U.S. SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549


                              Form 10-KSB


      [  X  ]  Annual Report Pursuant to Section 13 or 15(d) of the
               Securities Exchange Act of 1934 for the Fiscal Year
               Ended December 31, 2000


      [     ]  Transition Report Under 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.
               (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)


           NEVADA                                 72-1346591
(STATE OR OTHER JURISDICTION OF                 (IRS EMPLOYER
INCORPORATION OR ORGANIZATION)                IDENTIFICATION NO.)


           8748 Quarters Lake Road, Baton Rouge, Louisiana 70809
        (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)


                              (225) 922-7744
             (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)


     Securities Registered under Section 12(b) of the Exchange Act:


    Title of Each Class           Name of Exchange on Which Registered
    -------------------           ------------------------------------


       Common Stock                    The American Stock Exchange


   Securities Registered under Section 12(g) of the Exchange Act: None


Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject of such filing requirements for the past 90 days.
Yes [ X ]    No [    ]


Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [     ]


Registrant's revenues for its most recent fiscal year were $1,781,082.


The aggregate market value of the voting stock held by non-affiliates
computed based on the average of the closing bid and asked prices of such
stock as of April 11, 2001, was approximately $9,866,875.


The number of shares outstanding of the issuer's common equity as of April
11, 2000, was 19,526,770 shares of common stock, par value $.0001.


Documents Incorporated by Reference: Current Report on Form 8-K, date of
event: October 9, 2000; Current Report on Form 8-K, date of event: March 9,
2001; and Current Report on Form 8-K, date of event: April 4, 2001.


Transitional Small Business Disclosure Format (check one):  Yes [     ]
No [  X  ]



<PAGE>


                                    PART I


Item 1.  Description of Business

History


  In July 1999, we changed our name to "USURF America, Inc.", from
"Internet Media Corporation".  We were incorporated on November 1, 1996,
under the name "Media Entertainment, Inc.", to act as a holding company in
the wireless cable and community (low power) television industries.  Due to
current market conditions in the wireless cable industry, we have abandoned
efforts to develop our wireless cable properties.  In furtherance of our
plan to focus on the exploitation of our Quick-Cell wireless Internet
access products, we assigned all of our community (low power) television
properties to New Wave Media Corp.


  Since September 1998, we have acquired seven dial-up ISPs, the business
of www.e-tail.com and a web design firm.


Current Overview


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


  Our dial-up Internet access business has lost nearly all of its customers
and we have abandoned development of our e-commerce business.


Recent Developments


  On September 29, 2000, an involuntary bankruptcy petition was filed
against CyberHighway our wholly-owned subsidiary, in the Idaho Federal
Bankruptcy Court.  The petition was brought by ProPeople Staffing, CTC
Telecom, Inc. and Hawkins-Smith.  In December 2000, a settlement was
reached and the petitioning creditors and CyberHighway filed a joint motion
to dismiss this involuntary proceeding.  The joint motion to dismiss
requires the approval of CyberHighway's creditors.  However, some of
CyberHighway's creditors have objected to the dismissal of the proceeding.
The basis of the creditors' objection is their belief that CyberHighway's
as-yet unasserted damage claims against the original petitioning creditors
and their law firm represent CyberHighway's most valuable assets.  These
objecting creditors desire that these claims be adjudicated in the
bankruptcy court.  It is likely that, at some time in the future, a final
order of bankruptcy will be entered with respect to CyberHighway.  No
prediction of the timing of such an order can be made, although we believe
that such an order would come only after the final adjudication of the
claims described above.


  Due primarily to the involuntary bankruptcy proceeding, CyberHighway has
lost nearly all of its customers.  We do not expect that CyberHighway will
resume operations.


  On October 9, 2000, we executed a common stock purchase agreement with
Fusion Capital Fund II, LLC.  Under this agreement, Fusion Capital may
purchase up to $10 million of our common stock over a period of up to 25
months. (See "The Fusion Capital Transaction" below).


  With the recent merger between Qwest Communications and US West, we do
not expect to execute final agreements that embody our previously announced
letter of intent.  This change in circumstance will not hinder our
Quick-Cell business plan.


  We have abandoned our plan to establish ourselves as a national dial-up
ISP.  Because of this change, we terminated our contracts with two
companies that serve as Internet backbone providers, NaviNet, Inc. and
ioNET, Inc., a subsidiary of PSINet, Inc., with no liability accruing to us.


  In April 2001, we entered into a Quick-Cell reseller agreement with
Wireless WebConnect!, Inc., a Florida-based reseller of wireless Internet
access services.


The Fusion Capital Transaction


  General.  On October 9, 2000, we entered into a common stock purchase
agreement with Fusion Capital, as amended by letter agreement dated
December 27, 2000, pursuant to which Fusion Capital agreed to purchase up
to $10 million of our common stock. The selling price of the shares will be
equal to the lesser of (1) $20.00 or (2) a price based upon the future
market price of the common stock without any fixed discount to the market
price.


  We have filed with the SEC a registration statement on Form S-1, SEC File
No. 333-96027, that relates to the resale of the shares issued and to be
issued pursuant to the Fusion Capital agreement.


  Purchase of Shares Under the Fusion Capital Agreement.  Under the Fusion
Capital agreement, Fusion Capital will purchase shares of our common stock
by purchasing from time to time a specified dollar amount of our common
stock. Subject to the limits on purchase and the termination rights
described below, during each 30-day period during the term of up to 25
months, Fusion Capital will purchase $400,000 of our common stock.  The
term may be extended up to an additional 3 months at our election. This
amount may be decreased by us at any time. If our stock price equals or
exceeds $5.00 per share, we have the right to increase this monthly amount
up to the full remaining portion of the $10 million commitment. The selling
price per share is equal to the lesser of:


     -  the lowest sale price of our common stock on the day of submission
        of a purchase notice by Fusion Capital; or


     -  the average of any three closing bid prices of our common  stock,
        selected by Fusion Capital, during the 15 trading days prior to the
        date of submission of a purchase notice by Fusion Capital; or


     -  $20.00.


  The selling price will be adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar
transaction occurring during the fifteen (15) trading days in which the
closing bid price is used to compute the purchase price.  Even though the
Fusion Capital Agreement restricts Fusion Capital from owning more than
9.9% of our stock at any one time, this restriction does not prevent Fusion
Capital from selling a portion of its holdings and later purchasing
additional shares.  Thus, it is possible that the total number of shares
purchased by Fusion Capital would be greater than 9.9% of the
then-outstanding common stock.


  The following table sets forth the number of shares of our common stock
that would be sold to Fusion Capital upon our sale of common stock under
the Fusion Capital agreement at varying purchase prices:


           Number of shares                    Percent of our common
Assumed    to be issued upon                   stock outstanding as of
Per Share  a full purchase                     April 11, 2001, after
Purchase   under the Fusion                    giving effect to the issu-
Price      Capital agreement  Gross Proceeds   ance to Fusion Capital(1)
---------  -----------------  --------------   --------------------------


$.66(2)      6,000,000(3)      $ 3,960,000             23.50%
$1.00        6,000,000(3)      $ 6,000,000             23.50%
$5.00        2,000,000         $10,000,000              9.29%
$10.00       1,000,000         $10,000,000              4.87%
$20.00         500,000         $10,000,000              2.50%
-----------
(1) Based on 19,526,770 shares of common stock outstanding as of April 11,
2001. Includes the issuance of 800,000 shares of common stock issued to
Fusion Capital as a commitment fee, and the number of shares issuable at
the corresponding assumed purchase price set forth in the adjacent column.
(2) The closing price as of April 12, 2001 was $.66 per share.
(3) We estimate that we will issue no more than 6,000,000 shares to Fusion
Capital under the Fusion Capital agreement, excluding the shares of common
stock issued as a commitment fee, all of which are included in this
offering. If more than 6,000,000 shares are issuable to Fusion Capital
under the Fusion Capital agreement, we currently intend to terminate that
agreement without any payment or liability to Fusion Capital.


  Since we only plan to sell up to 6,000,000 shares to Fusion Capital under
the Fusion Capital agreement, the selling price of our stock sold to Fusion
Capital will need to average $1.67 per share for us to receive the maximum
proceeds of $10 million under that agreement.  Assuming a selling price of
$.66 per share (the closing sale price of the common stock on April 12,
2001) and the purchase by Fusion Capital of the full amount of shares
purchasable under the Fusion Capital agreement, proceeds to us would only
be approximately $3,960,000, unless we choose to issue more than 6,000,000
shares, which we have the right to do.


  Our Right to Prevent Purchases.  At any time or from time to time, so
long as the closing sale price of our common stock has been below $20.00
for the most recent three trading days, we shall have the unconditional
right to prevent any purchases by Fusion Capital effective upon three
trading days prior notice. To the extent we need to use the cash proceeds
of the sales of common stock under the Fusion Capital agreement for working
capital or other business purposes, we do not intend to restrict purchases
under the Fusion Capital agreement.


  Our Right to Mandatory Purchases.  If the closing sale price of our
common stock on each of the five trading days immediately prior to the
first trading day of any 30-day period is at least $5.00, we shall have the
right to require purchase by Fusion Capital of part or all of the
outstanding $10 million (in such amounts as determined by us), during such
time or times as Fusion Capital shall determine during the next two 30-day
periods, provided the closing sale price of our common stock during such
30-day period or periods is at least $5.00. Our right to require purchase
by Fusion Capital shall be exercisable by written notice from us to Fusion
Capital prior to the first trading day of any 30-day period.


  Our Termination Rights.  Prior to the date on which shares are purchased
by Fusion Capital, we shall have the right to terminate the common stock
purchase agreement at any time for any reason. After the date on which
shares are first purchased by Fusion Capital, if at any time the closing
sale price of our common stock for each of any ten consecutive trading days
is below $20.00, we may, at any time within the next three trading days,
give notice to Fusion Capital exercising our right to terminate the Fusion
Capital agreement. Such notice shall be effective three trading days after
Fusion Capital receives such notice. We may not exercise our termination
rights in anticipation of, or in connection with, a change of control or
other major transaction unless the change of control or other major
transaction has been publicly disclosed for at least 60 trading days.


  Effect of Performance of the Fusion Capital Agreement on USURF America
and Our Shareholders.  All shares registered in connection with the Fusion
Capital agreement will be freely tradable. It is anticipated that these
shares will be resold over a period of up to 25 months from the date of the
prospectus by which they are to be offered and resold by Fusion Capital.
The resale of a significant amount of these shares at any given time could
cause the trading price of our common stock to decline and to be highly
volatile. Fusion Capital may ultimately purchase all of the shares of
common stock issuable under the Fusion Capital agreement, and it may sell
all of the shares of common stock it acquires upon purchase. Therefore, the
purchases under the Fusion Capital agreement may result in substantial
dilution to the interests of other holders of our common stock. However, we
have the right to block purchases of our common stock and to require
termination of the Fusion Capital agreement, in some cases.


  No Short-Selling or Hedging by Fusion Capital.  Fusion Capital has agreed
that neither it nor any of its affiliates will engage in any direct or
indirect short-selling or hedging of our common stock during any time prior
to the termination of the Fusion Capital agreement.


  Events of Default.  Generally, Fusion Capital may terminate the Fusion
Capital agreement without any liability or payment to us upon the
occurrence of any of the following events of default:


     -  if for any legal reason the shares purchased by Fusion Capital
        cannot be resold pursuant to the prospectus by which they are to be
        offered for a period of 10 consecutive trading days or for more
        than an aggregate of 30 trading days in any 365-day period;


     -  suspension by the American Stock Exchange of our common stock from
        trading for a period of 10 consecutive trading days or for more
        than an aggregate of 30 trading days in any 365-day period;


     -  our failure to satisfy any listing criteria of the American Stock
        Exchange for a period of 10 consecutive trading days or for more
        than an aggregate of 30 trading days in any 365-day period;


     -  (1) notice from us or our transfer agent to the effect that we or
        the transfer agent intends not to comply with a proper request for
        purchase of shares under the Fusion Capital agreement; (2) our
        failure to promptly confirm to the transfer agent Fusion Capital's
        purchase notice; or (3) the failure of the transfer agent to issue
        shares of our common stock promptly upon delivery of a purchase
        notice;


     -  any material breach of the representations or warranties or
        covenants contained in the Fusion Capital agreement or any related
        agreements which has or which could have a material adverse affect
        on us, subject to a cure period of 10 trading days;


     -  if the number of shares to be issued to Fusion Capital reaches an
        aggregate amount that would require shareholder approval under our
        principal market regulations (to the extent not  previously
        obtained and then required) or otherwise cause us to breach our
        principal market rules and regulations;


     -  a default of any payment obligation of USURF America in excess of
        $1.0 million; or


     -  commencement of insolvency or bankruptcy proceedings by or against
        USURF America.


  Shares and Warrants Issued to Fusion Capital.  Under the terms of the
Fusion Capital agreement, Fusion Capital received 800,000 shares as part of
its commitment fee.  These shares may not be resold by Fusion Capital until
the earliest of termination of the Fusion Capital agreement, default under
the Fusion Capital agreement or approximately 25 months from the date of
the prospectus by which they are to be offered.  In connection with the
commencement of the Fusion Capital agreement, we have agreed to issue to
Fusion Capital, as part of its commitment fee, warrants to purchase 215,000
shares of our common stock at an exercise price of $.25 per share, warrants
to purchase 215,000 shares of our common stock at an exercise price of $.35
per share and warrants to purchase 215,000 shares of our common stock at an
exercise price of $.45 per share.  These warrants are exercisable by Fusion
Capital for a period of five years from their date of issuance.


  No Variable-Priced Financings.  Until the termination of the Fusion
Capital agreement, we have agreed not to issue, or enter into any agreement
with respect to the issuance of, any variable-priced equity or
variable-priced "equity-like" securities, unless we have obtained Fusion
Capital's prior written consent.


  Holdings of Fusion Capital Upon Completion of the Transaction.  Because
Fusion Capital may sell all, some or none of the common stock purchased by
it, no estimate can be given as to the amount of common stock that will be
held by Fusion Capital upon completion of the transaction.


  Use of Proceeds.  We will not receive any of the proceeds from the resale
of shares of our common stock by Fusion Capital; however, we may receive up
to $10 million from the sale of shares to Fusion Capital under the Fusion
Capital agreement. We are registering the shares for sale or resale to
provide Fusion Capital with freely tradable securities, but the
registration of these shares does not necessarily mean that any of these
shares will be offered or resold by Fusion Capital.


  Registration Rights Agreement.  In connection with the execution of the
Fusion Capital agreement, we executed a registration rights agreement with
Fusion Capital, which relates to all of the shares issuable to Fusion
Capital.  We are required under the registration rights agreement to
register all such shares of our common stock pursuant to a registration
statement and to keep such registration statement current for purposes of
Rule 424 under the Securities Act, for a period of up to five years.


  Finder's Fee.  Pursuant to the transactions contemplated by the Fusion
Capital agreement, we have issued, or will be obligated to issue, to our
investment banker, Gruntal & Co., L.L.C., as a finder's fee, 200,000 shares
of our common stock (these shares have been issued) and a total of 161,250
warrants (these warrants have not been issued).  All of the warrants to be
issued to Gruntal & Co. are exercisable for a period of five years from the
date of their issuance.


  In addition to the shares and warrants to be issued to Gruntal & Co., we
will be obligated to pay to Gruntal & Co., as a further finder's fee, a sum
of cash equal to 8% of the gross proceeds obtained by us pursuant to the
Fusion Capital agreement.


  The shares of our common stock issued or to be issued to Gruntal & Co.,
including the shares of our common stock underlying the warrants to be
issued to Gruntal & Co., are being registered on behalf of Gruntal & Co.


Industry Background


  Growth of the Internet; the World Wide Web.  The Internet, commonly known
as the World Wide Web, or simply the Web, is a collection of connected
computer systems and networks that link millions of public and private
computers to form, essentially, the largest computer network in the world.
The Internet has experienced rapid growth in recent years and is expected
to continue its growth.


  Internet Access.  Internet access services represent the means by which
ISPs interconnect business and consumer users to the Internet's resources.
Access services vary from dial-up modem access, like that provided by our
CyberHighway subsidiary, for individuals and small businesses to high-speed
dedicated transmission lines for broadband access by large organizations to
wireless Internet access systems, like our Quick-Cell wireless Internet
access system.


Strategic Relationships


  Financial Relationships.  We believe our investment banking relationship
with Gruntal & Co., L.LC., New York, New York, and our recently established
relationship with Fusion Capital are valuable strategic relationships as we
move ahead with efforts to exploit our wireless Internet access products.
Our efforts will require significant capital and we believe that these
relationships will, going forward, assist in obtaining some of the needed
capital.  However, we cannot assure you that this will be the case.


  Business Relationship.  We recently entered into a reseller agreement
relating to our Quick-Cell wireless Internet access products with Wireless
WebConnect!, Inc., a Florida-based subsidiary of Intellicall, Inc., a
publicly-held company.  WebConnect is a nationally-known reseller of
wireless Internet access services.  Based on statements made by WebConnect
personnel, we anticipate that this strategic alliance will provide us a
relatively rapid means of increasing the number of Quick-Cell customers.
However, because activities under this agreement have only recently begun,
there is no actual sales data available upon which you can judge
WebConnect's ability to resell our Quick-Cell products.


Wireless Internet Access


  What is Wireless Internet?  "Wireless Internet" is a new type of
communications spectrum recently designated by the FCC.  Wireless Internet
access requires a transmission facility maintained by an ISP employing a
wireless system and the user's modem (a transmitter/receiver modem)
equipped with an antenna.  Wireless Internet capability allows users to
access the Internet from a stationary computer or, in some situations, from
a mobile, lap-top computer.


  What is Quick-Cell?  "Quick-Cell" is the brand name of our proprietary
wireless Internet access system.  Each Quick-Cell system is comprised of
one or more server modems, or cells.  Server modems, which are less than
one cubic foot in size, are mounted on tall structures, towers, tall
buildings or billboards, for example.  The space needed for mounting the
server modems can be leased for an average monthly payment of about $500.
Each server modem relays transmitted data directly into the Internet via a
T1, or larger, telephone line.  The monthly charge for each T1 line ranges
from $600 to $1,500, depending on the market.


  Installed customer modems, which are slightly larger in size than a deck
of playing cards, transmit data to, and receive data from, a server modem.
Each customer modem is installed in the customer's computer and connected
by a thin cable to a small antenna that is mounted on the outside of the
customer's place of business or home, as the case may be.  The installation
process for customer modems is quite similar to that of cable television:
the installation crew installs the customer modem in the computer, mounts
the antenna outside, connects the modem and antenna with the cable and
tests the connection.  Depending on the market, each customer installation
is expected to cost between $40 and $80.


  The number of Quick-Cell server modems needed for a particular system
depends on a few factors:


     -  the geographic size of the city to be served each server modem's
        signal covers an area approximately seven miles in diameter;


     -  the population density of the city to be served since each server
        modem is capable of handling up to approximately 2,000 customers,
        the greater the population density, the greater the number of
        server modems required ;


     -  the terrain of the city to be served the hillier the terrain, the
        greater the number of server modems required; and


     -  the density of foliage of the city to be served more densely
        foliated areas require a greater number of server modems.


  Within a particular system, each additional server modem is configured to
share transmitted data with the other server modems, so as to provide an
uninterrupted connection to the Internet.  In a Quick-Cell system with
multiple server modems, the server modems are geographically located in a
honeycomb fashion, for technical reasons.


  Data transmission speeds remain constant within a Quick-Cell system's
transmission radius, regardless of the distance from the server modem.  On
the fringes of a Quick-Cell system's transmission radius, a customer's
connection may fade in and out, similar to the reception of distant AM
radio stations.  To avoid this circumstance, we will attempt to avoid
installing a customer modem within the fringe areas.


  Quick-Cell Equipment and Facilities.  Until February 2001, all of our
Quick-Cell modems were manufactured for us by OTC Telecom, San Jose,
California, using off-the-shelf circuit boards and other parts.  These
modems cost approximately $300 each, because we lacked capital to purchase
large quantities at a reduced per-modem cost.


  In February 2001, we completed the design and testing of our own modem
circuit board.  This advancement has freed us from our dependence on OTC
Telecom for modems.  We now are able to solicit competitive bids from
circuit board manufacturers and other parts suppliers, then assemble the
modems in our new facility located in Baton Rouge, Louisiana.  Our first
assembly run in this facility is planned for May 2001.  With these changes,
the modems will cost approximately $250 each.


  We will not construct towers on which to mount server modems.  Instead,
we will lease tower spaces, rooftop spaces or spaces on other tall
structures.  We have recently signed a 23-city tower lease agreement with
SBA Communications Corporation, a Boca Raton, Florida-based tower company.
We are currently negotiating with other tower companies for similar
agreements in other cities.  Based on our management's experience, securing
adequate locations to mount the server modems is not expected to impede
Quick-Cell system construction in any market.


  In each market, we will obtain the necessary fiber-optic telephone line
connections to the Internet from one of the many telecommunications
companies capable of providing an adequate Internet connection.  Based on
our past experience, we do not believe that we will encounter any
difficulty in obtaining needed connections to the Internet at acceptable
prices.


  Quick-Cell System Control Software.  We have developed software that
enables us to control the data transmission speed of each customer modem
within each Quick-Cell system, all from a single location.  With this
software, we are able to increase or decrease a customer's data
transmission speed in just a few minutes' time.  This software also permits
us to monitor easily each Quick-Cell server modem's bandwidth usage, which
will enable us to add a server modem to a Quick-Cell system that is
approaching maximum capacity prior to the time that system becomes
overloaded and its transmission speed slows.  This capability will enhance
our ability to provide our customers data transmission service at speeds
for which they contracted.


  Current Market.  We have one Quick-Cell system operating in Santa Fe, New
Mexico, where we serve approximately 120 customers.  We have been unable to
acquire more customers in Santa Fe, because we have lacked capital for
advertising and customer installation expenses.


  Reseller Agreement.  In April 2001, we entered into a Quick-Cell reseller
agreement with Wireless WebConnect!, Inc., a Florida-based wireless
Internet access reseller.  Prior to this time, WebConnect has acted
primarily as a reseller of a nationally-known wireless Internet access
service, known as "RicochetTM", which is offered by Metricom, Inc., San
Jose, California.  Our reseller agreement with WebConnect is for an initial
term of 10 years.


  Under the reseller agreement, WebConnect will select markets in which it
desires to market our Quick-Cell service and begin to pre-sell the service.
 When 200 customers have subscribed to the service, we will construct the
Quick-Cell system for that market, at WebConnect's expense, paid in
advance.  WebConnect will also purchase all customer modems from us.  We
will provide all customer installation services, at WebConnect's expense.
WebConnect will provide all first level customer support services, services
that do not require a visit to the customer's location.  We will provide
all second level customer support services, services that require technical
expertise and/or a visit to the customer's location, at WebConnect's
expense.  In addition, WebConnect will pay us a monthly per-customer
royalty that we expect to average about $12.  However, because WebConnect
has not yet begun selling our Quick-Cell service in any market, we cannot
state with certainty the actual average monthly per-customer royalties that
we will be paid by WebConnect.


  While WebConnect has achieved a high level of success in reselling
Metricom's RicochetTM wireless Internet service, we cannot assure you that
WebConnect will be successful in reselling our Quick-Cell service.


  It is possible that WebConnect's rate of sales will outstrip our ability
to obtain needed equipment, including customer modems, due to our lack of
capital, or ability to hire and train qualified installation crews.  In
these circumstances, we would be unable to take full advantage of
WebConnect's abilities, thereby limiting potential profits.


  Other Quick-Cell Marketing Strategies.  In the middle of 2000, we began
marketing our Quick-Cell systems to local exchange telephone companies,
independent telephone companies, digital subscriber line resellers and
Internet service providers.  We sold three Quick-Cell systems in a short
time.  Due to a lack of capital, we have suspended this marketing effort.


  These Quick-Cell systems were sold to companies located in Brownwood,
Texas, Wheeling, West Virginia, and San Juan, Puerto Rico.  No paying
customers use these systems, due to circumstances involving these companies
that are beyond our control.  We are unsure if and when the owners of these
Quick-Cell systems will begin to offer service to the public.


  In 1999, we licensed five small Internet service providers to operate our
Quick-Cell system.  Three of these companies never acted on the granted
licenses and they expired.  A licensed Quick-Cell system in Casper,
Wyoming, operated for three months, but was discontinued due to the sale of
the licensee's business.  The Santa Fe, New Mexico, licensee was acquired
by us in June 1999.


  Quick-Cell Sales and Marketing.  In cities in which we construct
company-owned Quick-Cell systems, we intend to employ telephone marketing
as the initial means for acquiring customers, primarily business customers.
 As a particular market begins to mature, we will employ mass media,
including radio advertising.  In conjunction with our mass media
advertising, we will employ a sales force that will focus primarily on
potential business customers.  This focus on business customers is based on
our management's informal study of Internet usage by businesses versus home
users that revealed businesses' higher demand for high-speed Internet
access.  Our management's decision may prove to have been incorrect, which
would significantly impair our ability to earn a profit.


  Without additional capital, we will not be able to construct another
company-owned Quick-Cell system.


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


  Competitive Features of Quick-Cell.  While we believe Quick-Cell
possesses some competitive advantages over other Internet access modes, it
currently has three significant competitive disadvantages:


     -  No wide-spread brand name recognition;


     -  Professional installation usually required; and


     -  Internet access only available locally, compared to dial-up
        Internet access that is available from virtually any telephone in
        any geographic location.


It is possible that we could overcome the first two listed disadvantages,
after a lengthy period of marketing and product research and development.
However, we currently lack capital to overcome either disadvantage.
Further, it is likely that we will never overcome the third disadvantage,
due to the inherent broadcast limitations of wireless technologies.


  We believe Quick-Cell offers the following competitive advantages:


     -  Speed: our Quick-Cell system is capable of data transmission speeds
        of  up to 10 Mbs; we expect that most of our customers' connections
        will transmit data at the rate of 256 kbs, the wireless equivalent
        of the well-publicized digital subscriber line (DSL) hard wire
        Internet access method; our Quick-Cell system offers far greater
        data transmission speeds than cellular telephone-based Internet
        access methods;


     -  Lower Cost: we expect that our Quick-Cell service will be offered
        at costs between 15% and 60% less than available hard-wire Internet
        access, depending on the particular market, that is, less than the
        sum of monthly Internet service provider charges and monthly
        telephone line charges; Quick-Cell will also be priced
        competitively with cellular-telephone-based and other wireless
        Internet access methods;


     -  No Telephone Company Involvement: our Quick-Cell customers will not
        be required to incur the expense of a hard-wire telephone line
        through which to access the Internet;


     -  Security/Encryption: our Quick-Cell system is capable of
        encrypting, or scrambling, its broadcast signal, thereby offering a
        high degree of security to customers; and


     -  Mobility: our Quick-Cell system is able to permit service personnel
        of a business to file contemporaneous reports, request and receive
        technical assistance and perform other computer-based functions
        from a customer's place of business or from a service vehicle, as
        long as the personnel remain within the Quick-Cell system's
        coverage area.


  Other Wireless Product.  In January 1998, we delivered our first
proprietary wireless DataLink system.  This DataLink system was delivered
to the Baton Rouge refinery of one of the largest international oil
companies, the refinery being the second largest in the U.S.  The DataLink
system was purchased to replace an existing hard-wire (T1 telephone line)
data transmission system.  The wireless DataLink system transfers data at
the rate of 2 megabytes per second.  Due to a lack of capital for marketing
and equipment, our management suspended DataLink-related activities.  It
was determined that our Quick-Cell products provided us the greater
opportunity of achieving short-term market share and profitability.  We
cannot assume you that our management's decision in the regard will prove
to have been correct or that we will ever earn a profit.


Dial-up Internet Access


  As recently as September 2000, our CyberHighway subsidiary provided
dial-up Internet service to about 25,000 customers, approximately 8,500
directly and 16,500 through affiliate-Internet service providers.  As of
the end of February 2001, we had lost nearly all of our dial-up customers.
This rapid demise of CyberHighway's business is due primarily to three
factors:


     -  In September 2000, we sold our affiliate-ISP business, due to its
        lack of profitability;


     -  In September 2000, an involuntary bankruptcy petition was filed
        against CyberHighway we believe we lost at least 6,000 customers
        due to this event;


     -  Our November 2000 switch-over to our contracted Internet service
        company's network we believe that we lost at least 2,000
        customers to due to this event.


  The remainder of lost customers is attributable to CyberHighway's normal
customer attrition rate, in light of the fact that CyberHighway ceased to
advertise its services following the involuntary bankruptcy filing.


  We do not intend to commit any resources towards the revitalization of
the business of CyberHighway.


  Customers and Markets.  We have lost nearly all of our dial-up Internet
access customers.  We do not believe we will ever reclaim any dial-up
customers.


  Sales and Marketing.  CyberHighway has ceased all sales and marketing
activities.  We do not expect that these activities will be resumed.


  Affiliate-ISP Program.  From its inception, CyberHighway employed an
affiliate marketing program, a technique designed to generate rapid
expansion of CyberHighway's subscriber base, which it did. However, the
affiliate-ISP program was terminated during 1999.  In September 2000, this
business was sold, due to its continuing monthly losses.


Customer Service and Support


  We are committed to the highest levels of customer satisfaction.  We
believe that maintaining high levels of customer satisfaction will remain
as a key competitive factor.  Currently, we provide wireless Internet
access customer support during normal business hours.  Our customer support
operations can be expected to expand, if and when we obtain needed capital.


Competition


  We believe that the primary competitive factors determining success as an
Internet access provider are: a reputation for reliability and high-quality
service; effective customer support; access speed; pricing; effective
marketing techniques for customer acquisition; ease of use; and scope of
geographic coverage.  We believe that we will be able to address adequately
all of these factors, except that we will not be able to offer scope of
geographic coverage for the foreseeable future.  It is also possible that
we will not address any of these competitive factors successfully.  Should
we fail to do so, our business would likely never earn a profit.  We
currently lack capital necessary to compete effectively.


  We face severe competition from other wireless Internet access providers,
such as from Metricom's RicochetTM product, as well as large, national
providers of cellular telephone service providers..


  The market for the provision of dial-up Internet access services, in
which our Quick-Cell wireless Internet access service will compete, is
extremely competitive and highly fragmented.  Current and prospective
competitors include many large, nationally-known companies that possess
substantially greater resources, financial and otherwise, market presence
and brand name recognition than do we.  We currently compete, or expect to
compete, for the foreseeable future, with the following: national Internet
service providers, numerous regional and local Internet service providers,
most of which have significant market share in their markets; established
on-line information service providers, such as America Online, which
provide basic Internet access, as well as proprietary information not
available through public Internet access; providers of web hosting,
co-location and other Internet-based business services; computer hardware
and software and other technology companies that provide Internet
connectivity with their products; telecommunications companies, including
global long distance carriers, regional Bell operating companies and local
telephone companies; operators that provide Internet access through
television cable lines; electric utility companies; communications
companies; companies that provide television or telecommunications through
participation in satellite systems; and, to a lesser extent, non-profit or
educational Internet access providers.


  With respect to potential competitors, we believe that manufacturers of
computer hardware and software products, as well as media and
telecommunications companies will continue to enter the Internet services
market, which will serve to intensify competition.  In addition, as more
consumers and businesses increase their Internet usage, we expect existing
competitors to increase further their emphasis on Internet access and
electronic commerce initiatives, resulting in even greater competition.
The ability of competitors or others to enter into business combinations,
strategic alliances or joint ventures, or to bundle their services and
products with Internet access, could place us at a significant competitive
disadvantage.  We currently lack capital necessary to compete effectively
and we may never obtain enough capital to permit us to compete effectively
in our markets.


  Moreover, we expect to face competition in the future from companies that
provide connections to consumers' homes, such as telecommunications
providers, cable companies and electrical utility companies. For example,
recent advances in technology have enabled cable television operators to
offer Internet access through their cable facilities at significantly
higher speeds than existing analog modem speeds. These types of companies
could include Internet access in their basic bundle of services or offer
such access for a nominal additional charge.  Any such developments could
reduce our market share, thereby impairing our ability to earn a profit.


Regulation


  Quick-Cell Wireless Internet Access.  Our Quick-Cell wireless Internet
access products operate in unregulated spectra, the 900 MHz and 2400 MHz
spectra (primarily the 2400 MHz spectrum), and we expect that such spectra
will remain unregulated.


  Regulation of Internet Access Services.  We provide Internet access, in
part, using telecommunications services provided by third-party carriers.
Terms, conditions and prices for telecommunications services are subject to
economic regulation by state and federal agencies.  As an Internet access
provider, we are not currently subject to direct economic regulation by the
FCC or any state regulatory body, other than the type and scope of
regulation that is applicable to businesses generally.  In April 1998, the
FCC reaffirmed that Internet access providers should be classified as
unregulated "information service providers" rather than regulated
"telecommunications providers" under the terms of the Federal
Telecommunications Act of 1996.  As a result, we are not subject to federal
regulations applicable to telephone companies and similar carriers merely
because we provide our services using telecommunications services provided
by third-party carriers.  To date, no state has attempted to exercise
economic regulation over Internet access providers.


  Governmental regulatory approaches and policies to Internet access
providers and others that use the Internet to facilitate data and
communication transmissions are continuing to develop and, in the future,
we could be exposed to regulation by the FCC or other federal agencies or
by state regulatory agencies or bodies.  In this regard, the FCC has
expressed an intention to consider whether to regulate providers of voice
and fax services that employ the Internet, or IP, switching as
"telecommunications providers", even though Internet access itself would
not be regulated. The FCC is also considering whether providers of
Internet-based telephone services should be required to contribute to the
universal service fund, which subsidizes telephone service for rural and
low income consumers, or should pay carrier access charges on the same
basis as applicable to regulated telecommunications providers. To the
extent that we engage in the provision of Internet or Internet
protocol-based telephony or fax services, we may become subject to
regulations promulgated by the FCC or states with respect to such
activities.  We cannot assure you that these regulations, if adopted, would
not adversely affect our ability to offer certain enhanced business
services in the future.


  Regulation of the Internet.  Due to the increasing popularity and use of
the Internet by broad segments of the population, it is possible that laws
and regulations may be adopted with respect to the Internet pertaining to
content of Web sites, privacy, pricing, encryption standards, consumer
protection, electronic commerce, taxation, and copyright infringement and
other intellectual property issues.  No one is able to predict the effect,
if any, that any future regulatory changes or developments may have on the
demand for our Internet access or other Internet-related services.  Changes
in the regulatory environment relating to the Internet access industry,
including the enactment of laws or promulgation of regulations that
directly or indirectly affect the costs of telecommunications access or
that increase the likelihood or scope of competition from national or
regional telephone companies, could materially and adversely affect our
business, operating results and financial condition.


Employees


  We have eight employees, including four officers.  All of our officers
have entered into employment agreements.


  None of our employees is covered by any collective bargaining agreement,
nor have we ever experienced a work stoppage.  Our management believes
employee relations to be good.  Much of our future success will depend, in
large measure, upon our ability to continue to attract and retain highly
skilled technical, sales, marketing and customer support personnel.


Risk Factors Concerning Us and Our Common Stock


  You should carefully consider the risks described below before you decide
to buy our common stock.  If any of the following risks actually occur, our
business, financial condition or results of operations would likely suffer.
In such case, the trading price of our common stock could decline, and you
could lose all or part of your investment.


Because we have a short operating history, there is a limited amount of
information about us upon which you can evaluate our business and potential
for future success.


  We were incorporated in 1996 and have only a limited operating history
upon which you can evaluate our business and prospects.  You must consider
the risks and uncertainties frequently encountered by early stage companies
in new and rapidly evolving markets, such as the market for wireless
Internet access services.  Some of these risks and uncertainties relate to
our ability to:


     -  gain access to sufficient capital with which to support
        anticipated growth;


     -  achieve customer acceptance of our Quick-Cell wireless Internet
        access products;


     -  expand our wireless Internet access subscriber base and
        subscriber-related revenues;


     -  compete successfully in a highly competitive market; and


     -  recruit and train qualified employees.


  We cannot assure you that we will successfully address any of these risks
and uncertainties.


Our independent auditor expressed substantial doubt about our ability to
continue as a going concern.


  In its opinion on our financial statements for the year ended December
31, 2000, our independent auditor, Postlethwaite & Netterville, expressed
substantial doubt about our ability to continue as a going concern.  This
means that, given our current lack of capital, our independent auditor has
substantial doubt that we will be in business one year from the date of its
opinion on our financial statements.  Please review the Independent
Auditor's Report and Note 17 to the consolidated financial statements
appearing elsewhere in this prospectus.


Unless we obtain $300,000 in new capital, we will be unable to remain in
business.


  During the next twelve months, we will need approximately $300,000 just
to continue our operations at their current levels.  Absent this amount of
funding, we will be able to continue our operations.


Some of our shareholders may have rights of rescission, due to potential
violations by us of Section 5 of the Securities Act.


  Since January 2000, a total of 5,302,085 shares of our common stock may
have been issued in violation of Section 5 of the Securities Act.  The
aggregate value assigned to these shares upon their issuance totalled
$5,719,502.  It is possible that each of the issuees of these shares has a
potential claim for rescission of their respective issuance transactions.
We do not possess capital with which to pay any such claims, if asserted.


We had an accumulated deficit of $33,655,426 (unaudited) as of December 31,
2000, and we expect to continue to incur losses for the foreseeable future.


  We have had substantial losses since our inception and our operating
losses may continue in the future.


  We have incurred annual operating losses since our inception. As a
result, at December 31, 2000, we had an accumulated deficit of
$33,655,426 (unaudited).  Our gross revenues for the years ended December
31, 2000,1999 and 1998, were $1,781,082 (unaudited), $2,547,225, and
$5,440, respectively, with losses from operations of $14,427,178
(unaudited), $10,446,254 and $1,029,024, respectively.  Our net losses for
the years ended December 31, 2000, 1999 and 1998, were $21,063,599
(unaudited), $10,930,163 and $1,037,626, respectively.  We cannot assure
you that we will experience revenue growth, or that we will be profitable
in the future.


  As we pursue full-scale sales and installation of our Quick-Cell wireless
Internet products, we expect our operating expenses to increase
significantly, especially in the areas of sales and marketing.  As a result
of these expected cost increases, we will need to generate increased
revenues to become profitable.  Accordingly, we cannot assure you that we
will ever become or remain profitable.  If our revenues fail to grow at
anticipated rates or our operating expenses increase without a commensurate
increase in our revenues, our financial condition will be adversely
affected.  Our inability to become profitable on a quarterly or annual
basis would have a materially adverse effect on our business and financial
condition.  Also, the market price for our stock could fall.


You will suffer substantial dilution in the net tangible book value of the
common stock you purchase.


  You will suffer substantial and immediate dilution, due to the lower book
value per share of our common stock compared to the purchase price per
share of our common stock.  We cannot predict your actual dilution.


We are unable to calculate the exact number of shares that we will issue
under the Fusion Capital agreement.


  Based on the closing price of our stock on April 12, 2001, of $.66 per
share, we would issue a total of 6,000,000 shares to Fusion Capital,
representing approximately 23.5% of our then-outstanding shares.


  However, due to the fact that the number of shares to be issued under the
Fusion Capital agreement depends on future market prices of our stock, we
are unable to calculate the exact number of shares that we will issue under
that agreement.


The lower our stock price at the time Fusion Capital makes a purchase, the
more shares of stock Fusion Capital will receive.


  Since the shares covered under the Fusion Capital agreement are issuable
at a floating rate based on our stock price, Fusion Capital will receive
more shares at the time it makes a purchase, the lower the price of our
stock.  The following table sets forth the number of shares issuable to
Fusion Capital at varying purchase prices:



           Number of shares                    Percent of our common
Assumed    to be issued upon                   stock outstanding as of
Per Share  a full purchase                     April 11, 2001, after
Purchase   under the Fusion                    giving effect to the issu-
Price      Capital agreement  Gross Proceeds   ance to Fusion Capital(1)
---------  -----------------  --------------   --------------------------


$.66(2)      6,000,000(3)      $ 3,960,000             23.50%
$1.50        6,000,000(3)      $ 6,000,000             23.50%
$2.00        5,000,000         $10,000,000             20.38%
$5.00        2,000,000         $10,000,000              9.29%
$10.00       1,000,000         $10,000,000              4.87%
$20.00         500,000         $10,000,000              2.50%
-----------
(1) Closing price on April 12, 2001, as reported by AMEX.
(2) In this circumstance, we intend to terminate the agreement without
payment or liability to Fusion Capital.


Sales of stock by Fusion Capital could depress the price for our stock.


  To the extent Fusion Capital sells its shares of stock, the market price
of our stock may decrease, due to the additional shares in the market.  In
turn, this could allow Fusion Capital to receive ever greater amounts of
our stock, the sales of which would continue downward pressure on, if not
further depress, our stock price.


Fusion Capital may purchase more than 9.9% of our common stock.


  Even though the Fusion Capital agreement restricts Fusion Capital from
owning any more than 9.9% of our stock at any one time, this restriction
does not prevent Fusion Capital from selling a portion of its holdings and
later purchasing additional shares.  Thus, it is possible that the total
number of shares purchased by Fusion Capital would be greater than 9.9% of
the then-outstanding common stock.


The existence of the agreement with Fusion Capital could cause downward
pressure on the market price of our common stock.


  Simply the existence of the Fusion Capital agreement and the attendant
dilution resulting from sales to Fusion Capital could cause holders of our
common stock to sell their shares, which could cause the market price of
our common stock to decline.  Also, prospective investors anticipating the
downward pressure on the price of our common stock due to the shares
available for sale by Fusion Capital could refrain from purchases or effect
sales in anticipation of a decline of the market price.


Even if our stock price decreases, we may elect to cause purchases of our
common stock under the Fusion Capital agreement, causing more shares to be
outstanding and resulting in substantial dilution.


  Because we are in need of funds with which to implement our Quick-Cell
business plan, it is possible that we will elect to cause purchases of our
stock under the Fusion Capital agreement, even if our stock price
decreases.  Fusion Capital's resale of shares purchased could cause the
market price for our stock to decline further.  Should these circumstances
occur, we may encounter difficulty in obtaining the maximum $10 million
under the Fusion Capital agreement.  This would cause us to reduce the rate
of our growth, due to a lack of capital.


We may be unable to obtain sufficient capital to sustain our business or
pursue our growth strategy.


  Currently, we do not have sufficient financial resources to implement our
business plan or grow our operations. Therefore, excluding any funding that
we might receive from Fusion Capital, we will need additional funds to
continue our operations and to grow our business.  Assuming we do not
receive any funding from Fusion Capital, there is no assurance that we will
be able to generate revenues that are sufficient to sustain our operations
and we would require additional sources of financing in order to satisfy
our working capital needs.  Should needed financing be unavailable or
prohibitively expensive when we require it, it is possible that we would be
forced to cease operations.


  We have designed a very aggressive growth strategy for the commercial
exploitation of our Quick-Cell wireless Internet access products.  This
strategy is expected to place a significant strain on our managerial,
operational and financial resources.  In particular, our planned wireless
Internet expansion will require significant capital with which to purchase
equipment necessary for the construction and implementation of systems.  If
we are unable to secure enough capital, we will be unable to achieve our
growth objectives.  We cannot assure you that we will be able to obtain
enough capital for our growth needs.


  Even if we are able to access $400,000 per month under the Fusion Capital
agreement, we will need additional capital to implement fully our growth
plans.  We only have the right to receive more than $400,000 per month
under the Fusion Capital agreement if our stock price equals or exceeds
$5.00 per share.  Our stock price may never reach this level.


We may not be able to secure enough Quick-Cell customer installation
personnel to keep up with demand.


  It is possible that we will be unable to secure Quick-Cell installation
crews, either through independent contractors or directly hiring personnel,
in large enough numbers that will allow us to install new Quick-Cell
customers in a timely manner.  Any unreasonable delays in installation can
cause customers to cancel their orders.  We may not be able to overcome
this potential barrier to market penetration.  Our failure to do so would
restrict our growth in revenues and severely impair our ability to earn a
profit.


Our future operating results may vary from period to period, and, as a
result, we may fail to meet the expectations of our investors and analysts,
which could cause our stock price to fluctuate or decline and inhibit our
ability to obtain funds under the Fusion Capital agreement.


  Our revenues and results of operations have fluctuated in the past and
can be expected to fluctuate significantly in the future, as we make
financial commitments to facilitate expected growth.  The following factors
will influence our operating results:


     -  access to funds for expansion-related capital expenditures,
        including Quick-Cell equipment purchases;


     -  market acceptance of our Quick-Cell wireless Internet access
        products;


     -  the rates of new wireless Internet access subscriber acquisition
        and retention;


     -  changes in our pricing policies or those of our competitors; and


     -  potential competition from large, well-funded national
        telecommunications companies.


  Our personnel costs, marketing programs and overhead cannot be adjusted
quickly and are, therefore, relatively fixed in the short term.  To the
extent that we begin to derive funding pursuant to the Fusion Capital
agreement, our operating expense levels will be based, in part, on our
expectations of future revenue.  If actual revenues are below our
expectations, our results of operations will suffer and we could be forced
to cease operations.


  Period-to-period comparisons of our results of operations will likely not
provide reliable indications of our future performance.


  Price fluctuations of our common stock could negatively impact our
ability to obtain needed capital under the Fusion Capital agreement.


Because we depend heavily on outside suppliers, our business may suffer,
should our suppliers fail to perform in a timely manner.


  We depend on third-party suppliers of hardware components and
telecommunications carriers to provide equipment and communications
capacity.  The failure of one or more of our suppliers to perform in a
timely manner could cause a significant disruption in our business.


Our failure to manage future growth would reduce our chance of earning a
profit.


  Without additional capital, we will be unable to expand significantly our
operations.  However, as we obtain funds under the Fusion Capital
agreement, we will begin to serve new geographic markets.  This expected
expansion will place a significant strain on our management and operating
systems.  In order to accommodate this sort of growth, we will need to hire
and retain appropriate management personnel.  We may not be able to hire
and retain enough qualified managers.  This circumstance would likely
hinder our growth and reduce our chance of earning a profit.


  If and when we experience our anticipated rapid growth, we may encounter
difficulties in developing and implementing needed internal systems,
including our recruiting and management systems.  Our failure to do so will
reduce the likelihood that we will earn a profit.


Our future success will depend on our ability to keep pace with the
Internet's rapid technological changes, evolving industry standards and
changing customer needs.


  The Internet access market is constantly evolving, due primarily to
technological innovations, as well as evolving industry standards, changes
in subscriber needs and frequent new service and product introductions.
New services and products based on new technologies or new industry
standards expose us to risks of equipment obsolescence.  We must use
leading technologies effectively, continue to develop our technical
expertise and enhance our existing services on a timely basis to remain
competitive in this industry.  We cannot assure you that we will be able to
do so.


  Our ability to compete successfully in our markets also depends on the
continued compatibility of our services with products and systems utilized
and sold by various third parties.  Our failure to do so could cause us to
lose a competitive position in our markets, thereby causing us to operate
less profitably.


Our growth plans depend on the continued growth in the demand for
high-speed Internet access.


  As Internet usage has become a common part of Americans' lives, a growing
number of consumers have begun to demand higher Internet-access speed than
can be provided by hard wire dial-up methods.  If our wireless Internet
access products are unable to address changes in consumers' preferences, we
would become less likely ever to earn a profit.


Our Quick-Cell wireless Internet access products are new and consumer
acceptance may not be achieved.


  Our Quick-Cell wireless Internet access products are new and do not enjoy
wide-spread name recognition among consumers.  If we are unable to achieve
consumer acceptance of our products, it is unlikely that we would be able
to earn a profit.


We could fail to overcome the severe competition for Internet access
customers, which would impair our ability to earn a profit and cause our
overall financial condition to deteriorate.


  The market for Internet access services is extremely competitive and
highly fragmented.  As there are no significant barriers to entry, we
expect that competition will intensify over time.


  Our competitors include many large, nationally-known companies, such as
America Online and Earthlink.  These and other companies possess greater
resources, particularly access to capital sources, market presence and
brand name recognition than do we.  In addition, we will face competition
from other wireless Internet access providers, such as Metricom, and
larger, national cellular telephone service providers.  If we are unable to
overcome this severe competition, we do not expect that we would earn a
profit and our overall financial condition would decline.


We depend on our key personnel; the loss of any key personnel could disrupt
our operations, adversely affect our business and result in reduced revenues.


  Our future success will depend on the continued services and on the
performance of our senior management and other key employees.  In
particular, we depend on our president, David M. Loflin.  While we have
entered into an employment agreement with Mr. Loflin, the loss of his
services for any reason could seriously impair our ability to execute our
business plan, which could reduce our revenues and have a materially
adverse effect on our business and results of operations.  We have not
purchased any key-man life insurance.


Our directors and executive officers own enough of our common stock
effectively to control directors' elections and thereby control our
management policies.


  Our directors and executive officers own approximately 21% of our common
stock.  Two of our directors, as well as three other persons, have entered
into a voting agreement relating to the voting in elections of directors.
Currently, approximately 21% of our outstanding shares of common stock are
subject to this voting agreement.  These shareholders will be able
effectively to control the outcome of corporate actions requiring
shareholder approval by majority action.  Their stock ownership may have
the effect of delaying, deferring or preventing a change in control of
USURF America.


Our business plan is not based on independent market studies, so we cannot
assure you that our strategy will be successful.


  We have not commissioned any independent market studies concerning the
extent to which customers will utilize our services and products.  Rather,
our plans for implementing our business strategy and achieving
profitability are based on the experience, judgment and assumptions of our
key management personnel, and upon other available information concerning
the communications industry.  If our management's assumptions prove to be
incorrect, we will not be successful in establishing our wireless Internet
access business.


We may not be able to protect our intellectual property rights, which could
dramatically reduce our ability to earn a profit.


  We currently rely on common law principles for the protection of our
copyrights and trademarks and trade secret laws to protect our proprietary
intellectual property rights.  We do not intend to file patent applications
relating to our Quick-Cell wireless Internet access products, until
completion of future generations of the products.  We have not filed
trademark applications relating to the "Quick-Cell" and "USURF Wireless
Internet" brand names.


  Without patent or trademark protection, the existing trade secret and
copyright laws afford us only limited protection.  Third parties may
attempt to disclose, obtain or use our technologies.  Others may
independently develop and obtain patents or copyrights for technologies
that are similar or superior to our technologies.  If that happens, we may
need to license these technologies and we may not be able to obtain
licenses on reasonable terms, if at all, thereby causing great harm to our
business.


The market price of our common stock will continue to be extremely
volatile, and it may drop unexpectedly.


  The market price of our common stock has fluctuated significantly in the
past and we expect this volatility to continue in the future.  Since
January 2000, trading prices for our common stock have ranged from $.1875
per share to $11.00 per share.  It is possible that the market price of our
common stock could fall below the price you paid for your shares of our
common stock.


  The stock prices for many high technology companies, especially those
that base their businesses on the Internet, recently have experienced wide
fluctuations and extreme volatility.  This volatility has often been
unrelated to the operating performance of such companies, so our stock
price could decline even if our wireless Internet access business is
successful.  Also, following periods of volatility in the market price of a
company's securities, securities class action claims frequently are brought
against the subject company.  To the extent that the market price of our
shares falls dramatically in any period of time, shareholders may bring
claims, with or without merit, against us.  Such litigation would be
expensive to defend and would divert management attention and resources
regardless of outcome.


Nearly all of our shares will be eligible for future sale, which could
cause the market price for our common stock to decline.


  Upon completion of our pending registration statement, nearly all of our
outstanding shares of our common stock owned by non-affiliates will be
eligible for resale to the public.  This amount of common stock represents
a significant overhang on the market for our common stock.  The sale of a
significant amount of these shares at any given time could cause the
trading price of our common stock to decline and to be highly volatile.


Cautionary Statement


  This Annual Report on Form 10-KSB contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934.  All
statements above, other than statements of historical facts included in
this Annual Report on Form 10-KSB, including those under "THE FUSION
CAPITAL TRANSACTION", "STRATEGIC RELATIONSHIPS" AND "WIRELESS INTERNET
ACCESS", are forward looking in nature.  These statements are subject to
risks and uncertainties, including:


     -  our ability to obtain additional capital when we need it and at the
        times we need it;


     -  changes in prices or demand for our products as a result of
        competitive actions or economic factors;


     -  changes in the cost of equipment; and


     -  unexpected changes in operating costs.


  Should one or more of these risks or uncertainties, among others,
materialize, our actual operating results may vary materially from those
estimated, anticipated or projected.  Although we believe that the
expectations reflected by these forward-looking statements are reasonable
based on information currently available to us, we cannot assure you that
our expectations will prove to have been correct.  All forward-looking
statements included in this Annual Report on Form 10-KSB and all subsequent
oral forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by these cautionary
statements.


Item 2.  Description of Property


General


  We own all of the equipment necessary for the operation of a
state-of-the-art network operations center.  However, because of our
agreement with Dialup USA, we no longer maintain this center.  We intend to
utilize this equipment in facilitating the expected growth of our wireless
Internet access business.  In addition, we own office equipment necessary
to conduct our business.


  In Baton Rouge, Louisiana, we lease approximately 650 square feet for our
executive offices, for a monthly rental of approximately $800, and a 1,600
square foot modem assembly facility, for a monthly rental of approximately
$1500.  We lease approximately 500 square feet in Santa Fe, New Mexico, for
a monthly rental of approximately $800.  CyberHighway has given up our
leased premises.


Wireless Cable Properties


  We own the rights to wireless cable channels in Poplar Bluff, Missouri,
Lebanon, Missouri, Port Angeles, Washington, The Dalles, Oregon, Sand
Point, Idaho, Fallon, Nevada, and Astoria, Oregon.  We have abandoned our
efforts to develop these wireless cable properties, due to current market
conditions.  Rather, because our Quick-Cell system can be adapted for use
on the wireless cable frequencies, we intend to develop these properties
into operating wireless Internet systems, at such time as two-way data
transmission on these frequencies is permitted.  We cannot predict when
this permission will be granted, if ever.


Intellectual Property


  We currently rely on common law principles for the protection of our
copyrights and trademarks and trade secret laws to protect our proprietary
intellectual property rights.  We do not intend to file patent applications
relating to our Quick-Cell wireless Internet access products, until
completion of future generations of the products.  We have not filed
trademark applications relating to the "Quick-Cell" and the "USURF Wireless
Internet" brand names.


  We have received authorization to use the products of each manufacturer
of software that is bundled in its software for users with personal
computers operating on the Windows or Macintosh platforms. While certain of
the applications included in our start-up kit for Internet access services
subscribers are shareware that we have obtained permission to distribute or
that are otherwise in the public domain and freely distributable, certain
other applications included in our start-up kit have been licensed where
necessary.  We currently intend to maintain or negotiate renewals of all
existing software licenses and authorizations as necessary.  We may also
enter into licensing arrangements for other applications, in the future.



Item 3.  Legal Proceedings


Net 1 Acquisition Transaction


  In September 1999, we tendered the acquired shares of capital stock of
Net 1, Inc. for rescission.  We had intended to commence arbitration to
pursue our rescission claim.  However, one of the former owners of Net 1,
Knud Nielsen, III, instituted arbitration, through the American Arbitration
Association, and sought to enforce certain registration rights associated
with a portion of the shares of our common stock received by him in the
acquisition transaction.  We presented the rescission claim as a
counterclaim in the arbitration proceeding.  In October 2000, this
litigation was settled, with the acquisition being rescinded in its
entirety.  We issued 250,000 shares of our common stock to the former
owners of Net 1 in settlement of certain claims.


CyberHighway Involuntary Bankruptcy


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


Other Litigation


  In November 2000, CyberHighway requested and received a temporary
restraining order against Darrell Davis, formerly one of our officers, and
his wife, Deanna Davis.  We have alleged that the Davises have diverted
dial-up customers from CyberHighway to a company controlled by him, all
while he was an employee of USURF America.  We expect that a hearing for
our motion for a permanent injunction will occur in the very near future.
In addition, we are seeking monetary damages in this action.  This case is
in its early stages and no prediction as to its final outcome can be made.
This case is styled: CyberHighway, Inc. versus Deanna Davis, individually
and d/b/a Cyber-Trail, Inc., and Darrell D. Davis, 19th Judicial District
Court, Parish of East Baton Rouge, State of Louisiana.  Patrick F. McGrew,
Esquire, is our counsel in this case.


  In January 2000, we instituted arbitration proceedings against
Christopher L. Wiebelt, our former vice president of finance and chief
financial officer.  We have alleged that Mr. Wiebelt violated certain terms
of his employment agreement and are seeking damages resulting from those
violations.  This case is in its early stages and no prediction as to its
outcome can be made.  This case is styled: USURF America, Inc. versus
Christopher L. Wiebelt, American Arbitration Association, Case No.
71-160-00087-01.  The law firm of Newlan & Newlan is our counsel in this
proceeding.


Possible Claim


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


Potential Legal Proceeding


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


Item 4.  Submission of Matters to Vote of Security Holders


  No matters were submitted to a vote of our security holders during the
fourth quarter of the fiscal year ended December 31, 2000.


                               PART II


Item 5.  Market for Common Equity and Related Stockholder Matters


Market Information


  From 1997 through October 14, 1999, our common stock was traded on the
NASD's OTC Bulletin Board, first under the symbol "MEME", then under the
symbol "USRF".  The table below sets forth, for the periods indicated, the
high and low bid and asked prices for our common stock, as reported by the
OTCBB:


                           High     High      Low        Low
Quarter/Period Ended:      Bid      Ask       Bid        Ask


December 31, 1997          $.75     $1.625    $.0625     $.21875


March 31, 1998             $2.00    $3.00     $.03125    $.08
June 30, 1998              $2.00    $2.0625   $.8125     $.875
September 30, 1998         $1.50    $1.625    $.75       $.84375
December 31, 1998          $5.3125  $5.50     $.50       $.53125


March 31, 1999             $13.50   $13.75    $3.34375   $2.00
June 30, 1999              $7.375   $5.6875   $3.5625    $3.60
September 30, 1999         $8.8125  $8.875    $3.28125   $3.4375
10/1/99 thru 10/14/99      $3.8125  $3.9375   $2.875     $3.00


  These prices represented quotations between dealers without adjustment
for retail mark-ups, mark-downs or commissions, and may not have
necessarily represented actual transactions.


  Beginning on October 15, 1999, our common stock began to be traded on the
American Stock Exchange, under the symbol "UAX".  The table below sets
forth, for the period indicated, the high and low sales prices for our
common stock, as reported by the American Stock Exchange:


      Quarter/Period Ended:               High       Low


      10/15/99 thru 12/31/99              $5.875     $2.50


      March 31, 2000                      $11.00     $3.625
      June 30, 2000                       $6.00      $2.25
      September 30, 2000                  $2.50      $.875
      December 31, 2000                   $1.25      $.1875


      March 31, 2001                      $.80       $.22


  You should note that our common stock, like many newly-traded,
technology-related stocks, has experienced significant fluctuations in its
price and trading volume.  We cannot predict the future trading patterns of
our common stock.


Holders


  On April 11, 2001, the number of record holders of our common stock,
excluding nominees and brokers, was 1,121, holding 19,526,770 shares.


Dividends


  We have never paid cash dividends on our common stock.  We intend to
re-invest any future earnings for the foreseeable future.


  Our board of directors has declared property dividends comprised of
common stock of three private companies acquired by us.  These dividends of
stock are: 1,500,000 shares of New Wave Media Corp., in exchange for all of
our community-television-related assets; 400,000 shares of Argo Petroleum
Corporation, in exchange for 10,000 shares of our common stock; and 800,000
shares of Woodcomm International, Inc., in exchange for 7,500 shares of our
common stock.  The aggregate value of these dividends is $57,519.


  None of the three dividend distributions will occur unless and until a
registration statement relating to each distribution transaction has been
declared effective by the SEC.



Item 6.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations


Background


  We were organized to operate in the wireless cable and community (low
power) television industries.  Due to existing market conditions, we have
abandoned our wireless cable business.  Because our Quick-Cell wireless
Internet access system can be adapted for use on the wireless cable
frequencies, we believe our frequencies possess future value.  However,
these frequencies will not be of value to us, unless and until the FCC
approves two-way communications on them.  We cannot predict if this
approval will be granted.  If FCC approval is not granted during 2001, our
wireless-cable-related assets will become impaired and their book value
written off.


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


  Since 1998, we have acquired seven dial-up Internet service providers,
including CyberHighway, the business of www.e-tail.com and a web design
firm, none of which was an affiliated company, nor were any acquired from
an affiliate.  All but one of these acquisitions were made for shares of
our stock.  All of these acquisitions were accounted for as a purchase,
which means that we did not include past operations of the acquired
businesses in our historical statements of operations.  Also in connection
with these acquisitions, we recorded large amounts of amortizable customer
base and goodwill values, as a result of the acquisitions' valuations
exceeding the values of the acquired customer bases and assets.


  All of the customers of the acquired Internet access providers were
assimilated into the dial-up operations of our CyberHighway subsidiary,
which has few remaining customers please see the discussion under
"CyberHighway Bankruptcy" below.


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


Current Overview


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


  As CyberHighway's business has dwindled to near nothing while in
bankruptcy, we have determined not to attempt to revive of our dial-up
Internet access business and, for the foreseeable future, we have abandoned
development of our e-commerce business.


  In October 2000, we entered into the Fusion Capital agreement, pursuant
to which Fusion Capital may purchase up to $10 million of our common stock.
 Please see the discussion under the heading "The Fusion Capital
Transaction", for a more thorough explanation of this agreement.  Should we
obtain this funding, we would be able to begin to pursue our wireless
Internet business plan.  We have commenced marketing of our Quick-Cell
service through a reseller.  We will need more capital thereafter, as we
continue to expand our wireless Internet business.  We may never possess
enough capital to permit us to earn a profit.


CyberHighway Bankruptcy


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


  The January 1999 acquisition of CyberHighway fundamentally altered our
company.  Our annual revenues went from nearly zero to about $2.5 million.
Beginning in the last half of 1999, operating losses at CyberHighway,
primarily personnel costs and leased telephone-line charges, steadily
increased, while revenues began to decrease slightly each quarter.  This
trend continued throughout 2000.


  As a means to achieve immediate cost savings at CyberHighway, in
September 2000, the following actions were taken:


     -  CyberHighway sold its affiliate-ISP business for $40,500, in
        cash; and


     -  CyberHighway contracted with Dialup USA for all "backroom" and
        customer support services, which took effect at the end of
        October 2000.


These actions did reduce monthly operating costs by approximately $50,000.


  However, the involuntary bankruptcy proceeding started the demise of
CyberHighway's business, in effect rendering our September 2000 actions
meaningless.  Since that time, CyberHighway's company-owned dial-up
customer base has gone from approximately 8,500 to nearly none.  The filing
of the involuntary bankruptcy and CyberHighway's switch-over to the network
of Dialup USA were the primary causes of CyberHighway's customer base
demise.  We will not apply any available future capital to the
revitalization of our dial-up Internet access business.


  This sudden and permanent demise of CyberHighway's customer base has
caused our intangible assets, including goodwill, relating to those
customers to become worthless.  The write-off of these intangible assets
totalled $18,229,229, as reflected in our December 31, 2000, financial
statements.  Please see the discussion below under the heading "Liquidity
and Capital Resources" for more information on this topic.


Shareholder Loans - Conversion to Equity


  In August 2000, our president, David M. Loflin, converted all loan
amounts owed to him at that time, including accrued interest, into a total
of 774,162 shares of our common stock.  The total amount of indebtedness
converted to common stock was $967,703.  Since August 2000, Mr. Loflin has
made small loans to us to ease periods of restricted cash flow.


Results of Operations


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


  Until the involuntary bankruptcy was filed against CyberHighway in
September 2000, our revenues for 2000 were approximately 10% below 1999's
nine-month results.  Our revenues for the last three months of 2000
diminished rapidly month to month.


  We will report nominal revenues for the first quarter of 2001, most of
which are attributable to our Quick-Cell system in Santa Fe, New Mexico.
With the demise of CyberHighway, any future revenues will be derived from
sales of our Quick-Cell wireless Internet access service.  We currently
lack the capital necessary to pursue our Quick-Cell business plan, and we
may never possess enough capital with which to exploit fully our Quick-Cell
products.  In this circumstance, it is likely that we would never earn a
profit.


  Prior to 1999, nearly all of our revenues were generated by our
now-defunct community television segment.  During 1999 and 2000, all of our
revenues were generated by our Internet segment.  Before the demise of
CyberHighway, our revenues were derived primarily from monthly customer
payments for dial-up access and from per-customer royalty payments from our
CyberHighway affiliate-ISPs.


  Beginning in March 2000, we began initial Quick-Cell wireless Internet
access operations in Santa Fe, New Mexico.  Currently, we have
approximately 120 Quick-Cell customers.  Throughout 2000, these customers
were in their one-year "free-use" period.  Beginning in March 2001, we
began to receive monthly payments from the customers who had completed
their one-year of free use.  The lack of growth of our wireless Internet
access business during 2000 is due to the fact that our available monies
were applied to CyberHighway expenses and corporate overhead.  We had no
available capital to apply to the expansion of the Santa Fe market.


  In the middle of 2000, we began marketing our Quick-Cell systems to local
exchange telephone companies, independent telephone companies, digital
subscriber line resellers and Internet service providers.  We sold three
Quick-Cell systems in a short time, and received approximately 200
additional indications of interest via e-mail and telephone from other
telecommunications companies and others, 25% of which our management
considered to be of a serious nature.  Due to a lack of capital, however,
this marketing effort was suspended before we pursued sales to the other
inquiring companies.  No paying customers use these systems, due to
circumstances involving these companies that are beyond our control.
During 2001, we do not expect to derive significant revenues from customer
modem sales to these Quick-Cell purchasers.


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


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


  Under our reseller agreement with WebConnect, we expect to derive
revenues as follows:


     -  WebConnect's purchase of each Quick-Cell cell site;


     -  WebConnect's purchase of all customer modems;


     -  Charges for installation services on behalf of every customer
        acquired by WebConnect; and


     -  Monthly per-Quick-Cell-customer royalties while we anticipate
        that this monthly per-customer royalty will average approximately
        $12.00, we cannot assure you that the monthly per-customer
        royalty will be that high; in any event, given the number of
        customers that can use a single Quick-Cell cell site,
        approximately 2,000, the lowest monthly per-customer royalty to
        be paid by WebConnect will be about $9.00.


  The results of operations for 1999 and 2000, when compared to those
expected for 2001, will not be similar.  We expect our revenues for 2001 to
be significantly below those of 1999 and 2000, since we no longer will
derive revenues from the operations of CyberHighway.  In 2001, we will
produce significant revenues only if:


     -  our Quick-Cell reseller is as successful selling our wireless
        Internet access products as it has been in the past in reselling
        a competing wireless Internet access service; or


     -  we are able to obtain at least $3,000,000 under the Fusion
        Capital agreement.  Our reseller may not be successful enough for
        us to make a profit, nor can we assure you that funding under the
        Fusion Capital agreement will permit us to make a profit.


  Year Ended December 31, 2000, versus Year Ended December 31, 1999.
During 1999 and 2000, all of our revenues were generated by CyberHighway's
dial-up Internet access operations.  We derived our revenues from monthly
customer payments for dial-up Internet access, which averaged approximately
$18.00 per customer.  Also, we derived revenue from per-customer royalty
payments from our CyberHighway affiliate-ISPs, which averaged approximately
$1.75 per customer.  Due to the recent demise of CyberHighway, our revenues
for most of 2001 can be expected to be significantly below our revenue
levels of 1999 and 2000.  However, we can make no prediction of our actual
revenues.


  Our operating results for 2000 and 1999 are summarized in the following
table:


                           2000              1999
                       (unaudited)         (audited)
Revenues                $1,781,082         $ 2,547,225
Cost of Goods Sold      2,145,955            1,152,721
Gross Profit (loss)       273,326            1,394,504
Operating Expenses     14,153,852           11,860,758
Other Expense           8,231,845            2,117,070
Loss from Operations   14,427,178           10,466,254
Net Loss               21,063,599           10,930,163


  During each of the reporting periods, we issued a relatively large number
of shares of our common stock for consulting services or as bonuses.  The
value of the consulting services received under each agreement has been
expensed in equal monthly amounts over their respective terms.


  Our net loss for 2000 is attributable largely to the write-off all of our
intangible assets relating to CyberHighway, resulting from the demise of
the business of CyberHighway.  Also, professional fees of $2,811,856
(unaudited), substantially all of which is attributable to stock issuances
under various consulting agreements, and $2,574,353 (unaudited) in salary
and commissions was expensed, $875,000 of which is the result of stock
bonuses to three officers.


  Our loss from business operations during 2000 was $273,326 (unaudited).
This loss is attributable to expenses, primarily personnel costs and leased
telephone line charges, that exceeded revenues.


  During 2000, we incurred the following significant charges against our
earnings:


     -  $875,000 750,000 shares of our common stock were issued to
        three vice presidents as bonuses, which appears in our statements
        of operations under the "Salary and Commissions" line item.


     -  $2,811,856 this amount was incurred as professional fees,
        substantially all of which is attributable to the issuance of
        stock for professional services.


     -  $9,239,310 this amount is an impairment loss relating to the
        demise of the business of CyberHighway and is comprised of
        amortization of our customer base, goodwill and other
        intangibles.


  Our acquisition and subsequent rescission of the acquisition of Net 1,
Inc. affected our 1999 and 2000 financial statements in different ways, as
follows:


     -  On August 23, 1999, we acquired Net 1, Inc.  Net 1 is primarily
engaged as an Internet service provider in Alabama.  In September 1999, we
tendered the shares of capital stock obtained in the acquisition of Net 1
for rescission of the transaction.  This rescission was based on perceived
material misstatements made by one of the principals of Net 1.  However,
legally, we were still the owner of the outstanding shares of Net 1 at
December 31, 1999, and were required by generally accepted accounting
principles to record Net 1 as a wholly-owned subsidiary from the date of
acquisition.


     -  It was discovered during the arbitration proceedings between us and
the former owners of Net 1 that no activity had occurred in Net 1 after the
acquisition.  The customer base was moved to an unrelated company by a
former owner, and all activity was transacted in the unrelated company.
Therefore, no revenues or expenses were incurred by Net 1 from the date of
acquisition, August 23, 1999, through December 31, 1999.


     -  The total cost of the acquisition was $1,164,561, which exceeded
fair value of the net assets of Net 1 by $1,164,561.  The excess was deemed
to be impaired at December 31, 1999, due to the change in the operating
environment and was recorded as an impairment loss in our 1999 financial
statements appearing elsewhere in this prospectus.


     -  On October 12, 2000, the acquisition of Net 1 was rescinded.
Included in the terms of the settlement agreement was the return to us of
the 250,000 shares issued by us in the original transaction. We then issued
250,000 shares of our stock in settlement of the arbitration.  The
settlement agreement also called for one of the former owners of Net 1 to
assume a $50,000 liability, that was recorded by us upon the acquisition.
The total gain on the recission of the Net 1 transaction, $961,436
(unaudited), has been recognized in our 2000 financial statements appearing
elsewhere in this prospectus


  For 1999, our net loss is attributable in large measure to the
depreciation and amortization of acquired customer bases, goodwill and
other intangibles of $7,653,924, while an additional $1,945,935 in
professional fees, substantially all of which is attributable to stock
issuances under various consulting agreements, and $1,603,556 in salary and
commissions were expensed.


  We issued 566,000 shares of common stock under consulting agreements
during 1999; these shares were valued for financial accounting purposes at
$2,216,000, in the aggregate. $2,000,000 of this amount is being expensed
in equal monthly amounts over five years, while the remaining $216,000 of
this amount was expensed in equal monthly amounts over periods ranging from
three to six months.


  In our 1999 financial statements, we incurred two significant charges
against our earnings, which appear in our statement of operations under the
"Other Income (Expense)" heading:


     -  As described above, we incurred a charge of $1,164,561 arising out
of our acquisition, and subsequent tender for rescission, of Net 1.


     -  We incurred a charge of $957,075 arising out a settlement agreement
and mutual release, which settled legal proceedings in which USURF America
and CyberHighway were involved.  These legal proceedings were settled in
full by the issuance of 340,000 shares of our common stock to the adverse
parties and we paid $43,325 for reimbursement of their respective
attorneys' fees.  The 340,000 shares were valued at $2.6875 per share, or
$913,750, in the aggregate.  The price per share assigned to these shares
was the closing price of our common stock on November 30, 1999, as reported
by AMEX.


  For 1999 and 2000, our statements of operations reflect an income tax
benefit of $1,595,424 (unaudited) and $1,653,161, respectively, resulting
from the difference in the bases of the acquired customer bases for book
versus tax purposes.  Due to the demise of the business of CyberHighway,
our statement of operations for 2001 will not contain a similar tax benefit.


  Community Television Segment.  During 1999, this segment had no revenues
and incurred a nominal loss from operations.  As discussed above, effective
July 1, 1999, we assigned all of our community television properties to New
Wave Media Corp. and is now defunct.  This segment was discontinued as of
that date and will not generate any revenues in the future.


  Wireless Cable Segment.  The wireless cable segment has had no operating
activity since 1997.  As described above, we have ceased, for the
foreseeable future, our wireless cable activities.


Liquidity and Capital Resources


  General.  Since our inception, we have had a significant working capital
deficit.  Prior to our January 1999 acquisition of CyberHighway, we had no
material revenues and we operated from a severely illiquid position.
Following the CyberHighway acquisition and until the recent demise of
CyberHighway's business, we generated significant monthly revenues, yet
continued to have a significant working capital deficit.  Currently, we are
substantially illiquid, although we do possess approximately $200,000 in
cash, the result of recent non-public stock sales to private investors.
Without additional capital, it is possible that we would be forced to cease
operations.


  Our Capital Needs.  To sustain our current level of operations for the
next twelve months, we will require additional capital of approximately
$300,000.  To accomplish our goals of expanding our Quick-Cell business, we
will require at least $3 million.  If we are unable to obtain this needed
capital, we could be forced to cease our operations.


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


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


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


     -  Direct T1 telephone line connection from the server modem to the
Internet projected average cost: $1,200 per month; and


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


Each Quick-Cell cell site added to an existing system will cost
approximately $25,000 for the server modem, parts and configuration, plus
tower lease costs and, if customer usage requires, the cost of a direct T1
telephone line connection to the Internet.


  Should we be able to obtain the minimum of $400,000 per month pursuant to
the Fusion Capital agreement, we would have enough money to pay for the
construction of the initial Quick-Cell cell site in at least three markets
per month.  We cannot assure you that we will be able to construct
Quick-Cell cell sites at that rate.


  In light of the relatively small amount of capital required to construct
each Quick-Cell cell site, we believe that the expected funding under the
Fusion Capital agreement would provide us with enough capital to construct
the initial Quick-Cell cell site and commence marketing activities in
approximately 60 markets.  With the Quick-Cell construction permitted by
this amount of capital, we will be able to determine whether our Quick-Cell
wireless Internet access business is a viable business, as presently
offered.  However, the funds expected under the Fusion Capital agreement
will not be adequate for us to pursue our complete Quick-Cell business
plan, and we cannot assure you that we will be able to obtain capital when
needed.  Our inability to obtain further capital when needed would lessen
our chance of earning a profit, as we would become illiquid.


  Proceeds from the Fusion Capital Agreement.  We may receive up to $10
million under the Fusion Capital agreement.  Assuming we receive this
amount of funds, we anticipate that we will apply these funds as follows:


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


             Total                      $10,000,000


  Should all of our outstanding warrants, including all of the warrants to
be issued in connection with the Fusion Capital agreement, be exercised, we
would receive cash proceeds of approximately $3,200,000.  All funds
received from the exercise of warrants would be used to purchase Quick-Cell
equipment and for the marketing of our Quick-Cell wireless Internet access
service.


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


  December 31, 2000.  At December 31, 2000, our working capital deficit was
$1,517,164 (unaudited), which is greater than our deficit at December 31,
1999, of $1,060,532.  Our deficit would have been significantly larger, if
not for our president's converting $967,000 of our indebtedness to him
(including interest) into shares of our stock.  This conversion of debt
into stock was more than offset by an increase in accounts payable, accrued
salary and other current liabilities.


  The following table sets forth our current assets and current liabilities
at December 31, 2000 and 1999:


                                    2000              1999
                                (unaudited)        (audited)
Current Assets   Cash            $   1,088         $  75,313
    Accounts Receivable                  -            59,098
    Inventory                      246,721            21,207
    Prepaids                             -             5,500


Current Liabilities
    Notes payable -
     current portion             $       -         $    5,910
Accounts payable                 1,472,030            363,665
Accrued payroll                    158,262            118,157
Other current liabilities           41,824            216,650
Property dividends payable          43,750             43,750
Accrued interest to stockholder          -             29,741
Notes payable to stockholder         6,638            356,239
Deferred revenue                         -             87,538


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


  The increase in our accounts payable is attributable to (1) operating
costs that continued to increase during 2000, until September 2000, when
the involuntary bankruptcy proceeding was filed against CyberHighway, and
(2) our determination to defer payment of nearly all of our accounts
payable for most of 2000, due our lack of working capital.  It is unlikely
that this indebtedness will ever be paid by CyberHighway, due to the demise
of its dial-up Internet access business.  To date, no creditor of USURF
America has taken any adverse action as a result of this policy.


  Our accrued payroll at December 31, 2000, as well as at December 31,
1999, is primarily attributable to accrued salary of our president and two
of our vice presidents.


  In August 2000, our president, David M. Loflin, converted the entire
amount owed to him at that time, including accrued interest, into a total
of 774,162 shares of our common stock.  The total amount of indebtedness
converted to common stock was $967,703.  Mr. Loflin received one share for
each $1.25 owed him - $1.25 was the low sale price for our common stock on
the American Stock Exchange on August 18, 2000, the last trading day prior
to the conversion.  Until converted, all of the loans from Mr. Loflin were
payable on demand, with interest accruing at 8% per annum.  The funds
loaned by Mr. Loflin were used primarily for operating expenses, including
expenses of CyberHighway, corporate overhead and the construction of our
Quick-Cell system in Santa Fe, New Mexico.


  During 2000, we obtained funds from private sales of our securities. In
March and April 2000, we sold a total of 60,000 units of securities, each
unit being comprised of one share of our stock and one warrant with an
exercise price of $7.50 per share.  The warrants are exercisable for a
period of two years.  Each unit was sold for $5.00 in cash, for total
proceeds of $300,000.  These proceeds were used to pay approximately
$250,000 in operating expenses, including operating expenses of
CyberHighway, and to purchase about $50,000 of equipment.


  In December 2000, we sold 400,000 shares of our common stock to a private
investor for $80,000 in cash.  The proceeds from this sale of stock were
used to pay accounting expenses and for working capital.  In connection
with this sale of stock, we issued to a finder 40,000 shares of our common
stock and a warrant to purchase 380,000 shares of our common stock at an
exercise price of $.20 per share.  These warrants are exercisable for a
period of three years.  The 40,000 shares issued to the finder were valued
at $.20 per share, a total value of $8,000.  No value was placed on the
warrants issued.


  Subsequent to 2000, we sold securities on two occasions.  In February
2001, we sold 840,000 units of securities, each unit being comprised of one
share of our stock and one warrant with an exercise price of $.15 per
share, to a private investor for $126,000 in cash.  The warrants are
exercisable for a period of three years.  The proceeds from this sale of
securities will be applied to the payment of approximately $50,000 in
professional fees and the balance will be used for working capital.  In
connection with this sale of securities, we issued to a finder 84,000
shares of our common stock and a warrant to purchase 336,000 shares of our
common stock at an exercise price of $.15 per share.  These warrants are
exercisable for a period of three years.  The 84,000 shares issued to the
finder were valued at $.15 per share, a total value of $12,600.  No value
was placed on the warrants issued.


  In March 2001, we sold 500,000 units of securities, each unit being
comprised of one share of our stock and one warrant with an exercise price
of $.25 per share, to a private investor for $125,000 in cash.  The
warrants are exercisable for a period of three years.  Approximately 60% of
the proceeds from this sale of securities will be applied to the
construction of a Quick-Cell system and the balance will be used for
working capital.  In connection with this sale of securities, we issued to
a finder 50,000 shares of our common stock and a warrant to purchase
200,000 shares of our common stock at an exercise price of $.25 per share.
These warrants are exercisable for a period of three years.  The 50,000
shares issued to the finder were valued at $.25 per share, a total value of
$12,500.  No value was placed on the warrants issued.


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


  Community Television Stations. In furtherance of our plan to focus on the
implementation of our Quick-Cell business plan, effective July 1, 1999, we
assigned all of our community (low power) television properties to New Wave
Media Corp., in exchange for 1,500,000 shares of New Wave common stock.
Our board of directors declared a dividend with respect to all 1,500,000
New Wave shares.


        Cash Flows from Operating Activities.  During the year ended
December 31, 2000, our operations used $953,112 (unaudited) in cash
compared to cash
used of $546,097 during the same period of 1999.  In both periods, the use
of cash in operations was a result of the lack of revenues compared to our
operating expenses, particularly our Internet access costs and salary and
commissions.  The recent demise of the business of CyberHighway has served
to reduce substantially our ongoing operating expenses.  The effects of the
demise of CyberHighway will not be readily apparent from our financial
statements until the first quarter of 2001.


        For the year ended December 31, 2000, our operations would have used
approximately $500,000 more in cash, had we not determined to defer payment
of nearly all of our accounts payable for most of the year, due to our lack
of working capital.


        Cash Flows from Investing Activities.  During the year ended
December 31, 2000, our investing activities used cash of $85,150 (unaudited)
compared to $412,785 in the same period of 1999.  During the 2000 period, in our
investing activities, purchases of equipment used cash; however, in the
1999 period, our equipment purchases were offset, to some degree, by cash
acquired in acquisitions of $180,817.  Because we lack working capital, we
cannot predict our cash flows from investing activities for 2001.


       Cash Flows from Financing Activities.  For 2000, our financing activities
provided $964,037 (unaudited) in cash.  Of this amount, $568,571
(unaudited) is attributable to loans from our president and the balance is
attributable to sales of securities.   For 1999, our financing activities
provided $1,026,963 in cash, most of which is attributable to private sales
of our securities.  Because we continue to seek capital and cannot,
therefore, predict future levels of cash flows from financing activities.


        Non-Cash Investing and Financing Activities.  During the year ended
December 31, 2000, we issued a total of 131,063 shares of common stock in
acquisitions.


        In May 2000, we issued 250,000 shares of our common stock to a vice
president as a signing bonus under his employment agreement, which were
valued at $750,000, in the aggregate.


        In July 2000, we  we entered into an investment banking agreement with
Gruntal & Co., L.L.C., under which we issued 250,000 shares of our common
stock, valued at $375,000, in the aggregate.


        During 2000, we issued a total of 500,000 shares of our common stock as
bonuses to two of our vice presidents, which were valued at $.25 per share,
the last closing price of our common stock prior to the issuances, a total
value of $125,000.


        During 1999, non-cash investing and financing activities included the
issuance of shares for the acquisition of several businesses. By far the
largest of these transactions was the acquisition of CyberHighway.  We
issued 2,325,000 shares of our common stock in connection with this
acquisition.  These shares were valued at approximately $18,530,250.  Each
of the four other Internet service providers acquired by us were
assimilated into the operations of CyberHighway.  Now, with the involuntary
bankruptcy of CyberHighway, none of these Internet service providers
represents a portion of our continuing operations.  Our historical balance
sheets have reflected these acquisition values, less accumulated
amortization.  However, due to the recent demise of CyberHighway, the
unamortized portion of this value was written-off on our December 31, 2000
balance sheet.  We have suspended, for the foreseeable future, the
development of the acquired business known as www.e-tail.com, due to a lack
of capital, the acquisition of which was valued at $863,000.


Management's Plans Relating to Future Liquidity


       To sustain our current level of operations for the next twelve months, we
will require additional capital of approximately $300,000.  To accomplish
our goals of expanding our Quick-Cell business, we will require at least $3
million.


       Our best opportunity for obtaining needed funds is pursuant to the Fusion
Capital agreement.  The following summarizes the important terms under the
Fusion Capital agreement:


      -     Fusion Capital may purchase up to $10 million of our common stock;


      -     The selling price to Fusion Capital will be equal to the lesser of :


              -       $20.00; or


              -       a price based upon the future market price of the
                      common stock without any fixed discount to the
                      market price;


      -     As long as our stock price is below $5.00 per share, we have the
            right to require Fusion Capital to purchase up to $400,000 during
            each 30-day period of the agreement;


      -     Should our stock price is $5.00 or higher, we have the right to
            require Fusion Capital to purchase up to the full remaining portion
            of the $10 million commitment;


      -     The highest purchase price of our common stock under this agreement
            is $20.00 per share; and


      -     During the term of the Fusion Capital agreement, we may not issue,
            or agree to issue, any variable-priced equity or variable-priced
            "equity-like" securities, unless we have obtained Fusion Capital's
             prior written consent.


        Since we only plan to sell up to 6,000,000 shares to Fusion Capital
under the Fusion Capital agreement, the selling price of our stock sold to
Fusion Capital will need to average $1.67 per share for us to receive the
maximum proceeds of $10 million under that agreement.  Assuming a selling
price of $.66 per share, the closing sale price of the common stock on
April 12, 2001, and the purchase by Fusion Capital of the full amount of shares
purchasable under the Fusion Capital agreement, proceeds to us would only
be approximately $3,960,000, unless we choose to issue more than 6,000,000
shares, which we have the right to do.


        Should we obtain at least $3 million under the Fusion Capital agreement,
we believe that we will be able to have accomplished our two primary
objectives:


      -     Placing at least 20,000 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 of the Fusion
Capital transaction.


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


Capital Expenditures


        During 2000, we made approximately $400,000 in equipment purchases,
approximately 15% for wireless Internet equipment and approximately 85% for
needed equipment in our network operations center.  We currently have no
capital with which to make any significant capital expenditures.  Should we
obtain funding under the Fusion Capital agreement, we will be able to make
major expenditures on Quick-Cell-related equipment, as described above.
However, without additional capital, we will make no capital expenditures.
During Fiscal 1999, we made $614,193 in equipment purchases.


Year 2000 Issues


        We experienced no problems related to Year 2000 issues.  During our
efforts to become completely Year 2000 compliant, we incurred expenses of
approximately $75,000.




Item 7.  Financial Statements


  The financial statements required to be furnished under this Item 7 are
attached at the end of this Annual Report on Form 10-KSB.  An index to our
financial statements is also included below in Item 13(a).


Item 8.  Changes In and Disagreements With Accountants
           on Accounting and Financial Disclosure


  On January 11, 2000, we dismissed Weaver and Tidwell, L.L.P. as our
independent auditor.  At the time of the dismissal, there was no
disagreement with respect to any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure.
On January 24, 2000, we engaged Postlethwaite & Netterville as our new
independent auditor, which firm audited our financial statements for the
year ended December 31, 1999.  The audit committee of our board of
directors recommended this change in auditors and the full board approved
the change.


                               PART III


Item 9.  Directors, Executive Officers, Promoters and Control Persons;
            Compliance with Section 16(a) of the Exchange Act


Directors and Executive Officers


  The following table sets forth the officers and directors of USURF America.


   Name                  Age     Position(s)


David M. Loflin(1)       43      President, Acting Chief
                                  Financial Officer and Director
Waddell D. Loflin(1)     51      Vice President, Secretary and
                                  Director
Robert A. Hart IV        53      Vice President of Technology
James Kaufman            36      Vice President Corporate
                                  Development
Ross S. Bravata          42      Director
Michael Cohn             43      Director
------------
(1) David M. Loflin and Waddell D. Loflin are brothers.


  Our current officers and directors serve until the next annual meeting of
our board of directors or until their respective successors are elected and
qualified.  All officers serve at the discretion of our board of directors.
Family relationships between our officers and directors are noted above.
Certain information regarding the backgrounds of each of the officers and
directors is set forth below.


  David M. Loflin, President and Director, has, for more than the past five
years, owned and operated Gulf Atlantic Communications, Inc., a Baton
Rouge, Louisiana-based wireless technology firm specializing in development
of wireless cable systems and broadcast television stations.  Gulf Atlantic
has designed, constructed and operated two wireless cable systems: (1)
Baton Rouge, Louisiana, and (2) Selma, Alabama.  Mr. Loflin developed and
currently operates one television station, WTVK-TV11, Inc. (a Warner
Brothers Network affiliate), Channel 11 in Baton Rouge, Louisiana.  For
over ten years, Mr. Loflin has served as a consultant for Wireless One, one
of the largest wireless communications firms in the United States.  Mr.
Loflin is a member of the Wireless Cable Association International and the
Community Broadcasters Association.


  Waddell D. Loflin, Vice President, Secretary and Director, has, for more
than the past five years, served as Vice President of Operations and
Treasurer of Gulf Atlantic Communications, Inc. and WTVK-TV11, Inc., both
in Baton Rouge, Louisiana.  In addition, Mr. Loflin serves as Production
Manager and Film Director for WTVK-TV11, Inc.  Mr. Loflin served as General
Manager for Baton Rouge Television Company, Baton Rouge, Louisiana, a
wireless cable system, where he directed the development and launch of such
wireless cable system.  Also, Mr. Loflin has devoted over five years to
demographic research relating to the wireless cable industry.  Mr. Loflin
is a member of the Wireless Cable Association International and the
Community Broadcasters Association.  Mr. Loflin holds a B.A. degree in
Social Sciences from Oglethorpe University, Atlanta, Georgia.


  Robert A. Hart, IV, Vice President of Technology, has, for the last 30
years, worked in the telecommunications industry as proprietor of Hart
Engineers, which provides engineering and consulting services to BellSouth,
numerous independent telephone companies and other communications service
providers.  Mr. Hart is a graduate of Louisiana State University with a
B.S. degree in Electrical Engineering and is a Registered Professional
Engineer.  Mr. Hart has served on the board of the Small Business Personal
Communications Services (PCS) Association, a national trade association
focused on small business applications and opportunities for PCS technology
(a universal wireless communications technology), and also served this
organization as chairman of the lobbying committee.  He is also a past
board member and current member of the Association of Communication
Engineers, and current member of the Institute of Electrical and
Electronics Engineers, National Society of Professional Engineers and the
Louisiana Engineering Society.


  James Kaufman, Vice President Corporate Development, received a B.S.
degree in Journalism from the University of Colorado, Boulder, Colorado.
>From 1994 to 1995, Mr. Kaufman was a registered representative with D.E.
Fry, a Denver, Colorado-based broker-dealer.  From 1995 to 1996, Mr.
Kaufman was a registered representative with A.G. Edwards, a St. Louis,
Missouri-based broker-dealer.  From 1997 to February 1999, Mr. Kaufman
served as Director of Corporate Development for B. Edward Haun & Company, a
Denver, Colorado-based investment banking and research firm.


  Ross S. Bravata, Director, has, since 1981, worked for Novartis (formerly
Ciba Corporation), in various positions, and currently serves as a Senior
Control Systems Technician.  In such capacity, Mr. Bravata supervises the
service and maintenance of electronic instrumentation.  Since 1988, Mr.
Bravata has served as a director and principal financial officer of CG
Federal Credit Union, Baton Rouge, Louisiana.  Also, Mr. Bravata has, since
its inception in 1994, served as a director of Trinity's Restaurant, Inc.,
in Baton Rouge, Louisiana.


  Michael Cohn, Director, has, for over 20 years, owned and operated Arrow
Pest Control, Inc., Baton Rouge, Louisiana.  In addition, Mr. Cohn owns
Arrow Pest Control of New Orleans, Wilson and Sons Exterminating in Mobile,
Alabama, and Premier Termite and Pest Control in Florida.


Executive Committee


  Our board of directors created an Executive Committee to facilitate
management between meetings of the full board of directors.  David M.
Loflin, Waddell D. Loflin and Ross S. Bravata comprise the Executive
Committee.


  Our bylaws provide that the Executive Committee has the authority to
exercise all powers of the board of directors, except the power:


     -  Declare dividends;


     -  Sell or otherwise dispose of all or substantially all of our
        assets;


     -  Recommend to our shareholders any action requiring their
        approval; and


     -  Change the membership of any committee, fill the vacancies
        thereon or discharge any committee.


  The Executive Committee, in general, acts on all matters requiring
approval of our board of directors.


Audit Committee


  In September 1999, our board of directors created an Audit Committee,
consisting of three members, the majority of whom must be outside
directors.  The initial members of the Audit Committee are David M. Loflin
and Michael Cohn.  There is one vacancy on this committee, due to the
recent resignation of Richard N. Gill as a director.  The Audit Committee
has the responsibility to review internal controls, accounting policies and
financial reporting practices, to review the financial statements, the
arrangements for, and scope of, the independent audit as well as the
results of the audit arrangement and to review the services and fees of the
independent auditors, their independence and recommend to the board of
directors for its approval and for the ratification by our shareholders the
engagement of the independent auditors to serve the following year in
examining our accounts.  The Audit Committee has held two meetings.


  The Audit Committee recommended the change in our auditors to the full
board of directors.


Compensation of Directors


  In March 1998, four of our directors, Waddell Loflin, Ross S. Bravata,
Richard N. Gill and Michael Cohn, were issued 20,000 shares each of our
common stock as a bonus for their services as directors.  These shares were
valued at $.80 per share by the board of directors; however, for financial
reporting purposes, these shares were valued at $.56 per share, the last
closing bid price for our common stock prior to issuance.


  No other compensation has been paid to any of our directors for their
services as directors.  It is possible that our management could begin to
pay our directors for meetings attended or grant a small number of stock
options for their services.  However, no specific determination in this
regard has been made.


Indemnification of Directors and Officers


  Article X of the Articles of Incorporation of USURF America provides that
no director or officer shall be personally liable to USURF America or its
shareholders for damages for breach of fiduciary duty as a director
officer; provided, however, that such provision shall not eliminate or
limit the liability of a director or officer for (1) acts or omissions
which involve intentional misconduct, fraud or a knowing violation of law
or (2) the payment of dividends in violation of law.  Any repeal or
modification of Article X shall be prospective only and shall not adversely
affect any right or protection of a director or officer of USURF America
existing at the time of such repeal or modification for any breach covered
by Article X which occurred prior to any such repeal or modification.  The
effect of Article X is that directors and officers will experience no
monetary loss for damages arising out of actions taken (or not taken) in
such capacities, except for damages arising out of intentional misconduct,
fraud or a knowing violation of law, or the payment of dividends in
violation of law.


  As permitted by Nevada law, our bylaws provide that we will indemnify our
directors and officers against expense and liabilities they incur to
defend, settle or satisfy any civil, including any action alleging
negligence, or criminal action brought against them on account of their
being or having been directors or officers unless, in any such action, they
are judged to have acted with gross negligence or willful misconduct.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers or control
persons pursuant to the foregoing provisions, we have been informed that,
in the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable.


Compliance with Section 16(a) of the Securities Exchange Act


  We became subject to the provisions of Sections 16(a) of the Securities
Exchange Act of 1934 on October 14, 1999.  Section 16(a) requires
directors, executive officers and persons who own more than 10% of our
outstanding common stock to file with the SEC an Initial Statement of
Beneficial Ownership of Securities (Form 3) and Statements of Changes of
Beneficial Ownership of Securities (Form 4).  Directors, executive officers
and greater-than-10% shareholders are required by SEC regulation to furnish
copies to us of all Section 16(a) forms they file.


  Based on a review of copies of these reports furnished to us, we believe
that all of our directors, executive directors and greater-than-10%
beneficial owners filed their respective Form 3 reports; all of the Form 3
reports were filed late.  Form 5 reports for 1999 and 2000 for all officers
and directors have not yet been filed.  Form 4 reports for certain of our
officers and directors are due and have not yet been filed.  We have
requested that all of these persons file the required reports.


  Based on a review of the copies of these reports furnished to us, it
appears that Julius W. Basham, II, a former officer, director and
10%-owner, is current in his filings of required Forms 4 and Form 5 and is
no longer required to file ownership reports.


Item 10.  Executive Compensation


Executive Compensation


  The following table sets forth in summary form the compensation received
during each of the last three completed fiscal years by our Chief Executive
Officer and each executive officer who received total salary and bonus
exceeding $100,000 during any of the last three fiscal years.


                                                Long-
                                                term
                                                Compen-
                                                sation
                                       Other    Awards    All
                                       Annual     of     other
Name and                               Compen-  Stock    Compen-
Principal          Salary    Bonus     sation   Options  sation
Position   Year      $         $          $        #        $
---------  ----  --------  ----------  -------  -------  -------
David M.   2000  $62,500(1)  $-0-      $-0-        0      $-0-
 Loflin    1999  $62,500(2)  $-0-      $-0-        0      $-0-
President  1998  $55,000     $-0-      $-0-        0      $-0-
[Principal
Executive
Officer]


Waddell D. 2000  $41,667(3)  $50,000(7)$-0-        0      $-0-
 Loflin    1999  $41,667(4)  $-0-      $-0-        0      $-0-
[Vice      1998  $48,000     $-0-      $-0-        0      $-0-
President
and Sec-
retary]


James      2000  $103,333(5) $75,000(8)$-0-        0      $-0-
 Kaufman   1999  $103,333(6) $-0-      $-0-        0      $-0-
[Vice      1998  $-0-        $-0-      $-0-        0      $-0-
President
- Corporate
Develop-
ment]


Julius W.  2000  $-0-        $-0-      $-0-        0      $-0-
 Basham II 1999  $133,762    $-0-      $-0-        0      $-0-
[Former    1998  $-0-        $-0-      $-0-        0      $-0-
Chief
Operating
Officer]


Robert A.  2000  $-0-        $750,000(9)$-0-       0       $-0-
 Hart IV   1999  $-0-        $-0-       $-0-       0       $-0-
[Vice      1998  $-0-        $-0-       $-0-       0       $-0-
President
- Tech-
nology]
-------------
(1) $27,083 of this amount has been accrued.
(2) $27,083 of this amount has been accrued.
(3) $10,417 of this amount has been accrued.
(4) $10,417 of this amount has been accrued.
(5) $20,667 of this amount has been accrued.
(6) $20,667 of this amount has been accrued; $82,666 of this amount was
paid in shares of our stock.
(7) This bonus was paid by the issuance of 200,000 shares to Mr. Loflin,
which were valued at $.25 per share, the last closing price of our common
stock prior to the issuance.
(8) This bonus was paid by the issuance of 300,000 shares to Mr. Kaufman,
which were valued at $.25 per share, the last closing price of our common
stock prior to the issuance.
(9) Mr. Hart received 250,000 shares of our common stock as a signing bonus
under the terms of his employment agreement.  These shares were valued at
$3.00 per share.


  In May 2000, we issued 250,000 shares to Robert A. Hart IV, our vice
president of technology, as a bonus, upon the execution of his employment
agreement.  These shares were valued at $3.00 per share, which was the
closing price of our common stock on the day of Mr. Hart's execution of his
employment agreement.


  In December 2000, two of our vice presidents, Waddell D. Loflin and James
Kaufman, were issued shares of our common stock as a bonus.  Mr. Loflin was
issued 200,000 shares and Mr. Kaufman was issued 300,000 shares.  These
shares were valued at $.25 per share, which was the closing sale price of
our common stock on the day immediately preceding their issuance.


Employment Contracts and Termination of Employment and Change-in-Control
Agreements


  Each of our officers have entered into employment agreement, as well as
confidentiality agreements and agreements not to compete.


Name of Officer     Position(s)    Term       Salary         Date
----------------    -----------    ----       ------         ----



David M. Loflin     President      7 years   $150,000(1)    6/1/99



Waddell D. Loflin   Vice President 7 years   $100,000(2)    6/1/99
                     and Secretary



Robert A. Hart, IV  Vice President 3 years   $90,000(3)     5/25/00
                     of Technology



James Kaufman       Vice President, 1 year   $120,000(4)    3/22/99
                     Corporate    (renewable)
                     Development
-----------
(1) Mr. Loflin has agreed to defer payment of a portion of his salary until
we are able to pay it.  As at December 31, 2000, we owed Mr. Loflin
deferred salary in the amount of $27,083.
(2) Mr. Loflin has agreed to defer payment of a portion of his salary until
we are able to pay it.  As at December 31, 2000, we owed Mr. Loflin
deferred salary in the amount of $10,417.
(3) Mr. Hart will begin to receive salary payments at such time as we
obtain a significant capital investment.  Mr. Hart received 250,000 shares
of our stock as a signing bonus, which shares were valued at $750,000.  The
value of these shares was derived from the closing price for our stock on
the date of execution of his employment agreement.
(4) Mr. Kaufman has agreed to defer payment of a portion of his salary
until we are able to pay it.  As at December 31, 2000, we owed Mr. Kaufman
deferred salary in the amount of $20,667.  In 2000, we issued Mr. Kaufman a
total of 34,536 shares of our stock valued at $154,667 in payment of the
stock portion of his salary.


  In January 1999, we entered into an employment agreement with Julius W.
Basham, II, formerly a director and our former chief operating officer.
Pursuant to the terms of a settlement agreement, Mr. Basham resigned as
chief operating officer on January 4, 2000.


  In May 2000, we issued 250,000 shares to Robert A. Hart IV, our vice
president of technology, as a bonus, upon the execution of his employment
agreement.  These shares were valued at $3.00 per share, which was the
closing price of our common stock on the day of Mr. Hart's execution of his
employment agreement.


  In November 2000, we terminated the employment of Darrell Davis, formerly
Vice President of U.S. Internet Operations, based on violations of his
employment agreement.  (See "Litigation" for a discussion of Mr. Davis'
termination).


  In December 2000, we terminated the employment of Christopher L. Wiebelt,
formerly Vice President of Finance and Chief Financial Officer, based on
violations of his employment agreement.  (See "Litigation" for a discussion
of Mr. Wiebelt's termination).


  We have no compensatory plan or arrangement that results or will result
from the resignation, retirement or any other termination of an executive
officer's employment or from a change in control or a change in an
executive officer's responsibilities following a change-in-control.


Option/SAR Grants in Last Fiscal Year


  We did not grant any options to any person during the fiscal year ended
December 31, 2000.  We have never granted any stock appreciation rights
(SARs), nor do we expect to grant any SARs in the foreseeable future.




Item 11.  Security Ownership of Certain Beneficial Owners
            and Management


  There are 19,526,770 shares of our common stock issued and outstanding.
The following table sets forth certain information regarding the current
beneficial ownership of our common stock, by (1) persons known to be
beneficial owners of more than 5% of our common stock, (2) each our
officers and directors and (3) our officers and directors, as a group.
Unless otherwise noted, the address of the listed persons is 8748 Quarters
Lake Road, Baton Rouge, Louisiana 70809.


Name and                      Shares
Address of                    Owned             Percent
Beneficial Owner           Beneficially         Owned(1)
----------------           ------------         --------


David M. Loflin(2)           3,250,960           14.67%


Waddell D. Loflin(2)           290,000            1.31%


James Kaufman                  625,000            2.82%
665 W. Velarde Drive
Thousand Oaks, CA 91360


Robert A. Hart IV              250,000            1.12%


Ross S. Bravata                 32,000              *


Michael Cohn                   209,000(3)           *


Fusion Capital Fund            810,000            3.65%
 II, LLC
222 Merchandise Mart Plaza
Suite 9-112
Chicago, IL 60654


Shelter Capital Ltd.         1,328,000(4)         5.99%
P.O. Box 635
Providenciales
Turks & Caicos Islands
British West Indies


Claymore Asset Management    1,680,000(5)         7.58%
 Group, Ltd.
Market Place, Unit C-12
Providenciales
Turks & Caicos Islands
British West Indies


All officers and             4,656,960(3)        21.01%
 directors as a group
 (6 persons)
-------------
* Less than 1%.
(1)  Based on 22,163,247 shares outstanding, assuming the issuance of all
2,636,477 shares underlying currently exercisable warrants.
(2)  All of the shares owned by this shareholder are subject to a voting
agreement and must be voted for David M. Loflin and Waddell D. Loflin in
all elections of directors.
(3) 80,000 of these shares have not been issued, but underlie currently
exercisable warrants.
(4) 960,000 of these shares have not been issued, but underlie currently
exercisable warrants.
(5) 840,000 of these shares have not been issued, but underlie currently
exercisable warrants.


Item 12.  Certain Relationships and Related Transactions


Founders


  In November 1996, David M. Loflin purchased 1,600,000 shares of our
common stock for $1,600 and Waddell D. Loflin, purchased 200,000 shares of
our common stock for $200.


Conversion of Loans to Stock by Officer


  As of August 21, 2000, we owed Mr. Loflin a total of $967,703 ($916,045
in principal, $51,658 in interest), the result of cash loans made to us by
Mr. Loflin during the past approximately two years.  The proceeds of these
loans were used primarily for operating expenses and purchases of
equipment.  On August 21, 2000, we entered into a letter agreement with our
president, David M. Loflin, whereby Mr. Loflin agreed to convert all sums
owed to him into shares of our common stock.


  Pursuant to the letter agreement, Mr. Loflin received one share of common
stock for every $1.25 of debt converted, for a total of 774,162 shares.
The $1.25 price was agreed upon as that price was the low sale price for
our common stock on Friday, August 18, 2000, as reported by AMEX.


  Our board of directors, in authorizing the transaction described above,
found the transaction to be in the best interest of USURF America, as it
would significantly improve our financial condition, potentially making it
more attractive to prospective investors.


Subscription Agreements


  In December 1996, we entered into a subscription agreement with David M.
Loflin, whereby we issued 1,578,512 shares of our common stock to Mr.
Loflin in exchange for assignments of licenses and leases of licenses of
television channels and wireless cable television channels and options to
acquire these assets.


  These assets were valued at $1,826,873, which was determined pursuant to
a market report and appraisal prepared by Broadcast Services International,
Inc., Sacramento, California.  A more complete description of this
appraisal appears below, under the heading "Appraisal".  Mr. Loflin's total
acquisition costs of these assets are unknown.  Accordingly, our financial
statements attribute no value to these assets.


  Also in December 1996, we entered into a subscription agreement with
Waddell D. Loflin, whereby we issued 104,249 shares of our common stock to
Mr. Loflin in exchange for an assignment of the license of a television
channel.


  These assets were valued at $120,652, which was determined pursuant to
the appraisal described above.  Mr. Loflin's acquisition costs of these
assets are unknown.  Accordingly, our financial statements attribute no
value to these assets.


Reorganizations


  Effective December 31, 1996, we entered into an agreement and plan of
reorganization, whereby we purchased television station K13VE Channel 13 in
Baton Rouge, Louisiana.  In this transaction, David M. Loflin received
227,336 shares of our common stock for his ownership in this television
station.  The television station was valued at $263,106, which was
determined pursuant to the appraisal described above.  Mr. Loflin's
acquisition costs relating to the rights to K13VE Channel 13 were $6,750.
An additional $10,587 in costs was capitalized.


  Effective December 31, 1996, we entered into an agreement and plan of
reorganization, whereby we purchased licenses and leases of licenses of
wireless cable television channels in Poplar Bluff, Missouri, and Lebanon,
Missouri.  In this transaction, David M. Loflin received 1,179,389 shares
of our common stock valued at $1,364,553; Ross S. Bravata, one of our
directors, received 42,887 shares of our common stock valued at $49,620;
and Michael Cohn, one of our directors, received 53,608 shares of our
common stock valued at $62,024.  The values assigned to the assets acquired
from Messrs. Loflin, Bravata and Cohn were determined pursuant to the
appraisal described above.  The acquisition cost of these assets was
$179,611, which is reflected in our financial statements.  At the time of
this transaction, Messrs. Bravata and Cohn were not directors.


Securities Purchases


  In March 1997, Michael Cohn purchased 20,000 shares of our common stock
for $50,000 in cash. At the time of this transaction, Mr. Cohn was not a
director.


  In January 1999, Mr. Cohn purchased 30,000 units of our securities in a
private offering, at a purchase of $4.50 per unit, or $135,000 in the
aggregate.  Each unit purchased by Mr. Cohn consisted of one share of our
common stock and one common stock purchase warrant to purchase one share of
our common stock at an exercise price of $7.00 per share.  Mr. Cohn
purchased units on the same terms and conditions as were offered to
unaffiliated persons.


  In November 1999, Mr. Cohn purchased 50,000 units of our securities in a
private offering, at a purchase of $3.00 per unit, or $150,000 in the
aggregate.  Each unit purchased by Mr. Cohn consisted of one share of our
common stock and one common stock purchase warrant to purchase one share of
our common stock at an exercise price of $7.00 per share.  Mr. Cohn
purchased units on the same terms and conditions as were offered to
unaffiliated investors.


Stock Bonus Officers


  In December 2000, two of our vice presidents, Waddell D. Loflin and James
Kaufman, were issued shares of our common stock as a bonus.  Mr. Loflin was
issued 200,000 shares and Mr. Kaufman was issued 300,000 shares.  These
shares were valued at $125,000, or $.25 per share, which was the closing
sale price of our common stock on the day immediately preceding their
issuance.


Stock Bonus Directors


  In March 1998, four of our directors, Waddell Loflin, Ross S. Bravata,
Richard N. Gill and Michael Cohn, were issued 20,000 shares each of our
common stock as a bonus for their services as directors.  These shares were
valued by the board of directors at $.80 per share.  However, for financial
reporting purposes, these shares were valued at $.56 per share, the last
closing bid price for our common stock prior to issuance.


Employment Agreements


  Each of our officers have entered into employment agreement, as well as
confidentiality agreements and agreements not to compete.


Name of Officer     Position(s)    Term       Salary         Date
----------------    -----------    ----       ------         ----



David M. Loflin     President      7 years   $150,000(1)    6/1/99



Waddell D. Loflin   Vice President 7 years   $100,000(2)    6/1/99
                     and Secretary



Robert A. Hart, IV  Vice President 3 years   $90,000(3)     5/25/00
                     of Technology



James Kaufman       Vice President, 1 year   $120,000(4)    3/22/99
                     Corporate    (renewable)
                     Development
-----------
(1) Mr. Loflin has agreed to defer payment of a portion of his salary until
we are able to pay it.  As at December 31, 2000, we owed Mr. Loflin
deferred salary in the amount of $27,083.
(2) Mr. Loflin has agreed to defer payment of a portion of his salary until
we are able to pay it.  As at December 31, 2000, we owed Mr. Loflin
deferred salary in the amount of $10,417.
(3) Mr. Hart will begin to receive salary payments at such time as we
obtain a significant capital investment.  Mr. Hart received 250,000 shares
of our stock as a signing bonus, which shares were valued at $750,000.  The
value of these shares was derived from the closing price for our stock on
the date of execution of his employment agreement.
(4) Mr. Kaufman has agreed to defer payment of a portion of his salary
until we are able to pay it.  As at December 31, 2000, we owed Mr. Kaufman
deferred salary in the amount of $20,667.  In 2000, we issued Mr. Kaufman a
total of 34,536 shares of our stock valued at $154,667 in payment of the
stock portion of his salary.


  In January 1999, we entered into an employment agreement with Julius W.
Basham, II, formerly a director and our former chief operating officer.
Pursuant to the terms of a settlement agreement, Mr. Basham resigned as
chief operating officer on January 4, 2000.


  In May 2000, we issued 250,000 shares to Robert A. Hart IV, our vice
president of technology, as a bonus, upon the execution of his employment
agreement.  These shares were valued at $3.00 per share, which was the
closing price of our common stock on the day of Mr. Hart's execution of his
employment agreement.


  In November 2000, we terminated the employment of Darrell Davis, formerly
Vice President of U.S. Internet Operations, based on violations of his
employment agreement.  (See "Litigation" for a discussion of Mr. Davis'
termination).


  In December 2000, we terminated the employment of Christopher L. Wiebelt,
formerly Vice President of Finance and Chief Financial Officer, based on
violations of his employment agreement.  (See "Litigation" for a discussion
of Mr. Wiebelt's termination).


Voting Agreement


  On January 29, 1999, David W. Loflin, Waddell D. Loflin, Julius W.
Basham, David W. Brown and Wm. Kim Stimpson entered into a voting
agreement, whereby all of these persons are required to vote all shares
owned by them for David M. Loflin and Waddell D. Loflin in all elections of
directors of USURF America.  Currently, approximately 4,100,000 shares are
subject to this voting agreement.  This amount of stock represents
approximately 21% of our currently outstanding shares.


Settlement Agreement


  On November 30, 1999, we entered into a settlement agreement and mutual
release, which settled certain legal proceedings in which USURF America and
CyberHighway, had been involved.  The parties to the settlement agreement
were: USURF America, CyberHighway, Julius W. Basham, II, William Kim
Stimpson and David W. Brown.


  Under the settlement agreement, the following legal proceedings have been
settled in full:  (1) David W. Brown, Plaintiff v. USURF America, Inc. and
Cyberhighway, Inc., Defendants, in the District Court of the Fourth
Judicial District of the State of Idaho, in and for the County of Ada,
Civil Case No. CV OC 9904230D; (2) Julius W. Basham, II, Individual
Plaintiff, David W. Brown, William Kim Stimpson, Individuals, Involuntary
Party Plaintiffs v. USURF America, Inc., formerly known as Internet Media,
Inc., in the District Court of the Fourth Judicial District of the State of
Idaho, in and for the County of Ada, Civil Case No. CVOC 9904382D; and (3)
David W. Brown, Claimant v. Cyberhighway, Inc., Respondent, Industrial
Commission, State of Idaho, IDOL 3362-1999.


  Other material terms of the settlement agreement include


     -  each and every of the claims made in the legal proceedings
        described above by Basham, Stimpson and Brown were dismissed
        with prejudice and any other potential claims of Basham,
        Stimpson and Brown against USURF America and/or CyberHighway
        released;


     -  USURF America and CyberHighway released any and all claims
        against Basham, Stimpson and Brown;


     -  Basham, Stimpson and Brown each reaffirmed their existing
        agreements not to compete, with the exception that Brown is now
        able to seek any employment opportunity, except that Brown
        remains prohibited from working for any person or entity
        engaged in the 2.4 GHz wireless Internet access industry;


     -  Basham, Stimpson and Brown each reaffirmed their existing
        confidentiality agreements in their entirety;


     -  USURF America delivered a total of 340,000 shares of common
        stock, as follows: 215,000 shares to Basham; 34,000 shares to
        Stimpson; and 91,000 shares to Brown; these shares were valued
        at $2.6875 per share, $913,750, in the aggregate;


     -  Basham resigned as chief operating officer of USURF America;


     -  USURF America paid, as reimbursement for attorneys fees
        incurred by Basham, Stimpson and Brown, the total sum of
        $43,325 to the law firm of Givens Pursley, Boise, Idaho;


     -  each of Basham, Stimpson and Brown acknowledged that the voting
        agreement among Basham, Stimpson, Brown, David M. Loflin and
        Waddell D. Loflin remained in full force and effect; and


     -  nothing contained in the settlement agreement is construed as
        an admission of liability by any party to the settlement
        agreement.


  For a discussion on the financial impact of the settlement agreement,
please see "Management's Discussion and Analysis of Financial Condition and
Results of Operations".


  The board of directors determined that entering into the settlement
agreement was in the best interest of USURF America.


H + N Partners


  During 1998, we issued a total of 187,000 shares of our common stock to H
+ N Partners, a fictitious name division of B. Edward Haun & Company, a
Denver, Colorado-based investment banking and research firm in which James
Kaufman, our Vice President Corporate Development, was a partner.  Mr.
Kaufman received a portion of the shares issued to H + N Partners.  37,000
of the shares were valued at $2.00 per share and 150,000 of the shares were
valued at $2.50 per share.  All of the shares issued to H+N Partners were
the subject of effective registration statements filed with the SEC.  Mr.
Kaufman was not an officer at the time of the stock issuances to H + N
Partners.


  Also during 1998, in connection with a private offering of our
securities, we issued  to H + N Partners 56,667 warrants to purchase a like
number of shares of our common stock at an exercise price of $1.25 per
share and 56,667 warrants to purchase a like number of shares of our common
stock at an exercise price of $1.50 per share.  H+N Partners is a selling
shareholder under this prospectus as to all of the shares underlying these
warrants.  Mr. Kaufman was not an officer at the time of the warrant
issuances to H + N Partners.


Fusion Capital Consulting Agreement


  On January 12, 2001, we entered into a one-year consulting agreement with
Fusion Capital, pursuant to which Fusion Capital agreed to provide certain
operational and strategic consulting services.  Fusion Capital will receive
10,000 shares of our common stock during each month of this agreement and
reimbursement for certain expenses.


Appraisal


  Background.  The appraisal referred to above was prepared by Broadcast
Services International, Inc., a Sacramento, California-based communications
appraisal firm.  The report of Broadcast Services was based on 1990 Census
Data.  With respect to the wireless cable markets, the engineering studies
relied upon by Broadcast Services indicate the number of households within
the broadcast radius using the 1200 MHZ frequency.  The 1200 MHZ frequency
was assumed, due to Broadcast Service's experience that, given all of the
variables that may be present in a market-by-market system build-out, the
actual benchmark performance is more truly reflected by using the higher
(1200 MHZ) frequency, such that the signal attenuation is not over-stated.
Valuation formulas for the wireless cable markets were based on initial
public offerings within the wireless cable industry during the past three
years.  The formulas used in evaluation of the broadcast channels were
based on recent sales and market evaluation techniques employed by the
Community Broadcasters Association, among others.


  Use of Appraisal.  At our inception, the board of directors adopted a
plan that provided that our initial capitalization be 6,000,000 shares.
1,800,000 of these shares were sold as founders' stock and 360,000 shares
were sold to a public company for distribution as a dividend.  The balance
of these shares, 3,840,000 shares, were to be utilized to acquire assets,
which were acquired pursuant to the subscription agreements  and the
reorganization agreements described above.  The board of directors utilized
the appraisal as a means to allocate the 3,840,000 shares among the assets
acquired, as follows:


                                                        Current
                                                        Percentage of
              Appraised Value  Shares of Common Outstanding Historical Cost
Transaction      of Assets Acquired           Stock Issued      Shares
     of Assets
                                               Current
                                               Percentage
                 Appraised         Shares      of Out-     Historical
                  of Value        of Common    standing       Cost
Transaction   Assets Acquired   Stock Issued   Shares      of Assets


Subscription  $1,826,873          1,578,512      8.08%     Unknown(1)
 Agreement
 with David
 M. Loflin


Subscription     120,652            104,249    less than   Unknown(1)
 Agreement                                        1%
 with Waddell
 D. Loflin


First            263,106            227,336      1.16%     $ 17,337
 Reorgan-
 ization


Second         2,233,555          1,929,903      9.88%     $179,611
 Reorgani-
 zation


      Total   $4,444,186          3,840,000     19.66%     $196,948
------------
(1) These historical costs could not be determined by our original
independent auditor, due to the lack of reliable cost records associated
with the underlying assets.  Consequently, no value was assigned to these
assets, for financial statement purposes.


The apparent $1.157 per share value was determined by dividing the
3,840,000 shares of our common stock allocated by the board of directors
for asset acquisition into the $4,444,186 total appraised value of the
assets acquired.  The board of directors utilized this apparent per share
value for corporate purposes, that is, the determination of consideration
received for the issuance of shares of our common stock.  However, the
independent appraiser did not value the shares of our common stock issued
in consideration of the assets acquired.  Rather, the independent appraiser
valued only the assets acquired by us in the various transactions.  The
$1.157 per share figure was utilized by the board of directors primarily as
a means of allocating the 3,840,000 shares among the four asset acquisition
transactions consummated in completing its plan for our initial
capitalization.  Thus, the $1.157 figure, while utilized in two ways by the
board of directors, was determined arbitrarily by the board of directors
and is not based on any accounting or other financial criteria.


  The appraised value of the assets described above bears no relationship
to the costs of the assets to the affiliates from whom they were acquired.


Item 13.  Exhibits and Reports on Form 8-K


  (a)(1) Financial Statements


  Index to Financial Statements of USURF America


     Consolidated Balance Sheets as of December 31, 2000 and 1999
     Consolidated Statements of Operations for the Years Ended
       December 31, 2000, 1999 and  1998
     Consolidated Statements of Changes in Stockholders' Equity
       for the Years Ended December 31, 2000, 1999 and  1998
     Consolidated Statements of Cash Flows for the Years Ended
       December 31, 2000, 1999 and  1998
     Notes to Consolidated Financial Statements


  (a)(2) Exhibits


     None.


  (b) Reports on Form 8-K


  During the three months ended December 31, 2000, we filed a Current
Report on Form 8-K, date of event: October 9, 2000, wherein we reported the
execution of a common stock purchase agreement with Fusion Capital Fund II,
LLC.  This Current Report on Form 8-K is incorporated herein by this
reference.


  Subsequent to December 31, 2000, we have filed two Current Reports on
Form 8-K:


     -  Date of event: March 9, 2001, wherein we reported the
        resignation of one of our directors.  This Current Report on
        Form 8-K is incorporated herein by this reference.


     -  Date of event: April 4, 2001, wherein we reported information
        pursuant to Regulation FD.



                            SIGNATURES


In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.


                       USURF AMERICA, INC.



                       By: /s/ David M. Loflin
                            David M. Loflin
                            President


In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.



/s/ David M. Loflin                             April 16, 2001
David M. Loflin
President (Principal Executive
Officer), Acting Principal
Financial Officer and Director



/s/ Waddell D. Loflin                           April 16, 2001
Waddell D. Loflin
Vice President, Secretary
and Director



___________________________                     April   , 2001
James Kaufman
Vice President Corporate
Development



___________________________                     April   , 2001
Robert A. Hart IV
Vice President Technology



/s/ Ross S. Bravata                             April 16, 2001
Ross S. Bravata
Director



/s/ Michael Cohn                                April 16, 2001
Michael Cohn
Director


Supplemental Information to be Furnished With Reports Filed Pursuant to
15(d) of the Exchange Act by Non-reporting Issuers.


As of the date of this Annual Report on Form 10-KSB, no annual report or
proxy material has been sent to security holders of USURF America.  It is
anticipated that an annual report and proxy material will be furnished to
security holders subsequent to the filing of this Annual Report on Form
10-KSB.



         INDEX TO FINANCIAL STATEMENTS OF USURF AMERICA, INC.


Consolidated Balance Sheets as of December 31, 2000 (unaudited) and 1999
Consolidated Statements of Operations for the Years Ended December 31,
  2000 (unaudited), 1999 and 1998
Consolidated Statements of Changes in Stockholders' Equity for the
  Years Ended December 31, 2000 (unaudited), 1999 and 1998
Consolidated Statements of Cash Flows for the Years Ended December 31,
  2000 (unaudited), 1999 and 1998
Notes to Consolidated Financial Statements



                      USURF AMERICA, INC. AND SUBSIDIARIES
                            BATON ROUGE, LOUISIANA
                         CONSOLIDATED BALANCE SHEETS
                          DECEMBER 31, 2000 AND 1999


ASSETS


                                       2000            1999
CURRENT ASSETS                      (unaudited)     (audited)
  Cash and cash equivalents        $     1,088     $   75,313
  Accounts receivable-net                    -         59,098
  Inventory                            246,721         21,207
  Prepaid expenses and
   other current assets                      -          5,500
                                       247,809        161,118
PROPERTY AND EQUIPMENT
  Cost                                  92,557      1,501,233
  Less: accumulated depreciation       (46,279)      (421,786)


                                        46,278      1,079,447


INVESTMENTS                             68,029         68,029


OTHER ASSETS
  Acquired customer base-net                 -     11,764,650
  Goodwill-net                               -      5,681,992
  Other intangibles-net                      -        782,580
  Other assets                          25,000          7,353
                                        25,000     18,236,575


     TOTAL ASSETS                  $   387,116    $19,545,169



LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Disbursements in Excess of
   Cash Balances                   $    42,469
  Notes payable-current portion              -    $     5,910
  Accounts payable                   1,472,030        363,665
  Accrued payroll                      158,262        118,157
  Other current liabilities             41,824       216,650
  Property dividends payable            43,750         43,750
  Accrued interest to stockholder            -         29,741
  Notes payable to stockholder           6,638        356,239
  Deferred revenue                           -         87,538
                                     1,764,973     1,221,650


LONG-TERM LIABILITIES
  Deferred income taxes                      -      3,883,210
                                     1,764,973      5,104,860


STOCKHOLDERS' EQUITY
  Common stock, $.0001 par value
   Authorized: 100,000,000 shares
   Issued and outstanding:
    16,688,808 in 2000; 12,786,116
    in 1999                             1,669           1,279
  Additional paid-in capital       33,261,803      28,918,638
  Accumulated deficit             (33,655,426)    (12,616,830)
  Subscriptions receivable            953,514            (860)
  Deferred consulting              (1,939,417)     (1,861,918)
                                   (1,377,857)     14,440,309


     TOTAL LIABILTIES AND
      STOCKHOLDERS' EQUITY        $   387,116     $19,545,169



The accompanying notes are an integral part of these statements.



<PAGE>



                     USURF AMERICA, INC. AND SUBSIDIARIES
                            BATON ROUGE, LOUISIANA
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998



                                 2000          1999         1998
REVENUES                     (unaudited)    (audited)    (audited)
  Internet access revenues   $1,781,082     $2,268,511   $    5,440
  Equipment sales                91,547        278,714            -
  Internet access costs
   and cost of goods sold    (2,145,955)   (1,152,721)           -
    Gross profit (loss)        (273,326)    1,394,504        5,440



OPERATING EXPENSES
  Depreciation and
   amortization               7,628,910      7,653,924        4,394
  Professional fees           2,811,856      1,945,935      813,517
  Rent                          216,416        132,395       15,823
  Salaries and commissions    2,574,353      1,603,556      154,924
  Advertising                    24,583        125,034            -
  Other                         897,734        399,914       45,806
                             14,153,852     11,860,758    1,034,464



LOSS FROM OPERATIONS        (14,427,178)   (10,466,254)  (1,029,024)



OTHER INCOME (EXPENSE)
  Other income                   67,447         23,875            -
  Litigation settlement               -       (957,075)           -
  Impairment loss            (9,239,310)    (1,164,561)           -
  Interest expense              (21,418)       (19,309)      (8,602)
  Gain on rescission            961,436


                             (8,231,845)    (2,117,070)      (8,602)



LOSS BEFORE INCOME TAX      (22,659,023)   (12,583,324)  (1,037,626)



INCOME TAX BENEFIT            1,595,424      1,653,161            -



NET LOSS                   $(21,063,599) $(10,930,163) $(1,037,626)



Net loss per common share      (1.54)        $(0.96)       $(0.14)



Weighted average number
 of shares outstanding       13,679,385     11,419,641    7,361,275



The accompanying notes are an integral part of these statements.



<PAGE>



                     USURF AMERICA, INC. AND SUBSIDIARIES
                            BATON ROUGE, LOUISIANA
                     CONSOLIDATED STATEMENTS OF CHANGES IN
                             STOCKHOLDERS' EQUITY
                   YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                                 (unaudited)
                                          Sub-
                                          scrip-
                              Accum-      tions     Deferred
           Common Paid-in     ulated      Receiv-   Con-
  Shares   Stock  Capital     Deficit     vable     sulting      Total
---------- ----- ---------- ------------ --------- ---------  -----------


Balance,
December
31, 1997


 6,424,000   642    998,466    (649,041)     (860)  (311,889)      37,318


Issuance of
common
stock for
future
services


 1,655,759   166  1,556,734           -         - (1,556,900)           -


Issuance of
common
stock for
cash


   400,000    40    332,760           -         -          -      332,800


Issuance of
common
stock for
investments


    17,500     2     43,748           -         -          -       43,750


Declared
dividends


         -     -    (57,519)          -         -          -      (57,519)


Amortization
of deferred
consulting


         -     -          -           -         -    765,865      765,865


Net loss


         -     -          -  (1,037,626)        -          -   (1,037,626)


Balance,
December
31, 1998


 8,497,259   850  2,874,189  (1,686,667)     (860)(1,102,924)      84,588


Issuance of
common
stock for
future
services


   566,000    57  2,215,943           -         - (2,216,000)           -


Issuance of
common
stock for
acqui-
sitions


 3,030,000   303 21,586,726           -         -          -   21,587,029


Issuance of
common
stock for
cash


   115,000    11    394,989           -         -          -      395,000


Exercise of
warrants


   176,857    18    337,304           -         -          -      337,322


Issuance of
subscription
agreement


    50,000     5    149,995           -  (150,000)         -            -


Proceeds
on sub-
scription
receivable


         -     -          -           -   150,000          -      150,000


Issuance of
stock per
employment
agreement


    11,000     1     43,311           -         -          -       43,312


Expenses to
be paid by
issuance
of common
stock


         -     -    257,167           -         -          -      257,167


Issuance of
common
stock for
settlement


   340,000    34    913,716           -         -          -      913,750


Stock
warrants


         -     -    145,298           -         -          -      145,298


Amortization
of deferred
consulting


         -     -          -           -         -  1,457,006    1,457,006


Net loss


         -     -          - (10,930,163)        -          -  (10,930,163)


Balance,
December
31, 1999


12,786,116 1,279 28,918,638 (12,616,830)     (860)(1,861,918)  14,440,309


Issuance of
common
stock for
future
services


 2,262,166   226  2,500,047           -         - (2,500,273)           -


Issuance of
common
stock for
acqui-
sitions


   131,063    13    761,738           -         -          -      761,751


Issuance of
common
stock for
cash


   400,000    40     79,960           -   (10,000)         -       70,000


Issuance of
subscription
agreement


    65,000     7    324,993           -  (325,000)         -            -


Proceeds
on sub-
scription
receivable


         -     -          -           -   300,000          -      300,000


Issuance of
stock per
employment
agreement


   754,463    75    345,992           -         -          -      346,067


Expenses to
be paid by
issuance
of common
stock


   290,000    29    330,435           -         -          -      330,464


Conversion
of debt to
equity


         -     -          -           -   969,374          -      969,374


Amortization
of deferred
consulting


         -     -          -           -         -  2,422,774    2,422,774


Net loss


         -     -          - (21,038,596)        -          -  (21,038,596)



The accompanying notes are an integral part of these statements.



<PAGE>



                     USURF AMERICA, INC. AND SUBSIDIARIES
                             BATON ROUGE, LOUISIANA
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998


                                2000             1999             1998
CASH FLOWS FROM              (unaudited)       (audited)       (audited)
OPERATING ACTIVITIES
  Net loss                 $(21,063,599)    $(10,930,163)     $(1,037,626)
  Adjustment to
   reconcile net loss
   to net cash used
   in operating
   activities
     Depreciation and
      amortization            7,628,910       7,653,924            4,394
     Consulting fees
      recognized              3,181,856       1,457,006          765,865
     Litigation settlement            -         913,750                -
     Impairment loss          9,804,764        1,164,561                -
     Legal fees                       -          126,500                -
     Compensation expense       816,582         319,301                -
     Deferred income taxes   (1,595,423)     (1,653,161)               -
     Loss on disposal                 -              280                -
  Changes in operating
   assets and liabilities
     Accounts receivable         59,098           35,537             (809)
     Inventory                   71,000           49,518                -
     Prepaid expenses and
      other current assets        5,500            7,980                -
     Accounts payable         1,157,334          (36,857)            1,787
     Accrued payroll             40,105          118,157           (39,310)
     Other current
      liabilities               (10,265)         215,929                -
     Other assets and
      liabilities                     -          (11,555)            (300)
     Deferred revenue           (87,538)          23,196                -
      Net cash used in
      operating activities      953,112         (546,097)        (305,999)



CASH FLOWS FROM
INVESTING ACTIVITIES
  Proceeds on disposal
   of fixed assets               40,050           15,090                -
  Cash acquired in
   acquisitions                       -          186,318          (24,666)
  Payment of organization
   costs                              -                -              569
  Capital expenditures                          (614,193)         (25,605)
      Net cash used in
      investing activities      (85,150)        (412,785)         (49,702)



CASH FLOWS FROM
FINANCING ACTIVITIES
  Payments on notes
   payable                       (5,910)         (65,369)               -
  Disbursements in excess of
   cash balances                 42,469                -                -
  Payments on notes
   payable-stockholder          (11,093)         (25,000)               -
  Payments on subscriptions
   receivable                         -          150,000                -
  Proceeds from note
   payable-stockholder          568,571          235,010           30,133
  Issuance of common
   stock for cash               370,000          395,000          332,800
  Warrants exercised                  -          337,322                -
      Net cash provided
      by financing
      activities                964,037        1,026,963          362,933



Net increase (decrease)
in cash and cash
equivalents                     (74,225)          68,081            7,232



Cash and cash equivalents,
Beginning of period              75,313            7,232                -



Cash and cash equivalents,
End of period                    $1,088       $   75,313        $   7,232



The accompanying notes are an integral part of these statements.



<PAGE>


                  USURF AMERICA, INC. AND SUBSIDIARIES



               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Basis of Presentation


USURF America, Inc. (USURF), formerly Internet Media Corporation, was
incorporated as Media Entertainment, Inc. in the State of Nevada on
November 1, 1996.  USURF currently provides wireless Internet access
services to a small number of customers in Santa Fe, New Mexico.  USURF's
original purpose was to operate as a holding company in the wireless cable
television and community (low power) television industries, as well as
other segments of the communications industry. Until January 1999, the
Company was in the development stage.  In 1998 the Company changed its
focus to concentrate its efforts in the wireless internet communications
industry.  The Company later ceased efforts to develop the wireless cable
and low power television business areas and assigned all of its assets from
the low power television activities to New Wave Media Corp. in exchange for
a 15% ownership interest in New Wave Media Corp.



Effective December 31, 1996, USURF acquired all of the outstanding common
stock of Winter Entertainment, Inc., a Delaware corporation incorporated on
December 28, 1995 (WEI), and Missouri Cable TV Corp., a Louisiana
corporation incorporated on October 9, 1996 (MCTV).  WEI operates a
community television station in Baton Rouge, Louisiana; MCTV owns wireless
cable television channels in Poplar Bluff, Missouri, which system has been
constructed and is ready for operation, and Lebanon, Missouri.  Effective
October 8, 1998, the Company formed Santa Fe Wireless Internet, Inc. (Santa
Fe), a New Mexico corporation, to hold the assets acquired from Desert Rain
Internet Services.  Santa Fe was organized to provide wireless internet
access.  The acquisition of WEI and MCTV by USURF was accounted for as a
reorganization of companies under common control.  The assets and
liabilities acquired were recorded at historical cost in a manner similar
to a pooling of interests.  The acquisition of Santa Fe was accounted for
as a purchase whereby cost is allocated to the assets acquired.


On January 29, 1999, the Company acquired all the stock of CyberHighway,
Inc., a Boise, Idaho-based ISP, by issuing 2,000,000 shares of stock valued
at approximately $15,940,000.  In addition, 325,000 shares of common stock
were issued in payment of a finder's fee arising out of this acquisition.
This acquisition was accounted for as a purchase business combination.


In June 1999, USURF acquired all the stock of Santa Fe Trail Internet Plus,
Inc., a Santa Fe, New Mexico-based ISP, by issuing 100,000 shares of stock
valued at approximately $400,000.  This acquisition was accounted for as a
purchase business combination.  Disclosure of what operations would have
been as if the transaction had occurred at the beginning of the period, and
as of the beginning of the preceding period, are not shown due to the
transaction being immaterial to the financial statements taken as a whole.


In July 1999, USURF acquired all of the stock of Premier Internet Services,
Inc., an Idaho-based ISP, by issuing 127,000 shares of stock valued at
approximately $508,000. This acquisition was accounted for as a purchase
business combination.  Disclosure of what operations would have been as if
the transaction had occurred at the beginning of the period, and as of the
beginning of the preceding period, are not shown due to the transaction
being immaterial to the financial statements taken as a whole.


In August 1999, USURF acquired the www.usurf.com domain by issuing 150,000
shares of stock valued at approximately $863,000.  This acquisition has
been accounted for as a purchase business combination.  Disclosure of what
operations would have been as if the transaction had occurred at the
beginning of the period are not shown due to the transactions being
immaterial to the financial statements taken as a whole.


In November 1999, the Company acquired the customer base of Cyber Mountain,
Inc., a Denver, Colorado-based ISP, for 25,000 shares of stock valued at
approximately $75,000.  This acquisition has been accounted for as a
purchase business combination.  Disclosure of what operations would have
been as if the transaction had occurred at the beginning of the period are
not shown due to the transactions being immaterial to the financial
statements taken as a whole.


In December 1999, USURF acquired a portion of the ISP-related equipment and
customer base of Cyber Highway of North Georgia, Inc., a Demorest,
Georgia-based ISP, for 53,000 shares of stock valued at approximately
$21,000. This acquisition has been accounted for as a purchase business
combination.  Disclosure of what operations would have been as if the
transaction had occurred at the beginning of the period are not shown due
to the transactions being immaterial to the financial statements taken as a
whole.


In February 2000, the Company acquired the Spinning Wheel, Inc., an Idaho
Springs, Idaho-based ISP, for 81,063 shares of common stock valued at
approximately $260,000. This acquisition has been accounted for as a
purchase business combination.  Disclosure of what operations would have
been as if the transaction had occurred at the beginning of the period are
not shown due to the transactions being immaterial to the financial
statements taken as a whole.


In February 2000, the Company acquired Internet Innovations, LLC, a Baton
Rouge, Louisiana-based web design company, for 50,000 shares of common
stock valued at approximately $200,000. This acquisition has been accounted
for as a purchase business combination.  Disclosure of what operations
would have been as if the transaction had occurred at the beginning of the
period are not shown due to the transactions being immaterial to the
financial statements taken as a whole.



Principles of Consolidation


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



Use of Estimates


The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those
estimates.



A material estimate that is particularly susceptible to significant change
is the amortization of intangibles.  In estimating the period over which to
amortize the acquired customer bases, management obtains information from
industry data.



Cash Equivalents


The Company considers all highly liquid investments with original
maturities of three months or less from the date of purchase to be cash
equivalents.



Inventory


Inventory consists of internet access equipment held for sale and is valued
at the lower of cost or market.  Cost is determined using the specific
identification method.



Property and Equipment


Property and equipment are stated at cost and are depreciated principally
by the straight-line method over the estimated useful lives of the assets,
ranging from 3 to 15 years.  Included in property and equipment are
wireless modems, which had not been placed in service at December 31, 2000,
and are therefore, not being depreciated.



Revenue Recognition


Until September 2000, the Company maintained license agreements with
affiliate ISP's to provide internet access to affiliates' customers.
License fees were typically billed in the month the services were provided.
 The Company charges direct customers (residential and business
subscribers) monthly access fees to the internet and recognizes the revenue
in the month the access is provided. For certain subscribers billed in
advance, the Company recognizes the revenue ratably over the period the
billing covers.  Revenue for other services provided, including set-up fees
charged to customers and affiliates, and equipment sales are recognized as
the service is performed or the equipment is delivered.



Costs of Access Revenues


Costs of access revenues primarily consist of telecommunications expenses
inherent in the network infrastructure.  Costs of access expenses also
include fees paid for lease of the Company's backbone, as well as license
fees for Web browser software based on a per-user charge, other license
fees paid to third-party software vendors, product costs, and contractor
fees for distribution of software to new subscribers.



Income Taxes


Deferred income tax assets and liabilities are computed for differences
between financial statement and tax basis of assets and liabilities that
will result in taxable or deductible amounts in the future based on enacted
tax laws and rates applicable to the period in which the differences are
expected to affect taxable income. Valuation allowances are established
when realization is less than 50% probable. Income tax expense is the tax
payable or refundable for the period plus or minus the change during the
period in deferred tax assets and liabilities.



Financial Instruments and Concentration of Credit Risk


Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of cash and trade
receivables.  The Company maintains its cash in bank deposit accounts,
which, at times, may exceed federally insured limits.  The Company has not
experienced any losses in such accounts and believes it is not exposed to
any significant credit risk on cash.


Concentrations of credit risk with respect to trade receivables are limited
due to the large number of customers and markets, which comprise the
Company's customer base.  The Company generally does not require
collateral, and receivables are generally due within 30 days.



Fair Values of Financial Instruments


The carrying amounts of financial instruments including cash, trade
receivables, accounts payable and accrued expenses approximate fair value
because of the immediate or short-term maturities of these instruments. The
difference between the carrying amount and fair value of the Company's
long-term debt is not significant.



Loss Per Common Share


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



Goodwill and Other Intangible Assets


Goodwill and other intangible assets, primarily acquired customer bases,
are stated on the basis of cost and are amortized, principally on a
straight-line basis, over the estimated future periods to be benefitted
(generally 3 years).  Goodwill and other intangible assets are periodically
reviewed for impairment to ensure they are appropriately valued. Conditions
which may indicate an impairment issue exists include a negative economic
downturn or a change in the assessment of future operations.  In the event
that a condition is identified which may indicate an impairment issue
exists, an assessment is performed using a variety of methodologies,
including cash flow analysis, estimates of sales proceeds and independent
appraisals.  Where applicable, an appropriate interest rate is utilized,
based on location specific economic factors.


Due to the demise of the business of the dial-up Internet access business
of the CyberHighway subsidiary, associated goodwill and other intangibles
were impaired at December 31, 2000, and were written down in the total
amount of $18,229,229.



Advertising


The Company expenses advertising costs as incurred.  During the year ended
December 31, 2000, the Company incurred approximately $24,583, in
advertising costs.



Investments


Investments include minority interests held in three non-public companies
recorded at cost, which approximates fair value.



2.  NET 1, INC. ACQUISITION


On August 23, 1999, the Company acquired Net 1, Inc. (Net 1) in a business
combination accounted for as a purchase.  Net 1 was primarily engaged as an
ISP in Alabama.  In September, 1999 the Company tendered the shares of
capital stock obtained in the acquisition of Net 1 for rescission of the
transaction.  However, legally the Company was still the owner of the
outstanding shares of Net 1 at December 31, 1999, and is required by
generally accepted accounting principles to record Net 1 as a wholly owned
subsidiary from the date of acquisition.


It was discovered during arbitration proceedings that no activity occurred
in the newly acquired subsidiary, Net 1, after the acquisition. The
customer base was moved to an unrelated company by a former owner, and all
activity was transacted in the unrelated company.  Therefore, no revenues
or expenses were incurred by Net 1 from the date of acquisition, August 23,
1999 through December 31, 1999.


The total cost of the acquisition was $1,164,561, which exceeded fair value
of the net assets of Net 1 by $1,164,561.  The excess was deemed to be
impaired at December 31, 1999 due to the change in the operating
environment and was recorded in the accompanying financial statements as an
impairment loss.


On October 12, 2000 the acquisition of Net 1 was rescinded.  Included in
the terms of the settlement agreement was the return of  the 250,000 shares
issued in the original transaction to the Company. The Company then issued
250,000 shares of stock in settlement of the arbitration.  The agreement
also called for one of the former owners to assume a $50,000 liability,
that was recorded by USURF upon the acquisition.  The total gain on the
recission of the transaction was $961,436 and will be recognized in the
December 31, 2000 financial statements.



3.  PROPERTY AND EQUIPMENT


Property and equipment and accumulated depreciation were as follows at
December 31, 2000 and 1999:


                                 2000                  1999


Total property and equipment   $92,557             $1,501,233



Accumulated depreciation       (46,279)              (421,786)


Property and equipment, net    $46,278             $1,079,447



4.  INTANGIBLES


Classification of intangibles and accumulated amortization at December
31st were as follows:


                                2000                           1999


Acquired customer base      $        -                      $16,676,433
Goodwill                             -                        8,126,616
Other                                -                          940,186


                                     -                       25,743,235


Accumulated amortization             -                       (7,514,013)


                            $        -                      $18,229,222



5.  WIRELESS CABLE ASSETS


Property and equipment includes wireless cable station equipment, which is
capable of operation but has not been put into use.  The equipment is
recorded at cost of approximately $188,000 and is not being depreciated.
In addition, the Company owns licenses in the wireless cable markets, which
operate on the same frequencies and will be used in the wireless internet
market.


The Company's ability to provide two-way interactive internet service on
its current channel license agreements depends on Federal Communication
Commission (FCC) approval of two-way communication on the related
frequencies.  Management cannot predict if and when the FCC will grant this
approval; however, if such approval is not obtained, the carrying value may
become impaired.



6.  LICENSES AND RIGHTS TO LEASES OF LICENSES


The Company owns licenses or rights to leases of licenses in the following
wireless cable and community television markets:


Wireless Cable Market                 Expiration Date



Poplar Bluff, Missouri                October 16, 2006
Lebanon, Missouri                     October 16, 2006
Port Angeles, Washington              December 21, 2003
Astoria, Oregon                       December 21, 2003
Sand Point, Idaho                     August 09, 2006
The Dalles, Oregon                    August 09, 2006
Fallon, Nevada                        August 09, 2006


Application for renewal of licenses must be filed within a certain period
prior to expiration.


If FCC approval of two-way communications on these frequencies is not
obtained, the carrying value may become impaired.



7.  NOTE PAYABLE TO STOCKHOLDER


                                                 2000           1999


Note payable to stockholder,
interest accrues at 8%, due
on demand and unsecured.                        $6,638              $356,239



8.  LOAN CONVERSION - STOCKHOLDER


As of August 21, 2000, the Company owed its president, David M. Loflin, a
total of $967,703 ($916,045 in principal, $51,658 in interest), the result
of cash loans made to the Company by Mr. Loflin during the previous
approximately two years.  On August 21, 2000, the Company entered into a
letter agreement with Mr. Loflin, whereby Mr. Loflin agreed to convert all
sums owed to him into shares of our common stock.


Pursuant to the letter agreement, Mr. Loflin received one share of common
stock for every $1.25 of debt converted, for a total of 774,162 shares.
The $1.25 price was agreed upon as that price was the low sale price for
the Company's common stock on Friday, August 18, 2000, as reported by the
American Stock Exchange.


The Company's board of directors, in authorizing the transaction described
above, found the transaction to be in the best interest of USURF America.



9.  SOURCES OF SUPPLIES


The Company relies on local telephone companies and other companies to
provide data communications.  Although management believes alternative
telecommunications facilities could be found in a timely manner, any
disruption of these services could have an adverse effect on operating
results.


The Company maintains various vendors for required products, such as
modems, terminal services and high-performance routers, which are important
components of its network.  Some of the Company's suppliers have limited
resources and production capacity.  If the suppliers are unable to meet the
Company's needs as it is building out its network infrastructure, then
delays and increased costs in the expansion of the Company's network
infrastructure could result, having an adverse effect on operating results.



10.  COMMITMENTS


The Company has contracts with various telephone companies and other
companies to provide data communication services.  The terms on these
agreements range from month-to-month to five years.  Future obligations
under these agreements as of December 31, 1999 are as follows for the years
ending December 31:



          2000          $820,000
          2001          540,000
          2002          330,000
          2003          140,000
          2004          100,000



11.  STOCK FOR SERVICES


The Company has issued stock pursuant to various consulting agreements.
Deferred consulting costs, which are valued at the stock price on the date
of the agreements, are recorded as a reduction of shareholder's equity and
will be amortized over the respective lives of the agreements.



12.  RELATED PARTIES


In March 1998, four directors of the Company were issued 20,000 shares each
of Company common stock as a bonus for their services as directors.
Compensation expense of approximately $45,000 was recorded based on the
fair value of the common stock on the date of issue.


In December 2000, a total of 500,000 shares of common stock were issued to
two officers as bonuses for their services as officers.  Compensation
expense of approximately $125,000 was recorded based on the fair value of
the common stock on the date of issue.



13.  WARRANTS


Warrants outstanding at December 31, 2000 consists of the following:


60,000 issued in January 1999, pursuant to a private offering, with an
exercise price of $7.00, exercisable for a period of three years from
issuance, redeemable by the Company at any time the bid price of the
Company's common stock has been at or above $8.50 per share for five
consecutive trading days.


56,667 issued in May 1999, pursuant to an Investment Banking Agreement,
with an exercise price of $1.25, exercisable for a period of four years
from issuance.


56,667 issued in May 1999, pursuant to an Investment Banking Agreement,
with an exercise price of $1.50, exercisable for a period of four years
from issuance.


34,000 issued in May 1999, pursuant to a Selling Agreement, with an
exercise price of $1.25, exercisable for a period of five years from
issuance, of which 21,857 were exercised during 1999.


35,000 issued in June 1999, pursuant to a private offering, with an
exercise price of $7.00, exercisable for a period of two years from
issuance, redeemable by the Company at any time the bid price of the
Company's common stock has been at or above $10.00 per share for five
consecutive trading days.


50,000 issued on August 27, 1999, pursuant to a Subscription Agreement,
with an exercise price of $6.00, exercisable for a period of three years
from issuance.


60,000 issued on December 1, 1999, pursuant to a Consulting Agreement, with
an exercise price of $3.50, exercisable for a period of five years from
issuance.  The Company does apply SFAS No. 123, Accounting for Stock-Based
Compensation, in accounting for the stock warrants issued to non-employees
in connection with the original stock issuance.  The Company has recorded
expense of $145,298 pursuant to the issuance of these warrants.  The fair
value of the warrants granted to non-employees is estimated on the date of
the grant using the assumption of an expected life of 5 years, and a
risk-free interest rate of 5.0%.


60,000 issued in April 2000, pursuant to a private offering, with an
exercise price of $7.50, exercisable for a period of two years from issuance.


35,000 issued in November 2000, pursuant to a Consulting Agreement, with an
exercise price of $1.00, exercisable for a period of three years from
issuance.


380,000 issued in December 2000, as a finder's fee, an exercise price of
$.20, exercisable for a period of three years from issuance.



14.  SETTLEMENT AGREEMENT


In November l999, the Company entered into a settlement agreement and
mutual release, which settled certain legal proceedings in which USURF and
CyberHighway had been involved.  The parties to the settlement agreement
were: USURF, CyberHighway, the former operating officer and a former
director, and two former owner-employees (collectively the plaintiffs) of
CyberHighway.


Pursuant to this settlement agreement, certain legal proceedings were
settled in full by issuance of 340,000 shares of USURF common stock to the
plaintiffs.  The 0Company paid a total sum of $43,325 for reimbursement of
attorneys' fees paid by the plaintiffs.


The 340,000 shares issued were valued at $2.6875 per share, or $913,750, in
the aggregate.  The price per share assigned to the issued shares was the
closing price of the common stock, as reported by the American Stock
Exchange.  The total charge against earnings in 1999 resulting from the
settlement agreement was $957,075.



15.  CONTINGENCIES


  A.  Bankruptcy


        On September 29, 2000, three creditors of CyberHighway filed an
involuntary petition in the Idaho Federal Bankruptcy Court, styled In Re:
CyberHighway, Inc., Case No. 00-02454.  In December 2000, CyberHighway and
the petitioning creditors filed a joint motion to dismiss this proceeding.
The joint motion to dismiss requires the approval of CyberHighway's
creditors.  However, some of CyberHighway's creditors have objected to the
dismissal of the proceeding.  The basis of the creditors' objection is
their belief that CyberHighway's as-yet unasserted damage claims against
the original petitioning creditors and their law firm and a claim against
Dialup USA, Inc. represent CyberHighway's most valuable assets.  These
as-yet unasserted claims include claims for bad faith filing of the
original bankruptcy petition as to the original petitioning creditors and
their law firm, as well as claim for tortious interference with beneficial
business relationships as to Dialup USA, Inc.  The objecting creditors
desire that these claims be adjudicated in the bankruptcy court.  The
Company believes it is likely that, at some time in the future, a final
order of bankruptcy will be entered with respect to CyberHighway.


      This involuntary bankruptcy filing has caused the demise of CyberHighway's
dial-up Internet access business.  CyberHighway has lost nearly all of its
customers.  Due to this loss of customer base, the Company's intangible
assets relating to those customers are worthless.  The write-off of the
intangible assets reflected on the Company's December 31, 2000, balance
sheet was $18,229,229.  Due to this change in operating environment, the
Company's revenues have decreased substantially as well as a decrease in
expenses associated with the elimination of personnel previously required
to operate the Company's network operations center, and accordingly
goodwill has been impaired. The write-down of goodwill reflected on the
Company's December 31, 2000, balance sheet was $3,800,000.


  B.  Potential Rescission Claims


        From January 24, 2000, to December 31, 2000, a total of 5,032,085 shares
of the common stock of the Company may have been issued in violation of
Section 5 of the Securities Act of 1933, as amended.  The aggregate value
assigned to these shares upon their issuance totalled $5,521,502.  It is
possible that each of the issuees of these shares has a potential claim for
rescission of their respective issuance transactions.


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


16.  Going Concern


It is expected that the Company's independent auditor will express a going
concern opinion in its report on the Company financial statements for the
year ended December 31, 2000.



17.  Pending Financing Transaction


In October 9, 2000, the Company signed a common stock purchase agreement
with an unrelated company to sell up to 6,000,000 shares of common stock
and 645,000 common stock purchase warrants for up to $10,000,000.  The
purchase price of the shares under this agreement will vary, based on
future market prices of the Company's common stock.  The agreement calls
for the Company to meet certain requirements and maintain certain criteria
with respect to its common stock in order to avoid an event of default.
Upon the occurrence of the event of default the buyer is no longer
obligated to purchase any additional shares of stock.  The agreement will
terminate on April 30, 2001, if all of the circumstances necessary to
effect the transaction have not occurred by that date, including completion
of a registration statement with respect thereto.



18.  SIGNIFICANT BUSINESS COMBINATION


On January 29, 1999, the Company acquired all of the capital stock of
CyberHighway, Inc. (CyberHighway), an Idaho corporation.


The acquisition was effected pursuant to a Plan and Agreement of
Reorganization dated January 20, 1999 between the Company and CyberHighway.
The Company paid the shareholders of CyberHighway approximately $15,940,000
through the issuance of 2,000,000 shares of common stock.  The purchase
price was based upon the weighted average closing price of the Company's
common stock for five days prior and subsequent to the acquisition date.


The transaction was accounted for as a purchase.  The purchase price was
allocated to the underlying assets purchased and liabilities assumed based
on their fair market values at the acquisition date.


The following table summarizes the net assets purchased in connection with
the CyberHighway acquisition and the amount attributable to cost in excess
of net assets acquired:


Net assets acquired           $   372,472
Acquired customer base         15,566,787
Other assets                    5,260,690
Deferred tax liability         (5,260,690)


The following shows the unaudited proforma condensed balance sheets of the
Company and CyberHighway as if the acquisition occurred on December 31, 1998:


                         Historical
                                  Cyber-     Proforma       Proforma
                      USURF       Highway   Adjustments   Consolidated


Current assets     $  8,265       $306,018  $      -      $    314,283
Property and
 equipment, net     247,267        408,558   (72,692)          583,133
Other assets         43,920         13,480         -            57,400
Intangibles          34,207              -   20,827,477      20,861,684
Total assets       $333,659       $728,056  $20,754,785     $21,816,500


                         Historical
                                  Cyber-     Proforma       Proforma
                      USURF       Highway   Adjustments   Consolidated


Current liabilities $249,071   $  282,892   $      -       $  531,963
Deferred tax
 liability                 -            -    5,260,690        5,260,690
Stockholders'
 equity               84,588      445,164    15,494,095       16,023,847


Total liabilities
 and stockholders'
 equity             $333,659    $728,056    $20,754,785      $21,816,500


The following unaudited proforma condensed statements of operations assumes
the CyberHighway acquisition occurred on January 1, 1998.  In the opinion
of management, all adjustments necessary to present fairly such unaudited
pro forma condensed statements of operations have been made.


                         Historical
                                  Cyber-     Proforma       Proforma
                      USURF       Highway   Adjustments   Consolidated


Revenues            $  5,440    $2,449,156  $       -       $2,454,596
Expenses
  Internet access
   cost                    -       510,036          -          510,036
  Equipment cost           -       326,488          -          326,488
  Depreciation and
   amortization        4,394       138,674  6,918,262        7,061,330
  General and
   administrative  1,030,070     1,292,526          -        2,322,596
  Selling                  -       110,397          -          110,397
Total operating
 expense            1,034,464     2,378,121 6,918,262       10,330,847


Operating income
 (loss)            (1,029,024)      71,035 (6,918,262)      (7,876,251)


Other income
 (expense)             (8,602)       6,960          -           (1,642)


Income (loss)
 before taxes      (1,037,626)      77,995 (6,918,262)      (7,877,893)


Income tax
 benefit                    -            - (1,753,563)      (1,753,563)


Net income
 (loss)          ($1,037,626)      $77,995($5,164,699)     ($6,124,330)


Net income
 (loss) per
 share              ($0.14)        $31.51                     ($0.65)


Weighted average
 number of
 shares
 outstanding       7,361,275       2,475                      9,361,275



19.  SUBSEQUENT EVENTS


In January 2000, the Company issued 800,000 shares of its common stock as a
commitment fee under the common stock purchase agreement to the unrelated
company, as well as 200,000 shares as a finder's fee to the Company's
investment banker.


In February 2001, the Company sold, pursuant to a Securities Purchase
Agreement, 840,000 shares of common stock and 840,000 warrants with an
exercise price of $.15, exercisable for a period of three years from
issuance.  These securities were sold for $126,000 in cash, with no portion
of the purchase price having been allocated to the warrants.


In February 2001, the Company issued, as a finder's fee, 84,000 shares of
common stock and 336,000 warrants with an exercise price of $.15 per share,
exercisable for a period of three years from issuance.


In March 2001, the Company sold, pursuant to a Securities Purchase
Agreement, 500,000 shares of common stock and 500,000 warrants with an
exercise price of $.25, exercisable for a period of three years from
issuance.  These securities were sold for $125,000 in cash, with no portion
of the purchase price having been allocated to the warrants.


In March 2001, the Company issued, as a finder's fee, 50,000 shares of
common stock and 200,000 warrants with an exercise price of $.25 per share,
exercisable for a period of three years from issuance.



 .