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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A


[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
        ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000.

                                       OR


[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
        EXCHANGE ACT OF 1934

                     FOR THE TRANSITION PERIOD FROM         TO

                        COMMISSION FILE NUMBER 000-23387

                                 TELIGENT, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


              DELAWARE                              54-1866562
  (STATE OR OTHER JURISDICTION OF       (I.R.S. EMPLOYER IDENTIFICATION NO.)
  INCORPORATION OR ORGANIZATION)

           8065 LEESBURG PIKE                         22182
               SUITE 400                           (ZIP CODE)
            VIENNA, VIRGINIA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (703) 762-5100

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                      NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                          11 1/2 % SENIOR NOTES DUE 2007
                     11 1/2 % SENIOR DISCOUNT NOTES DUE 2008
                 COMMON STOCK, CLASS A, PAR VALUE $.01 PER SHARE

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

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

      The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant was approximately $27 million on March 26,
2001, based on the closing sales price of the registrant's Class A Common Stock
as reported on The Nasdaq Stock Market as of such date.

      The number of shares outstanding of each of the registrant's classes of
common stock as of March 26, 2001 was as follows:

                        Common Stock, Class A 42,583,265
                        Common Stock, Class B 21,260,610

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      This Form 10-K/A is being filed in order to amend the Items set forth
below so as to respond to certain comments the Company received from the SEC on
its original Form 10-K for the year ended December 31, 2000 (the "Original
10-K"). In reviewing the Form 10-K/A and the Original 10-K, the reader should be
aware that since the filing of the Original 10-K the Company and all of its
domestic subsidiaries have filed voluntary bankruptcy petitions under Chapter 11
of the U.S. Bankruptcy Code (see the Company's Form 8-K dated May 21, 2001) and
there have been substantial changes in the Company's stock ownership, Board of
Directors and management. The information contained in the Form 10-K/A under
Part II, Item 7 (Management's Discussion and Analysis of Financial Condition and
Results of Operations) and 7A (Quantitative and Qualitative Disclosure About
Market Risk) have not been updated to reflect financial changes, including the
bankruptcy filings, since the filing of the Original 10-K. The information
contained under Part IV of the Form 10-K/A has been revised from that contained
in the Original 10-K only in that the financial statements contain a new note
regarding the bankruptcy filings and the Auditor's Report has been modified in
like thereof.

      Except for any historical information contained herein, the matters
discussed in this Form 10-K contain certain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 with respect
to the Company's financial condition, results of operation and business. The
words "anticipate," "believe," "estimate," "expect," "plan," "intend" and
similar expressions, as they relate to the Company, are intended to identify
forward-looking statements. Such statements reflect our current views with
respect to future events and involve known and unknown risks, uncertainties and
other factors. The Company cannot be sure that any of its expectations will be
realized.

      In this Annual Report on Form 10-K, we will refer to Teligent, Inc., a
Delaware corporation, and, as appropriate, its subsidiaries, as "Teligent," "the
Company," "we," "us," and "our." Where applicable, such references refer to
Teligent's limited liability company predecessor.

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

      Certain statements set forth below under this caption constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Please refer to page 3 of the Original 10-K for
additional factors relating to such statements.

GENERAL

      The following discussion and analysis is based on Teligent's financial
statements for the years ended December 31, 1998 through 2000 and should be read
together with the Financial Statements and related notes contained elsewhere in
this Annual Report on Form 10-K.

FACTORS AFFECTING FUTURE OPERATIONS

      The execution of our business plan has resulted in the rapid expansion of
our operations. This expansion of our operations, including our international
operations, has created operating losses and negative cash flow since our
inception, and may continue to place a significant strain on our management,
financial condition and other resources. Our ability to manage this expansion
effectively will depend upon, among other things, raising capital to pay
expenses, monitoring operations, controlling costs, maintaining regulatory
compliance, interconnecting successfully with the incumbent telephone companies,
maintaining effective quality controls, securing building access, significantly
expanding our internal management, technical, information and accounting systems
and attracting, assimilating and retaining qualified management and professional
and technical personnel. If we are unable to hire and retain senior management
and key staff, expand our facilities, purchase adequate supplies of equipment,
secure building access, increase the capacity of our information systems and/or
successfully manage and integrate such additional resources, customers could
experience delays in connection of service and/or lower levels of customer
service. Failure to meet the demands of customers and to manage the expansion of
our business and operations could have a material adverse effect on our
business, financial condition and results of operations.

      As of March 26, 2001, we had approximately $194 million of cash, cash
equivalents and short-term investments, which based on internal projections, is
expected to allow us to remain funded through the second quarter of 2001. Our

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credit facility, entered into on July 2, 1998, has been fully drawn down. Thus,
we need additional sources of funding to finance our operations starting in the
third quarter.

      We will require significant capital to, among other things, finance the
further development and expansion of our business and deployment of our
services, including purchasing and installing equipment, operating our network,
obtaining additional spectrum licenses, investing in our international expansion
and joint ventures, leasing office space, hiring and retaining employees,
funding operating losses and for working capital and debt service purposes.
Based on our current business plan, we expect to incur between $220 million and
$250 million in capital investments in the year 2001.

      As of March 26, 2001, we had outstanding $300 million aggregate principal
amount of 11.5% Senior Notes due 2007, $440 million aggregate principal amount
of 11.5% Senior Discount Notes due 2008, and $800 million under our existing
credit facility. These debt instruments impose significant operating and
financial restrictions on us, including certain limitations on our ability to
incur additional debt, pay dividends, redeem capital stock, sell assets, engage
in mergers and acquisitions or make investments, transact with affiliates, sell
stock of subsidiaries and place liens on our assets. In addition, our credit
facility contains certain covenants, including covenants regarding the
achievement of certain financing and performance targets and the maintenance of
certain financial ratios.

      We received a waiver of the fixed charge coverage ratio for the period
ending December 31, 2000 from the lenders as a part of an amendment and consent
to our existing credit facility. We were in compliance with all other debt
covenants of the existing credit facility as of December 31, 2000. Failure to
observe or perform one or more of the covenants at any given time will require
us to obtain a waiver or consent from the lenders, or refinance our credit
facility. Such a waiver, consent or refinancing may not be available to us on
reasonable terms. A breach of these covenants, ratios or restrictions in our
credit facility also could result in an event of default. Upon the occurrence of
an event of default under our credit facility, the lenders could elect to
declare all amounts outstanding under our credit facility, together with our
accrued interest, to be immediately due and payable. Our failure to comply with
any of these covenants or restrictions could also limit our ability to obtain
future financings.

   Revenues

      We offer an integrated package of local and long distance services,
value-added services, high-speed data connectivity and Internet access. We
market these services primarily to businesses within buildings on our network
that have been historically served by incumbent telephone companies. We seek to
attract these customers through a broad product offering, superior customer
service and attractive pricing. We anticipate that some of these incumbent
telephone companies may reduce their prices as increased competition begins to
reduce their market share.

   Cost of Services

      Certain costs are required to operate and maintain our networks,
including:


-     Real estate leases for switching centers, base station and customer
      buildings;


-     Preparation, installation, operation and maintenance of switching centers,
      base station sites and individual customer radio links, as well as
      equipment in customer buildings.;


-     Leasing of backhaul facilities between base station sites and switching
      centers.;


-     Leasing of capacity lines;


-     Network operations and data center facility expenses;


-     The cost to interconnect and terminate traffic with other network and
      internet service providers;


-     Software licensing fees; and


-     And network design and base station configuration planning.


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      Sales, General and Administrative Costs


      We incur costs related to the selling, marketing and promotion of our
      products and services. These costs primarily include headcount costs for
      our sales and other personnel, as well as advertising costs to develop
      brand awareness of the Teligent name.


      We also incur operating costs that are common to all telecommunications
      providers including customer service and technical support, information
      systems, billing and collections, general management and overhead expense,
      office leases, bad debt expense and administrative functions. Those areas
      that will require more personnel as our customer base grows, such as
      customer service, will increase gradually as customer demand increases.
      Other areas, particularly information and billing systems, have required
      significant up-front capital expenditures and operating costs.


      Capital Expenditures


      Our main capital expenditure requirements currently include the purchase
      and installation of equipment in customer buildings, base stations,
      network switches, switch electronics, optical fiber transport equipment,
      network operations center tools and systems, data centers equipment and
      information technology systems.

             Equipment in Customer Buildings. The purchase and installation of
      equipment in customer buildings is the largest single capital expense
      component in our business plan. These equipment costs include an
      integrated radio/antenna unit, modem(s), power supply, multiplexer and
      router equipment, DSL equipment, line interface cards, and cables and
      installation materials. Customers in the same building may share portions
      of this equipment, which reduces the capital expenditures required per
      customer. In the event a customer leaves us, our equipment can be used by
      other customers within the building or in other buildings, which reduces
      stranded assets.

             Base Station Site. A base station can serve customers within a
      coverage area of up to 360-degrees, subject to line-of-sight limitations.
      A base station typically comprises four to eight sectors, each of which
      cover a section of the service area depending on coverage and capacity
      requirements. Each sector requires one or more radio/antenna units and
      modems, depending on the system deployed. Construction costs per base
      station are typically higher than construction costs per building site. We
      expect that our sites will typically be built on top of buildings as
      opposed to located on towers. While a certain amount of equipment must
      initially be installed at each base station, the overall equipment cost
      will depend on the number of customers acquired. As more customers are
      loaded onto a given base station area, we will add additional sectors,
      radio antennas and modems to the initial base station equipment to meet
      customer demand.

             Base Station to Switch Transport. We transport traffic between our
      base stations and switching sites. To the extent we use wireless transport
      rather than leased fiber, we would incur capital expenditures as opposed
      to operating costs. We also plan to acquire and deploy equipment necessary
      to activate and use leased dark fiber.

                     Switching. Switching costs include traditional
      circuit-based switch modules, line cards for interfacing with the backhaul
      networks and with the networks of other carriers, packet-based routers,
      power systems, and environmental maintenance equipment.

                     Network Operations Center. Network operation center costs
      include investments in developing a command, control and communications
      center to monitor and manage our entire network infrastructure. Further
      costs include investments in applications and commercial hardware and
      software solutions customized for problem identification and network
      monitoring.

                     Data Centers. Data centers are specifically designed for
      the 24-hour a day routing of Internet traffic and hosting of Web sites and
      e-mail. Costs to develop data centers include investments in computer
      hardware and software, redundancy equipment, utilities and environmental
      controls, security systems, and broadband connectivity.

                     Information Technology. Costs to acquire, develop and
      enhance information technology systems will also require significant
      capital investment. Systems for billing, customer services, order entry
      and management, finance and network provisioning and monitoring, among
      others, have been or are under development or further enhancement.


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             COSTS OF OBTAINING ADDITIONAL SPECTRUM

                     Our existing spectrum has been obtained through means other
than competitive bidding procedures. In the future, additional spectrum may be
obtained in the United States and abroad through acquisitions and auctions.
Additionally, Teligent International, Ltd. has obtained spectrum in
international markets through an award process. Such awards are based on the
quality of the application and the capabilities of the applicants, relative to
the requirements of the regulatory bodies within a particular country.

             RESULTS OF OPERATIONS

             YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED
             DECEMBER 31, 1999

                     Teligent's revenues from communication services grew by
$120.8 million, or 386%, to $152.1 million during 2000, compared to $31.3
million during 1999. The increase in revenues is due to growth in our customer
base, revenue from acquisitions and expansion into new markets.

                     Revenue, exclusive of revenues from entities acquired
during 2000, increased by $80.3 million, or 257%, to $111.6 million for the year
ended December 31, 2000, compared to the corresponding prior year period. This
growth is due to an increase in customers served by a greater number of service
lines in existing market areas and expansion into new markets throughout 1999
and 2000. As of December 31, 2000, Teligent served approximately 35,500
customers, compared to approximately 15,000 customers at December 31, 1999.
Additionally, Teligent had approximately 490,000 lines in service, compared to
approximately 228,000 as of December 31, 1999. These lines may be provisioned
for local, long distance or data service or a combination thereof. Revenues from
entities acquired during 2000 totaled $40.5 million for the year ended December
31, 2000. Our revenues are comprised of the following (amounts in thousands):

<TABLE>
<CAPTION>
                                       YEAR ENDED DECEMBER 31,
                                       -----------------------
                                       2000              1999
                                       ----              ----
<S>                                 <C>              <C>
                  Local             $ 32,692         $   6,018
                  Long distance       73,203            19,491
                  Data and Other      46,177             5,795
                                    --------         ---------
                                    $152,072         $  31,304
                                    ========         =========
</TABLE>


      -     Local service revenues increased by $26.7 million, or 443%, for the
            year ended December 31, 2000, compared to the corresponding prior
            year period. This increase is due to a greater volume of customers
            ordering local service over an increased number of local service
            lines in our network. Customers ordering local service increased by
            165% to approximately 8,500 as of December 31, 2000, up from 3,200
            as of December 31, 1999. Total local lines increased by 306% to
            approximately 138,000 as of December 31, 2000, up from approximately
            34,000 as compared to the corresponding prior year period.


      -     Long distance service revenues increased by $53.7 million, or 276%,
            for the year ended December 31, 2000, compared to the corresponding
            prior year period. This increase is primarily due to additional
            customers ordering long distance service over our increased number
            of long distance service lines. Customers ordering long distance
            service increased by 141% to approximately 34,500 as of December 31,
            2000, up from 14,300 as of December 31, 1999. Total long distance
            service lines increased by 89% to approximately 413,000 as of
            December 31, 2000, up from approximately 219,000 as compared to the
            corresponding prior year period.


      -     Data and other service revenues increased by $40.4 million, or 697%,
            for the year ended December 31, 2000, compared to the corresponding
            prior year period. The increase is due to revenue from acquisitions
            and higher number of customers ordering data services over an
            increased number of data lines in our network.

      Cost of services, consisting primarily of telecommunications expenses,
operating personnel costs and site acquisition and rent expenses, increased by
$117.6 million, or 57%, to $325.1 million from $207.5 million for the year ended
December 31, 2000, as compared to the corresponding prior year period. This
increase is primarily due to the costs of provisioning higher volumes of
telecommunications and data traffic over our networks. Increases in personnel-
related costs, site rent and utility expenses and office rent related to our
expansion into new markets during 1999 and 2000 also contributed to the increase
in cost of services for these periods. Additionally, telecommunication costs
were reduced

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by $39.7 million for the year ended December 31, 2000 related to the resolution
of an outstanding liability with one of our vendors. The Company completed a
settlement with the vendor in September 2000 that resulted in the payment of
$17.3 million in interest to the vendor and reimbursement by the vendor to the
Company in the amount of $55 million. Of this amount, $39.7 million was for
equipment costs, telecommunication costs, and other network costs for multipoint
radio equipment that did not perform to design specifications. The $39.7 million
was recorded as a reduction of telecommunications costs which were incurred
prior to the completion of the equipment upgrades. The remaining $15.8 million
of the reimbursement from the vendor was applied against a receivable from the
vendor and towards a reserve for fixed assets associated with the assets to be
taken out of service.

      Sales, general and administrative expenses increased by $57.2 million, or
28%, to $262.8 million from $205.6 million for the year ended December 31, 2000,
as compared to the corresponding prior year period. This increase is primarily
attributable to the hiring of additional employees during the second half of
1999 and first half of 2000 to support the expansion of our business through
additional markets and services.

      Restructuring and asset impairment totaled $34.6 million for the year
ended December 31, 2000. One-time restructuring charges totaled $14.5 million
and include $6.8 million for severance and other compensation, $5.8 million for
net costs relating to lease terminations, and other costs of $1.9 million.
Severance and other compensation relates to the workforce reduction which
occurred in November 2000, and resulted in the termination of approximately 600
employees, primarily in the sales, real estate, and network operations areas. A
non-cash charge of $20.1 million was recorded to reflect the impairment of fixed
assets in markets in which we are planning to reduce services under the
restructuring plan. The asset impairment charge was calculated based on 100% of
the net book value of the assets located in these markets.

      Stock-based and other non-cash compensation expense decreased by $3.1
million, or 10%, to $28.4 million from $31.5 million for the year ended December
31, 2000, as compared to the corresponding prior year period. These expenses
relate to compensation earned by certain employees and executives at the time of
the initial public offering that are being recognized over specified vesting
periods. No additional grants have been made to these persons since the date of
the initial public offering.

      Depreciation and amortization increased by $87.8 million, or 192%, to
$133.5 million from $45.7 million, for the year ended December 31, 2000, as
compared to the corresponding prior year period. This increase is due to
significant capital expenditures made during 1999 and 2000 for property,
equipment and acquisitions. The Company also charged $31.1 million to
depreciation and amortization in 2000 for the write down of certain undeployed
assets, where it was determined that such assets would not be deployed.

      Interest income increased by $6.1 million, or 32%, to $25.0 million from
$18.9 million, for the year ended December 31, 2000, as compared to the
corresponding prior year period. This increase is due to higher average cash and
cash equivalent balances in 2000 resulting from the proceeds received from the
November 1999 Series A Preferred Stock and April 2000 Class A common stock
offerings, draw downs made on the credit facility and higher average interest
rates during 2000.

      Interest expense increased by $45.0 million, or 51%, to $133.3 million
from $88.3 million, for the year ended December 31, 2000, as compared to the
corresponding prior year period. The increase is due to higher long-term debt
balances. Additionally, the Company recorded $17.3 million in interest expense
during the third quarter of 2000 related to the resolution of an outstanding
liability with one of our vendors.

      Equity in losses of international ventures totaled $6.6 million for the
year ended December 31, 2000. These losses are the Company's share of losses
incurred on its investments in international ventures.

      Other expense increased by $60.3 million to $60.8 million from $500,000
for the year ended December 31, 2000, as compared to the corresponding prior
year period. This increase is due to a $61.6 million loss on the write down of
available-for-sale securities to their fair value.

   YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

      We generated revenues of $31.3 million from communication services during
1999, compared to $1.0 million during 1998. The increase in revenues is
reflective of, among other things, the growth in our customer base, continued
expansion into new market areas during 1999 and revenue attributable to
acquisitions.

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      Cost of services, consisting primarily of personnel-related costs,
telecommunications expenses and site rent and site acquisition expenses related
to network operations, totaled $207.5 million for 1999, compared to $79.3
million in 1998. This increase reflects the growth and development of our
network operations to serve 40 major market areas and the increased number of
employees from 1998 to 1999.

      Sales, general and administrative expenses, consisting primarily of
personnel-related costs, were $205.6 million for 1999, compared to $124.0
million in 1998. This increase primarily results from higher compensation and
other personnel costs incurred during 1999 due to the increased number of
employees required to drive our growth.

      Stock-based and other non-cash compensation expense was $31.5 million in
1999, compared to $32.2 million in 1998.

      Depreciation and amortization for 1999 was $45.7 million, compared to
$14.2 million in 1998. The increase is due to higher capital expenditures in
1999 and the amortization of goodwill associated with acquisitions.

      Interest income for 1999 was $18.9 million, compared to $34.5 million in
1998. The decrease is due to lower average cash and cash equivalent balances.

      Interest expense was $88.3 million in 1999, compared to $66.9 million in
1998. The increase is due to higher long- term debt balances resulting from
borrowings made against the credit facility during 1999 and the amortization of
credit facility fees and interest incurred on the 11 1/2% Senior Discount Notes.

      Other expense was $500,000 in 1999, compared to $400,000 in 1998. These
amounts are due to losses from the disposal of property and equipment.

LIQUIDITY AND CAPITAL RESOURCES

      We have approximately $194 million of cash, cash equivalents and
short-term investments as of March 26, 2001. Based on our internal projections,
we expect this amount will allow us to remain funded through the second quarter
of 2001. Our credit facility, entered into on July 2, 1998, has been fully drawn
down. Thus, we need additional sources of funding to finance our operations
starting in the third quarter. In addition, in order to develop our business, we
will need a significant amount of money to pay for equipment, meet our debt
obligations, operate our business on a day-to- day basis and contribute
additional capital to our international ventures. Our principal
equipment-related needs include the purchase and installation of equipment in
customer buildings, base stations, network switches and switch electronics,
network operations and data center expenditures and information systems,
platforms and interfaces. We are exploring a variety of alternatives that may
provide the necessary financing, including equity, debt and vendor financing.

      We plan to supplement these funds with proceeds, if available, of up to
$250 million in connection with a stock purchase agreement dated December 7,
2000. (See "Liquidity and Capital Resources--Stock Purchase Agreement") Were we
to gain access to all $250 million in 2001, our projections indicate that we
would be funded through 2001. These projections may be materially different than
the actual timing and amount of money required for the development of our
business and to fund net operating expenses. The stock purchase agreement is
contingent upon certain conditions that we currently do not meet, and there can
be no assurance that we will be able to obtain all or any part of the $250
million equity financing, when such financing will be available or that we will
be able to obtain any other additional financing on terms acceptable to us.

      On February 15, 2001, we announced a workforce reduction associated with
the continuing efforts to realign our sales operations. As a result of this
reduction, we terminated 172 employees company-wide and expect to record a
charge of approximately $600,000 in the quarter ended March 31, 2001. We will
continue to evaluate our capital requirements as it relates to personnel-related
expenses. We are managing operations with reduced headcount-related and other
operating expenses and monitoring our on-going capital requirements.

   Credit facility and vendor financing

      On July 2, 1998, we entered into a credit agreement, as subsequently
amended, with The Chase Manhattan Bank, Goldman Sachs Credit Partners, and
Toronto Dominion Bank, and other lenders, providing for credit facility up to an
aggregate of $800 million. Our obligations under the credit agreement are
secured by substantially all our assets and

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certain of our subsidiaries' assets. As of December 31, 2000, we had issued a
notice to draw the remaining available balance under our credit facility, which
amount was fully funded in January 2001.

      The credit agreement contains certain financial and other covenants that
restrict, among other things, our ability to incur or create additional debt,
enter into mergers or consolidations, dispose of a significant amount of assets,
pay cash dividends, or change the nature of our business. We will also be
subject to certain negative covenants, including covenants regarding the
achievement of certain performance targets and the maintenance of certain
financial ratios. In addition, the amounts outstanding under the credit facility
are subject to mandatory prepayments in certain circumstances.

      We executed an amendment and consent to the credit agreement subsequent to
December 31, 2000. Pursuant to the amendment, the interest rates applicable to
borrowings under the facility were increased. The amendment also increased the
maximum aggregate principal amount under the optional term loan tranche of the
facilities from $400 million to $600 million, of which $350 million can be
utilized as vendor loans. The optional term loan tranche is not a binding
commitment of the lenders, rather it provides a vehicle for any of the lenders
to loan us additional funds under the credit facility.

      The amendment also changed several of the covenants applicable to us. Any
default under the consolidated fixed charge coverage ratio for the fourth
quarter of 2000 was waived and the test was suspended for the first quarter of
2001. The amendment requires us to maintain substantially all of our cash and
cash equivalents in a collateral and securities account with a lender bank and
the remainder of our funds in a separate operating account. The amendment also
contains a waiver that permitted the explanatory paragraph included in our
auditor's opinion for the year ended December 31, 2000.

      As part of the amendment, we are required to deliver definitive
documentation with respect to vendor financing (in an aggregate amount of at
least $250 million) and convertible notes (in an aggregate amount of at least
$100 million), no later than April 30, 2001. We are attempting to secure vendor
financing in the amount of $250 million. If we do not meet the April 30, 2001
deadline described above, we will be in default under our credit facility unless
we receive a waiver. There can be no assurance that we will execute either the
vendor financing or convertible notes by such date or at all. In addition, the
Company has a new financial covenant that requires compliance effective June 30,
2001 for which there can be no assurance.

   Stock Purchase Agreement

      On December 7, 2000, we entered into a stock purchase agreement with RGC
International Investors, LDC, or RGC, as a private placement pursuant to Section
4(2) of the Securities Act of 1933. Pursuant to the purchase agreement, we may,
subject to satisfying certain conditions, at our sole discretion during the 18
months from effectiveness of the resale registration statement, require RGC to
purchase up to $250 million of our Class A common stock in a series of draw
downs. Additionally, we issued 4,972,370 warrants to RGC to purchase an equal
number of shares of our Class A common stock at an exercise price of $3.62 per
share. Warrants to purchase 3,729,278 shares vested on December 7, 2000. The
remaining 1,243,092 warrants will vest pro rata with each tranche purchased
after we have drawn down a total of $150 million.

   A draw down is initiated upon our delivery of a draw down notice that will
include a draw down amount and a minimum price at which we are willing to issue
stock to RGC. The number of shares to be purchased by RGC for each tranche will
be based upon the volume-weighted average trading price, or VWAP, of the shares
for each of the nine business days following the receipt of a draw down notice.
If, on any given date, the maximum permitted draw down amount is less than $1
million, or if the VWAP is at or below $2 per share for the preceding trading
day, we may not deliver a draw down notice. If the VWAP is at or below $2 per
share on any day during a draw down period, the total amount of the draw down
will be reduced by the percentage of the draw down amount attributable to that
particular day.

   RGC may sell the shares of Class A common stock purchased under the purchase
agreement, including upon exercise of the warrants, from time to time on the
principal exchange or market upon which our common stock is then listed or in
negotiated transactions at prices determined at the time of sale. However,
pursuant to the terms of the purchase agreement and warrants, we may not give
notice of a draw down and RGC may not exercise warrants if doing so would result
in RGC's ownership of greater than 9.9% of our Class A common stock. Further, we
may not issue 20% or more of our common stock as of December 7, 2000, or 20% or
more of our voting power outstanding as of December 7, 2000, without shareholder
approval.

                                        8

<PAGE>   9

   The purchase agreement is contingent upon certain conditions, including a
minimum trading price of $2.00 per share for our common stock at the time of
draw down, limits on the amount that can be drawn down based on trading price
and trading volume of our common stock, and the listing of our common stock on a
principal trading exchange or market such as the Nasdaq National Market or the
Nasdaq SmallCap Market. We may not be able to obtain all or any part of the $250
million equity financing unless the price and volume of our common stock
increase significantly and we may not be able to obtain any other additional
financing on terms acceptable to us.

   Convertible Notes

      We are currently in negotiations for the issuance of convertible notes.
Although we have not entered into a definitive agreement, and can provide no
assurance that we will reach such an agreement, we expect that any such notes
will be conditioned on completion of the vendor financing discussed above.
Definitive documentation for the issuance of up to $100 million of convertible
notes must be completed as of April 30, 2001, as a condition to our credit
facility, as amended. If we do not enter into a definitive agreement by that
date, we will be in default under the credit facility unless we receive a
waiver.

   Historical Cash Flows and Working Capital

      For the year ended December 31, 2000 we used cash in operations of $669.1
million, due primarily to the operating loss for the period, partially offset by
depreciation and amortization, loss recognized on the write-down of
available-for- sale securities, stock based and other non-cash compensation,
asset impairment charges recorded during the year and other charges. We used
cash in operations of $313.4 million for the year ended December 31, 1999, due
primarily to the operating loss for the period reduced by depreciation and
amortization, non-cash stock-based compensation and an increase in current
liabilities.

      We used $296.4 million of cash in investing activities in 2000 relating to
the purchase of property and equipment, advances to international ventures and
cash paid for acquisitions, partially offset by the use of restricted cash for
interest payments and net maturities of short-term investments. In 1999, we used
cash in investing activities of $354.8 million, consisting primarily of the
purchase of property and equipment and net purchases of short-term investments,
partially offset by the use of restricted cash for interest payments.

      Cash flows provided by financing activities amounted to $785.8 million in
2000, consisting primarily of the draw-down of our credit facility and net
proceeds from the issuance of common stock. For 1999, cash flows provided by
financing activities amounted to $692.2 million, consisting primarily of net
proceeds from the issuance of preferred stock and a $200 million draw-down of
our credit facility.

      At December 31, 2000, we had working capital of $249.8 million including
unrestricted cash (including cash equivalents and short-term investments) of
$357.2 million, compared to working capital of $342.7 million and cash of $556.9
million at December 31, 1999. The decrease in working capital is primarily a
result of the use of cash and cash equivalents to cover our operating
expenditures and purchase property and equipment. We will need a significant
amount of cash to continue to build our networks, market our services and cover
operating expenditures.

      Our total assets increased to $1,209.5 million at December 31, 2000, from
$1,131.8 million as of December 31, 1999, due primarily to the purchase of
property and equipment, acquired companies and investments in and advances to
international ventures, partially offset by a decrease in current assets.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

      We have certain exposure to financial market risks, including changes in
interest rates and other relevant market prices. Specifically, an increase or
decrease in interest rates would affect interest costs relating to our credit
facility. At December 31, 2000, we had an outstanding loan balance of $789.7
million under the credit facility. $575.0 million incurs interest at a floating
rate tied to a LIBOR or an alternate base rate and the remaining $214.7 million
incurs interest at a fixed rate of 11.125% per annum. If the interest rate
increased by 1%, then interest expense would increase by approximately $5.8
million. The outstanding balance under the credit facility that incurs interest
at a floating rate represents approximately 40% of our outstanding long-term
debt.

                                        9

<PAGE>   10

      Changes in interest rates do not have a direct impact on interest expense
relating to our remaining fixed rate long-term debt, although the fair market
value of our fixed rate debt is sensitive to changes in interest rates. If
market rates declined, our interest payments could exceed those based on the
current market rate. We currently do not use interest rate derivative
instruments to manage our exposure to interest rate changes, but may do so in
the future.

      We also maintain securities with an original maturity of greater than 90
days, but less than one year. These securities are classified as "available for
sale." An immediate increase or decrease in interest rates could have a material
impact on the fair value of these financial instruments or on our short-term
investment portfolio. Based on the fact that the investments are short-term and
are in government securities and/or high-grade corporate debt, no material
interest rate exposure exists as of December 31, 2000.

PART IV

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

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

      (1) FINANCIAL STATEMENTS

            Consolidated Balance Sheets as of December 31, 2000 and 1999.
            Consolidated Statements of Operations for the years ended December
            31, 2000, 1999 and 1998.
            Consolidated Statements of Stockholders' (Deficit) Equity for the
            years ended December 31, 2000, 1999 and 1998.
            Consolidated Statements of Cash Flows for the years ended December
            31, 2000, 1999, and 1998.
            Notes to Consolidated Financial Statements.

      (2) FINANCIAL STATEMENT SCHEDULES

          SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

            All other schedules are omitted because they are not applicable or
            not required or because the required information is incorporated
            herein by reference or included in the financial statements or
            related notes included elsewhere in this report.

      (b) REPORTS ON FORM 8-K.

<TABLE>
<CAPTION>
                                                           Item
           Date of Report                                Reported                 Financial Statements Filed
           --------------                                --------                 --------------------------

<S>                                             <C>                              <C>
           October 4, 2000                               Item 5 -                         None
                                                      Other Events;
                                                    Financial Statements
                                                    Pro Forma Financial
                                                 Information and Exhibits

           December 21, 2000                             Item 5 -                         None
                                                      Other Events;
                                                    Financial Statements
                                                    Pro Forma Financial
                                                 Information and Exhibits
</TABLE>

      (c) EXHIBITS. The following exhibits are filed as a part of this Annual
          Report on Form 10-K:


3.1      Form of Certificate of Incorporation of Registrant, filed as Exhibit
         3.1 to the Company's Registration Statement on Form S-1 (Registration
         No. 333-37381), dated November 26, 1997, and incorporated herein by
         reference.

3.2      Form of By-laws of Registrant, filed as Exhibit 3.2 to the Company's
         Registration Statement on Form S-1 (Registration No. 333-37381), dated
         November 26, 1997, and incorporated herein by reference.



                                       10
<PAGE>   11

3.3      Certificate of Designation of the Powers, Preferences and Relative,
         Participating, Optional and other Special Rights of 7 3/4% Cumulative
         Convertible Preferred Stock and Qualifications, Limitations and
         Restrictions Thereof, filed as Exhibit 10.4 to the Company's Current
         Report on Form 8-K, dated January 18, 2000, and incorporated herein by
         reference.

4.1      Form of Stockholders Agreement, filed as Exhibit 4.1 to the Company's
         Registration Statement on Form S-1 (Registration No. 333-37381), dated
         November 26, 1997, and incorporated herein by reference.

4.2      Form of Indenture between the Registrant, as issuer, and First Union
         National Bank, as Trustee, relating to Registrant's Senior Notes due
         2007, including form of Note, filed as Exhibit 4.2 to the Company's
         Registration Statement on Form S-1 (Registration No. 333-37381), dated
         November 26, 1997, and incorporated herein by reference.

4.3      Form of Pledge Agreement between Registrant, as issuer, and First Union
         National Bank, as Escrow Agent, relating to Registrant's Senior Notes
         due 2007, filed as Exhibit 4.3 to the Company's Registration Statement
         on Form S-1 (Registration No. 333-37381), dated November 26, 1997, and
         incorporated herein by reference.

4.4      Form of Indenture between the Registrant, as issuer, and First Union
         National Bank, as Trustee, relating to Registrant's Senior Discount
         Notes due 2008, including form of Note, filed as Exhibit 4.4 to the
         Company's Annual Report on Form 10-K filed with the Commission on March
         31, 1998, and incorporated herein by reference.

4.5      Form of Certificate for the Class A common stock, filed as Exhibit 4.4
         to the Company's Registration Statement on Form S-1 (Registration No.
         333-37381), dated November 26, 1997, and incorporated herein by
         reference.

4.6      Stockholders Agreement, dated as of January 13, 2000, by and among Alex
         J. Mandl, Liberty Media Corporation, Telcom--DTS Investors, L.L.C., and
         Microwave Services, Inc., filed as Exhibit 10.1 to the Company's
         Current Report on Form 8-K, dated January 18, 2000, and incorporated
         herein by reference.

4.7      Stock Purchase Warrant, dated as of December 7, 2000, by the registrant
         in favor of RGC International Investors, LDC, filed as Exhibit 10.3 to
         the Company's Current Report on Form 8-K, dated December 21, 2000, and
         incorporated herein by reference.

10.1     Employment Agreement, dated August 19, 1996, between Associated
         Communications, L.L.C. and Alex J. Mandl, filed as Exhibit 10.1 to the
         Company's Registration Statement on Form S-1 (Registration No.
         333-37381), dated November 26, 1997, and incorporated herein by
         reference.

10.2     Stock Contribution Agreement, dated as of March 10, 1997, among
         Associated Communications, L.L.C., FirstMark Communications, Inc. and
         Lynn Forester, filed as Exhibit 10.2 to the Company's Registration
         Statement on Form S-1 (Registration No. 333-37381), dated November 26,
         1997, and incorporated herein by reference.

10.3     Securities Purchase Agreement, dated as of September 30, 1997, by and
         among Teligent, L.L.C., Microwave Services, Inc., Digital Services
         Corporation, and Nippon Telegraph and Telephone Corporation, filed as
         Exhibit 10.3 to the Company's Registration Statement on Form S-1
         (Registration No. 333-37381), dated November 26, 1997, and incorporated
         herein by reference.

10.4     Form of Registration Rights Agreement, by and among Teligent, L.L.C.
         and Nippon Telegraph and Telephone Corporation, filed as Exhibit 10.4
         to the Company's Registration Statement on Form S-1 (Registration No.
         333-37381), dated November 26, 1997, and incorporated herein by
         reference.

10.5     Form of Technical Services Agreement, by and among Teligent, L.L.C. and
         NTT America, Inc., filed as Exhibit 10.5 to the Company's Registration
         Statement on Form S-1 (Registration No. 333-37381), dated November 26,
         1997, and incorporated herein by reference.

10.6     Agreement, dated September 29, 1997, among Teligent, L.L.C., Digital
         Services Corporation, Telcom-DTS Investors, L.L.C., Microwave
         Services, Inc., The Associated Group, Inc. and certain other parties,
         filed as Exhibit 10.6 to the Company's Registration Statement on Form
         S-1 (Registration No. 333-37381), dated November 26, 1997, and
         incorporated herein by reference.

10.7     Agreement and Plan of Merger, dated as of October 6, 1997, by and
         between Teligent, Inc. and Teligent, L.L.C., filed as Exhibit 10.7 to
         the Company's Registration Statement on Form S-1 (Registration No.
         333-37381), dated November 26, 1997, and incorporated herein by
         reference.

10.8     Form of Lease Agreement, dated as of July 22, 1997, for the 8065
         Leesburg Pike, Vienna, Virginia office space lease between NHP
         Incorporated and Teligent, L.L.C., filed as Exhibit 10.8 to the
         Company's Registration Statement on Form S-1 (Registration No.
         333-37381), dated November 26, 1997, and incorporated herein by
         reference.

10.9     Form of Teligent, Inc. 1997 Stock Incentive Plan, as amended and
         restated, filed as Exhibit 4.4 to the



                                       11
<PAGE>   12

         Company's Registration Statement on Form S-8 (Registration No.
         333-93241), dated December 31, 1999, and incorporated herein by
         reference.

10.10    Network Products Purchase Agreement, dated December 11, 1997, by and
         between Northern Telcom Inc. and Teligent, Inc., filed as Exhibit 10.10
         to the Company's Annual Report on Form 10-K filed with the Commission
         on March 31, 1997, and incorporated herein by reference. [Confidential
         treatment has been granted for portions of this document].

10.11    Credit Agreement, dated July 2, 1998 among Teligent, Inc., several
         banks and other financial institutions or entities, Chase Securities,
         Inc., Goldman Sachs Credit Partners L.P. and TD Securities (USA) Inc.,
         as advisers and arrangers, Goldman Sachs Credit Partners L.P., as
         syndication agent, The Chase Manhattan Bank, as administrative agent
         and Toronto Dominion (Texas), Inc. as documentation agent. Filed as
         Exhibit 10 to the Company's Form 8-K, filed on August 13, 1998, and
         incorporated herein by reference. [Confidential treatment has been
         granted for portions of this document].

10.12    Promissory Note, dated February 1, 1997, by Kirby G. Pickle, Jr. to
         Associated Communications, L.L.C., filed as Exhibit 10.10 to the
         Company's Registration Statement (Registration No. 333-37381), dated
         November 26, 1997, and incorporated herein by reference.

10.13    Promissory Notes, each dated October 29, 1997, by Abraham L. Morris to
         Teligent, L.L.C., filed as Exhibit 10.11 to the Company's Registration
         Statement on Form S-1 (Registration No. 333-37381), dated November 26,
         1997, and incorporated herein by reference.

10.14    Promissory Note, dated August 5, 1997, by Laurence E. Harris to
         Associated Communications, L.L.C., filed as Exhibit 10.12 to the
         Company's Registration Statement on Form S-1 (Registration No.
         333-37381), dated November 26, 1997, and incorporated herein by
         reference.

10.15    Promissory Note, dated April 7, 1997, by Steven F. Bell to Associated
         Communications, L.L.C., filed as Exhibit 10.14 to the Company's
         Registration Statement on Form S-1 (Registration No. 333-37381), dated
         November 26, 1997, and incorporated herein by reference.

10.16    Registration rights agreement, dated as of March 6, 1998, by and
         between Teligent, Inc., and Microwave Services, Inc., filed as Exhibit
         10.16 to the Company's Annual Report on Form 10-K, filed with the
         Commission on March 31, 1998, and incorporated herein by reference.

10.17    Registration rights agreement, dated as of February 20, 1998, by and
         between Teligent, Inc. and Merrill Lynch, Pierce, Fenner & Smith
         Incorporated ("Merrill Lynch"), Goldman Sachs & Co., Salomon Brothers
         Inc., and TD Securities (USA) Inc., filed as Exhibit 10.17 to the
         Company's Annual Report on Form 10-K, filed with the Commission on
         March 31, 1998, and incorporated herein by reference.

10.18    Equipment Purchase Definitive Agreement, dated December 18, 1998, by
         and between Teligent, Inc. and Hughes Network Systems, filed as Exhibit
         10 to the Company's Current Report on Form 8-K, filed with the
         Commission on April 19, 1999, and incorporated herein by reference.
         [Confidential treatment has been granted for portions of this
         document].

10.19    Teligent, Inc. 1999 Employee Stock Purchase Plan, filed as Exhibit 4.5
         to the Company's Registration Statement on Form S-8 (Registration No.
         333-93241), dated December 21, 1999, and incorporated herein by
         reference.

10.20    Stock Purchase Agreement, dated as of November 4, 1999, between the
         Issuer and the Purchasers (as defined in the Stock Purchase Agreement)
         named on Schedule I thereto, relating to the purchase and sale of
         7 3/4% Series A Convertible Preferred Stock of Teligent, Inc, filed as
         Exhibit 10.2 to the Company's Current Report on Form 8-K, dated
         January 18, 2000, and incorporated herein by reference.

10.21    Registration Rights Agreement, dated as of November 4, 1999, between
         the Issuer and each of the Initial Holders (as defined in the
         Registration Rights Agreement), filed as Exhibit 10.3 to the Company's
         Current Report on Form 8-K, dated January 18, 2000, and incorporated
         herein by reference.

10.22    Common Stock Purchase Agreement, dated as of December 7, 2000, by and
         between the registrant and RGC International Investors, LDC, filed as
         Exhibit 10.1 to the Company's Current Report on Form 8-K, dated
         December 21, 2000, and incorporated herein by reference

10.23    Registration Rights Agreement, dated as of December 7, 2000, by and
         among the registrant and RGC International Investors, LDC, filed as
         Exhibit 10.2 to the Company's Current Report on Form 8-K, dated
         December 21, 2000, and incorporated herein by reference.

10.24    Agreement, dated as of May 9, 2000, by and between Level 3
         Communications, LLC and Teligent Services, Inc., as amended, filed as
         Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with
         the Commission on November 14, 2000, and incorporated herein by
         reference. [Portions of the document have been omitted pursuant to a
         request for confidential treatment requested through November 1, 2005.]

10.25    Amendment and Consent, dated as of March 30, 2001, to the Credit
         Agreement, dated as of July 2, 1998,



                                       12
<PAGE>   13
         among Teligent, Inc., lenders from time to time parties thereto,
         Goldman Sachs Credit Partners L.P., as syndication agent, Toronto
         Dominion (Texas), Inc., as documentation agent, and The Chase Manhattan
         Bank, as administrative agent, filed as Exhibit 10.25 to the Company's
         Annual Report on Form 10-K, dated March 30, 2001, and incorporated
         herein by reference. [Portions of the document have been omitted
         pursuant to a request for confidential treatment requested through
         March 30, 2006].

12.1     Statement regarding computation of ratios, filed as Exhibit 12.1 to the
         Company's Annual Report on Form 10-K, dated March 30, 2001, and
         incorporated herein by reference.

12.2     Statement regarding computation of ratios, filed as Exhibit 12.2 to the
         Company's Annual Report on Form 10-K, dated March 30, 2001, and
         incorporated herein by reference.

21.1     Significant Subsidiaries of the Registrant, filed as Exhibit 21.1 to
         the Company's Annual Report on Form 10-K, dated March 30, 2001, and
         incorporated herein by reference.

23.1     Consent of Independent Auditors dated May 21, 2001.

99.1     Press release of Teligent, Inc. dated February 28, 2001, filed as
         Exhibit 99.1 to the Company's Annual Report on Form 10-K, dated March
         30, 2001, and incorporated herein by reference.



                                       13
<PAGE>   14

                                   SIGNATURES

      PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.



                                        TELIGENT, INC.

                                       (Registrant)


Date: May 23, 2001                     By:  /s/ YOAV KRILL
                                            ------------------------------------
                                            Yoav Krill
                                                Chief Executive Officer,
                                                President and Director
                                                (Principal Executive Officer)



                                       14
<PAGE>   15

                                 TELIGENT, INC.

                          INDEX TO FINANCIAL STATEMENTS



<TABLE>
<CAPTION>
                                                                                                                               PAGE
                                                                                                                              NUMBER
<S>                                                                                                                     <C>
    Report of Ernst & Young LLP, Independent Auditors..............................................................            F-2
    Consolidated Balance Sheets as of December 31, 2000 and December 31, 1999......................................            F-3
    Consolidated Statements of Operations for the years ended December 31, 2000, 1999
    and 1998.......................................................................................................            F-4
    Consolidated Statement of Stockholders (Deficit) Equity for the years ended
    December 31, 2000, 1999 and 1998...............................................................................            F-5
    Consolidated Statements of Cash Flows for the years ended December 31, 2000,
    1999 and 1998..................................................................................................            F-6
    Notes to Consolidated Financial Statements.....................................................................            F-7
</TABLE>


                                       F-1

<PAGE>   16
                         Report of Independent Auditors




The Board of Directors and Stockholders

Teligent, Inc.

We have audited the accompanying consolidated balance sheets of Teligent, Inc.
as of December 31, 2000 and 1999, and the related consolidated statements of
operations, shareholders' (deficit) equity, and cash flows for each of the three
years in the period ended December 31, 2000. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Teligent, Inc. at
December 31, 2000 and 1999, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31,
2000, in conformity with accounting principles generally accepted in the United
States. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

The accompanying financial statements have been prepared assuming that Teligent,
Inc. will continue as a going concern. As more fully described in Note 1, the
Company has incurred recurring operating losses and has a substantial need for
working capital. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.

                                                   /s/ Ernst & Young LLP

McLean, Virginia
February 23, 2001




                                       F-2

<PAGE>   17
                                 TELIGENT, INC.

                           CONSOLIDATED BALANCE SHEETS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                         DECEMBER 31,
                                                                                --------------------------------------------------
                                                                                                 2000                 1999
                                                                                ---------------------         --------------------
<S>                                                                               <C>                          <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS                                                                 $   260,555                  $   440,293
SHORT-TERM INVESTMENTS                                                                         96,635                      116,610
ACCOUNTS RECEIVABLE, NET                                                                       37,267                       12,673
PREPAID EXPENSES AND OTHER CURRENT ASSETS                                                      28,394                       17,914
RESTRICTED CASH AND OTHER INVESTMENTS                                                           5,374                       38,224
                                                                                ---------------------         --------------------
      TOTAL CURRENT ASSETS                                                                    428,225                      625,714

PROPERTY AND EQUIPMENT, NET                                                                   560,534                      402,989
INTANGIBLE ASSETS, NET                                                                        187,976                       96,418
INVESTMENTS IN AND ADVANCES TO INTERNATIONAL VENTURES
AND OTHER ASSETS                                                                               32,741                        6,722
                                                                                ---------------------         --------------------

      TOTAL ASSETS                                                                        $ 1,209,476                  $ 1,131,843
                                                                                =====================         ====================

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
ACCOUNTS PAYABLE                                                                          $   107,410                  $   239,139
ACCRUED EXPENSES AND OTHER                                                                     71,065                       43,869
                                                                                ---------------------         --------------------
      TOTAL CURRENT LIABILITIES                                                               178,475                      283,008

LONG-TERM DEBT                                                                              1,435,070                      808,799
OTHER NONCURRENT LIABILITIES                                                                   35,858                        3,165

SERIES A CUMULATIVE CONVERTIBLE REDEEMABLE
PREFERRED STOCK                                                                               520,658                      478,788

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT:
COMMON STOCK                                                                                      637                          547
ADDITIONAL PAID-IN CAPITAL                                                                    808,835                      519,607
ACCUMULATED DEFICIT                                                                        (1,770,057)                    (962,071)
                                                                                ---------------------         --------------------
      TOTAL STOCKHOLDERS' DEFICIT                                                            (960,585)                    (441,917)
                                                                                ---------------------         --------------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $ 1,209,476                  $ 1,131,843
                                                                                =====================         ====================
</TABLE>

                See notes to consolidated financial statements



                                       F-3
<PAGE>   18
                                 TELIGENT, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



<TABLE>
<CAPTION>
                                                                                     YEARS ENDED DECEMBER 31,
                                                               ---------------------------------------------------------------------
                                                                       2000                   1999                      1998
                                                               --------------------   --------------------      --------------------
<S>                                                              <C>                   <C>                     <C>
REVENUES:
COMMUNICATION SERVICES                                               $     152,072          $      31,304          $            960

COSTS AND EXPENSES:
COST OF SERVICES                                                           325,119                207,538                    79,342
SALES, GENERAL AND ADMINISTRATIVE                                          262,806                205,589                   123,958
RESTRUCTURING AND ASSET IMPAIRMENT                                          34,585                      -                         -
STOCK-BASED AND OTHER NONCASH COMPENSATION                                  28,377                 31,451                    32,164
DEPRECIATION AND AMORTIZATION                                              133,544                 45,742                    14,193
                                                               --------------------   --------------------      --------------------
      TOTAL COSTS AND EXPENSES                                             784,431                490,320                   249,657
                                                               ====================   ====================      ====================

LOSS FROM OPERATIONS                                                      (632,359)              (459,016)                 (248,697)
INTEREST INCOME                                                             25,052                 18,933                    34,510
INTEREST EXPENSE                                                          (133,286)               (88,347)                  (66,880)
EQUITY IN LOSSES OF INTERNATIONAL VENTURES                                  (6,605)                     -                         -
OTHER EXPENSE                                                              (60,788)                  (483)                     (404)
                                                               --------------------   --------------------      --------------------
NET LOSS                                                                  (807,986)              (528,913)                 (281,471)

ACCRUED PREFERRED STOCK DIVIDENDS AND
AMORTIZATION OF ISSUANCE COSTS                                             (41,870)                (2,906)                        -
                                                               --------------------   --------------------      --------------------
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS                           $    (849,856)         $    (531,819)         $       (281,471)
                                                               ====================   ====================      ====================
BASIC AND DILUTED NET LOSS PER COMMON SHARE                          $      (14.19)         $       (9.95)         $          (5.35)
                                                               ====================   ====================      ====================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                  59,897                 53,423                    52,597
                                                               ====================   ====================      ====================
</TABLE>

                See notes to consolidated financial statements

                                       F-4
<PAGE>   19

                                 TELIGENT, INC.
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                       ADDITIONAL
                                                    COMMON                PAID-IN        ACCUMULATED
                                                     STOCK         CAPITAL                 DEFICIT                  TOTAL
                                          ----------------  ---------------------  -----------------------   --------------------

<S>                                              <C>                 <C>                   <C>                       <C>
BALANCE AT JANUARY 1, 1998                       $     526           $    436,307          $      (151,687)          $    285,146

STOCK-BASED COMPENSATION                                 -                 27,006                        -                 27,006
EXERCISE OF STOCK OPTIONS                                -                    372                        -                    372
NET LOSS                                                 -                      -                 (281,471)              (281,471)
                                          ----------------  ---------------------  -----------------------   --------------------
   BALANCE AT DECEMBER 31, 1998                        526                463,685                 (433,158)                31,053
                                          ----------------  ---------------------  -----------------------   --------------------

STOCK-BASED COMPENSATION                                 -                 26,094                        -                 26,094
EXERCISE OF STOCK OPTIONS                               18                 17,042                        -                 17,060
ISSUANCE OF COMMON STOCK FOR                             3                 15,692                        -                 15,695
ACQUISITIONS

ACCRUED PREFERRED STOCK DIVIDENDS AND                    -                 (2,906)                       -                 (2,906)
  AMORTIZATION OF ISSUANCE COSTS
NET LOSS                                                 -                      -                 (528,913)              (528,913)
                                          ----------------  ---------------------  -----------------------   --------------------
   BALANCE AT DECEMBER 31, 1999                        547                519,607                 (962,071)              (441,917)
                                          ----------------  ---------------------  -----------------------   --------------------

ISSUANCE OF COMMON STOCK                                40                188,332                        -                188,372
ISSUANCE OF COMMON STOCK IN ICG                         10                 61,973                        -                 61,983
TRANSACTION
ISSUANCE OF COMMON STOCK FOR                            28                 47,197                        -                 47,225
ACQUISITIONS
ACCRUED PREFERRED STOCK DIVIDENDS AND                    -                (41,870)                       -                (41,870)
   AMORTIZATION OF ISSUANCE COSTS
STOCK-BASED COMPENSATION                                 -                 21,929                        -                 21,929
EXERCISE OF STOCK OPTIONS                                9                  7,813                        -                  7,822
OTHER                                                    3                  3,854                        -                  3,857
NET LOSS                                                 -                      -                 (807,986)              (807,986)
                                          ----------------  ---------------------  -----------------------   --------------------
   BALANCE AT DECEMBER 31, 2000                  $     637           $    808,835           $   (1,770,057)          $   (960,585)
                                          ================  =====================  =======================   ====================
</TABLE>

                 See notes to consolidated financial statements

                                       F-5

<PAGE>   20

                                 TELIGENT, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                 YEARS ENDED DECEMBER 31,
                                                                                --------------------------
                                                                         2000              1999             1998
                                                                   ----------------   --------------  -----------------
<S>                                                                    <C>              <C>                <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
 NET LOSS                                                              $   (807,986)    $   (528,913)      $   (281,471)
 ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED
   IN OPERATING ACTIVITIES:
        DEPRECIATION AND AMORTIZATION                                       133,544           45,742             14,193
        LOSS ON WRITE-DOWN OF AVAILABLE-FOR-SALE SECURITIES                  61,609                -                  -
        ACCRETION OF SENIOR DISCOUNT NOTES AND OTHER                         40,589           36,707             27,880
       AMORTIZATION
        STOCK-BASED AND OTHER NONCASH COMPENSATION                           28,377           31,451             32,164
        EQUITY IN LOSSES OF INTERNATIONAL VENTURES                            6,605                -                  -
        ASSET IMPAIRMENT                                                     20,085                -                  -
        CHANGES IN CURRENT ASSETS AND CURRENT LIABILITIES,
         NET OF ACQUISITIONS:
           ACCOUNTS RECEIVABLE                                              (19,568)          (8,921)            (1,172)
           PREPAID EXPENSES AND OTHER CURRENT ASSETS                        (13,322)         (12,569)            (1,355)
           ACCOUNTS PAYABLE                                                (127,529)         101,336            118,581
           ACCRUED LIABILITIES                                                8,480           21,788             14,552
                                                                   ----------------   --------------  -----------------

              NET CASH USED IN OPERATING ACTIVITIES                        (669,116)        (313,379)           (76,628)
                                                                   ----------------   --------------  -----------------

 CASH FLOWS FROM INVESTING ACTIVITIES:
     PURCHASE OF PROPERTY AND EQUIPMENT                                    (284,778)        (261,427)          (183,098)
     MATURITY OF SHORT-TERM INVESTMENTS                                     139,675           25,378                  -
     PURCHASES OF SHORT-TERM INVESTMENTS                                   (119,700)        (141,988)                 -
     INVESTMENT IN AND ADVANCES TO INTERNATIONAL VENTURES                   (37,822)               -                  -
     RESTRICTED CASH AND OTHER INVESTMENTS                                   33,924           26,249             29,477
     CASH PAID FOR ACQUISITIONS, NET OF CASH ACQUIRED                       (27,684)          (2,986)                 -
                                                                   ----------------   --------------  -----------------

              NET CASH USED IN INVESTING ACTIVITIES                        (296,385)        (354,774)          (153,621)
                                                                   ================   ==============  =================

 CASH FLOWS FROM FINANCING ACTIVITIES:
     PROCEEDS FROM LONG-TERM DEBT                                           589,569          200,000            250,703
     PROCEEDS FROM ISSUANCE OF COMMON STOCK, NET                            188,372                -                  -
     PROCEEDS FROM EXERCISE OF STOCK OPTIONS                                  7,822           17,060                372
     PROCEEDS FROM ISSUANCE OF PREFERRED STOCK, NET                               -          475,882                  -
     DEBT FINANCING COSTS                                                         -             (743)           (29,480)
                                                                   ----------------   --------------  -----------------

              NET CASH PROVIDED BY FINANCING ACTIVITIES                     785,763          692,199            221,595
                                                                   ----------------   --------------  -----------------

 NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS                           (179,738)          24,046             (8,654)

 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                             440,293          416,247            424,901
                                                                   ----------------   --------------  -----------------

 CASH AND CASH EQUIVALENTS, END OF PERIOD                               $   260,555      $   440,293        $   416,247
                                                                   ================   ==============  =================

 SUPPLEMENTAL CASH FLOW INFORMATION:
 CASH PAID FOR INTEREST                                                 $    79,500      $    43,191        $    39,279
                                                                   ================   ==============  =================
 ACCRUED PREFERRED STOCK DIVIDENDS TO BE PAID IN KIND                   $    41,870      $     2,906        $         -
                                                                   ================   ==============  =================
</TABLE>

                 See notes to consolidated financial statements

                                       F-6

<PAGE>   21

                                 TELIGENT, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    NATURE OF BUSINESS AND LIQUIDITY

      Teligent, Inc. ("Teligent" or the "Company") is a full-service
communications company that offers business customers local and long-distance
telephony; high-speed data and Internet access services over the Company's
digital SmartWave local networks. The Company's SmartWave local networks
integrate advanced fixed wireless technologies with traditional broadband
wireline technology.

      The Company has had operating losses and negative cash flow since its
inception. Development of the Company's telecommunications networks and other
elements of its business are costly, and these costs have resulted in negative
cash flow. The Company will require significant capital to, among other things,
finance the further development and expansion of its business and deployment of
its services, including purchasing and installing telecommunications equipment
and operating its network, among other activities. With the Company's existing
cash, cash equivalents and short-term investments, the Company does not have
sufficient funds to operate its business through 2001. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
The Company's continued existence is dependent upon receiving additional funding
to operate its business. The Company cannot guarantee that it will be able to
obtain additional funding on acceptable terms.

      In order to conserve cash reserves, the Company has targeted reductions in
selling, general and administrative expenses, network expenses and other
operating costs. In addition, the Company has implemented a focused control over
capital expenditures, which should enable it to selectively deploy assets only
in market areas with the greatest return potential.

2.    SIGNIFICANT ACCOUNTING POLICIES

   Consolidation

      The consolidated financial statements include the accounts of the Company
and its subsidiaries after elimination of all significant intercompany
transactions. International ventures are accounted for by the equity method.

   Cash and Cash Equivalents

      The Company considers all highly liquid investments purchased with
maturity dates of 90 days or less at the time of purchase to be cash
equivalents. Cash equivalents consist of money market fund investments and
short-term commercial paper. Restricted cash and other investments relates
primarily to cash and securities which had been held exclusively to fund
interest payments and to secure letters of credit obtained by the Company.

   Short-Term Investments

      The Company classifies all of its short-term investments as
available-for-sale securities and such investments are reported at fair value,
which approximates cost at December 31, 2000. The Company determines the fair
value of its short-term investments based on quoted market prices. Realized
gains or losses are included in earnings and are determined using the specific
identification method.

      At December 31, 2000, the Company's investments are primarily comprised of
corporate bonds,


                                       F-7
<PAGE>   22
                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

medium and short-term notes and Euro dollar bonds. Gains and losses for
available-for-sale securities have been recognized in interest income for the
years ended December 31, 2000 and 1999. At December 31, 2000, $91.6 million of
the Company's short-term investments are due within one year. The remaining $5.0
million is due within two years.

   Accounts Receivable

      Accounts receivable are reflected net of an allowance for doubtful
accounts of $7.8 million and $0.9 million at December 31, 2000 and 1999,
respectively.

   Property and Equipment

      Property and equipment is stated at cost. Costs incurred to prepare an
asset for service, including installation costs; labor and related supplies are
capitalized and depreciated over the useful life of the asset. Depreciation is
computed on the straight-line method over the estimated useful lives of the
assets: 3-10 years for telecommunications equipment, computer systems, and
furniture, and the lesser of the life of the asset or the lease term for
leasehold improvements. Undeployed assets are not depreciated until placed in
service. Repairs and maintenance are charged to expense when incurred.
Construction of these assets takes generally less than 90 days, therefore, no
interest costs were capitalized during the years ended December 31, 2000, 1999
or 1998.

   Intangible Assets

      Intangible assets are comprised primarily of fixed wireless licenses, debt
financing costs and acquired intangibles. Fixed wireless licenses represent the
direct costs of obtaining such licenses. Debt financing costs represent fees and
other costs incurred in connection with the Credit Facility (see Note 8), and
the issuance of long-term debt. Debt financing costs are amortized to interest
expense over the term of the related debt. Acquired intangibles represent the
excess cost of acquisitions over the fair value of assets or shares of stock
acquired. Fixed wireless licenses, debt financing costs and acquired intangibles
are amortized over useful lives of 15 years, 8-10 years and 5-15 years,
respectively. During 2000, the Company recorded a write-down of intangible
assets. See Note 6. No impairment expense was recognized during the years ended
December 31, 1999 or 1998.

   Long-Lived Assets

      In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", management periodically reviews, if impairment
indicators exist, the carrying value and lives of long-lived assets. During
2000, the Company recorded a write-down of certain long-lived assets that were
determined to be impaired in accordance with SFAS No. 121. See Note 3. No
impairment expense was recognized during the years ended December 31, 1999 or
1998.

   Income Taxes

      The Company uses the liability method of accounting for income taxes.
Deferred income taxes result from temporary differences between the tax basis of
assets and liabilities and the basis reported in the financial statements.

   Revenue Recognition

      Revenue from providing communications services is recognized when services
are rendered based on usage of the Company's network and from the sale of
certain telecommunications equipment.

   Advertising Costs

           Costs related to advertising are expensed when the advertising
occurs. Advertising expense was $20.3 million, $19.7 million and $16.1 million
for the years ended December 31, 2000, 1999 and 1998, respectively.



                                       F-8
<PAGE>   23

                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

   Net Loss Per Share

      The Company follows the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings Per Share," which requires the Company to
present basic and fully diluted earnings per share. Common stock equivalents
have been excluded from the calculation because their effect would be
anti-dilutive.

   Stock-Based Compensation

      The Company accounts for its stock-based compensation in accordance with
the provisions of Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB No. 25"), and has provided pro forma
disclosures of net loss and net loss per share in accordance with SFAS No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123").

   Business Segments

      In June 1997, the Financial Accounting Standards Board issued SFAS No.
131, "Disclosures About Segments of an Enterprise and Related Information"
("SFAS No. 131"). SFAS No. 131 changes the way public companies report segment
information in annual financial statements and also requires those companies to
report selected segment information in interim financial reports to
stockholders. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. Management
believes the Company's operations comprise only one segment.

   Concentration of Credit Risk and Major Vendor

      Financial instruments that may subject the Company to concentration of
credit risk consist primarily of trade receivables. The Company's trade
receivables are geographically dispersed and include customers in many different
industries. The Company believes that its risk of loss is limited due to the
diversity of its customers and geographic sales areas.

      The Company used one vendor as a primary supplier of network equipment for
use in the construction of its digital SmartWavea local networks until September
2000. As of December 31, 2000 and 1999, amounts due to this vendor for trade
payables totaled $4.7 million and $167.8 million, respectively. Capital
expenditures from this vendor represented 12%, 40% and 47% of the Company's
total capital expenditures for the years ended December 31, 2000, 1999 and 1998,
respectively.

   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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

   Reclassifications

      Certain amounts in the prior periods' financial statements have been
reclassified to conform to the current year's presentation.

                                      F-9
<PAGE>   24

                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


3.    RESTRUCTURING AND ASSET IMPAIRMENT

           On November 8, 2000, the Company announced a plan to restructure its
operations in order to focus future business growth on the Company's fixed
wireless networks. This restructuring included a workforce reduction associated
with its efforts to realign its sales, operations and real estate organizations.
As a result of this work force reduction and organizational realignment, the
Company recorded a $14.5 million restructuring charge in the quarter ending
December 31, 2000. The charge consisted of personnel-related costs, primarily
related to severance totaling $6.8 million and office closure and other costs of
$7.7 million. As of December 31, 2000, the balance of the restructuring reserve
was $10.9 million.

           The Company recorded a $20.1 million asset impairment charge during
the quarter ended December 31, 2000. The charge consisted principally of the
carrying value of assets abandoned in nine markets where the Company has decided
to focus on a wholesale business strategy.


4.    COMPREHENSIVE LOSS


Comprehensive loss includes net loss and foreign currency translation
adjustments. The components of other comprehensive loss are as follows: (amounts
in thousands):


<TABLE>
<CAPTION>
                                                                                          YEARS ENDED DECEMBER 31,
                                                                                --------------------------------------------
                                                                                     2000          1999             1998
                                                                                -------------     -----------    -----------
<S>                                                                                <C>             <C>            <C>
Loss applicable to common shareholders........................................     $(849,856)      $(531,819)     $(281,471)
Other comprehensive loss:
   Foreign currency translation adjustments...................................          (788)             --             --
                                                                                -------------     -----------    -----------
Comprehensive loss applicable to common shareholders..........................     $(850,644)      $(531,819)     $(281,471)
                                                                                =============     ===========    ===========
</TABLE>

5.    PROPERTY AND EQUIPMENT

      The amounts included in property and equipment are as follows as of
      December 31 (in thousands):


<TABLE>
<CAPTION>
                                                                          DECEMBER 31,
                                                                     -----------------------
                                                                        2000          1999
                                                                     ---------    ----------
<S>                                                                   <C>           <C>
      Telecommunications equipment...............................     $476,486      $279,749
      Computer systems...........................................      123,112        79,390
      Furniture and leasehold improvements.......................       25,912        18,510
      Undeployed equipment and construction in progress..........      109,628        81,744
                                                                     ---------    ----------
                                                                       735,138       459,393
      Accumulated depreciation...................................     (174,604)      (56,404)
                                                                     ---------     ---------
                                                                      $560,534      $402,989
                                                                     =========     =========
</TABLE>

      Depreciation expense for the years ended December 31, 2000, 1999 and 1998
was $118.2 million, $40.1 million and $10.7 million, respectively. Depreciation
expense for the year ended December 31, 2000 included $26.6 million related to
the write-down of certain undeployed assets, when it was determined that such
undeployed assets would not be deployed.

                                      F-10
<PAGE>   25

                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


6.    INTANGIBLE ASSETS

      Intangible assets as of December 31 are as follows (in thousands):


<TABLE>
<CAPTION>
                                                                               2000         1999
                                                                           ----------   ----------
<S>                                                                         <C>           <C>
      Acquired intangibles..............................................    $127,016      $20,947
      Fixed wireless licenses...........................................      52,704       51,813
      Debt financing costs and other intangibles........................      39,577       39,638
                                                                           ----------   ----------
                                                                             219,297      112,398
      Accumulated amortization..........................................     (31,321)     (15,980)
                                                                           ----------   ----------
                                                                            $187,976      $96,418
                                                                           ==========   ==========
</TABLE>

           Amortization expense for the year ended December 31, 2000 included a
$4.2 million write-down resulting from the Company's decision to cease
operations of a wholly-owned subsidiary. The write-down represents the gross
assets of the acquired company, the largest component of which is intangibles.



7.    ACCRUED EXPENSES

      Accrued expenses consist of the following (in thousands):


<TABLE>
<CAPTION>
                                                                                DECEMBER 31,
                                                                         -----------------------
                                                                            2000         1999
                                                                         ----------   ----------
<S>                                                                      <C>          <C>
      Accrued compensation..............................................   $20,956      $30,570
      Accrued telecommunications taxes..................................    17,539        9,167
      Restructuring reserve.............................................    10,870          --
      Accrued interest..................................................    10,801        2,886
      Other accrued liabilities.........................................    10,899        1,246
                                                                          --------    ---------
                                                                           $71,065      $43,869
                                                                          ========    =========
</TABLE>



8.    LONG-TERM DEBT

      Long-term debt consists of the following (in thousands):


<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,
                                                                            -----------------------
                                                                                2000         1999
                                                                            -----------   ----------
<S>                                                                         <C>           <C>
      11.5% Senior Notes due 2007........................................    $  300,000     $300,000
      11.5% Senior Discount Notes due 2008...............................       345,331      308,799
      Credit Facility....................................................       789,739      200,000
                                                                            -----------   ----------
                                                                             $1,435,070     $808,799
                                                                            ===========   ==========
</TABLE>

      SENIOR NOTES OFFERING

           In November 1997, the Company issued $300 million of 11 1/2% Senior
Notes due 2007 (the "Senior Notes"). The Company used $93.9 million of the net
proceeds of this offering to purchase a portfolio of Treasury securities which
were classified as restricted cash and investments on the balance sheet, and
were pledged as collateral for the payment of interest on the Senior Notes
through December 1, 2000. Interest on the Senior Notes accrues at a rate of
11 1/2% per annum and is payable semi-annually in June and December.


                                      F-11
<PAGE>   26

                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      On or after December 1, 2002, the Notes will be redeemable at the option
of the Company, in whole at any time or in part from time to time, at prices
ranging from 100.00% to 105.75% (expressed in percentages of the principal
amount thereof).

      Upon the occurrence of a change in control, as defined in the Senior Notes
agreement, each holder of the Senior Notes will have the right to require the
Company to repurchase all or any part of such holder's Senior Notes at a
purchase price in cash equal to 101% of the principal amount.

   Senior Discount Notes Offering

      On February 20, 1998, the Company completed an offering (the "Discount
Notes Offering") of $440 million 11 1/2% Senior Discount Notes due 2008 (the
"Senior Discount Notes"). The Company received $243.1 million in net proceeds
from the Discount Notes Offering, after deductions for offering expenses of $7.6
million. Under a 1998 exchange offer, all outstanding Senior Discount Notes were
exchanged for 11 1/2% Series B Discount Notes due 2008 (the "New Discount
Notes") which have been registered under the Securities Act of 1933, as amended.
The New Discount Notes are identical in all material respects to the Senior
Discount Notes.

      On or after March 1, 2003, the New Discount Notes will be redeemable at
the option of the Company on terms similar to those of the Senior Notes. In
addition, the New Discount Notes contain change in control repurchase
commitments similar to the Senior Notes.

   Credit Facility

      On July 2, 1998, the Company entered into a credit agreement, as
subsequently amended, (the "Bank Credit Agreement") with certain lenders,
providing for credit facilities up to an aggregate of $800 million (the "Credit
Facility"). Availability of funds under the Credit Facility were subject to
certain conditions as defined in the Bank Credit Agreement, all of which were
met prior to the draw down of the entire facility in January 2001. Substantially
all of the Company's assets secure the obligations under the Bank Credit
Agreement.

      The Credit Facility is structured into three separate tranches consisting
of a term loan facility, a delayed draw term loan facility and a revolving
credit facility, each of which has a final maturity of eight years. Interest
accrues on $575.0 million of outstanding borrowings based on a floating rate
tied to the prevailing LIBOR rate and adjusts based on the attainment of certain
key revenue and leverage benchmarks. The remaining $214.7 million accrued
interest at a fixed rate of 11.125% per annum. The Company incurred commitment
and other fees in connection with obtaining the Credit Facility totaling $19.9
million, which is being amortized over eight years. The Credit Facility contains
certain financial and other covenants that restrict, among other things, the
Company's ability to (a) incur or create additional debt, (b) enter into mergers
or consolidations, (c) dispose of a significant amount of assets, (d) pay cash
dividends, or (e) change the nature of its business. The amounts outstanding
under the Credit Facility are subject to mandatory prepayments in certain
circumstances.

           The Company executed an Amendment and Consent (the "Amendment") to
the Bank Credit Agreement subsequent to December 31, 2000. Pursuant to the
Amendment, the interest rates applicable to borrowings under the Credit Facility
were increased. The Amendment also increased the maximum aggregate principal
amount under the optional term loan tranche of the Credit Facility from $400
million to $600 million, of which $350 million can be utilized as vendor loans.
The optional term loan tranche is not a binding commitment of the lenders,
rather it provides a vehicle for any of the lenders to loan the Company
additional funds under the Credit Facility.


                                      F-12

<PAGE>   27

                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


      The Amendment also changed several of the covenants applicable to the
Company. The Company received a waiver for default of the fixed charge coverage
ratio for the period ending December 31, 2000 from the lenders as part of the
Amendment, and the test was suspended for the first quarter of 2001. The Company
was in compliance with all other debt covenants of the Credit Facility as of
December 31, 2000. The Amendment also requires the Company to maintain
substantially all of its cash and cash equivalents in a collateral and
securities account with a lender bank and the remainder of its funds in a
separate operating account. The Amendment also contains a waiver that permitted
the explanatory paragraph included in the Company's auditor's opinion for the
year ended December 31, 2000.


           As part of the Amendment, the Company is required to deliver
definitive documentation with respect to vendor financing (in an aggregate
amount of at least $250 million) and convertible notes (in an aggregate amount
of at least $100 million), no later than April 30, 2001. The Company is
attempting to secure vendor financing in the amount of $250 million. If the
Company does not meet the April 30, 2001 deadline described above, it will be in
default under its Credit Facility. There can be no assurance that the Company
will execute either the vendor financing or convertible notes by such date or at
all. In addition, the Company has a new financial covenant that requires
compliance effective June 30, 2001 for which there can be no assurance.

           Maturities of long-term debt at December 31, 2000 are as follows (in
           thousands):


<TABLE>
<S>                                                                                                                   <C>
            2002...................................................................................................    $   50,520
            2003...................................................................................................       110,267
            2004...................................................................................................       135,731
            2005...................................................................................................       139,555
            Thereafter.............................................................................................       998,997
                                                                                                                     ------------
                                                                                                                       $1,435,070
                                                                                                                     ============
</TABLE>



9.    FAIR VALUE OF FINANCIAL INSTRUMENTS

      The fair value of the Company's financial instruments classified as
current assets or liabilities, and investments approximate their carrying value.
At December 31, 2000, the estimated fair value and carrying amounts of the
Company's Senior Notes, Senior Discount Notes and the Company's Series A
cumulative convertible redeemable preferred stock, par value, $.01 per share
("Series A Preferred Stock") are as follows (in thousands):


<TABLE>
<CAPTION>
                                                                                                       FAIR VALUE      CARRYING
                                                                                                       ----------      --------
                                                                                                                        AMOUNT
                                                                                                                        ------
<S>                                                                                                     <C>           <C>
      Senior Notes...................................................................................   $40,500        $ 300,000
      Senior Discount Notes..........................................................................   $37,400        $ 345,331
      Series A Preferred Stock.......................................................................   $18,185        $ 520,658
</TABLE>

      The fair value of the Senior Notes, Senior Discount Notes and the Series A
Preferred Stock was estimated based on quoted market prices.



                                      F-13

<PAGE>   28

                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)



10.   INCOME TAXES

      Deferred tax assets and liabilities are as follows, as of December 31 (in
      thousands):


<TABLE>
<CAPTION>
                                                                                                         2000         1999
                                                                                                     ----------- ------------
<S>                                                                                                   <C>           <C>
      Deferred tax assets:
            Net operating loss carryforward.......................................................    $  556,142    $ 278,870
            Stock based compensation..............................................................         6,126       41,843
            Original issue discount...............................................................        35,959       22,077
            Losses on investments/ asset impairment...............................................        39,216           --
            Other.................................................................................        12,007        1,741
                                                                                                     ----------- ------------
                  Total deferred tax assets.......................................................       649,450      344,531
      Deferred tax liability:
            Intangible assets.....................................................................       (10,705)     (11,760)
                                                                                                     ----------- ------------
      Net deferred tax assets.....................................................................       638,745      332,771
      Valuation allowance.........................................................................      (638,745)    (332,771)
                                                                                                     ----------- ------------
                  Total...........................................................................    $       --    $      --
                                                                                                   ============= ============
</TABLE>

           During the years ended December 31, 2000 and 1999, the Company did
not record an income tax benefit or expenses. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences become deductible. At
December 31, 2000, the Company had federal net operating loss carryforwards of
$1.534 billion that expire in various amounts through 2020.

           A reconciliation between income taxes computed using the statutory
federal income tax rate and the effective rate, for the years ended December 31,
2000 and 1999, is as follows:


<TABLE>
<CAPTION>
                                                                                                        2000        1999
                                                                                                       ---------  ----------
<S>                                                                                                     <C>          <C>
                                                                                                             -         -
      Federal income tax benefit at statutory rate....................................................    (34.0)%    (34.0)%
      State income taxes net of federal...............................................................     (4.0)      (4.0)
      Net change in valuation allowance...............................................................     38.1       38.6
      Other...........................................................................................     (0.1)      (0.6)
                                                                                                          -----       -----
                                                                                                            --  %       -- %
                                                                                                          =====       =====
</TABLE>



11.   RELATED PARTY TRANSACTIONS

      In 1999 and 1998, the Company paid $3.7 million and $4.0 million to a
subsidiary of Nippon Telegraph and Telephone Corporation for technical services
related to network design and implementation. No such payments were made during
2000.

           Employees of the parent company of Microwave Services, Inc performed
administrative and management services on behalf of the Company. These charges
totaled $0.3 million and $1.1 million for the years ended December 31, 1999 and
1998, respectively.

           Certain technical services were performed by an affiliate of Digital
Services Corporation. The cost of these services totaled $0.9 million in 1999
and $0.6 million in 1998.


                                      F-14

<PAGE>   29

                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


12.   OTHER TRANSACTIONS

      During 2000, the Company acquired several communications companies (the
"2000 Transactions"), all of which were accounted for as purchases. The combined
purchase price of the 2000 Transactions consisted of the issuance of 2,822,154
shares of the Company's Class A common stock, par value $.01 per share ("Class A
Common Stock"), valued at $47.2 million at the time of issuance and cash
payments totaling $30.4 million. Earnout provisions could result in the issuance
of up to $30.3 million in additional cash payments or shares of Class A Common
Stock, if certain revenue and other benchmarks are achieved. Revenues from
companies acquired during 2000 totaled $40.5 million for the year ended December
31, 2000.

           During 1999, the Company acquired three communications companies (the
"1999 Transactions"), all of which were accounted for as purchases. The combined
purchase price of the 1999 Transactions consisted of 269,308 shares of Class A
Common Stock valued at $15.7 million, and cash payments totaling $3.2 million.
Earnout provisions could result in the issuance of up to an additional 285,562
shares of Class A Common Stock and shares of Class A Common Stock totaling $4.5
million based on the market price of when specific earn-out conditions are met
over the next three years, if certain revenue and other benchmarks are achieved.
No additional earn-out was recorded during the year ended December 31, 2000.
Revenues from companies acquired during 1999 totaled $9.1 million for the year
ended December 31, 1999.

           The 2000 and 1999 Transactions are summarized as follows. Amounts
allocated to intangibles are being amortized on a straight-line basis over
periods ranging from 5 to 15 years:


<TABLE>
<CAPTION>
                                                                                                YEARS ENDED DECEMBER 31,
                                                                                           -----------------------------------
                                                                                                     2000              1999
                                                                                                    ------            ------
<S>                                                                                               <C>               <C>
Cash paid for acquisitions, net of cash acquired:
         Recorded value of assets acquired................................................        $  21,495         $   3,438
         Identified intangibles...........................................................          113,414            20,949
         Net liabilities assumed..........................................................          (60,000)           (5,706)
         Common stock issued in acquisitions..............................................          (47,225)          (15,695)
                                                                                                 -----------       -----------
                                                                                                  $  27,684         $   2,986
                                                                                                 ===========       ===========
</TABLE>

      In July 2000, the Company closed an investment in ICG Communications
("ICG"); whereby a subsidiary of the Company acquired 2,996,076 shares of ICG
common stock in exchange for one million shares of Class A Common Stock (the
"ICG Transaction"). The value of the Company's investment in ICG as of the
closing date was $62.0 million. Subsequent to the closing date of the ICG
Transaction, the market value of ICG common stock decreased significantly, and
the Company has concluded that the decline is permanent. Accordingly, the
Company has written its investment in ICG common stock down to its market value,
which management believes approximately fair value. At December 31, 2000, the
market value of the investment in ICG common stock was $400,000 and Teligent had
realized a loss on this investment of $61.6 million, which is included in other
expenses.

      In September 2000, the Company resolved an outstanding liability with one
of its vendors. This transaction resulted in a reduction of telecommunications
costs (cost of services) of $39.7 million for the year ended December 31, 2000.
Additionally, the transaction resulted in the payment of $17.3 million in
interest to the vendor.


                                      F-15

<PAGE>   30
                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


13.   CONVERTIBLE REDEEMABLE PREFERRED STOCK

      On December 3, 1999, the Company completed the sale of 500,000 shares of
its 7 3/4% Series A cumulative convertible redeemable preferred stock,
liquidation preference $1,000 per share, par value $.01 per share to an investor
group for gross proceeds of $500 million. At December 31, 2000 and 1999, there
were 539,543 and 500,000 shares authorized, issued and outstanding of Series A
Preferred Stock, respectively.

      The Series A Preferred Stock has an annual dividend rate of 7 3/4% payable
quarterly and dividends are cumulative from the date of issuance. Dividends must
be paid in additional shares of Series A Preferred Stock through December 3,
2004, and may be paid in either cash or additional shares of Series A Preferred
Stock, at the option of the Company, thereafter.

      The Series A Preferred Stock is convertible into Class A Common Stock by
the holders at any time at a initial conversion price of $57.50, but may be
called by the Company after five years and, if still outstanding, must be
redeemed in 2014. The holders of the Series A Preferred Stock have voting rights
equal to the rights held by holders of Class A Common Stock.


14.   COMMITMENTS AND CONTINGENCIES

      In May 2000, the Company announced a comprehensive network services
agreement (the "Network Services Agreement") with Level 3 Communications, Inc.
("Level 3"). Under the Network Services Agreement, the Company will acquire dark
fiber and other assets. At December 31, 2000, the Company had recorded $6.6
million of assets acquired under capitalized leases related to this agreement.
Commitments for additional capital expenditures totaling $54.1 million at
December 31, 2000 are as follows (in thousands):


<TABLE>
<S>   <C>                                                                                                         <C>
      2001...................................................................................................     $31,957
      2002...................................................................................................       5,134
      2003...................................................................................................       5,134
      2004...................................................................................................       5,134
      2005...................................................................................................       5,134
      Thereafter.............................................................................................       1,574
                                                                                                             -------------
                                                                                                                  $54,067
                                                                                                             =============
</TABLE>

           The Company leases various operating sites, rooftops, storage, and
administrative offices under operating leases. Rent expense was $58.1 million,
$28.0 million and $10.9 million for the years ended December 31, 2000, 1999 and
1998, respectively. Future minimum lease payments by year, and in the aggregate,
at December 31, 2000, are as follows (in thousands):


<TABLE>
<S>   <C>                                                                                                       <C>
      2001...................................................................................................    $ 64,099
      2002...................................................................................................      61,543
      2003...................................................................................................      57,270
      2004...................................................................................................      45,765
      2005...................................................................................................      28,105
      Thereafter.............................................................................................      80,827
                                                                                                             -------------
                                                                                                                 $337,609
                                                                                                             =============
</TABLE>


15.   CAPITAL STOCK

      The Company has authorized two classes of common stock, Class A Common
Stock and Class B Common Stock. The rights of the two classes of common stock
are substantially identical, except that until the number of shares held by
holders of the respective series of Class B Common Stock fall below



                                      F-16
<PAGE>   31
                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


certain thresholds, such holders will have the right to elect two directors to
the Company's Board of Directors. As a result of Liberty Media Corporation's
acquisition of The Associated Group, Inc. on January 14, 2000, all of the shares
of Series B-1 Common Stock (defined below) were converted into 21,436,689 shares
of Class A Common Stock and the Series B-1 shares were subsequently cancelled.
Liberty Media Corporation has the right to elect three directors pursuant to the
terms of the Shareholders' Agreement, dated as of January 13, 2000, by and among
Alex J. Mandl, Liberty Media Corporation, Telcom - DTS Investor, L.L.C. and
Microwave Services, Inc.

      The number of shares authorized, issued and outstanding at December 31,
2000 and 1999, for each class of stock is summarized below:


<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                            -------------------------------------------------------------------------------------------------

                                             2000                                                 1999
                            ------------------------------------------    ----------------------------------------------------

                PAR             SHARES               SHARES ISSUED                 SHARES                  SHARES ISSUED
CLASS             VALUE       AUTHORIZED            AND OUTSTANDING              AUTHORIZED               AND OUTSTANDING
-------------- -----------  -------------------   --------------------     -----------------------   --------------------------
<S>                  <C>            <C>                     <C>                        <C>                           <C>
A                    $0.01          500,000,000             42,423,082                 200,000,000                   10,281,667
Series B-1           $0.01                   --                     --                  30,000,000                   21,436,689
Series B-2           $0.01           50,000,000             15,477,210                  25,000,000                   17,206,210
Series B-3           $0.01           20,000,000              5,783,400                  10,000,000                    5,783,400
</TABLE>

      Common share activity by class is summarized below:


<TABLE>
<CAPTION>
                                          CLASS             SERIES              SERIES              SERIES
                                            A                B-1                  B-2                B-3                TOTAL
                                       --------------  ----------------    -----------------   ----------------   -----------------

<S>                                    <C>              <C>                  <C>                 <C>                <C>
Balance at January 1, 1999                  8,206,392        21,436,689           17,206,210          5,783,400          52,632,691

Exercise of employee stock options          1,803,291                --                   --                 --           1,803,291
Issuance of shares for acquisitions           269,308                --                   --                 --             269,308
Other                                           2,676                --                   --                 --               2,676
                                       --------------  -----------------   -----------------    ---------------     ---------------
Balance at December 31, 1999               10,281,667        21,436,689           17,206,210          5,783,400          54,707,966

Conversion of Series B-1 to Class A        21,436,689       (21,436,689)                  --                 --                  --
Issuance of shares from stock               4,000,000                --                   --                 --           4,000,000
offering
Issuance of shares for acquisitions         2,822,154                --                   --                 --           2,822,154
Conversion and sale of Series B-2           1,729,000                --           (1,729,000)                --                  --
Issuance of shares for ICG                  1,000,000                --                   --                 --           1,000,000
Transaction
Exercise of employee stock options            838,258                --                   --                 --             838,258
Other                                         315,314                --                   --                 --             315,314
                                       --------------  -----------------   -----------------    ---------------     ---------------
Balance at December 31, 2000               42,423,082                --           15,477,210          5,783,400          63,683,692
                                       ==============  ==================  =================    ===============     ===============
</TABLE>

      The Company has authorized 10,000,000 shares of preferred stock, par value
$.01 per share. For shares issued and outstanding, see Note 13.

      On May 25, 2000, the Company's shareholders approved an amendment to the
Company's certificate of incorporation, increasing the total number of
authorized shares of Class A Common Stock to 500,000,000, eliminating the Series
B-1 common stock and increasing the number of authorized shares of Series B-2
common stock to 50,000,000 and Series B-3 common stock to 20,000,000. The
Company filed an amendment to the certificate of incorporation with the
Secretary of State of the State of Delaware as approved by the Company's
shareholders, reflecting the amendments.


   Common Stock Offering

      In April 2000, the Company completed an underwritten offering of 4,000,000
shares of Class A Common Stock at a price of $50 per share, from which the
Company raised approximately $188.3 million of net proceeds, after deducting
approximately $11.7 million of offering expenses. In addition, one of the
Company's stockholders sold 1,000,000 shares of Class A Common Stock, at a price
of $50 per share, of which the Company received no proceeds.


                                      F-17

<PAGE>   32

                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


                Stock Purchase Agreement and Issuance of Warrants

           On December 7, 2000, the Company entered into a stock purchase
agreement with RGC International Investors, LDC ("RGC"), as a private placement
pursuant to Section 4(2) of the Securities Act of 1933. Pursuant to the purchase
agreement, the Company may, subject to satisfying certain conditions, at its
sole discretion during the 18 months from the effectiveness of the resale
registration statement, require RGC to purchase up to $250 million of its Class
A Common Stock in a series of draw-downs. Pursuant to the purchase agreement,
the Company also issued 4,972,370 warrants to RGC to purchase an equal number of
shares of Class A Common Stock at an exercise price of $3.62 per share. Warrants
to purchase 3,729,278 shares vested on December 7, 2000. The remaining 1,243,092
warrants will vest pro rata with each tranche purchased after we have drawn down
a total of $150 million.

           A draw down is initiated upon the Company's delivery of a draw down
notice that will include a draw down amount and a minimum price at which the
Company is willing to issue stock to RGC. The number of shares to be purchased
by RGC for each tranche will be based upon the volume-weighted average trading
price ("VWAP") of the shares for each of the nine business days following the
receipt of a draw down notice. If, on any given date, the maximum permitted draw
down amount is less than $1 million, or if the VWAP is at or below $2 per share
for the preceding trading day, the Company may not deliver a draw down notice.
If the VWAP is at or below $2 per share during any day during a draw down
period, the total amount of the draw down will be reduced by the percentage of
the draw down amount attributable to that particular day.

           RGC may sell the shares of Class A Common Stock purchased pursuant to
the purchase agreement, including upon exercise of the warrants, from time to
time on the principal exchange or market upon which the Company's common stock
is then listed or in negotiated transactions at prices determined at the time of
sale. However, pursuant to the terms of the purchase agreement and warrants, the
Company may not give notice of a draw down and RGC may not exercise warrants if
doing so would result in RGC's ownership of greater than 9.9% of our Class A
Common Stock. Further, the Company may not issue 20% or more of our common stock
as of December 7, 2000, or 20% or more of our voting power outstanding as of
December 7, 2000, without shareholder approval.

           The purchase agreement is contingent upon certain conditions,
including a minimum trading price of $2.00 per share for the Company's common
stock at the time of draw down, limits on the amount that can be drawn down
based on trading price and trading volume of our common stock, and the listing
of our common stock on a principal trading exchange or market such as the Nasdaq
National Market or the Nasdaq SmallCap Market. We may not be able to obtain all
or any part of the $250 million equity financing unless the price and volume of
our common stock increase significantly and we may not be able to obtain any
other additional financing on terms acceptable to us.

   Company Appreciation Rights, Appreciation Units and Stock Options

      In 1996, certain employees were granted Company Appreciation Rights
("CARs") and appreciation units. At the time of the Company's Initial Public
Offering, these CARs and appreciation units were converted into options to
purchase Class A Common Stock. The Company will recognize up to $173.3 million
of compensation expense over the vesting period of the options. Through December
31, 2000, $160.2 million of stock-based compensation expense has been
recognized, and up to $13.1 million will be recognized through September 1, 2002
as follows: $12.7 million in 2001 and $400,000 in 2002. The employees receiving
these benefits are primarily executives and key employees whose compensation
expenses are typically included in general and administrative expenses for the
years ended December 31, 2000, 1999 and 1998.


                                      F-18

<PAGE>   33

                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      1997 Stock Incentive Plan

      The Company maintains the Teligent, Inc. 1997 Stock Incentive Plan, as
amended (the "1997 Plan"). The 1997 Plan authorizes options to purchase an
aggregate of 18,729,125 shares of Class A Common Stock, including the options
converted from the CARs and Appreciation Units. The exercise price of options
granted, as determined by the Company's Compensation Committee, approximates
fair value. Generally, all options granted under the 1997 Plan vest over a
period of five years and expire ten years from the date of grant.

      The Company applies the provisions of APB No. 25 in accounting for its
stock-based compensation. If compensation expense had been determined in
accordance with SFAS No. 123, the Company's net loss for the years ended
December 31, 2000, 1999 and 1998 would have been $892.4 million, $570.6 million
and $324.4 million, or $14.90, $10.68 and $6.16 per share, respectively. Options
arising from the conversion of CARs and Appreciation Units have been valued
based on the number and exercise price of the options issued upon conversion.
The weighted average fair value of options granted was $21.17, $47.25 and $21.91
in 2000, 1999 and 1998, respectively, using the Black-Scholes option pricing
model with the following assumptions: dividend yield 0%, risk free rate interest
rate of 6.4%, 6.0% in 1999 and 5.3% in 1998, an expected life of 5 years in 2000
and 10 years in 1999 and 1998, and an expected volatility of 1.010 in 2000, .861
in 1999 and .648 in 1998.

      Option activity for 2000, 1999 and 1998 is set forth below:


<TABLE>
<CAPTION>
                                                       WEIGHTED-                      WEIGHTED-                     WEIGHTED-
                                                        AVERAGE                        AVERAGE                       AVERAGE
                                                       EXERCISE                        EXERCISE                      EXERCISE
                                           2000         PRICE            1999            PRICE           1998          PRICE
                                          ------       --------         ------          -------         ------        -------

<S>                                    <C>             <C>            <C>               <C>         <C>                <C>
 Outstanding, January 1...............    15,543,964      $20.65       14,618,967        $12.32       13,165,374        $10.30
 Granted..............................     6,197,743       27.10        3,255,655         53.74        1,730,735         28.42
 Canceled.............................    (2,591,629)      37.73         (513,366)        32.61         (223,581)        19.59
 Exercised............................      (838,258)       9.33       (1,803,291)         9.46          (49,922)         7.42
 Expired..............................       (99,862)      26.47          (14,001)        18.07           (3,639)         6.52
                                         -----------                  -----------                    -----------      --------
 Outstanding, December 31.............    18,211,958       20.90       15,543,964         20.65       14,618,967         12.32
                                         ===========                  ===========                    ===========      ========
 Exercisable, December 31.............     7,232,215      $10.78        5,337,648        $ 6.91        3,824,319        $ 5.79
                                         ===========                  ===========                    ===========      ========
</TABLE>

      Options outstanding and exercisable by price range as of December 31, 2000
are as follows:


<TABLE>
<CAPTION>
                                                   WEIGHTED-
                                                    AVERAGE                                                           WEIGHTED-
                                                   REMAINING             WEIGHTED -                                    AVERAGE
       RANGE OF                                   CONTRACTUAL              AVERAGE                                     EXERCISE
   EXERCISE PRICES          OUTSTANDING         LIFE (IN YEARS)            EXERCISE            EXERCISABLE              PRICE
  ------------------       --------------      ------------------         ---------           -------------            ------
                                                                           Price
<S>                              <C>              <C>                   <C>                     <C>                    <C>
          $ 1.81 - 2.36                15,800         9.9                    2.12                             --         --
            2.83 - 4.18             2,009,244         5.7                    3.76                      2,003,244         3.77
            4.34 - 6.48             1,067,922         5.9                    5.44                      1,001,622         5.44
            6.52 - 9.63             5,550,970         6.0                    7.00                      2,998,394         6.74
           9.91 - 14.72             1,505,971         9.3                   11.88                        205,749        12.53
          14.94 - 22.13               561,427         7.5                   20.36                        119,247        21.49
           22.50 -32.75             3,643,295         8.8                   24.37                        332,612        27.87
          33.94 - 50.66             2,049,712         7.2                   44.57                        272,650        44.66
          51.16 - 76.56             1,479,817         8.7                   61.91                        298,697        60.90
          77.13 - 95.81               327,800         9.1                   83.23                             --         --
                       ----------------------                                             ----------------------
                                   18,211,958         7.3                   20.90                      7,232,215        10.78
                       ======================                                             ======================
</TABLE>


                                      F-19

<PAGE>   34

                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)



16.   EMPLOYEE BENEFIT PLANS

      Employees of the Company may participate in a 401(k) retirement plan in
which eligible employees may elect to contribute, on a tax-deferred basis, up to
15% of their compensation, not to exceed annual maximums as defined in the
Internal Revenue Code. The Company matches one-half of a participant's
contribution up to 6% of the participant's compensation, vesting over 4 years.
The Company's contributions to the plan were $2.8 million, $1.7 million and $0.9
million for 2000, 1999 and 1998, respectively.

      Effective July 1, 1999, the Company adopted the Employee Stock Purchase
Plan ("ESPP"). Under the ESPP, the Company authorized the issuance of 300,000
shares of Class A Common Stock, which allowed eligible employees to purchase
such shares at 85% of the fair value of the Class A Common Stock. As of January
2001, the Company had issued all such shares available under the ESPP. No
additional shares will be distributed under the ESPP until more shares of Class
A Common Stock are authorized for distribution under the ESPP.



17.   QUARTERLY FINANCIAL DATA (UNAUDITED)

      The following table has been prepared from the financial records of the
Company, without audit, and reflects all adjustments that are, in the opinion of
management, necessary for a fair presentation of the results of operations for
the interim periods presented (in thousands, except per share amounts).


<TABLE>
<CAPTION>
                                                                  1ST           2ND           3RD          4TH
                                                                QUARTER       QUARTER       QUARTER      QUARTER        TOTAL
                                                               -----------  ------------  -----------  ------------  -----------
<S>                                                              <C>           <C>          <C>           <C>          <C>
2000
Revenues.....................................................     $23,064       $32,264      $42,669       $54,075     $152,072
Loss from operations.........................................    (137,815)     (145,976)    (124,335)     (224,233)    (632,359)
Net loss applicable to common stockholders...................    (166,037)     (174,456)    (238,638)     (270,725)    (849,856)
Basic and diluted net loss per common share..................      ($3.02)        (2.94)       (3.88)        (4.25)      (14.19)


<CAPTION>
                                                                   1ST          2ND           3RD          4TH
                                                                 QUARTER      QUARTER       QUARTER      QUARTER        TOTAL
                                                               -----------  ------------  -----------  ------------  -----------
<S>                                                             <C>           <C>           <C>           <C>          <C>
1999
Revenues.....................................................   $   1,523     $   3,961     $ 10,320      $ 15,500     $ 31,304
Loss from operations.........................................     (93,532)     (107,752)    (123,999)     (133,733)    (459,016)
Net loss applicable to common stockholders...................    (108,112)     (123,472)    (143,640)     (156,595)    (531,819)
Basic and diluted net loss per common share..................       (2.05)        (2.34)       (2.66)        (2.89)       (9.95)
</TABLE>

      The sum of the per common share amounts do not equal the annual amounts
because of the changes in the weighted-average number of shares outstanding
during the year.

                                      F-20

<PAGE>   35

                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


18.   SUBSEQUENT EVENTS (UNAUDITED)

   Filing for Chapter 11 under the U.S. Bankruptcy Code

      On May 21, 2001, the Company and all of its direct and indirect domestic
subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S.
Bankruptcy Code in the United States Bankruptcy Court for the Southern District
of New York. The 21 separate cases were procedurally (but not substantively)
consolidated for joint administration. Each of the Company and the subsidiaries
included in the filings will continue to operate their businesses as debtors in
possession during the reorganization proceeding. The Company's foreign
subsidiaries were not part of the Chapter 11 filing.

      In conjunction with the filing of the petitions, the Company entered into
an interim arrangement with its lenders to provide funds, subject to certain
conditions, for near-term operations. The Bankruptcy Court approved the interim
arrangement with the Company's lenders on May 21, 2001. A hearing on the interim
arrangement is scheduled for June 13, 2001.

      While under the protection of Chapter 11, the Company may sell or
otherwise dispose of assets and liquidate or settle liabilities for amounts
other than those reflected in the consolidated financial statements. The
financial statements do not include any adjustments that might be necessary as a
result of the outcome of the uncertainties discussed herein, including the
effects of any plan of reorganization or liquidation.

      Based on the aforementioned bankruptcy coupled with the violation of
certain debt-covenants, the repayment of the debt obligations can be accelerated
by its lenders.

Changes in Management and the Board of Directors

      On April 17, 2001, Gary Howard and Carl Vogel resigned their seats on the
Company's Board of Directors. David Berkman had resigned his seat on the
Company's Board of Directors on March 2, 2001. On April 17, 2001, Liberty Media
Corporation nominated Howard Jonas, Morris Lichtenstein and Anthony Davidson to
the Company's Board of Directors pursuant to the terms of the Stockholders'
Agreement, dated as of January 13, 2000, by and among Alex J. Mandl, Liberty
Media Corporation, Telcom-DTS Investors, L.L.C. and Microwave Services, Inc.
(the "Stockholders' Agreement"). On April 19, 2001, Howard Jonas, Morris
Lichtenstein, and Anthony Davidson were elected to the Company's Board of
Directors.

      On April 20, 2001, Rajendra Singh and Neera Singh resigned their seats on
the Company's Board of Directors and Telcom-DTS Investors, L.L.C. nominated Hal
Perkins and Rahul Prakash pursuant to the terms of the Stockholders' Agreement.
On April 25, 2001, Hal Perkins and Rahul Prakash were elected to the Company's
Board of Directors.

      On April 27, 2001, Tetsuro Mikami resigned his seat on the Company's Board
of Directors. Pursuant to the terms of the Company's certificate of
incorporation, Nippon Telegraph and Telephone Corporation ("NTT") is entitled to
elect a director to replace Mr. Mikami. As of May 4, 2001, NTT has not elected a
director to fill the vacancy on the Company's Board of Directors. On the same
date, Alex Mandl was removed as the Chief Executive Officer, Chief Operating
Officer and Chairman of the Company.

      On April 30, 2001, Yoav Krill was appointed as the Company's Chief
Executive Officer and on May 1, 2001 he was elected to the Company's Board of
Directors.

      On May 2, 2001, Steven F. Bell and Peter T. Garahan resigned their
positions with the Company. Mr. Bell was the Company's Senior Vice President of
Human Resources and Mr. Garahan was the Company's Vice-Chairman and Chief
Financial Officer.

      On May 2, 2001, Michael Levitt resigned his seat on the Company's Board of
Directors. Pursuant to the Company's certificate of designation, Hicks, Muse,
Tate & Furst Incorporated and its affiliates

                                      F-21
<PAGE>   36

                                 TELIGENT, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


("Hicks, Muse") are entitled to elect a director to replace Mr. Levitt. On May
18, 2001, Hicks, Muse waived their right to elect a director (subject to the
closing of the transaction with IDT on or before June 30, 2001). On May 18,
2001, James V. Continenza was elected to fill this vacancy on the Board.

      On May 7, 2001, Mr. Harris resigned his position as General Counsel and
Secretary of the Company. On the same date Stuart H. Kupinsky was appointed as
General Counsel and Secretary of the Company, Mr. Continenza was appointed as
Chief Operating Officer of the Company and Norman Klugman was appointed as the
Company's Chief Financial Officer and Treasurer.

      On May 10, 2001, Hamid Akhavan was removed as the Senior Vice President
of Information Technology and Chief Technology Officer of the Company.

      Changes in work force

           On May 11, 2001, the Company terminated approximately 800 employees
in an effort to reduce costs.

                                      F-22