ADVANCED RADIO TELECOM CORP, S-1/A, 1997-08-14

ADVANCED RADIO TELECOM CORP
S-1/A, 1997-08-14
CABLE & OTHER PAY TELEVISION SERVICES

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 14, 1997.
REGISTRATION NO. 333-31453
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ADVANCED RADIO TELECOM CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 4812 52-1869023
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)

500 108TH AVENUE NE, SUITE 2600, BELLEVUE, WASHINGTON 98004 (425) 688-8700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

THOMAS M. WALKER, ESQ.
GENERAL COUNSEL
500 108TH AVENUE NE, SUITE 2600
BELLEVUE, WASHINGTON 98004
(425) 688-8700 / (425) 990-1642 (FAX)
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES OF ALL COMMUNICATIONS TO:

MARY E. WEBER, ESQ.
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MA 02110-2624
(617) 951-7000 / (617) 951-7050 (FAX)

--------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

================================================================================
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the of an
offer to buy nor shall there by any sale of these securities in any State in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such State.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Subject to completion dated August 14, 1997

PROSPECTUS
----------

2,731,725 SHARES
ISSUABLE UPON EXERCISE OF WARRANTS

ADVANCED RADIO TELECOM CORP.

--------------------------------

COMMON STOCK

--------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

This Prospectus covers 2,731,725 shares (the "Shares") of common stock
$.001 par value (the "Common Stock"), of Advanced Radio Telecom Corp. ("ART" or
the "Company") to be issued and sold by the Company upon exercise of the
2,025,000 warrants (the "Warrants") issued in conjunction with the 14% Senior
Notes due 2007 (the "Senior Notes"), each entitling the holder to purchase 1.349
shares of Common Stock for $.01 per share, subject to adjustment under certain
circumstances as described in the Warrant Agreement. The Warrants are
exercisable from August 15, 1997 until 5:00 p.m. on February 15, 2007.

The Common Stock is listed on the Nasdaq National Market under the
symbol "ARTT." Application will be made to list the Shares offered hereby on
the Nasdaq National Market upon notice of issuance. The last reported sale price
of the Common Stock on the Nasdaq National Market on August 11, 1997 was $8.

All expenses of the offering of the Shares made hereby will be paid by
the Company.

FOR A DISCUSSION OF FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE COMMON STOCK OFFERED HEREBY, SEE "RISK FACTORS" BEGINNING ON
PAGE 4.

<TABLE>
<CAPTION>
==================================================================================
Price to Underwriting Discounts Proceeds to
Public and Commissions Company
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share for the Warrants $.01(1) $0 $.01
- ----------------------------------------------------------------------------------
Total (3) $27,317.25 $0 $27,317.25 (2)
==================================================================================
</TABLE>

(1) Calculated using the initial exercise price of $.01 per Share, which is
subject to adjustment under certain circumstances as provided in the
Warrant Agreement.
(2) Before deducting expenses payable by the Company, estimated to be $65,000.
(3) Based on 2,025,000 outstanding Warrants.

The date of this Prospectus is August , 1997
<PAGE>

No person has been authorized to give information or make any
representation not contained in this Prospectus in connection with any offer
made hereby. If given or made, such information or representation must not be
relied upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder, under any circumstances, shall create
any implication that there has been no change in the affairs of the Company
since the date hereof.

TABLE OF CONTENTS
Page
----

AVAILABLE INFORMATION.................................................. 1
PROSPECTUS SUMMARY..................................................... 2
RISK FACTORS........................................................... 4
DIVIDEND POLICY........................................................ 8
PRICE RANGE OF COMMON STOCK............................................ 8
DETERMINATION OF OFFERING PRICE........................................ 8
PLAN OF DISTRIBUTION.................................................. 8
USE OF PROCEEDS........................................................ 8
SELECTED CONSOLIDATED FINANCIAL DATA................................... 10
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..................... 11
BUSINESS............................................................... 14
MANAGEMENT............................................................. 23
COMMON STOCK OWNERSHIP................................................. 29
CERTAIN TRANSACTIONS................................................... 31
DESCRIPTION OF CAPITAL STOCK........................................... 34
SHARES ELIGIBLE FOR FUTURE SALE........................................ 38
SENIOR NOTES AND WARRANTS.............................................. 39
LEGAL MATTERS.......................................................... 40
EXPERTS................................................................ 40
ADDITIONAL INFORMATION................................................. 40
INDEX TO FINANCIAL STATEMENTS.......................................... F-1

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and copies may be obtained at the prescribed rates from the
Public Reference Section of the Commission at its principal office in
Washington, D.C. In addition, the Commission maintains a site on the World Wide
Web that contains reports, proxy and information statements, and other
information regarding registrants such as the Company that file electronically
with the Commission. The address of the Commission web site is
http://www.sec.gov.

-1-
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more
detailed information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus. Investors should carefully consider the
risk factors related to the purchase of the Shares. See "Risk Factors."

The Company provides point-to-point wireless broadband digital
telecommunications services. Utilizing 38 GHz frequencies, the Company offers
cost-effective, high-capacity, high-quality "last mile" local access to voice,
data, video and Internet services. Licenses which the Company owns, manages or
has a long-term right to use permit it to develop a large-scale national network
in 173 U.S. markets covering an estimated aggregate population of approximately
158 million people, including 83 of the top 100 markets.

Utilizing unobtrusive equipment mounted on rooftops and other tall
structures, ART is able to transmit voice, data and video signals from fiber-
optic, copper, coaxial cable and satellite earth stations to the end user
locations. Advantages of ART's "last mile" wireless solution include:

. Broad Footprint. The broad scope of the Company's license footprint
enables it to offer wireless broadband services targeting much of the United
States' addressable business market.

. High Data Transfer Rates. ART's current technology permits data
transfer at over 350 times the rate of the current fastest integrated
services digital network, permitting real-time, full motion video and 3-D
graphics and other data-intensive interactive applications.

. High-Quality Transmission. ART's networks are designed for
performance comparable to fiber and superior to copper networks.

. Significant Channel Capacity. Because 38 GHz channels can be
efficiently reused within the licensed area, a single channel can serve a
significant number of end users.

. Rapidly Deployed and Easily Installed Equipment. ART's 38 GHz
equipment can be deployed considerably faster than both wireline and many
other wireless technologies. It is small and unobtrusive and can be easily
installed and redeployed.

. Cost-Effective Service. ART's wireless solution enjoys favorable
economics compared to cabled networks.

ART is marketing its services primarily to carriers, including
competitive local exchange carriers ("CLECs"), local exchange carriers ("LECs"),
competitive access providers ("CAPs"), Internet service providers ("ISPs"),
mobile communications service providers and long distance companies ("IXCs"), to
enable them to extend their networks on a cost-effective basis. ART is
identifying and obtaining roof rights for high-density off-net customer
locations in its markets and plans to market high-speed broadband access to
these locations to carriers. The Company is building its wireless networks
incrementally in response to customer demand in each of its target markets,
thereby efficiently deploying its capital.

The Company is a Delaware corporation organized in 1993 under the name
of Advanced Radio Technologies Corporation. In October 1996, the Company
acquired through a merger (the "Merger") Advanced Radio Telecom Corp., a
corporation organized by the Company and others in 1995 to acquire 38 GHz
licenses and to operate its business jointly with the Company. Upon the Merger,
Advanced Radio Telecom Corp. became a wholly owned subsidiary of the Company and
changed its name to ART Licensing Corp. ("ART Licensing"), and the Company

-2-
<PAGE>

changed its name to Advanced Radio Telecom Corp. The Company commenced
commercial operations in the fourth quarter of 1996. The Company's executive
offices are located at 500 108th Avenue NE, Suite 2600, Bellevue, Washington
98004 and its telephone number is (425) 688-8700.

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The summary financial data presented below as of December 31, 1996 and
for the years ended December 31, 1995 and 1996 were derived from and should be
read in conjunction with the audited consolidated financial statements of the
Company and the related notes thereto included elsewhere in this Prospectus.
The summary financial data presented below as of June 30, 1997 and for the
six months ended June 30, 1996 and 1997 were derived from and should be read
in conjunction with the unaudited condensed consolidated financial statements of
the Company and the related notes thereto included elsewhere in this Prospectus.

YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,

1995 1996 1996 1997
-------- -------- -------- -------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue (1)................ $ 5,793 $ 2,907,927 $ 61,520 $ 685,193
Depreciation and
amortization.............. 15,684 1,017,959 278,375 2,361,275
Interest and other
expenses, net....... 121,986 6,512,251 1,826,805 8,756,883
Net loss................... (3,234,843) (30,670,303) (15,671,864) (25,158,390)
Net loss per share......... (0.54) (3.97) (2.38) (1.42)
Weighted average number of
shares of Common Stock
outstanding............... 5,946,338 7,717,755 6,577,461 17,735,974

OTHER FINANCIAL DATA:
EBITDA (2)................. $(2,007,568) $(14,348,920) $ (5,150,958) $(14,455,716)
Capital expenditures....... 3,585,144 16,631,451 4,040,806 10,124,970
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
1996 1997
------------------ ----------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital surplus
(deficit)................. $(9,623,905) $ 49,098,454
Property and equipment, net 19,303,849 28,228,836
FCC licenses, net.......... 4,330,906 131,822,061
Total assets............... 36,648,701 263,948,181
Long-term debt (including
current portion).......... 4,977,246 110,278,144
Total stockholders' equity. 19,949,920 111,752,301
</TABLE>
- --------

(1) For the year ended December 31, 1996 and for the six months ended June
30, 1997, $2,660,811 and $356,970, respectively, of revenue were derived
from non-recurring equipment sales and construction revenue.
(2) EBITDA represents loss before interest and financing expense (net of
interest income), income tax expense (benefit), depreciation and
amortization expense, non-cash compensation expense and non-cash market
development expense. EBITDA is not intended to represent cash flows from
operating activities, as determined in accordance with generally accepted
accounting principles. EBITDA should not be considered as an alternative to,
or more meaningful than, operating income or loss, net income or loss or
cash flow as an indicator of the Company's performance. EBITDA has been
included because the Company uses it as one means of analyzing its ability
to service its debt, because a similar measure is used in the indenture
relating to the Company's 14% Senior Notes due 2007 (the "Senior Notes")
with respect to computations under certain covenants and because the Company
understands that it is used by certain investors as one measure of a
company's historical ability to service its debt. Not all companies
calculate EBITDA in the same fashion and therefore EBITDA as presented may
not be comparable to other similarly titled measures of other companies.

-3-
<PAGE>

RISK FACTORS

The following risk factors should be considered carefully in addition
to the other information in this Prospectus before purchasing the Shares offered
by this Prospectus. Except for the historical information contained herein, the
discussion in this Prospectus contains certain forward-looking statements that
involve risks and uncertainties. The cautionary statements made in this
Prospectus, including those made in "Management Discussion and Analysis" and
"Business -- Business Strategy," should be read as being applicable to all
related forward-looking statements wherever they appear in this Prospectus. The
Company's actual results could differ materially from those discussed here.
Important factors that could cause or contribute to such differences include,
but are not limited to, those discussed below.

Limited Operations; History of Net Losses. ART has a limited operating
history. Having commenced commercial operations in the fourth quarter of 1996,
the Company has generated only nominal revenues from operations to date. Since
inception, the Company has primarily focused on acquiring licenses, hiring
management and other key personnel, raising capital, acquiring equipment and
roof rights and developing its operating and support systems and infrastructure.
The Company has generated operating and net losses since its inception and
expects to generate significant operating and net losses for at least the next
several years. A substantial portion of revenue to date has been from non-
recurring equipment sales and construction activities. There can be no assurance
that the Company will develop a successful business or achieve or sustain
profitability in the future.

Significant Capital Requirements; Need for Additional Financing. The
Company will require significant additional capital in 1998 to fund its
operations and business plan. Based on its current business plan, ART estimates
that it will require several hundred million dollars over the next few years for
the continued development and expansion of its wireless broadband operations.
Because the Company generally deploys radio equipment in response to customer
orders, a substantial portion of its capital requirements is dependent on
customer demand. Accordingly, the Company's capital requirements may increase
or decrease depending largely upon the cost and amount of equipment acquired,
the number of networks installed, the number of markets served and the prices
charged for its services as well as other factors. In addition, if, among other
things, the assumptions underlying the Company's business plan change or prove
to be inaccurate or the Company changes its business plan, the Company's capital
requirements may change. There can be no assurance that the Company will be
able to obtain any financing when required, or, if available, that the Company
will be able to obtain it on acceptable terms. In the event that the Company
fails to obtain additional financing when required, such failure could result in
the modification, delay or abandonment of some or all of the Company's
development and expansion plans. Any such modification, delay or abandonment
could have a material adverse effect on the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."

Leverage; Ability to Service Indebtedness. The Company is highly
leveraged and, accordingly, (i) a substantial portion of the Company's cash flow
from operations will be required to pay interest with respect to its Senior
Notes commencing in 2000 and to pay interest with respect to any additional
indebtedness incurred by the Company; (ii) the Company's ability to obtain any
necessary financing in the future may be limited; (iii) the failure to comply
with the numerous financial and other restrictive covenants of such debt may
result in an event of default, which, if not cured or waived, could have a
material adverse effect on the Company; (iv) the ability of the Company to
satisfy its obligations pursuant to such indebtedness is dependent upon its
future performance which, in turn, is subject to management, financial, business
and other factors affecting the business and operations of the Company; (v) the
Company's flexibility may be limited in responding to changes in the industry
and economic conditions generally; (vi) the Company may be more highly leveraged
than many of its competitors, which may put it at a competitive disadvantage;
and (vii) the Company's leverage may make it more vulnerable in the event of an
economic downturn. There can be no assurance that the Company will be able to
generate sufficient cash flow to meet required interest and principal payments
associated with its indebtedness. If the Company is unable to generate
sufficient cash flow to meet its debt obligations, the Company may be required
to renegotiate the payment terms or to refinance all or a portion of its
indebtedness, to sell assets or to obtain additional financing. There is no
assurance that the Company would be able to do so. See "Senior Notes and
Warrants."

Uncertain Acceptance of 38 GHz Services. The Company and other
providers have only recently begun to market wireless broadband services on 38
GHz frequencies and sales to date have been limited. The demand for such
services is uncertain. There can be no assurance that a substantial market will
develop for 38 GHz wireless broadband services.

-4-
<PAGE>

Developing Technology; Reliability of Equipment; Attenuation. The
Company has only recently commenced commercial operation of its wireless
broadband digital telecommunications networks. Use of 38 GHz frequencies to
provide wireless broadband telecommunications services is a new and developing
technology, and, to date, there has been only limited use of 38 GHz frequencies
for the provision of wireless broadband services. There can be no assurances
that the equipment used by the Company to provide broadband services will
operate at a level of quality and reliability satisfactory to ART's customers.
The Company is unable to predict what technical difficulties and complications
may arise during the implementation of its wireless broadband services on 38 GHz
frequencies. If technical difficulties do occur, the Company cannot predict
what effect this may have on the design, implementation and operation of its
networks or on its ability to retain customers or to market its services to
potential new customers. In addition, wireless broadband services over 38 GHz
frequencies are subject to distance and rain attenuation. There can be no
assurance that the Company will be able to overcome such attenuation on a cost-
effective basis.

Roof Rights. Because 38 GHz services require a direct line of sight
between two transceivers, the Company generally must obtain rights to install
its transceivers and antennas on rooftops and other tall structures ("roof
rights") in appropriate locations in each of its market areas to provide
services. Due to the increased use of wireless technology and increased number
of licensees of mobile communication frequencies, there are frequently lengthy
negotiations to obtain rights, which may take several weeks to several months.
There can be no assurance that the Company will succeed in obtaining roof rights
where required, on a timely basis, and on favorable terms, if at all. Failure to
do so may have a material adverse effect on the Company's development and
results of operations. See "Business --Business Strategy."

Competition. The industry and markets in which the Company plans to
provide services are highly competitive. In each of its markets, the Company
will compete with wireline providers such as LECs, CLECs, CAPs, cable television
operators and IXCs and with other wireless providers, including other 38 GHz
service providers and providers in other portions of the radio spectrum. Many
of these providers have established market acceptance, longer operating
histories, longer standing relationships with customers and suppliers, greater
name recognition, better geographic footprints and greater financial, technical
and marketing resources than the Company. The Company expects to compete
primarily on the basis of price, responsiveness to customer needs, customer
service, quality, reliability and features. There can be no assurance that the
Company will be able to compete effectively against other service providers in
any of its markets. See "Business--Competition." Because the Company's
business strategy is to market primarily to other carriers to leverage ART's
carrier customers' sales forces, channels of distribution and customer bases,
the Company's initial target customers include the LECs, CLECs, CAPs and IXCs
that also compete with the Company. There can be no assurance that such
carriers will choose to utilize the Company's services to provide "last mile"
access service to their end users. See "Business -- Business Strategy."

Government Regulation. The telecommunications services offered by the
Company are subject to regulation by federal, state and local government
agencies. Changes in existing laws and regulations applicable to the provision
of wireless local telecommunications services via 38 GHz or other frequencies
with which the Company competes, including without limitation, those which place
additional restrictions on the Company or its 38 GHz licenses, or which
interfere with the Company's services or operations could have a material
adverse effect on the Company. Also, any failure or significant delay by the
Company in obtaining or maintaining any regulatory approvals which may be
required, could have a material adverse effect on the Company. See "Business--
Government Regulation."

Risk of Forfeiture, Non-Renewal and Fluctuation in Value of FCC
Licenses. The Company must comply with FCC rules relating to its licenses,
including transmission of operational traffic and non-removal of equipment and
facilities. Failure to comply with FCC rules could subject licenses to
forfeiture.

All of the Company's 38 GHz licenses expire in February 2001. Although
the Company currently anticipates that its licenses will be renewed, there can
be no assurance that all or any of the licenses will be renewed upon expiration
of their initial terms. In the event that the FCC does not renew one or more of
the licenses, the Company's business and results of operations could be
materially adversely affected.

The value of the Company's licenses will depend, among other things,
upon the success of the wireless broadband operations of the Company and others
and fluctuations in the level of supply and demand for such licenses. Transfer
of licenses and changes of control involving entities holding licenses require
prior FCC and, in some instances, state regulatory approval and are subject to
restrictions and limitations on the identity and status of the transferee or

-5-
<PAGE>

acquiror. These regulatory restrictions on transfer of licenses may adversely
affect the value of the Company's licenses. See "Business--Government
Regulation--Federal Regulation."

Foreign Licenses. Entities in which the Company has a substantial
interest have obtained licenses in certain Western European countries and have
applied for licenses to provide wireless broadband services in Canada and in
other Western European countries. There can be no assurance that such entities
will be able to acquire additional licenses, comply with applicable license
restrictions, retain any licenses granted, obtain any other necessary
governmental approvals, obtain necessary financing from third parties, implement
their business plans or operate in any country on a profitable basis or at all.
Because of limitations pursuant to the indenture relating to the Senior Notes,
each of such entities is expected to be independently financed. See "Business-
- -Foreign Licenses."

Management of Expanding Business. The Company is pursuing a business
plan that, if successfully implemented, will result in expansion of its
operations and the provision of 38 GHz services on a wide-spread basis over the
next two to five years. If this expansion is achieved, the Company's success
will depend on its ability to manage its expanding business effectively, enhance
its operational and financial controls and information systems, and attract and
retain qualified and key personnel. Failure to meet customer demands and manage
expansion could have a material adverse effect on the Company's results of
operations.

Reliance on Third Parties for Construction and Installation. The
Company presently contracts, and expects to continue to contract, with third
parties for a substantial portion of its equipment staging and outfitting, site
acquisition, site preparation, equipment installation and maintenance for the
Company's wireless services and network management software and services
relating to the Company's network management system. There can be no assurance
that the Company will be able to secure contracts with third parties for
installation, construction and maintenance at competitive prices or when needed.
The failure to secure such contracts and the failure of third parties to perform
under existing agreements could have a material adverse effect on the Company's
customer relations, development and results of operations.

Reliance on Equipment Supplier; Lack of Industry Standards. The
Company presently purchases its telecommunications equipment from one supplier.
Any reduction or interruption in supply from this supplier could have a
disruptive effect on the Company. There is no industry standard or uniform
protocol for 38 GHz equipment. A single manufacturer's equipment must be used in
establishing a link and generally will be used across an entire market area.
Failure of the Company to procure sufficient equipment from one manufacturer for
a particular market area could adversely effect the Company's results of
operations.

Possible Need to Acquire Additional Bandwidth in Selected Areas; Risks
Associated with Acquisitions. The Company may need to acquire or lease
additional licenses to expand its geographic footprint, to enhance its ability
to provide service to its current target market or customers it may target in
the future or to adapt to changes in equipment technology. There can be no
assurance that the Company will be able to acquire additional radio spectrum if
or when needed on favorable terms or at all. See "Business--38 GHz Wireless
Broadband Licenses."

The Company may face competition for acquisition opportunities in the
industry, increasing the costs of capitalizing on such opportunities. The
Company expects to compete for acquisition opportunities with other companies
that have significantly greater financial and management resources than the
Company. Furthermore, there can be no assurance that the Company would generate
sufficient revenues from any such acquisitions to offset the associated
acquisition costs. In addition, the anticipated benefits from any acquisitions
may not be achieved unless the assets and/or operations of any acquired business
are successfully combined with those of the Company in a timely manner.

New Services; Technological Change. The telecommunications industry
has been characterized by rapid technological advances, changes in end-user
requirements, frequent new service introductions, evolving industry standards,
and decreases in the cost of equipment. There can be no assurance that (i) the
Company's wireless broadband services will not be outmoded by technology or
services now existing or developed and implemented in the future, (ii) the
Company will have sufficient resources to develop or acquire new technologies or
to introduce new services capable of competing with future technologies or
services offerings, (iii) the Company's equipment will not be rendered obsolete
or (iv) the cost of 38 GHz equipment will decline at all or as rapidly as that
of competitive alternatives.

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<PAGE>

Dependence on Key Employees. The success of the Company is dependent,
in part, on its ability to attract and retain qualified technical, marketing,
sales and management personnel. Competition for such personnel is intense and
the Company expects such competition to increase. There can be no assurance
that the Company will be successful in attracting and retaining such qualified
personnel. The Company's inability to attract and retain additional key
employees or the loss of one or more of its current key employees could have a
material adverse effect on the Company's business and results of operations.
See "Management."

Possible Volatility of Stock Price. The stock market historically has
experienced volatility which has affected the market price of securities of many
companies and which has sometimes been unrelated to the operating performance of
such companies. In addition, factors such as announcements of developments
related to the Company's business, or that of its competitors, its industry
group or its customers, fluctuations in the Company's results of operations, a
shortfall in revenues or earnings compared to analysts' expectations and changes
in analysts' recommendations or projections, sales of substantial amounts of
securities of the Company into the marketplace, regulatory developments
affecting the telecommunications industry or 38 GHz services or general
conditions in the telecommunications industry or the worldwide economy, could
cause the market price of the Common Stock to fluctuate substantially.

Shares Eligible for Future Sale; Future Dilution. As of August 11,
1997, the Company had 19,749,452 shares of Common Stock outstanding, assuming no
exercise of outstanding options or warrants to purchase Common Stock. Of these
outstanding shares, 5,442,241 are freely tradeable by persons other than
"affiliates" of the Company, as that term is defined under the Securities Act,
without restrictions or further registration under the Securities Act. Of the
remaining 14,307,211 outstanding shares, 1,007,776 shares are now available for
sale in the public market under Rule 144, 7,299,435 shares will become available
for sale in the public market under Rule 144 in October 1997, and an additional
6,000,000 shares will become available for sale in the public market under Rule
144 in February 1998. Holders of approximately 14.3 million shares of Common
Stock on a fully diluted basis also have contractual rights to have those shares
registered under the Securities Act for resale to the public in certain
circumstances. As of August 11, 1997, an aggregate of 4,603,878 shares of Common
Stock were subject to outstanding options and warrants. The Company
has filed a registration statement on form S-8 with respect to 1,475,000 shares
of Common Stock reserved for issuance under its stock option plans. The
2,731,725 Shares that may be issued from time to time pursuant to this
Prospectus may be resold without restriction or further registration under the
Securities Act by persons other than "affiliates" of the Company, as that term
is defined under the Securities Act. An increase in the number of shares of
Common Stock that may become available for sale in the public market may
adversely affect the market price prevailing from time to time of the Common
Stock in the public market and could impair the Company's ability to raise
additional capital through the sale of its equity securities. See "Shares
Eligible for Future Sale."

Significant Influence of Voting by Officers, Directors and Related
Entities. As of the date of this Prospectus, the Company's officers and
directors and entities which may be considered affiliates of, or related to,
such officers and directors beneficially owned approximately 29.7% of the
Company's outstanding Common Stock (assuming no exercise of outstanding warrants
or options). In addition, approximately 14.7% of the Company's outstanding
Common Stock is held in a voting trust, pursuant to which such shares are voted
in proportion to, or in certain cases, consistent with the majority of, the vote
of other stockholders of the Company. See "Common Stock Ownership--Voting Trust
Agreement." Accordingly, the Common Stock held by the Company's officers and
directors and entities which may be considered affiliates of, or related to,
such officers and directors represents a significant portion of outstanding
Common Stock that is voted on an independent basis. Thus, these stockholders
will have the ability to exercise significant influence over the Company and the
election of its directors and the approval of any action requiring the approval
of the holders of the Company's voting stock, including adopting certain
amendments to the Company's Certificate of Incorporation and approving mergers
or sales of substantially all of the Company's assets. See "Common Stock
Ownership."

Absence of Dividends. The Company has not paid and does not
anticipate paying any cash dividends on its Common Stock in the foreseeable
future. The Company intends to retain its earnings, if any, for use in the
Company's growth and ongoing operations. In addition, the terms of the
indenture relating to the Senior Notes restrict the ability of the Company to
pay dividends on the Common Stock. See "Senior Notes and Warrants."

Potential Effect of Anti-Takeover Provisions and Issuances of
Preferred Stock. Certain provisions of the Company's Certificate of
Incorporation and Bylaws, the Delaware General Corporation Law and the Company's
Shareholder Rights Plan may have the effect of delaying, deterring or preventing
a change in control of the Company or preventing the removal of incumbent
directors. The existence of these provisions and this Plan may have a negative

-7-
<PAGE>

impact on the price of the Common Stock and may discourage third party bidders
from making a bid for the Company or may reduce any premiums paid to
stockholders for their Common Stock. In addition, the Company's Board of
Directors has the authority without action by the Company's stockholders to
issue shares of the Company's Preferred Stock and to fix the rights, privileges
and preferences of such stock, which may have the effect of delaying, deterring
or preventing a change in control. See "Description of Capital Stock."

DIVIDEND POLICY

ART has not paid any cash dividends on its Common Stock in the past
and does not anticipate paying any cash dividends on its Common Stock in the
foreseeable future. ART's Board of Directors intends to retain earnings, if any,
to repay indebtedness, to expand ART's business and to fund ongoing operations
for the foreseeable future. In addition, the terms of the indenture relating to
the Senior Notes restrict the ability of the Company to pay dividends on Common
Stock.

PRICE RANGE OF COMMON STOCK

ART's Common Stock is traded in the over-the-counter market and is
reported on the Nasdaq National Market under the symbol "ARTT." The following
table sets forth for the periods indicated the high and low bid information of
the Common Stock as reported on the Nasdaq National Market.
<TABLE>
<CAPTION>

High Low
<S> <C> <C>
1996 Fourth Quarter (commencing on November 5) $ 16.50 $ 11.50

1997 First Quarter 15.625 10.375

1997 Second Quarter 12.00 5.75

1997 Third Quarter (through August 11, 1997) 9.875 6.25

</TABLE>

DETERMINATION OF OFFERING PRICE

The Warrant Agreement provides that each outstanding Warrant may be
converted into 1.349 Shares for a price of $.01 per Share, subject to
adjustments as provided in the Warrant Agreement. The Warrants were issued in
conjunction with the Senior Notes. The terms, conditions and exercise prices
per share for the Warrants were determined by the Company and the underwriters
at the time of the offering of the Senior Notes and Warrants.

PLAN OF DISTRIBUTION

The Shares issuable upon exercise of Warrants are offered solely by
the Company. No underwriters are participating in this offering. It is
anticipated that the Shares offered will be previously authorized but unissued.
Warrants may be exercised by giving written notice and paying the exercise price
to the Company, and as otherwise required by the Warrant Agreement.

USE OF PROCEEDS

Gross proceeds of approximately $27,000 would be realized if all
2,025,000 Warrants were exercised at the initial exercise price of $.01 per
Share. Net proceeds, if any, will be used for general corporate purposes. It
is anticipated that Warrants will be exercised from time to time based upon
decisions of the individual Warrant holders and that the Company will receive
the net proceeds gradually through February 15, 2007, when the

-8-
<PAGE>

Warrants expire. To the extent Warrants are not exercised, the net proceeds to
the Company will be reduced. There is no assurance that all Warrants will be
exercised or that the Company will receive the net proceeds which would be
available if all Warrants had been exercised.

-9-
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected financial data presented below as of December 31, 1995 and 1996
and for the years ended December 31, 1994, 1995 and 1996 were derived from and
should be read in conjunction with the audited consolidated financial statements
of the Company and the related notes thereto included elsewhere in this
Prospectus. The selected financial data presented below as of December 31, 1993
and 1994 and for the period from August 23, 1993 (date of inception) to December
31, 1993 were derived from the audited consolidated financial statements of the
Company not included herein which were audited by Coopers & Lybrand L.L.P. The
selected financial data presented below as of June 30, 1997 and for the six
months ended June 30, 1996 and 1997 were derived from and should be read in
conjunction with the unaudited condensed consolidated financial statements of
the Company and the related notes thereto included elsewhere in this Prospectus.

AUGUST 23, 1993 SIX MONTHS ENDED
(DATE OF INCEPTION) YEAR ENDED DECEMBER 31, JUNE 30,
TO --------------------------------------- --------------------------
DECEMBER 31, 1993 1994 1995 1996 1996 1997
------------------- ---------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Service revenue..................... $ _____ $ _____ $ 5,793 $ 247,116 $ 61,520 $ 328,223
Equipment sales and
construction revenue............... _____ _____ _____ 2,660,811 _____ 356,970
Consulting revenue.................. _____ 137,489 _____ ______ _____ _____
Technical and network
operations expenses................ _____ _____ _____ 3,402,948 270,319 2,621,878
Cost of equipment sales and
construction................... _____ _____ _____ 1,590,779 _____ 214,399
Sales and marketing expenses........ _____ 191,693 5,548,584 1,472,198 6,241,797
General and administrative _____
expenses....................... 5,906 253,453 2,911,273 12,896,134 11,364,281 6,383,433
Research and development
expenses....................... _____ _____ _____ 1,269,579 521,406 128,715
Depreciation and amortization....... 688 8,281 15,684 1,017,959 278,375 2,361,275
Loss from operations................ _____ (124,245) (3,112,857) (22,818,056) (13,845,059) (17,266,304)
Interest and other expenses......... _____ 4,375 121,986 6,512,251 1,826,805 8,756,883
Extraordinary loss.................. _____ _____ _____ (1,339,996) _____ _____
Net loss............................ $ (6,594) $ (128,620) $(3,234,843) $(30,670,303) $(15,671,864) $(25,158,390)
Net loss per share.................. $ _____ $ (0.04) $ (0.54) $ (3.97) $ (2.38) $ (1.42)
Weighted average number of
shares of Common Stock
outstanding........................ 1,820,555 3,337,685 5,946,338 7,717,755 6,577,461 17,735,974

OTHER FINANCIAL DATA:
EBITDA (1).......................... $ (5,906) $ (115,964) $(2,007,568) $(14,348,920) $ (5,150,958) $(14,455,716)
Capital expenditures................ _____ 5,175 3,585,144 16,631,451 4,040,806 10,124,970
<CAPTION>

AS OF DECEMBER 31, AS OF JUNE 30, 1997
------------------------------------------------- --------------------
1993 1994 1995 1996
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital surplus
(deficit).......................... $ 13,958 $ (76,556) $(3,008,510) $ (9,623,905) $ 49,098,454
Property and equipment, net......... _____ 3,448 3,581,561 19,303,849 28,228,836
FCC licenses, net................... _____ _____ 4,235,734 4,330,906 131,822,061
Total assets........................ 74,513 42,611 9,876,559 36,648,701 263,948,181
Long-term debt
(including current portion)........ _____ _____ 6,450,000 4,977,246 110,278,144
Accumulated deficit................. (6,594) (135,214) (3,370,057) (34,040,360) (59,198,750)
Total stockholders' equity
(deficit).......................... 54,542 (39,078) (312,860) 19,949,920 111,752,301
</TABLE>

- --------
(1) EBITDA represents loss before interest and financing expense (net
of interest income), income tax expense (benefit) depreciation and
amortization expense, non-cash compensation expense and non-cash market
development expense. EBITDA is not intended to represent cash flows from
operating activities, as determined in accordance with generally accepted
accounting principles. EBITDA should not be considered as an alternative
to, or more meaningful than, operating income or loss, net income or loss
or cash flow as an indicator of the Company's performance. EBITDA has been
included because the Company uses it as one means of analyzing its ability
to service its debt, because a similar measure is used in the indenture
relating to the Senior Notes with respect to computations under certain
covenants and because the Company understands that it is used by certain
investors as one measure of a company's historical ability to service its
debt. Not all companies calculate EBITDA in the same fashion and therefore
EBITDA as presented may not be comparable to other similarly titled
measures of other companies.

-10-
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and other sections of this Prospectus include forward-
looking statements. These forward-looking statements are subject to business
and economic risks and uncertainties, and the Company's actual results of
operations may differ materially from those contained in the forward-looking
statements. Factors that could cause or contribute to such differences include,
but are not limited to, those discussed in "Risk Factors" as well as other risks
and uncertainties referenced in this Prospectus.

OVERVIEW

From its inception in 1993 to the fourth quarter of 1996, the Company
had primarily focused on acquiring licenses, hiring management and other key
personnel, raising capital, acquiring equipment and roof rights and developing
its operating and support systems and infrastructure. In the fourth quarter of
1996, the Company commenced commercial operations.

RESULTS OF OPERATIONS

Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996

Revenue for the six months ended June 30, 1997, was approximately $685,000
compared to approximately $62,000 for the same period in 1996. The revenue for
the first six months of 1997 included approximately $357,000 of non-recurring
installation and equipment sales revenue.

Operating costs and expenses were approximately $18.0 million for the six
months ended June 30, 1997, compared to approximately $13.9 million for the same
period in 1996. General and administrative expenses in the 1996 period included
a $6.8 million charge related to release of escrowed shares to executive
officers. Equipment sales and construction costs of approximately $214,000
incurred in the 1997 period related to non-recurring revenue and sales and
marketing expenses in the 1996 period included a $1.1 million charge relating to
a distribution agreement. Excluding non-cash and non-recurring items, operating
costs and expenses for the six months ended June 30, 1997, were approximately
$14.9 million compared to approximately $5.2 million for the same period in
1996.

During July 1997, management initiated certain restructuring activities
intended to more closely align its organization with its current marketing and
business development plans. The Company's preliminary estimate of the resulting
non-recurring employee severance and office closure costs is approximately
$500,000. These activities are expected to result in a slight reduction in
recurring operating expenses for the remainder of 1997. In future periods the
Company expects increases in cash expenses for sales and marketing and network
operations as the development and deployment of the Company's business
continues. The Company also expects depreciation and amortization to increase
substantially in future periods as a result of deployment of its wireless
transmission equipment. Operating losses for the six months ended June 30, 1997,
were approximately $17.3 million compared to approximately $13.8 million for the
same period in the previous year.

Net interest and other expenses were approximately $8.8 million for the six
months ended June 30, 1997, compared to approximately $1.8 million for the same
period in 1996. Included in net interest and other expenses for 1997 was
approximately $2.7 million related to a terminated financing commitment.
Interest expense will increase in future periods due to the amortization of the
original discount on the Senior Notes which were issued in February 1997. The
net loss for the six months ended June 30, 1997, was approximately $25.2 million
compared to a net loss for the same period of 1996 of approximately $15.7
million.

1996 compared to 1995

Revenues for the year ended December 31, 1996 were approximately $2.9
million compared to $5,793 in 1995. Included in 1996 revenues was approximately
$2.7 million representing non-recurring sales and construction revenue
associated with radio links installed for a third party.

-11-
<PAGE>

Operating expenses other than interest were approximately $25.7
million for the year ended December 31, 1996 compared to approximately $3.1
million in 1995. The increase was primarily due to an overall increase in costs
and expenses associated with preparing for the commencement of commercial
operations, including higher general and administrative, sales and marketing
expenses, technical and network operating expenses and research and development
expenses. Also included in 1996 was approximately $1.6 million of non-recurring
expenses for sales and construction performed for a third party and a non-cash
compensation expense of approximately $7.6 million, including approximately $6.8
million arising from the release from escrow of shares of Common Stock to two
executive officers. Included in sales and marketing expenses were non-cash
marketing costs of approximately $1.1 million related to a strategic
distribution agreement. Research and development costs were incurred as the
Company initiated its research and development of microwave radio technology.

Net interest and other expenses were approximately $6.5 million for
the year ended December 31, 1996 compared to $121,986 in 1995. Included in
interest and other expenses for 1996 were approximately $1.2 million relating to
an unsuccessful debt offering in July 1996 and approximately $3.7 million
related to a financing commitment which was terminated in 1997 upon the sale of
the Senior Notes. Interest expense increased in 1996 due to increased borrowings
in 1996. The early repayment in November 1996 of bridge financings resulted in a
non-cash extraordinary loss of approximately $1.3 million arising from the
write-off of associated unamortized issuance discount and deferred financing
costs.

1995 compared to 1994

The Company's historical financial statements for 1994 primarily
reflect ART's activities in applying for 38 GHz licenses and meeting FCC
requirements.

The Company had $137,489 in consulting revenue for engineering and
management services in 1994, related to filing of applications for 38 GHz
licenses on behalf of others, and $5,793 in service revenue in 1995 derived from
customers for wireless broadband services in markets in which licenses were
acquired in November 1995.

General and administrative expenses increased to approximately $2.9
million for 1995, from $253,453 for 1994 due to an increased number of employees
and the recognition of non-cash compensation expenses of approximately $1.1
million relating to the release from escrow of shares of Common Stock to two
executive officers as a result of meeting certain performance objectives and
relating to certain employee stock options. Sales and marketing expenses
increased to $191,693 in 1995 from $0 in 1994 as the Company prepared for
commercial operations. Net interest expense increased to $121,986 in 1995 from
$4,375 in 1994 due to increased levels of borrowing. As a result, the net loss
for 1995 was approximately $3.2 million, as compared to a net loss of $128,620
in 1994.

LIQUIDITY AND CAPITAL RESOURCES

The Company has generated negative cash flow and net losses each year
since its inception and expects such negative cash flow and net losses to
continue at least for the next few years. Accordingly, the Company will be
dependent on various financing sources to fund its growth as well as its
continued losses from operations. To date, funding for acquisitions, capital
expenditures and net operating losses has been provided from private placements
of equity and bridge financings in 1994 through 1996, the Company's initial
public offering in November 1996 and the Company's public offering of its Senior
Notes in February 1997. Approximately $52 million of the approximately $130
million net proceeds from the sale of the Senior Notes was used to purchase a
portfolio of U.S. Treasury securities that will provide for payment of interest
on the Senior Notes through February 2000. Because the Senior Notes have
"significant original issue discount" for tax purposes, the Company is not able
to deduct the interest expense related to the accretion of this original issue
discount for tax purposes.

The Company currently estimates that it will incur approximately $5.0
million of capital expenditures for the last two quarters of 1997, including
outstanding commitments to purchase approximately $2.0 million of wireless
transmission equipment. The Company will require significant additional capital
in 1998 to fund its operations and business plan. Based on its current business
plan, ART estimates that it will require several hundred million dollars over
the next few years for the continued development and expansion of its wireless
broadband operations. Because the Company generally deploys radio equipment in
response to customer orders, a substantial portion of its capital requirements
is dependent on customer demand. Accordingly, the Company's capital requirements
may increase or decrease depending largely upon the cost and amount of equipment
acquired, the number of networks installed, the number of markets served and the
prices charged for its services
-12-
<PAGE>

as well as other factors. In addition, if, among other things, the assumptions
underlying the Company's business plan change or prove to be inaccurate or the
Company changes its business plan, the Company's capital requirements may
change. There can be no assurance that the Company will be able to obtain any
financing when required, or, if available, that the Company will be able to
obtain it on acceptable terms. In the event that the Company fails to obtain
additional financing when required, such failure could result in the
modification, delay or abandonment of some or all of the Company's development
and expansion plans. Any such modification, delay or abandonment could have a
material adverse effect on the Company.

NEW ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board ("FASB")
issued Financial Accounting Standards No. 128, "Earnings per Share." This
statement, effective for the year ending December 31, 1997, specifies the
computation, presentation and disclosure requirements for earnings per share
("EPS"). The statement will replace "primary" EPS with "basic" EPS, the
principal difference being the exclusion of common stock equivalents in the
computation of basic EPS and the required dual presentation of basic and diluted
EPS on the face of the consolidated statement of operations. Due to the
Company's net losses, basic and diluted EPS computed pursuant to this statement
are not expected to be materially different from the historical net losses per
share previously presented.

In June 1997, the FASB issued Financial Accounting Standards No. 130,
"Reporting Comprehensive Income." This statement establishes requirements for
disclosure of comprehensive income and becomes effective for the Company for the
year ending December 31, 1998. Comprehensive income includes such items as
foreign currency translation adjustments and unrealized holding gains and losses
on certain investments that are reported by the Company as a component of
stockholders' equity. The Company does not expect this pronouncement to
materially affect the Company's results of operations.

INFLATION

The Company's business has not been materially affected by inflation
during the last three fiscal years and the six months ended June 30, 1997.

-13-
<PAGE>

BUSINESS

The Company provides point-to-point wireless broadband digital
telecommunications services. Utilizing 38 GHz frequencies, the Company offers
cost-effective, high-capacity, high-quality "last mile" local access to voice,
data, video and Internet services. Licenses which the Company owns, manages or
has a long-term right to use permit it to develop a large-scale national network
in 173 U.S. markets covering an aggregate population of approximately 158
million people, including 83 of the top 100 markets.

INDUSTRY OVERVIEW

Significant increases in microprocessor power and advances in
multimedia and on-line applications such as the Internet, local and wide area
networks and video teleconferencing have significantly increased demand for
high-speed, high-capacity telecommunications services. The growth in demand
for high-speed digital telecommunications services is being driven by the
revolution in microprocessor power and advances in new multimedia and on-line
applications such as the Internet. The ability to access and distribute
information quickly has become critical to business and government users of
telecommunications services. The rapid growth of local area networks ("LANs"),
Internet services, video teleconferencing and other data intensive applications
is significantly increasing the volume of broadband telecommunications traffic.
This increasing demand, together with changes in the regulatory environment, has
created an opportunity to offer cost-effective, high-capacity "last mile" access
using both wireline and wireless solutions. Conventional copper wire networks of
local telephone companies do not have sufficient capacity to service this
demand. Until recently, only fiber-optic networks have been available to address
the "last mile bottleneck." However, fiber reaches only a small percentage of
the addressable market and is expensive to extend to the end user. Recent
advances in 38 GHz technology, coupled with metropolitan-wide footprint
licensing, has enabled 38 GHz providers to extend the reach of
telecommunications networks using broadband wireless technology.

ADVANTAGES OF ART'S WIRELESS SOLUTION

The Company believes that it is well positioned to compete in offering
broadband "last mile" services and broadband network services to other
telecommunications providers. Advantages of ART's wireless solution include:

. Broad Footprint. The broad scope of the Company's footprint enables it to
offer wireless broadband services targeting much of the United States'
addressable business market.

. High Data Transfer Rates. The 100 MHz bandwidth of each 38 GHz channel
supports full broadband capability. An ART transparent LAN service circuit
at 6 Megabits per second ("Mbps") linking a corporate user to an ISP point
of presence ("POP") can transfer data more than 100 times faster than a 56
Kilobits per second ("Kbps") dial-up modem, which is the fastest dial-up
modem currently in wide-spread commercial use, and approximately 45 times
faster than the fastest integrated services digital network ("ISDN") lines
currently in use (128 Kbps). A 38 GHz DS-3 link at 45 Mbps today can
transfer data at a rate which is over 800 times the rate of a 56 Kbps dial-
up modem and over 350 times the rate of the 128 Kbps ISDN line. Each of the
Company's 38 GHz links can support one DS-3 circuit, which is equivalent to
28 DS-1 circuits. In addition to accommodating standard voice and data
requirements, 45 Mbps data transmission rates allow end users to receive
real-time, full motion video and 3-D graphics at their workstations and to
utilize other data intensive interactive applications on the Internet and
other networks.

. High-Quality Transmission. ART's networks are designed for performance
comparable to fiber and superior to copper networks. The Company's networks
are engineered to provide no less than 99.995% RF path availability based
on local weather patterns with better than a 10 /-7/ bit error rate. Actual
performance of the networks will depend on various other factors such as
the quality and reliability of the transmission equipment. See "Risk
Factors -- Developing Technology; Reliability of Equipment; Attenuation."

-14-
<PAGE>

. Significant Channel Capacity. Because 38 GHz radio emissions have a
narrow beam width, a relatively short range and in most instances the
capability to intersect without creating interference, 38 GHz channels can
be efficiently reused in the licensed area, and, as a result, a single
channel can serve a significant number of end users.

. Rapidly Deployed and Easily Installed Equipment. 38 GHz technology can be
deployed considerably faster than both wireline and many other wireless
technologies. Extending fiber-optic or copper-based networks to reach new
customers requires significant time and expense. The equipment used for 38
GHz point-to-point applications is small (12 to 24 inches in diameter),
unobtrusive and can be easily installed and redeployed to meet changing
customer demand. Microwave equipment at certain other frequencies is
larger and more susceptible to zoning restrictions. 38 GHz license holders
can install and operate as many transmission links as they can engineer in
the licensed area without obtaining additional approvals from the FCC,
while certain other portions of the microwave radio spectrum must be
licensed on a link-by-link basis before commencing service.

. Cost-Effective Service. ART's wireless solution enjoys favorable economics
compared to cabled networks.

BUSINESS STRATEGY

The Company's strategy is to capitalize on its broad footprint of 38
GHz licenses and other competitive strengths to become a leading provider of
"last mile" wireless broadband services to a diverse group of traditional and
emerging telecommunications service providers. The Company has begun to
implement the following strategic initiatives to achieve this objective:

. Develop Large-Scale Network. The Company's spectrum assets provide it with
the foundation on which to create a large-scale commercial network of
wireless broadband operations. The Company will continue to build out its
infrastructure incrementally in response to customer demand in order to
exploit the value inherent in its spectrum assets and efficiently deploy
its capital.

. Market to Carriers. The Company is marketing its services primarily to
carriers in order to leverage ART's carrier customers' sales forces,
channels of distribution and customer base. The Company believes that its
services will be attractive to carriers because it will allow them to
expand their networks and customer base more cost-effectively. The
Company's initial target customers include CLECs, LECs, CAPs, ISPs, mobile
communications service providers and IXCs.

. Proactively Identify Off-Net Market Opportunities. ART is analyzing
certain carriers' networks to identify high density off-net customer
locations and obtaining roof rights necessary to serve those locations. By
obtaining these roof rights, the Company will be able to provide wireless
access to such locations and plans to market these locations aggressively
to the respective carriers. Utilizing this proactive approach, the Company
will reduce the time from order to service and will provide the carriers
with an immediate and viable alternative to installing fiber.

. Data Based Services. The Company's 38 GHz services are conducive to
providing high-bandwidth data applications such as Internet access, high-
volume data transmission, high resolution imaging, video conferencing and
video on-demand to end users. ART is developing new direct and indirect
distribution channels to market these services to end users and may offer
switched data services.

. Technological Advancements. The Company has been working with equipment
manufacturers and technology companies to encourage development of improved
equipment with increased capacity, efficiency and capabilities at lower
costs. Lower-cost OC-3 SONET radios which are expected to provide three
times the largest current capacity are under development. In the future,
the Company also expects technological advances to permit the deployment of
multiple point-to-point wireless broadband networks providing greater cost
and spectrum usage efficiencies.

-15-
<PAGE>

ART WIRELESS SERVICES AND APPLICATIONS

The Company's wireless circuits range in capacity from DS-1 (1.544
Mbps, capable of carrying 24 voice conversations) to DS-3 (45 Mbps, capable of
carrying 672 simultaneous voice conversations). The Company's wireless broadband
links consist of paired millimeter wave radio transceivers. Each link requires a
direct line of sight between the two transceivers. Because the maximum length of
a single link is generally limited to three to five miles, intermediate links
(or "repeaters") are used to permit wireless broadband transmission beyond this
limit. Repeaters are also used to circumvent obstacles, such as buildings in
urban areas or hills in rural areas. Transmission links in areas of heavy
rainfall are engineered for shorter distances and greater margin for
transmission quality. The Company currently installs its transceivers on
building rooftops and other tall structures and must secure roof rights for each
building or other structure on which equipment is installed. The Company
generally contracts with third parties for equipment staging and outfitting,
site acquisition, site preparation, equipment installation and maintenance for
the Company's wireless services and network management software and services
relating to the Company's network management system.

The Company's wireless broadband services are sold through a sales
cycle that may average more than six months because of the need to demonstrate
the quality of the Company's 38 GHz services, to formalize service agreements
with customers, to design networks, to acquire necessary roof rights and to
provide and install equipment. The Company believes that the sales cycle may
shorten as the Company's 38 GHz technology becomes more widely accepted and the
Company markets locations where the Company has already acquired roof rights.

The Company is providing or has received orders to provide wireless
broadband services to LECs, CAPs/CLECs, ISPs and mobile communications service
providers and is in the process of becoming a qualified vendor to major IXCs.
The Company currently provides services to carriers such as Bell Atlantic NYNEX
Mobile, MFS Communications Company, Inc./WorldCom, Inc., UUNet, Electric
Lightwave, NEXTLINK Communications LLC, American PCS, L.P., Western Wireless,
Commonwealth Telephone, Public Interest Network, Chadwick Telephone, CGX
Telecom, CAIS, Inc., Brooks Fiber Properties, Inc. and GST Telecommunications,
among others. The Company has entered into master service agreements with
certain of these and other companies which contain the terms by which such
customers may place future orders, including volume discounts, approximate
geographic location of links needed and representative pricing. Although a
master service agreement is not a commitment to purchase, it facilitates the
placement of future orders by a customer.

The Company currently provides, or anticipates providing, wireless
broadband services to the following types of customers, among others:

Competitive Access Providers/Competitive Local Exchange Carriers and
Local Exchange Carriers. Currently, CAPs/CLECs compete with LECs by installing
fiber-optic cable rings in the highest density business locations to connect
with long distance carriers and for intra-ring transmissions. Due to the high
cost inherent in building fiber networks, CAPs/CLECs generally target densely
populated areas with high concentrations of large end users. In order to reach
"off-net" customers, CAPs/CLECs must either lease or purchase facilities and
services from LECs or alternative suppliers until such time as it becomes
economical to extend the CAP/CLEC fiber networks to these customers. Without
sharing proprietary information with a direct competitor, such as a LEC,
CAPs/CLECs can utilize the Company's wireless broadband services as an
alternative to LEC facilities to reach areas where extensions of CAP/CLEC
networks are not cost-efficient, feasible or quick or to provide redundant or
backup capacity to their existing networks.

LECs are encountering many of the same obstacles CAPs/CLECs are
encountering in seeking to enhance their networks to deliver broadband services.
Certain LECs have sought to utilize 38 GHz technology to expand the range of
their service offerings to match those offered by CAPs/CLECs. Further, as LECs
are permitted to provide inter-LATA long distance services, they may seek to use
38 GHz technology to bypass other LECs outside of their region.

Internet Service Providers. The expanding demand for Internet access,
the growing importance of audio, video and graphic Internet applications to both
businesses and individuals and the lack of high-capacity access through existing
LEC facilities has created a growing market for wireless broadband services. The
Company can provide ISPs access at the required high-speed data rates from 1.544
Mbps to 45 Mbps, linking ISPs and their customers and linking ISP POPs and the
Internet backbone.

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<PAGE>

Mobile Communications Service Providers. ART's wireless broadband
services can provide cellular, wireless dispatch and PCS carriers, cost-
effective backbone network connections between cell sites, base stations and
wireline networks, with reduced construction time and installation costs.

Inter-exchange Carriers. To minimize LEC access charges and to gain
more direct contact with the consumer, IXCs can utilize the Company's wireless
broadband services to connect call origination or termination points either
directly to the IXCs' POPs or by way of CAP/CLEC intermediate fiber rings or two
or more of their respective POPs in a single market area and to provide carriers
with physical diversity routes (i.e., backup capacity) for traffic in situations
when primary routes become incapacitated or network reliability concerns demand
alternate telecommunications paths. By utilizing the Company's wireless
broadband services, IXCs are able to avoid the capacity barriers inherent in
copper wire connections, which have typically prevented them from providing
their customers with the end-to-end, high bandwidth, full digital services
available from a fiber-optic or wireless-based system.

Private User Networks. Heavy usage customers can utilize ART's
wireless broadband services to create private voice, data and video
communications networks within and among their local facilities and buildings.

Interactive Video Services Users. ART's wireless broadband services
can provide high-speed, high-capacity access to communications networks for
customers who require reliable videoconferencing, video on demand, and Internet
video services.

As a non-dominant carrier, ART does not have to cost-justify its rates
to regulatory bodies and therefore has a wide latitude to exercise individual
case-based pricing, subject to certain policies against discriminatory
treatment. As a result, ART enters into customer-specific and service-specific
arrangements, which include volume, capacity and term discounts and customized
billing and payment options. ART expects to price its services competitively
with those of the incumbent LECs. The Company also expects to charge for
installation where appropriate. The Company also anticipates offering metered
services to various end users at an appropriate point in the future.

38 GHZ WIRELESS BROADBAND LICENSES

The FCC has allocated the 37.0-40.0 GHz (the "38 GHz") band for
wireless broadband transmissions and authorized the use of fourteen 100 MHz
channels between 38.6 GHz and 40.0 GHz. Licensees are authorized to provide
point-to-point wireless telecommunications services within a specified
geographic footprint.

The Company owns 217 38 GHz licenses and manages or has the right to
use on a long-term basis 28 38 GHz licenses (including the 12 licenses that are
subject to the Commco Option (as defined herein)). Of the 217 licenses that the
Company owns, it acquired 129 from CommcoCCC, Inc. in 1997 in exchange for 6
million shares of Common Stock and 32 from EMI Communications Corporation in
1995 for $3.0 million in cash and a $1.5 million three-year promissory note.
The Company's agreements for managing and using on a long-term basis 38 GHz
licenses generally have terms of five or more years. Taken together, these
licenses allow the Company to provide 38 GHz wireless broadband services in 173
U.S. markets, covering an aggregate population of approximately 158 million
people, allowing it to provide between 100 and 500 MHz of transmission capacity
in 83 of the top 100 U.S. markets.

The Company selectively utilizes other radio frequencies to provide
its services under certain circumstances. The Company intends to seek to acquire
additional licenses or businesses which hold licenses to expand its geographic
footprint or to enhance its ability to provide service within its current
markets. In light of the recent grant by the Federal Communications Commissions
(the "FCC") of licenses applications for which had previously been frozen, the
Company believes it may have an opportunity to acquire additional spectrum.

FOREIGN LICENSES

Foreign subsidiaries of the Company have been granted broadband
wireless authorizations covering Norway, Denmark and the United Kingdom which
authorize "last mile" broadband wireless connectivity for voice, video, data and
Internet applications with certain limitations and have applied for licenses in
other countries in Europe. The Company has provided a consultant of the Company
the right to acquire an equity interest in certain subsidiaries formed or to be
formed to conduct operations in Europe upon achievement of certain performance
objectives. There can be no assurance

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<PAGE>

that such entities will be able to acquire additional licenses, comply with
applicable license restrictions, retain any such licenses, obtain any other
necessary governmental approvals, obtain necessary financing from third parties,
implement their business plans or operate in any country on a profitable basis
or at all. Because of limitations pursuant to the indenture relating to the
Senior Notes, each of such entities is expected to be independently financed.

ART has entered into a binding letter of intent with Advantage
Telecom, Inc. ("ATI"), a Canadian Company which has applied for licenses to
provide 38 GHz service in the 66 major markets in Canada covering a population
of at least 21 million people. The letter of intent provides for ART to acquire
a substantial direct and indirect minority interest in ATI and to be a party to
a services agreement with ATI pursuant to which ART may construct and operate
radio systems based upon any licenses that may be granted to ATI and subject to
control by ATI. Under the letter of intent ATI is responsible for securing any
additional funding necessary to construct the radio systems. Due to current
uncertainty in Canada's licensing policy, there can be no assurance that ATI
will be granted these licenses or that, if licenses are granted, ATI will obtain
the funding necessary to construct the radio systems.

COMPETITION

The telecommunications services industry is highly competitive. The
Company has only recently begun to market its wireless broadband services to
potential customers and is currently providing services on a limited basis. In
each market area in which the Company is authorized to provide services, the
Company competes or will compete with several other service providers and
technologies. The consolidation of telecommunications companies and the
formation of strategic alliances and cooperative relationships in the
telecommunications and related industries, as well as the development of new
technologies, could give rise to significant new competitors to the Company. The
Company expects to compete primarily on the basis of price, responsiveness to
customer needs, customer service, quality, reliability and features. The Company
faces significant competition from incumbent LECs, CAPs/CLECs and other 38 GHz
providers. The Company may also compete with other wireless service providers,
cable television operators, electric utilities, LECs operating outside their
current local service areas and IXCs. There can be no assurance that the Company
will be able to compete effectively in any of its market areas with any of its
existing and potential competitors. Many of the Company's competitors have long-
standing relationships with customers and suppliers, greater name recognition
and greater financial, technical and marketing resources than the Company. As a
result, these competitors may be able to develop and exploit, among other
things, new or emerging technologies or adapt to changes in customer
requirements more quickly than the Company or devote greater resources to the
marketing and sale of their services than the Company. Because the Company's
business strategy is to market primarily to other carriers to leverage ART's
carrier customers' sales forces, channels of distribution and customer bases,
the Company's initial target customers include the CLECs, LECs, CAPs and IXCs
that also compete with the Company. There can be no assurance that such carriers
will choose to utilize the Company's services to service their end users.

Incumbent LECs. The Company faces significant competition from
incumbent LECs, utilizing copper and fiber-optic networks as well as 38 GHz and
other wireless services. Incumbent LECs have long-standing relationships with
their customers, generally own significant PCS or cellular assets, have the
potential to subsidize competitive services with revenues from a variety of
businesses and benefit from favorable federal and state policies and
regulations. Regulatory decisions and recent legislation, such as the
Telecommunications Act of 1996 (the "Telecommunications Act"), have reduced
barriers to entry into the local exchange markets which is expected to increase
competition in these markets which in turn may result in increased price
competition. These changes will affect both the Company and its carrier
customers.

Digital subscriber line products, such as ADSL (asymmetrical digital
subscriber line), HDSL (high-speed digital subscriber line) and VDSL (video
digital subscriber line) are under development or are being implemented to
enhance the performance of LECs' copper networks. There can be no assurance that
the Company will be able to compete effectively with companies offering these
enhancements.

CAPs/CLECs. The Company also competes with CAPs/CLECs for the
provision of "last mile" access and additional services in most of its market
areas. However, the Company believes that many CAPs/CLECs may utilize 38 GHz
transmission links to augment their own service offerings to other carriers and
end users and that the Company is well positioned to provide such 38 GHz
services to CAPs/CLECs. Nonetheless, there can be no assurance that CAPs/CLECs
will utilize the Company's 38 GHz services or that CAPs/CLECs will not seek to
acquire their own 38 GHz licenses or other spectrum or use the services of other
wireless or wireline providers. Furthermore, the ability of

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<PAGE>

CAPs/CLECs to compete in the local exchange market currently is limited by lack
of parity with LECs in number portability, dialing parity and reasonable
interconnection.

38 GHz Service Providers. The Company also faces competition from
other 38 GHz service providers within its market areas including WinStar
Communications, Inc. and BizTel Communications, Inc., a subsidiary of Teleport
Communications Group, Inc. ("TCG"). In many cases, one or both of these service
providers hold licenses to operate in other portions of the 38 GHz band in the
Company's market areas. In certain of the Company's market areas, they may have
a longer history of operations, a larger geographic footprint and more spectrum.
Both WinStar and TCG operate as CLECs and have substantially greater financial
resources than the Company. In addition, several dozen other entities have been
granted 38 GHz authorizations in the Company's markets. Due to the relative ease
and speed of deployment of 38 GHz technology, the Company could face intense
price competition and competition for customers from other 38 GHz service
providers.

The Company also faces potential competition from new entrants to the
38 GHz market, including LECs, CAPs, CLECs and other telecommunications
companies. The FCC has granted additional licenses in the 38 GHz band as a
result of a partial lifting of the freeze on processing new applications and may
grant licenses in other portions of the spectrum with characteristics similar to
the 38 GHz band and is expected to auction additional 38 GHz licenses. Entities
having greater resources than the Company could acquire licenses and provide
services competitive with the Company's services. See "--Government Regulation--
Federal Regulation--FCC Rulemaking."

Other Wireless Competitors. The Company also faces or may face
competition from other terrestrial wireless services, including 2 GHz and 28 GHz
wireless cable systems (MMDS and LMDS), 24 GHz point-to-point or multipoint
microwave services (DEMS), FCC Part 15 wireless radio devices, wireless
communications services at 2.3 GHz (WCS), and other services that use existing
point-to-point microwave channels on other frequencies.

The FCC recently established service and competitive bidding rules for
LMDS and has announced plans to initiate an auction by the end of 1997 to award
LMDS licenses. LMDS licensees may use the spectrum to offer a variety of
services such as multichannel video programming, telephony, video communications
and data services in competition with the Company. Recently, the FCC has
permitted certain wireless cable operators licensed to provide video programming
in the 2 GHz band to offer two-way digital broadband telecommunications services
in select markets. It is expected that the FCC will continue authorizing
wireless cable operators to provide similar services.

In addition, one competitive group holds licenses in the 24 GHz band
in 31 markets, which would allow it to provide voice, data, Internet and
videoconferencing services to small and medium sized businesses in competition
with the Company.

Motorola Satellite Systems, Inc. has filed an application with the FCC
for a global network of satellites in certain spectrum bands including 38 GHz,
which are proposed to be used for broadband voice and data services. Other
companies have filed applications for global broadband satellite systems in the
28 GHz band and other companies may file applications for satellite systems in
the 38 GHz band. If licensed and developed, these systems could also represent
future competition to the Company. Satellite transmissions in the 38 GHz
frequencies could adversely affect the Company's existing operations or its
future expansions by creating interference or by inducing the FCC to impose
power and other limitations upon the Company's transmissions. However, licensing
satellite systems in the 38 GHz band would require changes in FCC rules.

The FCC has allocated a number of spectrum blocks for use by wireless
devices that do not require site or network licensing. A number of vendors have
developed such devices that may provide competition to the Company for certain
low data-rate transmission services.

In January 1997, the FCC allocated 300 MHz of spectrum in the 5 GHz
band for unlicensed devices to provide short-range, high-speed wireless digital
communications. These frequencies must be shared with incumbent users without
causing interference. Although the allocation is designed to facilitate the
creation of new wireless local area networks (and thus might not be competitive
for the Company's services), it is too early to predict what kind of equipment
might ultimately be manufactured and for what purposes it might be utilized.

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<PAGE>

Other Competitors. Although cable modems that provide high-speed data
capability over installed coaxial cable television networks are not widely
available currently and may require significant cable system upgrades, the
Company may face competition from cable television operators providing such
modems.

The Company may also face competition from electric utilities, LECs
operating outside their current local service areas, IXCs and other providers.
These entities may provide transmission services using technologies which may
enjoy a greater degree of market acceptance than 38 GHz wireless broadband
technology in the provision of "last mile" broadband services. In addition, the
Company may face competition from new market entrants using fiber-optic and
enhanced copper-based networks to provide local broadband services.

GOVERNMENT REGULATION

The Company's wireless broadband services are subject to regulation by
federal, state and local governmental agencies. At the federal level, the FCC
has jurisdiction over the use of the electromagnetic spectrum (i.e., wireless
services) and has exclusive jurisdiction over all interstate telecommunications
services, that is, those that originate in one state and terminate in another
state. State regulatory commissions have jurisdiction over intrastate
communications, that is, those that originate and terminate in the same state.
Municipalities may regulate limited aspects of the Company's business by, for
example, imposing zoning requirements and requiring installation permits.

Federal Regulation

FCC Licensing. The Communications Act of 1934 (the "Communications
Act") imposes certain requirements relating to licensing, common carrier
obligations, reporting and treatment of competition. Under current FCC rules,
the recipient of a license for 38 GHz microwave facilities is required to
construct facilities to place the station "in operation" within 18 months of the
date of grant of the license. Although, under current FCC regulations, the term
"in operation" is not defined beyond the requirement that the station be capable
of providing service, the industry custom is to establish at least one link
between two transceivers in each market area for which it holds a license. In
the event that the recipient fails to comply with the construction deadline, the
license is subject to forfeiture. In addition, pursuant to rules that became
effective August 1, 1996, if a station does not transmit operational traffic
(not test or maintenance signals) for a consecutive period of twelve months at
any time after construction is complete, or if removal of equipment or
facilities renders the station incapable of providing service, the license is
subject to forfeiture, absent a waiver of the FCC's rules. Although this rule
has not been interpreted by the FCC, it is possible that it could be applied in
such a way that could cause one or more of the Company's licenses to be subject
to forfeiture.

All of the 38 GHz licenses owned or to be acquired by the Company are
due to expire in February 2001. Although there can be no assurance, the Company
anticipates that its licenses will be renewed based upon the FCC's custom and
practice in connection with other services which have established a presumption
in favor of licensees that have complied with regulatory obligations during the
initial license period.

Common Carrier Regulation. Under the terms of its licenses, the
Company is classified as a common carrier, and as such is required to offer
service on a non-discriminatory basis at just and reasonable rates to anyone
reasonably requesting such service. Although the Communications Act prohibits
the Company from discriminating among its customers, the Communications Act, as
currently interpreted by the FCC, does permit the Company substantial discretion
in classifying its customers and discriminating among such classifications. The
Company generally is obligated to furnish service to its competitors and might
be obligated to allow other 38 GHz providers to install links within one of the
Company's market areas for a non-discriminatory fee. Under the FCC's streamlined
regulation of non-dominant carriers, the Company, as a non-dominant carrier,
must file tariffs with the FCC for certain interstate services on an ongoing
basis. The Company is in the process of filing tariffs with the FCC, to the
extent required, with respect to its provision of interstate service. The FCC
has recently initiated a Rulemaking proceeding to eliminate the tariff filing
requirement. The Company is not currently subject to rate regulation as a non-
dominant carrier.

Services Agreements. There is no FCC precedent addressing the limits
of management and service agreements for 38 GHz services. However, the Company
believes that the provisions of its management and service agreements comply
with the FCC's policies concerning licensee control of FCC-licensed facilities
in other services. No assurance can be given that the Company's management and
service agreements, if challenged, would be found to comply with FCC policies or
what modifications, if any, may need to be made to comply with those policies.
If the FCC were to void or

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<PAGE>

require modifications of the management and service arrangements, the Company's
operating results could be adversely affected.

Competition. Over the last several years, the FCC has issued a series
of decisions and Congress has recently enacted legislation making the interstate
access services market more competitive by requiring reasonable and fair
interconnection by LECs. Concomitant with its decision to require such
interconnection, the FCC has provided LECs with a greater degree of pricing
flexibility between services and between geographic markets (such as cross-
subsidizing price cuts across geographic markets).

Telecommunications Act. The Telecommunications Act substantially
departs from prior legislation in the telecommunications industry by
establishing local exchange competition as a national policy through the removal
of state regulatory barriers to competition and the preemption of laws
restricting competition in the local exchange market. The provisions of the
Telecommunications Act are designed to ensure that RBOCs take affirmative steps
to level the playing field for their competitors so that CAPs, CLECs and others
can compete effectively. The FCC, with advice from the United States Department
of Justice, and the states are given jurisdiction to enforce these requirements.
There can be no assurance, however, that the states and the FCC will implement
the Telecommunications Act in a manner favorable to the Company.

FCC Rulemaking. On November 13, 1995, the FCC released an order
barring the acceptance of new applications for 38 GHz licenses. On December 15,
1995, the FCC announced the issuance of a notice of proposed Rulemaking (the
"NPRM"), pursuant to which it proposed to amend its current rules to provide
for, among other things, (i) the adoption of an auction procedure for the
issuance of licenses in the 38 GHz band, including a possible auction of the
lower fourteen proposed 100 MHz channels (which are similar to those used by the
Company) and the lower four proposed 50 MHz channels in the 38 GHz band that
have not been previously available for commercial use and a possible auction of
the unlicensed areas in the upper fourteen 100 MHz channels, (ii) licensing
frequencies using predefined geographic service areas ("Basic Trading Areas"),
(iii) the imposition of substantially stricter construction requirements for
licenses that are not received pursuant to auctions as a condition to the
retention of such licenses and (iv) the implementation of certain technical
rules designed to avoid radio frequency interference among licensees. In
addition, the FCC ordered that those applications subject to mutual exclusivity
with other applicants or placed on public notice by the FCC after September 13,
1995 would be held in abeyance pending the outcome of the NPRM and might then be
dismissed (the "freeze"). In December 1996, the FCC adopted an order that
partially lifted the freeze on the processing of pending applications. Among
other actions, the order provides that the FCC will process certain amendments
filed before December 15, 1995 that have the effect of eliminating mutual
exclusivity among pending applications. The FCC has granted additional 38 GHz
licenses to various applicants, including the Company. On March 24, 1997, the
FCC released another notice of proposed rulemaking ("FNPRM") in which it
proposed an omnibus spectrum allocation plan for the frequencies located above
38 GHz. The FCC proposed to allocate the spectrum band that the Company
currently uses (38.6-40.0 GHz) for wireless services. In the FNPRM, the FCC
noted that it has already issued licenses for fixed operations throughout this
band and that it has proposed to continue to license these services in that
band. In addition, the FCC has proposed to designate the spectrum bands that
surround the Company's licenses (37.5-38.5 GHz and 40.5-41.5 GHz) as well as
48.2-50.2 GHz bands predominantly for fixed-satellite services. The FCC has
announced its intention to open a processing window so that interested parties
can file applications for systems in these bands. Final rules issued in
connection with the NPRM and FNPRM may require that 38 GHz service providers
share the 38 GHz band with satellite services. The NPRM proposes substantial
strengthening of the current rules concerning the steps that a grantee of a 38
GHz license must take to satisfy the FCC's construction requirements other than
those received pursuant to an auction. There can be no assurance that the final
rules, if any, issued in connection with the NPRM will resemble the rules
proposed in the NPRM. There also can be no assurance that any proposed or final
rules will not have a material adverse effect on the Company. The Company has
not determined whether to seek additional licenses in the event of an auction.

State Regulation

Many of the Company's services, either now or in the future, may be
classified as intrastate and therefore may be subject to state regulation. The
Company is in the process of obtaining state authorizations to conduct its
proposed business in the near-term. The Company is implementing a program to
expand the scope of its intrastate certifications in various state jurisdictions
as its product line expands and as the Telecommunications Act is implemented.

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Under current state regulatory schemes, entities can compete with LECs
in the provision of (i) local access services, (ii) dedicated access services,
(iii) private network services, including WAN services, for businesses and other
entities and (iv) long distance toll services. The remaining local
telecommunications services, including switched local exchange services
encompassing calls originating and terminating within a single defined local
area, are not currently subject to competition in most states. The
Telecommunication Act requires each of these states to remove these barriers to
competition. No assurance can be given as to how quickly and how effectively
each state will act to implement the new legislation.

EMPLOYEES

As of August 11, 1997, the Company had a total of 148 employees. None
of the Company's employees is represented by a collective bargaining agreement.

PROPERTIES

The Company leases approximately 32,500 square feet of office,
technical operations and engineering field services depot space in Bellevue,
Washington, under leases expiring in January 2002. As of August 11, 1997, the
Company also leased an additional approximately 58,088 square feet of office
space in 23 cities nationwide.

LEGAL PROCEEDINGS

The Company is not a party to any material litigation.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position*
- ---- --- -----------
<S> <C> <C>
Vernon L. Fotheringham (1).......... 49 Chairman of the Board of Directors, President and
Chief Executive Officer

Thomas A. Grina..................... 39 Executive Vice President, Chief Operating Officer
and Chief Financial Officer

James D. Miller..................... 55 Senior Vice President, Sales and Marketing

Richard A. Shields, Jr. ............ 41 Senior Vice President, Technical Operations

James C. Cook (2)................... 37 Director

Mark C. Demetree (1)................ 40 Director

Andrew I. Fillat (2)................ 49 Director

James B. Murray, Jr. (1)............ 50 Director

Alan Z. Senter (2).................. 55 Director
</TABLE>
- --------
* Includes positions with predecessor

(1) Member of Compensation Committee
(2) Member of Audit Committee

Vernon L. Fotheringham has served as Chairman of the Board of
Directors and Chief Executive Officer of the Company and ART Licensing since
inception and as President since April 1997. From 1993 to 1995, Mr.
Fotheringham served as president and chief executive officer of Norcom Networks
Corporation, a nationwide provider of mobile satellite services. In 1992, Mr.
Fotheringham co-founded Digital Satellite Broadcasting Corporation, a
development stage company planning to provide satellite radio services
nationwide, served as its chairman from 1992 to 1993 and currently serves as one
of its directors. From 1988 to 1994, Mr. Fotheringham served as senior vice
president of The Walter Group, Inc., a wireless telecommunications consulting
and project management firm.

Thomas A. Grina has served as Executive Vice President, Chief
Operating Officer and Chief Financial Officer of the Company and ART Licensing
since April 1997 and as Executive Vice President, Finance and Chief Financial
Officer from April 1996 until April 1997. Mr. Grina was executive vice president
and chief financial officer of Dial Page, Inc., a paging provider, from 1989 to
1996 and as executive vice president of its wholly-owned subsidiary, Dial Call
Communications, Inc., a wireless communications company operating in the
southeastern U.S., from 1993 to 1996.

James D. Miller has served as Senior Vice President, Sales and
Marketing of the Company since December 1995. From 1993 to 1995, Mr. Miller was
vice president and general manager of U.S. Intelco Wireless. Mr. Miller served
as executive vice president of Atlas Telecom from 1987 to 1993.

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<PAGE>

Richard A. Shields, Jr. has served as Senior Vice President, Technical
Operations of the Company since December 1996 and served as Vice President,
Technology Development of the Company from March 1996 to December 1996. From
1992 through 1996, Mr. Shields was vice president, engineering and design for
Claircom Communications. From 1991 to 1992, Mr. Shields served as director of
product development of The Walter Group, Inc.

James C. Cook has served as director of the Company since November
1996. Mr. Cook is currently senior vice president of First Union Capital
Partners, Inc., the private equity investment affiliate of First Union
Corporation, where he has been employed since 1989.

Mark C. Demetree has served as director of the Company since May 1995.
From 1993 to June 1997, Mr. Demetree was president of North American Salt
Company. From 1991 through 1993, Mr. Demetree served as president of Trona
Railway Company, a shortline railroad division of North American Chemical
Company. Mr. Demetree currently is a director of J.C. Nichols Company, a real
estate Company.

Andrew I. Fillat has served as a director of the Company since
November 1995. Mr. Fillat has been employed since 1989 by Advent International
Corporation ("Advent"), a global venture capital and private equity management
firm and currently serves as senior vice president. Mr. Fillat is also a
director of: Interlink Computer Sciences, a systems management and
communications software company; Lightbridge, Inc., a company providing customer
acquisition and marketing related services for cellular and PCS carriers;
Voxware, Inc., a software company providing advanced voice compression and
processing; and several private companies in the Advent portfolio.

James B. Murray, Jr. became a director of the Company in February 1997
as a condition of the Company's acquisition of assets from CommcoCCC, Inc.
Since March 1989, Mr. Murray has been a director of the Columbia Capital
Corporation, a venture capital firm focusing on the telecommunications industry,
and since January 1995, has been a director of The Columbia Group Incorporated.
From January 1990 to January 1993, Mr. Murray was also the President of Randolph
Cellular Corp., a cellular communications company. Mr. Murray is a director of
Saville Systems, which provides billing solutions for service providers in the
telecommunications industry, as well as several privately-held
telecommunications companies.

Alan Z. Senter has served as a director of the Company since December
1996. From June 1996 to date and from 1993 to 1994, Mr. Senter has served as
chairman of Senter Associates, a financial advisory firm. From 1994 to May 1996,
Mr. Senter served as executive vice president and chief financial officer of
NYNEX Corporation. From 1992 to 1993, Mr. Senter was executive vice president,
chief financial officer and a director of GAF/ISP Corporation. From 1990 to
1992, Mr. Senter was vice president of finance at Xerox Corporation. Mr.
Senter is also a director of XL Insurance Company.

BOARD COMPOSITION

Under the terms of the Company's Amended and Restated Certificate of
Incorporation and bylaws, the Board of Directors is composed of three classes of
similar size, each to be elected in a different year, so that only one class
will be elected each year, in each case for a three-year term and until their
respective successors are duly elected and qualified. The Board of Directors
currently consists of six members. Messrs. Fillat and Senter serve as Class I
directors for terms expiring at the 2000 Annual Meeting of Stockholders and when
their respective successors are duly elected and qualified. Messrs. Cook and
Fotheringham serve as Class II directors for terms expiring at the 1998 Annual
Meeting of Stockholders and when their respective successors are duly elected
and qualified. Messrs. Demetree and Murray serve as Class III directors for
terms expiring at the 1999 Annual Meeting of Stockholders and when their
successors are duly elected and qualified.

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<PAGE>

DIRECTOR COMPENSATION

Each director who is not a full-time employee of the Company or one of
its subsidiaries receives $4,000 per year for services rendered as a director
and $500 for each board meeting attended and $500 for each committee meeting
attended.

The 1996 Non-Employee Directors Automatic Stock Option Plan, as
amended (the "Directors Plan"), provides for the automatic grant of stock
options to directors who are not employees of the Company or one of its
subsidiaries to purchase up to an aggregate of 75,000 shares. Under the
Directors Plan, options to acquire 2,200 shares of Common Stock are
automatically granted to each such director on January 1 of each year. In
addition, each non-employee director serving on the Board of Directors
immediately after the date of the Company's initial public offering in November
1996, or if later the date of his first appointment to the Board of Directors,
received, and in the future each newly elected non-employee director on the date
of his or her first appointment or election to the Board of Directors will
receive, an automatic grant of options to acquire 2,600 shares of Common Stock.

Stock options awarded under the Directors Plan are priced
automatically at an exercise price equal to the most recent closing selling
price per share of Common Stock prior to the date of the grant or, if no public
market for the Common Stock exists, the fair market value of the Common Stock on
the date of grant. Under the Directors Plan, option grants vest over a three-
year period and are exercisable for a period of 5 years from the date of grant,
provided, however, vested options may only be exercised for (i) three months
following the date the director ceases to be a director for any reason other
than death and (ii) one year following the date the director ceases to be a
director because of death.

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EXECUTIVE COMPENSATION

The following table sets forth information with respect to
compensation paid to or accrued on behalf of the Chief Executive Officer and
each of the four other most highly paid executive officers of the Company in
1996 (the "Named Executive Officers").

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

LONG TERM
COMPENSATION
AWARDS
---------------
ANNUAL COMPENSATION SECURITIES
------------------------- UNDERLYING ALL OTHER
YEAR SALARY BONUS OPTIONS(#) COMPENSATION
----- -------- ----- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Vernon L. Fotheringham, Chief Executive
Officer 1996 $250,000 -- -- --
1995 90,000 -- -- --

Steven D. Comrie(1), President and Chief
Operating Officer 1996 197,500 -- -- --
1995 70,000(2) -- 275,160 $ 30,000(3)

W. Theodore Pierson, Jr.(4), Executive
Vice President 1996 186,107(5) -- -- --
1995 77,000(5) -- -- --
Thomas A. Grina, Chief Operating Officer,
Executive Vice President and Chief
Financial Officer 1996 122,190(2) -- 181,818 25,000(6)
1995 -- -- -- --

James D. Miller, Senior Vice President,
Sales and Marketing 1996 135,000 -- 36,364 --
1995 -- -- 18,182 --
- -------------
</TABLE>
(1) Mr. Comrie resigned his position as an executive officer of the Company in
April 1997.
(2) Reflects compensation for a partial year.
(3) Reflects the forgiveness on January 1, 1996 of a loan to Mr. Comrie that has
been accounted for as compensation expense in the 1995 statement of
operations of the Company.
(4) Mr. Pierson resigned his position as an executive officer of the Company in
March 1997.
(5) The Company paid Pierson & Burnett, L.L.P., of which Mr. Pierson is a
partner, approximately $520,000 and $210,000 for services rendered to the
Company in 1996 and 1995, respectively.
(6) Reflects the reimbursement of moving expenses.

Option Grants. The following table sets forth certain information
regarding stock option grants made to the Named Executive Officers during the
fiscal year ended December 31, 1996. No grants were made during 1996 to Messrs.
Fotheringham, Comrie or Pierson.

-26-
<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (2)
--------------------------------------------------------------

POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM (1)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION ------------------------------
NAME GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
- ----------------- ------- ----------- ------------- -------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Thomas A. Grina 109,091 25.0% $17.1875 4/25/04(3) $432,927 $1,341,934
72,727 16.6% 17.1875 10/13/01 325,270 992,323
James D. Miller 36,364 8.3% 17.1875 10/13/01 162,635 496,161
- -------------
</TABLE>
(1) The potential realizable value is calculated based on the term of the option
at its time of grant. It is calculated by assuming that the stock price on
the date of grant appreciates at the indicated annual rate, compounded
annually for the entire term of the option.
(2) See "--Employment Agreements."
(3) One-third of such options vested at the time of grant, one-third vested on
April 26, 1997 and the remainder vest on April 26, 1999, provided however,
vesting of the remainder may be accelerated to April 26, 1998 if certain
financial goals to be agreed upon are met. The options are exercisable for
five years from the date of vesting.

Aggregate Stock Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values. The following table sets forth the number and value as of
December 31, 1996 of shares underlying unexercised options held by each of the
Named Executive Officers. As of December 31, 1996, Messrs. Fotheringham and
Pierson held no options. As of December 31, 1996, no stock options had been
exercised by any Named Executive Officers.

FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>

NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY-OPTIONS AT
FISCAL YEAR END FISCAL YEAR END(1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Steven D. Comrie 172,525 102,635 $1,660,657 $987,923
Thomas A. Grina 36,364 145,454 -- --
James D. Miller 7,273 47,273 48,780 73,167
- -------------
</TABLE>
(1) Based on the last sales price of the Company's Common Stock reported on the
Nasdaq National Market on December 31, 1996 of $11.25 per share, less the
exercise price payable upon exercise of such options.

EMPLOYMENT AGREEMENTS

On December 15, 1995, the Company entered into a three-year employment
agreement with Mr. Fotheringham providing for full-time employment at an
annualized base salary of $250,000 for 1996, $275,000 for 1997 and $300,000 for
1998. Under the agreement, Mr. Fotheringham is entitled to receive an annual
bonus of up to $100,000 depending on the achievement of specified annual link
installation goals to be established based on the operating budget approved by
the Board of Directors. The agreement contains a noncompetition provision for
one year after the cessation of his employment, regardless of the reason for
such cessation. The agreement may be terminated at any time by either party and
provides that, if the Company terminates Mr. Fotheringham without cause or Mr.
Fotheringham's employment is terminated due to his disability or death, Mr.
Fotheringham will be entitled to continue to receive the full amount of his base
salary and bonus and any other benefits to which he would have been entitled for
a period of 12 months, and all options granted to Mr. Fotheringham pursuant to
the agreement, if any, will vest fully.

The Company has entered into an employment agreement with Mr. Grina,
providing for full-time employment on an at will basis at an annualized base
salary currently of $210,000. Under the Agreement, Mr. Grina is entitled to
receive an annual bonus of up to $100,000 depending upon the achievement of
specified annual link installation goals to be established based on the
operating budget approved by the Board of Directors. The agreement contains a
noncompetition provision for one year after the cessation of his employment,
regardless of the reason for such cessation. The agreement may be terminated at
any time by either party and provides that, if the Company terminates Mr. Grina
without cause or Mr. Grina's employment is terminated due to his disability or
death, Mr. Grina will be entitled to continue to receive the full amount of his
base salary and any other benefits to which he would have

-27-
<PAGE>

otherwise been entitled for a period of six months from the date of such
termination. Pursuant to his employment agreement, Mr. Grina has been granted
NQSOs expiring on various dates through April 25, 2004 to purchase 109,091
shares of Common Stock at a price of $17.1875 per share.

The Company has also entered into an employment agreement with Mr.
Miller, providing for full-time employment at an annual base salary equal to
$150,000. His employment agreement provides for the payment by the Company of an
annual bonus in designated amounts based upon the achievement of specified
performance goals. The agreement has a term of three years expiring January 1999
and precludes him from competing with the Company for one year after the
cessation of employment, regardless of the reason for such cessation. Mr. Miller
has been granted NQSOs expiring December 29, 2000 to purchase 18,182 shares of
Common Stock at a price of $4.543 per share. The employment agreement may be
terminated at any time by the Company or Mr. Miller and provides that, if the
Company terminates Mr. Miller's employment without cause or his employment is
terminated due to his disability or death, Mr. Miller may continue to receive
the full amount of his base salary and any other benefits to which he would have
otherwise been entitled for a period of six months from the date of such
termination.

Steven D. Comrie resigned his positions as director, president and
chief operating officer of the Company effective April 3, 1997 and terminated
his employment with the Company effective May 1, 1997. Pursuant to his
employment and separation agreements, Mr. Comrie received severance benefits of
$320,000, a monthly relocation allowance of $3,800 and certain benefits for
twelve months and options previously granted by the Company to Mr. Comrie to
acquire 102,635 shares of Common Stock were vested.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Demetree, Fillat and Fotheringham served on the Compensation
Committee during 1996. Matthew C. Gove served on the Compensation Committee
until November 1996 when he resigned as a director of the Company. Only Mr.
Fotheringham has been an executive officer or employee of the Company.

The Advent Partnerships purchased $725,000 principal amount of March
Bridge Notes and 58,000 March Bridge Warrants in the March Bridge Financing and
purchased $500,000 principal amount of September Bridge Notes and 14,546
September Bridge Warrants in the September Bridge Financing. Advent, of which
Mr. Fillat is an officer, controls the general partner of each of the Advent
Partnerships. In 1995, partnerships in which Mr. Demetree and members of his
immediate family were limited partners purchased $1,789,000 of ART Licensing
common stock and Series A and B preferred stock. Immediate family members of
Mr. Demetree purchased $500,000 principal amount of March Bridge Notes and
40,000 March Bridge Warrants in the March Bridge Financing and purchased
$100,000 principal amount of September Bridge Notes and 2,909 September Bridge
Warrants in the September Bridge Financing. Mr. Demetree, an immediate family
member and their designees were also paid $225,000 and were issued 59,090
Indemnity Warrants for providing credit support to the Company in connection
with the Equipment Financing. See ''Certain Transactions--LHC Purchase Agreement
and Related Transactions," "--March Bridge Financing,'' ''--Equipment
Financing'' and ''--September Bridge Financing.''

-28-
<PAGE>

COMMON STOCK OWNERSHIP

The following table sets forth certain information with respect to the
beneficial ownership of shares of Common Stock as of July 11, 1997 by (i) each
Named Executive Officer, (ii) each director of the Company, (iii) all executive
officers and directors of the Company as a group and (iv) each person (including
any ''group'' as that term is used in Section 13(d)(3) of the Exchange Act)
known to the Company to be the beneficial owner of more than five percent of the
outstanding Common Stock. Except as noted below, each of the persons listed has
sole investment and voting power with respect to the shares indicated:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
--------------------
NAME NUMBER PERCENT
---- --------- --------
<S> <C> <C>

Advent International Corporation (1) 1,321,511 6.7%
Columbia Capital Corporation (2) 2,719,978 13.7%
Commco, L.L.C. (3) 2,848,577 14.1%
Landover Holdings Corporation (4) 2,909,718 14.7%
Steven D. Comrie (5) 85,128 *
James C. Cook (6) 56,969 *
Mark C. Demetree (7) 385,342 2.0%
Andrew I. Fillat (8) 4,128 *
Vernon L. Fotheringham 1,289,114 6.5%
Thomas A. Grina (9) 72,728 *
James D. Miller (10) 7,273 *
James B. Murray, Jr. (11) 61,656 *
W. Theodore Pierson, Jr. (12) 657,377 3.3%
Alan Z. Senter (13) 6,817 *
Laurence S. Zimmerman (4) 2,909,718 14.7%
All executive officers and directors
as a group (14) . 1,885,168 9.5%

- -------------
</TABLE>

Unless otherwise indicated, the business address of each director and executive
officer named above is c/o Advanced Radio Telecom Corp., 500 108th Avenue NE,
Suite 2600, Bellevue, Washington 98004.

*Less than 1.0%.

(1) Includes 1,189,673 shares, 1,149 shares and 58,143 shares of Common Stock
and 69,107 shares, 58 shares and 3,381 shares of Common Stock issuable upon
exercise of warrants, respectively, owned by Global Private Equity II, L.P.,
Advent International Investors II Limited Partnership and Advent Partners
Limited Partnership (collectively, the ''Advent Partnerships''), each a
limited partnership whose general partner is controlled by Advent
International Corporation (''Advent''). Mr. Fillat is an officer of Advent.
The address of Advent and each of the Advent Partnerships is 101 Federal
Street, Boston, Massachusetts 02110.
(2) Includes 62,173 shares of Common Stock issuable upon exercise of warrants
owned by Columbia Capital Corporation (''Columbia Capital'') and includes
2,350,310 shares, 171,060 shares and 136,435 shares owned by CCC Millimeter
L.P. (''CCC Millimeter''), Columbia Millimeter Communications, L.P.
(''Millimeter'') and Columbia Capital, respectively. Columbia Capital, as
the sole general partner of CCC Millimeter and Millimeter, has the power to
vote and dispose of the Common Stock held by CCC Millimeter and Millimeter.
Messrs. Blow, Kington, Mixer, Murray and Warner share investment control of
the shares held by such entities and may be deemed to beneficially own such
shares. Each of Messrs. Blow, Byrne, Herget, Kington, Mixer, Murray,
Schneider and Warner disclaims beneficial ownership of the shares held by
such entities, except to the extent of such individual's interest in such
entities. The address of each of Columbia Capital, CCC Millimeter and
Millimeter is 0 Court Square, P.O. Box 1465, Charlottesville, VA 22902
(3) Includes 54,191 shares of Common Stock issuable upon exercise of warrants.
The address of Commco, L.L.C. is 4513 Pin Oak Court, Sioux Falls, SD 57103.

(4) All of such securities are held in the LHC Voting Trust (as defined below).
Includes 15,672 shares of Common Stock issuable upon exercise of warrants.
Does not include 36,364 shares of Common Stock beneficially owned by the
wife of and 36,364 shares of Common Stock beneficially owned by a family
trust of Laurence S. Zimmerman, of which shares LHC and Mr. Zimmerman
disclaim beneficial ownership. LHC is controlled by Mr. Zimmerman. LHC's
address is 156 West 56th Street, Suite 2000, New York, New York 10019. See
"--Voting Trust Agreement."

(5) Mr. Comrie resigned his position as an executive officer of the Company in
April 1997. Includes 85,128 shares of Common Stock issuable upon exercise
of options exercisable within 60 days of August 11, 1997.

(6) Includes 8,000 shares of Common Stock issuable upon exercise of warrants and
1,601 shares of Common Stock issuable upon exercise of options exercisable
within 60 days of August 11, 1997.

(7) Includes 1,601 shares of Common Stock beneficially issuable upon exercise of
options exercisable within 60 days of August 11, 1997. Does not include
117,999 shares of Common Stock issuable upon exercise of warrants or
1,534,964 shares of Common Stock beneficially owned

-29-
<PAGE>

in each case by members of Mr. Demetree's family or a trust for their
benefit, of which he disclaims beneficial ownership. Mr. Demetree's address
is 11825 Norwood, Leawood, KS 66211.
(8) Includes 1,601 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 11, 1997. Does not include shares of
Common Stock and shares of Common Stock issuable upon exercise of warrants
held by the Advent Partnerships, of which Mr. Fillat disclaims beneficial
ownership, except for 2,495 shares of Common Stock and 32 shares issuable
upon exercise of warrants.
(9) Includes 72,728 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 11, 1997.
(10) Includes 7,273 shares of Common Stock issuable upon exercise of an option
exercisable within 60 days of August 11, 1997.
(11) Includes 867 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 11, 1997. Mr. Murray is a Managing
Director of Columbia Capital Corporation. Excludes shares held by Columbia
Capital, CCC Millimeter and Millimeter. See Footnote 2. Mr. Murray's
address is c/o Columbia Capital Corporation, 0 Court Square, P.O. Box 1465,
Charlottesville, VA 22902.
(12) Mr. Pierson's address is c/o Pierson & Burnett L.L.P., 1667 K Street, N.W.,
Washington, D.C. 20006. Mr. Pierson resigned his position as an executive
officer of the Company in March 1997.
(13) Includes 4,817 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 11, 1997.
(14) Includes 91,629 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 11, 1997 and 8,032 shares of Common
Stock issuable upon exercise of warrants. Does not include 2,894,046
shares of Common Stock held in the LHC Voting Trust by trustees, all of
whom are directors of the Company and do not have beneficial ownership of
such shares. See ''--Voting Trust Agreement.''

VOTING TRUST AGREEMENT

Pursuant to a Voting Trust Agreement, dated November 5, 1996, Landover
Holdings Corporation (''LHC'') and the wife of and a trust for the benefit of
the family of Laurence S. Zimmerman deposited all of their shares of Common
Stock in trust (the ''LHC Voting Trust'') with Messrs. Demetree, Fillat and
Fotheringham with irrevocable instructions to vote such shares on all matters
submitted to a vote of the stockholders of the Company in proportion to, or in
certain cases, consistent with the majority of, the vote of other stockholders
of the Company. The voting trust will expire on November 5, 2006, but is subject
to early termination in the event of (i) a business combination in which the
Company stockholders own less than 50%, and the Company directors constitute
less than 50% of the board of directors, of the combined entity and LHC owns
less than 5% of the voting power of such entity, (ii) the death of Mr. Zimmerman
or (iii) the sale by LHC of such shares to unaffiliated parties. The trustees of
the trust will be indemnified by the Company. LHC retains the right to dispose
of the Common Stock to third parties. Any such shares of Common Stock which are
transferred to an affiliate of LHC will remain subject to the terms of the
Voting Trust Agreement. Any such shares of Common Stock which are transferred to
parties not affiliated with LHC will be released from the LHC Voting Trust upon
such transfer.

-30-
<PAGE>

CERTAIN TRANSACTIONS

Organization of ART Licensing

On March 28, 1995, ART and LHC organized ART Licensing and purchased
for $.001 per share 340,000 shares of Class A common stock and 640,000 shares of
Class B common stock of ART Licensing, respectively.

LHC Purchase Agreement and Related Transactions

LHC Purchase Agreement. Pursuant to a Purchase Agreement, dated April
21, 1995 (the "LHC Purchase Agreement") among ART, LHC and ART Licensing, LHC
agreed to purchase or cause to be purchased additional securities of ART
Licensing (the "LHC Stock") for an aggregate purchase price of $7,000,000 (the
"Purchase Price"). Pursuant to the LHC Purchase Agreement, these additional
securities would dilute only LHC's interest in ART Licensing. In 1995, the
Company entered into various transactions which satisfied LHC's commitment under
the LHC Purchase Agreement including those described below. Because actual cash
proceeds received from these transactions exceeded LHC's commitment, the Company
redeemed 62,148 shares of stock held by LHC for $2 million. The Company paid LHC
expenses of $391,750 in connection with the LHC Purchase Agreement.

Landover Partnerships. In a series of separate private placements in
1995 pursuant to the LHC Purchase Agreement, the Company issued to various
limited partnerships 419,677 shares of ART Licensing Series A preferred stock
for $1,006,600, 114,679 shares of ART Licensing Series B preferred stock for
$880,700, and 7,363 shares of ART Licensing Series C preferred stock for
$112,700. The general partner for each of the partnerships was controlled by
LHC. Mark Demetree and members of his immediate family were limited partners
in two of the partnerships.

Advent Private Placement. In 1995, pursuant to the LHC Purchase
Agreement, ART sold, for $5.0 million in the aggregate, $4.95 million principal
amount of 10% notes due May 13, 1997 (the "Advent Notes") and $50,000 stated
amount of ART Series A Preferred Stock, convertible into 232,826 shares of ART
Licensing Series E preferred stock. The general partner of each of the Advent
Partnerships is controlled by Advent.

Merger, Services and Related Agreement. Pursuant to the LHC Purchase
Agreement, ART and ART Licensing entered into a Merger Agreement pursuant to
which ART was to merge into ART Licensing and a Services Agreement dated May 8,
1995 pursuant to which for a 20-year term, ART Licensing was to provide
management services for, and receive 75.0% of the cash flow from, operations
after deducting certain related direct expenses under wireless licenses held by
ART. The Company also entered into a stockholders agreement and a registration
rights agreement. In connection with these agreements, Mr. Fotheringham
deposited 733,711 shares of Common Stock in escrow to be released upon
achievement by the Company of certain performance goals. These shares were
released to Mr. Fotheringham in part on November 13, 1995 and the balance on
February 2, 1996 in connection with the February 1996 Reorganization described
below.

LHC Consulting Agreements. Pursuant to the LHC Purchase Agreement,
LHC and ART Licensing entered into a consulting agreement (the "LHC Consulting
Agreement"), dated May 8, 1995, under which LHC agreed to provide financial and
strategic planning and other advisory and management services to the Company for
a fee of $10,000 per month. The LHC Consulting Agreement was terminated on
November 13, 1995. Thereafter, LHC and ART Licensing entered into a new
consulting agreement (the "Second LHC Consulting Agreement"), dated November 13,
1995, for an initial term of one year under which the Company would pay LHC
$420,000 per year for consulting services and additional fees in connection with
additional services, such as merger and acquisition advisory services, provided
to the Company by LHC. The Second LHC Consulting Agreement was terminated in
November 1996. The Company paid LHC an aggregate of $830,000 and $70,000 in
1996 and 1995, respectively, in connection with services rendered under the LHC
Consulting Agreement and the Second LHC Consulting Agreement.

February 1996 Reorganization

On February 2, 1996, the Company, ART Licensing and their respective
stockholders agreed to an amendment and restatement of the May 1995 Stockholders
Agreement, which, among other things, (i) reorganized the capital structure of
ART Licensing, including providing for the conversion of ART Licensing Class A
and Class B common stock into ART Licensing common stock, the revision of the
terms of the conversion of the Series A, B, C, D, E and F preferred stock
(originally issued by ART Licensing and converted to the Company's preferred
stock in the Merger)

-31-
<PAGE>

into the Company's Common Stock (which conversion occurred upon the consummation
of the Company's initial public offering) and a 13-for-1 stock split, (ii)
exchanged the Advent Securities for 232,826 shares of ART Licensing Series E
preferred stock (which was ultimately converted into 1,100,632 shares of Common
Stock), (iii) revised provisions for election of directors, (iv) amended and
restated the Company's registration rights agreement, including waiver of
registration rights relating to the Company's initial public offering and (v)
released to Mr. Fotheringham his remaining escrow shares. (The foregoing is
collectively referred to as the "February 1996 Reorganization").

March Bridge Financing

On March 8, 1996, ART Licensing entered into a financing (the "March
Bridge Financing") pursuant to which it issued $5.0 million of 10% unsecured
notes due in 1998 (the "March Bridge Notes") and five-year warrants to purchase
up to an aggregate of 400,000 shares of ART Licensing common stock at a price of
$17.1875 per share (the "March Bridge Warrants") to private investors including
(i) immediate family members of Mark C. Demetree and (ii) the Advent
Partnerships, who invested $500,000 and $725,000, respectively, in the March
Bridge Notes and March Bridge Warrants. The March Bridge Notes were repaid with
the proceeds of the Company's initial public offering.

Equipment Financing

On April 1, 1996, CRA, Inc. ("CRA") provided the Company with $2.5
million in equipment financing (the "Equipment Financing") secured by the
equipment, the Company's $1.0 million letter of credit and a $500,000 letter of
credit provided by Mark C. Demetree, a member of his immediate family and LHC
(the "Indemnitors"). The Indemnitors also agreed to provide the Company with
funds and support for up to $2.0 million of its obligations in the event of
default under the Equipment Financing or draw against the Company's letter of
credit. The Company paid the Indemnitors or their designees an aggregate of
$225,000 in cash and five-year warrants to purchase an aggregate of 118,181
shares of Common Stock (the "Indemnity Warrants") on terms substantially similar
to the March Bridge Warrants as compensation for such indemnity. The letter of
credit provided by the Indemnitors was returned to the Indemnitors in December
1996.

September Bridge Financing

In August 1996, the Company received commitments for $3.0 million of
14.75% unsecured notes due March 1998 (the "September Bridge Financing"). Such
notes (the "September Bridge Notes") were funded from August 1996 to October
1996. In October 1996, the Company also received a commitment for an additional
$1.0 million of such notes. The Company also issued five-year warrants to
purchase up to an aggregate of 116,363 shares of Common Stock at a price of
$17.1875 per share ($15.00 after giving effect to anti-dilution adjustment) (the
"September Bridge Warrants") to private investors who participated in the
financing, including the Advent Partnerships, affiliates of CommcoCCC, LHC and
immediate family members of Mark C. Demetree. The September Bridge Notes were
repaid with the proceeds of the Company's initial public offering.

Merger of ART Licensing

In October 1996, ART Licensing became a wholly-owned subsidiary of the
Company through the Merger. In the Merger, the holders of ART Licensing common
stock received 2,945,848 shares of Common Stock and holders of ART Licensing
preferred stock received 920,951 shares of preferred stock of the Company which
was converted into 4,353,587 shares of Common Stock upon the consummation of the
Company's initial public offering in November 1996. LHC received an aggregate of
2,920,393 shares of Common Stock in the Merger on an as-converted basis.

Commco Option and Sublease

In connection with the CommcoCCC Acquisition, the Company granted
Commco, L.L.C., a stockholder of CommcoCCC, an option (the "Commco Option") to
acquire twelve 38 GHz licenses, each in one of the top 100 markets by estimated
population. Each of the licenses covers a market in which ART holds one or more
other 38 GHz licenses. Commco exercised its option in June 1997. The purchase
price will be paid by a non-recourse secured note and will be determined by a
formula based on $7.125, the sales price of ART's Common Stock on Nasdaq on the
day

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<PAGE>

the option was exercised, and the population covered by the twelve
authorizations. The Company has the right to be a reseller with respect to these
licenses for a term of five years at market rates. In addition, an affiliate of
Commco L.L.C. has the right to sublease channel capacity from the Company in the
New York and Washington, D.C. markets on terms agreed to by the Company and
Commco L.L.C.

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<PAGE>

DESCRIPTION OF CAPITAL STOCK

The following description of the capital stock of the Company and
certain provisions of the Company's Certificate of Incorporation, Bylaws and
Rights Agreement (as defined below) is a summary and is qualified in its
entirety by the provisions of the Certificate of Incorporation, Bylaws and
Rights Agreement, which have been incorporated by reference as exhibits to the
Company's Registration Statement of which this Prospectus is part.

The authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, $.001 par value, and 10,000,000 shares of Serial
Preferred Stock, $.001 par value (the "Preferred Stock").

COMMON STOCK

As of August 11, 1997, there were 19,749,452 shares of Common Stock
outstanding held of record by 1505 stockholders (without giving effect to any
exercise of outstanding warrants or options). The holders of Common Stock are
entitled to one vote per share on all matters to be voted on by the
stockholders. Subject to preferences that may be applicable to the outstanding
shares of Preferred Stock, if any, the holders of Common Stock are entitled to
receive ratably such dividends as may be declared from time to time by the Board
of Directors out of funds legally available therefor. See "Dividend Policy."
In the event of the liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to share ratably in all assets remaining
after payment of liabilities, subject to prior liquidation rights of the
Preferred Stock then outstanding. The Common Stock has no preemptive conversion
rights or other subscription rights. There are no redemption or sinking fund
provisions applicable to the Common Stock. All outstanding shares of Common
Stock are, and the shares of Common Stock being offered by the Company, upon
their issuances and sale, will be, fully paid and non-assessable.

PREFERRED STOCK

The Board of Directors has the authority to issue Preferred Stock in
one or more series and to fix the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued shares of Preferred
Stock and to fix the number of shares consisting any series in the designation
of such series, without any further vote or action by the stockholders. The
Board of Directors, without stockholder approval, can issue Preferred Stock with
voting and conversion rights which could adversely affect the voting power of
the holders of Common Stock. The issuance of Preferred Stock may have the
effect of delaying, deferring or preventing a change in control of the Company.

The Board of Directors has reserved 1,000,000 shares of Junior
Preferred Stock for issuance upon exercise of the Rights (as hereinafter
defined), which shares have the following terms. Each share of Junior Preferred
Stock will be entitled, subject to the rights of holders of any other series of
preference stock having superior rights, to receive cumulative quarterly cash
dividends payable on the last day of March, June, September and December in each
year equal to the greater of (a) $1.00, or (b) subject to certain adjustments
for stock splits, combinations or dividends, 100 times the aggregate per share
amount of all cash dividends and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than
dividends payable in shares of Common Stock, payable since the immediately
preceding quarterly dividend payment date on the Junior Preferred Stock or, with
respect to the first such dividend, since the first issuance of any share or
fraction thereof of Junior Preferred Stock.

Holders of shares of Junior Preferred Stock shall, subject to certain
adjustments for stock splits, combinations or dividends, be entitled to 100
votes per share of Junior Preferred Stock on all matters submitted to a vote of
the Company's stockholders, voting together with the Common Stock as a single
class, except as otherwise required by law or the Certificate of Designation.

In the event that any dividends or distributions payable on the Junior
Preferred stock are in arrears, the Company is subject to certain limitations in
its ability to (i) pay or declare dividends or make any distribution to holders
of stock ranking junior to or on parity with the Junior Preferred Stock, (ii)
redeem, purchase or otherwise acquire shares of any stock ranking junior to the
Junior Preferred stock, and (iii) redeem, purchase or otherwise acquire shares
of any stock ranking on a parity with the Junior Preferred Stock.

-34-
<PAGE>

Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Company, holders of the Junior Preferred stock shall be entitled to
receive, before any distribution is made with respect to shares of stock ranking
junior to the Junior Preferred Stock, $100 per share plus an amount equal to any
accrued and unpaid dividends and distributions thereon. After such payments are
made, additional distributions shall be made to holders of shares of Junior
Preferred Stock only after certain payments are made to holders of Common Stock
and stock ranking on parity therewith.

In the event of any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or other property, then in any such
case the shares of the Junior Preferred Stock shall be similarly exchanged or
changed in an amount per share, subject to certain adjustments for stock splits,
combinations or dividends, equal to 100 times the aggregate amount of stock,
securities, cash and /or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.

The shares of Junior Preferred Stock shall rank pari passu with (or if
---- -----
determined by the Board of Directors in any vote establishing any other series
of preferred stock, either senior to and prior in preference to, or junior and
subordinate to) other series of preferred stock of the Company with respect to
dividends and/or liquidation preference.

The shares of Junior Preferred Stock may be issued in fractional
shares, and are not subject to mandatory redemption.

DELAWARE LAW AND CERTAIN PROVISIONS OF THE COMPANY'S CHARTER, BYLAWS AND
SHAREHOLDERS' RIGHTS PLAN

Certain provisions of the Company's Certificate of Incorporation,
Bylaws and Shareholders' Rights Plan may have the effect of preventing,
discouraging or delaying any change in the control of the Company and may
maintain the incumbency of the Board of Directors and management. The
authorization of Preferred Stock makes it possible for the Board of Directors to
issue Preferred Stock with voting or other rights or preferences that could
impede the success of any attempt to effect a change in control of the Company.
Certain provisions of the Certificate of Incorporation create three classes of
directors serving for staggered three-year terms and prevent any amendment to
such provisions without the consent of holders of at least 75% of the then
outstanding shares of Common Stock. These provisions could also impede the
success of any attempt to effect a change in control of the Company.

The Company is subject to Section 203 ("Section 203") of the Delaware
General Corporation Law (the "Delaware GCL"). Section 203 prohibits a publicly-
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the time of the
transaction in which the person became an interested stockholder, unless (i)
prior to such time, the board of directors of the corporation approves either
the business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owns at least 85% of the outstanding voting stock
(excluding certain shares held by persons who are both directors and officers of
the corporation and certain employee stock plans), or (iii) on or after the
consummation date, the business combination is approved by the board of
directors and by the affirmative vote of at least 66 2/3% of the outstanding
voting stock that is not owned by the interested stockholder. For purposes of
Section 203, a "business combination" includes, among other things, a merger,
asset sale or other transaction resulting in a financial benefit to the
interested stockholder, and an "interested stockholder" is generally a person
who, together with affiliates and associates, owns (or within three years,
owned) 15% or more of the corporation's voting stock.

The Company's Certificate of Incorporation provides that so long as
the Company has a class of capital stock registered under the Exchange Act, any
action by the stockholders of that class must be taken at a duly called annual
or special meeting of the stockholders, and not by written consent. This
provision could have the effect of delaying until the next stockholders meeting
stockholder actions which are favored by the holders of a majority of the
outstanding voting securities of the Company, since special meetings of
stockholders may be called only by a majority of the Board of Directors, the
Chairman of the Board, the Vice-Chairman of the Board, if any, or the President
of the Company. These provisions may also discourage another person or entity
from making a tender offer for Common Stock, because such person or entity, even
if it acquired a majority of the outstanding voting securities of the Company,
would be able to take action as a stockholder (such as electing new directors or
approving a merger) only at a duly called stockholders meeting, and not by
written consent.

-35-
<PAGE>

The Bylaws establish procedures, including advance notice procedures,
with regard to the nomination, other than by or at the direction of the Board of
Directors, of candidates for election as directors and with regard to certain
matters to be brought before meetings of stockholders of the Company. In
general, notice must be received by the Company not less than 30 days prior to
the meeting and must contain certain specified information concerning the
stockholder submitting the proposal. In addition, the By-laws require that any
such nomination of candidates for election as a director be accompanied by a
petition signed by at least 50 record holders of capital stock entitled to vote
in the election of directors, representing in the aggregate 5% of the
outstanding capital stock entitled to vote thereon. Such procedures also
authorize regulation of the order of business and conduct of stockholder
meetings, the authority of the presiding officer and attendance at such
meetings. The foregoing provisions, which may be amended only by the
affirmative vote of 75% of the outstanding shares of capital stock entitled to
vote generally in the election of directors, could have the effect of making it
more difficult for a third party to effect a change in the control of the Board
of Directors. In addition, these provisions could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, a majority of the outstanding voting stock of the
Company and may make more difficult or discourage a takeover of the Company.

The Board of Directors is permitted pursuant to the Certificate of
Incorporation to consider special factors, such as employee welfare and the
future prospects of the Company, when evaluating tender or exchange offers or a
"business combination" as defined in Section 203 of the Delaware General
Corporation Law.

The Company has also included in its Certificate of Incorporation
provisions to eliminate the personal liability of its directors for monetary
damages resulting from breaches of their fiduciary duty to the extent permitted
by the Delaware General Corporation Law and to indemnify its directors and
officers to the fullest extent permitted by Section 145 of the Delaware General
Corporation Law.

On June 20, 1997, the Board of Directors of the Company declared a
dividend of one purchase right (a "Right") for every outstanding share of the
Common Stock. The terms of the Rights are set forth in a Rights Agreement dated
as of June 20, 1997 (the "Rights Agreement") between the Company and Continental
Stock Transfer & Trust Company (the "Rights Agent"). The Rights Agreement also
provides for the issuance of one Right for each share of Common Stock which is
issued or sold after that date and prior to the "Distribution Date" (as defined
below). Each Right entitles the holder to purchase from the Company one one-
hundredth of a share of Junior Preferred Stock at a price of $90 per one one-
hundredth of a share, subject to adjustment and expires on June 20, 2007, or the
earlier redemption of the Rights (the "Expiration Date"), and are not
exercisable until the Distribution Date. At any time prior to the Expiration
Date, the Company, by a majority vote of the Board of Directors, may redeem the
Rights at a redemption price of $.01 per Right, as described in the Rights
Agreement. Unless otherwise determined by a majority of the Board of Directors
then in office, the Distribution Date will occur on the earlier of (i) the
fifteenth business day following the later of the date of a public announcement
that a person (an "Acquiring Person"), including affiliates or associates of
such person, has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of Common Stock (including
shares of Common Stock subject to the Warrants and certain other warrants) and
the date on which an executive officer of the Company has actual knowledge of
such acquisition (the "Stock Acquisition Date") and (ii) the fifteenth business
day following commencement of a tender offer or exchange offer that would result
in any person or its affiliates and associates owning 15% or more of the
Company's outstanding Common Stock (including shares of Common Stock subject to
the Warrants and certain other warrants). The Board of Directors may delay the
distribution of the certificates. After the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Company's Common Stock.

If any person or group of affiliated or associated persons (other than
the Company and its affiliates), becomes an Acquiring Person, each holder of a
Right will have the right to receive shares of Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a
market value of two times the then current purchase price of the Right. Also,
if the Company were acquired in a merger or other business combination, or more
than 25% of its assets or earning power were sold, each holder of a Right would
have the right to exercise such Right and thereby receive common stock of the
acquiring company with a market value of two times the then current purchase
price of the Right. Following the occurrence of any of the foregoing events, any
Rights that are, or (in certain circumstances) were, beneficially owned by any
Acquiring Person will become null and void.

The Board of Directors may, at any time after any person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable
Rights for shares of Common Stock at a ratio of one share of Common Stock per
Right, subject to adjustment. The Board of Directors may not effect an exchange
at any time after any person (other than the Company, any subsidiary of the
Company, any

-36-
<PAGE>

employee benefit plan of the Company or any such subsidiary or any entity
holding Common Stock for or pursuant to the terms of any such plan), together
with all affiliates of such person, becomes the beneficial owner of 50% or more
of the Common Stock then outstanding.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is Continental
Stock Transfer & Trust Company.

-37-
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

As of August 11, 1997, the Company had 19,749,452 shares of Common
Stock outstanding, assuming no exercise of outstanding options or warrants. Of
these outstanding shares, 5,442,241 are freely tradeable by persons other than
"affiliates" of the Company as that term is defined under the Securities Act,
without restrictions or further registration under the Securities Act. Of the
remaining 14,307,211 shares outstanding, 1,007,776 shares are available for sale
in the public market under Rule 144, 7,299,435 shares will become available for
sale in the public market under Rule 144 in October 1997 and an additional
6,000,000 shares will become available for sale under Rule 144 in February 1998.

As of August 11, 1997, an aggregate of 4,603,878 shares of Common
Stock are subject to outstanding options and warrants, including the Warrants
described herein. An aggregate of 1,475,000 shares are reserved for future
issuance pursuant to the Company's Equity Incentive Plan and Directors Plan
(collectively, the "Plans"). As of August 11, 1997, 245,145 of such shares were
vested and exercisable. The Company has filed a registration statement on Form
S-8 to register the shares of Common Stock to be issued and issuable pursuant to
the Plans. Accordingly, shares of Common Stock issued under the Plans are
available for sale in the public market upon vesting of such shares, subject,
with respect to affiliates of the Company, to certain volume limitations under
Rule 144. The Common Stock issued from time to time pursuant to this Prospectus
may be resold without restriction or further registration under the Securities
Act by persons other than "affiliates" of the Company, as that term is defined
under the Securities Act.

In general, under Rule 144 as currently in effect, a person (or person
whose shares are aggregated), who has beneficially owned "restricted securities"
(as that term is defined in Rule 144) for a period of at least one year from the
later of the date such restricted securities were acquired from the Company or
the date they were acquired from an affiliate, is entitled to sell, within any
three-month period, a number of such securities that does not exceed the greater
of 1% of the then outstanding shares of the Company's Common Stock
(approximately 197,000 shares as of the date of this Prospectus) or the average
weekly trading volume in the Company's Common Stock during the four calendar
weeks preceding the filing of notice of such sale. Sales under Rule 144 are
also subject to certain restrictions on the manner of sale, notice requirements,
and the availability of current public information about the Company. Further,
under Rule 144(k), if a period of at least two years has elapsed between the
later of the date restricted securities were acquired from the Company and the
date they were acquired from an affiliate of the Company, a holder of such
restricted securities who is not an affiliate of the Company at the time of the
sale and has not been an affiliate of the Company for at least three months
prior to the sale would be entitled to sell the shares immediately without
regard to such volume limitations and other conditions.

There has been a limited trading market for the Common Stock and no
prediction can be made as to the effect that sales of Common Stock under Rule
144, pursuant to a registration statement or otherwise, or the availability of
shares of Common Stock for sale, will have on the market price prevailing from
time to time. Sales of substantial amounts of Common Stock in the public market
could adversely affect the market price of the Common Stock and could impair the
Company's future ability to raise capital through the sale of its equity
securities.

REGISTRATION RIGHTS

Under the terms of the Second Amended and Restated Registration Rights
Agreement, dated as of July 3, 1996, among the Company, ART Licensing, their
respective stockholders and the holders of the March Bridge Warrants, Indemnity
Warrants, CommcoCCC Warrants, the September Bridge Warrants, and Initial CIBC
Warrants, and CommcoCCC, Inc. (as amended, the "Registration Rights Agreement"),
such stockholders and the holders of the March Bridge Warrants, Indemnity
Warrants, the September Bridge Warrants, CommcoCCC Warrants and Initial CIBC
Warrants, who are the holders of an aggregate approximately 14.3 million shares
of Common Stock on a fully-diluted basis (the "Registrable Securities"), will be
entitled to certain demand rights with respect to the registration of such
shares under the Securities Act. In addition, under the Registration Rights
Agreement, if the Company proposes to register any of its securities under the
Securities Act (other than on Form S-4 or Form S-8), either for its own account
or the account of other security holders, the holders of Registrable Securities
are entitled to notice of such registration and are entitled to include their
Registrable Securities in any such registration on the same terms and conditions
as the securities otherwise being sold in such registration; provided, that,
among other things, the underwriters have the right, subject to certain
limitations, to limit the number of such shares included therein.

-38-
<PAGE>

SENIOR NOTES AND WARRANTS

There are outstanding $135 million principal amount of Senior Notes
issued by the Company pursuant to an indenture between the Company and The Bank
of New York, as trustee (the "Indenture"). The following is a summary of
certain provisions of the Senior Notes and the Indenture and is qualified in its
entirety by reference to all the provisions of the Senior Notes and the
Indenture, copies of which have been filed as exhibits to the Registration
Statement of which this Prospectus is a part.

Cash interest on the Senior Notes is payable at a rate of 14% per
annum, semi-annually in arrears on February 15 and August 15 of each year,
commencing August 15, 1997. The Notes will mature on February 15, 2007. Upon a
change of control, each holder of the Senior Notes has the right to require the
Company to repurchase such holder's Senior Notes at 101% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the date of
repurchase. In addition, the Company may be obligated to make an offer to
repurchase Senior Notes with the net cash proceeds of certain asset sales at a
price of 100% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the date of purchase. The Senior Notes are senior obligations of the
Company and are unsecured, except for the pledge by the Company of the
securities purchased with a portion of the proceeds of the Senior Notes as
described below under "Security." The Senior Notes will rank pari passu in
right of payment with any future unsecured, senior indebtedness of the Company.
The Indenture permits the Company to incur a substantial amount of secured
indebtedness, which if incurred will effectively rank senior to the Senior Notes
with respect to the assets securing such indebtedness.

REDEMPTION PROVISIONS

In the event of a sale by the Company of its Common Stock in one or
more registered underwritten public offerings or floatation of Common Stock of
the Company or an investment by one or more Strategic Equity Investors (as
defined) on or prior to February 15, 2000 (other than in connection with a
change in control of the Company), the Company may, at its option, upon not less
than 30 nor more than 60 days' notice given within 30 days after any such
offering or investment by Strategic Equity Investors, use all or a portion of
the net proceeds thereof to redeem up to a maximum of 25% of the initially
outstanding aggregate principal amount of the Notes at a redemption price equal
to 114% of the principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the repurchase date; provided that not less than 75% of the
initially outstanding aggregate principal amount of the Senior Notes remains
outstanding following such redemption. A Strategic Equity Investor is defined in
the Indenture as any person engaged principally in the telecommunications
business that has a total market capitalization of at least $1.0 billion.

In addition, the Senior Notes are subject to redemption at the option
of the Company, in whole or in part, at any time on or after February 15, 2002,
upon not less than 30 nor more than 60 days' notice, at the redemption prices as
a percentage of the principal amount at maturity thereof of 107.00% to February
14, 2003, 104.67% to February 14, 2004, 102.33% to February 14, 2005, and 100%
thereafter, together in each case with accrued and unpaid interest, if any, to
the date of repurchase.

SECURITY

The Company used approximately $51.8 million of the net proceeds of
from the sale of the Senior Notes to purchase a portfolio of securities, pledged
as collateral and held by the collateral agent for the benefit of the collateral
agent and the holders of the Senior Notes to provide for the payment of interest
on the Senior Notes through February 15, 2000.

COVENANTS

The Senior Notes contain covenants that, among other things, restrict
the ability of the Company and its Restricted Subsidiaries to incur debt; to
make distributions; to make investments; to repurchase stock; to make optional
repayments on indebtedness; to engage in other businesses; to incur liens; to
engage in transactions with affiliates; and to sell assets. The Indenture also
requires that the Company offer to repurchase the Senior Notes in the event of a
change in control.

-39-
<PAGE>

THE WARRANTS

The Warrants were issued pursuant to a warrant agreement by and
between the Company and The Bank of New York, as warrant agent (the "Warrant
Agreement"). The following is a summary of certain provisions of the Warrant
Agreement and the Warrants and is qualified in its entirety by reference to the
Warrant Agreement and the Warrants, copies of which have been filed as exhibits
to the Registration Statement of which this Prospectus is a part.

Each Warrant, when exercised, will entitle the holder to receive 1.349
shares of Common Stock at an exercise price of $.01 per share, subject to
adjustment under certain circumstances as described in the Warrant Agreement.
The Warrants are exercisable at any time on or after August 15, 1997, and unless
exercised, will automatically expire 5:00 p.m. on February 15, 2007.

LEGAL MATTERS

The validity of the Shares offered hereby will be passed upon for the
Company by Ropes & Gray, Boston, Massachusetts.

EXPERTS

The consolidated balance sheets as of December 31, 1996 and 1995 and
the consolidated statements of operations, stockholders' equity (deficit) and
cash flows for the years ended December 31, 1996, 1995 and 1994 included in this
Prospectus, have been included herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on
Form S-1 (the "Registration Statement") under the Securities Act, with respect
to the Common Stock offered hereby. This Prospectus, which constitutes part of
the Registration Statement, omits certain of the information contained in the
Registration Statement and the exhibits and schedules thereto on file with the
Commission pursuant to the Securities Act and the rules and regulations of the
Commission thereunder. The Registration Statement, including exhibits and
schedules thereto, may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, DC 20549, and at the Commission's regional offices
at 7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and copies
may be obtained at prescribed rates from the Public Reference Section of the
Commission at its principal office in Washington, D.C. Statements contained in
this Prospectus as to the contents of any contract or other document are not
necessarily complete and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. In
addition, the Commission maintains a site on the World Wide Web that contains
reports, proxy and information statements, and other information regarding
registrants such as the Company that file electronically with the Commission.
The address of the Commission web site is http://www.sec.gov.

-40-
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES PAGE
----
<S> <C>
Report of Independent Accountants............................................... F-2
Consolidated Balance Sheets -- December 31, 1996 and 1995....................... F-3
Consolidated Statements of Operations for the Three
Years Ended December 31, 1996, 1995 and 1994................................... F-4
Consolidated Statements of Stockholders' Equity
(Deficit) for the Three Years Ended December 31, 1996,
1995 and 1994.................................................................. F-5
Consolidated Statements of Cash Flows for the Three
Years Ended December 31, 1996, 1995 and 1994................................... F-6
Notes to Consolidated Financial Statements...................................... F-7

Condensed Consolidated Balance Sheet -- June 30, 1997
(unaudited).................................................................... F-20
Condensed Consolidated Statements of Operations (unaudited) for the
Six Months Ended June 30, 1997 and 1996 ....................................... F-21
Condensed Consolidated Statements of Stockholders' Equity (unaudited)
for the Six Months Ended June 30, 1997 ........................................ F-22
Condensed Consolidated Statements of Cash Flows for the (unaudited)
Six Months Ended June 30, 1997 and 1996 ....................................... F-23
Notes to Unaudited Interim Condensed Consolidated
Financial Statements........................................................... F-24
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Advanced Radio Telecom Corp.

We have audited the accompanying consolidated balance sheets of
Advanced Radio Telecom Corp. and Subsidiaries as of December 31, 1996 and 1995,
and the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for the years ended December 31, 1996, 1995 and 1994.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall 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 consolidated financial position of
Advanced Radio Telecom Corp. and Subsidiaries as of December 31, 1996 and 1995,
and the consolidated results of their operations and their cash flows for the
years ended December 31, 1996, 1995 and 1994, in conformity with generally
accepted accounting principles.

Coopers & Lybrand L.L.P.
Seattle, Washington
March 18, 1997

F-2
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................................... $ 1,974,407 $ 633,654
Accounts receivable............................................................ 1,819,593
Prepaid expenses and other current assets...................................... 196,791 52,325
----------- ----------
Total current assets........................................................... 3,990,791 685,979
Restricted cash................................................................... 1,032,060
Property and equipment, net....................................................... 19,303,849 3,581,561
FCC licenses, net................................................................. 4,330,906 4,235,734
Equity investment................................................................. 3,285,000 285,000
Deferred financing costs, net..................................................... 3,255,688 778,897
Other assets...................................................................... 1,450,407 309,388
----------- ----------
Total assets............................................................ $36,648,701 $9,876,559
=========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Accounts payable............................................................... $ 9,425,834 $3,340,144
Accrued compensation and benefits.............................................. 1,350,894 267,091
Other accrued liabilities...................................................... 944,807 87,254
Current portion of long-term debt.............................................. 1,893,161
------------ ----------
Total current liabilities...................................................... 13,614,696 3,694,489
Long-term debt, net of current portion............................................ 3,084,085 6,450,000
------------ ----------
Total liabilities....................................................... 16,698,781 10,144,489
------------ ----------
Commitments and contingencies

Redeemable preferred stock, $0.01 par value, 1 share issued and outstanding at
December 31, 1995............................................................... 44,930
------------ ----------
Stockholders' equity (deficit):
Serial preferred stock, $0.001 par value, 488,492 shares issued and
outstanding at December 31, 1995.............................................. 488
Common stock, $0.001 par value, 13,559,420 and 6,529,975 shares issued
and outstanding............................................................... 13,559 6,530
Additional paid-in capital........................................................ 53,976,721 3,050,179
Accumulated deficit............................................................... (34,040,360) (3,370,057)
------------ ----------
Total stockholders' equity (deficit).................................... 19,949,920 (312,860)
------------ ----------
Total liabilities and stockholders' equity (deficit) $ 36,648,701 $9,876,559
============ ==========

</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-3
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>

1996 1995 1994
------------- ------------ ------------
<S> <C> <C> <C>
Service revenue................................................ $ 247,116 $ 5,793
Equipment sales and construction revenue....................... 2,660,811
Consulting revenue............................................. $ 137,489
------------ ----------- -----------
Total revenue 2,907,927 5,793 137,489
------------ ----------- -----------

Costs and expenses:
Technical and network operations.......................... 3,402,948
Cost of equipment sales and construction.................. 1,590,779
Sales and marketing....................................... 5,548,584 191,693
General and administrative................................ 12,896,134 2,911,273 253,453
Research and development.................................. 1,269,579
Depreciation and amortization............................. 1,017,959 15,684 8,281
------------ ----------- -----------
Total operating expenses................................ 25,725,983 3,118,650 261,734
------------ ----------- -----------
Loss from operations........................................... (22,818,056) (3,112,857) (124,245)

Interest and other:
Interest expense.......................................... (1,695,489) (131,540) (4,375)
Financing commitment expense.............................. (3,687,644)
Other..................................................... (1,248,000)
Interest income........................................... 118,882 9,554
------------ ----------- -----------
Loss before extraordinary item........................ (29,330,307) (3,234,843) (128,620)
Extraordinary loss on early retirement of debt........ ( 1,339,996)
------------ ----------- -----------
Net loss.............................................. $(30,670,303) $(3,234,843) $ (128,620)
============ =========== ===========

Pro forma loss per share of common stock before extraordinary
item......................................................... $ (2.97) $ (0.30)
Extraordinary loss per share of common stock................... (0.13)
------------ -----------
Pro forma net loss per share of common stock................... $ (3.10) $ (0.30)
============ ===========

Pro forma weighted average number of shares of common stock
outstanding.................................................. 9,885,193 10,912,338
============ ===========

</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-4
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>

SERIAL
COMMON STOCK PREFERRED STOCK ADDITIONAL
----------------------------- ---------------------------- PAID-IN ACCUMULATED
SHARES PAR VALUE SHARES PAR VALUE CAPITAL DEFICIT TOTAL
------------- -------------- -------------- ------------- ------------- ------------- -----------

<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993. 1,070,915 $ 1,071 $ 60,065 $ (6,594) $ 54,542
Issuance of common stock
for cash.................. 1,070,915 1,071 33,929 35,000
Net loss................... (128,620) (128,620)
------------- -------------- -------------- ------------- ------------- ------------- -----------

Balance, December 31, 1994. 2,141,830 2,142 93,994 (135,214) (39,078)
Issuance of common stock
to ART West............... 26,773 27 24,973 25,000
Issuance of common stock
to existing
stockholders.............. 1,472,508 1,472 (1,472)
Conversion of note payable
and interest to
paid-in capital........... 75,250 75,250
Issuance of common stock
to Landover and
affiliates for cash....... 3,120,000 3,120 (2,100) 1,020
Issuance of preferred
stock to limited
partnerships affiliated
with Landover for cash:
Series A.................. 332,091 $ 332 1,006,268 1,006,600
Series B.................. 82,318 82 880,618 880,700
Series C.................. 5,402 5 112,695 112,700
Issuance of Series D
preferred stock for cash.. 61,640 62 1,999,938 2,000,000
Shares issued to reflect
anti-dilution
adjustments............... 62,655 63 7,041 7 (70)
Preferred stock issuance
costs..................... (229,814) (229,814)

Redemption of common stock. (293,791) (294) (1,999,706) (2,000,000)

Increase in additional
paid-in capital as a
result
of the release of
Escrow Shares.......... 802,002 802,002
Accrued stock option
compensation.............. 287,603 287,603
Net loss................... (3,234,843) (3,234,843)
------------- -------------- -------------- ------------- ------------- ------------- -----------

Balance, December 31, 1995. 6,529,975 6,530 488,492 488 3,050,179 (3,370,057) (312,860)

Issuance of Series E
preferred stock........... 232,826 233 4,672,953 4,673,186
Shares issued to reflect
anti-dilution
adjustments............... 56,984 57 150,740 151 (208)
Issuance of Series F
preferred stock and
warrants
in exchange for cash
and the Ameritech
strategic distribution
agreement................. 48,893 49 3,552,951 3,553,000
Preferred stock issuance
costs..................... (150,000) (150,000)

Increase in additional
paid-in capital as a
result
of the release of
Escrow Shares.......... 6,795,514 6,795,514
Value ascribed to the
equipment financing
warrants.................. 484,937 484,937
Value ascribed to the
Bridge Financing
Warrants.................. 1,795,533 1,795,533
Issuance of common stock
in an initial public
offering.................. 2,300,500 2,301 34,505,199 34,507,500
Initial public offering
common stock issuance
costs..................... (6,081,098) (6,081,098)
Conversion of preferred
stock to common stock
in connection with the
initial public offering.. 4,353,587 4,353 (920,951) (921) (3,432)
Value ascribed to the CIBC
Warrants.................. 4,503,848 4,503,848
Accrued stock option
compensation.............. 850,663 850,663
Common stock issued in
connection with the
exercise of the
Ameritech warrants..... 318,374 318 (318)
Net loss................... (30,670,303) (30,670,303)
------------- -------------- -------------- ------------- ------------- ------------- -----------
Balance, December 31, 1996. 13,559,420 $ 13,559 $ $53,976,721 $(34,040,360) $19,949,920
============= ============== ============== ============= ============= ============= ===========

</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.

F-5
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------ ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss........................................................ $(30,670,303) $(3,234,843) $(128,620)
Adjustments to reconcile net loss to net cash used in operating
activities:
Non-cash compensation expense.................................. 7,646,177 1,089,605
Depreciation and amortization.................................. 1,017,959 15,684 8,281
Financing commitment expense................................... 3,687,644
Extraordinary item............................................. 1,339,996
Non-cash interest expense...................................... 772,221 110,828
Non-cash marketing expense..................................... 1,053,000
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities...................... 3,633,043 563,351 (8,282)
Accounts receivable........................................... (1,819,593)
Prepaid expenses and other current assets..................... (144,466) (56,337)
------------ ----------- ---------

Net cash used in operating activities....................... (13,484,322) (1,511,712) (128,621)
------------ ----------- ---------

Cash flows from investing activities:
Additions to property and equipment............................. (9,439,481) (621,364) (5,175)
Investment in ART West.......................................... (3,000,000) (255,000)
Acquisition of EMI licenses and property and equipment.......... (3,023,971)
Additions to other assets....................................... (1,425,032) (280,000)
Investment in restricted cash................................... (1,032,060)
Additions to FCC licenses....................................... (201,183) (13,912)
------------ ----------- ---------

Net cash used in investing activities....................... (15,097,756) (4,194,247) (5,175)
------------ ----------- ---------

Cash flows from financing activities:
Proceeds from issuance of common stock.......................... 34,507,500 1,020 35,000
Proceeds from issuance of preferred stock....................... 2,500,000 4,050,000
Proceeds from bridge financings................................. 12,000,000
Proceeds from issuance of equipment financing note.............. 2,445,000
Proceeds from issuance of convertible note payable.............. 4,950,000
Proceeds from loan and advances from Landover................... 183,500 70,000
Redemption of common stock...................................... (2,000,000)
Stock issuance costs............................................ (6,231,098) (213,884)
Repayment of bridge financings.................................. (12,000,000)
Principal payments of loan and long-term debt................... (1,131,443) (8,500)
Additions to deferred financing costs........................... (2,167,128) (452,656)
Repayment of cash advances from Landover........................ (175,000)
------------ ----------- ---------

Net cash provided by financing activities................... 29,922,831 6,334,480 105,000
------------ ----------- ---------

Net increase (decrease) in cash............................. 1,340,753 628,521 (28,796)
Cash, beginning of period............................................ 633,654 5,133 33,929
------------ ----------- ---------

Cash, end of period.................................................. $ 1,974,407 $ 633,654 $ 5,133
============ =========== =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.

F-6
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY AND BASIS OF PRESENTATION:

Advanced Radio Telecom Corp. ("ART", and collectively with its
subsidiaries, the "Company") provides wireless broadband telecommunications
services using point-to-point microwave transmissions in the 38 GHz band of the
radio spectrum throughout the United States. Prior to the commencement of
commercial operations during 1996, the Company's principal business activities
included the acquisition of spectrum rights, build out of its systems,
development of its operating infrastructure, and raising of funds to implement
its business plan.

ART, formerly named Advanced Radio Technologies Corporation, was
organized as a Delaware corporation in August 1993. Advanced Radio Technology
Ltd., renamed Advanced Radio Telecom Corp. ("Telecom"), was organized in March
1995 by ART and Landover Holdings Corporation ("Landover") for the purpose of
acquiring certain 38 GHz licenses and to facilitate Landover's commitment to
invest or cause to invest $7 million in the Company. Pursuant to the related
purchase, shareholder, and services agreements, ART and Telecom were operated as
a single entity pending approval of their merger from the Federal Communications
Commission ("FCC"). Such approval was received and Telecom became a wholly-owned
subsidiary of ART by merger in October 1996. The merger was accounted for in a
manner consistent with a reorganization of entities under common control which
is similar to that of a pooling of interests, and the financial statements of
prior periods have been restated.

Under the Company's current business plan, the development of the
Company's business and the deployment of its services and systems will require
significant expenditures in the near term, a substantial portion of which is
expected to be incurred before realization of significant revenues. Management
believes that under its current business plans, the funds received from its
initial public offering of equity securities and issuance of public debt
securities are sufficient to enable the Company to fund its operations and
capital requirements at least through December 1997 and that the Company will
require significant additional capital after that date. While not expected, in
the event that the Company's business development and expansion plans change,
the Company may require additional financing earlier than December 31, 1997. In
the event that the Company fails to obtain such financing when required, such
failure could result in the modification, delay or abandonment of some or all of
the Company's development and expansion plans which in turn, could have a
material adverse affect on the Company.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Consolidation

The consolidated financial statements include all majority owned
subsidiaries in which the Company has the ability to exercise control. All
intercompany transactions have been eliminated in consolidation.

Development Stage Enterprise

During 1996, the Company commenced commercial operations, and is no
longer considered to be in the development stage as defined in Statement of
Financial Accounting Standards No. 7, "Accounting and Reporting by Development
Stage Enterprises." Such change in classification of the Company had no impact
on the net loss or stockholders' equity (deficit) for any periods presented.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with
remaining maturities of three months or less to be cash equivalents.

The Company places its temporary cash investments with major financial
institutions. At December 31, 1996 and 1995, the Company's temporary cash
investments are principally placed in one entity.

F-7
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Property and Equipment

Property and equipment are stated at cost. Depreciation and
amortization are computed using the straight-line method over the estimated
useful lives, generally 5 years for wireless transmission equipment and 3 to 5
years for other property and equipment.

The costs of normal maintenance and repairs are charged to expense as
incurred. Direct costs of placing assets into service and major improvements are
capitalized. Gains or losses on the disposition of assets are recorded at the
time of disposition.

Capitalized Software

Purchased software is capitalized at cost and amortized over its
estimated useful life of 3 to 5 years.

FCC Licenses

The direct costs of obtaining 38 GHz radio spectrum licenses by grant
from the FCC or by purchase from others and the cost of perfecting such licenses
are capitalized and amortized on a straight-line basis over a 40 year period.
Accumulated amortization as of December 31, 1996 totaled $106,011. All of the
Company's licenses expire in 2001 and it is management's expectation that they
will be renewed by the FCC for successive ten year periods.

Recoverability of Long-Lived Assets

The recoverability of property and equipment and capitalized FCC
licenses is dependent on, among other things, the successful development of
systems in each of the respective markets, or sale of such assets. Management
estimates that it will recover the carrying amount of those costs from
undiscounted cash flows generated by the systems once they have been developed.
However, it is reasonably possible that such estimates will change in the near
term as a result of technological, regulatory or other changes. The Company
periodically reviews the carrying value of its capitalized assets for impairment
and recoverability.

Equity Investment

The Company accounts for its fifty percent interest in the ART West
joint venture under the equity method. There were no operations in this joint
venture for the year ended December 31, 1996.

Financing Costs

Direct costs associated with obtaining debt financing are deferred and
charged to interest expense using the effective interest rate method over the
term of the debt. Direct costs of obtaining commitments for financing are
deferred and charged to expense over the term of the commitments. Direct costs
associated with obtaining equity financing are deferred and charged to
additional paid-in capital as the related funds are raised. Deferred costs
associated with unsuccessful financings are charged to other expense.

Accumulated amortization of deferred financing costs totaled
$3,753,605 and $44,376 at December 31, 1996 and 1995, respectively. Deferred
costs of approximately $1.2 million associated with an unsuccessful public debt
offering were charged to other expense in 1996.

Revenue Recognition

Revenue from telecommunications services are recognized ratably over
the period such services are provided.

Equipment sales and construction revenue is recorded at the time the
equipment is delivered and construction is completed. Cost of equipment sales
are based on the average cost method.

F-8
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

A single customer accounted for approximately forty-two percent of the
Company's service revenues during 1996. Additionally, the Company entered into
an equipment sales and construction services agreement with another customer
during 1996 to act as a sub-contractor to provide transmission facilities
construction services and the related wireless transmission equipment. This
agreement was substantially completed during 1996 and total equipment sales and
construction revenue are attributable to this customer. The receivables from
this customer accounted for approximately ninety-four percent of total accounts
receivable at December 31, 1996.

During 1994, the Company recognized income from consulting fees
associated with the application of FCC licenses on behalf of third parties,
including consulting fees of approximately $80,000 to a related party.

Research and Development

Research and development costs are charged to expense as incurred.

Income Taxes

The Company accounts for income taxes under the liability method of
accounting. Under the liability method, deferred taxes are determined based on
the differences between the financial statement and tax bases of assets and
liabilities at enacted tax rates in effect in the year in which the differences
are expected to reverse. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amounts expected to be realized.

Net Loss Per Share

Historical net loss per share is computed based on the loss for the
period divided by the weighted average number of shares of common stock
outstanding during each period. Historical net loss per share and the weighted
average number of shares of common stock outstanding for the years ended
December 31 are as follows:
<TABLE>
<CAPTION>

1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>

Loss per share before extraordinary item...................... $ (3.80) $ (0.54) $ (0.04)
Extraordinary loss per share.................................. (0.17)
---------- ---------- ----------

Net loss per share............................................ $ (3.97) $ (0.54) $ (0.04)
========== ========== ==========

Weighted average number of shares of common stock outstanding. 7.717.755 5,946,338 3,337,685
========== ========== ==========

</TABLE>

In accordance with the Securities and Exchange Commission rules,
potentially dilutive instruments issued within one year prior to the Company's
initial public offering at exercise prices below the initial public offering
price must be treated as outstanding for all periods presented in the initial
public offering prospectus. Accordingly, 2,167,438 and 4,966,000 additional
shares are reflected in the weighted average number of shares of common stock
outstanding in computing the unaudited pro forma net loss per share for the
years ended December 31, 1996 and 1995, respectively.

In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share." This
statement specifies the computation, presentation, and disclosure requirements
for earnings per share ("EPS"), to simplify the existing computational
guidelines and increase comparability on an international basis. The statement
will be effective for the year ending December 31, 1997. This statement will
replace "primary" EPS with "basic" EPS, the principal difference being the
exclusion of common stock equivalents in the computation of basic EPS. In
addition, this statement will require the dual presentation of basic and diluted
EPS on the face of the consolidated statement of operations. Due to the
Company's net losses, basic and diluted EPS computed pursuant to this statement
are not expected to be materially different from the historical net losses per
share previously presented.

F-9
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 as of the date of the financial
statements and the reported amounts of expenses during the reporting period.
Actual results could differ from those estimates.

3. SPECTRUM ACQUISITIONS:

CommcoCCC Licenses

In June 1996, the Company agreed to acquire 129 38 GHz licenses from
CommcoCCC, Inc. ("CommcoCCC") in exchange for 6 million shares of the Company's
common stock, which acquisition was consummated in February 1997. The aggregate
market value of the common shares issued to CommcoCCC was approximately $88
million. The Company incurred approximately $3 million in fees in connection
with this acquisition, of which approximately $1 million had been paid as of
December 31, 1996 and included in other assets.

The Company has given a stockholder of CommcoCCC an option to purchase
FCC licenses in specified market areas in which the Company will have more than
one license. The Option is exercisable only in the event that the stockholder
receives licenses pursuant to pending applications covering a minimum specified
population and expires in August 1997. The price of licenses to be purchased
under the option is based upon a formula that considers the market price of the
Company's common stock on the date of exercise.

ART West Licenses

In February 1997, the Company completed its acquisition from Extended
Communications, Inc. ("Extended") of the remaining 50% interest in ART West, a
partnership jointly controlled by Extended and the Company, for $6 million in
cash, of which $3 million was paid in November 1996. The Company's initial 50%
interest was obtained in 1995 through its initial capital contribution of
$255,000 in cash and 26,773 shares of common stock. ART West held certain 38 GHz
licenses that were transferred to the Company upon the completion of the
acquisition. An officer of the Company is the president and a shareholder of
Extended.

EMI Licenses

In November 1995, the Company acquired from EMI Communications Corp.
("EMI") certain 38 GHz radio spectrum licenses and related assets (the "EMI
Licenses") in exchange for $3 million in cash and a $1.5 million non-negotiable
promissory note. Landover advanced $175,000 to the Company to fund a portion of
the initial payment to EMI, which was repaid in 1995. The total purchase price,
including expenses, was allocated to the acquired assets as follows:

<TABLE>
<S> <C>
FCC licenses.............................. $4,226,821
Property and equipment.................... 297,150
----------
$4,523,971
==========
</TABLE>

F-10
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. PROPERTY AND EQUIPMENT:

Property and equipment at December 31 were as follows:

<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Wireless transmission equipment placed in service............ $ 5,303,386 $ 297,150
Wireless transmission equipment not yet placed in operation.. 10,727,923 3,199,755
Computer software............................................ 2,334,683
Computer hardware............................................ 1,063,928
Office furniture and equipment............................... 458,698 93,414
Other equipment and vehicles................................. 333,152
----------- ----------
20,221,770 3,590,319
Accumulated depreciation..................................... (917,921) (8,758)
----------- ----------
$19,303,849 $ 3,581,561
=========== ===========

</TABLE>
Depreciation expense for the years ended December 31, 1996, 1995 and
1994 was $909,163, $7,031, and $1,727, respectively.

5. INCOME TAXES:

Deferred tax assets and liabilities at December 31 were as follows:

<TABLE>
<CAPTION>
1996 1995
------------ ----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards............ $ 9,100,000 $ 870,000
Accrued compensation and benefits........... 470,000
Valuation allowance......................... (9,258,000) (870,000)
----------- ---------
$ 312,000 $
=========== =========
Deferred tax liabilities:
Depreciation and amortization............... $ (312,000)
===========

</TABLE>

Differences between the tax bases of assets and liabilities and their
financial statement amounts are reflected as deferred income taxes based on
enacted tax rates. The net deferred tax assets have been reduced by a valuation
allowance based on management's determination that the recognition criteria for
realization has not been met.

At December 31, 1996, the Company has accumulated net operating loss
carryforwards for Federal income tax purposes of approximately $26.7 million
which expire between 2008 and 2011. The Company's ability to use its net
operating losses to offset future income is subject to restrictions in the
Internal Revenue Code which could limit the Company's future use of its net
operating losses if certain stock ownership changes occur.

F-11
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. LONG-TERM DEBT, BRIDGE, AND OTHER FINANCINGS:

Long-Term Debt

Long-term debt as of December 31 consisted of the following:
<TABLE>
<CAPTION>
1996 1995
------------ ----------
<S> <C> <C>
EMI note, payable in quarterly installments of principal of $187,500 plus interest
at prime plus 2% (10.25% at December 31, 1996), through January 1, 1999........... $ 1,312,500 $1,500,000

Equipment financing note, net of original issue discount of $333,476, payable in
monthly installments of $92,694 including interest at 17.26%, and final
payment of $642,305 due April 29, 1998............................................ 1,446,699

GTE software financing, payable in monthly installments of $67,000 including
interest at 8.5%, through December 1, 1999........................................ 2,079,372

Other.............................................................................. 138,675

Advent notes, payable on demand on or after May 13, 1997........................... 4,950,000
----------- ----------
4,977,246 6,450,000
Less current portion............................................................... (1,893,161)
-----------
$ 3,084,085 $6,450,000
=========== ==========

</TABLE>
The aggregate amount of the principal payments for long-term debt as
of December 31, 1996 follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31:
- ------------------------
<S> <C>
1997........... $2,159,941
1998........... 2,346,811
1999........... 803,970
----------
$5,310,722
==========
</TABLE>

The equipment financing note is collateralized by a portion of the
Company's wireless transmission equipment and a $1 million certificate of
deposit. The certificate of deposit is included in restricted cash. In
connection with the issuance of the equipment financing note, certain
shareholders of the Company guaranteed payment of the note in exchange for
warrants to purchase 118,181 shares of the Company's common stock for $17.19 per
share and $225,000 in fees. In November 1996, the shareholders were released
from the guarantee.

Bridge Financings

During 1996 the Company issued in the aggregate $12 million of bridge
financings in three private placements, consisting of $5 million of 10% notes
issued in March 1996, $3 million of 14.75% notes issued in July 1996, and $4
million of 14.75% notes issued in September and October 1996. Of these notes,
approximately $8.1 million principal amount was issued to certain shareholders
of the Company and CommcoCCC. Warrants to purchase in the aggregate 603,637
shares of the Company's common stock (the "Bridge Financing Warrants") at a
price per share ranging from $15.00 to $17.19, were issued in connection with
these bridge financings.

In November 1996, the Company repaid these bridge financings with the
proceeds from the initial public offering of the Company's common stock. The
early repayment of these bridge financings resulted in an extraordinary loss
arising from the write-off of the unamortized note discounts and the related
deferred financing costs.

In November 1995, the Company issued $4.95 million in 10% promissory
notes and one share of the Company's Series A redeemable preferred stock to
certain limited partnerships controlled by Advent International

F-12
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Corp. in exchange for $5 million in cash. In February 1996, the notes, related
accrued interest and the redeemable preferred stock were exchanged for 232,826
shares of Series E preferred stock.

Public Debt Offering

In February 1997, the Company received $135 million of gross proceeds
from a public offering of $135 million of 14% Senior Notes due 2007 (the "Senior
Notes") and warrants to purchase an aggregate of 2,731,725 shares of the
Company's common stock for $0.01 per share. The Company used approximately $51.8
million of the net proceeds of this offering to purchase a portfolio of U.S.
Treasury securities, pledged as collateral for the payment of interest on the
Senior Notes through February 15, 2000.

The Senior Notes are unsecured senior obligations of the Company, due
February 2007, with interest payable on February 15 and August 15 of each year
and are redeemable at the Company's option beginning in February 2002 at
redemption prices declining to par. The Senior Notes were issued under an
indenture which contains covenants limiting the Company's ability to incur
additional debt, pay dividends or make other distributions, incur liens, merge
or sell assets, or enter into certain transactions with related parties, among
other restrictions.

CIBC Financing Commitment

In November 1996, in connection with Company's initial public offering
of common stock, the Company entered into agreements with certain lenders which
provided for the issuance of up to $50 million of Senior Secured Notes (the
"CIBC Financing Commitment"), at any time at the Company's option through
February 1997. In connection with the CIBC Financing Commitment, the Company
paid placement and commitment fees and other expenses of approximately $1.9
million and issued warrants to purchase 300,258 shares of common stock (the
"CIBC Warrants") at an exercise price of $0.01 per share. No amounts were
borrowed under the CIBC Financing Commitment. The CIBC Financing Commitment was
terminated in connection with the issuance of the Senior Notes.

7. COMMITMENTS AND CONTINGENCIES:

Equipment Purchase Agreement

In August 1995, the Company entered into an agreement to purchase
wireless transmission equipment from a vendor. Under the terms of the agreement,
the Company is obligated to purchase a specified number of wireless transmission
units between August 1995 and December 31, 1998, subject to termination upon 90
days advance notice by either party. At December 31, 1996, this obligation
amounted to approximately $9.5 million.

The Company currently purchases the majority of its wireless
transmission equipment from this vendor. There are a limited number of other
manufacturers who have, or are developing, equipment that would meet the
Company's requirements; however, there can be no assurance that such equipment
would be available to the Company on comparable terms or on terms more favorable
to those included in its current arrangements. Moreover, a change in vendors
could cause a delay in the Company's ability to provide its services, which
would affect future operating results adversely.

F-13
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Operating Leases

The Company has entered into operating leases for office space and
antenna sites which expire between 1997 and 2002. Lease expense amounted to
approximately $618,000, $16,000 and $6,400 for 1996, 1995 and 1994,
respectively. Future annual minimum lease payments as of December 31, 1996 are
as follows:
<TABLE>
<CAPTION>

<S> <C>
1997.............. $ 645,493
1998.............. $ 535,021
1999.............. $ 526,200
2000.............. $ 500,439
2001.............. $ 500,547
Thereafter........ $ 382,033
----------
$3,089,733
==========
</TABLE>

Research and Development Arrangements

During 1996, the Company funded approximately $400,000 of research and
development with an entity, of which an executive of the Company was a
shareholder and former director, related to development of wireless transmission
equipment.

Employment Agreements

The Company has entered into various employment agreements with
certain executives that provide for annual base salaries and cash bonuses based
on achievement of specific performance goals.

DCT Agreement

In June 1996, the Company entered into an agreement with DCT
Communications, Inc. ("DCT") to acquire 16 38 GHz licenses from DCT for $3.6
million in cash. DCT has alleged that the Company has failed to satisfy a
provision of the agreement, causing it to terminate and DCT to be able to retain
a $100,000 deposit. Although the Company believes that it has satisfied such
provision, there can be no assurance as to the outcome of such dispute. The
Company does not currently expect to purchase the licenses pursuant to the
agreement.

Contingencies

The Company is party to certain claims and makes routine filings with
the FCC and state regulatory authorities. Management believes that the
resolution of any such claims or matters arising from such filings, if any, will
not have a material adverse impact on the consolidated financial position,
results of operations or cash flows of the Company.

8. CAPITAL STOCK:

Preferred Stock

The Company is authorized to issue 10 million shares of $0.001 par
value serial preferred stock. Each series of the preferred stock issued is a
separate class and, as a class, has a liquidation preference equal to the
aggregate purchase price paid for such class. As of December 31, 1996, there
were no shares of preferred stock outstanding. The historical share information
regarding the Company's preferred stock activity follows:

F-14
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
SERIAL PREFERRED STOCK
-----------------------------------------------------------------------
SERIES A SERIES B SERIES C SERIES D SERIES E SERIES F TOTAL
-------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Issuance of preferred stock to limited partnerships
affiliated with Landover for cash:
Series A........................................... 332,091 332,091
Series B........................................... 82,318 82,318
Series C........................................... 5,402 5,402
Issuance of Series D preferred stock for cash........ 61,640 61,640
Shares issued to reflect anti-dilution.............. 2,852 4,189 7,041
-------- -------- ------- ------- -------- --------- ---------
334,943 86,507 5,402 61,640 488,492
Year ended December 31, 1996:
Issuance of Series E preferred stock................. 232,826 232,826
Shares issued to reflect anti-dilution............... 120,607 28,172 1,961 150,740
Issuance of Series F preferred stock to Ameritech.... 48,893 48,893
-------- -------- ------- ------- -------- --------- ---------
455,550 114,679 7,363 61,640 232,826 48,893 920,951
Serial preferred stock converted to common stock
in connection with initial public offering of
common stock......................................... (455,550) (114,679) (7,363) (61,640) (232,826) (48,893) (920,951)

</TABLE>
Common Stock

The Company is authorized to issue 100 million shares of common stock,
$0.001 par value. As of December 31, 1996, and February 25, 1997, there were
13,559,420 and 19,559,420 shares of the Company's common stock outstanding,
respectively.

The Company was initially formed in August 1993 by two of its
executives and during November 1993, the Company issued additional shares of
common stock in a private placement to a limited partnership. During March
1994, an affiliate of the limited partnership contributed $100,000 to the
Company in exchange for 214,183 shares of common stock and a $70,000 promissory
note. In connection with this financing, the Company issued an additional
856,732 shares of common stock to all of the then existing shareholders. In
March 1995, the limited partnership agreed to assign the $70,000 promissory
note, plus accrued interest, to the executives in exchange for two new
promissory notes executed by the executives. Concurrent with the exchange of the
promissory notes, the executives contributed the $70,000 promissory notes plus
accrued interest to the Company, for which contribution there were no additional
shares issued.

In March and April 1995, the Company entered into certain agreements
with Landover pursuant to which Landover agreed to invest or cause to be
invested $7 million in the Company (the "Landover Funding Commitment") in
exchange for approximately 3.1 million shares of the Company's common stock
issued to Landover and certain of its affiliates. The agreements also contained
provisions under which additional shares of the Company's preferred and common
stock would be issued to shareholders of the Company, excluding Landover, for no
consideration, such that the additional securities issued to satisfy the
Landover Funding Commitment would dilute only Landover's ownership interest in
the Company. The preferred stock transactions in 1995 and 1996 satisfied the
Landover Funding Commitment and, as a result, the anti-dilution provisions
terminated. As the actual cash proceeds received from these preferred stock
transactions were in excess of Landover's commitment, the Company redeemed
293,791 shares of common stock from Landover for $2 million.

As part of the Landover Funding Commitment, approximately 1.9 million
shares of the Company's common stock previously held by certain individual
shareholders were placed in escrow to be released upon attainment of certain
objectives, including the acquisition of a specified number of 38 GHz licenses
("Escrow Shares"). In November 1995,

F-15
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

681,102 Escrow Shares, with an estimated fair value of approximately $800,000,
were released as a result of the acquisition of the EMI Licenses. In February
1996, the remaining Escrow Shares, with an estimated fair value of $6.8 million,
were released as part of a reorganization of the Company. The estimated fair
values of the Escrow Shares on the dates such shares were released were recorded
as compensation expense and as an increase in additional paid-in capital.

In February 1996, the Company sold 48,893 shares of preferred stock
for an aggregate purchase price of $2.5 million to Ameritech Development
Corporation ("Ameritech"). In addition, the Company entered into a strategic
distribution agreement with Ameritech Corp., the parent of Ameritech, and, as
partial consideration, granted warrants to Ameritech to purchase up to 318,959
shares of common stock at an exercise price of $0.01 per share. The Company
recorded the estimated value of the strategic distribution agreement of $1.1
million as marketing expense and additional paid-in capital in 1996. The Company
incurred fees of $150,000 in connection with this transaction. In December 1996,
Ameritech exercised its warrants and was issued 318,374 shares of common stock
by the Company.

The financial statements and footnotes reflect the effects of various
common stock splits and reverse stock splits, including a 1 for 2.75 reverse
split of the Company's common stock effected in October 1996. All references to
the number of shares, per share amounts and par value amounts have been restated
for all stock splits and reverse stock splits. Such stock splits and reverse
stock splits have no impact on the total amount of stockholders' equity
(deficit).

Initial Public Common Stock Offering

During November 1996, the Company completed an initial public offering
of 2,300,500 shares of common stock, raising approximately $34.5 million of
gross proceeds. The Company incurred approximately $6.1 million of expenses in
connection with this offering.

Warrants to Purchase Common Stock

The Company has issued warrants to purchase common stock in connection
with its financing activities during the year ended December 31, 1996. The
following summarizes the warrants outstanding at December 31, 1996:
<TABLE>
<CAPTION>

Exercise
Number of Price per Period of
Shares Share Exercise
--------- --------- ---------
<S> <C> <C> <C>

Equipment financing warrants...... 118,181 17.19 2001
Bridge Financing Warrants......... 400,000 17.19 2001
Bridge Financing Warrants......... 203,637 15.00 2001
CIBC Warrants..................... 300,258 0.01 2001
</TABLE>

The warrants contain certain anti-dilution provisions.

In February 1997, in connection with the issuance of the Senior Notes,
the Company issued warrants to purchase 2,731,725 shares of the Company's common
stock at an exercise price of $0.01 per share. The warrants will be exercisable
at any time after August 15, 1997 through February 2007.

Stock Option Plans

During 1996, the Company adopted the Restated Equity Incentive Plan
(the "Plan") that permits the Company to grant incentive and non-qualified
options and other equity incentives to employees and independent consultants of
the Company. The Company has reserved 1,400,000 shares of common stock for
issuance under the Plan. The exercise price of incentive options granted under
the Plan may not be less than 100% of the fair market value of the common

F-16
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

stock on the grant date. Options granted under the Plan are generally
exercisable for a term that does not exceed ten years from the date of grant.

In May 1996 the Company adopted the 1996 Non-Employee Directors
Automatic Stock Option Plan (the "Directors Plan"), which provides for the
automatic grant of stock options to non-employee directors to purchase up to an
aggregate of 75,000 shares.

The Company applies the accounting provisions of Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations for its stock-based plans. Accordingly, compensation costs for
employee stock options is measured as the excess, if any, of the fair value of
the Company's stock at the measurement date over the amount an employee must pay
to acquire the stock. Deferred compensation costs charged to operations was
$850,663 and $287,603 in 1996 and 1995, respectively, and as of December 31,
1996, unearned compensation costs amounted to $449,312.

A summary of the stock option transactions follows:
<TABLE>
<CAPTION>

Weighted Average
Shares Exercise Price
----------------- --------------
<S> <C> <C>

Options granted in 1995................. 382,630 $ 2.276
-------

Options outstanding, December 31, 1995.. 382,630 2.276
Options granted.................... 461,112 16.074
Options canceled................... (16,363) 12.247
-------

Options outstanding, December 31, 1996.. 827,379 $ 9.950
=======
</TABLE>

The Company has adopted the disclosure provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"). Had the Company elected to recognize
compensation costs as provided for by SFAS No. 123, the Company's net loss and
per share amounts on a pro forma basis for the years ended December 31 would
have been as follows:
<TABLE>
<CAPTION>

1996 1995
Pro Forma Pro Forma
------------- -----------
<S> <C> <C>

Loss before extraordinary item.................. $(29,410,915) $(3,049,032)
Extraordinary item.............................. (1,339,996)
------------ -----------

Net loss........................................ $(30,750,911) $(3,049,032)
============ ===========

Loss per share before extraordinary item........ $ (3.81) $ (0.51)
Extraordinary loss per share.................... (0.17)
------------ -----------

Net loss per share.............................. $ (3.98) $ (0.51)
============ ===========

</TABLE>

F-17
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The weighted average fair values per share at the date of grant for options
granted during the years ended December 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>

1996 1995
----- -----
<S> <C> <C>

Options granted with exercise prices equal to the fair value
of the stock at the date of grant........................ $6.59 $0.82
Options granted with exercise prices greater than the fair
value of the stock at the date of grant..................... $7.04
</TABLE>

The assumptions applied in these valuations for periods prior to the
Company becoming a public entity were (i) use of the minimum value method, (ii)
risk free interest rates ranging from 6.1% to 6.5%, (iii) assumed expected lives
of 3 to 5 years, and (iv) no expected dividends. The assumptions applied for
periods subsequent to the Company becoming a public entity were (i) use of the
Black-Scholes option pricing model, (ii) risk free interest rates ranging from
5.8% to 6.0%, (iii) expected volatility rate of approximately 60%, (iv) assumed
expected lives of 3 to 5 years, and (v) no expected dividends.

F-18
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table summarizes information about fixed-price options
outstanding at December 31, 1996 as follows:
<TABLE>
<CAPTION>

Weighted-
Number Average Weighted- Number Weighted-
Outstanding Remaining Average Exercisable Average
Exercise Price at 12/31/96 Contractual Life Exercise Price at 12/31/96 Exercise Price
- ----------------------------- ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 1.624 to 4.543............. 382,630 3 $ 2.276 194,876 $ 2.136
$10.835 to 17.188............ 444,749 4.5 $16.552 58,887 $16.163

</TABLE>
9. RELATED PARTY TRANSACTIONS:

In 1995 and 1996, the Company entered into various management
consulting agreements with Landover. Fees paid to Landover under the agreements
totaled approximately $830,000 and $70,000 in 1996 and 1995, respectively. The
agreements with Landover terminated in November 1996. Additionally, the Company
paid Landover approximately $390,000 for expenses in connection with the
Landover Funding Commitment.

The Company has paid legal fees to a law firm in which a principal of
the law firm was also an officer of the Company. Total fees paid to such law
firm were approximately $520,000, $210,000 and $74,600 in 1996, 1995 and 1994,
respectively.

10. FAIR VALUES OF FINANCIAL INSTRUMENTS:

The carrying amounts and the estimated fair values of the Company's
financial instruments at December 31, 1996 were as follows:
<TABLE>
<CAPTION>

Carrying Fair
Amount Value
---------- ----------
<S> <C> <C>

Cash and cash equivalents....... $1,974,407 $1,974,407
Restricted cash................. 1,032,060 1,032,060
EMI Note........................ 1,312,500 1,312,500
Other long-term debt............ 3,664,746 3,950,568
</TABLE>
Cash, cash equivalents and restricted cash: The carrying amount
reported in the balance sheet approximates fair value.

EMI Note and other long-term debt: The fair values are based upon
interest rates currently available to the Company for issuance of similar debt
with similar terms and maturities.

F-19
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. SUPPLEMENTAL CASH FLOW INFORMATION:

Supplemental disclosure of cash flow information are summarized below
for the years ended December 31:
<TABLE>
<CAPTION>

1996 1995
---------- ----------
<S> <C> <C>

Non-cash financing and investing activities:
Additions to property and equipment......................... $9,548,102 $2,666,630
Exchange of Advent Notes for Series E preferred stock,
net of deferred financing costs........................... 4,673,186
Value ascribed to issuance of warrants...................... 2,115,388
Accrued deferred financing costs............................ 300,405 370,617
Issuance of promissory note payable to EMI.................. 1,500,000
Conversion of note payable and interest to common stock..... 75,250
Issuance of stock and contribution of licenses to ART West.. 30,000
Interest paid $ 926,821
</TABLE>

F-20
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
June 30,
ASSETS 1997
----------
(Unaudited)
<S> <C>
Current assets:
Cash and cash equivalents $ 24,463,966
Short-term investments 19,671,556
Pledged securities 18,251,339
Accounts receivable 448,303
Prepaid and other current assets 305,168
-------------
Total current assets 63,140,332

Restricted cash 1,032,060
Pledged securities 34,787,959
Property and equipment, net of accumulated depreciation and
amortization of $2,117,904 28,228,836
FCC licenses, net of accumulated amortization of
$1,267,303 131,822,061
Deferred financing costs, net 4,300,668
Other assets 636,265
-------------
Total assets $263,948,181
=============
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Trade accounts payable $ 1,657,015
Accrued compensation and benefits 1,934,891
Accrued interest payable 7,508,219
Other accrued liabilities 446,243
Current portion of long-term debt 2,495,510
------------
Total current liabilities 14,041,878

Long-term debt, net of current portion 107,782,634
Deferred income tax liability 30,371,368
-------------
Total liabilities 152,195,880
-------------
Commitments and contingencies

Stockholders' equity:
Common stock, $.001 par value, 100,000,000 shares authorized,
19,749,452 shares issued and outstanding 19,749
Additional paid-in capital 170,931,302
Accumulated deficit (59,198,750)
-------------
Total stockholders' equity 111,752,301
-------------

Total liabilities and stockholders' equity $263,948,181
============
</TABLE>

The accompanying notes are an integral part of the unaudited interim
consolidated financial statements.

F-21
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)

Six months ended June 30,
1997 1996
-------------------------
<S> <C> <C>
Service revenue $ 328,223 $ 61,520
Equipment sales and construction
revenue 356,970
------------ ------------
Total revenue 685,193 61,520
------------ ------------

Costs and expenses:
Technical and network operations 2,621,878 270,319
Cost of equipment sales and
construction 214,399
Sales and marketing 6,241,797 1,472,198
General and administrative 6,383,433 11,364,281
Research and development 128,715 521,406
Depreciation and amortization 2,361,275 278,375
------------ ------------
Total operating costs and expenses 17,951,497 13,906,579
------------ ------------

Loss from operations (17,266,304) (13,845,059)

Interest expense (8,616,576) (618,694)
Financing commitment expense (2,699,881)
Other (1,248,000)
Interest income 2,559,574 39,889
------------ ------------
Loss before income taxes (26,023,187) (15,671,864)

Deferred income tax benefit 864,797
------------ ------------
Net loss $(25,158,390) $(15,671,864)
============ ============

Pro forma net loss per share of
common stock $ (1.44)
===========
Pro forma weighted average shares 10,912,338
of common stock ===========

Net loss per share of common stock $ (1.42) $ (2.38)
============ ============
Weighted average shares of
common stock 17,735,974 6,577,461
============ ============
</TABLE>

The accompanying notes are an integral part of the condensed consolidated
financial statements.

F-22
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders' Equity (Unaudited)
for the six months ended June 30, 1997

Common Stock Additional
------------------------ Paid-In Accumulated
Shares Par Value Capital Deficit Total
--------- ---------- ----------- ------------ -------
<S> <C> <C> <C> <C> <C>

Balance, December 31, 1996 13,559,420 $13,559 $ 53,976,721 $(34,040,360) $ 19,949,920

Common stock issued in connection
with the acquisition of the
CommcoCCC, Inc. licenses 6,000,000 6,000 87,744,000 87,750,000

Value ascribed to warrants issued
with Senior Notes 29,707,509 29,707,509

Warrant issuance costs (1,254,697) (1,254,697)

Accrued stock option compensation 449,313 449,313

Stock options exercised 190,032 190 308,456 308,646

Net loss (25,158,390) (25,158,390)
---------- -------- ------------ ------------ -------------
Balance, June 30, 1997 19,749,452 $19,749 $170,931,302 $(59,198,750) $111,752,301
========== ======== ============ ============ ============
</TABLE>

The accompanying notes are an integral part of the condensed consolidated
financial statements.

F-23
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)

Six months ended June 30,
-----------------------------
1997 1996
------------ -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(25,158,390) $(15,671,864)
Adjustments to reconcile net loss to net cash used
in operating activities:
Non-cash compensation expense 449,313 7,362,726
Non-cash marketing expense 1,053,000
Depreciation and amortization 2,361,275 278,375
Non-cash financing commitment expense 2,699,881
Write-off of deferred financing costs 1,248,000
Non-cash interest expense 824,263 587,992
Changes in assets and liabilities:
Accrued interest payable 7,491,060 167,567
Accounts receivable 1,371,290
Accrued interest on pledged securities (1,261,232)
Accounts payable and accrued liabilities (1,674,200) (890,333)
Deferred income taxes (864,797)
Deposits and other assets (198,774) (50,381)
Prepaid expenses and other current assets (78,474) (79,615)
------------ -----------
Net cash used in operating activities (14,038,785) (5,994,533)
------------ -----------

Cash flows from investing activities:
Additions to property and equipment (15,571,289) (3,050,607)
Additions to FCC licenses (5,398,269)
Additions to short-term investments (19,671,556)
Investment in restricted cash (1,000,000)
Investment in pledged securities (51,778,066)
------------ -----------
Net cash used in investing activities (92,419,180) (4,050,607)
------------ -----------

Cash flows from financing activities:
Proceeds from issuance of Senior Notes and warrants 135,000,000
Proceeds from exercise of stock options 308,646
Proceeds from issuance of preferred stock 2,500,000
Proceeds from bridge financings 6,000,000
Proceeds from issuance of equipment financing note 2,445,000
Stock issuance costs (150,000)
Warrant issuance costs (1,254,697)
Principal payments on loan and long-term debt (1,121,997) (272,814)
Additions to deferred financing costs (3,984,428) (281,103)
------------ -----------
Net cash provided by financing activities 128,947,524 10,241,083
------------ -----------

Net increase in cash 22,489,559 195,943

Cash, beginning of period 1,974,407 633,654
------------ -----------
Cash, end of period $ 24,463,966 $ 829,597
============ ===========
</TABLE>

The accompanying notes are an integral part of the condensed consolidated
financial statements.

F-24

<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

1. The Company and Basis of Presentation:

Advanced Radio Telecom Corp. (Collectively with its subsidiaries "ART" or
the "Company") provides wireless broadband telecommunications services
using point-to-point microwave transmissions in the 38 GHz band of the
radio spectrum throughout the United States.

The unaudited condensed consolidated financial statements included herein
have been prepared by the Company. The financial statements contain all
adjustments, consisting only of normal recurring adjustments which are, in
the opinion of the Company's management, necessary to present fairly the
consolidated financial position of the Company as of June 30, 1997, the
consolidated results of its operations for the six months ended June 30,
1997 and 1996, and its cash flows for the six months ended June 30, 1997
and 1996. The consolidated statements of operations for the six months
ended June 30, 1996, and cash flows for the six months ended June 30, 1996,
have been restated to reflect a merger in October 1996.

The Company will require significant additional capital in 1998 to fund its
operations and business plan. Based on its current business plan, the
Company will require significant capital over the next few years for the
continued development and expansion of its wireless broadband operations.
Because the Company generally deploys radio equipment in response to
customer orders, a substantial portion of its capital requirements is
dependent on customer demand. Accordingly, the Company's capital
requirements may increase or decrease depending largely upon the cost and
amount of equipment acquired, the number of networks installed, the number
of markets served and the prices charged for its services as well as other
factors. In addition, if, among other things, the assumptions underlying
the Company's business plan change or prove to be inaccurate or the Company
changes its business plan, the Company's capital requirements may change.
In the event the Company fails to obtain such financing when required, such
failure could result in the modification, delay or abandonment of some or
all of the Company's development and expansion plans which in turn, could
have a material adverse effect on the Company.

Certain information and footnote disclosures normally included in financial
statements have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The unaudited
condensed consolidated financial statements should be read in conjunction
with the Company's December 31, 1996, audited consolidated financial
statements and notes thereto.

2. Summary of Significant Accounting Policies:

Short-Term Investments

Short-term investments are comprised of commercial paper and other similar
investments purchased with a term to maturity of more than three months.
The amount reported in the balance sheet at June 30, 1997, approximates
fair value.

Property and Equipment

As of June 30, 1997, approximately $7.0 million out of a total of $23.0
million of wireless transmission equipment had been placed in service.

3. FCC Licenses

In February 1997, the Company completed the acquisition (the "CommcoCCC
Acquisition") of 129 38 GHz licenses from CommcoCCC, Inc. ("CommcoCCC") in
exchange for six million shares of the Company's common stock. The total
acquisition cost was approximately $122.2 million, comprised of the fair
value of the six million shares of common stock issued of approximately
$87.8 million, direct costs incurred of approximately $3.2 million and the
related deferred tax liability of approximately $31.2 million.

In connection with the CommcoCCC Acquisition, the Company granted Commco,
L.L.C.,("Commco"), a stockholder of CommcoCCC, an option to acquire twelve
38 GHz licenses. Each of the licenses covers a market in which ART holds
one or more other 38 GHz licenses. Commco exercised its option in June
1997, with closing subject to FCC approval. The purchase price will be paid
by a non-recourse secured note and will be determined by a formula based on
the sales price of the Company's common stock on the day the option was
exercised and the population covered by the twelve licenses. The Company
has the right to be a reseller with respect to these licenses for a term of
five years at market rates.

In February 1997, the Company completed its acquisition from Extended
Communications, Inc. of the remaining 50% interest in ART West, for $6
million in cash, of which $3 million was paid in November 1996, of which
the total cost has been included in FCC licenses.

4. Senior Notes:

In February 1997, the Company received $135 million of gross proceeds from
a public offering of $135 million of 14% Senior Notes (the "Senior Notes")
and warrants to purchase an aggregate of 2,731,725 shares of the Company's
common stock for $0.01 per share. The aggregate value ascribed to the
warrants of approximately $29.7 million, was reflected as both a debt
discount and an increase in additional paid-in capital. The debt discount
is accounted for as a component of interest expense using the effective
interest rate method. The Senior Notes are considered to have "significant
original issue discount" under Federal tax rules and the Company is not
able to deduct the accretion of the debt discount for Federal income tax
purposes.

5. Income Taxes:

Deferred income tax liabilities at June 30, 1997, consisted of
approximately $44.4 million of deferred tax liabilities, principally
arising from the CommcoCCC Acquisition, partially offset by approximately
$13.8 million of deferred tax assets. Deferred tax assets consisted
primarily of $19.3 million of net operating loss carryforwards, partially
offset by a valuation allowance of approximately $5.6 million. In February
1997, the Company reversed approximately $12.8 million of its deferred tax
asset valuation allowance as a result of recording deferred taxes arising
from the CommcoCCC Acquisition. The valuation allowance is based on
management's determination that the recognition criteria for a portion of
the deferred tax assets has not been met.

The effective tax rate is based on an estimate of the annualized tax rate
and differs from the Federal statutory rate principally due to the
provision for the net deferred tax asset valuation allowance.

6. Supplemental Cash Flow Information:

Supplemental disclosure of cash flow information is summarized below:

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1997 1996
------ ------
<S> <C> <C>

Non-cash financing and investing activities:
Additions to property and equipment $ 829,217 $ 4,040,806
Value ascribed to warrants 29,707,509 509,937
Issuance of shares for licenses 87,750,000
Value ascribed to strategic distribution
agreement reflected as paid-in capital 1,053,000
Accrued deferred financing costs 967,491
Exchange of notes for Series E preferred stock,
net of deferred financing costs 4,673,186
Release of escrow shares 6,795,514
Conversion of note payable and interest into common stock 75,250
Interest paid 287,716 74,538

</TABLE>

F-25
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<CAPTION>

<S> <C>
Securities and Exchange Commission registration fee $ 828
Printing 2,000*
Legal fees and expenses 35,000*
Nasdaq National Market Additional Listing Fee 17,500*
Accounting fees and expenses 5,000*
Miscellaneous $ 4,672*
-------
Total........................................... $65,000
=======
</TABLE>
- -------------
* Estimated

ITEM 14. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law, as amended (the
"DGCL"), provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amount paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had not reasonable cause to believe his conduct was unlawful.
Section 145 further provides that a corporation similarly may indemnify any such
person serving in any such capacity who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor, against expenses
actually and reasonably incurred in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interest of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Delaware Court of Chancery or
such other court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnify for such expenses which the Court of Chancery or such other court
shall deem proper.

Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL (relating to
unlawful payment of dividends and unlawful stock purchase and redemption) or
(iv) for any transaction from which the director derived an improper personal
benefit.

The Registrant's Certificate of Incorporation provides that the
liability of the directors shall be eliminated to the fullest extent permissible
by Section 102(b)(7) of the DGCL, as amended. The Certificate of Incorporation
further provides that the Registrant shall indemnify its directors and officers
to the fullest extent permitted by Section 145 of the DGCL, as amended.

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<PAGE>

Reference is made to each of the Indemnification Agreements
incorporated by reference as Exhibit 10.7 to this Registration Statement for
information regarding indemnification of directors and officers under certain
circumstances.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

ART Licensing Class A and B Common Stock Private Placement

In April 1995, the Company and LHC purchased 340,000 shares of ART
Licensing Class A common stock and 640,000 shares of ART Licensing Class B
common stock, respectively, for $0.001 per share, (which, after giving effect to
anti-dilution adjustments and the February 1996 Reorganization converted into
3,641,111 shares and 2,650,414 shares, respectively, of Common Stock upon
completion of the Company's initial public offering). In addition, Hedgerow
Corporation of Maine and Toro Financial Corp. purchased 15,000 shares and 5,000
shares, respectively, of ART Licensing Class A common stock for $0.001 per
share, (which, after giving effect to the anti-dilution adjustments and the
February 1996 Reorganization, converted into 160,637 shares and 53,546 shares of
Common Stock, respectively, upon completion of the Company's initial public
offering). The securities issued in the above transactions were offered and sold
in reliance upon the exemption from registration under Section 4(2) of the Act.
The recipients made certain representations as to the nature of their
investments and had adequacy of access to information about the Registrant.

Preferred Stock

In a series of separate private placements in 1995, the Company issued
to various limited partnerships, the general partner of each of which was
controlled by LHC, 419,677 shares of ART Licensing Series A preferred stock
(which converted into 1,983,927 shares of Common Stock upon completion of the
Company's initial public offering) for $1,006,600, 114,679 shares of ART
Licensing Series B preferred stock (which converted into 542,119 shares of
Common Stock upon completion of the Company's initial public offering) for
$880,700 and 7,363 shares of ART Licensing Series C preferred stock (which
converted into 34,807 shares of Common Stock upon completion of the Company's
initial public offering) for $112,700. In a separate private placement, ART
Licensing also sold 61,640 shares of ART Licensing Series D preferred stock
(which converted into 291,390 shares of Common Stock upon completion of the
Company's initial public offering) for $2,000,000. The securities issued in
each of the foregoing transactions were offered and sold in reliance on an
exemption from registration under Regulation D promulgated under the Act.

In the February 1996 reorganization of ART Licensing, Global Private
Equity II, L.P., Advent Partners Limited Partnership and Advent International
Investors II L.P. (collectively, "Advent") exchanged $50,000 stated amount of
the Company's preferred stock and a $4.95 million note of the Company for
232,826 shares of ART Licensing Series E preferred stock (which converted into
1,100,632 shares of Common Stock upon completion of the Company's initial public
offering). The securities issued in the foregoing transaction were offered and
sold in reliance on an exemption from registration under Regulation D
promulgated under the Act.

On February 2, 1996, Ameritech Development Corp. ("Ameritech")
purchased 48,893 shares of ART Licensing Series F preferred stock (which
converted into 231,131 shares of Common Stock upon completion of the Company's
initial public offering). In addition, in connection with the Ameritech
Strategic Distribution Agreement, ART Licensing granted Ameritech a ten-year
warrant to purchase 318,959 shares of ART Licensing common stock exercisable at
a nominal price per share (the "Ameritech Warrant") which warrant has been
exercised. The securities issued in each of the foregoing transactions were
offered and sold in reliance on an exemption from registration under Regulation
D promulgated under the Act.

March Bridge Notes

On March 8, 1996, ART Licensing issued in a private placement
$5,000,000 principal amount of two year, 10% unsecured notes (the "March Bridge
Notes") and five-year warrants to purchase up to an aggregate of 400,000 shares
of ART Licensing common stock at a price of $17.1875 per share (the "March
Bridge Warrants") to then existing shareholders of ART Licensing and their
affiliates and other accredited investors. The securities issued in the

II-2
<PAGE>

foregoing transaction were offered and sold in reliance on an exemption from
registration under Regulation D promulgated under the Act.

Indemnitor Warrants

In April 1996, in connection with credit support for an equipment
financing offered to ART Licensing by Mark C. Demetree and a member of his
immediate family and LHC (the "Indemnitors"), the Company issued to the
Indemnitors in a private placement five-year warrants to purchase an aggregate
of 118,181 shares of Common Stock. The securities issued in the foregoing
transactions were offered and sold in reliance on an exemption from registration
under Regulation D promulgated under the Act.

September Bridge Financing

In August 1996, the Company received commitments for $3.0 million of
14.75% unsecured notes due March 1998 (the "September Bridge Notes"). The
September Bridge Notes were funded from August 30, 1996 to October 1996. In
October 1996, the Company received an additional $1.0 million of proceeds
therefrom. The Company also issued five-year warrants to purchase up to an
aggregate of 116,364 shares of Common Stock at a price of $15.00 per share (the
"September Bridge Warrants") to then existing shareholders of ART Licensing and
their affiliates and other accredited investors. The securities issued in the
foregoing transaction were offered and sold in reliance on an exemption from
registration under Regulation D promulgated under the Act.

CIBC Financing Commitment

The Company entered into agreements with certain investors (the "CIBC
Investors") which provided for the issuance of $50.0 million of the Company's
12.5% Senior Secured Notes due 1998 (the "Senior Secured Notes") at any time, at
the Company's option, until February 10, 1997 (the "CIBC Financing Commitment").
In connection with the CIBC Financing Commitment, the Company issued five-year
warrants to purchase 300,258 shares of Common Stock at a nominal exercise price
to the CIBC Investors. The Company did not elect to issue the Senior Secured
Notes, and the CIBC Financing Commitment was terminated. The securities issued
in the foregoing transaction were offered and sold in reliance on an exemption
from registration under Regulation D promulgated under the Act.

The Merger with ART Licensing

In October 1996, the Company merged with ART Licensing through a
wholly owned subsidiary, in which the holders of ART Licensing Common Stock
received 2,945,848 shares of Common Stock and holders of ART Licensing preferred
stock received 920,951 shares of preferred stock of the Company, which was
converted into 4,353,587 shares of Common Stock upon the consummation of the
Company's initial public offering in November 1996. The securities issued in the
foregoing transaction were offered and sold in reliance on an exemption from
registration under Regulation D promulgated under the Act.

CommcoCCC Acquisition

On February 25, 1997, the Company acquired the CommcoCCC Assets from
CommcoCCC in exchange for 6,000,000 shares of Common Stock. Simultaneous with
the execution of the CommcoCCC agreement pursuant to which the CommcoCCC
Acquisition was consummated (the "CommcoCCC Agreement"), the stockholders of
CommcoCCC loaned $3.0 million on a secured, subordinated basis bearing interest
at the prime rate and payable on September 30, 1996 and issued three- year
warrants to acquire 18,182 shares of Common Stock at $24.75 per share. In
connection with an amendment to the CommcoCCC Agreement, the Company modified
the terms of such warrants, reduced the exercise price of such warrants to
$15.00 per share and increased the number of shares issuable upon exercise to
87,273 shares. The securities issued in the foregoing transaction were offered
and sold in reliance on an exemption from registration under Regulation D
promulgated under the Act.

II-3
<PAGE>

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibits

Exhibit
Number Description
- ------ -----------

3.1 --Amended and Restated Certificate of Incorporation.
3.2 --Restated and Amended Bylaws of Registrant.
3.3 --Certificate of Designation.
4.1 --Specimen of Common Stock Certificate.
4.2 --Indenture relating to the Senior Notes.
4.3 --Specimen of Senior Note (included in Exhibit 4.2).
4.4 --Collateral Pledge and Security Agreement relating to the Senior
Notes.
4.5 --Form of Warrant Agreement in connection with offering of Senior
Notes.
4.6 --Specimen of Warrant Certificate in connection with offering of
Senior Notes (included in Exhibit 4.5).
4.7 --Shareholders' Rights Agreement.
4.8 --Form of Rights Certificate.
5.1 --Opinion of Ropes & Gray.
9.1 --Voting Trust Agreement dated November 5, 1996.
9.2 --Form of Trustee Indemnification Agreement.
9.3 --Cooperation Agreement dated November 5, 1996.
9.4 --Confidentiality Agreement dated November 5, 1996.
10.1 --Employment Agreement between the Company and Vernon L.
Fotheringham, dated December 16, 1995.
10.2 --Severance Agreement between the Company and Steven D. Comrie,
dated April 13, 1997.
10.3 --Consulting Agreement between the Company and W. Theodore Pierson,
Jr., dated May 8, 1995 and effective January 1, 1995.
10.4 --Employment Agreement between the Company and Charles Menatti,
dated March 8, 1996.
10.5 --Employment Agreement between the Company and James D. Miller,
dated February 1, 1996.
10.6 --Employment Agreement between the Company and Thomas A. Grina,
dated April 26, 1996.
10.7 --Form of Director Indemnification Agreement.
10.8 --Company's Restated Equity Incentive Plan, as amended.
10.9 --Form of Stock Option Agreement.
10.10 --Company's 1996 Non-Employee Directors Automatic Stock Option Plan.
10.11 --Form of Non-Employee Directors Stock Option Agreement.
10.12 --Grina Option Agreement.
10.13 --$1,500,000 Non-negotiable and Nontransferable Promissory Note to
EMI Communications Corp.
10.14 --38 GHz Radio Links Purchase Agreement dated August 11, 1995 with
P-Com, Inc.
10.15 --Second Restated and Amended Registration Rights Agreement dated
July 3, 1996 with ART Licensing and the stockholders of each of
ART Licensing and the Company.
10.16 --Amendment No. 1 to Registration Rights Agreement dated as of
October 16, 1996.
10.17 --Warrant issued on February 2, 1996 to Ameritech.
10.18 --$2,445,000 Promissory Note in favor of CRA, Inc. ("CRA").
10.19 --Security Agreement with CRA.
10.20 --Form of Indemnity Warrant.
10.21 --Form of Subscription Agreement dated March 8, 1996, including
Forms of Bridge Note and Bridge Warrant.
10.22 --Asset Acquisition Agreement and Plan of Reorganization dated July
3, 1996 with CommcoCCC, Inc.
10.23 --Option Agreement dated July 3, 1996 with Commco, L.L.C.
10.24 --Form of Noncompetition Agreement with Columbia and affiliates of
Columbia.
10.25 --Right of First Offer Agreement dated July 3, 1996 with Columbia
and affiliates of Columbia.
10.26 --Agreement to Lease between Commco, L.L.C. and Advanced Radio
Technologies Corporation.

II-4
<PAGE>

10.27 --Amendment No. 1 to Asset Acquisition Agreement and Plan of
Reorganization.
10.28 --Consulting Agreement dated March 1, 1996 with Trond Johannesen.
10.29 --Shareholders Agreement between the Company and Trond Johannesen.
10.30 --Form of September Bridge Warrant.
10.31 --Form of CIBC Warrants.
10.32 --Services Agreement dated as of October 29, 1996 with ICG Telecom
Group, Inc. and Pacific & Eastern Digital Transmission Services,
Inc.
21 --Subsidiaries of the Company.
23 --Consent of Independent Accountants.
23.1 --Consent of Ropes & Gray (Included in Exhibit 5.1).

24 --Power of Attorney.

ITEM 17. UNDERTAKINGS

The undersigned Company hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective Registration
Statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.

(2) That for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any securities being registered which remain unsold at the termination of the
offering.

(4) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 14, or otherwise,
the registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.

II-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act, the Company has
duly caused this Amendment No. 1 to the Registration Statement on Form S-1 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Bellevue, State of Washington on the 14th day of August, 1997.

Advanced Radio Telecom Corp.

By: /s/ Thomas A. Grina
------------------------------------
Title: Executive Vice President,
Chief Operating Officer and
Chief Financial Officer

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act, this Amendment
No. 1 to the Registration Statement on Form S-1 has been signed by the following
persons in the capacities indicated below on the 14th day of August, 1997.

SIGNATURE TITLE
--------- -----
/s/ Vernon L. Fotheringham* Chairman, Chief Executive Officer and
- -------------------------------------- Director
Vernon L. Fotheringham

/s/ Thomas A. Grina Executive Vice President,
- -------------------------------------- Chief Operating Officer and
Thomas A. Grina Chief Financial Officer

/s/ James C. Cook* Director
- --------------------------------------
James C. Cook

/s/ Mark C. Demetree* Director
- --------------------------------------
Mark C. Demetree

/s/ Andrew I. Fillat* Director
- --------------------------------------
Andrew I. Fillat

/s/ James B. Murray* Director
- --------------------------------------
James B. Murray

/s/ Alan Z. Senter* Director
- --------------------------------------
Alan Z. Senter

* By /s/ Thomas A. Grina
-----------------------
Attorney-in-Fact

II-6
<PAGE>

EXHIBIT INDEX

Exhibit
Number Description
- ------ -----------

3.1 --Amended and Restated Certificate of Incorporation.(11)
3.2 --Restated and Amended Bylaws of Registrant.(11)
3.3 --Form of Certificate of Designation.(12)
4.1 --Specimen of Common Stock Certificate.(3)
4.2 --Indenture relating to the Senior Notes.(10)
4.3 --Specimen of Senior Note (included in Exhibit 4.2).(10)
4.4 --Collateral Pledge and Security Agreement relating to the Senior
Notes.(10)
4.5 --Form of Warrant Agreement in connection with offering of Senior
Notes.(10)
4.6 --Specimen of Warrant Certificate in connection with offering of
Senior Notes (included in Exhibit 4.5).(10)
4.7 --Shareholders' Rights Agreement.(12)
4.8 --Form of Rights Certificate.(12)

5.1 --Opinion of Ropes & Gray.(13)
9.1 --Voting Trust Agreement dated November 5, 1996.(9)
9.2 --Form of Trustee Indemnification Agreement.(3)
9.3 --Cooperation Agreement dated November 5, 1996.(9)
9.4 --Confidentiality Agreement dated November 5, 1996.(9)
10.1 --Employment Agreement between the Company and Vernon L.
Fotheringham, dated December 16, 1995.(1)

10.2 --Severance Agreement between the Company and Steven D. Comrie,
dated April 3, 1997.(13)
10.3 --Consulting Agreement between the Company and W. Theodore Pierson,
Jr., dated May 8, 1995 and effective January 1, 1995.(1)
10.4 --Employment Agreement between the Company and Charles Menatti,
dated March 8, 1996.(1)
10.5 --Employment Agreement between the Company and James D. Miller,
dated February 1, 1996.(1)
10.6 --Employment Agreement between the Company and Thomas A. Grina,
dated April 26, 1996.(8)
10.7 --Form of Director Indemnification Agreement.(1)
10.8 --Company's Restated Equity Incentive Plan, as amended.(2)
10.9 --Form of Stock Option Agreement.(3)
10.10 --Company's 1996 Non-Employee Directors Automatic Stock Option
Plan.(1)
10.11 --Form of Non-Employee Directors Stock Option Agreement.(3)
10.12 --Grina Option Agreement.(9)
10.13 --$1,500,000 Non-negotiable and Nontransferable Promissory Note to
EMI Communications Corp.(1)
10.14 --38 GHz Radio Links Purchase Agreement dated August 11, 1995 with
P-Com, Inc.(1)
10.15 --Second Restated and Amended Registration Rights Agreement dated
July 3, 1996 with ART Licensing and the stockholders of each of
ART Licensing and the Company.(2)
10.16 --Amendment No. 1 to Registration Rights Agreement dated as of
October 16, 1996.(9)
10.17 --Warrant issued on February 2, 1996 to Ameritech.(1)
10.18 --$2,445,000 Promissory Note in favor of CRA, Inc. ("CRA").(1)
10.19 --Security Agreement with CRA.(1)
10.20 --Form of Indemnity Warrant.(1)
10.21 --Form of Subscription Agreement dated March 8, 1996, including
Forms of Bridge Note and Bridge Warrant.(2)
10.22 --Asset Acquisition Agreement and Plan of Reorganization dated
July 3, 1996 with CommcoCCC, Inc.(2)
10.23 --Option Agreement dated July 3, 1996 with Commco, L.L.C.(2)
10.24 --Form of Noncompetition Agreement with Columbia and affiliates of
Columbia.(2)
<PAGE>

10.25 --Right of First Offer Agreement dated July 3, 1996 with Columbia
and affiliates of Columbia.(2)
10.26 --Agreement to Lease between Commco, L.L.C. and Advanced Radio
Technologies Corporation.(4)
10.27 --Amendment No. 1 to Asset Acquisition Agreement and Plan of
Reorganization.(5)
10.28 --Consulting Agreement dated March 1, 1996 with Trond Johannesen.(3)
10.29 --Shareholders Agreement between the Company and Trond
Johannesen. (5)
10.30 --Form of September Bridge Warrant.(9)
10.31 --Form of CIBC Warrants.(7)
10.32 --Services Agreement dated as of October 29, 1996 with ICG Telecom
Group, Inc. and Pacific & Eastern Digital Transmission Services,
Inc.(6)
21 --Subsidiaries of the Company.(2)
23 --Consent of Independent Accountants.

23.1 --Consent of Ropes & Gray (Included in Exhibit 5.1).(13)

24 --Power of Attorney.(13)
__________________
(1) Previously filed with the Company's Registration Statement on Form S-1,
effective November 5, 1996 (SEC Reg. No. 333-04388) and incorporated by
reference herein.
(2) Previously filed with Amendment 1 to the Company's Registration Statement
on Form S-1, effective November 5, 1996 (SEC Reg. No. 333-04388) and
incorporated by reference herein.
(3) Previously filed with Amendment 2 to the Company's Registration Statement
on Form S-1, effective November 5, 1996 (SEC Reg. No. 333-04388) and
incorporated by reference herein.
(4) Previously filed with Amendment 4 to the Company's Registration Statement
on Form S-1, effective November 5, 1996 (SEC Reg. No. 333-04388) and
incorporated by reference herein.
(5) Previously filed with Amendment 6 to the Company's Registration Statement
on Form S-1, effective November 5, 1996 (SEC Reg. No. 333-04388) and
incorporated by reference herein.
(6) Previously filed with Amendment 7 to the Company's Registration Statement
on Form S-1, effective November 5, 1996 (SEC Reg. No. 333-04388) and
incorporated by reference herein.
(7) Previously filed with Amendment 8 to the Company's Registration Statement
on Form S-1, effective November 5, 1996 (SEC Reg. No. 333-04388) and
incorporated by reference herein.
(8) Previously filed with the Company's Registration Statement on Form S-1,
filed May 15, 1996 (SEC Reg. No. 333-03735) and incorporated by reference
herein.
(9) Previously filed with the Company's Registration Statement on Form S-1,
effective February 3, 1997 (SEC Reg. No. 333-19295) and incorporated by
reference herein.
(10) Previously filed with Amendment 2 to the Company's Registration Statement
on Form S-1, effective February 3, 1997 (SEC Reg. No. 333-19295) and
incorporated by reference herein.
(11) Previously filed with the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 and incorporated by reference herein.
(12) Previously filed with the Company's Registration Statement on Form 8-A,
filed on July 10, 1997 (SEC Reg. No. 000-21091) and incorporated by
reference herein.

(13) Previously filed.

<PAGE>

EXHIBIT 23

Consent of Independent Accountants

We consent to the inclusion in this Amendment No. 1 to the Registration
Statement on Form S-1 (File No. 333-31453) of our report dated March 18, 1997,
on our audits of the consolidated financial statements of Advanced Radio Telecom
Corp. and Subsidiaries as of December 31, 1996 and 1995 and for the years ended
December 31, 1996, 1995 and 1994. We also consent to the references to our firm
under the captions "Experts" and "Selected Consolidated Financial Data."

Coopers & Lybrand L.L.P.

Seattle, Washington

August 12, 1997