PCS 2000 LP, 10-K/A, 1997-07-17

PCS 2000 LP
10-K/A, 1997-07-17
RADIOTELEPHONE COMMUNICATIONS

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<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K/A
Amendment No. 1

For Annual and Transition Reports to Section 13 or 15(d) of the
Securities Exchange Act of 1934

(Mark one)

/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934.

For the fiscal year ended December 31, 1996 or
-----------------

/ / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required)

For the transition period from to
----------- ----------------

Commission file number 0-28362
-------------------------

CLEARCOMM, L.P.
(formerly PCS 2000, L.P.)
(Exact Name of Registrant as Specified in its Charter)

DELAWARE 66-0514434
------------------------------ ----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

620 BROADWAY
SONOMA, CALIFORNIA 95476
-------------------------- -----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (707) 938-2428

Securities registered pursuant to Section 12(b) of the Act:

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

Securities registered pursuant to Section 12(g) of the Act:

Units of Limited Partnership Interest
-------------------------------------
(Title of class)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---- ----

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

The Registrant's outstanding securities consist of units of limited
partnership interests which have no readily ascertainable market value since
there is no public trading market for these securities on which to base a
calculation of aggregate market value.

Documents incorporated by reference. None.
-----

<PAGE>

ITEM 1. BUSINESS

GENERAL

ClearComm, L.P., a Delaware limited partnership (the "Partnership"), was
formed on January 24, 1995 under the name PCS 2000, L.P., to own and operate
broadband personal communications services ("PCS") licenses to be acquired in
auctions conducted by the Federal Communications Commission (the "FCC"). On
April 17, 1997, the Partnership was renamed ClearComm, L.P. The Partnership
competed for PCS licenses in frequency Block C, set aside for "designated
entities" ("Entrepreneurs") that meet certain financial and equity structure
requirements and that qualify for certain benefits under rules, regulations and
policies of the FCC and related statutory provisions ("FCC Rules"). On January
22, 1997, the Partnership was awarded 15 PCS licenses covering markets in the
United States and Puerto Rico (the "Licenses") by the FCC. The Partnership's
business strategy is to acquire the Licenses and operate such Licenses with a
view to providing capital appreciation in the value of the Partnership's units
of limited partnership interest (the "Units"). Unicom Corporation, the former
general partner ("Unicom") of the Partnership and SuperTel Communications Corp.,
the current general partner of the Partnership, formed on June 7, 1996
("SuperTel" or the "General Partner"), have taken steps to qualify the
Partnership for the maximum benefits allowed by the FCC for an Entrepreneur
under 47 C.F.R. Section 24.711(d) (installment payments) and 24.712(c) (bidding
credits) of the final rules of the FCC for PCS systems. Unicom is not related to
the parent of Commonwealth Edison. See "Background of Personal Communications
Services Business and FCC Auctions -- Entrepreneur Classes and Economic
Preferences" and "The Partnership -- Transfer of General Partner's Interest."

The Partnership filed an application (the "Application") with the FCC for
the authority to acquire licenses to provide PCS systems in all Basic Trading
Areas in the United States. The Partnership was high bidder for the Licenses at
the Block C auction for the award of PCS licenses authorized under Part 24 of
the FCC's rules. The Partnership expects to develop, own and operate the
Licenses it has been awarded. See "The Partnership -- The Partnership's
Business to Date" below. On January 22, 1997, the FCC issued its Memorandum
Opinion and Order, FCC, 97-15 (the "Order") granting the Partnership the
Licenses. See "The Partnership -- Transfer of the General Partnership
Interest." The FCC's grant of the Licenses may, however, be reversed on the
basis of an interested party's motion for reconsideration or on appeal to the
United States Court of Appeals for the District of Columbia Circuit. On February
21, 1997, the SDE Trust, a stockholder of Unicom, filed with the FCC a motion
for reconsideration with respect to the Order (the "Petition for
Reconsideration"). The Partnership filed a response to the Petition for
Reconsideration on March 6, 1997 and is vigorously defending its interests in
this matter. The SDE Trust filed a reply on March 18, 1997. See "The Partnership
- -- Petitions to Deny."

The Partnership currently anticipates that it will take 18 months or more to
complete the initial build-out of its PCS systems and to begin offering wireless
services in the markets covered by its Licenses. Development of the
infrastructure necessary to offer PCS systems is subject to delays, including
those associated with design, acquisition, obtaining of financing, installation
and construction of wireless telephone systems. See "Development of the
Licenses" below.

<PAGE>

The Agreement of Limited Partnership of the Partnership (the "Partnership
Agreement") provides that the Partnership will terminate on December 31, 2005.
The Partnership will dissolve on such date (unless terminated earlier or unless
the Partnership Agreement is amended to change such date). The General Partner
anticipates that it will have developed its Licenses by such date, and depending
upon business considerations, will have restructured itself or transferred or
sold its Licenses.

BACKGROUND OF PERSONAL COMMUNICATIONS SERVICES BUSINESS AND FCC AUCTIONS

In 1993, Congress adopted the Omnibus Budget Reconciliation Act of 1993 (the
"Reconciliation Act") which, among other things, mandated Auctions for the award
of certain FCC licenses, including PCS licenses. Pursuant to authority granted
to the FCC by the Reconciliation Act, the FCC awarded PCS licenses through a
process of competitive bidding auctions in which there were multiple
applications for the same license (the "Auctions").

The PCS technology is expected to be a completely digital technology
designed from the ground up to be a wireless "telecommunicator" system. Since
PCS will be digital, it is capable of numerous advanced service features,
including caller-ID, voice-prompting, voice-recognition, scrambled (secure)
calling, message and image delivery, intelligent call transfer and follow-me
calling, single number service (the same number can be assigned to multiple PCS
telephones in different locations) and auto-trace of crank callers. In addition,
if such features are incorporated into a given PCS network, PCS subscribers will
have E-mail access and personal computer compatibility.

PCS is a radio-based transmission technology which, like cellular
technology, uses the same frequencies repeatedly in a multiple-transmitter cell
design. PCS systems use frequencies in the 1900 MHz band, not the 800 MHz band
(which is used by cellular technology). PCS transmissions are not as prone to
out-of-cell interference, which can occur with the existing cellular telephone
frequencies. The first PCS system began operations in the Washington, D.C.
metropolitan area in the fourth quarter of 1995 and new PCS systems continue to
commence operations in different markets.

FREQUENCY BLOCKS

The FCC has divided PCS into six frequency blocks, designated Blocks A
through F, such that there are six overlapping licenses in each market in each
geographic area of the country. Blocks A, B and C are 30 MHz blocks, and Blocks
D, E and F are 10 MHz blocks. Thirty MHz blocks allow for the PCS operator to
provide the full range of services described above to a larger number of
subscribers. Conversely, 10 MHz blocks allow the PCS operator to provide either
a smaller range of services, such as paging or E-mail to a larger number of
subscribers, or a larger range of services to a smaller number of subscribers.
Subject to certain restrictions applicable to Blocks C and F, PCS operators can
combine blocks to provide subscribers with a broader range of services.

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<PAGE>

FCC Rules now allow companies to hold up to 45 MHz of cellular, PCS and
other commercial mobile service spectrum in any combination per market. As a
result, an existing cellular provider may acquire up to two additional 10 MHz
PCS licenses in a market in which it provides cellular services, and a person
holding any Block A or Block B 30 MHz license in a particular market may also
hold one 10 MHz license for the same area. This rule is subject to
reconsideration and review or appeal. A single licensee may hold 51 Block A or B
licenses nationally. Other than the 45 MHz ceiling per market described above,
there are no limitations on the number of Block D and E licenses that a single
operator may hold. With respect to Blocks C and F, no license holder may hold
more than 10% of the licenses, or 98 licenses, available nationwide.

FCC Rules permitted any U.S. entity, regardless of size, to participate in
the Auctions at which Blocks A, B, D and E licenses were sold. Blocks C and F,
however, were set aside for Entrepreneurs, which are entities meeting certain
financial and equity structure requirements and that qualify for certain
benefits under FCC Rules. The General Partner qualified the Partnership as an
Entrepreneur, and the Partnership was awarded the Licenses in the Block C
auction. Although the Partnership was eligible to bid in the Block F auction,
the General Partner determined not to do so because it believes that the
Partnership must devote its efforts to fully develop its Block C Licenses. In
addition, the General Partner has considered the amount of capital the
Partnership will need to develop its Block C Licenses and the availability of
additional capital.

MAJOR TRADING AREA; BASIC TRADING AREA

PCS licenses are awarded either on the basis of Major Trading Areas (each, a
"MTA") or Basic Trading Areas (each, a "BTA"). Each MTA is comprised of one or
more BTAs. The FCC has divided the entire United States into 51 MTAs and 493
BTAs. The MTAs contain anywhere from one to 23 BTAs. Block A and B licenses were
awarded on the basis of MTAs. Block C, D, E and F Auctions awarded licenses
covering the entire country on the basis of BTAs, including Puerto Rico,
American Samoa, Guam, Northern Mariana Islands and the U.S. Virgin Islands.

FCC AUCTIONS

The FCC began the Auctions in December 1994. The first Auction was for
frequency Blocks A and B (30 MHz) licenses, which lasted from December 1994 to
March 1995. This Auction was open to all bidders, and the major
telecommunications companies were the principal participants in this Auction,
which awarded 99 MTA licenses in Blocks A and B. The price paid per person of
population ("POP") for a 30 MHz license ranged from $1 to $32. The average price
was approximately $15.25 per POP. Total Auction proceeds were approximately $7.7
billion.

The Auction for Block C (30 MHz) licenses, in which the Partnership
participated, began on December 18, 1995 and ended on May 6, 1996. This Auction,
in which the Block C spectrum

3
<PAGE>

was offered in each of the 493 BTAs, was restricted to companies which qualified
as Entrepreneurs, as described below. The prices bid per POP ranged
approximately from $1.91 to $101.93. The average price bid was $52.39 per POP.
Total Auction bids were approximately $13.25 billion. These prices will be
discounted, however, because of bidding credits and installment financing
options available to Entrepreneurs, as described below.

The remaining Auctions in which frequency Blocks D, E and F licenses (all 10
MHz licenses) were offered on a BTA basis were completed in January 1997. In
these Auctions, Blocks D and E licenses were open to all bidders and Block F
licenses were restricted to Entrepreneurs. Total Auction proceeds for these
Auctions were approximately $2.52 billion. The FCC has not yet published
detailed per POP information on the results of these Auctions, but the average
price per POP is estimated by the General Partner to have been approximately
$3.32.

ENTREPRENEUR CLASSES AND ECONOMIC PREFERENCES

Block C and F licenses were reserved for Entrepreneurs meeting certain
limiting criteria set forth in FCC Rules. Entrepreneurs were granted a set of
economic preferences in the Auctions.

Under FCC Rules, an Entrepreneur is defined as an entity that, together with
its affiliates and persons or entities that hold attributable interests in such
entity and their affiliates, has less than (i) $500 million of assets and (ii)
$125 million of annual gross revenue over the prior two years. In addition, FCC
Rules define three classes of Entrepreneurs, with each class eligible for
different economic preferences in the Blocks C and F Auctions. A "Large Business
Entrepreneur" is defined as an entity that has aggregate gross revenues for each
of the last two years between $75 million and $125 million. A "Business
Entrepreneur" is an entity that has aggregate gross revenues for each of the
last two years between $75 million and $40 million. A "Small Business" is an
entity that has less than $40 million of aggregate annual gross revenue averaged
over the last three years. (Originally the FCC had defined four classes, but, as
a result of constitutional challenges to the benefits granted to Minority- or
Women-Owned Businesses, the FCC decided to grant the benefits originally
intended for Minority- or Women-Owned Businesses to all entities that fit the
criteria for being a Small Business.)

Each class of Entrepreneurs was entitled to differing economic preferences,
which are summarized in the table below. All Entrepreneurs qualified for the
FCC's installment payment plan under which the federal government will finance
90% of the winning Auction bid in the Block C spectrum. The terms of the
installment plan vary according to the Entrepreneurial class. A Large Business
Entrepreneur can finance the balance of its Auction bid in the Block C Auction
at an interest rate equal to the 10-year treasury note rate at the date of grant
of the license plus 3.5%, with principal and interest amortized over the 10-year
license term. A Business Entrepreneur is entitled to similar terms in the Block
C Auction, except that interest-only payments are permitted in the first year
and that the interest rate is the 10-year treasury note rate plus 2.5%.

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<PAGE>

Small Businesses are entitled to make interest-only payments for the first
six years and can amortize interest and principal over the remaining four years
of the license term. In March 1997, the FCC issued an order suspending
indefinitely interest payments on all Block C licenses; however, interest will
continue to accrue. The interest rate applicable to Small Businesses is the
10-year treasury note rate at the date of grant of the license. In addition,
Small Businesses are entitled to a bidding credit of 25%. The bidding credit
operates as follows: if a qualifying Small Business submits a winning bid, the
price it bids for the license is reduced by the bidding credit, and the reduced
price is then eligible for the installment payment benefits applicable to such
Small Business.

SUMMARY OF ECONOMIC PREFERENCES FOR ENTREPRENEURS IN BLOCK C AUCTION

<TABLE>
<CAPTION>
INSTALLMENT INTEREST RATE/ BIDDING
PLAN AMORTIZATION CREDIT
--------------- -------------------------------------------------------------------- ------------
<S> <C> <C> <C>
Large Business Yes 10-year treasury note rate plus 3.5% n/a
Entrepreneur
Principal and interest amortized over the 10-year license term

Business Yes 10-year treasury note rate plus 2.5% n/a
Entrepreneur
Interest-only payments permitted in the first year and principal
and interest amortized over remaining nine years of the license term

Small Business Yes 10-year treasury note rate Interest-only payments permitted for the 25% bidding
first six years and principal and interest amortized over the credit
remaining four years of the license term
</TABLE>

GENERAL PARTNER STRUCTURE

As noted above, as originally promulgated, in order to be classified as both
a Small Business and a Minority-or Women Owned Business (entitled to the maximum
benefits under the original rules), FCC Rules required minorities and women to
exercise control over the Partnership through an entity that qualified as a
Small Business. Unicom, and its successor, the General Partner, were created to
serve as the entity through which these requirements could be met. The
Partnership met these requirements by placing management control of the
Partnership in the General Partner, restricting ownership of a majority of its
shares of Common Stock (the "Common Stock") to minorities and women, and
providing the General Partner with 25% of the equity of the Partnership.
Accordingly, the General Partner manages the Partnership and limited partners
only have certain limited rights amounting to less than de facto and de jure
control.

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<PAGE>

PARTICIPATION IN THE AUCTION

The Partnership filed with the FCC its Short Form Application ("Form 175"),
in which the Partnership certified that it: (i) met all of the FCC's
requirements for PCS license holders, including specific legal, technical,
financial and other qualification requirements for the licenses for which it
applied, that it was in compliance with certain foreign ownership requirements,
and that it was eligible for the special benefits and credits given to a Small
Business and consents to FCC audits to verify such eligibility; (ii) was the
real party in interest and that no undisclosed agreements or understandings
provide that someone other than the Partnership will have an interest in the
licenses for which it applied; and (iii) did not and would not enter into any
agreements or understandings regarding the amount to be bid, bidding strategies
or the license on which to bid, except with parties identified in the Form 175.

The Partnership was required to make a one-time up-front bidding deposit to
the FCC equal to $0.015 per POP per MHz for Block C licenses, for the largest
combination of MHz-POPs encompassed by licenses on which the Partnership
intended to bid. The Partnership made a deposit of $50 million, which entitled
it to bid for 111 million POPs. This deposit was the fifth largest deposit
received by the FCC for the Block C Auction. The Partnership's bidding in any
single round was limited by the amount of this payment.

FCC Rules strictly prohibit collusion among bidders, and strictly limit
communications among applicants after the filing of Form 175 to the extent such
communications concern bids, bidding strategies and markets on which bids will
be placed while the auction is in progress.

POST AUCTION PROCEDURES

Of the $50 million that the Partnership deposited with the FCC,
approximately $34.5 million was credited toward the license down payments for
the Licenses the Partnership was awarded. The remainder of the deposit,
approximately $11,039,602 after deduction of two bid withdrawal penalties, was
returned to the Partnership on January 27, 1997. On January 27, 1997, the
Partnership paid a forfeiture of $1,000,000 with respect to actions of Anthony
T. Easton following an erroneous bid in the Norfolk, Virginia market. See "The
Partnership -- Bidding Error" and "-- Omaha Withdrawal."

Successful bidders had 10 business days after the conclusion of the Block C
Auction to file a long form application ("Form 600") for the markets purchased
at the Auction. The Partnership timely filed its Form 600, and on July 2, 1996
filed an amendment to the Form 600. Following the filing of the original Form
600, the FCC issued a public notice which commenced a period during which any
interested party could file a petition to deny the Partnership's Form 600. This
period commenced on May 2, 1996 and ended on July 1, 1996. Two parties filed
petitions to deny the award of any of the Licenses to the Partnership. See "The
Partnership -- Petitions to Deny." Additionally, on July 11, 1996, the FCC
issued a public notice commencing a second 30-day period (which ended on August
12, 1996) during which any interested party could file a petition to deny with
respect to matters covered in the Partnership's July 2, 1996 amendment

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to its Form 600. A third petition to deny was filed during this second period.
In the FCC's Order dated January 22, 1997, the FCC rejected the three petitions
to deny and awarded the Partnership its Licenses. Any interested party, however,
still has the right to file a motion asking the FCC to reconsider its decision,
or appeal the FCC's decision to the United States Court of Appeals for the
District of Columbia Circuit. On February 21, 1997, the SDE Trust filed the
Petition for Reconsideration. See "The Partnership -- Transfer of the General
Partnership Interest" and "The Partnership -- Petitions to Deny." The
Partnership filed a response to the Petition for Reconsideration on March 6,
1997 and is vigorously defending its interests in this matter. The SDE Trust
filed a reply on March 18, 1997. There is no statute or regulation prescribing
the time period during which the FCC must act on the Petition for
Reconsideration. Once the FCC acts on this petition, interested parties have a
30-day period to appeal the FCC's decision to the United States Court of Appeals
for the District of Columbia.

Entrepreneurs made an initial payment within five days of the end of the
Auction to increase their up-front bidding deposit to 5% of the purchase price,
net of bidding credits. They were required to pay an additional 5% of the net
purchase price after the grant of license, with the remaining 90% payable in
installments. If an Entrepreneur's initial up-front bidding deposit was in
excess of 10% of the purchase price, the FCC returned the excess. As the
Partnership was the high bidder for the 15 Licenses at an aggregate net bid
price of $344,293,125, the Partnership, which had deposited $50 million at the
commencement of the auction, received back approximately $12.3 million in excess
payments from the FCC, after payment of approximately $4.5 million of bid
withdrawal penalties assessed by the FCC. In addition, the Partnership paid to
the FCC a forfeiture of $1 million with respect to actions subsequent to the
Bidding Error. See "The Partnership -- Bidding Error" and "-- Omaha
Withdrawal."

BUILD-OUT REQUIREMENTS

All PCS license holders are required to meet certain requirements imposed by
the FCC relating to the provision of service in each license area. Block C
license holders must provide coverage to one-third of the POPs in each license
service area within five years of license grant and two-thirds of the POPs in
each license service area within ten years of license grant. Failure to comply
with the build-out requirements could subject the Partnership to license
forfeiture or other penalties, and may have a material adverse effect on the
financial condition of the Partnership.

DEVELOPMENT OF THE LICENSES

The Partnership currently anticipates requiring, for each of the Licenses it
has acquired, 18 months or more to complete the initial build-out and to begin
offering wireless service in the Markets. Development of the infrastructure
necessary to offer PCS systems is subject to delays and risks, including those
inherent in the general uncertainty associated with further regulatory review
and appeal of the license grants, financing design, acquisition, installation
and construction of wireless telephone systems. The successful implementation of
the Licenses also depends on the Partnership's ability to lease or acquire sites
for the location of its base station equipment,

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which includes the negotiation of lease or acquisition terms for numerous sites
per Market (varying with the size of the Market) and may require in many
instances that the Partnership obtain zoning variances or other governmental or
local regulatory approvals that are beyond the Partnership's control. Delays in
the site acquisition process as well as construction delays and other factors
could adversely affect the timing for build-out and commercial operation of the
Partnership's Licenses.

THE PARTNERSHIP

THE GENERAL PARTNER

Unicom was incorporated in Puerto Rico in March 1993 and the General Partner
was incorporated in Puerto Rico in June 1996. Unicom was structured to ensure
that the Partnership would receive the maximum benefits eligible to
Entrepreneurs. The General Partner, as the successor of Unicom, was also
structured to receive the benefits offered to Small Businesses and Minority- or
Women-Owned Businesses. (As noted above, the FCC subsequently determined to
grant to all Small Businesses the benefits that Minority- or Women-Owned
Businesses were to receive.) The Partnership has no employees and is managed and
controlled by the Board of Directors and executive officers of the General
Partner. Currently, Fred H. Martinez is the Chairman of the General Partner's
Board of Directors which includes Richard Reiss, Javier Lamoso, Gary H. Arizala,
Margaret W. Minnich, Lawrence Odell, James T. Perry, Nezam Tooloee and Daniel J.
Parks. Richard Reiss is the President and Chief Executive Officer of the General
Partner, Javier Lamoso is the Executive Vice President, John Duffy is the Senior
Vice President for External Affairs, Eric Spackey is the Vice President, Daniel
J. Parks is the General Counsel and Lawrence Odell is the Secretary.

From January 26, 1995 through August 18, 1995, the Partnership raised
$65,112,500 in its private placement (the "Private Placement") of 2,604.5 of its
Units. Consistent with the terms of the Private Placement, the proceeds were
used as follows: (i) 80% of the proceeds were used to bid for and make down
payments on the PCS licenses the Partnership acquired, and to develop, own and
operate these licenses and (ii) 20% of the proceeds were allocated for payment
to Romulus Telecommunications, Inc., a Puerto Rico corporation ("Romulus"), for
its services in preparing and filing of the Application and assisting the
Partnership in bidding under the Services Agreement. See "Item 13 / / Payments
to Romulus." One-half of such fee ($6,511,250) was non-refundable and was paid
to Romulus prior to the commencement of the Auctions. The remaining one-half of
such fee ($6,511,250) is held in a separate account controlled by Quentin L.
Breen and Anthony T. Easton, and was intended to be paid to Romulus only if the
Partnership was successful in acquiring at least one PCS license. The
Partnership has filed suit in Puerto Rico, however, attaching the amount held in
this account until resolution of the bidding error described below. Under the
Services Agreement, had the Partnership been unsuccessful in obtaining a PCS
license, the $6,511,250 held in the account would have been returned to the
Partnership. If the Partnership License grants are reversed on reconsideration
or appeal, the Partnership shall return to the holders of Units (the
"Investors") their pro-rata investment (less

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the fee paid to Romulus and any other fees and expenses the Partnership may
incur), without interest.

THE PARTNERSHIP'S BUSINESS TO DATE

The Partnership's operations to date have focused on raising capital in the
Private Placement, preparing for the Auctions, bidding in the Block C Auction
and obtaining the Licenses. In addition, the Partnership has been conducting
preliminary discussions with telecommunications equipment vendors and strategic
service providers. See "The Partnership's Plan of Operation" below.

The Partnership deposited $50 million with the FCC on November 18, 1995
qualifying it to bid on 111 million POPs. On January 22, 1997, the FCC awarded
the Partnership the Licenses; however, the license grants are subject to
reconsideration by the FCC and appeal to the United States Court of Appeals for
the District of Columbia Circuit.

The table below identifies each market to which the Licenses pertain, the
population, the Partnership's winning bid and the net price payable by the
Partnership per person of population ("Price/POP").

MARKET NAME POPULATION* BID** PRICE/POP**
- ---------------------------------------------------------------------- ----------- -------------- -------------
<S> <C> <C> <C>
San Juan, PR 2,170,250 $ 84,687,825 $ 39.02
Mayaguez-Aguadilla, PR 1,325,600 $ 29,400,075 $ 21.75
Salt Lake City-Ogden, UT 1,308,040 $ 82,293,825 $ 62.91
Logan, UT 79,420 $ 276,825 $ 3.49
Provo-Orem, UT 269,410 $ 6,678,075 $ 24.79
Reno, NV 439,280 $ 27,802,575 $ 63.29
Fresno, CA 755,580 $ 47,026,575 $ 62.24
Bakersfield, CA 543,480 $ 26,941,575 $ 49.57
Modesto, CA 418,980 $ 12,320,325 $ 29.41
Visalia-Porterville, CA 413,390 $ 9,371,325 $ 22.67
Redding, CA 253,260 $ 4,500,825 $ 17.77
Merced, CA 192,710 $ 3,532,575 $ 18.33
Eureka, CA 142,580 $ 1,181,325 $ 8.29
Boise-Nampa, ID 416,500 $ 7,742,325 $ 18.59

</TABLE>

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<PAGE>
<TABLE>
<CAPTION>

* Based on the 1990 census figures used by the FCC.

** Gives effect to the 25% bidding credit to which the Partnership is eligible
under FCC rules.

The net cost of the Partnership's Licenses was $344,293,125. The Partnership
made a down payment of 10% of the net cost, or approximately $34,429,312, and
owes the federal government approximately $309,863,813, which amount is payable
over 10 years, as follows. Interest only payments are required to be made for
the first six years, at an interest rate of 6.5% per year. Interest (at 6.5% a
year) and principal payments are required to be made during the seventh through
the tenth year, when the loan must be paid off completely. In March 1997, the
FCC issued an order suspending indefinitely interest payments on all Block C
licenses; however, interest on the licenses will continue to accrue. The
Partnership anticipates that interest payments on the cost of the Licenses will
be approximately $20.2 million a year for the first six years and the entire
$309,863,813 must be amortized during the remaining four years.

Although the Partnership was awarded these Licenses, no assurance can be
made that the Partnership ultimately will retain these Licenses. FCC Rules
provide other parties the opportunity to file petitions to deny the licenses and
three parties filed such petitions with respect to matters covered in the
Partnership's original and amended Form 600 applications. See "The Partnership
- -- Petitions to Deny" below. The persons filing these petitions to deny had the
right until February 21, 1997, to ask the FCC to reconsider its award of the
Licenses to the Partnership or file claim in the United States Court of Appeals
for the District of Columbia Circuit. On February 21, 1997, the SDE Trust filed
the Petition for Reconsideration asking that the FCC reconsider its approval of
the transfer of the Partnership's general partnership interest. The Partnership
filed a response to the Petition for Reconsideration on March 6, 1997 and is
vigorously defending its interests in these matters. The SDE Trust filed a reply
on March 18, 1997. See "The Partnership -- Petitions to Deny."

BIDDING ERROR

On January 23, 1996, Anthony T. Easton entered an erroneous bid on behalf of
the Partnership for the PCS license for the Norfolk, Virginia market. Mr.
Easton, in his capacity as bidding agent and Director of Engineering of Romulus,
mistakenly entered a bid of $180,060,000 when he had meant to bid $18,006,000
(the "Bidding Error"). At the time, Mr. Easton was also the acting chief
executive officer of Unicom and a member of its Board of Directors. Unicom
engaged special counsel to investigate and report (the "Report") to Unicom the
circumstances surrounding the Bidding Error. Unicom also engaged Price
Waterhouse LLP to evaluate Romulus' bidding procedures and recommend steps to
ensure that no other errors would occur.

The Report concluded that a preponderance of the evidence indicated that Mr.
Easton prepared and directed submission of the erroneous bid, and that Mr.
Easton was most likely the

10
<PAGE>

person who erroneously typed an extra zero on the erroneous bid, causing the bid
to be changed from $18,006,000 to $180,060,000. In addition, the Report
concluded that a preponderance of the evidence indicated that upon learning of
the erroneous bid, Mr. Easton took affirmative steps to conceal his possible
responsibility for the mistake. The Report stated that there was no evidence
that any other person knowingly took affirmative steps to conceal responsibility
for the mistake.

Upon receiving the Report, the board of directors of Unicom asked for and
received Mr. Easton's resignation from his positions as acting chief executive
officer of Unicom and a member of its board of directors effective February 19,
1996. Mr. Breen, who is President of Romulus and who was not directly involved
in the Bidding Error, resigned from his position as a member of Unicom's board
of directors on April 26, 1996. In addition, Unicom's board of directors
determined to assume greater control over the Partnership's bidding, and to
restrict Romulus' role. Accordingly, Unicom's management oversaw the preparation
and submission of all bids after February 19, 1996.

The Partnership withdrew the erroneous bid on January 24, 1996 and requested
the FCC to waive or reduce the amount of any withdrawal penalty. Under FCC
Rules, a bidder who withdraws a high bid during the course of an auction is
subject to a penalty equal to the difference between the amount of the withdrawn
bid and the amount of the bid awarded the license. Since the high bid for the
license for the Norfolk, Virginia market was $87,569,000, the Partnership could
have been subject to a withdrawal penalty as high as $92,491,000. On December
19, 1996, however, the FCC determined to assess the Partnership a bid withdrawal
penalty of $3,273,374. The Partnership has requested further reduction in the
amount of this penalty.

In addition, in a Notice of Apparent Liability for Forfeiture, dated January
22, 1997 (the "Notice"), the FCC proposed forfeiture of $1,000,000 on the
Partnership because of the actions of Mr. Easton. In the Notice, the FCC
concluded that in connection with the Bidding Error, although the error was
inadvertent, Mr. Easton misrepresented facts to the FCC, lacked candor before
the FCC and otherwise attempted to mislead it. The FCC proposed that the
Partnership pay this forfeiture because Mr. Easton was an officer and director
of the Partnership's former general partner at the time the misrepresentations
were made. The FCC concluded, however, that because the Partnership moved
quickly to take adequate remedial steps to eliminate any ownership or management
participation by anyone possibly responsible for the misrepresentations, the
Partnership was not to be disqualified from receiving its Licenses. See
"Transfer of General Partnership Interest" below. Accordingly, the FCC granted
the Partnership the 15 Licenses in the Order.

The Partnership is seeking to recover this penalty in a legal action against
Mr. Easton and Romulus. Although the Partnership has determined to seek a full
reimbursement, through litigation if necessary, of any penalty and all costs
related to it from Romulus, the General Partner does not have specific
information on the financial condition of Romulus. The General Partner

11
<PAGE>

believes, however, that Romulus could pay at least $6.5 million held in the
account which the Partnership has attached.

Romulus does not currently and will not in the future have any involvement
in the affairs of the General Partner or the Partnership.

TRANSFER OF THE GENERAL PARTNERSHIP INTEREST

Based upon the Report and after discussions and consultations with FCC
staff, Unicom's board of directors concluded that it was in the best interest of
the Partnership and the Investors that the beneficial interests of Mr. Easton,
or any members of his family, in Unicom be divested. Mr. Easton's wife, Susan D.
Easton, is the beneficiary of the SDE Trust which owned shares in Unicom. Since
Unicom and the SDE Trust were unable to come to an agreement on transferring
such shares back to Unicom or to a third party, Unicom determined to sell its
general partnership interest in the Partnership to SuperTel. On June 18, 1996,
pursuant to an Asset Purchase Agreement, dated as of June 18, 1996, Unicom sold
its general partnership interest in the Partnership to SuperTel for $100,000 by
means of a nonrecourse 7% promissory note due in seven years.

Other than the SDE Trust and the Breen Family Trust, all stockholders of
Unicom received the same amount of shares of SuperTel that each held in Unicom.
The SDE Trust and the Breen Family Trust still hold shares in Unicom and have
not received any consideration for such shares. The proportion of SuperTel
shares that were not issued to the SDE Trust were issued to Richard Reiss, Chief
Executive Officer of SuperTel, and are subject to an agreement that allows the
Partnership to reacquire them at nominal consideration for use as incentive
compensation for current and future management necessary to build and operate
the Licenses or to attract additional investors. Mr. Breen is a beneficiary of
the Breen Family Trust, which was issued a warrant instead of any SuperTel
shares. The warrant provides the Breen Family Trust the right to purchase, for
nominal consideration, the same proportion of SuperTel shares as it owned in
Unicom only if the FCC awards the Partnership its Licenses and if the FCC
consents to the acquisition of the SuperTel shares by the Breen Family Trust. In
addition, Mr. Breen beneficially owned three Partnership Units, and the
Partnership repurchased these Units at the original price paid by Mr. Breen.

Except for Messrs. Easton and Breen, the officers and directors of SuperTel
are the same as those of Unicom, other than Lawrence Odell and Nezam Tooloee,
who were elected to the Board of Directors of SuperTel, and Patricia J. Jordan
who was not reelected to Unicom's board of directors in the June 1996
stockholders meeting and who was not elected to the Board of Directors of
SuperTel.

Susan D. Easton filed suit against the Partnership on May 28, 1996,
challenging the transfer of the general partnership interest, which suit was
later withdrawn without prejudice. Mr. Easton filed an amended complaint (the
original complaint had never been served) on June 18, 1996 seeking declaratory
judgment that he is not responsible and should have no liability for the

12
<PAGE>

Bidding Error, which suit was dismissed by the court without leave to amend on
December 24, 1996; on January 31, 1997, Mr. Easton filed a motion for
reconsideration which was denied on March 7, 1997. On January 27, 1997, the
Trustee of the SDE Trust filed a suit seeking damages for the elimination of its
interest in the Partnership. In addition, the SDE Trust filed with the FCC the
Petition for Reconsideration. See "Item 3." The General Partner has vigorously
defended the interests of the Partnership in these cases and will continue to do
so.

PETITIONS TO DENY

On July 1, 1996, two parties filed petitions to deny the award of any
Licenses to the Partnership. Susan D. Easton, the beneficiary of the SDE Trust,
filed a petition maintaining that the Partnership should not receive any
Licenses because the SDE Trust's interest in the Partnership was extinguished as
described above. (Subsequently, the SDE Trust also filed the petition described
below). In addition, an Investor, WillowRun, L.P., filed a petition stating that
the Partnership should not receive any Licenses on grounds that the General
Partner does not hold a 25% equity interest in the Partnership, and that the
General Partner was not truthful with the FCC or in its disclosures to the
Investors. In the alternative, WillowRun, L.P. requested that the FCC release
records that it collected in connection with its investigation of the Bidding
Error, fully inform the Investors of developments and extend the comment period
for opposition to the award of any Licenses to the Partnership following release
of such information. The Partnership filed an opposition statement to these two
petitions on July 16, 1996.

In addition, on August 12, 1996, the SDE Trust filed a new petition to deny
the award of any Licenses to the Partnership. This petition, like the one filed
by Susan D. Easton, also maintained that the Licenses should not be granted
because of the elimination of the interest of the SDE Trust and its beneficiary,
Susan D. Easton, in the Partnership. On August 27, 1996, the Partnership filed
its opposition statement to this petition. Following the filing of the
Partnership's opposition statements, the parties who filed the petitions to deny
had an opportunity to file replies, and did so.

In its Order issued on January 22, 1997, the FCC rejected these petitions to
deny and awarded the Partnership the Licenses. On February 21, 1997, the SDE
Trust filed the Petition for Reconsideration requesting the FCC to reconsider
the Notice and the Order. See "-- Bidding Error." The Petition for
Reconsideration argues that the grounds upon which the FCC based the Notice and
the Order should be corrected and clarified because, as written, the Notice and
the Order could be misinterpreted to impute wrongdoing to the SDE Trust thereby
jeopardizing a lawsuit filed by the SDE Trust against the Partnership, Unicom,
the General Partner and certain of these entities' officers, directors, trustees
and attorneys in California state court. See "Item 8." The Partnership filed a
response to the Petition for Reconsideration on March 6, 1997 and is vigorously
defending its interests in this matter. The SDE Trust filed a reply on March 18,
1997.

Although no assurances can be made, the General Partner expects that the
Partnership will ultimately retain its Licenses. There is no statute or
regulation prescribing the time period during

<PAGE>

which the FCC must act on the Petition for Reconsideration. Once the FCC acts
on this petition, interested parties may appeal the FCC's decision to the
United States Court of Appeals for the District of Columbia Circuit within 30
days of the FCC's decision.

OMAHA WITHDRAWAL

The Partnership was subject to a withdrawal penalty for its strategic
withdrawal of a bid for the PCS license covering Omaha, Nebraska. On December
19, 1996, the FCC issued the Partnership a penalty of $1,257,711 for the
withdrawal. This withdrawal was the result of the Partnership's targeting and
bidding, at one point during the Block C auction, for certain midwestern
markets. During the course of the auction, however, the Partnership was
outbid in all of its bids in the midwest except for Omaha, Nebraska.
Accordingly, the Partnership withdrew its bid for the Omaha market and became
subject to the withdrawal penalty. The bidding team decided it was more
desirable to risk paying a bid withdrawal penalty rather than have to spend
the $30 million to develop what would have been a stand alone market. The
presence of a stand alone market without any relationship to the two clusters
the Partnership acquired would have made financing it difficult and would
have taken too much of management's focus. The withdrawal penalty adds 12.6
cents per POP to the cost of the Partnership's 8.8 million POP portfolio.

THE PARTNERSHIP'S PLAN OF OPERATION

The Partnership's operations to date have focused on raising capital,
preparing for and bidding in the Auctions, working to retain the Licenses it has
been awarded, raising financing and conducting preliminary discussions with
telecommunications equipment vendors and strategic service providers. The
Partnership has no revenues (other than interest income) and is likely to incur
operating losses after commencing commercial operations, until such time when
its subscriber base generates revenue in excess of the Partnership's expenses.
Development of a significant subscriber base is likely to take time, during
which the Partnership must finance its operations by other means than its
revenues. Consequently, should the Partnership ultimately retain the Licenses,
the Partnership will need additional debt or equity financing to hire and retain
qualified key employees, pay accrued interest on the License debt, develop and
construct the infrastructure necessary to operate complex wireless telephone
systems, introduce and market a new range of service offerings on a commercial
basis and otherwise operate its licensed PCS systems. The Partnership owes the
federal government approximately $309,863,813 in connection with the acquisition
of the Licenses, which is payable over 10 years. Interest only payments (at a
rate of 6.5% a year) are required for the first six years, and interest (at a
rate of 6.5% a year) and principal payments are required during the seventh
through the tenth year, when the loan must be paid off completely. In March
1997, the FCC issued an order suspending indefinitely interest payments on all
Block C licenses; however, interest on the licenses will continue to accrue. The
Partnership anticipates that interest payments (or accruals) on this amount will
be approximately $20.2 million a year for the first six years. In addition, the
Partnership believes that the total equipment costs, including design and
engineering, will approximate some $20 per POP acquired. The Partnership may
also need as much as $13 per POP to cover negative cash

<PAGE>

flow from initial operations and other start-up costs before it becomes
profitable. Accordingly, as the Partnership was awarded Licenses in 15
markets with approximately 8.8 million POPs (based on 1990 population
statistics used by the FCC), and, therefore, based on the cost estimations,
the Partnership will need approximately $290 million in additional financing
over the next three years.

The Partnership plans to be a leading provider of PCS systems in its
licensed markets. It plans to construct its markets as quickly as possible to
both fulfill the FCC build-out requirements as well as to have enough capacity
to handle the anticipated growth of its customer base. It plans to employ
focused marketing strategies targeted at specific audiences to build market
share. The Partnership believes it has acquired markets with strong potential
for high growth consisting of persons with high levels of income and education
who are eager to adopt new technologies. It plans to gain a competitive
advantage by providing quality service at a competitive price.

The Partnership is currently in various stages of discussions with a variety
of equipment vendors to determine the best selection of equipment with the most
attractive financing terms. The Partnership is seeking vendors that meet the
Partnership's goals of prompt construction, system reliability, pricing and
vendor financing. Presently, the Partnership has entered into an agreement with
respect to the Puerto Rico market with Ericsson, a PCS equipment manufacturer.
The agreement is binding only if the Partnership obtains the Puerto Rico license
and if the Partnership obtains financing that is mutually acceptable to finance
the acquisition and installation of the PCS equipment.

The Partnership plans to begin prompt construction of its PCS systems.
The Partnership is conducting a series of meetings with major Wall Street
investment firms to discuss its long term capital requirements. Although no
assurances can be made that the Partnership will be successful, it is
anticipated that the Partnership will complete a round of third-party
financing in the future. This financing will be used as working capital. The
Partnership also has commenced a capital call to raise up to approximately $2
million from its Investors to increase its equity base thereby becoming more
attractive to new investors.

If the Partnership is unable to develop the Licenses, it can transfer them
to a third person only with FCC approval. In addition, within the first five
years, it can only transfer the Licenses to another Entrepreneur. Further, such
a transfer could subject the Partnership to reduced favorable government
financing and to loss of bidding credits unless, within the first five years of
receipt of the Licenses, the Partnership transfers them to qualified
Entrepreneurs, or unless the Licenses are transferred after five years.
Accordingly, the Partnership does not expect to transfer any of its licenses
until such time as it is not subject to such a loss.

The General Partner has no plans or arrangements to purchase the
Partnership's assets.

On April 14, 1997, the Partnership formed three Delaware limited liability
companies: CommClear, LLC; ClearCorp, LLC; and ClearComm West, LLC. The
Partnership is the sole member of these three entities. The Partnership may, at
some future date, transfer its western

<PAGE>

U.S. Licenses to ClearComm West, LLC which would develop the Partnership's
business in the markets which cover these Licenses. Also on April 14, 1997,
ClearCorp, LLC and CommClear, LLC formed a Delaware general partnership,
ClearComm de Puerto Rico. The Partnership may transfer its two Puerto Rico
Licenses to ClearComm de Puerto Rico which would develop the Partnership's
business in Puerto Rico. Transfer of any Licenses will only occur after the
Partnership receives all requisite FCC approvals.

ITEM 2. PROPERTIES

The Partnership did not own any property as of the end of fiscal year ended
December 31, 1996, and as of June 30, 1997, the Partnership has not acquired any
property. The Partnership sublets its principal offices in California from its
General Counsel at no charge.

The Partnership is embarking on an aggressive build-out phase which includes
leasing sites where its telephone switching equipment, relay stations and other
equipment will be located. In addition, the Partnership anticipates leasing
offices in cities where it has Licenses at such time as when necessary to
develop the Licenses. The Partnership also intends to establish a strategically
located principal office from where it can best manage the Licenses.

ITEM 3. LEGAL PROCEEDINGS

The Partnership is a party to three legal proceedings, two demands for
arbitration and a FCC license proceeding in which three petitions to deny the
award of any of the Licenses to the Partnership were filed, all of which have
arisen in connection with the Bidding Error. In addition, the Partnership was a
party to two additional lawsuits, one of which was voluntarily withdrawn and the
other was dismissed with prejudice.

On June 6, 1996, the Partnership filed suit in San Juan, Superior Court for
the Commonwealth of Puerto Rico and attached the Romulus account which holds
approximately $6.5 million which would be payable to Romulus under its agreement
with the Partnership. See "Item 1 -- Bidding Error." The Partnership took steps
to attach the funds to ensure that Romulus funds were available to repay the
Partnership the amount of the Norfolk, Virginia withdrawal penalty, forfeiture
and related expenses totaling approximately $5.5 million that the Partnership
paid in connection with the Bidding Error.

On July 26, 1996, Romulus and Mr. Easton each filed a demand for arbitration
with the American Arbitration Association at its Miami, Florida office seeking
to arbitrate all matters relating to the Bidding Error, including the attachment
of the Romulus account. The General Partner is presently determining its
response to these demands for arbitration.

In addition, certain officers, directors, employees and consultants of the
General Partner, as well as persons unrelated to the General Partner and the
Partnership, have been sued by certain

<PAGE>

limited partners in the Circuit Court for the State of Oregon, Multnomah
County. This lawsuit was commenced on November 27, 1996, and alleges certain
securities law violations, common law fraud and activities violating Oregon's
racketeering laws in connection with the Partnership's initial sale of Units.
Although the Partnership is not a named party, the Partnership has agreed to
indemnify all persons related to it in this suit. The Partnership believes
the suit is totally without merit and is vigorously defending this lawsuit.

On January 27, 1997, in the Superior Court of the State of California for
the County of San Mateo, the trustee of the SDE Trust filed a complaint for
damages of $300 million and equitable relief against Unicom, the General
Partner, the Partnership and certain officers and directors, trustees of
trusts holding Unicom shares and attorneys for breach of fiduciary duty
arising out of an alleged conspiracy among the defendants to attempt to
unlawfully purchase the Unicom shares held by the SDE Trust for the personal
gain of Unicom shareholders. The Partnership denies engaging in any unlawful
activity in connection with the Unicom shares held by the SDE Trust. On
April 7, 1997, the Partnership filed a motion to move this case to Puerto Rico
on grounds of forum non conveniens.

In addition, the Partnership was subject to three petitions to deny the
award of any of the Licenses to the Partnership. Although the FCC denied these
petitions on January 22, 1997, on February 21, 1997 the SDE Trust filed a
petition asking that the FCC reconsider its statements regarding the transfer of
the Partnership's general partnership interest. See "Item 1 -- Petitions to
Deny." On March 6, 1997, the Partnership filed a response with the FCC to
this petition and the SDE Trust filed a reply on March 18, 1997.

The General Partner believes that an adverse result in any of these lawsuits
or the failure to retain some or all of the Licenses will have a materially
adverse effect on the financial condition and operations of the Partnership.
Although no assurances can be made, the General Partner expects that the
Partnership will ultimately prevail in all of these matters.

In addition, Anthony T. Easton filed a suit in the Superior Court for the
State of California, County of San Mateo, on June 18, 1996, seeking declaratory
judgment that he is not responsible or liable for the Bidding Error. As noted
above, the General Partner maintains that Romulus must reimburse the Partnership
for the penalty, forfeiture and related costs incurred by the Partnership in
connection with the Bidding Error. This case was dismissed without leave to
amend on December 24, 1996 and Mr. Easton has filed a motion for reconsideration
on January 31, 1997. On March 7, 1997, the motion for reconsideration was
denied.

Susan D. Easton, beneficiary of the SDE Trust and wife of Anthony T. Easton,
filed suit in Superior Court for the State of California, County of San Mateo,
on May 28, 1996, seeking declaratory judgment with respect to the transfer of
the general partnership interest to the General Partner. Ms. Easton withdrew
this suit without prejudice on December 12, 1996.

<PAGE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.

None.

ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS

Between September 30, 1996 and January 27, 1997, the Partnership conducted a
capital call, in which it sold to its existing Investors one-fifth Units at a
price of $5,000 per one-fifth Unit. The Partnership sold 798.5 one-fifth Units
to its existing Investors for an aggregate price of $3,992,500. Five one-fifth
Units are the equivalent of one Unit.

In addition, on March 26, 1997, the Partnership commenced a second
capital call in which it is offering to its existing Investors one-fifth
Units at a price of $6,000 per one-fifth Unit. As of June 30, 1997, the
Partnership has sold 146 one-fifth Units for an aggregate price of $876,000.
This capital call is expected to be terminated on September 1, 1997, unless
extended by the General Partner. Five one-fifth Units are the equivalent of
one Unit.

These offerings were made in reliance upon, among others, the exemption from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended,
and Regulation D of the Rules and Regulations of the Securities and Exchange
Commission for an offer and sale of securities which do not involve a public
offering. The sales qualify as an exempt offering under Rule 506 of Regulation D
because all of the Investors, other than one, are Accredited Investors as
defined by Regulation D.

There is no trading market for the Units, and it is unlikely that a trading
market will exist at any time in the future. Any transfer of the Units is
severely restricted by certain conditions outlined in the Partnership Agreement,
and requires the consent of the General Partner which can be withheld in the
General Partner's sole reasonable discretion.

As of June 30, 1997, only the General Partner holds a general partnership
interest and 1,634 Investors hold an aggregate of 2,790.4 Units of limited
partnership interest.

There have been no cash distributions to the Investors to date. The
following summary of certain allocation provisions of the Partnership Agreement
is entirely qualified by reference to the Partnership Agreement, which is filed
as an Exhibit to this Form 10-K. As a general rule, the General Partner shall
cause the Partnership to make distributions, if any, of cash flow received from
operations of the Partnership which the General Partner, in its sole discretion,
determines to distribute to Investors ("Cash Flow"). All distributions will be
made 75% to the Investors and 25% to the General Partner. Distributions to the
Investors shall be made in proportion to the number of Units held by each
Investor on the last day of the calendar quarter to which such distribution
relates.

<PAGE>

The availability of Cash Flow for distribution to the Investors is dependent
upon the Partnership earning more than its expenses. No assurance can be given
that income in any year will be sufficient to generate Cash Flow for
distribution to the Investors or that there will not be cash deficits. Further,
because operating expenses are subject to increases, and increases in revenue
from Partnership operations may be subject to market limitations, income from
the Partnership in any year may not be sufficient to generate Cash Flow.

Net losses from operations of the Partnership will be allocated as follows:
first, to the Investors to offset any profits previously allocated to the
Investors, and second, 75% to the Investors in accordance with the number of
Units held by each Investor and 25% to the General Partner. The gain from a
financing, refinancing, sale or other disposition of the Partnership's assets
(or from similar capital transactions) (collectively, "Capital Transactions")
will be allocated 75% to the Investors and 25% to the General Partner. The loss
from a Capital Transaction will be allocated in the same way that net losses
from the Partnership's operations are allocated. Further adjustments to capital
accounts may be required and are authorized by the Partnership Agreement to
comply with the provisions of any future Internal Revenue Service regulations.

The Partnership may realize net proceeds (that is, proceeds available after
the payment of certain fees and expenses including payments to the General
Partner or its affiliates) from a Capital Transaction. No assurance can be
given, however, as to the availability of a Capital Transaction or the amount of
net cash proceeds therefrom. Any amounts received by the Partnership which
constitute amounts derived from a Capital Transaction, will be treated as being
received from operations of the Partnership and will be distributed to Investors
only if the General Partner determines to do so.

The General Partner is entitled to reimbursement of all reasonable operating
expenses, plus 10% of such amount. See "Item 13 -- Management Fee."

ITEM 6. SELECTED FINANCIAL DATA

Selected Financial Data for the years ended December 31, 1995 and December
31, 1996

The following tables summarize selected financial data of the Partnership
from the period from inception (January 24, 1995) to December 31, 1995, and from
January 1, 1996 to December 31, 1996. The table should be read in conjunction
with the more detailed financial statements contained in Item 8 below.

19
<PAGE>

STATEMENT OF OPERATIONS DATA

<TABLE>
<CAPTION>
JANUARY 24, 1995
(DATE OF INCEPTION)
TO
DECEMBER 31, 1995 DECEMBER 31, 1996
------------------- -----------------
<S> <C> <C>
Total Revenues:
Interest Earnings....................................................... $ 1,469,099 $ 66,767
Total Expenses:
Consulting and legal services rendered by related parties............... 6,756,250(1) 744,862
Management Fee to General Partner....................................... 513,288 424,334
Other Legal Fees........................................................ 368,704 1,283,356
Miscellaneous Consulting Services....................................... 325,604 557,353
Travel.................................................................. 118,850 282,890
Insurance............................................................... 32,000 133,784
Other Administrative Expenses........................................... 68,769 183,890
Omaha Withdrawal Fee.................................................... 1,257,771
Norfolk Bid Withdrawal.................................................. 3,273,374
Forfeiture Imposed by FCC............................................... 1,000,000
------------------- -----------------
Subtotal:................................................................. $ 8,183,465 $ 9,141,614
------------------- -----------------
Net Income (Loss)......................................................... $ (6,714,366) ($ 9,074,847)
------------------- -----------------
------------------- -----------------
Net Income (Loss) Attributable to General Partner......................... $ (1,678,592) ($ 2,268,712)
------------------- -----------------
------------------- -----------------
Net Income (Loss) Attributable to Unitholders
($1,933,49) in 1995 and ($2,609.71) in
1996 per Unit respectively)............................................ ($ 5,035,774) ($ 6,806,135)
------------------- -----------------
------------------- -----------------
</TABLE>

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

(1) Includes payments of $6,511,250 to Romulus for its services in preparation
of the Application and bidding at Auctions, see "Item 13 -- Payments to
Romulus," and other consulting fees.

20
<PAGE>
BALANCE SHEET DATA

<TABLE>
<CAPTION>
PRO-FORMA
DECEMBER 31,
DECEMBER 31, 1995 DECEMBER 31, 1996 1996(1)
----------------- ----------------- --------------
<S> <C> <C> <C>
ASSETS:

Cash and Cash Equivalents.................................. $ 2,727,541 $ 2,492,851 $ 13,532,394

Prepaid Expenses........................................... 96,000 100,538 100,538

Deposits................................................... 50,000,000 45,468,855 0

Restricted Cash(2)......................................... 6,511,250 6,511,250 0

Equipment Net.............................................. 0 14,535 14,535

PCS Licenses............................................... 344,293,125

Accounts Payable and Accrued

Liabilities................................................ $ 836,657 $ 2,287,242 $ 2,287,242

License Loan Payable....................................... 309,863,813

Unitholders' Equity (2,604.5 Units in 1995 and 2,719.6
Units in 1996; and 1 general partnership interest)....... 58,498,134 52,300,787 45,789,537

Total:..................................................... $ 59,334,791 $ 54,588,029 $ 357,940,592
----------------- ----------------- --------------
----------------- ----------------- --------------
Book Value Per Unit........................................ $ 22,452 $ 19,224 $ 16,831
----------------- ----------------- --------------
----------------- ----------------- --------------
</TABLE>

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

(1) The pro forma financial data gives effect to the Partnership's receipt of
the Licenses, which were granted by the FCC on January 22, 1997, the related
liability and the refunding of a portion of the Partnership's deposit by the
FCC. As a result of the grant of the Licenses, the Partnership became liable
to Romulus for $6,511,250, which amount has been attached in connection with
the Partnership's lawsuit against Romulus.

(2) Partnership has filed suit attaching this amount which will be released
after resolution of the Partnership's lawsuit against Romulus.

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

The Partnership was formed in January 1995 and is managed by the General
Partner. The Partnership was organized to acquire, own and operate PCS licenses
in frequency Blocks C and F, and to take advantage of the benefits that the FCC
has set aside for Entrepreneurs. The Partnership's income to date has consisted
only of interest earnings as the Partnership was awarded the Licenses on January
27, 1997 and has not yet established operations.

Results of Operations--1996 Compared to 1995

REVENUES

The Partnership's sole source of revenue continued to be interest income for
the year ended December 31, 1996. In 1995, the Partnership had interest earnings
of $1,469,099. Interest income for this year was $66,767. Interest income in
1995 was greater because the Partnership had invested the capital contributions
of its Investors until it placed its $50 million deposit with the FCC in
November 1995.

EXPENSES

Expenses for the year ended December 31, 1996 totaled $9,141,614. This
amount included an accrual for $424,334 of expenses to be reimbursed to the
General Partner, including its management fee. Pursuant to the original
Partnership Agreement, the management fee was 1% of the Partnership's gross
assets plus reasonable costs and expenses in managing the Partnership. The
General Partner then amended the Partnership Agreement to reduce the management
fee to all reasonable costs and expenses in managing the Partnership, plus 10%
of such amount. Subsequent to the issuance of the Partnership's 1995 financial
statements, the General Partner determined that the management fee was not
contingent upon the Partnership making a down payment to the FCC to purchase a
License, but should have been accrued in the 1995 financial statements. This
management fee, approximately $513,000, was accrued in 1995, and the
Partnership's 1995 financial statements were restated to reflect this accrual.
As a result, in 1995 the Partnership's loss increased by approximately $513,000.

General and administrative expenses for the period ended December 31, 1995
were $8,183,465, which included amounts paid to Romulus under Services Agreement
and the expenses and the management fee of the General Partner. Expenses for the
year ended on December 31, 1996 are higher than the expenses for the same period
of 1995 because the 1996 expenses includes the Omaha withdrawal fee of
$1,257,771, the Norfolk bid withdrawal fee of $3,273,374, the $1,000,000
forfeiture imposed by the FCC, and related legal fees and certain consulting
expenses amounting to $1,373,547 which were incurred in connection with the
result of the Bidding Error. The Partnership is seeking to recover the costs,
penalties and fines associated with

<PAGE>

the Bidding Error from Romulus and Mr. Easton, and has attached $6,511,250 of
restricted cash held in the account controlled by Romulus. Although no
assurances can be made, the General Partner believes it will prevail in
collecting these amounts.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1996, the Partnership had assets totaling $54,588,029,
consisting of $2,492,851 in cash and cash equivalents, $45,468,855 ($50 million
less bid withdrawal penalty) on deposit with the FCC, $6,511,250 in restricted
cash, $100,538 in prepaid expenses, $14,535 in equipment and current liabilities
of $2,287,242. As of December 31, 1995, the Partnership had assets totaling
$59,334,791, consisting of $2,727,541 in cash and cash equivalents, $50 million
on deposit with the FCC, other assets of $96,000, $6,511,250 in restricted cash
and current liabilities of $836,657. The Partnership assets decreased during
1996 because of expenses associated with securing the Licenses and a forfeiture
and bid withdrawal penalty associated with the Bidding Error. During 1995, the
Partnership assets increased as the result of the Private Placement begun in
1995, which ended during the fourth quarter of 1995.

As of December 31, 1996 the Partnership raised $2,952,500 of additional
capital from a capital call that began on September 30, 1996 and ended on
January 22, 1997. The total amount raised in this capital call was $3,992,500.
Three Units were repurchased during the second quarter 1996 from Mr. Breen
following the Bidding Error.

On March 26, 1997, the Partnership commenced a second capital call to
raise up to an additional $2 million by offering to its existing Investors
one-fifth Units at a price of $6,000 per one-fifth Unit. As of June 30, 1997,
the Partnership has sold 146 one-fifth Units for an aggregate price of
$876,000. This capital call is expected to terminate on September 1, 1997,
unless extended by the General Partner. In addition, the Partnership is
continuing to seek additional capital for purposes of developing the
Licenses. The Partnership's efforts to raise additional capital to develop
Licenses is dependent upon whether the Partnership retains any of the
Licenses. Failure to retain its Licenses or the failure to prevail in the
litigation to which the Partnership is subject will have a material adverse
impact on the Partnership's business and operations. Although no assurance
can be made, the Partnership expects to raise the additional amounts it needs
to develop the Licenses it retains. The Partnership currently estimates it
will need to raise approximately $290 million over the next three years to
develop all of the Licenses. In addition, the Partnership owes the federal
government approximately $309,863,813 in connection with the acquisition of
the Licenses. Although no assurances can be made, the Partnership expects to
prevail in the litigation in which it is a party. See "Item 3."

23
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

FINANCIAL STATEMENTS PAGE
- ----------------------------------------------------------------------------------------------------------- -----
<S> <C>
ClearComm, L.P.
Report of Independent Accountants 26
Statements of Assets, Liabilities and Partners' Capital for fiscal years ended December 31, 1995 and
December 31, 1996 27
Statement of Revenues and Expenses for fiscal years ended
December 31, 1995 and December 31, 1996 29
Statement of Cash Flows for fiscal years ended December 31, 1995 and December 31, 1996 30
Statement of Changes in Partners' Capital Accounts for fiscal years ended December 31, 1996 32
Notes to Financial Statements 33

SuperTel Communications Corp.
- -----------------------------
Report of Independent Accountants 39
Balance Sheet, December 31, 1996 40
Statement of Revenues and Expenses from inception to December 31, 1996 41
Statement of Cash Flows from inception to December 31, 1996 42
Notes to Financial Statements 43
</TABLE>

<PAGE>
CLEARCOMM, L.P.

(a development stage enterprise)

REPORT AND FINANCIAL STATEMENTS

DECEMBER 31, 1996 AND 1995

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of ClearComm, L.P.

In our opinion, the accompanying statement of assets, liabilities and
partners' capital, and the related statements of revenues and expenses, of
cash flows and of changes in partners' capital accounts, after the
restatement described in Note 7, present fairly, in all material respects,
the financial position of ClearComm, L.P. (formerly PCS 2000, L.P.) (the
Partnership), a development stage enterprise, at December 31, 1996 and 1995
and the results of its operations and its cash flows for the year ended
December 31, 1996 and for the periods from inception (January 24, 1995)
through December 31, 1995 and December 31, 1996, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Partnership's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally
accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE
San Juan, Puerto Rico
February 7, 1997

<PAGE>

CLEARCOMM, L.P.
(a development stage enterprise)

STATEMENT OF ASSETS, LIABILITIES AND

PARTNERS' CAPITAL

<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31,
----------------- ----------------------------
PRO FORMA 1996 1995
--------- ---- -----
(UNAUDITED)
(NOTE 8)
----------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................... $ 13,532,394 $ 2,492,851 $ 2,727,541
Prepaid expenses............................................... 100,538 100,538 96,000
Other current assets--FCC deposit.............................. 45,468,855
----------------- ------------- -------------
Total current assets.......................................... 13,632,932 48,062,244 2,823,541
Restricted cash--escrow account................................. 6,511,250 6,511,250
FCC deposits.................................................... 50,000,000
PCS licenses.................................................... 344,293,125 -- --
Other assets.................................................... 14,535 14,535
----------------- ------------- -------------
$ 357,940,592 $ 54,588,029 $ 59,334,791
----------------- ------------- -------------
----------------- ------------- -------------
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Bank overdraft................................................. $ 46,173
Payable to FCC................................................. $ 1,000,000 $ 1,000,000
Accounts payable and accrued liabilities....................... 204,927 204,927 130,634
Accounts payable for legal fees................................ 440,847 440,847
Accounts payable to related parties............................ 641,468 641,468 659,850
----------------- ------------- -------------
Total current liabilities..................................... 2,287,242 2,287,242 836,657
----------------- ------------- -------------
Payable to FCC.................................................. 309,863,813
----------------- ------------- -------------
Contingency (Note 10)

Partners' capital:
Limited partners' capital (2,719.6 units issued and outstanding
in 1996 and 2,604.5 in 1995)................................. 67,990,000 67,990,000 65,112,500
General partner's capital....................................... 100,000 100,000 100,000
</TABLE>

27
<PAGE>

Undistributed losses accumulated during development stage....... (22,300,463) (15,789,213) (6,714,366)
----------------- ------------- -------------
Total partners' capital....................................... 45,789,537 52,300,787 58,498,134
----------------- ------------- -------------
Total liabilities and partners'capital........................ $ 357,940,592 $ 54,588,029 $ 59,334,791
----------------- ------------- -------------
----------------- ------------- -------------
</TABLE>

The accompanying notes are an integral part of this statement.

<PAGE>

CLEARCOMM, L.P.

(a development stage enterprise)

STATEMENT OF REVENUES AND EXPENSES

<TABLE>
<CAPTION>
JANUARY 24, 1995 JANUARY 24, 1995
YEAR ENDED (INCEPTION) TO (INCEPTION) TO
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1996
----------------- ----------------- -----------------
<S> <C> <C> <C>
Revenues:
Interest income........................ $ 66,767 $1,469,099 $ 1,535,866
---------- ---------- -----------
Expenses:
Consulting and legal services rendered
by related parties.................... 744,862 6,756,250 7,501,112
Management fee to General Partner...... 424,334 513,288 937,622
Other legal fees....................... 1,283,356 368,704 1,652,060
Miscellaneous consulting services...... 557,353 325,604 882,957
Travel................................. 282,890 118,850 401,740
Insurance.............................. 133,784 32,000 165,784
Other administrative expenses.......... 183,890 68,769 252,659
Bid withdrawal penalty (Omaha,
Nebraska)............................. 1,257,771 1,257,771
Bid withdrawal penalty (Norfolk,
Virginia)............................. 3,273,374 3,273,374
Forfeiture imposed by FCC.............. 1,000,000 1,000,000
---------- ---------- -----------
9,141,614 8,183,465 17,325,079
---------- ---------- -----------
Net loss............................... $9,074,847 $6,714,366 $15,789,213
---------- ---------- -----------
---------- ---------- -----------

Net loss attributable to general
partner................................ $2,268,712 $1,678,592
---------- ----------
---------- ----------

Net loss attributable to limited
partners ($2,609.71 and $1,933.49 per
limited partnership unit in 1996 and
1995, respectively).................... $6,806,135 $5,035,774
---------- ----------
---------- ----------
</TABLE>

The accompanying notes are an integral part of this statement.

<PAGE>

CLEARCOMM, L.P.

(a development stage enterprise)

STATEMENT OF CASH FLOWS

Adjustments to reconcile net loss for
the period to net cash used by
operating activities:
Increase in prepaid expenses.......... (4,538) (96,000) (100,538)
(Decrease) increase in bank
overdraft............................ (46,173) 46,173
Increase in payable to FCC............ 1,000,000 1,000,000
Increase in accounts payable and
accrued liabilities.................. 74,293 130,634 204,927
Increase in accounts payable for
legal fees........................... 440,847 440,847
(Decrease) increase in accounts
payable to related parties.......... (18,382) 659,850 641,468
------------ ------------- -------------

Total adjustments................... 1,446,047 740,657 2,186,704
------------ ------------- -------------

Net cash used by operating
activities......................... (7,628,800) (5,973,709) (13,602,509)
------------ ------------- -------------

Cash provided (used) by flows investing
activities:
FCC auction deposit................... (50,000,000) (50,000,000)
Bid withdrawal payment................ 4,531,145 4,531,145
Other assets.......................... (14,535) (14,535)
------------ ------------- -------------

Net cash provided (used) by investing
activities......................... 4,516,610 (50,000,000) (45,483,390)
------------ ------------- -------------

Cash flows from financing activities:
Capital investment by partners........ 2,952,500 65,212,500 68,165,000
Capital repurchased from partner...... (75,000) (75,000)
Restricted cash....................... (6,511,250) (6,511,250)
------------ ------------- -------------

Net cash provided from financing
activities......................... 2,877,500 58,701,250 61,578,750
------------ ------------- -------------

Net (decrease) increase in cash......... (234,690) 2,727,541 2,492,851

Cash and cash equivalent at beginning

<PAGE>

beginning of period.................... 2,727,541
------------ ------------- -------------
Cash and cash equivalents
at end of period....................... $2,492,851 $ 2,727,541 $ 2,492,851
------------ ------------- -------------
------------ ------------- -------------
</TABLE>

The accompanying notes are an integral part of this statement.

<PAGE>

CLEARCOMM, L.P.

(a development stage enterprise)

STATEMENT OF CHANGES IN PARTNERS' CAPITAL ACCOUNTS

<TABLE>
<CAPTION>
LIMITED PARTNERS GENERAL TOTAL
UNITS AMOUNT PARTNER
------------------------ ------- -----
<S> <C> <C> <C> <C>
Capital invested.......................... 2,604.5 $65,112,500 $ 100,000 $65,212,500
Share of undistributed losses............. (5,035,774) (1,678,592) (6,714,366)
-------- ------------- ------------- ------------

Balance (deficit) at December 31, 1995.... 2,604.5 60,076,726 (1,578,592) 58,498,134

Repurchase of limited partners units...... (3.0) (75,000) (75,000)
Capital invested in 1996.................. 118.1 2,952,500 2,952,500
Share of undistributed losses............. (6,806,135) (2,268,712) (9,074,847)
------- ----------- ------------ -----------

Balance (deficit) at December 31, 1996.... 2,719.6 $56,148,091 ($3,847,304) $52,300,787
------- ----------- ------------ ------------
------- ----------- ------------ ------------
</TABLE>

The accompanying notes are an integral part of this statement.

<PAGE>

CLEARCOMM, L.P.

(a development stage enterprise)

NOTES TO FINANCIAL STATEMENTS

NOTE 1--REPORTING ENTITY AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES:

ClearComm, L.P. (formerly PCS 2000, L.P.) (the Partnership), a development
stage enterprise, is a limited partnership organized on January 24, 1995
under the laws of the State of Delaware. The Partnership was formed to file
applications with the Federal Communications Commission ("FCC") under
personal communications service ("PCS") frequency Block C, originally
restricted to minorities, small businesses and designated entities, to become
a provider of broadband PCS, a new telecommunications technology. The
Partnership will terminate on December 31, 2005, or earlier upon the
occurrence of certain specified events as detailed in the Partnership
Agreement. The Partnership has not yet generated revenues from commercial
operations.

In 1996, the Partnership's former general partner, Unicom Corporation,
sold its interest in the Partnership to SuperTel Communications Corp.
(SuperTel), a Puerto Rico corporation (the "General Partner"). The General
Partner's total share of the income and losses of the Partnership is 25% as
per the Partnership's Agreement. Approximately 1,600 limited partners also
invested in the Partnership through a private placement.

USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS

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

BASIS OF ACCOUNTING AND FISCAL YEAR

The Partnership's records are maintained on the accrual basis of accounting
for financial reporting and tax purposes. The fiscal year of the Partnership
ends on December 31.

CASH EQUIVALENTS

The Partnership considers all highly liquid investment instruments purchased
with an original maturity of three months or less to be cash equivalents.

PCS LICENSES

Upon the acquisition of the licenses, the Partnership will record them at
cost, to be amortized over the estimated life of the licenses (forty years)
once the PCS network is placed in service. The Partnership will capitalize
the interest related to debt pertaining to the PCS licenses during the
construction period.

<PAGE>

NOTE 2--FINANCING REQUIREMENTS:

The Partnership has no revenues (other than interest income) and is likely to
incur operating losses after commencing commercial operations until such time
as its subscriber base generates revenue in excess of the Partnership's
expenses. Development of a significant subscriber base is likely to take
time, during which the Partnership must finance its operations by other means
than its revenues. Consequently, following the grant of the licenses, the
Partnership will need additional debt or equity financing to develop and
construct the infrastructure necessary to operate wireless telephone systems,
introduce and market a new range of service offerings on a commercial basis
and otherwise operate its licensed PCS systems.

The Partnership is currently in various stages of discussions with a variety
of equipment vendors to determine the selection of equipment with the best
financing terms.

The Partnership plans to begin construction of its system as soon as it
receives the licenses from the FCC and is currently evaluating several
options to satisfy its financing needs.

NOTE 3--BID WITHDRAWAL PAYMENT AND PENALTY:

In 1996, the Partnership, through its bidding agent, inadvertently submitted
to the FCC an erroneous bid for one of the PCS licenses being auctioned
(Norfolk, Virginia). Although the Partnership withdrew the bid immediately,
the FCC could have imposed a substantial penalty for withdrawal of the then
highest submitted bid, which penalty is based on the difference between the
bid withdrawn and the eventual highest bid. The General Partner met with FCC
officials and filed a petition for a waiver of the penalty or, in the
alternative, a substantial reduction in the penalty amount, as the FCC's
rules were intended to deter frivolous and manipulative bids, and not errors.

On December 20, 1996, the FCC issued an order (the "Order") resolving the
Partnership's request for waiver of the related bid withdrawal payment for
the license applicable to Round 11 of the Broad Band PCS C Block auction
(Norfolk, Virginia) for which the FCC ordered the Partnership to pay a
penalty of approximately $3,273,000. This Order also assessed a bid
withdrawal payment of approximately $1,258,000 for license B332 (Omaha,
Nebraska) for the Broad Band PCS C block auction. In accordance with the
Order, these amounts were deducted from the Partnership's deposit with the
FCC. In addition to the December 20, 1996 Order, the FCC issued a Notice of
Apparent Liability and Forfeiture dated January 22, 1997, finding the
Partnership liable for $1,000,000 for misrepresentations made to the
Commission by its bidding agent. This amount has been recorded as of December
31, 1996 and is reflected as a liability in the accompanying balance sheet.

The Partnership and its General Partner have filed several actions in court
to recover the FCC assessments made in connection with the bidding error as
well as other related expenses incurred (See Note 10). One of the actions
filed resulted in the attachment of a $6.5 million escrow account deposited
in the name of the bidding agent, Romulus Telecommunications, Inc.
("Romulus"), with a local bank, which would have been payable upon obtaining
the PCS licenses.

It is management's intention to pursue vigorously the recovery of the FCC
assessments from Romulus. Management believes it will prevail in collecting
from the restricted cash all the assessments made by the FCC in connection
with the bidding error and other related expenses.

<PAGE>

NOTE 4--RESTRICTED CASH:

As of December 31, 1996, restricted cash amounting to $6,511,250 is held in
trust for Romulus and is restricted for payment of all services related to
the auction process. The amount is payable only if the Partnership obtains at
least one PCS license. However, the Partnership has obtained a Court Order
attaching this amount as a result of a lawsuit more fully explained in
Note 10.

NOTE 5--FCC DEPOSITS:

This account represents the deposits placed with the FCC to participate in
the auctions for the licenses mentioned above. The deposits will be partly
used for the downpayment of the licenses to be acquired.

NOTE 6--PARTNERS' CAPITAL:

At December 31, 1995, the limited partners' capital was composed of 2,604 1/2
units distributed among approximately 1,600 limited partners. In 1996, the
Partnership repurchased 3 units from a limited partner and sold to its
limited partners 590.5 one-fifth units. As a result the limited partners'
capital at December 31, 1996 consists of 2,601.5 units and 590.5 one-fifth
units.

The Partnership Agreement provides that the Partnership may sell additional
limited partnership interests after the initial offering to raise additional
equity.

Cash flow received from normal operations of the Partnership which the
General Partner, in its sole discretion, determines to distribute to the
investors of the Partnership, will be distributed 75% to the limited partners
and 25% to the General Partner. The operating losses of the Partnership for
federal income tax purposes will be allocated first to the partners as
necessary to offset any profits previously allocated to them until each
partner has cumulative losses equal to cumulative profits previously
allocated to each partner, and second, 75% to the limited partners in
accordance with the number of units held by each limited partner and 25% to
the General Partner; provided, however, that any losses that would have the
effect of causing or increasing a partner's capital account deficit will be
allocated first, pro rata to the other partners in accordance with their
respective share of partnership distributions, and second, when such
allocations can be made without increasing a partner's capital account
deficit, to the General Partner.

NOTE 7--RELATED PARTY TRANSACTIONS:

In 1996, the Partnership incurred legal and consulting expenses paid to
limited partners and members of the Board of Directors amounting to
approximately $745,000 (1995--$245,000).

Additionally, the application, preparation and auction bidding services were
performed by a related party for which a fee of $6,511,250 was paid during
1995. An additional $6,511,250 remains as a contingent fee payable upon
acquisition of at least one PCS license.

The Partnership Agreement, as amended, provides for payment of a management
fee to its General Partner, equal to the reasonable costs of operating the
business of the Partnership, plus 10% of such aggregate amount, which fee
shall be payable monthly, on the first day of each month during the year.
Expenses reimbursed include, but are not limited to, compensation costs and
expenses related to the officers, directors, and employees in the performance
of their duties. In connection with this agreement, the General Partner
billed $424,000 in 1996 for these services.

<PAGE>

Subsequent to the issuance of the Partnership's 1995 financial statements,
management became aware that the management fee was not contingent upon
obtaining a PCS license as originally interpreted. As a result, the
Partnership has recognized a management fee of approximately $513,000 in 1995
in the accompanying financial statements which increased the previously
reported net loss by the same amount. Of this amount $128,250 and $384,750
were attributed to the General Partner and the limited partners, respectively.

NOTE 8--LICENSES:

On January 22, 1997, the Partnership was granted the Broad Band PCS C block
licenses. This resulted in recognizing the cost of the licenses of
$344,293,125 and the related liability of $309,863,813. The down payment, or
10% of the bid amount, was deducted by the FCC from the deposits held, along
with $4,531,145 for bid withdrawal payments assessed by the FCC (see Note 3).
The FCC deposits returned to the Partnership amounted to $11,039,543.

As a result of obtaining the licenses, the Partnership became liable for
services provided by Romulus as discussed in Note 4. However, management is
challenging in court the payment of such fees (See Notes 3 and 10).

The pro forma effects of obtaining the licenses are reflected on the
unaudited pro forma balance sheet as if the licenses had been granted on
December 31, 1996.

NOTE 9--INCOME TAX:

The Partnership, as a limited partnership, is not subject to income tax and
the tax effect of its activities accrues to the partners.

Taxable income to the General and Limited Partners differs from that reported
in the statement of revenues and expenses mainly due to different treatment
of operational expenses incurred in 1996 and 1995 for tax and book purposes.
Since the partnership has not been assigned any PCS licenses yet, all
operating expenses were deferred for tax purposes creating a temporary
difference for the partners.

These expenses will be amortized over a period not exceeding 10 years. The
taxable income for the partners is determined as follows:

<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Net loss per books................. ($9,074,846) ($6,714,366)
Add--Operating expenses deferred
until a PCS license is assigned
to the Partnership................ 9,141,613 8,183,465
------------ -----------
Taxable income..................... $ 66,767 $1,469,099
------------ -----------
------------ -----------
</TABLE>

There are no other significant differences between taxable income for the
partners and the net loss reported in the statement of revenues and expenses.

<PAGE>

NOTE 10--CONTINGENCY:

In 1996, the Partnership's bidding agent, Romulus, submitted an erroneous bid
for one of the PCS licenses being auctioned (Norfolk, Virginia). The
Partnership withdrew the bid immediately and the General Partner filed a
petition for a waiver of the penalty or, in the alternative, a substantial
reduction in the penalty amount.

On December 20, 1996, the FCC resolved the Partnership's request and assessed
a bid withdrawal payment of $3,273,000 for the Norfolk, Virginia market.
Also, on January 22, 1997 the FCC issued a Notice of Apparent Liability and
Forfeiture and found the Partnership liable for $1,000,000 for
misrepresentations made by its bidding agent.

As a result of the penalty and assessment imposed by the FCC, the Partnership
and its General Partner filed, on June 6, 1996, an action for damages against
Romulus (bidding agent) and one of its directors, wherein they seek
reimbursement for the defendants' gross negligence and subsequent fraudulent
acts in covering up an error in bidding in the January 23, 1996 FCC auction
for certain telecommunication markets. In connection with this case, the
Partnership has attached the $6.5 million deposited in the name of Romulus
with a local bank and posted a $25,000 bond pursuant to such order. Romulus
and its director have both filed separate requests for arbitration. The
Partnership has filed for dismissal of these proceedings. Management is
pursuing this matter vigorously and is confident that its position will
prevail.

On June 28, 1996 Romulus's director filed a declaratory relief action against
the Partnership's general partner in regard to the respective rights and
duties revolving around the erroneous bid submitted on behalf of the
Partnership to the FCC in connection with PCS licenses.

In November 1996, certain limited partners of the Partnership filed a suit in
the Circuit Court of the State of Oregon against the Company and certain of
its officers, directors, employees and consultants. The suit alleges that
defendants employed misstatements and omissions of fact in connection with
the sale of limited partnership units of the Partnership and seeks the return
of the investment of $25,000 per unit for approximately 22 units, plus
interest and attorney fees. The case is in the early stage, however, the
Company is defending this matter vigorously.

<PAGE>

SUPERTEL COMMUNICATIONS CORP.

REPORT AND FINANCIAL STATEMENTS

DECEMBER 31, 1996

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
SuperTel Communications Corp.

In our opinion, the accompanying balance sheet and the related statements of
loss and deficit and of cash flows present fairly, in all material respects,
the financial position of SuperTel Communications Corp. at December 31, 1996
and the results of its operations and its cash flows for the period from
inception on June 7, 1996 to December 31, 1996, in conformity with generally
accepted accounting principles. 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 audit. We conducted our
audit of these statements in accordance with generally accepted auditing
standards which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE
San Juan, Puerto Rico
February 7, 1997

<PAGE>

SUPERTEL COMMUNICATIONS CORP.

BALANCE SHEET

DECEMBER 31, 1996

ASSETS

<TABLE>
<S> <C>
Assets:
Cash................................................ $ 8,237
Accounts receivable from affiliated company......... 101,954
--------

Total assets............................ $110,191
--------
--------

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Liabilities:
Accounts payable to officers and directors......... $ 63,304
Accounts payable to affiliated company............. 30,997
Income tax payable................................. 3,277
Note payable to affiliate.......................... 100,000
--------
Total liabilities...................... 197,578
--------

Stockholders' deficiency:
Common stock, no par value, 1,000 shares authorized;
1,000 shares issued and outstanding 1,000
Accumulated deficit................................. (88,387)
---------

Total stockholders' deficiency.......... (87,387)
---------

Total liabilities and stockholders' deficiency............. $110,191
--------
--------
</TABLE>

The accompanying notes are an integral part of this statement.

<PAGE>

SUPERTEL COMMUNICATIONS CORP.

STATEMENT OF REVENUES AND EXPENSES AND DEFICIT

FOR THE PERIOD FROM INCEPTION ON JUNE 7, 1996

TO DECEMBER 31 1996

<TABLE>
<S> <C>
Revenues:
Management fees.................................... $ 205,036
---------
Expenses:
Directors' fees.................................... 112,000
Salaries........................................... 29,167
Travel expenses.................................... 27,658
Interest expense................................... 3,749
Other general and administrative expenses.......... 17,572
---------
Total expenses........................ 190,146
---------

Income before loss on investment and income taxes........ 14,890

Loss on investment in partnership........................ (100,000)
---------
(85,110)

Provision for income taxes............................... (3,277)
---------

Net loss and deficit at December 31, 1996................. ($ 88,387)
---------
---------
</TABLE>

The accompanying notes are an integral part of this statement.

<PAGE>

SUPERTEL COMMUNICATIONS CORP.

STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM INCEPTION JUNE 7, 1996

TO DECEMBER 31, 1996

<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss........................................ ($88,387)
Adjustments to reconcile net income to net cash
provided by operating activities: Loss on
investment in subsidiary....................... 100,000
Increase in accounts receivable-trade...... (101,954)
Increase in accounts payable and accruals.. 97,578
---------

Total adjustment................. 95,624
---------

Net cash from operating activities.................. 7,237

Cash flows provided by financing activities -
Proceeds from issuance of common stock........ 1,000
---------
Net increase in cash and
cash equivalents at end of the period......... $ 8,237
---------
---------
</TABLE>

The accompanying notes are an integral part of this statement.

<PAGE>

SUPERTEL COMMUNICATIONS CORP.

NOTES TO FINANCIAL STATEMENTS

NOTE 1--REPORTING ENTITY AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES:

REPORTING ENTITY

SuperTel Communication Corp. (the "Company") was organized on June 7, 1996
under the laws of Puerto Rico. It was created to serve as General Partner of
ClearComm, L.P. (formally PCS 2000 L.P.) (the "Partnership"), a development
stage enterprise.

On June 18, 1996, the Company acquired the general partnership interest in
the Partnership from Unicom Corporation ("Unicom") for $100,000 by means of a
nonrecourse promissory note. The stockholders, officers and directors of the
Company are essentially the same as those of Unicom. All stockholders of
Unicom received the same number of shares of the Company that they previously
held in Unicom except for shares held by two trusts for the benefit of the
respective families of two former directors of Unicom. The transfer is the
subject of a lawsuit brought by a trust that is a substantial shareholder of
Unicom, and whose sole beneficiary is the wife of a former director. The
Company is vigorously defending its position in this case; it believes it has
meritorious defenses to such suit and that the outcome of such suit will not
adversely affect the financial position and future operations of the Company.

During 1996, most of the Company's transactions were related to the
administration of the Partnership, a limited partnership organized on
February 14, 1995 under the laws of the State of Delaware, for which the
Company has served as the general partner since June 18, 1996. The
Partnership is engaged in the acquisition of licenses from the Federal
Communications Commission ("FCC") to serve as provider of Personal
Communications Services ("PCS"). The Company is entitled to 25% of all
distributions made by the Partnership.

The accounting and reporting policies of the Company conform to generally
accepted accounting principles. The following summarizes the most significant
accounting policies followed in the preparation of the accompanying financial
statements:

USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS

<PAGE>

CASH EQUIVALENTS

The Company considers highly liquid investments with maturity of three months
or less, at the time of purchase, to be cash equivalents. No cash equivalents
were held by the Company at December 31, 1996.

INVESTMENT IN PARTNERSHIP

The investment in the Partnership represents an investment of the Partnership
amounting to $100,000. The Company accounts for the investment in the
Partnership using the equity method. As of December 31, 1996, the Company's
investment in the undistributed losses of the Partnership amounted to
approximately $3,847,000, therefore, the carrying value of its investment was
written down to zero.

NOTE 2--RELATED PARTY TRANSACTIONS:

The partnership agreement of the Partnership, as amended, provides for
payment of a management fee to its general partner, equal to the reasonable
costs of operating the business of the Partnership, plus 10% of such
aggregate amount, which fee shall be payable monthly, on the first day of
each month during the year. Expenses reimbursed include, but are not limited
to, compensation costs, and expenses related to officers, directors, and
employees in the performance of their duties. During 1996, fees billed
amounted to approximately $205,000.

All other related party transactions are advances from / to affiliated
companies made in the ordinary course of business.

NOTE 3--NOTE PAYABLE:

Note payable consists of a nonrecourse promissory note due to an affiliate
amounting to $100,000, bearing interest at 7%, and due on June 18, 2003.

NOTE 4--INCOME TAX:

Under the provisions of the Puerto Rico tax law, the loss on the investment
in partnership is not deductible until it is finally determined that the
investment is worthless.

<PAGE>

NOTE 5--CAPITAL:

The Company is authorized to issue 2,000 shares, which shall be divided into
1,000 shares of restricted voting common stock without par value and 1,000
shares of restricted non-voting preferred stock without par value. The
preferred shares are divided into classes, from A to J with 100 shares each
class and upon their issuance the Company has the option to redeem them at
their issuance price plus accrued dividends. At December 31, 1996 none of the
preferred shares had been issued.

NOTE 6--SUPPLEMENTAL CASH FLOW INFORMATION:

During the year, the Company issued a nonrecourse promissory note amounting
to $100,000 (See Note 3) to acquire the investment in the Partnership.

NOTE 7--BID WITHDRAWAL PAYMENT AND PENALTY:

In 1996, the Partnership, through its bidding agent, inadvertently submitted
an erroneous bid for one of the licenses being auctioned. Although the
Partnership withdrew the bid immediately, the FCC could have imposed a very
substantial penalty for withdrawal of the then highest submitted bid, which
penalty is based on the difference between the bid withdrawn and the eventual
highest bid. The Company filed a petition for a waiver of the penalty or, in
the alternative, a substantial reduction in the penalty amount, as the FCC's
rules were intended to deter frivolous and manipulative bids, and not errors.

On December 20, 1996, the FCC issued an order (the "Order") resolving the
Partnership's request for waiver of the related bid withdrawal payment for
the license applicable to Round 11 of the Broad Band PCS C Block auction for
which the FCC ordered the Partnership to pay a penalty of approximately
$3,300,000. This Order also assessed a bid withdrawal payment of
approximately $1,258,000 for license B332 (Omaha, Nebraska) for the Broad
Band PCS C block auction. In accordance with the Order, these amounts were
deducted from the Partnership's deposit with the FCC. In addition to the
December 20, 1996 order, the FCC issued a Notice of Apparent Liability for
Forfeiture dated January 22, 1997, finding the Partnership liable for
$1,000,000 for misrepresentations made to the FCC by its bidding agent. It is
the Partnership's intention to recover this and other expenses related to the
bidding error from its former bidding agent.

As a result of the assessment made and penalty imposed by the FCC, the
Partnership and its General Partner filed, on June 6, 1996, an action for
damages against Romulus Telecommunications, Inc. (bidding agent) and one of
its directors, wherein they seek reimbursement for the defendants' gross
negligence and subsequent fraudulent acts in covering up an error in bidding
in the January 23, 1996 FCC auction for certain telecommunication

<PAGE>

market. In connection with this case, the Partnership has attached the $6.5
million deposited in the name of Romulus Telecommunications, Inc. ("Romulus")
with a local bank and posted $25,000 bond pursuant to such order. Romulus and
its director have both filed separate requests for arbitration. The
Partnership has filed for dismissal of these proceedings. Management is
pursuing this matter vigorously and is confident that its position will
prevail.

NOTE 8--CONTINGENCY:

In mid 1996, Romulus's director and his wife filed declaratory relief actions
against the Company in regard to the respective rights and duties revolving
around the erroneous bid submitted on behalf of the Partnership to the FCC in
connection with PCS licenses (See Note 7).

Management believes that the outcome of these lawsuits will not have an
adverse effect on the Company's financial condition or results of operations.

NOTE 9--SUBSEQUENT EVENTS:

On January 22, 1997 the Partnership was granted the 15 Broad Band PCS C block
licenses for which it has been the high bidder in the PCS auctions which
remained pending at December 31, 1996.

<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

The Partnership has no employees, directors or executive officers. The
Partnership is managed by the General Partner, whose directors and executives
officers are listed below.

Fred H. Martinez, Director and Chairman of the Board, age 51, has been
chairman of the board of trustees of the University of Puerto Rico from 1993 to
the present. During 1977 to 1979, Mr. Martinez was director of the Puerto Rico
Income Tax Bureau, member of the Governor's Economic Advisory Council, chairman,
Committee on Section 936, Government of Puerto Rico, assistant secretary of the
treasury, Internal Revenue, PR Treasury Department (1978- 1979), president, Tax
Committee, PR Chamber of Commerce (1978-1979). In 1993 he was chairman of the
board of the Solid Wastes Management Authority, Government of PR. Mr. Martinez
has extensive experience in contract negotiations, corporate and tax law, and in
directing major institutions. He holds a B.S. in Economics from Villanova
University (1967), an LL.B. (law) from the University of Puerto Rico (1971), and
an LL.M (taxation) from Georgetown University (1972).

Richard Reiss, Director, President, Chief Executive Officer and
Treasurer, age 50, has been president of his own business consulting firm
since 1979, specializing in financial and management matters. Mr. Reiss has
long experience in developing, structuring and managing corporate equity and
debt placements, and in the overseeing and management of substantial
businesses. Formerly Mr. Reiss was chief financial officer and chief
operating officer of Bacardi Corporation. He has been a member of the Board
of Directors of Banco Santander, Puerto Rico for 16 years. Since February
1996, Mr. Reiss has been a member of the Board of Directors of Pepsi Cola
Puerto Rico Bottling Co., Inc. Mr. Reiss is a member of the Board of
Directors of NovaComm Corporation, a manufacturer of access control units for
financial institutions, and was its President from 1995 to 1996. Mr. Reiss is
a certified public accountant and graduated magna cum laude from the
University of Puerto Rico with B.B.A. in business administration.

Javier O. Lamoso, Director and Executive Vice President, age 32, has had
extensive experience in the telecommunications industry and has been responsible
for developing, negotiating and overseeing numerous strategic operational,
economic and political aspects of the cellular telephone industry, including
cell-site acquisition, environmental impacts, leasing contractual arrangements
and inter-company relations with other operating telecommunications
organizations, including interexchange carriers and local telephone companies.
Until recently, Mr. Lamoso acted as counsel to the Puerto Rico Cable Operators
Association in various matters which include the negotiation of rates and levies
and the drafting of new legislation. From 1986 to 1987 Mr. Lamoso held a
non-legal position in the corporate finance department of Simpson, Thacher &

<PAGE>

Bartlett, and was involved with 1987 successful external debt restructuring of
Chile. He holds a B.A. in Political Science/ Economics from Fordham University
(1986), and a J.D. in law from the University of Puerto Rico (1990).

Gary H. Arizala, Director, age 58, is an entrepreneur and successful
businessman. Mr. Arizala has extensive experience in the cellular telephone
industry serving as chairman of United Cellular Associates from 1988 to the
present and of Aikane Cellular from 1991 to the present. In these capacities he
directed the executive committee activities to oversee the development of the
ME-3 RSA cellular telephone system which was successfully acquired by Telephone
& Data Systems in early 1994. In 1972 Mr. Arizala founded Alphabetland Preschool
and Kindergarten, which he owns and operates. Alphabetland provides high-quality
child care and preschool education ser- vices to 400 to 500 families annually
through five child care centers located on Oahu, Hawaii, and employs
approximately 90 people. From 1963 to 1971, Mr. Arizala was an assistant civil
engineer with the State of California responsible for utilities relocation for
the State Water Project. His duties included negotiating plans and agreements
with Southern California Edison, Southern California Gas, the United State
Forest Service among other major private and public organizations. He is on the
Guardian Advisory Council of the National Federation of Independent Businesses,
and an active member of the Chamber of Commerce and Small Business Hawaii
organizations. Mr. Arizala holds a B.S. in Civil Engineering from the University
of Hawaii (1963).

Margaret W. Minnich, Director, age 42, has held management and supervisory
positions in finance and accounting over a 10-year period in the non-profit,
manufacturing and public accounting field. She has been a member of the board of
several privately-held companies and a private foundation for over seven years.
From 1992 to the present, she has served as director of finance/controller of
The California Wellness Foundation, and is responsible for all financial
reporting, accounting, budgeting and tax functions including investment
performance and asset allocation review of a $450 million investment portfolio,
and managing cash flow for an annual budget exceeding $40 million. From 1984
through 1990, Ms. Minnich held several key positions with MICOM Communications
Corporation, including manager of financial planning where she directed all
accounting and financial functions. From 1981 to 1984, Ms. Minnich was a senior
accountant with Ernst & Young, Los Angeles, specializing in electronics,
aerospace and heavy industry fields. Ms. Minnich is a member of the California
Society of Certified Public Accountants, the Southern California Association for
Philanthropy, and serves on the boards of the Wharton Foundation and The Wealden
Company. She holds a B.A. in Philosophy from the University of Southern
California (1978) and an MBA in accounting from USC (1981).

Lawrence Odell, Director and Secretary, age 47, is the co-managing partner
of Puerto Rico's third largest law firm with substantial expertise in the fields
of corporate finance, administrative law, securities and banking. He is a member
of the Trial Lawyers Association of America, served as a member of the
Inter-American Law Review from 1973 to 1974, and has written for that
publication in the past. He holds a B.A. (1971) and a J.D. (1974) from the
Inter-American University of Puerto Rico, and an LL.M. in labor law from New
York University (1975). Mr.

<PAGE>

Odell has served in the capacity of secretary for several major corporations,
including Buenos Aires Embotelladora, S.A. (BAESA).

Daniel J. Parks, Director and General Counsel, age 52, is a lawyer with a
private practice located in Sonoma, California. Mr. Parks graduated from the
University of Hawaii with a B.S. in Geology in 1969 and received his Juris
Doctor degree from Hastings College of Law in 1972. For the past 10 years, Mr.
Parks has specialized in the tax, corporate and transactional aspects of the
representation of entities holding and operating FCC licenses. Mr. Parks is also
the proprietor of Parks Vineyards which owns premium vineyards in Sonoma and
Napa counties.

James T. Perry, Director, age 64, is a successful entrepreneur and
businessman with substantial experience in the real estate and retail foods
industries. From 1987 to the present, he has been general partner of Telenode
Rincon, the original owner and developer of the RSA cellular telephone system
for PR-1, which was successfully acquired by Cellular Communications, Inc., as
well as managing other cellular telephone and telecommunications holdings. From
1959 to 1975, Mr. Perry was the president and/or owner of several successful
licensed real estate firms including United Realty Group, Milwaukee, the largest
black-owned real estate firm in Wisconsin, and Perry and Sherard Realty,
Milwaukee, which specialized in rehabilitating and selling between 75 to 100
properties per year utilizing a staff of approximately 30 people. From 1975 to
1992, Mr. Perry owned and operated a McDonald's franchise in Saint Louis,
Missouri, and was responsible for all operations of this successful business.
Mr. Perry served in the U.S. Army in Korea, and has taken extensive courses in
the fields of general business and real estate. From 1988 to 1992 he was vice
president of the Ronald McDonald Children's Charities, and from 1980 to 1984 he
served as a member of the McDonald's Advertising Committee. His memberships
include the board of directors of the Skinker DeBaliviere Business Association,
Hamilton Community Schools, Saint Louis, and the admissions committee of the
Milwaukee Board of Realtors. He is a past president of the Urban Brokers
Association, and a director of the Multiple Listing Service.

Nezam Tooloee, Director and Consultant, age 38, is a consultant to the Chief
Executive Officer and will act as chief executive officer of the western region
of the United States, in which the Partnership has Licenses. Mr. Tooloee most
recently was vice president and corporate development officer of U.S. AirWaves
Inc., a bidder in the PCS auctions until its withdrawal. Previously, he was a
senior vice president of International Wireless Communications, in which
position he was responsible for its PCS business. Through his work in
international markets, Mr. Tooloee is experienced in wireless operations,
license and frequency acquisition, strategy formulation, supply contracts
negotiation, vendor financing and economic analysis. Formerly, he was a
principal at Strategic Decisions Group, specializing in management and strategic
consulting for major high-technology corporations. Mr. Tooloee has nearly 10
years of experience in creating and managing strategic alliances, partnerships
and joint ventures.

John Duffy, Senior Vice President of External Affairs, age 47, has been
associated with the Partnership's general partner since September, 1994. Mr.
Duffy is responsible for the Partnership's capital raising activities. He was
the principal in his own consulting firm from

<PAGE>

1990 until joining the General Partner. He worked with a variety of start-up
companies developing business plans, market strategies and raising investment
capital and was at various times a client service representative of Romulus.
Prior to that time, he was employed with Drexel Burnham Lambert, an
international securities firm from 1981 to 1989, where he held the position
of vice president. Prior to Drexel, Mr. Duffy was an associate vice president
with Dean Witter Reynolds from 1979 to 1981.

Eric Spackey, Vice President, age 34, was appointed vice president of the
General Partner in January 1996. Mr. Spackey is responsible for the development
and the day to day operations of the Puerto Rico market. Prior to joining the
General Partner, Mr. Spackey served as an independent consultant providing
strategic planning and business development to telecommunication, finance, and
health care organizations throughout Northern California. During this same
period, he served on the board of directors of Health Business Development.
Previously, he was affiliated with General Cellular Corporation from 1990 to
1993, where he was most recently manager of financial planning. Mr. Spackey
graduated from the University of California at Berkeley in 1986.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely upon review of Forms 3, 4 and 5 and any amendments thereto
furnished to the Registrant pursuant to Rule 16a-3(e) of the Rules of the
Securities and Exchange Commission, the Registrant is not aware of any failure
of any officer or director of the General Partner or beneficial owner of more
than ten percent of the Units to timely file with the Securities and Exchange
Commission any Form 3, 4 or 5 relating to the Registrant for 1996, except that
each of Messrs. Reiss, Arizala, Perry and Duffy and the Martinez Odell and
Calabria Pension Fund filed a late report on Form 4 reporting one transaction.

ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no employees. It is managed by the General Partner's
Board of Directors and employees. The Partnership reimburses the General Partner
for all reasonable expenses incurred by it in connection with managing the
Partnership, including salaries and expenses of the General Partner's employees
who manage the Partnership.

The following Summary Compensation Table sets forth certain information
concerning the cash and non-cash compensation earned by or awarded to the chief
executive officer of the Partnership's General Partner and the other most highly
compensated executive officers who earned more than $100,000 in 1996. It also
includes information regarding Anthony T. Easton, who acted as Unicom's chief
executive officer until his resignation on February 19, 1996. Mr. Easton did not
receive a salary from the Partnership or Unicom in 1995. Richard Reiss was
appointed Unicom's chief executive officer effective February 19, 1996, and is
the Chief Executive Officer of the General Partner.

<PAGE>

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------------- AWARDS
-------------

SECURITIES
NAME & PRINCIPAL FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION ($) OPTIONS/SAR'S COMPENSATION($)
- ---------------------- --------- --------- -------- ---------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Richard Reiss, President 1996 $289,000 $ 0 $25,000(1) 0 $0
Chief Executive Officer,
and Treasurer

Anthony T. Easton
Former Acting Chief
Executive Officer 1995 $ 0 $ 0 $ 0 0 $0

Javier Lamoso
Executive Vice President 1996 $125,000 $ 41,250 $25,000 0 $0
1995 $ 0 $ 0 $ 0 0 $0

John Duffy
Senior Vice President 1996 $125,000 $111,250 $ 0 0 $0
External Affairs 1995 $ 0 $ 0 $ 0 0 $0

Eric Spackey 1996 $125,000 $ 31,250 $ 0 0 $0
Vice President 1995 $ 0 $ 0 0 0 $0

</TABLE>

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

(1) Consists of director's fee in the amount of $25,000 per year.

In 1996, the General Partner engaged a compensation consulting company to
assist it in determining the appropriate levels for executive compensation.
Other than with respect to the Chief Executive Officer, the General Partner's
Board of Directors determined to pay each of the executive officers the salary
recommended by the compensation consulting company. The Board of Directors
determined that the Chief Executive Officer should receive a higher salary than
that recommended by the compensation consultants.

In 1996, each of the executive officers agreed to defer 60% of their salary
listed in the Summary Compensation Table. The deferred amounts were to be paid
only if the Partnership was granted its Licenses. Subsequent to the FCC's grant
of the Licenses, the Board of Directors of the General Partner determined to
award each of the executive officers the deferred amounts, along with the
bonuses listed in the Summary Compensation Table. The General Counsel of the
General Partner presently receives an annual salary of $75,000, is eligible for
an annual bonus of $20,000 and receives director's fees of $25,000. For 1996,
the General Counsel earned $76,250.

On March 19, 1997, the General Partner determined that future executive
compensation should be established by a committee of non-employee directors.
Accordingly, the Board of

<PAGE>

Directors established a Compensation Committee that consists of Mr. Martinez,
Ms. Minnich and Mr. Perry.

Directors receive an annual fee of $25,000 each, other than the Chairman
of the Board, Mr. Martinez, who received an annual fee of $50,000 for 1996
(and will receive a fee of $100,000 for 1997) , Mr. Odell, who receives an
annual fee of $35,000 and Mr. Tooloee, who does not receive a fee. Directors
are reimbursed for their reasonable expenses in attending board meetings.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The entire Board of Directors, including the following officers of the
General Partner participated in deliberations regarding executive compensation
during fiscal year 1996: Richard Reiss, Daniel Parks and Javier Lamoso.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

Exclusive management and control of the Partnership's business is vested in
the General Partner. The Partnership has no employees and is managed and
controlled by the Board of Directors and executive officers of the General
Partner. The General Partner owns 100% of the Partnership's general partnership
interest. The shares of General Partner are held by certain Puerto Rican
individuals and Puerto Rico trusts.

The following table sets forth, as of June 30, 1997, information with
respect to beneficial ownership of the Partnership's Units by: (i) all persons
known to the General Partner to be the beneficial owner of 5.0% or more thereof;
(ii) each Director of the General Partner; (iii) each of the executive officers
of the General Partner; and (iv) all executive officers and Directors as a group
of the General Partner. All persons listed have sole voting and investment power
with respect to their Units unless otherwise indicated.

NAME OF BENEFICIAL OWNER UNITS BENEFICIALLY OWNED PERCENTAGE OWNERSHIP
- ------------------------- ------------------------- --------------------

Fred H. Martinez(1) 1.2 *
Richard Reiss(2) 1.2 *
Javier O. Lamoso(3) 0 *
Gary H. Arizala(4) 2.4 *
Margaret W. Minnich(5) 0 *
Daniel J. Parks(6) 4 *
James T. Perry(7) 2.4 *
Nezam Tooloee(8) 0 *
John Duffy(9) 1.2 *
Lawrence Odell(10) 1.2 *

<PAGE>

Eric Spackey(11) 0 *
All executive officers and
directors of the General Partner
as a group (11 persons) 12.4 *

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

* Less than 1.0%.

(1) Mr. Martinez is Chairman of the Board of Directors of the General Partner.
Mr. Martinez and Mr. Odell are Trustees of Martinez Odell & Calabria Pension
Fund, which owns the Unit reflected in the table.

(2) Mr. Reiss is President, Chief Executive Officer and Treasurer of the General
Partner and a member of the Board of Directors.

(3) Mr. Lamoso is Executive Vice President of the General Partner and a member
of the Board of Directors.

(4) Mr. Arizala is a Director.

(5) Ms. Minnich is a Director. The Table does not include 12 Units held by The
Wealden Company, of which Ms. Minnich is a director and vice president, and
4.8 Units held by J.B. Wharton, Jr. Residual Trust, of which Ms. Minnich is
co-trustee and a contingent beneficiary.

(6) Mr. Parks is a Director and General Counsel of the General Partner. The
Units reflected in the table consist of 4 Units held by a pension plan, of
which Mr. Parks and another individual are beneficiaries, and of which Mr.
Parks is a trustee.

(7) Mr. Perry is a Director.

(8) Mr. Tooloee is a consultant and a Director.

(9) Mr. Duffy is Senior Vice President of External Affairs of the General
Partner.

(10) Mr. Odell is a Director and Secretary of the General Partner. Mr. Martinez
and Mr. Odell are trustees of Martinez Odell & Calabria Pension Fund, which
owns the Unit reflected in the table.

(11) Mr. Spackey is Vice President of the General Partner.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

GENERAL PARTNERSHIP INTEREST

Unicom contributed $100,000, which entitled it to receive 100% of the
Partnership's general partner interest. The general partnership interest was
transferred to SuperTel in exchange for $100,000. The general partner interest
entitles the General Partner to 25% of the equity of the Partnership. See "Item
5."

MANAGEMENT FEE

The General Partner has amended the Agreement of Limited Partnership of PCS
2000, L.P. (the "Partnership Agreement") to provide that the General Partner
will be entitled to reimbursement for all reasonable operating expenses, plus
10% of such amount. The management fee is paid on a monthly basis. The
Partnership Agreement had originally provided for an annual management fee equal
to 1% of the amount of the Partnership's gross assets including the value of the
licenses purchased at the Block C Auction, plus reimbursement for all reasonable
expenses

<PAGE>

and costs incurred in managing and operating the Partnership. The General
Partner, by a resolution approved by its shareholders, amended the
Partnership Agreement and reduced the management fee because it believed the
original fee would adversely affect the ability of the Partnership to receive
additional funding for developing the Licenses. The management fee for 1995
was accrued in accordance with the amended Partnership Agreement.

PAYMENTS TO ROMULUS

Unicom and Romulus entered into a Services Agreement, dated as of January
24, 1995, whereby in exchange for a fee of up to 20% of the amount which the
Partnership raised in the Private Placement of its Units, Romulus agreed to
prepare and file the Application with the FCC for licenses to provide PCS
systems in certain markets and bid at the Auction for such licenses on the
Partnership's behalf. As the Partnership raised $65,112,500 in the Private
Placement, Romulus may be entitled to as much as $13,022,500. The Application
prepared by Romulus included all information required by the FCC for authority
to bid, including any engineering and engineering forms required under the FCC
reports and orders, rules, regulations, and other guidelines issued by the FCC.
Quentin L. Breen, formerly a Director of Unicom, is the President of Romulus.
Mr. Breen and Anthony T. Easton, formerly a Director and acting chief executive
officer of Unicom, are beneficial owners of Romulus. Mr. Easton and Mr. Breen,
as principals of Romulus, were appointed as two of the Partnership's
representatives in bidding for Markets in the Auctions. See "Bidding Error"
above.

Under the Services Agreement, Romulus was entitled to a fee of $5,000 per
Unit sold in the Private Placement. One-half of this fee was non- refundable and
was paid to Romulus prior to the commencement of the Block C Auction. In
accordance with the Services Agreement, Romulus was paid $6,511,250 during 1995.
The remaining $6,511,250 is held in a separate account controlled by Messrs.
Easton and Breen. The Partnership has filed a suit attaching this account. The
Partnership is seeking to recover from the account the penalty for the Norfolk,
Virginia bid withdrawal and the forfeiture which totalled approximately $4.27
million, and related costs associated with the Bidding Error.

OTHER RELATIONSHIPS AND TRANSACTIONS

Mr. Martinez and Mr. Odell are partners of Martinez, Odell & Calabria, a law
firm which provides legal services to the General Partner and the Partnership.

Mr. Tooloee is paid $10,000 per month for 40% of his time for services as an
outside consultant to the Partnership. If Mr. Tooloee spends more than 40% of
his time consulting on Partnership business, he will be compensated accordingly.

Mr. Breen beneficially owned three Partnership Units, and following the
Bidding Error, the Partnership repurchased these Units at the original price
paid by Mr. Breen.

<PAGE>

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K

(a) The following documents are filed as part of this report:

(1) Financial Statements (See Item 8 hereof)

ClearComm, L.P.

Report of Independent Accountants 26
Statement of Assets, Liabilities and Partners' Capital for
fiscal years ended December 31, 1995 and December 31, 1996 27
Statement of Revenues and Expenses for fiscal years ended
December 31, 1995 and December 31, 1996 29
Statement of Cash Flow for fiscal years ended December 31, 1995
and December 31, 1996 30
Statement of Changes in Partners' Capital Accounts for fiscal
years ended December 31, 1996 32
Notes to Financial Statements 33

SuperTel Communications Corp.

Report of Independent Accountants 39
Balance Sheet, December 31, 1996 40
Statement of Revenues and Expenses from inception to December
31, 1996 41
Statement of Cash Flows from inception to December 31, 1996 42
Notes to Financial Statements 43

(2) Financial Statement Schedules

(3) Exhibits

Exhibit
Number

3.1 Agreement of Limited Partnership (Exhibit 3.1 of the
Registrant's Registration Statement on Form 10 (File
No. 0-28362), effective June 28, 1996, is hereby
incorporated by reference)

10.1 Form of Services Agreement between PCS 2000, L.P. and
Romulus Telecommunications, Inc. (Exhibit 10.1 of the
Registrant's Registration Statement on Form 10 (File
No.0-28362), effective June 28, 1996, is hereby
incorporated by reference)

<PAGE>

10.2 Asset Purchase Agreement, dated as of June 18, 1996,
by and between SuperTel Communications Corp. and
Unicom Corporation (Exhibit 10.2 of the Registrant's
Registration Statement on Form 10 (File No. 0-28362),
effective June 28, 1996, is hereby incorporated by
reference)

27 Financial Data Schedule

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the last quarter of
fiscal 1996.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

ClearComm, L.P.

By: SuperTel Communications Corp.
General Partner

By: /s/ Richard Reiss
--------------------------
Name: Richard Reiss
Title: Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

CAPACITY IN
SIGNATURE WHICH SIGNED DATE
- ------------------------------ -------------------------- -------------------

/s/ FRED H. MARTINEZ
- ------------------------------ Director and Chairman of June 19, 1997
Fred H. Martinez the Board

/s/ RICHARD REISS
- ------------------------------ Director, Chief Executive June 19, 1997
Richard Reiss Officer and Treasurer

/s/ JAVIER O. LAMOSO
- ------------------------------ Director and Executive June 19, 1997
Javier O. Lamoso Vice President

/s/ GARY H. ARIZALA
- ------------------------------ Director June 19, 1997
Gary H. Arizala

/s/ MARGARET W. MINNICH
- ------------------------------ Director June 19, 1997
Margaret W. Minnich

/s/ LAWRENCE ODELL
- ------------------------------ Director June 19, 1997
Lawrence Odell

/s/ DANIEL J. PARKS
- ------------------------------ Director June 19, 1997
Daniel J. Parks

/s/ JAMES T. PERRY
- ------------------------------ Director June 19, 1997
James T. Perry

/s/ NEZAM TOOLOEE
- ------------------------------ Director June 24, 1997
Nezam Tooloee

<PAGE>

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION
- --------- -----------

3.1 Agreement of Limited Partnership (Exhibit 3.1 of the Registrant's
Registration Statement on Form 10 (File No. 0-28362), effective
June 28, 1996, is hereby incorporated by reference)

10.1 Form of Services Agreement between PCS 2000, L.P. and Romulus
Telecommunications, Inc. (Exhibit 10.1 of the Registrant's
Registration Statement on Form 10 (File No. 0-28362), effective
June 28, 1996, is hereby incorporated by reference)

10.2 Asset Purchase Agreement, dated as of June 18, 1996, by and
between SuperTel Communications Corp. and Unicom Corporation
(Exhibit 10.2 of the Registrant's Registration Statement on
Form 10 (File No. 0-28362), effective June 28, 1996, is hereby
incorporated by reference)

27 Financial Data Schedule

<PAGE>
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