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

                                   FORM 10-K

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

                 For the fiscal year ended December 31, 1999.

                                      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 [X] No [_].

  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of 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 $1,008 million on March 14,
2000, 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 14, 2000 was as follows:

                       Common Stock, Class A 32,781,419
                       Common Stock, Class B 22,260,610

                      DOCUMENTS INCORPORATED BY REFERENCE

  Portions of the Registrant's definitive proxy statement to be filed with the
Securities and Exchange Commission in connection with the Registrant's 2000
Annual Meeting of Stockholders are incorporated by reference into Part III.
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                               TABLE OF CONTENTS

                                     PART I

<TABLE>
 <C>      <S>                                                               <C>
 Item 1.  Business                                                            3
 Item 2.  Properties                                                         13
 Item 3.  Legal Proceedings                                                  13
 Item 4.  Submission of Matters to a Vote of Security Holders                13

                                    PART II

 Item 5.  Market for Registrant's Common Equity and Related Stockholder
          Matters                                                            14
 Item 6.  Selected Financial Data                                            16
 Item 7.  Management's Discussion and Analysis of Financial Condition and
          Results of Operations                                              17
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk         23
 Item 8.  Financial Statements and Supplementary Data                        23
 Item 9.  Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure                                               23

                                    PART III

 Item 10. Directors and Executive Officers of the Registrant                 24
 Item 11. Executive Compensation                                             24
 Item 12. Security Ownership of Certain Beneficial Owners and Management     24
 Item 13. Certain Relationships and Related Transactions                     24

                                    PART IV

 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K    25

 Signatures                                                                  27
 Index to Financial Statements                                              F-1
</TABLE>

                                       2
<PAGE>

  Except for any historical information contained herein, the matters
discussed in this Annual Report on 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. Factors that may cause actual
results, performance or achievements of the Company, or industry results, to
differ materially from those contemplated by such forward-looking statements,
include, without limitation: (1) the Company's ability to meet its existing
debt service obligations and the availability of additional funds to pursue
the Company's business plan; (2) the Company's pace of entry into new domestic
and international market areas and the ability to secure building access; (3)
the Company's success in obtaining spectrum licenses in international markets
and the ability of the Company to negotiate definitive agreements with its
international joint venture partners; (4) the time and expense required to
build the Company's planned network; (5) the Company's ability to integrate
and maintain internal management, technical information and accounting
systems; (6) the Company's ability to hire and retain qualified personnel to
operate its business; (7) the impact of changes in telecommunication laws and
regulations; (8) the Company's success in gaining regulatory approval for its
products and services, when required; (9) the Company's ability to
successfully interconnect with the incumbent carriers; (10) the timely supply
of necessary equipment; (11) the Company's ability to adjust to rapid changes
in technology and to prevent misappropriation of its technology; (12) the
intensity of competition; and (13) general economic conditions.

  Given these uncertainties, prospective investors are cautioned not to place
undue reliance on such forward-looking statements.

                                    PART I

  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 1. BUSINESS

Teligent

  We are a full-service, facilities-based communications company. We offer
small and medium-sized business customers local and long distance telephony,
high-speed data and Internet access services over our digital SmartWave(TM)
local networks. Our SmartWave(TM) local networks integrate advanced fixed
wireless technologies with traditional broadband wireline technology. Our
digital wireless technology provides many of the advantages of fiber and can
transport information within the network at up to 155 Megabits per second, or
Mbps, also known as OC-3 speed, via a point-to-point radio. We believe this
technology addresses the growing marketplace demand for the delivery of
broadband applications and services. This demand results in part from the
increased acceptance and reliance on the Internet by business users as well as
the emergence of bandwidth intensive applications such as electronic commerce,
streaming audio and video and large data file transfers.

  We believe we are well positioned to capture revenues in the rapidly
growing, approximately $150 billion domestic business local exchange, long
distance, Internet, and data communications markets. Incumbent local exchange
carriers, or ILECs, whose networks are increasingly burdened by capacity
constraints, have historically provided local exchange services. These
capacity constraints are a result of increased data traffic and the inherent
inefficiency of the ILECs' older, copper wire-based networks. The need for
companies that can alleviate this local access bottleneck, coupled with
changes in the regulatory environment intended to enhance competition, has
created opportunities for providers of broadband access such as ourselves.

                                       3
<PAGE>

  We are currently offering commercial service using our SmartWave(TM) local
networks in 40 major market areas that comprise more than 580 cities and towns
with a combined population of more than 100 million. As of March 17, 2000, we
offer our service in the following cities:

<TABLE>
<S>                           <C>                             <C>
New York, NY                  Baltimore, MD                   San Antonio, TX
Los Angeles, CA               Phoenix, AZ                     Indianapolis, IN
Chicago, IL                   Seattle, WA                     Orlando, FL
Philadelphia, PA              Denver, CO                      New Orleans, LA
Detroit, MI                   Miami-Fort Lauderdale, FL       Hartford, CT
Dallas-Fort Worth, TX         Tampa, FL                       Nashville, TN
Houston, TX                   Cleveland, OH                   Jacksonville, FL
Washington, DC                Portland, OR                    West Palm Beach, FL
San Francisco-Oakland, CA     San Jose, CA                    Austin, TX
Boston, MA                    Cincinnati, OH                  Charlotte, NC
Atlanta, GA                   Kansas City, MO                 Richmond, VA
San Diego, CA                 Sacramento, CA                  Raleigh, NC
Minneapolis-St. Paul, MN      Milwaukee, WI                   Wilmington, DE
St. Louis, MO
</TABLE>

Our Network

  We deploy our SmartWave(TM) local networks, made up of advanced fixed
wireless as well as traditional wireline networks, to provide last mile
customer connection in the majority of major market areas in the United
States. Our network carries traffic using various transport protocols,
including the Asynchronous Transfer Mode, or ATM, protocol, a digital cell-
based transport protocol that can carry Internet Protocol, or IP, data traffic
and voice traffic. We believe that having these types of digital, integrated
networks allow us to offer robust, high-speed data and Internet solutions, in
addition to local and long distance voice, across a broad service area,
accommodate new customers quickly, and expand our customer base.

  We use a combination of fixed wireless and wireline facilities to connect
the voice switching and data routing center to the base stations distributed
throughout the market area. Our base stations transmit to, and receive signals
from, equipment at customer premises. In the case of our fixed wireless
customers, the customer premises equipment includes two components: (i) a
small digital microwave antenna installed generally on the roof of the
customer's building and (ii) indoor equipment installed within the building
which is connected to the internal building wiring. The antenna communicates
with a Teligent base station by a microwave signal. Our base stations have
coverage areas of up to 30 square miles, depending on a number of factors such
as power levels used, customer density, local weather environment and network
design. We provide services to our wireline customers by using T-1 or higher
capacity lines installed at our customer's premises. We lease these T-1 or
higher capacity lines from other carriers.

  Our broadband switching centers house traditional circuit-based systems as
well as packet-based routers and data switches. These switching systems are
engineered to interconnect customer locations the customer may have within the
Teligent network. Our customer premises equipment is shared among all
customers in the building. Similarly, equipment at each node site is shared
among all customer premises equipment served by that node.

Our Service Offerings

  We offer an integrated package of services, including local and long
distance services (domestic and international) as well as Internet services,
broadband access, voice mail, conference calling, call forwarding and other
advanced communications services.

  Local Phone Services. We provide our customers a wide range of local phone
services. These services include basic local services, access to long distance
and intra-local access and transport area, or LATA, switched and dedicated
lines, direct inward dialing, Digital Private Branch Exchange, Premium Rate
Interface, voice mail and custom calling services.

                                       4
<PAGE>

  Long Distance. We offer long distance services, which we seek to sell to
customers as part of a product bundle, through agreements with national long
distance companies. These long distance services include domestic intrastate,
interstate and international calling, toll-free services (800, 888, 877),
calling card, and conference calling and other enhanced services. When our
coverage area spans multiple LATAs, we use our own facilities to provide
inter-LATA long distance service.

  Internet and Data Services. Using the high bandwidth capacity of our
SmartWave(TM) local networks, which allows large volumes of information to be
transmitted at high speeds, we offer transport for Internet services from our
customer's premise to the Internet through Teligent's central office in each
city in which we offer services. Current Internet services that we offer on
our own facilities include Domain Name Serving, or DNS, e-mail, basic web
hosting and transit facilities. We also offer dedicated private line services,
providing local dedicated data access circuits as well as the long distance
portion of those circuits. These links are used to connect offices for file
sharing, e-mail and workgroup applications.

Our Spectrum Licenses

  Through our wholly-owned licensed subsidiaries, we hold 24 GHz fixed
wireless digital message service, or DEMS, licenses granted by the Federal
Communications Commission, or FCC. Our DEMS licenses cover 74 major market
areas, comprising more than 750 municipalities in the United States, including
320-400 MHz of spectrum in 27 of the 35 most populous market areas in the
United States, and at least 80 MHz of spectrum in 47 other major market areas.
These licenses, which were previously granted for operations only in the 18
GHz band, were not subject to grant by auction. The majority of the 24 GHz
licenses were either transferred or assigned to Teligent pursuant to FCC
authority. Teligent, through certain of its subsidiaries, also holds common
carrier microwave licenses at other frequencies for use in its business.

  Teligent is seeking to become a provider of fixed wireless services
internationally and has been granted, or the joint ventures to which we are a
party have been granted, spectrum licenses in Germany, Hong Kong, Argentina
and Spain. We have also submitted, through a joint venture, an application for
spectrum licenses in France and are participating in a spectrum auction in
Austria. Additionally, Teligent intends to apply or bid for other international
rights. See "Teligent International" below.

Our Business Strategy

  Our goal is to be a full-service, premier facilities-based communications
provider to small and medium-sized businesses. Our strategy is as follows:

  Rapid deployment of local broadband networks to alleviate the last mile
local bottleneck . We build high-bandwidth local networks that integrate data
and voice signals on a single, digital platform. We are able to quickly
establish service in our market areas because our wireless equipment can be
deployed more rapidly than wireline networks. Additionally, our customer
premises equipment may be shared among all customers in a building and
equipment at each node site is shared among all customer premises equipment
served by that node.

  Target small and medium-sized business. We focus our marketing efforts on
small and medium-sized businesses with up to 700 telephone lines. We target
these customers through direct sales efforts, partnership marketing, targeted
advertising, promotional efforts and other indirect sales channels. We may
also, from time to time, selectively pursue sales opportunities with larger
businesses.

  Focus on the local, data and Internet markets. We are deploying the most
current digital technologies available (such as ATM and IP equipment) to meet
the growth opportunities in the local, data and Internet markets. We intend to
build on the capabilities of our all-digital networks to create a premier
suite of local, data and Internet service offerings for our customers. We
currently offer on our own facilities DNS, e-mail, basic web hosting and
transit facilities. New service offerings may include advanced Web and
application hosting products, virtual private networks and business-to-
business e-commerce. See "Internet and Data Initiatives" below.

                                       5
<PAGE>

  Continue to build infrastructure to support growth. We are focused on
continuing to build our infrastructure, including people, processes and back
office systems, to compete successfully in our market areas. Consequently, we
have implemented programs to attract and retain highly qualified personnel and
have streamlined processes to ensure an optimal customer experience. We have
installed an integrated systems architecture to support rapid growth in the
business.

  Develop brand awareness and deliver high quality customer servce. We seek to
provide high quality and reliable communications services and highly
responsive customer support at competitive prices. We continue to market
ourselves through a national print, radio and display campaign. We also
distinguish ourselves through high quality service that is responsive to our
customers' needs.

  Expand internationally. We are actively pursuing opportunities in countries
where we and our partners have been awarded fixed wireless licenses. We
continue to evaluate additional opportunities or seek licenses in countries
where radio spectrum is becoming available for non-government use for the
first time and where we believe that our broadband integrated technology would
provide a viable economic alternative. We believe that our fixed wireless
expertise will give us an advantage when entering international market areas.
See "Teligent International" below.

Internet and Data Initiatives

  The market for Internet and data services is growing rapidly. High bandwidth
applications such as electronic commerce and streaming audio and video will
drive this growth. For example, International Data Corporation predicts that
worldwide Internet commerce will grow from approximately $50 billion in 1998
to over $1.3 trillion in 2003. We are positioning ourselves to take full
advantage of this opportunity by providing an end-to-end broadband solution
for our small and medium-sized business customers. Since we provide the
connection to our end user for the last mile, we can configure the network to
support broadband technology from the customer premise directly to the
Internet. We currently offer a variety of Internet services as a complement to
our broadband access. We plan to extend our capabilities to include advanced
Web and application hosting products, virtual private networks and business-
to-business e-commerce. We believe that developing a broader array of
communications service offerings will allow us to more easily attract and
retain customers as well as increase our average revenue per customer.

 Internet Infrastructure

  We are establishing the infrastructure required to offer our own Internet
service provider, or ISP, service and migrating customers to that service. We
have completed a new data center in Washington, DC and nearing completion of
construction of a data center in Chicago, are constructing an additional data
center in Northern California and are carrying Internet traffic through our
ISP facilities in all of our market areas. Our data centers provide our entry
points to the Internet and allow us to provide our customers with DNS, e-mail
and basic web hosting services directly through our servers. We believe that
providing our own ISP service to our customers will elicit the following
benefits for us:

  Data and Internet sales. Demand for bandwidth in our target market is higher
than we originally anticipated with a significant number of customers
purchasing service at T-1 capacity. For our customers that are taking
dedicated access at lower speeds, such as 128 or 256 kilobits per second, the
flexibility of our network allows us to migrate them to significantly higher
speeds as their needs grow.

  Tailored product offering. We believe it will be critical to respond to
changing customer needs with customized applications delivered in a timely
manner. Through direct control of our own ISP services, we expect we will be
well positioned to respond quickly to the changing and disparate requirements
of our customer base. In addition, with our own facilities-based ISP, we are
free to develop, partner, or acquire state-of-the-art, customized services
that might not be available to us on a wholesale basis.

  Better margins and return on capital. We believe we can realize
substantially higher gross margins and operating leverage with Internet
services provided over our own network. Because we already have the access,

                                       6
<PAGE>

switching/routing, and transport infrastructure in place, adding the ISP
functionality should improve network utilization which will increase our
return on invested capital.

 SmartWave DSL(TM)

  As part of our Internet and data initiatives, we also offer SmartWave
DSL(TM), a shared access service offering that is competitively priced for
customers who do not need dedicated access. SmartWave DSL(TM) utilizes a
Digital Subscriber Access Line Multiplexer, or DSLAM, in the customer building
to deliver Internet access to the end user. The DSLAM equipment currently
deployed allows us to deliver speeds up to 1.5 megabits per second to these
customers. As our SmartWave DSL(TM) customers' needs grow, we can migrate them
to dedicated access.

  SmartWave DSL(TM) offers the following advantages over Digital Subscriber
Line, or DSL, services offered by ILECs and most other competitive local
exchange carriers, or CLECs:

  No distance limitations. The speeds available to a given customer over
copper lines depend on the distance from the ILEC's central office to the
customer. If the distance from the central office to the customer is too far,
DSL service cannot be delivered within commercial standards. Because our
SmartWave DSL(TM) uses DSL technology only within the customer's building,
typical copper-line distance limitations do not restrict us.

  Greater network control/Ease of upgrade. Some other service providers
deploying DSL have no clear migration path for their customers when their
needs outgrow a shared service. Our SmartWave(TM) network allows us to upgrade
DSL customers to dedicated Internet service.

Sales and Marketing

  Sales and Marketing Overview. Our target market is small and medium-sized
businesses. To develop the market potential of our network in the United
States, we have organized our operations into three geographic regions. The
extent of sales activity in each market area depends upon a number of factors
including (1) number of license areas, (2) geographic size of license areas,
(3) customer density within licensed areas and (4) the competitive landscape.

  Sales Force. We seek to recruit salespeople with successful experience in
competitive communications businesses, including individuals with backgrounds
in competitive local exchange, competitive long distance, telecommunications
equipment and data services. Our salespeople have performance incentives that
tie a significant portion of their compensation to the actual revenue they
produce. Salespeople receive performance incentives that encourage them to
maximize penetration in buildings in which we have a lease. Our sales force is
trained to sell our full product line of local, long distance, Internet and
data services.

  Marketing. We supplement our direct sales force through various marketing
plans, including direct mail, partnership marketing (in specific buildings or
associated properties), targeted advertising and promotional efforts in our
coverage areas. In addition, we use alternate or indirect channels of
distribution, including a sales agent program and telemarketing.

Teligent International

  We have established international joint ventures with local partners through
which we have acquired fixed wireless spectrum licenses and are in the process
of building and operating wireless "last mile" connection facilities. We also
continue to evaluate actively opportunities to acquire fixed wireless spectrum
in other target countries, either through applications or auctions. The
business communications market outside the United States was $312 billion in
1999, almost twice the size of the U.S. market, and we believe that this
market is also growing rapidly. We believe that only approximately 1% of
commercial buildings in Europe are directly connected to fiber facilities,
whereas in the United States approximately 3-4% of commercial buildings are
directly connected. In many Asian and South American countries, the existing
local telecommunications infrastructure is obsolete and needs to be updated
quickly. In these international market areas, the "last mile"

                                       7
<PAGE>

connection often constitutes the biggest bandwidth bottleneck and therefore
presents the best opportunity for the deployment of fixed wireless
infrastructure. The speed of deployment of fixed wireless infrastructure also
makes this technology an attractive means to provide Internet access to market
areas.

  The following table shows the countries in which we have established
partnerships, the approximate population coverage in each country, the
spectrum bands licensed to each joint venture and our partners in those
countries:

<TABLE>
<CAPTION>
                    Approximate
                     Population
     Country          Coverage            Spectrum Band                Partners
     -------        ------------         ----------------         ------------------
     <S>            <C>                  <C>                      <C>
     Germany        23.1 million         26 GHz & 3.5 GHz         Mannesmann Arcor
     Spain          39.1 million         26 GHz                   Jazztel, Abengoa
     Hong Kong       6.5 million         24-25 GHz                HKNet, CCT Telecom
     Argentina      16.4 million         24-25 GHz                Telcom Ventures
</TABLE>

  In each of the countries listed above, we and/or our partners were awarded
spectrum as a result of regulated application procedures, not auction. Build-
out requirements, however, are included in the terms of such licenses.

  In addition, in France, we have formed a joint venture with LD Com and
Artemis, and the joint venture submitted an application to the French
telecommunications authority for fixed wireless spectrum
licenses in the 24.5--26.5 GHz band. We are also participating in a spectrum
auction in Austria. We are in the process of negotiating definitive agreements
with respect to each of our established joint ventures.

International Strategy

  Target countries with positive economic and regulatory environments. We have
identified target countries for potential expansion based on two major
factors: economic environment and regulatory environment. We assess a
country's economic environment on the basis of key drivers, including gross
domestic product, per capita gross domestic product, inflation rate, interest
rates, telecommunications spending and the size of the small to medium
business market. We assess a country's regulatory environment based on the
degree to which the market is open to competition and how strongly the
relevant regulatory body supports new entrants.

  Acquire spectrum. Before constructing our networks in an international
market area, it is necessary for us to acquire rights to use fixed wireless
spectrum in such market area. We and/or our partners have been granted
spectrum licenses in Germany, Hong Kong, Spain and Argentina and have
submitted, or are preparing, applications to acquire licenses in a number of
other countries. We expect that additional countries may either allocate or
auction fixed wireless spectrum during 2000. We believe that our position as a
leading provider of fixed wireless service in the U.S. will give us an
advantage over other applicants that do not have experience in building and
operating fixed wireless networks.

  Establish partnering relationships with local providers. We generally enter
each target market by forming a joint venture with one or more local partners.
We generally hold a minority interest in these joint ventures. We seek local
partners because we believe that a local partner will help the joint venture
obtain local regulatory approval, provide access to capital, hire experienced
local management and acquire building access rights and local network assets,
all of which will accelerate the build-out of the network in that country.

  Capitalize on our fixed wireless experience. We intend to enter new
international market areas quickly and effectively by capitalizing on our
experience in selecting switch and nodal sites, acquiring building access
rights, network planning, systems integration, marketing and sales.

  Capitalize on the strengths of our local partners. We will look to
capitalize on the local infrastructure, operational marketing, customer base
and regulatory expertise of each of our local partners, which include
Mannesmann Arcor, Jazztel, HKNet and CCT Telecom.

                                       8
<PAGE>

Key Vendors

  The majority of our network equipment, including switches, base stations and
antennas, is currently provided by Nortel Networks, Inc., pursuant to a
network products purchase agreement signed in December 1997. Although Nortel
is our primary vendor and systems integrator, our strategy is to identify and
use additional suppliers to ensure a high level of quality and reduce the cost
of our equipment over time. In this regard, we entered into an equipment
purchase definitive agreement dated December 18, 1998 with Hughes Network
Systems. We expect the delivery of point to multi-point equipment in
commercial quantities before the end of 2000 pursuant to the agreement with
Hughes Network Systems. We continue to evaluate different suppliers and to
test equipment manufactured by other suppliers.

Our Corporate History

  Teligent was formed in September 1997 as a wholly owned subsidiary of
Teligent, L.L.C., a limited liability company formed in March 1996. Teligent,
L.L.C. was formed by Microwave Services, Inc., or MSI, a subsidiary of
Associated, and Digital Services Corporation, or DSC, an affiliate of Telcom
Ventures, L.L.C., both of which had extensive experience in pioneering
wireless communications businesses. In September 1996, Alex J. Mandl, formerly
President and Chief Operating Officer of AT&T Corp., was named our Chairman of
the Board and Chief Executive Officer. In October 1997, Teligent, L.L.C.
acquired all of the stock of FirstMark Communications, Inc. for cash and a 5%
member interest in Teligent, L.L.C. FirstMark held various fixed wireless
licenses. On November 21, 1997, in connection with our initial public
offering, Teligent, L.L.C. merged into Teligent. Prior to the merger, a wholly
owned subsidiary of Nippon Telegraph and Telephone Corporation, or NTT,
acquired a 5% interest in Teligent, L.L.C., and immediately after the merger
acquired an additional 7.5% equity interest in Teligent. Pursuant to the
merger, all of the ownership interests of Teligent, L.L.C. were exchanged for
shares of Teligent Class B common stock, except for the ownership interest
held by FirstMark which was exchanged for shares of Class A common stock.

  On January 14, 2000, Liberty Media Corporation acquired Associated. As a
result, Liberty Media acquired Associated's beneficial ownership interest in
Teligent, representing approximately 33.5% of the total issued and outstanding
shares of our Class A common stock as of March 14, 2000, after giving effect
to conversion of the 7 3/4% Series A convertible preferred stock. Liberty
Media, which holds most of the assets included in the Liberty Media Group, is
an indirect wholly owned subsidiary of AT&T; however, the management of
Liberty Media Group is not controlled by AT&T.

Competition in the Telecommunications Industry

 Local Telecommunications Market

  Competition from ILECs. The local telecommunications market is intensely
competitive for newer entrants and currently is dominated by the regional bell
operating companies, known as RBOCs, and other ILECs. In each market area in
which we are authorized to provide services, we compete or will compete with
several other service providers and technologies, including cable. We compete
on the basis of local service features, quality, price, reliability, customer
service and rapid response to customer needs. The ILECs have long standing
relationships with their customers, have significant name recognition and
financial resources, have the potential to subsidize competitive services with
revenues from a variety of business services, and benefit from outmoded
regulations that still favor the ILECs over us in certain respects.

  The Telecommunications Act of 1996 reduced barriers to entry into new
segments of the industry. We believe that the requirements of the
Telecommunications Act promote greater competition and have helped provide
opportunities for broader entrance into the local exchange markets. However,
as ILECs face increased competition, regulatory decisions are starting to
provide them with increased pricing flexibility, which in turn may result in
increased price competition. Increased price competition may negatively impact
Teligent.

  A number of companies, including the ILECs themselves, are developing
enhancements to increase the performance of the ILECs' copper wire-based
legacy networks. These generally consist of digital subscriber line products,
such as ADSL and SDSL. We may not be able to compete effectively with these
enhancements.

                                       9
<PAGE>

  Competition from Potential New 24 GHz and Other Fixed Wireless Companies. We
face potential competition from other fixed wireless service providers, such
as Winstar Communications, Inc. and NextLink Communications, Inc., as well as
interexchange carriers, or IXCs, other CLECs and other leading
telecommunications companies. Recently, the FCC proposed rules for the
issuance of additional 24 GHz licenses for up to five 80 MHz channels in each
market area (except for those market areas already licensed to Teligent.) See
"Government Regulation." The FCC has proposed to make additional 24 GHz
licenses available through an auction. Other entities having greater resources
than we do could acquire these authorizations, when made available by the FCC.
See "Government Regulation." Teligent is currently the only commercial
licensee in the 24 GHz band. In 27 of the top 35 market areas in the United
States, Teligent already holds 4 or 5 of the 5 channels that are available in
each market within the band.

  We also face competition from entities that offer or are licensed to offer
terrestrial fixed wireless services in other frequency bands, including
Multichannel Multipoint Distribution Service, or MMDS, 28/31 GHz Local
Multipoint Distribution Service, 39 GHz wireless communications systems, 2.8
GHz Wireless Communications Service, FCC Part 15 unlicensed wireless radio
devices, and other services that use existing point-to-point wireless channels
on other frequencies. On April 12, 2000, the FCC will commence an auction that
will award additional 39 GHz fixed-wireless licenses, the outcome of which
will likely increase the number of 39 GHz service providers in the United
States. Teligent has submitted an application to participate in this auction.
Some companies, such as TeraBeam Corporation, may seek to deploy fiberless
optical technologies that rely on light waves such as laser beams to carry
signals. Additionally, other companies have filed applications for global
broadband satellite systems proposed to be used for broadband voice and data
services. If developed, these systems could also present us with significant
competition.

  Other Competitors. We also face local and long distance competition from
AT&T, MCI WorldCom, Sprint, and other IXCs. We may face competition from
electric utilities (several have secured the necessary authorizations to
provide local telephone service and are in various stages of implementing
their business plans), ILECs operating outside their current local service
areas, and other providers. These entities provide transmission services using
technologies that may enjoy a greater degree of market acceptance than our
wireless broadband technology in the provision of last mile services.
Moreover, the consolidation of telecommunications companies and the formation
of business alliances within the telecommunications industry, which have
accelerated as a result of the passage of the Telecommunications Act, could
give rise to significant new or stronger competitors. We may not be able to
compete effectively in any of our market areas.

 Long Distance Telecommunications Market

  The long distance market has relatively insignificant barriers to entry,
numerous entities competing for the same customers and a high average churn
rate as customers frequently change long distance providers in response to the
offering of lower rates or promotional incentives by competitors. We compete
with major carriers such as AT&T, Sprint and MCI WorldCom, as well as other
national and regional long distance carriers and resellers. Bell Atlantic, the
first RBOC to receive in-region long distance authority, is now competing in
the long distance market in the state of New York and Southwestern Bell
Telephone Co. has sought similar FCC approval for the state of Texas. We
believe that one or more other RBOCs may compete in the long distance
telecommunications industry in certain states by year-end 2000. See
"Government Regulation." ISPs also will compete in this market. We believe
that the principal competitive factors affecting our market share will be
pricing, customer service, accurate billing, clear pricing policies and, to a
lesser extent, variety of services. Our ability to compete effectively will
depend on maintaining high quality, market-driven services at prices generally
perceived to be equal to or below those charged by our competitors. To
maintain a competitive posture, we believe that we must be in a position to
reduce prices in order to meet reductions in rates, if any, by others. Any
such reductions could adversely affect us. In addition, ILECs have been
obtaining additional pricing flexibility for certain services. This may enable
ILECs to give volume discounts to larger long distance customers, which also
would put our long distance business at a disadvantage in competing with these
providers.

 Internet Services

  Our Internet services face significant competition from other ISPs, as well
as from other ILECs, CLECs and IXCs. There is a great deal of competition in
the delivery of Internet service to small and medium-sized

                                      10
<PAGE>

businesses, our target market. We believe our local networks provide a low-
cost advantage in delivering Internet service. However, there can be no
assurance that we can successfully compete with larger and more established
companies that already provide Internet service or have resources to enter the
market.

Intellectual Property

  We use the name "Teligent" as our primary business name and service mark in
the United States. We own U.S. Reg. Nos. 2,290,419, 2,265,163, 2,306,392 and
2,265,162 for the TELIGENT mark in connection with a variety of communications
services. Three of the registrations were issued by the U.S. Trademark Office
in 1999 and one was issued in January, 2000.

  In addition, we own a U.S. service mark registration for THE SMART WAY TO
COMMUNICATE, U.S. Reg. No. 2,220,244, for use with communications services,
issued January 26, 1999. We have also filed several applications with the U.S.
Trademark Office to register marks that we are using or which we intend to
use, including SMARTWAVE, E.MAGINE and other marks. We reasonably believe that
the applications will mature to registration, but there is no assurance until
the registrations are actually issued. We are also pursuing the registration
of service marks and trademarks in various countries outside the United
States. We have secured some of those registrations, but we are still in the
application prosecution stage for the majority of them. If we decide to
conduct business in a country in which we are unable to obtain rights to some
of the marks we use in the U.S., including "TELIGENT," we may determine to
license rights to use those marks or conduct business under a different name
or mark.

  We rely upon a combination of licenses, confidentiality agreements and other
contractual covenants, to establish and protect our technology and other
intellectual property rights. We currently have no patents; however, we have a
U.S. patent application pending for our online customer billing and usage
system known as e.magine SM and another U.S. application pending for our
proprietary active repeater antenna technology. In addition, we have filed a
patent application for the e.magine SM system under the WIPO patent
application procedures, preserving our right to file patent applications in
most countries outside of the United States.

  We cannot be sure the steps we take will be adequate to prevent
misappropriation of our technology or other intellectual property or that our
competitors will not independently develop technologies that are substantially
equivalent or superior to Teligent's technology. Moreover, although we believe
that our business as currently conducted does not infringe upon the valid
proprietary rights of others, we cannot be sure that third parties will not
assert infringement claims against Teligent or that, in the event of an
unfavorable ruling on any such claim, a license or similar agreement to
utilize technology that we rely upon in the conduct of our business will be
available on reasonable terms.

Government Regulation

 Overview

  Our fixed wireless broadband services are subject to regulation by federal,
state and local governmental agencies. We have authority to offer competitive
local telephone services in 39 states and the District of Columbia, covering
all of our 74 licensed major market areas. We have also successfully
negotiated interconnection agreements with all of the major local exchange
carriers, including Ameritech, Bell Atlantic, GTE, Pacific Bell, Southwestern
Bell, Sprint, Bell South and US WEST.

  At the federal level, the FCC has jurisdiction over the use of the
electromagnetic spectrum (i.e., the frequency bands used to provide our
wireless services) and has exclusive jurisdiction over all interstate
telecommunications services, that is, those that originate in one state and
terminate in another state or country. State regulatory commissions generally
have jurisdiction over intrastate communications, that is, those that
originate and terminate in the same state. Municipalities and other local
jurisdictions may regulate limited aspects of our business by, for example,
imposing zoning and franchise requirements and requiring installation permits.
We are also subject to taxation at the federal and state levels and may be
subject to varying taxes and fees from local jurisdictions.

                                      11
<PAGE>

 Federal Legislation

  The Telecommunications Act. The Telecommunications Act, enacted on February
8, 1996, established local exchange competition as a national policy by
removing state regulatory barriers to competition and preempting laws
restricting competition in the local exchange market. The Telecommunications
Act mandated that ILECs comply with various requirements designed to foster
competition. In addition, the Telecommunications Act allows RBOCs to provide
in-region inter-LATA or long distance services on a state-by-state basis once
certain market-opening requirements are implemented and entry is determined to
be in the public interest. The provisions of the Telecommunications Act are
designed to ensure that RBOCs take affirmative steps to level the playing
field for their competitors so that others can compete effectively before the
RBOC secures in-region long-distance entry. To date, only Bell Atlantic has
gained authority to provide in-region inter-LATA service for the state of New
York, although Southwestern Bell has an application pending at the FCC for
such authority for the state of Texas.

 Federal Regulation

  The Telecommunications Act Regulations. The Telecommunications Act in some
sections is self-executing, but in most cases the FCC must issue regulations
that identify specific requirements before we and our competitors can proceed
to implement the changes prescribed by the Telecommunications Act. The outcome
of these various ongoing FCC rulemaking proceedings or judicial appeals of
such proceedings could materially affect our business, financial condition and
results of operations.

  Certain of our interconnection agreements are currently being renegotiated
because they have reached their expiration dates and others will reach their
expiration dates and will become subject to renegotiation this year. While
these agreements contain provisions for uninterrupted interconnection during
the renegotiation period, we may not be able to obtain comparable provisions
in the subsequent agreements or we may have to resort to the states for
resolution pursuant to arbitration under the Telecommunications Act. In
November 1999, the FCC adopted new rules for unbundled network elements, or
UNEs. While we rely less on UNEs than many of our competitors, we may not be
able to obtain provisions in interconnection agreements that incorporate these
UNE modifications to benefit us.

  FCC Licensing. The Communications Act of 1934 imposes certain requirements
relating to licensing, common carrier obligations, and reporting. We believe
that we are in compliance with all FCC requirements relating to our licenses
and common carrier obligations, including our "Section 214" authorization
which authorizes us to provide international facilities-based and resold
telecommunications services between the U.S. and virtually any other country.
We must maintain--and currently do have--tariffs on file with the FCC
governing our provision of domestic interstate and international common
carrier telecommunications services. On October 30, 1998, the FCC granted
Teligent's petition for a public interest determination that its license-
holding subsidiaries could increase their indirect foreign ownership from WTO
countries up to a 49.9% non-controlling level through fluctuations in publicly
traded shares without obtaining prior FCC approval. Our foreign ownership is
currently below 49.9%.

  Numerous federal regulatory proceedings are pending regarding issues that
may materially affect us, including but not limited to the rules governing use
of the spectrum licensed to us in any band and the radio equipment we use,
universal service, preemption of barriers to competition and access to rights-
of-way and buildings. For example, the FCC has proposed to adopt new rules for
future fixed wireless licensing in the 24 GHz band which include proposals to
auction available spectrum and to adopt modified service rules for 24 GHz
operations. The licensing rules that the FCC has proposed may never be
adopted. Moreover, the point-to-multipoint equipment we currently use may not
comply with the service rules ultimately adopted by the FCC. The FCC is also
considering whether to adopt new rules to address non-discriminatory building
access for all service providers. These rules may never be adopted, and if
they are, they may not enhance our ability to gain access.

                                      12
<PAGE>

 State Regulation

  Many of our services are classified as intrastate services subject to state
regulation. All of the states where we operate require some degree of state
regulatory commission approval to provide certain intrastate services. In most
states, intrastate tariffs are also required for various intrastate services,
although we are not typically subject to price or rate of return regulation
for tariffed intrastate services. We have received state authorizations to
provide facilities-based local and long distance services in 39 states and the
District of Columbia, covering all 74 of our licensed market areas. Of the
remaining eleven states, we have obtained resold long distance-only authority
in ten states and still have an application pending for such authority in
Alaska.

 Local Regulation

  We need to interact with local governments in a variety of ways. How diverse
local governments will exercise traditional functions, including zoning,
permitting and management of rights of ways, and address the expansion of
telecommunications competition and varying means of entry in particular, is
uncertain. The kinds and timing of approvals required to install antennas and
conduct other aspects of our business varies among local governments and may
also vary with the specific technology or equipment configuration.

  While the Telecommunications Act permits local governments to manage rights
of way, the scope of that authority, including the circumstances when fees can
be charged and the amount of such charges, has already been the subject of
numerous disputes between telecommunications carriers and local governments.
In addition, some local governments have been requiring substantial filings
and review before telecommunications carriers can operate in their licensed
areas and have also required the payment of significant franchise fees or
taxes. Some of these disputes involving franchising requirements, antenna
siting, and rights-of-way are in litigation and more litigation is likely. The
FCC has recently prevented enforcement of certain state and local regulations
that had the effect of inhibiting local competition. Any inability or
unwillingness by the FCC or the courts to preempt additional state and local
regulations in a timely fashion could adversely impact us.

Employees

  As of March 14, 2000, we had a total of 2,882 employees. We are not a party
to any collective bargaining agreements and believe that our relations with
our employees are good.

ITEM 2. PROPERTIES

  Our principal executive offices are located in Vienna, Virginia, and consist
of approximately 114,000 square feet held under leases that expire in four to
seven years. We also have other office space under short-term subleases in
Fairfax and Reston, Virginia totaling approximately 98,000 square feet. We are
taking steps to ensure that we have appropriate facilities for our current and
future needs.

  We have a ten-year lease for facilities that house a network operation
center and other functions in Herndon, Virginia, consisting of approximately
50,000 square feet.

  We will lease and have been leasing space in and around each of our licensed
areas where it is necessary to house switches, other equipment and personnel.

ITEM 3. LEGAL PROCEEDINGS

  We are involved from time to time in ordinary routine litigation incidental
to our operations. Other than the license and regulatory proceedings described
under "Government Regulation," we are not currently a party to any legal
proceedings that we believe will have a material adverse effect on our
financial condition or results of operations.

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

  During the fourth quarter of the fiscal year covered by this Annual Report
on Form 10-K, there were no matters submitted to a vote of security holders
through the solicitation of proxies or otherwise.

                                      13
<PAGE>

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

  We have two classes of common stock authorized and outstanding, Class A
common stock and Class B common stock. Our Class A common stock, par value
$.01 per share was first offered to the public on November 21, 1997 and is
listed on The Nasdaq National Market under the symbol "TGNT." Our Class B
common stock, par value $.01 per share, is not traded on any exchange. As of
March 14, 2000, there were two stockholders of record of the Class B common
stock. The following table shows the high and low closing prices of the Class
A common stock as reported on The Nasdaq National Market. These transactions
reflect inter-dealer quotations, without retail markup, markdown or commission
and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
                                                              Class A
                                                              Common
                                                               Stock
                                                             --------------
                                                             High      Low
                                                             ----      ----
<S>                                                          <C>       <C>
Quarter Ended:
March 31, 1998.............................................. $34 15/16 $24 1/4
June 30, 1998............................................... $31 5/8   $26 1/4
September 30, 1998.......................................... $33 1/4   $19 1/2
December 31, 1998........................................... $33       $21 15/16

Quarter Ended:
March 31, 1999.............................................. $43 1/2   $30
June 30, 1999............................................... $62 1/2   $39 3/16
September 30, 1999.......................................... $75 5/8   $46
December 31, 1999........................................... $65 1/4   $42 11/16
</TABLE>

  As of March 14, 2000, the last sale price of the Class A common stock as
reported on The Nasdaq National Market was $91 per share. As of March 14, 2000
there were 210 record holders of Teligent's Class A common stock. This number
does not include stockholders who beneficially own shares held in street name
by brokers.

  We have not paid any cash dividends on our common stock in the past and do
not plan to in the foreseeable future. The terms of the Existing Credit
Facility (see "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources"), the indentures
relating to our 11 1/2% Senior Notes due 2007, and our 11 1/2% Senior Discount
Notes due 2008, restrict our ability to pay dividends on common stock.

Recent Sales of Unregistered Securities

  On December 3, 1999, the Company completed the sale of 500,000 shares of its
7 3/4% Series A cumulative convertible preferred stock, liquidation preference
$1,000 per share, par value $.01 (the "Series A Preferred Stock"), to an
investor group for gross proceeds of $500 million. The investor group included
Microsoft Corp., Hicks, Muse, Tate & Furst Incorporated, Chase Capital
Partners, DB Capital Partners and Olympus Partners. Chase Securities, Inc.
initiated and acted as agent on this transaction. Net cash proceeds to the
Company, less fees and expenses, totaled $475.9 million.

  All shares of Series A Preferred Stock were issued pursuant to an exemption
from the registration requirements of the Securities Act of 1933, as amended
(the "1933 Act"), under Section 4(2) of the 1933 Act. These sales were made
without any general solicitation or advertising. The Series A Preferred Stock
is convertible into Class A Common Stock of the Company at any time. Such
shares are convertible into a number of fully paid and nonassessable shares of
Class A Common Stock equal to the then effective liquidation preference
thereof plus accrued and unpaid dividends to the date of conversion divided by
the conversion price in effect at the time of conversion. The initial
conversion price is $57.50 per common share.

                                      14
<PAGE>

  On December 20, 1999, the Company issued an aggregate of 38,682 shares of
Class A Common Stock in connection with the acquisition of a communications
company (the "Fourth Quarter Transaction"). Such shares were issued to a trust
established for the benefit of a certain individual in exchange for the
outstanding capital stock of the acquired company, of which such individual
was the sole shareholder. In addition, the Company may issue additional shares
of its Class A Common Stock, valued at $4.5 million in the aggregate, to the
same individual after November 30, 2002, pursuant to earnout provisions to
which such individual is entitled if certain revenue and other benchmarks are
achieved. All shares of Class A Common Stock issued in the Fourth Quarter
Transaction were issued pursuant to an exemption from the registration
requirements of the 1933 Act, under Section 4(2) of the 1933 Act. These sales
were made without general solicitation or advertising. The Company has not
received and will not receive any proceeds from the sale of these shares of
Class A Common Stock other than the assets and liabilities of the acquired
company.

                                      15
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

  The selected financial data presented below as of December 31, 1999, 1998,
1997 and 1996 and for the years ended December 31, 1999, 1998, 1997 and the
period from March 5, 1996 (date of inception) to December 31, 1996, were
derived from our audited financial statements. You should read this data
together with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our audited financial statements and related notes,
included elsewhere in this Annual Report on Form 10-K.

<TABLE>
<CAPTION>
                                                                  March 5, 1996
                                                                    (date of
                                   Years Ended December 31,       inception) to
                                --------------------------------  December 31,
                                   1999       1998       1997         1996
                                ----------  ---------  ---------  -------------
                                   (in thousands, except per share data)
<S>                             <C>         <C>        <C>        <C>
Statement of Operations Data:
 (1)
Revenues......................  $   31,304  $     960  $   3,311    $  1,386
Cost and expenses:
 Cost of services.............     207,358     79,920      4,785       1,625
 Sales, general and
  administrative..............     205,769    123,380     38,398       8,290
 Stock-based and other noncash
  compensation................      31,451     32,164     89,111       4,071
 Depreciation and
  amortization................      45,742     14,193      6,454         164
                                ----------  ---------  ---------    --------
Total costs and expenses......     490,320    249,657    138,748      14,150
                                ----------  ---------  ---------    --------
Loss from operations..........    (459,016)  (248,697)  (135,437)    (12,764)
Interest and other income.....      18,450     34,106      3,242          10
Interest expense..............     (88,347)   (66,880)    (5,859)       (879)
                                ----------  ---------  ---------    --------
Net loss......................  $ (528,913) $(281,471) $(138,054)   $(13,633)
                                ----------  ---------  ---------    --------
Accrued preferred stock
 dividends....................      (2,906)        --         --          --
                                ----------  ---------  ---------    --------
Net loss applicable to common
 stockholders.................  $ (531,819) $(281,471) $(138,054)   $(13,633)
                                ==========  =========  =========    ========
Basic and diluted net loss per
 common share.................  $    (9.95) $   (5.35) $   (2.94)   $  (0.29)
Weighted average common shares
 outstanding..................      53,423     52,597     46,951      46,258
Other Data:
EBITDA (2)....................  $ (381,823) $(202,340) $ (39,872)   $ (8,529)
Cash used in operating
 activities...................    (393,904)  (162,077)   (33,260)     (6,046)
Cash used in investing
 activities...................    (274,249)   (68,172)  (115,755)     (3,709)
Cash provided by financing
 activities...................     692,199    221,595    572,613      11,058
<CAPTION>
                                                December 31,
                                -----------------------------------------------
                                   1999       1998       1997         1996
                                ----------  ---------  ---------  -------------
                                               (in thousands)
<S>                             <C>         <C>        <C>        <C>
Balance Sheet Data:
Cash and cash equivalents.....  $  440,293  $ 416,247  $ 424,901    $  1,303
Working capital (deficit).....     342,706    302,408    441,316      (6,978)
Property and equipment, net...     402,989    180,726      8,186       3,545
Total assets..................   1,131,843    763,434    607,380      19,145
Long-term debt, less current
 portion......................     808,799    576,058    300,000          --
Convertible redeemable
 preferred stock..............     478,788         --         --          --
Stockholders' (deficit)
 equity.......................    (441,917)    31,053    285,146      10,425
</TABLE>
--------
(1) Certain amounts in the prior periods' financial statements have been
    reclassified to conform to the current year's presentation.
(2) EBITDA consists of earnings before interest, taxes, depreciation,
    amortization, and charges for stock-based and other non-cash compensation.
    While not a measure under generally accepted accounting principles
    ("GAAP"), EBITDA is a measure commonly used in the telecommunications
    industry, and we include it to help you understand the Company's operating
    results. Although you should not assume that EBITDA is a substitute for
    operating income determined in accordance with GAAP, we present it to
    provide additional information about our ability to meet future debt
    service, capital expenditures and working capital requirements. See the
    Financial Statements and the related notes. Since all companies and
    analysts do not calculate these non-GAAP measurements the same way, the
    amount may not be comparable to other calculations.

                                      16
<PAGE>

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 this Annual Report on Form 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, 1997 through 1999 and should be
read together with the Financial Statements and related notes contained
elsewhere in this Annual Report on Form 10-K.

Overview

   From our inception, on March 5, 1996, through the initiation of full-scale
commercial service in October 1998, our main activities were the acquisition
of licenses and authorizations, the acquisition of building access rights, the
hiring of management and other key personnel, the raising of funds, the
development of operating systems, the negotiation of interconnection
agreements and the purchase and deployment of our equipment and network. Since
October 1998, we have initiated commercial service using our SmartWave(TM)
local networks in 40 market areas that comprise more than 580 cities and towns
with a combined population of more than 100 million people.

   Our losses, as well as our negative operating cash flow, have been
significant to date, and we expect both to continue for several years until we
develop a customer base that will generate sufficient revenues to fund
operating expenses. After we initiate service in most of our market areas, we
expect to have positive operating margins over time by increasing the number
of customers and selling them additional capacity or services without
significantly increasing related capital expenditures, costs of building
access rights and other operating costs. Our ability to generate positive cash
flow will depend in part on the extent of capital expenditures in current and
new market areas, competition in our current market areas and any potential
adverse regulatory developments. Various financing sources will be required to
fund our growth as well as cover our expected losses from operations.

Factors Affecting Future Operations

   The successful execution of our business plan is expected to result in
rapid expansion of our operations. This expansion of our operations, including
our international operations, may place a significant strain on our
management, financial and other resources. Our ability to manage this
expansion effectively will depend upon, among other things, monitoring
operations, controlling costs, maintaining regulatory compliance, raising
capital to pay expenses, interconnecting successfully with the incumbent
carriers, 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.

   Although fixed wireless technology has been in use for a significant period
of time, our point-to-multipoint technology has only been commercially used on
a limited basis. We selected point-to-multipoint technology because we believe
it complements existing wireless and wireline technologies that we employ in
our networks. If our point-to-multipoint technology does not perform as
expected or provide the advantages that we expect, our business, financial
condition and results of operations may be materially adversely affected.

                                      17
<PAGE>

   Part of our strategy may be to make acquisitions in the future, some of
which may be significant. We currently have no undisclosed definitive
agreements with respect to any material acquisition or joint venture, although
from time to time we have discussions with other companies and assess
opportunities on an ongoing basis.

 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 small and medium-sized businesses which have been
historically served by ILECs. We seek to attract these customers through a
broad product offering, superior customer service and attractive pricing. We
anticipate that some ILECs may reduce their prices as increased competition
begins to reduce their market share. We expect to remain competitive if market
prices decline because of our lower network costs compared to those of the
ILECs.

 Cost of Services

  Certain costs are required to operate and maintain our networks, including:
real estate leases for switching centers, base station and customer sites;
preparation, installation, operation and maintenance of switching centers,
base station sites and individual customer radio links, as well as customer
premise equipment; 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
network design and base station configuration planning.

 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 customer premises equipment, base stations, network switches,
switch electronics, network operations center, data centers and information
technology systems.

  Customer Premises Equipment. The purchase and installation of customer
premise equipment, or CPE, 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, line interface
cards, and cables and installation materials. Customers in the same building
may share portions of these costs, which reduces the capital expenditures
required per customer. In the event a customer leaves us, our CPE 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 360-degree
coverage area, subject to lines of sight. 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 are construction
costs per customer site. We expect that our sites will typically be built on
top of buildings as

                                      18
<PAGE>

opposed to 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.

  Switching. Switching costs include traditional circuit-based switches, 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,
multi-redundant mechanics, 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, finance and network monitoring have been or
are under development or further enhancement.

Costs of Obtaining Additional Spectrum

  Teligent's 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.
For example, Teligent recently submitted an application to participate in the
39 GHz spectrum auction in the United States, as well as to participate in a
spectrum auction in Austria.

Year 2000

  Our mission-critical infrastructure transitioned into 2000 and beyond
February 29, 2000, without incident. We have not been advised that any of our
significant suppliers or customers experienced any significant disruptions due
to the Year 2000 issue, and hence do not believe that any such disruption
occurred. In the event that unknown claims are hereafter brought to our
attention, we may be required to expend significant management time and
resources to investigate and defend against such claims.

Results of Operations

 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.

  Cost of services, consisting primarily of personnel-related costs,
telecommunications expenses and site rent and site acquisition expenses
related to network operations, totaled $207.4 million for 1999, compared to
$80.0 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. We expect that our cost of services will
continue to increase in accordance with our growth strategy.

                                      19
<PAGE>

  Sales, general and administrative expenses, consisting primarily of
personnel-related costs, were $205.8 million for 1999, compared to $123.4
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 expected future growth.

  Stock-based and other noncash 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. We expect
depreciation expense to increase in the coming year as we further implement
our growth strategy.

  Interest and other income for 1999 was $18.5 million, compared to $34.1
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.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

  We generated revenues of $1.0 million from communication services during
1998, compared to $33,000 during 1997. In 1997, we generated $3.3 million of
revenues related to management services and equipment leases primarily
provided to two of our original stockholders.

  Cost of services, consisting primarily of personnel-related costs and site
rent and acquisition expenses related to network operations, was $79.9 million
for 1998, compared with $4.8 million in 1997. This increase reflects the
establishment of our initial fifteen market areas and development of network
operations.

  Sales, general and administrative expenses, consisting primarily of
headcount-related costs, were $123.4 million for 1998, compared with $38.4
million in 1997. This increase relates primarily to costs incurred to develop
our infrastructure and sales force as we prepared for commencement of
operations in 1998.

  Stock-based and other noncash compensation expense was $32.2 million in
1998, compared to $89.1 million in 1997. The decrease is due to the charge
related to company appreciation rights granted prior to our initial public
offering in 1997.

  Depreciation and amortization for 1998 was $14.2 million, compared with $6.5
million in 1997, due primarily to higher capital expenditures in 1998, and
amortization expense of intangibles which were principally acquired in the
fourth quarter of 1997.

  Interest and other income for 1998 was $34.1 million, compared to $3.2
million in 1997. This increase was primarily the result of interest earned on
increased levels of cash and investments resulting from our initial public
equity offering and our two debt offerings in 1997 and 1998.

  Interest expense was $66.9 million for 1998, compared to $5.9 million in
1997. This increase was due to the 11 1/2% Senior Notes issued in November
1997 and the 11 1/2% Senior Discount Notes issued in February 1998.

Liquidity and Capital Resources

  We have approximately $401.9 million of cash, cash equivalents and short-
term investments as of March 14, 2000 and approximately $600 million available
under our credit facilities ($250 million of which we do not expect to be
available until the second half of 2000). In order to develop our business, we
will need a significant amount of money to pay for equipment, meet our debt
obligations, bid on spectrum auctions, operate our business on a day-to-day
basis, acquire complementary assets or businesses and contribute additional
capital to our

                                      20
<PAGE>

international ventures. Our principal equipment-related needs include the
purchase and installation of CPE, base stations, network switches and switch
electronics, network operations and data center expenditures and information
systems, platforms and interfaces. Based on our current business plan, we
anticipate that our existing cash and cash equivalents and short-term
investments on hand and our credit facilities will provide enough money to
carry out our current business plan into 2001. Actual requirements may vary
based upon the timing and success of our roll-out. If demand for our services
is lower than anticipated, we may be able to cut back on purchases of
equipment such as CPE and switch electronics, which are not needed until a
customer signs up with us. If we accelerate implementation of our network
roll-out or international activities, we may need to obtain additional
financing earlier than anticipated.

  We expect that we will need additional financing to fund our business plan,
both domestically and internationally, which may include commercial bank
borrowings, additional credit facilities or the sale or issuance of equity or
debt securities either through one or more offerings or to one or more
strategic investors. Such offerings may be at the parent company level or by
one of our subsidiaries. There can be no assurance that we will be able to
obtain additional financing at all, or on terms acceptable to us.

  Because the cost of rolling-out our networks and operating our business will
depend on a variety of factors (including our ability to meet our roll-out
schedules, our ability to negotiate favorable prices for purchases of network
equipment, the number of customers and the services for which they subscribe,
the nature and success of new services that we may offer, regulatory changes
and changes in technology), actual costs and revenues may vary from expected
amounts, possibly to a material degree, and such variations are likely to
affect how much additional financing we will need. Further, the exact amount
of our financial needs will depend upon other factors, including the cost to
develop our networks in each of our market areas, the extent of competition
and pricing of telecommunications services in our market areas, the acceptance
of our services, the cost of acquiring complementary assets or businesses and
the development of new products. Accordingly, there can be no assurance that
our actual financial needs will not exceed the anticipated amounts described
above.

 Credit Facilities

  On July 2, 1998, we entered into a credit agreement with The Chase Manhattan
Bank, Goldman Sachs Credit Partners, and Toronto Dominion Bank, and other
lenders, providing for credit facilities up to an aggregate of $800 million
($250 million of which we do not expect to be available until the second half
of the year 2000 contingent upon the satisfaction of a performance test). The
credit facilities will be used primarily for the purchase of
telecommunications equipment, software and services and are also available for
working capital and general corporate purposes. Availability of funds under
the credit facilities is subject to certain conditions and compliance with
covenants as described in the credit agreement. Our obligations under the
credit agreement are secured by substantially all our assets and certain of
our subsidiaries' assets.

  The credit facilities are structured into three separate tranches consisting
of a term loan facility, a delayed draw term loan facility and a revolving
credit facility. We have the ability to borrow funds over the next four years
(other than with respect to the delayed draw facility which converted on July
1, 1999 into a conversion term loan), with a final maturity of eight years.
Interest accrues on outstanding borrowings based on a floating rate tied to
the prevailing LIBOR rate or an alternate base rate, and adjusts based on our
attainment of certain key revenue and leverage benchmarks. We incurred
commitment and other fees in connection with obtaining the credit facilities
totaling $19.9 million, which is being amortized on a straight line basis over
eight years. As of December 31, 1999, we had a $200 million outstanding loan
balance under our credit facilities as a conversion term loan, and we may make
additional draw-downs this year.

  The credit agreement contains certain financial and other covenants that
restrict, among other things, our 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 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, that became applicable at the
beginning of the third quarter of 1999, and continue to be applicable. In
addition, the amounts outstanding under the credit facilities are subject to
mandatory prepayments in certain circumstances.

                                      21
<PAGE>

 Historical Cash Flows

  From January 1, 1997 through December 31, 1999, we used $589.2 million of
cash for operating activities and $458.2 million of cash in our investing
activities. At December 31, 1999, we had working capital of $342.7 million
including unrestricted cash (including cash equivalents) of $440.3 million,
compared to working capital of $302.4 million and cash of $416.2 million at
December 31, 1998. The increase in working capital is primarily a result of
$475.9 million of net proceeds received from the issuance of preferred stock,
partially offset by an increase in accounts payable to vendors as we implement
our growth strategy. We will need a significant amount of cash to build our
networks, market our services and cover operating expenditures. Although we
anticipate our existing cash and cash equivalents on hand, together with the
credit facilities, will provide sufficient funds to carry out our current
business plan into the year 2001, our management continually evaluates
potential financing options. We also expect that current and future expansion
and acquisitions will be financed from funds generated from operations,
borrowings under the credit facilities, financing under the Registration
Statement and potential additional financings. However, there can be no
assurance that we will be able to obtain additional financing, or financing on
terms acceptable to us.

  Our total assets increased to $1,131.8 million at December 31, 1999, from
$763.4 million as of December 31, 1998, due primarily to receiving proceeds
from the issuance of preferred stock, borrowings under the credit facility and
the acquisition of property and equipment which was accrued and will be paid
in 2000.

  For the year ended December 31, 1999 we used cash in operations of $393.9
million, due primarily to the operating loss for the period, partially offset
by depreciation and amortization, stock based and other noncash compensation,
and other charges. We used cash in operations of $162.1 million for the year
ended December 31, 1998, due primarily to the operating loss for the period
reduced by non-cash stock-based compensation and an increase in current
liabilities during 1998.

  We used $274.2 million of cash in investing activities in 1999 relating to
the purchase of property and equipment and the purchase of short-term
investments. In 1998, we used cash in investing activities of $68.2 million,
consisting primarily of $97.2 million for the purchase of property and
equipment, partially offset by $29.0 million of interest received on the U.S.
Treasury securities.

  Cash flows provided by financing activities amounted to $692.2 million in
1999, consisting primarily of $475.9 million of net proceeds from the issuance
of preferred stock, a $200 million draw-down of the Credit Facilities and the
exercise of Class A common stock options. For 1998, cash flows provided by
financing activities amounted to $221.6 million, consisting primarily of net
proceeds from our senior discount notes offering, after costs of $29.5
million.

Subsequent Event

  On February 28, 2000, the Company and two of its stockholders entered into
agreements to make major investments in ICG, a fiber-based communications
company. We expect to acquire approximately three million shares of ICG stock
in an all-stock transaction in exchange for one million shares of Teligent
Class A common stock. Teligent signed a memorandum with ICG to negotiate an
agreement that will enable us to explore opportunities to leverage many of
ICG's backbone facilities and other assets to extend the reach of our network,
improve our network efficiency and reduce our network costs.

  The closing of the ICG transaction is subject to regulatory and stockholder
approval and satisfaction of other customary closing conditions. The ICG
transaction is expected to close during the second quarter of 2000.

                                      22
<PAGE>

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, 1999, we had an outstanding loan balance of $200
million under the Credit Facility, which incurs interest at a floating rate
tied to a LIBOR or an alternate base rate. The outstanding balance under the
Credit Facility represents approximately 25% of our outstanding long-term
debt.

  The Company also maintains 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.

  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.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

  Our financial statements and supplementary data, together with the report of
the independent auditor, are included or incorporated by reference elsewhere
in this report. Refer to the "Index to Financial Statements and Financial
Statement Schedule" following the signature pages.

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

  None.

                                      23
<PAGE>

                                   PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

  The information required by this Item is incorporated here by reference to
our definitive proxy statement for our 2000 Annual Meeting of Stockholders.

ITEM 11. EXECUTIVE COMPENSATION

  The information required by this Item is incorporated here by reference to
our definitive proxy statement for our 2000 Annual Meeting of Stockholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  The information required by this Item is incorporated here by reference to
our definitive proxy statement for our 2000 Annual Meeting of Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  The information required by this Item is incorporated here by reference to
our definitive proxy statement for our 2000 Annual Meeting of Stockholders.

                                      24
<PAGE>

                                    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, 1999 and 1998.
    Consolidated Statements of Operations for the years ended December 31,
    1999, 1998 and 1997.
    Consolidated Statements of Stockholders' (Deficit) Equity for the years
    ended December 31, 1999, 1998 and 1997.
    Consolidated Statements of Cash Flows for the years ended December 31,
    1999, 1998, and 1997.
    Notes to Consolidated Financial Statements.

  (2)Financial Statement Schedules

    All 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.

  None

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

<TABLE>
 <C>   <S>
   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.
   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.
</TABLE>

                                      25
<PAGE>

<TABLE>
 <C>   <S>
 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 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.
</TABLE>

                                       26
<PAGE>

<TABLE>
 <C>   <S>
 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.
 12.1  Statement regarding computation of ratios.
 12.2  Statement regarding computation of ratios.
 21.1  Significant Subsidiaries of the Registrant.
 23.1  Consent of Independent Auditors.
 27.1  Financial Data Schedule (filed only electronically with the Securities
       and Exchange Commission).
 99.1  Press release of Teligent, Inc. dated March 6, 2000 (filed herein).
</TABLE>

                                       27
<PAGE>

                                  SIGNATURES

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

                                          TELIGENT, INC.
                                          (Registrant)

Date: March 21, 2000                      By: /s/ Alex J. Mandl
                                            ___________________________________
                                            Alex J. Mandl
                                            Chairman of the Board, Chief
                                              Executive Officer and Director

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

Date: March 21, 2000                      By: /s/ Alex J. Mandl
                                            ___________________________________
                                            Alex J. Mandl
                                            Chairman of the Board, Chief
                                              Executive Officer and Director

Date: March 21, 2000                      By: /s/ Cindy L. Tallent
                                            ___________________________________
                                            Cindy L. Tallent
                                            Acting Chief Financial Officer and
                                              Treasurer, Senior Vice President
                                              and
                                              Controller (Principal Accounting
                                              Officer)

Date: March 21, 2000                      By: /s/ Robert R. Bennett
                                            ___________________________________
                                            Robert R. Bennett
                                            Director

Date: March 21, 2000                      By: /s/ David J. Berkman
                                            ___________________________________
                                            David J. Berkman
                                            Director

Date: March 21, 2000                      By: /s/ Thomas O. Hicks
                                            ___________________________________
                                            Thomas O. Hicks
                                            Director

                                      28
<PAGE>

Date: March 21, 2000                      By: /s/ Gary S. Howard
                                            ___________________________________
                                            Gary S. Howard
                                            Director

Date: March 21, 2000                      By: /s/ Tetsuro Mikami
                                            ___________________________________
                                            Tetsuro Mikami
                                            Director

Date: March 21, 2000                      By: /s/ Rajendra Singh
                                            ___________________________________
                                            Rajendra Singh
                                            Director

Date: March 21, 2000                      By: /s/ Neera Singh
                                            ___________________________________
                                            Neera Singh
                                            Director

                                       29
<PAGE>

                                 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, 1999 and 1998...........   F-3

Consolidated Statements of Operations for the years ended December 31,
 1999, 1998 and 1997...................................................   F-4

Consolidated Statements of Stockholders' (Deficit) Equity for the years
 ended December 31, 1999, 1998 and 1997................................   F-5

Consolidated Statements of Cash Flows for the years ended December 31,
 1999, 1998 and 1997...................................................   F-6

Notes to Consolidated Financial Statements.............................   F-7
</TABLE>

                                      F-1
<PAGE>

               REPORT OF ERNST & YOUNG LLP, 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, 1999 and 1998, and the related consolidated
statements of operations, stockholders' (deficit) equity and cash flows for
each of the three years in the period ended December 31, 1999. 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, 1999 and 1998, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.

                                                       /s/ Ernst & Young LLP

McLean, Virginia
February 18, 2000

                                      F-2
<PAGE>

                                 TELIGENT, INC.

                          CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                             December 31,
                                                         ---------------------
                                                            1999       1998
                                                         ----------  ---------
<S>                                                      <C>         <C>
Assets
Current assets:
  Cash and cash equivalents............................. $  440,293  $ 416,247
  Short-term investments................................    116,610         --
  Accounts receivable, net..............................     12,673      1,191
  Prepaid expenses and other current assets.............     17,914      6,964
  Restricted cash and investments.......................     38,224     32,184
                                                         ----------  ---------
    Total current assets................................    625,714    456,586
Property and equipment, net.............................    402,989    180,726
Restricted cash and investments.........................         --     33,117
Intangible assets, net..................................     96,426     83,857
Other assets............................................      6,714      9,148
                                                         ----------  ---------
    Total assets........................................ $1,131,843  $ 763,434
                                                         ==========  =========
Liabilities and Stockholders' (Deficit) Equity
Current liabilities:
  Accounts payable...................................... $   46,994  $  42,727
  Accrued trade liabilities.............................    192,145     92,431
  Accrued compensation..................................     30,570     12,546
  Accrued interest and other............................     13,299      6,474
                                                         ----------  ---------
    Total current liabilities...........................    283,008    154,178
Long-term debt..........................................    808,799    576,058
Other non-current liabilities...........................      3,165      2,145
Series A cumulative convertible redeemable preferred
 stock, 500,000 shares authorized, issued and
 outstanding; $.01 par value; liquidation preference of
 $1,000 per share.......................................    478,788         --
Commitments and contingencies
Stockholders' (deficit) equity:
  Preferred stock.......................................         --         --
  Common stock..........................................        547        526
  Additional paid-in capital............................    519,607    463,685
  Accumulated deficit...................................   (962,071)  (433,158)
                                                         ----------  ---------
    Total stockholders' (deficit) equity................   (441,917)    31,053
                                                         ----------  ---------
  Total liabilities and stockholders' (deficit) equity.. $1,131,843  $ 763,434
                                                         ==========  =========
</TABLE>

                See notes to consolidated financial statements.

                                      F-3
<PAGE>

                                 TELIGENT, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                  Years ended December 31,
                                                -------------------------------
                                                  1999       1998       1997
                                                ---------  ---------  ---------
<S>                                             <C>        <C>        <C>
Revenues:
  Communication services....................... $  31,304  $     960  $      33
  Management fees and other services...........        --         --      3,278
                                                ---------  ---------  ---------
    Total revenues.............................    31,304        960      3,311
Costs and expenses:
  Cost of services.............................   207,358     79,920      4,785
  Sales, general and administrative............   205,769    123,380     38,398
  Stock-based and other noncash compensation...    31,451     32,164     89,111
  Depreciation and amortization................    45,742     14,193      6,454
                                                ---------  ---------  ---------
    Total costs and expenses...................   490,320    249,657    138,748
                                                ---------  ---------  ---------
  Loss from operations.........................  (459,016)  (248,697)  (135,437)
Interest and other income......................    18,450     34,106      3,242
Interest expense...............................   (88,347)   (66,880)    (5,859)
                                                ---------  ---------  ---------
  Net loss.....................................  (528,913)  (281,471)  (138,054)
Accrued preferred stock dividends..............    (2,906)        --         --
                                                ---------  ---------  ---------
Net loss applicable to common stockholders..... $(531,819) $(281,471) $(138,054)
                                                =========  =========  =========
Basic and diluted net loss per common share.... $   (9.95) $   (5.35) $   (2.94)
                                                =========  =========  =========
Weighted average common shares outstanding.....    53,423     52,597     46,951
                                                =========  =========  =========
</TABLE>


                See notes to consolidated financial statements.

                                      F-4
<PAGE>

                                 TELIGENT, INC.

           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
                                 (In thousands)

<TABLE>
<CAPTION>
                                               Additional
                             Capital    Common  Paid-in   Accumulated
                          Contributions Stock   Capital     Deficit     Total
                          ------------- ------ ---------- ----------- ---------
<S>                       <C>           <C>    <C>        <C>         <C>
Balance at January 1,
 1997...................    $  24,058    $ --   $     --   $ (13,633) $  10,425
Contribution of licenses
 from members...........        8,497      --         --          --      8,497
Acquisition.............       31,500      --         --          --     31,500
Cash contributions......      100,301      --         --          --    100,301
Contribution of equity
 prior to public
 offering...............           --      35     59,965          --     60,000
Conversion of member
 interests to capital
 stock..................     (164,356)    428    163,928          --         --
Conversion of CARs and
 Appreciation Units to
 stock options..........           --      --     86,821          --     86,821
Public stock offering...           --      63    125,593          --    125,656
Net loss................           --      --         --    (138,054)  (138,054)
                            ---------    ----   --------   ---------  ---------
  Balance at December
   31, 1997.............           --     526    436,307    (151,687)   285,146
                            ---------    ----   --------   ---------  ---------
Exercise of stock
 options................           --      --        372          --        372
Stock-based
 compensation...........           --      --     27,006          --     27,006
Net loss................           --      --         --    (281,471)  (281,471)
                            ---------    ----   --------   ---------  ---------
  Balance at December
   31, 1998.............           --     526    463,685    (433,158)    31,053
                            ---------    ----   --------   ---------  ---------
Exercise of stock
 options................           --      18     17,042          --     17,060
Issuance of common stock
 for acquisitions.......           --       3     15,692          --     15,695
Stock-based
 compensation...........           --      --     26,094                 26,094
Accrued preferred stock
 dividends..............           --      --     (2,906)         --     (2,906)
Net loss................           --      --         --    (528,913)  (528,913)
                            ---------    ----   --------   ---------  ---------
  Balance at December
   31, 1999.............    $      --    $547   $519,607   $(962,071) $(441,917)
                            =========    ====   ========   =========  =========
</TABLE>


                See notes to consolidated financial statements.

                                      F-5
<PAGE>

                                 TELIGENT, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                 Years ended December 31,
                                               -------------------------------
                                                 1999       1998       1997
                                               ---------  ---------  ---------
<S>                                            <C>        <C>        <C>
Cash flows from operating activities:
Net loss.....................................  $(528,913) $(281,471) $(138,054)
Adjustments to reconcile net loss to net cash
 used in operating activities:
  Depreciation and amortization..............     45,742     14,193      6,454
  Accretion of senior discount notes and
   other amortization........................     36,707     27,880         59
  Stock-based and other noncash
   compensation..............................     31,451     32,164     89,111
  Other......................................       (562)       461        271
  Changes in current assets and current
   liabilities, net of acquisitions:
    Accounts receivable......................     (8,921)    (1,172)       (19)
    Prepaid expenses and other current
     assets..................................    (12,569)    (1,355)    (8,477)
    Accounts payable.........................      1,622     28,051     13,575
    Accrued trade liabilities................     19,751      4,620         --
    Accrued interest and other...............     21,788     14,552      3,820
                                               ---------  ---------  ---------
      Net cash used in operating activities..   (393,904)  (162,077)   (33,260)
                                               ---------  ---------  ---------
Cash flows from investing activities:
  Purchase of property and equipment.........   (182,159)   (97,188)    (9,960)
  Purchases of short-term investments, net...   (116,610)        --         --
  Restricted cash and investments............     27,077     29,016    (95,075)
  Cash paid for acquisitions, net of cash
   acquired..................................     (2,986)        --    (10,500)
  Other investing activities.................        429         --       (220)
                                               ---------  ---------  ---------
    Net cash used in investing activities....   (274,249)   (68,172)  (115,755)
                                               ---------  ---------  ---------
Cash flows from financing activities:
  Proceeds from issuance of preferred stock,
   net.......................................    475,882         --         --
  Proceeds from long-term debt...............    200,000    250,703    300,000
  Proceeds from exercise of stock options....     17,060        372         --
  Debt financing costs.......................       (743)   (29,480)   (11,344)
  Equity contributions.......................         --         --    160,301
  Net proceeds from issuance of common
   stock.....................................         --         --    125,656
  Other financing activities.................         --         --     (2,000)
                                               ---------  ---------  ---------
    Net cash provided by financing
     activities..............................    692,199    221,595    572,613
                                               ---------  ---------  ---------
Net increase (decrease) in cash and
 equivalents.................................     24,046     (8,654)   423,598
Cash and cash equivalents, beginning of
 period......................................    416,247    424,901      1,303
                                               ---------  ---------  ---------
Cash and cash equivalents, end of period.....  $ 440,293  $ 416,247  $ 424,901
                                               =========  =========  =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest.......................  $  88,285  $  39,279  $   2,450
                                               =========  =========  =========
Accrued preferred stock dividends to be paid
 in kind.....................................  $   2,906  $      --  $      --
                                               =========  =========  =========
</TABLE>

                See notes to consolidated financial statements.

                                      F-6
<PAGE>

                                TELIGENT, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY

  Teligent, Inc. ("Teligent" or the "Company"), is a full-service, facilities-
based communications company offering small and medium-sized business
customers local and long-distance, high-speed data and dedicated Internet
access services over the Company's digital SmartWave(TM) local networks. The
Company"s SmartWave(TM) local networks integrate advanced fixed wireless
technologies with traditional broadband wireline technology. The Company has
initiated commercial service using its SmartWave(TM) networks in 40 markets
across the United States.

  The Company was formed in September 1997, as a wholly owned subsidiary of
Teligent, L.L.C. Teligent, L.L.C. was formed by Microwave Services, Inc.
("MSI"), a subsidiary of The Associated Group, Inc. ("Associated") and Digital
Services Corporation ("DSC"), an affiliate of Telcom Ventures, L.L.C., both of
which have had extensive experience in pioneering wireless communications
businesses. On November 21, 1997, concurrent with the initial public offering
of the Company's Class A common stock, par value $.01 per share ("Class A
Common Stock"), Teligent, L.L.C. merged into the Company (the "Merger") with
the Company as the surviving entity. All of the ownership interests of
Teligent, L.L.C. were exchanged for shares of Teligent, Inc. Class B common
stock, par value $.01 per share ("Class B Common Stock", and together with the
Class A Common Stock "Teligent Common Stock").

  On January 14, 2000, Liberty Media Corporation ("Liberty Media") acquired
Associated's ownership interest in Teligent. Liberty Media is an indirect
wholly owned subsidiary of AT&T Corp.

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.

 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 investments relates to cash and securities held
exclusively to fund future interest payments and to secure letters of credit
obtained by the Company.

 Short-Term Investments

  The Company classifies its short-term investments as available-for-sale.
Investments in securities that are classified as available-for-sale and have
readily determinable fair values are measured at fair value in the
consolidated balance sheets, which approximates cost.

 Receivables

  Receivables are reflected net of an allowance for doubtful accounts of $2.5
million at December 31, 1999. Such allowance was not significant at December
31, 1998.

 Property and Equipment

  Property and equipment is stated at cost. Certain costs, labor and
applicable overhead related to construction of our network facilities are
capitalized. Depreciation is computed on the straight-line method over the
estimated useful lives of the assets: 3-10 years for operating systems,
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.


                                      F-7
<PAGE>

                                TELIGENT, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

 Intangible Assets

  Intangible assets are comprised 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 5), 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 five
years, respectively.

 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. For long-
lived assets to be held and used, the Company bases its evaluation on such
impairment indicators as the nature of the assets, the future economic benefit
of the assets, any historical or future profitability measurements, as well as
other external market conditions or factors that may be present. If such
impairment indicators are present or other factors exist that indicate that
the carrying amount of the asset may not be recoverable, the Company
determines whether an impairment has occurred through the use of an
undiscounted cash flows analysis of assets at the lowest level for which
identifiable cash flows exist. If impairment has occurred, the Company
recognizes a loss for the difference between the carrying amount and the
estimated value of the asset. The fair value of the asset is measured using
discounted cash flow analysis or other valuation techniques.

 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 networks.

 Advertising Costs

  Costs related to advertising are expensed when the advertising occurs.
Advertising expense was $19.7 million in 1999, $16.1 million in 1998, and $0
in 1997.

 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. The Company's basic and
diluted loss per share is calculated by dividing the net loss, after
consideration of preferred stock accretion and dividends, by the weighted
average number of shares of common stock outstanding during all periods
presented.

 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

                                      F-8
<PAGE>

                                TELIGENT, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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").

 Comprehensive Income

  Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting of
Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 establishes standards for
the display of comprehensive income and its components. For the years ended
December 31, 1999, 1998 and 1997, the Company's comprehensive loss
approximates its net loss and, as such, no disclosure is presented in the
consolidated financial statements.

 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 currently uses one vendor as a primary supplier of network
equipment for use in the construction of its digital SmartWave(TM) local
networks. As of December 31, 1999 and 1998, amounts due to this vendor for
trade payables totaled $167.8 million and $87.8 million, respectively. Capital
expenditures from this vendor represented 40% and 48% of the Company's total
capital expenditures for the years ended December 31, 1999 and 1998.

 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>

                                TELIGENT, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


3. PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                               December 31,
                                                             ------------------
                                                               1999      1998
                                                             --------  --------
   <S>                                                       <C>       <C>
   Operating systems........................................ $279,749  $ 99,153
   Computer systems.........................................   79,390    38,057
   Furniture and leasehold improvements.....................   18,510    11,849
   Undeployed equipment and construction in progress........   81,744    48,211
                                                             --------  --------
                                                              459,393   197,270
   Accumulated depreciation.................................  (56,404)  (16,544)
                                                             --------  --------
                                                             $402,989  $180,726
                                                             ========  ========
</TABLE>

  During the years ended December 31, 1999, 1998 and 1997, the Company
incurred capital expenditures of $262.1 million, $183.1 million and $10.0
million respectively, of which $80.0 million, $85.9 million and $0 were
accrued but unpaid, respectively, and are not reflected in the accompanying
consolidated statement of cash flows.

  Depreciation expense for the years ended December 31, 1999, 1998 and 1997
was $40.1 million, $10.7 million and $5.7 million, respectively.

4. INTANGIBLE ASSETS

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

<TABLE>
<CAPTION>
                                                                1999     1998
                                                              --------  -------
   <S>                                                        <C>       <C>
   Fixed wireless licenses................................... $ 51,813  $51,813
   Debt financing costs......................................   38,857   38,820
   Acquired intangibles and other............................   21,735      --
                                                              --------  -------
                                                               112,405   90,633
   Accumulated amortization..................................  (15,979)  (6,776)
                                                              --------  -------
                                                              $ 96,426  $83,857
                                                              ========  =======
</TABLE>

5. LONG-TERM DEBT

  Debt is summarized as follows:

<TABLE>
<CAPTION>
                                                                December 31,
                                                              -----------------
                                                                1999     1998
                                                              -------- --------
   <S>                                                        <C>      <C>
   11.5% Senior Notes due 2007............................... $300,000 $300,000
   11.5% Senior Discount Notes due 2008......................  308,799  276,058
   Credit Facility...........................................  200,000      --
                                                              -------- --------
                                                              $808,799 $576,058
                                                              ======== ========
</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 U.S.

                                     F-10
<PAGE>

                                TELIGENT, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Treasury securities which are classified as restricted cash and investments on
the balance sheet, and have been 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.

  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 (the "Bank
Credit Agreement") with certain lenders, providing for facilities up to an
aggregate of $800 million (the "Credit Facility"). The Credit Facility will be
used primarily for the purchase of telecommunications equipment, software and
services, and is also available for working capital and general corporate
purposes. Availability of funds under the Credit Facility is subject to
certain conditions as defined in the Bank Credit Agreement. 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. The Company has the ability to borrow funds over the next four years
(other than with respect to the delayed draw facility which was drawn down on
July 1, 1999), with a final maturity of eight years. Interest accrues on
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 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 has $200 million drawn on the facility as of December 31, 1999.

                                     F-11
<PAGE>

                                TELIGENT, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  Maturities of long-term debt at December 31, 1999 are as follows (in
thousands):

<TABLE>
     <S>                                                                <C>
     2002.............................................................. $  6,660
     2003..............................................................   28,840
     2004..............................................................   35,500
     Thereafter........................................................  737,799
                                                                        --------
                                                                        $808,799
                                                                        ========
</TABLE>

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

  The fair value of the Company's financial instruments classified as current
assets or liabilities, non-current restricted cash, and investments
approximate their carrying value. At December 31, 1999, 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, $.01 par value ("Series A Preferred Stock") are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                      Fair Value Carrying Amount
                                                      ---------- ---------------
   <S>                                                <C>        <C>
   Senior Notes......................................  $292,500     $300,000
   Senior Discount Notes.............................  $258,500     $308,799
   Series A Preferred Stock..........................  $536,957     $478,788
</TABLE>

7. INCOME TAXES

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

<TABLE>
<CAPTION>
                                                             1999       1998
                                                           ---------  ---------
   <S>                                                     <C>        <C>
   Deferred tax assets:
     Net operating loss carryforward...................... $ 278,870  $  90,171
     Stock based compensation.............................    41,843     38,905
     Original issue discount..............................    22,077      8,651
     Other................................................     1,741      4,381
                                                           ---------  ---------
       Total deferred tax assets..........................   344,531    142,108
   Deferred tax liability:
     Intangible assets....................................   (11,760)   (14,305)
                                                           ---------  ---------
   Net deferred tax assets................................   332,771    127,803
   Valuation allowance....................................  (332,771)  (127,803)
                                                           ---------  ---------
       Total.............................................. $     --   $     --
                                                           =========  =========
</TABLE>

  During the years ended December 31, 1999 and 1998, the Company did not
record an income tax benefit. 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, 1999,
the Company had federal net operating loss carryforwards of $498.5 million
that expire in various amounts through 2019.

  A reconciliation between income taxes computed using the statutory federal
income tax rate and the effective rate, for the years ended December 31, 1999
and 1998, is as follows:

<TABLE>
<CAPTION>
                                                                 1999    1998
                                                                 -----   -----
   <S>                                                           <C>     <C>
   Federal income tax benefit at statutory rate................. (34.0)% (34.0)%
   Net change in valuation allowance............................  38.6    37.9
   State income taxes net of federal............................  (4.0)   (4.0)
   Other........................................................  (0.6)    0.1
                                                                 -----   -----
                                                                   --  %   --  %
                                                                 =====   =====
</TABLE>

                                     F-12
<PAGE>

                                TELIGENT, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


8. 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.

  Employees of the parent company of MSI performed administrative and
management services on behalf of the Company. These charges totaled $0.3
million, $1.1 million, and $1.7 million for the years ended December 31, 1999,
1998 and 1997, respectively.

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

9. OTHER TRANSACTIONS

  During 1999, the Company acquired three communications companies (the
"Transactions"). The combined purchase price of the 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
additional 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. The Transactions
were accounted for as purchases, with the majority of the purchase price being
assigned to acquired intangibles.

  In October 1997, Teligent, L.L.C. acquired all of the outstanding stock of
FirstMark (the "FirstMark Acquisition"), for an aggregate purchase price of
$42.0 million which consisted of $10.5 million in cash and 1,831,410 shares of
Class A Common Stock, valued at $31.5 million. The FirstMark Acquisition was
accounted for under the purchase method of accounting. A total of $41.6
million of the purchase price was allocated to the fixed wireless licenses
acquired and the remaining $0.4 million amount was allocated to the net assets
acquired.

  Unaudited pro forma results of operations for the Transactions and the
FirstMark Acquisition would not have had a material impact on the Company's
operating results for the years ended December 31, 1999, 1998 or 1997 and thus
no pro forma information has been included.

10. 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 preferred stock, liquidation preference
$1,000 per share, par value $.01 to an investor group for gross proceeds of
$500 million.

  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. As of December 31,
1999, accrued dividends of $2.9 million have been recorded.

  The Series A Preferred Stock is convertible into Class A Common Stock by the
holders at any time, 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.

  The Series A Preferred Stock ranks (i) senior to all existing shares of
Teligent Common Stock and to each other existing class of capital stock or
series of preferred stock of the Company; (ii) on a parity basis with
additional shares of Series A Preferred Stock; and (iii) junior to all Senior
Shares (as defined in the Certificate of Designation).

                                     F-13
<PAGE>

                                TELIGENT, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


11. COMMITMENTS AND CONTINGENCIES

  The Company leases various operating sites, rooftops, storage, and
administrative offices under operating leases. Rent expense was $28.0 million,
$10.9 million and $2.3 million for the years ended December 31, 1999, 1998 and
1997, respectively. Future minimum lease payments by year, and in the
aggregate, at December 31, 1999, are as follows (in thousands):

<TABLE>
     <S>                                                                <C>
     2000.............................................................. $ 47,780
     2001..............................................................   45,748
     2002..............................................................   43,007
     2003..............................................................   39,942
     2004..............................................................   28,354
     Thereafter........................................................   65,955
                                                                        --------
                                                                        $270,786
                                                                        ========
</TABLE>

12. 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 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's acquisition of
Associated 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.
Liberty Media has the right to elect three directors.

  The number of shares authorized, issued and outstanding at December 31, 1999
and 1998, for each class of stock is summarized below:

<TABLE>
<CAPTION>
                                                               Shares Issued
                                                              and Outstanding
                                                 Shares    ---------------------
   Class                             Par Value Authorized     1999       1998
   -----                             --------- ----------- ---------- ----------
   <S>                               <C>       <C>         <C>        <C>
   A................................   $.01    200,000,000 10,281,667  8,206,392
   Series B-1.......................    .01     30,000,000 21,436,689 21,436,689
   Series B-2.......................    .01     25,000,000 17,206,210 17,206,210
   Series B-3.......................    .01     10,000,000  5,783,400  5,783,400
</TABLE>

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

 Initial Public Common Stock Offering

  In November 1997, the Company completed an initial public offering of
6,325,000 shares of Common Stock (the "Equity Offering"), raising $125.7
million of net proceeds, after deducting $10.3 million of offering expenses.

 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 $185.5 million of
compensation expense over the vesting period of the options. Through December
31, 1999, $138.3 million of stock-based compensation expense has been
recognized, and up to $47.2 million will be recognized through September 1,
2002 as follows: $25.3 million in 2000, $20.0 million in 2001 and $1.9 million
in 2002.


                                     F-14
<PAGE>

                                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. Had compensation expense been determined in
accordance with SFAS No. 123, the Company's net loss for the years ended
December 31, 1999, 1998 and 1997 would have been $570.6 million, $324.4
million, and $161.2 million, or $10.68, $6.16, and $3.43 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
$43.13, $21.66, and $18.57 in 1999, 1998 and 1997, respectively, using the
Black-Scholes option pricing model with the following assumptions: dividend
yield 0%, risk free rate interest rate of 6.4% in 1999, 5.0% in 1998 and 6.6%
in 1997, an expected life of 10 years, and an expected volatility of .861 in
1999, .648 in 1998 and .50 in 1997.

  Option activity for 1999, 1998 and 1997 is set forth below:

<TABLE>
<CAPTION>
                                         Weighted-             Weighted-             Weighted-
                                          Average               Average               Average
                                         Exercise              Exercise              Exercise
                                1999       Price      1998       Price      1997       Price
                             ----------  --------- ----------  --------- ----------  ---------
   <S>                       <C>         <C>       <C>         <C>       <C>         <C>
   Outstanding, January 1..  14,650,786   $12.32   12,810,685   $10.00          --    $  --
   Converted from
    Appreciation Units.....         --       --           --       --     6,471,047     7.07
   Converted from CARs.....         --       --           --       --     6,009,732    12.41
   Granted.................   2,073,700    50.07    2,084,714    28.43      380,450    22.18
   Canceled................    (510,538)   30.43     (194,631)   20.52      (50,544)   12.94
   Exercised...............  (1,803,691)    9.46      (49,982)    7.44          --       --
                             ----------            ----------            ----------
   Outstanding, December
    31.....................  14,410,257    17.47   14,650,786    12.32   12,810,685    10.00
                             ==========            ==========            ==========
   Exercisable, December
    31.....................   5,337,648   $ 6.91    3,824,319   $ 5.79    1,455,729   $ 4.34
                             ==========            ==========            ==========
</TABLE>

  Options outstanding and exercisable by price range as of December 31, 1999
are as follows:

<TABLE>
<CAPTION>
                                        Weighted-
                                         Average                                Weighted-
                                        Remaining      Weighted -                Average
        Range of                       Contractual      Average                 Exercise
     Exercise Prices     Outstanding Life (in years) Exercise Price Exercisable   Price
   -------------------   ----------- --------------- -------------- ----------- ---------
   <S>                   <C>         <C>             <C>            <C>         <C>
        $ 0.00--
          $10.00          9,371,240        6.9           $ 6.09      4,800,789   $ 5.16
         10.01--
           20.00            306,797        7.7            13.38         95,676    13.38
         20.01--
           30.00          1,428,792        8.3            25.10        391,562    23.69
         30.01--
           40.00            521,906        8.6            32.98         49,621    31.81
         40.01--
           50.00          1,914,722        8.1            45.41            --       --
         50.01--
           60.00            648,400        9.6            56.44            --       --
         60.01--
           70.00            215,100        9.6            63.57            --       --
         70.01--
           80.00              3,300        9.6            72.14            --       --
                         ----------                                  ---------
                         14,410,257        7.4           $17.47      5,337,648   $ 6.91
                         ==========                                  =========
</TABLE>


                                     F-15
<PAGE>

                                TELIGENT, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

13. 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. The Company's
contributions to the plan were $1.7 million, $0.9 million and $0.1 million for
1999, 1998 and 1997, respectively.

  Effective July 1, 1999, the Company adopted the Employee Stock Purchase Plan
("ESPP"). Under the ESPP, the Company has authorized the issuance of 300,000
shares of Class A Common Stock, which allows eligible employees to purchase
such shares at 85% of the fair value of the Class A Common Stock. At December
31, 1999, the Company recorded a $2.3 million liability related to the
purchase of 46,499 shares on January 2, 2000.

14. EVENT (UNAUDITED) SUBSEQUENT TO DATE OF REPORT OF INDEPENDENT AUDITORS

  In February 2000, the Company and two of its major shareholders entered into
agreements to make major investments in ICG Communications, Inc. Teligent will
acquire nearly three million shares of ICG stock for one million shares of
Teligent common stock in an all stock-transaction (the "ICG Transaction"). The
closing of the ICG Transaction, which is expected to close during the second
quarter of 2000, is subject to regulatory and shareholder approval and
satisfaction of other customary closing conditions.

15. 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>
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)

<CAPTION>
                               1st       2nd       3rd       4th
                             Quarter   Quarter   Quarter   Quarter    Total
                             --------  --------  --------  --------  --------
<S>                          <C>       <C>       <C>       <C>       <C>
1998
Revenues.................... $     98  $    143  $    240  $    479  $    960
Loss from operations........  (34,724)  (53,032)  (68,202)  (92,739) (248,697)
Net loss applicable to
 common stockholders........  (38,558)  (59,136)  (78,545) (105,232) (281,471)
Basic and diluted net loss
 per common share...........    (0.73)    (1.12)    (1.49)    (2.00)    (5.35)
</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-16