Form 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.


[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934
                 For the quarterly period ended March 31, 2002

                                       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 No. 1-15383


                               USURF America, Inc.
        (Exact Name of Small Business Issuer as Specified in its Charter)


            NEVADA                                          91-2117796
(State or Other Jurisdiction of                  (I.R.S. Employer Identification
incorporation or organization)                                Number)


              8748 Quarters Lake Road, Baton Rouge, Louisiana 70809
          (Address of Principal Executive Offices, including Zip Code)


                                 (225) 922-7744
                (Issuer's telephone number, including area code)

Indicate by check mark whether  Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the preceding 12 months (or for such shorter period that  Registrant as required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days: Yes [X] No [ ]

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock as of the latest practicable date:


                Class                         Outstanding as of 5-17-02
      ------------------------                -------------------------
      Common Stock, $.0001 par                        43,731,870
                value



<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                               USURF America, Inc.

                                                                            Page
                                                                            ----
        Consolidated Balance Sheets as of March 31, 2002                      3
        (unaudited), and December 31, 2001
        Consolidated Statements of Operations for the Three                   6
        Months Ended March 31, 2002 and 2001 (unaudited)
        Consolidated Statements of Cash Flows for the Three                   8
        Months Ended March 31, 2002 and 2001 (unaudited)
        Notes to Consolidated Statements                                     11



<PAGE>

                      USURF AMERICA, INC. AND SUBSIDIARIES
                             BATON ROUGE, LOUISIANA
                           CONSOLIDATED BALANCE SHEETS
                DECEMBER 31, 2001, AND MARCH 31, 2002 (UNAUDITED)

                                     ASSETS


                                                         3/31/02       12/31/01
                                                       (unaudited)    (audited)
                                                       ----------    ----------
CURRENT ASSETS
 Cash and cash equivalents                             $      284    $       10
 Inventory                                                133,500       134,746
                                                       ----------    ----------
                                                          133,784       134,756
                                                       ----------    ----------
PROPERTY AND EQUIPMENT
 Cost                                                     204,387       203,141
 Less: accumulated depreciation                          (129,986)     (125,036)
                                                       ----------    ----------
                                                           74,401        78,105
                                                       ----------    ----------
OTHER ASSETS                                               14,583        16,667
                                                       ----------    ----------
TOTAL ASSETS                                           $  222,768    $  229,528
                                                       ==========    ==========

        The accompanying notes are an integral part of these statements.

                                       3

<PAGE>
<TABLE>
<CAPTION>

                      LIABILITIES AND STOCKHOLDERS' DEFICIT


                                                                     3/31/02        12/31/01
                                                                   (unaudited)     (audited)
                                                                   ------------    ------------
<S>                                                                <C>            <C>
CURRENT LIABILITIES
 Disbursements in excess of cash balances                          $          0    $     15,539
 Accounts payable                                                     1,042,150       1,034,619
 Accrued payroll                                                        272,820         265,978
 Other current liabilities                                               59,396          54,996
 Notes payable to stockholder                                                 0          18,521
                                                                   ------------    ------------
                                                                      1,374,366       1,389,653
                                                                   ------------    ------------
LONG-TERM LIABILITIES                                                         0               0
                                                                   ------------    ------------
                                                                      1,374,366       1,389,653
REDEEMABLE COMMON STOCK
Common stock subject to rescission, 2,138,726 shares outstanding        220,998       1,192,700
at December 31, 2001, and 524,564 shares outstanding at March 31,
2002, $.0001 par value per share
                                                                   ------------    ------------
                                                                        220,998       1,192,700
                                                                   ------------    ------------


                                       4
<PAGE>


STOCKHOLDERS' DEFICIT
Common stock, $.0001 par value; Authorized: 100,000,000 shares;           2,892           2,385
Issued and outstanding: 23,848,108 at December 31, 2001, and
28,919,306 at March 31, 2002
Additional paid-in capital                                           37,030,408      35,642,817
Accumulated deficit                                                 (37,608,585)    (37,000,628)
Subscriptions receivable                                                166,500         165,750
Deferred consulting                                                    (963,811)     (1,163,149)
                                                                   ------------    ------------
                                                                     (1,372,596)     (2,352,825)
                                                                   ------------    ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                        $    222,768    $    229,528
                                                                   ============    ============

        The accompanying notes are an integral part of these statements.

</TABLE>


                                       5
<PAGE>

                      USURF AMERICA, INC. AND SUBSIDIARIES
                             BATON ROUGE, LOUISIANA
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001


                                                    Three Months Ended March 31,

                                                         2002           2001
                                                     (unaudited)    (unaudited)
                                                     -----------    -----------
REVENUES
Revenues                                             $     4,626    $       384
Internet access costs, cost of goods sold                 (8,482)             0
                                                     -----------    -----------
Gross profit (loss)                                       (3,856)           384
                                                     -----------    -----------
OPERATING EXPENSES
 Depreciation and amortization                             7,033         11,580
 Professional fees                                       270,147        707,288
 Rent                                                      7,681          5,361
 Salaries and commissions                                242,314        160,746
 Advertising                                              62,000              0
 Other                                                    14,743         16,668
                                                     -----------    -----------
                                                         603,918        901,643
                                                     -----------    -----------
LOSS FROM OPERATIONS                                    (607,774)      (901,259)
                                                     -----------    -----------


                                       6
<PAGE>


OTHER INCOME (EXPENSE)
 Interest expense                                           183               0
                                                   ------------    ------------
                                                            183               0
                                                   ------------    ------------
LOSS BEFORE EXTRAORDINARY ITEMS                        (607,957)       (901,259)
                                                   ------------    ------------
LOSS BEFORE INCOME TAX                                 (607,957)       (901,259)
INCOME TAX BENEFIT                                            0               0
                                                   ------------    ------------
NET LOSS                                           $   (607,957)   $   (901,259)
                                                   ============    ============
Net loss per common share                          $      (0.02)   $      (0.05)
                                                   ============    ============
Weighted average number of shares outstanding        25,503,752      18,208,215
                                                   ============    ============

        The accompanying notes are an integral part of these statements.



                                       7
<PAGE>
<TABLE>
<CAPTION>

                      USURF AMERICA, INC. AND SUBSIDIARIES
                             BATON ROUGE, LOUISIANA
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001


                                                       Three Months Ended March 31,

                                                            2002           2001
                                                        (unaudited)    (unaudited)
                                                        -----------    -----------
<S>                                                     <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES

---------------------------
Net loss                                                $  (607,957)   $  (901,259)
Adjustments to reconcile net loss to net cash used in
operating activities
 Depreciation and amortization                                7,033         11,580
 Consulting fees paid with stock                            247,663        670,400
 Legal fees paid with stock                                   6,000              0
 Compensation expense paid with stock                       163,146              0
 Advertising expense paid with stock                         62,000              0
 Compensation expense                                             0          3,300
Changes in operating assets and liabilities
 Accounts receivable                                              0           (384)
 Inventory                                                        0              0
 Accounts payable                                            (8,032)         1,786
 Accrued payroll                                              6,842         41,893
 Other current liabilities                                        0         10,000
                                                        -----------    -----------
Net cash used in operating activities                      (123,305)      (162,684)
                                                        -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
---------------------------
Proceeds on disposal of fixed assets                    $         0    $         0

</TABLE>



                                       8
<PAGE>

Capital expenditures                                              0            0
                                                          ---------    ---------
Net cash used in investing activities                             0            0
                                                          ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES

---------------------------
Payments on notes payable                                 $       0    $       0
Disbursements in excess of cash balances                          0            0
Payments on notes payable - stockholder                     (18,521)           0
Payments on subscriptions receivable                         70,000      261,000
Proceeds from note payable - stockholder                          0       26,090
Issuance of common stock for cash                            64,000            0
Warrants exercised                                           13,000            0
Fee for stock issuances                                      (4,900)           0
                                                          ---------    ---------
Net cash provided by financing activities                   123,579      287,090
                                                          ---------    ---------
Net increase in cash and cash equivalents                       274      124,406
Cash and cash equivalents, Beginning of period                   10        1,088
Cash and cash equivalents, End of period                  $     284    $ 125,494
                                                          =========    =========

The accompanying notes are an integral part of these statements.




                                       9
<PAGE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND OTHER CASH FLOW INFORMATION

Three Months March 31, 2002:

- In January 2002, the Company entered into a one-year consulting agreement,  by
issuing 120,000 shares of stock valued at $10,800.

- In February 2002,  the Company  issued  300,000 under a four month  consulting
agreement, which shares of stock were valued at $30,000.

- In March 2002, the Company entered into a one-month consulting  agreement,  by
issuing 75,000 shares of stock valued at $7,500.

- In March 2002, the Company issued 75,000 shares in payment of legal  services,
which shares of stock were valued at $6,000.

Three Months March 31, 2001:

- In January 2001, the Company entered into a one-year consulting agreement,  by
issuing 200,000 shares of stock valued at $62,000.

- In  January  2001,  the  Company  issued  800,000  shares  of stock  valued at
$248,000,  in  payment  of a  commitment  fee  under  a  common  stock  purchase
agreement.

- In January  2001,  774,162  shares  were  issued to the  Company's  president,
pursuant to a debt conversion  agreement,  which shares were not issued in 2000,
due to an administrative error.


                                       10
<PAGE>

                      USURF AMERICA, INC. AND SUBSIDIARIES
                             BATON ROUGE, LOUISIANA
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        THREE MONTHS ENDED MARCH 31, 2002
                                   (Unaudited)

Note 1.  Nature of Business, Organization and Basis of Presentation

Basis of Presentation

USURF America,  Inc. (the "Company"),  formerly Internet Media Corporation,  was
incorporated as Media Entertainment,  Inc. in the State of Nevada on November 1,
1996. The Company  currently  provides  wireless  Internet  access services to a
small number of customers in Del Rio, Texas, and Santa Fe, New Mexico.

Principles of Consolidation

The accompanying  consolidated  financial statements include all the accounts of
USURF and all wholly owned subsidiaries. Inter-company transactions and balances
have been eliminated in the consolidation.

Loss Per Common Share

Basic loss per common  share has been  computed by dividing  the net loss by the
weighted  average  number of shares of common stock  outstanding  throughout the
period.  Calculation  of diluted loss per common share is not presented  because
the effects of potential  common stock  issuable  upon exercise of stock options
and contingently issuable or redeemable shares would be anti-dilutive.

Note 2.  Interim Consolidated Financial Statements

In the opinion of management, the accompanying consolidated financial statements
for the three  months  ended  March 31, 2002 and 2001,  reflect all  adjustments
(consisting  only of normal recurring  adjustments)  necessary to present fairly
the  financial  condition,  results  of  operations  and cash  flows  of  USURF,
including  subsidiaries,  and  include  the  accounts  of  USURF  and all of its
subsidiaries.   All  material   inter-company   transactions  and  balances  are
eliminated.

The financial  statements  included herein have been prepared by USURF,  without
audit, pursuant to the rules and regulations of the SEC. Certain information and
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance  with  U.S.  generally  accepted  accounting   principles  have  been
condensed  or omitted  pursuant to such rules and  regulations.  It is suggested
that  these  unaudited  financial  statements  be read in  conjunction  with the
financial statements and notes thereto included in USURF's Annual Report on Form
10-KSB for the year ended  December  31,  2001,  as filed with the SEC.  Certain
reclassifications and adjustments may have been made to the financial statements
for the  comparative  period of the prior  fiscal year to conform  with the 2001
presentation.  The  results  of  operations  for  the  interim  periods  are not
necessarily indicative of the results to be obtained for the entire year.


                                       11
<PAGE>

Note 3.  Notes Payable to Shareholder


                                             March 31, 2002    December 31, 2001
                                              (unaudited)
                                           -----------------   -----------------
     Notes payable to majority                     $0               $18,521
     stockholder, interest accrues at 8%,
     due on demand and unsecured

Note 4.  Stock and Warrant Issuances

During the three  months  ended March 31,  2002,  the Company  issued (or became
obligated to issue) shares of common stock and common stock  purchase  warrants,
as follows:


     -    486,500 shares as finder's fees.

     -    570,000 shares in payment of consulting fees.

     -    1,519,000 warrants (200,000 warrants,  exercise price $.049 per share;
          560,000  warrants,  exercise price $.10 per share;  666,000  warrants,
          exercise price of $.20 per share;  93,000 warrants,  exercise price of
          $.30 per share) were issued in payment of consulting fees.

Note 5.  Contingencies


     A.   Bankruptcy

          On  September  29, 2000,  three  creditors  of  CyberHighway  filed an
          involuntary  petition in the Idaho Federal Bankruptcy Court, styled In
          Re:CyberHighway,   Inc..  In  December  2000,   CyberHighway  and  the
          petitioning creditors filed a joint motion to dismiss this proceeding.
          However, some of CyberHighway's creditors objected to the joint motion
          to  dismiss  and the  motion  failed.

          Subsequent to the involuntary bankruptcy, CyberHighway lost all of its
          customers. Due to this loss of customer base, the Company's intangible
          assets relating to those customers  became  worthless and were written
          off in 2000. Due to this change in operating environment, goodwill was
          impaired  and,  consequently,   the  goodwill  associated  with  these
          operations was written off in the 2000 statement of operations.

     B.   Potential Rescission Claims

          From January  2000  through June 2001, a total of 4,906,549  shares of
          the common  stock of the Company may have been issued in  violation of
          Section 5 of the  Securities  Act of 1933,  as amended.  The aggregate
          value assigned to these shares upon their issuance totaled $5,090,252.
          For a period of one year from  issuance,  the issuees of these  shares
          have or had, as the case may be, a potential  claim for  rescission of
          their respective issuance transactions.

          At December  31, 2001,  2,138,726 of these shares have been  reflected
          under the redeemable stock caption on the  accompanying  balance sheet
          with an assigned value of $1,192,700.

          At March 31, 2002,  524,564 of these shares have been reflected  under
          the redeemable stock caption on the accompanying balance sheet with an
          assigned value of $220,998


                                       12
<PAGE>


          The  diminishing  number of shares  subject  to  potential  rescission
          claims was caused either by the expiration of the  respective  statute
          of limitations periods or by the transfer of the subject shares by the
          original issuees.

          The Company  believes that it is unlikely that any of these  potential
          rescission claims will be asserted against the Company.

Note 6.  Financing Transaction

On May 9, 2001, the Company signed an amended and restated common stock purchase
agreement  with an unrelated  company to sell up to  6,000,000  shares of common
stock  for up to  $10,000,000.  The  purchase  price of the  shares  under  this
purchase agreement varies, based on market prices of the Company's common stock.
The purchase  agreement calls for the Company to meet certain  requirements  and
maintain  certain criteria with respect to its common stock in order to avoid an
event of default.  Upon the occurrence of the event of default,  the buyer is no
longer  obligated  to  purchase  any  additional  shares  of common  stock.  The
registration  statement filed with respect to this financing  transaction became
effective on June 29, 2001. The commencement date of the purchase  agreement was
July 10,  2001.  To date,  the Company has  received  approximately  $395,000 in
proceeds  under  the  purchase  agreement,  approximately  $55,000  of which was
received by the  Company  during the first three  months of 2002.  The  purchase
agreement remains in effect.

Note 7.  Stock Ownership Plan

In March 2002, the Company adopted a 2002 Stock Ownership Plan for employees and
consultants,  reserving  3,000,000  shares  of its  common  stock  for  issuance
thereunder.

In March 2002,  the Company  entered into a  consulting  and  marketing  license
agreement  with a third party,  under which  agreement  the Company  granted the
consultant  options,  under its 2002 Stock  Ownership  Plan,  to  purchase up to
$600,000 of its common  stock,  up to $50,000  per month for ten years,  the per
share exercise price being based on future market prices, with a 38.75% discount
to the  market  price on the date of  exercise.  In March  and April  2002,  the
consultant  exercised  options to  purchase  $98,000 of  Company  common  stock.
2,000,000 shares of common stock were issued pursuant to this option exercise.

Note 8. Subsequent Events

Significant Equity Purchase

In April 2002, the Company entered into a securities  purchase  agreement with a
third party,  whereby the Company is to issue 3,125,000 units of its securities,
each unit  consisting  of one share of common stock,  one common stock  purchase
warrant to  purchase  one share at an  exercise  price of $.15 per share and one
common stock purchase warrant to purchase one share at an exercise price of $.30
per share, for cash in the amount of $250,000 payable in two equal increments at
the initial  closing  (held April 15, 2002) and June 14, 2002.  Also pursuant to
this agreement,  the Company hired a new president and chief executive  officer,
who  became a director  of the  Company,  and,  as a signing  bonus,  issued him
3,000,000 shares of common stock;  the current  president became Chairman of the
Board,  reduced the term of his remaining term of employment from  approximately
four years to six months,  waived the  payment of all accrued and unpaid  salary
and  waived  the  repayment  of  all  loans  made  by him  to  the  Company,  in
consideration  of  2,000,000  shares of common stock being issued to him; two of
the Company's  vice  presidents  reduced the terms of their  remaining  terms of
employment  from  approximately  four  years to six  months  and one year to six
months,  respectively,  and waived the payment of all accrued and unpaid salary,
in  consideration  of  2,000,000  shares of common stock being issued to each of
them; and the other vice president of the Company terminated his employment with
the Company.

                                       13
<PAGE>

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

Background

     We  have  determined  to  commit  all of  our  available  resources  to the
exploitation of our Quick-Cell  wireless Internet access products.  We currently
lack the capital necessary to do so.

     We were  organized  to operate in the  wireless  cable and  community  (low
power)  television  industries.  Due to  existing  market  conditions,  we  have
abandoned our wireless cable business.  Because our Quick-Cell wireless Internet
access  system can be adapted  for use on the  wireless  cable  frequencies,  we
believe our frequencies  possess future value.  However,  these frequencies will
not be of value to us, unless and until the FCC approves two-way  communications
on them.

     Effective July 1, 1999, we assigned all of our television-related assets to
New Wave Media  Corp.,  in  exchange  for a 15%  ownership  interest in New Wave
common stock.  This business segment was discontinued as of that date and, since
then, has not, and will not,  generate any revenues.  Our board of directors has
declared a dividend  with  respect to all of the New Wave  shares.  These shares
will be  distributed  to our  shareholders,  upon  New  Wave's  completion  of a
Securities Act registration of the distribution  transaction.  This registration
proceeding has not been commenced by New Wave, due to a lack of funds  necessary
to pay related professional  expenses. New Wave has advised us that it is making
its best efforts to obtain capital for this purpose, but cannot provide an exact
time by which this will occur.

Current Overview

     Our management  has committed all available  current and future capital and
other  resources  to the  commercial  exploitation  of our  Quick-Cell  wireless
Internet access products. It is these products upon which our future is based.

     Our new  president  has  expanded  the  scope  of our  original  Quick-Cell
business plan, which called for the construction of Quick-Cell  systems in small
and medium-sized cities. In addition to our original plan, we are now attempting
to develop  working  partnerships  with  companies  who need to create or extend
broadband Internet connectivity for their customers, employees and partners. The
companies  with which we seek to do  business  operate in the  following  market
segments,  among others:  hospitality,  education,  aviation,  multiple dwelling
unit,  planned community  development,  independent local exchange,  utility and
municipality.

         On April 15, 2002, we consummated a securities purchase agreement with
Evergreen Venture Partners, LLC. Under this agreement, we are to issue a total
of 3,125,000 units of our securities for cash in the amount of $250,000, payable
in two equal increments: on April 15, 2002, and June 14, 2002. Each unit sold to
Evergreen consists of one share of our common stock, one common stock purchase
warrant to purchase one share at an exercise price of $.15 per share and one
common stock purchase warrant to purchase one share at an exercise price of $.30
per share. Also pursuant to this agreement, we hired a new president and chief
executive officer, Douglas O. McKinnon, who also became a director, and who
received, as a signing bonus, 3,000,000 shares of our common stock; David M.
Lofin, our former president, became our Chairman of the Board, reduced the term
of his remaining term of employment from approximately 4 years to six months,
waived the payment of all accrued and unpaid salary and waived the repayment of
all loans made by him to us, in consideration of 2,000,000 shares of our common
stock; two of our vice presidents reduced the terms of their remaining terms of
employment from approximately 4 years to six months and one year to six months,
respectively, and waived the payment of all accrued and unpaid salary, in
consideration of 2,000,000 shares of our common stock; and our other vice
president terminated his employment with us. Also, under this agreement, upon
the final closing scheduled for June 14, 2002, Evergreen will name two persons
to become directors of USURF America.

     As a result of the transactions with these four officers arising out of the
Evergreen  agreement,  we will incur a charge  against our  earnings  during the
second quarter of 2002 of approximately $650,000.


                                       14
<PAGE>

     In May 2001, we entered into an amended and restated  common stock purchase
agreement with Fusion  Capital Fund II, LLC, which replaced a similar  agreement
entered into in October  2000.  Pursuant to the  agreement,  Fusion  Capital may
purchase up to $10 million of our common  stock.  The shares of our common stock
being issued under this  agreement are the subject of an effective  registration
statement.  To date, we have received  only  $395,000  under our agreement  with
Fusion  Capital.  Fusion Capital has not purchased the maximum  shares  possible
under this agreement.  This lack of significant  funding has impeded our ability
to expand our Quick-Cell  business  operations.  We will remain in this position
unless and until (1) our stock price  increases  significantly  or (2) we secure
funding from a source other than Fusion Capital, of which there is no assurance.
Please see the  discussion  under the heading  "Management's  Plans  Relating to
Future Liquidity",  for a more thorough explanation of the impact this agreement
could have on our business.  Should we obtain more substantial funding, we would
be able to begin to pursue our wireless Internet business plan. In October 2001,
we  began  company-owned  Quick-Cell  operations  in Del  Rio,  Texas,  and have
agreements with two resellers  there. We have  approximately 50 customers in Del
Rio, and consumer response has been excellent. However, our customer growth will
continue to be slowed by a lack of capital.  We have also completed  engineering
efforts  in four  other  South  Texas  towns.  We will not begin  marketing  our
Quick-Cell  service in these  towns,  until we  stabilize  our  working  capital
situation.

     As the level of funding under the Fusion  Capital  agreement has been lower
than we had earlier  anticipated,  from November 2001 through March 31, 2002, we
obtained additional funds through sales of our securities, as follows:


     -    $57,500 (2001) from the sale of 575,000 shares of our common stock and
          a total of 1,150,000 warrants;

     -    $30,000  (2002) from the  exercise of  outstanding  warrants - 200,000
          shares at $.15 per share;

     -    $13,000  (2002) from the  exercise of  outstanding  warrants - 162,500
          shares at $.08 per share; and

     -    $49,000  (2002) from the  exercise  of options -  1,000,000  shares at
          $.049 per share (a 38.75%  discount to the market price on the date of
          exercise).

These funds were used for  operating  expenses and not for the  expansion of our
wireless Internet access business.

     Subsequent  to March 31, 2002,  in April 2002,  we obtained  funds  through
sales of our securities, as follows:


     -    $49,000 from the  exercise of options - 1,000,000  shares at $.049 per
          share (a 38.75% discount to the market price on the date of exercise).
          These funds were applied exclusively to operating expenses.

     -    $125,000  from the sale of  1,562,500  shares and a total of 3,125,000
          warrants,  pursuant to the Evergreen  transaction.  A portion of these
          funds are to be used for operating  expenses,  while the balance is to
          be  utilized  in our efforts to expand our  wireless  Internet  access
          business.

     Pursuant  to the  Evergreen  agreement,  we are to  receive  an  additional
$125,000,  in June  2002,  which  funds we expect  will  enable us to pursue our
business plan more aggressively. However, we cannot assure you that we will ever
earn a profit.

     We will need further capital, as we continue to expand our wireless
Internet access business.

CyberHighway Bankruptcy

In  September  2000,  an  involuntary  bankruptcy  petition  was  filed  against
CyberHighway in the Idaho Federal Bankruptcy Court, styled In Re:  CyberHighway,
Inc.,  Case  No.  00-02454,  by  ProPeople  Staffing,   CTC  Telecom,  Inc.  and


                                       15
<PAGE>

Hawkins-Smith.   A  joint  motion  to  dismiss  the  bankruptcy  proceeding  was
unsuccessful   because   some   of   CyberHighway's   creditors   believe   that
CyberHighway's  as-yet unasserted damage claims against the original petitioning
creditors  and their law firm and a claim  against  Dialup USA,  Inc.  represent
CyberHighway's  most valuable  assets.  These as-yet  unasserted  claims include
claims  for bad  faith  filing of the  original  bankruptcy  petition  as to the
original  petitioning  creditors  and  their  law  firm,  as well as a claim for
tortious  interference with beneficial business  relationships as to Dialup USA,
Inc. These  creditors  desire that these claims be adjudicated in the bankruptcy
court.  It is  likely  that,  at some  time in the  future,  a  final  order  of
bankruptcy  will be entered with respect to  CyberHighway.  No prediction of the
timing  of such an order can be made,  although  we  believe  that such an order
would come only after the final adjudication of the claims described above.

     The January 1999  acquisition  of  CyberHighway  fundamentally  altered our
company.  Our annual  revenues  went from  nearly  zero to about  $2.5  million.
However,   the   involuntary   bankruptcy   proceeding   caused  the  demise  of
CyberHighway's business. CyberHighway's company-owned dial-up customer base went
from approximately  8,500 to none. The filing of the involuntary  bankruptcy and
CyberHighway's  switch-over to the network of Dialup USA were the primary causes
of  CyberHighway's  customer base demise. We will not apply any available future
capital to the revitalization of our dial-up Internet access business.

Results of Operations

     General.  By the end of  February  2001,  CyberHighway  had lost all of its
dial-up  Internet access customers and we do not foresee the  revitalization  of
CyberHighway's business. You should not purchase our common stock expecting that
CyberHighway's business will assist in making us profitable.

     During the first quarter of 2001, we derived no revenue from CyberHighway's
business.  For the first  three  months of 2001 and 2002,  our small  amounts of
revenues were dervied from our Quick-Cell  wireless Internet access  operations.
We  currently  lack the  capital  necessary  to pursue our  complete  Quick-Cell
business  plan,  and we may never possess  enough  capital with which to exploit
fully our Quick-Cell products. In this circumstance,  it is likely that we would
never earn a profit.

     Before the demise of CyberHighway, our revenues were derived primarily from
monthly  customer  payments  for dial-up  access and from  per-customer  royalty
payments from our CyberHighway affiliate-ISPs.

     Beginning in March 2000,  we began  initial  Quick-Cell  wireless  Internet
access  operations in Santa Fe, New Mexico.  Throughout  2000,  our customers in
Santa Fe were in their one-year  "free-use" period.  During most of 2001, we did
not charge our Santa Fe customers for service,  due to our commencing an upgrade
to the system. We were forced to suspend the upgrade of the system and have only
a few customers  remaining.  We have yet to derive significant  revenue from our
Santa Fe market.  In the last quarter of 2001, we began to derive  revenues from
the first  customers  in Del Rio,  Texas.  We have lacked  capital with which to
expand either of these markets.

     In September  2001, we began  Quick-Cell  operations in Del Rio,  Texas. We
have  approximately  50 customers  online,  but our growth there has been slowed
significantly  due to our lack of  capital.  We  cannot  predict  the  number of
customers we will secure in any specific time frame, due to our lack of capital.
In Del  Rio,  we have  chosen  to  make  sustained  slow  progress  in  customer
acquisition,  rather than to have begun full-scale  marketing activities only to
suspend them soon after their start due to our lack of capital.  Should we begin
to derive greater  amounts of funds under the Fusion  Capital  agreement or from
another source, of which there is no assurance,  we plan to construct additional
Quick-Cell systems throughout the remainder of 2002.

     In the middle of 2000, we began  marketing our Quick-Cell  systems to local
exchange  telephone  companies,   independent   telephone   companies,   digital
subscriber  line  resellers  and  Internet  service  providers.  We  sold  three
Quick-Cell  systems in a short  time.  Due to a lack of capital,  however,  this
marketing  effort was suspended  before we investigated  the nature of the other
inquiring companies. No paying customers use these systems, due to circumstances
involving  these  companies that are beyond our control.  During the first three
months of 2001 and 2002, we derived no significant  revenues from customer modem
sales to these Quick-Cell purchasers, and we do not expect to do so during 2002.


                                       16
<PAGE>
<TABLE>
<CAPTION>

     In cities in which we construct company-owned Quick-Cell systems, we intend
to employ telephone  marketing as the initial means for acquiring customers and,
later,  mass media.  We will employ a sales force that will focus  primarily  on
potential business  customers.  This focus on business customers is based on our
management's  informal study of Internet  usage by businesses  versus home users
that revealed  businesses'  higher demand for high-speed  Internet  access.  Our
management's   decision   may  prove  to  have  been   incorrect,   which  would
significantly  impair our  ability to earn a profit.  Our  management  believes,
based on its collective business experience, that effective marketing techniques
can overcome  Quick-Cell's  lack of name  recognition,  although this belief may
also prove to be incorrect.  Our Quick-Cell business will not be able to succeed
without additional capital.

     In cities  where a  Quick-Cell  reseller  operates,  we will not have final
approval of the reseller's marketing strategies. Our resellers will be permitted
to market our  Quick-Cell  service in any  commercially  reasonable  manner.  We
cannot,  therefore,  assure you that any of our resellers will ever achieve high
enough sales levels that would permit us to earn a profit.

     We  have  entered  into  a  Quick-Cell  reseller  agreement  with  Wireless
WebConnect!,  Inc. Due to issues within WebConnect that were out of our control,
to date,  we have not derived any benefit from this  agreement.  However,  after
recent  discussions  with  WebConnect,  it is  possible  that we will  begin  to
implement our agreement  during 2002, as it appears that  WebConnect's  internal
issues have been resolved to a point that it is now in a position to participate
as a Quick-Cell  reseller.  It is possible that the terms of our agreement  with
WebConnect might be amended in the future,  but we cannot predict if and when an
amendment would be executed.

     Our revenues for the first three months of 2001 and 2002 were significantly
below those of 2000,  since we no longer derive  revenues from the operations of
CyberHighway  and we have lacked  capital  with which to  implement a full-scale
implementation  of our  Quick-Cell  business  plan.  In  2002,  we will  produce
significant  revenues only if we are able to be successful in placing Quick-Cell
service customers online, of which there is no assurance, due to the uncertainty
surrounding our level of  capitalization  to be derived under the Fusion Capital
agreement or any other sources.

     We have taken steps  towards the  preparation  of tax returns for all years
since our inception,  though none has been filed. Because we have never earned a
profit, there is no tax liability that would arise from this circumstance.

     Potential  Rescission  Claims.  At March 31,  2002,  524,564  shares of our
common stock with an aggregate  assigned  value of $220,998 may have been issued
in violation of Section 5 of the Securities Act. It is possible that each of the
issuees of these shares has a potential claim for rescission of their respective
issuance  transactions.  We do not  possess  capital  with which to pay any such
claims, if asserted,  and, if such claims are asserted,  it is possible that our
then-available  capital would become impaired and our future  operating  results
would likely suffer.

     Three  Months  Ended March 31,  2002,  versus  Three Months Ended March 31,
2001.  During both periods,  our small amounts of revenues were derived from our
wireless Internet access business. Without additional capital, our revenues will
remain at these levels.

     Our  operating  results  for the  first  quarters  of  2002  and  2001  are
summarized in the following table:


                                                 First Quarter 2002   First Quarter 2001
                                                     (unaudited)          (unaudited)
                                                  ----------------     ----------------
<S>                                                    <C>                   <C>
     Revenues                                          $4,626                $384
     Internet Access Costs, Cost of Goods Sold          8,482                  0



                                       17
<PAGE>





     Gross Profit (Loss)                               (3,856)                384
     Operating Expenses                               603,918             901,643
     Loss from Operations                            (607,774)           (901,259)
     Net Loss                                        (607,957)           (901,259)
</TABLE>

     Our net loss of  $574,274  (unaudited)  for the first  quarter  of 2002 was
significantly   less  than  our  net  loss  for  the  2001  period  of  $901,259
(unaudited).  Certain  line  items  in  our  statements  of  operations  changed
materially  from the 2001 period to the 2002 period,  which  contributed  to the
reduction in our net loss for the current period, as follows:


     -    Professional  fees  decreased  from  $707,288  in the 2001  period  to
          $270,147  in the 2002  period.  This  decrease  is a result of our not
          having  required  professional  services during the 2002 period at the
          levels required during the 2001 period.  Also, during the 2002, we did
          not have a charge against our earnings  similar to the $248,000 amount
          that  occurred  during the 2001 period,  the result of the issuance of
          800,000  shares  as a  commitment  fee under a common  stock  purchase
          agreement.  Should we  continue  to lack cash  reserves,  it is likely
          that,  during the  remainder  of 2002,  we would  issue  shares of our
          common stock in payment of certain professional fees.

     -    During the 2001 period, we incurred no advertising  expense.  However,
          during the 2002 period, we incurred  advertising  expenses of $62,000.
          All  of  our  advertising  expenses  during  the  current  period  are
          attributable  to the  exercise  of options  to  acquire  shares of our
          common stock by a consultant.

     -    An increase in salaries  and  commissions,  from  $160,746 in the 2001
          period to $242,314 in the 2002 period, was offset by the reduction the
          expenses described in the prior paragraphs.  This increase in salaries
          and  commissions is  attributable  to the issuance of 34,536 shares of
          our common  stock to one of our  officers,  in payment of a portion of
          his accrued  salary in the  approximate  amount of $140,000.  Had this
          one-time expense not been incurred, our salaries and commissions would
          have been well below 2001 levels,  due to our  reductions in personnel
          during the last quarter of 2001 and the first quarter of 2002.

     As a result of the Evergreen  transaction,  we will incur a one-time charge
against our earnings for the second quarter of 2002 in the approximate amount of
$650,000, due to the following stock issuances:


     -    3,000,000  shares  issued to our new  president  and  chief  executive
          officer as a signing bonus under his employment agreement.

     -    2,000,000  shares to our former  president  (current  Chairman  of the
          Board) in  consideration  of his  agreeing  to reduce  the term of his
          employment  agreement,  waive the payment of accrued  salary and waive
          the repayment of unpaid loans made by him to us.

     -    2,000,000 shares to one of our vice presidents in consideration of his
          agreeing to reduce the term of his employment  agreement and waive the
          payment of accrued salary.

     -    2,000,000  shares to our vice  president of corporate  development  in
          consideration  of his  agreeing  to reduce the term of his  employment
          agreement and waive the payment of accrued salary.

     We expect that our  results of  operations  for the second  quarter of 2002
will be similar to those of the first quarter of 2002.


                                       18
<PAGE>

     Due to our severe  lack of capital  during  the 2001 and 2002  periods,  we
issued shares of our stock to consultants in payment of their services. The fair
value of the shares  issued to  consultants  is  included in our  statements  of
operations under the "Professional Fees" line item. Issuing shares of our common
stock was the only means by which we could obtain the consultants' services. The
value of the  consulting  services  received by us under each agreement has been
expensed in equal monthly amounts over their respective terms:


     -    during the first three months of 2001, we issued 320,000 shares of our
          common stock under two consulting agreements; these shares were valued
          for financial  accounting purposes at $99,200, in the aggregate.  This
          amount was expensed in equal monthly amounts during 2001.

     -    during the first three months of 2002, we issued 570,000 shares of our
          common stock under consulting agreements; these shares were valued for
          financial  accounting  purposes at  $61,500,  in the  aggregate.  This
          amount is being expensed in equal monthly amounts over periods ranging
          from  four  months  to one  year.  All of this  total  amount  will be
          expensed during 2002.

     Subsequent  to March  31,  2002,  we have  issued  shares  to  consultants,
professional  service  providers  and to certain of our  officers,  the value of
which will be charged  against our earnings,  beginning in the second quarter of
2002. Specifically,  we have issued: 1,625,000 shares to consultants,  valued at
approximately $165,000, all of which will be charged against our earnings during
2002; 500,000 shares to professional service providers,  valued at approximately
$40,000, all of which will be charged against our earnings in the second quarter
of 2002;  and  9,000,000  shares to  certain  of our  officers  pursuant  to the
Evergreen  transaction,  value at approximately  $800,000,  which amount will be
charged against our earnings in the second quarter of 2002.

Liquidity and Capital Resources

     General.  Since our inception,  we have had a significant  working  capital
deficit. Currently, we are substantially illiquid, although we do possess enough
cash to continue our current level of business activities, through the result of
recent  securities  sales.  As the level of  funding  under the  Fusion  Capital
agreement  has been lower than we had earlier  anticipated,  during the last two
months of 2001 and the first three months of 2002, we obtained  additional funds
through sales of our common stock, as follows:


     -    $57,500 (2001) from the sale of 575,000 shares of our common stock and
          a total of 1,150,000 warrants;

     -    $30,000  (2002) from the  exercise of  outstanding  warrants - 200,000
          shares at $.15 per share;

     -    $13,000  (2002) from the  exercise of  outstanding  warrants - 162,500
          shares at $.08 per share; and

     -    $49,000  (2002) from the  exercise  of options -  1,000,000  shares at
          $.049 per share (a 38.75%  discount to the market price on the date of
          exercise).

     These funds were used for  operating  expenses and not for the expansion of
our wireless Internet access business.

     Subsequent  to March 31, 2002,  in April 2002,  we obtained  funds  through
sales of our securities, as follows:


     -    $49,000 from the  exercise of options - 1,000,000  shares at $.049 per
          share (a 38.75% discount to the market price on the date of exercise).
          These funds were applied exclusively to operating expenses.


                                       19
<PAGE>

     -    $125,000  from the sale of  1,562,500  shares and a total of 3,125,000
          warrants,  pursuant to the Evergreen  transaction.  A portion of these
          funds are to be used for operating  expenses,  while the balance is to
          be  utilized  in our efforts to expand our  wireless  Internet  access
          business.

     Pursuant  to the  Evergreen  agreement,  we are to  receive  an  additional
$125,000,  in June  2002,  which  funds we expect  will  enable us to pursue our
business plan more aggressively. However, we cannot assure you that we will ever
earn a profit.

     We will  need  further  capital,  as we  continue  to expand  our  wireless
Internet  access  business.  It is  possible  that we will not be able to secure
adequate capital as we need it. Also, without additional capital, it is possible
that we would be forced to cease operations.

         Our Capital Needs. To sustain our current level of operations for the
next twelve months, we will require additional capital of approximately
$300,000. To accomplish our goals of expanding our Quick-Cell business, we will
require at least $1.2 million. If we are unable to obtain this needed capital,
we could be forced to cease our operations.

     Currently we do not possess  enough capital to accomplish our goals for our
Quick-Cell  wireless  Internet access  business,  including the  construction of
Quick-Cell systems. When we refer to the construction of a Quick- Cell system in
any city, that process requires the following expenditures:


     -    A single  Quick-Cell cell site,  including a Quick-Cell  server modem,
          parts and configuration - projected average cost: $25,000;

     -    Tower lease site - projected average cost: $500 per month;

     -    Direct T1  telephone  line  connection  to the  Internet  -  projected
          average cost: $2,000 per month; and

     -    Initial inventory of customer modems - approximate cost: $70,000.

     However, in Del Rio, due to our lack of large sums of capital, we were able
to re-design our Quick-Cell system to achieve significant cost savings and built
the first portion of that system, which included two server cells - the original
plan having called for one server cell - for approximately  $18,000, and we have
added a third  server cell to this  system,  in  response  to  consumer  demand.
However, we continue to lack capital with which to market our Quick-Cell service
aggressively. Rather, in Del Rio, we have chosen to make sustained slow progress
in  customer  acquisition,  rather  than  to  have  begun  full-scale  marketing
activities  only to  suspend  them  soon  after  their  start due to our lack of
capital.  Should we begin to derive  greater  amounts of funds  under the Fusion
Capital  agreement,  of  which  there  is no  assurance,  we plan  to  construct
additional Quick-Cell systems throughout 2002.

     If and  when we begin to  obtain  the  maximum  amount  of funds  available
pursuant to the Fusion Capital agreement,  we expect, then, to have enough money
to pay for the  construction  of the  initial  Quick-Cell  cell site in at least
three markets per month.  We cannot assure you that we will be able to construct
Quick-Cell cell sites at that rate or that we will ever possess adequate capital
with which to engage in this level of activities.

     In light of the  relatively  small amount of capital  required to construct
each Quick-Cell cell site, we believe that the expected funding under the Fusion
Capital  agreement would provide us with enough capital to construct the initial
Quick-Cell  cell site and commence  marketing  activities  in  approximately  30
markets. With the Quick-Cell  construction  permitted by this amount of capital,
we will be able to determine  whether our Quick-Cell  wireless  Internet  access
business is a viable business, as presently offered. However, the funds expected
under the Fusion  Capital  agreement  will not be adequate  for us to pursue our
complete Quick-Cell business plan, and we cannot assure you that we will be able
to obtain  capital when needed.  Our  inability to obtain  further  capital when
needed would lessen our chance of earning a profit, as we would become illiquid.

                                       20
<PAGE>

     Proceeds  from the Fusion  Capital  Agreement.  Beginning in July 2001,  we
began to receive the first funds of up to $10 million under our  agreement  with
Fusion Capital. Since then, we have received only $395,000 in payment of a total
of 3,100,000  shares under this agreement.  Fusion Capital has not purchased the
maximum funding amount  possible under this agreement.  This lack of significant
funding has impeded our ability to expand our Quick-Cell business operations. We
will  remain in this  position  unless and until (1) our stock  price  increases
significantly  or (2) we secure funding from a source other than Fusion Capital,
of which there is no assurance. Assuming we receive the entire $10 million under
that agreement, of which there is no assurance, we anticipate that we will apply
these funds as follows:


     Purchase of Quick-Cell Equipment                                $ 6,000,000
     Construction of Quick-Cell Systems                                1,300,000
     Marketing                                                         1,000,000
     General and Administrative Expenses                                 200,000
     Finder's Fee                                                        800,000
     Working Capital                                                     700,000
                                                                     -----------
                            Total                                    $10,000,000
                                                                     ===========

     You should  note,  however,  that we may not realize $10 million  under the
Fusion  Capital  agreement,  due to the current  low market  price of our common
stock.  In  addition,  under the  Fusion  Capital  agreement,  we must  maintain
compliance  with  certain  criteria  in order  to  avoid  an  event of  default.
Currently,  we are in  compliance  with these  criteria  and expect to remain in
compliance for the foreseeable future.

     Should all of our outstanding warrants, including all of the warrants to be
issued in connection with the Fusion Capital agreement,  be exercised,  we would
receive cash proceeds of approximately $3,278,376.  Upon the final closing under
the Evergreen  agreement,  we will issue  warrants that could yield  $703,125 if
exercised.  Funds  received  from  the  exercise  of  warrants  would be used to
purchase Quick-Cell  equipment,  to construct  Quick-Cell systems, to market our
Quick-Cell wireless Internet access service and for working capital.  Please see
the discussion under "Use of Proceeds".

     You should note that we may never receive any of the funds discussed above.
Our failure to obtain  capital  from these  sources  could cause us to cease our
operations.

     Potential  Rescission  Claims.  Because  we  lack  the  capital  to pay any
potential   claims  for  rescission   that  may  be  asserted  by  some  of  our
shareholders, any such claim made against us could negatively impact our ability
to continue in business.  At March 31, 2002,  524,564 of these  shares,  with an
aggregate value of $220,998,  remain subject to potential claims for rescission.
We do not possess capital with which to pay any such claims,  if asserted,  and,
if such claims are  asserted,  it is  possible  that we would be forced to cease
operations, as our then-available capital could become severely impaired.

     March 31, 2002.  Historically,  we have had a significant  working  capital
deficit.  At  March  31,  2002,  our  working  capital  deficit  was  $1,240,582
(unaudited) which is only slightly lower than our $1,254,897 deficit at December
31, 2001. Our receipt of funds through sales of our securities  during the first
three months of 2002 permitted us to maintain a constant working capital deficit
throughout the quarter.  Approximately  85% of our accounts payable are accounts
payable of  CyberHighway  and are  subject to the pending  Chapter 7  bankruptcy
proceeding of  CyberHighway.  Without  additional  capital,  our working capital
deficit can be expected to become larger each quarter.


                                       21
<PAGE>

     The following  table sets forth our current assets and current  liabilities
at March 31, 2002, and December 31, 2001:


<PAGE>
<TABLE>
<CAPTION>

                                                                 March 31, 2002       December 31, 2001
                                                               -----------------     --------------------
                                                                  (unaudited)             (audited)
<S>                                                            <C>                   <C>
    Current Assets         Cash                                $         284         $            10
                           Inventory                                 133,500                 134,756

    Current Liabilities    Disbursements  of Cash              $           0         $        15,539
                           Balances
                           Accounts Payable                        1,042,150               1,034,619
                           Accrued Payroll                           272,820                 265,978
                           Other Current Liabilities                  59,396                  54,996
                           Notes Payable to Stockholder                    0                  18,521
</TABLE>

     Our accrued  payroll at March 31, 2002, as well as at December 31, 2001, is
attributable to accrued salary of three of our officers.  In connection with the
Evergreen  transaction  described above, these officers waived payment of all of
their accrued  salaries,  which will be reflected on our June 30, 2002,  balance
sheet.

     We reduced our note payable to stockholder during the first quarter of 2002
by $18,521,  and owed this  shareholder  no amount at March 31, 2002.  We do not
expect that we will again borrow funds from this shareholder.

     During the first  quarter of 2002,  we obtained a total of $149,500 in cash
from sales of our securities.



     -    $57,500 (2001) from the sale of 575,000 shares of our common stock and
          a total of 1,150,000 warrants;

     -    $30,000  (2002) from the  exercise of  outstanding  warrants - 200,000
          shares at $.15 per share;

     -    $13,000  (2002) from the  exercise of  outstanding  warrants - 162,500
          shares at $.08 per share; and

     -    $49,000  (2002) from the  exercise  of options -  1,000,000  shares at
          $.049 per share (a 38.75%  discount to the market price on the date of
          exercise).

The funds received were applied primarily to operating expenses.

     Subsequent  to March 31, 2002,  in April 2002,  we obtained  funds  through
sales of our securities, as follows:


     -    $49,000 from the  exercise of options - 1,000,000  shares at $.049 per
          share (a 38.75% discount to the market price on the date of exercise).
          These funds were applied exclusively to operating expenses.

     -    $125,000  from the sale of  1,562,500  shares and a total of 3,125,000
          warrants,  pursuant to the Evergreen  transaction.  A portion of these
          funds are to be used for operating  expenses,  while the balance is to
          be  utilized  in our efforts to expand our  wireless  Internet  access
          business.


                                       22
<PAGE>

     Pursuant  to the  Evergreen  agreement,  we are to  receive  an  additional
$125,000,  in June  2002,  which  funds we expect  will  enable us to pursue our
business plan more aggressively. However, we cannot assure you that we will ever
earn a profit.

     Without  obtaining at least $1,000,000 in new capital,  we will continue to
have a significant  working capital deficit and will not be able to operate from
a position of liquidity.  This will impair our ability to pursue our Quick- Cell
business plan and, thus, our ability ever to earn a profit.

     If we are unable to obtain significant  additional  capital, it is possible
that we would be forced to cease operations.

     Cash Flows from Operating Activities. During the first quarter of 2002, our
operations  used $123,305  (unaudited) in cash compared to cash used of $162,684
(unaudited)  during the first quarter of 2001. In both periods,  the use of cash
in  operations  was a direct  result  of the lack of  revenues  compared  to our
operating expenses, particularly salaries and commissions.

         Cash Flows from Investing Activities. During the first quarters of 2001
and 2002, our investing activities neither provided nor used cash. Because we
     lack  working  capital,  we cannot  predict  our cash flows from  investing
activities
for the remainder of 2002.

     Cash Flows from  Financing  Activities.  For the first quarter of 2002, our
financing  activities  provided  $123,579  (unaudited)  in cash. Our payments on
notes payable to  stockholder of $18,521 and $4,900 in finder's fees were offset
by payments on subscriptions  receivable of $70,000,  $64,000 in cash from sales
of our common  stock and  $13,000 in cash  obtained  by the  exercise of certain
warrants.  For the first  quarter of 2001,  our  financing  activities  provided
$287,090 in cash.  Of this  amount,  $26,090 is  attributable  to loans from our
president  and  $261,000 is  attributable  to private  sales of  securities.  We
continue to seek capital and cannot,  therefore,  predict  future levels of cash
flows from financing activities.

Management's Plans Relating to Future Liquidity

     To sustain our current level of operations for the next twelve  months,  we
will require additional capital of approximately $300,000. Our recent securities
purchase  agreement with  Evergreen  will provide a significant  portion of this
capital  requirement.  To  accomplish  our  goals of  expanding  our  Quick-Cell
business, we will require at least $1.2 million.

     Our best  opportunity for obtaining  needed funds is pursuant to the Fusion
Capital  agreement.  However,  to date, we have received only $395,000 under our
agreement  with Fusion  Capital.  Fusion  Capital has not  purchased the maximum
shares possible under this agreement.

     Since we only plan to sell up to 6,000,000  shares to Fusion  Capital under
the Fusion  Capital  agreement,  the  selling  price of our stock sold to Fusion
Capital  will need to  average  $1.67 per share for us to  receive  the  maximum
proceeds of $10 million under that  agreement.  Assuming a selling price of $.08
per share,  the closing sale price of the common stock on May 16, 2002,  and the
purchase by Fusion  Capital of the full amount of shares  purchasable  under the
Fusion  Capital  agreement,  total  proceeds  to us would only be  approximately
$600,000,  unless we choose to issue more than 6,000,000  shares,  which we have
the right to do.

     Should we obtain at least $1.2 million under the Fusion Capital  agreement,
we believe that we will be able to have accomplished our primary objectives:


     -    entering into several working  partnerships with companies who need to
          create or extend broadband Internet  connectivity for their customers,
          employees and partners;

     -    placing at least 10,000 customers on our Quick-Cell systems during the
          next year; and


                                       23
<PAGE>

     -    proving the commercial  viability of our Quick-Cell  wireless Internet
          access service.

We cannot assure you that we will accomplish these objectives.

     Currently,  we have no other sources for funding on the scale  contemplated
by the Fusion Capital transaction.

     If we do not  obtain  the  necessary  funding,  we would be forced to cease
operations.

Capital Expenditures

     During the first three months of 2002, we made no capital  expenditures and
we  currently  have no  capital  with  which  to make  any  significant  capital
expenditures.  Should  we  obtain  significant  funding,  of  which  there is no
assurance,  we would be able to make major  expenditures  on  Quick-Cell-related
equipment.  However,  without  additional  capital,  we  will  make  no  capital
expenditures.

     CERTAIN STATEMENTS CONTAINED IN THIS "MANAGEMENT'S  DISCUSSION AND ANALYSIS
OF  FINANCIAL   CONDITION  AND  RESULTS  OF  OPERATIONS"  ARE   "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE  SECURITIES  LITIGATION REFORM ACT
OF 1995 AND ARE, THUS, PROSPECTIVE. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT
TO RISKS,  UNCERTAINTIES  AND OTHER FACTORS WHICH COULD CAUSE ACTUAL  RESULTS TO
DIFFER  MATERIALLY  FROM FUTURE  RESULTS  EXPRESSED OR IMPLIED BY SUCH  FORWARD-
LOOKING STATEMENTS.  THE MOST SIGNIFICANT OF SUCH RISKS, UNCERTAINTIES AND OTHER
FACTORS  IS OUR  ABILITY  TO  OBTAIN  CAPITAL  IN  AMOUNTS  NECESSARY  FOR US TO
ACCOMPLISH OUR PLAN FOR THE  EXPLOITATION  OF OUR QUICK-CELL  WIRELESS  INTERNET
ACCESS PRODUCTS, AS WELL AS CONSUMER ACCEPTANCE OF THESE PRODUCTS.

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

CyberHighway Involuntary Bankruptcy

     On September 29, 2000, an involuntary bankruptcy petition was filed against
CyberHighway in the Idaho Federal Bankruptcy Court, styled In Re:  CyberHighway,
Inc., Case No. 00-02454.  The petitioning creditors were ProPeople Staffing, CTC
Telecom,  Inc.  and  Hawkins-Smith.  In  December  2000,  CyberHighway  and  the
petitioning creditors filed a joint motion to dismiss this proceeding. The joint
motion to dismiss was denied because the creditors  believe that  CyberHighway's
as-yet unasserted damage claims against the original  petitioning  creditors and
their law firm and a claim  against  Dialup USA, Inc.  represent  CyberHighway's
most valuable  assets.  These as-yet  unasserted  claims  include claims for bad
faith filing of the original bankruptcy petition as to the original  petitioning
creditors  and their law firm, as well as claim for tortious  interference  with
beneficial  business  relationships as to Dialup USA, Inc. It is likely that, at
some time in the  future,  a final  order of  bankruptcy  will be  entered  with
respect to  CyberHighway,  no  prediction  of the timing of such an order can be
made,  although  we believe  that such an order  would come only after the final
adjudication of the claims described above.

Other Litigation

     In  November  2000,   CyberHighway   requested  and  received  a  temporary
restraining order against Darrell Davis,  formerly one of our officers,  and his
wife,  Deanna  Davis.  We have alleged that the Davises  have  diverted  dial-up
customers from CyberHighway to a company  controlled by him, all while he was an
employee  of USURF  America.  We expect  that a  hearing  for our  motion  for a
permanent  injunction  will occur in the  future.  In  addition,  we are seeking
monetary  damages in this action.  No  prediction as to its final outcome can be


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<PAGE>

made. This case is styled: CyberHighway,  Inc. versus Deanna Davis, individually
and d/b/a Cyber-Trail, Inc., and Darrell D. Davis, 19th Judicial District Court,
Parish of East Baton Rouge, State of Louisiana, Case No. 478320.

     In January 2000, we instituted arbitration  proceedings against Christopher
L. Wiebelt, our former vice president of finance and chief financial officer. We
have alleged that Mr. Wiebelt violated certain terms of his employment agreement
and are seeking damages  resulting from those  violations.  This case is styled:
USURF  America,  Inc.  versus  Christopher  L.  Wiebelt,   American  Arbitration
Association, Case No. 71-160-00087-01.  We expect this arbitration proceeding to
be settled in the near future.

Possible Claim

     Some time in the future, it is possible that we will enter into arbitration
proceedings   with   Commonwealth   Associates.   The  dispute  revolves  around
Commonwealth's  claim that we owe it approximately  127,000 shares of our common
stock.  We do not  believe  Commonwealth  is  entitled  to any  shares  and will
vigorously defend our position in arbitration.  We cannot predict the outcome of
this arbitration proceeding.

Potential Legal Proceeding

     In addition to CyberHighway's cause of action against Dialup USA, it is the
intention  of USURF  America  to pursue  damage  claims  against  Dialup USA for
tortiously  interfering  with  the  beneficial  business  relationships  between
CyberHighway  and its customers.  These claims arise out of Dialup USA's actions
on behalf of one of our former officers, which were designed to divert customers
to a  company  controlled  by him.  Our  claim  against  Dialup  USA will be for
approximately  $2 million.  We have not established a date by which we intend to
commence this legal proceeding.

Item 2.  Changes in Securities.

     During the three  months  ended March 31,  2002,  we issued  securities  as
follows:

1.  (a) Securities Sold. In January 2002, 120,000 shares of Company Common Stock
were issued.
    (b)  Underwriter  or Other  Purchasers.  Such  shares  of Common  Stock were
issued to Fusion Capital Fund II, LLC. (c) Consideration.  Such shares of Common
Stock were issued pursuant to a consulting agreement and were valued at $12,000.
(d) Exemption from Registration  Claimed.  The Company relied upon the exemption
from  registration  afforded by Section 4(2) of the  Securities  Act of 1933, as
amended.

2.  (a) Securities Sold. In February 2002, 86,500 shares of Company Common Stock
were issued.
    (b)  Underwriter  or Other  Purchasers.  Such  shares of Common  Stock  were
issued to Shelter Capital Ltd.
    (c)  Consideration.  Such shares  of Common  Stock were issued as a finder's
fee.
    (d) Exemption  from Registration  Claimed.  These securities are exempt from
registration  under the  Securities  Act of 1933,  as  amended,  pursuant to the
provisions of Regulation S thereunder.

3.  (a) Securities Sold.In February 2002, 160,000 common stock purchase warrants
of the Company were issued.
    (b)  Underwriter or Other  Purchasers.  Such warrants were issued to Shelter
Capital Ltd.
    (c) Consideration. Such warrants were issued as a finder's fee.
    (d) Exemption from  Registration  Claimed.  These securities are exempt from
registration  under the  Securities  Act of 1933,  as  amended,  pursuant to the
provisions of Regulation S thereunder.
    (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.10
per share and exercisable for a period of three years from issuance.

4.  (a)  Securities  Sold.  In February  2002,  266,000  common  stock  purchase
warrants of the Company were issued.
    (b)  Underwriter or Other  Purchasers.  Such warrants were issued to Shelter
Capital Ltd.
    (c) Consideration. Such warrants were issued as a finder's fee.
    (d) Exemption from  Registration  Claimed.  These securities are exempt from
registration  under the  Securities  Act of 1933,  as  amended,  pursuant to the
provisions of Regulation S thereunder.


                                       25
<PAGE>

    (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.20
per share and exercisable for a period of three years from issuance.

5.  (a) Securities Sold. In February 2002, 93,000 common stock purchase warrants
of the Company were issued.
    (b)  Underwriter or Other  Purchasers.  Such warrants were issued to Shelter
Capital Ltd.
    (c) Consideration. Such warrants were issued as a finder's fee.
    (d) Exemption from  Registration  Claimed.  These securities are exempt from
registration  under the  Securities  Act of 1933,  as  amended,  pursuant to the
provisions of Regulation S thereunder.
    (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.30
per share and exercisable for a period of three years from issuance.

6.  (a)  Securities  Sold. In February  2002,  300,000  shares of Company Common
Stock were issued.
    (b) Underwriter or Other Purchasers. Such shares of Common Stock were issued
to Peter Rochow.
    (c)  Consideration.  Such shares of Common  Stock were issued  pursuant to a
consulting agreement and were value at $30,000.
    (d) Exemption from  Registration  Claimed.  These securities are exempt from
registration  under the  Securities  Act of 1933,  as  amended,  pursuant to the
provisions of Regulation S thereunder.

7.  (a) Securities  Sold. In March 2002,  400,000 shares of Company Common Stock
were issued.
    (b) Underwriter or Other Purchasers. Such shares of Common Stock were issued
to Peter Rochow.
  (c)  Consideration.  Such  shares of Common  Stock were issued as a finder's
fee.
    (d) Exemption from  Registration  Claimed.  These securities are exempt from
registration  under the  Securities  Act of 1933,  as  amended,  pursuant to the
provisions of Regulation S thereunder.

8.  (a) Securities Sold. In March 2002,  400,000 common stock purchase  warrants
of the Company were issued.
    (b)  Underwriter  or Other  Purchasers.  Such  warrants were issued to Peter
Rochow.
    (c) Consideration. Such warrants were issued as a finder's fee.
    (d) Exemption from  Registration  Claimed.  These securities are exempt from
registration  under the  Securities  Act of 1933,  as  amended,  pursuant to the
provisions of Regulation S thereunder.
    (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.10
per share and exercisable for a period of three years from issuance.

9.  (a) Securities Sold. In March 2002,  400,000 common stock purchase  warrants
of the Company were issued.
    (b)  Underwriter  or Other  Purchasers.  Such  warrants were issued to Peter
Rochow.
    (c) Consideration. Such warrants were issued as a finder's fee.
    (d) Exemption from  Registration  Claimed.  These securities are exempt from
registration  under the  Securities  Act of 1933,  as  amended,  pursuant to the
provisions of Regulation S thereunder.
    (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.20
per share and exercisable for a period of three years from issuance.

10. (a) Securities Sold. In March 2002,  200,000 common stock purchase  warrants
of the Company were issued.
    (b)  Underwriter or Other  Purchasers.  Such warrants were issued to Shelter
Capital Ltd.
    (c) Consideration. Such warrants were issued as a finder's fee.
    (d) Exemption from  Registration  Claimed.  These securities are exempt from
registration  under the  Securities  Act of 1933,  as  amended,  pursuant to the
provisions of Regulation S thereunder.
    (e) Terms of Conversion or Exercise. Exercise price of the warrants is $.049
per share and exercisable for a period of three years from issuance.

    Subsequent to March 31, 2002,  we have issued  unregistered  securities,  as
follows:

1.  (a) Securities Sold. In April 2002,  200,000 common stock purchase  warrants
of the Company were issued.
    (b)  Underwriter or Other  Purchasers.  Such warrants were issued to Shelter
Capital Ltd.
    (c) Consideration. Such warrants were issued as a finder's fee.

                                       26
<PAGE>

    (d) Exemption from  Registration  Claimed.  These securities are exempt from
registration  under the  Securities  Act of 1933,  as  amended,  pursuant to the
provisions of Regulation S thereunder.
    (e) Terms of Conversion or Exercise. Exercise price of the warrants is $.049
per share and exercisable for a period of three years from issuance.

2.  (a) Securities  Sold. In April 2002,  500,000 shares of Company Common Stock
were issued.
    (b) Underwriter or Other Purchasers. Such shares of Common Stock were issued
to Newlan & Newlan.
    (c) Consideration.  Such shares of Common Stock were issued as a bonus, at a
price of $.10 per share.
    (d)  Exemption  from  Registration  Claimed.  The  Company  relied  upon the
exemption  from  registration  afforded by Section 4(2) of the Securities Act of
1933, as amended.

3.  (a)  Securities  Sold. In April 2002,  75,000 shares of Company Common Stock
were issued.
    (b) Underwriter or Other Purchasers. Such shares of Common Stock were issued
to Patrick F. McGrew.
    (c) Consideration.  Such shares of Common Stock were issued as a bonus, at a
price of $.10 per share.
    (d)  Exemption  from  Registration  Claimed.  The  Company  relied  upon the
exemption  from  registration  afforded by Section 4(2) of the Securities Act of
1933, as amended.

4.  (a) Securities  Sold. In April 2002,  500,000 shares of Company Common Stock
were issued.
    (b) Underwriter or Other Purchasers. Such shares of Common Stock were issued
to Heyer Capital Fund.
    (c)  Consideration.  Such  shares of Common  Stock were issued as a finder's
fee.
    (d) Exemption from  Registration  Claimed.  These securities are exempt from
registration  under the  Securities  Act of 1933,  as  amended,  pursuant to the
provisions of Regulation S thereunder.

5.  (a) Securities  Sold. In April 2002,  200,000 shares of Company Common Stock
were issued.
    (b) Underwriter or Other Purchasers. Such shares of Common Stock were issued
to Employer Support Services.
    (c)  Consideration.  Such shares of Common Stock were issued in payment of a
trade payable and were valued at a price of $20,000.
    (d)  Exemption  from  Registration  Claimed.  The  Company  relied  upon the
exemption  from  registration  afforded by Section 4(2) of the Securities Act of
1933, as amended.

6.  (a) Securities  Sold. In April 2002, a total of 9,000,000  shares of Company
Common Stock were issued.
    (b) Underwriter or Other Purchasers. Such shares of Common Stock were issued
to Douglas O. McKinnon (3,000,000  shares),  David M. Loflin (2,000,000 shares),
Waddell D. Loflin (2,000,000 shares) and James Kaufman (2,000,000 shares).
    (c)  Consideration.  Such shares of Common  Stock were issued in pursuant to
the terms of  employment-related  agreements  and were  valued at  approximately
$930,000, in the aggregate.
    (d)  Exemption  from  Registration  Claimed.  The  Company  relied  upon the
exemption  from  registration  afforded by Section 4(2) of the Securities Act of
1933, as amended.

7.  (a) Securities Sold. In April 2002, 1,562,500 shares of Company Common Stock
were issued.
    (b) Underwriter or Other Purchasers. Such shares of Common Stock were issued
to Evergreen Venture Partners, LLC.
    (c)  Consideration.  Such shares of Common  Stock were issued  pursuant to a
securities purchase agreement, at a price of $.08 per share.
    (d)  Exemption  from  Registration  Claimed.  The  Company  relied  upon the
exemption  from  registration  afforded by Section 4(2) of the Securities Act of
1933, as amended.

8.  (a) Securities Sold. In April 2002, 1,562,500 common stock purchase warrants
of the Company were issued.
    (b) Underwriter or Other Purchasers.  Such warrants were issued to Evergreen
Venture Partners, LLC.
    (c) Consideration. Such warrants were issued for no additional consideration
pursuant to securities purchase agreement.
    (d)  Exemption  from  Registration  Claimed.  The  Company  relied  upon the
exemption  from  registration  afforded by Section 4(2) of the Securities Act of
1933, as amended.
    (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.15
per share and exercisable for a period of three years from issuance.

                                       27
<PAGE>

9.  (a) Securities Sold. In April 2002, 1,562,500 common stock purchase warrants
of the Company were issued.
    (b) Underwriter or Other Purchasers.  Such warrants were issued to Evergreen
Venture Partners, LLC.
    (c) Consideration. Such warrants were issued for no additional consideration
pursuant to securities purchase agreement.
    (d)  Exemption  from  Registration  Claimed.  The  Company  relied  upon the
exemption  from  registration  afforded by Section 4(2) of the Securities Act of
1933, as amended.
    (e) Terms of Conversion or Exercise.  Exercise price of the warrants is $.30
per share and exercisable for a period of three years from issuance.

10. (a) Securities  Sold. In April 2002,  900,000 shares of Company Common Stock
were issued.
    (b) Underwriter or Other Purchasers. Such shares of Common Stock were issued
to Allen & Company Business Communications.
    (c)  Consideration.  Such shares of Common  Stock were issued  pursuant to a
consulting agreement and were valued at $90,000.
    (d)  Exemption  from  Registration  Claimed.  The  Company  relied  upon the
exemption  from  registration  afforded by Section 4(2) of the Securities Act of
1933, as amended.

11. (a) Securities  Sold. In April 2002,  250,000 shares of Company Common Stock
were issued.
    (b) Underwriter or Other Purchasers. Such shares of Common Stock were issued
to B. Edward Haun & Company.
    (c)  Consideration.  Such shares of Common  Stock were issued  pursuant to a
consulting agreement and were valued at $25,000.
    (d)  Exemption  from  Registration  Claimed.  The  Company  relied  upon the
exemption  from  registration  afforded by Section 4(2) of the Securities Act of
1933, as amended.

12. (a) Securities  Sold. In April 2002,  250,000 shares of Company Common Stock
were issued.
    (b) Underwriter or Other Purchasers. Such shares of Common Stock were issued
to Summit Venture Partners, LLC.
    (c)  Consideration.  Such shares of Common  Stock were issued  pursuant to a
consulting agreement and were valued at $25,000.
    (d)  Exemption  from  Registration  Claimed.  The  Company  relied  upon the
exemption  from  registration  afforded by Section 4(2) of the Securities Act of
1933, as amended.

13. (a) Securities  Sold. In April 2002,  150,000 shares of Company Common Stock
were issued.
    (b) Underwriter or Other Purchasers. Such shares of Common Stock were issued
to Barker Design, Inc.
    (c)  Consideration.  Such shares of Common  Stock were issued  pursuant to a
consulting agreement and were valued at $15,000.
    (d)  Exemption  from  Registration  Claimed.  The  Company  relied  upon the
exemption  from  registration  afforded by Section 4(2) of the Securities Act of
1933, as amended.

Item 3.  Defaults upon Senior Securities.

None.

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

None.

Item 5.  Other Information.

None.

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<PAGE>

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


    (a) Exhibits.

        None.

    (b) Reports on From 8-K.

        During the three  months  ended  March 31,  2002,  we filed one  Current
        Report on Form 8-K, as follows:

        -   Date of event: February 6, 2002, wherein we reported the resignation
            of one  of  our  directors.  This  Current  Report  on  Form  8-K is
            incorporated herein by this reference.

        Subsequent to March 31, 2002, we have filed two Current  Reports on Form
        8-K, as follows:

        -   Date of  event:  April 5,  2002,  wherein  we  reported  information
            pursuant to Regulation FD; and

        -   Date of event:  April 15,  2002,  wherein  we  reported  a  material
            securities  sale  transaction  and the hiring of a new president and
            chief executive officer.

                                   SIGNATURES

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

         Dated: May 20, 2002.


                                                    USURF AMERICA, INC.
                                                    By: /s/ DAVID M. LOFLIN
                                                       --------------------
                                                    David M. Loflin
                                                    Chairman of the Board and
                                                    Principal Accounting Officer




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