CLEARCOMM L P, 10-K, 1998-03-31

CLEARCOMM L P
10-K, 1998-03-31
RADIOTELEPHONE COMMUNICATIONS

Previous: APPLIED ANALYTICAL INDUSTRIES INC, 10-K, 1998-03-31

Next: NORWOOD FINANCIAL CORP, 10-K405, 1998-03-31

<PAGE>

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

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, 1997 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.

(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").
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. See "Background of Personal Communications Services Business
and FCC Auctions."

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. On January 22, 1997, the FCC
issued its Memorandum Opinion and Order, FCC, 97-15 (the "Order") granting
the Partnership the Licenses. The FCC's grant of the Licenses may, however,
be reversed on the basis of an interested party's motion for reconsideration
or an appeal to the United States Court of Appeals for the District of
Columbia Circuit. 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.

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,

2
<PAGE>

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").

PCS is a radio-based transmission technology which, like cellular
technology, uses the same frequencies repeatedly in a multiple-transmitter
cell design. 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.

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.

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. The
General Partner qualified the Partnership as an Entrepreneur, and the
Partnership was awarded the Licenses in the Block C auction.

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.

<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. On October 16, 1997 the FCC issued the
Second Report and Order and Further Notice of Proposed Rulemaking requiring
the resumption of interest payments commencing with the March 31, 1998
installment. On February 24, 1998 the FCC extended the March 31, 1998
payment deadline to be after the publication of the March 24, 1998 Order on
Reconsideration of the Second Report and Order (the "Reconsideration Order")
to a future date that will be 30 days after a 60 day election deadline which
began on March 24, 1998. 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 were entitled to a bidding credit of 25%.

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 Person of
Population ("POP") 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, 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.

4
<PAGE>

The Partnership

The General Partner

Unicom Corporation, the former general partner ("Unicom") of the
Partnership, 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. The
Partnership 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 Javier Lamoso,
Richard Reiss, Gary H. Arizala, Margaret W. Minnich, Lawrence Odell, James T.
Perry, and Daniel J. Parks. Javier Lamoso is the President and acting Chief
Executive Officer of the General Partner, John Duffy is the Executive Vice
President, Tyrone Brown is Senior Vice President for Regulatory Affairs, Eric
Spackey is 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. 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, the beneficial owners of Romulus, 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 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."

5
<PAGE>

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
Lewiston-Moscow, ID 110,030 $ 537,075 $ 4.88
Totals: 8,864,510 $344,293,125 $38.84

</TABLE>

* 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: (1) Interest only payments
are required to be made for the first six years, at an interest rate of 6.5%
per year, (2) 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.

<PAGE>

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. On October 16, 1997 the FCC issued the Second Report and
Order and Further Notice of Proposed Rulemaking requiring the resumption of
interest payments commencing with the March 31, 1998 installment. It also
required that the interest accrued during the interest suspension period will
be paid in eight quarterly installments commencing with the March 31, 1998
installment. On February 24, 1998 the FCC moved the interest payment
deadline to a date 30 days after a 60 day election period that began on March
24, 1998 with the publication of the Reconsideration Order. 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.

The Reconsideration Order provides the following options designed to
assist C Block licensees in obtaining financing to build their systems:

DISAGGREGATION. This option allows a C Block licensee to elect to
disaggregate all of its 30 MHz licenses within an MTA and return 15 MHz
of each license to the Commission in exchange for forgiveness of 50% of
the outstanding debt associated with those licenses. For licensees who
elect to disaggregate, there are two options: resume payments on the
disaggregated licenses under the terms of the installment payment plan
or prepay the outstanding loan balance on the disaggregated license.
Licensees who elect to continue installment payments for the
disaggregated licenses will receive a total credit equal to 70% of the
original down payment made on the 30 MHz disaggregated licenses. One
half of the credit will be applied as a down payment on the outstanding
debt and 40 percent of the downpayment associated with the disaggregated
spectrum that is returned to the Commission may be used to prepay the
interest that has accrued during the payment suspension period or reduce
principal at the licensee's option. Licensees who elect to prepay
outstanding debt on the disaggregated licenses will receive a credit
equal to 85% of the original down payment made on the 30 MHz
disaggregated licenses. Consistent with the prepayment option for 30
MHz licenses, this credit represents 70% of the down payment associated
with the 15 MHz returned spectrum.

AMNESTY. This option allows a C Block licensee to surrender any of its
licenses, so long as all licenses within an MTA are returned in exchange
for the FCC forgiving all outstanding debt on returned licenses. For
licenses that are returned, the licensee will have two choices: (i) the
licenses may opt to re-bid on those licenses in the reauction; or (ii) the
licensee may opt to forgo the opportunity to re-acquire its returned
licenses in exchange for a credit of 70% of the down payment already made
on the returned licenses. The same choice must be made for all licenses
within an MTA. The 70% credit must be used to prepay either a 30 MHz or 15
MHz disaggregated licenses retained by the licensee.

PREPAYMENT. This option allows a C Block licensee to prepay any of its
outstanding notes and the interest accrued from the date of the conditional
license grant through the election date will be forgiven. Also, licensees
can surrender licenses and use 70% of their

7
<PAGE>

total down payments as a credit towards the prepayment of any of the
licenses they retain. The licensee must pay off the outstanding principal
debt obligations for all BTA licenses it holds within a single MTA and
prepay as many of its notes it desires. The remaining 30% of the down
payments plus any unapplied portions of the first 70% of the down payments
will not be returned. The licensee may not rebid in the reauction for any
of the licenses surrendered, and is forbidden to acquire these licenses in
the secondary market for a period of two years from the reauction start
date.

The Partnership is currently evaluating these options and has not determined
which option, if any, it will utilize.

Bidding Error and Withdrawals

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) (the "Bidding Error"). On December 20, 1996,
the FCC issued an order (the "Order") requiring the Partnership to pay a
penalty of approximately $3,273,000 for the Bidding Error. This Order also
assessed a bid withdrawal payment of approximately $1,258,000 for license
B332 (Omaha, Nebraska) for the Broad Band PCS Block C 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. These amounts were charged to operations in
1996.

The Partnership and its General Partner have filed an action in court to
recover the FCC assessments made in connection with the bidding error as well
as other related expenses incurred. The action filed resulted in the
attachment of a $6.5 million escrow account deposited in the name of Romulus,
with a local bank, which would have been payable upon obtaining the PCS
licenses.

The Partnership's management intends to pursue vigorously the recovery
of the FCC assessments from Romulus. Management believes it will prevail in
collecting from the cash in the escrow account all the assessments made by
the FCC in connection with the bidding error and other related expenses.

Petitions to Deny

On July 1, 1996, Susan D. Easton, the beneficiary of the SDE Trust
(which owned shares of the Partnership's former general partner), and
WillowRun, L.P., an investor, filed petitions to deny the award of any
Licenses to the Partnership. In addition, on August 12, 1996, the SDE Trust
filed a new petition to deny the award of any Licenses to the Partnership.
In its Order

8
<PAGE>

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 a Petition for Reconsideration requesting the FCC to reconsider the
Notice and the Order. 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 in California state court. 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 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.

9
<PAGE>

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. Interest payments will
resume to a date 30 days after a 60 day election period that began on March
24, 1998 with the publication of the Reconsideration Order. See "The
Partnership--The Partnership's Business to Date." The Partnership is
currently evaluating the three options contained in the Reconsideration
Order.

If the Partnership determines not to utilize any of those options, 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 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,

<PAGE>

system reliability, pricing and vendor financing. The Partnership is
presently meeting with equipment vendors to negotiate final equipment prices,
and vendor purchasing, if appropriate.

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 conducted a capital call that commenced in March 26, 1997 and
ended in October 30, 1997 and raised $1,939,000 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 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 Puerto Rico 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 has entered into various operating lease agreements for
rental of office facilities. The leases expire at various dates through
December 2000. The Partnership has acquired only the office equipment
necessary to conduct its business. The Partnership sublets its principal
offices in California from its General Counsel at no charge.

The Partnership will embark on a build-out phase which includes leasing
sites where its telephone switching equipment, relay stations and other
equipment will be located. In addition,

<PAGE>

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

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 and
Withdrawals." 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 (the "AAA")
at its Miami, Florida office seeking to arbitrate all matters relating to the
Bidding Error, including the attachment of the Romulus account. The AAA
accepted these matters for arbitration. However, the Partnership filed for a
stay of the arbitration proceedings with the U.S. Federal District Court for
the Commonwealth of Puerto Rico, and obtained a stay of the arbitration
proceedings.

In addition, two separate civil actions were filed in the Circuit Court
of the State of Oregon for Multnomah County that have now been consolidated.
The first was filed in November, 1996 and amended in August 1997. The second
was filed in August 1997. In both cases certain officers, directors,
employees and consultants of the General Partner, as well as persons
unrelated to the General Partner and the Partnership have been named as
defendants. Both lawsuits alleged certain securities law violations, common
law fraud and activities violating Oregon's racketeering laws in connection
with the Partnership's initial sale of Units. In February 1998, the court
dismissed the racketeering claim and took under submission other
jurisdictional motions filed by the Partnership. The Partnership believes the
suit is 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 purchasing the Unicom shares held by the SDE Trust. In an order
dated July 21, 1997, the

<PAGE>

Judge granted the Partnership's motion to move this case to Puerto Rico. The
SOE Trust filed a notice of appeal on September 29, 1997 with the California
Court of Appeals and its brief is due to be filed in mid-April 1998. The
Partnership believes the case is wholly without merit and intends to defend
it vigorously.

After the FCC denied the SDE Trust's petition to deny 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, which petition is pending. See "Item 1 - Petitions to
Deny."

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.

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 22, 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 of which $1,050,000 was raised between January 1, 1997 and
January 22, 1997. 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 offered to its existing Investors one-fifth Units at
a price of $6,000 per one-fifth Unit. This offering ended on October 30,
1997, the Partnership has sold 323.5 one-fifth Units for an aggregate price
of $1,939,000. 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.

<PAGE>

As of December 31, 1997 only the General Partner holds a general
partnership interest and 1,634 Investors hold an aggregate of 2,825.9 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.

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."

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

Selected Financial Data for the years ended December 31, 1996 and
December 31, 1997

The following tables summarize selected consolidated 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, and from January 1,
1997 to December 31, 1997. This information should be read in conjunction
with the Partnership's consolidated financial statements and related notes
thereto and management discussion contained herein.

15
<PAGE>

Statement of Operations Data

<TABLE>
<CAPTION>
January 24, 1995
(Date of Inception)
to December 31,
1995 December 31, 1996 December 31, 1997
------------------- ----------------- -----------------
<S> <C> <C> <C>
Total Revenues:
Interest Earnings............................ $ 1,469,099 $ 66,767 $ 495,614
Total Expenses:
Consulting and legal services rendered
by related parties (1)....................... 6,756,250 744,862 8,291,492
Management Fee to General Partner............ 513,288 424,334 369,643
Other Legal Fees............................. 368,704 1,283,356 1,546,887
Miscellaneous Consulting Services............ 325,604 557,353 1,506,310
Travel....................................... 118,850 282,890 421,048
Insurance.................................... 32,000 133,784 130,332
Salaries and bonuses......................... 68,769 730,828
Other Administrative Expenses................ 183,890 443,381
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 $ 13,439,921
------------ ------------ -------------
Net Income (Loss)................................. $(6,714,366) $(9,074,847 $(12,944,307)
------------ ------------ -------------
------------ ------------ -------------
Net Income (Loss) Attributable to General
Partner........................................... $(1,678,592) $(2,268,712) $ (3,236,077)
------------ ------------ -------------
------------ ------------ -------------
Net Income (Loss) Attributable to Unitholders
($1,933.49) in 1995, ($2,609.71) in 1996 and
($3,974.74) in 1997 per Unit respectively......... $(5,035,774) $(6,806,135) $ (9,708,230)
------------ ------------ -------------
------------ ------------ -------------

</TABLE>

(1) The 1997 and 1995 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.

16
<PAGE>

Balance Sheet Data

<TABLE>
<CAPTION>
December 31, 1995 December 31, 1996 December 31, 1997
----------------- ----------------- -----------------
<S> <C> <C> <C>
ASSETS:
Cash and Cash Equivalents............... $ 2,727,541 $ 2,492,851 $ 9,761,729
Prepaid Expenses........................ 96,000 100,538 108,700
Deposits................................ 50,000,000 45,468,855 --
Restricted Cash(1)...................... 6,511,250 6,511,250 --
Other Assets............................ 0 14,535 80,258
PCS Licenses............................ 270,245,139
Deposits................................ 25,000
Total:.................................. $59,334,791 $54,588,029 $280,220,826

LIABILITIES AND PARTNERS CAPITAL:
Accounts Payable and
Accrued Liabilities..................... $ 836,657 $ 2,287,242 $ 2,069,520
Current Accrued Interest-FCC............ 4,399,837
License Loan Payable, including
long-term portion of interest......... 231,415,989
Unitholders' Equity (2,604.5 in 1995,
2,719.6 Units in 1996 and 2,825.9
Units in 1997; and 1 general
partnership interest)................... $58,498,134 52,300,787 42,335,480
Total:.................................. $59,334,791 $54,588,029 $280,220,826
Book Value Per Unit..................... $ 22,452 $ 19,224 $ 14,976
----------- ----------- ------------
----------- ----------- ------------

</TABLE>

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

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

17
<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 Block C, 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 22, 1997 and has not yet established operations.

Results of Operations - 1997 Compared to 1996

Revenues

The Partnership's sole source of revenue continued to be interest income
for the year ended December 31, 1997. Interest income for this year was
$495,614. In 1996, the Partnership had interest earnings of $66,767. The
increase in interest earnings is primarily due to the FCC refunding to the
Partnership approximately $11,039,543, which the Partnership had placed on
deposit with the FCC in connection with the acquisition of its PCS licenses
and the interest earned by the additional capital invested by the limited
partners during 1997.

Expenses

Expenses for the year ended December 31, 1997 totaled $13,439,921. This
amount included an accrual for $369,643 of expenses to be reimbursed to the
General Partner, including its management fee. Also 1997 expenses include
the $6,511,250 classified in the 1996 financial statements as Restricted Cash
expensed in 1997 under the Services Agreement and advanced to Romulus.

General and administrative expenses for the period ended December 31,
1996 were $9,141,614. 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 the management fee of the General Partner.
Expenses for the year ended on December 31, 1997 are higher than the expenses
for the same period of 1996 because the 1997 expenses include the amount
expensed under the Services Agreement advanced to Romulus. The Partnership is
seeking to recover the costs and the penalties and fines associated with 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.

<PAGE>

Liquidity and Capital Resources

As of December 31, 1997, the Partnership had assets totaling
$280,220,826, consisting of $9,761,729 in cash and cash equivalents, $108,700
in prepaid expenses, $270,245,139 in PCS Licenses including $25,672,000 in
capitalized interest, $25,000 in deposits, $80,258 in other assets and
current liabilities of $6,469,357 and long-term liabilities due to the FCC
including accrued interest of $231,415,690. 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 on deposit with the FCC, prepaid expenses
of $100,538, other assets of $14,535, $6,511,250 in restricted cash and
current liabilities of $2,287,242. The Partnership assets increased during
1997 because of the issuance of PCS licenses on January 22, 1997 and
additional capital invested by its existing investors.

During the year ended on December 31, 1997 the Partnership raised
$2,979,000 of additional capital from two capital offerings the first one
commenced September 30, 1996 and ended on January 22, 1997 the amount raised
in 1997 was $1,050,000. In addition on March 26, 1997, the Partnership
commenced a second capital offering to its existing investors of one-fifth
units at a price of $6,000 per one fifth-unit. This offering ended on
October 30, 1997 and the Partnership sold 323.5 one-fifth Units for an
aggregate price of $1,929,000. Three Units were repurchased during the second
quarter 1996 from Mr. Breen following the Bidding Error.

The Partnership is presently considering the options contained in the
FCC's Reconsideration Order. These options would provide limited debt relief
as an alternative to continuing under the Partnership's existing installment
payment plan.

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 that, if it elects not to utilize any of
the options contained in the Reconsideration Order, 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 plus accrued interest at 6.5% of $18,959,350 in
connection with the acquisition of the Licenses. In accordance with industry
practice, the Partnership recorded the licenses and the related debt at a net
present value of $210,143,476. Based on the Partnership estimates of
borrowing cost for debt similar to that issued by the FCC, the Partnership
used a 13% discount rate. At December 31, 1997, the notes payable to the FCC
are presented net of a discount of approximately $93,007,000.

Although no assurances can be made, the Partnership expects to prevail
in the litigation in which it is a party. See "Item 3."

Results of Operations - 1996 Compared to 1995

Revenues

The Partnership's sole source of revenue was interest income for the
year ended December 31, 1996. In 1995, the Partnership had interest earnings
of $1,469,099. Interest income for 1996 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.

19
<PAGE>

Expenses

Expenses for the year ended December 31, 1996 totaled $9,141,614.
General and administrative expenses for the period that 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 that ended December 31, 1996 were 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.

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.

20
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

<TABLE>
<CAPTION>
Financial Statements Page
<S> <C>
ClearComm, L.P.

Report of Independent Accountants 23
Consolidated Statements of Assets, Liabilities and Partners' Capital
as of December 31, 1996 and 1997 24
Consolidated Statement of Revenues and Expenses for years ended
December 31, 1996 and 1997 and periods from inception to
December 31, 1995 and to December 31, 1997 25
Consolidated Statement of Cash Flows for years ended December 31,
1996 and 1997 and periods from inception to December 31, 1995
and to December 31, 1997 26
Consolidated Statement of Changes in Partners' Capital Accounts
from inception to December 31, 1997 27
Notes to Consolidated Financial Statements 28

SuperTel Communications Corp.

Report of Independent Accountants 38
Balance Sheet for December 31, 1996 and 1997 39
Statement of Revenues and Expenses and deficit for the year ended
December 31, 1997 and from inception to December 31, 1996 40
Statement of Cash Flows for the year ended December 31, 1997 and from
inception to December 31, 1996 41
Notes to Financial Statements 42

</TABLE>

All financial schedules have been omitted because they are not
applicable or because the information required is included in the financial
statements or notes thereto.

<PAGE>

CLEARCOMM, L.P.
(formerly PCS 2000, L.P.)
(a development stage enterprise)
Report and Consolidated
Financial Statements
December 31, 1997 and 1996

22
<PAGE>

Report of Independent Accountants

To the Partners of ClearComm, L.P.
(formerly PCS 2000, L.P.)

In our opinion, the accompanying consolidated statement of assets,
liabilities and partners' capital, and the related consolidated statements of
revenues and expenses, of cash flows and of changes in partners' capital
accounts 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, 1997 and 1996 and the results of its
operations and its cash flows for the years ended December 31, 1997 and 1996,
and for the periods from inception (January 24, 1995) through December 31,
1995 and through December 31, 1997, 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.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has not yet obtained the
financing required to develop and construct the infrastructure necessary to
begin commercial operations that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to this matter is
also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

PRICE WATERHOUSE

San Juan, Puerto Rico
March 26, 1998

Stamp 1458016 of the P.R. Society of Certified Public Accountants has been
affixed to the file copy of this report

23
<PAGE>

CLEARCOMM, L.P.
(formerly PCS 2000, L.P.)
(a development stage enterprise)
Consolidated Statement of Assets, Liabilities and Partners' Capital
December 31, 1997 and 1996
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents...................................... $ 9,761,729 $ 2,492,851
Prepaid expenses............................................... 108,700 100,538
Other current assets--auction deposits......................... 45,468,855
------------ ------------
Total current assets..................................... 9,870,429 48,062,244

Licenses, including capitalized interest of $25,672,000.......... 270,245,139
Restricted cash--escrow account.................................. 6,511,250
Deposits......................................................... 25,000
Other assets..................................................... 80,258 14,535
------------ ------------
$280,220,826 $ 54,588,029
------------ ------------
------------ ------------
Liabilities and Partners' Capital
Current liabilities:
Accounts payable and accrued liabilities....................... $ 1,195,145 $ 204,927
Accounts payable for legal fees, including $63,329 to
related parties (1996--$41,815) ............................. 184,257 440,847
Accounts payable to related parties.............................. 690,118 641,468
Payable to the FCC............................................... 1,000,000
Accrued interest--FCC............................................ 4,399,837
------------ ------------
------------ ------------
Total current liabilities................................ 6,469,357 2,287,242
------------ ------------
------------ ------------
Long-term liabilities:
Notes payable-- FCC.......................................... 216,856,476
Accrued interest--FCC........................................ 14,559,513
------------ ------------
Total long-term liabilities.............................. 231,415,989
------------ ------------
Commitments and contingencies (Notes 9 and 10)...................
------------ ------------
Partners' capital:
Limited partners' capital (2,825.9 units issued and
outstanding in 1997 and 2,719.6 in 1996)..................... 70,969,000 67,990,000
General partner's capital...................................... 100,000 100,000
Undistributed losses accumulated during development stage........ (28,733,520) (15,789,213)
------------ ------------
Total partners' capital.................................. 42,335,480 52,300,787
------------ ------------
Total liabilities and partners' capital.................. $280,220,826 $ 54,588,029
------------ ------------
------------ ------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

24
<PAGE>

CLEARCOMM, L.P.
(formerly PCS 2000, L.P.)
(a development stage enterprise)
Consolidated Statement of Revenues and Expense
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
January 24, 1995 January 24, 1995
Year Ended Year Ended (Inception) to (Inception) to
December 31, 1997 December 31, 1996 December 31, 1995 December 31, 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Revenues:
Interest income........................... $ 495,614 $ 66,767 $ 1,469,099 $ 2,031,480
----------------- ----------------- ----------------- -----------------
Expenses:
Consulting and legal services
rendered by related parties........... 8,291,492 744,862 6,756,250 15,792,604
Management fee to General Partner....... 369,643 424,334 513,288 1,307,265
Other legal fees........................ 1,546,887 1,283,356 368,704 3,198,947
Consulting services..................... 1,506,310 557,353 325,604 2,389,267
Travel.................................. 421,048 282,890 118,850 822,788
Insurance............................... 130,332 133,784 32,000 296,116
Salaries and bonuses.................... 730,828 730,828
Other administrative expenses........... 443,381 183,890 68,769 696,040
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 the FCC........... 1,000,000 1,000,000
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
13,439,921 9,141,614 8,183,465 30,765,000
----------------- ----------------- ----------------- -----------------
Net loss.................................. ($ 12,944,307) ($ 9,074,847) ($ 6,714,366) ($ 28,733,520)
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
Net loss attributable to general partner.. ($ 3,236,077) ($ 2,268,712) ($ 1,678,592)
----------------- ----------------- -----------------
----------------- ----------------- -----------------
Net loss attributable to limited
partners ($3,494.74, $2,609.71 and
$1,933.49 per limited partnership
unit in 1997, 1996 and 1995,
respectively) ($ 9,708,230) ($ 6,806,135) ($ 5,035,774)
----------------- ----------------- -----------------
----------------- ----------------- -----------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

25
<PAGE>

CLEARCOMM, L.P.
(formerly PCS 2000, L.P.)
(a development stage enterprise)
Consolidated Statement of Cash Flows
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
January 24, 1995 January 24, 1995
Year Ended Year Ended (Inception) to (Inception) to
December 31, 1997 December 31, 1996 December 31, 1995 December 31, 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss................................ ($ 12,944,307) ($ 9,074,847) ($ 6,714,366) ($ 28,733,520)
----------------- ----------------- ----------------- -----------------
Adjustments to reconcile net loss
for the period to net cash used by
operating activities:
Depreciation............................ 26,192 26,192
Increase in prepaid expenses............ (8,163) (4,538) (96,000) (108,701)
Increase in deposits.................... (25,000) (25,000)
Decrease (increase) in bank overdraft... (46,173) 46,173
(Decrease) increase in payable to FCC... (1,000,000) 1,000,000
Increase in accounts payable and
accrued liabilities................... 990,218 74,293 130,634 1,195,145
(Decrease) increase in accounts
payable for legal fees................ (256,590) 440,847 184,257
Increase (decrease) in accounts
payable to related parties............ 48,650 (18,382) 659,850 690,118
----------------- ----------------- ----------------- -----------------

Total adjustments................. (224,693) 1,446,047 740,657 1,962,011

----------------- ----------------- ----------------- -----------------
Net cash used by operating
activities.................... (13,169,000) (7,628,800) (5,973,709) (26,771,509)
----------------- ----------------- ----------------- -----------------
Cash flows from investing activities:
FCC auction deposit returned (paid)..... 11,039,543 (50,000,000) (38,960,457)
Bid withdrawal payment.................. 4,531,145 4,531,145
Other assets............................ (91,915) (14,535) (106,450)
----------------- ----------------- ----------------- -----------------
Net cash provided (used) by
investing activities............ 10,947,628 4,516,610 (50,000,000) (34,535,762)
----------------- ----------------- ----------------- -----------------
Cash flows from financing activities:
Capital investment by partners.......... 2,979,000 2,952,500 65,212,500 71,144,000
Capital repurchased from partner........ (75,000) (75,000)
Decrease (increase) in restricted cash.. 6,511,250 (6,511,250)
----------------- ----------------- ----------------- -----------------
Net cash provided by financing
activities...................... 9,490,250 2,877,500 58,701,250 71,069,000
----------------- ----------------- ----------------- -----------------
Net increase (decrease) in cash and
cash equivalents........................ 7,268,878 (234,690) 2,727,541 9,761,729
Cash and cash equivalents at
beginning of period..................... 2,492,851 2,727,541
----------------- ----------------- ----------------- -----------------
Cash and cash equivalents at end of
period.................................. $ 9,761,729 $ 2,492,851 $ 2,727,541 $ 9,761,729
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

26
<PAGE>

CLEARCOMM, L.P.
(formerly PCS 2000, L.P.)
(a development stage enterprise)
Consolidated Statement of Changes in Partners' Capital Accounts
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
LIMITED PARTNERS
-------------------------- GENERAL
UNITS AMOUNT PARTNER TOTAL
----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Capital invested.............................. 2604.5 $ 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........ 2604.5 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........ 2719.6 56,148,091 (3,847,304) 52,300,787
Capital invested in 1997...................... 106.3 2,979,000 2,979,000
Share of undistributed losses................. (9,708,230) (3,236,077) (12,944,307)
----------- ------------- ------------- -------------
Balance (deficit) at December 31, 1997........ 2825.9 $49,418,861 ($7,083,381) $ 42,335,480
----------- ------------- ------------- -------------
----------- ------------- ------------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

27
<PAGE>

CLEARCOMM, L.P.
(formerly PCS 2000, L.P.)
(a development stage enterprise)
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
- -----------------------------------------------------------------------------

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. 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.

As discussed in Note 7, on January 22, 1997, the Partnership was granted
the PCS Block C licenses for Puerto Rico and certain western states of
the United States.

During 1997 the Partnership organized the following wholly-owned
subsidiaries: ClearComm West, LLC, ClearCorp., LLC, CommClear, LLC and
ClearComm de Puerto Rico. These companies are also in a development stage
and their assets, liabilities and expenses have been included in the
Partnership's financial statements. All significant intercompany accounts
and transactions have been eliminated.

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. Cash equivalent at December 31, 1997 consist of shares in
money market portfolio ($9,737,000) (1996--$2,939,000).

28
<PAGE>

PCS Licenses

PCS licenses are recorded at cost, and will be amortized over the
estimated life of the licenses (forty years) once the PCS network is
ready for its intended use. The licenses expire in January 2007, however,
FCC rules provide for renewal expectancy provisions. The Company expects
to exercise the renewal provisions. The Partnership capitalizes the
interest related to the debt pertaining to the PCS licenses during the
construction period.

OTHER ASSETS

Other assets consist of computer and office equipment and are carried at
cost. Major additions or renewals which extend the useful lives of the
respective assets are capitalized, while repairs and maintenance are
charged to expense as incurred. When equipment is retired or otherwise
disposed of, the related cost and accumulated depreciation are removed
from the accounts and any gain or loss is credited or charged to income.

Depreciation is computed on the straight-line basis over the estimated
useful lives of the assets.

NET LOSS PER LIMITED PARTNERSHIP UNIT

Net loss per limited partnership unit is computed by dividing net loss
for the period by the weighted-average number of limited partnership
units outstanding during the period. The weighted-average number of
limited partnership units outstanding during the period ended December
31, 1997 was approximately 2,777 (2,608 and 2,604 in 1996 and 1995,
respectively).

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of the Partnership's financial instruments (cash and
cash equivalents, accounts payable and accrued liabilities) are considered
reasonable estimates of fair value due to the short period to maturity.

Management believes, based on current interest rates available, that the
fair value of its notes and interest payable to the FCC approximates the
carrying amount.

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 needs 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.

29
<PAGE>

The Partnership is currently evaluating several options to satisfy
its financing needs but has not been able to obtain the financing
required to develop and construct the infrastructure necessary to
begin commercial operations.

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 Block C
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 Block C 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. These amounts were charged to operations
in 1996.

The Partnership and its General Partner have filed several actions in
court to recover the FCC assessments from the bidding agent made in
connection with the bidding error as well as other related expenses
incurred (See Note 9). One of the actions filed resulted in the
attachment by the Partnership 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 cash in the escrow account all the assessments made
by the FCC in connection with the bidding error and other related
expenses.

4. RESTRICTED CASH

As of December 31, 1996, restricted cash consisted of $6,511,250 held in
trust by Romulus and was restricted for payment of all services related
to the auction process. This amount was charged to operations in 1997
once the Partnership obtained the PCS licenses. The Partnership has
obtained a Court Order attaching this amount as a result of the lawsuit
more fully explained in Note 9.

30
<PAGE>

5. PARTNERS' CAPITAL

At December 31, 1996, the limited partners' capital consisted of 2,719.6
units distributed among approximately 1,600 limited partners.

The Partnership raised $2,979,000 in two separate offerings during 1997.
In the first offering which ended on January 22, 1997, the Partnership
raised $1,050,000 and issued 42 units. In the second offering which ended
on October 30, 1997, the Partnership raised $1,929,000 and issued 64.3
units.

At December 31, 1997, the limited partners' capital consisted of 2,825.9
units (consisting of 2,601.5 units and 1,122 one-fifth units) distributed
among approximately 1,600 limited partners.

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.

6. RELATED PARTY TRANSACTIONS

In 1997, the Partnership incurred legal and consulting expenses paid to
limited partners and members of the Board of Directors and shareholders
of the General Partner amounting to approximately $8,291,000, including
$6.5 million recognized as a result of obtaining the PCS licenses
(1996--$745,000, 1995--$6,756,000 including $6.5 million for application,
preparation, and auction bidding services).

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 approximately $370,000 in 1997
(1996--$424,000, 1995 -$513,000) for these services.

31
<PAGE>

During the year ended December 31, 1997, the General Partner issued 5,600
shares of its restricted voting common stock to certain employees and
consultants of the Partnership at no cost. The shares were issued by the
General Partner in consideration of their valuable collaboration in
obtaining the Partnership's PCS licenses. These individuals were not
employees of the General Partner at the time the services were provided.
The agreement under which the shares were granted provides that the General
Partner has the right to repurchase 50% of the shares in the event that
certain of these individuals cease to be employees of the Partnership within
the period ending with the second anniversary of the date of the issuance of
the stock. The fair value, of the shares granted is deemed insignificant
and, therefore, has not been recognized.

7. LICENSES AND LONG-TERM NOTES PAYABLE

On January 22, 1997, the Partnership was granted the PCS Block C licenses
for $344,293,125. A down payment, or 10% of the bid amount, was deducted
by the FCC from the deposit held.

The remaining balance or $309,863,813 consists of 10 year notes due to
the FCC bearing interest at 6.5% and guaranteed by the licenses obtained.
In accordance with industry practice, the Partnership recorded the
licenses and the related debt at a net present value of $210,143,476.
Based on the Partnership's estimates of borrowing costs for debt similar
to that issued by the FCC, the Partnership used a 13% discount rate. At
December 31, 1997, the notes payable to the FCC are presented net of a
discount of approximately $93,007,000.

The original payment term provided for paying only interest for the first
six years starting in April 1997 and both interest and principal for the
remaining four years starting in April 2003. In March 1997, the FCC
suspended the deadline for starting the payments. The Company is accruing
the interest on the notes.

In September 1997, the FCC ended the suspension and established March 31,
1998 as the deadline to resume payments. The FCC also adopted certain
options designed to assist Block C licensees in obtaining financing and
building their systems. The licensees were originally given up to
February 26, 1998 to make an election on the options provided by the FCC.
However, on February 24, 1998, the FCC extended the due date for such
election and the due date for starting the payments to a future date yet
to be determined. On March 24, 1998, the FCC issued a new order (the
"March FCC Order") establishing new options and due dates. The options
are as follows:

PREPAYMENT

A licensee may purchase any of its licenses, at the face value of the
outstanding debt on those licenses. Subject to the affordability
exception, a licensee must purchase all of the licenses it now owns
within any single Major Trading Area ("MTA"). A licensee may use seventy
percent of its down payment on licenses from other MTAs that it does not
wish to retain as a credit towards prepaying those licenses that it
wishes to keep. Licenses that are relinquished in accordance with this
option must be surrendered to the FCC for reauction. A licensee electing
this option, and its affiliates, may not bid at the auction for any of the
licenses that the licensee

32
<PAGE>

relinquishes, and may not otherwise acquire any such license in the
secondary market for a period of two years.

AMNESTY

A licensee may return to the FCC Commission any of its licenses so long
as all licenses within an MTA are returned. The entire outstanding debt
on returned licenses will be forgiven. For licenses that are returned,
the licensee will have two choices: (1) the licensee may opt to re-bid on
those licenses in the reauction; (2) the licensee may opt to forgo the
opportunity to re-acquire its returned licenses in exchange for a credit
of seventy percent of the down payment already made on the returned
licenses. The same choice must be made for all licenses within an MTA.
The seventy percent credit must be used to prepay either a 30 MHz or 15
MHz disaggregated licenses retained by the licensee.

DISAGGREGATION

A licensee may disaggregate all of its 30 MHz licenses within an MTA and
return 15 MHz to the FCC Commission in exchange for forgiveness of fifty
percent of the outstanding debt. For licensees who elect to disaggregate,
there are two options, resume payments on the disaggregated license under
the terms of the original ten year installment payment plan or prepay the
outstanding loan balance on the disaggregated license. For a licensee who
elects to continue installment payments for the disaggregated license,
the licensee will receive a total credit equal to seventy percent of the
original down payment made on the 30 MHz disaggregated license. Fifty
percent of the credit will be applied as a down payment on the
outstanding debt and forty percent of the down payment associated with
the disaggregated spectrum that is returned to the Commission may be used
to prepay suspended interest or reduce principal at the licensee's
option. For licensees who elect to prepay outstanding debt on the
disaggregated license, the licensee will receive a credit equal to
eighty-five percent of the original down payment made on the 30 MHz
disaggregated license.

The licensees have sixty days after the March FCC Order is published in
the Federal Register to make the election. The interest payments will
start 90 days after the election is made and will consist of eight
quarterly payments of approximately $2,369,000. Therefore, the
Partnership has presented as short-term the interest amount due in 1998.

8. 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 since inception for
tax and book purposes. Since the partnership has not operated any PCS
licenses yet, all operating expenses were deferred for tax purposes
creating a temporary difference for the partners.

33
<PAGE>

These expenses will be amortized over a period not exceeding 5 years. The
taxable income for the partners is determined as follows:

<TABLE>
<CAPTION>
1997 1996 1995
------------ ---------- ------------
<S> <C> <C> <C>
Net loss per books ($12,944,307) ($9,074,846) ($6,714,366)
Add--Operating expenses deferred until the Partnership begins
operations............................................................. 13,439,921 9,141,613 8,183,465
------------ ---------- ------------
Taxable income........................................................... $ 495,614 $ 66,767 $ 1,469,099
------------ ---------- ------------
------------ ---------- ------------
</TABLE>

Total operating expenses deferred through December 31, 1997 amounted to
approximately $30.7 million. There are no other significant differences
between taxable income for the partners and the net loss reported in the
statement of revenues and expenses.

9. 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.

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.

34
<PAGE>

The Partnership and SuperTel are defendants in an action under which
plaintiffs allege causes of action for damages for breach of fiduciary
duty of Corporate Director, Officers and Controlling shareholders,
fraudulent concealment and other matters. The action involves alleged
damages in excess of $600 million. The defendants brought a motion for
stay based upon inconvenient forum. The San Mateo County Superior Court
granted the motion to stay. The plaintiffs are appealing that decision to
the Court of Appeals. Under an Indemnity Agreement, the Partnership
agreed to indemnify, defend and hold harmless the General Partner and
each General Partner's director, shareholder and other persons related to
the General Partnership for any damages arising from this case.

In November 1996, certain limited partners of the Partnership filed a
suit in the Circuit Court of the State of Oregon against the Partnership,
the General Partner, certain of their 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. In August 1997 a suit brought by approximately 30 additional
plaintiffs was filed. The two suits contain virtually identical
allegations and have been consolidated. The Court has not yet made a
final determination on this matter, however, the RICO claims asserted
by plaintiffs were dimissed.

Management believes, based the opinion of legal counsel, that the final
outcome of the above legal actions will not have a material adverse
effect on the Partnership's financial statements.

10. COMMITMENTS

In October 1997, the Partnership entered into an agreement with a
financial advisor for providing general investment banking services. As
compensation for the financial advisor's services, a non-reimbursable fee
of $100,000 was paid upon execution of the agreement on October 3, 1997.
In addition, the agreement provides for a quarterly advisory fee of
$100,000 payable on the first of January, April, July and October 1998.
The agreement is cancellable by the Partnership upon written notice.

During the year ended December 31, 1997, the Partnership has charged to
operations $200,000 related to this agreement.

35
<PAGE>

The Partnership has entered into various operating lease agreements for
rental of office facilities. The leases expire at various dates through
December 2000. As of December 31, 1997, future rental commitments under
the terms of the leases are as follows:

<TABLE>
<CAPTION>
YEAR AMOUNT
---------- ----------
<S> <C>
1998.......................... $ 200,000
1999.......................... 180,000
2000.......................... 180,000
----------
$ 560,000
----------
----------
</TABLE>

Rent expense for the year ended December 31, 1997 was approximately
$100,000 (1996--$12,000).

11. SUPPLEMENTARY CASH FLOWS INFORMATION

Non-cash investing and financing activities during 1997 include:
acquisition of licenses with notes payable amounting to $210,143,476
and the capitalization of interest not paid of approximately $25,672,000.

36
<PAGE>

SUPERTEL
COMMUNICATIONS
CORP.
Report and Financial Statements
December 31, 1997 and 1996

37
<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
revenues and expenses and deficit and of cash flows present fairly, in all
material respects, the financial position of SuperTel Communications Corp. at
December 31, 1997 and 1996, and the results of its operations and its cash
flows for the year ended December 31, 1997 and 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 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
March 26, 1998

Stamp 1458015 of the P.R. Society of Certified
Public Accountants has been affixed to the file
copy of this report

38
<PAGE>

SUPERTEL COMMUNICATIONS CORP.
Balance Sheet
December 31, 1997 and 1996
- ------------------------------------------------------------------------------

ASSETS

<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Assets:
Cash.................................................. $ 291 $ 8,237
Accounts receivable from affiliated company........... 150,604 101,954
------------ ------------
Total assets.................................... $150,895 $ 110,191
------------ ------------
------------ ------------
Liabilities and Stockholders' Deficiency
Liabilities:
Accounts payable to officers and directors............ $ 71,619 $ 59,555
Accounts payable to affiliated company................ 30,997 30,997
Income tax payable.................................... 3,714 3,277
Note payable to affiliate, including accrued
interest of $10,749 (1996-- $3,749)................. 110,749 103,749
------------ ------------
Total liabilities............................... 217,079 197,578
------------ ------------
Stockholders' deficiency:
Common stock, no par value, 100,000 shares authorized
86,000 shares issued and outstanding (80,400
shares in 1996)..................................... 1,000 1,000
Accumulated deficit................................... (67,184) (88,387)
------------ ------------
Total stockholder's deficiency.................. (66,184) (87,387)
------------ ------------
Total liabilities and stockholders' deficiency......... $150,895 $110,191
------------ ------------
------------ ------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

39
<PAGE>

SUPERTEL COMMUNICATIONS CORP.
Statement of Revenues and Expenses and Deficit
For the Year Ended December 31, 1997 and for the
period from inception on June 7, 1996 to December 31, 1996
- ------------------------------------------------------------------------------

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Revenues:
Management fees............................................. $ 369,643 $ 205,036
---------- ----------
Expenses:
Directors' fees............................................. 284,000 112,000
Salaries.................................................... 4,167 29,167
Travel expenses............................................. 37,755 27,658
Interest expense............................................ 7,000 3,749
Other general and administrative expenses................... 10,118 17,572
---------- ----------
Total expenses............................................ 343,040 190,146
---------- ----------
Income before loss on investment and income taxes............. 26,603 14,890
Loss on investment in partnership............................. (100,000)
---------- ----------
26,603 (85,110)
Provision for income taxes.................................... (5,400) (3,277)
---------- ----------
Net income (loss)............................................. 21,203 (88,387)
Deficit at beginning of period................................ (88,387)
---------- ----------
Deficit at end of period $ (67,184) $ (88,387)
---------- ----------
---------- ----------
</TABLE>

The accompanying notes are an integral part of these financial statements.

40
<PAGE>

SUPERTEL COMMUNICATIONS CORP.
Statement of Cash Flows
For the Year Ended December 31, 1997 and for the
period from inception on June 7, 1996 to December 31, 1996
- ------------------------------------------------------------------------------

<TABLE>
<CAPTION>
1997 1996
--------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)........................................................................ $ 21,203 $ (88,387)
---------- ----------
Adjustments to reconcile net income (loss) to net cash (used) provided by operating
activities:
Loss on investment in partnership...................................................... 100,000
Increase in accounts receivable from affiliated Company................................ (48,650) (101,954)
Increase in accounts payable........................................................... 19,064 94,301
Increase in income tax payable......................................................... 437 3,277
---------- ----------
Total adjustments.................................................................. (29,149) 95,624
---------- ----------
Net cash (used) provided by operating activities........................................... (7,946) 7,237
---------- ----------
Cash flows provided by financing activities -Proceeds from issuance of common stock......... 1,000
--------- ----------
Net (decrease) increase in cash............................................................ (7,946) 8,237
Cash at beginning of period................................................................ 8,237
--------- ----------
Cash at end of period...................................................................... $ 291 $ 8,237
--------- ----------
--------- ----------
</TABLE>

The accompanying notes are an integral part of these financial statements.

41
<PAGE>

SUPERTEL COMMUNICATIONS CORP.
Notes to Financial Statements
December 31, 1997 and 1996
- ------------------------------------------------------------------------------

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. (formerly, PCS 2000, L.P.) (the
"Partnership"), a development stage enterprise.

On June 18, 1996, the Company acquired the general partnership interest
of 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.

Most of the Company's transactions are 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 serves as
the general partner since June 18, 1996. On January 22, 1997, the
Partnership was granted the PCS Block C licenses for Puerto Rico and
certain western states of the United States. The Partnership is currently
evaluating several options to satisfy its financing needs in order to
begin constructing its communication network system to serve as provider
of Personal Communications Services. 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

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, 1997 and 1996.

<PAGE>

SUPERTEL COMMUNICATIONS CORP.
Notes to Financial Statements
December 31, 1997 and 1996
- ------------------------------------------------------------------------------

INVESTMENT IN PARTNERSHIP

The investment in partnership represents an investment in ClearComm, L.
P. amounting to $100,000. The Company accounts for the investment in the
Partnership using the equity method. As of December 31, 1997, the
Company's investment in the undistributed losses of the Partnership
amounted to approximately $7,083,000, (1996 -$3,847,000) therefore, the
carrying value of its investment was written down to zero in 1996.

INCOME TAXES

Income taxes are reported under the liability method of accounting for
income taxes. Deferred tax assets and liabilities are recorded for the
expected future tax consequences of temporary differences that have been
recognized in the Company's financial statements or tax returns. In
estimating future tax consequences, all expected future events other than
enactments of changes in law or rates are considered. A valuation
allowance is recognized for any deferred tax asset for which, based on
management's evaluation, it is more likely than not (a likelihood of more
than 50%) that some portion or all the deferred tax asset will not be
realized.

RECLASSIFICATIONS

Certain reclassifications have been made to the 1996 financial statements
to conform with the 1997 presentation.

2. RELATED PARTY TRANSACTIONS

The partnership agreement with ClearComm, L. P., 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 1997,
fees billed amounted to approximately $370,000 (1996--$205,000).

As explained in Note 5, certain employees and consultants of the
Partnership were granted shares of the Company's common stock.

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

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.

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 for tax purposes. No deferred
tax asset has been recognized for this loss due to its uncertainty.

<PAGE>

SUPERTEL COMMUNICATIONS CORP.
Notes to Financial Statements
December 31, 1997 and 1996
- ------------------------------------------------------------------------------

5. CAPITAL

The Company's certificate of incorporation was amended during 1997 to
increase the authorized number of restricted voting common stock shares
from 1,000 to 100,000 shares. On June 19, 1997, the Board of Directors of
the Company declared a hundred-for-one stock split of the Company's
restricted voting common stock. Shares outstanding at December 31, 1996
have been restated to reflect the split.

The Company is also authorized to issue 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, 1997, none of the
preferred shares had been issued.

During the year ended December 31, 1997, the Company issued 5,600 shares
of its restricted voting common stock to certain employees and
consultants of the Partnership at no cost in consideration of their
valuable collaboration in obtaining the Partnership PCS licenses. These
individuals were not employees of the Company at the time the services
were provided. The agreement under which the shares were granted provides
that the Company has the right to repurchase 50% of the shares in the
event that certain of these individuals cease to be employees of the
Partnership within the period ending with the second anniversary of the
date of the issuance of the stock. The fair value, of the shares granted
is deemed insignificant and, therefore, has not been recognized.

At December 31, 1997 and 1996 the Company has 19,600 warrants
outstanding. Each warrant has the right to buy a share of the Company's
restricted voting common stock at the nominal value of ten cents.

6. SUPPLEMENTAL CASH FLOW INFORMATION

During the year ended December 31, 1997, the Company paid income tax
amounting to approximately $5,000 and issued 5,600 shares of common stock
at no cost.

During the period ended December 31, 1996, the Company issued a
nonrecourse promissory note amounting to $100,000 to acquire the
investment in partnership.

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.

<PAGE>

SUPERTEL COMMUNICATIONS CORP.
Notes to Financial Statements
December 31, 1997 and 1996
-----------------------------
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 Block C
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 Block C 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. These amounts were charged to operations by the
Partnership in 1996. It is the Partnership's intention to recover this
and other expenses related to the bidding error from its former bidding
agent.

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 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 one of its directors 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.

8. CONTINGENCY

In mid 1996, a Romulus 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).

As discussed in Note 1, the Company and ClearComm are defendants in an
action underwhich plaintiffs allege causes of action for damages for
breach of fiduciary duty of corporate directors, officers and controlling
shareholders, fraudulent concealment and other matters. The action
involves alleged damages in excess of $600 million. The defendants
brought a motion for stay based upon inconvenient forum. The San Mateo
County Superior Court granted the motion to stay. The plaintiffs are
appealing that decision to the Court of Appeals. Under an Indemnity
Agreement, the Partnership agreed to indemnify, defend and hold harmless
the Company and each Company's director, shareholder and other persons
related to the Company for any damages arising from this case.

In November 1996, certain limited partners of the Partnership filed a
suit in the Circuit Court of the State of Oregon against the Company, the
Partnership and certain of their 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. In August 1997 a suit brought by approximately 30 additional
plaintiffs was filed. The two suits contain virtually identical
allegations and have been consolidated for all purposes. The Court has
not made a final determination on this matter, however, RICO claims
asserted by plaintiffs were dismissed.

<PAGE>

SUPERTEL COMMUNICATIONS CORP.
Notes to Financial Statements
December 31, 1997 and 1996
- ------------------------------------------------------------------------------

Management believes, based on the opinion of legal counsel, that the
outcome of the above legal actions will not have a material adverse
effect on the Company's financial statements.

46
<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 53, 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).

Javier O. Lamoso, President, acting CEO and, 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 & Bartlett, and was involved with the 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).

Richard Reiss, Director and Treasurer, (President and CEO until December 4,
1997) 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 certified public accountant and graduated

<PAGE>

magna cum laude from the University of Puerto Rico with B.B.A. in business
administration.

Gary H. Arizala, Director, age 59, is an entrepreneur and successful
businessman. Mr. Arizala has 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 350 to 400 families annually through four child care centers located
on Oahu, Hawaii, and employs approximately 60 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 agencies. He is on the Guardian Advisory Council of the
National Federation of Independent Businesses Hawaii Chapter, 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 43, has held management and supervisory
positions in finance and accounting over a 15-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 worked for the California
Wellness Foundation and since December 1997 is serving as Treasurer and Chief
Financial, and is responsible for all financial reporting, accounting,
budgeting and tax functions including investment performance and asset
allocation review of a $750 million investment portfolio, and managing cash
flow for an annual budget exceeding $45 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 49, 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. Odell has served in the capacity of secretary
for several major corporations, including Buenos Aires Embotelladora, S.A.
(BAESA).

48
<PAGE>

Daniel J. Parks, Director and General Counsel, age 53, 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 65, 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.

John Duffy, Executive Vice President age 48, has been associated with the
Partnership's general partner since September, 1994. Mr. Duffy is
responsible for the Partnership's financing activities. He was the principal
in his own consulting firm from 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.

Tyrone Brown, Senior Vice President--Regulatory, age 57, is a lawyer with
substantial expertise in the Federal Communications Commission ("FCC")
regulations. Mr. Brown was of counsel to Wiley, Rein and Fielding until
1997. Mr. Brown was a FCC Commissioner from 1977 to 1981, and a member of the
President's Commission on Executive Exchange from 1979 to 1981. He was also
a Law Clerk to Chief Justice Earl Warren, U.S. Supreme Court, from 1967 to
1968. He holds an A.B. from Hamilton College (1964) and a J.D. from Cornell
University (1967).

Eric Spackey, Vice President, age 34. 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.

49
<PAGE>

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 1997.

ITEM 11. EXECUTIVE COMPENSATION

The Partnership is managed by the General Partner's Board of Directors
and executive officers of the General Partner. 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
1997.

<PAGE>

SUMMARY COMPENSATION TABLE

Annual Compensation Long-Term
------------------- Compensation
Awards
------------
Other Annual Securities
Name & Principal Fiscal Bonus($) Compensation ($) Underlying All Other
Position Year Salary($) Options/SAR's Compensation($)
- ----------------------------- ------ ------------ -------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Javier Lamoso, President 1997 $125,000 $0 $25,000(1) 0 $25,000
Director and acting CEO 1996 $125,000 $41,250 $25,000 0 $0
1995 $0 $0 $0 0 $0

Richard Reiss, former CEO 1997 $289,000 $0 $25,000(1) 0 $87,961
Director, And Treasurer(2) 1996 $289,000 $0 $0 0 $0
1995 $0 $0 $0 0 $0

John Duffy 1997 $150,000 $0 $0 0 $0
Executive Vice President 1996 $125,000 $112,250 $0 0 $0
1995 $0 $0 $0 0 $0

Eric Spacey, Vice President 1997 $125,000 $0 $0 0 $25,000
1996 $125,000 $31,250 $0 0 $0
1995 $0 $0 $0 0 $0

Daniel J. Parks, Director 1997 $75,000 $0 $25,000 0 $0
And General Counsel 1996 $70,000 $0 $6,250 0 $0
1995 $0 $0 $0 0 $0
</TABLE>

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

(2) On December 4, 1997, Mr. Reiss resigned as CEO and Mr. Lamoso was named
acting CEO.

On March 19, 1997, the General Partner determined that executive
compensation should be established by a committee of non-employee directors.
Accordingly, the Board of Directors established a Compensation Committee that
consists of Mr. Martinez, Ms. Minnich and Mr. Perry. The Compensation
Committee engaged a compensation consulting company to assist it in
determining the appropriate levels for executive compensation. Other than
with respect to the former Chief Executive Officer, the Compensation
Committee determined to pay each of the executive officers the salary
recommended by the compensation consulting company. The Compensation
Committee determined that the Chief Executive Officer should receive a higher
salary than that recommended by the compensation consultants.

<PAGE>

Directors receive an annual fee of $25,000 each, other than the Chairman
of the Board, Mr. Martinez, who received an annual fee of $100,000 for 1997
and Mr. Odell, who receives an annual fee of $35,000. Directors are
reimbursed for their reasonable expenses in attending board meetings.

Mr. Nezam Tooloee, a former director and former consultant, was paid
$10,000 per month for 40% of his time for services as an outside consultant
to the Partnership. Mr. Tooloee resigned his directorship in September, 1997.
Pursuant to a settlement agreement, Mr. Tooloee received $279,358 for the
termination of the consulting agreement with the General Partnership.

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
individuals and Puerto Rico trusts.

The following table sets forth, as of March 30, 1998, 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.

<PAGE>

Name of Beneficial Owner Units Beneficially Owned Percentage Ownership
<S> <C> <C>
Fred H. Martinez(1) 1.4 *
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 *
John Duffy(8) 1.4 *
Lawrence Odell(9) 1.4 *
Eric Spackey(10) 0 *
Tyrone Brown(11) 0 *
All executive officers and
directors of the General
Partner as a group (11 persons) 12.8 *

</TABLE>

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

* 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 Treasurer of the General Partner and a member of the Board of
Directors.

(3) Mr. Lamoso is President and acting Chief Executive Officer 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. Duffy is Executive Vice President of the General Partner.

(9) 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.

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

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

<PAGE>

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 Partnership Agreement provides that the General Partner is entitled
to reimbursement for all reasonable operating expenses, plus 10% of such
amount. The management fee is paid on a monthly basis. The total management
fee for 1997 was approximately $370,000.

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.

<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.

<TABLE>
<S> <C>
Report of Independent Accountants 23
Consolidated Statements of Assets, Liabilities and Partners' Capital
as of December 31, 1996 and 1997 24
Consolidated Statement of Revenues and Expenses for years ended
December 31, 1996 and 1997 and periods from inception to
December 31, 1995 and to December 31, 1997 25
Consolidated Statement of Cash Flows for years ended December 31,
1996 and 1997 and periods from inception to December 31, 1995
and to December 31, 1997 26
Consolidated Statement of Changes in Partners' Capital Accounts
from inception to December 31, 1997 27
Notes to Consolidated Financial Statements 28

SuperTel Communications Corp.

Report of Independent Accountants 38
Balance Sheet for December 31, 1996 and 1997 39
Statement of Revenues and Expenses and deficits for the year ended
December 31, 1997 and from inception to December 31, 1996 40
Statement of Cash Flows for the year ended December 31, 1997 and from
inception to December 31, 1996 41
Notes to Financial Statements 42

</TABLE>

(2) Financial Statement Schedules

All financial schedules have been omitted because they are not
applicable or because the information required is included in the
financial statements or notes thereto.

(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)

55
<PAGE>

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 an between
SuperTel Communications Corp. and Unicom Corporation

27 Financial Data Schedule

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the last quarter of fiscal 1997.

<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/ Javier Lamoso
--------------------------------
Name: Javier Lamoso
Title: Acting 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 March 31, 1998
- ------------------------ of the Board
Fred H. Martinez

/s/ Javier O. Lamoso Director and Acting March 31, 1998
- ------------------------ Chief Executive Officer
Javier O. Lamoso

/s/ Richard Reiss Director, March 31, 1998
- ------------------------ and Treasurer
Richard Reiss

/s/ Gary H. Arizala Director March 31, 1998
- ------------------------
Gary H. Arizala

/s/ Margaret W. Minnich Director March 31, 1998
- ------------------------
Margaret W. Minnich

Director March 31, 1998
- ------------------------
Lawrence Odell

/s/ Daniel J. Parks Director March 31, 1998
- ------------------------
Daniel J. Parks

/s/ James T. Perry Director March 31, 1998
- ------------------------
James T. Perry

<PAGE>

EXHIBIT INDEX

Exhibit
Number Description
- --------- -----------
<S> <C>
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)

10.2 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

</TABLE>

<PAGE>
<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 9,762
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,870
<PP&E> 80
<DEPRECIATION> 0
<TOTAL-ASSETS> 280,221
<CURRENT-LIABILITIES> 4,400
<BONDS> 0
0
0
<COMMON> 71,069
<OTHER-SE> (28,734)
<TOTAL-LIABILITY-AND-EQUITY> 42,335
<SALES> 0
<TOTAL-REVENUES> 496
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,440
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (12,944)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,944)
<EPS-PRIMARY> (3,495)
<EPS-DILUTED> (4,660)

</TABLE>