|   | 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 September 30, 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 ofincorporation or organization) |   | (I.R.S. Employer IdentificationNumber) |   |

|   | 3333 S. Bannock Street, Suite 790, Englewood, Colorado 80110 |   |
|--------|--------------------------------------------------------------|--------|
|   | (Address of Principal Executive Offices, including Zip Code) |   |

|   | (303) 789-7100                                         |   |
|--------|--------------------------------------------------------|--------|
|   | (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) ofthe Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that Registrantas 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 latestpracticable date: |
|-----------------------------------------------------------------------------------------------------------------------------------|

|   | Class                          |   | Outstanding as of 11-18-02 |   |
|--------|--------------------------------|--------|----------------------------|--------|
|   | Common Stock, $.0001 par value |   | 55,986,338                 |   |

| PART I - FINANCIAL INFORMATION |
|--------------------------------|

| Item 1.  Financial Statements. |   |
|--------------------------------|--------|

| INDEX TO CONSOLIDATED FINANCIAL STATEMENTS |
|--------------------------------------------|

|   | USURF America, Inc. and Subsidiaries |   |
|--------|--------------------------------------|--------|

|   |                                                                                                                                                                       | Page |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------|
|   | Consolidated Balance Sheets as of September 30, 2002 (unaudited), and December 31, 2001                                                                                    | 3    |
|   | Consolidated Statements of Operations for the Three Months Ended September 30, 2002 and2001 (unaudited), and the Nine Months Ended September 30, 2002 and 2001 (unaudited) | 6    |
|   | Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and2001 (unaudited)                                                                     | 8    |
|   | Notes to Consolidated Statements                                                                                                                                           | 11   |

| USURF AMERICA, INC. AND SUBSIDIARIES                  |
|-------------------------------------------------------|
| ENGLEWOOD, COLORADO                                   |
| CONSOLIDATED BALANCE SHEETS                           |
| SEPTEMBER 30, 2002 (UNAUDITED), AND DECEMBER 31, 2001 |

| ASSETS |
|--------|

|                                 | September 30, 2002(unaudited) |   | December 31, 2001(audited) |
|--------------------------------------|-------------------------------|--------|----------------------------|
| CURRENT ASSETS                       |                          |   |                       |
|  Cash and cash equivalents      | $60,071                       |   | $10                        |
|  Inventory                      | 99,057                        |   | 134,746                    |
|                                 |                          |   |                       |
|                                 | 159,128                       |   | 134,756                    |
|                                 |                          |   |                       |
| PROPERTY AND EQUIPMENT               |                          |   |                       |
|  Cost                           | 238,161                       |   | 203,141                    |
|  Less: accumulated depreciation | (141,191)                     |   | (125,036)                  |
|                                 | 96,970                        |   | 78,105                     |
|                                 |                          |   |                       |
| OTHER ASSETS                         | 10,417                        |   | 16,667                     |
| TOTAL ASSETS                         | $266,515                      |   | $229,528                   |

| LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|---------------------------------------------|

|                                                                                                                                                              | September 30, 2002(unaudited) |   | December 31, 2001(audited) |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|--------|----------------------------|
| CURRENT LIABILITIES                                                                                                                                               |                          |   |                       |
|  Disbursements in excess of cash balances                                                                                                                    | $0                            |   | $15,539                    |
|  Accounts payable                                                                                                                                            | 1,042,132                     |   | 1,034,619                  |
|  Accrued payroll                                                                                                                                             | 169,989                       |   | 265,978                    |
|  Other current liabilities                                                                                                                                   | 161,396                       |   | 54,996                     |
|  Notes payable to stockholder                                                                                                                                | 0                             |   | 18,521                     |
|                                                                                                                                                              | 1,373,517                     |   | 1,389,653                  |
| LONG-TERM LIABILITIES                                                                                                                                             | 0                             |   | 0                          |
| TOTAL LIABILITIES                                                                                                                                                 | 1,373,517                     |   | 1,389,653                  |
|                                                                                                                                                              |                          |   |                       |
| REDEEMABLE COMMON STOCK                                                                                                                                           |                          |   |                       |
| Common stock subject to rescission: no sharesoutstanding at September 30, 2002, $.0001 par value pershare, and 2,138,726 shares outstanding at December 31,2001   | 0                             |   | 1,192,700                  |
|                                                                                                                                                              | 0                             |   | 1,192,700                  |
|                                                                                                                                                              |                          |   |                       |
| STOCKHOLDERS’ DEFICIT                                                                                                                                       |                          |   |                       |
| Common stock, $.0001 par value; Authorized:100,000,000 shares; Issued and outstanding: 50,766,338shares at September 30, 2002, and 23,848,108 atDecember 31, 2001 | 5,077                         |   | 2,385                      |
| Additional paid-in capital                                                                                                                                        | 38,945,575                    |   | 35,642,817                 |
| Accumulated deficit                                                                                                                                               | (39,375,003)                  |   | (37,000,628)               |
| Subscriptions receivable                                                                                                                                          | 153,500                       |   | 165,750                    |
| Deferred consulting                                                                                                                                               | (836,151)                     |   | (1,163,149)                |
|                                                                                                                                                              | (1,107,002)                   |   | (2,352,825)                |
| TOTAL LIABILITIES AND STOCKHOLDERS’DEFICIT                                                                                                                  | $266,515                      |   |  $229,528             |

The accompanying notes are an integral part of these statements.

|   | USURF AMERICA, INC. AND SUBSIDIARIES                                                                         |   |
|--------|--------------------------------------------------------------------------------------------------------------|--------|
|   | ENGLEWOOD, COLORADO                                                                                          |   |
|   | CONSOLIDATED STATEMENTS OF OPERATIONS                                                                        |   |
|   | FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001,AND THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 |   |

|   | Three Months Ended September30, |   | Nine Months Ended September30, |
|--------|---------------------------------|--------|--------------------------------|

|                                           | 2002(unaudited) |   | 2001(unaudited) |   | 2002(unaudited) |   | 2001(unaudited) |
|------------------------------------------------|-----------------|--------|-----------------|--------|-----------------|--------|-----------------|
| REVENUES                                       |            |   |            |   |            |   |            |
|  Revenues (returns)                       | 4,676           |   | $(11,287)       |   | $13,978         |   | $4,604          |
|  Internet access costs, cost ofgoods sold | (8,669)         |   | (3,945)         |   | (25,820)        |   | (1,398)         |
|  Gross profit (loss)                      | (3,993)         |   | (7,342)         |   | (11,842)        |   | 3,206           |
| OPERATING EXPENSES                             |            |   |            |   |            |   |            |
|  Depreciation and amortization            | 8,850           |   | 7,938           |   | 22,917          |   | 27,231          |
|  Professional fees                        | 328,645         |   | 320,840         |   | 1,021,702       |   | 1,460,446       |
|  Rent                                     | 6,646           |   | 9,551           |   | 22,009          |   | 22,043          |
|  Salaries and commissions                 | 213,313         |   | 176,728         |   | 1,028,476       |   | 553,296         |
|  Advertising                              | 1,388           |   | 0               |   | 66,233          |   | 0               |
|  Other                                    | 60,650          |   | 53,544          |   | 201,021         |   | 101,539         |
|                                           | 619,492         |   | 568,601         |   | 2,362,358       |   | 2,164,555       |
| LOSS FROM OPERATIONS                           | (623,485)       |   | (575,943)       |   | (2,374,200)     |   | (2,161,349)     |
| OTHER INCOME (EXPENSE)                         |            |   |            |   |            |   |            |
|  Interest income                          | 1               |   | 0               |   | 8               |   | 0               |
|  Interest expense                         | 0               |   | (1,025)         |   | (183)           |   | (1,025)         |
| LOSS BEFORE INCOME TAX                         | (623,484)       |   | (576,968)       |   | (2,374,375)     |   | (2,164,374)     |
| INCOME TAX BENEFIT                             | 0               |   | 0               |   | 0               |   | 0               |
|                                           |            |   |            |   |            |   |            |
| NET LOSS                                       | $(623,484)      |   | $(576,968)      |   | $(2,374,375)    |   | $(2,162,374)    |
|                                           |            |   |            |   |            |   |            |
| Net loss per common share                      | $(.01)          |   | $(.03)          |   | $(.06)          |   | $(.14)          |
|                                           |            |   |            |   |            |   |            |
| Weighted average number ofshares outstanding   | 47,424,671      |   | 16,517,151      |   | 38,938,546      |   | 15,195,778      |

The accompanying notes are an integral part of these statements.

| USURF AMERICA, INC. AND SUBSIDIARIES          |
|-----------------------------------------------|
| BATON ROUGE, LOUISIANA                        |
| CONSOLIDATED STATEMENTS OF CASH FLOWS         |
| NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 |

|   | Nine Months EndedSeptember 30, 2002(unaudited) |   | Nine Months EndedSeptember 30, 2001(unaudited) |
|--------|------------------------------------------------|--------|------------------------------------------------|

| CASH FLOWS FROM OPERATING ACTIVITIES                                       |         |   |         |
|----------------------------------------------------------------------------|--------------|--------|--------------|
| Net loss                                                                   | $(2,374,375) |   | $(2,162,374) |
| Adjustments to reconcile net loss to net cash used inoperating activities: |         |   |         |
|  Depreciation and amortization                                        | 22,917       |   | 27,231       |
|  Consulting fees paid with stock                                      | 812,824      |   | 1,321,843    |
|  Legal fees paid with stock                                           | 101,000      |   | 0            |
|  Compensation expense paid with stock                                 | 900,880      |   | 47,947       |
|  Advertising expense paid with stock                                  | 62,000       |   | 0            |
| Changes in operating assets and liabilities:                               |         |   |         |
|  Inventory                                                            | (4,100)      |   | 1,398        |
|  Other current liabilities                                            | 102,000      |   | 19,775       |
|  Other assets and liabilities                                         | 0            |   | 7,400        |
|  Accounts payable                                                     | 44,941       |   | 22,786       |
|  Accrued payroll                                                      | (86,038)     |   | 129,422      |
| Net cash used in operating activities                                      | (417,951)    |   | (584,572)    |
|                                                                       |         |   |         |
| CASH FLOWS FROM INVESTING ACTIVITIES                                       |         |   |         |
|  Capital expenditures                                                 | (28,567)     |   | (4,160)      |
| Net cash used in investing activities                                      | (28,567)     |   | (4,160)      |
|                                                                       |         |   |         |
| CASH FLOWS FROM FINANCING ACTIVITIES                                       |         |   |         |
|  Proceeds from subscriptions receivable                               | 305,000      |   | 302,000      |
|  Proceeds from notes payable to stockholder                           | 0            |   | 48,290       |
|  Issuance of common stock for cash                                    | 212,000      |   | 250,000      |
|  Payment on note payable to stockholder                               | (18,521)     |   | 0            |
|  Warrants exercised                                                   | 13,000       |   | 0            |
|  Fee for stock issuances                                              | (4,900)      |   | (8,000)      |
| Net cash provided by financing activities                                  | 506,579      |   | 592,290      |
| Net increase (decrease) in cash and cash equivalents                       | 60,061       |   | 3,558        |
| Cash and cash equivalents, beginning of period                             | 10           |   | 1,088        |
| Cash and cash equivalents, end of period                                   | $60,071      |   | $4,646       |

| SUPPLEMENTAL DISCLOSURE OF NON-CASH

INVESTING AND OTHER CASH FLOW INFORMATION |   |
|--------------------------------------------------------------------------------|--------|

| Nin Months Ended September 30, 2002: |   |
|--------------------------------------|--------|

| - | In January 2002, the Company entered into a one-year consulting agreement, by issuing 120,000 shares ofstock valued at $10,800.                                                    |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| - | In February 2002, the Company entered into a four-month consulting agreement, by issuing 300,000shares of stock valued at $30,000.                                                 |
| - | In March 2002, the Company entered into a one-month consulting agreement, by issuing 75,000 shares ofstock valued at $7,500.                                                       |
| - | In March 2002, the Company issued 75,000 shares in payment of legal services, which shares of stockwere valued at $6,000.                                                          |
| - | In April 2002, the Company entered into a one-month consulting agreement, by issuing 75,000 shares ofstock valued at $6,000.                                                       |
| - | In April 2002, the Company issued 500,000 shares in payment of legal services, which shares of stockwere valued at $35,000.                                                        |
| - | In April 2002, the Company issued 500,000 shares of stock to a consultant valued at $35,000.                                                                                       |
| - | In April 2002, the Company issued a total of 9,000,000 shares to certain officers, in connection with theirrespective employment agreements, which shares were valued at $960,000. |
| - | In April 2002, the Company issued 200,000 in payment of a $20,000 account payable.                                                                                                 |
| - | In April 2002, the Company entered into a six-month consulting agreement, by issuing 900,000 shares ofstock valued at $99,000.                                                     |
| - | In April 2002, the Company entered into a six-month consulting agreement, by issuing 250,000 shares ofstock valued at $27,500.                                                     |
| - | In April 2002, the Company entered into a six-month consulting agreement, by issuing 250,000 shares ofstock valued at $27,500.                                                     |
| - | In April 2002, the Company entered into a six-month consulting agreement, by issuing 150,000 shares ofstock valued at $15,000.                                                     |
| - | In May 2002, the Company issued 900,000 shares in payment of legal services, which shares of stockwere valued at $60,000.                                                          |
| - | In May 2002, the Company entered into a one-month consulting agreement, by issuing 75,000 shares ofstock valued at $4,500.                                                         |
| - | In July 2002, the Company entered into a four-month consulting agreement, by issuing 300,000 shares ofstock valued at $15,000.                                                     |
| - | In July 2002, the Company entered into a three-month consulting agreement, by issuing 300,000 shares ofstock valued at $15,000.                                                    |
| - | In July 2002, the Company entered into a six-month consulting agreement, by issuing 300,000 shares ofstock valued at $18,000.                                                      |
| - | In July 2002, the Company issued 600,000 shares of stock, valued at $36,000, as an employment bonus.                                                                               |
| - | In August 2002, the Company issued 75,000 shares of stock to a consultant valued at $4,500.                                                                                        |
| - | In August 2002, the Company entered into a three-month consulting agreement, by issuing 375,000 sharesof stock valued at $18,750.                                                  |
| - | In September 2002, the Company entered into a six-month consulting agreement, by issuing 1,000,000shares of stock valued at $60,000.                                               |
| - | In September 2002, the Company issued 1,000,000 shares in payment of legal services, which shares ofstock were valued at $80,000.                                                  |
| - | In September 2002, the Company entered into a three-month consulting agreement, by issuing 300,000shares of stock valued at $18,000.                                               |

| Nine Months Ended September 30, 2001: |   |
|---------------------------------------|--------|

| - | In January 2001, the Company entered into a one-year consulting agreement, by issuing 200,000 shares ofstock valued at $62,000.                                                                                                                               |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| - | In January 2001, the Company issued 800,000 shares of stock valued at $248,000, in payment of acommitment fee under a common stock purchase agreement.                                                                                                        |
| - | In January 2001, 774,162 shares were issued to the Company's president, pursuant to a debt conversionagreement, which shares were not issued in 2000, due to an administrative error.                                                                         |
| - | In April 2001, the Company issued 300,000 shares of stock valued at $183,000, under a consultingagreement.                                                                                                                                                    |
| - | In May 2001, the Company issued 200,000 shares of stock valued at $62,000, in payment of a finder’s feearising out of a common stock purchase agreement.                                                                                                |
| - | In May 2001, the Company issued 60,000 shares of stock valued at $24,000, under a consultingagreement.                                                                                                                                                        |
| - | In June 2001, the Company issued 20,000 shares of stock valued at $7,400, pursuant to a settlementagreement.                                                                                                                                                  |
| - | During the nine months ended September 30, 2001, the Company issued a total of 100,000 shares of stockto a consultant, which shares were issued under a consulting agreement at prices based on then-currentmarket price of the Company’s common stock. |
| - | In July 2001, the Company issued 300,000 shares of stock valued at approximately $111,000, under aconsulting agreement.                                                                                                                                       |
| - | In September 2001, the Company issued 400,000 shares of stock valued at approximately $68,000, undera consulting agreement.                                                                                                                                   |

The accompanying notes are an integral part of these statements.

| USURF AMERICA, INC. AND SUBSIDIARIES       |
|--------------------------------------------|
| ENGLEWOOD, COLORADO                        |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
| NINE MONTHS ENDED SEPTEMBER 30, 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 MediaEntertainment, Inc. in the State of Nevada on November 1, 1996.  The Company currently provides wirelessInternet access services to a small number of customers in Del Rio, Texas, Colorado Springs, Colorado, andDenver, Colorado. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Principles of Consolidation |   |
|-----------------------------|--------|

| The accompanying consolidated financial statements include all the accounts of the Company and all whollyowned 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 ofshares of common stock outstanding throughout the period.  Calculation of diluted loss per common share is notpresented because the effects of potential common stock issuable upon exercise of stock options and contingentlyissuable 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 nine months endedSeptember 30, 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 the Company,including subsidiaries, and include the accounts of the Company and all of its subsidiaries.  All material inter-company transactions and balances are eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| The financial statements included herein have been prepared by the Company, without audit, pursuant to therules and regulations of the SEC.  Certain information and footnote disclosures normally included in financialstatements prepared in accordance with U.S. generally accepted accounting principles have been condensed oromitted pursuant to such rules and regulations.  It is suggested that these unaudited financial statements be readin conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form10-KSB for the year ended December 31, 2001, as filed with the SEC.  Certain reclassifications and adjustmentsmay have been made to the financial statements for the comparative period of the prior fiscal year to conformwith the 2001 presentation.  The results of operations for the interim periods are not necessarily indicative of theresults to be obtained for the entire year. |

| Note 3. Notes Payable to Shareholder |   |
|--------------------------------------|--------|

|   |                                                                                      | September 30, 2002(unaudited) |   | December 31, 2001 |
|--------|-------------------------------------------------------------------------------------------|-------------------------------|--------|-------------------|
|   | Notes payable to majority stockholder, interestaccrues at 8%, due on demand and unsecured | $0                            |   | $18,521           |

| Note 4. Stock and Warrant Issuances |   |
|-------------------------------------|--------|

| During the nine months ended September 30, 2002, the Company issued shares of common stock and commonstock purchase warrants, as follows: |
|-------------------------------------------------------------------------------------------------------------------------------------------|

| - | 486,500 shares as finder’s fees.                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| - | 7,820,000 shares in payment of consulting and professional fees.                                                                                                                                                                                                                                                                                                                                                                                                                            |
| - | 9,769,600 warrants (400,000 warrants, exercise price $.049 per share; 560,000 warrants, exercise price$.10 per share; 3,525,000 warrants, exercise price of $.15 per share; 1,066,000 warrants, exercise priceof $.20 per share; 400,000 warrants, exercise price of $.25 per share; 3,618,000 warrants, exercise priceof $.30 per share; 400,000 warrants, exercise price of $.35 per share; 400,000 warrants, exercise priceof $.40 per share) were issued in payment of consulting fees. |
| - | 9,600,000 shares issued to officers pursuant to employment agreements.                                                                                                                                                                                                                                                                                                                                                                                                                      |
| - | 5,530,833 shares sold for cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| - | 1,200,000 shares issued in payment of accounts payable and advertising expenses.                                                                                                                                                                                                                                                                                                                                                                                                            |

| Note 5. Contingencies |   |
|-----------------------|--------|

| A. Bankruptcy |   |
|---------------|--------|

| On September 29, 2000, three creditors of CyberHighway filed an involuntary petition in the Idaho FederalBankruptcy Court, styled In Re: CyberHighway, Inc.  In December 2000, CyberHighway and the petitioningcreditors filed a joint motion to dismiss this proceeding.  However, some of CyberHighway’s creditors objectedto 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 customerbase, 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 associatedwith 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 mayhave been issued in violation of Section 5 of the Securities Act of 1933, as amended.  The aggregate valueassigned to these shares upon their issuance totaled $5,090,252.  For a period of one year from issuance, theissuees of these shares had 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 theaccompanying balance sheet with an assigned value of $1,192,700.                                                                                                                                                                                                                                                         |
| At September 30, 2002, none of these shares remained subject to potential rescission claims.                                                                                                                                                                                                                                                                                                                                          |
| The diminishing number of shares subject to potential rescission claims was caused either by the expiration ofthe respective statute of limitations periods or by the transfer of the subject shares by the original issuees.                                                                                                                                                                                                         |
| None of these potential rescission claims was ever asserted against the Company.                                                                                                                                                                                                                                                                                                                                                      |

| Note 6. Financing Transaction |   |
|-------------------------------|--------|

| On May 9, 2001, the Company signed an amended and restated common stock purchase agreement with anunrelated company to sell up to 6,000,000 shares of common stock for up to $10,000,000.  The purchase price ofthe shares under this purchase agreement varies, based on market prices of the Company's common stock.  Thepurchase agreement calls for the Company to meet certain requirements and maintain certain criteria with respectto its common stock in order to avoid an event of default.  Upon the occurrence of the event of default, the buyeris no longer obligated to purchase any additional shares of common stock.  The registration statement filed withrespect to this financing transaction became effective on June 29, 2001.  The commencement date of thepurchase agreement was July 10, 2001. To date, the Company has received approximately $395,000 in proceedsunder the purchase agreement, approximately $55,000 of which was received by the Company during the firstnine 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, reserving3,000,000 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, underwhich agreement the Company granted the consultant options, under its 2002 Stock Ownership Plan, to purchaseup to $600,000 of its common stock, up to $50,000 per month for ten years, the per share exercise price beingbased on future market prices, with a 38.75% discount to the market price on the date of exercise.  In March andApril 2002, the consultant exercised options to purchase $98,000 of Company common stock.  2,000,000 sharesof common stock were issued pursuant to this option exercise. In August 2002, the consultant exercised optionsto purchase $23,000 of Company common stock.  750,000 shares of common stock were issued pursuant to thisoption exercise. |
| In May and August 2002, the Company issued, under its 2002 Stock Ownership Plan, to a consultant a total of150,000 shares of stock (75,000 shares at each issuance), which shares were valued at $4,500 and $4,500,respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

| Note 8. AMEX Listing |   |
|----------------------|--------|

| Currently, we are not in compliance with the continued listing guidelines of AMEX.  During the second quarterof 2001, AMEX first inquired with respect to our plan for achieving compliance with its continued listingguidelines.  Our response to AMEX included an explanation of our anticipated future funding under the FusionCapital agreement and the positive effects this funding would likely have on our business and financialcondition, particularly in increasing our total assets and stockholders’ equity.  In July 2002, we were notified byAMEX that we have fallen below the continued listing standards of AMEX.  We have 18 months in which toregain compliance with AMEX’s continued listing standards.  We have fallen below certain of AMEX’scontinued listing standards: (1) losses from operations in its two most recent fiscal years with shareholders’equity below $2 million; and (2) sustained losses so substantial in relation to the company’s overall operations orits existing financial resources, or its financial condition in relation to its overall operations or its existingfinancial resources, or its financial condition has become so impaired that it appears questionable, the opinion ofAMEX, as to whether the company will be able to continue operations and/or meet its obligations as they mature.After AMEX reviewed our plan for regaining compliance, we were granted an extension of time (18 months) toregain compliance with the continued listing standards.  We will be subject to periodic review by the AMEXstaff during the extension period.  Failure to make progress consistent with the plan or to regain compliance withthe continued listing standards by the end of the extension period could result in our being delisted from AMEX.Should our common stock be delisted from AMEX, it is very likely that the market price for our stock could dropdramatically.  We cannot assure you that we will be able to maintain our listing on AMEX. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Note 9. Significant Equity Purchase |   |
|-------------------------------------|--------|

| On June 14, 2002, the Company completed a securities purchase agreement with Evergreen Venture Partners,LLC, whereby the Company issued units of its securities for cash in the amount of $250,000 ($115,000 in cashplus a subscription of $10,000 in April and $125,000 in cash in June).  The Company sold to Evergreen a total of3,645,833 shares of common stock, 3,125,000 common stock purchase warrants to purchase one a like number ofshares at an exercise price of $.15 per share and 3,125,000 common stock purchase warrants to purchase one alike number of shares at an exercise price of $.30 per share.  Also pursuant to this agreement, the Company hireda new president and chief executive officer, who received, as a signing bonus, 3,000,000 shares of commonstock; the Company’s former president, became Chairman of the Board, reduced the term of his remaining termof employment from approximately 4 years to six months, waived the payment of all accrued and unpaid salaryand waived the repayment of all loans made by him to the Company, in consideration of 2,000,000 shares ofcommon stock; two of the Company’s vice presidents reduced the terms of their remaining terms of employmentfrom approximately 4 years to six months and one year to six months, respectively, and waived the payment ofall accrued and unpaid salary, in consideration of 2,000,000 shares of common stock; and the Company’s othervice president terminated his employment with the Company.  Also, under this agreement, Evergreen has theright to name two persons to become directors of the Company.  Evergreen has not yet named any person as adirector. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| As a result of the transactions with these four officers arising out of the Evergreen agreement, the Companyincurred a charge against earnings during the second quarter of 2002 of $567,180.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

| Note 10. Subsequent Events |   |
|----------------------------|--------|

| In November 2002, the Company acquired all of the outstanding capital stock of NeighborLync, Inc., a Coloradocorporation, by issuing 2,000,000 shares of its common stock.                          |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| In November 2002, the Company acquired all of the outstanding ownership interests of MDU Cable Properties,LLC, a Colorado limited liability company, by issuing 200,000 shares of its common stock. |

| 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 wirelessInternet 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.  Dueto existing market conditions, we have abandoned our wireless cable business.  Because our Quick-Cellwireless Internet access system can be adapted for use on the wireless cable frequencies, we believe ourfrequencies possess future value.  However, these frequencies will not be of value to us, unless and until theFCC approves two-way communications on them.                                                                                                                                                                                                                                                                                                                                                                |
|   | Effective July 1, 1999, we assigned all of our television-related assets to New Wave Media Corp., inexchange for a 15% ownership interest in New Wave common stock.  This business segment wasdiscontinued as of that date and, since then, has not, and will not, generate any revenues.  Our board ofdirectors has declared a dividend with respect to all of the New Wave shares.  These shares will bedistributed to our shareholders, upon New Wave’s completion of a Securities Act registration of thedistribution transaction.  This registration proceeding has not been commenced by New Wave, due to a lackof funds necessary to pay related professional expenses.  New Wave has advised us that it is making its bestefforts 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 thecommercial exploitation of our Quick-Cell wireless Internet access products.  It is these products uponwhich our future is based.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Our new president has expanded the scope of our original Quick-Cell business plan, which called for theconstruction of Quick-Cell systems in small and medium-sized cities.  In addition to our original plan, we arenow attempting to develop working partnerships with companies who need to create or extend broadbandInternet connectivity for their customers, employees and partners.  The companies with which we seek to dobusiness operate in the following market segments, among others: hospitality, education, aviation, multipledwelling unit, planned community development, independent local exchange, utility and municipality.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | On June 14, 2002, we completed a securities purchase agreement with Evergreen Venture Partners, LLC,whereby we issued securities for cash in the amount of $250,000 (including a $10,000 stock subscriptionreceivable).  We sold to Evergreen a total of 3,645,833 shares of our common stock, 3,125,000 commonstock purchase warrants to purchase a like number of shares at an exercise price of $.15 per share and3,125,000 common stock purchase warrants to purchase a like number of shares at an exercise price of $.30per 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 ourcommon stock; David M. Lofin, our former president, became our Chairman of the Board, reduced the termof his remaining term of employment from approximately 4 years to six months, waived the payment of allaccrued and unpaid salary and waived the repayment of all loans made by him to us, in consideration of2,000,000 shares of our common stock; two of our vice presidents reduced the terms of their remainingterms of employment from approximately 4 years to six months and one year to six months, respectively, andwaived the payment of all accrued and unpaid salary, in consideration of 2,000,000 shares of our commonstock; and our other vice president terminated his employment with us.  Also, under this agreement,Evergreen has the right to name two persons to become directors of USURF America.  To date, Evergreenhas not named any person as a director.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | As a result of the transactions with these four officers arising out of the Evergreen agreement, we incurred acharge against our earnings during the second quarter of 2002 of $567,180 (unaudited).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | In May 2001, we entered into an amended and restated common stock purchase agreement with FusionCapital Fund II, LLC, which replaced a similar agreement entered into in October 2000.  Pursuant to theagreement,  Fusion Capital may purchase up to $10 million of our common stock.  The shares of ourcommon stock being issued under this agreement are the subject of an effective registration statement.  Todate, we have received only $395,000 under our agreement with Fusion Capital.  Fusion Capital has notpurchased the maximum shares possible under this agreement.  This lack of significant funding has impededour 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 Relatingto Future Liquidity”, for a more thorough explanation of the impact this agreement could have on ourbusiness.  Should we obtain more substantial funding, we would be able to begin to pursue our wirelessInternet business plan.  With the funds provided by the Evergreen agreement transaction, we have been ableto begin to implement our newly expanded business plan.  We have begun to build our wireless Internetnetwork in Denver and have begun to place customers on line there.  Also, we have begun to build ourwireless Internet network in Colorado Springs and expect to begin to place customers on line there duringthe last part of November 2002, once our channel partner, SunWest Communications completes itstelephone line termination activities.  Our management expects that these recent developments will modestlyimpact our 2002 fourth quarter operating results.  In November we acquired NeighborLync, Inc. and MDUCable Properties, Inc., each of which are start-up companies that have exclusive contracts to provide videoand/or high-speed Internet access to a total of eight multiple dwelling unit (MDU) properties located in theDenver and Colorado Springs areas.  In the aggregate, the MDU properties under contract contain over1,800 residential units.  We expect the operations of these newly acquired subsidiaries to begin to impact ouroperating statements during the first quarter of 2003. |
|   | In October 2001, we began company-owned Quick-Cell operations in Del Rio, Texas, and have agreementswith two resellers there.  We have approximately 50 customers in Del Rio, and consumer response has beenexcellent.  However, our customer growth will continue to be slowed by a lack of capital.  We have alsocompleted engineering efforts in four other South Texas towns.  We will not begin marketing our Quick-Cellservice 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,$55,000 during the nine months half of 2002, during 2002 we have obtained additional funds through salesof our securities, as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

| - | $57,500 (last quarter of 2001) from the sale of 575,000 shares of our common stock and a total of1,150,000 warrants;                                                                            |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| - | $30,000 from the exercise of outstanding warrants - 200,000 shares at $.15 per share;                                                                                                           |
| - | $13,000 from the exercise of outstanding warrants - 162,500 shares at $.08 per share;                                                                                                           |
| - | $121,000 from the exercise of options - 2,000,000 shares at $.049 per share and 750,000 shares at$.03067 per shares (a 38.75% discount to the market price on the date of exercise);            |
| - | $240,000 ($115,000 plus a subscription of $10,000 in April and $125,000 in June) from the sale of3,645,833 shares and a total of 6,250,000 warrants, pursuant to the Evergreen transaction; and |
| - | $66,000 from the sale of 1,135,000 shares of our common stock.                                                                                                                                  |

|   | The majority of these funds were used for operating expenses.  Approximately $100,000 of these funds hasbeen applied toward the expansion of our wireless Internet access business. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 FederalBankruptcy Court, styled In Re: CyberHighway, Inc., Case No. 00-02454, by ProPeople Staffing, CTCTelecom, Inc. and Hawkins-Smith.  A joint motion to dismiss the bankruptcy proceeding was unsuccessfulbecause some of CyberHighway’s creditors believe that CyberHighway’s as-yet unasserted damage claimsagainst the original petitioning creditors and their law firm and a claim against Dialup USA, Inc. representCyberHighway’s most valuable assets.  These as-yet unasserted claims include claims for bad faith filing ofthe original bankruptcy petition as to the original petitioning creditors and their law firm, as well as a claimfor tortious interference with beneficial business relationships as to Dialup USA, Inc.  These creditors desirethat these claims be adjudicated in the bankruptcy court.  It is likely that, at some time in the future, a finalorder of bankruptcy will be entered with respect to CyberHighway.  No prediction of the timing of such anorder can be made, although we believe that such an order would come only after the final adjudication ofthe claims described above. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The January 1999 acquisition of CyberHighway fundamentally altered our company.  Our annual revenueswent from nearly zero to about $2.5 million.  However, the involuntary bankruptcy proceeding caused thedemise of CyberHighway’s business.  CyberHighway’s company-owned dial-up customer base went fromapproximately 8,500 to none.  The filing of the involuntary bankruptcy and CyberHighway’s switch-over tothe network of Dialup USA were the primary causes of CyberHighway’s customer base demise.  We will notapply any available future capital to the revitalization of our dial-up Internet access business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | This sudden and permanent demise of CyberHighway’s customer base rendered our intangible assets relatingto those customers worthless.  The write-off of these intangible assets totalled $4,814,272, net of deferredtaxes, as reflected in our December 31, 2000, financial statements.  Due to this change in operatingenvironment, monthly revenues decreased substantially, and, accordingly, goodwill was impaired.  Thewrite-down of goodwill totaled $4,425,037, as reflected in our December 31, 2000, financial statements.Please see the discussion below under the heading “Liquidity and Capital Resources” for more informationon this topic.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

| Results of Operations |   |
|-----------------------|--------|

|   | General. |   |
|--------|----------|--------|

|   | By the end of February 2001, CyberHighway had lost all of its dial-up Internet access customers and we donot foresee the revitalization of CyberHighway’s business.  You should not purchase our common stockexpecting that CyberHighway’s business will assist in making us profitable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | During the first half of 2001, we derived no revenue from CyberHighway’s business.  For the first ninemonths of 2001 and 2002, our small amounts of revenues were dervied from our Quick-Cell wirelessInternet access operations.  We currently lack the capital necessary to pursue our complete Quick-Cellbusiness 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 paymentsfor 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, NewMexico.  Throughout 2000, our customers in Santa Fe were in their one-year “free-use” period.  Duringmost of 2001, we did not charge our Santa Fe customers for service, due to our commencing an upgrade tothe 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 toderive revenues from the first customers in Del Rio, Texas.  We have lacked capital with which to expandeither of these markets.                                                                                                                                                                                                                                          |
|   | In September 2001, we began Quick-Cell operations in Del Rio, Texas.  We have approximately 50customers online, but our growth there has been slowed significantly due to our lack of capital.  We cannotpredict the number of customers we will secure in any specific time frame, due to our lack of capital.  In DelRio, 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 webegin to derive greater amounts of funds under the Fusion Capital agreement or from another source, ofwhich there is no assurance, we plan to construct additional Quick-Cell systems throughout the remainder of2002.                                                                                                                                                           |
|   | 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 soldthree Quick-Cell systems in a short time.  Due to a lack of capital, however, this marketing effort wassuspended before we investigated the nature of the other inquiring companies.  No paying customers usethese systems, due to circumstances involving these companies that are beyond our control.  During the firstnine months of 2001 and 2002, we derived no significant revenues from customer modem sales to theseQuick-Cell purchasers, and we do not expect to do so during 2002.                                                                                                                                                                                                                  |
|   | In cities in which we construct company-owned Quick-Cell systems, we intend to employ telephonemarketing as the initial means for acquiring customers and, later, mass media.  We will employ a sales forcethat will focus primarily on potential business customers.  This focus on business customers is based on ourmanagement’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 beenincorrect, which would significantly impair our ability to earn a profit.  Our management believes, based onits collective business experience, that effective marketing techniques can overcome Quick-Cell’s lack ofname recognition, although this belief may also prove to be incorrect.  Our Quick-Cell business will not beable to succeed without additional capital. |
|   | In cities where a Quick-Cell reseller operates, we will not have final approval of the reseller’s marketingstrategies.  Our resellers will be permitted to market our Quick-Cell service in any commercially reasonablemanner. We cannot, therefore, assure you that any of our resellers will ever achieve high enough sales levelsthat would permit us to earn a profit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Our revenues for the first nine months of 2001 and 2002 were significantly below those of the comparable2000 period, since we no longer derive revenues from the operations of CyberHighway and we have lackedcapital with which to commence a full-scale implementation of our Quick-Cell business plan.  In 2003, wewill produce significant revenues only if we are able to be successful in placing Quick-Cell servicecustomers online, of which there is no assurance, due to the uncertainty surrounding our level ofcapitalization 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 hasbeen filed.  Because we have never earned a profit, there is no tax liability that would arise from thiscircumstance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

|   | Potential Rescission Claims. |   |
|--------|------------------------------|--------|

|   | At December 31, 2001, 2,138,726 shares of our common stock with an aggregate assigned value of$1,192,700 may have been issued in violation of Section 5 of the Securities Act.  Our December 31, 2001,balance sheet reflects a Redeemable Common Stock line item with this assigned value, since each of theissuees of these shares may have had a potential claim for rescission of their respective issuancetransactions.  None of these issuees made such a claim within the various statute of limitations periods and,consequently, at September 30, 2002, none of our shares remained subject to potential rescission claims,which circumstance is reflected in the Redeemable Common Stock line item of our September 30, 2002,balance sheet. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Nine Months Ended September 30, 2002, versusNine Months Ended September 30, 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 nine months of 2002 and 2001 are summarized in the following table:                                                                          |

|   |                                      | First Nine Months of2002 (unaudited) |   | First Nine Months of2001 (unaudited) |
|--------|-------------------------------------------|--------------------------------------|--------|--------------------------------------|
|   | Revenues                                  | $13,978                              |   | $4,604                               |
|   | Internet Access Costs, Cost of Goods Sold | (25,820)                             |   | (13,989)                             |
|   | Gross Profit (Loss)                       | (11,842)                             |   | 3,206                                |
|   | Operating Expenses                        | 2,362,358                            |   | 2,164,555                            |
|   | Loss from Operations                      | (2,374,200)                          |   | (2,161,349)                          |
|   | Net Loss                                  | (2,374,375)                          |   | (2,162,374)                          |

|   | Our net loss of $2,374,375 (unaudited) for the first nine months of 2002 was slightly higher than our net lossfor the 2001 period of $2,162,374 (unaudited).  Certain line items in our statements of operations changedmaterially from the 2001 period to the 2002 period. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| - | Professional fees decreased from $1,460,446 in the 2001 period to $1,021,702 in the 2002 period.  Thisdecrease is a result of our not having required professional services during the 2002 period at the levelsrequired during the 2001 period.  Also, during 2002, we did not have a charge against our earningssimilar to the $248,000 amount that occurred during the 2001 period, the result of the issuance of800,000 shares as a commitment fee under a common stock purchase agreement.  Should we continue tolack cash reserves, it is likely that, during the remainder of 2002, we would issue shares of our commonstock in payment of certain professional fees. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| - | During the 2001 period, we incurred no advertising expense.  However, during the 2002 period, weincurred advertising expenses of $66,233.  Substantially all of our advertising expenses during thecurrent period are attributable to the exercise of options to acquire shares of our common stock by aconsultant at a 38.75% discount to the market price on the date of exercise.                                                                                                                                                                                                                                                                                         |
| - | Salaries and commissions increased from $553,296 in the 2001 period to $1,028,476 in the 2002 period.This increase in salaries and commissions is attributable primarily to issuances of shares of our commonstock to our officers under their employment agreements, in connection with the Evergreen transaction,as described in the following paragraph.                                                                                                                                                                                                                                                                                                                  |

|   | As a result of the Evergreen transaction, we incurred a one-time charge against our earnings during thesecond quarter of 2002 in the amount of $567,180 (net of forgiven accrued and unpaid salaries and unpaidloans to certain of our officers), due to the following stock issuances: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| - | 3,000,000 shares issued to our new president and chief executive officer as a signing bonus under hisemployment agreement.                                                                                                                             |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| - | 2,000,000 shares to our former president (current Chairman of the Board) in consideration of hisagreeing to reduce the term of his employment agreement, waive the payment of accrued salary andwaive 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 hisemployment agreement and waive the payment of accrued salary.                                                                                 |
| - | 2,000,000 shares to our vice president of corporate development in consideration of his agreeing toreduce the term of his employment agreement and waive the payment of accrued salary.                                                                |

|   | We expect that our results of operations for the fourth quarter of 2002 will be similar to those of the firstthree quarters of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Due to our severe lack of capital during the 2001 and 2002 periods, we issued shares of our stock toconsultants in payment of their services.  The fair value of the shares issued to consultants is included in ourstatements of operations under the “Professional Fees” line item.  Issuing shares of our common stock wasthe only means by which we could obtain the consultants’ services.  The value of the consulting servicesreceived by us under each agreement has been expensed in equal monthly amounts over their respectiveterms: |

| - | during the first nine months of 2001, we issued 1,355,000 shares of our common stock under consultingagreements; these shares were valued for financial accounting purposes at approximately $479,000, inthe aggregate.  This amount was expensed in monthly amounts during 2001.                                                                                                                                                 |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| - | during the first nine months of 2002, we issued 7,820,000 shares of our common stock under consultingagreements and in payment of professional fees; these shares were valued for financial accountingpurposes at approximately $839,250, in the aggregate.  This amount is being expensed in equal monthlyamounts over periods ranging from one month to one year.  Nearly all of this total amount will beexpensed during 2002. |

| Liquidity and Capital Resources |   |
|---------------------------------|--------|

|   | General. |   |
|--------|----------|--------|

|   | Since our inception, we have had a significant working capital deficit.  Currently, we are substantiallyilliquid, although we do possess enough cash to continue our current level of business activities, through theresult of recent securities sales.  As the level of funding under the Fusion Capital agreement has been lowerthan we had earlier anticipated, $55,000 during the first half of 2002, during 2002, we have obtainedadditional funds through sales of our securities, as follows: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| - | $57,500 (last quarter of 2001) from the sale of 575,000 shares of our common stock and a total of1,150,000 warrants;                                                                            |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| - | $30,000 from the exercise of outstanding warrants - 200,000 shares at $.15 per share;                                                                                                           |
| - | $13,000 from the exercise of outstanding warrants - 162,500 shares at $.08 per share;                                                                                                           |
| - | $121,000 from the exercise of options - 2,000,000 shares at $.049 per share and 750,000 shares at$.03067 per shares (a 38.75% discount to the market price on the date of exercise);            |
| - | $240,000 ($115,000 plus a subscription of $10,000 in April and $125,000 in June) from the sale of3,645,833 shares and a total of 6,250,000 warrants, pursuant to the Evergreen transaction; and |
| - | $66,000 from the sale of 1,135,000 shares of our common stock.                                                                                                                                  |

|   | The majority of these funds were used for operating expenses.  Approximately $100,000 of these funds hasbeen applied toward the expansion of our wireless Internet access business. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We will need further capital, as we continue to expand our wireless Internet access business.  It is possiblethat we will not be able to secure adequate capital as we need it.  Also, without additional capital, it ispossible that we would be forced to cease operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | In July 2002, we became aware of an existing default judgment against us, dated June 7, 2001, in theapproximate amount of $22,000.  The lawsuit went unchallenged as a result of administrative error.  Weintend to seek to set aside this judgment, as we have a valid defense to the underlying claims.  However, wecannot predict the outcome of our efforts in this regard.  Should we fail to set aside this judgment, we will berequired to pay this judgment amount.  In August 2002, an arbitrator ruled against us in an arbitrationproceeding against our former chief financial officer, in the amount of $100,000.  It is likely that we will berequired to pay this amount; however, the terms of this payment have not yet been determined. |

|   | Our Capital Needs. |   |
|--------|--------------------|--------|

|   | To sustain our current level of operations for the next twelve months, we will require additional capital ofapproximately $300,000.  To accomplish our goals of expanding our Quick-Cell business, we will require atleast $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 Internetaccess business, including the construction of Quick-Cell systems.  When we refer to the construction of aQuick-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 - projectedaverage 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-Cellsystem to achieve significant cost savings and built the first portion of that system, which included twoserver cells - the original plan having called for one server cell - for approximately $18,000, and we haveadded a third server cell to this system, in response to consumer demand.  However, we continue to lackcapital with which to market our Quick-Cell service aggressively.  Rather, in Del Rio, we have chosen tomake sustained slow progress in customer acquisition, rather than to have begun full-scale marketingactivities only to suspend them soon after their start due to our lack of capital.  Should we begin to derivegreater amounts of funds under the Fusion Capital agreement, of which there is no assurance, we plan toconstruct additional Quick-Cell systems throughout 2002.  We currently possess enough capital with whichto sustain our current operations. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | If and when we begin to obtain the maximum amount of funds available pursuant to the Fusion Capitalagreement, we expect, then, to have enough money to pay for the construction of the initial Quick-Cell cellsite in at least three markets per month.  We cannot assure you that we will be able to construct Quick-Cellcell sites at that rate or that we will ever possess adequate capital with which to engage in this level ofactivities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | In light of the relatively small amount of capital required to construct each Quick-Cell cell site, we believethat the expected funding under the Fusion Capital agreement would provide us with enough capital toconstruct 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 whetherour Quick-Cell wireless Internet access business is a viable business, as presently offered.  However, thefunds expected under the Fusion Capital agreement will not be adequate for us to pursue our completeQuick-Cell business plan, and we cannot assure you that we will be able to obtain capital when needed.  Ourinability to obtain further capital when needed would lessen our chance of earning a profit, as we wouldbecome illiquid.                                                                                                                       |

|   | 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 withFusion Capital.  Since then, we have received only $395,000 in payment of a total of 3,100,000 shares underthis agreement.  Fusion Capital has not purchased the maximum funding amount possible under thisagreement.  This lack of significant funding has impeded our ability to expand our Quick-Cell businessoperations.  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 wereceive the entire $10 million under that agreement, of which there is no assurance, we anticipate that wewill 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 tothe current low market price of our common stock.  In addition, under the Fusion Capital agreement, wemust maintain compliance with certain criteria in order to avoid an event of default.  Currently, we are incompliance 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 theFusion Capital agreement, be exercised, we would receive cash proceeds of approximately $4,000,000.Funds received from the exercise of warrants would be used to purchase Quick-Cell equipment, to constructQuick-Cell systems, to market our Quick-Cell wireless Internet access service and for working capital. |
|   | You should note that we may never receive any of the funds discussed above.  Our failure to obtain capitalfrom these sources could cause us to cease our operations.                                                                                                                                                                                                                                                        |

|   | Potential Rescission Claims. |   |
|--------|------------------------------|--------|

|   | At December 31, 2001, 2,138,726 shares of our common stock with an aggregate assigned value of$1,192,700 may have been issued in violation of Section 5 of the Securities Act.  Our December 31, 2001,balance sheet reflects a Redeemable Common Stock line item with this assigned value, since each of theissuees of these shares may have had a potential claim for rescission of their respective issuancetransactions.  None of these issuees made such a claim within the various statute of limitations periods and,consequently, at September 30, 2002, none of our shares remained subject to potential rescission claims,which circumstance is reflected in the Redeemable Common Stock line item of our September 30, 2002,balance sheet. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | September 30, 2002. |   |
|--------|---------------------|--------|

|   | Historically, we have had a significant working capital deficit.  At September 30, 2002, our working capitaldeficit was $1,214,489 (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 nine months of 2002 permitted usto improve moderately our working capital deficit by the end of the period.  Approximately 85% of ouraccounts payable are accounts payable of CyberHighway and are subject to the pending Chapter 7bankruptcy proceeding of CyberHighway.  Without additional capital, our working capital deficit can beexpected to become larger each quarter. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The following table sets forth our current assets and current liabilities at September 30, 2002, and December31, 2001:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

|   |                |                                    | September 30, 2002(unaudited) |   | December 31, 2001(audited) |
|--------|---------------------|-----------------------------------------|-------------------------------|--------|----------------------------|
|   | Current Assets      | Cash                                    | $60,071                       |   | $10                        |
|   |                | Inventory                               | 99,057                        |   | 134,756                    |
|   |                |                                    |                          |   |                       |
|   | Current Liabilities | Disbursements in Excess ofCash Balances | $0                            |   | $15,539                    |
|   |                | Accounts Payable                        | 1,042,132                     |   | 1,034,619                  |
|   |                | Accrued Payroll                         | 169,989                       |   | 265,978                    |
|   |                | Other Current Liabilities               | 161,396                       |   | 54,996                     |
|   |                | Notes Payable to Stockholder            | 0                             |   | 18,521                     |

|   | Our accrued payroll at September 30, 2002, as well as at December 31, 2001, is attributable to accruedsalary of our officers.  In connection with the Evergreen transaction described above, three of our officerswaived payment of all of their accrued salaries, in the approximate amount of $225,000, which is reflectedon our September 30, 2002, balance sheet. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | We reduced our note payable to stockholder during the first quarter of 2002 by $18,521, and owed thisshareholder no amount at September 30, 2002.  We do not expect that we will again borrow funds from thisshareholder.                                                                                                                                             |
|   | As the level of funding under the Fusion Capital agreement has been lower than we had earlier anticipated,$55,000 during the first half of 2002, we obtained additional funds through sales of our securities, asfollows:                                                                                                                                             |

| - | $57,500 (last quarter of 2001) from the sale of 575,000 shares of our common stock and a total of1,150,000 warrants;                                                                        |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| - | $30,000 from the exercise of outstanding warrants - 200,000 shares at $.15 per share;                                                                                                       |
| - | $13,000 from the exercise of outstanding warrants - 162,500 shares at $.08 per share;                                                                                                       |
| - | $121,000 from the exercise of options - 2,000,000 shares at $.049 per share and 750,000 shares at$.03067 per shares (a 38.75% discount to the market price on the date of exercise);        |
| - | $240,000 ($115,000 plus a subscription of $10,000 in April and $125,000 in June) from the sale of3,645,833 shares and a total of 6,250,000 warrants, pursuant to the Evergreen transaction. |
| - | $66,000 from the sale of 1,135,000 shares of our common stock.                                                                                                                              |

|   | The majority of these funds were used for operating expenses.  Approximately $100,000 of these funds hasbeen applied toward the expansion of our wireless Internet access business.                                                                                                                 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Without obtaining at least $1,200,000 in new capital, we will continue to have a significant working capitaldeficit and will not be able to operate from a position of liquidity.  This will impair our ability to pursue ourQuick-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 ceaseoperations.                                                                                                                                                                               |

|   | Cash Flows from Operating Activities. |   |
|--------|---------------------------------------|--------|

|   | During the first nine months of 2002, our operations used $417,951 (unaudited) in cash compared to cashused of $584,572 (unaudited) during the first nine months of 2001.  In both periods, the use of cash inoperations was a direct result of the lack of revenues compared to our operating expenses, particularlysalaries and commissions in 2001 and greater business development activities in 2002. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Cash Flows from Investing Activities. |   |
|--------|---------------------------------------|--------|

|   | Our investing activities used $28,567 (unaudited) in cash in the first nine months of 2002 and used $4,160 incash during the first nine months of 2001.  Capital expenditures comprised the use of cash in both periods.Because we lack working capital, we cannot predict our cash flows from investing activities for theremainder of 2002. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Cash Flows from Financing Activities. |   |
|--------|---------------------------------------|--------|

|   | For the first nine months of 2002, our financing activities provided $506,579 (unaudited) in cash.  Ourpayments on notes payable to stockholder of $18,521 and $4,900 in finder’s fees were offset by paymentsreceived on subscriptions receivable of $305,000, $212,000 in cash from sales of our common stock and$13,000 in cash obtained by the exercise of certain warrants.  For the first nine months of 2001, ourfinancing activities provided $592,290 in cash.  Of this amount, $48,290 is attributable to loans from ourpresident and $552,000 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 ofapproximately $300,000.  Our recent securities purchase agreement with Evergreen has provided asignificant portion of this capital requirement.  To accomplish our goals of expanding our Quick-Cellbusiness, we will require at least $1.2 million.                                                                                                                                                                                                                                                                                  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Our best opportunity for obtaining needed funds is pursuant to the Fusion Capital agreement.  However, todate, we have received only $395,000 under our agreement with Fusion Capital.  Fusion Capital has notpurchased 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, theselling price of our stock sold to Fusion Capital will need to average $1.67 per share for us to receive themaximum proceeds of $10 million under that agreement.  Assuming a selling price of $.08 per share, theclosing sale price of the common stock on May 16, 2002, and the purchase by Fusion Capital of the fullamount of shares purchasable under the Fusion Capital agreement, total proceeds to us would only beapproximately $600,000, unless we choose to issue more than 6,000,000 shares, which we have the right todo. |
|   | Should we obtain at least $1.2 million under the Fusion Capital agreement, we believe that we will be able tohave accomplished our primary objectives:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

| - | entering into several working partnerships with companies who need to create or extend broadbandInternet connectivity for their customers, employees and partners; |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| - | placing at least 10,000 customers on our Quick-Cell systems during the next year; and                                                                              |
| - | 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 six months of 2002, we made no capital expenditures and we currently have no capital withwhich to make any significant capital expenditures.  Should we obtain significant funding, of which there isno 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 OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS” ARE “FORWARD-LOOKINGSTATEMENTS” WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACTOF 1995 AND ARE, THUS, PROSPECTIVE.  THESE FORWARD-LOOKING STATEMENTS ARESUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE ACTUALRESULTS TO DIFFER MATERIALLY FROM FUTURE RESULTS EXPRESSED OR IMPLIED BY SUCHFORWARD-LOOKING STATEMENTS.  THE MOST SIGNIFICANT OF SUCH RISKS, UNCERTAINTIESAND OTHER FACTORS IS OUR ABILITY TO OBTAIN CAPITAL IN AMOUNTS NECESSARY FOR USTO ACCOMPLISH OUR PLAN FOR THE EXPLOITATION OF OUR QUICK-CELL WIRELESSINTERNET 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 IdahoFederal Bankruptcy Court, styled In Re: CyberHighway, Inc., Case No. 00-02454.  The petitioning creditorswere ProPeople Staffing, CTC Telecom, Inc. and Hawkins-Smith.  In December 2000, CyberHighway andthe petitioning creditors filed a joint motion to dismiss this proceeding.  The joint motion to dismiss wasdenied because the creditors believe that CyberHighway’s as-yet unasserted damage claims against theoriginal petitioning creditors and their law firm and a claim against Dialup USA, Inc. representCyberHighway’s most valuable assets.  These as-yet unasserted claims include claims for bad faith filing ofthe original bankruptcy petition as to the original petitioning creditors and their law firm, as well as claim fortortious interference with beneficial business relationships as to Dialup USA, Inc.  It is likely that, at sometime in the future, a final order of bankruptcy will be entered with respect to CyberHighway, no predictionof the timing of such an order can be made, although we believe that such an order would come only afterthe final adjudication of the claims described above. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Other Litigation |   |
|------------------|--------|

|   | In November 2000, CyberHighway requested and received a temporary restraining order against DarrellDavis, formerly one of our officers, and his wife, Deanna Davis.  We have alleged that the Davises havediverted dial-up customers from CyberHighway to a company controlled by him, all while he was anemployee of USURF America.  We expect that a hearing for our motion for a permanent injunction willoccur in the future.  In addition, we are seeking monetary damages in this action.  No prediction as to itsfinal outcome can be made.  This case is styled: CyberHighway, Inc. versus Deanna Davis, individually andd/b/a Cyber-Trail, Inc., and Darrell D. Davis, 19th Judicial District Court, Parish of East Baton Rouge, Stateof Louisiana, Case No. 478320.  Patrick F. McGrew, Esquire, is our counsel in this case. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | In January 2000, we instituted arbitration proceedings against Christopher L. Wiebelt, our former vicepresident of finance and chief financial officer.  At the recent hearing, we alleged that Mr. Wiebelt violatedcertain terms of his employment agreement and sought damages resulting from those violations, while Mr.Wiebelt claimed wrongful termination under his employment agreement.  The arbitrator has awarded Mr.Wiebelt $100,000.  We expect to negotiate payment terms in the near future. This case is styled: USURFAmerica, Inc. versus Christopher L. Wiebelt, American Arbitration Association, Case No. 71-160-00087-01.Patrick F. McGrew, Esquire, is our counsel in this case.                                                                                                                                   |
|   | In July 2002, we became aware of an existing default judgment against us, dated June 7, 2001, in theapproximate amount of $22,000.  The lawsuit, filed by a law firm in Boise, Idaho, went unchallenged as aresult of administrative error.  We intend to seek to set aside this judgment, as we have a valid defense to theunderlying claims.  However, we cannot predict the outcome of our efforts in this regard.  Should we fail toset aside this judgment, we will be required to pay this judgment amount.  This case is styled: Marcus,Merrick, Montgomery, Christian & Hardee, LLP vs. USURF America, Inc., District Court of the FourthJudicial District of the State of Idaho, in and for the County of Ada, Case No. CV OC 0101693D.  We havenot yet retained legal counsel in this matter.                             |

| Possible Claim |   |
|----------------|--------|

|   | Some time in the future, it is possible that we will enter into arbitration proceedings with CommonwealthAssociates.  The dispute revolves around Commonwealth’s claim that we owe it approximately 127,000shares of our common stock.  We do not believe Commonwealth is entitled to any shares and will vigorouslydefend 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 topursue damage claims against Dialup USA for tortiously interfering with the beneficial businessrelationships between CyberHighway and its customers.  These claims arise out of Dialup USA’s actions onbehalf of one of our former officers, which were designed to divert customers to a company controlled byhim.  Our claim against Dialup USA will be for approximately $2 million.  We have not established a dateby which we intend to commence this legal proceeding. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Item 2. Changes in Securities. |   |
|--------------------------------|--------|

|   | During the three months ended September 30, 2002, we issued securities asfollows: |   |
|--------|-----------------------------------------------------------------------------------|--------|

| 1.     | (a) | Securities Sold.  In July 2002, 300,000 shares of Company Common Stock were issued.                                                                              |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such shares of Common Stock were issued to RegencyCapital, LLC.                                                                |
|   | (c) | Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreementand were valued at $15,000.                                            |
|   | (d) | Exemption from Registration Claimed.  The Company relied upon the exemption fromregistration afforded by Section 4(2) of the Securities Act of 1933, as amended. |

| 2.     | (a) | Securities Sold.  In July 2002, 300,000 shares of Company Common Stock were issued.                                                                                                     |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such shares of Common Stock were issued to PeterRochow.                                                                                               |
|   | (c) | Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreementand were valued at $15,000.                                                                   |
|   | (d) | Exemption from Registration Claimed.  These securities are exempt from registration under theSecurities Act of 1933, as amended, pursuant to the provisions of Regulation S thereunder. |

| 3.     | (a) | Securities Sold.  In August 2002, 300,000 shares of Company Common Stock were issued.                                                                                                                                                                                                    |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such shares of Common Stock were issued to JFMills/Worldwide.                                                                                                                                                                                          |
|   | (c) | Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreementand were valued at $21,000.                                                                                                                                                                    |
|   | (d) | Exemption from Registration Claimed.  The Company relied upon the exemption fromregistration afforded by Section 4(2) of the Securities Act of 1933, as amended, and Rule 506thereunder.  This purchaser was a sophisticated investor capable of evaluating an investment inthe Company. |

| 4.     | (a) | Securities Sold.  In August 2002, 600,000 shares of Company Common Stock were issued.                                                                                                                                                                                                    |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Kenneth J.Upcraft.                                                                                                                                                                                          |
|   | (c) | Consideration.  Such shares of Common Stock were issued as a signing bonus pursuant to anemployment agreement and were valued at $36,000.                                                                                                                                                |
|   | (d) | Exemption from Registration Claimed.  The Company relied upon the exemption fromregistration afforded by Section 4(2) of the Securities Act of 1933, as amended, and Rule 506thereunder.  This purchaser was a sophisticated investor capable of evaluating an investment inthe Company. |

| 5.     | (a) | Securities Sold.  In August 2002, 375,000 shares of Company Common Stock were issued.                                                                                                                                                                                                    |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such shares of Common Stock were issued to PreciseDirections, LLC.                                                                                                                                                                                     |
|   | (c) | Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreementand were valued at $18,750.                                                                                                                                                                    |
|   | (d) | Exemption from Registration Claimed.  The Company relied upon the exemption fromregistration afforded by Section 4(2) of the Securities Act of 1933, as amended, and Rule 506thereunder.  This purchaser was a sophisticated investor capable of evaluating an investment inthe Company. |

| 6.     | (a) | Securities Sold.  In August 2002, 1,000,000 shares of Company Common Stock were issued.                                                                                                                                                     |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such shares of Common Stock were issued to PeterRochow.                                                                                                                                                   |
|   | (c) | Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreementand were valued at $60,000.                                                                                                                       |
|   | (d) | Exemption from Registration Claimed.  These securities were sold to a single purchaser andthese 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 August 2002, 400,000 common stock purchase warrants of the Companywere issued.                                                                                                                                         |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such warrants were issued to Heyer Capital Fund.                                                                                                                                                          |
|   | (c) | Consideration.  Such warrants were issued pursuant to a consulting agreement.                                                                                                                                                               |
|   | (d) | Exemption from Registration Claimed.  These securities were sold to a single purchaser andthese 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 $.15 per share andexercisable for a period of three years from issuance.                                                                                                |

| 8.     | (a) | Securities Sold.  In August 2002, 400,000 common stock purchase warrants of the Companywere issued.                                                                                                                                         |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such warrants were issued to Heyer Capital Fund.                                                                                                                                                          |
|   | (c) | Consideration.  Such warrants were issued pursuant to a consulting agreement.                                                                                                                                                               |
|   | (d) | Exemption from Registration Claimed.  These securities were sold to a single purchaser andthese 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 andexercisable for a period of three years from issuance.                                                                                                |

| 9.     | (a) | Securities Sold.  In August 2002, 400,000 common stock purchase warrants of the Companywere issued.                                                                                                                                         |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such warrants were issued to Heyer Capital Fund.                                                                                                                                                          |
|   | (c) | Consideration.  Such warrants were issued pursuant to a consulting agreement.                                                                                                                                                               |
|   | (d) | Exemption from Registration Claimed.  These securities were sold to a single purchaser andthese 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 $.25 per share andexercisable for a period of three years from issuance.                                                                                                |

| 10.    | (a) | Securities Sold.  In August 2002, 400,000 common stock purchase warrants of the Companywere issued.                                                                                                                                         |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such warrants were issued to Heyer Capital Fund.                                                                                                                                                          |
|   | (c) | Consideration.  Such warrants were issued pursuant to a consulting agreement.                                                                                                                                                               |
|   | (d) | Exemption from Registration Claimed.  These securities were sold to a single purchaser andthese 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 andexercisable for a period of three years from issuance.                                                                                                |

| 11.    | (a) | Securities Sold.  In August 2002, 400,000 common stock purchase warrants of the Companywere issued.                                                                                                                                         |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such warrants were issued to Heyer Capital Fund.                                                                                                                                                          |
|   | (c) | Consideration.  Such warrants were issued pursuant to a consulting agreement.                                                                                                                                                               |
|   | (d) | Exemption from Registration Claimed.  These securities were sold to a single purchaser andthese 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 $.35 per share andexercisable for a period of three years from issuance.                                                                                                |

| 12.    | (a) | Securities Sold.  In August 2002, 400,000 common stock purchase warrants of the Companywere issued.                                                                                                                                         |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such warrants were issued to Heyer Capital Fund.                                                                                                                                                          |
|   | (c) | Consideration.  Such warrants were issued pursuant to a consulting agreement.                                                                                                                                                               |
|   | (d) | Exemption from Registration Claimed.  These securities were sold to a single purchaser andthese 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 $.40 per share andexercisable for a period of three years from issuance.                                                                                                |

| 13.    | (a) | Securities Sold.  In September 2002, 1,000,000 shares of Company Common Stock wereissued.                                                                                                                                                                                                |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Newlan &Newlan.                                                                                                                                                                                         |
|   | (c) | Consideration.  Such shares of Common Stock were issued in payment of legal services, at aprice of $.07 per share.                                                                                                                                                                       |
|   | (d) | Exemption from Registration Claimed.  The Company relied upon the exemption fromregistration afforded by Section 4(2) of the Securities Act of 1933, as amended, and Rule 506thereunder.  This purchaser was a sophisticated investor capable of evaluating an investment inthe Company. |

| 14.    | (a) | Securities Sold.  In September 2002, 135,000 shares of Company Common Stock were sold.                                                                                                                                                                                                                               |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such shares of Common Stock were issued to ChristopherK. Brenner and Janice B. Brenner.                                                                                                                                                                                            |
|   | (c) | Consideration.  Such shares of Common Stock were sold for cash, at a price of $.045 per share.                                                                                                                                                                                                                       |
|   | (d) | Exemption from Registration Claimed.  These securities are exempt from registration under theSecurities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof andRule 506 thereunder, as a transaction not involving a public offering.  These purchasers,together, were accredited investors. |

| 15.    | (a) | Securities Sold.  In September 2002, 1,000,000 shares of Company Common Stock were sold.                                                                                                                                                                                                                 |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such shares of Common Stock were issued to the JohnPriztlaff Revocable Trust.                                                                                                                                                                                          |
|   | (c) | Consideration.  Such shares of Common Stock were sold for cash, at a price of $.06 per share.                                                                                                                                                                                                            |
|   | (d) | Exemption from Registration Claimed.  These securities are exempt from registration under theSecurities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof andRule 506 thereunder, as a transaction not involving a public offering.  This purchaser was anaccredited investor. |

| 16.    | (a) | Securities Sold.  In September 2002, 300,000 shares of Company Common Stock were issued.                                                                                                                                                                                                                                                                      |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Philip A.Samuels.                                                                                                                                                                                                                                                                |
|   | (c) | Consideration.  Such shares of Common Stock were issued pursuant to a consulting agreementand were valued at $18,000.                                                                                                                                                                                                                                         |
|   | (d) | Exemption from Registration Claimed.  These securities are exempt from registration under theSecurities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof andRule 506 thereunder, as a transaction not involving a public offering.  This purchaser was asophisticated investor capable of evaluating an investment in the Company. |

|   | Subsequent to September 30, 2002, we have issued securities as follows: |   |
|--------|-------------------------------------------------------------------------|--------|

| 1.     | (a) | Securities Sold.  In November 2002, 2,000,000 shares of Company Common Stock wereissued.                                                                                                                                                                                                                                                                        |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such shares of Common Stock were issued to Michael T.Woods (1,600,000 shares) and HomeSync Corporation (400,000 shares).                                                                                                                                                                                                      |
|   | (c) | Consideration.  Such shares of Common Stock were issued pursuant to a plan and agreement ofreorganization.                                                                                                                                                                                                                                                      |
|   | (d) | Exemption from Registration Claimed.  These securities are exempt from registration under theSecurities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof andRule 506 thereunder, as a transaction not involving a public offering.  These purchasers weresophisticated investors capable of evaluating an investment in the Company. |

| 2.     | (a) | Securities Sold.  In November 2002, 200,000 shares of Company Common Stock were issued.                                                                                                                                                                                                                                                                         |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers.  Such shares of Common Stock were issued to George Coon(100,000 shares) and Richard Vorwaller (100,000 shares).                                                                                                                                                                                                                |
|   | (c) | Consideration.  Such shares of Common Stock were issued pursuant to a letter agreement.                                                                                                                                                                                                                                                                         |
|   | (d) | Exemption from Registration Claimed.  These securities are exempt from registration under theSecurities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof andRule 506 thereunder, as a transaction not involving a public offering.  These purchasers weresophisticated investors capable of evaluating an investment in the Company. |

| Item 3. Defaults upon Senior Securities. |   |
|------------------------------------------|--------|

|   | None. |
|--------|-------|

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

|   | None. |
|--------|-------|

| Item 5. Other Information. |   |
|----------------------------|--------|

|   | None. |
|--------|-------|

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

|   | (a) | Exhibits. |   |
|--------|-----|-----------|--------|

|   | Exhibit No. |   | Description                                                                     |
|--------|-------------|--------|---------------------------------------------------------------------------------|
|   | 99.1        |   | Certification Pursuant to 18 U.S.C. Section 1350 of President and CEO           |
|   | 99.2        |   | Certification Pursuant to 18 U.S.C. Section 1350 of Principal AccountingOfficer |

|   | (b) | Reports on From 8-K. |   |
|--------|-----|----------------------|--------|

|   | During the three months ended September 30, 2002, we filed no Current Report on Form 8-K. |
|--------|-------------------------------------------------------------------------------------------|

|   | Since September 30, 2002, we have not filed a Current Report on Form 8-K. |
|--------|---------------------------------------------------------------------------|

| SIGNATURES |
|------------|

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

|   | Dated: November 20, 2002. |
|--------|---------------------------|

|   | USURF AMERICA, INC. |
|--------|---------------------|
|   |                |

|   | By: | /s/ David M. Loflin |   |
|--------|-----|---------------------|--------|

|   |   | David M. LoflinChairman of the Boardand Principal AccountingOfficer |   |
|--------|--------|---------------------------------------------------------------------|--------|