  Internet  access  and  other
services  to  residents  of  MDUs.  On July  21,  1999,  Holdings,  through  its
subsidiary USOL,  Inc.,  purchased  substantially  all of the assets and certain
liabilities  of U.S.  OnLine  Communications,  Inc.  ("US  OnLine").  US  OnLine
provided  telecommunications  and cable television services to residents of MDUs
in Texas,  Virginia  and  Colorado.  Pursuant to the asset  purchase  agreement,
Holdings  exchanged 750,000 shares of Holdings' common stock valued at $2.00 per
share,  warrants to purchase  1,500,000  shares of Holdings'  common stock at an
exercise price of $5.50 per share,  and $845,000 of cash. The Company valued the
warrants,  using the Black-Scholes  pricing model, at approximately  $1,324,800.
The Black-Scholes  valuation was based on the warrant terms using Holdings' then
current   stock   price  of  $2.00  per  share  and  a   volatility   percentage
representative  of a  public  company  operating  in this  industry.  The  total
purchase  price was  $3,669,800.  The  acquisition  was  accounted for under the
purchase method of accounting with the purchase price allocated as follows:

          Current assets..........       $   2,357,577
          Fixed assets............          13,648,334
          Other assets............           1,029,117
          Current liabilities.....         (16,823,702)
          Minority interest.......            (236,413)
          Goodwill................           3,694,887
                                         -------------
                                         $   3,669,800

     Also on July 21,  1999,  Holdings  through its  subsidiary  TRC,  purchased
certain assets and contract  rights from GMAC  Commercial  Mortgage  Corporation
("GMACCM").  Pursuant to the asset  purchase  agreement,  the purchase  price of
$2,843,800  consisted of cash of  $2,500,000  and a warrant to purchase  325,000
shares of  Holdings'  common  stock at an  exercise  price of $2.00  per  share.
Holdings'  valued  this  warrant,  using the  Black-Scholes  pricing  model,  at
approximately  $343,800.  The  Black-Scholes  valuation was based on the warrant
terms  using  Holdings'  then  current  stock  price of $2.00  per  share  and a
volatility  percentage  representative  of a public  company  operating  in this
industry.  The  acquisition  was  accounted  for as a  purchase  with the entire
purchase price being recorded as goodwill.

     The purchase price  allocation for these  acquisitions  is preliminary  and
further refinements may be made in accordance with generally accepted accounting
principles.

     The table below reflects the unaudited  combined results of US OnLine,  the
Company's accounting predecessor, and FirstLink for the three months ended March
31, 1999:

<TABLE>
<CAPTION>

                                                  US OnLine         FirstLink
                                               (Preacquisition)    (Premerger)        Combined
                                               ----------------    -----------        --------
<S>                                              <C>                <C>            <C>
Revenues..................................       $  1,410,915       $   326,813    $  1,737,728
Loss from operations......................           (840,533)         (445,839)     (1,286,372)
Loss before minority interest.............         (1,916,402)         (421,916)     (2,338,318)
Net loss..................................         (1,913,751)         (421,916)     (2,335,667)

</TABLE>


     Financial  statements  for the three  months  ended  March 31,  1999 for US
OnLine are included elsewhere in this Form 10-QSB.

(3)  Write-down of Capitalized Software Costs

     On March 31,  2000,  the  Company  signed a  five-year  agreement  with CSG
Systems,  Inc.  ("CSG") to outsource its billing and customer care system.  As a
result,  the Company wrote off  $1,870,551 of  previously  capitalized  software
development  costs  associated  with the in-house  build of the  Company's  next
generation billing and customer care system, which will not be utilized.

(4)  Stock Compensation Expense

     In connection  with the hiring of a certain  officer in January  2000,  the
Company  issued  options to acquire  150,000 shares of common stock at $3.50 per
share with 20% vesting  immediately  and the  remaining  80% vesting  over three
years.  As the exercise price of these options was below that of the fair market
value on the date of  grant,  the  Company  recorded  deferred  compensation  of
$540,000 and recognized stock compensation  expense of $135,000 for such options
during the period ended March 31, 2000.

                                       7
<PAGE>

(5)      Segment Disclosure

     The  Company's  operations  are  classified  into two  reportable  business
segments:  USOL and TRC. The  Company's  two  reportable  business  segments are
managed separately based on fundamental differences in their operations.

     USOL provides  integrated  telecommunications  services including local and
long-distance  telephone,   enhanced  calling  features,  cable  television  and
Internet   access  to  residents  of   multi-family   apartment   complexes  and
condominiums in Texas, Oregon, Virginia and Colorado.

     TRC provides a range of move-in and lifestyle  enhancement services for the
residential  real  estate  industry  and other  affinity  groups  utilizing  the
Internet.

     The  operating  results by business  segment were as follows for the period
ended March 31, 2000:


<TABLE>
<CAPTION>

                                                USOL, Inc.                  TRC              Consolidated
                                               ------------            ------------          ------------
<S>                                            <C>                     <C>                   <C>
Revenues                                       $  2,258,445            $      3,068          $  2,261,513
Segment profit (loss)                            (4,423,464)               (747,159)           (5,170,623)
Total assets                                     64,352,586               3,398,996            67,751,582
Capital expenditures                              2,782,240                 403,716             3,185,956
Depreciation and amortization                     1,481,555                  86,373             1,567,928

</TABLE>


(6)  loss Per Common Share

     Basic and diluted loss per common share is  calculated  by dividing the net
loss by the weighted  average number of shares  outstanding.  The calculation of
basic and diluted loss per common share does not assume conversion,  exercise or
contingent  issuance of securities  that would have an  anti-dilutive  effect on
earnings per share.


                                       8

<PAGE>



<TABLE>
<CAPTION>


                        U.S. ONLINE COMMUNICATIONS, INC.

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)

                           For the Three Months Ended
                                 March 31, 1999
                                    (Note 2)


<S>                                                                      <C>
REVENUES                                                                 $   1,410,915
                                                                         -------------

OPERATING EXPENSES:
   Operating                                                                 1,048,523
   Selling, general and administrative                                         791,184
   Depreciation and amortization                                               411,741
                                                                         -------------

             Total expenses                                                  2,251,448
                                                                         -------------

LOSS FROM OPERATIONS                                                          (840,533)
                                                                         -------------

OTHER:

   Interest expense                                                         (1,054,993)
   Other expense, net                                                          (20,876)
                                                                         -------------

             Total other                                                    (1,075,869)
                                                                         -------------

LOSS BEFORE MINORITY INTEREST                                               (1,916,402)

MINORITY INTEREST IN LOSS OF SUBSIDIARY                                          2,651
                                                                         -------------

             Net loss                                                    $  (1,913,751)
                                                                         =============
</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                       9
<PAGE>


<TABLE>
<CAPTION>


                        U.S. ONLINE COMMUNICATIONS, INC.

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)

                           For the Three Months Ended
                                 March 31, 1999
                                    (Note 2)

<S>                                                                                      <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                              $  (1,913,751)
   Adjustments to reconcile net loss to net cash used in operating activities-
    Depreciation and amortization                                                              941,180
    Minority interest                                                                           (2,651)
    Accretion of deferred compensation                                                          25,781
    Changes in operating assets and liabilities-
      Restricted cash                                                                          352,071
      Accounts receivable, net                                                                 154,943
      Other current assets                                                                     (12,217)
      Accounts payable and accrued expenses                                                    405,485
      Deferred revenue                                                                         (27,238)
                                                                                         -------------

              Net cash used in operating activities                                            (76,397)
                                                                                         -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment                                                        (201,243)
                                                                                         -------------

              Net cash used in investing activities                                           (201,243)
                                                                                         -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term debt                                                                275,000
                                                                                         -------------

              Net cash provided by financing activities                                        275,000
                                                                                         -------------

DECREASE IN CASH AND CASH EQUIVALENTS                                                           (2,640)

CASH AND CASH EQUIVALENTS, beginning of period                                               1,007,988
                                                                                         -------------

CASH AND CASH EQUIVALENTS, end of period                                                 $   1,005,348
                                                                                         =============

SUPPLEMENTAL CASH FLOW INFORMATION:
   Cash paid for interest                                                                $    317,615

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       10
<PAGE>



                        U.S. ONLINE COMMUNICATIONS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1999

(1)  Unaudited Condensed Financial Statements

     The financial  statements included herein have been prepared by U.S. OnLine
Communications,  Inc. ("US OnLine") pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial  statements prepared in accordance with generally
accepted  accounting  principles have been condensed or omitted pursuant to such
rules and regulations, although US OnLine believes that the disclosures included
herein  are  adequate  to make  the  information  presented  not  misleading.  A
description of US OnLine's accounting  policies and other financial  information
is included in the audited financial statements as filed with the Securities and
Exchange Commission in USOL Holdings, Inc.'s Annual Report on Form 10-KSB.

     The financial statements and related notes for the three months ended March
31,  1999  are  unaudited  but,  in  the  opinion  of  management,  include  all
adjustments,   consisting  only  of  normal  recurring  adjustments,  which  are
necessary  for a  fair  presentation  of the  financial  condition,  results  of
operations and cash flows of US OnLine.

(2)  Business Organization and Basis of Presentation

    US OnLine and its 50% owned subsidiary, U.S.-Austin Cable Associates I, Ltd.
("USAC")  (collectively  referred to herein as "US USAC"),  provided  integrated
telecommunications  services including local telephone, long distance telephone,
enhanced  calling  features and cable  television  to  residents of  multifamily
apartment  complexes  and  condominiums  in Texas,  Virginia and  Colorado.  The
services  were provided to the tenants in accordance  with  long-term  operating
agreements  between US USAC and the  property  owners  under which the  property
owners received  royalties from the  telecommunication  revenues  generated from
their  properties.  The  agreements  provided the tenants with the option to use
either US USAC or the local telephone and  long-distance  carriers for telephone
services.  Tenants who subscribed to cable television had to utilize US USAC. In
July  1999,  the  Company  sold   substantially   all  its  assets  and  certain
liabilities.  As such,  US USAC is no longer  providing  the services  described
above.

    US OnLine was  incorporated  March 5, 1998, by the management of U.S. OnLine
Communications L.L.C. (the "LLC") for the purpose of acquiring substantially all
of the assets and certain of the  liabilities of the LLC. This  transaction  was
consummated  on July 21, 1998.  US OnLine  issued  800,000  shares of its common
stock and a $3  million  note to  acquire  certain  assets  and  liabilities  of
approximately $17,166,000 and $17,985,000,  respectively, of the LLC. The assets
acquired included the 50 percent interest held by the LLC in USAC. In accordance
with generally accepted accounting principles,  US OnLine recorded the purchased
assets and liabilities at the LLC's  historical cost since US OnLine and the LLC
are entities under common control.

                                       11
<PAGE>


Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

Forward-Looking Statements

     The statements  contained in this Form 10-QSB  ("Quarterly  Report") of the
Company which are not historical in nature are forward-looking statements within
the  meaning of the  Private  Securities  Litigation  Reform Act of 1995.  These
forward-looking  statements  include  statements  in this Item 2.,  Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations,
regarding intent,  belief or current expectations of the Company or its officers
with respect to the development or acquisition of new business.

     Such  forward-looking  statements  involve certain risks and  uncertainties
that could cause actual results to differ  materially from anticipated  results.
These risks and uncertainties  include regulatory  developments,  the ability of
the Company to acquire or build passings on economical terms and conditions, the
risk of insufficient cable and phone penetrations, the ability of the Company to
effectively  manage growth,  general and local market  conditions  including the
presence of competing  companies,  as well as other factors as may be identified
from time to time in the  Company's  filings  with the  Securities  and Exchange
Commission or in the Company's press releases.

General

     The  following  discussion  of the  results  of  operations  and  financial
condition  of the  Company  should  be read in  conjunction  with the  Condensed
Financial  Statements  and the Notes  thereto of the Company and US OnLine,  the
Company's predecessor, included elsewhere in this Quarterly Report.

Overview

     We provide bundled telecommunications and Internet services to residents of
multi-family  apartment and condominium  complexes.  Services  provided  include
cable  television and enhanced local and  long-distance  telephone  services and
high-speed  Internet  access.  As of March 31, 2000,  the Company  passed 23,430
cable,  11,343  phone and 2,963  Internet  units in  Austin,  Dallas/Ft.  Worth,
Denver,  Houston,  Portland,  San Antonio and  Washington,  D.C. The Company had
15,429 cable, 4,639 telephone and 177 Internet subscribers, respectively.

     For  purposes  of  management's  discussion  and  analysis  of  results  of
operations,  the results for the three  months ended March 31, 1999 are those of
the Company's predecessor, US OnLine.

Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999

     The Company  reported a net loss of  $5,170,623  for the three months ended
March 31, 2000 compared to a net loss of  $1,913,751  for the same period of the
prior year. The increase in net loss is attributable to a one-time write-down of
capitalized  software costs in 2000 of $1,870,551,  increased  depreciation  and
amortization  expenses  (primarily   amortization  of  goodwill)  and  increased
operating and selling, general and administrative expenses.

     Revenue increased $850,598 or 60% for the three months ended March 31, 2000
compared to the same period of the prior year. The increase in revenue is due to
an  increase  in  operational  passings,  which is  primarily  the result of the
Company  operating  in two  additional  markets  (Portland  and Houston) in 2000
compared to 1999.

     Operating  expense  increased  $675,311 or 64% for the three  months  ended
March 31, 2000  compared to the same period of the prior year.  The  increase in
operating   expense  between  periods  is  primarily  due  to  the  increase  in
operational  passings and markets between periods.  Operating expense was 76% of
revenue for the three-month period in 2000 compared to 74% in the same period of
the prior year.

     Selling,  general and administrative  expense increased  $1,308,410 or 165%
for the three  months  ended March 31,  2000  compared to the same period of the
prior year.  The  increase in selling,  general and  administrative  expense was
primarily  the result of increases in payroll  costs,  travel and  entertainment
expenses,  royalties  and  increases  in other  costs  directly  related  to the
Company's public status in 2000 such as legal,  accounting,  investor  relations
and insurance.  Selling,  general and administrative  expense was 93% of revenue
for the three months ended March 31, 2000 compared to 56% for the same period of
the prior year.

                                       12

<PAGE>

     Depreciation and amortization  expense increased $1,156,187 or 281% for the
three months ended March 31, 2000 compared to the same period of the prior year.
The increase in depreciation  and amortization  expense resulted  primarily from
goodwill  amortization in 2000 that was not incurred in 1999.  Depreciation  and
amortization  expense  was 69% of revenue for the three  months  ended March 31,
2000 compared to 29% for the same period of the prior year.

     The Company had other income of $45,174 during the three months ended March
31, 2000 compared to other  expense of $1,075,869  during the same period of the
prior year. The increase in other income between  periods is the combined result
of the Company  having  higher cash  balances in 2000 when  compared to 1999, as
well as the Company having certain interest bearing debt securities in 1999 that
were not outstanding in 2000.

Liquidity and Capital Resources

     At March 31, 2000, the Company had $8,039,240 of cash and cash  equivalents
compared to $13,637,511 at December 31, 1999. Net cash of $2,872,631 was used in
operating  activities  for the three months  ended March 31,  2000,  which was a
result of the  Company's  net loss for the  period  and a  decrease  in  accrued
liabilities,  offset by noncash charges related to  depreciation,  amortization,
the  write-down of certain  capitalized  software  costs and stock  compensation
expense.

     Net cash of  $3,233,214  was used in  investing  activities,  which was the
result of  purchases  of property  and  equipment  related to new  passings  and
capitalized software costs.

     Net cash of $507,574 was provided by financing activities,  which consisted
of proceeds from the exercise of stock options and warrants  offset by principal
payments under capital leases.

     As more fully described elsewhere in this Form 10-QSB, we have two separate
and distinct  businesses with USOL and TRC. We believe that our cash on hand and
available proceeds from the Company's credit facility (the "Facility") should be
sufficient  to fund the  activities  of USOL for at  least  the next 12  months.
However,  an  integral  part  of the  USOL  business  plan  is to  grow  through
acquisitions. Should we find acquisition opportunities that are either larger in
magnitude  or in number than our  business  plan  anticipates,  then  additional
funding may be required sooner than planned.

     The  Facility  allows us to borrow up to $35 million for a two-year  period
commencing  January 1, 2000 and ending  December 31, 2001, at which time it will
convert to a five-year  term loan.  The Facility bears interest at our option at
an annual rate of prime plus 2.75% or LIBOR plus 3.75%.  Borrowings  cannot take
place  under  the  Facility  until  we have  used all of the  proceeds  from the
preferred  stock sale. We anticipate  that this will occur in the second quarter
of 2000. The Facility is secured by all of the assets of the Company,  excluding
TRC. At March 31, 2000, there were no borrowings under the Facility.

     The Facility  limits the amount of funding that can be provided to TRC from
the preferred stock and Facility  proceeds to an aggregate of $2,000,000.  As of
March 31, 2000, we had provided approximately $1,951,000 of funding to TRC under
an intercompany  note agreement.  We have received an amendment from the lenders
that temporarily  increases the TRC funding cap to $3,000,000 until August 2000,
which should be sufficient to finance  TRC's  activities  through June 30, 2000.
Accordingly,  TRC will  require  additional  funding  in order  to  execute  its
business plan.  The amount of funding  required to execute the TRC business plan
is still being determined and is dependent upon numerous  variables.  Management
expects  that  approximately  $20  million to $30  million  in  funding  will be
required  over the next 18 to 24 months to execute the TRC  business  plan.  Any
delays in raising the  required  funding will delay  executing  the TRC business
plan, which could adversely  impact TRC and the Company.  Because of the funding
limitation set forth in the Facility,  management does not expect TRC to have an
immediately  significant  impact on the  liquidity  or capital  resources of the
Company.

     We are currently negotiating with Newman & Associates,  Inc. ("Newman"),  a
subsidiary  of GMACCM,  to loan TRC $5 million  with the  proceeds to be used to
provide  interim  financing for TRC, as well as to repay any funding to TRC from
USOL in excess of $2 million. We believe that the proceeds from the contemplated
loan will be adequate to fund TRC for a period of at least six months.

     In order the adequately capitalize TRC beyond the next six-month period, we
are  contemplating  a  private  placement  of TRC  stock in the  second or third
quarter  of  2000.  The  Company  is  currently  conducting   negotiations  with
investment bankers regarding such an offering.

                                       13
<PAGE>


     We maintain various  cancelable and  noncancelable  service  agreements for
telecommunications  services with several LECs and one IXC that commit us to the
LECs' and IXCs'  services.  These  agreements  require  minimum  monthly charges
ranging  from $340 to $25,000 per month and have terms  ranging from one year to
five years.  We also have  agreements  with certain cable  providers to purchase
bulk cable signal at some of our  properties.  The agreements  provide for us to
pay fixed monthly  amounts  regardless of the number of customers we have at the
properties.  As of  December  31,  1999,  the  fixed  minimum  charges  for  all
noncancelable  agreements  over  the  life  of the  agreements  was  $2,515,635.
Additionally,  we are planning on upgrading and consolidating telephone switches
during 2000 in Austin, Dallas/Ft. Worth and San Antonio, at an anticipated costs
of $450,000.

Year 2000

    The  "Year  2000"  issue is a  general  term used to  describe  the  various
problems  that may have  resulted  from the  improper  processing  of dates  and
date-sensitive  calculations  by computers and other  machinery as the Year 2000
was  approached  and reached.  These  problems  arise from hardware and software
unable to distinguish  dates in the "2000's" from dates in the "1900's" and from
other sources, such as the use of special codes and conventions in software that
make use of a date field.  We did not  experience  any  significant  hardware or
software failures as a result of the Year 2000 date change.

Preferred Stock Dividends

    The Series A and Series B Preferred Stock accrete dividends from the date of
issuance at the rate of 12% per year,  payable  quarterly in arrears on the last
day of March,  June,  September and  December.  We have the option of paying the
dividend in cash or in shares of common stock. The Facility prohibits the paying
of such dividends in cash.

Adoption of New Accounting Standards

    In December  1999,  the  Securities  and  Exchange  Commission  issued Staff
Accounting  Bulletin  No. 101 ("SAB  101"),  Revenue  Recognition  in  Financial
Statements.  SAB 101 provides guidance on applying generally accepted accounting
principles to revenue  recognition issues in financial  statements.  The Company
adopted SAB 101 as required in the first  quarter of 2000.  The  adoption of SAB
101 did not have a material impact on the Company's results of operations.


                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     There are no material  existing or pending legal  proceedings  to which the
Company is a party.

Item 2. Changes in Securities and Use of Proceeds

     Not applicable.

Item 3. Defaults Upon Senior Securities

     Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

     Not applicable.

Item 5. Other Information

     Not applicable.

Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits

          -    27 Financial Data Schedule

     (b)  Reports on Form 8-K

          -    Form 8-K dated January 6, 2000 regarding Items 1, 2, 4 and 7.

          -    Form 8-K dated March 6, 2000 regarding Items 7 (Unaudited Pro-
               Forma Condensed Consolidated Financial Information)


                                       14
<PAGE>



                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  Report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                                      USOL HOLDINGS, INC.


                                                      By: /s/ Robert G. Solomon
                                                          ---------------------
                                                          Robert G. Solomon, CEO


                                       15