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                                  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 September 30, 2001

                                       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 November 12, 2001 the Registrant had 11,901,935  shares of its no par
value Common Stock outstanding.

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<PAGE>

<TABLE>
<CAPTION>

                                      INDEX

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

                                Item 1.     Financial Statements--USOL Holdings, Inc.
                                            Condensed Consolidated Balance Sheet as of
                                            September 30, 2001................................................      3
                                            Condensed Consolidated Statements of Operations for the
                                            Three and Nine Months Ended September 30, 2001 and 2000...........      4
                                            Condensed Consolidated Statements of Cash Flows for the
                                            Nine Months Ended September 30, 2001 and 2000.....................      5
                                            Notes to Condensed Consolidated Financial Statements..............      6

                                Item 2.     Management's Discussion and Analysis of Financial
                                            Condition and Results of Operations................................    11
                                            Forward-Looking Statements.........................................    11
                                            General............................................................    11
                                            Overview...........................................................    11
                                            Three Months Ended September 30, 2001 Compared to
                                            Three Months Ended September 30, 2000..............................    11
                                            Nine Months Ended September 30, 2001 Compared to
                                            Nine Months Ended September 30, 2000...............................    12
                                            Liquidity and Capital Resources....................................    13

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

PART II                                     OTHER INFORMATION

                                Item 1.     Legal Proceedings..................................................    15

                                Item 2.     Changes in Securities..............................................    15

                                Item 3.     Defaults Upon Senior Securities....................................    15

                                Item 4.     Submission of Matters to a Vote of Security Holders................    15

                                Item 5.     Other Information..................................................    15

                                Item 6.     Exhibits and Reports on Form 8-K...................................    15

                                Signatures......................................................................   16

</TABLE>

                                       2

<PAGE>

<TABLE>
<CAPTION>

                               USOL HOLDINGS, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (Unaudited)


                                                                           September 30,
                                ASSETS                                         2001
                                                                           -------------
<S>                                                                      <C>
Current assets:
  Cash and cash equivalents......................................        $      1,669,092
  Accounts receivable, net of allowance for doubtful
    accounts of $262,954.........................................               1,562,799
  Notes receivable, related parties..............................                 173,167
  Other current assets...........................................                 320,763
  Assets held for sale...........................................              13,378,000
                                                                         ----------------
          Total current assets...................................              17,103,821

Property and equipment, net......................................              24,811,291

GOODWILL AND OTHER INTANGIBLES, net..............................              18,523,129

DEFERRED LOAN COSTS, net.........................................               1,735,121

Other assets.....................................................                 159,357
                                                                         ----------------

          Total assets...........................................        $     62,332,719
                                                                         ================

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable...............................................        $      1,521,923
  Accrued liabilities............................................               3,468,862
  Current portion of capital lease obligations...................                 591,011
  Preferred dividends payable....................................               1,099,980
  Deferred revenue...............................................                 832,002
                                                                         ----------------
          Total current liabilities..............................               7,513,778
                                                                         ----------------

CAPITAL LEASE OBLIGATIONS, less current portion..................                 745,181
                                                                         ----------------

SENIOR CREDIT FACILITY...........................................              16,000,000
                                                                         ----------------

OTHER LONG-TERM LIABILITIES......................................                  47,111
                                                                         ----------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
  Convertible preferred stock, no par value; 5,000,000 shares
     authorized--
    Series A, 1,311,640 shares issued and outstanding; liquidation
       preference of $32,791,000.................................              30,366,061
    Series B, 155,000 shares issued and outstanding;
       liquidation preference of $3,875,000......................               3,588,439
  Common stock, no par value; 50,000,000 shares authorized,
       10,027,891 shares issued and outstanding..................              48,124,673
  Deferred compensation..........................................                (168,765)
  Accumulated deficit............................................             (43,883,759)
                                                                         ----------------
          Total stockholders' equity.............................              38,026,649
                                                                         ----------------
          Total liabilities and stockholders' equity.............        $     62,332,719
                                                                         ================

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>

<TABLE>
<CAPTION>

                               USOL HOLDINGS, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                                          Three Months Ended             Nine Months Ended
                                                                             September 30,                  September 30,
                                                                    -----------------------------  -----------------------------
                                                                         2001            2000            2001            2000
                                                                    -------------   -------------  --------------  -------------
<S>                                                                 <C>             <C>            <C>             <C>
Revenue........................................................     $   3,862,312   $   2,705,243  $   10,551,339  $   7,427,343
                                                                    -------------   -------------  --------------  -------------

expenses:
  Operating....................................................         2,323,331       2,011,268       6,217,777      5,626,076
  Selling, general and administrative..........................         2,447,932       2,629,656       7,817,543      7,268,848
  Depreciation and amortization................................         1,533,549       1,679,013       5,058,288      4,879,290
  Stock compensation expense...................................            91,971          79,611         283,136        431,059
  Write-down of capitalized software costs.....................                --              --              --      1,870,551
  Write-down of assets held for sale...........................         2,275,713              --       2,275,713             --
                                                                    -------------   -------------  --------------  -------------
          Total operating expenses.............................         8,672,496       6,399,548      21,652,457     20,075,824
                                                                    -------------   -------------  --------------  -------------
          Loss from operations.................................        (4,810,184)     (3,694,305)    (11,101,118)   (12,648,481)
                                                                    -------------   -------------  --------------  -------------

Other INCOME (EXPENSE):
  Interest, net................................................          (518,943)       (169,557)     (1,690,069)      (143,623)
  Other, net...................................................             4,877              --         (64,020)            --
  Gain (loss) on disposal of assets............................             1,200         (25,713)          8,074        (81,857)
  Gain on contract termination.................................         5,867,509              --       5,867,509             --
                                                                    -------------   -------------  --------------  -------------
                                                                        5,354,643        (195,270)      4,121,494       (225,480)
                                                                    -------------   -------------  --------------  -------------

INCOME (LOSS) BEFORE MINORITY INTEREST.........................           544,459      (3,889,575)     (6,979,624)   (12,873,961)

MINORITY INTEREST IN LOSS (INCOME) OF SUBSIDIARY...............            17,419         (15,534)         87,744        (44,493)
                                                                    -------------   -------------  --------------  -------------

          Net income (loss)....................................     $     561,878   $  (3,905,109) $   (6,891,880) $ (12,918,454)
                                                                    =============   =============  ==============  =============

PREFERRED STOCK DIVIDENDS......................................        (1,099,980)     (1,110,000)     (3,315,960)    (3,330,000)
                                                                    -------------   -------------  --------------  -------------

LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS.......................     $    (538,102)  $  (5,015,109) $  (10,207,840) $ (16,248,454)
                                                                    =============   =============  ==============  =============

PER SHARE AMOUNTS:.............................................
  Basic and diluted loss per common share......................     $        (.05)  $        (.64) $        (1.03) $       (2.16)
                                                                    =============   =============  ==============  =============
  Basic and diluted weighted average common shares.............         9,993,915       7,819,637       9,869,880      7,523,931
                                                                    =============   =============  ==============  =============

</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>

<TABLE>
<CAPTION>

                               USOL HOLDINGS, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                                                                 Nine Months Ended
                                                                                                    September 30,
                                                                                         --------------------------------
                                                                                                2001            2000
                                                                                         ---------------  ---------------
<S>     <C>                                                                              <C>              <C>
        Cash flows from operating activities:
          Net loss..................................................................     $   (6,891,880)  $  (12,918,454)
          Adjustments to reconcile net loss to net cash used in
            operating activities--
              Depreciation and amortization.........................................          5,058,288        4,879,290
              Amortization of deferred loan costs...................................            367,815               --
              Stock compensation expense............................................            283,136          431,059
              Write-down of capitalized software costs..............................                 --        1,870,551
              Write-down of assets held for sale....................................          2,275,713               --
              Gain on contract termination..........................................         (5,867,509)              --
              (Gain) loss on disposal of assets.....................................             (8,074)          81,857
              Minority interest.....................................................            (87,744)          44,493
              Changes in assets and liabilities--
                 Accounts receivable................................................           (327,176)        (471,347)
                 Other assets.......................................................            (22,527)        (904,342)
                 Accounts payable and accrued liabilities...........................           (402,696)      (1,699,059)
                 Deferred revenue and other.........................................             97,507          285,356
                                                                                         --------------   --------------
                      Net cash used in operating activities.........................         (5,525,147)      (8,400,596)
                                                                                         --------------   --------------

        Cash flows from investing activities:
          Purchases of property, equipment and other................................         (5,710,468)      (6,497,069)
          Cash paid for acquisition.................................................         (4,000,000)              --
          Proceeds from contract termination........................................          6,053,778               --
          Loans to related parties, net.............................................             (5,256)         (57,258)
                                                                                         --------------   --------------
                      Net cash used in investing activities.........................         (3,661,946)      (6,554,327)
                                                                                         --------------   --------------

        Cash flows from financing activities:
          Principal payments under capital leases...................................           (418,394)        (462,948)
          Proceeds from the exercise of stock options and
            warrants................................................................                 --        1,087,923
          Proceeds from note payable, related party.................................                 --        5,000,000
          Repayment of note payable, related party..................................         (5,000,000)              --
          Borrowings under Senior Credit Facility...................................         11,500,000        2,000,000
          Deferred loan costs.......................................................            (30,413)        (242,253)
                                                                                         --------------   --------------
                      Net cash provided by financing activities.....................          6,051,193        7,382,722
                                                                                         --------------   --------------
                      Net decrease in cash and cash equivalents.....................         (3,135,900)      (7,572,201)
        Cash and cash equivalents, beginning of period..............................          4,804,992       13,637,511
                                                                                         --------------   --------------
        Cash and cash equivalents, end of period....................................     $    1,669,092   $    6,065,310
                                                                                         ==============   ==============

        Supplemental DISCLOSURE OF cash flow information:
            Cash paid for interest..................................................     $    1,398,052   $      539,041
            Deferred compensation...................................................                 --          540,000
            Accretion of dividends on preferred stock...............................          3,315,960        3,330,000
            Issuance of common stock as payment of preferred stock dividends........                 --        4,193,333
            Issuance of common stock for purchase of assets.........................            618,000               --

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       5

<PAGE>


                               USOL HOLDINGS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2001



(1)  Business Organization and Basis of Presentation

     USOL Holdings, Inc. ("Holdings"),  an Oregon corporation,  its wholly owned
subsidiary USOL, Inc. and USOL, Inc.'s 50% owned  subsidiary,  U.S. Austin Cable
Association  I,  Ltd.  (collectively  referred  to herein  as  "USOL"),  provide
integrated  telecommunications services including local telephone, long distance
telephone,  enhanced  calling  features  and cable  television  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 right-of-entry agreements ("ROE Agreements") between USOL 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 USOL or the local  telephone
and long distance carriers for telephone services. Tenants desiring to subscribe
to cable  television  must  utilize  USOL.  USOL  also owns a 100%  interest  in
TheResidentClub,  Inc.  ("TRC").  See Note 3 regarding the winding down of TRC's
operations.  Holdings,  USOL and TRC are collectively  referred to herein as the
Company.

     The financial  statements included herein have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and notes normally included in financial statements prepared
in accordance with accounting principles generally accepted in the United States
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 September 30, 2001,  and
for the three and nine months ended September 30, 2001 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 the Company.  The
operating results for the three and nine months ended September 30, 2001 are not
necessarily  indicative  of the results  that may be expected for the year ended
December 31, 2001.

(2)  Liquidity

     The Company has not generated cash from  operations  since  inception,  and
both its  operations  and  purchases  of property  and  equipment  to expand its
subscriber  base have been funded  primarily from its initial equity  financing,
which occurred in July 1999.  During the last half of 2000, the Company began to
borrow against its senior credit facility (the  "Facility") and has continued to
borrow under the Facility through  September 30, 2001.  Under the Facility,  the
Company has the ability to borrow up to $35 million  until  December  31,  2002,
subject to certain borrowing base  limitations,  at which time the Facility will
convert to a five-year term loan. The borrowing base is calculated as a multiple
of the number of the  Company's  cable and telephone  subscribers,  with a total
available  borrowing  base of  approximately  $19.9  million as of September 30,
2001, of which the Company has borrowed $16 million.

     In order to fund expected future cash  expenditure and resource needs,  the
Company must continue to increase its subscriber base and revenues. Accordingly,
the Facility maintains certain  operational  covenants  requiring the Company to
meet increasing quarterly minimums related to revenues,  operating cash flow and
the number of MDU units to which the Company has available  service.  Management
believes  that the Company  will attain the  prescribed  growth in  subscribers,
revenues and cash flow for the  remainder of 2001 and  throughout  2002,  either
through  organic  sales  growth or through  acquisitions,  and that it will have
sufficient cash resources available under the Facility to fund operations. While
management  believes  that the  Company  will  attain the  prescribed  growth in
subscribers,  revenue and cash flow,  such  growth is  dependent  on  completing
acquisitions.  Management believes that the Company's  acquisition strategy will
be  successful,  but there can be no assurance  that such  acquisitions  will be
completed  or  completed  on a timely  basis  in  order  to meet the  increasing
quarterly minimums. If such quarterly minimums are not met, the Company would be
in default of its  covenants  under the  Facility and the holder of the Facility
could call the  amount  outstanding  under the  Facility  or prevent  additional
borrowings.  In order to establish an adequate  subscriber base that can provide
sufficient cash from operations to satisfy the quarterly repayment  requirements
of the Facility  beginning in 2003 (see Note 7),  management  believes  that the
Company  must  continue to invest in  long-term  assets  through  December  2002
through organic sales growth and through  acquisitions.  As discussed in Note 4,
the Company has


                                       6

<PAGE>

entered  into  a  definitive  agreement  (the  "Sale  Agreement")  to  sell  ROE
Agreements and property and equipment for  properties  located in Austin and San
Antonio, Texas to Grande Communications, Inc. ("Grande"). Under the terms of the
Sale Agreement,  the Company will receive cash proceeds of  approximately  $13.4
million,  which the Company  will use to pay down  amounts  previously  borrowed
under the  Facility.  The sale  of these assets  should not impact the Company's
operations in its other markets located in Texas, Oregon, Virginia and Colorado,
and the receipt of these proceeds will not eliminate the need for the Company to
continue to increase  its  subscriber  base and revenues in order to fund future
expected cash resource needs.  The terms of the Facility  require the Company to
obtain approval from the lender to sell these assets.  Such approval has not yet
been  obtained,  but  management  believes  that the lender  will  provide  such
approval.  The effect of selling  these  assets  will  significantly  affect the
Company's ability to meet the operational covenants discussed above. As such, in
connection  with  obtaining  the  lender's  approval to sell these  assets,  the
Company is also in the process of  requesting  an amendment  to its  operational
covenants. Management believes that such covenants will be favorably amended and
that the Company will be able to continue to borrow under the Facility. However,
there can be no assurance that the covenants will be favorably amended.

(3)  Winding Down of TRC

     TRC was in the business of developing  private labeled  Internet  solutions
for MDU's and other  residential  markets.  In August  2000,  TRC entered into a
technology  and  services  agreement  (the "IT  Services  Agreement")  with GMAC
Mortgage  Corporation  ("GMACM"),  a sister company of GMAC Commercial  Mortgage
Corporation  which is a  significant  shareholder  of the Company,  to develop a
private labeled  Internet site for GMACM and provide  certain  services over the
period of the IT Services Agreement. TRC received formal notification from GMACM
(TRC's sole  customer)  on April 10,  2001,  that GMACM was  terminating  the IT
Services  Agreement.  As  part  of the  termination,  TRC  and  GMACM  continued
negotiations  that  culminated  in an agreement  setting  forth the terms of the
termination of their relationship under the IT Services Agreement. TRC and GMACM
entered into a Confidential  Release and Settlement  Agreement (the  "Settlement
Agreement") on June 6, 2001, whereby TRC agreed to transfer a significant amount
of its assets to GMACM in exchange  for  payment of $6.6  million and release of
certain  claims.  The assets  transferred by TRC included  substantially  all of
TRC's hardware and software.

     Although the Settlement Agreement was entered into on June 6, 2001, closing
of  the   settlement   was  delayed  until  July  13,  2001,  due  to  continued
negotiations,  at which  time TRC  received  a payment  of  approximately  $6.05
million  from  GMACM.  This  amount  differed  from  that  provided  for  in the
Settlement Agreement due to offsets of amounts paid by GMACM to release liens on
certain TRC assets and a $300,000  adjustment to reflect amounts previously paid
to TRC by GMACM.  Of this  amount,  approximately  $5.6 million has been used to
repay the  principal and interest on a loan made to TRC in August 2000 by Newman
Financial  Services,  Inc.  ("Newman"),  an entity  related  to GMAC  Commercial
Mortgage  Corporation.  In connection with the closing of the settlement in July
2001, TRC's operations have ceased, and TRC recorded a net gain of approximately
$5.9 million during the three months ended September 30, 2001.

     See further  discussions  of these matters in  Management's  Discussion and
Analysis of Financial  Condition and Results of Operations included elsewhere in
this Quarterly Report.

(4)  Grande Agreements

     On August 31, 2001, the Company entered into the Sale Agreement with Grande
to sell all of the Company's ROE Agreements  and certain  property and equipment
located in Austin and San  Antonio,  Texas for  approximately  $13.4  million in
cash.  The Sale  Agreement  includes the  assignment of ROE Agreements on 48 MDU
communities,  representing  13,057  apartment  units,  and related  property and
equipment. Grande is a Texas-based broadband service provider that offers retail
telecommunication services including local and long distance telephone, advanced
digital video and high-speed  Internet access over a single "deep-fiber  network
to residential customers and small and medium enterprises (collectively referred
to herein as the  "Grande's  Broadband  Business").  The cash  proceeds  will be
received as part of several  closings  which are  expected  to begin  during the
fourth quarter of 2001 and will continue from time to time during 2002, with the
final  closing  to occur no later  than  September  30,  2002.  Each  closing is
contingent  upon the Company  receiving  consent  from the  individual  property
owners for the Company to assign the ROE Agreement to Grande,  and bank approval
as required by the Facility.

                                       7
<PAGE>


     Concurrent with the signing of the Sale Agreement, the Company also entered
into a 10-year agreement (the "Services Agreement") to become Grande's exclusive
sales  and  marketing  agent  with  respect  to the sale of  Grande's  Broadband
Business to MDU owners in Austin,  San Antonio,  and certain  surrounding  areas
(collectively  referred to herein as "the  Austin/San  Antonio  Corridor").  The
Services  Agreement  will become  effective  upon the first  closing of the Sale
Agreement.  Under the  terms of the  Services  Agreement,  the  Company  will be
responsible  for obtaining ROE  Agreements  for MDU's located in the  Austin/San
Antonio  Corridor  on behalf of  Grande.  The  Company is also  responsible  for
marketing  Grande's  Broadband  Business to the  residents  of all MDU's  Grande
serves in the Austin/San  Antonio Corridor.  As consideration for providing this
service,  the  Company  will  receive  a share of  Grande's  Broadband  Business
revenues related to the MDU's served, including the properties sold to Grande as
part of the Sale  Agreement.  The Company is required to maintain an  increasing
minimum  number of units for which it has obtained ROE  Agreements and a minimum
number of subscribers to Grande's Broadband Service on the MDUs served.  Failure
to meet these  minimum  requirements  at the end of any  calendar  quarter  will
result in the  Company's  revenue  share  being  reduced,  and failure for three
consecutive  calendar  quarters  will give  Grande  the right to  terminate  the
Services  Agreement.  If Grande is not in  compliance  with its minimum  service
level standards during a quarter in which the Company fails to meet its targets,
the reduction in revenue share and ability to terminate do not apply.

(5)  Assets Held For Sale

     Due to the Company's  agreement to sell ROE Agreements and certain property
and  equipment  found in the  Sale  Agreement  (see  Note 4),  the  Company  has
reclassified  amounts  associated with these assets,  including related goodwill
and other intangibles, to assets held for sale within the accompanying condensed
consolidated  balance sheet. The Company also reviewed the recoverability of the
net book value of these  assets based on the cash  proceeds to be received  from
the Sale  Agreement.  Based on this  analysis,  and accruing for  liabilities of
approximately  $708,000  that the Company  will incur to effect  this sale,  the
Company  determined the net book value of these assets was in excess of its fair
market value. As a result, during the three months ended September 30, 2001, the
Company  recorded a write-down of approximately  $2.3 million.  At September 30,
2001,  assets held for sale  consists of property and equipment and goodwill and
other intangibles of approximately $3.4 million and $10 million, respectively.

(6)  SIMCOM Acquisition

     In May 2001,  the  Company  purchased  substantially  all of the  long-term
assets of Great West Services,  Ltd., d/b/a SIMCOM  ("SIMCOM"),  a subsidiary of
Simpson  Housing  Limited  Partnership,  which  provided  voice,  video and data
services to MDU's in Colorado, Oregon and Texas, for an aggregate purchase price
of  approximately  $4.6  million,  consisting  of $4 million in cash and 600,000
shares of the Company's common stock. The acquired assets included exclusive ROE
Agreements,  as well as other  telecommunications  property and  equipment.  The
purchase price was financed through a draw on the Facility.  The acquisition was
accounted for using the purchase  method of  accounting  and,  accordingly,  the
operating   results  of  the  acquired   business  have  been  included  in  the
accompanying  unaudited condensed  consolidated  financial  statements since the
date of  acquisition.  The Company  allocated the entire  purchase  price to the
telecommunications   property  and  equipment  that  was  acquired  based  on  a
preliminary estimate of fair value which is subject to final adjustment.

     The following summarized unaudited pro forma financial  information assumes
that  the  SIMCOM  acquisition  had  occurred  at the  beginning  of the  period
indicated.  The following  unaudited pro forma  information  is not  necessarily
indicative  of the results  that would have  occurred had the  acquisition  been
completed at the  beginning of the periods  indicated,  nor is it  indicative of
future operating results:

<TABLE>
<CAPTION>


                                                         Three Months Ended                      Nine Months Ended
                                                            September 30,                          September 30,
                                                 ---------------------------------      --------------------------------
                                                       2001               2000               2001                 2000
                                                 -------------       -------------      -------------      -------------
<S>                                              <C>                 <C>                <C>                <C>
Revenues..................................       $  3,862,312        $  3,227,980       $ 11,524,428       $  8,854,113
 Net loss..................................          (538,102)         (5,143,257)       (10,384,288)       (16,701,599)
Loss attributable to common
  shareholders per share--
  basic and diluted.......................       $       (.05)       $       (.66)      $      (1.05)      $      (2.22)
</TABLE>


                                       8


<PAGE>


(7)  Senior Credit Facility

     Beginning in 2003,  the Facility will be payable in quarterly  installments
starting  at 1% of the  December  31,  2002,  outstanding  balance for the three
months ended March 31, 2003,  increasing  periodically  to 7.75% of the December
31, 2002, outstanding balance for the year ended December 31, 2007.

     The Facility  bears  interest at the Company's  option at an annual rate of
prime plus 3% or LIBOR plus 4%. The Facility  contains an unused  commitment fee
ranging  from  .625% to  1.375%  depending  on  borrowing  levels  and an annual
administrative fee of $30,000.  See Note 2 regarding various covenants contained
in the Facility.

(8)  Segment Disclosure

     The Company's  operations  during the quarterly  period ended September 30,
2001 are classified into two reportable  business  segments:  Telecommunications
and TRC.  The  Company's  two  reportable  business  segments  have been managed
separately based on fundamental differences in their operations.

     Telecommunications    consists    principally   of   providing   integrated
telecommunications   services  including  telephone,   long-distance  telephone,
enhanced  call  features  and cable  television  to  residents of MDUs in Texas,
Oregon, Virginia and Colorado.

     Prior  to  its  ceasing  operations,   TRC  consisted  principally  of  the
development of a  private-labeled  Internet service portal for GMACM and related
entities (see Note 3).

     The operating results by business segment were as follows:
<TABLE>
<CAPTION>

                                           Three Months Ended                                  Nine Months Ended
                                              September 30                                        September 30
                            ----------------------------------------------    -------------------------------------------------
                                Tele-                                              Tele-
                            communications         TRC        Consolidated    communications         TRC         Consolidated
                            --------------     ------------  -------------    ---------------   -------------   ---------------
<S>                          <C>               <C>           <C>               <C>              <C>             <C>
2001
Revenues.............        $  3,862,312      $        --   $  3,862,312      $   9,822,610    $    728,729    $   10,551,339
Segment net income (loss)      (7,458,577)       8,020,455        561,878        (13,754,390)      6,862,510        (6,891,880)
Total assets.........          62,277,730           54,989     62,332,719         62,277,730          54,989        62,332,719
Capital expenditures.           2,389,789               --      2,389,789          9,680,058          30,410         9,710,468
Depreciation and
  amortization.......           1,533,549               --      1,533,549          5,034,178          24,110         5,058,288


                                           Three Months Ended                                  Nine Months Ended
                                              September 30                                        September 30
                            ----------------------------------------------    -------------------------------------------------
                                Tele-                                              Tele-
                            communications         TRC        Consolidated    communications         TRC         Consolidated
                            --------------     ------------  -------------    ---------------   -------------   ---------------
2000
Revenues.............        $  2,703,942      $     1,301   $  2,705,243      $   7,421,707    $      5,636    $    7,427,343
Segment net loss.....          (2,759,106)      (1,146,003)    (3,905,109)       (10,021,806)     (2,896,648)      (12,918,454)
Total assets.........          60,308,730        6,371,463     66,680,193         60,308,730       6,371,463        66,680,193
Capital expenditures.           1,256,097          271,638      1,527,735          5,332,691       1,164,378         6,497,069
Depreciation and
  amortization.......           1,569,076          109,937      1,679,013          4,595,071         284,219         4,879,290

</TABLE>
                                       9

<PAGE>


(9)  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.  The following  common stock  equivalents were excluded from
the  diluted net loss per share  calculations  as their  effect  would have been
anti-dilutive:

<TABLE>
<CAPTION>


                                                           Three Months Ended                   Nine Months Ended
                                                              September 30,                        September 30,
                                                 -----------------------------------    ----------------------------------
                                                        2001                2000              2001               2000
                                                 ---------------     ---------------    ---------------    ---------------
<S>                                              <C>                 <C>                <C>                <C>
Preferred stock shares as converted.......          18,333,000          18,500,000         18,333,000         18,500,000
Common stock warrants.....................           2,987,145           3,104,644          2,987,145          3,104,644
Stock options--
  Shares..................................           1,844,502           2,236,002          1,844,502          2,236,002
  Weighted average price..................       $        2.65       $        2.58      $        2.65      $        2.58

</TABLE>

(10) Warrants

     On April 2, 2001, the Company's board of directors  extended the expiration
date for certain warrants, which were to terminate on July 28, 2001, to July 28,
2002. The warrants represent 804,445 shares of common stock exercisable at $5.50
per share.

(11) Recently Issued Accounting Standards

     In July 2001, the Financial  Accounting  Standards Board ("FASB")  released
for issuance SFAS No. 141,  "Business  Combinations" and No. 142,  "Goodwill and
Other Intangible  Assets." SFAS No. 141 requires that all business  combinations
subsequent  to June 30,  2001 be  accounted  for  under the  purchase  method of
accounting.  The pooling-of-interests  method is no longer allowed. SFAS No. 142
requires that upon  adoption,  amortization  of goodwill will cease and instead,
the carrying  value of goodwill will be evaluated for  impairment on at least an
annual  basis.  SFAS No. 142 is  effective  for  fiscal  years  beginning  after
December 15, 2001. Management of the Company is in the process of evaluating the
impact of adoption  of these  standards.  Based on  management's  evaluation  of
goodwill  and other  intangibles  in  accordance  with SFAS No. 142,  management
expects  to record a  cumulative  effect on change in  accounting  principle  of
approximately  $3.5  million  to $4.5  million  upon  adoption  during the first
quarter of 2002.

     In  August  2001,  the FASB  released  SFAS No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived  Assets." SFAS No. 144 establishes a single
accounting  model,  based upon the  framework  established  in SFAS No. 121, for
long-lived  assets  to be  disposed  of by  sale.  SFAS  No.  144  broadens  the
presentation of discontinued  operations to include more disposal  transactions,
and also provides additional  implementation guidance for SFAS No. 121. SFAS No.
144 is effective for fiscal years  beginning  after December 15, 2001, but early
adoption is  encouraged.  The Company has adopted SFAS No. 144, and the adoption
did not have a material impact upon the Company's financial position and results
of operations.


                                       10
<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
Consolidated  Financial Statements and the Notes thereto of the Company included
elsewhere in this Quarterly Report.

Overview

     USOL  provides   bundled   telecommunications   services  to  residents  of
multi-family  communities.   Services  provided  include  cable  television  and
enhanced local and  long-distance  telephone  services and  high-speed  Internet
access. As of September 30, 2001, the Company passed 40,288 cable,  16,455 phone
and  16,973  Internet  units  in  Austin,  Dallas/Ft.  Worth,  Denver,  Houston,
Portland,  San Antonio and Washington,  D.C.,  respectively,  compared to 24,711
cable,  12,117  telephone  and 4,549  Internet  units at  September  30, 2000. A
passing is an apartment  unit capable of  receiving a  respective  service.  The
Company  had 22,468  cable,  7,489  telephone  and 1,502  Internet  subscribers,
respectively, as of September 30, 2001 compared to 16,391 cable, 5,402 phone and
310 Internet subscribers at September 30, 2000.

     USOL also owns a 100%  interest in TRC.  See Note 3  regarding  the winding
down of TRC's operations.

Three Months Ended  September 30, 2001 Compared to Three Months Ended  September
30, 2000

     The  Company  reported  a  loss  attributable  to  common  shareholders  of
approximately  $538,000 for the three months ended September 30, 2001,  compared
to a loss of approximately $5,015,000 for the same period of the prior year. The
decrease  in  net  loss  is  primarily   attributable  to  a  one-time  gain  of
approximately  $5,868,000  recorded  on GMACM's  termination  of its IT Services
Agreement  with  TRC.  The net loss  decrease  was also  impacted  by  increased
revenues during the quarter offset by increased  operating expenses and interest
expense.

     Revenue  increased  approximately  $1,157,000  or 43% for the three  months
ended  September  30, 2001,  compared to the same period of the prior year.  The
increase in revenue is primarily due to increases in subscribers  for all of the
Company's  services,  which is the result of the Company's expansion of MDU's to
which it provides service in existing markets.

     Operating  expense  increased  approximately  $312,000 or 16% for the three
months ended September 30, 2001,  compared to the same period of the prior year.
The increase in operating  expense between periods is primarily due to increases
in operations  personnel required to service the Company's increase in cable and
telephone passings of 63% and 34%, respectively. The smaller percentage increase
in operating  expense when  compared to the increase in revenue is the result of
certain  expense  reductions and process  improvements  the Company  implemented
during the fourth  quarter of 2000,  which have  allowed the Company to increase
revenues without significant operational expense increases. As a result of these
measures,  operating  expense  decreased  to 60% of revenue for the  three-month
period in 2001 compared to 74% in the same period of the prior year.

                                       11

<PAGE>


     Selling,   general  and  administrative  expense  decreased   approximately
$182,000 or 7% for the three months ended  September  30, 2001,  compared to the
same  period  of  the  prior  year.   The  decrease  in  selling,   general  and
administrative  expense was primarily the result of certain  expense  reductions
and process  improvements the Company  implemented  during the fourth quarter of
2000,  which have allowed the Company to increase  revenue  without  significant
selling,  general and  administrative  expense  increases.  As a result of these
measures,  selling,  general and  administrative  expenses  decreased  to 63% of
revenue for the three-month period in 2001 compared to 97% in the same period of
the prior year.

     Depreciation and amortization expense decreased  approximately  $145,000 or
9% for the three months ended September 30, 2001, compared to the same period of
the prior year.  The decrease  resulted  from  decreased  goodwill  amortization
resulting  from the  write-off of TRC's  goodwill  during the fourth  quarter of
2000,  offset  by  increases  in  property  and  equipment  associated  with new
properties  to which the  Company  provides  service in 2001.  Depreciation  and
amortization expense was 40% of revenue for the three months ended September 30,
2001 compared to 62% for the same period of the prior year.

     Write  down of  assets  held for sale  consists  of a  one-time  charge  of
approximately  $2,276,000.  The Company reviewed the  recoverability  of the net
book  value of assets to be sold to  Grande as part of the Sale  Agreement  (see
Note 4).  Based on this  analysis the Company  determined  the net book value of
these  assets was in excess of its fair market  value.  As a result,  during the
three months ended  September  30, 2001,  the Company  recorded a write-down  of
these assets.

     The Company had interest expense, net of approximately  $519,000 during the
three months ended September 30, 2001 compared to approximately  $170,000 during
the same period of the prior year. The increase between periods is primarily the
result  of  interest  and fees  associated  with  increased  borrowing  from the
Facility during 2001 compared to 2000.

Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30,
2000

     The Company  reported a net loss  attributable  to common  shareholders  of
approximately $10,208,000 for the nine months ended September 30, 2001, compared
to a net loss of $16,248,000 for the same period of the prior year. The decrease
in net  loss is  primarily  attributable  to a  one-time  gain of  approximately
$5,868,000  recorded on GMACM's  termination  of its IT Services  Agreement with
TRC.  The  Company  has also had a larger  increase  in revenue in 2001 than the
offsetting increase in total operating expenses.

     Revenue increased approximately $3,124,000 or 42% for the nine months ended
September 30, 2001,  compared to the same period of the prior year. The increase
in revenue is primarily due to increases in subscribers for all of the Company's
services,  which is the result of the  Company's  expansion of MDU's to which it
provides service in existing markets.

     Operating  expense  increased  approximately  $592,000  or 11% for the nine
months ended September 30, 2001,  compared to the same period of the prior year.
The increase in operating  expense between periods is primarily due to increases
in operations  personnel required to service the Company's increase in cable and
telephone passings of 63% and 34%, respectively. The smaller percentage increase
in operating  expense when  compared to the increase in revenue is the result of
certain  expense  reductions and process  improvements  the Company  implemented
during the fourth  quarter of 2000,  which have  allowed the Company to increase
revenues without significant operational expense increases. As a result of these
measures,  operating  expense  decreased  to 59% of revenue for the  three-month
period in 2001 compared to 76% in the same period of the prior year.

     Selling,   general  and  administrative  expense  increased   approximately
$549,000 or 8% for the nine months ended  September  30,  2001,  compared to the
same  period  of  the  prior  year.   The  increase  in  selling,   general  and
administrative expense was primarily the result of increased sales and marketing
expenses and increased  call center costs all  associated  with the increases in
passings and subscribers. Selling, general and administrative expense was 74% of
revenue for the nine months  ended  September  30, 2001  compared to 98% for the
same period of the prior year.

     Depreciation and amortization expense increased  approximately  $179,000 or
4% for the nine months ended September 30, 2001,  compared to the same period of
the prior year.  The increase  resulted from increases in property and equipment
associated  with new properties to which the Company  provides  service in 2001,
offset by decreased goodwill amortization  resulting from the write-off of TRC's
goodwill  during  the  fourth  quarter of 2000.  Depreciation  and  amortization
expense was 48% of revenue for the nine months ended September 30, 2001 compared
to 66% for the same period of the prior year.

                                       12

<PAGE>


     Write down of assets held for sale for the nine months ended  September 30,
2001  consists of a one-time  charge of  approximately  $2,276,000.  The Company
reviewed the recoverability of the net book value of assets to be sold to Grande
as part of the Sale  Agreement  (see Note 4). Based on this analysis the Company
determined  the net book value of these  assets was in excess of its fair market
value.  As a result,  during the three months  ended  September  30,  2001,  the
Company recorded a write-down of these assets.

     Write down of  long-term  assets for the nine months  ended  September  30,
2000,  consists of a one-time charge of approximately  $1,871,000 for previously
capitalized  internal  costs  associated  with the  development of the Company's
billing  and  customer  care  system.  On March 31,  2000 the  Company  signed a
five-year agreement with CSG Systems, Inc. to outsource its billing and customer
care operations.

     The Company had interest  expense,  net of approximately  $1,690,000 during
the nine months ended  September  30, 2001  compared to  approximately  $144,000
during the same period of the prior  year.  The  increase  in  interest  expense
between  periods is primarily  the result of interest and fees  associated  with
increased borrowing from the Facility during 2001 compared to 2000.

Liquidity and Capital Resources

     At September 30, 2001, the Company had approximately $1,669,000 of cash and
cash equivalents compared to approximately  $4,805,000 at December 31, 2000. Net
cash of approximately  $54,525,000 was used in operating activities for the nine
months ended  September  30, 2001,  which was a result of the Company's net loss
for the period combined with using  approximately  $655,000 of working  capital,
offset by noncash charges related to depreciation,  amortization,  loss on asset
disposals,  write-downs  of long  term  assets,  gain on  contract  termination,
minority interest and stock compensation expense.

     Net cash of  approximately  $3,662,000  was used in  investing  activities,
which was  primarily  the result of  approximately  $5,710,000  for purchases of
property and equipment related to acquiring or building new passings and capital
expenditures  for  upgrading   services  to  passings   currently  served,   and
approximately  $4,000,000  paid for  acquisitions.  These amounts were offset by
proceeds  of  approximately  6,054,000  received  from  GMACM  as  part  of  the
termination of the IT Services Agreement (see Note 3).

     Net cash of approximately  $6,051,000 was provided by financing activities,
which  primarily  consisted  of  proceeds  of  approximately   $11,500,000  from
borrowings  under the  Facility  offset by  approximately  $418,000 in principal
payments  under capital  leases and  approximately  $5,000,000 in repayment of a
related party note payable.

     The Company had  approximately  $1,669,000 of cash on hand on September 30,
2001. We believe that our cash on hand and available  proceeds from the Facility
will 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 USOL 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 Company is dependent on the  Facility for its  liquidity  requirements.
Under the  Facility,  the  Company  has the  ability to borrow up to $35 million
until December 31, 2002, subject to certain borrowing base limitations, at which
time the Facility will convert to a five-year  term loan.  The borrowing base is
calculated  as a  multiple  of the  Company's  number  of  cable  and  telephone
subscribers,  with a  total  available  borrowing  base of  approximately  $19.9
million  as of  September  30,  2001,  of which $16  million  has been  borrowed
against.  In order to fund expected future cash resource needs, the Company must
continue to increase its subscriber base and revenues. Accordingly, the Facility
maintains certain operational covenants requiring the Company to meet increasing
quarterly  minimums  related to revenues,  operating cash flow and the number of
MDU units to which the  Company  has  available  service.  We  believe  that the
Company  will attain the  prescribed  growth in  subscribers,  revenues and cash
flow,  and that it will  have  sufficient  cash  resources  available  under the
Facility to fund  operations.  While we believe that the Company will attain the
prescribed  growth  in  subscribers,  revenue  and cash  flow,  such  growth  is
dependent on completing acquisitions. We believes that the Company's acquisition
strategy  will  be  successful,   but  there  can  be  no  assurance  that  such
acquisitions  will be completed  or are  completed on a timely basis in order to
meet the increasing quarterly minimums.  If such quarterly minimums are not met,
the Company  would be in default of its  covenants  under the  Facility  and the
holder of the  Facility  could call the amount  outstanding  under the  Facility
and/or  prevent  additional  borrowings.  In  order  to  establish  an  adequate
subscriber base that can provide  sufficient cash from operations to satisfy the
quarterly repayment requirements of the Facility beginning in 2003 (see Note 7),
we believe that the Company must continue to invest in long-term  assets through
December 2002 through  organic sales growth and through  acquisitions.  Based on
our  estimates,  the  borrowing  base  availability  under the Facility  will be
adequate to continue to fund the necessary growth expenditures.  As discussed in
Note 4,  the  Company  has  entered  into a  definitive  agreement  to sell  ROE
Agreements and property and equipment for  properties  located in Austin and San
Antonio, Texas to Grande Communications, Inc. ("Grande"). Under the terms of the
Agreement,  the  Company  will  receive  cash  proceeds of  approximately  $13.4
million,  which the Company  will use to pay down  amounts  previously  borrowed
under the


                                       13

<PAGE>

Facility.  The sales of these assets will not impact the Company's operations in
its other  markets  located in Texas,  Oregon,  Virginia and  Colorado,  and the
receipt  of these  proceeds  will not  eliminate  the  need for the  Company  to
continue to increase  its  subscriber  base and revenues in order to fund future
expected  cash  resource  needs.  The terms of the Facility  require the Company
to obtain approval from the lender to sell these  assets.  Such approval has not
yet been  obtained,  but  management  believes that the lender will provide such
approval.  The effect of selling  these  assets  will  significantly  affect the
Company's ability to meet the operational covenants discussed above. As such, in
connection  with  obtaining  the  lender's  approval to sell these  assets,  the
Company is also in the process of  requesting  an amendment  to its  operational
covenants. Management believes that such covenants will be favorably amended and
that the Company will be able to continue to borrow under the Facility. However,
there can be no assurance that the covenants will be favorably  amended.  We are
currently  evaluating  financing  alternatives  to determine  what resources are
available to continue to fund growth opportunities beyond 2002.

     USOL maintains various cancelable and noncancelable  service agreements for
telecommunications  services  with several local  exchange  carriers  (each,  an
"LEC") and one inter exchange  carrier (each,  an "IXC") that commit USOL to the
LECs' and IXC's  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.  USOL also has agreements  with certain cable  providers to purchase
bulk cable signal at some of its properties.  The agreements provide for USOL to
pay fixed  monthly  amounts  regardless of the number of customers it has at the
properties.   At  September  30,  2001,  the  fixed  minimum   charges  for  all
noncancelable  agreements  over the  life of the  agreements  was  approximately
$1,399,000.  Additionally,  USOL is planning on upgrading  existing head-ends to
give USOL the ability to provide  digital  cable to selected  properties  during
2001. The anticipated costs of such upgrades are approximately  $1,176,000.  The
Company has spent  approximately  $620,000 as of  September  30,  2001,  on such
upgrades and expects to spend the remaining amounts by December 31, 2001.

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 August 2001, the Financial  Accounting Standards Board released SFAS No.
144,  "Accounting for the Impairment or Disposal of Long-Lived assets." SFAS No.
144 establishes a single accounting model, based upon the framework  established
in SFAS No. 121, for long-lived  assets to be disposed of by sale.  SFAS No. 144
broadens the  presentation of  discontinued  operations to include more disposal
transactions,  and also provides additional implementation guidance for SFAS No.
121. SFAS No. 144 is effective  for fiscal years  beginning  after  December 15,
2001, but early  adoption is  encouraged.  The Company has adopted SFAS No. 144,
and the adoption  did not have a material  impact upon the  Company's  financial
position and results of operations.


                                       14
<PAGE>


                           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

     Not applicable.

Item 3. Defaults Upon Senior Securities

     None.

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

    Not applicable.

Item 5. Other Information

     None.

Item 6. Exhibits and Reports on Form 8-K

     (a) Exhibits

                Exhibit No.                              Description
             -----------------                          -------------
                   3(ii)                             Amendment to Bylaws

     (b) Reports

         No reports on  Form 8-K were  filed  during the  quarter for which this
report is filed.


                                       15

<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/ Shane Menking
                                                              ------------------
                                                              Shane Menking, CFO

Dated November 14, 2001


                                       16