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


                                Form 10-KSB/A


  [  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 18 to the consolidated financial statements
appearing elsewhere in this Annual Report.


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. 5,172,085 of these shares, with an assigned value of
$5,069,502, were issued in payment of services or as bonuses to employees
and 130,000 of these shares were issued for cash or underlie currently
exercisable warrants, which were sold or will be sold for at total of
$650,00 in cash.  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 $34,502,160 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 $34,502,160.
Our gross revenues for the years ended December 31, 2000, 1999 and 1998, were
$1,781,082, $2,547,225, and $5,440, respectively, with losses from
operations of $15,248,909, $10,446,254 and $1,029,024, respectively.  Our
net losses for the years ended December 31, 2000, 1999 and 1998, were
$21,855,330, $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 negative impact on our 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.  These shares were valued
at $961,436.


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 $43,750.


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 $23,197 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.  At
December 31, 2000, all of these values were written off, due to the demise
of CyberHighway's business.  Please see the discussion under "CyberHighway
Bankruptcy" below.


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 "Management's Plans Relating to
Future Liquidity", 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, until September 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
rendered our intangible assets relating to those customers to become
worthless.  The write-off of these intangible assets totalled $4,814,272,
net of deferred taxes, as reflected in our December 31, 2000, financial
statements.  Due to this change in operating environment, monthly revenues
have decreased substantially, and, accordingly, goodwill has been impaired.
 The write-down of goodwill totalled $4,425,037, as reflected in our
December 31, 2000, financial statements.  Please see the discussion below
under the heading "Liquidity and Capital Resources" for more information on
this topic.


Shareholder Loans - Conversion to Equity


In August 2000, our president, David M. Loflin, converted all loan amounts
owed to him, 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.  At December 31, 2000, we owed
Mr. Loflin $6,638.


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 investigated the nature of
the other inquiring companies.  No paying customers use these systems, due
to circumstances involving these companies that are beyond our control.
During 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 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, until September 2000, 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


     Revenues                       $ 1,781,082       $ 2,547,225
     Internet Access Costs and
       Cost of Goods Sold             2,145,955         1,152,721
     Gross Profit (Loss)               (273,326)        1,394,504
     Operating Expenses              14,975,583        11,860,758
     Other Expense                    9,193,281         2,117,070
     Loss from Operations            15,248,909        10,466,254
     Net Loss                        21,855,330        10,930,163


Our 2000 statement of operations reflect the following significant charges
against our earnings:


        -       each of the following amounts relates to the demise of the
business of CyberHighway:


                -       $4,814,272 amount of intangible assets written off
attributable to acquired customers bases, net of deferred taxes; and


                -       $4,425,037 amount of intangible assets written off
attributable to goodwill.


        -       $875,000  750,000 shares of our common stock were issued to
three vice presidents, 250,000 shares as an employment agreement signing
bonus valued at $3.00 per share and 500,000 shares as employment bonuses
valued at $125,000 this expense is included in the "Salary and Commissions"
statement of operations line item.


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.


Due to our severe lack of capital during 1999 and 2000, during both years,
we issued a large number of shares of our stock to consultants in payment
of their services.  The fair value of the shares issued to consultants is
included in our statements of operations under the "Professional Fees" line
item.  Issuing stock was the only means by which we could obtain the
consultants' services.  The value of the consulting services received by us
under each agreement has been expensed in equal monthly amounts over their
respective terms:


        -       in 2000, we issued 2,262,166 shares of our common stock under
consulting agreements; these shares were valued for financial accounting
purposes at $3,110,000, in the aggregate.  This amount is being expensed
in equal monthly amounts over periods ranging from four months to one year.
Nearly all of this total amount was expensed during 2000.


        -       in 1999, we issued 566,000 shares of common stock under
consulting agreements; 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.


Our net loss for 2000 is attributable to several large non-standard items


        -       the depreciation and amortization of acquired customer bases,
goodwill and other intangibles of $7,618,755;


        -       $2,811,856 in professional fees, substantially all of which is
attributable to stock issuances under various consulting agreements;


        -       $4,168,610 in salary and commissions was expensed, $875,000 of
which is the result of stock bonuses to three officers; and


        -       $9,239,310 in impairment loss relating to the demise of
CyberHighway's business and the associated write off of all related intangible
assets.


For 1999, our net loss is attributable in large measure to the following
expense items:


        -       $7,653,924 in depreciation and amortization of acquired customer
bases, goodwill and other intangibles;


        -       $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.


Our acquisition and subsequent rescission of the acquisition of Net 1, Inc.
affected our 1999 and 2000 statements of operations 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 statement of
operations for 1999 under the "Other Income/Expense" heading.


        -       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, has
been recorded in our statement of operations for 2000 under the "Gain on
Rescission" heading.


For 1999 and 2000, our statements of operations reflect an income tax
benefit of $1,595,424 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 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 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, 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


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


Many balance sheet line items changed significantly from 1999 to 2000.
These changes are summarized below:


        -       Accounts Payable our accounts payable increased to $1,472,030
in 2000, from $363,665 in 1999.  This increase is due to our lack of capital
throughout 2000, compounded by our decision to suspend payment of most of
our accounts, beginning in April 2000.  While no creditor has taken any
adverse action against USURF America as a result of this policy, this
policy did negatively impact CyberHighway.


        -       Other Current Liabilities our other current liabilities
decreased from 1999 to 2000, from $216,650 to $41,824.  This change resulted
from the rescission of the Net 1 acquisition transaction, as Net 1's liabilities
were removed.


        -       Accrued Interest to Stockholder at December 31, 2000,
we owed our president only $6,638, because of his converting approximately
$967,000 that we owed him into shares of our stock in August 2000.


        -       Deferred Revenue we had no deferred revenue for 2000, due to
the sudden demise of CyberHighway during the last quarter of 2000.


        -       Long-term Liabilities at December 31, 2000, we had no long-term
liabilities.  Our 1999 long-term liabilities consisted primarily of
deferred taxes relating to our acquired customer bases.  However, deferred
taxes are no longer applicable, since our intangible assets have been
written off.


        -       Subscriptions Receivable this amount of $933,514 arises from our
president's converting his loans into shares of our stock. This entry
appears due to the fact that the shares issued in that transaction were not
actually issued until after December 31, 2000, due to an administrative
oversight.


        -       Stockholders' Equity (Deficit)  at December 31, 2000, we had a
stockholders' deficit of $1,377,857, the result of the write off of all of
our intangible assets.  This is compared to our stockholders' equity of
$14,440,309 at December 31, 1999.


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 to ever earn a profit.


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, 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.  Subsequent to the conversion transaction,
Mr. Loflin has loaned us small sums.  At December 31, 2000, we owed Mr.
Loflin $6,638.  All sums owed to Mr. Loflin are payable on demand, with
interest accruing at 8% per annum.   We cannot assure you that Mr. Loflin
will continue to loan us money when we need it.


During 2000, we obtained funds from private sales of our securities on two
occasions:


        -       In March and April 2000, we sold a total of 65,000 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 $325,000.  These proceeds were used to pay approximately
$275,000 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 in cash compared to cash used of
$546,097 during 1999.  In both years, the use of cash in operations was a
direct 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; however, its demise also
reduced our revenues to insubstantial amounts.  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 $750,000 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 compared to $412,785 in
1999.  During 2000, in our investing activities, purchases of equipment
used cash, though to a lesser extent than during 1999; in 1999, our
equipment purchases of $614,193 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 in cash.  Of this amount, $568,571 is attributable to
loans from our president and $370,000 is attributable to sales of
securities.  For 1999, our financing activities provided $1,026,963 in
cash, $235,010 of which is attributable to loans from our president and
$545,000 of which is attributable to private sales of our securities.  We
continue to seek capital and cannot, therefore, predict future levels of
cash flows from financing activities. However, we expect that financing
activities will provide significant sums of cash, as a result of sales of
our common stock expected under the agreement with Fusion Capital.


Non-Cash Investing and Financing Activities.  During the year ended
December 31, 2000, we issued a total of 2,262,166 shares of common stock
under consulting agreements; these shares have been valued at $3,110,000,
in the aggregate.  Also during 2000, we issued a total of 131,063 shares of
common stock in acquisitions, which shares were valued at $761,739, in the
aggregate.


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.


In December 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.usurf.com, due to a lack
of capital, the acquisition of which was valued at $863,000, and we have
determined not to pursue the development of www.e-tail.com.


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 (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;


        -       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 is
payable 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 $54,166.
(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 $20,834.
(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 $41,334, 80% of which is payable in shares
of our stock.  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 have never attributed
any 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 $54,166.
(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 $20,834.
(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 $41,334, 80% of which is payable in shares
of our stock.  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 necessary 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
                 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


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


  (a)(2) Exhibits


     Exhibit No.       Description


        23.1           Consent of Postlethwaite & Netterville,
                       Independent Auditor


  (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 18, 2001
David M. Loflin
President (Principal Executive
Officer), Acting Principal
Financial Officer and Director





/s/ Waddell D. Loflin                           April 18, 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 18, 2001
Ross S. Bravata
Director





/s/ Michael Cohn                                April 18, 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/A, 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/A.



<PAGE>


           INDEX TO FINANCIAL STATEMENTS OF USURF AMERICA, INC.


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


<PAGE>

INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
USURF America, Inc. and Subsidiaries
Baton Rouge, Louisiana


We have audited the accompanying consolidated balance sheets of USURF
America, Inc. and Subsidiaries as of December 31, 2000 and 1999, and the
related consolidated statements of operations, changes in stockholders'
equity and cash flows for the years then ended.  These consolidated
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement.  An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement
presentation.  We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of USURF America, Inc. and
Subsidiaries as of December 31,2000 and 1999, and the results of its
operations and cash flows for the years then ended in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 18 to the
consolidated financial statements, the Company has significant operating
losses.  In addition, the Company has excess current liabilities over
current assets of approximately $1.5 million. These conditions raise
substantial doubt about its ability to continue as a going concern.
Management's plans regarding these matters are also described in Note 18.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.


/s/ POSTLETHWAITE & NETTERVILLE

Baton Rouge, Louisiana
April 16, 2001


<PAGE>

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

ASSETS
                                       2000            1999
CURRENT ASSETS
  Cash and cash equivalents        $     1,088     $   75,313
  Accounts receivable-net                    -         59,098
  Inventory                            246,721        386,802
  Prepaid expenses and
   other current assets                      -          5,500
                                    ----------      ---------
                                       247,809        526,713
                                    ----------      ---------

PROPERTY AND EQUIPMENT
  Cost                                 138,954      1,135,638
  Less: accumulated depreciation       (69,476)      (421,786)
                                    ----------      ---------
                                        69,478        713,852
                                    ----------      ---------

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                  $   410,316    $19,545,169
                                    ==========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Disbursements in Excess of
   Cash Balances                   $    42,469    $         0
  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       34,183,962      28,918,638
  Accumulated deficit             (34,502,160)    (12,616,830)
  Subscriptions receivable            933,514            (860)
  Deferred consulting              (1,971,642)     (1,861,918)
                                    ---------       ---------
                                   (1,354,657)     14,440,309
                                    ----------      ---------
     TOTAL LIABILTIES AND
      STOCKHOLDERS' EQUITY        $   410,316     $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 AND 1999


                                 2000          1999

REVENUES
  Internet access revenues   $1,781,082    $2,268,511
  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
                              ---------     ---------

OPERATING EXPENSES
  Depreciation and
   amortization               7,618,755     7,653,924
  Professional fees           4,168,610     1,945,935
  Rent                          216,416       132,395
  Salaries and commissions    2,060,528     1,603,556
  Advertising                    24,583       125,034
  Other                         886,691       399,914
                              ---------     ---------
                             14,153,852    11,860,758


LOSS FROM OPERATIONS        (15,248,909)  (10,466,254)

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)
                              ---------     ---------
                             (9,193,281)   (2,117,070)
                              ---------     ---------

GAIN ON RESCISSION              961,436             -
                              ---------     ---------

LOSS BEFORE INCOME TAX      (23,480,754)  (12,583,324)

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

NET LOSS                   $(21,855,330) $(10,930,163)
                             ==========    ==========

Net loss per common share      (1.60)        $(0.96)
                             ==========    ==========

Weighted average number
 of shares outstanding       13,679,385    11,419,641
                             ==========    ==========

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 AND 1999

                                          Sub-
                                          scrip-
                              Accum-      tions     Deferred
           Common Paid-in     ulated      Receiv-   Con-
  Shares   Stock  Capital     Deficit     vable     sulting      Total
---------- ----- ---------- ------------ --------- ---------  -----------

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  3,109,774           -         - (3,110,000)           -

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
paid by
issuance
of common
stock

   290,000    29    214,871           -         -          -      214,900

Conversion
of debt to
equity

         -     -          -           -   969,374          -      969,374

Stock
warrants

         -     -          -           -         -          -            -

Amortization
of deferred
consulting

         -     -          -           -         -  3,000,276    3,000,276

Net loss

         -     -          - (21,855,330)        -         -  (21,855,330)


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 AND 1999

                                2000             1999

CASH FLOWS FROM
OPERATING ACTIVITIES
  Net loss                 $(21,855,330)    $(10,930,163)
  Adjustment to
   reconcile net loss
   to net cash used
   in operating
   activities
     Depreciation and
      amortization            7,618,755       7,653,924
     Consulting fees
      paid with stock         3,000,276       1,457,006
     Litigation settlement      214,900         913,750
     Gain on rescission        (961,436)
     Impairment loss and
      write down of assets   10,577,878       1,164,561
     Legal fees paid
      with stock                281,498         126,500
     Compensation expense
      paid with stock           774,066         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
     Inventory                   71,000           49,518
     Prepaid expenses and
      other current assets        5,500            7,980
     Accounts payable         1,108,365          (36,857)
     Accrued payroll             40,105          118,157
     Other current
      liabilities              (174,826)         215,929
     Other assets and
      liabilities                     -          (11,555)
     Deferred revenue           (87,538)          23,196
                              ---------        ---------

      Net cash used in
      operating activities     (953,112)        (546,097)
                              ---------        ---------

CASH FLOWS FROM
INVESTING ACTIVITIES
  Proceeds on disposal
   of fixed assets             $ 40,050        $  15,090
  Cash acquired in
   acquisitions                       -          186,318
  Payment of organization
   costs                              -                -
  Capital expenditures         (125,000)        (614,193)
                              ---------        ---------

      Net cash used in
      investing activities      (85,150)        (412,785)
                              ---------        ---------

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
  Issuance of common
   stock for cash               370,000          395,000
  Warrants exercised                  -          337,322
                              ---------        ---------

      Net cash provided
      by financing
      activities                964,037        1,026,963
                              ---------        ---------

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


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


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

The accompanying notes are an integral part of these statements.


<PAGE>

                     USURF AMERICA, INC. AND SUBSIDIARIES
                             BATON ROUGE, LOUISIANA

                  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 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.

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.

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.

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 54,000 shares of stock valued at approximately $212,000.

In February 2000, the Company acquired Spinning Wheel, Inc., an Idaho
Springs, Idaho-based ISP, for 81,063 shares of stock valued at
approximately $325,000.  This acquisition has been accounted for as a
purchase business combination.

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 $437,000.  This acquisition has been
accounted for as a purchase business combination.

None of the acquisitions described above, with the exception of
Cyberhighway which was near the beginning of 1999, had significant
operations at the time they were acquired by the Company.  Therefore,
proforma disclosure of what operations would have been as if the
transactions 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

Inventories are stated at the lower of cost or market, and represents
modems purchased from suppliers.

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 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 benefited
(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 amounts of
$4,425,037 and $4,814,272 (net of deferred taxes of $2,531,497), respectively.

Advertising

The Company expenses advertising costs as incurred.  During the years ended
December 31, 2000 and 1999, the Company incurred approximately $25,000 and
$125,000, in advertising costs, respectively.

Investments

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

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 shareholders' equity and
will be amortized over the respective lives of the agreements.

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 is 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 approximately $960,000.

3.  PROPERTY AND EQUIPMENT

Classifications of property and equipment and accumulated depreciation were
as follows at December 31, 2000 and 1999:

                                    2000                1999

     Wireless cable equipment     $         -        $   188,091
     Equipment                         92,557            906,047
     Furniture and fixtures                 -             37,487
     Office equipment                       -            338,531
     Leasehold improvements                 -             31,077
                                   ----------         ----------

                                       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
operational 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 pending 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.

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 of agreement with Mr. Loflin, whereby Mr. Loflin agreed to convert
all sums owed to him into shares of Company 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 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.  The issuance of shares was not complete until
the first quarter of 2001, therefore, the substance of this transaction has
been reflected as stock subscription in the accompanying financial statements.

9.  NOTE PAYABLE

The note payable of $5,910 at December 31, 1999, consists of a note payable
to a bank with interest at 9.25%, due in monthly payments of $2,887, with
final payment due February 25, 2000, secured by accounts receivable,
inventory and equipment.

10.  INCOME TAXES

The significant components of deferred tax assets and liabilities were as
follows at December 31:

                     +OK 3 2367

     Deferred tax liabilities
       Amortization of intangibles   $        -        $3,883,210
                                      ---------         ---------

     Deferred tax assets
       Net operating loss
        carryforwards                 3,739,588         2,313,159
       Less - valuation
        allowance                    (3,739,588)       (2,313,159)
                                      ---------         ---------
                                              -                 -

     Net deferred tax
      liability                      $        -        $3,883,210

The net changes in the valuation allowance for the periods ended December
31, 1999 and 1998 were $1,739,692 and $352,793, respectively.

The deferred tax liability results from the acquisitions of Cyberhighway,
Inc., Santa Fe Trail Internet Plus, Inc., and Premier Internet Services,
Inc. in tax free reorganizations, in which there is no tax basis in the
acquired customer base.

The Company has a net operating loss carry forward of approximately
$11,000,000 available to offset future income for income tax reporting
purposes, which will ultimately expire between 2011 and 2014 if not utilized.

11.  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.

During 2000, the Company purchased all of its network radios from one
supplier.  Additionally, the Company has purchased its modems principally
from two suppliers.  Additional changes in suppliers could cause a delay in
manufacturing which would affect operation results adversely.

12.  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:

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

13.  RELATED PARTY

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.

14.  WARRANTS

During 2000, the Company issued warrants to purchase 480,000 shares of
common stock at various share prices.  The remaining warrants expire
between 2001 and 2004.  Warrants at December 31, 2000 consist of the
following:

56,667 issued on May 18, 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 on May 18, 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 on May 18, 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.

60,000 issued on January 20, 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.

35,000 issued on June 4, 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.

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 five years, and a
risk-free interest rate of 5.0%.

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.

65,000 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.

15.  SETTLEMENT AGREEMENT

On November 30, 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 Company is paying the 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.

16.  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 objected to the dismissal of
         the proceeding.  The objecting creditors desire that all 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.

         Subsequent to the involuntary bankruptcy, CyberHighway 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 $4,814,272
         (net of deferred taxes).

Also, e reported pursuant
to SFAS 131.

18.  GOING CONCERN

These financial statements are presented on the basis that the Company is a
going concern.  Going concern contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business over a
reasonable length of time.  The accompanying financial statement shows that
current liabilities exceed current assets by approximately $1.5 million at
December 31, 2000.  The Company's president loaned the Company
approximately $568,571 during fiscal 2000 and loaned an additional $26,590
subsequent to year-end. The appropriateness of using the going concern
basis is dependent upon continued funding by the Company's president,
obtaining additional financing or equity capital and, ultimately, to
achieve profitable operations. The uncertainty about these conditions
raises substantial doubt about its ability to continue as a going concern.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

Management plans to raise capital by obtaining financing and eventually,
through public offerings. Management intends to use the proceeds from any
borrowings to acquire and develop markets to implement its Wireless
Internet Access System and sell its service.  The Company believes that
these actions will enable it to carry out its business plan and ultimately
to achieve profitable operations.

19.  FINANCING TRANSACTION

On 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 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.

20.  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)

21.  SUBSEQUENT EVENTS

The following events occurred subsequent to December 31, 2000:

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.

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 these 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 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.


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