POCKET COMMUNICATIONS INC, S-1, 1996-08-29

POCKET COMMUNICATIONS INC
S-1, 1996-08-29

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 29, 1996

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

POCKET COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
------------------------

<TABLE>
<S> <C> <C>
Maryland 4812 52-1872888
(State of incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
</TABLE>

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

2550 M Street, NW
Suite 200
Washington, DC 20037
(202) 496-4300
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
------------------------

Daniel C. Riker
Chairman of the Board and Chief Executive Officer
Pocket Communications, Inc.
2550 M Street, NW
Suite 200
Washington, DC 20037
(202) 496-4300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------

Copies to:

<TABLE>
<S> <C> <C>
RONALD S. SCHIMEL, ESQ. CRAIG M. WASSERMAN, ESQ. GARY P. CULLEN, ESQ.
Levan, Schimel, Belman & Abramson, Wachtell, Lipton, Rosen & Katz Skadden, Arps, Slate, Meagher & Flom
P.A. 51 West 52nd Street 333 West Wacker Drive
Woodmere I, Suite 400 New York, NY 10019 Chicago, IL 60606
9881 Broken Land Parkway
Columbia, MD 21046-1153
</TABLE>

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

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

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

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
---------------

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
---------------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
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PROPOSED MAXIMUM
AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES OFFERING REGISTRATION
TO BE REGISTERED PRICE(1)(2) FEE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class B Common Stock,
$.01 par value per share.............................................. $172,500,000 $59,483
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes $22,500,000 relating to shares of Class B Common Stock that the
Underwriters have options to purchase to cover over-allotments, if any.

(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act.
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

POCKET COMMUNICATIONS, INC.

CROSS-REFERENCE SHEET PURSUANT TO REGULATION S-K, ITEM 501(B)

<TABLE>
<CAPTION>
ITEM
NO. LOCATION IN PROSPECTUS
<S> <C> <C>
I. Forepart of the Registration Statement Outside Front Cover Page
and Outside Front Cover Page of
Prospectus
II. Inside Front and Outside Back Cover Pages Inside Front Cover Page; Table of
of Prospectus Contents
III. Summary Information, Risk Factors and Prospectus Summary; Risk Factors;
Ratio of Earnings to Fixed Charges Selected Financial Data
IV. Use of Proceeds Prospectus Summary; Use of Proceeds
V. Determination of Offering Price Outside Front Cover Page; Underwriting
VI. Dilution Dilution
VII. Selling Security Holders Not Applicable
VIII. Plan of Distribution Outside Front Cover Page; Underwriting
IX. Description of Securities to be Outside Front Cover Page; Description of
Registered Capital Stock
X. Interests of Named Experts and Counsel Not Applicable
XI. Information with respect to the Outside Front Cover Page; Prospectus
Registrant Summary; Risk Factors; Use of Proceeds;
Dividend Policy; Capitalization; Selected
Financial Data; Management's Discussion
and Analysis of Financial Condition and
Results of Operations; Business;
Regulation of the Wireless
Telecommunications Industry; Management;
Principal Stockholders; Certain
Relationships and Related Transactions;
Description of Certain Indebtedness;
Description of Capital Stock; Shares
Eligible for Future Sale; Underwriting;
Experts; Other Matters; Consolidated
Financial Statements
XII. Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act
Liabilities
</TABLE>
<PAGE> 3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.

SUBJECT TO COMPLETION, DATED AUGUST 29, 1996
PROSPECTUS
, 1996
SHARES

[LOGO]

POCKET COMMUNICATIONS, INC.

CLASS B COMMON STOCK

All of the shares of Class B Common Stock offered hereby are being sold by
Pocket Communications, Inc. (the "Offering"). Prior to the Offering, there has
been no public market for the Class B Common Stock. It is currently estimated
that the initial public offering price will be between $ and $ per
share. See "Underwriting" for information relating to the factors considered in
determining the initial public offering price.

After the Offering, the Company's issued and outstanding capital stock will
consist of Class A Common Stock and Class B Common Stock. Initially, each holder
of Class A Common Stock is entitled to five votes per share, and each holder of
Class B Common Stock is entitled to one vote per share on all matters submitted
to a vote of stockholders. Except as required by law and the Company's Articles
of Incorporation, holders of the Class A Common Stock and the Class B Common
Stock vote together as a single class. The holders of Class A Common Stock vote
as a separate class for the election of a majority of the directors, and the
holders of Class B Common Stock vote as a separate class for the election of the
remainder of the directors. Shares of Class A Common Stock will be convertible
into shares of Class B Common Stock on a 1-to-1 basis under certain
circumstances and subject to certain limitations. Each share of Class A Common
Stock and Class B Common Stock will share ratably in any dividends or other
distributions, including upon the liquidation, dissolution or winding up of the
Company. See "Description of Capital Stock."

Concurrently with the Offering, the Company is offering $ million gross
proceeds of % Senior Discount Notes due 2006 (the "Notes") to the public
(the "Debt Offering" and, together with the Offering, the "Offerings"). The
Offering is not conditioned upon completion of the Debt Offering, but the Debt
Offering is conditioned upon completion of the Offering.

Application has been made to have the Class B Common Stock quoted on the
Nasdaq National Market under the symbol " ."

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR INFORMATION CONCERNING CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS
TO THE DISCOUNTS AND TO THE
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
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Per Share................................... $ $ $
Total(3).................................... $ $ $
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</TABLE>

(1) See "Underwriting" for indemnification arrangements with the Underwriters.

(2) Before deducting expenses, estimated at $ , which will be paid by
the Company.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to additional shares of Class B Common Stock at the Price to Public
less Underwriting Discounts and Commissions solely to cover over-allotments,
if any. If such option is exercised in full, the total Price to the Public,
Underwriting Discounts and Commissions, and Proceeds to the Company will be
$ , $ and $ , respectively. See "Underwriting."

The shares are being offered by the several Underwriters when, as and if
delivered to and accepted by the Underwriters and subject to various prior
conditions, including their right to reject orders in whole or in part. It is
expected that delivery of the share certificates will be made in New York, New
York on or about , 1996.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO., INC.

COWEN & COMPANY

GOLDMAN, SACHS & CO.
<PAGE> 4

[MAP OF POCKET MARKETS APPEARS HERE]

IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS B COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

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

THIS PROSPECTUS IS SUBJECT TO COMPLETION OR AMENDMENT. AS OF THE DATE
HEREOF, THE COMPANY IS IN NEGOTIATION WITH CERTAIN VENDORS AND OTHER THIRD
PARTIES CONCERNING VARIOUS OF THE AGREEMENTS AND RELATED ARRANGEMENTS DESCRIBED
HEREIN. SUCH AGREEMENTS ARE SUBJECT TO THE EXECUTION OF DEFINITIVE
DOCUMENTATION, WHICH DOCUMENTATION MAY CONTAIN ADDITIONAL OR DIFFERENT TERMS
FROM THE DESCRIPTIONS CURRENTLY SET FORTH HEREIN. AS OF THE DATE HEREOF, THE PCS
LICENSES HAVE NOT BEEN GRANTED TO THE COMPANY BY THE FEDERAL COMMUNICATIONS
COMMISSION (THE "FCC"). THE COMPANY DOES NOT INTEND TO COMMENCE THE OFFERING
UNTIL AFTER SUCH GRANT. THE INFORMATION HEREIN (OTHER THAN THE INFORMATION SET
FORTH IN THE CONSOLIDATED FINANCIAL STATEMENTS ON PAGES F-1 TO F-20) ASSUMES
THAT SUCH GRANT HAS ALREADY OCCURRED.
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information, including the Consolidated
Financial Statements and the notes thereto, set forth elsewhere in this
Prospectus. As used herein, the terms "Company" and "Pocket," unless otherwise
indicated, refer to Pocket Communications, Inc., a Maryland corporation, and its
subsidiaries. The term population equivalents ("POPs") means the Paul Kagan
Associates 1995 PCS Atlas & Databook estimate of the 1995 population of a
particular Major Trading Area ("MTA") or Basic Trading Area ("BTA") of the U.S.
In addition, certain terms used in this Prospectus are defined in the Glossary
of Terms. Unless otherwise indicated, all information in this Prospectus (i)
reflects (a) the reclassification prior to the Offering and the Debt Offering of
the outstanding securities of the Company into shares of the Company's Class A
Common Stock, par value $0.01 per share (the "Class A Common Stock"), and Class
B Common Stock, par value $0.01 per share (the "Class B Common Stock" and
together with the Class A Common Stock, the "Common Stock") and (b) the
subsequent reverse stock split (collectively, the "Recapitalization"),
to become effective upon consummation of the Offering and subject to any
necessary FCC approvals, and (ii) assumes the FCC has granted the Company all
licenses on which the Company has successfully bid and that the Company has made
a down payment of 10% of the Company's total net bid on such licenses. See
"Description of Capital Stock." Except as otherwise specified, the information
in this Prospectus assumes no exercise of the Underwriters' option to purchase
up to additional shares of Class B Common Stock from the Company to
cover over-allotments, if any.

THE COMPANY

Pocket intends to be a leading provider of full-service wireless
telecommunications services in its markets, which cover approximately 35.5
million POPs. The Company currently is the sixth largest Personal Communications
Services ("PCS") licensee in the United States in terms of POPs, having acquired
43 BTA licenses, each consisting of 30 MHz of spectrum, in the recently
completed FCC C Block auction. Major markets covered by the Company's PCS
licenses include Chicago, Dallas-Ft. Worth, Detroit, St. Louis, New Orleans, Las
Vegas, and Honolulu. More than 85% of the Company's POPs are in substantially
contiguous markets located in the central region of the U.S. The Company intends
to build out its PCS networks (each a "network" and collectively the "Network")
rapidly using commercially established Global System for Mobile Communications
("GSM") technology, and anticipates commencing service in Las Vegas and Honolulu
in early 1997.

The Company successfully bid $1.43 billion, net of a 25% bidding credit,
for 43 BTA licenses in the FCC C Block auction. To date, the Company has paid
$143 million, representing 10% of this total net bid, as a down payment. The
government financing terms for the balance of $1.28 billion include a
below-market interest rate of % fixed for the 10-year term of the financing
(the "Government Financing"). This Government Financing allows the Company to
pay interest only on the principal balance for the first six years of the
license term, with payments of interest and principal amortized over the
remaining four years of the license term. This favorable Government Financing
significantly reduces the effective cost of these licenses to the Company on a
net present value basis.

The Company intends to position its PCS service as a "new category" of
wireless telephone service aimed primarily at that segment of the mass consumer
market that has not previously purchased cellular service. The Company has
developed an initial marketing and advertising plan that is designed to create a
new identity for the service. The Company plans to offer the mobility features
of cellular, the calling features of landline and a pricing plan more similar to
current local telephone service than to existing cellular. The Company will be
using GSM, which is an advanced digital technology that is superior to
traditional analog cellular systems in terms of voice quality, reliability,
functionality and privacy while providing substantially greater capacity. The
Company's marketing and distribution strategy will be based on the use of
custom-designed user-friendly handsets, brand name development and unique
packaging. With the increased number of wireless telecommunications services and
the anticipated decrease in service rates, the Company believes that there will
be a growing demand for wireless services. The Company will focus its marketing
efforts to target the estimated
<PAGE> 6

85% of the population in its markets who currently are not using cellular
services and to attract cellular users who may be dissatisfied with the quality
or cost of their existing service.

The Company has selected GSM technology, with established commercial
performance and multiple equipment suppliers, to position it to rapidly build
out its PCS networks at competitive costs. Based on the announced intentions of
other PCS licensees to date, the Company will be the second largest PCS licensee
in the U.S. (in terms of POPs) using GSM technology, and in 37 of its 43 BTAs
(representing 93% of the Company's total POPs), the Company will be the only PCS
licensee using GSM technology. GSM permits enhanced features such as secure
calling, text messaging and data and fax services. In addition, GSM permits the
networking of equipment from a number of different manufacturers. The Company
believes that, given the global predominance of GSM usage, the cost of GSM
equipment will decrease as economies of scale in production of network equipment
are realized and competition among equipment suppliers intensifies.

GSM is the predominant digital wireless technology in the world, serving
over 20 million customers in 77 countries as of June 1996. GSM technology has
been chosen by a number of other companies in the United States, which, together
with Pocket's markets, are licensed to cover over 200 million POPs, or over 76%
of the population of the United States, based on currently announced intentions.
Pocket is negotiating or intends to negotiate roaming agreements with all North
American GSM carriers including Pacific Bell Mobile Services Inc. ("Pacific
Bell"), BellSouth Mobility DCS ("BellSouth"), Omnipoint Corporation
("Omnipoint"), InterCel, Inc. ("InterCel"), American Portable Telecom, Inc.
("APT"), Western Wireless Corporation ("Western Wireless"), American PCS, L.P.
("APC") and Microcell Telecommunications, Inc. ("Microcell") of Canada. The
upcoming FCC D, E and F Block PCS auctions may result in GSM technology being
chosen by licensees in areas currently not having a declared GSM operator.

The Company has strategic relationships with Ericsson, Inc. ("Ericsson"),
Siemens Stromberg-Carlson ("Siemens"), Northern Telecom Inc. ("Nortel"),
Mitsubishi Corporation (together with certain of its affiliates, "Mitsubishi"),
LCC, L.L.C. ("LCC"), and Booz - Allen & Hamilton, Inc. ("Booz - Allen"). The
Company has established agreements for the supply of up to $ million of
equipment and services and is negotiating vendor financing agreements that are
expected to total at least $ million. It is anticipated that in each one of
the Company's markets, Ericsson, Siemens or Nortel will be the primary network
equipment supplier and provide related vendor financing. The Company and
Mitsubishi are developing a custom-designed handset and are negotiating a
handset supply agreement. LCC is providing radio network design, program
management (including site acquisition and construction management) and network
optimization services. Booz - Allen is providing product design, information
system deployment, systems integration services and management consulting. See
"Business -- Strategic Relationships."

The key elements of the Company's business strategy include entering its
markets as one of the first PCS providers; targeting its products and services
primarily to the mass consumer market; offering wireless products and services
with superior voice quality, reliability, functionality and privacy; operating
its business in clusters to provide a regional market focus and achieve
economies of scale; and expanding its market coverage through the establishment
of strategic alliances with other GSM licensees and the possible acquisition of
additional PCS licenses.

- Early Market Entry. The Company's objective is to be among the first PCS
providers in each of its markets, which will help it to set the standard
for high quality wireless telecommunications services, thereby building
brand name recognition and product awareness. The Company believes that
by building its PCS Network using commercially established GSM
technology, it will minimize many risks associated with using new
technology and will achieve early market entry. The Company has made
significant progress towards the completion of the detailed engineering
work to build out its Las Vegas and Honolulu networks and has begun the
preliminary network design and site acquisition processes in certain
other service areas. The Company plans to begin offering services in Las
Vegas and Honolulu in early 1997, in Chicago, Detroit, Dallas and St.
Louis by late 1997, in Little Rock and New Orleans by early 1998 and in
its remaining markets by the end of 1998. The Company plans to build out
PCS networks that will be able to offer service to at least 90% of the
POPs within its service areas by the end of 1998.

2
<PAGE> 7

- Target Mass Consumer Market. The Company's marketing strategy is to
focus on the mass consumer market, targeting the estimated 85% of the
population in its markets who currently are not using cellular services
as well as cellular service users who may be dissatisfied with the
quality or cost of their existing service. In order to attract
subscribers from this potential market, the Company plans to offer
service packages priced significantly below current cellular rates on a
per minute basis. The Company also plans to simplify the products and
services it will offer by not requiring service contracts, providing
immediate service activation, offering 24-hour customer service,
streamlining the customer's bill and providing user-friendly handsets.
The Company plans to distribute its products and services through a
variety of distribution channels, including Company-owned stores, direct
marketing and retail electronics stores as well as through
non-traditional channels such as supermarkets, kiosks and vending
machines. Prior to launching its services, the Company plans to begin
aggressively developing and marketing its brand in order to establish it
in the consumer marketplace.

- Superior Products and Services. The Company plans to offer wireless
products and services with superior voice quality, reliability,
functionality and privacy. The Company plans to offer PCS service that
will include one-way paging, voice mail, call waiting, call forwarding,
conference calling and caller ID, with two-way text messaging as an
option. Existing GSM technology will also enable the Company to offer
personalized services such as call screening, rejection, routing and
forwarding, enhanced voice mail and data transmission services such as
electronic mail, facsimile and Internet access. In addition, the Company
and Mitsubishi are developing a custom-designed handset that incorporates
an ergonomic design with easy-to-use menus and large screens to manage
handset functions and significantly longer battery life than is currently
available for cellular handsets. The existing and planned GSM systems
worldwide will enable the Company to offer national and international
roaming in conjunction with other GSM operators.

- Market Clustering. The Company has organized its 43 BTAs into eight
clusters to provide a regional market focus while allowing it to achieve
operational efficiencies and lower infrastructure costs. The Company
plans to establish management and operational teams in each of its
clusters to support all of the BTAs in such clusters. Emphasis on
operations at the regional market level will allow the Company to serve
its customers more effectively and to build a loyal customer base. The
Company also believes that this approach will allow it to customize its
marketing efforts and maintain high levels of customer satisfaction. This
clustering strategy is designed to facilitate network switch-sharing,
allow the Company to benefit from shared resources and coordinated
management and provide efficiencies in advertising, marketing and
distribution within a region.

- Expand Market Coverage. The Company currently is negotiating strategic
alliances with other PCS licensees to broaden its markets. The Company
also may seek to expand its markets by entering into additional strategic
alliances or acquiring other PCS licenses.

FINANCING PLAN

The Company is offering , shares of Class B Common Stock in the
Offering and $ , gross proceeds of % Senior Discount Notes due 2006
(the "Notes") in the concurrent Debt Offering for estimated aggregate net
proceeds to the Company of $ million ($ million if the Underwriters' over-
allotment options are exercised in full). The Debt Offering will be contingent
upon the successful completion of the Offering. The Offering will not be
contingent upon the Debt Offering. The Company believes that the net proceeds of
the Offerings in combination with committed and anticipated vendor financing of
approximately $ million, will be sufficient to fund operating losses,
capital expenditures and working capital

3
<PAGE> 8

necessary for the buildout of its PCS networks through December 31, 1997, as
well as to repay certain of the Company's debt and satisfy the Company's debt
service requirements, including interest payments on the Government Financing.

The Company will require substantial additional capital after 1997 to
complete the buildout of its PCS Network and implement the Company's business
strategy, including operating losses, capital expenditures, working capital and
debt service requirements. The exact amount of the Company's future requirements
will depend upon many factors, including the cost of development of PCS networks
in each of its clusters, the extent of completion and pricing of wireless
services in these clusters, the acceptance of the Company's services and the
development of new consumer products. See "Risk Factors -- Significant Capital
Requirements and Uncertainty of Additional Financing."

The Company was incorporated in Maryland in 1994. The Company's principal
executive offices are located at 2550 M Street NW, Suite 200, Washington, DC
20037, and its telephone number is (202) 496-4300.

4
<PAGE> 9

THE OFFERING

Class B Common Stock Offered
by the Company................ shares

Class B Common Stock to be
Outstanding after the
Offering..................... shares (1)

Class A Common Stock to be
Outstanding after the
Offering..................... shares

Total Common Stock to be
Outstanding after the
Offering..................... shares (1)

Concurrent Debt Offering...... Concurrently with the Offering, the Company is
offering $ million gross proceeds of %
Senior Discount Notes due 2006. Under the terms
of the indenture relating to the Notes (the
"Indenture"), the Company generally may not pay
any dividend or make any distribution on its
Common Stock unless and until the Company meets
certain requirements that the Company does not
expect to meet for the foreseeable future. See
"Dividend Policy." The Indenture also contains
covenants relating to preservation of the
Company's assets, limitation on the scope of
the Company's business, limitations on debt
incurrence, limitations on mergers,
consolidations and sales of assets of the
Company, and restrictions on transactions with
affiliates. The Offering is not conditioned on
the consummation of the Debt Offering, but the
Debt Offering is conditioned on the
consummation of the Offering.

Use of Proceeds............... The net proceeds to the Company from the
Offering are estimated to be approximately
$ million after deducting estimated
underwriting discounts and commissions and
offering expenses. This figure assumes an
initial public offering price of $ per
share, the midpoint of the range set forth on
the cover page hereof. The Company expects to
use the net proceeds of the Offering, together
with the net proceeds from the Debt Offering,
(i) for interest payments on the Government
Financing and to repay the borrowings under
certain of the Company's loan and credit
facilities (approximately $ million),
and (ii) for the buildout and operation of the
PCS networks in its license areas, to finance
potential acquisitions and for general
corporate purposes (approximately $
million).

Nasdaq National Market
Symbol........................ " "

- ---------------
(1) Includes shares assumed to be issued in connection with the conversion
of $ convertible debt in connection with the Offering. Due to FCC
requirements, the actual amount of shares to be issued upon conversion may
be different. Excludes 7,429,880 shares reserved for issuance under the
Company's stock option plans and grants for employees and directors and
warrants to purchase Class B Common Stock, including 2,240,880 shares
issuable upon exercise of outstanding options (the "Reserved Option
Shares"); and shares reserved for issuance under certain
circumstances to members of the Control Group pursuant to the Company's
Articles of Incorporation (the "Articles of Incorporation") to comply with
certain FCC requirements (the "Control Group Option Shares"). See
"Management -- Stock Option Plans" and "-- Compensation of Directors,"
"Regulation of the Wireless Telecommunications Industry," "Description of
Certain Indebtedness," and "Description of Capital Stock."

RISK FACTORS

Prior to making an investment in the Class B Common Stock offered hereby,
prospective purchasers of the Class B Common Stock should take into account the
specific considerations set forth under "Risk Factors" as well as the other
information set forth in this Prospectus.

5
<PAGE> 10

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table sets forth summary historical financial information and
operating data of the Company for the period from April 20, 1994 (inception) to
December 31, 1994, the fiscal year ended December 31, 1995 and the six-month
periods ended June 30, 1995 and 1996. The information set forth below was
derived from, and should be read in conjunction with, "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the audited
consolidated financial statements of the Company (the "Audited Consolidated
Financial Statements") and notes thereto included elsewhere in this Prospectus.
The financial information and operating data for the six-month periods ended
June 30, 1995 and 1996 were derived from the unaudited consolidated financial
statements of the Company and, in the opinion of management, include all
adjustments necessary for a fair presentation of such data. Interim results are
not necessarily indicative of results to be expected for the full fiscal year.

<TABLE>
<CAPTION>
FOR THE PERIOD SIX MONTHS
APRIL 20, 1994 ENDED JUNE 30,
(DATE OF INCEPTION) YEAR ENDED -------------------
TO DECEMBER 31, 1994 DECEMBER 31, 1995 1995 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................... $ -- $ -- $ -- $ --
Operating expenses..................... 1,039 7,172 2,320 4,758
-------- -------- --------
Operating loss......................... (1,039) (7,172) (2,320) (4,758)
Interest income (expense).............. -- (221) 25 (1,889)
-------- -------- --------
Net loss............................... $ (1,039) $(7,393) $(2,295) $(6,647)
======== ======== ========
Pro forma net loss per common
share(1)............................ $ $
Pro forma weighted average number of
common shares outstanding(1)........
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
----------------------------------------
AS OF PRO FORMA
DECEMBER 31, 1995 ACTUAL PRO FORMA(2) AS ADJUSTED(3)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA
Working capital (deficit)............... $(2,905) $(30,619) $ $
License deposit......................... 40,050 71,338
Total assets............................ 44,333 91,429
Short-term borrowings................... 1,500 17,000
Long-term debt, including deferred
interest............................. 40,400 63,354
Total stockholders' equity (deficit).... (2,116) (8,299)
</TABLE>

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

(1) See Note 3 of the Notes to Consolidated Financial Statements for an
explanation of the pro forma loss per share and the shares used in computing
pro forma loss per share.

(2) Gives effect to (i) additional borrowings totaling $ million to
satisfy the balance due on the FCC down payment requirement subsequent to
June 30, 1996 and prior to the consummation of the Offering, (ii) the
conversion of approximately $ million principal amount of certain
convertible debt into
shares of Class B Common Stock, subject to compliance with FCC requirements
and (iii) the capitalization as an intangible asset of the PCS licenses
awarded to the Company and the recognition of the resulting indebtedness to
the FCC of $ million.

(3) Gives effect to the events and transactions referred to in note 2 above and
(i) the sale by the Company of shares of Class B Common Stock pursuant
to the Offering (at an assumed public offering price of $ per share,
which is the midpoint of the range stated on the cover page hereof),
resulting in estimated aggregate net proceeds of approximately
$ million, (ii) the sale of $ million in gross proceeds in the Debt
Offering, resulting in estimated aggregate net proceeds of approximately
$ million and (iii) the application of the net proceeds therefrom to
repay $ million of borrowings under certain loan and credit facilities.

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<PAGE> 11

In addition to the historical information contained herein, this Prospectus
contains forward-looking statements which involve risks and uncertainties. The
Company's actual results may differ significantly from those discussed in such
forward looking statements. Factors that might cause such a difference include,
but are not limited to, those discussed in "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" as
well as those discussed elsewhere in this Prospectus. See "Risk
Factors -- Development Stage Company; Historical and Expected Future Operating
Losses."

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<PAGE> 12

RISK FACTORS

Purchasers of shares of Class B Common Stock should carefully consider and
evaluate all of the information set forth in this Prospectus, including the risk
factors listed below.

DEVELOPMENT STAGE COMPANY; HISTORICAL AND EXPECTED FUTURE OPERATING LOSSES

The Company was incorporated in April 1994 for the purposes of (i)
acquiring broadband PCS licenses in the FCC's Entrepreneurs' Block auctions,
(ii) constructing and operating PCS networks in its markets and (iii) offering
wireless communications services in these areas. The Company has no significant
operating history and no significant operations. The Company is subject to all
the risks typically associated with start-up entities, including, but not
limited to, its potential inability to obtain sufficient financing, implement
the Company's strategic plan and attract and retain qualified individuals. The
Company has incurred net losses from inception to June 30, 1996 of approximately
$15.1 million. The Company will be incurring further significant expenses in
advance of generating revenues and is expected to realize net operating losses
in its initial stages of operations while it develops and constructs its PCS
networks and builds a customer base. Although the Company intends to commence
PCS service within the next 12 months, there can be no assurance that it will be
able to generate revenues during that period. In addition, there can be no
assurance that the Company will achieve or sustain profitability or positive
cash flow from operating activities in the future, in which case it may not be
able to meet its debt service or working capital requirements and the shares of
Class B Common Stock may have little or no value. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

HIGH LEVERAGE; RESTRICTIVE COVENANTS; ABILITY TO SERVICE DEBT

The Company is, and will continue to be, highly leveraged and subject to
significant financial restrictions and limitations. As of June 30, 1996, on an
as adjusted basis after giving effect to the Offering, the Debt Offering and the
Government Financing, the Company's total indebtedness would have been $
million. In addition, the Company currently is negotiating certain vendor
financing agreements, pursuant to which the Company will be entitled to draw
down up to $ million. The Company also is entitled, subject to the
restrictions in the Indenture and certain loan agreements, to incur substantial
additional indebtedness. See "Description of Certain Indebtedness."

The Company's obligations to the U.S. Government pursuant to the Government
Financing will be approximately $1.28 billion. Although the Company's obligation
under the Government Financing will be recorded on the Company's financial
statements at its estimated fair market value of $ , based on an estimated
fair market borrowing rate of %, the amount that would be owed to the U.S.
Government if the Government Financing were declared immediately due and payable
would be $1.28 billion plus accrued interest. The initial annual interest
payments on the Government Financing will be approximately $ million (at a
fixed interest rate of % per annum), payable in quarterly installments
commencing , 1996. The Company may incur substantial financial
penalties, license revocation or other enforcement measures at the FCC's
discretion in the event that the Company becomes unable to make timely payments
on its Government Financing. Payments are deemed untimely for such purposes if
not made within 90 days after they become due. The FCC has indicated that, in
the event that a C Block licensee anticipates an inability to make any required
payment based upon bankruptcy, foreclosure or financial distress, there will be
a presumption in favor of granting the licensee's request for a further
three-month grace period before the FCC cancels its license. In the event of
default by the Company, the FCC could reclaim the licenses, reauction them, and
subject the Company to a penalty comprised of the difference between the price
at which it acquired its license and the amount of the winning bid at the
reauction, plus an additional penalty of 3% of the lesser of the subsequent
winning bid and the defaulting bid. There can be no assurance that the Company
will be able to submit all of the required payments pursuant to the Government
Financing in a timely manner, or that the FCC will not require immediate
repayment of all amounts due under the Government Financing or revoke the
Company's licenses, if it fails to meet such obligations. In either such event,
the Company will likely be unable to meet its obligations to other creditors.

8
<PAGE> 13

The current payment terms of the Government Financing for the PCS licenses
are conditioned upon the continued compliance by the Company with certain equity
ownership requirements and restrictions promulgated by the FCC for the C Block
auction, many of which have not yet been definitively interpreted. Although the
Company intends to take all steps necessary or appropriate to comply with such
requirements and restrictions, there can be no assurance that it will succeed in
doing so. Failure to maintain such compliance may result in imposition of less
favorable schedules for or acceleration of payments due under the license
acquisition or revocation of the licenses. See "-- Control Group Requirement"
and "Regulation of the Wireless Telecommunications Industry."

The Indenture for the Notes and certain vendor financing agreements will
contain, and any additional financing agreements may contain, certain
restrictive covenants. Such vendor financing agreements will require the Company
to comply with certain financial and operational performance covenants. Although
the Company expects to remain in compliance with such covenants, there can be no
assurance to that effect. The restrictions in the vendor financing agreements
and the Indenture will affect, and, in some cases, will significantly limit or
prohibit, among other things, the ability of the Company to incur indebtedness,
make prepayments of certain indebtedness, pay dividends, make investments,
create liens, sell assets and engage in mergers and consolidations. In addition
to such covenants, the vendor financing agreements will require the Company to
maintain certain financial ratios. See "Description of Certain Indebtedness" for
a more detailed description of the restrictive covenants and other terms of the
vendor financing agreements and the Indenture. An event of default under the
vendor financing agreements and the Indenture would allow the lenders thereunder
to accelerate the maturity of the indebtedness. In such event, it is likely that
substantially all of the Company's indebtedness would become immediately due and
payable.

After giving pro forma effect to the Debt Offering, for the six months
ended June 30, 1996 and the year ended December 31, 1995, the Company's earnings
would have been insufficient to cover fixed charges by approximately $
million. The successful implementation of the Company's business strategy is
necessary for the Company to be able to meet its debt service requirements. The
buildout of the PCS Network may require substantial additional capital. See
"-- Significant Capital Requirements and Uncertainty of Additional Financing ."
In addition, the Company's ability to satisfy its obligations once the PCS
Network is operational will depend upon the Company's future performance, which
is subject to a number of factors, many of which are beyond the Company's
control. There can be no assurance that the Company can complete the PCS Network
or that, once the Network is completed, the Company will generate sufficient
cash flow from operating activities to meet its debt service and working capital
requirements. In such event, the Company may need to seek additional financing.
In addition, the indebtedness under vendor financing agreements and the Notes
may need to be refinanced at their maturity. There can be no assurance that any
such financing or refinancing could be obtained on terms that are acceptable to
the Company. In the absence of such financing or refinancing, the Company could
be materially limited in its ability to build out its PCS networks or be forced
to dispose of its assets under circumstances that might not result in the
realization of the highest price in order to make up for any shortfall in the
payments due on its indebtedness. Given that a substantial portion of the
Company's assets are intangible, principally licenses granted by the FCC, the
value of which depends upon a variety of factors (including the success of the
Company's PCS business and the wireless telecommunications industry in general),
and the transfer of which requires prior FCC approval and is subject to specific
C Block transfer restrictions, there can be no assurance that the Company's
assets could be sold expeditiously or for sufficient amounts to enable the
Company to meet its obligations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and "Description of Certain Indebtedness."

SIGNIFICANT CAPITAL REQUIREMENTS AND UNCERTAINTY OF ADDITIONAL FINANCING

The Company successfully bid in the C Block auction a total of $1.43
billion, net of bidding credits, for PCS licenses in 43 BTAs. The Company will
require substantial capital to fund the development, construction, debt service
and operating costs of the PCS networks. Through December 31, 1997, the
Company's requirements are expected to be met through a combination of the net
proceeds from the Offerings, committed and anticipated vendor financing, and the
financing raised to date. In the event that the

9
<PAGE> 14

buildout of the PCS networks occurs more quickly than expected, the costs are
greater than anticipated or the Company takes advantage of acquisition
opportunities, including those that may arise through future FCC auctions, the
Company will require additional funding prior to December 31, 1997. In all
circumstances, the Company will require substantial additional funding to
complete the buildout and implement the Company's business strategy after
December 31, 1997.

Sources for future financing may include additional vendor financing, debt
financing and equity offerings. The Company currently has no sources of revenue.
There can be no assurance that such future financing will be available to the
Company or, if available, that it can be obtained on terms acceptable to the
Company and consistent with any limitations that may be contained in the vendor
financing, other financing arrangements then existing or FCC regulations.
Inability to obtain such financing could result in delay or reduction of the
Company's development and construction plans, cause its development and
construction to fall behind its competitors in providing PCS services, and
result in failure to meet the FCC buildout requirements and its debt service
obligations, which, individually or in the aggregate, could have a material
adverse effect on the Company's financial condition and results of operation. In
addition, failure to meet the buildout requirements could result in revocation
of the Company's PCS licenses. Any future financing may also have an adverse
effect on the price of the shares of Class B Common Stock. In addition,
compliance with certain FCC regulations regarding equity ownership of C Block
licenses may limit the Company's flexibility in obtaining additional financing.

EMERGING MARKET FOR PCS SERVICE

PCS systems have no significant operating history in the United States, and
there can be no assurance that these businesses will become profitable. In
addition, the extent of potential demand for PCS in the Company's markets cannot
be estimated with any degree of certainty. The inability of the Company to
establish PCS services or to obtain appropriate equipment for its PCS business
would have a material adverse effect on the Company. In addition, the Company's
success in the implementation and operation of its PCS networks is subject to
certain factors beyond the Company's control. These factors include, without
limitation, changes in the general and local economic conditions, availability
of equipment, changes in communications service rates charged by others, changes
in the supply and demand for PCS and for other wireless communications services,
the commercial viability of PCS networks as a result of competition from
wireline and wireless operators in the same geographic region, changes in the
federal and state regulatory scheme affecting the operation of PCS networks
(including the enactment of new statutes and the promulgation of new rules and
regulations and changes in the interpretation or enforcement of existing rules
and regulations) and changes in technology that may potentially render obsolete
the PCS networks the Company plans to deploy. There can be no assurance that one
or more of these factors will not have an adverse effect on the Company's
financial condition and results of operations.

COMPETITION

In each of its PCS markets, the Company will potentially compete with up to
five other PCS providers. A and B Block PCS licensees in the Company's service
areas include, among others, AT&T Wireless Services, Inc. ("AT&T Wireless"),
PrimeCo Personal Communications L.P. ("PrimeCo") and Sprint Spectrum L.P.
("Sprint Spectrum"). These companies received their PCS licenses in June 1995
and have had significant lead time for buildout of their networks. The FCC's
auction of broadband D, E and F Block licenses is currently scheduled to begin
on August 26, 1996, and, accordingly, there may be additional PCS competitors in
the Company's PCS markets.

The PCS networks to be deployed by the Company will compete, directly or
indirectly, with all market segments in telecommunications, including cellular,
as well as landline, specialized mobile radio ("SMR") service, enhanced SMR
("ESMR") service, paging (including two-way paging) and mobile satellite
systems. The principal cellular providers in the Company's PCS markets are AT&T
Wireless, SBC Communications, Inc. ("SBC"), Ameritech Cellular Systems
("Ameritech") and AirTouch Communications, Inc. ("AirTouch"). PCS may also face
competition for users from cable operators who expand into offering traditional
communications services over their cable systems in the future. Energy utilities
and local

10
<PAGE> 15

multipoint distribution service ("LMDS") providers may also seek to offer
communications services over their infrastructure in the future. The Company
also expects that existing cellular providers servicing the Company's PCS
markets will seek to improve their networks and upgrade their technologies to
provide comparable services in competition with those of the Company. Moreover,
the FCC recently relaxed its limitation on cellular cross-ownership of PCS
licenses in the same area, permitting existing cellular licensees to acquire up
to 20 MHz of broadband PCS spectrum in overlapping markets, and certain cellular
companies have sought judicial review of this 20 MHz limitation in proceedings
that, if successful, could permit them to acquire 30 MHz PCS licenses in such
markets. Such competition from traditional cellular providers entering the PCS
industry in overlapping markets could adversely affect the Company's competitive
position. Competition in telecommunications services generally, including
landline services, is expected to result in declining prices that could affect
the prices that the Company may be able to charge for its services. In addition,
the FCC has proposed or adopted rules authorizing additional spectrum for
communications services. Finally, the Company may face competition from
technologies that may be introduced in the future. See
"Business -- Competition."

All of such competition is expected to be intense. Many of the Company's
existing and potential competitors have substantially greater access than the
Company to capital, experienced personnel, and technical and marketing
resources. There can be no assurance that the Company will be able to compete in
this environment. The Company's strategy for competing against its direct
competitors is to build out its network infrastructure rapidly and develop a
subscriber base by implementing proven GSM technology, but there can be no
guarantee that the Company's strategy will be successful.

RAPID CHANGE IN WIRELESS TELECOMMUNICATIONS INDUSTRY

The wireless telecommunications industry is experiencing significant
technological change, as evidenced by the increasing pace of digital upgrades of
existing analog wireless networks, evolving industry standards, ongoing
improvements in the capacity and quality of digital technology, shorter
development cycles for new products and enhancements, and changes in end-user
requirements and preferences. Also, there is uncertainty as to the extent of
customer demand as well as the extent to which airtime and monthly access rates
may continue to decline. As a result, the future prospects of the industry and
the Company as well as the success of PCS and other competitive services are
uncertain. There can be no assurance that new technologies or products that are
superior in quality and services or that are more commercially effective than
the Company's technology or products will not be developed.

GSM TECHNICAL STANDARD AND IMPLICATIONS FOR ROAMING SERVICES

When the FCC first licensed cellular systems in the U.S., it mandated all
technical aspects of system operation and protocol to ensure nationwide
compatibility between all cellular carriers. In contrast, the FCC has not
mandated the technology protocols for PCS operations, leaving each licensee free
to select among competing technologies that have sufficient technological
differences to preclude their interoperability.

The Company has chosen the GSM technical standard for deployment in its PCS
markets. Although GSM has been in commercial use outside the U.S. since the
beginning of 1992, it was adapted to the 1900 MHz band and commercially deployed
in the U.S. only within the past year. There can be no assurance that the
Company will not experience technical problems in the deployment of GSM.
Additionally, there is no assurance that equipment manufacturers will continue
to produce products compatible with GSM-based technology if other digital
technologies become more widely used or products for such other technologies
become more cost effective to build. Furthermore, at least two other PCS
technologies are competing for acceptance in the U.S., Code Division Multiple
Access ("CDMA") and Time Division Multiple Access ("TDMA"), and alternative
technological and service advancements could materialize in the future, none of
which is required to be compatible with GSM. Such existing and potential
technologies could prove both viable and competitive to the GSM-based technology
chosen by the Company. If in the future the PCS industry agrees to adopt a
technology standard that is not compatible with GSM, the Company's GSM
technology might be rendered obsolete and the Company's financial condition and
results of operations would be materially adversely affected.

11
<PAGE> 16

The Company's selection of the GSM technology may limit its ability to
provide and obtain roaming service in other, non-GSM markets in the future. Due
to the current incompatibility of the various digital protocols, customers using
one PCS technology can only roam in other service areas having at least one PCS
provider using the same technology. Dual mode phones, which would allow users to
switch between PCS technologies or between PCS and cellular services, as used in
the U.S., are not yet available. Although such phones are currently in
development, there is no certainty as to whether such phones would be
commercially accepted on a wide scale. Therefore, the scope of roaming coverage
available to GSM system users will depend on, among other things, the selection
of GSM technology by certain other PCS licensees and the availability of dual
mode phones. To date, 10 PCS licensees, including the Company, have announced
that they intend to deploy GSM-based PCS networks in the U.S. Together, these
bidders and grantees represent markets with a population of over 200 million, or
76% of the U.S. population. Several major PCS providers, including PrimeCo and
Sprint Spectrum, have publicly announced that they intend to deploy CDMA-based
PCS networks. AT&T Wireless and SBC have selected the TDMA standard. Licensees
in future auctions of PCS licenses may or may not select GSM technology. In
addition, no assurance can be given that the companies that have chosen GSM
technology will be able to successfully deploy their GSM-based systems or
continue to choose to do so. It is anticipated that together, CDMA-based PCS
providers, including competitors in several of the Company's markets, will own
licenses covering approximately 91% of the U.S. population (based on 1990 U.S.
Census Bureau figures) and AT&T Wireless and SBC, using the TDMA standard, own
PCS licenses covering approximately 45% of the U.S. population (based on 1990
U.S. Census Bureau figures). To the extent that there will be service areas with
no GSM system, the roaming options of GSM system users may be limited until dual
mode phones become available. Such roaming limitations may adversely affect the
Company's ability to establish a PCS customer base and to compete successfully
in the PCS business with those PCS operators offering greater roaming
capabilities.

PCS NETWORK BUILDOUT

The Company's proposed development and operation of its PCS Network
involves a high degree of risk. The Company's PCS licenses are subject to a
requirement that the Company construct network facilities that offer coverage to
at least one-third of the population in each of the relevant BTAs within five
years from the grant of the licenses (the "Five-Year Buildout Requirement"), and
to at least two-thirds of the population within 10 years from the grant of the
licenses (the "Ten-Year Buildout Requirement"). The Company is currently in the
radio frequency ("RF") engineering and design phase for its PCS networks in Las
Vegas, Honolulu and certain other markets, and has made significant progress
towards the completion of the detailed engineering work to build out its Las
Vegas and Honolulu PCS networks. The Company anticipates that its buildout in
all of its BTA markets, if completed by the end of 1998 as currently planned,
will satisfy the Ten-Year Buildout Requirement. Should the Company fail to meet
these coverage requirements, it may be subject to forfeiture of its licenses or
the imposition of fines by the FCC. See "Regulation of the Wireless
Telecommunications Industry." The PCS buildout in each BTA is subject to the
successful completion of network design, site and facility acquisitions, the
purchase and installation of the network equipment, network testing and the
satisfactory accommodation of microwave users currently using the spectrum.
There can be no assurance that the Company will be able to implement its PCS
network in any particular market in accordance with its current buildout plan
and schedule. Delays in any of these areas or other unanticipated setbacks could
have a material adverse effect on the Company's ability to complete the buildout
in a timely manner.

The successful buildout of the Company's PCS networks will depend, to a
significant degree, upon the Company's ability to lease or acquire appropriate
sites for the location of its base station equipment. The Company has begun the
site selection and acquisition processes in Las Vegas, Honolulu and certain
other markets. The site selection process will require the successful
negotiation of agreements for the use or acquisition of numerous sites and may
require the Company to obtain zoning variances or other governmental or local
regulatory approvals, the granting of which is beyond the Company's control.
Delays in the site acquisition process, as well as construction delays and other
related factors, could adversely affect the commencement of commercial service
in the Company's PCS networks. See "-- Relocation of Fixed Microwave Licensees"
and "Regulation of the Wireless Telecommunications Industry."

12
<PAGE> 17

In addition, the implementation of the PCS buildout plan is subject to the
availability of the infrastructure equipment and handsets that the Company plans
to use. Accordingly, there are risks associated with the completion of
development, the timely manufacture and the successful deployment of this
equipment in the buildout of the Company's PCS networks. The Company has entered
into agreements for the supply of equipment with Ericsson and Nortel and is
negotiating a similar agreement with Siemens, subject, however, to acceptable
financing from these respective vendors. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources," "Business -- Strategic Relationships" and "Description of
Certain Indebtedness."

There can be no assurance that the Company will be able to implement the
buildout of its PCS markets as currently planned. If the Company fails to meet
either the Five-Year Buildout Requirement or the Ten-Year Buildout Requirement
in any of its service areas, it could lose one or more of its PCS licenses. It
is possible that failure by the Company to meet the buildout requirement in one
of its service areas might result in forfeiture or risk of forfeiture of all of
the Company's PCS licenses. Accordingly, the Company must be committed to
building out each of its service areas regardless of the expected return from
any one service area. This buildout requirement and the restraint on the
Company's ability to exit could have a material adverse effect on the Company's
financial condition and results of operations.

The Company's success in the implementation and operation of its system is
subject to other factors beyond the Company's control. These factors include,
without limitation, changes in general and local economic conditions,
availability of equipment necessary to operate the PCS system, changes in
communications service rates charged by others, changes in the supply and demand
for PCS, the commercial viability of PCS systems as a result of competition with
landline and wireless operators in the same geographic area, demographic changes
that might affect negatively the potential market for PCS, changes in the
federal and state regulatory scene affecting the operation of PCS systems
(including the enactment of new statutes and the promulgation of changes in the
interpretation or enforcement of existing or new rules and regulations) and
changes in technology that have the potential of rendering obsolete the
Company's technology and equipment. In addition, the extent of the potential
demand for PCS cannot be estimated with any degree of certainty. There can be no
assurance that one or more of these factors will not have a material adverse
effect on the Company's financial condition and result of operations.

DEPENDENCE ON VENDOR AGREEMENTS

The Company's future financial condition is highly dependent upon its
ability to rapidly build out and then operate a PCS network in the markets for
which it has received licenses. To do so effectively will require the timely
delivery of infrastructure equipment for use in the Company's base stations and
switching offices and of handsets for subscriber use. To date, the Company has
entered into agreements with Ericsson and Nortel for the supply of up to $
million of network equipment and services. The Company currently is negotiating
with each of Ericsson and Nortel the terms for the financing of the respective
supply contracts. There can be no assurance that such financing will be
available on terms acceptable to the Company. The Company is also negotiating
with Siemens with respect to an equipment supply agreement and related vendor
financing. The Company also has a letter of intent from Mitsubishi for the
supply of handsets. There can be no assurance that such agreements will be
executed. See "Business -- Strategic Relationships."

Although the Company chose its vendors based upon their experience,
manufacturing expertise and servicing abilities, there can be no assurance that
such vendors will be able to provide the Company with the equipment and services
required to build out the Company's PCS Network in a timely and cost effective
manner and to be able to operate it at a high level of performance and
subscriber satisfaction. The termination of any of the described supply
agreements or the failure of any of the vendors to perform under the supply
agreements could have a material adverse effect on the Company's financial
condition and results of operations.

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<PAGE> 18

DEPENDENCE ON THIRD PARTIES

As part of the Company's strategy to build out rapidly its PCS networks,
the Company will rely significantly upon third parties to provide equipment and
services, to distribute the Company's products and services and to provide
certain other functions such as customer billing. In addition, the Company
intends to engage a primary network vendor and other third parties for a
significant portion of the buildout of each of the Company's PCS networks. There
can be no assurance that such third parties will provide acceptable equipment
and services on a timely basis and any failure to do so will have a material
adverse effect upon the Company's business, results of operations and financial
condition. See "-- PCS Network Buildout," "Business -- Pocket's Strategy" and
"-- Marketing and Distribution Strategy."

DEPENDENCE UPON KEY PERSONNEL

The Company will be dependent, to a large degree, on the services of Daniel
C. Riker, as Chairman of the Board and Chief Executive Officer, of Janis A.
Riker, as the Company's President and Chief Operating Officer and of other
current members of management. The Company has entered into employment
agreements with each of Mr. Riker and Ms. Riker, which agreements specify the
salary and severance obligations of the Company, provide that such employee's
employment may be terminated by the Company at any time, and contain certain
covenants restricting such employee's activities. Loss of the services of Mr.
Riker, Ms. Riker or other members of management could have a material adverse
effect on the business of the Company and qualified replacements may be
difficult or impossible to find or retain. In addition, certain agreements with
Ericsson contain as an event of default the cessation of employment of either
Mr. Riker or Ms. Riker in substantially the same capacity as each is currently
employed by the Company. Furthermore, certain key positions have yet to be
filled, and any delay in identifying and difficulty in hiring such key managers
could adversely affect the Company. See "Management -- Employment Agreements."

RISKS ASSOCIATED WITH RAPID EXPANSION

The Company's growth may cause a significant strain on its operational and
financial resources. To manage its growth effectively, the Company will be
required to continue to implement and improve its operational and financial
systems. The Company's success will depend in large part on a limited number of
key technical, marketing and sales employees and on the Company's ability to
attract and retain highly talented personnel. Competition for qualified
personnel in the PCS equipment and service industries is intense. The demands of
rapid expansion will require the addition of new management personnel and the
development of additional expertise by existing management. The failure of the
Company's management team to effectively manage growth could have a material
adverse impact on the Company's financial condition and results of operations.

NEW BUSINESS PLAN

The Company's business plan, however, is largely new and untested, and the
Company's ability to implement successfully its business plan is dependent on a
number of factors, many of which, including the anticipated expansion of the
demand for wireless telecommunications services, are beyond the Company's
control. In addition, the Company's marketing and distribution plan requires a
significant amount of capital, including, without limitation, its intent to use
Company-owned stores as an initial primary distribution channel, to operate a
full-service 24-hour-a-day customer service department and to establish the
Company's products and brand name in the marketplace by advertising
aggressively. There can be no assurance that the

14
<PAGE> 19

Company will be able to implement such plans on a timely and cost effective
basis or that the Company will achieve sufficient revenues to provide a positive
return on such investments. See "Business."

POTENTIAL FLUCTUATIONS IN FUTURE RESULTS

The Company believes that its future operating results over both the short
and long term will be subject to annual and quarterly fluctuations due to
several factors, some of which are outside the Company's control. These factors
include, among others, the buildout cost of PCS networks for all of its service
areas (including any unanticipated costs associated therewith), variations in
market demand for the Company's products and services, establishment of a market
for PCS, competition over pricing and services, changes in the regulatory
environment, and general and local economic conditions. In addition, the extent
of the potential demand for PCS cannot be estimated with certainty. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

CONTROL GROUP REQUIREMENT

The Company qualified as an Entrepreneur and a Small Business, as such
terms are defined by the FCC rules and regulations, for participation in the C
Block auction and payment for its C Block PCS licenses. To retain its C Block
PCS licenses and its favorable Government Financing, the Company must maintain
such status (the "Designated Entity Status"). Alternatively, it may assign or
transfer its licenses to another entity qualifying for Designated Entity Status,
subject to prior FCC approval. To maintain all of the benefits of its Designated
Entity Status, the Company's Control Group and Qualifying Investors (each, as
defined in "Regulation of the Wireless Telecommunications Industry") must retain
certain minimum stock ownership and voting stock of the Company as well as de
jure and de facto control of the Company for 10 years from the date of grant of
its PCS licenses. The FCC has indicated that it will not rely solely on de jure
control in determining whether the Control Group and its Qualifying Investors
are truly in control of an entity. Even if the Control Group (and the Qualifying
Investors) holds the requisite percentages of equity and voting control, the FCC
will still engage in a fact-specific inquiry to determine whether actual control
exists. Factors indicating control include whether the Control Group members
manage the day-to-day activities of the entity, elect a majority of the board of
directors, constitute some of the entity's officers and directors, appoint,
promote, demote and dismiss senior executives and otherwise exercise actual
control. See "Regulation of the Wireless Telecommunications Industry."

The Company believes it has taken steps to comply with and prevent
violation of such regulatory requirements, including the adoption of certain
charter provisions that ensure adherence to such requirements, but there can be
no assurance that the Company's ownership and control structure will not be
challenged. See "Business -- Legal Proceedings" and "Description of Capital
Stock." If such challenges are successful, the Company could be required to
restructure or recapitalize, and possibly forfeit its PCS licenses. Failure by
the Company to maintain its Designated Entity Status could result in the
imposition of less favorable schedules for or the acceleration of payments due
under the Government Financing or revocation of its licenses. The inability of
non-Control Group stockholders to gain control of the Company could negatively
impact the price of the shares of Class B Common Stock and the Company's ability
to attract additional capital. This control requirement may also discourage
certain transactions involving an actual or potential change of control of the
Company, including transactions in which the holders of Class B Common Stock
might receive a takeover premium for their shares over the then-prevailing
market price. The control requirement may also necessitate the issuance of
additional equity to the Control Group stockholders as discussed under
"Description of Capital Stock" to ensure that the Control Group maintains the
requisite minimum equity ownership mandated under the FCC rules to maintain the
Company's Designated Entity Status. See "Control by Principal Stockholders."

MINORITY INTERESTS IN CERTAIN SUBSIDIARIES

The Company holds an indirect 73.1% interest in the limited partnership
formed to build and operate the Company's PCS network in the Las Vegas BTA and
expects to hold a 95% interest in the entity it expects to form to build and
operate the Company's PCS network in the Honolulu and Hilo BTAs. The Company
intends to transfer certain of its PCS licenses to wholly owned subsidiaries of
such partially owned subsidiaries,

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<PAGE> 20

subject to receipt of necessary FCC approvals. See "Business -- Minority
Interests in Certain Subsidiaries." The Company plans to structure certain of
its partially owned subsidiaries and their respective wholly owned subsidiaries
with the requisite Control Group structure. Transfers of the licenses pursuant
to such plans will be subject to FCC approval. Although the Company believes
that such structure would allow it to comply with the Control Group
requirements, both at the subsidiary level and at the Company level, there can
be no assurance that the Company's ownership and control structure will not be
challenged. If such challenges are successful, the Company could be required to
restructure or recapitalize some of its subsidiaries or the entire Company or
forfeit some of its PCS licenses. Failure on the part of the Company to maintain
its Designated Entity Status could result in the imposition of less favorable
schedules for or acceleration of payments due under the Government Financing or
revocation of some of its licenses. See "-- Control Group Requirement."

CONTROL BY PRINCIPAL STOCKHOLDERS

Upon consummation of the Recapitalization, holders of Class A Common Stock
(who will be the only members of the Control Group) will be entitled to five
votes per share and holders of Class B Common Stock will be entitled to one vote
per share. Immediately after the Offering, the Control Group, consisting of
Daniel C. Riker, the Company's Chairman of the Board and Chief Executive
Officer, Janis A. Riker, the Company's President and Chief Operating Officer,
and Teleconsult Incorporated ("Teleconsult"), a telecommunications consulting
and systems integration company of which Eduardo Paz, a director of the Company,
is President and sole director, will beneficially own all shares of issued
and outstanding Class A Common Stock, representing approximately % of the
outstanding shares of Common Stock and % of the combined voting power of the
Common Stock (the "Voting Power"). The Control Group, collectively, will also
beneficially own in the aggregate shares of issued and outstanding Class B
Common Stock, which, combined with their shares of Class A Common Stock, will
represent approximately % of the outstanding shares of Common Stock and
% of the Voting Power. To maintain its Designated Entity Status, the number
of votes per share of Class A Common Stock may be adjusted as needed to ensure
that the total number of votes of the issued and outstanding shares of Class A
Common Stock is not less than 50.1% of the Voting Power. As sole owners of the
Class A Common Stock, the Control Group members have the right to elect, as a
separate class, a majority of the Board of Directors of the Company (the "Board
of Directors" or the "Company Board"). With respect to certain extraordinary
corporate actions, however, the affirmative vote of 66 2/3% or 75% of the entire
Board of Directors is required. The concentration of Voting Power in a small
group of investors may adversely affect the price of the Class B Common Stock.
See "Description of Capital Stock."

In order to maintain all of the benefits of the Designated Entity Status,
the Control Group and Qualifying Investors must maintain certain minimum equity
interest levels for periods of three and ten years, respectively, from the date
of grant of the PCS licenses. To ensure compliance with such requirements, the
Company's Articles of Incorporation limits transfers or issuances of capital
stock of the Company that, if effective, would result in violation of such
requirements. In the event that the Company issues additional equity or takes
other action that would otherwise result in violation of such requirements, the
members of the Control Group will be granted options to purchase shares of Class
A Common Stock and Class B Common Stock at the fair market price at the time of
grant to the extent necessary to comply with such requirements. Such issuance
would cause disproportional dilution of other stockholders' interests and may
negatively impact the Company's ability to attract additional capital. See
"Principal Stockholders," "Regulation of the Wireless Telecommunications
Industry" and "Description of Capital Stock."

GOVERNMENT REGULATION

The licensing, construction, operation, acquisition and sale of PCS
networks, as well as the number of PCS, cellular and other wireless licensees
permitted in each market, are regulated by the FCC. Changes in the regulation of
such activities could have a material adverse effect on the Company's
operations. The FCC has proceedings in process that could open up other
frequency bands for wireless telecommunications and PCS-like services. Federal
law prohibits the states from regulating the rates charged by wireless
telecommunications carriers (including PCS and cellular). Although some states
petitioned the FCC for authority to regulate

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<PAGE> 21

wireless rates, thus far no such petitions have been successful. Federal law
also expressly prohibits the states from regulating the entry of wireless
carriers. However, to the extent not otherwise preempted, the states are
permitted to regulate any other terms and conditions of wireless services, such
as but not limited to customer billing information and practices; consumer
protection matters; bundling of service and equipment; availability of wholesale
capacity; and facilities siting issues. There can be no assurance that state
agencies having jurisdiction over the Company's business will not adopt
regulations, impose taxes on PCS licenses or take other actions that would
adversely affect the business of the Company. Federal and state regulators will
also determine important aspects of the Company's operations, such as technical
aspects of and payments for interconnections with landline and other wireless
networks.

The Telecommunications Act of 1996, enacted on February 8, 1996 (the
"Telecommunications Act of 1996"), mandates significant changes in existing
regulation of the telecommunications industry to promote the competitive
development of new service offerings, to expand the public availability of
telecommunications services and to streamline regulation of the industry. The
implementation of these mandates by the FCC and state authorities potentially
involves numerous changes in established rules and policies which could
adversely affect the Company's financial condition or results of operations. See
"Regulation of the Wireless Telecommunications Industry."

On July 26, 1996, the FCC released a report and order establishing
timetables for making emergency 911 services available by PCS and other mobile
services providers, including "enhanced 911" services that provide the caller's
telephone number, location and other useful information. By late 1997, PCS
providers must be able to process and transmit 911 calls (without call
validation), including those from callers with speech or hearing disabilities.
Assuming a cost recovery mechanism is in place, by mid-1998 such providers must
have completed actions enabling them to relay a caller's automatic number
identification and cell site, and by 2001 they must be able to identify the
location of a 911 caller within 125 meters in 67% of all cases. State actions
incompatible with these FCC rules are subject to preemption.

On August 1, 1996, the FCC released a report and order expanding the
flexibility of PCS and other commercial mobile radio services ("CMRS") carriers
to provide fixed as well as mobile services. Such fixed services include, but
need not be limited to, "wireless local loop" services, e.g., to apartment and
office buildings, and wireless backup to PBXs and local area networks, to be
used in the event of interruptions due to weather or other emergencies. The FCC
has not yet decided whether such fixed services should be subjected to universal
service obligations, or how they should be regulated, but it has proposed a
presumption that they be regulated as CMRS services.

On August 8, 1996, the FCC released its decision implementing the
interconnection provisions of the Telecommunications Act of 1996. The FCC's
decision is lengthy and complex and will be subject to petitions for
reconsideration and judicial review, and its precise contours and effects are
difficult to predict with certainty. However, the FCC's decision concludes that
CMRS providers are entitled to reciprocal compensation arrangements with local
exchange carriers ("LECs") and prohibits LECs from charging CMRS providers for
terminating LEC-originated traffic. While the FCC has noted the potential for
asserting federal jurisdiction over certain aspects of CMRS interconnection, it
has so far determined to defer primarily to the states in implementing
interconnection policies pursuant to general guidelines established by the FCC.
Under these guidelines, states must set arbitrated rates for interconnection and
access to unbundled elements based upon LECs' long run incremental costs, plus a
reasonable share of forward-looking joint and common costs. In lieu of such
cost-based rates, the FCC has also established for use by states a benchmark
range of 0.2-0.4 cents per minute for end office termination pending further
cost-based studies, and subject to a possible "true-up" payment later. The FCC
has also permitted states to impose "bill and keep" arrangements, under which
CMRS providers would make no payments for LEC termination of calls where LECs
and CMRS providers have symmetrical termination costs and roughly balanced
traffic flows. However, the FCC has found no evidence that these conditions
presently exist. The relationship of these charges to the payment of access
charges and universal service contributions has not yet been resolved by the
FCC.

All PCS licenses will be granted for a ten-year period, at the end of which
period the licensee may apply for renewal. Licenses may be revoked by the FCC at
any time for cause. All 30 MHz broadband PCS licenses,

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<PAGE> 22

including those of the Company, are subject to the Five-Year Buildout
Requirement and the Ten-Year Buildout Requirement. PCS licenses generally will
be renewed based upon FCC rules and policies establishing a presumption in favor
of licensees that have provided "substantial" service during the past license
term and have substantially complied with their regulatory obligations during
the initial license period, but there can be no assurance that any or all of the
Company's PCS licenses will be so renewed. See "-- PCS Network Buildout."

The Company must obtain a number of approvals, licenses and permits for the
operation of its business, including land use regulatory approvals and licenses
from the Federal Aviation Administration (the "FAA") in connection with its PCS
towers. Additionally, the wireless telecommunications industry is subject to
certain state and local governmental regulation. Operating costs are also
affected by other government actions that are beyond the Company's control.
There is no assurance that the various federal, state and local agencies
responsible for granting such licenses, approvals and permits will do so or
that, once granted, those agencies will not revoke or fail to renew them.
Failure to obtain such licenses, approvals and permits would adversely affect,
delay commencement of or prohibit certain business operations proposed by the
Company. See "Regulation of the Wireless Telecommunications Industry."

Regulation of the wireless telecommunications industry is subject to
constant change. There are a number of issues on which regulation has been or
may be suggested, including the effect of wireless communications equipment on
medical equipment and devices as well as interference between types of wireless
systems. As new regulations are promulgated on these or other subjects, the
Company may be required to modify its business plans or operations in order to
comply with any such regulations. There can be no assurance that the Company
will be able to do so in a cost effective manner, if at all. See "-- Radio
Frequency Emission Concerns; Medical Device Interference" and "Regulation of the
Wireless Telecommunications Industry."

Along with the A, B and C Block auctions, future auctions and the
subsequent regulation of the licensees will be administered by the FCC. The FCC
has created eligibility requirements and conditions to be met for a company to
be awarded and to retain a license in the Entrepreneurs (C and F) Block auctions
and to qualify for preferential payment options. Although the Company believes
that it meets the appropriate eligibility requirements and that its ownership
structure, network design, buildout plans and financing plans will satisfy the
FCC conditions, there is no certainty that subsequent actions by the Company or
its subsidiaries, unanticipated delays, difficulties in the deployment of the
system or future regulatory changes or interpretations will not result in the
violation of one or more such requirements or in the failure of the Company to
meet such conditions. Any changes in the law and regulations or interpretations
thereof affecting the PCS industry could have a significant adverse impact on
the Company and its plans. The Company's business may be adversely affected by
the adoption of restrictive government regulation, which is beyond the Company's
control. The failure to comply, on an ongoing basis, with all applicable current
and future FCC regulations could result in revocation of its licenses or
otherwise prove detrimental to the Company.

FOREIGN OWNERSHIP LIMITATIONS

As of August 20, 1996, the Company had approximately 21.6% of its capital
stock owned or voted, directly or indirectly, by a foreign entity and may raise
additional foreign capital. The Company holds all of its PCS licenses indirectly
through a subsidiary. Under existing law, if the parent entity of a licensee has
more than 25% of its capital stock owned or voted, directly or indirectly, by a
foreign entity, the FCC can refuse to renew or revoke a license if it finds that
the public interest will be served by its refusal to renew or revocation. In
addition, no more than 20% of the capital stock of an FCC licensee may be owned
or voted, directly or indirectly, by a foreign entity. The Company intends to
structure all investments in the Company so as to comply with these guidelines.
These restrictions could adversely affect the ability of the Company to obtain
additional equity financing from foreign companies. If the FCC deems that the
Company has exceeded the foreign ownership or control limits, it could revoke or
deny the renewal of the Company's licenses or require the Company to
restructure. See "-- Finality of C Block License Awards at License Grant Date,"
"Business -- Legal Proceedings" and "Regulation of the Wireless
Telecommunications Industry."

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<PAGE> 23

NO PRIOR MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public market for the Class B
Common Stock. Although application has been made to have the Class B Common
Stock quoted on the Nasdaq National Market ("Nasdaq"), there can be no assurance
that an active public market for the Class B Common Stock will develop or will
be sustained. The initial public offering price will be determined through
negotiations between the Company and the Underwriters. See "Underwriting." There
can be no assurance that the price at which the Class B Common Stock will trade
in the public market after the Offering will not be lower than the initial
public offering price. Factors such as fluctuations in the valuation of wireless
licenses, results of future FCC auctions, acquisitions by the Company, quarterly
variations in the Company's operating results, announcements of technological
innovations by the Company or its competitors, differences between actual
results and financial estimates by securities analysts, the depth and liquidity
of the market for the Class B Common Stock as well as investor perceptions of
the Company and the PCS industry could cause the market price of the shares of
Class B Common Stock to fluctuate significantly. In addition, the stock market
has experienced volatility that has particularly affected the market prices of
equity securities of many telecommunications companies. Broad market
fluctuations may adversely affect the market price of the Class B Common Stock.

RADIO FREQUENCY EMISSION CONCERNS; MEDICAL DEVICE INTERFERENCE

Allegations have been raised that certain RF emissions from wireless
handsets may be linked to various health concerns, including cancer, and may
interfere with various electronic medical devices, including hearing aids and
pacemakers. In August 1996, the FCC released a report and order adopting new and
generally more restrictive standards for evaluating the environmental effects of
RF emissions from FCC-regulated transmitters, including wireless handsets. These
standards generally follow the criteria established by the National Council on
Radiation Protection and Measurements and endorsed by the Environmental
Protection Agency, and are, in certain respects, similar to existing standards
developed by the American National Standards Institute. Environmental
assessments are required for RF radiation levels in excess of those established
by these criteria, which assessments could significantly impede the grant of FCC
authorizations necessary for commencing service. The new standards include
specific absorption rate limits for low power devices such as PCS handsets
designed for use within 20 centimeters of the body of the user and separate
maximum permissible exposure limits for controlled and uncontrolled environments
for PCS mobile devices with at least 1.5 watts effective radiated power that are
normally maintained at greater distances from the body. While these new
standards have not yet been fully developed and evaluated, the Company believes
that they will not present any significant obstacles to its use or marketing of
PCS equipment, including PCS handsets. In accordance with the Telecommunications
Act of 1996, the FCC has preempted state and local regulation of PCS facilities
on the basis of RF environmental effects, but only to the extent such facilities
comply with these new federal standards. Although the Company's selected
handsets comply with applicable standards, concerns over RF emissions may have
the effect of discouraging the use of wireless handsets, which could have an
adverse effect upon the Company's financial condition and results of operations.

Certain interest groups have requested that the FCC investigate claims that
digital wireless handsets pose health concerns and cause interference with
hearing aids and other medical devices. The Center for the Study of
Electromagnetic Compatibility at the University of Oklahoma (the "Center"),
which was founded in 1994 with funds from the wireless industry, is studying
this issue. The Center recently released results from the first phase of its
study, which focused on the operation of handsets at maximum power. This study
indicated that the three wireless technologies tested, including GSM, caused
interference with hearing aids only in some instances. In addition, the Personal
Communications Industry Association (the "PCIA") announced in July 1995 that it
was undertaking an industry-wide study to gather information on possible PCS
interference with medical devices for all PCS standards. There can be no
assurance that the findings of such studies will not have an adverse effect on
the Company's business (including its use of GSM technology) or that such
findings will not lead to government regulations that will have an adverse
effect on the Company's business.

Preliminary results from researchers working under the guidance of Wireless
Technology Research LLC indicate that digital wireless handsets cause
interference with pacemakers. These researchers have recommended preliminarily
that patients dependent on pacemakers avoid using digital telephones and that

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<PAGE> 24

nondependent patients keep such telephones away from their implanted devices.
Final recommendations from this group are expected in the second half of 1996.
There can be no assurance that such recommendations will not lead to
governmental regulation or that such recommendations will not have a material
adverse effect on the Company. See "Regulation of the Wireless
Telecommunications Industry."

RELOCATION OF FIXED MICROWAVE LICENSEES

Upon the grant of a PCS license, a PCS licensee will be required to share
spectrum with existing licensees that operate certain fixed microwave systems
within each of its BTAs. These licensees will initially have priority use of the
spectrum. To secure a sufficient amount of unencumbered spectrum to operate its
PCS networks efficiently, the Company may need to negotiate agreements to pay
for the relocation of many of these existing licensees. In such places where
relocation is necessary to permit operation of the Company's PCS networks, any
delay in the relocation of such licensees may adversely affect the Company's
ability to commence timely commercial operation of its PCS networks. In an
effort to balance the competing interests of existing microwave operators and
newly authorized PCS licensees, the FCC has adopted a transition plan to
relocate such microwave operators to other spectrum blocks at the expense of the
PCS licensees. This transition plan allows most microwave operators to use the
PCS spectrum for a two-year voluntary negotiation period, beginning on May 22,
1996, the date on which the Company filed the long-form application for its PCS
licenses, and an additional one-year mandatory negotiation period thereafter.
For public safety entities dedicating a majority of their system communications
for police, fire or emergency medical services operations, the voluntary
negotiation period is three years, with a two-year mandatory negotiation period.
PCS licensees unable to reach agreement within these time periods may pursue
involuntary relocation procedures, but such procedures will require the
construction of comparable equipment facilities for microwave operators at the
expense of the PCS licensee. Incumbent microwave licensees lose their priority
status after April 2005 if they have not relocated by that time and if a PCS
licensee provides six months' notice that it intends to turn on a system within
interference range of the incumbent's system. The FCC is currently considering
shortening the voluntary negotiation period and lengthening the mandatory
negotiation period for each class of incumbent. There can be no assurance that
the Company will be successful in reaching timely agreements with the existing
microwave licensees or that any such agreements will be on terms favorable to
the Company. The Company also may be required to contribute to the costs of
relocation under agreements reached by other PCS licensees if such relocation
benefits the Company's license areas. Conversely, the Company may receive
contributions from other PCS licensees towards its relocation costs. Depending
on the terms of such agreements, the Company's ability to operate its PCS
networks profitably may be adversely affected. See "Regulation of the Wireless
Telecommunications Industry."

DILUTION

Investors participating in the Offering will incur immediate, substantial
dilution. To the extent outstanding options and warrants to purchase the Common
Stock are exercised, there will be further dilution. Dilution may also result
from future stock option grants and equity issuances. In connection with such
grants and issuances, stock options may have to be granted to Control Group
members and Qualifying Investors to maintain FCC required equity ownership
levels, thereby increasing such dilutive effect. See "Dilution," "Regulation of
the Wireless Telecommunications Industry" and "Description of Capital Stock."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Class B Common Stock in the public market
after the Offering could adversely affect the market price for the Class B
Common Stock and the Company's ability to raise additional capital. In addition
to the shares ( shares if the Underwriters'
over-allotment options are exercised in full) of Class B Common Stock offered by
the Company in the Offering, beginning days after the date of this
Prospectus, following the expiration of certain lock-up agreements between the
Underwriters, the Company's executive officers and directors and certain other
stockholders of the Company, additional outstanding shares of
Class B Common Stock will be eligible for sale in the public market, subject to
the provisions of Rule 144 ("Rule 144") or Rule 701 ("Rule 701") under the
Securities

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<PAGE> 25

Act of 1933, as amended (the "Securities Act"). In addition, up to an aggregate
of shares of Class B Common Stock, including an aggregate of
shares issuable upon exercise of outstanding stock options (the
"Option Shares") and conversion rights, may become eligible for resale in the
public market at various times after the expiration of the day lock-up
period, depending upon when such shares are actually issued, if at all, and
whether such shares are registered for resale under the Securities Act, or are
subject to Rule 144 or Rule 701 under the Securities Act.

From the date of the consummation of the Offering through the end of the
third year after the date of grant to the Company of its first PCS license (the
"License Grant Date"), up to 2% of the shares of Class A Common Stock then
outstanding are convertible into shares of Class B Common Stock on a 1-to-1
basis, subject to the condition that, following such conversion, the Company
would maintain its Designated Entity Status. Following the end of the third year
after the License Grant Date, up to 20% of the shares of Class A Common Stock
then outstanding are convertible into shares of Class B Common Stock on a 1-to-1
basis and under the same condition. Following the end of the fifth year after
the License Grant Date, additional shares of Class A Common Stock may be
converted into shares of Class B Common Stock on a 1-to-1 basis and under the
same condition; provided that the number of such shares to be exchanged, when
added to the number of shares of Class A Common Stock previously converted, do
not exceed 60% of the shares of Class A Common Stock outstanding at the time of
the Offering. Such shares of Class B Common Stock issued upon conversion of
shares of Class A Common Stock may become eligible for resale in the public
market subject to the provisions of Rule 144 or Rule 701. The Company is unable
to estimate the number of shares which may be sold under Rule 144 or Rule 701 or
pursuant to registration rights since this will depend upon the market price of
the Common Stock, the individual circumstances of the sellers and other factors.
See "Description of Capital Stock" and "Shares Eligible for Future Sale."

The Company intends to register all or a portion of the Option Shares for
resale in the public market days after the effective date of the
Offering. Approximately of such Option Shares will be subject to
the lock-up agreements with the Underwriters. Options with respect
to of the Option Shares are currently exercisable. In
addition, additional shares of Class B Common Stock are reserved
for issuance pursuant to future option grants under the Company's stock option
plan. See "Management -- Executive Compensation," "Principal Stockholders"
and "Shares Eligible for Future Sale."

FINALITY OF C BLOCK LICENSE AWARDS AT LICENSE GRANT DATE

The grant of a C Block license by the FCC becomes final after a 30- to
40-day reconsideration period following the license grant date, provided that
such order of license grant is not subject to FCC reconsideration, a petition
for reconsideration, an application for review, or judicial appeal. At the
license grant date, the Company will have authorization to commence construction
of its PCS network for the licensed service area. Any preparation for PCS
network construction prior to the grant becoming final (e.g., negotiation with
incumbent microwave licensees, site acquisition activities and equipment
procurement and construction) will be performed at the Company's risk and
expense. The Company's applications for its PCS licenses were the subject of
certain challenges by third parties. See "Business -- Legal Proceedings."

UNCERTAINTY OF PROTECTION OF INTELLECTUAL PROPERTY RIGHTS AND BRANDING

The Company's business strategy relies on a combination of trademarks and
non-disclosure and development agreements in order to establish and protect its
proprietary rights. As the Company expects to be a retail provider of PCS, the
success of its marketing strategy will depend in part on its ability to create
value in its brand name. The Company has applied for registration of the name
"Pocket Communications" and certain derivatives thereof. The Company has been
informed by a third party that such party may object to the use of the term
Pocket as a mark for certain types of goods and services. The Company believes
that any such objection would be overbroad and would not materially affect the
Company's business plans. There can be no assurance, however, that such
registration, if granted, will provide any meaningful benefit to the Company.
The Company's competitors may develop branding with significantly greater name
recognition than that of the Company. Failure by the Company to develop value in
a brand name or to develop suitable alternatives thereto would have a material
adverse effect on the Company's ability to market its products and services and

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<PAGE> 26

could require the Company to invest significant additional funds to develop or
license alternatives. Furthermore, the Company will need to develop, register
and promote a trade name for its mass market phones. There can be no assurance
that a brand name chosen by the Company will be granted registration or that if
granted registration will provide any meaningful benefit to the Company or will
not be challenged by owners of similar trade names. See "Business -- Products
and Services" and "-- Marketing and Distribution Strategy."

ABSENCE OF DIVIDENDS

The Company has never paid dividends on its Common Stock and does not
anticipate paying any such dividends in the foreseeable future. In addition, the
Indenture and certain vendor financing agreements are expected to contain
restrictions on the Company's ability to declare and pay dividends on its Common
Stock. See "Dividend Policy." Under the Articles of Incorporation, the
declaration of dividends on Common Stock requires the approval of at least
two-thirds of the entire Board of Directors.

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USE OF PROCEEDS

The net proceeds to the Company from the Offering are estimated to be
approximately $ million after deducting estimated underwriting
discounts and commissions and offering expenses. This figure assumes an initial
public offering price of $ per share, the midpoint of the range set
forth on the cover page hereof. The Company expects to use the net proceeds of
the Offering, together with the net proceeds from the Debt Offering (estimated
to be $ million), (i) for interest payments on the Government Financing
and to repay the borrowings under certain of the Company's loan and credit
facilities (approximately $ million, including $ million of
borrowings at % interest, payable quarterly, under the Short-Term Facility
(as defined herein) used for the down payment of the PCS licenses and maturing
on ), and (ii) for the buildout and operation of the PCS networks in
its license areas, to finance potential acquisitions and for general corporate
purposes (approximately $ million). Pending such uses, the net proceeds
of the Offering will be invested in short-term, interest-bearing, investment
grade marketable securities. The Company expects that it will require further
financing for the foregoing activities beyond the funds provided by the
Offering. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources" and "Description of
Certain Indebtedness."

DIVIDEND POLICY

The Company has never paid or declared any cash dividends on its Common
Stock. The Company presently intends to retain future earnings to support the
growth of its business and, therefore, does not anticipate paying cash dividends
in the near future. The payment of any future dividends on the Common Stock will
be determined by the Board of Directors in light of conditions then existing,
including the Company's earnings, financial condition, capital requirements,
restrictions in financing arrangements, business conditions, regulations
relating to the Control Group ownership requirements and other factors. Under
the provisions of the Articles of Incorporation, the declaration of dividends on
Common Stock requires the approval of at least two-thirds of the entire Board of
Directors. In addition, the Indenture and certain vendor financing agreements
are expected to contain provisions that will preclude the ability of the Company
to pay cash dividends on the Class B Common Stock. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

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DILUTION

The pro forma net tangible book value of the Company at June 30, 1996 was
approximately $ million or $ per share of Common Stock. Pro forma net
tangible book value per share represents the amount of the Company's tangible
assets less total liabilities, divided by the number of shares of Common Stock
outstanding, after the anticipated conversion of $ principal amount of
certain convertible debt into shares of Class B Common Stock. After giving
effect to the sale by the Company of shares of the Class B Common Stock
offered hereby at an assumed initial public offering price of $ , which is
the midpoint of the range stated on the cover page hereof, resulting in
estimated aggregate net proceeds of approximately $ million, the pro forma
net tangible book value of the Company at June 30, 1996 would have been
approximately $ per share. This represents an immediate increase of $
per share to existing stockholders and an immediate dilution of $ to new
investors purchasing Class B Common Stock in the Offering. The following table
illustrates this per share dilution as of June 30, 1996.

<TABLE>
<S> <C> <C>
Initial public offering price per share.......................... $ .
Pro Forma net tangible book value (deficit) per share before
the Offering................................................ $ ( .)
Increase per share attributable to the Offering................ .
-------
Pro Forma net tangible book value (deficit) per share after the
Offering....................................................... ( .)
-------
Dilution per share to new investors.............................. $ .
=======
</TABLE>

If the Underwriters' over-allotment option were exercised in full, the pro
forma net tangible book value per share of Common Stock after giving effect to
the Offering would be $ per share, the increase in net tangible book value
per share would be $ and the dilution to persons who purchase shares of
Class B Common Stock would be $ per share.

The following table summarizes, on a pro forma basis as of June 30, 1996,
the differences between the existing stockholders and the new investors with
respect to the number of shares of Common Stock purchased from the Company, the
total consideration paid therefor and the average price per share paid by the
existing stockholders and the new investors, at the initial public offering
price of $ per share, which is the midpoint of the range stated on the cover
page hereof.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------ ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
<S> <C> <C> <C> <C> <C>
Current stockholders................... . % $ , , . % $ .
New investors.......................... . % $ , , . % $ .
------ ------- ----------- ------- ---------
Total............................. . % $ , , . % $ .
</TABLE>

The foregoing computations in this Dilution section exclude the Reserved
Option Shares, the Control Group Option Shares and shares reserved for issuance
upon exercise of certain warrants. See "Management -- Stock Option Plans,"
"-- Compensation of Directors," "Regulation of the Wireless Telecommunications
Industry," "Description of Certain Indebtedness" and "Description of Capital
Stock."

24
<PAGE> 29

CAPITALIZATION

The following table sets forth the actual, pro forma and pro forma as
adjusted capitalization of the Company as of June 30, 1996. The information set
forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Audited
Consolidated Financial Statements and the notes thereto appearing elsewhere in
this Prospectus. See "Use of Proceeds."

<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
-------------------------------------------
PRO FORMA
ACTUAL(1) PRO FORMA(2) AS ADJUSTED(3)
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents................................ $ 417 $ $
======= ======= =======
Short-term borrowings.................................... $ 17,000 $ $
======= ======= =======
Long-term debt:
Senior Discount Notes.................................. $ -- $ $
Government Financing(4)................................ --
Other including deferred interest...................... 63,354
------- ------- -------
Total long-term debt........................... 63,354
Minority interest........................................ 1,528
Redeemable Class B Common Stock.......................... 1,500
Stockholders' equity (deficit)(5):
Preferred Stock, par value $.01 per share, 100,000,000
shares authorized; no shares issued and
outstanding.........................................
Common Stock, par value $.01 per share,
Class A Common Stock, 100,000,000 shares authorized,
19,700,000 shares issued and outstanding actual;
pro forma shares issued and outstanding;
and shares issued and outstanding pro
forma as adjusted................................. 197
Class B Common Stock, 100,000,000 shares authorized,
7,560,120 shares issued and outstanding actual;
pro forma shares issued and outstanding;
and shares issued and outstanding pro
forma as adjusted................................. 76
Additional paid-in capital............................. 6,817
Deferred compensation.................................. (310)
Deficit accumulated during the development stage....... (15,079)
------- ------- -------
Total stockholders' equity (deficit)........... (8,299)
------- ------- -------
Total capitalization................................... $ 58,083 $ $
======= ======= =======
</TABLE>

- ---------------
(1) Gives effect to the Recapitalization, effected prior to the consummation of
the Offering.

(2) Gives effect to certain events which occurred subsequent to June 30, 1996,
including (i) the $ million of additional borrowings under certain loan
agreements and credit facilities to satisfy the balance of the FCC down
payment requirement, (ii) conversion of approximately $ million principal
amount of convertible debt into shares of Class B Common Stock, subject to
compliance with FCC requirements and (iii) the capitalization as an
intangible asset of the FCC licenses awarded to the Company and the
recognition of the resulting indebtedness to the FCC of $ million.

(3) Adjusted to reflect (i) the sale by the Company of shares of Class B
Common Stock pursuant to the Offering offered hereby at an assumed initial
public offering price of $ , which is the midpoint of the range stated on
the cover page hereof, resulting in estimated aggregate net proceeds of
approximately $ million, (ii) the sale of $ million of gross proceeds
in the Debt Offering resulting in estimated aggregate net proceeds of
approximately $ million and (iii) the application of the net proceeds
therefrom to repay $ million of borrowings under certain loan and credit
facilities.

(4) Recorded at its estimated fair market value at the date the PCS licenses
were awarded to the Company.

(5) Excludes the Reserved Option Shares, the Control Group Option Shares and
shares reserved for issuance upon exercise of warrants. See
"Management -- Stock Option Plans" and "-- Compensation of Directors,"
"Regulation of the Wireless Telecommunications Industry," "Description of
Certain Indebtedness" and "Description of Capital Stock." The Company
expects that the number of authorized shares of capital stock will be
adjusted as part of the Recapitalization.

25
<PAGE> 30

SELECTED FINANCIAL DATA

The following table presents selected historical financial data of the
Company. The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Audited Consolidated Financial Statements and notes thereto
included elsewhere in this Prospectus. The consolidated statement of operations
data set forth below for the year ended December 31, 1995 and the period April
20, 1994 (date of inception) to December 31, 1994 and the consolidated balance
sheet data as of December 31, 1995 and 1994 are derived from the Audited
Consolidated Financial Statements and the notes thereto included elsewhere in
this Prospectus. The selected consolidated financial data for the six-month
periods ended June 30, 1995 and 1996 has been derived from the unaudited
consolidated financial statements of the Company, which, in the opinion of
management, include all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the information set forth therein. The
results for the six-month periods ended June 30, 1995 and 1996 are not
necessarily indicative of the results that may be expected for the full year or
for any future period.
<TABLE>
<CAPTION>
FOR THE PERIOD SIX MONTHS
APRIL 20, 1994 ENDED JUNE 30,
(DATE OF INCEPTION) YEAR ENDED -------------------
TO DECEMBER 31, 1994 DECEMBER 31, 1995 1995 1996
(UNAUDITED)

STATEMENT OF OPERATIONS DATA: (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues............................... $ -- $ -- $ -- $ --
Operating expenses:
General and administrative.......... 198 4,348 1,555 3,201
Business development................ 841 2,257 710 1,131
Sales and marketing................. -- 567 55 426
------ ------ ------ ------
Operating loss......................... (1,039) (7,172) (2,320) (4,758)
Interest income (expense).............. -- (221) 25 (1,889)
------ ------ ------ ------
Net loss............................... $ (1,039) $(7,393) $(2,295) $(6,647)
====== ====== ====== ======
PRO FORMA:
Net loss per common share(1)........... $ $
Weighted average number of common
shares outstanding(1)...............
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER AS OF JUNE 30, 1996
31, ----------------------------------------
----------------- PRO FORMA
1994 1995 ACTUAL PRO FORMA(2) AS ADJUSTED(3)
BALANCE SHEET DATA: (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Working capital (deficit)........... $(113) $(2,905) $(30,619) $ $
License deposit..................... -- 40,050 71,338
Total assets........................ 23 44,333 91,429
Short-term borrowings............... -- 1,500 17,000
Long-term debt, including deferred -- 40,400 63,354
interest.........................
Minority interest................... -- 76 1,528
Total stockholders' equity (100) (2,116) (8,299)
(deficit)........................
</TABLE>

- ---------------
(1) See Note 3 of the Notes to Consolidated Financial Statements for an
explanation of the pro forma loss per share and the shares used in computing
pro forma loss per share.

(2) Gives effect to (i) additional borrowings totaling $ million to
satisfy the balance due on the FCC down payment subsequent to June 30, 1996
and prior to the consummation of the Offering, (ii) the conversion of
approximately $ million principal amount of certain convertible debt into
shares of Class B Common Stock, subject to compliance with FCC
requirements, and (iii) the capitalization as an intangible asset of the PCS
licenses awarded to the Company and the recognition of the resulting
indebtedness to the FCC of $ million.

(3) Gives effect to the events and transactions referred to in note 2 above and
(i) the sale by the Company of shares of Class B Common Stock pursuant
to the Offering (at an assumed public offering price of $ per share,
which is the midpoint of the range stated on the cover page hereof),
resulting in estimated aggregate net proceeds of approximately $
million, (ii) the sale of $ million of gross proceeds in the Debt
Offering resulting in estimated aggregate net proceeds of approximately
$ million and (iii) the application of the net proceeds therefrom to
repay $ million of borrowings under certain loan and credit
facilities.

26
<PAGE> 31

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

OVERVIEW

The Company was incorporated in April 1994 for the purposes of (i)
acquiring PCS licenses from the FCC, (ii) constructing and operating PCS
networks in its markets and (iii) offering wireless communications services in
these areas. The Company is currently the sixth largest PCS licensee in the U.S.
in terms of POPs, having acquired 43 BTA licenses in the recently completed C
Block auction. More than 85% of the Company's 35.5 million POPs are in
substantially contiguous markets located in the central region of the United
States. The Company intends to build out its PCS networks rapidly using
commercially proven GSM technology and intends to offer commercial services in
Las Vegas and Honolulu in early 1997.

Since formation, the Company has been focusing on developing its business
and has not generated any operating revenues. The Company has been devoting its
efforts to establishing its business, including recruiting its management team,
conducting market research, participating in the C Block auction, arranging
financing and performing initial activities relating to the development and
construction of its PCS networks.

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995

Total operating expenses increased $2.5 million to $4.8 million for the
six-month period ended June 30, 1996, compared with $2.3 million for the
comparable period in 1995. General and administrative expenses were $3.2 million
and $1.6 million, representing approximately 67% of operating expenses for each
of the six-month periods ended June 30, 1996 and 1995, respectively. The
increase in general and administrative expenses is primarily attributable to (i)
a $1.2 million increase in headcount and personnel related costs and (ii) an
increase of $218,000 in occupancy related costs, including equipment rental,
both of which reflect the Company's growth in connection with efforts to prepare
for the C Block auction and to arrange financing. Business development expenses
were $1.1 million and $710,000, representing approximately 24% and 31% of
operating expenses for the six-month periods ended June 30, 1996 and 1995,
respectively. The increase in business development expenses was primarily
attributable to professional fees related to services during the C Block auction
and to the development of the Company's corporate structure. Sales and marketing
expenses were $426,000 and $55,000, representing 9% and 2% of operating expenses
for the six-month periods ended June 30, 1996 and 1995, respectively. The
increase in sales and marketing expenses was primarily attributable to initial
efforts in marketing the Company's products and services, which the Company
expects to begin offering in early 1997.

Net interest expense was $1.9 million for the six-month period ended June
30, 1996, as compared to $25,000 interest income for the six-month period ended
June 30, 1995. Net interest expense for the six-month period ended June 30, 1996
increased as a result of financing agreements undertaken in 1995 to fund working
capital requirements and the down payment for the PCS licenses. See "Description
of Certain Indebtedness."

YEAR ENDED DECEMBER 31, 1995 COMPARED TO THE PERIOD FROM APRIL 20, 1994
(INCEPTION) TO DECEMBER 31, 1994

Total operating expenses increased $6.2 million to $7.2 million for 1995,
compared with $1.0 million for the period April 20, 1994 to December 31, 1994.
General and administrative expenses were $4.3 million and $198,000, representing
approximately 61% and 19% of operating expenses for 1995 and the period April
20, 1994 to December 31, 1994, respectively. The increase in general and
administrative expenses is primarily attributable to (i) a $3.5 million increase
in headcount and personnel related costs and (ii) an increase of $367,000 in
occupancy related costs, including equipment rental, both of which reflect the
Company's growth in connection with efforts to prepare for the C Block auction
and to arrange financing. Business development expenses were $2.3 million and
$841,000, representing 31% and 81% of operating expenses in 1995 and the period
April 20, 1994 to December 31, 1994, respectively. The increase in business
development expenses was primarily attributable to professional fees related to
services during the C Block auction and to the development of the Company's
corporate structure. The decrease in business development expenses as a

27
<PAGE> 32

percentage of operating expenses was due to certain one-time development efforts
incurred in 1994. Sales and marketing expenses were $567,000 in 1995,
representing 8% of operating expenses and reflecting the initial costs in
marketing the Company's products and services, which the Company expects to
begin offering in early 1997.

Net interest expense was $221,000 for the year ended December 31, 1995
compared to no interest expense or income in the period April 20, 1994 to
December 31, 1994. Net interest expense for the year ended 1995 increased as a
result of financing agreements undertaken in 1995 to fund working capital
requirements and the down payment for the PCS licenses. See "Description of
Certain Indebtedness."

LIQUIDITY AND CAPITAL RESOURCES

As set forth in its consolidated statements of cash flows, since inception
through June 30, 1996, the primary source of cash has been $6.7 million from the
sale of Common Stock and $77.1 million of proceeds from the issuance of debt,
$61.6 million of which is convertible into Class B Common Stock, subject to
compliance with FCC requirements. These sources of cash have (i) financed
operating activities of $8.4 million including personnel related costs, and
consulting and legal fees through June 30, 1996, (ii) funded capital expenditure
requirements of $3.1 million, including $2.7 million in connection with the
design and development of certain PCS networks and (iii) partially funded the
Company's initial FCC license deposit. At June 30, 1996, the Company had
$417,000 of cash and cash equivalents and negative working capital of $30.6
million, including $17.0 million of the current portion of long-term debt and
$4.7 million of accrued network development costs, both of which are expected to
be refinanced as part of long-term vendor financing facilities.

FINANCING PLAN

To date, sources of financing secured by the Company total $ million
primarily from (i) the issuance of $14.3 million in Common Stock, (ii) $ of
committed vendor financing and (iii) debt issuances of $146.0 million.

The Company estimates that the aggregate funds required for the
development, construction and deployment of PCS networks in its markets through
December 31, 1997 will total approximately $1.18 billion. This figure consists
of (i) approximately $785 million for capital expenditures, (ii) approximately
$210 million in debt service requirements and (iii) approximately $180 million
for operating losses and working capital needs. The requirements are expected to
be met through a combination of anticipated financing and existing financing,
which together the Company believes will be sufficient to fund its operations
and meet its obligations until at least December 31, 1997. In addition, the
Company has incurred the Government Financing to finance the balance due for its
licenses. See "Description of Certain Indebtedness." Additional financing will
be required in the event that the buildout of the PCS networks occurs more
quickly than expected, the costs are greater than anticipated or the Company
takes advantage of additional acquisition opportunities, including those that
may arise through future FCC auctions.

Certain of the existing financing arrangements include financial and
non-financial covenants. These covenants impose restrictions and limitations on
transactions by the Company other than in the ordinary course of its business or
that would affect its cash flow, liabilities or capital structure. Additionally,
the Company has entered into a pledge agreement pursuant to which the capital
stock of DCR PCS, Inc., a wholly owned subsidiary of the Company ("DCR PCS"), is
pledged to certain lenders to collateralize borrowings under related financing
agreements. It is expected that the various agreements under future financing,
if finalized, will contain various covenants deemed customary and appropriate
for financing of this nature, including, without limitation, restrictions on
indebtedness, restrictions on payments of dividends and maintenance of certain
financial requirements. Certain of such anticipated financing may be secured by
substantially all of the assets of the Company.

28
<PAGE> 33

then existing or FCC regulations. Inability to obtain such financing could
result in delay or reduction of the Company's development and construction
plans, cause its development and construction to fall behind schedule and result
in failure to meet the FCC buildout requirements and its debt service
obligations, which, individually or in the aggregate, could have a material
adverse effect on the Company's financial condition and results of operation. In
addition, failure to meet the buildout requirements could result in revocation
of the Company's PCS licenses. Any future financing may also have an adverse
effect on the price of the shares of Class B Common Stock. In addition,
compliance with certain FCC regulations regarding equity ownership of C Block
licenses may limit the Company's flexibility in obtaining additional financing.

Further, the exact amount of the Company's future requirements will depend
upon many factors, including the cost of development of PCS networks in each of
its clusters, the extent of completion and pricing of wireless services in these
clusters, the acceptance of the Company's services, and the development of new
consumer products. Failure to obtain such financing could result in delay or
abandonment of some or all of the Company's development and expansion plans. See
"Risk Factors."

The Company has entered into certain supply agreements with third parties,
pursuant to which the Company may purchase up to a total of approximately $
million in equipment, services and software required to construct and deploy its
PCS Network. These supply agreements are subject to various conditions,
including, as to some, the availability of financing by the respective vendor.

The Company's maturities of long-term debt for the next five years and the
Company's future commitments for lease arrangements, and anticipated purchases
under supply agreements for equipment and services are discussed in Notes 7 and
10, respectively, to the consolidated financial statements as of June 30, 1996.

Certain of the Company's operating expenses, system expansion efforts
beyond 1998 and debt obligations may be subject to inflation and interest rate
adjustments. There can be no assurance that the Company will be able to raise
rates to customers in order to offset increased expenses caused by such
inflation or interest rate adjustments.

Given the Company's network development activities, certain of its costs,
including interest, have been capitalized. The policy of capitalizing interest
costs will be discontinued when the PCS network is ready for commercial use,
and, thereafter, all interest costs associated with that specific PCS network
will be expensed. Additionally, depreciation of a PCS network will commence when
that network is available for commercial use. Future charges to operations for
interest cost and depreciation expense of the PCS Network will be significant.
Beginning in the fourth quarter of 1996, the Company expects increased
advertising, promotion and personnel costs in connection with the anticipated
offering in early 1997 of service in the Company's Las Vegas and Honolulu
markets. The Company expects increased capital expenditures and supporting
costs, including personnel, through the buildout of additional Company PCS
networks in other markets.

RECENT ACCOUNTING PRONOUNCEMENT

In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." SFAS No. 123 encourages, but
does not require, a fair value based method of accounting for employee stock
options or similar equity instruments. Entities which elect not to adopt the
fair value method of accounting are required to make pro forma disclosures of
net loss and net loss per share as if the fair value method were adopted. SFAS
No. 123 is required for fiscal years beginning after December 15, 1995.
Management does not intend to adopt the fair value method of accounting.
Accordingly, adoption of SFAS No. 123 in the fiscal year ending December 31,
1996, will only impact the Company's disclosures.

29
<PAGE> 34

BUSINESS

OVERVIEW

Pocket intends to be a leading provider of full-service wireless
telecommunications services in its markets, which cover approximately 35.5
million POPs. The Company currently is the sixth largest PCS licensee in the
United States in terms of POPs, having acquired 43 BTA licenses, each consisting
of 30 MHz of spectrum, in the recently completed FCC C Block auction. Major
markets covered by the Company's PCS licenses include Chicago, Dallas-Ft. Worth,
Detroit, St. Louis, New Orleans, Las Vegas, and Honolulu. More than 85% of the
Company's POPs are in substantially contiguous markets located in the central
region of the U.S. The Company intends to build out its PCS networks rapidly
using commercially established GSM technology, and anticipates commencing
service in Las Vegas and Honolulu in early 1997.

The Company successfully bid $1.43 billion, net of a 25% bidding credit,
for 43 BTA licenses in the C Block auction. To date, the Company has paid $143
million, representing 10% of this total net bid, as a down payment. The
Government Financing terms for the balance of $1.28 billion include a
below-market interest rate of % fixed for the 10-year term of the
financing. This Government Financing allows the Company to pay interest only on
the principal balance for the first six years of the license term at %, with
payments of interest and principal amortized over the remaining four years of
the license term. This favorable Government Financing significantly reduces the
effective cost of these licenses to the Company, on a net present value basis.

The Company has selected GSM technology, with established commercial
performance and multiple equipment suppliers, to position it to rapidly build
out its PCS networks at competitive costs. Based on the announced intentions of
other PCS licensees to date, the Company will be the second largest PCS licensee
in the U.S. (in terms of POPs) using GSM technology, and in 37 of its 43 BTAs
(representing 93% of the Company's total POPs), the Company will be the only PCS
licensee using GSM technology. GSM is the predominant digital wireless
technology in the world, serving over 20 million customers in 77 countries as of
June 1996. GSM permits enhanced features such as secure calling, text messaging
and data and fax services. In addition, GSM permits the networking of equipment
from a number of different manufacturers. The Company believes that, given the
global predominance of GSM usage, the cost of GSM equipment will decrease as
economies of scale in production of network equipment are realized and
competition among equipment suppliers intensifies.

The Company has strategic relationships with Ericsson, Siemens, Nortel,
Mitsubishi, LCC and Booz - Allen. The Company has established agreements for the
supply of up to $ million of equipment and services and is negotiating vendor
financing agreements that are expected to total at least $ million. It is
anticipated that in each one of the Company's markets, Ericsson, Siemens or
Nortel will be the primary network equipment supplier and provide related vendor
financing. The Company and Mitsubishi are developing a custom-designed handset
and are negotiating a handset supply agreement. LCC is providing radio network
design, program management (including site acquisition and construction
management) and

30
<PAGE> 35

network optimization services. Booz - Allen is providing product design,
information system deployment, systems integration services and management
consulting. See "-- Strategic Relationships."

POCKET'S STRATEGY

- Early Market Entry. The Company's objective is to be among the first PCS
providers in each of its markets, which will help it to set the standard
for high quality wireless telecommunications services, thereby building
brand name recognition and product awareness. The Company believes that
by building its PCS network using commercially established GSM
technology, it will minimize many risks associated with using new
technology and will achieve early market entry. The Company has made
significant progress towards the completion of the detailed engineering
work to build out its Las Vegas and Honolulu networks and has begun the
preliminary network design and site acquisition processes in certain
other service areas. The Company plans to begin offering services in Las
Vegas and Honolulu in early 1997, in Chicago, Detroit, Dallas and St.
Louis by late 1997, in Little Rock and New Orleans by early 1998 and in
its remaining markets by the end of 1998. The Company plans to build out
networks that will be able to offer service to at least 90% of the
population within its service areas by the end of 1998.

- Target Mass Consumer Market. The Company's marketing strategy is to
focus on the mass consumer market, targeting the estimated 85% of the
population in its markets who currently are not using cellular services
as well as cellular service users who may be dissatisfied with the
quality or cost of their existing service. In order to attract
subscribers from this potential market, the Company plans to offer
service packages priced significantly below current cellular rates on a
per minute basis. The Company also plans to simplify the products and
services it will offer by not requiring service contracts, providing
immediate service activation, offering 24-hour customer service,
streamlining the customer's bill and providing user-friendly handsets.
The Company plans to distribute its products and services through a
variety of distribution channels, including Company-owned stores, direct
marketing and retail electronics stores as well as through
non-traditional channels such as supermarkets, kiosks and vending
machines. Prior to launching its services, the Company plans to begin
aggressively developing and marketing its proprietary brand in order to
establish it in the consumer marketplace.

- Superior Products and Services. The Company plans to offer wireless
products and services with superior voice quality, reliability,
functionality and privacy. The Company plans to offer PCS service that
will include one-way paging, voice mail, call waiting, call forwarding,
conference calling and caller ID, with two-way text messaging as an
option. Existing GSM technology will also enable the Company to offer
personalized services such as call screening, rejection, routing and
forwarding, enhanced voice mail and data transmission services such as
electronic mail, facsimile and Internet access. In addition, the Company
and Mitsubishi are developing a custom handset that incorporates an
ergonomic design with easy-to-use menus and large screens to manage
handset functions, and significantly longer battery life than is
currently available for cellular handsets. The existing and planned GSM
systems worldwide will enable the Company to offer national and
international roaming in conjunction with other GSM operators.

31
<PAGE> 36

that this approach will allow it to customize its marketing efforts and
maintain high levels of customer satisfaction. This clustering strategy is
designed to facilitate network switch-sharing, allow the Company to
benefit from shared resources and coordinated management and provide
efficiencies in advertising, marketing and distribution within a region.

INDUSTRY OVERVIEW

Since 1985, the wireless telecommunications services industry has
experienced strong growth in demand driven by the increasing availability of
services, the introduction of improved technology, new features, regulatory
changes and more affordable pricing. According to the Cellular
Telecommunications Industry Association ("CTIA"), the number of cellular users
in the United States has grown from approximately 340,000 at the end of 1985 to
over 33.8 million at the end of 1995. During the three years ending December
1995, the compounded annual cellular subscriber growth rate in the United States
has been approximately 45%. Over that same time period, the wireless telephony
penetration rate has grown from approximately 4% to approximately 13%, and is
forecasted by Paul Kagan Associates to reach approximately 48% by 2006.

Current wireless telecommunications service is available using either
analog or digital technology. Analog systems use one continuous electronic
signal which varies in amplitude or frequency over a single radio channel.
Although analog cellular is the most widely deployed service currently
available, it is limited by a number of factors, including inconsistent service
quality, lack of privacy, limited capacity, susceptibility to fraud and
reliability problems in transferring data. Digital systems convert voice or data
signals into a stream of digits and typically use voice compression and other
technologies to allow multiple, simultaneous signal transmissions to be carried
over a single channel. Digital technology offers improved network capacity,
efficiency and flexibility. Digital transmission also allows wireless
telecommunications companies to offer new and enhanced services such as two-way
text messaging, caller ID, improved call privacy and single number ("find me")
service. It also makes possible more robust data transmission features and
"mobile office" applications, such as facsimile, electronic mail and Internet
access. PCS differs from traditional cellular services principally in that PCS
networks operate at a higher frequency band and employ advanced digital
technology.

PCS spectrum differs from existing cellular and SMR spectrum in three basic
ways: frequency, spectrum and geographic division. PCS networks will operate in
a higher-frequency range (1850-1990 MHz) compared to the cellular and SMR
frequency (800-900 MHz). PCS licenses consist of 30 or 10 MHz blocks versus 25
MHz for cellular networks. As a result of the improved capacity of the
infrastructure and large allocation of spectrum in the A, B and C Blocks, PCS
will have more capacity for new wireless services such as data and video
transmission. Finally, the geographic areas for PCS licenses are divided
differently than for cellular licenses. PCS is segmented into 51 MTAs comprised
of 493 BTAs, based upon Rand McNally market definitions. Cellular is divided
into 734 mutually exclusive service areas, consisting of 306 metropolitan
statistical areas ("MSAs") and 428 rural service areas ("RSAs"), which were
created by the U.S. Census Bureau.

PCS and current digital cellular networks also utilize different signaling
protocols. There are currently three principal, competing and incompatible
signaling protocols that have been proposed for use in PCS networks: GSM; CDMA
(Code Division Multiple Access); and TDMA (Time Division Multiple Access). GSM
is the most widely used digital wireless technology in the world and the only
PCS platform commercially available on a broad scale. The CDMA standard is
currently available for PCS only on a test basis in the U.S. The TDMA-based PCS
standard is an "up-banded" version of the time-division based digital cellular
standard currently in limited use by cellular operators in the United States.
TDMA has been selected by AT&T Wireless and SBC for their cellular and PCS
properties.

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<PAGE> 37

GLOBAL SYSTEM FOR MOBILE COMMUNICATIONS

The Company believes that adopting GSM for its PCS network will provide it
with distinct advantages over other technologies. GSM-based PCS networks are
currently in commercial operation and have demonstrated their reliability and
functionality. There are more GSM-based commercial systems throughout the world
than all other digital platforms combined, with over 128 GSM networks serving
over 20 million customers in 77 countries as of June 1996. By deploying GSM, the
Company believes that it can mitigate many of the risks associated with
developing, testing, installing and operating a new technology platform. GSM
also permits the networking of equipment from a number of different
manufacturers. In addition, specifications for GSM systems have been completed,
and GSM standards have been set for switching centers, location registers, base
station controllers and base station transceiver stations as well as Subscriber
Identity Modules ("SIM" or "Smartcards") and handsets.

One of the design objectives for the GSM-based architecture was to offer
advanced services and functionality from a single network. To meet this goal,
the designers made such services part of the standard and based the architecture
on the Integrated Services Digital Network ("ISDN") platform. GSM-based
operators have the flexibility to offer integrated voice, high speed data, fax
and short message services capabilities from one network. GSM also supports the
Intelligent Network ("IN") functionality required to offer advanced subscriber
features needed for virtual private networks, such as abbreviated dialing,
restrictions on incoming or outgoing calls and call handling procedures based on
location. The versatility and advanced feature functionality of GSM allows
operators to have diverse marketing strategies and service offerings.

The Company believes that a GSM network will initially be less expensive to
build than networks based on other digital platforms because the equipment costs
are lower. The number of available equipment vendors provides the Company with
greater purchasing leverage than would be available with alternative
technologies. Currently, there are several manufacturers of GSM networking
equipment, including Ericsson, Nortel, Siemens and Nokia Corporation ("Nokia"),
and a number of manufacturers of GSM handsets, including Ericsson, Mitsubishi,
Motorola, Inc. ("Motorola"), Nokia, Nortel, Siemens and Sony Corporation. The
Company believes that the availability of off-the-shelf GSM equipment and its
entry into key vendor agreements will allow the Company to pursue its aggressive
buildout program earlier than would be possible were the Company to employ other
PCS technologies.

To date, 10 PCS licensees have announced that they intend to deploy
GSM-based PCS networks. As of July 1996, the first six PCS networks that were
operational in the U.S. all utilize GSM technology. APC, the first company to
offer PCS services in the U.S., has been operating a GSM system in the
Baltimore/ Washington D.C. MTA since November 1995, and was reported to serve
approximately 80,000 subscribers after six months of operation. Together, these
10 PCS licensees, including the Company, have licenses covering markets with
over 200 million POPs, or 76% of the United States population. This percentage
may increase when additional successful bidders in the C, D, E and F Blocks
select their PCS technology. The Company is a founding member of the North
American Interest Group, which was formed to promote GSM in order to expand GSM
coverage throughout North America and to seek to establish standards to address
technical and operating issues. The Company expects to enter into roaming
agreements with most or all of the domestic carriers as well as the foreign
carriers who choose to adopt GSM standards for their PCS networks. These
agreements are intended to provide subscribers of either the Company or the
participating carrier to roam in the other's PCS markets.

PRODUCTS AND SERVICES

The Company intends to position its PCS service as a "new category" of
wireless telephone service aimed primarily at the mass consumer market that has
not previously purchased cellular service. The Company has developed an initial
marketing and advertising plan that is designed to create a new identity for its
service. The Company plans to offer the mobility features of cellular, the
calling features of landline and a pricing plan more similar to current local
telephone service than to cellular. The Company's goal is to stimulate demand
for PCS voice and data services and attract subscribers by providing reliable,
superior service at affordable prices. By implementing a GSM-based digital PCS
network, the Company will be able to offer enhanced

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<PAGE> 38

products and services that are not generally available through cellular services
today. Several of these advanced applications and features are described below.

- Mass Market Phone: The Company will offer, as part of its mass marketing
strategy, user-friendly, custom-designed handsets that will replicate the
functionality of traditional landline telephones while offering simple
menus to operate enhanced call functions such as call forwarding and text
messaging.

- Secure Communications: GSM technology provides sophisticated
authentication and encryption functions to verify the user's identity and
to ensure the confidentiality of each call. Digital encryption methods
provide increased call security to protect the confidentiality of voice
and data calls. This increased security may encourage users to make
private calls using PCS that they otherwise would not make with existing
cellular service.

- Excellent Voice Quality: Initially, the Company will use the GSM 13 kbps
full rate vocoder, which provides improved voice quality relative to
existing cellular. Further enhancement in GSM voice quality is expected
to be implemented with the introduction of the 13 kbps enhanced full rate
("EFR") vocoder, which will provide voice quality comparable to existing
wireline service and is expected to be available for commercial service
in early 1997.

- Reliable Service: The Company's initial Network will be designed to
support substantial market penetration by building out relatively high
density cell site configurations. The capacity inherent in the Company's
networks will increase the percentage of calls successfully completed on
the first attempt. The Company believes that the relatively high density
cell site configuration within the Company's networks will allow it to
provide higher quality indoor coverage in most key areas of each market.

- Enhanced Battery Performance: The Company's handsets will have a battery
life that is significantly longer than that of the typical battery life
associated with existing cellular handsets. A GSM handset transmits
messages in segments, turning itself off between transmissions. This
switching is not noticed by the user because the handset is turned on and
off hundreds of times per second. As a result, the handset draws
significantly less battery power, thereby extending the length of time a
battery can be used without having to be recharged. GSM handsets are
capable of entering into "sleep" mode when not in use, which also
significantly extends a battery's power life. In addition, because the
Company's system will utilize closely spaced base stations, less power
will be required to transmit calls, thereby further extending battery
life. Mitsubishi is developing an additional battery for use with the
Company's custom-designed mass market phone, which will provide even
longer talk and standby time.

- Custom Calling Features: The Company plans to offer PCS service that
will include one-way paging, voice mail, call waiting, call forwarding,
conference calling and caller ID, with two-way text messaging as an
option. The technology will also enable the Company to offer personalized
services such as call screening, rejection, routing and forwarding,
enhanced voice mail and data transmission services such as electronic
mail, facsimile and Internet access.

- Subscriber Identity Module: The Company's handsets will utilize GSM's
SIM or Smartcard, which will be programmed with the subscriber's personal
identification and service profile information. This will enable
customers to obtain wireless communications services automatically from
any location served by a GSM provider by simply inserting their SIMs into
any compatible PCS handset. SIMs will also allow the Company to use an
authentication function to verify the activation of a SIM and the current
status of an account. If a SIM is reported stolen, the Company simply
deactivates it. Sophisticated authentication techniques also guard
against cloning of SIMs, which will protect the Company from certain
types of fraud found in the cellular industry today.

- National and International Roaming Capability: The GSM architecture
supports full-featured roaming between GSM systems in North America and
around the world in 77 countries. This inherent roaming capability allows
operators to easily exchange common services, billing records and
location information. Roaming agreements currently are being established
between the various North American GSM operators. GSM coverage may be
supplemented further through roaming agreements between

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<PAGE> 39

GSM operators and current cellular providers once dual-mode phones become
available. See "-- Roaming Agreements."

- Enhanced Data Transmission: Digital networks provide enhanced data
transmission capabilities that will allow the Company to offer a wide
variety of communications and information services such as electronic
mail, facsimile, Internet access and paging through a single handset. The
Company expects that other data applications such as information
services, remote device monitoring and control, image transmission and
point-of-sale device connectivity will become available within the next
few years.

MARKETING AND DISTRIBUTION STRATEGY

Marketing

The Company's marketing objective is to offer the mass consumer market a
comprehensive, differentiated and easy-to-use package of wireless
telecommunications services. Based on management's research into customer
preference and behavior patterns, the Company has developed and adopted a mass
marketing and distribution plan that emphasizes low pricing, quality service,
enhanced features and ease of use. The Company's primary target is the estimated
85% of the population in its markets who do not currently utilize cellular
services. To achieve its objective, the Company is developing its proprietary
brand name and handset for use as part of a package of services that will result
in an affordable product that is easy to find, easy to buy and easy to use. The
Company believes that this approach will broaden the appeal of its products and
services in the mass market and stimulate usage. The Company plans to generate
awareness of its products and services by spending heavily on introductory
advertising prior to entering a market and maintaining significant advertising
expenditures over time. The Company's marketing plan includes the following:

- Easy-to-Use Mass Market Phone: The Company and Mitsubishi are developing
a custom handset that will be easy to use and that is designed to
replicate the functionality of traditional landline telephones. These
handsets also will offer simple menus to operate enhanced call functions
such as call forwarding and text messaging. The Company will offer these
handsets as part of a pre-packaged bundle of services and equipment
targeted to meet the needs of the mass consumer market. The Company also
plans to simplify the activation process in order to offer immediate
local service upon purchase of the phone.

- Affordable Pricing: The Company intends to stimulate demand by offering
service packages with a different structure and a significantly lower
price on a per minute basis than existing cellular plans. The Company
believes that its strategy will eliminate the "sticker shock" experienced
by many first-time cellular customers and provide customers with a price
level closer to their landline service, thereby increasing overall usage.

- No Service Contracts: The Company will not require customers to sign
service contracts and will not charge for activation. Subscribers will
have the flexibility to use the Company's services on a month to month
basis and will not be charged for deactivation of service.

- Immediate Activation: Unlike conventional cellular activation, which
requires a lengthy process after the purchase, the Company intends to
sell a product that will be immediately operable, with no complex
instructions or processes to follow before a local call can be made.

- Encourage Inbound Calls: By offering incentives to receive inbound
calls, the Company believes it will stimulate overall usage and remove
one of the historical barriers to acceptance of wireless services. As a
result, the Company expects to experience an increase in minutes of use
per subscriber, as compared to existing cellular service.

- Simplified Billing: Based on the service package chosen, the Company
plans to provide its subscribers with simplified monthly bills that are
considerably less complex than those used by most existing cellular
operators. By simplifying the bill, the Company expects to minimize
billing inquiries, increase customer satisfaction and build customer
loyalty. The Company plans to make more detailed call information
available to customers upon request at an extra charge.

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<PAGE> 40

- Customer Service: The Company intends to offer efficient and responsive
customer service 24 hours a day, 365 days a year through regional
customer service teams using centralized customer information systems. By
focusing its operations on the regional market level, the Company
believes it will be better able to serve its customers, monitor and
maintain customer satisfaction, build customer loyalty, minimize churn
rates and maximize customer retention.

Distribution

In order to achieve rapid market penetration, the Company will use a wide
range of direct and indirect distribution channels, including Company-owned
stores and micro stores, indirect mass retailers and other low-cost distribution
channels. The Company believes its initial focus on direct channels will allow
for both a direct relationship with its customers and refinement of its selling
process. Over time, the Company expects its increasing use of indirect and other
channels will provide lower customer acquisition costs.

In each market, the Company plans to open several Company-owned stores in
regional malls and prime downtown locations. Each store will use modular designs
focusing on product familiarization and instructional areas and will be designed
to accommodate retail spaces ranging in size from 620 to 3,000 square feet. The
Company also intends to deploy multiple micro stores, or kiosks, which can be
placed in mall common areas, shopping centers, airports and other high-traffic
areas. Micro stores will be free-standing booths designed to occupy from 24 to
100 square feet of space. Advertising campaigns will encourage direct response
ordering, available through the Company's 24-hour customer service, with next
day delivery of the product.

The Company believes that the straightforward nature of its products (i.e.,
immediate activation, bundled service features, simplified billing) will
facilitate sales through indirect channels without significant training support
or compensation from the Company. Accordingly, the Company does not intend to
develop or use a network of highly compensated dealers or agents as an indirect
channel. Rather, the Company will seek to complement its store sales by
distributing its products and services through retail outlets such as consumer
electronics chains, department stores, home improvement stores, grocery stores
and specialty chains.

The Company intends to lower customer acquisition costs by increasing the
volume of sales through indirect retail, as well as developing additional
low-cost channels. These channels are expected to include affinity marketing
programs, telemarketing, Internet commerce and self-service vending machines
designed to sell accessories as well as phones.

POCKET'S PCS MARKETS

Bidding Strategy

The Company's bidding strategy in the C Block auction was guided by four
fundamental strategic objectives:

- Achieve Scale: The Company sought to obtain licenses covering a
sufficiently large market area to allow it to achieve economies of scale
in network construction, operations, marketing and financial structure.
The Company also wanted to assume a leadership role within the GSM
alliance in North America. The Company acquired approximately 35.5
million POPs, making it the second largest GSM operator, the sixth
largest PCS operator and the tenth largest wireless operator in the U.S.
(based on POPs).

- Win Several Large, Geographically Diverse Markets: The Company believed
that winning licenses for several large markets would be key to
establishing itself as an attractive partner to investors, equipment
suppliers and other operators. The Company also believed that geographic
diversity of markets could mitigate adverse consequences resulting from
an economic downturn in any one particular region. The Company won three
of the top seven largest markets -- Chicago, Dallas and Detroit -- as
well as St. Louis, New Orleans, Las Vegas, Honolulu, Omaha and Little
Rock.

- Create Contiguous Clusters: The Company sought to expand coverage around
its large markets by purchasing licenses for smaller, contiguous markets.
The Company believes that contiguous clusters will foster operating
economies of scale and regional marketing opportunities. Thirty-four of
the Company's markets are substantially contiguous, representing
approximately 85% of its license area POPs.

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<PAGE> 41

- Expand GSM Footprint: In 37 out of the Company's 43 BTAs, representing
93% of the Company's total POPs, the A and B Block licensees in place
have chosen a non-GSM standard. By focusing on the gaps in the GSM
coverage left by the A and B Block licensees, the Company has created an
opportunity to offer its customers, in conjunction with the GSM PCS
providers in neighboring markets, roaming capabilities in wide areas.
Furthermore, the Company believes that being the only GSM operator in a
service area may result in a lower churn rate.

Market Clusters

As part of its operating strategy, the Company has segmented its markets
into clusters to maximize construction and operational efficiencies while
providing for a regional market focus. The Company also believes that this
approach will allow it to customize its marketing efforts and maintain high
levels of customer satisfaction. This clustering strategy is designed to
facilitate switch-sharing, allow the Company to benefit from shared resources
and coordinated management and provide efficiencies in advertising, marketing
and distribution within a region. The BTAs have been organized into clusters,
primarily by major-market MTA, in order to reflect the natural flow of commerce
within each geographic region represented by the MTA and to allow local
management to be closer to the customer and the community.

The Las Vegas and Pacific clusters, although lacking the advantages of
being contiguous with the Company's other markets, offer significant
opportunities. Las Vegas is one of the fastest growing urban areas and is one of
the country's top vacation destinations and convention sites, attracting over 30
million visitors annually. Similarly, Hawaii, Guam and the Northern Mariana
Islands (including Saipan), are prime vacation destinations for both U.S. and
international travelers and are on the edge of the high-growth Pacific Rim
countries. The Company believes that these BTAs offer significant opportunities
to develop a hospitality rental market, capture international and domestic long
distance revenue and expose the Company's products and services to a large
number of people.

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<PAGE> 42

The following table lists the Company's market cluster organization:

<TABLE>
<CAPTION>
THE COMPANY'S
OWNERSHIP POPS
MARKET 1995 POPS PERCENTAGE (THOUSANDS)
(THOUSANDS)
<S> <C> <C> <C>
CHICAGO CLUSTER
Chicago, IL............................................... 8,602 100% 8,602
Omaha, NE................................................. 943 100 943
Rockford, IL.............................................. 435 100 435
Springfield, IL........................................... 262 100 262
Decatur - Effingham, IL................................... 248 100 248
Champaign - Urbana, IL.................................... 228 100 228
Bloomington, IL........................................... 226 100 226
La Salle, IL.............................................. 150 100 150
Kankakee, IL.............................................. 132 100 132
Michigan City, IN......................................... 111 100 111
------ ------
11,337 11,337
DETROIT CLUSTER
Detroit, MI............................................... 4,802 100% 4,802
Grand Rapids, MI.......................................... 991 100 991
Toledo, OH................................................ 797 100 797
Flint, MI................................................. 502 100 502
Kalamazoo, MI............................................. 364 100 364
Lima, OH.................................................. 256 100 256
Battle Creek, MI.......................................... 235 100 235
Muskegon, MI.............................................. 215 100 215
Jackson, MI............................................... 200 100 200
Sandusky, OH.............................................. 138 100 138
Adrian, MI................................................ 95 100 95
------ ------
8,595 8,595
DALLAS CLUSTER
Dallas - Ft. Worth, TX.................................... 4,879 100% 4,879
Shreveport, LA............................................ 582 100 582
Longview - Marshall, TX................................... 305 100 305
Tyler, TX................................................. 285 100 285
Texarkana, TX/AR.......................................... 263 100 263
------ ------
6,314 6,314
ST. LOUIS CLUSTER
St. Louis, MO............................................. 2,834 100% 2,834
Carbondale - Marion, IL................................... 211 100 211
Columbia, MO.............................................. 198 100 198
Poplar Bluff, MO.......................................... 151 100 151
Mount Vernon, IL.......................................... 118 100 118
Pittsburg - Parsons, KS................................... 89 100 89
------ ------
3,601 3,601
NEW ORLEANS CLUSTER
New Orleans, LA........................................... 1,411 100% 1,411
Houma - Thibodaux, LA..................................... 268 100 268
------ ------
1,679 1,679
LITTLE ROCK CLUSTER
Little Rock, AR........................................... 908 100% 908
Ft. Smith, AR............................................. 303 100 303
Fayetteville, AR.......................................... 260 100 260
Jonesboro - Paragould, AR................................. 167 100 167
------ ------
1,638 1,638
PACIFIC CLUSTER
Honolulu, HI.............................................. 892 95% 847
Guam...................................................... 149...... 100 149
Hilo, HI.................................................. 143 95 136
Northern Mariana Islands.................................. 70 100 70
------ ------
1,254 1,202
LAS VEGAS CLUSTER
Las Vegas, NV............................................. 1,121 73% 819
------ ------
GRAND TOTAL........................................ 35,539 35,185
====== ======
</TABLE>

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<PAGE> 43

STRATEGIC RELATIONSHIPS

The Company has established agreements with Ericsson and Nortel to supply
up to $ million of equipment and services and is negotiating a third
agreement with Siemens. It is anticipated that in each one of the Company's
markets, Ericsson, Siemens or Nortel will be the primary network equipment
supplier and provide related vendor financing. The Company and Mitsubishi are
working to develop a custom handset and are negotiating handset supply
agreements. LCC is providing radio network design, site acquisition,
construction management and network optimization services. Booz - Allen is
providing a variety of services, including the development of management
information systems and systems integration services. The scope of each vendor
agreement is summarized below:

- Ericsson. In June 1995, the Company and Ericsson entered into an
equipment acquisition agreement (the "Equipment Acquisition Agreement")
for Ericsson to supply the Company with equipment and services having a
potential value of up to $ million. The Equipment Acquisition Agreement
is subject to financing by Ericsson, the terms of which are under
negotiation. Subsequently, the Company concluded two short-term loan
facilities with Ericsson and is negotiating a long-term credit facility.
Under the Equipment Acquisition Agreement, Ericsson will be primary
equipment supplier and provide network infrastructure equipment,
including base stations and switches in certain market clusters including
Chicago, St. Louis and Honolulu. In certain markets, it is anticipated
that Ericsson will also provide network design services, site acquisition
services and project management services. In other markets, these
services may be subcontracted by Ericsson to, or performed directly by,
other contractors such as LCC. Honolulu will be the first of the
Company's markets to be deployed using Ericsson equipment.

- Nortel. In July 1995, the Company and Nortel entered into a project and
supply agreement pursuant to which Nortel agreed to provide PCS equipment
and services. The Company is completing its agreements with Nortel to be
the primary equipment supplier and provide network infrastructure
equipment, including base stations and switches, for the Las Vegas
market. In this market, Nortel also will provide network design services
and project management services, and financing of up to $ million.

- Siemens. The Company is negotiating with Siemens for the provision of
PCS equipment and related services in certain of the Company's clusters.
The Company is also negotiating a credit facility with Siemens, having a
value of up to $ million. In August 1996, the Company concluded a
short-term loan facility with Siemens.

- Booz - Allen. The Company and Booz - Allen have entered into an
agreement for the provision of product design, information system
development, systems integration services and management consulting. In
addition, Booz - Allen has made an equity investment in the Company.

- LCC. LCC will provide radio network design, program management
(including site acquisition and construction management) and network
optimization services. LCC also may serve as subcontractor to one or more
of the Company's primary equipment vendors to provide these services in
the various market clusters.

- Mitsubishi. Mitsubishi has been working with the Company to develop the
Company's custom handset, and is expected to be the primary supplier of
handsets for the Company's PCS Network.

NETWORK BUILDOUT AND OPERATIONS

The Company is pursuing a three stage buildout plan. In Phase I, the
Company will be constructing the Honolulu and Las Vegas markets. These markets
were chosen for early deployment because their smaller size and relative
isolation will allow the Company and its equipment vendors to establish and
refine their market development processes in an environment where project size
is not a significant risk. In Phase II, the Company will seek to deploy its four
largest market clusters -- Chicago, Dallas, Detroit and St. Louis -- in order to
offer service in these markets quickly. In Phase III, the Company will build out
markets and complete its footprint.

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<PAGE> 44

The Company's initial network will be designed to support substantial
market penetration by building out relatively high density cell site
configurations. The capacity inherent in the Company's networks will increase
the percentage of calls successfully completed on the first attempt. The Company
believes that the relatively high density cell site configuration within the
Company's networks will allow it to provide higher quality indoor coverage in
most key areas of each market. As a result, the Company initially will deploy
more base stations than are required for superior outdoor coverage. When
capacity needs exceed the initial buildout, additional capacity can be added to
existing base stations. Extensive additions of new base stations should not be
required unless the Company substantially exceeds its penetration projections.

Once the initial buildout of each market is complete, the Company's
centralized Network Operations department will have responsibility for
in-service network operations, network management, trouble resolution and
technical assistance to the clusters. Network Operations will be responsible for
ensuring the integrity of the network and the quality of the service provided by
the network while minimizing the complexity of managing a multi-vendor network
environment.

The Company plans to have national customer service, network management and
management information systems operational by the end of 1997. A national
network management center, to be located in Dallas, will provide 24-hour
monitoring of the regional networks as well as manage the signaling, voice and
data networks linking the clusters with each other and with other domestic and
foreign networks. While the systems will be centralized, certain operations,
including customer service, will be local or regional to provide high quality
service.

ROAMING AGREEMENTS

Based on the declared technology choices indicated by A, B and C Block
licensees, combined population coverage of GSM is expected to exceed 200 million
people, representing approximately 76% of the U.S. population. This percentage
could increase when additional successful bidders in the C, D, E and F Blocks
select their PCS technology. GSM, through the use of SIMs, allows operators to
easily exchange common services, billing records and location information,
thereby facilitating roaming between markets. The Company will negotiate roaming
agreements with all of the companies that have chosen to deploy the GSM standard
in their PCS markets in the United States. These agreements are intended to
provide subscribers of either the Company or the participating carrier the
capability to roam in the other's PCS markets. The Company also will seek
reciprocal roaming agreements with international carriers who have chosen to
deploy the GSM standard to form an international GSM PCS network.

The Company is working with other PCS licensees that intend to deploy
GSM-based systems to increase GSM coverage in the U.S. and to establish GSM as
the leading PCS standard. The Company is an active member of the international
GSM MoU Association and a leading member of the North American PCS 1900 Interest
Group (the "NAIG"). These organizations are composed of current and prospective
PCS licensees that are committed to implementing GSM technology and to expanding
GSM coverage in the U.S. The two groups also work closely with manufacturers,
standards bodies and regulatory agencies to establish advanced wireless network
technology based on open standards. Other member companies of the NAIG include:
APC, APT, BellSouth, InterCel, Omnipoint, Pacific Bell, Western Wireless,
Microcell and Airadigm Communications.

COMPETITION

PCS will compete directly or indirectly with existing cellular telephone,
paging, mobile radio and landline services. The Company expects competition in
the wireless telecommunications industry and the telecommunications industry
generally to be dynamic and intense as a result of the development of new
technologies, products and services and the entrance of new competitors. The
Company hopes to attract and retain subscribers principally on the basis of
brand name, high quality and user-friendly service, simplified and affordable
pricing and the coverage of a large service area (including affiliation
agreements to permit roaming).

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<PAGE> 45

The Company will compete directly with up to five other PCS providers in
each of its markets. The successful bidders in the FCC's broadband A and B Block
PCS auctions in the Company's markets include, among others, AT&T Wireless,
PrimeCo and Sprint Spectrum. These companies received their PCS licenses in June
1995 and have had significant lead time for buildout of their networks. Many of
the Company's competitors have been operating in the telecommunications industry
for a number of years and have greater experience than the Company in testing
new telecommunications products and services and in obtaining regulatory
approvals. Furthermore, many of these competitors have greater financial,
technical, marketing and sales resources than those currently available to the
Company. Several of the Company's competitors have or are planning to enter into
affiliation agreements that will allow them to operate wireless systems that
encompass most of the United States. The FCC auction for the D, E and F Blocks
has not been completed. Thus, the identity of potential additional PCS
competitors in the Company's PCS markets has yet to be determined.

In addition to competition from other PCS providers, the Company will
compete for its share of the wireless market with existing cellular providers,
all of whom have infrastructure in place and have been operational for a number
of years. The principal cellular providers in the Company's PCS markets are AT&T
Wireless, SBC, Ameritech and AirTouch. Many of these operators either have
upgraded to digital service or plan to upgrade their systems to digital service
in the future. Moreover, the FCC recently relaxed its limitation on cellular
cross-ownership of PCS licenses in the same area, permitting existing cellular
licensees to acquire up to 20 MHz of broadband PCS spectrum in overlapping
markets, and certain companies have sought judicial review of the 20 MHz
limitation in proceedings that, if successful, would permit them to acquire 30
MHz PCS licenses in such markets. Such competition from traditional cellular
providers entering the PCS industry in overlapping markets could adversely
affect the Company's competitive position.

In the future, cellular service and PCS also will compete more directly
with traditional landline telephone service providers and with cable operators
who may expand into providing telecommunications services over their cable
networks. Energy utilities and LMDS providers may also seek to offer
communications service over their infrastructure in the future. The Company also
may experience competition from one-way and two-way paging services. The FCC has
licensed SMR dispatch system operators to construct digital mobile
communications systems on existing SMR frequencies, referred to as ESMR, in many
areas throughout the United States, including most of the areas in which the
Company operates. ESMR networks increase the capacity of SMR frequencies to a
level that may be competitive with analog cellular networks. SMR service
providers currently offer or plan to offer fleet dispatch services, short
messaging, data services and interconnected voice telephone services. In
addition, several companies have announced plans to design, construct, deploy
and operate satellite-based telecommunications systems worldwide. Lastly, the
Company may also face competition from new technologies that have yet to be
introduced.

The FCC has proposed to reallocate former federal government spectrum at
the 4 GHz band for a broad range of wireless fixed and mobile services, and is
expected to reallocate additional former federal government spectrum for similar
uses in the future.

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<PAGE> 46

PERSONNEL

As of August 1, 1996, the Company employed approximately 45 individuals,
all of whom were located in the United States. None of these employees are
represented by unions. The Company expects to hire a significant number of
personnel to meet the various aspects of its business strategy.

FACILITIES

The Company's principal executive offices, located in Washington D.C.,
consist of approximately 23,000 square feet of leased space. The Company intends
to lease a facility in Dallas to house the Company's network management center
and operations division. The Company has leased office space in Las Vegas
(approximately 1,900 square feet) as well as switch space in Las Vegas and
Honolulu (approximately 7,400 and 6,700 square feet, respectively). To implement
its business plan, the Company will need additional offices for its regional
teams of customer service and operations personnel as well as space for its
stores and micro-stores throughout its service areas. The Company believes it
will be able to lease such spaces as needed on acceptable terms. In addition, as
of August 1, 1996, the Company has leased spaces for 42 cell sites. The Company
anticipates leasing, acquiring or otherwise obtaining necessary rights for up to
a total of approximately 2,000 to 2,500 cell sites and at least one switch site
per cluster to complete its buildout plan.

ORGANIZATION

The Company intends to conduct its operations and hold most of its assets
primarily through subsidiaries so that the Company would be effectively a
holding company providing management and administrative support for its
subsidiaries and affiliates. The Company has formed several subsidiaries and
affiliates, most of which have had little or no activity. DCR PCS is a wholly
owned subsidiary of the Company formed to act as the bidding entity in the C
Block auction; it currently holds all of the Company's PCS licenses.

In addition to its existing subsidiaries and affiliates, the Company
anticipates forming additional subsidiaries, including regional holding
companies (the "HCs"), and local or regional operating companies (the "OCs").
The OCs will be operating subsidiaries formed at the regional (i.e., cluster) or
local level to operate the network and service the customers for one or more of
the Company's license areas. Each OC will have one or more license holding
companies (the "LHCs") as its wholly owned subsidiaries, and each LHC will own
one FCC license. The Company anticipates creating HCs as a parent company to one
or more OCs. Any transfer of the DCR PCS licenses pursuant to these plans would
require prior FCC approval.

MINORITY INTERESTS IN CERTAIN SUBSIDIARIES

The Company holds, directly and indirectly through a wholly owned
subsidiary, DCR Nevada, Inc., a 73.1% interest in DCR Pacific PCS Limited
Partnership (the "Limited Partnership"). DCR Nevada, Inc. is the sole general
partner of the Limited Partnership, which was formed to own, directly or
indirectly, PCS licenses covering the Las Vegas BTA and to build, own and
operate a PCS network in the Las Vegas BTA. In addition to the Company, the
other limited partners are Onyx Telecommunications, L.L.C., Wireless PCS, Inc.,
Andrew Molasky, Alan Molasky, Steven Molasky and the Todd and Vivica Marshall
Revocable Trust.

The Company has entered into a letter of intent with Gloria Borland Hawaii
PCS, Inc. ("GBH"), dated as of September 21, 1995, pursuant to which the Company
has agreed to form an entity to hold its PCS licenses covering the Honolulu and
Hilo BTAs and to build, own and operate a PCS network in these BTAs (the "Hawaii
Company"). Initially, the Company will own 95% and GBH will own an undilutable
5% of the Hawaii Company.

LEGAL PROCEEDINGS

On June 21, 1996, National Telecom PCS, Inc. ("NatTel") filed a petition to
deny all of the applications of the Company for the C Block licenses (the
"NatTel Petition"). NatTel alleged, among other things, that the Company does
not meet certain of the Small Business requirements and the FCC alien ownership

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<PAGE> 47

requirements. NatTel also objects to the Company's qualifications to hold an FCC
license based on certain prior misconduct by Westinghouse Electric Corporation
("Westinghouse," a stockholder of the Company) and alleges that DCR PCS's short
form application should have been dismissed as incomplete. On July 1, 1996,
Radiofone, Inc. ("Radiofone") filed petitions to dismiss or deny the Company's
applications and reauction the C Block licenses for New Orleans and
Houma-Thibodaux, Louisiana, for each of which DCR PCS was the high bidder (the
"Radiofone Petition"). Radiofone alleged that the FCC's conduct of C Block
auctions for markets in which Radiofone is a cellular carrier was unlawful, in
that it permitted Radiofone to bid only subject to its potential future
disqualification (based upon the outcome of Radiofone's challenge to the FCC's
spectrum cap rules). Radiofone also asserted that Westinghouse has some degree
of control over DCR PCS and requested that the FCC require further information
as to this question. In July 1996, DCR PCS filed oppositions to these petitions
as being without merit.

In July 1996, Radiofone also filed a petition for review in the United
States Court of Appeals for the Fifth Circuit, challenging the FCC's
determination not to permit cellular licensees to hold 30MHz PCS licenses in
their home markets; and Cincinnati Bell Telephone Company, Inc. filed a similar
challenge in the United States Court of Appeals for the Sixth Circuit,
challenging the limitations on cellular providers' investments in PCS licensees.
If these appeals are successful, they could result in a reauction of C Block
licenses.

The Company is aware of no other material, pending legal proceedings to
which the Company or any of its subsidiaries or affiliates is a party or of
which any of their property is subject which, if adversely decided, would have a
material adverse effect on the Company.

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<PAGE> 48

REGULATION OF THE WIRELESS TELECOMMUNICATIONS INDUSTRY

The FCC regulates the licensing, construction, operation, acquisition and
sale of cellular and PCS networks in the United States pursuant to the
Communications Act of 1934, as amended (the "Communications Act"), and the
rules, regulations and policies promulgated by the FCC thereunder. In order to
increase competition in wireless communications, promote improved quality and
service, and make available the widest possible range of wireless services,
Congress enacted legislation directing the FCC to allocate radio frequency
spectrum for PCS by competitive bidding. The FCC has allocated 120 MHz of radio
spectrum in the 2 GHz band for licensed broadband PCS services. The FCC
established PCS service areas in the U.S. based upon Rand McNally's market
definition of 51 MTAs comprised of 493 BTAs, which are the geographic
territories for which licenses have been or will be auctioned. The FCC divided
the 120 MHz of spectrum into six individual blocks: two 30 MHz blocks (A and B
Blocks) licensed for each of the 51 MTAs, one 30 MHz block (C Block) licensed
for each of the 493 BTAs, and three 10 MHz blocks (D, E and F Blocks) licensed
for each of the 493 BTAs. A PCS license will be awarded for each MTA or BTA in
every block, for a total of more than 2,000 licenses. The FCC has adopted
comprehensive rules outlining the bidding application, bidding and payment
processes, payment process, establishing penalties for certain bid withdrawals,
default or disqualification and establishing regulatory safeguards. The FCC
reserved two of the six frequency blocks (the C and F Blocks) for Entrepreneurs
and Small Businesses. In March 1995, the FCC completed its first auction, the A
and B Block auction, resulting in the award of two licenses for 30 MHz each of
spectrum in each of 51 MTAs. The C Block auction, for licenses of 30 MHz of
bandwidth in the BTAs, was completed on May 6, 1996, with the exception of
certain licenses whose winning bidder did not submit the required down payment.
The reauction of these licenses began on July 3, 1996 and was completed on July
16, 1996. The C block auction will be followed by D, E and F Block auctions,
scheduled to begin on August 26, 1996.

FCC rules establish two separate spectrum aggregation limits for broadband
PCS licensees. First, no entity may hold or own an attributable investment in
licenses totalling more than 45 MHz of PCS, cellular and SMR services regulated
as CMRS in any geographic area where there is significant overlap (i.e., where
at least 10% of the population of the entity's PCS service area is within its
cellular and/or SMR service area(s)). Second, a single entity may win no more
than 10% of the licenses available in the C and F Block auctions.

The C and F Block licenses are for adjacent frequency bands and have been
reserved for Entrepreneurs. Generally, an Entrepreneur is an applicant with
gross revenues of less than $125 million in each of the last two relevant years
and total assets of less than $500 million at the time the initial application
for participation in the auction is filed. Each eligible Entrepreneur may pay
90% of the purchase price of a C Block license and 80% of the purchase price of
an F Block license in installments over ten years. The FCC also established
bidding credits and more favorable installment payment plans for C and F Block
applicants qualifying as Small Businesses or (for the F Block) as Very Small
Businesses (as defined by the rules and regulations promulgated by the FCC (the
"Entrepreneurs' Block Regulations")). Generally, a Small Business is an entity
that has average annual gross revenues of not more than $40 million for the
preceding three relevant years, while a Very Small Business has average annual
gross revenues of not more than $15 million for the preceding three relevant
years.

In determining whether a license applicant meets the financial caps for
qualification as an Entrepreneur or a Small Business, the FCC will examine,
individually and cumulatively, the assets and revenues of the applicant, its
affiliates, investors with more than 25% or 49.9% (depending on which Control
Group equity structure is utilized), of the applicant's fully-diluted equity or
voting stock (the "attributable investor") and its Control Group members. The
holdings of investors with affiliated interests (including spouses or companies
that have an identity of interest) will be consolidated, and all ownership
interests will be calculated on a fully-diluted basis in order to determine
attribution levels.

Applicants seeking to qualify either as an Entrepreneur or a Small Business
must be controlled by a Control Group made up principally of individuals or
entities who meet the Entrepreneur financial qualifications or the Small
Business financial qualifications, as the case may be (such group a "Control
Group," and such qualifying investor a "Qualifying Investor"). Only certain
non-qualifying investors may be in the Control Group, such as members of the
entity's management team or qualifying institutional investors. However, the

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<PAGE> 49

applicant must be able to demonstrate that the Qualifying Investors control the
Control Group. The analysis is fact-specific; however, the entity must at
minimum meet certain structural requirements. The Control Group must hold at
least 25% or 50.1% of the applicant's total equity (depending on which Control
Group equity structure is utilized) during the first three years and 50.1% of
the applicant's voting stock. Control Group members must be entitled to receive
100% of the value of each share of stock they hold in the event of a sale and
must receive 50.1% of the annual distribution of dividends on voting stock, if
any. Members of the Control Group must either constitute or appoint more than
50% of the board of directors of the applicant, have authority over the senior
executives in control of the applicant's day-to-day activities and play an
integral role in management decisions of the applicant. The Qualifying Investors
in the Control Group must own at least 50.1% of the Control Group's voting stock
and at least 15% or 30% of the applicant's total equity (depending on which
Control Group equity structure is utilized).

All PCS licenses will be granted for a 10-year period, at the end of which
they may be renewed. Under its standards, the FCC will award renewal expectancy
to a PCS licensee that has provided substantial service during its past license
term and has substantially complied with applicable FCC rules and policies and
the Communications Act. Each 30 MHz PCS license is subject to a requirement that
the licensee provide network facilities offering coverage to at least one-third
of the population in the applicable market within five years of the grant of the
license and to at least two-thirds of such population within 10 years of the
grant of the license. Licensees that fail to meet such coverage requirements may
be subject to forfeiture of their licenses.

The Communications Act and the FCC rules promulgated thereunder require the
FCC's prior approval of the assignment or transfer of control of a PCS license.
The Entrepreneurs' Block Regulations further restrict voluntary assignments or
transfers of control of C or F Block licenses. During the first five years of
the initial license term, any proposed assignee or transferee of C or F Block
licenses, at the time the application for assignment or transfer of control is
filed, must meet the eligibility criteria for participation in the
Entrepreneurs' Block auction or such proposed assignee or transferee must hold
other C and F Block licenses and, at the time of receipt of such licenses, must
have met the same eligibility criteria. Any transfers or assignments during the
10-year initial license term are subject to unjust enrichment penalties,
including the forfeiture of any bidding credits and/or the acceleration of any
installment payment plans if the assignee or transferee does not qualify for the
same benefits. The FCC will conduct random audits to ensure that licensees are
in compliance with the Entrepreneurs' Block Regulations.

In addition, the FCC has established transfer disclosure requirements that
require all licensees receiving licenses from FCC auctions who transfer control
of or assign a PCS license within the first three years of their license term to
file with the FCC associated contracts for sale, option agreements, management
agreements or other documents disclosing the total consideration that the
licensee to be received in return for the transfer or assignment of its license.
Non-controlling interests in an entity that holds a PCS license or a PCS network
generally may be bought or sold without FCC approval, subject to compliance with
the Entrepreneurs' Block Regulations relating to Control Group ownership
requirements for C or F Block licenses and foreign ownership requirements. Any
acquisition or sale by the Company of PCS interests may also require the prior
filing of a Premerger Notification form with the Federal Trade Commission and
the Department of Justice if over a certain size as well as with state or local
regulatory authorities having competent jurisdiction. Violations of the
Communications Act or the rules promulgated thereunder, including the
Entrepreneurs' Block Regulations, could result in license revocations,
forfeitures or fines.

Over time, C and F Block licensees (as well as their affiliates and
investors) may exceed the gross revenue caps through equity investment by
non-attributable investors, debt financing, revenue from operations, business
development and expanded service. Furthermore, after three years from the date
of the license grant, Qualifying Investors in the Control Group will be required
to hold only 10% or 20% of the total equity (depending on which Control Group
equity structure is utilized) and there will be no minimum equity ownership
requirement for the Control Group as a whole. The Control Group's ownership of
voting stock, however, must remain at least 50.1%.

Under existing law, no more than 20% of an FCC licensee's capital stock may
be owned or voted, directly or indirectly, by non-U.S. citizens or their
representatives, by a foreign government or its representatives or by

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<PAGE> 50

a foreign corporation. The FCC can refuse to renew or revoke a license if the
parent entity of a licensee has more than 25% of its capital stock owned or
voted, directly or indirectly, by a foreign entity upon a finding by the FCC
that the public interest will be served by its refusal to renew or revocation.
The Company intends to structure all investments in the Company so as to comply
with these guidelines. As of August 20, 1996, the Company had approximately
21.6% of its capital stock owned or voted, directly or indirectly, by a foreign
entity and holds all of its PCS licenses indirectly through subsidiaries. These
restrictions could adversely affect the ability of the Company to attract
additional equity financing from foreign companies. If the FCC deems that the
Company has exceeded the foreign ownership or control limits, it could revoke or
deny the renewal of the Company's licenses or require the Company to
restructure.

Upon the grant of a PCS license, a PCS licensee will be required to share
spectrum with existing licensees that operate certain fixed microwave systems
(that will initially have priority use of the spectrum during this period)
within each of its BTAs. To secure a sufficient amount of unencumbered spectrum
to operate its PCS networks efficiently, the Company may need to negotiate
agreements to pay for the relocation of many of these existing licensees. In
such places where relocation is necessary to permit operation of the Company's
PCS networks, any delay in the relocation of such licensees may adversely affect
the Company's ability to commence timely commercial operation of its PCS
networks. In an effort to balance the competing interests of existing microwave
operators and newly authorized PCS licensees, the FCC has adopted a transition
plan to relocate such microwave operators to other spectrum blocks at the
expense of PCS licensees. This transition plan allows most microwave operators
to use the PCS spectrum for a two-year voluntary negotiation period, beginning
on May 22, 1996, the date on which the Company filed the long-form application
for its PCS licenses, and an additional one-year mandatory negotiation period
thereafter. For public safety entities dedicating a majority of their system
communications for police, fire or emergency medical services operations, the
voluntary negotiation period is three years, with a two-year mandatory
negotiation period. PCS licensees unable to reach agreement within these time
periods may pursue involuntary relocation procedures, but such procedures will
require the construction of comparable equipment facilities for microwave
operators at the expense of the PCS licensee. Incumbent microwave licensees lose
their priority status after April 2005 if they have not relocated by that time
and a PCS licensee provides six months' notice that it intends to turn on a
system within interference range of the incumbent's system. The FCC is currently
considering shortening the voluntary negotiation period and lengthening the
mandatory negotiation period for each class of incumbent. There can be no
assurance that the Company will be successful in reaching timely agreements with
the existing microwave licensees or that any such agreements will be on terms
favorable to the Company. The Company also may be required to contribute to the
costs of relocation under agreements reached by other PCS licensees if such
relocation benefits the Company's license areas. Conversely, the Company may
receive contributions from other PCS licensees towards its relocation costs.
Depending on the terms of such agreements, the Company's ability to operate its
PCS networks profitably may be adversely affected.

The Telecommunications Act of 1996 substantially revised the regulation of
communications. The goal of the Telecommunications Act is to enhance competition
and remove barriers to market entry, while deregulating the communications
industry to the greatest extent possible. To facilitate the entry of new
carriers, the Telecommunications Act of 1996 imposes certain interconnection and
equal access requirements on incumbent carriers. The FCC recently adopted rules
on telephone number portability pursuant to which subscribers will be able to
migrate their landline and cellular telephone numbers to a PCS carrier and from
a PCS carrier to another service provider. On August 8, 1996, the FCC released
its decision implementing the interconnection provisions of the
Telecommunications Act of 1996. The FCC's decision is lengthy and complex and
will be subject to petitions for reconsideration and judicial review, and its
precise contours and effects are difficult to predict with certainty. However,
the FCC's decision concludes that CMRS providers are entitled to reciprocal
compensation arrangements with LECs and prohibits LECs from charging CMRS
providers for terminating LEC-originated traffic. While the FCC has noted the
potential for asserting federal jurisdiction over certain aspects of CMRS
interconnection, it has so far determined to defer primarily to the states in
implementing interconnection policies pursuant to general guidelines established
by the FCC. Under these guidelines, states must set arbitrated rates for
interconnection and access to unbundled elements based upon LECs' long-run
incremental costs, plus a reasonable share of forward-looking joint and common
costs.

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In lieu of such cost-based rates, the FCC has also established for use by states
a benchmark range of 0.2-0.4 cents per minute for end office termination pending
further cost-based studies, and subject to a possible "true-up" payment later.
The FCC has also permitted states to impose "bill and keep" arrangements, under
which CMRS providers would make no payments for LEC termination of calls where
LECs and CMRS providers have symmetrical termination costs and roughly balanced
traffic flows. However, the FCC has found no evidence that these conditions
presently exist. The relationship of these charges to the payment of access
charges and universal service contributions has not yet been resolved by the
FCC.

Additionally, all communications carriers providing interstate
communications services must contribute to the federal universal service support
mechanisms that the FCC will establish. The Company cannot predict the outcome
of the FCC's rulemaking proceedings to promulgate regulations to implement the
new law or the effects of any new regulations on cellular service or PCS, and
there can be no assurance that such regulations will not adversely affect the
Company's business or financial condition.

The Telecommunications Act of 1996 codifies the FCC policy that CMRS
providers shall not currently be required to provide equal access to long
distance carriers. The FCC, however, may require CMRS carriers to offer
unblocked access (implemented through the subscriber's use of a carrier
identification code or other mechanisms at the time of placing a call) to the
long distance provider of a subscriber's choice.

Federal law generally prohibits the states from regulating the rates
charged by CMRS providers (including PCS carriers), although states are
permitted to regulate other terms and conditions. Some states petitioned the FCC
for authority to regulate cellular rates, but thus far no such petition has been
successful. The FCC does not regulate CMRS rates, but does impose various resale
and interconnection requirements on CMRS carriers.

On July 26, 1996, the FCC released a report and order establishing
timetables for making emergency 911 services available by PCS and other mobile
services providers, including "enhanced 911" services that provide the caller's
telephone number, location, and other useful information. By late 1997, PCS
providers must be able to process and transmit 911 calls (without call
validation), including those from callers with speech or hearing disabilities.
Assuming a cost recovery mechanism is in place, by mid-1998 such providers must
have completed actions enabling them to relay a caller's automatic number
identification and cell site, and by 2001 they must be able to identify the
location of a 911 caller within 125 meters in 67% of all cases. State actions
incompatible with these FCC rules are subject to preemption.

On August 1, 1996, the FCC released a report and order expanding the
flexibility of PCS and other CMRS carriers to provide fixed as well as mobile
services. Such fixed services include, but need not be limited to, "wireless
local loop" services, e.g., to apartment and office buildings, and wireless
backup to PBXs and local area networks, to be used in the event of interruptions
due to weather or other emergencies. The FCC has not yet decided whether such
fixed services should be subjected to universal service obligations or how they
should be regulated, but it has proposed a presumption that they be regulated as
CMRS services.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below is certain information concerning the executive officers of
the Company and the individuals who are expected to be elected to the Company
Board prior to the consummation of the Offering to serve as directors of the
Company following the date on which the Offering is consummated. The Company
Board will consist of 13 directors. The holders of Class A Common Stock, acting
as a single class, are entitled to elect a majority of the total number of
directors (the "A Directors") and the holders of Class B Common Stock, subject
to the right of any then outstanding Preferred Stock, acting as a single class,
are entitled to elect the remainder of the directors (the "B Directors"). The B
Directors will be further divided, with respect to the time for which they
severally hold office, into separate classes. See "Description of Capital
Stock -- Anti-takeover Effects of Certain Provisions of the Articles of
Incorporation and By-Laws." The Company currently has eight directors, whose
terms will expire upon the date on which the Offering is consummated. The
following table sets forth certain information with respect to the individuals
who are expected to be elected to the Company Board prior to the consummation of
the Offering and to serve as directors and executive officers following the date
on which the Offering is consummated.

<TABLE>
<CAPTION>
NAME AGE OFFICE
<S> <C> <C>
Daniel C. Riker................ 52 Chairman of the Board and Chief Executive Officer
Janis A. Riker................. 51 Director, President and Chief Operating Officer
Thomas L. Leming............... 72 Director
J. Herbert Nunnally............ 54 Director
Eduardo Paz.................... 36 Director, Vice Chairman of the Board
Brion Sasaki................... 50 Director
Ronald S. Schimel.............. 51 Director and Secretary
George S. Wills................ 60 Director
Randall S. Anderson............ 45 Executive Vice President, Network Services Group
Barry C. Winkle................ 51 Executive Vice President, Markets
Carlos A. Pichardo............. 35 Senior Vice President and General Manager, Network
Services Group
Robert A. Kerstein............. 44 Senior Vice President and Chief Financial Officer
</TABLE>

DANIEL C. RIKER has been Chairman of the Board and Chief Executive Officer
since he co-founded Pocket in 1994. Previously, Mr. Riker was Director of PCS
Business and Technology Development at MCI Communications Corporation ("MCI")
where he had worked for 13 years. Mr. Riker was responsible for MCI's cellular
business unit until it was sold, and he developed a national network structure
for MCI which was adopted as its early PCS strategy. Prior to 1981, Mr. Riker
had served as News and Sales Executive for United Press International, the
Assistant Director of Public Relations for Johns Hopkins University and the
Assistant Press Secretary to the Governor of Maryland. Mr. Riker received his BA
from The Johns Hopkins University and his JD with honors from the University of
Baltimore Law School. Mr. Riker is married to Janis Riker.

JANIS A. RIKER has been a director since she co-founded Pocket in 1994. She
is currently President and Chief Operating Officer. Prior thereto, she had
served as Pocket's Vice President and General Counsel. Before forming Pocket,
Ms. Riker was an attorney in private practice. Prior to practicing law, she had
been employed as Director of Public Relations for The Johns Hopkins Medical
Institutions, the Columbia Medical Plan (an HMO), and Howard County General
Hospital. Ms. Riker received her BA from Goucher College and her JD with honors
from the University of Baltimore Law School. Ms. Riker is married to Daniel
Riker.

THOMAS L. LEMING has been a director of Pocket since 1995. Mr. Leming was
the President of Leming Telecom Consulting from 1986 until 1993, during which
time he was a consultant to, among others, Fujitsu America, Inc., MCI, and
General Electric Company. Previously, from 1971 to 1986, he served as Senior
Vice President at MCI in charge of the planning, design, development and
construction of the MCI telecommuni-

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cations network. Mr. Leming has also held positions at Motorola and the Collins
Radio Company. Mr. Leming is a veteran of the United States Navy. He is
currently retired.

J. HERBERT NUNNALLY has been a director at Pocket since 1995. From 1986 to
1996, Mr. Nunnally was a Division General Manager with Westinghouse in charge of
commercial communications, networks and products. He is currently retired. He
joined Westinghouse in 1963 and has held a variety of positions during his
tenure. Mr. Nunnally received a BS in Electrical Engineering from Mississippi
State University in 1963 and a Masters of Science degree from George Washington
University in 1971.

EDUARDO PAZ has been a director at Pocket since 1994 and also serves as
Vice Chairman of the Board. Mr. Paz is President and sole director of
Teleconsult, a position he has held since 1990. Teleconsult is a
telecommunications and systems integration consulting firm which was
incorporated in 1970. Prior to joining Teleconsult, he was President of
Communications Management Inc., providing professional services for
international and government institutions as well as private corporations in the
United States and abroad. Mr. Paz was a Network Planning Engineer with MCI
Communications Corporation from 1984 to 1989. Mr. Paz holds a BS and an MS in
Electrical and Mechanical Engineering from Cornell University.

BRION SASAKI has been a director at Pocket since 1995. He is President of
MASA, Inc. ("MASA"), an international trade and finance consulting firm
primarily concerned with the development of business opportunities for
manufacturers seeking to penetrate new markets. Prior to forming MASA in 1994,
Mr. Sasaki was Executive Director of Multinational Business Services, Inc. for
10 years, Chief Economist for the American Mining Congress and Senior Policy
Analyst for the Office of Management and Budget. Mr. Sasaki received a BS in
Microbiology and a PhD in Economics from the University of Cincinnati. Mr.
Sasaki serves as director of the Company through designation by Masa Telecom,
Inc. ("MTI") pursuant to a stockholders' agreement, dated as of January 30, 1995
and as amended, by and between the stockholders listed therein.

RONALD S. SCHIMEL has been director and secretary of Pocket since 1994. He
is a principal-attorney at the law firm of Levan, Schimel, Belman & Abramson,
P.A. ("Levan, Schimel"), which he co-founded in 1977 and for which he served as
the managing director for the first 15 years of its existence. He received a JD
from the Columbus School of Law, The Catholic University of America.

GEORGE S. WILLS has been a director at Pocket since 1995. Since 1978, Mr.
Wills has served as the President of Wills & Associates, a public affairs firm
that provides communications and government relations services to corporations.
In conjunction with his professional practice, Mr. Wills is a trustee and public
affairs advisor to the Aspen Institute, an international public policy
organization, and is a member of the Public Affairs Council in Washington D.C.
Mr. Wills received a BA from Pennsylvania State University in 1958, an MA in
American Government from the University of Virginia and a PhD from the Johns
Hopkins University in 1969.

RANDALL S. ANDERSON has been an Executive Vice President at Pocket since
January 1996. He joined Pocket in December 1994 as Senior Vice President of
Network Systems. Prior to joining Pocket, Mr. Anderson was Director of Business
Development at Nortel, where he worked for approximately 10 years. Prior to
joining Nortel, Mr. Anderson held management positions with each of GTE, Sprint
Communications and Cable TV of Virginia. His 23 years of telecommunications
experience includes working with digital microwave, fiber-optic technology,
cable television, long distance switching & transmission and the local access
market. He received his AS degree in Engineering Technology, cum laude, from New
River College in 1972.

BARRY C. WINKLE has been an Executive Vice President at Pocket since 1995.
He was a consultant of Teleconsult, a telecommunications consulting firm, from
1993 to 1994. Mr. Winkle was also president of Fountainhead Inc., a printing
company, from 1989 to 1992. In 1992, Fountainhead Inc. filed for protection
under the U.S. Bankruptcy Code. From 1978 to 1989 Mr. Winkle held several
positions with MCI, including Director of Corporate Marketing, Vice President of
MCI Sales, Vice President of Finance for MCI Western Division and Senior Vice
President of Management Information Systems. As Senior Vice President, Mr.
Winkle was responsible for implementing significant billing software system
changes and preparing a

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<PAGE> 54

strategic plan for fully integrating management information system functions in
the company. He received his BA in Business Management from the University of
Dayton, Ohio.

CARLOS A. PICHARDO has been a Senior Vice President at Pocket since
December 1995. Mr. Pichardo joined Pocket in April 1995 as Vice President in
charge of Vendor Relations. Prior thereto, Mr. Pichardo was a Regional Managing
Director for Network Wireless Systems at AT&T Corp. Mr. Pichardo started his 12-
year AT&T career at Bell Laboratories in 1983. In 1988, he became District
Manager in Business Communications Systems and held several management positions
until 1995. Mr. Pichardo serves as an advisor to Teleconsult where he is a
minority investor. He received a BS with honors in Electrical Engineering and a
Masters of Engineering from Cornell University.

ROBERT A. KERSTEIN has been Senior Vice President and Chief Financial
Officer since 1996. Prior to joining Pocket, Mr. Kerstein was Chief Information
Officer of Orca Bay Sports and Entertainment. From 1990 to 1995, he was employed
at American Mobile Satellite Corporation, a wireless telecommunications company,
where he was Vice President of Operations from 1994 through 1995 and Chief
Financial Officer from 1990 through 1993. From 1980 to 1990, Mr. Kerstein held
senior management positions at various media and telecommunications companies,
including Controller and Chief Financial Officer of Falcon Cable TV, Chief
Financial Officer of L.A. Cellular, and Senior Vice President and Cellular Chief
Financial Officer of McCaw Cellular Communications, Inc. He is a C.P.A. and has
a BA degree with honors in Business Administration from California State
University, Long Beach.

ANNUAL MEETING

The Company's By-Laws (the "By-Laws") provide that annual meetings of
stockholders will be held at the Company's principal office or at such other
place and on such date as may be fixed from time to time by resolution of the
Company Board. The first Annual Meeting for which proxies will be solicited from
stockholders will be held on May , 1997.

COMMITTEES OF THE BOARD OF DIRECTORS

Audit Committee. The Audit Committee meets with management to consider the
adequacy of internal controls and the objectivity of financial reporting. The
Audit Committee also meets with the independent auditors and with appropriate
financial personnel of the Company regarding these matters. The Audit Committee
recommends to the Company Board the appointment of the independent auditors,
subject to ratification by the stockholders at the annual meeting. The
independent auditors will meet periodically with the Audit Committee and will
have unrestricted access to the Audit Committee. The Audit Committee reviews the
Company's long-term plans and financings and reports its recommendations to the
full Company Board for approval and to authorize action. The Chief Executive
Officer, Daniel C. Riker, and the Chief Operating Officer, Janis A. Riker, shall
serve as ex officio members and neither will participate in Audit Committee
meetings when audit matters are discussed. The members of the Audit Committee,
all of whom are directors who are not employees of the Company ("Non-Employee
Directors"), are Ronald S. Schimel, Eduardo Paz and Brion Sasaki.

Compensation Committee. The Compensation Committee's functions include
recommending to the Company Board nominees for election as directors of the
Company, making recommendations from time to time to the Company Board as to
matters of corporate governance, administering management incentive compensation
plan, the Company's stock option plans, and making recommendations to the Board
with respect to the compensation of directors and officers of the Company. The
members of the Compensation Committee, all of whom are Non-Employee Directors,
are George S. Wills, Eduardo Paz and Ronald S. Schimel.

Finance Committee. The Finance Committee reviews the annual budget prior
to its presentation to the Board of Directors for approval, develops and
recommends to the Board financial goals and objectives for the Company, reviews
all agreements having material financial impact on the Company and shall perform
such other functions as are delegated to it by the Board of Directors. The
members of the Finance Committee are Janis A. Riker, Brion Sasaki, George S.
Wills and Eduardo Paz.

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<PAGE> 55

Executive Committee. The Executive Committee is authorized, between
meetings of the Board, to exercise all powers and authority of the Board
regarding the management of the business and affairs of the Company, except for
powers reserved to the full Board under Maryland General Corporation Law. The
members of the Executive Committee are Daniel C. Riker, Janis A. Riker and
Eduardo Paz.

Auction Committee. The Auction Committee helped to formulate an auction
strategy for the Company for its participation in C Block auction and will
continue to formulate strategies in future auctions as needed. The members of
the Auction Committee are Daniel C. Riker, Brion Sasaki and Thomas L. Leming.

COMPENSATION OF DIRECTORS

Several members (Messrs. Leming, Sasaki, Schimel and Wills) of the Board of
Directors each received as director compensation for the 12-month period
beginning May 17, 1995, 20,000 shares of Class B Common Stock, which was issued
by the Company in November 1995, and are entitled to receive cash compensation
for their services during this same period in the amount of $7,000. All
directors are to be reimbursed for out-of-pocket travel expenses in connection
with Company related business. On May 17, 1996, the Board of Directors
authorized the grant of stock options to all directors as further described in
"-- Stock Option Plans." The Company has no other compensation arrangements for
its directors. Concerning compensation received by certain directors for the
performance of services for the Company other than as a director, see
"-- Certain Relationships and Related Transactions."

EXECUTIVE COMPENSATION

The following information relating to executive compensation gives effect
to the adjustments to be made pursuant to the Recapitalization.

The following table sets forth certain compensation information for the
Chief Executive Officer and the four other executive officers of the Company as
of July 1, 1996 who were the most highly compensated for the year ended December
31, 1995 (the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------------------- ----------------------
FISCAL OTHER ANNUAL STOCK
NAME & PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS
<S> <C> <C> <C> <C> <C>
Daniel C. Riker........................ 1995 $182,692 $ -- $ -- --
Chairman and Chief Executive Officer
Janis A. Riker......................... 1995 $135,711 $ -- $ -- --
Director, President and Chief
Operating Officer
Randall S. Anderson.................... 1995 $150,000 $ -- $ -- 1,500,000
Executive Vice President, Network
Services Group
Barry C. Winkle........................ 1995 $118,953 $ -- $ -- 125,000
Executive Vice President, Markets
Carlos A. Pichardo..................... 1995 $ 94,998 $ -- $ -- 70,000
Senior Vice President, and General
Manager, Network Services Group
</TABLE>

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<PAGE> 56

Set forth in the table below is information with respect to options to
purchase Class B Common Stock granted to the Named Executive Officers during the
fiscal year ended December 31, 1995. The grants to Messrs. Winkle and Pichardo
were made under the 1995 Plan (as defined herein). The grant to Mr. Anderson was
made outside the 1995 Plan. See "-- Stock Option Plans -- 1995 Non-Qualified
Stock Options."

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION FOR
GRANTED TO EXERCISE PRICE OPTION TERM(2)
OPTIONS EMPLOYEES IN PER SHARE EXPIRATION --------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE(1) 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Daniel C. Riker........... -- -- $ -- -- -- --
Janis A. Riker............ -- -- -- -- -- --
Randall S. Anderson....... 1,500,000 68.3 .83 8-10-05 782,974 1,984,209
Barry C. Winkle........... 125,000 5.7 .83 7-12-05 65,248 165,351
Carlos A. Pichardo........ 70,000 3.2 .83 7-12-05 36,539 92,596
</TABLE>

- ---------------
(1) Under the 1995 Plan, the Board of Directors determines the exercise price,
vesting schedule and exercise periods for option grants made pursuant to the
1995 Plan. Options granted during the fiscal year ended December 31, 1995
become exercisable in three equal, annual installments commencing on July
12, 1996. Each such option expires 10 years from the date of grant.

(2) Potential gains are net of the option exercise price, but before taxes
associated with exercise. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Class B Common Stock, overall
stock market conditions, as well as the option holders' continued employment
through the vesting period. The amounts reflected in this table may not
necessarily be achieved.

The following table provides information concerning the exercise of stock
options by the Named Executive Officers during the fiscal year ended December
31, 1995 and the fiscal year-end value of all unexercised options held by such
individuals.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED, IN-THE-
OPTIONS HELD AT FISCAL MONEY OPTIONS AT FISCAL YEAR-
SHARES YEAR END(#) END($)(1)
ACQUIRED ON VALUE ---------------------------- ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Daniel C. Riker..... -- -- -- -- -- --
Janis A. Riker...... -- -- -- -- -- --
Randall S.
Anderson.......... -- -- 500,000 1,000,000
Barry C. Winkle..... -- -- -- 125,000
Carlos A.
Pichardo.......... -- -- -- 70,000
</TABLE>

- ---------------
(1) Represents the difference between $ per share, the fair market value of
the Class B Common Stock at December 31, 1995, as determined by the Board of
Directors, and the exercise price per share of the options, and does not
include the federal and state taxes due upon exercise.

EMPLOYMENT AGREEMENTS

The Company has entered into an employment agreement with each of Mr.
Riker, Ms. Riker, Mr. Anderson and Mr. Winkle, pursuant to which such
individuals serve as executive officers of the Company. These agreements, as
amended, provide for initial annual base salaries of $170,000, $160,000,
$150,000 and $150,000, respectively. Upon the grant by the FCC to the Company of
construction permits for one or more

52
<PAGE> 57

BTAs representing at least two million POPs, Mr. Riker's base salary will be
increased to $250,000 per year. Upon commencement of commercial service by the
Company, Mr. Riker's and Ms. Riker's base salaries will be increased to $300,000
and $200,000 per year, respectively.

Each such employment agreement also provides that such employee's base
salary is subject to other increases at the discretion of the Board of
Directors. Each such employee also is entitled to an annual cash incentive
bonus, targeted at 50% of his or her base salary, based on the Company's
performance, as approved by the Board of Directors, as well as to additional
cash and stock based bonuses in accordance with policies as may be established
by the Board of Directors.

Each such employment agreement provides that the Company may terminate such
person's employment with the Company at any time, with or without good cause (as
such term is defined in the agreements). In the event of termination by the
Company other than for good cause, however, such executive will be entitled to
receive a lump sum payment equal to the amount of salary to which such executive
would have been entitled for the greater of the period of time remaining in the
agreement term and two years. For that same time period, such executive will
also continue to receive fringe benefits until he or she begins full-time
employment elsewhere.

Pursuant to each such agreement, each executive officer agrees, that during
the term of such employment agreement and for one year following the termination
of such executive officer's employment with the Company (with or without good
cause), such executive officer will not hire any other individual who was
employed by the Company during the one-year period immediately prior to the
termination of such executive officer's employment; assist, advise or serve, in
any capacity, any third party in an action against or a transaction involving
the Company; engage in the business of selling or providing communication or
telephone services; or otherwise compete for orders, contracts or accounts for
services comparable to those offered by the Company to or from any person or
entity for whom, during the one-year period immediately prior to the termination
of such executive officer's employment, the Company provided telephone or
communication services or sold, offered to sell or solicited orders, contracts
or accounts for services comparable to those offered by the Company. Each such
agreement also contains certain confidentiality provisions.

Pursuant to the Articles of Incorporation, Mr. and Ms. Riker and
Teleconsult, as well as any future members of the Control Group, will receive
certain options to purchase shares of Class A Common Stock or Class B Common
Stock at fair market value at the time of grant when and to the extent required
for the Control Group to maintain the minimum ownership interests required for
the Company's Designated Entity Status.

STOCK OPTION PLANS

The following descriptions of certain stock option plans give effect to the
adjustments to be made pursuant to the Recapitalization.

1995 Incentive Stock Option Plan

The Company has adopted the Pocket 1995 Incentive Stock Option Plan (the
"1995 Plan"). The 1995 Plan is designed to promote the success and enhance the
value of the Company by linking the interests of certain of the employees of the
Company (the "1995 Plan Participants") to those of the Company's stockholders.
As determined by the Company Board, Company employees, including employees who
are members of the Company Board, are eligible to participate in the 1995 Plan.
Non-employee directors are not eligible to participate in the 1995 Plan. The
Company Board has provided for the 1995 Plan to remain in effect for 10 years,
to 2005. The description below is intended as a summary only and is qualified in
its entirety by reference to the 1995 Plan, a copy of which is filed as an
exhibit to the registration statement of which this Prospectus forms a part.

General. The 1995 Plan will be administered by the Company Board. The 1995
Plan provides for the granting of "incentive stock options" ("1995 Options")
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").

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<PAGE> 58

The 1995 Plan provides that the total number of shares of Class B Common
Stock available for grant under the 1995 Plan may not exceed 1,550,000 shares.
Shares of Class B Common Stock subject to the 1995 Options which have terminated
unexercised, either in whole or in part, shall be available for future 1995
Options granted under the 1995 Plan. To date, 1995 Options are outstanding with
respect to 771,000 shares of Class B Common Stock, and no shares of Class B
Common Stock have been issued under the 1995 Plan.

In the event of any change in corporate capitalization, such as a stock
split, or a corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock or property of
the Company, any reorganization or partial or complete liquidation of the
Company, the Company Board may make such substitutions or adjustments in the
aggregate number and class of shares reserved for issuance or subject to
outstanding 1995 Options and in the number, kind and price of shares subject to
outstanding 1995 Options as it may determine to be appropriate.

1995 Options. The term of 1995 Options granted under the 1995 Plan may not
exceed 10 years (five years with respect to the 1995 Plan Participants who own
stock representing more than 10% of the total combined voting power of all
classes of stock of the Company ("10% Owners"). The exercise price for each 1995
Option granted will be determined by the Board; provided that the exercise price
may not be less than 100% of the fair market value (as defined in the 1995 Plan)
of a share of Class B Common Stock on the date of grant (110% of the fair market
value with respect to 10% Owners). A 1995 Plan Participant exercising a 1995
Option is required to pay the exercise price in full in cash. 1995 Options are
non-transferable other than by will or the laws of descent and distribution,
and, during the 1995 Plan Participant's lifetime, may be exercised only by the
1995 Plan Participant or his legal representative.

Amendments. The Company Board may at any time terminate, amend, or modify
the 1995 Plan; provided that, to the extent required by law, no such amendment
will be made without the approval of the Company's stockholders.

Federal Income Tax Considerations. The following brief summary of the
United States federal income tax rules currently applicable to incentive stock
options is not intended to be specific tax advice to 1995 Plan Participants
under the 1995 Plan. The grant of 1995 Options generally has no immediate tax
consequences to the 1995 Plan Participant or to the Company. The 1995 Plan
Participants may, in certain circumstances, recognize ordinary income upon the
disposition of shares acquired by exercise of a 1995 Option, depending upon how
long such shares were held prior to disposition.

Resale of Shares. The registration requirements of any applicable state
securities laws and resale restrictions of Rule 144 under the Securities Act may
restrict the sale of shares of Class B Common Stock acquired pursuant to the
exercise of 1995 Options by "affiliates" of the Company within the meaning of
the Securities Act. For purposes of creating short-swing profit liability under
Section 16 of the Exchange Act, sales of such shares by affiliates will be
matchable with market purchases within less than six months before or after such
sales.

1995 Non-Qualified Stock Options

The Company authorized the grant of non-qualified stock options to certain
employees in 1995 (the "1995 Non-Qualified Options"). The 1995 Non-Qualified
Options were designed to promote the success and enhance the value of the
Company by linking the interests of certain of the employees of the Company (the
"1995 Grantees") to those of the Company's stockholders. 3,000,000 shares of
Class B Common Stock were authorized for issuance pursuant to the 1995
Non-Qualified Options. To date, the Company, under such authorization, has
granted to Randall Anderson a 1995 Non-Qualified Option for 1,500,000 shares of
Class B Common Stock, which has been exercised with respect to 30,120 shares of
Class B Common Stock (the "Anderson Option").

54
<PAGE> 59

subject to the 1995 Non-Qualified Options and in the number, kind and price of
shares subject to the 1995 Non-Qualified Options as it may determine to be
appropriate.

The 1995 Non-Qualified Options are not qualified under Section 401(a) of
the Code.

The term of the Anderson Option is 10 years, commencing in 1995. The
exercise price for the Anderson Option is $.83 per share of Class B Common
Stock. Upon exercise of the Anderson Option, the grantee is required to pay the
exercise price in full in cash. The Anderson Option is non-transferable other
than by will or the laws of descent and distribution, and, during the grantee's
lifetime, may be exercised only by the grantee or his legal representative.

The registration requirements of any applicable state securities laws and
resale restrictions of Rule 144 under the Securities Act may restrict the sale
of shares of Class B Common Stock acquired pursuant to the exercise of 1995
Non-Qualified Options by "affiliates" of the Company within the meaning of the
Securities Act. For purposes of creating short-swing profit liability under
Section 16 of the Exchange Act, sales of such shares by affiliates will be
matchable with market purchases within less than six months before or after such
sales.

1996 Employee Non-Qualified Stock Option Plan

The Company has adopted the Pocket 1996 Employee Non-Qualified Stock Option
Plan (the "1996 Employee Plan"). The 1996 Employee Plan is designed to promote
the success and enhance the value of the Company by linking the interests of
certain of the employees of the Company (the "1996 Employee Plan Participants")
to those of the Company's stockholders. As determined by the Compensation
Committee of the Company Board, or any other designated committee of the Company
Board, Company officers and employees, including employees who are members of
the Company Board, are eligible to participate in the 1996 Employee Plan.
Non-employee directors are not eligible to participate in the 1996 Employee
Plan. The Company Board has provided for the 1996 Employee Plan to remain in
effect for 10 years, to 2006. The description below is intended as a summary
only and is qualified in its entirety by reference to the 1996 Employee Plan, a
copy of which is filed as an exhibit to the registration statement of which this
Prospectus forms a part.

General. The 1996 Employee Plan will be administered by the Compensation
Committee or any other committee designated by the Board for such purposes. The
1996 Employee Plan provides for the granting of non-qualified stock options
("1996 Non-Qualified Options").

The 1996 Employee Plan provides that the total number of shares of Class B
Common Stock available for grant under the 1996 Employee Plan may not exceed
2,370,000 shares. Shares of Class B Common Stock subject to the 1996
Non-Qualified Options which have terminated unexercised, either in whole or in
part, shall be available for future 1996 Non-Qualified Options granted under the
1996 Employee Plan. To date, no options are outstanding and no shares of Class B
Common Stock have been issued under the 1996 Employee Plan. However, the Company
Board has authorized the grant of certain 1996 Non-Qualified Options to purchase
up to 1,585,000 shares of Class B Common Stock under the 1996 Employee Plan.

In the event of any change in corporate capitalization, such as a stock
split, or a corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock or property of
the Company, any reorganization or partial or complete liquidation of the
Company, the Company Board may make such substitutions or adjustments in the
aggregate number and class of shares reserved for issuance or subject to
outstanding 1996 Non-Qualified Options and in the number, kind and price of
shares subject to outstanding 1996 Non-Qualified Options as it may determine to
be appropriate.

The 1996 Employee Plan is not qualified under Section 401(a) of the Code.

1996 Non-Qualified Options. The term of 1996 Non-Qualified Options granted
under the 1996 Employee Plan may not exceed 10 years. The exercise price for
each 1996 Non-Qualified Option granted will be determined by the Company Board;
provided, further, that the exercise price may not be less than the lesser

55
<PAGE> 60

of (i) the fair market value (as defined in the 1996 Employee Plan) of a share
of Class B Common Stock on the date of grant and (ii) $.83 per share of Class B
Common Stock.

A 1996 Employee Plan Participant exercising a 1996 Non-Qualified Option may
pay the exercise price in full in cash, or, if approved by the committee, with
previously acquired shares of Class B Common Stock. The committee, in its
discretion, may allow cashless exercise of 1996 Non-Qualified Options.

Options are non-transferable other than by will or the laws of descent and
distribution, or pursuant to a domestic relations order, or (if permitted by the
committee) by gift to members of the holder's immediate family, whether directly
or indirectly or by means of a trust or partnership, and, during the 1996
Employee Plan Participant's lifetime, may be exercised only by such participant
or his legal representative.

Shares of Class B Common Stock acquired upon the exercise of 1996
Non-Qualified Options may, at the discretion of the committee, be subject to
certain restrictions on resale, including (i) various transfer restrictions and
call rights of the Company applicable before such time as the Company completes
an initial underwritten public offering of common stock of the Company, and (ii)
the restriction that 1996 Employee Plan Participants may not resell shares
acquired upon exercise of the 1996 Non-Qualified Options during such lock-up
period as may be agreed to by the Company and the Underwriters.

Change in Control. In the event of a Change in Control (as defined in the
1996 Employee Plan), any 1996 Non-Qualified Option that is not then exercisable
and vested will become fully exercisable and vested; provided that in the case
of any holder of a 1996 Non-Qualified Option who is subject to Section 16(b) of
the Exchange Act, such 1996 Non-Qualified Option has been outstanding for at
least six months as of the date of such Change in Control. During the 60-day
period following a Change in Control, any 1996 Employee Plan Participant will
have the right to surrender all or part of any 1996 Non-Qualified Option held by
such participant, in lieu of payment of the exercise price, and to receive cash
in an amount equal to the difference between (i) the higher of the price
received for Class B Common Stock in connection with the Change in Control and
the fair market value (as defined in the 1996 Employee Plan) of a share of Class
B Common Stock on the date, if any, that such 1996 Non-Qualified Option is
cancelled (the "Change in Control Price"), and (ii) the exercise price (the
difference between (i) and (ii) being referred to as the "Spread") multiplied by
the number of shares of Class B Common Stock granted in connection with the
exercise of such 1996 Non-Qualified Option; provided that such Change in Control
transaction would not thereby be made ineligible for pooling of interests
accounting; and provided, further, that, if the Change in Control is within six
months of the grant date of any such 1996 Non-Qualified Option, any such 1996
Non-Qualified Option held by a 1996 Employee Plan Participant subject to Section
16 of the Exchange Act will be cancelled and the holder thereof will receive six
months and one day after the grant of such 1996 Non-Qualified Option, an amount
equal to the Spread multiplied by the number of shares of Class B Common Stock
granted under or underlying such 1996 Non-Qualified Options.

Amendments. The Company Board may at any time terminate, amend, or modify
the 1996 Employee Plan; provided that, no amendment, alteration or
discontinuation will be made which will disqualify the 1996 Employee Plan from
the exemption provided by Rule 16b-3 promulgated under the Exchange Act, and, to
the extent required by law, no such amendment will be made without the approval
of the Company's stockholders.

Federal Income Tax Considerations. The following brief summary of the
United States federal income tax rules currently applicable to non-qualified
stock options is not intended to be specific tax advice to 1996 Employee Plan
Participants under the 1996 Employee Plan. The grant of 1996 Non-Qualified
Options generally has no immediate tax consequences to the 1996 Employee Plan
Participant or to the Company. 1996 Employee Plan Participants will generally
recognize ordinary income upon the exercise of a 1996 Non-Qualified Option on
the difference between the exercise price and the fair market value of the Class
B Common Stock with respect to which the 1996 Non-Qualified Option is exercised.
In such case, the Company will receive a corresponding deduction.

56
<PAGE> 61

meaning of the Securities Act. For purposes of creating short-swing profit
liability under Section 16 of the Exchange Act, sales of such shares by
affiliates will be matchable with market purchases within less than six months
before or after such sales.

1996 Director Non-Qualified Stock Option Plan

The Company has adopted the Pocket 1996 Director Non-Qualified Stock Option
Plan (the "1996 Director Plan"). The purposes of the 1996 Director Plan are to
(i) promote a greater identity of the interests of the Company's directors and
of its stockholders, (ii) attract and retain individuals to serve as directors
of the Company and (iii) provide a more direct link between director
compensation and stockholder value. The description below is intended as a
summary only and is qualified in its entirety by reference to the 1996 Director
Plan, a copy of which is filed as an exhibit to the registration statement of
which this Prospectus forms a part.

General. The 1996 Director Plan will be administered by the Company Board
or a committee of the Board designated for such purpose.

Pursuant to the terms of the 1996 Director Plan, directors of the Company
serving on the Company Board during the period June 1, 1996 through May 31, 1997
(the "Applicable Period") will be eligible to participate in the 1996 Director
Plan (the "1996 Director Plan Participants"). A total of 390,000 shares of Class
B Common Stock are reserved for issuance and available for grants of options
under the 1996 Director Plan (the "1996 Non-Qualified Director Options"). To
date, no shares of Class B Common Stock have been issued under the 1996 Director
Plan.

In the event of any change in corporate capitalization, such as a stock
split, or a corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock or property of
the Company, any reorganization or partial or complete liquidation of the
Company, the Company Board may make such substitutions or adjustments in the
aggregate number and class of shares reserved for issuance or subject to
outstanding 1996 Non-Qualified Director Options and in the number, kind and
price of shares subject to outstanding 1996 Non-Qualified Director Options as it
may determine to be appropriate.

The 1996 Director Plan is not qualified under Section 401(a) of the Code.

1996 Non-Qualified Director Options. The term of 1996 Non-Qualified
Director Options granted under the 1996 Director Plan may not exceed 10 years.
The exercise price for each 1996 Non-Qualified Director Option granted will be
(i) $.83 per share of Class B Common Stock, or (ii) at the discretion of the
Board, if less, the fair market value (as defined in the 1996 Director Plan) of
such shares at the date of grant.

A 1996 Director Plan Participant exercising a 1996 Non-Qualified Director
Option may pay the exercise price in full in cash, or, if approved by the
Company Board or designated committee, as the case may be, with previously
acquired shares of Class B Common Stock. The Company Board or designated
committee, as the case may be, in its discretion, may allow cashless exercise of
1996 Non-Qualified Director Options.

1996 Non-Qualified Director Options are non-transferable other than by will
or the laws of descent and distribution, or pursuant to a domestic relations
order, or (if permitted by the Company Board) by gift to members of the holder's
immediate family, whether directly or indirectly or by means of a trust or
partnership, and, during the 1996 Director Plan Participant's lifetime, may be
exercised only by such participant or his legal representative.

Shares of Class B Common Stock acquired upon the exercise of 1996
Non-Qualified Director Options are subject to certain restrictions on resale,
including (i) various transfer restrictions and call rights of the Company
applicable before such time as the Company completes an initial underwritten
public offering of common stock of the Company, and (ii) the restriction that
1996 Director Plan Participants may not resell shares acquired upon exercise of
the 1996 Non-Qualified Director Options during such lock-up period as may be
agreed to by the Company and the Underwriters.

Change in Control. In the event of a Change in Control (as defined in the
1996 Director Plan), any 1996 Non-Qualified Director Option that is not then
exercisable and vested will become fully exercisable and

57
<PAGE> 62

vested; provided that in the case of any holder of a 1996 Non-Qualified Director
Option who is subject to Section 16(b) of the Exchange Act, such 1996
Non-Qualified Director Option has been outstanding for at least six months as of
the date of such Change in Control. During the 60-day period following a Change
in Control, any 1996 Director Plan Participant will have the right to surrender
all or part of any 1996 Non-Qualified Option held by such participant, in lieu
of payment of the exercise price, and to receive cash in an amount equal to the
Spread multiplied by the number of shares of Class B Common Stock granted in
connection with the exercise of such 1996 Non-Qualified Director Option;
provided that such Change in Control transaction would not thereby be made
ineligible for pooling of interests accounting; and provided, further, that, if
the Change in Control is within six months of the grant date of any such 1996
Non-Qualified Director Option, any such 1996 Non-Qualified Director Option held
by a 1996 Director Plan Participant subject to Section 16 of the Exchange Act
will be cancelled and the holder thereof will receive six months and one day
after the grant of such 1996 Non-Qualified Director Option, an amount equal to
the Spread multiplied by the number of shares of Class B Common Stock granted
under or underlying such 1996 Non-Qualified Director Options.

Amendments. The Company Board may at any time terminate, amend, or modify
the 1996 Director Plan; provided that, no amendment, alteration or
discontinuation will be made which will disqualify the 1996 Director Plan from
the exemption provided by Rule 16b-3 promulgated under the Exchange Act, and, to
the extent required by law, no such amendment will be made without the approval
of the Company's stockholders.

Federal Income Tax Considerations. The following brief summary of the
United States federal income tax rules currently applicable to non-qualified
stock options is not intended to be specific tax advice to 1996 Director Plan
Participants under the 1996 Director Plan. Directors granted 1996 Non-Qualified
Director Options will be taxed at the time of exercise of the 1996 Non-Qualified
Director Options on the difference between the exercise price and the fair
market value of the Class B Common Stock with respect to which the 1996
Non-Qualified Director Options is exercised. In such case, the Company will
receive a corresponding deduction.

Resale of Shares. The holders of shares of Class B Common Stock received
upon the exercise of a 1996 Non-Qualified Director Option must comply with the
resale requirements of the Securities Act and the rules and regulations
promulgated thereunder. Securities registration requirements under the
Securities Act may be applicable to resales by any director. The restrictions
imposed by Section 16 of the Exchange Act upon any director and the registration
requirements of any applicable state securities laws may restrict the resales of
shares acquired pursuant to the exercise of 1996 Non-Qualified Director Options
by a director.

1996 Incentive Compensation Plan

The Company has adopted the Pocket 1996 Incentive Compensation Plan (the
"1996 Incentive Compensation Plan"). The 1996 Incentive Compensation Plan is
designed to promote the success and enhance the value of the Company by linking
the interests of certain of the full-time employees of the Company ("1996
Incentive Compensation Plan Participants") to those of the Company's
stockholders and by providing employees with an incentive for outstanding
performance. The 1996 Incentive Compensation Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract and retain
employees upon whose judgment, interest and special efforts the Company's
successful operation largely is dependent. As determined by the Compensation
Committee of the Company Board, or any other designated committee of the Company
Board, the Company employees, including employees who are members of the Company
Board, are eligible to participate in the 1996 Incentive Compensation Plan.
Non-employee directors are not eligible to participate in the 1996 Incentive
Compensation Plan. The Company Board has provided for the 1996 Incentive
Compensation Plan to remain in effect for 10 years, to 2006. The description
below is intended as a summary only and is qualified in its entirety by
reference to the 1996 Incentive Compensation Plan, a copy of which is filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.

General. The 1996 Incentive Compensation Plan will be administered by the
Compensation Committee of the Company Board or, at the discretion of the Company
Board, any other committee appointed by the Company for such purpose (the
"Committee"). Four types of awards may be granted to 1996 Incentive

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Compensation Plan Participants under the 1996 Incentive Compensation Plan: (i)
stock options (both non-qualified and incentive) ("Options"), (ii) stock
appreciation rights ("SARs"), (iii) restricted Common Stock ("Restricted Stock")
and (iv) performance awards ("Performance Awards," and together with the
Options, SARs and Restricted Stock, the "Awards").

The 1996 Incentive Compensation Plan provides that the total number of
shares of Class B Common Stock available for grant under the 1996 Incentive
Compensation Plan may not exceed shares. No 1996 Incentive
Compensation Plan Participant may be granted Awards covering in excess of % of
the shares of Class B Common Stock available for issuance over the life of the
1996 Incentive Compensation Plan. If any Award is cancelled or forfeited or
terminates, expires, or lapses (other than a termination of a Tandem SAR (as
defined herein)), upon exercise of the related Option or the termination of a
related Option upon exercise of the corresponding Tandem SAR, shares subject to
such Award will again be available for the grant of an Award under the 1996
Incentive Compensation Plan. To date, no Awards have been issued under the 1996
Incentive Compensation Plan.

In the event of any change in corporate capitalization, such as a stock
split, or a corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock or property of
the Company, any reorganization or partial or complete liquidation of the
Company, the Committee or the Company Board may make such substitutions or
adjustments in the aggregate number and class of shares reserved for issuance or
subject to outstanding Awards and in the number, kind and price of shares
subject to outstanding Options of SAR's as it may determine to be appropriate.

The 1996 Incentive Compensation Plan is not subject to the provisions of
ERISA and is not qualified under Section 401(a) of the Code.

Options. The term of Options granted under the 1996 Incentive Compensation
Plan may not exceed 10 years. The term and exercise price for each Option
granted will be determined by the Committee; provided that the exercise price
may not be less than 100% of the fair market value (as defined in the 1996
Incentive Compensation Plan) of a share of Class B Common Stock on the date of
grant.

A Participant exercising an Option may pay the exercise price in full in
cash, or, if approved by the Committee, with previously acquired shares of Class
B Common Stock. The Committee, in its discretion, may allow cashless exercise of
Options.

Options are nontransferable other than by will or laws of descent and
distribution (and, in the case of a nonqualified Option, as otherwise expressly
permitted under the applicable option agreement including, if so permitted,
pursuant to a gift to members of the holder's immediate family, whether directly
or indirectly or by means of a trust or partnership), and may be exercised only
by the Participant or his guardian or legal representative.

SARs. SARs may be granted by the Committee in connection with all or part
of any Option grant ("Tandem SARs"). A Tandem SAR may be exercised only with
respect to the shares for which its related Option is then exercisable. SARs
permit the Participant to receive in cash or shares of Class B Common Stock (or
a combination of both) an amount equal to the excess of the fair market value of
a share of Class B Common Stock on the date the SAR is exercised over the
exercise price for the SAR times the number of shares of Class B Common Stock
with respect to which such SAR is exercised.

The term of SARs granted under the 1996 Incentive Compensation Plan may not
exceed 10 years. The exercise price of a Tandem SAR will equal the exercise
price of the related Option.

SARs are transferable only to permitted transferees of the underlying
Option and to the extent allowed under such Option.

Restricted Stock. The Committee may grant Restricted Stock, which may or
may not be performance based, to eligible employees in such amounts as the
Committee determines. At the time of each award of Restricted Stock the
Committee will establish a restricted period (the "Restricted Period") during
which such stock may not be sold, transferred, pledged, assigned or otherwise
alienated. If a 1996 Incentive Compensation Plan Participant terminates his
employment or is involuntarily terminated for cause during the

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Restricted Period, all Restricted Stock held by such 1996 Incentive Compensation
Plan Participant will be forfeited. If a 1996 Incentive Compensation Plan
Participant retires or is involuntarily terminated other than for cause, the
Committee may waive all or part of any remaining restrictions on such 1996
Incentive Compensation Plan Participant's Restricted Stock. After the Restricted
Period has expired, the related Restricted Stock is freely transferable.

The Committee has discretion to determine whether holders of Restricted
Stock will be entitled to dividends or other distributions thereon. If any such
dividends or distributions are in shares of Class B Common Stock, such shares
will be subject to the same restrictions as the related Restricted Stock. In the
event the holder of Restricted Stock on which dividends or distributions are
made is subject to Section 16 of the Exchange Act, the vesting period for such
dividend or distribution will be the longer of (i) the remaining vesting period
on the related Restricted Stock and (ii) six months.

Performance Awards. The Committee may from time to time grant Performance
Awards, which may or may not be performance based, and which, as determined by
the Committee, may include, without limitation, cash, Class B Common Stock,
performance units, performance shares or any combination thereof. The Committee
will set the performance goals and restrictions applicable to each Performance
Award, including establishing the applicable performance period and the value of
the Performance Award. After the applicable performance period has ended, the
holder of a Performance Award will be entitled to receive the payout earned to
the extent to which the corresponding performance goals were satisfied.

Subject to the provisions of the applicable Performance Award agreement,
Performance Awards may not be sold, assigned, transferred, pledged or otherwise
encumbered during the applicable performance period.

Change in Control. In the event of a Change in Control (as defined in the
1996 Incentive Compensation Plan), (i) any Option or SAR that is not then
exercisable and vested will become fully exercisable and vested (provided that,
in the case of any holder of an Option or SAR who is subject to Section 16(b) of
the Exchange Act, such Option or SAR has been outstanding for at least six
months as of the date of such Change in Control), (ii) the restrictions on any
Restricted Stock will lapse and (iii) all Performance Awards will be deemed
earned.

During the 60-day period following a Change in Control, any 1996 Incentive
Compensation Plan Participant will have the right to surrender all or part of
any Option held by such Participant, in lieu of payment of the exercise price,
and to receive cash in an amount equal to the 1996 Incentive Compensation Plan
Spread multiplied by the number of shares of Class B Common Stock granted in
connection with the exercise of such Option; provided that such Change in
Control transaction would not thereby be made ineligible for pooling of
interests accounting; and provided, further, that, if the Change in Control is
within six months of the grant date for any such Option, no such election may be
made prior to six months from such grant date; and provided, further, that, if
the Option is an "incentive stock option" under Section 422 of the Code, the
Change in Control Price will equal the fair market value of a share of the Class
B Common Stock on the date, if any, that such Option is cancelled. If such
60-day period ends within the period six months after the grant date for an
Option, any such Option held by a 1996 Incentive Compensation Plan Participant
subject to Section 16 of the Exchange Act will be cancelled and the holder
thereof will receive six months and one day after the grant of such Option, an
amount equal to the Spread multiplied times the number of shares of Class B
Common Stock granted under or comprising such Option.

Deferrals. The Committee may permit a 1996 Incentive Compensation Plan
Participant to elect, or the Committee may require, at its sole discretion,
subject to the proviso set forth below, any one or more of the following: (i)
the deferral of a 1996 Incentive Compensation Plan Participant's receipt of
cash, (ii) a delay in the exercise of an Option or SAR, (iii) a delay in the
lapse or waiver of restrictions with respect to Restricted Stock, or (iv) a
delay of the satisfaction of any requirements or goals with respect to
Performance Awards; provided that the Committee's authority to take such actions
exists only to the extent necessary to reduce or eliminate a limitation on the
deductibility of compensation paid to a 1996 Incentive Compensation Plan
Participant pursuant to (and so long as such action in and of itself does not
constitute the exercise of impermissible discretion under) Section 162(m) of the
Code, or any successor provision thereunder. If any such deferral is required or
permitted, the Committee will establish rules and procedures for such deferrals,

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including provisions relating to periods of deferral, the terms of payment
following the expiration of the deferral periods, and the rate of earnings, if
any, to be credited to any amounts deferred thereunder.

Amendments. The Company Board may at any time terminate, amend, or modify
the 1996 Incentive Compensation Plan; provided that no amendment, alteration or
discontinuation will be made which will disqualify the 1996 Incentive
Compensation Plan from any exemption provided by Rule 16b-3 promulgated under
the Exchange Act, and, to the extent required by law, no such amendment will be
made without the approval of the Company's stockholders.

Federal Income Tax Considerations. The following brief summary of the
United States federal income tax rules currently applicable to nonqualified
stock options, incentive stock options, SARs, restricted stock and performance
awards is not intended to be specific tax advice to Participants under the 1996
Incentive Compensation Plan.

Two types of stock options may be granted under the 1996 Incentive
Compensation Plan: nonqualified stock Options ("NQOs") and incentive stock
Options ("ISOs"). SARs, Restricted Stock and Performance Awards may also be
granted under the 1996 Incentive Compensation Plan. The grant of an Award
generally has no immediate tax consequences to the 1996 Incentive Compensation
Plan Participant or the Company. Generally, 1996 Incentive Compensation Plan
Participants will recognize ordinary income upon: (i) the exercise of NQOs or
SARs; (ii) the vesting of shares of Restricted Stock; and (iii) the actual
receipt of cash or stock pursuant to Performance Awards. In the case of NQOs and
SARs, the amount of income recognized is measured by the difference between the
exercise price and the fair market value of Class B Common Stock on the date of
exercise. In the case of Restricted Stock and Performance awards, the amount of
income is equal to the fair market value of the stock or other property
(including cash) received. The exercise of an ISO for cash generally has no
immediate tax consequences to a 1996 Incentive Compensation Plan Participant or
to the Company. 1996 Incentive Compensation Plan Participants may, in certain
circumstances, recognize ordinary income upon the disposition of shares acquired
by exercise of an ISO, depending upon how long such shares were held prior to
disposition. Special rules apply to shares acquired by exercise of ISOs for
previously held shares. In addition, special tax rules may result in the
imposition of a 20% excise tax on any "excess parachute payments" that result
from the acceleration of the vesting or exercisability of Awards upon a Change
in Control.

The Company is generally required to withhold applicable income and Social
Security taxes ("employment taxes") from ordinary income which a 1996 Incentive
Compensation Plan Participant recognizes on the exercise or receipt of an Award.
The Company thus may either require 1996 Incentive Compensation Plan
Participants to pay to the Company an amount equal to the employment taxes the
Company is required to withhold or retain or sell without notice a sufficient
number of the shares to cover the amount required to be withheld.

The Company generally will be entitled to a deduction for the amount
includible in a 1996 Incentive Compensation Plan Participant's gross income for
federal income tax purposes upon the exercise or actual receipt of an Award.
However, such deduction generally is available only if the Company timely
complies with applicable information reporting requirements under Sections 6041
and 6041A of the Code. Furthermore, Section 162(m) of the Code and the
regulations thereunder may, in some circumstances, limit deductibility with
respect to "covered employees" whose total annual compensation exceeds one
million dollars, and Section 280G of the Code and the regulations thereunder may
render nondeductible amounts includible in income by employees that are
contingent upon a Change in Control and that are characterized as "excess
parachute payments."

Resale of Shares. The registration requirements of any applicable state
securities laws and the resale restrictions of Rule 144 under the Securities Act
may restrict the sale of shares of Class B Common Stock acquired pursuant to the
exercise of Awards by "affiliates" of the Company within the meaning of the
Securities Act. For purposes of creating short-swing profit liability under
Section 16 of the Exchange Act, sales of such shares by affiliates will be
matchable with market purchases within less than six months before or after such
sales.

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THE DIRECTOR STOCK COMPENSATION PLAN

The Company has adopted the Pocket Director Stock Compensation Plan (the
"Director Stock Plan"). The purposes of the Director Stock Plan are to (i)
promote a greater identity of interest between the Company's non-employee
directors and its stockholders and (ii) attract and retain individuals to serve
as directors.

General. The Director Stock Plan will be administered by the Company Board
or a committee of the Company Board designated for such purpose.

Pursuant to the terms of the Director Stock Plan, non-employee directors of
the Company will be eligible to participant in the Director Stock Plan following
the Distribution (each, an "Eligible Director"). A total of shares of
Class B Common Stock will be reserved for issuance and available for grants
under the Director Stock Plan. To date, no shares of Class B Common Stock have
been issued under the Director Stock Plan.

In the event of any change in corporate capitalization (such as a stock
split) or a corporate transaction (such as a merger, consolidation, separation
including a spin-off or other distribution of stock or property of the Company,
any reorganization or any complete liquidation of the Company), the Company
Board or the designated committee may make such substitution or adjustments in
the aggregate number and class of shares reserved for issuance under the
Director Stock Plan, in the number, kind and option price of shares subject to
outstanding Options, in the number and kind of shares subject to other
outstanding awards granted under the Director Stock Plan, and/or such other
equitable substitution or adjustments as it may determine to be appropriate in
its sole discretion; provided, however, that the number of shares subject to any
award must always be a whole number.

Class B Common Stock. With respect to the annual retainer paid to
directors (the "Annual Retainer"), each Eligible Director may make an annual
irrevocable election to receive shares of Class B Common Stock in lieu of all or
any portion (in 25% increments) of the Annual Retainer; provided that the
election of cash, Class B Common Stock and options under the Director Stock Plan
are alternatives and taken together, may not exceed 100% of such Annual
Retainer; and provided further, that any such election may be refused, in whole
or in part, by the committee if such refusal is necessary or appropriate for the
Company to maintain compliance with FCC requirements. The number of shares of
Class B Common Stock granted to an Eligible Director will be equal to the
appropriate percentage of the Annual Retainer payable in each fiscal quarter
divided by the fair market value (as defined in the Director Stock Plan) of a
share of Class B Common Stock on the last business day of such fiscal quarter
rounded to the nearest number of shares of Class B Common Stock. Fractional
shares of Class B Common Stock will not be granted and any remainder in Annual
Retainer which otherwise would have purchased fractional shares will be paid in
cash.

Options. On the first Tuesday following his or her election and thereafter
on the day after each annual meeting of stockholders during such director's
term, each Eligible Director shall be granted options ("Director Options") on
1,000 shares of Class B Common Stock. The exercise price for the Director
Options will be 100% of the fair market value of Class B Common Stock on the
date of the grant of such option. Each Director Option will become vested and
exercisable, immediately commencing on the first anniversary of the date of
grant of such Director Option, a share of Class B Common Stock has a fair market
value equal to or greater than the exercise price of such Director Option. If
such stock does not attain such fair market value during such 30-day period,
then such Director Option shall terminate. Each Director Option terminates no
later than the tenth anniversary of the date of grant. Any unvested Director
Options terminate and are cancelled as of the date the optionee's service as a
director ceases for any reason (including death, disability, retirement, removal
from office or otherwise). All Director Options become fully vested and
exercisable upon a Change of Control (as defined in the Director Stock Plan).

Transferability. No Director Option will be transferable by the optionee
other than by will or by laws of descent and distribution or as otherwise
expressly permitted under the applicable option agreement including, if so
permitted, pursuant to a gift to such optionee's family, whether directly or
indirectly or by means of a

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trust or partnership or otherwise. All Director Options will be exercisable,
subject to the terms of this Plan, only by the optionee, the guardian or legal
representative of the optionee.

Amendments. The Director Stock Plan may be amended by the Company Board,
provided that, to the extent required to qualify transactions under the Director
Stock Plan for exemption under Rule 16b-3 promulgated under the Exchange Act, no
amendment to the Director Stock Plan may be adopted without further approval by
the holders of at least a majority of the shares of Common Stock present, or
represented, and entitled to vote at a meeting held for such purpose; and
provided, further, that, if and to the extent required for the Director Stock
Plan to comply with Rule 16b-3, no amendment to the Director Stock Plan shall be
made more than once in any six-month period that would change the amount, price
or timing of the grants of awards or Options thereunder other than to comply
with changes in the Code, ERISA, or the regulations thereunder.

Termination. The Director Stock Plan may be terminated at any time by
either the Company Board or by holders of a majority of the shares of Common
Stock present and entitled to vote at a duly convened meeting of stockholders.

Change in Control. In the event of a Change in Control (as defined in the
Director Stock Plan), any outstanding Options that are not then exercisable and
vested will become fully exercisable and vested. During the 60-day period
following a Change in Control, any Eligible Director will have the right to
surrender all or part of any Option or award of Class B Common Stock held by
such Eligible Director, and, in the case of an Option, in lieu of payment of the
exercise price, to receive cash in an amount equal to the Spread multiplied by
the number of shares of Class B Common Stock granted in connection with the
exercise of such Option so surrendered, or, in the case of an award of Class B
Common Stock, to receive cash in an amount equal to the Change in Control Price
multiplied by the number of shares of Class B Common Stock so surrendered;
provided that, if any right granted pursuant to this provision would make a
Change in Control transaction ineligible for pooling-of-interests accounting
that but for the nature of such right would otherwise be eligible for such
accounting treatment, the Company Board shall have the ability to substitute for
the cash payable pursuant to such right. Class B Common Stock with a fair market
value equal to the cash that would otherwise be payable hereunder.

Federal Income Tax Considerations. Eligible Directors electing Class B
Common Stock in lieu of cash fees will be taxed on the value of the Class B
Common Stock at the time of receipt. In each case, the Company will receive a
corresponding deduction; provided that Section 280G of the Code and the
regulations thereunder may render nondeductible amounts that are contingent upon
a Change in Control and are characterized as "excess parachute payments".

Resale of Shares. The holders of shares of Class B Common Stock received
upon the exercise of an Option must comply with the resale requirements of the
Securities Act and the rules and regulations promulgated thereunder. Securities
registration requirements under the Securities Act may be applicable to resales
by any Eligible Director. The restrictions imposed by Section 16 of the Exchange
Act upon any Eligible Director and the registration requirements of any
applicable state securities laws may restrict the resales of shares acquired
pursuant to the exercise of Options by an Eligible Director.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Teleconsult, a stockholder and a member of the Control Group of the
Company, provided the Company with professional services and office space and
services worth approximately $167,000 in 1995 in exchange for shares of Class A
Common Stock. Eduardo Paz, a director of the Company, is also the President and
sole director of Teleconsult. See "Certain Transactions."

C.E. Capital Consultants, Inc. ("C.E. Capital") has provided certain
financial consulting services to the Company through January 1996, for which the
Company has paid $250,000 in 1995 and $277,000 in 1996, and for which the
Company, as of June 30, 1996, has outstanding over $1.2 million payable. In
addition, for such

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services, the Company issued to C.E. Capital 150,000 shares of Class B Common
Stock and warrants to purchase 150,000 shares of Class B Common Stock. See
"Certain Transactions." MASA, which is 100% owned by Mr. Sasaki, owns a minority
interest in and is a subcontractor to C.E. Capital. As a subcontractor to C.E.
Capital, MASA has an agreement to share consulting fees, which fees may include
equity securities of the Company, that C.E. Capital receives from the Company.

MTI received a $100,000 escrow fee for acting as the escrow agent with
respect to the MTAI Agreement (as defined herein). In addition, the Company has
agreed to pay MTI a $5 million finder's fee for its efforts in obtaining
financing for the Company. Mr. Sasaki, a director of the Company, is also
president of MTI. Mr. Sasaki owns 100% of MASA, which owns 51% of the voting
stock of MT Holdings, Inc., which in turn owns all of the voting stock of MTI.

Pursuant to certain agreements entered into with Westinghouse in 1995, and,
subject to satisfaction of certain conditions, the Company currently
contemplates a repurchase of the 1,800,729 shares of Class B Common Stock
currently held by Westinghouse at a total repurchase price of $1.5 million,
which is equal to the price for which such shares were originally issued.

The Company has retained Wills and Associates, Inc. ("Wills") to provide
public relations services to the Company. George S. Wills, a director of the
Company, is the president of Wills. In fiscal year 1995, the Company paid to
Wills a total of $104,679. Under an agreement with Wills, dated as of December
1, 1995, the Company will pay a monthly retainer of $20,000, $5,000 of which was
deferred for the months during which the C Block auction was ongoing. Such
monthly $5,000 portions are still being deferred. As of June 30, 1996, the
Company has paid $184,000 to Wills for professional services including services
under this agreement.

In addition, the Company has retained and continues to retain the services
of the law firm Levan, Schimel, of which Ronald S. Schimel, a director of the
Company, is a principal. In fiscal year 1995, the Company paid Levan, Schimel a
total of approximately $389,000. From the beginning of fiscal year 1996 to June
30, 1996, the Company has paid approximately $171,000 for services rendered.

In April 1996, Carlos Pichardo borrowed and executed a promissory note for
the benefit of the Company in the original principal amount of $32,600, plus
interest at 6% per annum. Mr. Pichardo is an officer of the Company and holds a
minority equity interest in Teleconsult. The entire principal balance of this
promissory note, together with all accrued and unpaid interest, will be payable
on the first anniversary of the date of its execution. The note may be
immediately due and payable upon default or the termination of employment with
the Company. Upon default, the Company has the right to withhold or deduct an
amount equal to the amount due and payable under the note from any wages due to
Mr. Pichardo from the Company. As of June 30, 1996, all such amounts remain
outstanding.

Daniel C. Riker, Chairman of the Board and Chief Executive Officer of the
Company, and Janis A. Riker, President and Chief Operating Officer of the
Company, are married to one another.

CERTAIN TRANSACTIONS

The following description of certain transactions relating to the
capitalization of the Company to date reflects adjustments for stock
reclassifications and stock splits pursuant to the Recapitalization as well as
prior events. As of June 30, 1996, Mr. Riker owns 4,670,000 shares of Class A
Common Stock; Ms. Riker owns 5,730,000 shares of Class A Common Stock and Mr.
Anderson owns 1,030,120 shares of Class B Common Stock.

In 1995, the Company issued to Teleconsult 9,300,000 shares of Class A
Common Stock. Eduardo Paz, a director of the Company, is also the President and
sole director of Teleconsult. In addition, Teleconsult has agreed to grant to
Ms. Riker an irrevocable proxy with respect to up to 9% of the outstanding
shares of Common Stock. The proxy would expire 10 years from the License Grant
Date unless terminated earlier by mutual consent of Ms. Riker and Teleconsult,
or unless it is no longer required for purposes of helping to satisfy FCC
Control Group requirements. The purchase agreements entered into by and between
the Company and Teleconsult include representations by Teleconsult regarding the
status of Teleconsult as a

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Qualifying Investor and covenants by Teleconsult that it will not, without the
prior written consent of the Company, assign or transfer control of any
ownership interest of Teleconsult to any person or entity unless, following such
assignment or transfer, Teleconsult will continue to be a Qualifying Investor
and that any interest currently owned by Teleconsult shall continue to be owned
by a Qualifying Investor. In addition, such agreements provide the Company with
the right to repurchase shares of Class A Common Stock of the Company owned by
Teleconsult in the event that Teleconsult fails to maintain its status as a
Qualifying Investor or otherwise causes the Company to lose its Designated
Entity Status.

In 1995, MTI acquired 6,000,000 shares of Class B Common Stock. See
"Management -- Certain Relationships and Related Transactions."

In 1995, the Company entered into certain loan agreements with each of Masa
Telecom Asia Investment Pte. Ltd., a Republic of Singapore corporation ("MTAI")
and Pacific Eagle Investments Ltd., a British Virgin Islands corporation
("Pacific Eagle"), which may be deemed affiliates of MTI. These loan agreements
provided for the Company to borrow up to an aggregate of $65 million. The
majority of such borrowings have been used for the down payment of the PCS
licenses. These loans are convertible, subject to compliance with FCC
regulations and certain other conditions, into convertible debentures which are
convertible into shares of Class B Common Stock. In addition, in 1995, the
Company entered into a purchase agreement with Multinational Technology and
Business Limited, a Republic of Hong Kong corporation ("MTB") for the purchase
by MTB of convertible debentures for $833,000. The debentures are convertible
into 1,000,000 shares of Class B Common Stock, subject to compliance with FCC
regulations and certain other conditions. In 1995, MTB assigned its rights under
the MTB Agreement and its convertible debentures to Pacific Eagle. See
"Description of Certain Indebtedness."

MTB has also entered into an agreement pursuant to which it has the right
to acquire options or warrants for nonvoting common stock of Teleconsult in
connection with a three-year term loan to Teleconsult. MTB's right to acquire
such interest is conditioned upon, among other things, such acquisition not
resulting in the violation by the Company of the FCC's foreign ownership
restrictions.

All existing stockholders of the Company have entered into a stockholders'
agreement (the "Stockholders' Agreement") that provides for, among other things,
(i) the agreement by each stockholder to vote their shares of Common Stock for
one nominee to the Company Board of Directors designated by MTI; (ii) the right
of first refusal of the Company and non-selling stockholders for shares of
Common Stock of the Company which a stockholder desires to sell; (iii) the
repurchase by the Company of shares of Common Stock upon the occurrence of
certain "repurchase events" (as defined in the Stockholders' Agreement), which
includes violations of the FCC's foreign ownership restrictions or Designated
Entity Status; (iv) and the covenant by each stockholder not to take any action
that would jeopardize the Company's compliance with the foreign ownership
restrictions or the Company's Designated Entity Status. The provisions referred
to in clauses (i) and (ii) above expire upon the completion of an underwritten
public offering of Common Stock totaling at least $5 million.

The Company has arranged with certain affiliated entities, including
Pacific Eagle and MTI for short term borrowings of approximately $41.7 million
to meet a portion of the second half of the down payment and associated fees.
Such borrowings are anticipated to be repaid in whole or in part from the
proceeds of the Offering. In connection with this financing, the Company has
also issued a note with a principal amount of $8 million and 1,000,000
non-detachable warrants to purchase Class B Common Stock at an exercise price of
$8.00 per warrant, subject to FCC requirements.

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PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Class A Common Stock and Class B Common Stock as of June 30,
1996, after giving effect to the Recapitalization, (i) immediately prior to and
conditioned upon the Offering, and subject to any necessary FCC approvals, and
(ii) as adjusted to reflect the sale of shares of Class B Common Stock in the
Offering (assuming the Underwriters' over-allotment option is not exercised), by
(a) each person who is known by the Company to own beneficially more than 5% of
either the Class A Common Stock or the Class B Common Stock; (b) each of the
Company's directors; (c) each of the Named Executive Officers; and (d) all
current Executive Officers and directors as a group. Unless otherwise indicated,
each person has sole voting power and investment power with respect to the
shares attributed to them.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
-------------------------------------------------------------------------------------------------
PRIOR TO OFFERING AFTER OFFERING
----------------------------------------------- -----------------------------------------------
NAME AND ADDRESS OF NUMBER OF PERCENT OF NUMBER OF PERCENT OF NUMBER OF PERCENT OF NUMBER OF PERCENT OF
BENEFICIAL OWNER(2) A SHARES A SHARES B SHARES B SHARES A SHARES A SHARES B SHARES B SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel C. Riker(3)........... % % % %
Janis A. Riker(4)............
Teleconsult,
Incorporated(5)............
2715 M Street, NW
Suite 100
Washington, DC 20007
Masa Telecom, Inc.(6)........
1140 19th Street, NW
Suite 602
Washington, DC 20036
Westinghouse Electric
Corporation(7).............
11 Stanwix Street
Pittsburgh, PA 15222
Thomas L. Leming.............
J. Herbert Nunnally(8).......
Eduardo Paz(9)...............
Brion Sasaki(10).............
Ronald S. Schimel............
George S. Wills..............
Randall S. Anderson(11)......
Barry C. Winkle(12)..........
Carlos A. Pichardo(13).......
All Officers and Directors as
a Group (11
individuals)(14)...........
</TABLE>

- ---------------
* Less than 1%.

(1) Under the rules of the Commission, a person is deemed to be a "beneficial
owner" of a security if that person has or shares "voting power," which
includes the power to vote or to direct the voting of such security, or
"investment power," which includes the power to dispose of or to direct the
disposition of such security. A person is also deemed to be the beneficial
owner of any securities of which that person has the right to acquire
beneficial ownership within 60 days. Under these rules, more than one
person may be deemed to be a beneficial owner of the same securities and a
person may be deemed to be a beneficial owner of securities as to which
that person has no beneficial interest.

(2) Unless otherwise indicated, the address of the beneficial owner is c/o
Pocket Communications, Inc., 2550 M St., N.W., Washington, D.C. 20037.

(3) Excludes 5,730,000 shares of Class A Common Stock held by Ms. Riker, of
which beneficial ownership is disclaimed.

(4) Excludes 4,670,000 shares of Class A Common Stock held by Mr. Riker, of
which beneficial ownership is disclaimed. Ms. Riker may be deemed to be the
owner of up to 837,000 shares of Class A Common Stock held by Teleconsult
over which she may have sole voting control pursuant to an Agreement to

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<PAGE> 71

Execute Irrevocable Proxy, dated as of May 14, 1996, by and between Ms.
Riker and Teleconsult (the "Teleconsult Voting Agreement").

(5) Includes 837,000 shares held by Teleconsult over which Ms. Riker may have
sole voting control pursuant to the Teleconsult Voting Agreement.

(6) Includes shares issuable upon conversion of the convertible
debentures held by Pacific Eagle, which may be deemed to be an affiliate of
MTI, subject to compliance with FCC requirements, but does not include
shares held by Mr. Sasaki.

(7)

(8)

(9) Mr. Paz may be deemed to be the owner of the 9,300,000 shares of Class A
Common Stock held by Teleconsult as he is President, sole director and
majority owner of Teleconsult. This number includes 837,000 shares held by
Teleconsult over which Ms. Riker may have sole voting control pursuant to
the Teleconsult Voting Agreement.

(10) Includes 6,000,000 shares, held by MTI, of which Mr. Sasaki may be deemed
to be the owner because he owns 100% of MASA, which owns 51% of the voting
stock of MT Holdings, Inc., which, in turn, owns all of the voting stock of
MTI. Mr. Sasaki is also president of MTI. Includes 75,000 shares and
warrants to purchase 75,000 shares of Class B Common Stock held by C.E.
Capital.

(11) Does not include unvested options to purchase shares of Class B
Common Stock.

(12) Does not include unvested options to purchase shares of Class B
Common Stock.

(13) Does not include unvested options to purchase shares of Class B
Common Stock.

(14) Does not include unvested options to purchase shares of Class B
Common Stock.

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<PAGE> 72

DESCRIPTION OF CERTAIN INDEBTEDNESS

THE LOAN AND PURCHASE AGREEMENTS

In June 1995, the Company entered into a Loan and Purchase Agreement with
MTAI (the "MTAI Agreement") with MTAI, pursuant to which the Company borrowed
$30.0 million in November 1995 at an interest rate of 6.71% per annum, all of
which was used to satisfy partially the down payment for the Company's PCS
licenses. In August 1995, the Company entered into a similar Loan and Purchase
Agreement with Pacific Eagle (the "Pacific Eagle Agreement"), pursuant to which
the Company would receive up to $35.0 million to satisfy partially the down
payment. In November 1995, the Company borrowed $9.3 million under the Pacific
Eagle Agreement at an interest rate of 6.71% per annum, all of which was used
towards the down payment. In April 1996, the Company, MASA and Pacific Eagle
amended the Pacific Eagle Agreement to modify certain conditions for and to
permit further borrowings. In May 1996, the Company borrowed $15 million under
the Pacific Eagle Agreement, as amended, at an interest rate of 7.28% per annum
and applied such borrowings towards the down payment. The Pacific Eagle
Agreement, as amended, also provides that Pacific Eagle will make available for
borrowing the remaining $10.7 million for payment of a portion of the down
payment, at an annual percentage rate that will provide an annual percentage
yield equal to the Dow Jones Bond Averages -- 10 Industrials on the date closest
to the date on which the funds were disbursed.

The borrowings under both the MTAI Agreement and the Pacific Eagle
Agreement may convert into convertible debentures (the "Series A Convertible
Debentures") only if and to the extent that such conversion does not result in
the violation of the Company's Designated Entity Status. For borrowings which do
convert, all unpaid interest, together with interest payable thereon at the same
rate, is due five years after the date of the borrowing conversion. Borrowings
that remain unconverted, along with all deferred and unpaid in interest, would
be due and payable on May 15, 2001. The Series A Convertible Debentures bear
interest at the Applicable Federal Midterm Rate in effect at the date on which
they are issued. The Series A Convertible Debentures would have a face amount
equivalent to the original principal amount of such borrowings and unless
subsequently converted, will, along with all unpaid interest, be due on
September 1, 2000.

Under the MTAI Agreement and the Pacific Eagle Agreement, the holders of
the Series A Convertible Debentures would have the option, at any time prior to
September 1, 2000, to convert the debentures into the then existing convertible
preferred stock, par value $.01 per share, of the Company (the "Old Convertible
Preferred Stock"). The Old Convertible Preferred Stock was convertible into
shares of then existing Class B common stock, par value $.01 per share, of the
Company (the "Old Class B Common Stock"). As part of the Recapitalization, the
MTAI Agreement and the Pacific Eagle Agreement will be amended to provide for
the conversion of the Series A Convertible Debentures directly into shares of
Class B Common Stock. Such conversions can only occur in increments of $5
million. Beginning September 1, 1997, and each anniversary thereafter, until
maturity, the Company, at its option can require conversion of all outstanding
debentures into shares of Class B Common Stock. For convertible debentures which
are converted at the option of the debenture holder or at the option of the
Company, all unpaid interest, together with interest payable thereon at the same
rate, is due five years after date of conversion. Additionally, all Series A
Convertible Debentures are subject to mandatory conversion into shares of Class
B Common Stock with the sale of capital stock of the Company totalling at least
$5.0 million in an initial public offering. For convertible debentures which
convert as a result of mandatory conversions, all unpaid interest, together with
interest payable thereon at the same rate, is due five years after date of
conversion. Any conversion of the Series A Convertible Debentures into Class B
Common Stock, upon effectiveness of the Recapitalization, will be at a price
equal to the lesser of $8.00, subject to certain adjustments, and the price at
which the shares of Class B Common Stock are sold in the Offering. All
conversions, including mandatory conversions, are subject to the Company's
continued compliance with foreign ownership restrictions and maintenance of its
Designated Entity Status.

The Company has arranged with certain related entities, including Pacific
Eagle, for short-term borrowings of approximately $41.7 million, which includes
associated fees of approximately $1 million, to meet a portion of the second
half of the down payment (the "Short-Term Facility"). Borrowings under the
Short-Term Facility will accrue interest at % per annum, with such interest
paid quarterly. Amounts borrowed under the Short-Term Facility are subject to
mandatory prepayment by the Company in the event

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<PAGE> 73

that at least $200 million of certain financing is raised, including amounts
raised in the Offerings. Borrowings that are not prepaid will mature on the
earlier of (i) one year from the first borrowing, and (ii) the occurrence of an
event of default (as defined in the Short-Term Facility). Additionally, in
connection with the borrowing of $41.7 million for the down payment under the
Short-Term Facility, the Company issued a promissory note in the principal
amount of $8 million to a third party, which is related to Pacific Eagle, in
satisfaction of services provided in securing the financing. Warrants to
purchase 1 million shares of Class B Common Stock at an exercise price of $8 per
share, subject to FCC requirements, were attached to such promissory note. The
promissory note matures two years from the date of issuance unless tendered by
the holder in satisfaction of the exercise price of the attached warrants.

SERIES B CONVERTIBLE DEBENTURE

In August 1995, the Company issued a total of $833,000 in Series B
convertible debentures (the "Series B Convertible Debentures"), which bear
interest at rates ranging from 6.31% to 6.38% per annum, to MTB pursuant to a
Purchase Agreement (the "MTB Agreement"). The Series B Convertible Debentures,
which mature on September 1, 2000, were convertible, at the holder's option,
into shares of then existing Class A voting common stock, par value $.01, of the
Company ("Old Class A Voting Common Stock") in minimum increments of $200,000.
The Series B Convertible Debentures were convertible into shares of Old Class A
Voting Common Stock at a ratio of $.83 per share. As a result of the
Recapitalization, the MTB Agreement will be amended to provide for the
conversion of the Series B Convertible Debentures into shares of Class B Common
Stock at the same price per share. Additionally, the MTB Agreement allows for
the Company to elect to cause mandatory conversion of any outstanding Series B
Convertible Debentures if (i) Series A Convertible Debentures have been
converted and (ii) the sale of the capital stock of the Company totalling at
least $5.0 million in an initial public offering is consummated. Pursuant to the
MTB Agreement, any conversion of the Series B Convertible Debentures would be
(i) secondary to any elected or mandatory conversion of Series A Convertible
Debentures and (ii) subject to the FCC foreign ownership restrictions. For
Series B Convertible Debentures which do convert, all unpaid interest, together
with interest payable thereon at the same rate, is due five years after the date
of the conversion.

In 1995, MTB assigned its rights under the MTB Agreement and the Series B
Convertible Debentures to Pacific Eagle.

ERICSSON AGREEMENTS

In November 1995, the Company entered into a loan agreement with Ericsson
pursuant to which the Company received $2.0 million for working capital purposes
(the "Working Capital Loan"). Borrowings under the Working Capital Loan accrue
interest at a rate of 11% per annum compounded quarterly with interest and
principal due on the earlier of (i) September 30, 1996, and (ii) the date upon
which the Company obtains another loan facility with Ericsson that permits the
proceeds thereof to be used for working capital purposes.

In May 1996, the Company entered into a second loan agreement (the "1996
Ericsson Loan") with Ericsson pursuant to which the Company may potentially draw
up to $23.0 million, which is divided into two parts as follows:

(i) An advance of up to $20.0 million to be used for general corporate
purposes, which bears interest at the prime rate plus 3% per annum to be
determined quarterly. In May 1996, the Company borrowed $15.0 million under
the 1996 Ericsson Loan. In , 1996, the Company borrowed the
balance of $5.0 million.

(ii) An advance of up to $3.0 million for deferred interest costs
incurred on the 1996 Ericsson Loan.

All amounts financed under the 1996 Ericsson Loan mature on the earlier of
(i) May 13, 1997 and (ii) the date on which the Company enters into another
credit facility with Ericsson that permits the proceeds thereof to be used to
repay the 1996 Ericsson Loan. The 1996 Ericsson Loan was not a loan facility
triggering repayment of the Working Capital Loan.

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<PAGE> 74

The loans by Ericsson described in this section contain certain financial
and non-financial covenants. These covenants impose restrictions and limitations
on transactions by the Company other than in the ordinary course of its
business, including, among others, (i) restrictions on the use of proceeds from
the Working Capital Loan and the 1996 Ericsson Loan (ii) compliance with the
Company's prior commitment to use GSM technology in each BTA located in the
Continental United States and in Hawaii for which it or a subsidiary purchased a
license in the C Block auction and (iii) the commitment to use Ericsson
equipment and related services in certain BTAs, including those in which
Ericsson or its affiliates will be providing vendor financing.

In connection with the Equipment Acquisition Agreement for the supply by
Ericsson to the Company of equipment and services having a value of up to
$ million, the Company and Ericsson currently are discussing a vendor
financing agreement.

NORTEL AGREEMENT

In July 1995, the Company and Nortel entered into a project and supply
agreement pursuant to which Nortel agreed to provide PCS equipment and services.
The Company is completing its agreements with Nortel to be the primary equipment
supplier and provide network infrastructure equipment, including base stations
and switches, for the Las Vegas market. In this market, Nortel also will provide
network design services and project management services, and financing of up to
$ million.

LCC AGREEMENTS

In March 1996, the Company entered into a Convertible Loan and Investment
Agreement with LCC (the "LCC Agreement"), under which the Company received a
total of $6.5 million through the issuance of convertible debentures (the
"Series D Convertible Debentures") divided into two parts as follows:

(i) An initial loan of $3.5 million, of which (i) $1.5 million was
allocated for the license to use LCC's CellCAD Software for five years (the
"License Agreement") and (ii) $2.0 million of which was allocated for
working capital purposes and to satisfy partially the down payment.
Interest on this initial loan accrues for the first six months at the prime
rate plus 4% per annum and thereafter at the prime rate plus 2.5% per
annum, with interest payments commencing March 31, 1997, covering the
period from the date of initial funding through March 31, 1997, and
quarterly thereafter. The entire unpaid principal balance will be due and
payable in March 2001. Borrowings under the initial loan at June 30, 1996
bear interest at 12.25% per annum.

(ii) A subsequent loan of $3.0 million was applied towards working
capital purposes and to satisfy partially the down payment requirement.
Interest on the subsequent loan accrues at the prime rate plus 2.5% per
annum. The entire unpaid principal balance will be due and payable in May
2001. Borrowings under the subsequent loan at June 30, 1996 bear interest
at 10.75% per annum.

Pursuant to the LCC Agreement, LCC was entitled to convert, subject to the
FCC's foreign ownership restrictions, the unpaid balance of the borrowings
thereunder into shares of Old Class B Common Stock in multiples of not less than
$1.0 million. As part of the Recapitalization, the LCC Agreement will be amended
to provide that the Series D Convertible Debentures be convertible on the same
terms into shares of Class B Common Stock. As a result, upon effectiveness of
Recapitalization, such borrowings would be convertible into shares of Class B
Common Stock at the lesser of $14.00 and the price at which the Company sells
certain shares of its equity securities, including shares anticipated to be sold
at $8 per share to third parties and including the shares sold in the Offering.
Additionally, the LCC Agreement allows for the Company to elect to cause
mandatory conversion of the borrowings into shares of Class B Common Stock, or
similar equity, as defined in the LCC Agreement, in certain situations,
including the sale of capital stock of the Company totalling at least $25.0
million in an initial public offering. Upon receipt of a notice of mandatory
conversion by the Company, LCC may elect not to have the borrowings converted in
exchange for forfeiting its rights to future voluntary conversions.

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<PAGE> 75

Borrowings under the LCC Agreement were conditioned on the Company's
commitment to (i) purchase from LCC, over a period of five years, not less than
$65.0 million worth of radio frequency engineering and program management
services (the "Services Agreement") and (ii) the License Agreement. The Services
Agreement provides for minimum purchases per year commencing March 1996. Both
the License Agreement and the Services Agreement are renewable at the option of
both parties.

SIEMENS AGREEMENT

In August 1996, the Company entered into an agreement with Siemens pursuant
to which Siemens agreed to loan the Company $10 million for use in connection
with the down payment for the PCS licenses (the "Siemens Loan"). In 1996,
the Company borrowed $ million of the funds available under the Siemens
Loan. Borrowings under the Siemens Loan accrue interest at a rate of %. Under
terms currently anticipated, borrowings under the Siemens Loan, unless
refinanced as part of a long-term vendor financing arrangement, would be payable
out of the proceeds of the Offering.

GOVERNMENT FINANCING FOR PCS LICENSES

The total cost of the PCS licenses acquired by the Company is approximately
$1.43 billion, net of approximately $476 million in bidding credits provided to
bidders in the C Block auction. Although the Company's obligation under the
Government Financing will be recorded on the Company's financial statements at
its estimated fair market value of $ , based on an estimated fair market
borrowing rate of %, the amount that would be owed to the U.S. Government
if the Government Financing were declared immediately due and payable would be
$1.28 billion plus accrued interest. The Company paid the first half of the down
payment on May 14, 1996 and the second half of the down payment on ,
1996. As a Small Business, the Company is eligible for favorable financing
through a deferred payment arrangement provided by the U.S. Government for the
remaining 90% of the license cost. This Government Financing has a 10-year term
with a fixed rate of % and will require payments of interest only for the
first six years with payments of interest and principal amortized over the
remaining four years of the license term.

Failure to make timely quarterly installment payments on the Government
Financing (within 90 days of the due date of any installment) pursuant to such
financing terms may result in the imposition of substantial financial penalties,
license revocation or other enforcement measures, at the FCC's discretion. In
the event that the Company anticipates inability to make any required payment,
it may request a further three- to six-month grace period before the FCC cancels
its license. In the event of default by the Company, the FCC could reclaim the
licenses, reauction them and subject the Company to a penalty comprised of the
difference between the price at which it acquired its license and the amount of
the winning bid at the reauction, plus an additional penalty of three percent of
the subsequent winning bid or the defaulting bid, whichever is less. See
"Regulation of the Wireless Telecommunications Industry."

In addition, the Company must maintain its Designated Entity Status while
any part of the Government Financing remains outstanding in order to retain its
eligibility to take advantage of such favorable payment terms. In the event that
the Company loses its Designated Entity Status during such period, it may be
required to pay the Government Financing under terms that are less favorable to
the Company or to pay the entire outstanding amount immediately in order to
retain its PCS licenses, and may be subject to revocation of its licenses.

SENIOR DISCOUNT NOTES

The Company is offering $ million gross proceeds of % Senior
Discount Notes due 2006 in the Debt Offering for estimated net proceeds of
$ million. The Notes will be issued pursuant to the Indenture between the
Company and Trust Company of New York, as trustee. See "Use of
Proceeds."

The Notes mature in 2006. The Notes will be issued at a discount to their
aggregate principal amount to generate gross proceeds of approximately $
million. The Notes will accrete at a rate of %, compounded semiannually,
to an aggregate principal amount of $ million by , 2001.
Thereafter, interest on the Notes will accrue at the rate of % per annum
and will be payable semiannually on

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and , commencing on , 2002. The Notes will be subject to
redemption at the option of the Company, in whole or in part, at any time on or
after , 2001, initially at % and declining to 100% of their
principal amount on or after , 2004, plus accrued and unpaid interest
thereon to the applicable redemption date. In addition, in the event of a public
equity offering with proceeds of $ million or more prior to , 1999,
the Company may, at its option, within 60 days thereof, use net proceeds of such
equity offering to redeem up to % of the aggregate principal amount of the
Notes originally issued at a redemption price of % of the accreted value
as of the redemption date of the Notes so redeemed; provided that at least %
of the aggregate principal amount of the Notes originally issued remains
outstanding after such redemption. Upon the occurrence of a Change of Control
(as defined in the Indentures), each holder of Notes will have the right to
require the Company to purchase all or any part of such holder's Notes at a
purchase price equal to 101% of the accreted value thereof in the event of a
Change of Control occurring prior to , 2001, plus any accrued and unpaid
interest not otherwise included in the accreted value.

The Notes will rank pari passu in right of payment with all existing and
future unsecured, unsubordinated indebtedness of the Company and will be senior
in right of payment to all existing and future subordinated indebtedness of the
Company. The Notes will be effectively subordinated to all liabilities of the
Company's subsidiaries, including trade payables and indebtedness that may be
incurred by the Company's subsidiaries under certain vendor financing
arrangements.

The Indenture relating to the Notes contains, among others, covenants with
respect to incurrence of indebtedness, preferred stock of subsidiaries,
restricted payments, distributions and transfers by subsidiaries, subordinated
liens, certain asset dispositions, issuances and sales of capital stock of
wholly owned subsidiaries, transactions with affiliates and related persons and
mergers, consolidations and certain sales of assets. The indebtedness covenant
limits the incurrence of indebtedness by the Company based on certain of the
Company's financial ratios; provided, however, that such limitation does not
prohibit, among other exceptions, indebtedness incurred or committed by the
Company for the acquisition, construction or improvement of assets in the
wireless communications business.

The closing of the Debt Offering is conditioned on the closing of the
Offering and the Company may elect not to consummate the Debt Offering. The
closing of the Offering is not conditioned on the closing of the Debt Offering.

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED CAPITAL STOCK

Upon consummation of the Recapitalization, the Company will have authorized
100,000,000 shares of Class A Common Stock, 100,000,000 shares of Class B Common
Stock and 100,000,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock"). As of August 15, 1996 and prior to the Recapitalization, the
Company had issued and outstanding 28,910,849 shares of Old Class A Voting
Common Stock, 150,000 shares of Old Class B Common Stock and no shares of Old
Convertible Preferred Stock. As part of the Recapitalization, shares of Old
Class B Common Stock and Old Convertible Preferred Stock issued and outstanding
immediately before the consummation of the Recapitalization will be
automatically converted into shares of Class B Common Stock at a conversion
ratio of 1-to-1. Shares of Old Class A Voting Common Stock issued and
outstanding and not held by a member of the Control Group immediately before the
consummation of the Recapitalization will be automatically converted into shares
of Class B Common Stock at a conversion ratio of 1-to-1. Shares of Old Class A
Voting Common Stock held by a member of the Control Group immediately before the
consummation of the Recapitalization will be automatically converted into shares
of Class A Common Stock at a conversion ratio of 1-to-1.

The remainder of this section describes the capital stock of the Company
following the Recapitalization.

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<PAGE> 77

COMMON STOCK

The Company has two classes of authorized Common Stock, Class A Common
Stock and Class B Common Stock. Only Class B Common Stock is being offered in
the Offering. Shares of Class A Common Stock can only be issued and transferred
to persons who are Control Group members. The Class A Common Stock has five
votes per share and the Class B Common Stock has one vote per share; but in all
cases, the outstanding shares of Class A Common Stock, as a class, will have at
least 50.1% of the total votes, with the number of votes per share to be
adjusted appropriately as necessary from time to time. Until three years after
the License Grant Date, up to 2% of the shares of the Class A Common Stock
outstanding as of the date of the Offering are convertible into shares of Class
B Common Stock on a 1-to-1 basis, subject to the condition that following such
conversion, the Company would maintain its Designated Entity Status. Three years
after the License Grant Date, up to 20% of the shares of Class A Common Stock
then outstanding are convertible into shares of Class B Common Stock on a 1-to-1
basis and subject to the same condition. Five years after the License Grant
Date, additional shares of Class A Common Stock may be converted into shares of
Class B Common Stock on a 1-to-1 basis and subject to the same condition;
provided that the number of such shares to be exchanged, when added to the total
number of shares of Class A Common Stock previously converted, do not exceed 60%
of the shares of Class A Common Stock outstanding at the date of the Offering.

Any merger, reorganization, recapitalization, liquidation, dissolution or
winding-up, sale or transfer of substantially all of the assets of the Company
(except for pro forma transfers among the Company, its controlled affiliates and
its subsidiaries); any amendment to the Articles of Incorporation that
materially affects the right of the holders of Class B Common Stock; and any
transfer or assignment of ownership of interest in the Control Group that would
be deemed a transfer of control under FCC rules requires the approval of the
holders of a majority of the outstanding shares of Class A Common Stock and the
approval of the holders of a majority of the outstanding shares of Class B
Common Stock, each voting separately as a class. The holders of Class A Common
Stock, acting as a single class, are entitled to elect the A Directors (a
majority of the total number of directors (rounded up to the nearest whole
number)) and the holders of Class B Common Stock, subject to the right of any
then outstanding Preferred Stock, acting as a single class, are entitled to
elect the B Directors (the remainder of the directors).

Except as described below, holders of Common Stock have no cumulative
voting rights and no preemptive, subscription or sinking fund rights. Subject to
preferences that may be applicable to any then outstanding Preferred Stock,
holders of Common Stock will be entitled to receive ratably such dividends as
may be declared by the Board of Directors out of funds legally available
therefor. See "Dividend Policy." In the event of a liquidation, dissolution or
winding up of the Company, holders of Common Stock will be entitled to share
ratably in all assets remaining after payment of liabilities and the liquidation
preference to any then outstanding Preferred Stock.

The Articles of Incorporation also contain certain provisions to ensure
compliance with certain regulatory requirements regarding ownership of C Block
licenses, as follows. No person, together with its affiliates (as defined by
applicable FCC rules and regulations), can own shares of capital stock of the
Company or options to purchase shares of capital stock of the Company in excess
of the amount that would require attribution of such person's assets and
revenues with that of the Company's for purposes of the Designated Entity Status
requirements, unless the Board of Directors determines, in its sole discretion
and upon opinion of counsel that such ownership by a certain person would not
cause the Company to be in violation of such requirements, to waive this
restriction as to that person. No alien (which term includes an alien and its
representatives, a foreign government and its representatives, and a corporation
organized under the laws of a foreign country) can own shares of capital stock
of the Company in excess of the amount that would result in the violation of the
FCC's foreign ownership limitation, unless the Board of Directors determines, in
its sole discretion and upon waiver by the FCC of such ownership limits for such
alien, to waive this restriction as to that alien. Any transfer or issuance of
such shares or options will be void ab initio to the extent it would result in
violations of the above restrictions.

In order to maintain the requisite equity and voting power holdings of the
Control Group, the Articles of Incorporation also provide that any transfer by a
Control Group member of shares of capital stock of the

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Company, shares of voting stock of the Company or options to purchase capital
stock of the Company, that, if effective, would result in the Control Group as a
whole owning less than the required equity (anticipated to be 25% for the first
three years of the initial license term upon effectiveness of Recapitalization
and consummation of the Offering) and voting power (50.1% for the initial
license term) of the Company will be void ab initio to the extent necessary for
compliance. The Company will not issue such shares or options if such issuance
would result in violation of these Control Group ownership requirements. In
addition, the Articles of Incorporation also contain comparable provisions to
guard against the failure of the Qualifying Investors to own the percentages of
equity (anticipated to be 15% for the first three years and 10% for the
following two years of the initial license term upon effectiveness of
Recapitalization and consummation of the Offering) or voting power (50.1% of the
Control Group's voting stock for the initial license term) required for
Designated Entity Status. The Articles of Incorporation require the Company to
grant to the Control Group members options to purchase shares of Class B Common
Stock of the Company at fair market value at time of grant to the extent
required for the Company to comply with the Control Group ownership
requirements.

The Articles of Incorporation provide that no Class B Common Stock
shareholder who does not also hold Class A Common Stock may vote more than 25%
of the Voting Power and that the Company has the right to redeem, at fair market
value, shares of Class B Common Stock, on a last-in-first-out basis, in order to
reduce such shares to the 25% limit necessary to maintain compliance with the
foreign ownership and Designated Entity Status restrictions to protect the
Company's ownership of its PCS licenses. Certificates for shares of Common Stock
will bear legends describing all of the above restrictions.

The Control Group ownership requirements, in particular the requirement
that the Control Group hold 50.1% of the voting stock of the Company, would
effectively preclude a third party from gaining control of the Company without
consent of one or more of the Control Group members. In addition, the Designated
Entity Status requirement mandating the Control Group's control of a majority of
the Board of Directors, which control is ensured by the Company's classification
of its Common Stock and Directors, would effectively prevent changes by persons
outside the Control Group of the membership of the majority of the Board of
Directors (i.e., the A Directors). The above provisions of the Articles of
Incorporation would also prevent a third party from taking control of the
Company without consent of the Board of Directors.

PREFERRED STOCK

The Articles of Incorporation authorize the Company Board to establish one
or more series of Preferred Stock and to determine, with respect to any series
of Preferred Stock, the terms and rights of such series, including (i) the
designation of the series, (ii) the number of shares of the series, which number
the Company Board may thereafter (except where otherwise provided in the
applicable certificate of designation) increase or decrease (but not below the
number of shares thereof then outstanding), (iii) whether dividends, if any,
will be cumulative or noncumulative, and, in the case of shares of any series
having cumulative dividend rights, the date or dates or method of determining
the date or dates from which dividends on the shares of such series shall be
cumulative, (iv) the rate of any dividends (or method of determining such
dividends) payable to the holders of the shares of such series, any conditions
upon which such dividends will be paid and the date or dates or the method for
determining the date or dates upon which such dividends will be payable; (v) the
redemption rights and price or prices, if any, for shares of the series, (vi)
the terms and amounts of any sinking fund provided for the purchase or
redemption of shares of the series, (vii) the amounts payable on and the
preferences, if any, of shares of the series in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Company, (viii) whether the shares of the series will be convertible or
exchangeable into shares of any other class or series, or any other security, of
the Company or any other corporation, and, if so, the specification of such
other class or series or such other security, the conversion or exchange price
or prices or rate or rates, any adjustments thereof, the date or dates as of
which such shares will be convertible or exchangeable and all other terms and
conditions upon which such conversion or exchange may be made, (ix) restrictions
on the issuance of shares of the same series or of any other class or series,
(x) the voting rights, if any, of the holders of the shares of the series, and
(xi) any other relative rights, preferences and limitations of such series.

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The Company believes that the ability of the Company Board to issue one or
more series of Preferred Stock will provide the Company with flexibility in
structuring possible future financings and acquisitions, and in meeting other
corporate needs which might arise. The authorized shares of Preferred Stock, as
well as shares of Class B Common Stock, will be available for issuance without
further action by the Company's stockholders, unless such action is required by
applicable law or the rules of any stock exchange or automated quotation system
on which the Company's securities may be listed or traded. The National
Association of Securities Dealers, Inc. currently requires stockholder approval
as a prerequisite to listing shares in several instances, including where the
present or potential issuance of shares could result in an increase in the
number of shares of common stock, or in the amount of voting securities,
outstanding of at least 20%. If the approval of the Company's stockholders is
not required for the issuance of shares of Preferred Stock or Class B Common
Stock, the Board may determine not to seek stockholder approval.

Although the Company Board has no intention at the present time of doing
so, it could issue a series of Preferred Stock that could, depending on the
terms of such series, impede the completion of a merger, tender offer or other
takeover attempt. The Company Board will make any determination to issue such
shares based on its judgment as to the best interests of the Company and its
stockholders. The Company Board, in so acting, could issue Preferred Stock
having terms that could discourage an acquisition attempt through which an
acquiror may be able to change the composition of the Company Board, including a
tender offer or other transaction that some, or a majority, of the Company's
stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then current
market price of such stock.

ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND
BY-LAWS

Board of Directors

The Articles of Incorporation provide that, except as otherwise fixed by or
pursuant to the provisions of any Articles Supplementary setting forth the
rights of the holders of any class or series of Preferred Stock, the number of
the directors of the Company will be fixed from time to time exclusively
pursuant to a resolution adopted by a majority of the total number of directors
which the Company would have if there were no vacancies (the "Whole Board") (but
shall not be less than three). The holders of Class A Common Stock, acting as a
single class, are entitled to elect a majority of the total number of directors
(rounded up to the nearest whole number) (the A Directors) and the holders of
Class B Common Stock, subject to the right of any then outstanding Preferred
Stock, acting as a single class, are entitled to elect the remainder of the
directors (the B Directors). The B Directors will be further divided, with
respect to the time for which they severally hold office, into separate classes.

The Articles of Incorporation provide that, except as otherwise required by
law, provided for or fixed by or pursuant to any Articles Supplementary thereto
setting forth the rights of the holders of any class or series of Preferred
Stock, newly created directorships resulting from any increase in the number of
A Directors or B Directors and any vacancies for A Directors or B Directors on
the Company Board resulting from death, resignation, disqualification, removal
or other cause will be filled by the affirmative vote of a majority of the
remaining A Directors or B Directors, respectively, then in office, even though
less than a quorum of the Company Board, and not by the stockholders. Any
director elected in accordance with the preceding sentence will hold office
until such director's successor shall have been duly elected and qualified. No
decrease in the number of directors constituting the Company Board will shorten
the term of any incumbent director.

Certain extraordinary corporate actions, pursuant to the Articles of
Incorporation, require approval by at least 75% of the entire Board of
Directors, including issuance or sale of stock, or the issuance of options, to
employees as well as third parties, at a purchase price below fair market value
at the date of issuance or sale; certain significant capital expenditures,
incurrence of indebtedness or acquisitions; certain significant participation in
joint ventures or partnerships; any merger, reorganization, recapitalization,
liquidation, dissolution or winding up of the Company or sale, transfer or other
disposal affecting all or substantially all of the assets of a majority-owned
subsidiary of the Company (except pro forma transfers among the Company, its
controlled affiliates or subsidiaries); a declaration of bankruptcy by the
Company; issuance of stock representing more

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<PAGE> 80

than 20% of the outstanding shares; during the first year following the
consummation of the Offering, a change in control of the Control Group that
would cause a change in control of the Company; and a decision to abandon the
Company's Designated Entity Status while the Company is still utilizing any
special benefits thereunder or if such action would result in a material penalty
to the Company. In addition, the affirmative vote of two-thirds of the entire
Board of Directors is required for declaration of dividends; any lease, mortgage
or encumbrance of all or substantially all of the assets of the Corporation or
its subsidiaries (after approval by the Finance Committee of the Company Board);
and authorization and issuance of a new class of capital stock of the Company.

Persons outside the Control Group, which will have sole ownership of all
outstanding shares of Class A Common Stock, will not be able to remove A
Directors, who will comprise the majority of the Board of Directors. In
addition, the classified board provisions described above would preclude a third
party from removing incumbent B Directors and simultaneously gaining control of
the B Directors on the Company Board by filling the vacancies created by removal
with its own nominees. Under such provisions, it would take at least two
elections of B Directors for any individual or group to gain control of the B
Directors. Accordingly, these provisions would discourage a third party from
initiating a proxy contest, making a tender offer or otherwise attempting to
gain control of the Company.

Special Meetings

The Articles of Incorporation and By-Laws provide that, except as otherwise
required by law and subject to the rights of the holders of any Preferred Stock,
special meetings of stockholders of the Company for any purpose or purposes may
be called only by the Company Board pursuant to a resolution stating the purpose
or purposes thereof approved by a majority of the Whole Board or by the Chairman
of the Company Board. No business other than that stated in the notice shall be
transacted at any special meeting. These provisions may have the effect of
delaying consideration of a stockholder proposal until the next annual meeting
unless a special meeting is called by the Company Board or the Chairman of the
Board.

Advance Notice Procedures

The By-Laws establish an advance notice procedure for stockholders to make
nominations of candidates for election as directors or to bring other business
before an annual meeting of stockholders of the Company (the "Stockholder Notice
Procedure"). The Stockholder Notice Procedure provides that only persons who are
nominated by, or at the direction of, the Chairman of the Board, or by a
stockholder who has given timely written notice to the Secretary of the Company
prior to the meeting at which directors are to be elected, will be eligible for
election as directors of the Company. The Stockholder Notice Procedure also
provides that at an annual meeting only such business may be conducted as has
been brought before the meeting by, or at the direction of, the Chairman of the
Board or the Company Board, or by a stockholder who has given timely written
notice to the Secretary of the Company of such stockholder's intention to bring
such business before such meeting. Under the Stockholder Notice Procedure, for
notice of stockholder nominations to be made at an annual meeting to be timely,
such notice must be received by the Company not later than the close of business
on the 60th calendar day nor earlier than the close of business on the 90th
calendar day prior to the first anniversary of the preceding year's annual
meeting (except that, in the event that the date of the annual meeting is more
than 30 calendar days before or more than 60 calendar days after such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the close of business on the 90th calendar day prior to such
annual meeting and not later than the close of business on the later of the 60th
calendar day prior to such annual meeting or the 10th calendar day following the
day on which public announcement of a meeting date is first made by the
Company).

Notwithstanding the foregoing, in the event that the number of directors to
be elected to the Company Board is increased and there is no public announcement
by the Company naming all of the nominees for director or specifying the size of
the increased Company Board at least 90 calendar days prior to the first
anniversary of the preceding year's annual meeting, a stockholder's notice also
will be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered not later than the
close of business on the 10th calendar day following the day on which such
public announcement is

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<PAGE> 81

first made by the Company. Under the Stockholder Notice Procedure, for notice of
a stockholder nomination to be made at a special meeting at which directors are
to be elected to be timely, such notice must be received by the Company not
earlier than the close of business on the 90th calendar day prior to such
special meeting and not later than the close of business on the later of the
60th calendar day prior to such special meeting or the 10th calendar day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Company Board to be elected
at such meeting.

In addition, under the Stockholder Notice Procedure, a stockholder's notice
to the Company proposing to nominate an individual for election as a director or
relating to the conduct of business other than the nomination of directors must
contain certain specified information. If the chairman of a meeting determines
that an individual was not nominated, or other business was not brought before
the meeting, in accordance with the Stockholder Notice Procedure, such
individual will not be eligible for election as a director, or such business
will not be conducted at such meeting, as the case may be.

The Stockholder Notice Procedure does not apply to members of the Control
Group and their respective affiliates.

Amendment

The Articles of Incorporation provide that the affirmative vote of the
holders of a majority of the outstanding shares of Class A Common Stock and the
holders of a majority of shares of Class B Common Stock, voting as separate
classes, is required to amend the Articles of Incorporation or By-Laws if such
amendment would materially affect the rights of the holders of Class B Common
Stock.

REGISTRATION RIGHTS

Pursuant to the terms of the Stockholders' Agreement and other agreements,
certain holders of Class B Common Stock have registration rights in defined
circumstances and such rights generally include, subject to certain
restrictions, underwriter cutbacks and pro rata inclusion provisions, the right
to participate in both demand registrations (i.e., those that are required by
certain of the shareholders pursuant to contract) and "piggyback" rights (i.e.,
the right to join in any registrations undertaken by the Company). See
"Management -- Certain Relationships and Related Transactions" and "Certain
Transactions."

Pursuant to the Recapitalization, the issued and outstanding shares of
Class B Common Stock held by existing stockholders immediately prior to the
issuance of shares of Class B Common Stock pursuant to the Offering will be
registered in a shelf registration following the consummation of the Offering.
This shelf registration will also include shares reserved for issuance upon
exercise of outstanding warrants and conversion of certain convertible
debentures and the Control Group Option Shares. The resale of certain shares so
registered, however, are subject to restrictions under the Securities Act as
well as to lock-up agreements with the Underwriters.

MARYLAND BUSINESS COMBINATION STATUTE

Under the Corporation and Associations Article (the "Maryland Article") of
the Maryland Annotated Code, certain "business combinations" (including any
merger or similar transaction subject to a statutory stockholder vote and
additional transactions involving transfers of assets or securities in specific
amounts) between a Maryland corporation and any person who beneficially owns 10%
or more of the voting power of the corporation's shares or any affiliate of the
corporation who, at any time within the two-year period, was the beneficial
owner of 10% or was the beneficial owner of 10% or more of the voting power of
the then-outstanding voting stock of the corporation (an "Interested
Stockholder"), or an affiliate thereof, are prohibited for five years after the
most recent date on which the Interested Stockholder became an Interested
Stockholder unless an exemption is available. Thereafter, any such business
combination must be recommended by the board of directors of the corporation and
approved by the affirmative vote of at least: (i) 80% of the votes entitled to
be cast by holders of outstanding voting shares of the corporation and (ii)
two-thirds of the votes entitled to be cast by holders of outstanding voting
shares of the corporation other than shares held by the Interested Stockholder
with whom the business combination is to be effected, unless the corporation's

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stockholders receive a minimum price (as described in the Maryland Article) for
their shares and the consideration is received in cash or in the same form as
previously paid by the Interested Stockholder for its shares. These provisions
of Maryland law do not apply, however, to business combinations that are
approved or exempted by the board of directors prior to the time that the
Interested Stockholder becomes an Interested Stockholder. In order to amend the
Company's Articles of Incorporation to elect not to be subject to the foregoing
requirements with respect to Interested Stockholders, an affirmative vote of at
least 80% of the votes entitled to be cast by all holders of outstanding shares
of voting stock and two-thirds of the votes entitled to be cast by holders of
outstanding shares of voting stock who are not interested Stockholders is
required under the Maryland Article.

MARYLAND CONTROL SHARE ACQUISITIONS STATUTE

The Maryland Article provides that "control shares" of a Maryland
Corporation acquired in a "control share acquisition" have no voting rights
except as to the extent approved by a vote of two-thirds of the votes entitled
to be cast on the matter, excluding shares of stock owned by the acquiror or by
officers or directors who are employees of the corporation. "Control shares" are
voting shares of stock which, if aggregated with all other such shares of stock
previously acquired by the acquiror, or in respect of which the acquiror is able
to exercise or direct the exercise of voting power in electing directors within
one of the following ranges of voting power: (i) one-fifth or more but less than
one-third; (ii) one-third or more but less than a majority or (iii) a majority
of all voting power. Control Shares do not include shares the acquiring person
is then entitled to vote as a result of having previously obtained stockholder
approval. A "control share acquisition" means the acquisition of Control Shares,
subject to certain exceptions.

A person who has made or proposes to make a control share acquisition, upon
satisfaction of certain conditions (including an undertaking to pay expenses and
delivery of an "acquiring person statement"), may compel the corporation's board
of directors to call a special meeting of stockholders to be held within 90 days
of demand to consider the voting rights of the shares. If no request for a
meeting is made, the corporation may itself present the question at any
stockholders' meeting.

Unless the articles of incorporation or by-laws provide otherwise, if
voting rights are not approved at the meeting or if the acquiring person does
not deliver an acquiring person statement within 10 days following a control
share acquisition, then subject to certain conditions and limitations, the
corporation may redeem any or all of the control shares (except those for which
voting rights have previously been approved) for fair value determined, without
regard to the absence of voting rights for the control shares, as of the date of
the last control share acquisition or of any meeting of stockholders at which
the voting rights of such shares are considered and not approved. Moreover,
unless the articles of incorporation or by-laws provide otherwise, if voting
rights for control shares are approved at a stockholders' meeting and the
acquiror becomes entitled to exercise or direct the exercise of a majority or
more of all voting power, other stockholders may exercise appraisal rights. The
fair value of the shares as determined for purposes of such appraisal rights may
not be less than the highest price per share paid by the acquiror in the control
share acquisition.

The control share acquisition does not apply to shares acquired in a
merger, consolidation or share exchange if the corporation is a party to the
transaction, or to acquisitions approved or exempted by the charter or bylaws of
the corporation. The Company has not amended its Articles of Incorporation to
make itself exempt from the applicability of the control share provisions.

The business combination statute and the control share acquisition statute
could have the effect of delaying or preventing a change of control of the
Company.

LIABILITY OF DIRECTORS; INDEMNIFICATION

Under Maryland law, a corporation formed in Maryland is permitted to limit,
by provision in its charter, the liability of directors and officers so that no
director or officer of the corporation shall be liable to the corporation or to
any stockholder for money damages except to the extent that (i) the director or
officer actually received an improper benefit in money, property or services,
for the amount of the benefit or profit in money, property or services actually
received, or (ii) a judgment or other final adjudication adverse to the

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director or officer is entered in a proceeding based on a finding in a
proceeding that the director's or officer's action was the result of active and
deliberate dishonesty and was material to the cause of action adjudicated in the
proceeding. The Company's Articles of Incorporation have incorporated the
provisions of this law limiting the liability of directors and officers.

The Company's By-Laws require it to indemnify (i) any present or former
director or officer who has been successful, on the merits or otherwise, in the
defense of a proceeding to which he was made a party by reason of his service in
that capacity, against reasonable expenses incurred by him in connection with
the proceeding and (ii) any present or former director or officer against any
claim or liability unless it is established that (a) his act or omission was
committed in bad faith or was the result of active or deliberate dishonesty, (b)
he actually received an improper personal benefit in money, property or services
or (c) in the case of a criminal proceeding, he had reasonable cause to believe
that his act or omission was unlawful. In addition, the Company's By-Laws
require it to pay or reimburse, in advance of final disposition of a proceeding,
reasonable expenses incurred by a present or former director or officer made a
party to a proceeding by reason of his service as a director or officer provided
that the Company shall have received (A) a written affirmation by the director
or officer of his good faith belief that he has met the standard of conduct
necessary for indemnification by the Company as authorized by the By-Laws and
(B) a written undertaking by or on his behalf to repay the amount paid or
reimbursed by the Company if it shall ultimately be determined that the standard
of conduct was not met. The Company's By-Laws also (i) provide that any
indemnification or payment or reimbursement of the expenses permitted by the
By-Laws shall be furnished in accordance with the procedures provided for
indemnification and payment of expenses under Section 2-418 of the Maryland
General Corporation Law for directors of Maryland corporations and (ii) permit
the Company such other expenses as may be permitted under Section 2-418 of the
Maryland General Corporation Law for directors of Maryland corporations.

TRANSFER AGENT AND REGISTRAR

will be the transfer agent and registrar for the Class B
Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offerings, the Company will have outstanding
shares of Class B Common Stock ( shares if the Underwriters'
over-allotment options are exercised in full) and shares of Class A
Common Stock. An aggregate of shares of Class B Common Stock has been
reserved for issuance under the Company's stock option plans and options to
purchase of such shares of Class B Common Stock are currently
outstanding and shares of Class A Common Stock are reserved for
issuance pursuant to future option grants.

The shares of Class B Common Stock sold in the Offerings will be freely
tradeable without restriction or further registration under the Securities Act,
except for any shares purchased by an "affiliate" (as that term is defined under
the Securities Act) of the Company, which will be subject to the resale
limitations of Rule 144. All of such shares of Class B Common Stock are
"restricted securities" within the meaning of Rule 144 (the "Restricted Shares")
and may not be publicly sold unless registered under the Securities Act or sold
in accordance with an applicable exemption from registration, such as Rule 144.
In addition to the shares ( shares if the Underwriters'
over-allotment options are exercised in full) of Class B Common Stock offered by
the Company in the Offering, beginning days after the date of this
Prospectus, following the expiration of certain lock-up agreements between the
Underwriters, the Company's executive officers and directors and certain other
stockholders of the Company, additional outstanding shares of Class B
Common Stock will be eligible for sale in the public market, subject to the
provisions of Rule 144 or Rule 701. In addition, up to an aggregate of
shares of Class B Common Stock, including an aggregate of
the Option Shares issuable upon exercise of outstanding stock options may become
eligible for resale in the public market at various times after the expiration
of the day lock-up period, depending upon when such shares are
actually issued, if at all, and whether such shares are registered for resale
under the Securities Act, or are subject to Rule 144 or Rule 701. In addition,
shares of

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Class B Common Stock will be registered in a shelf registration following the
consummation of the Offering, and such shares may become eligible for resale in
the public market, subject to the provisions of Rule 144 or Rule 701, after the
expiration of a -day lock-up period. Subject to compliance with the FCC
regulations regarding ownership requirements for the Control Group, up to 2% of
the shares of Class A Common Stock outstanding at the date of the Offering (and
after three years from the License Grant Date, up to 20% of the shares of Class
A Common Stock then outstanding) will be convertible into shares of Class B
Common Stock on a one-for-one basis, and such shares of Class B Common Stock may
become eligible for resale in the public market subject to the provisions of
Rule 144 or Rule 701, after the expiration of a -day lock-up period. After
five years from the License Grant Date, additional shares of Class A Common
Stock, which, when added to the number of shares of Class A Common Stock
previously converted, do not exceed 60% of the shares of Class A Common Stock
outstanding as of the date of the Offering, will become convertible into shares
of Class B Common Stock and become eligible for resale subject to these
provisions.

In general, under Rule 144, as currently in effect, beginning 90 days after
the Offering, if two years have elapsed since the later of the date of
acquisition of Restricted Shares from the Company or any affiliate of the
Company, the acquiror or subsequent holder (including an affiliate) is entitled
to sell, within any three-month period, that number of shares that does not
exceed the greater of 1% of the then outstanding shares of Class B Common Stock
(approximately shares immediately after the Offerings) or the average
weekly trading volume of the shares of Class B Common Stock on all exchanges
and/or reported through the automated quotation system of a registered
securities association during the four calendar weeks preceding the date on
which notice of the sale is filed with the Securities and Exchange Commission
(the "Commission"). Sales under Rule 144 are also subject to certain
restrictions relating to manner of sale, notice requirements and the
availability of current public information about the Company. If three years
have elapsed since the later of the date of acquisition of Restricted Shares
from the Company or from any affiliate of the Company, and the acquiror or
subsequent holder thereof is deemed not to have been an affiliate of the Company
at any time during the 90 days preceding a sale, such person would be entitled
to sell such shares in the public market under Rule 144(k) without regard to the
volume limitations, manner of sale provisions, public information requirements
or notice requirements. As defined in Rule 144, an "affiliate" of an issuer is a
person that directly, or indirectly through the use of one or more
intermediaries, controls, or is controlled by, or is under common control with,
such issuer. In general, under Rule 701, as currently in effect, persons who
purchase shares upon exercise of options that were granted pursuant to Rule 701
are entitled to sell such shares in reliance on Rule 144 without regard to the
holding period, public information, volume limitations or notice provisions of
Rule 144, if such persons are not affiliates of the Company, and without regard
to the holding period requirements of Rule 144, if such persons are affiliates
of the Company. Restricted Shares properly sold in reliance on Rule 144 are
thereafter freely tradeable without restrictions or registration under the
Securities Act, unless thereafter held by an affiliate of the Company.

The Company, the Company's officers and directors and, certain other
shareholders of the Company have agreed that, during the period beginning from
the date of this Prospectus and continuing to and including the date days
after the date of this Prospectus, they will not offer, sell, contract to sell
or otherwise dispose of any securities of the Company that are substantially
similar to the shares of Common Stock or which are convertible or exchangeable
into securities which are substantially similar to the shares of Common Stock,
without the prior written consent of the representatives of the Underwriters,
except for the shares of Common Stock offered in connection with the concurrent
Offering and certain gift transactions.

Subject to certain limitations on the aggregate offering price of a
transaction and other conditions Rule 701 may be relied upon with respect to the
resale of securities originally purchased from the Company by its employees,
directors, officers, consultants or advisors between May 20, 1988, the effective
date of Rule 701, and the date the issuer becomes subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), pursuant to written compensatory benefit plans or written contracts
relating to the compensation of such persons. In addition, the Commission has
indicated that Rule 701 will apply to typical stock options granted by an issuer
before it becomes subject to the reporting requirements of the Exchange Act
(including options granted before May 20, 1988, if made in accordance with Rule
701 had it been in effect), along with the shares acquired upon exercise of such
options beginning May 20, 1988

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including exercises after the date of this Prospectus). Securities issued in
reliance on Rule 701 are Restricted Shares and, subject to the contractual
restrictions described above, beginning 90 days after the date of this
Prospectus, such securities may be sold (i) by persons other than affiliates,
subject only to the manner of sale provisions of Rule 144 and (ii) by affiliates
under Rule 144 without compliance with its two-year minimum holding period
requirements.

The Company intends to file a registration statement under the Securities
Act covering shares of Common Stock issued or issuable under the
Company's stock option plans. Such registration statement is expected to be
filed 90 days after the date of this Prospectus and will automatically become
effective upon filing. Accordingly, shares registered under such registration
statement will be, subject to Rule 144 volume limitations applicable to
affiliates, available for sale in the open market, except to the extent that
such shares are subject to vesting restrictions with the Company or the
contractual restrictions described above.

UNDERWRITING

Subject to the terms and conditions in the Underwriting Agreement (the
"Underwriting Agreement"), the Underwriters named below for whom Donaldson,
Lufkin & Jenrette Securities Corporation, Bear, Stearns & Co., Inc., Cowen &
Company and Goldman Sachs & Co. are acting as representatives (the
"Representatives") have severally agreed to purchase from the Company the
respective numbers of shares of Class B Common Stock set forth opposite their
names below:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation..................
Bear, Stearns & Co., Inc. ...........................................
Cowen & Company......................................................
Goldman, Sachs & Co. ................................................
----------------
Total................................................................
=============
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Class B Common
Stock offered hereby are subject to the approval of certain legal matters by
counsel and to certain other conditions. The Underwriters are obligated to
purchase all of the shares of Class B Common Stock offered hereby (other than
the shares of Class B Common Stock covered by the Underwriters' over-allotment
option described below) if any are purchased.

The Underwriters have advised the Company that they propose to offer the
Class B Common Stock to the public initially at the public offering price set
forth on the cover page of this Prospectus and to certain dealers (who may
include the Underwriters) at such a price less a concession not in excess of
$ per share. The Underwriters may allow, and such dealers may reallow,
a concession not in excess of $ per share to any other Underwriter and
to certain other dealers. After the initial offering of the shares of Class B
Common Stock, the public offering price and other selling terms may be changed
by the Representatives.

Prior to the Offering, there has been no established trading market for the
Class B Common Stock. The initial price to the public for the Class B Common
Stock offered hereby will be determined by negotiation among the Company and the
Representatives. The factors considered in determining the initial price to the
public include the history of and the prospects for the industry in which the
Company competes, the past and present operations of the Company, the historical
results of operations of the Company, the prospects for future earnings of the
Company, the recent market prices of securities of generally comparable
companies and the general condition of the securities markets at the time of the
Offering. Application has been made to have the Class B Common Stock quoted on
the Nasdaq under the symbol " ."

Pursuant to the Underwriting Agreement, the Company has granted to the
Underwriters an option, exercisable for 30 days from the date of this
Prospectus, to purchase up to an aggregate additional shares of Class
B Common Stock at the public offering price set forth on the cover page hereof,
less

81
<PAGE> 86

underwriting discounts and commissions. The Underwriters may exercise such
option to purchase additional shares solely for the purpose of covering
over-allotments, if any, made in connection with the sale of the shares of Class
B Common Stock offered hereby. To the extent such option is exercised, each
Underwriter will become obligated, subject to certain conditions, to purchase
the same percentage of such additional shares as the number set forth next to
such Underwriter's name in the preceding table bears to the total number of
shares of Class B Common Stock set forth above.

The Company has agreed subject to certain exceptions that, without the
prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation, it
will not register for sale or offer, issue, pledge, sell, contract to sell,
grant any other option or contract to purchase, or otherwise transfer or dispose
of, directly or indirectly, any shares of Class B Common Stock or any securities
convertible into or exercisable or exchangeable for Class B Common Stock. See
"Shares Eligible for Future Sale." In addition, except as set forth above, each
of has agreed not to (a) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase or otherwise transfer or dispose
of, directly or indirectly, any shares of Class B Common Stock or any securities
convertible into or exercisable or exchangeable for Class B Common Stock or (b)
enter into any swap or other agreement that transfers, in whole or in part, the
economic consequences of ownership of Class B Common Stock, whether any such
transaction described in clause (a) or (b) of this sentence is to be settled by
delivery of Class B Common Stock or other securities, in cash or otherwise, for
a period of days after the date of this Prospectus without the prior
written consent of Donaldson, Lufkin & Jenrette Securities Corporation.

The Representatives have informed the Company that the Underwriters do not
intend to confirm sales of Class B Common Stock offered hereby to any accounts
over which they exercise discretionary authority.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act or to contribute to
payments that the underwriters may be required to make in respect thereof.

LEGAL MATTERS

The validity of the Class B Common Stock offered hereby and certain other
legal matters will be passed upon for the Company by Wachtell, Lipton, Rosen &
Katz, New York, New York. Certain legal matters will be passed upon for the
Underwriters by Skadden, Arps, Slate, Meagher & Flom, Chicago, Illinois. Certain
regulatory matters will be passed upon for the Company by Wilmer, Cutler &
Pickering, Washington, D.C.

EXPERTS

The audited consolidated financial statements and financial statement
schedule included in this Prospectus and in the Registration Statement of which
this Prospectus forms a part have been included herein in reliance on the report
of Arthur Andersen LLP, independent auditors, given on the authority of that
firm as experts in accounting and auditing.

OTHER MATTERS

In May 1996, the Company retained Arthur Andersen LLP as accountants for
the Company after the Company's management decided to replace Coopers & Lybrand
L.L.P. The Audit Committee and the Board of Directors approved the replacement.
During the Company's two most recent fiscal years and during the subsequent
interim period preceding the date of replacement, there were no disagreements on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Coopers & Lybrand L.L.P., would have caused it to make reference
to the subject matter of the disagreement in connection with their report. The
report of Coopers & Lybrand L.L.P. on the Company financial statements for the
year ended December 31, 1994 included an explanatory paragraph for an
uncertainty as to the Company's ability to continue as a going concern. In

82
<PAGE> 87

addition, the report of Coopers & Lybrand L.L.P. for the year ended December 31,
1995 included a paragraph which emphasized the uncertainty of the ultimate
success of the auction and the Company's ability to finance the payment of
licenses awarded, construction of its PCS networks and implementation of its
planned service. Prior to the retention of Arthur Andersen LLP, neither the
Company nor anyone on the Company's behalf consulted Arthur Andersen LLP
regarding either the application of accounting principles related to a specified
transaction, completed or proposed, or the type of audit opinion that might be
rendered on the Company's financial statements.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 (together with all amendments, exhibits, schedules and supplements thereto,
the "Registration Statement") under the Securities Act with respect to the Class
B Common Stock offered hereby. This Prospectus, which forms a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and the Class B Common Stock offered hereby, reference is
made to the Registration Statement. Statements contained in this Prospectus as
to the contents of any contract, agreement or other document are not necessarily
complete, and, in each instance, reference is made to the copy of the document
filed as an exhibit to the Registration Statement. The Registration Statement
can be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; and at
the Commission's regional offices at Suite 1400, Northwest Atrium Center, 500
West Madison Street, Chicago, Illinois 60661, and 7 World Trade Center (13th
Floor), New York, New York 10048. Copies of such material can also be obtained
from the Commission at prescribed rates through its Public Reference Section at
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a web
site on the Internet that contains reports, proxy and information statements and
other information (http://www.sec.gov).

The Company is not currently subject to the informational requirements of
the Exchange Act. As a result of the Offering, the Company will become subject
to the informational requirements of the Exchange Act. The Company will fulfill
its obligations with respect to such requirements by filing periodic reports and
other information with the Commission. In addition, the Company intends to
furnish to its stockholders annual reports containing consolidated financial
statements examined by an independent public accounting firm.

83
<PAGE> 88

GLOSSARY OF TERMS

"1.9 GHz" or "1900 MHz" -- Generally, the radio spectrum between 1850 MHz and
1990 MHz used in broadband PCS in the U.S.

"900 MHz" -- The radio spectrum utilized in narrowband PCS.

"A Block" -- One of two sets of broadband PCS 30 MHz licenses auctioned by the
FCC covering the 51 MTAs.

"airtime charges" -- Charges for use of the wireless communication system based
on minutes of use (above any included in a monthly subscription) that are in
addition to any charges for access to the public switch telephone network or for
long distance.

"analog cellular" -- Existing cellular technology which uses one continuous
electronic signal that varies in amplitude or frequency over a single radio
channel.

"B Block" -- One of two sets of broadband PCS 30 MHz licenses auctioned by the
FCC covering the 51 MTAs.

"broadband PCS " -- Digital wireless services operating in the 1.9 GHz spectrum.

"BTA" -- Basic Trading Area, as defined by Rand McNally.

"C Block" -- The 30 MHz broadband PCS licenses auctioned by the FCC covering the
493 BTAs that are reserved for Designated Entities.

"CDMA" -- Code Division Multiple Access, a digital wireless transmission
technology for use in cellular telephone communications, personal communications
services and other wireless communications systems. CDMA is a spread spectrum
technology in which calls are assigned pseudo random code to encode digital bit
streams. The coded signals are then transmitted over the air on a frequency
between the end user and a cell site, where they are processed by a base
station. CDMA allows more than one wireless user to simultaneously occupy a
single radio frequency band with reduced interference.

"cell " -- A geographic area within a wireless network covered by a single base
station and having a radius anywhere from several hundred feet to several miles,
depending on the technology and service provided.

"cellular system" -- A telephone system based on a grid of "cells" deployed at
800 MHz. Each cell contains transmitters, receivers, antennas, and is connected
to switching gear and control equipment.

"churn rate" -- Expressed as a rate for a given measurement period, equal to the
number of subscriber units disconnected divided by the average number of units
of the entire installed base of customers.

"CTIA" -- The Cellular Telecommunications Industry Association, an industry
group in North America comprised primarily of cellular telephone service
companies and recently some PCS license holders.

"D Block" -- One of three sets of 10 MHz broadband PCS licenses to be auctioned
by the FCC which will cover each of the BTAs.

"digital " -- A method of storing, processing and transmitting information
through the use of distinct electronic or optical pulses that represent the
binary digits 0 and 1. Digital transmission/switching technologies employ a
sequence of discrete, distinct pulses to represent information, as opposed to
the continuously variable analog signal.

"dual mode operation" -- A wireless system which is capable of supporting either
different digital protocols or both digital and analog technologies, whether
operating at the same or different frequencies.

"dual mode phone" -- A mobile or portable phone which is capable of dual mode
operation.

"E Block" -- One of three sets 10 MHz broadband PCS licenses to be auctioned by
the FCC which will cover each of the BTAs.

84
<PAGE> 89

"Entrepreneurs' Block " -- The C and F Block licenses, consisting of 30 MHz and
10 MHz of spectrum, respectively, auctioned or to be auctioned by the FCC to
qualifying bidders.

"ESMR" -- Enhanced Specialized Mobile Radio is a radio communications system
that employs digital technology with a multi-site configuration that permits
frequency reuse but used in the SMR frequencies, offering enhanced dispatch
services to traditional analog SMR users.

"F Block" -- The 10 MHz broadband PCS licenses to be auctioned by the FCC which
covers the BTAs and is strictly for Designated Entities.

"FCC " -- The Federal Communications Commission.

"Five-Year Buildout Requirement" -- The requirement that a holder of a 30 MHz
PCS license build out its network so that service is available to one-third of
the POPs in its service area and that a holder of a 10 MHz PCS license buildout
its network so that service is available to one-quarter of the POPs in its
service area within five years of the date that the license was issued.

"frequency" -- The number of cycles per second, measured in hertz, of a periodic
oscillation or wave radio propagation.

"global satellite system" -- Satellite systems designed for communications in
remote locations where terrestrial wireless systems such as PCS are neither
feasible nor economical.

"GSM " -- Global System for Mobile Communications is a distributed networking
architecture designed for managing digital mobile telephone users.

"hand-off " -- The act of transferring communication with a mobile unit from one
base station to another. A hand-off transfers a call from the current base
station to the new base station. A "soft" hand-off establishes communications
with a new cell before terminating communication with the old cell.

"handset" -- The phone used by cellular, PCS and other wireless customers.

"infrastructure equipment" -- Fixed infrastructure equipment consisting of base
stations, base station controllers, antennas, switches, management information
systems and other equipment making up the backbone of the wireless
communications system that receives, transmits and processes signals from and to
subscriber equipment and/or between wireless systems and the public switched
telephone network.

"ISDN " -- Integrated Services Digital Network.

"LEC " -- Local Exchange Carrier.

"mobile network systems" -- Mobile systems such as cellular, PCS, SMR and ESMR.

"MSA" -- Metropolitan Statistical Area.

"MTA" -- Major Trading Area, as defined by Rand McNally.

"narrowband PCS " -- Refers to PCS in the 900 MHz spectrum which offers two-way
paging, digital voice paging, advanced telemetry, wireless E-mail, and data and
fax services.

"Network" -- The Company's collective PCS networks.

"Network Equipment" -- The fixed infrastructure consisting of base stations,
base station controllers, mobile switching centers and related information
processing control points that manages communications between the mobile unit
and the public switched telephone network.

"PBX" -- Private branch exchange.

"PCIA" -- Personal Communications Industry Association is a North America trade
association whose members either have narrowband or broadband PCS licenses.

85
<PAGE> 90

"PCS " -- The second generation digital wireless telecommunications service that
will be offered by companies that have or will acquire licenses to operate on
the broadband radio spectrum (frequency range of 1850-1990 Mhz) in the FCC
auctions.

"PCS-1900" -- A 1.9 GHz upbanded version of the 900 MHz RF access protocol to
GSM, proposed for use in PCS networks in the US.

"POPs" -- A shorthand abbreviation for the population covered by a license or
group of licenses. As used in this document, unless otherwise specified, the
term POPs means the Paul Kagan Associates 1995 PCS Atlas & Databook estimate of
the 1995 population of a particular MTA or BTA of the total U.S.

"protocols" -- Methodologies which serve to manage the communication for digital
signal transmission. CDMA and TDMA are examples of high level digital protocols.

"RF " -- Radio frequency. Frequencies of the electromagnetic spectrum that are
associated with radio wave propagation.

"RF access system " -- The portion of the wireless network which involved the
communications of the handset to the base station.

"RF bandwidth" -- The amount of radio frequency spectrum assigned to a channel
or license that encompasses a relative range of frequencies that can be passed
through a transmission medium without distortion (normally with respect to one
channel). The greater the bandwidth, the greater the information carrying
capacity. Bandwidth is measured in hertz.

"roaming" -- A service offered by mobile communications network operators which
allows a subscriber to use his/her handset while in the service area of another
carrier. Roaming requires an agreement between operators of different markets to
permit customers of either operator to access the other's system.

"RSA" -- Rural Statistical Area.

"SIM " -- Also known as a "Smartcard," the Subscriber Identity Module is an
integrated circuit chip housed in a plastic card which enables a subscriber to
activate service immediately, to use multiple handsets, to easily customize
features, and to use GSM technology around the world.

"Smartcard " -- See "SIM."

"SMR" -- Specialized mobile radio is a public two-way analog radio
communications network, using simplex push-to-talk technology, whereby services
such as dispatch for taxis, delivery, service, and utility repair services use
mobile radios in vehicles and/or portable radios, and typically operate on a
repeater network that "repeats" an incoming transmission on one channel onto an
appropriate outgoing designated or available channel.

"TDMA" -- Time Division Multiple Access, a digital wireless transmission
technology which converts analog voice signals into digital data and puts more
than one voice channel on a single RF channel by separating the users in time.
PCS technology that is an upbanded version of the TDMA-based digital cellular
protocol used by cellular operators in the US.

"Ten-Year Buildout Requirement" -- The requirement that a holder of a 30 MHz PCS
license build out its network so that service is available to two-thirds of the
population in its service area within 10 years of the date that the license was
issued.

"vocoder" -- A speech compression device which encodes voice signals to reduce
the amount of bandwidth required for a voice transmission.

86
<PAGE> 91

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Report of Arthur Andersen LLP, Independent Auditors................................... F-2
Consolidated Balance Sheets at December 31, 1994 and 1995 and June 30, 1996
(unaudited)......................................................................... F-3
Consolidated Statements of Loss for the period April 20, 1994 (date of inception) to
December 31, 1994, the year ended December 31, 1995, the period April 20, 1994 (date
of inception) to December 31, 1995 and the six months ended June 30, 1995 and 1996
(unaudited)......................................................................... F-4
Consolidated Statements of Cash Flows for the period April 20, 1994 (date of
inception) to December 31, 1994, the year ended December 31, 1995, the period April
20, 1994
(date of inception) to December 31, 1995 and the six months ended June 30, 1995
and 1996 (unaudited)................................................................ F-5
Consolidated Statements of Stockholders' Deficit...................................... F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>

F-1
<PAGE> 92

After the contemplated stock split and recapitalization discussed in Note 2
to Pocket Communications, Inc.'s consolidated financial statements is determined
and effected, we expect to be in a position to render the following audit
report.

Arthur Andersen LLP
August 29, 1996

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
Pocket Communications, Inc.:

We have audited the accompanying consolidated balance sheets of Pocket
Communications, Inc. (a Development Stage Enterprise and formerly DCR
Communications, Inc.) and subsidiaries, as of December 31, 1994 and 1995, and
the related consolidated statements of loss, stockholders' deficit and cash
flows for the period April 20, 1994 (date of inception) to December 31, 1994,
the year ended December 31, 1995, and for the period April 20, 1994 (date of
inception) to December 31, 1995. These consolidated financial statements and the
schedule referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and the schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Pocket Communications, Inc. and subsidiaries, as of December 31, 1994 and 1995,
and the results of their operations and their cash flows for the period April
20, 1994 (date of inception) to December 31, 1994, the year ended December 31,
1995, and the period April 20, 1994 (date of inception) to December 31, 1995, in
conformity with generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Schedule of Valuation and Qualifying
Accounts listed in Item 16, Exhibits and Financial Statement Schedules, is
presented for purposes of complying with the Securities and Exchange Commission
rules and is not part of the basic financial statements. The schedule has been
subjected to the auditing procedures applied in our audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

Washington, D.C.,
, 1996

F-2
<PAGE> 93

POCKET COMMUNICATIONS, INC. AND SUBSIDIARIES
(FORMERLY DCR COMMUNICATIONS, INC.)
(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30, 1996
------------------------- ---------------------------
1994 1995 ACTUAL PRO FORMA
(UNAUDITED)
(NOTE 2)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................... $ 7,755 $ 1,079,235 $ 416,956 $
Deposit held by FCC............................. -- -- 1,382,238
Other current assets............................ 2,588 174,084 125,279
----------- ----------- ------------ ------------
Total currents assets...................... 10,343 1,253,319 1,924,473
Property and equipment, net......................... 13,090 1,749,165 9,838,563
License deposit..................................... -- 40,050,000 71,338,145
Deferred financing costs, net....................... -- 1,122,400 8,137,750
Other assets........................................ -- 158,076 190,048
----------- ----------- ------------ ------------
Total assets............................... $ 23,433 $44,332,960 $ 91,428,979 $
=========== =========== ============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses........... $ 123,026 $ 1,006,165 $ 2,919,535 $
Accrued interest payable........................ -- 20,688 500,085
Accrued network development costs............... -- 509,549 4,718,752
Accrued financing costs......................... -- 1,122,400 7,405,432
Short-term borrowings........................... -- 1,500,000 17,000,000
----------- ----------- ------------ ------------
Total current liabilities.................. 123,026 4,158,802 32,543,804
Long-term liabilities
Long term debt.................................. -- 40,133,000 61,633,000
Deferred interest............................... -- 267,240 1,721,281
Other liabilities............................... -- 700,001 801,663
----------- ----------- ------------ ------------
Total long-term liabilities................ -- 41,100,241 64,155,944
Total liabilities.......................... 123,026 45,259,043 96,699,748
Commitments and contingencies (Notes 10 and 14)
Minority interest................................... -- 76,037 1,528,091
Class B Common stock subject to redemption, net of
subscription receivable of $386,057 as of December
31, 1995.......................................... -- 1,113,943 1,500,000
Stockholders' deficit:
Convertible Preferred stock, non-voting, $0.01
par value, 100,000,000 shares authorized; no
shares issued or outstanding.................. -- -- --
Class A Common stock, voting $0.01 par value,
100,000,000 shares authorized; 19,700,000
shares issued and outstanding as of December
31, 1994, December 31, 1995 and June 30, 1996,
respectively.................................. 197,000 197,000 197,000
Class B Common stock, voting $0.01 par value,
100,000,000 shares authorized; 1,200,000,
7,380,000 and 7,560,120 shares issued and
outstanding as of December 31, 1994, December
31, 1995 and June 30, 1996, respectively...... 12,000 73,800 75,601
Additional paid-in capital...................... 1,598,273 6,346,172 6,816,836
Deferred compensation........................... -- -- (309,555)
Subscriptions receivable........................ (868,297) (301,175) --
Deficit accumulated during the development
stage......................................... (1,038,569) (8,431,860) (15,078,742)
----------- ----------- ------------ ------------
Total stockholders' deficit................ (99,593) (2,116,063) (8,298,860)
----------- ----------- ------------ ------------
Total liabilities and stockholders'
deficit.................................. $ 23,433 $44,332,960 $ 91,428,979 $
=========== =========== ============ ============
</TABLE>

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

F-3
<PAGE> 94

POCKET COMMUNICATIONS, INC. AND SUBSIDIARIES
(FORMERLY DCR COMMUNICATIONS, INC.)
(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF LOSS

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

F-4
<PAGE> 95

POCKET COMMUNICATIONS, INC. AND SUBSIDIARIES
(FORMERLY DCR COMMUNICATIONS, INC.)
(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
APRIL 20, APRIL 20,
1994 (DATE OF 1994 (DATE OF
INCEPTION) TO YEAR ENDED INCEPTION) TO SIX MONTHS ENDED JUNE 30,
DECEMBER 31, DECEMBER 31, DECEMBER 31, ---------------------------
1994 1995 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss................................ $ (1,038,569) $(7,393,291 ) $ (8,431,860) $(2,294,822) $(6,646,882)
Adjustment to reconcile net loss to net
cash
used in operating activities
Depreciation........................ 302 44,233 44,535 15,409 59,402
Common stock and partnership
interests issued in exchange for
property and services............. 608,976 233,522 842,498 135,116 132,474
Accrued interest payable............ -- 287,928 287,928 -- 1,933,438
Compensation expense for stock
grants............................ -- -- -- -- 12,960
Minority interest................... -- -- -- -- (25,275)
Interest expense in connection with
amortization
of debt issuance costs............ -- -- -- -- 201,132
Increase (decrease) in cash and cash
equivalents resulting from changes in
operating assets and operating
liabilities:
Other assets........................ (2,588) (246,272 ) (248,860) (335,822) 16,833
Accounts payable, accrued expenses
and other liabilities............. 123,026 1,501,502 1,624,528 297,665 1,755,032
-------------- ------------ -------------- ----------- -----------
Net cash used in operating
activities........................ (308,853) (5,572,378 ) (5,881,231) (2,182,454) (2,560,886)
-------------- ------------ -------------- ----------- -----------
Cash flows from investing activities:
Expenditures for network development in
process............................... -- (725,774 ) (725,774) (207,802) (1,950,034)
Expenditures for property and
equipment............................. (13,392) (343,368 ) (356,760) (191,146) (103,506)
FCC License deposit..................... -- (40,050,000 ) (40,050,000) -- (32,670,383)
-------------- ------------ -------------- ----------- -----------
Net cash used in investing
activities........................ (13,392) (41,119,142 ) (41,132,534) (398,948) (34,723,923)
-------------- ------------ -------------- ----------- -----------
Cash flows from financing activities:
Net proceeds from issuance of Common
stock................................. 330,000 6,060,000 6,390,000 5,150,000 295,201
Proceeds from issuance of debt and
borrowings............................ -- 41,633,000 41,633,000 -- 35,500,000
Payment of financing costs.............. -- -- -- -- (550,000)
Contributions from minority interests... -- 70,000 70,000 -- 1,377,329
-------------- ------------ -------------- ----------- -----------
Net cash provided by financing
activities........................ 330,000 47,763,000 48,093,000 5,150,000 36,622,530
-------------- ------------ -------------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents............................... 7,755 1,071,480 1,079,235 2,568,598 (662,279)
Cash and cash equivalents at the beginning
of period................................. -- 7,755 -- 7,755 1,079,235
-------------- ------------ -------------- ----------- -----------
Cash and cash equivalents at the end of
period.................................... $ 7,755 $ 1,079,235 $ 1,079,235 $ 2,576,353 $ 416,956
=============== ============== =============== ============= =============
SUPPLEMENTAL INFORMATION:
NONCASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock to purchase
common stock in unrelated entity...... $ -- $ 83,300 $ 83,300 $ -- $ --
Issuance of common stock and partnership
interests in exchange for property and
services.............................. 608,976 233,522 842,498 135,116 132,474
Issuance of common stock for network
development, in process............... -- 113,942 113,942 -- 386,058
Issuance of common stock for deferred
financing costs....................... -- -- -- -- 123,450
Financing fee obligations incurred...... -- 1,122,400 1,122,400 -- 7,056,482
Accrued network development costs in
process and equipment in service...... -- 597,224 597,224 -- 5,709,203
PROCEEDS FROM (PAYMENT TO) RELATED PARTIES
Payments for services rendered.......... -- (843,000 ) (843,000) (212,298) (527,198)
Proceeds from debt issuance............. -- 40,133,000 40,133,000 -- 20,000,000
Loan to officer......................... -- -- -- -- 32,600
OTHER
Cash paid for interest.................. -- -- -- -- --
Cash paid for income taxes.............. $ -- $ -- $ -- $ -- $ --
</TABLE>

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

F-5
<PAGE> 96

POCKET COMMUNICATIONS, INC. AND SUBSIDIARIES
(FORMERLY DCR COMMUNICATIONS, INC.)
(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
------------------------ ---------------------- ADDITIONAL
AMOUNT NUMBER PAR NUMBER PAR PAID-IN
PER SHARE OF SHARES VALUE OF SHARES VALUE CAPITAL
<S> <C> <C> <C> <C> <C> <C>
April 20, 1994 (date of inception),
initial capitalization common stock
issued................................ $0.05 400,000 $ 4,000 -- $ -- $ 16,000
Common stock issued in exchange for
property and services in April 1994... $0.05 10,000,000 100,000 -- -- 400,000
Common stock subscribed in August
1994.................................. $0.05 5,000,000 50,000 -- -- 200,000
Common stock issued for cash in October
1994.................................. $0.05 -- -- 1,200,000 12,000 48,000
Common stock subscribed in December
1994.................................. $0.23 4,300,000 43,000 -- -- 934,273
Cash collection of subscription
receivable............................ -- -- -- -- --
Collection of subscription receivable in
consideration of services performed... -- -- -- -- --
Net loss................................ -- -- --
---------- -------- --------- ------- ----------
Balance, December 31, 1994.............. 19,700,000 197,000 1,200,000 12,000 1,598,273
---------- -------- --------- ------- ----------
Common stock issued for cash in January
and May 1995, net of stock issuance
costs................................. $0.83 -- -- 6,000,000 60,000 4,599,999
Common stock issued in October 1995 in
consideration of services performed... $0.83 -- -- 80,000 800 65,600
Common stock issued in exchange for
common stock in unrelated entity in
November 1995......................... $0.83 -- -- 100,000 1,000 82,300
Cash collection of subscription
receivable............................ -- -- -- -- --
Collection of subscription receivable in
consideration of services performed... -- -- -- -- --
Net loss................................ -- -- -- -- --
---------- -------- --------- ------- ----------
Balance, December 31, 1995.............. 19,700,000 197,000 7,380,000 73,800 6,346,172
---------- -------- --------- ------- ----------
Collection of subscription receivable in
consideration of services performed... -- -- -- -- --
Cash collection of subscription
receivable............................ -- -- -- -- --
Exercise of stock options in March
1996.................................. $0.83 -- -- 30,120 301 24,699
Common stock issued for cash in April,
1996.................................. $0.83 1,801 18 1,482
Common stock issued for services in
April, 1996........................... $0.83 -- -- 148,199 1,482 121,968
Issuance of stock options as a form of
compensation as authorized in May
1996.................................. -- -- -- -- 322,515
Amortization of deferred compensation... -- -- -- -- --
Net loss................................ -- -- -- -- --
---------- -------- --------- ------- ----------
Balance, June 30, 1996 (Unaudited)...... 19,700,000 $197,000 7,560,120 $75,601 $6,816,836
========= ======== ======== ======= =========

<CAPTION>
DEFICIT
DURING THE
DEFERRED SUBSCRIPTION DEVELOPMENT
COMPENSATION RECEIVABLE STAGE TOTAL
<S> <C> <C> <C> <C>
April 20, 1994 (date of inception),
initial capitalization common stock
issued................................ $ -- $ -- $ -- $ 20,000
Common stock issued in exchange for
property and services in April 1994... -- -- -- 500,000
Common stock subscribed in August
1994.................................. -- (250,000) -- --
Common stock issued for cash in October
1994.................................. -- -- -- 60,000
Common stock subscribed in December
1994.................................. -- (977,273) -- --
Cash collection of subscription
receivable............................ -- 250,000 -- 250,000
Collection of subscription receivable in
consideration of services performed... -- 108,976 -- 108,976
Net loss................................ -- -- (1,038,569) (1,038,569)
------------ ------------ ------------ -----------
Balance, December 31, 1994.............. -- (868,297) (1,038,569) (99,593)
------------ ------------ ------------ -----------
Common stock issued for cash in January
and May 1995, net of stock issuance
costs................................. -- -- -- 4,659,999
Common stock issued in October 1995 in
consideration of services performed... -- -- -- 66,400
Common stock issued in exchange for
common stock in unrelated entity in
November 1995......................... -- -- -- 83,300
Cash collection of subscription
receivable............................ -- 400,000 -- 400,000
Collection of subscription receivable in
consideration of services performed... -- 167,122 -- 167,122
Net loss................................ -- -- (7,393,291) (7,393,291)
------------ ------------ ------------ -----------
Balance, December 31, 1995.............. -- (301,175) (8,431,860) (2,116,063)
------------ ------------ ------------ -----------
Collection of subscription receivable in
consideration of services performed... -- 32,475 -- 32,475
Cash collection of subscription
receivable............................ -- 268,700 -- 268,700
Exercise of stock options in March
1996.................................. -- -- -- 25,000
Common stock issued for cash in April,
1996.................................. -- -- -- 1,500
Common stock issued for services in
April, 1996........................... -- -- -- 123,450
Issuance of stock options as a form of
compensation as authorized in May
1996.................................. (322,515) -- -- --
Amortization of deferred compensation... 12,960 -- -- 12,960
Net loss................................ -- -- (6,646,882) (6,646,882)
------------ ------------ ------------ -----------
Balance, June 30, 1996 (Unaudited)...... ($ 309,555) $ -- ($15,078,742) ($8,298,860)
=========== ========== =========== ==========
</TABLE>

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

F-6
<PAGE> 97

POCKET COMMUNICATIONS, INC. AND SUBSIDIARIES
(FORMERLY DCR COMMUNICATIONS, INC.)
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995, IS UNAUDITED)

1. BUSINESS

Pocket Communications, Inc. (together with its consolidated subsidiaries,
"Pocket" or the "Company"), formerly DCR Communications, Inc., was incorporated
in Maryland in April, 1994 for the purpose of (i) acquiring Personal
Communication Services ("PCS") licenses (the "PCS licenses") issued by the
Federal Communication Commission ("FCC"), (ii) constructing PCS networks to
operate in the Basic Trading Area ("BTAs") covered by its licenses and (iii)
providing PCS in these areas using Global System for Mobile Communications
("GSM") technology. Following a bidding process in the FCC broadband C Block
auction, which concluded on May 6, 1996 (the "Auction"), the Company was
notified that it was the highest bidder for and has pending licenses in 43 BTAs
consisting of 30 MHz of spectrum (the "Entrepreneurs' Block"). The Company's
winning bids totaled approximately $1.43 billion, net of a 25% bidding credit
available to the Company for qualifying as a small business, as defined by the
FCC, (the "Net Bid Price"). The Company's licenses, if granted, would allow the
Company to offer PCS to a population of approximately 35.5 million residents
("POPs") within BTAs principally in the central region of the United States,
including BTAs in and around Chicago, Dallas, Detroit, St. Louis and New
Orleans, as well as BTAs in Las Vegas and Honolulu (each a "market" and each PCS
network thereof a "PCS network", with all PCS networks in the aggregate the "PCS
Network").

Since formation, the Company has been devoting its efforts to establishing
its business, including recruiting its management team, conducting market
research, participating in the Auction, arranging financing and undertaking
initial activities relating to the development and future construction of its
PCS Network. The Company has commenced engineering and site acquisition with
respect to its PCS Network and intends to offer service within two markets by
early 1997 and within the majority of its remaining markets by the end of 1998.
Capital requirements including costs of licenses, development, construction and
start up activities for the Company will be significant.

As further discussed in the section "Risk Factors" of the Company's
Registration Statement, which, as discussed in Note 2, was filed on August 29,
1996, the Company, as a development stage enterprise, is subject to risks
typically associated with start-up entities in the telecommunications industry
including, but not limited to, (i) the potential inability to implement the
Company's strategic plan, (ii) the uncertainty of securing sufficient debt and
equity financing, (iii) competition from the other providers of
telecommunication services, (iv) dependence on key vendors and strategic
partners to perform their contractual obligations, and (v) difficulties and
resulting delays encountered in the development and successful operation of its
PCS networks. Notified high bidders in the Auction are required to make
post-auction down payments equaling ten percent of the Net Bid Price to be made
in two payments of five percent each. The Company made the first five percent
down payment of $71.3 million on May 14, 1996. The second post-auction down
payment of $71.3 million will be due five business days after the licenses are
granted, which the Company expects to occur by October 1996. Cash and cash
equivalents at June 30, 1996 are insufficient to satisfy the second down
payment. While the Company believes that, based on discussions with both
existing and prospective investors and lenders, sufficient capital will be
raised to satisfy the second down payment, there can be no assurances that such
funds will be secured. Depending on their extent and timing, these factors
individually or in the aggregate could have a material adverse effect on the
Company's financial condition.

2. RECAPITALIZATION AND REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION

The Company filed a Registration Statement on Form S-1 (the "Registration
Statement") on August 29, 1996, for an offering (the "Offering") of
shares of Class B Common Stock, par value of $.01 per share (the "Class B Common
Stock"). On August 9, 1996, the Board of Directors of the Company approved a

F-7
<PAGE> 98

plan of recapitalization (the "Recapitalization"), pursuant to which, subject to
stockholder approval, an amended and restated Articles of Incorporation will be
adopted to authorize, among other things, adjustments to the number of
authorized shares of capital stock, including shares of Class A Common Stock,
par value $.01 per share (the "Class A Common Stock"); shares of Class B Common
Stock, par value $.01 per share (the "Class B Common Stock"); and shares of
preferred stock, par value $.01 per share (the "Preferred Stock"). Pursuant to
the Recapitalization, immediately prior to and conditioned upon the consummation
of the Offering and subject to compliance with FCC rules and regulations
regarding the Company's ownership of the PCS licenses and any necessary FCC
approvals, the following transactions will occur: (i) the conversion of all
issued and outstanding shares of currently existing non-voting Class B Common
Stock, par value $.01 per share (the "Old Class B Common Stock"), into an equal
number of shares of Class B Common Stock; (ii) the conversion of all issued and
outstanding shares of currently existing voting Class A Common Stock, par value
$.01 per share (the "Old Class A Common Stock"), held by the members of the
Control Group, as defined below, into an equal number of shares of Class A
Common Stock; and (iii) the conversion of all issued and outstanding shares and
options granted to purchase Old Class A Common Stock not held by members of the
Control Group into an equal number of shares or options to purchase of Class B
Common Stock; and (iv) a reverse stock split of all outstanding shares
of Class A Common Stock and Class B Common Stock resulting from the conversion
described in clauses (i) through (iii).

In connection with the Recapitalization, certain outstanding agreements of
the Company which currently provide for loans, that, subject to compliance with
applicable FCC regulations and satisfaction of certain other conditions, are
convertible into debentures that, in turn, would be convertible into shares of
existing convertible Preferred Stock, par value $.01 per share (the "Old
Preferred Stock"), will be amended to provide for the direct conversion of such
debentures into shares of Class B Common Stock. Upon consummation of the
Offering, all such outstanding debentures will automatically convert into shares
of Class B Common Stock, but only to the extent that such conversion will not
result in violation of applicable FCC regulations. The pro forma balance sheet
as of June 30, 1996, reflects (i) additional borrowings of $ million
subsequent to the balance sheet and prior to the consummation of the Offering to
satisfy the balance of the FCC downpayment requirement, (ii) the conversion of
all convertible debt directly into Class B Common Stock and (iii) the
capitalization as an intangible asset of the PCS licenses awarded to the Company
and the recognition of the resulting indebtedness to the FCC. Due to FCC
compliance requirements, the actual amount of convertible debentures which do
convert into Class B Common Stock may be different than what is currently
anticipated. Accordingly, the actual amount of convertible debentures which do
convert will cause adjustment to the capital accounts when such transactions
occur.

Unless otherwise specified, the financial statements and the notes thereto
give retroactive effect to the Recapitalization, except for adjustments to the
authorized shares of capital stock, as though it had occurred at the beginning
of all periods presented. Also in connection with Recapitalization, outstanding
warrants to purchase shares of Old Class B Common Stock will be converted into
rights to purchase shares of Class B Common Stock, with appropriate adjustments
to the exercise price thereof.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Development Stage Company

The Company's activities to date principally have been planning and
participating in the Auction, conducting market research, securing capital,
developing its proposed service and PCS Network. The Company will continue to be
a development stage company, as defined in Statement of Financial Accounting
Standards ("SFAS") No. 7, "Accounting and Reporting by Development Stage
Enterprises," until it generates significant revenue from its products and
services.

Principles of consolidation

The consolidated financial statements include the accounts of the Company,
its wholly-owned subsidiaries and a partnership in which the Company has a
majority general partnership interest. All significant intercompany transactions
and balances have been eliminated. Minority interest in the partnership is
approximately $1,528,000 and $76,000, at June 30, 1996 and December 31, 1995,
respectively.

F-8
<PAGE> 99

Unaudited interim financial information

The accompanying consolidated financial statements as of June 30, 1996, and
for the six months ended June 30, 1996 and 1995, have been prepared by the
Company and are unaudited. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at June 30, 1996 and
for the interim periods have been made. Results of operations for the six months
ended June 30, 1996 and 1995 are not necessarily indicative of the results that
may be expected for the full year or for any future periods.

Use of estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of expenses during the
reported period. The estimates involve judgments with respect to, among other
things, various future factors which are difficult to predict and are beyond the
control of the Company. Therefore, actual amounts could differ from these
estimates.

Concentration of credit risk

The Company invests its excess cash in short-term highly liquid investments
including United States government securities and obligations. The Company's
intent is to hold its investments in debt securities to maturity.

Cash and cash equivalents

The Company considers all highly liquid instruments with remaining
maturities of 90 days or less at the time of purchase to be cash equivalents.

Licensing costs

As of June 30, 1996, the Company had deposited $71.3 million with the FCC
to satisfy the first five percent down payment, which included $40.0 million
initially deposited in 1995 to allow the Company to participate in the Auction.
Upon grant of its licenses by the FCC, the Company will record an intangible
asset for the acquired license at cost, with cost determined as (i) the present
value of the deferred payment obligation provided by the U.S. Government using
an appropriate discount rate (the "Government Financing") and (ii) the first and
second down payments (the "Downpayment"). The Government Financing, which
provides for favorable terms, including below market interest rates, is
available to the Company because it qualifies as a small business as defined by
the FCC rules and regulations for the Auction ("Small Business"). The PCS
licenses expire 10 years from the date of grant but typically are renewable for
a nominal fee. The licenses, if acquired, will be amortized using the
straight-line method over a period of 40 years.

As discussed in Note 14, "Regulatory Matters", the Company, as holder of
the PCS licenses, will be subject to various restrictions and regulations of the
FCC. If the Company should fail to meet or violate one or more of these
regulations, the FCC could revoke one or more of the Company's licenses, which
may result in an impairment loss to be recognized in the financial statements in
an amount that could be material.

The Company, as a matter of policy, and in accordance with SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of," will assess the fair value of its long-lived assets, including
intangibles, periodically and earlier if situations arise. Management's
evaluation will include a number of factors, including the impact of regulatory
issues, in determining potential impairment loss.

F-9
<PAGE> 100

Deferred financing costs

Deferred financing costs represent capitalized costs incurred to obtain
financing under debt agreements, vendor financing arrangements and borrowing and
credit facilities. The Company's policy is to amortize these costs over the life
of the underlying indebtedness using the effective interest method.

Property and equipment in service and network development in process

Property and equipment are recorded at cost and depreciated using the
straight-line method over three to seven years based upon the estimated useful
lives of the related equipment.

The Company's policy is to capitalize development and related build-out
costs of its PCS Network. As of December 31, 1995, the Company has capitalized
engineering, site acquisition and other development costs in two markets.
Charges to operations for depreciation expense of a PCS network will commence
when the respective PCS network is available for commercial use. The Company
follows the requirements of SFAS No. 34, "Capitalization of Interest Cost," when
the amounts become material. For the six months ended June 30, 1996, the Company
incurred interest costs of $2.1 million, of which $204,000 was capitalized as
part of the Company's network development activities. Interest costs incurred
prior to 1996 were expensed.

Pro forma net loss per common share (unaudited)

Pro forma net (loss) per common share is computed based on the weighted
average number of outstanding shares of common stock and dilutive common stock
equivalents. As required by the Securities and Exchange Commission Staff
Accounting Bulletin No. 83 ("SAB No. 83"), common stock and common stock
equivalents issued at prices below the anticipated initial public offering price
from August 1995 through August 1996, representing the twelve-month period prior
to the filing of the Registration Statement, have been included in the
calculation, even if antidilutive, as if they were outstanding for all periods.
As permitted under SAB No. 83, the common stock equivalents for stock options
and warrants, were determined using the treasury method at a per share price of
$ , the midpoint of the proposed public offering price range. In
addition, convertible subordinated debentures to be converted into Class B
Common Stock upon the consummation of the Offering are treated as having been
converted into Common Stock at the date of original issuance. Common stock
equivalents issued prior to August 1995 have not been included since the effect
would be antidilutive.

New accounting statement

During 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." This Statement encourages, but does not require, a fair value
based method of accounting for employee stock options or similar equity
instruments. Entities that elect not to adopt the fair value method of
accounting are required to make pro forma disclosures of net loss and net loss
per share as if the fair value method were adopted. This Statement is required
for fiscal years beginning after December 15, 1995. Management does not intend
to adopt the fair value method of accounting. Accordingly, adoption of the
Statement in the fiscal year ending December 31, 1996, will only impact the
Company's disclosures.

4. STOCKHOLDERS' DEFICIT

After the Recapitalization discussed in Note 2, the Company will have
authorized two classes of common stock, Class A Common Stock and Class B Common
Stock, and one class of Preferred Stock. The Class A Common Stock has five votes
per share and the Class B Common Stock has one vote per share; provided,
however, that the number of votes per share of Class A Common Stock may be
adjusted from time to time to ensure that the total number of votes of the
issued and outstanding shares of Class A Common Stock is not less than 50.1% of
the total number of votes of the issued and outstanding shares of voting stock
of the Company.

In order to maintain compliance with the FCC requirements, the control
group of the Company, consisting of individuals or entities who meet certain
financial requirements and members of the Company's

F-10
<PAGE> 101

management team (the "Control Group") must maintain certain minimum equity
interest levels in the Company. As provided in the Company's Articles of
Incorporation, a number of actions can be taken to ensure compliance, including
the grant of options to purchase either Class A Common Stock or Class B Common
Stock to Control Group members in sufficient number to increase the Control
Groups equity interest to the required minimum levels. The exercise price of
options granted prior to the Offering to acquire Class A Common Stock to
maintain the 50.1% Control Group equity structure, as defined, is $8.00. Options
to purchase Class A Common Stock granted after the Offering shall be fair market
value on the day of grant and will expire when the maintenance of such minimum
ownership level is no longer necessary. The exercise price of options granted to
acquire Class B Common Stock to maintain minimum levels of equity as provided by
the FCC requirements is the closing asked price of the Class B Common Stock at
the date of grant as quoted on the Nasdaq National Market. Such options expire
when they are no longer needed to maintain required minimum equity levels.
Outstanding shares of Class A Common Stock are convertible into Class B Common
Stock over time as limited by the condition that the Control Group's equity
ownership conforms with FCC requirements.

As provided in the charter of the Company, holders of Old Preferred Stock,
until August 1, 1998, are entitled to receive a preferential dividend equal to
$.98 per annum per share before any dividends are paid to holders of Old Class A
Common Stock or Old Class B Common Stock. Upon the closing of an initial public
offering with gross proceeds of at least $50.0 million and a per share price of
at least $16, every share of Old Preferred Stock outstanding would convert into
a share of Old Class B Common Stock. Additionally, holders of Old Preferred
Stock have the right, at any time, to convert any shares of Old Preferred Stock
in to an equal number of Old Class B Common Stock with the conversion ratio
adjustable based on certain sales of Old Class A Common Stock. As of June 30,
1996, there were no shares of Old Preferred Stock issued and outstanding.
Additionally, pursuant to the Recapitalization discussed in Note 2, the charter
of the Company will be amended to eliminate the preferential dividend and the
conversion rights of the Old Preferred Stock.

Prior to the Recapitalization discussed in Note 2, effective November 3,
1994 and July 7, 1995, the Board of Directors of the Company declared a 10 to 1
and a 1,000 to 1 stock split, respectively, of the then outstanding shares of
old Class A Common Stock. All references in the financial statements and notes
have been adjusted to give effect to the stock splits.

As of August 9, 1996, the Company reserved capital stock for future
issuance as detailed below:

<TABLE>
<CAPTION>
CLASS B COMMON STOCK
<S> <C>
Conversion of convertible debentures............................. 9,937,500
Stock purchase warrants.......................................... 150,000
Employee and director option plans and grants.................... 7,279,880
--------------------
Total.................................................. 17,367,380
=================
</TABLE>

In connection with the Recapitalization, which is to occur prior to the
consummation of the Offering, the Company will be required to reserve additional
amounts of capital stock for future issuances.

In exchange for services rendered, the Company, in April 1996, issued to C.
E. Capital Consultants, Inc., 150,000 shares of Class B Common Stock and
warrants to purchase 150,000 shares of Class B Common Stock at an exercise price
of $14 per share (the "Warrants"). The Warrants expire in January 1998. The
shares issued and the Warrants were recorded at the fair value of the
professional services, which the Company estimated at $123,000.

On August 19, 1996, the Company entered into subscription agreements with
Booz - Allen & Hamilton Inc. ("Booz - Allen") which provide for the issuance of
up to 718,750 shares of Class B Common Stock at a purchase price of $8 per
share, subject to certain adjustments and satisfaction of certain conditions.
Proceeds to the Company, before deducting expenses, will approximate $5.8
million consisting of $750,000, representing the sale of 93,750 shares to be
received in the form of services to be provided to the Company in connection
with the development of its PCS networks and $5 million to be received in cash,
representing the sale of 625,000 shares. Under the terms of a subscription
agreement, the Company will realize gross proceeds

F-11
<PAGE> 102

of $5 million from the sale of 625,000 shares of Class B Common Stock when it
has satisfied certain conditions in connection with the FCC Downpayment.
Additional shares of Class B Common Stock may be issued by the Company to
Booz - Allen to adjust for the lowest per share price paid to the Company for
certain sales of Class B Common Stock from and after August 1, 1996 until the
earlier of the consummation of the Offering and January 31, 1997.

5. PROPERTY AND EQUIPMENT

Property and equipment at December 31, 1994 and 1995 and June 30, 1996
consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1994 1995 1996
(UNAUDITED)

<S> <C> <C> <C>
Office equipment.................................... $11,029 $ 272,134 $ 372,319
Furniture and fixtures.............................. 2,363 120,053 109,766
Leasehold improvements.............................. -- 52,248 65,856
------- ---------- ----------
13,392 444,435 547,941
Less accumulated depreciation....................... (302) (44,535) (103,937)
------- ---------- ----------
13,090 399,900 444,004
Network development, in process..................... -- 1,349,265 9,394,559
------- ---------- ----------
$13,090 $1,749,165 $9,838,563
======= ========== ==========
</TABLE>

6. SHORT-TERM BORROWINGS

Working Capital Loan

In November 1995, the Company entered into a loan agreement with Ericsson
Inc. ("Ericsson"), whereby the Company would receive up to $2.0 million for
working capital purposes (the "Working Capital Loan"). Borrowings under the
Working Capital Loan, as amended, accrue interest at a rate of 11% per annum
compounded quarterly with interest and principal due on the earlier of September
30, 1996, or upon the Company obtaining another facility with Ericsson that
permits the proceeds to be used for working capital purposes. As of June 30,
1996, the Company had borrowed $2.0 million under the Working Capital Loan.

Additional Loan

In May 1996, the Company entered into a second loan agreement (the "1996
Ericsson Loan") with Ericsson providing the Company with a credit facility of up
to $20.0 million in principal and an additional $3.0 million for interest
advances on the borrowings. Borrowings under the 1996 Ericsson Loan accrue
interest at the prime rate plus 3% per annum and mature on the earlier of (i)
May 1997 and (ii) the date the Company enters into a facility with Ericsson that
permits the proceeds thereof to be used for, among other things, the repayment
of amounts borrowed under the 1996 Ericsson Loan. In May 1996, the Company
borrowed $15.0 million under the 1996 Ericsson Loan at an interest rate of
11.25% per annum. The 1996 Ericsson Loan was not a loan facility triggering
repayment of the Working Capital Loan.

The weighted average interest rates of the Company's short-term borrowings
was 11.17% and 11% for the six months ended June 30, 1996 and for the year ended
December 31, 1995, respectively.

Siemens Facility

In August 1996, the Company entered into an agreement with Siemens
Stromberg-Carlson ("Siemens") whereby Siemens agreed to loan the Company $10
million, subject to certain conditions, including satisfaction of certain
conditions in connection with the Downpayment, with such funds to be used to
partially satisfy the Downpayment. Borrowings under this facility accrue
interest at a rate equal to the two-year Treasury Bill rate plus 4.50%
established on the borrowing date. Under terms currently anticipated, any
borrowings under this

F-12
<PAGE> 103

facility, unless refinanced as part of a longer term vendor financing
arrangement, would be paid out of the proceeds of the Offering.

Short Term Facility

The Company has arranged with certain related entities for short-term
borrowings of approximately $41.7 million, which includes associated fees of
approximately $1 million, to meet a portion of the second half of the
Downpayment (the "Short-Term Facility"). Any borrowings under the Short-Term
Facility will accrue interest at prime plus 3% per annum, established on the
borrowing date, with such interest paid quarterly. The ability of the Company to
borrow under the Short-Term Facility is conditioned on (i) the finalization of
an inter-creditor agreement among certain of the Company's lenders with respect
to their security interest in the capital stock of certain of the Company's
wholly owned subsidiaries, and (ii) the Company securing financing commitments
to satisfy the Downpayment. Amounts borrowed under the Short-Term Facility will
be subject to mandatory prepayment by the Company in the event that at least
$200 million of certain financing is raised, including amounts raised in the
Offerings. Borrowings that are not prepaid will mature on the earlier of (i) one
year from the first borrowing, and (ii) the occurrence of an event of default,
as defined in the Short-Term Facility. Additionally, at such time as funds, in
an amount of not less than $33 million, are borrowed and used for the
Downpayment, the Company will issue a promissory note in the principal amount of
$8 million to an affiliated third party in satisfaction of services provided in
securing the financing. Warrants to purchase 1 million shares of Class B Common
Stock at an exercise price of $8 per share, subject to FCC requirements, would
be attached to such promissory note. The promissory note would mature two years
from the date of issuance unless tendered by the holder in satisfaction of the
exercise price of the warrants. The issuance of the warrants may require the
issuance of options to Control Group members in order to maintain compliance
with FCC requirements.

7. LONG-TERM DEBT

Long-term debt at December 31, 1995 and June 30, 1996 was:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JUNE 30, 1996
<S> <C> <C>
(UNAUDITED)

<CAPTION>
<S> <C> <C>
Convertible and Additional Convertible Loans............ $39,300,000 $ 54,300,000
Series B and Series D Convertible Debentures............ 833,000 7,333,000
----------------- -------------
$40,133,000 $ 61,633,000
============= ==========
</TABLE>

Convertible Loans

In June 1995, the Company entered into a loan and purchase agreement (the
"MTAI Agreement") with Masa Telecom Asia Investment Pte. Ltd. ("MTAI") whereby
MTAI agreed to loan the Company up to $30 million with such funds to be applied
towards the Downpayment. The MTAI Agreement provides that initial borrowings
will be in the form of convertible loans (the "Convertible Loans") which will
automatically convert into Series A convertible debentures (the "Convertible
Debentures"), subject to certain limitations, at the time the first license is
issued by the FCC to the Company. All conversions of both Convertible Loans and
Convertible Debentures, including mandatory conversion features, are subject to
the Company's continued compliance with the FCC's alien ownership restrictions,
Small Business qualifications and maintenance of its designated entity status as
discussed in Note 14 (together the "FCC Ownership Regulations").

In November 1995, the Company borrowed $30.0 million in Convertible Loans
at an interest rate of 6.71% per annum. The Company expects that certain of the
Convertible Loans will be converted into Convertible Debentures, in equivalent
principal amounts during 1996. For Convertible Loans which convert, all unpaid
interest, together with interest payable thereon at the same rate, is due five
years after date of the Convertible Loan conversion. Any portion of the
Convertible Loan which does not convert, and unless subsequently converted,
will, along with all deferred and unpaid interest, be due and payable in May
2001.

F-13
<PAGE> 104

Convertible Debentures bear interest at the Applicable Federal Midterm Rate
in effect at the date on which the Convertible Debentures are issued. The
Convertible Debentures, unless subsequently converted, along with unpaid
interest shall be due in September 2000. Convertible Debentures will be subject
to mandatory conversion to shares of Class B Common Stock in the event of a
public offering of stock by the Company, subject to the FCC Ownership
Regulations. Any such mandatory conversion shall be at a price equal to the
lesser of (i) $8, subject to certain adjustments or (ii) an amount equal to the
price paid per share of Class B Common Stock sold in the Offering, (the
"Conversion Ratio"). Certain of the outstanding Convertible Debentures are
expected to convert into shares of Class B Common Stock in connection with the
Offering discussed in Note 2. For Convertible Debentures which do convert as a
result of the mandatory conversion feature, all unpaid interest together with
interest payable thereon at the same rate, is due five years after date of the
conversion.

For the period prior to maturity, each Convertible Debenture is convertible
into shares of Class B Common Stock at the option of the debenture holder. Any
such voluntary conversion of the Convertible Debentures into shares of Class B
Common Stock shall be at the Conversion Ratio. Additionally, the Company, at its
option, can require conversion of all outstanding Convertible debentures into
shares of Class B Common Stock beginning September 1, 1997, and each anniversary
thereafter, until maturity. All conversions of the Convertible Debentures into
shares of Class B Common Stock are subject to the FCC Ownership Regulations. For
Convertible Debentures which are converted at the option of the debenture holder
or at the option of the Company, all unpaid interest together with interest
payable thereon is due five years after date of the conversion.

Additional Convertible Loans

The Company entered into a loan and purchase agreement (the "Pacific Eagle
Agreement") in August 1995, with Pacific Eagle Investments, Ltd. ("Pacific
Eagle"), whereby Pacific Eagle agreed to loan the Company up to $35 million to
be used towards the Downpayment. The Pacific Eagle Agreement provides that
initial borrowings will be in the form of convertible loans (the "Additional
Convertible Loans"), which will automatically convert into Convertible
Debentures, subject to certain limitations, at the time the first license is
issued by the FCC to the Company. All conversions of the Additional Convertible
Loans into Convertible Debentures are subject to continued compliance with the
FCC Ownership Regulations.

In November 1995, the Company borrowed $9.3 million in Additional
Convertible Loans at an interest rate of 6.71% per annum, which was used to
partially satisfy the Downpayment. In April 1996, the Pacific Eagle Agreement
was amended to permit further borrowings. In May 1996, the Company borrowed
$15.0 million in Additional Convertible Loans under the amended Pacific Eagle
Agreement at an interest rate of 7.28% per annum, which was used to partially
satisfy the Downpayment and expects to borrow an additional $10.7 million at
such time as the second half of the Downpayment is required. The repayment
terms, maturity, and conversion features and restrictions of the Additional
Convertible Loans, and conversion features and restrictions of Convertible
Debentures under the Pacific Eagle Agreement are the same as those provided in
the MTAI Agreement.

Certain of the Additional Convertible Loans are expected to be converted
into Convertible Debentures in 1996. Additionally, it is expected that in
connection with the consummation of the Offering discussed in Note 2, certain
outstanding Convertible Debentures will be converted into shares of Class B
Common Stock. All conversions of the Convertible Debentures into shares of Class
B Common Stock are subject to the FCC Ownership Regulations.

Series B Convertible Debentures

In August 1995, the Company issued a total of $833,000 in Series B
Convertible Debentures (the "Series B Convertible Debentures"), to Multinational
Technology and Business Limited ("MTB") which bear interest at rates ranging
from 6.31% to 6.38% per annum. The Series B Convertible Debentures, which mature
in September 2000, are convertible into shares of Class B Common Stock at a
price per share of $.833 at any time prior to maturity and automatically convert
in the event of a public offering of capital stock by the

F-14
<PAGE> 105

Company. Conversions are subject to (i) minimum conversion increments of
$200,000, (ii) continued compliance with FCC Ownership Regulations and (iii) the
conversion priority of holders of debentures issued in connection with the MTAI
Agreement and the Pacific Eagle Agreement, if any. In 1995, MTB assigned its
rights under the Series B Convertible Debentures to Pacific Eagle.

It is expected that, in connection with the consummation of the Offering
discussed in Note 2, a certain amount of Series B Convertible Debentures will be
converted into shares of Class B Common Stock. All conversions of the Series B
Convertible Debentures into shares of Class B Common Stock are subject to the
FCC Ownership Regulations. For Series B Convertible Debentures which convert,
all unpaid interest, together with interest payable thereon at the same rate, is
due five years after date of conversion.

The entities MTAI, Pacific Eagle, and MTB are all affiliated because some
of the principals own shares in two or more of the other entities.

Series D Convertible Debentures

In March 1996, the Company entered into a Convertible Loan and Investment
Agreement, (the "Investment Agreement"), with LCC, L.L.C. ("LCC") to provide the
Company financing of up to $6.5 million. In connection therewith, the Company
issued Series D convertible debentures (the "Series D Convertible Debentures")
in the amount of $6.5 million allocated by the Investment Agreement to (i) $1.5
million for software license fees and (ii) $5.0 million for working capital
purposes or to partially satisfy the Downpayment. The Series D Convertible
Debentures of $3.5 million accrue interest at prime, determined as of the last
business day of the immediately preceding calendar quarter, plus 4% per annum
for the first six months, and thereafter at prime plus 2.5% per annum. Series D
Convertible Debentures of $3.0 million accrue interest at prime, determined as
of the last business day of the immediately preceding calendar quarter, plus
2.5% per annum. Interest shall be payable quarterly, in arrears, with the first
interest payment due on March 31, 1997 covering the period from the initial
funding through March 1997. As of June 30, 1996, outstanding Series D
Convertible Debentures bear interest ranging from 10.75% to 12.25% per annum.
The Series D Convertible Debentures are convertible into shares of Class B
Common Stock at the lesser of $14 and the price at which the Company sells
certain shares of its equity securities, including the shares sold in the
Offering. In connection with the subscription agreement entered into with Booz -
Allen, which provides for a purchase price of $8 per share of Class B Common
Stock, the conversion rate of the Series D Convertible Debentures is anticipated
to be $8 per share. The Series D Convertible Debentures, unless converted into
Class B Common Stock, mature in 2001.

As specified in the Investment Agreement, the lender, at its option, can
convert the Series D Convertible Debentures into Class B Common Stock in
multiples of not less than $1.0 million, subject to the FCC's foreign ownership
restrictions. The Company may also exercise the mandatory conversion feature of
the Series D Convertible Debentures upon the closing of an initial public
offering of the Company's common stock resulting in gross proceeds of at least
$25 million and require the conversion of Series D Convertible Debentures,
subject to limitations, into Class B Common Stock or similar other equity, as
defined, if other equity is being offered. In those situations where the Company
has elected to cause mandatory conversion of the Series D Convertible
Debentures, LCC may elect to not have the Series D Convertible Debentures
mandatorily converted but in so doing waives its rights to effect future
voluntary conversions. Any conversion into Class B Common Stock would be at the
Conversion Rate.

In connection with the Offering discussed in Note 2, it is expected that a
certain amount of Series D Convertible Debentures will be converted into shares
of Class B Common Stock. All conversions of the Series D Convertible Debentures
into Class B Common Stock are subject to the FCC Ownership Regulations.

Government Financing

Upon grant of its licenses by the FCC, the Company will recognize an
obligation for the Government Financing to finance 90% of the Company's total
bid of $1.43 billion, which is net of a 25% bidding credit available to the
Company as a result of qualifying as a Small Business under FCC regulations.

F-15
<PAGE> 106

The Government Financing has a ten-year term and will require only
quarterly interest payments for the first six years. The interest rate will be
fixed at the ten-year US Treasury Note rate applicable on the date the licenses
are granted. For years seven through ten, the obligation requires both principal
and interest payments through maturity.

Other related matters

The agreements and contracts entered into by the Company contain various
restrictions, covenants, defaults, and requirements customarily found in such
financing agreements. Among other restrictions, these provisions include
limitations on restricted payments including cash dividends, material adverse
change clauses and limitations on new indebtedness. Additionally, certain of the
financing agreements provide for restrictions and limitations on transactions by
the Company other than in the ordinary course of its business or that would
affect its cash flow, liabilities or capital structure including the requirement
to continue the Company's prior commitment to use GSM technology and the
requirement to procure and use certain lenders' equipment and related services
in specific markets. Additionally, the Company has entered in to a pledge
agreement pursuant to which the capital stock of one of its wholly owned
subsidiaries is pledged as collateral for the benefit of certain lenders.

As of June 30, 1996, $833,000 and $60.8 million of long-term debt matures
in 2000 and 2001, respectively.

8. STOCK OPTIONS

The Company's Incentive Stock Option Plan (the "1995 Plan") was established
in 1995 and authorizes the grant of options for Class B Common Stock to all
eligible employees. As of June 30, 1996, a total of 1,550,000 shares of Class B
Common Stock have been reserved for issuance under the 1995 Plan. The exercise
price for each option may not be less than 100% of the fair market value, as
defined, of a share of Class B Common Stock on the date of grant. The 1995 Plan
is administered by the Board of Directors which has the authority to determine
the option recipients, the number of shares subject to each option, the term of
the option, the exercise price and the vesting schedule.

In May 1996, the Board approved the grant of options for Class B Common
Stock to eligible directors of the Company who serve on the Board pursuant to
the 1996 Director Non-Qualified Stock Option Plan (the "1996 Director Plan"). As
of June 30, 1996, a total of 390,000 shares of Class B Common Stock have been
reserved for issuance under the 1996 Director Plan. The 1996 Director Plan will
be administered by the Board of Directors. The exercise price for options
granted under the 1996 Director Plan will be (i) $.83 per share or (ii) at the
discretion of the Board, if less, the fair market value, as defined, of Class B
Common Stock at the date of grant. While the Company has not granted any options
under the 1996 Director Plan as of June 30, 1996, it is expected that options
providing for the purchase of up to 240,000 shares will be granted to directors
serving on the Board as of June 1, 1996, contingent on the finalization of plan
terms and conditions, compliance with FCC requirements and stockholder approval,
but prior to the consummation of the Offering.

The Board approved the grant of options for Class B Common Stock to
eligible employees pursuant to the 1996 Non-Qualified Stock Option Plan (the
"1996 Employee Plan"). The 1996 Employee Plan will be administered by the
Compensation Committee of the Board. As of June 30, 1996, a total of 2,370,000
shares of Class B Common Stock have been reserved for issuance under the 1996
Employee Plan. The exercise price for options granted will be determined by the
Board, but will not be less than the lesser of (i) $.83 per share and (ii) the
fair market value, as defined, of the Class B Common Stock on the date of grant.
While the Company has not granted any options under the 1996 Employee Plan as of
June 30, 1996, it is expected that grants providing for the purchase of up to
1,585,000 shares of Class B Common Stock will be issued prior to consummation of
the Offering. Additionally, subsequent to May 14, 1996 and through June 30,
1996, the Company committed a total of 45,000 options to employees under the
1996 Employee Plan at an exercise price of $.83 per share. All grants and
commitments under the 1996 Employee Plan are subject to finalization of terms
and conditions, compliance with FCC requirements and stockholder approval of the
1996 Employee Plan.

F-16
<PAGE> 107

In 1995, the Company authorized the grant of non-qualified stock options
for Class B Common Stock to certain employees (the "1995 Non-Qualified
Options"). The exercise price for the 1995 Non-Qualified Options is $.83 per
share. As of June 30, 1996, 3 million shares of Class B Common Stock have been
reserved for issuance to employees pursuant to the 1995 Non-Qualified Options.

The following table summarizes the Company's stock option activity:

<TABLE>
<CAPTION>
1995 INCENTIVE STOCK 1995 NON QUALIFIED
OPTION PLAN STOCK OPTIONS
---------------------- ----------------------
NUMBER OF PRICE PER NUMBER OF PRICE PER
SHARES SHARE SHARES SHARE
<S> <C> <C> <C> <C>
Granted during 1995........................... 696,000 $ .83 1,500,000 $ .83
Expired/forfeited during 1995................. -- -- -- --
Exercised during 1995......................... -- -- -- --
--------- --------- --------- ---------
Outstanding at December 31, 1995.............. 696,000 $ .83 1,500,000 $ .83
--------- --------- --------- ---------
Granted during 1996........................... 75,000 $ .83 -- --
Expired/forfeited during 1996................. -- -- -- --
Exercised during 1996......................... -- -- (30,120) $ .83
--------- --------- --------- ---------
Outstanding at June 30, 1996.................. 771,000 $ .83 1,469,880 $ .83
======== ======= ======== =======
Exercisable at December 31, 1995.............. -- -- 500,000 $ .83
Exercisable at June 30, 1996.................. -- -- 469,880 $ .83
</TABLE>

The Company believes that all options granted prior to May 14, 1996, (see
Note 1), were granted at a price which was equivalent to the fair market value
of the Company stock. For options committed to employees subsequent to May 14,
1996, the Company has recorded deferred compensation of $323,000 representing
the difference between the option exercise price and the estimated fair value of
the Company's common stock at date of grant. This amount is being amortized over
the vesting period of the individual options, generally three years. Deferred
compensation expense recognized in the six months ended June 30, 1996
approximated $13,000.

9. INCOME TAXES

Differences between accounting rules and tax laws cause differences between
the bases of certain assets and liabilities for financial reporting and tax
purposes, primarily related to different treatment of start up costs. The tax
effects of these differences, to the extent they are temporary, are recorded as
deferred tax assets and liabilities and consisted of the following components
at:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------ 1996
DEFERRED TAX ASSETS: 1994 1995 (UNAUDITED)
<S> <C> <C> <C>
Capitalized start-up costs for tax purposes..... $ 199,001 $ 2,824,433 $ 4,429,662
Accruals........................................ -- -- 135,080
Amortization of financing costs................. -- -- 74,318
Net operating loss carry-forwards............... -- 106,389 747,785
--------- ----------- -----------
Total deferred tax assets....................... 199,001 2,930,822 5,386,845
--------- ----------- -----------
Valuation allowance............................. (199,001) (2,930,822) (5,386,845)
--------- ----------- -----------
Deferred tax assets, net........................ $ -- $ -- $ --
========= ========== ==========
</TABLE>

Due to the uncertainty surrounding the realization of these assets, a
valuation allowance has been provided for the full amount of the deferred tax
assets. At June 30, 1996 the Company had net operating loss carryforwards of
approximately $2.0 million which can be used to offset taxable income through
the year 2010.

F-17
<PAGE> 108

10. COMMITMENTS

Supply Agreements and Vendor Financing

As further discussed below, the Company has entered into various supply and
service related agreements with vendors for the purchase of equipment, services,
and software required to construct and deploy the PCS Network. The Company's
ability to meet its business plan is largely dependent on the performance of
these suppliers. There are a limited number of suppliers who can perform these
services.

Ericsson

The Company has entered into a supply agreement with Ericsson whereby
Ericsson would be the Company's primary supplier of PCS equipment, services and
software required to build out the PCS Networks in markets designated by the
Company (the "Acquisition Agreement"). The Acquisition Agreement provides for
various alternatives and options for services and equipment to be selected by
the Company for the buildout. While changes in the Company's plans could affect
the amount of services and equipment ultimately ordered under the Acquisition
Agreement, the Company's purchases could aggregate up to $500 million, subject
to available financing. The Acquisition Agreement provides for (i) services for
operation system support, facilities preparation, and site acquisition and (ii)
GSM communications based PCS 1900 network equipment. The commitments are to be
filled by June 2000, unless extended by agreement of both parties or the
Acquisition Agreement is terminated, if earlier. The Acquisition Agreement is
subject to various conditions, including, the availability of financing by the
vendor.

Northern Telecom Inc.

In connection with an equipment supply agreement for the supply by Northern
Telecom Inc. ("Nortel") to the Company of equipment and services, the Company
and Nortel are negotiating an agreement which would provide financing up to $59
million, subject to finalization of terms and conditions.

LCC

In connection with the Investment Agreement, and in support of the design
and buildout of the PCS Network, the Company has agreed to purchase from LCC a
total of $65 million of professional services over a period of five years
consisting of (i) $45.0 million of program management services and (ii) $20.0
million of radio frequency engineering services.

Booz - Allen

The Company has entered into an agreement whereby Booz - Allen will provide
up to $50 million of management and technology consulting services over a five
year period. The agreement provides that the Company, in situations where
minimum services are not purchased within required time frames, will be
obligated to pay liquidated damages of up to 15% of the difference between
amounts purchased and the stipulated minimum requirements.

Financing

In connection with its financing efforts, the Company has entered into
agreements with third parties that generally provide for a fee based on either
performance within specified guidelines or a percentage of debt or equity raised
by the firm. At June 30, 1996, the Company has obligations of $7.5 million in
financing related costs for financing raised to date.

F-18
<PAGE> 109

Leases

The Company leases office space, office equipment and transponder sites
under arrangements accounted for as operating leases. As of June 30, 1996,
future annual minimum rental payments under operating leases are as follows :

<TABLE>
<S> <C>
1996 (6 months remaining)....................................... $ 439,151
1997............................................................ 1,277,818
1998............................................................ 975,851
1999............................................................ 783,491
2000............................................................ 786,220
2001............................................................ 613,613
Thereafter...................................................... 1,386,309
----------
Total........................................................... $6,262,453
=========
</TABLE>

Rent expense for the six months ended June 30, 1996, for the year ended
December 31, 1995, for the period April 20, 1994 (date of inception) to December
31, 1994 and for the period April 20, 1994 (date of inception) to June 30, 1996,
was approximately $292,000, $243,000, $22,000 and $557,000, respectively.

11. REDEEMABLE COMMON STOCK

In 1995, the Company entered into a services contract (the "Services
Contract") with a third party that provides that, in certain situations, the
Services Contract may be terminated by either party. In August 1996, the Company
notified the third party that it was terminating the Services Contract which
obligates the Company to redeem the 1,800,729 shares of Class B Common Stock
previously purchased by the third party for $1.5 million.

12. FAIR VALUE OF FINANCIAL INSTRUMENTS

At June 30, 1996, and December 31, 1995, the Company's carrying value of
financial instruments approximated fair value. The estimated fair value of the
financial instruments has been determined using available market information.
However, considerable judgment is required in interpreting market data and
assessing the impact of the FCC's alien ownership restrictions on certain
instruments conversion rights.

13. CERTAIN RELATED PARTY TRANSACTIONS

The Company has had transactions in the normal course of business with
various corporations, certain of whose directors or officers are also directors
of the Company. Payment to these corporations for services rendered was
approximately $527,000, $843,000 and $1.4 million for the six months ended June
30, 1996, for the year ended December 31, 1995 and for the period from April 20,
1994 to June 30, 1996, respectively. Since inception, the Company has issued
shares of its common stock to shareholders and affiliates for property and
services rendered. These services have been recorded at their estimated fair
value of $541,000, $347,000, $609,000 and $1.5 million for the six months ended
June 30, 1996, for the year ended December 31, 1995, for the period April 20,
1994 to December 31, 1994, and for the period from April 20, 1994 to June 30,
1996, respectively. At June 30, 1996, the Company was indebted to affiliates and
certain related parties for approximately $70.3 million.

14. REGULATORY MATTERS

On June 21, 1996, a third party filed a petition with the FCC to deny all
of the Company's applications for the C Block licenses. Allegations cited
include, among other things, the Company's failure to satisfy certain of the
FCC's small business requirements and alien ownership restrictions. In addition,
on July 1, 1996, a third party filed petitions to dismiss or deny and reauction
the C block licenses for certain markets, for each of which the Company was the
high bidder. This third party alleged, among other things, that the FCC's
conduct of C block auctions for these markets was unlawful. In July 1996, the
Company filed oppositions to

F-19
<PAGE> 110

these petitions as without merit. The Company does not believe that either
petition will have a significant effect on the Company's financial position.

Upon acquiring the licenses, the Company will be subject to various
restrictions, rules and regulations of the FCC. These regulations include
matters relating to the (i) ongoing eligibility requirements for entities
qualifying as a Small Business and designated entity status, (ii) restrictions
on the ownership and control of a FCC license holder and (iii) compliance with
established deadlines for the buildout of PCS Networks, among others. Depending
on their extent and timing, these matters, as well as other regulatory matters,
could individually or in the aggregate have an adverse effect on the Company's
financial condition, results of operations and cash flows.

To continue to qualify as a designated entity ("DE") under the FCC rules
and thereby qualifying for the favorable license financing terms of the
Government Financing, the DE rules require that the Control Group (as defined in
the rules and regulations promulgated by the FCC) hold 50.1% of the voting
control of the Company and either 50.1% or 25% (depending on which Control Group
minimum equity structure is used) of the "fully diluted" equity for at least 3
years. Additionally, the regulations include (i) restrictions on the composition
of the Control Group and certain members thereof (the "Qualifying Investors")
and restrictions on the Qualifying Investors voting stock and equity and (ii)
the involvement of the Control Group in the operations of the Company, (iii)
requirements as to rights and privileges of stock held by members of the Control
Group and (iv) requirements that the Control Group must constitute or appoint a
majority of the Board of Directors. Additionally, DE's are subject to
restrictions relating to the transfer and the assignment of licenses. License
holders are also subject to specific construction schedules for system build
out. Licensees that fail to meet construction and buildout schedules may be
subject to forfeiture of their licenses. With respect to foreign ownership
regulation, the Company is subject to a 25% limitation regarding the total
percentage of capital stock of the Company directly or indirectly owned of
record or voted by non-U.S. persons or entities or their representatives ("Alien
Ownership").

Failure on the part of an entity to maintain the Designated Entity Status,
satisfy specific buildout and construction requirements, and comply with Alien
Ownership limitations, among others, could result in the loss of the favorable
license financing terms of the Government Financing including the loss of
bidders credits, acceleration of payments due under the Government Financing or
the revocation of the awarded licenses, among others.

F-20
<PAGE> 111

------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SHARES BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
---------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary..................... 1
Risk Factors........................... 8
Use of Proceeds........................ 23
Dividend Policy........................ 23
Dilution............................... 24
Capitalization......................... 25
Selected Financial Data................ 26
Management's Discussion and
Analysis of Financial Condition
and Results of Operations............ 27
Business............................... 30
Regulation of the Wireless
Telecommunications Industry.......... 44
Management............................. 48
Certain Transactions................... 64
Principal Stockholders................. 66
Description of Certain Indebtedness.... 68
Description of Capital Stock........... 72
Shares Eligible for Future Sale........ 79
Underwriting........................... 81
Legal Matters.......................... 82
Experts................................ 82
Other Matters.......................... 82
Additional Information................. 83
Glossary of Terms...................... 84
Index to Financial Statements.......... F-1
---------------------
UNTIL , 1996 (25 DAYS
AFTER THE COMMENCEMENT OF THE OFFERING),
ALL DEALERS EFFECTING TRANSACTIONS IN THE
CLASS B COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
</TABLE>

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

[LOGO]

POCKET COMMUNICATIONS, INC.

CLASS B COMMON STOCK

--------------------
PROSPECTUS
--------------------

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

BEAR, STEARNS & CO., INC.

COWEN & COMPANY

GOLDMAN, SACHS & CO.

, 1996

------------------------------------------------------
------------------------------------------------------
<PAGE> 112

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered hereby, other than
underwriting discounts and commissions. All amounts are estimated except the
Securities and Exchange Commission (the "Commission") registration fee and the
National Association of Securities Dealers, Inc. ("NASD") registration fee.

<TABLE>
<CAPTION>
PAYABLE BY
THE REGISTRANT
<S> <C>
SEC registration fee............................................ $ 59,483
NASD registration fee...........................................
Blue Sky fees and expenses...................................... *
Accounting fees and expenses.................................... *
Legal fees and expenses......................................... *
Printing and engraving expenses................................. *
Miscellaneous fees and expenses................................. *
--------------
Total................................................. $ *
==========
</TABLE>

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

* To be supplied by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Articles of Incorporation provides that, to the fullest
extent that limitations on the liability of directors and officers are permitted
by the Maryland General Corporation Law, no director or officer of the Company
shall have any liability to the Company or its stockholders for monetary
damages. The Maryland General Corporation Law provides that a corporation's
charter may include a provision which restricts or limits the liability of its
directors or officers to the corporation or its stockholders for money damages
except: (1) to the extent that it is provided that the person actually received
an improper benefit or profit in money, property or services, for the amount of
the benefit or profit in money, property or services actually received, or (2)
to the extent that a judgment or other final adjudication adverse to the person
is entered in a proceeding based on a finding in the proceeding that the
person's action, or failure to act, was the result of active and deliberate
dishonesty and was material to the cause of action adjudicated in the
proceeding. The Company's Articles of Incorporation and By-laws provide that the
Company shall indemnify and advance expenses to its currently acting and its
former directors to the fullest extent permitted by the Maryland General
Corporation Law and that the Company shall indemnify and advance expenses to its
officers to the same extent as its directors and to such further extent as is
consistent with law.

The Articles of Incorporation and By-Laws provide that the Company will
indemnify its directors and officers and may indemnify employees or agents of
the Company to the fullest extent permitted by law against liabilities and
expenses incurred in connection with litigation in which they may be involved
because of their offices with the Company. In addition, the Company's Articles
of Incorporation provides that its directors and officers will not be liable to
stockholders for money damages, except in limited instances. However, nothing in
the Articles of Incorporation or By-Laws of the Company protects or indemnifies
a director, officer, employee or agent against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith gross
negligence or reckless disregard of the duties involved in the conduct of his
office. To the extent that a director has been successful in defense of any
proceeding, the Maryland General Corporation Law provides that he shall be
indemnified against reasonable expenses incurred in connection therewith.

The Underwriting Agreements provide for indemnification by the Underwriters
of the registrant, its Directors and officers, and by the registrant of the
Underwriters, for certain liabilities, including liabilities arising under the
Act, and affords certain rights of contribution with respect thereto.

II-1
<PAGE> 113

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since inception, the Company has issued and sold the following securities
(The following information has been adjusted to reflect the Recapitalization
Plan and will be adjusted to reflect the reverse stock split to be effected
prior to the effective date of this Registration Statement):

(a)(1) On April 20, 1994, the Company issued and sold an aggregate of
10,400,000 shares of Class A Common Stock at a price of $.05 per share to
two of its founding members, Janis A. Riker and Daniel C. Riker, in
exchange for $10,000 and the contribution by Ms. and Mr. Riker of a
business plan for the Company.

(2) On October 24, 1994, the Company issued and sold for $.05 per
share 1,000,000 shares of Class B Common Stock to Randall S. Anderson, for
$.05 per share and 200,000 shares of Class B Common Stock to Jonathan L.
Alpert and Jo Elizabeth Alpert, as tenants by the entirety for cash in the
aggregate amount of $60,000.

(3) In August 1994, the Company sold 5,000,000 shares of Class A
Common Stock at a price of $.05 per share to Teleconsult, Incorporated. In
December 1994, the Company agreed to sell to Teleconsult, Incorporated an
aggregate of 4,300,000 shares at a price of $.227 in exchange for $918,700
in cash and $308,573 in services. Such consideration was received by the
Company during the period December 1994 through February 1996.

(4) On January 30, 1995, the Company sold an aggregate of 6,000,000
shares of Class B Common Stock at $.83 per share to Masa Telecom, Inc., for
a $5,000,000 cash payment. 1,800,000 shares were issued on January 31, 1995
for a $1,500,000 cash payment. 4,200,000 shares were issued on May 1, 1995
for a $3,500,000 cash payment.

(5) On November 3, 1995, the Company sold to CTD, L.L.C. 100,000
shares of Class B Common Stock at a purchase price of $.83 per share in
exchange for 100 shares of FedSMR, Inc. Common Stock.

(6) On October 30, 1995, the Company issued 20,000 shares of Class B
Common Stock to each of the following directors of the Company, Brion R.
Sasaki, Ronald S. Schimel, Thomas L. Leming and George S. Wills, as
compensation for services rendered as a Board member, which shares were
valued at $.83 per share.

(7) On November 9, 1995, the Company sold to Westinghouse Electric
Corporation ("WEC") 1,800,729 shares of Class B Common Stock at $.83 per
share in exchange for $1,000,000 cash payment and $500,000 worth of
services, which services were provided by WEC to the Company during the
period from November 1995 through March 1996.

(8) On April 25, 1996, the Company agreed to sell to C.E. Capital
Consultants, Inc. (a) 150,000 shares of Class B Common Stock for a purchase
price of $.01 per share and (b) warrants to purchase 150,000 shares of
Class B Common Stock at an exercise price of $14.00 per share as partial
consideration of the consulting services provided to the Company by C.E.
Capital Consultants, Inc.

(9) On March 21, 1996, the Company agreed to sell and issue Class D
Convertible Debentures to LCC, L.L.C. for an aggregate purchase price of
$6,500,000 which debentures are convertible into common stock of the
Company. The Company issued two debentures, one with a principal amount of
$3,500,000 on March 27, 1996 in exchange for a $2,000,000 cash payment and
a $1,500,000 license fee and the other debenture with a principal amount of
$3,000,000 on May 10, 1996 in exchange for a $3,000,000 cash payment.

(10) In March 15, 1996, the Company issued and sold 30,120 shares of
Class B Common Stock to Randall S. Anderson pursuant to the exercise of his
option to purchase such stock and for which he paid $25,000 in cash or $.83
per share.

(11) On August 29, 1996, certain persons agreed to purchase an
aggregate of 140,000 shares of Class B Common Stock at a purchase price of
$8.00 per share, subject to certain adjustments, for aggregate purchase
price of $120,000 in cash and $1,000,000 in executive search and consulting
services.

II-2
<PAGE> 114

(12) On August 19, 1996, Booz - Allen & Hamilton, Inc. entered into a
subscription agreement to purchase 718,750 shares of Class B Common Stock
at a purchase price of $8.00 per share, subject to certain adjustments, for
an aggregate purchase price of $5,750,000 in services.

The issuances described in Item 15(a) were deemed exempt from registration
under the Securities Act in reliance on Section 4(2) of the Securities Act as
transactions by an issuer not involving a public offering. In addition, the
recipients of securities in each such transaction represented their intentions
to acquire the securities for investment only and not with a view to or for sale
in connection with any distribution thereof and appropriate legends were affixed
to the share certificates and/or debentures issued in such transactions. All
recipients had adequate access, through their relationships with the Company, to
information about the Company.

(b) The Company sold and issued Class B Convertible Debentures to
Multinational Technology and Business Limited ("MTB") on August 18, 1995,
for a $833,000 cash payment, which debentures are convertible into
1,000,000 shares of Class B Common Stock. MTB assigned the debenture to
Pacific Eagle Investments Ltd. The issuance of this debenture was deemed
exempt from registration under the Securities Act in reliance on Section
4(2) of the Securities Act as a transaction by an issuer not involving a
public offering and Regulation S promulgated under the Securities Act as an
offshore transaction. The recipient of the securities represented their
intention to acquire the securities for investment only and not with a view
to or for sale in connection with any distribution thereof, and had
adequate access through its relationship with the Company to information
about the Company. In addition, the recipient represented that it would not
engage in any direct selling efforts to a U.S. person or for the account or
benefit of a U.S. person. Appropriate legends were affixed to the
debentures.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Form of Restated Articles of Incorporation of the Company.
3.2 Form of By-Laws of the Company.
4.1 Form of the Company's Class B Common Stock certificate.
5.1 Opinion of Wachtell, Lipton, Rosen & Katz re: legality of shares being registered.
10.1 Stock Purchase Agreement, dated as of December 1, 1994, by and between the Company
and Teleconsult, Inc.
10.2 Consulting Agreement by and between the Company and C.E. Capital.
10.3 Stock Purchase Agreement, dated as of January 30, 1995, by and between the Company
and Teleconsult, Inc.
10.4 Stock Purchase Agreement, dated as of January 30, 1995, by and between the Company
and Masa Telecom, Inc., as amended as of November, 1995.
10.5 Stockholders' Agreement, dated as of January 30, 1995, as amended from time to time,
by and between the Company and the stockholders named therein and the amendments
thereto.
10.6 Consulting Agreement, dated as of February 1, 1995, by and between the Company and
Mobile Systems International, Inc.
10.7 Memorandum of Understanding and Acquisition Agreement, dated June 20, 1995, by and
between the Company and Ericsson, Inc.
10.8 Loan and Purchase Agreement, dated as of June 24, 1995, by and between the Company
and Masa Telecom Asia Investment Pte. Ltd.
10.9 PCS 1900 Project and Supply Agreement, dated as of July 26, 1995, by and between the
Company and Northern Telecom, Inc.
10.10 Loan and Purchase Agreement, dated as of August 18, 1995, by and between the Company
and Pacific Eagle Investments Ltd. and the amendments thereto.
</TABLE>

II-3
<PAGE> 115

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
10.11 Purchase Agreement, dated as of August 18, 1995, by and between the Company and
Multinational Technology and Business Limited.
10.12 Memorandum of Understanding Agreement, dated September 11, 1995, by and between the
Company and Ericsson, Inc., Radio Systems.
10.13 Working Capital Loan Agreement, dated as of November 8, 1995, by and between the
Company and Ericsson, Inc. and the amendment thereto.
10.14 Loan and Purchase Agreement, dated as of November 9, 1995, by and between the
Company and Westinghouse Electric Corporation and the amendments thereto.
10.15 Stock Purchase Agreement, dated November 3, 1995 by and between the Company and CTD,
L.L.C.
10.16 Stock Purchase and Warrant Agreement, dated January 21, 1996, by and between the
Company and C.E. Capital Consultants, Inc.
10.17 Convertible Loan and Investment Agreement, dated March 20, 1996, by and between the
Company and LCC, L.L.C., as amended as of May 10, 1996.
10.18 Loan Agreement, dated May 13, 1996, by and between the Company and Ericsson, Inc.
10.19 Stock Option Agreement by and between the Company and Randall Anderson, dated August
10, 1995.
10.20 1995 Incentive Stock Option Plan and amendments thereto.
10.21 1996 Employee Non-Qualified Stock Option Plan.
10.22 1996 Director Non-Qualified Stock Option Plan.
10.23 1996 Incentive Compensation Plan.
10.24 Pocket Director Stock Compensation Plan.
10.25 Employment Agreement, dated as of August 1, 1994 and amended as of July 12, 1995, by
and between the Company and Daniel C. Riker.
10.26 Employment Agreement, effective as of May 1, 1995, by and between the Company and
Janis A. Riker.
10.27 Employment Agreement, effective January 3, 1995, by and between the Company and
Randall S. Anderson.
10.28 Employment Agreement, effective January 15, 1995, by and between the Company and
James E. Titzell.
10.29 Employment Agreement, effective January 30, 1995, by and between the Company and
Robert Pepper.
10.30 Employment Agreement, effective February 13, 1995, by and between the Company and
Larry Berent.
10.31 Employment Agreement, effective March 6, 1995, by and between the Company and Barry
C. Winkle.
10.32 Employment Agreement, effective February 1, 1996, by and between the Company and
Robert A. Kerstein.
10.33 Public Relations Services Agreement, dated as of January 4, 1996, by and between the
Company and Wills and Associates, Inc.
10.34 Engagement Agreement, dated as of March 18, 1996, by and between the Company and The
Toronto Dominion Bank.
10.35 Engagement Agreement, dated as of May 15, 1996, by and between the Company and
Toronto Dominion Securities (USA) Inc.
10.36 DCR Pacific PCS Limited Partnership Agreement of Limited Partnership, dated as of
October 19, 1995, as amended.
10.37 Letter of Intent, dated as of September 21, 1995, by and between Pocket
Communications, Inc. and Gloria Borland Hawaii PCS, Inc.
10.38 Broker Agreement, dated as of June 10, 1996, by and between the Company and Coolidge
Securities Corporation.
10.39 Letter Agreement, dated as of April 1, 1996, by and between the Company and Masa
Telecom, Inc.
</TABLE>

II-4
<PAGE> 116

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
10.40 Financing Agreement, dated as of August 9, 1996, by and between the Company and
Siemens Stromberg-Carlson.
10.41 Subscription Agreements, dated as of August 19, 1996, by and between the Company and
Booz - Allen & Hamilton, Inc.
11.1 Computations of Earnings per Common Share.*
16.1 Letter from Coopers & Lybrand L.L.P.*
21.1 Subsidiaries of the Company.
23.1 Consent of Arthur Andersen LLP.*
23.2 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5.1).
24.1 Powers of Attorney (contained on signature page).
27.1 Financial Data Schedule.*
</TABLE>

- ---------------
* Filed herewith.

All other exhibits to be filed by amendment.

(b) Financial Statement Schedules. Schedule II -- Valuation and Qualifying
Accounts.

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing of the Offerings specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.

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

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

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

II-5
<PAGE> 117

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Washington, D.C., on the 29th day of
August, 1996.

POCKET COMMUNICATIONS, INC.

By: /s/ DANIEL C. RIKER
------------------------------------
(DANIEL C. RIKER)
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER

POWERS OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints jointly and severally, Daniel C. Riker and Janis
A. Riker or any of them, with full power to act alone, his true and lawful
attorney-in-fact, with full power of substitution, and resubstitution, for him
and in his name, place and stead in any and all capacities, to sign any and all
amendments (including post-effective amendments) to the Registration Statement,
and file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact full power and authority to do and perform each and every act
and thing requisite and necessary to be done as fully to all intents and
purposes as he might or could do in person, hereby satisfying and confirming all
that said attorney-in-fact or any of them may lawfully do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
/s/ DANIEL C. RIKER Chairman of the Board and Chief August 29, 1996
- --------------------------------------------- Executive Officer
(DANIEL C. RIKER)

/s/ JANIS A. RIKER Director, President and Chief August 29, 1996
- --------------------------------------------- Operating Officer
(JANIS A. RIKER)

/s/ THOMAS L. LEMING Director August 29, 1996
- ---------------------------------------------
(THOMAS L. LEMING)

/s/ J. HERBERT NUNNALLY Director August 29, 1996
- ---------------------------------------------
(J. HERBERT NUNNALLY)

/s/ EDUARDO PAZ Director August 29, 1996
- ---------------------------------------------
(EDUARDO PAZ)

/s/ BRION SASAKI Director August 29, 1996
- ---------------------------------------------
(BRION SASAKI)

/s/ RONALD S. SCHIMEL Director August 29, 1996
- ---------------------------------------------
(RONALD S. SCHIMEL)

/s/ GEORGE S. WILLS Director August 29, 1996
- ---------------------------------------------
(GEORGE S. WILLS)

/s/ ROBERT A. KERSTEIN Senior Vice President and Chief August 29, 1996
- --------------------------------------------- Financial Officer
(ROBERT A. KERSTEIN)

/s/ WILLIAM G. ARENDT Vice President and Controller August 29, 1996
- ---------------------------------------------
(WILLIAM G. ARENDT)
</TABLE>

II-6
<PAGE> 118

POCKET COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
VALUATION ALLOWANCE FOR DEFERRED TAX ASSETS

<TABLE>
<CAPTION>
BALANCE AT ADDITIONS WRITE-OFFS, BALANCE AT
BEGINNING CHARGED TO NET OF END OF
DESCRIPTION OF PERIOD INCOME RECOVERIES PERIOD
<S> <C> <C> <C> <C>
For the Year Ended December 31, 1995............ $199,001 $2,731,821 $-- $2,930,822
For the Period April 20, 1994 (Inception) to
December 31, 1994............................. $ -- $ 199,001 $-- $ 199,001
</TABLE>

S-1
<PAGE> 119

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
<C> <S> <C>
1.1 Form of Underwriting Agreement. .........................................
3.1 Form of Restated Articles of Incorporation of the Company. ..............
3.2 Form of By-Laws of the Company. .........................................
4.1 Form of the Company's Class B Common Stock certificate. .................
5.1 Opinion of Wachtell, Lipton, Rosen & Katz re: legality of shares being
registered. .............................................................
10.1 Stock Purchase Agreement, dated as of December 1, 1994, by and between
the Company and Teleconsult, Inc. .......................................
10.2 Consulting Agreement by and between the Company and C.E. Capital.
10.3 Stock Purchase Agreement, dated as of January 30, 1995, by and between
the Company and Teleconsult, Inc. .......................................
10.4 Stock Purchase Agreement, dated as of January 30, 1995, by and between
the Company and Masa Telecom, Inc., as amended as of November, 1995. ....
10.5 Stockholders' Agreement, dated as of January 30, 1995, as amended from
time to time, by and between the Company and the stockholders named
therein and the amendments thereto. .....................................
10.6 Consulting Agreement, dated as of February 1, 1995, by and between the
Company and Mobile Systems International, Inc. ..........................
10.7 Memorandum of Understanding and Acquisition Agreement, dated June 20,
1995, by and between the Company and Ericsson, Inc. .....................
10.8 Loan and Purchase Agreement, dated as of June 24, 1995, by and between
the Company and Masa Telecom Asia Investment Pte. Ltd. ..................
10.9 PCS 1900 Project and Supply Agreement, dated as of July 26, 1995, by and
between the Company and Northern Telecom, Inc. ..........................
10.10 Loan and Purchase Agreement, dated as of August 18, 1995, by and between
the Company and Pacific Eagle Investments Ltd. and the amendments
thereto. ................................................................
10.11 Purchase Agreement, dated as of August 18, 1995, by and between the
Company and Multinational Technology and Business Limited. ..............
10.12 Memorandum of Understanding Agreement, dated September 11, 1995, by and
between the Company and Ericsson, Inc., Radio Systems. ..................
10.13 Working Capital Loan Agreement, dated as of November 8, 1995, by and
between the Company and Ericsson, Inc. and the amendments thereto. ......
10.14 Loan and Purchase Agreement, dated as of November 9, 1995, by and between
the Company and Westinghouse Electric Corporation and the amendments
thereto. ................................................................
10.15 Stock Purchase Agreement, dated November 3, 1995 by and between the
Company and CTD, L.L.C. .................................................
10.16 Stock Purchase and Warrant Agreement, dated January 21, 1996, by and
between the Company and C.E. Capital Consultants, Inc. ..................
10.17 Convertible Loan and Investment Agreement, dated March 20, 1996, by and
between the Company and LCC, L.L.C., as amended as of May 10, 1996. .....
10.18 Loan Agreement, dated May 13, 1996, by and between the Company and
Ericsson, Inc. ..........................................................
10.19 Stock Option Agreement by and between the Company and Randall Anderson,
dated August 10, 1995. ..................................................
10.20 1995 Incentive Stock Option Plan and amendments thereto. ................
10.21 1996 Employee Non-Qualified Stock Option Plan. ..........................
10.22 1996 Director Non-Qualified Stock Option Plan. ..........................
10.23 1996 Incentive Compensation Plan. .......................................
10.24 Pocket Director Stock Compensation Plan. ................................
</TABLE>
<PAGE> 120

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
<C> <S> <C>
10.25 Employment Agreement, dated as of August 1, 1994 and amended as of July
12, 1995, by and between the Company and Daniel C. Riker. ...............
10.26 Employment Agreement, effective as of May 1, 1995, by and between the
Company and Janis A. Riker. .............................................
10.27 Employment Agreement, effective January 3, 1995, by and between the
Company and Randall S. Anderson. ........................................
10.28 Employment Agreement, effective January 15, 1995, by and between the
Company and James E. Titzell. ...........................................
10.29 Employment Agreement, effective January 30, 1995, by and between the
Company and Robert Pepper. ..............................................
10.30 Employment Agreement, effective February 13, 1995, by and between the
Company and Larry Berent. ...............................................
10.31 Employment Agreement, effective March 6, 1995, by and between the Company
and Barry C. Winkle. ....................................................
10.32 Employment Agreement, effective February 1, 1996, by and between the
Company and Robert A. Kerstein. .........................................
10.33 Public Relations Services Agreement, dated as of January 4, 1996, by and
between the Company and Wills and Associates, Inc. ......................
10.34 Engagement Agreement, dated as of March 18, 1996, by and between the
Company and The Toronto Dominion Bank. ..................................
10.35 Engagement Agreement, dated as of May 15, 1996, by and between the
Company and Toronto Dominion Securities (USA) Inc. ......................
10.36 DCR Pacific PCS Limited Partnership Agreement of Limited Partnership,
dated as of October 19, 1995, as amended. ...............................
10.37 Letter of Intent, dated as of September 21, 1995, by and between Pocket
Communications, Inc. and Gloria Borland Hawaii PCS, Inc. ................
10.38 Broker Agreement, dated as of June 10, 1996, by and between the Company
and Coolidge Securities Corporation. ....................................
10.39 Letter Agreement, dated as of April 1, 1996, by and between the Company
and Masa Telecom, Inc. ..................................................
10.40 Financing Agreement, dated as of August 9, 1996, by and between the
Company and Siemens Stromberg-Carlson. ..................................
10.41 Subscription Agreements, dated as of August 19, 1996, by and between the
Company and Booz - Allen & Hamilton, Inc. ...............................
11.1 Computations of Earnings per Common Share.*..............................
16.1 Letter from Coopers & Lybrand L.L.P.*....................................
21.1 Subsidiaries of the Company. ............................................
23.1 Consent of Arthur Andersen LLP.*.........................................
23.2 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5.1). ....
24.1 Power of Attorney (contained on signature page). ........................
27.1 Financial Data Schedule.*................................................
</TABLE>

- ---------------
* Filed herewith.

All other exhibits to be filed by amendment.

<PAGE> 1

EXHIBIT 11.1

POCKET COMMUNICATIONS, INC.

CALCULATION OF PRO FORMA NET (LOSS) PER SHARE (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED JUNE
DECEMBER 31, 1995 30, 1996
<S> <C> <C>
Pro forma net (loss) (unaudited):
Net loss................................................... $(7,393) $(6,716)
Adjustment to interest expense.............................
--------- --------
Pro forma net (loss) (unaudited)........................... $ $
========= ========
Calculation of pro forma common shares outstanding (unaudited):
Class B Common Stock outstanding...........................
Conversion of Class A Common Stock into Class B Common
Stock(1).................................................
Conversion of Series A Debentures into Class B Common
Stock....................................................
Conversion of Series B Debentures into Class B Common
Stock....................................................
Conversion of Series D Debentures into Class B Common
Stock....................................................
Options and warrants to purchase Class B Common Stock(1)...
--------- --------
Total pro forma common shares outstanding
(unaudited).........................................
========= ========
Pro forma net (loss) per share (unaudited)...................... $ $
========= ========
</TABLE>

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

(1) Treated as outstanding for the entire period pursuant to Securities and
Exchange Commission Staff Accounting Bulletin No. 83.

<PAGE> 1

EXHIBIT 16.1

[LETTERHEAD OF COOPERS & LYBRAND]

August 20, 1996

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Gentlemen:

We have read the statements made by Pocket Communications, Inc. (copy attached)
in response to Item 11(i) of Form S-1 contained under the caption of "Other
Matters" which we understand will be filed with the Commission. We agree with
the statements concerning our Firm in such Form S-1.

Very truly yours,

/s/ COOPERS & LYBRAND LLP

Coopers & Lybrand L.L.P.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
Registration Statement.
ARTHUR ANDERSEN LLP

Washington, D.C.
August 29, 1996

<ARTICLE> 5

<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1995 JUN-30-1995 JUN-30-1996
<PERIOD-START> APR-20-1994 JAN-01-1995 JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1994 DEC-31-1995 JUN-30-1995 JUN-30-1996
<CASH> 7,755 1,079,235 0 416,956
<SECURITIES> 0 0 0 0
<RECEIVABLES> 0 0 0 0
<ALLOWANCES> 0 0 0 0
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 10,343 1,253,319 0 1,924,473
<PP&E> 13,392 1,793,700 0 9,942,500
<DEPRECIATION> (302) (44,535) 0 (103,937)
<TOTAL-ASSETS> 23,433 44,332,960 0 91,428,979
<CURRENT-LIABILITIES> 123,026 4,158,802 0 32,543,804
<BONDS> 0 40,133,000 0 61,633,000
0 0 0 0
0 0 0 0
<COMMON> 1,807,273 7,730,915 0 8,589,437
<OTHER-SE> (1,906,866) (8,733,035) 0 (15,388,297)
<TOTAL-LIABILITY-AND-EQUITY> 23,433 44,332,960 0 91,428,979
<SALES> 0 0 0 0
<TOTAL-REVENUES> 0 0 0 0
<CGS> 0 0 0 0
<TOTAL-COSTS> 1,038,569 7,172,106 2,319,669 4,758,012
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 0 287,928 0 1,936,978
<INCOME-PRETAX> (1,038,569) (7,393,291) (2,294,822) (6,646,882)
<INCOME-TAX> 0 0 0 0
<INCOME-CONTINUING> 0 0 0 0
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (1,038,569) (7,393,291) (2,294,822) (6,646,882)
<EPS-PRIMARY> 0 0 0 0
<EPS-DILUTED> 0 0 0 0

</TABLE>