SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB
(Mark One)

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

                   For the Fiscal Year Ended December 31, 2004

                                       OR

  Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange
                                   Act of 1934

                        Commission File Number 333-50948

                            SUNSHINE PCS CORPORATION
             (Exact name of registrant as specified in its charter)
         Delaware                                     30-0076986
(State or other jurisdiction of                    (I.R.S.  Employer
incorporation or organization)                     Identification No.)
                                65 Highland Road
                               Rye, New York 10580
              (Address and zip code of principal executive offices)

       Registrant's telephone number, including area code: (646) 336-1718

        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None

     Check  whether  the issuer (1) 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 [ ]

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of Regulation S-B is not contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

     The issuer's revenues for the fiscal year ended December 31, 2004 was $0.

     As of March 25, 2005,  the aggregate  market value of the Company's  voting
and  nonvoting  common  equity  held  by   non-affiliates  of  the  Company  was
approximately  US  $359,000,  which  value,  solely  for  the  purposes  of this
calculation,  excludes  shares held by the Company's  officers,  directors,  and
their  affiliates.  Such exclusion  should not be deemed a  determination  or an
admission by the issuer that all such  individuals  are, in fact,  affiliates of
the issuer.

     The number of shares of the  Registrant's  Class A Common  Stock issued and
outstanding as of March 25, 2005 was 4,588,653.

<PAGE>
<TABLE>
<CAPTION>

                            SUNSHINE PCS CORPORATION
                                TABLE OF CONTENTS

                                                                      Page No.
<S>     <C>                                                             <C>

Item 1  Description of Business                                           3
Item 2  Description of Properties                                         4
Item 3  Legal Proceedings                                               4-5
Item 4  Submission of Matters To a Vote of Security Holders               5
Item 5  Market For Common Equity, Related Stockholder Matters
        and Small Business Issuer Purchases of Equity Securities        5-6
Item 6  Management's Discussion and Analysis or Plan of Operation       6-8
Item 7  Financial Statements                                           8-20
Item 8  Changes in and Disagreements with Accountants on Accounting
        and Financial Disclosure                                         20
Item 8A Controls and Procedures                                          20
Item 8B Other Information                                                21
Item 9  Directors and Executive Officers of the Registrant               22
Item 10 Executive Compensation                                        22-23
Item 11 Security Ownership of Certain Beneficial Owners and
        Management and Related Stockholder Matters                       23
Item 12 Certain Relationships and Related Transactions                23-25
Item 13 Exhibits, List and Reports on Form 8-K                        25-26
Item 14 Principal Accountant Fees and Services                        26-27
</TABLE>

                                      -2-
<PAGE>

                                     PART I

Item 1. Description of Business

     Prior to December 31, 2003, we were in the business of developing our three
personal communication services licenses in Florida. As described in more detail
below,  at that date we sold all of our licenses and during 2004 disposed of all
equipment  and  wound  down our  Florida  operations.  Since the sale of our PCS
licenses and wind down of our Florida operations, the Company has no appreciable
operations other than maintenance status as a public company and, therefore,  is
no longer in the development stage.

     We are continuing to evaluate all options available to us at this time. One
option  is to make a  further  distribution  of any  remaining  cash  after  all
accounts payable and other  liabilities are satisfied,  effectively  liquidating
the Company.

Background

     We were  incorporated  on July 13,  2000,  with  capital  of $1.00,  and on
February  14,  2001,  succeeded  to  the  rights  and  obligations  of  Fortunet
Communications,  L.P.  ("Fortunet").  We were  incorporated in July 2000, as the
successor to Fortunet  Communications,  L.P. We previously  held three licenses,
which  granted us the  non-exclusive  right to provide  personal  communications
services to  approximately  960,000 people in the Florida cities of Tallahassee,
Panama  City  and  Ocala.  Personal  communications  service  is a  phrase  that
describes a wireless telecommunications service that utilizes a portion of radio
spectrum  from 1850 to 1990  megahertz,  and each of our  licenses  allows us to
offer  wireless  services  across 15  megahertz  of this  spectrum  in the above
referenced  cities.  Fortunet  was formed on April 18,  1997,  to hold  personal
communications  services  ("PCS") licenses that had been acquired in the Federal
Communications  Commission's  ("FCC") C-Block  auction.  At that date,  Fortunet
succeeded to the assets and assumed the  liabilities  (the  "Transfers") of five
partnerships  ("Partnerships")  that were the high  bidders for  licenses in the
auction.  The  Partnerships  that  transferred  their assets and  liabilities to
Fortunet were Aer Force  Communications,  L.P. ("Aer Force"),  Fortunet Wireless
Communications,  L.P., High Country  Communications,  L.P., New England Wireless
Communications,  L.P. and Southeast Wireless  Communications  L.P., all of which
were formed on July 27, 1995. The Partnerships  received a proportional interest
in Fortunet based upon the relative  market values of the assets and liabilities
transferred.  These  licenses  had an aggregate  purchase  price of $216 million
after  a 25%  bidding  credit,  and  were  financed  primarily  by  the  Federal
Communications Commission. Fortunet Communications, L.P. experienced substantial
problems in  servicing  this debt  because a  perception  developed  in both the
public and private debt and equity  markets that the supply of spectrum  greatly
exceeded realistic customer demand. While the Federal Communications  Commission
offered Fortunet Communications,  L.P. a relief plan, because this plan required
Fortunet  Communications,  L.P.  to  forfeit  30% of its down  payment,  in 1997
Fortunet  Communications,  L.P. recorded a charge of $6.6 million to reflect the
impairment in the value of its licenses. In June 1998, Fortunet  Communications,
L.P.  returned 28 of its  licenses,  and 15 megahertz of its three  remaining 30
megahertz  licenses  and  surrendered  70% of its down  payment  to the  Federal
Communications  Commission  in exchange for credits,  which were used to pay all
remaining  indebtedness to the Federal Communications  Commission.  On April 15,
1999,  the Federal  Communications  Commission  completed a reauction of all the
C-Block licenses that were returned to it. Due to considerably lower amounts bid
for  these   licenses,   in  the  quarter   ended  March  31,   1999,   Fortunet
Communications,  L.P.  recorded a further  charge of $18.5 million to write down
its investment in the licenses,  plus an additional  $0.1 million of capitalized
expenses,  leaving a net carrying value of $2.7 million  subsequent to the write
down.

         On February 22, 2001, Lynch Interactive Corporation ("Interactive"),
distributed 2,821,766 shares of Sunshine's Class A Common Stock, representing
its 49.9% ownership it received from our

                                      -3-
<page>
incorporation,  to its  shareholders,  on the basis of one  share of  Sunshine's
Class A Common Stock for each share of Interactive's Common Stock outstanding.

     On  August  31,  2001,  we  met  the  Federal   Communications   Commission
requirement  that we provide  service  coverage to at least  one-quarter  of the
population in our licensed areas.  However,  we did not have the funds necessary
to fully  build  out a robust  voice  system  necessary  to  provide  commercial
operations, which we estimated to cost between $10.0 and $15.0 million.

     On December  31,  2003,  we  completed  the sale of our three 15  megahertz
C-Block personal  communications  services licenses to Cingular Wireless LLC for
$13,600,000  in cash.  Pursuant  to the sale  agreement,  we have  agreed to the
customary  indemnification of Cingular Wireless,  including  indemnification for
losses,  if any,  resulting  from certain  regulatory  matters (see  "Regulatory
Matters"  below)  and  losses  resulting  from the  "qui  tam"  lawsuit  that is
described in "Item 3. Legal  Proceedings."  In related  transactions,  we used a
portion of the sales proceeds to acquire all of our preferred stock and warrants
held by Lynch Interactive  Corporation for an aggregate amount of $7,587,000 and
all of our outstanding Class B Common Stock for an aggregate amount of $613,863.
On  March  19,  2004,  we made a cash  distribution  of $0.83  per  share on our
outstanding Class A Common Stock.

Regulatory Matters

     During our tenure as an FCC PCS  licensee,  we were subject to a variety of
federal,  as well as  certain  state and  local,  regulatory  requirements.  For
example, as a PCS licensee,  we were subject to detailed FCC license eligibility
rules,  construction notification  requirements,  and fixed microwave relocation
obligations,  among other  requirements.  We believe that we were in  compliance
with our regulatory obligations at all times that we held PCS licenses. However,
we cannot assure you that we will not be subject to future claims or liabilities
associated  with our former  status as a PCS  licensee,  our FCC licenses or any
operations based upon our licenses.

Item 2. Description of Properties

     Following the sale of our three personal communications service licenses we
have no remaining material property.

Item 3. Legal Proceedings

     Fortunet  Communications,  L.P.,  our  predecessor-in-interest,  as well as
Victoria  G. Kane,  the sole  stockholder  of  Fortunet  Wireless  Communication
Corporation  which is our  largest  stockholder,  Karen E.  Johnson,  our  Chief
Executive Officer, and Lynch Interactive Corporation, which through February 25,
2001 owned  49.9% of our equity and through  December  31, 2003 owned all of our
preferred stock and an option to acquire  4,300,000  shares of our common stock,
among  others,  have been named as  defendants  in a lawsuit  brought  under the
so-called  "qui tam"  provisions  of the federal  False Claims Act in the United
States  District  Court for the District of Columbia.  The  complaint  was filed
under  seal with the court on  February  14,  2001,  and the seal was  lifted on
January 11,  2002.  Under the False  Claims Act, a private  plaintiff,  termed a
"relator,"  may file a civil  action  on the U.S.  government's  behalf  against
another party for violation of the statute.  In return,  the relator  receives a
statutory bounty from the government's litigation proceeds if he is successful.

     The  relator in this  lawsuit  is R.C.  Taylor  III,  who is  allegedly  an
attorney specializing in telecommunications law. The main allegation in the case
is that the defendants  participated in the creation of "sham" bidding  entities
that allegedly  defrauded the federal  Treasury by improperly  participating  in
certain Federal Communications  Commission spectrum auctions restricted to small
businesses,  as well as obtaining  bidding  credits in other  spectrum  auctions
allocated to "small" and "very small"  businesses.  While the complaint seeks to
recover an unspecified amount of damages, which would

                                      -4-
<page>
be subject to  mandatory  trebling  under the statute,  a document  filed by the
relator with the Court on February 24, 2004, discloses an initial computation of
damages of not less than $88 million  resulting from bidding  credits awarded to
the defendants in FCC auctions and $120 million of unjust enrichment through the
sale or assignment of licenses  obtained by the  defendants in FCC auctions,  in
each prior to trebling.

     We strongly believe that this lawsuit is completely  without merit and that
relator's  initial damage  computation is without basis, and we intend to defend
the suit vigorously.  The U.S. Department of Justice has notified the court that
it has declined to intervene in the case.  Nevertheless,  we cannot  predict the
ultimate  outcome  of the  litigation,  nor can we predict  the effect  that the
lawsuit or its outcome will have on our business or plan of operation. We do not
have any insurance to cover the costs of defending this lawsuit.

     We were  formally  served with the complaint on July 10, 2002. On September
19, 2002, we joined Lynch Interactive and certain other defendants in filing two
motions with the United States  District  Court for the District of Columbia:  a
motion to  dismiss  the  lawsuit  and a motion  to  transfer  the  action to the
Southern  District  of New York.  On November  25,  2002,  the relator  filed an
opposition  reply to our motion to dismiss and on December 5, 2002,  Interactive
filed a reply in support of its motion to dismiss.  On September  30, 2003,  the
Court granted our motion to transfer the action to the Southern  District of New
York.

     A scheduling  conference  was held on February 10, 2004,  at which time the
judge approved a scheduling order and discovery commenced.

     On July 28,  2004,  the judge denied in part and granted in part our motion
to dismiss.  Defendant bidding entities that did not win licenses were dismissed
and the "reverse" false claims act count was dismissed as redundant. Interactive
and its subsidiaries remain parties to the litigation.

     In  December  2004,  the  defendants  filed a motion in the  United  States
District Court for the District of Columbia to compel the FCC to provide certain
information  subpoenaed  by them in order to enable  them to  conduct a defense.
This motion is still  pending  and  discovery  is  continuing.  See  "History of
Lynch's "C" Block Activities" below.

Item 4. Submission of Matters To a Vote of Security Holders.

     None during the fourth quarter.

                                     PART II

Item 5.  Market  For  Common  Equity,  Related  Stockholder  Matters,  and Small
         Business Issuer Purchases of Equity Securities.

     The Class A common stock commenced trading, under the symbol: SUNPA, on the
over-the-counter  market on March 13, 2001.  The following  table sets forth the
high  and low  closing  prices  of the  Class A  common  stock  for the  periods
indicated, as reported by published sources.
<TABLE>
<CAPTION>
                        Low         High
                    ----------- -----------
<S>                 <C>           <C>
2004 Fiscal Year:
  First Quarter .   $   0.05$      1.04
  Second Quarter    $   0.09$      0.15
  Third Quarter .   $   0.09$      0.11
  Fourth Quarter    $   0.10$      0.14
</TABLE>

                                      -5-
<page>

<TABLE>
<CAPTION>
                        Low         High
                    ----------- -----------
<S>                 <C>            <C>
2003 Fiscal Year:
  First Quarter .   $   0.18$      0.35
  Second Quarter    $   0.18$      0.25
  Third Quarter .   $   0.20$      1.01
  Fourth Quarter    $   0.55$      0.75
</TABLE>


     As of March 25, 2005, there were approximately 740 holders of record of our
Class A common stock.

     On March 2, 2004, our Board of Directors  declared a cash  distribution  on
our Class A common stock of $0.83 per share. Such dividend was paid on March 19,
2004. This is the first distribution on the Class A common stock.

Item 6. Management's Discussion and Analysis or Plan of Operation

Forward-Looking Statements and Uncertainty of Financial Projections

     Forward-looking  statements  are not based on  historical  information  but
relate  to  future   operations,   strategies,   financial   results   or  other
developments.  Forward-looking  statements are necessarily  based upon estimates
and assumptions that are inherently  subject to significant  business,  economic
and competitive  uncertainties and  contingencies,  many of which are beyond our
control  and many of which,  with  respect  to future  business  decisions,  are
subject to change.  These  uncertainties  and  contingencies  can affect  actual
results and could cause actual results to differ materially from those expressed
in any forward-looking statements made by, or on behalf of, us.

Sale of Licenses

     On December  31,  2003,  we  completed  the sale of our three 15  megahertz
C-Block personal  communications  services licenses to Cingular Wireless LLC for
$13,600,000  in cash.  In related  transactions,  we used a portion of the sales
proceeds  to  acquire  all of our  preferred  stock and  warrants  held by Lynch
Interactive  Corporation  for an aggregate  amount of $7,587,000  and all of our
outstanding  Class B Common Stock for an aggregate amount of $613,863.  On March
19,  2004,  we made a cash  distribution  of $0.83 per share on our  outstanding
Class A Common  Stock.  During  2004,  we disposed of all  equipment  related to
providing PCS service and wound down our Florida  operations.  Since the sale of
our PCS  licenses  and wind down of our Florida  operations,  the Company has no
appreciable  operations other than  maintenance  status as a public company and,
therefore, is no longer in the development stage.

     We are  continuing  to evaluate  all options  available to Sunshine at this
time. One option is to make a further  distribution  of any remaining cash after
all  accounts   payable  and  other   liabilities  are  satisfied,   effectively
liquidating the company.

Results of Operations

     During  the year  ended  December  31,  2004,  our net loss was  $40,000 as
compared to net income of $8,952,000 for the year ended December 31, 2003.

     During 2003,  the Company  recorded a $11.1 million gain on the sale of our
PCS licenses  (proceeds of $13.6 million less $276,000 expenses of sale over the
remaining carrying value of the licenses of $2.4 million),  a $654,000 provision
for impairment on our equipment,  and a $303,000 accrual for our remaining lease
liabilities.  In addition, prior to the sale of the PCS Licenses to Cingular, we
leased the use of the spectrum to Cingular and,  during 2003, we recorded  lease
income of $151,000 on the lease.

                                      -6-
<page>

     During the year ended  December 31, 2004, the Company  recorded  $58,000 in
Other Expenses.  Such amount was reduced by $158,000 as a result of a negotiated
settlement  of  certain  lease  obligations  of the  Company  at less than their
recorded  liability amount.  The $158,000  represents the difference between the
amount that was paid, in final settlement, and the amount accrued by the Company
on the date the leases were of no further use,  December 31, 2003.  Accordingly,
prior to the reduction in expenses due to the settlement of the lease obligation
of $158,000,  the Company incurred expenses of $216,000 which primarily consists
of  accounting  and legal fees.  Approximately  $120,000 of these  expenses  are
recurring.

     Also during 2003, the Company  accrued  $500,000 for Director  Compensation
that was  attributable  to their efforts in 2003,  primarily the sale of the PCS
licenses to Cingular.  During 2003, the Company  recorded Other Expenses of $1.0
million which included this aforementioned Director Compensation accrual and the
additional  costs of providing  service.  In addition,  during 2003, the Company
recorded  depreciation and amortization expense of $278,000,  the aforementioned
accrual of $303,000 of the remaining lease obligations and an impairment reserve
of $655,000 for equipment  that was no longer useable as a result of the sale of
the licenses.

Investment  income was  $18,000 in 2004,  as  compared  to $3,000 in 2003 due to
higher investable cash balances.

Liquidity and Capital Resources

     At December 31,  2004,  we had $790,000 in cash as compared to $5.7 million
at December 31, 2003.

     On March 2, 2004, we declared a cash distribution of $0.83 per share on our
Class A common stock totaling $3.8 million.  In addition,  the Company paid $0.5
million of accrued  Director  Compensation,  discussed above, and other accruals
and expenses relating to the sale of the PCS licenses to Cingular.

Recently Issued Accounting Pronouncements

     The  Financial   Accounting   Standards  Board  ("FASB")  issued  Financial
Interpretation  No.  46,   "Consolidation  of  Variable  Interest  Entities,  an
Interpretation  of ARB No.  51"  (FIN 46) in  January  2003  and  revised  it in
December 2003 (FIN 46R). FIN 46 requires certain variable  interest  entities to
be consolidated by the primary beneficiary of the entity if the equity investors
in the  entity  do not  have  the  characteristics  of a  controlling  financial
interest or do not have sufficient  equity at risk for the entity to finance its
activities without additional subordinated financial support from other parties.
The provisions of FIN 46R were applicable for the first interim or annual period
ending  after  March  15,  2004  for  both new and  existing  variable  interest
entities.   Certain  less  than  50%  owned  investments  in  limited  liability
companies,  which were considered to be variable interest entities, needed to be
consolidated as a result of the  implementation of FIN 46. The implementation of
this standard had no effect on the Company's financial statements.

     In November  2002,  the  Emerging  Issues Task Force of the FASB  reached a
consensus on EITF No. 00-21,  "Accounting for Revenue Arrangements with Multiple
Deliverables"  ("EITF No.  00-21").  EITF No. 00-21 addresses how to account for
arrangements  that  may  involve  multiple  revenue-generating  activities.  The
Company adopted this guidance on January 1, 2003,  which did not have a material
effect on our results of operations, financial position or cash flows.

     In December 2003, the SEC issued Staff Accounting Bulletin ("SAB") No. 104,
"Revenue  Recognition,"  which revises or rescinds  certain  sections of SAB No.
101,  "Revenue  Recognition,"  in  order  to  make  this  interpretive  guidance
consistent with current  authoritative  accounting and auditing guidance

                                      -7-
<page>

and SECrules and  regulations.  The changes  noted in SAB No. 104 did not have a
material effect on the Company's  results of operations,  financial  position or
cash flows.

     In December  2004,  the FASB issued SFAS No.153,  "Exchanges of Nonmonetary
Assets",  which  eliminates the exception for  nonmonetary  exchanges of similar
productive  assets and  replaces it with a general  exception  for  exchanges of
nonmonetary  assets that do not have commercial  substance.  SFAS No.153 will be
effective for nonmonetary asset exchanges  occurring in fiscal periods beginning
after June 15,  2005.  The Company  does not believe the adoption of SFAS No.153
will have a material impact on its financial statements.

     In December 2004, the FASB issued SFAS  No.123(R),  "Share-Based  Payment",
which  establishes  standards for  transactions in which an entity exchanges its
equity instruments for goods or services. This standard requires a public entity
to measure the cost of employee  services  received in exchange  for an award of
equity  instruments  based  on the  grant-date  fair  value of the  award.  This
eliminates  the exception to account for such awards using the intrinsic  method
previously  allowable under APB Opinion No.25.  SFAS No.123(R) will be effective
for interim or annual reporting periods beginning on or after June 15, 2005. The
Company is currently  evaluating  the impact of the  adoption of SFAS  No.123(R)
will have on its financial statements.

Quantative and Qualitative Analysis of Market Risk

     The Company is  minimally  exposed to changes in market risk  because as of
December 31, 2004 the Company has no market sensitive assets or liabilities.

Off Balance Sheet Arrangements

     None.

Item 7. Financial Statements

<TABLE>
<CAPTION>

                                      INDEX
                            Sunshine PCS Corporation

<S>                                                         <C>
Report of Independent Registered Public Accounting firm .    9
Balance Sheets at December 31, 2004 and 2003 ............   10
Statements of Operations for each of the two years in the
period  ended December 31, 2004 .........................   11
Statement of Changes in Stockholders'
Equity for the two years through December 31, 2004 ......   12
Statements of Cash Flows for each of the two years in the
period ended December 31, 2004 ..........................   13
Notes to Financial Statements ...........................   14-20
</TABLE>

                                      -8-
<PAGE>



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Sunshine PCS Corporation
New York, New York

     We have audited the accompanying  balance sheet of Sunshine PCS Corporation
(the "Company") as of December 31, 2004 and 2003, and the related  statements of
operations,  stockholders' equity and cash flows for the years then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

     We conducted our audit in accordance  with  standards of the Public Company
Accounting Oversight Board. Those standards require that we plan and perform the
audit to obtain reasonable  assurance about whether the financial statements are
free of material misstatement.  The Company is not required to have, nor were we
engaged to perform,  an audit of its internal control over financial  reporting.
Our audits included  consideration of internal control over financial  reporting
as  a  basis  for  designing  audit  procedures  that  are  appropriate  in  the
circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on the
effectiveness  of the  Company's  internal  control  over  financial  reporting.
Accordingly,  we express no such opinion. An audit also includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

     In our opinion,  such financial  statements present fairly, in all material
respects,  the financial position of Sunshine PCS Corporation as of December 31,
2004 and 2003,  and the  results  of its  operations  and its cash flows for the
period then ended in conformity with accounting principles generally accepted in
the United States of America.

/s/ DELOITTE & TOUCHE LLP

New York, New York
March 31, 2005


                                      -9-
<PAGE>
<TABLE>
<CAPTION>

                            Sunshine PCS Corporation
                                 Balance Sheets

Assets

                                                                                December 31,    December 31,
                                                                                   2004            2003
Assets

<S>                                                                            <C>             <C>
Cash and cash equivalents ..................................................   $    790,406    $  5,722,523
Other Assets ...............................................................          6,093            --
                                                                               ------------    ------------
  Total Assets .............................................................   $    796,499    $  5,722,523
                                                                               ============    ============
Liabilities and stockholders' equity (deficiency)

Liabilities

Accounts payable and accrued expenses ......................................   $    132,291    $  1,224,149

Stockholders' equity

Class A:  no par value Authorized shares-20,000,000; 4,588,653 shares issued
and outstanding at December 31, 2004 and 2003 ..............................           --              --
Class B:  no par value Authorized shares-9,000,000; no shares outstanding at
December 31, 2004 and 2003 .................................................           --              --
Additional paid-in capital .................................................     80,514,012      80,496,506
Accumulated deficit ........................................................    (79,849,804)    (75,998,132)
                                                                               ------------    ------------
  Stockholders' equity .....................................................        664,208       4,498,374
                                                                               ------------    ------------
  Total liabilities and stockholders' equity(deficiency) ...................   $    796,499    $  5,722,523
                                                                               ============    ============
</TABLE>
See accompanying notes to financial statements.

                                      -10-
<PAGE>
<TABLE>
<CAPTION>


                            Sunshine PCS Corporation
                            Statements of Operations

                                              Years ended December 31,
                                                 2004          2003
                                         ------------------------------
<S>                                       <C>             <C>
Lease revenues ........................   $       --      $    150,667
Interest income .......................         18,070           3,023
Other expenses ........................        (58,429)     (1,033,780)
Provision for impairment on equipment .           --          (654,926)
Accrual of lease liability ............           --          (302,951)
Gain on sale of PCS license ...........           --        11,067,796
Depreciation and amortization .........           --          (277,540)
                                          ------------    ------------
Net Income (Loss) .....................        (40,359)      8,952,289
Dividend requirement on
  preferred stock .....................           --          (792,770)
                                          ------------    ------------
     Income (loss) applicable to common
shares ................................        (40,359)   $  8,159,519
                                          ============    ============
Basic income (loss) per common share ..   $      (0.01)   $       1.07
                                          ============    ============
Diluted income (loss) per common shares   $      (0.01)   $        .84
                                          ============    ============
Weighted average shares used in basic
computation ...........................      4,588,653       7,657,966
                                          ============    ============
Weight average shares and equivalents
used in diluted computation ...........      4,588,653       9,657,966
                                          ============    ============

</TABLE>

See accompanying notes to financial statements

                                      -11-
<page>
<TABLE>
<CAPTION>


                            Sunshine PCS Corporation
                        Statement of Stockholders' Equity



                                        Additional                    Stockholders'
                                          paid-in      Accumulated       equity
                                          capital        deficit      (deficiency)

<S>                                    <C>              <C>             <C>
Balance at December 31, 2002 .......   $ 71,655,501     (84,157,651)    (12,502,150)
Change in value of CEO Options .....        142,441            --           142,441
Dividend requirement on preferred
stock ..............................           --          (792,770)       (792,770)
Redemption of Preferred stock ......      9,699,427            --         9,699,427
Purchase of Class B Common Stock ...       (613,863)           --          (613,863)
Purchase of Stock Warrants .........       (387,000)           --          (387,000)
Net income for year ended December
31, 2003 ...........................           --         8,952,289       8,952,289
                                       ------------    ------------    ------------
Balance at December 31, 2003 .......   $ 80,496,506    $(75,998,132)   $  4,498,374
Cash distribution to Stockholders ..           --      $ (3,811,313)   $ (3,811,313)
Net loss for year ended December 31,
                                2004           --           (40,359)        (40,359)
Change in value of CEO Option ......         17,506            --            17,506
                                       ------------    ------------    ------------
Balance at December 31, 2004 .......   $ 80,514,012    $(79,849,804)   $    664,208
                                       ============    ============    ============
</TABLE>

         See accompanying notes to financial statement


                                      -12-
<PAGE>
<TABLE>
<CAPTION>

                            Sunshine PCS Corporation
                            Statements of Cash Flows


                                                                       Years ended December 31,
                                                                  ----------------- ------------
                                                                        2004            2003
                                                                  ----------------- ------------
Operating activities
<S>                                                              <C>              <C>
Net (loss) income .............................................   $    (40,359)   $  8,952,289
Adjustments to reconcile net (loss) income  to
cash (used in) provided by operating activities:
Depreciation and amortization .................................           --           277,540
Compensation expense relating to
     executive's stock options ................................         17,506         142,441
Provision for impairment  of equipment ........................           --           654,926
Gain on sale of PCS Licenses ..................................           --       (11,067,796)
Increase(decrease) in accounts
     payable and accrued expenses .............................     (1,091,858)      1,077,155
Net change in other assets ....................................         (6,093)         14,653
                                                                  ------------    ------------

Net cash (used in) provided by operating activities ...........     (1,120,804)         51,208
                                                                  ------------    ------------

Investing Activities
Proceeds of sale of PCS Licenses ..............................           --        13,599,333
Expenses of sale of PCS Licenses ..............................           --          (158,892)
                                                                  ------------    ------------

     Net cash provided by investing activities ................           --        13,440,441
                                                                  ------------    ------------

Financing activities
Cash distribution to Stockholders .............................     (3,811,313)           --
Redemption of Preferred stock .................................           --        (7,200,000)
Purchase of Class B Common stock ..............................           --          (613,863)
Purchase of stock options .....................................           --          (387,000)
                                                                  ------------    ------------

Net cash used in financing activities .........................     (3,811,313)     (8,200,863)
                                                                  ------------    ------------

Net change in cash ............................................     (4,932,117)      5,290,786
Cash and cash equivalents at
beginning of period ...........................................      5,722,523         431,737
                                                                  ------------    ------------
Cash and cash equivalents at end of
period ........................................................   $    790,406    $  5,722,523
                                                                  ============    ============

     See accompanying notes to financial statements

                                      -13-
</TABLE>

<PAGE>

                            Sunshine PCS Corporation
                          Notes to Financial Statements

                                December 31, 2004

1.   Background

     On December 31, 2003,  Cingular  Wireless LLC  ("Cingular"),  pursuant to a
definitive agreement,  executed on August 18, 2003 ("Sale Agreement"),  acquired
all of Sunshine's three personal  communications services licenses for total net
proceeds of $13.6  million.  During 2003,  the Company  recorded a $11.1 million
gain on the sale of our PCS  licenses  (proceeds  of  $13.6  million  less  $0.2
million  expenses of sale over the remaining  carrying  value of the licenses of
$2.4 million).  Also during 2003, the Company  accrued $0.5 million for Director
Compensation, that was attributable to their efforts in 2003, primarily the sale
of the PCS licenses to Cingular. This amount was paid in 2004.

     Pursuant to the sale agreement, we agreed to the customary  indemnification
of  Cingular  Wireless,  including  indemnification  for losses  resulting  from
certain  regulatory matters and losses resulting from the "qui tam" lawsuit that
is described in Note 6. Sunshine considers it highly unlikely that Cingular will
incur losses, however, in accordance with the provisions of Financial Accounting
Standards  Board  ("FASB")  Interpretation,  No. 45  "Guarantor  Accounting  and
Disclosure Requirements," the Company recorded a liability which represented the
Company's best estimate of the fair value of such indemnification.

     The sale required the approval by the Sunshine shareholders  representing a
majority  of the voting  power of all  outstanding  shares.  Such  approval  was
obtained on September 10, 2003, by consent of Sunshine's Class B shareholder. In
addition,  completion  of the sale was  subject to the  consent  of the  Federal
Communications Commission to the assignment of the licenses.

     In a separate agreement also signed on August 18, 2003, Sunshine has agreed
to lease to Cingular the use of the spectrum in its three  licenses  ("Operating
Agreement")  for a  period  starting  the  date  the  shareholder  approval  was
obtained,  September 10, 2003,  until either (a) the transfer of the licenses is
accomplished, (b) August 18, 2006 or (c) Cingular cancels this agreement with 30
days notice. Under this agreement Cingular would construct,  own and operate the
equipment required for Cingular to provide wireless  telecommunications services
over this spectrum.  Sunshine  charged  Cingular on a per minute basis for using
the  spectrum and Cingular  charged  Sunshine for use of the  equipment on a per
minute basis. Under the Operating Agreement, Sunshine received a minimum payment
of $40,000 per month,  $30,667 for the partial  month of September  2003. No per
minute revenues or charges were recognized  during the period from September 10,
2003 to completion of the sale on December 31, 2003.  The  cumulative  amount of
these minimum  payments until closing was deducted from the proceeds of the Sale
Agreement.  Sunshine  recognized  $150,667 of lease income during the year ended
December 31, 2003, as a result of this agreement.

     In  connection  with  the  Sale  Agreement,   Sunshine  agreed  with  Lynch
Interactive Corporation,  which owned all of the outstanding shares of the three
series of Preferred  Stock of Sunshine,  to acquire  those shares for a total of
approximately  $7.2  million.  Sunshine  also has reached an agreement  with the
holder of its 3,069,313  shares of Class B Common Stock to reacquire such shares
for $.20 per share,  for a total of $0.6 million.  The  acquisition  of both the
Preferred  Stock and Class B Common Stock were  contingent  upon the closing and
sale of the licenses to Cingular and the  acquisition  was also  consummated  on
December 31,

                                      -14-
<page>

2003. The closing of these  transactions  also occurred on December 31, 2003. In
addition,  on that date,  Sunshine purchased all of our outstanding  warrants to
purchase 4.3 million shares of Class A common stock for a total of $0.4 million.
With regard to the  remaining  sale  proceeds,  on March 2, 2004,  we declared a
distribution  of $0.83  per  share on our  Class A common  stock  totaling  $3.8
million,  we are in the process of evaluating all of its  alternatives  and will
consider  all options  with regard to their  potential  use.  Sunshine's  system
equipment,  which had a current net book value after accumulated depreciation of
$654,000 at the time of the  consummation  of the sale agreement was not part of
the Sale  Agreement  and was not  being  used  under  the  Operating  Agreement.
Accordingly,  considering  that  Sunshine  would  have  no  further  use for the
equipment  and believed  that this  equipment  would have  minimal  value on the
resale  market  and all such  equipment  was  written  off during the year ended
December 31, 2003.

     On receipt of the FCC approval, all of our three classes of preferred stock
became  mandatorily  redeemable  and,  under SFAS 150,  "Accounting  for Certain
Financial  Instruments  with  Characteristics  of Both  Liabilities and Equity,"
therefore,  a liability of the Company.  Because of the related  party nature of
this  transaction,  the  difference  between the carrying value of the preferred
stock and the amount  paid,  was recorded as an increase to  additional  paid in
capital.

2.   Accounting and Reporting Policies

Use of Estimates

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

Intangible Assets

     While the  Company  owned its PCS  license,  it applied the  principals  of
Statements of Financial Accounting Standards No. 141, Business Combinations, No.
142,  Goodwill and Other  Intangible  Assets,  and No. 144,  Accounting  for the
Impairment  or  Disposal  of  Long-Lived  Assets.  SFAS No.  142  prohibits  the
amortization of goodwill and assets with indefinite  lives, but instead requires
that these  assets be reviewed  for  impairment  at least  annually.  Intangible
assets with finite  lives will  continue to be  amortized  over their  estimated
useful lives. While the Company expected renewal of its licenses by the granting
authorities  which  would  allow  for  the  classification  of its  licenses  as
indefinite lived assets, because of its lack of operating history, the Company's
current cash flow deficit and the inability to obtain the  necessary  funding to
build a network,  the Company  continued to amortized  its licenses  over twenty
years.  Amortization expense recorded in 2003 amounted to $134,000.  Considering
the licenses were sold on December 31, 2003, no such  amortization  was recorded
in 2004.

Cash Equivalents

     Cash and Cash  Equivalents  are invested in United  States  Treasury  money
market  funds for which an  affiliate  of the Company  serves as the  investment
manager.

Equipment

     Equipment  was  recorded at cost and  depreciated  using the  straight-line
method  based upon an estimated  useful life of seven years.  As of December 31,
2003, the Company sold its PCS licensing and

                                      -15-
<page>

recorded a reserve for  impairment of the equipment as it was no longer  useable
and the cost to remove  was  deemed to be greater  than its  market  value.  The
equipment was disposed of during 2004.

Fair Values of Financial Instruments

     The  Company's  financial  instruments  consist  primarily of cash and cash
equivalents,  accounts payable and debt. All financial instruments are accounted
for on a  historical  cost  basis,  which  approximates  fair  value  given  the
short-term nature of these instruments.

Income Taxes

     Sunshine (a "C" corporation for Federal tax purposes) files a U.S.  Federal
income  tax  return.  Accordingly  at the date of the  reorganization,  Sunshine
provided for deferred  income taxes for  temporary  differences  (primarily  the
reserve for impairment of PCS licenses) between the financial  statement and tax
bases of Sunshine's assets and liabilities.

     Valuation  allowances  have  been  provided  for  deferred  tax  assets  of
approximately  $1.4  million  and $1.5  million at  December  31,  2004 and 2003
respectively, as the realization of such assets is dependent upon the generation
of future  taxable  income during a period when such losses would be utilizable.
The  Company  currently  has $3.5  million  of net  federal  operating  tax loss
carryforwards,  generated  in 2001  through  2004,  expiring  in the years  2021
through 2024. In addition,  the Company has approximately  $4.9 million of state
net operating loss carryforwards expiring in the years 2021 through 2024.

     Cumulative  temporary  differences  at  December  31,  2004 and 2003 are as
follows:
<TABLE>
<CAPTION>

                        December 31, 2004   December 31, 2003
<S>                      <C>                <C>
Deferred tax assets:
Net operating losses     1,369,000          $ 1,164,000
Other ..............       107,000              289,000
                         1,476,000            1,453,000
Valuation allowance     (1,476,000)          (1,453,000)
                        ----------          -----------
                        $       --          $        --
                        ===========         ===========
</TABLE>


     The  reconciliation  of the  provision  (benefit)  for income taxes and the
amount  computed  by  applying  the  statutory  federal  income  tax rate to net
income(loss) is as follows:

<TABLE>
<CAPTION>

                                                  2004          2003

<S>                                          <C>            <C>
Tax (benefit) provision at statutory rate    $   (14,000)   $ 3,044,000
Increases (decreases):
State taxes, net of federal benefit ......        (1,000)      (325,000)
Increase (decrease) in valuation allowance        23,000     (3,369,000)
Other ....................................        (8,000)           --
                                             -----------    -----------
                                             $        --    $       --
                                             ===========    ===========
</TABLE>

     Prior to the reorganization,  the results of operations of the Partnerships
and  Fortunet  were  included  in the taxable  income or loss of the  individual
partners and, accordingly, no tax benefit has been recorded.

                                      -16-
<page>

Stock Options

     The  Company  accounts  for stock  options  issued to  directors  under the
provisions of APB 25 "Accounting Stock Issued to Employees" and consequently the
Company recognized no expense as the options were issued above their fair market
value at the date of the grant.  If these  options had been  accounted for under
the provisions of FAS 123 "Accounting for  Stock-Based  Compensation"  utilizing
the  Black-Scholes  Option Pricing Model as the way to calculate the fair market
value,  the effect Net Income (Loss) for the years ending  December 31, 2004 and
2003 would have been as follows:

<TABLE>
<CAPTION>


                                                2004          2004
                                           -----------    -----------
<S>                                        <C>            <C>
Net income (loss) as reported ..........   $   (40,359)   $ 8,952,289
Add (deduct):
Total stock-based employee compensation
(expense) income determined under fair
value based method for all awards ......        (1,233)        (9,999)
                                           -----------    -----------
Pro forma net income (loss) ............       (41,592)     8,942,290
Dividend requirement on preferred stock           --         (792,770)
                                           -----------    -----------

Pro forma income (loss) applicable to
common shares ..........................   $   (41,592)   $ 8,149,520
                                           ===========    ===========
Basic and diluted loss per common share:
As reported:
Basic ..................................   $       (0.01) $      1.07
Diluted ................................   $       (0.01) $      0.84
Pro formal:
Basic ..................................   $       (0.01) $      1.06
Diluted ................................   $       (0.01) $      0.84

</TABLE>


     As of May 1, 2001,  Sunshine granted to its Chief Operating Officer options
to purchase 306,819 sharesof its Class A common stock at $1.50 per share.  Fifty
percent of such  options  vested on  Sunshine's  meeting its first FCC  mandated
build-out requirement,  which occurred on August 31, 2001, and the remaining 50%
vested on the sale of the licenses.  All such options expire five years from the
date of grant.  Such options are also being accounted for in accordance with the
provisions  of EITF  96-18.  Sunshine  estimated  the fair value of the  153,410
options which vested in August 2001 at $337,502,  using the Black Scholes Option
Pricing  Model.  Such amount has been  capitalized as cost of equipment as these
costs  are  directly  attributed  to  construction  of the  equipment.  Sunshine
estimated the fair market value of the 153,409 options, which vested in December
2003, at $92,405, using the Black-Scholes Option Pricing Model and expensed such
amount in 2003.

Recently Issued Accounting Pronouncements

     The  Financial   Accounting   Standards  Board  ("FASB")  issued  Financial
Interpretation  No.  46,   "Consolidation  of  Variable  Interest  Entities,  an
Interpretation  of ARB No.  51"  (FIN 46) in  January  2003  and  revised  it in
December 2003 (FIN 46R). FIN 46 requires certain variable  interest  entities to
be consolidated by the primary beneficiary of the entity if the equity investors
in the entity do not have the

                                      -17-
<page>
characteristics  of a controlling  financial  interest or do not have sufficient
equity at risk for the  entity to  finance  its  activities  without  additional
subordinated  financial  support from other  parties.  The provisions of FIN 46R
were  applicable  for the first  interim or annual period ending after March 15,
2004 for both new and existing variable interest entities. Certain less than 50%
owned  investments in limited liability  companies,  which were considered to be
variable  interest  entities,  needed  to be  consolidated  as a  result  of the
implementation  of FIN 46. The  implementation of this standard had no effect on
the Company's financial statements.

     In November  2002,  the  Emerging  Issues Task Force of the FASB  reached a
consensus on EITF No. 00-21,  "Accounting for Revenue Arrangements with Multiple
Deliverables"  ("EITF No.  00-21").  EITF No. 00-21 addresses how to account for
arrangements  that  may  involve  multiple  revenue-generating  activities.  The
Company adopted this guidance on January 1, 2003,  which did not have a material
effect on our results of operations, financial position or cash flows.

     In December 2003, the SEC issued Staff Accounting Bulletin ("SAB") No. 104,
"Revenue  Recognition,"  which revises or rescinds  certain  sections of SAB No.
101,  "Revenue  Recognition,"  in  order  to  make  this  interpretive  guidance
consistent with current  authoritative  accounting and auditing guidance and SEC
rules and regulations.  The changes noted in SAB No. 104 did not have a material
effect on the Company's results of operations, financial position or cash flows.

     In December  2004,  the FASB issued SFAS No.153,  "Exchanges of Nonmonetary
Assets",  which  eliminates the exception for  nonmonetary  exchanges of similar
productive  assets and  replaces it with a general  exception  for  exchanges of
nonmonetary  assets that do not have commercial  substance.  SFAS No.153 will be
effective for nonmonetary asset exchanges  occurring in fiscal periods beginning
after June 15,  2005.  The Company  does not believe the adoption of SFAS No.153
will have a material impact on its financial statements.

     In December 2004, the FASB issued SFAS  No.123(R),  "Share-Based  Payment",
which  establishes  standards for  transactions in which an entity exchanges its
equity instruments for goods or services. This standard requires a public entity
to measure the cost of employee  services  received in exchange  for an award of
equity  instruments  based  on the  grant-date  fair  value of the  award.  This
eliminates  the exception to account for such awards using the intrinsic  method
previously  allowable under APB Opinion No.25.  SFAS No.123(R) will be effective
for interim or annual reporting periods beginning on or after June 15, 2005. The
Company is currently  evaluating  the impact of the  adoption of SFAS  No.123(R)
will have on its financial statements.

3.   Income (Loss) Per Share

     The income (loss) per share has been  calculated  based on actual number of
shares  outstanding.  Warrants  options and the convertible  preferred have been
excluded  from the  computation  of diluted  loss per share for all  periods for
which there are losses  because their issuance would have the effect of reducing
the loss per share.  For the years ended December 31, 2003, the Company recorded
income  applicable  to common  shareholders.  Warrants and options were excluded
from the diluted earnings per share computation because,  utilizing the treasury
stock method, their inclusion would have been anti-dilutive.  Assumed conversion
of the convertible preferred was included in the computation of diluted earnings
per share for the year ended December 31, 2003.

4.   Management Services Agreement

     As of May 1, 2001, the Company  entered into an agreement with Gray Florida
Holdings Inc., dba GrayLink  Wireless,  Inc.  (whose  President,  Robert Chomat,
serves as the Company's Chief Operating Officer) to provide management  services
to the Company. The agreement calls for payment of $125,000

                                      -18-
<page>
for services rendered during 2001 and $200,000 for services rendered in 2002. As
of January 1, 2003, the fees were reduced to $25,000 and a $100,000 payment upon
a liquidity event, due to a lower level of required service.  As of December 31,
2003, the Company had an amount payable of $242,000 under this agreement,  which
it paid in full in 2004.

5.   Lease Commitment

     The Company had entered into leases  covering  antenna space on four towers
(total rental expenses for the year ended December 31, 2003, was $110,401).  The
leases called for monthly  payments  totaling $9,280 per month. The leases had a
minimum term of five years and are subject to annual escalation  clauses.  As of
December 31,  2003,  the Company had no further use for these leases and accrued
the $303,000  remaining  liability  under the lease.  During  2004,  the Company
negotiated  a  full  settlement  of all  of  their  lease  obligations  and  the
difference  between the liability recorded of $303,000 and its settlement amount
paid during 2004, was recorded as a reduction of expenses of $158,000 during the
year ending December 31, 2004.

6.   Litigation

     Fortunet  Communications,  L.P.,  our  predecessor-in-interest,  as well as
Victoria  G. Kane,  the sole  stockholder  of  Fortunet  Wireless  Communication
Corporation which is our largest stockholder, Karen E. Johnson, our former Chief
Executive Officer,  and Lynch Interactive  Corporation,  among others, have been
named  as  defendants  in a  lawsuit  brought  under  the  so-called  "qui  tam"
provisions of the federal False Claims Act in the United States  District  Court
for the District of Columbia.  The complaint was filed under seal with the court
on February  14, 2001,  and the seal was lifted on January 11,  2002.  Under the
False  Claims Act, a private  plaintiff,  termed a  "relator,"  may file a civil
action on the U.S.  government's  behalf against  another party for violation of
the  statute.  In return,  the  relator  receives a  statutory  bounty  from the
government's litigation proceeds if he is successful.

     The  relator in this  lawsuit  is R.C.  Taylor  III,  who is  allegedly  an
attorney specializing in telecommunications law. The main allegation in the case
is that the defendants  participated in the creation of "sham" bidding  entities
that allegedly  defrauded the federal  Treasury by improperly  participating  in
certain Federal Communications  Commission spectrum auctions restricted to small
businesses,  as well as obtaining  bidding  credits in other  spectrum  auctions
allocated to "small" and "very small"  businesses.  While the complaint seeks to
recover an  unspecified  amount of damages,  which would be subject to mandatory
trebling  under the statute,  a document  filed by the relator with the Court on
February 24, 2004,  discloses an initial computation of damages of not less than
$88 million  resulting  from bidding  credits  awarded to the  defendants in FCC
auctions and $120 million of unjust enrichment through the sale or assignment of
licenses obtained by the defendants in FCC auctions, in each prior to trebling.

     We strongly believe that this lawsuit is completely  without merit and that
relator's initial damage computation is without basis, and intends to defend the
suit vigorously.  The U.S.  Department of Justice has notified the court that it
has  declined to  intervene  in the case.  Nevertheless,  we cannot  predict the
ultimate  outcome  of the  litigation,  nor can we predict  the effect  that the
lawsuit or its outcome will have on our business or plan of operation. We do not
have any insurance to cover the costs of defending this lawsuit.

         We were formally served with the complaint on July 10, 2002. On
September 19, 2002, we joined Lynch Interactive and certain other defendants in
filing two motions with the United States District Court for the District of
Columbia: a motion to dismiss the lawsuit and a motion to transfer the action to
the Southern District of New York. On November 25, 2002, the relator filed an
opposition reply to our motion to dismiss and on December 5, 2002, Interactive
filed a reply in support of its motion to dismiss.

                                      -19-
<page>
On September  30, 2003,  the Court  granted our motion to transfer the action to
the Southern District of New York.

     A scheduling  conference  was held on February 10, 2004,  at which time the
judge approved a scheduling order and discovery commenced.

     On July 28,  2004,  the judge denied in part and granted in part our motion
to dismiss.  Defendant bidding entities that did not win licenses were dismissed
and the "reverse" false claims act count was dismissed as redundant. Interactive
and its subsidiaries remain parties to the litigation.

     In  December  2004,  the  defendants  filed a motion in the  United  States
District Court for the District of Columbia to compel the FCC to provide certain
information  subpoenaed  by them in order to enable  them to  conduct a defense.
This motion is still  pending  and  discovery  is  continuing.  See  "History of
Lynch's "C" Block Activities" below.

     To date, Lynch  Interactive  Corporation has paid all legal fees associated
with this action.  While no agreement currently exists on the allocation of such
legal fees among the defendants, some costs may be allocated to the Company. The
Company is currently unable to estimate the amount of such costs and there is no
accrual for such costs in the accompanying financial statements.

Item 8.  Changes  In  And  Disagreements  With  Accountants  On  Accounting  And
         Financial Disclosure

     See our Current Report on Form 8-K filed on November 14, 2003.

     There  were  no  disagreements  with  our  independent   registered  public
accountants over this period.

Item 8A. Controls And Procedures

     (a)  Information required by Item 307

     Evaluation  of  disclosure  controls  and  procedures.  As required by Rule
15d-15 under the  Securities  Exchange Act of 1934,  as of the end of the period
covered  by  this  report,   the  Company  carried  out  an  evaluation  of  the
effectiveness  of the design and  operation of the our  disclosure  controls and
procedures.  This  evaluation was carried out under the supervision and with the
participation  of our  principal  executive  officer  as well  as our  principal
financial officer, who concluded that our disclosure controls and procedures are
effective.

     Disclosure  controls and procedures are controls and other  procedures that
are designed to ensure that information  required to be disclosed in our reports
filed or submitted  under the Securities  Exchange Act are recorded,  processed,
summarized and reported, within the time periods specified in the Securities and
Exchange  Commission's  rules and  forms.  Disclosure  controls  and  procedures
include,  without  limitation,  controls and procedures  designed to ensure that
information required to be disclosed in our reports filed under the Exchange Act
are  accumulated  and  communicated  to management,  including the our principal
executive officer and the our principal  financial officer,  as appropriate,  to
allow timely decisions regarding required disclosure.

     (b)  Information required by Item 308

     This disclosure is not yet required.

                                      -20-
<page>

Item 8B.  Other Information

         Not applicable.


                                      -21-
<PAGE>

                                    PART III

     Item 9. Directors and Executive Officers of the Registrant

     The  following  table  sets  forth  the  name,  business  address,  present
principal occupation,  employment history, positions, offices or employments for
the past five years and ages as of March 24, 2004 for our executive officers and
directors.  Members  of the board are  elected  and serve for one year  terms or
until their successors are elected and qualify.

<TABLE>
<CAPTION>

     Name          Age       Position
     ----          ---       --------

<S>                <C>                  <C>
David S.  Ahl ..   58   Class B director(1)
Robert E.  Dolan   53   Class A director(1) and Assistant Secretary

</TABLE>
(1)  The Class B directors  together  have three votes and the Class A directors
     together have two votes.

     David S. Ahl has been Chief Executive  Officer since June 2004 and has been
a Class B director  since  November  2000.  Mr. Ahl is a  marketer  of  start-up
entities.  Mr.  Ahl  first  gained  experience  in this  field as a  promotional
director for Young and Rubicam,  Inc. from 1984 to 1992.  Mr. Ahl co-founded and
helped  manage  Advance  Retail  Marketing,  a company that markets  coupons for
supermarkets,  from 1992 to 1994.  Mr. Ahl then  served as a general  manager of
Direct Media, the world's largest mailing list brokerage and management company,
from 1994 to 1998.  After  leaving  Direct  Media in 1998,  Mr. Ahl served as an
independent    marketing   consultant   for   GE   Capital,    AdKnowledge   and
CatalogCity.com. In 1999, Mr. Ahl became the head of Client Services for Message
Media, an email publishing company.

     Robert E.  Dolan has been our  Assistant  Secretary  and a Class A director
since  November  2000.  Mr. Dolan is also the Chief  Financial  Officer of Lynch
Interactive  Corporation,   a  diversified  holding  company  with  subsidiaries
primarily engaged in multimedia (September 1999 to present),  and served in such
capacity for Lynch Corporation,  a diversified holding company with subsidiaries
engaged in the manufacture of electronics components and manufacturing equipment
(1993 to January 2000).

Item 10. Executive Compensation

         The following table sets forth all compensation awarded to our Chief
Executive Officer during the year ended December 31, 2003. No other executive
officer received compensation in excess of $100,000 during fiscal 2004.

<TABLE>
<CAPTION>

                                                    Annual Compensation
                                         -----------------------------------------
                                                                 Other Annual
Name and Principal Position       Year     Salary ($) Bonus ($) Compensation ($)(1)
---------------------------       ----     ---------  --------  ------------------
<S>                               <C>      <C>       <C>             <C>
David S. Ahl ..................   2003       --       $150,000        --
   Chief Executive Officer

 Karen E. Johnson .............   2003       --       $300,000        --
     Chief Executive Officer(2)

</TABLE>

(1)  Perquisites  and other  personal  benefits,  securities or property to each
     executive  officer  did not  exceed  the  lesser of  $50,000 or 10% of such
     executive's salary and bonus.

(2)  Resigned June 17, 2004
                                      -22-
<page>
Directors's Compensation

     As compensation for their services as members of the Board of Directors, in
February 2001 each Board member was granted options to purchase 50,000 shares of
Class A common stock at an exercise  price of $.75 per share.  These options are
exercisable  in full  commencing  February  14, 2004 and expire on February  13,
2006.

Item 11.  Security  Ownership of Certain  Beneficial  Owners and  Management and
          Related Stockholder Matters

     The  following  table sets forth  information  concerning  ownership of our
common  stock  as of  March  25,  2005  by  each  person  known  by us to be the
beneficial  owner of more than five percent of the common stock,  each director,
each executive officer,  and by all directors and executive officers as a group.
We believe  that each  stockholder  has sole voting  power and sole  dispositive
power with respect to the shares  beneficially  owned by him.  Unless  otherwise
indicated,  the address of each  person  listed  below is 359 West 11th  Street,
Suite 7B, New York, New York 10014.

<TABLE>
<CAPTION>

                                                               Shares      Percentage
                                                               ------      ----------
<S>                                                            <C>            <C>
Fortunet Wireless Communications Corporation ...............   767,328        16.7%
Victoria G. Kane(2) ........................................   767,328        16.7%
Mario J.  Gabelli(3) .......................................   829,981(4)     18.1%
Lynch Interactive Corporation(5) ...........................   294,217         6.4%
Robert E.  Dolan ...........................................       525(6)      *
All Directors and Executive Officers as a Group (4 in total)       525         *
</TABLE>

*Less than 1%

(1)  A person is deemed to be the beneficial owner of voting securities that can
     be acquired by such person  within 60 days upon the exercise of options and
     warrants and the  conversion of  convertible  securities.  Each  beneficial
     owner's  percentage  ownership  is  determined  by assuming  that  options,
     warrants or  convertible  securities  that are held by such person (but not
     those  held by any other  person)  and that are  currently  exercisable  or
     convertible (i.e., that are exercisable or convertible within 60 days) have
     been exercised or converted.


(2)  Victoria G. Kane is the sole stockholder of Fortunet Wireless Communication
     Corporation,  and therefore shares owned by Fortunet Wireless Communication
     Corporation are set forth in the table as beneficially owned by Victoria G.
     Kane.  The  address of Fortunet  Wireless  Communications  Corporation  and
     Victoria G. Kane is 350 Stuyvesant Avenue, Rye, New York 10580.


(3)  Includes shares beneficially owned by Lynch Interactive Corporation.  Mario
     J.  Gabelli is a  "control  person" of Lynch  Interactive  Corporation  and
     therefore shares  beneficially  owned by Lynch Interactive  Corporation are
     set forth in the table as beneficially  owned by Mr.  Gabelli.  Mr. Gabelli
     disclaims  beneficial  ownership  of the shares  held by Lynch  Interactive
     Corporation except for his interest therein.  The address of Mr. Gabelli is
     401 Theodore Fremd Avenue, Rye, New York 10580.


(4)  Includes (i) 350,014 shares owned directly by Mr. Gabelli  (including 8,027
     held for the benefit of Mr. Gabelli under Lynch  Interactive  Corporation's
     401(k) Savings Plan),  (ii) 10,750 shares owned by a charitable  foundation
     of which Mr. Gabelli is a trustee,  (iii) 175,000 shares owned by a limited
     partnership  in  which  Mr.   Gabelli  is  the  general   partner  and  has
     approximately  a .5%  interest  and (iv)  294,117  shares of Class A common
     stock  owned  by  Lynch  Interactive  Corporation.  Mr.  Gabelli  disclaims
     beneficial ownership of the shares owned by Lynch Interactive  Corporation,
     the foundation and by the partnership, except for his interest therein. The
     address of Mr.  Gabelli is 401 Theodore Fremd Avenue,  Corporate  Center at
     Rye, Rye, NY 10580.


(5)  The address of Lynch Interactive  Corporation is 401 Theodore Fremd Avenue,
     Rye, New York 10580.


(6)  Includes 70 shares  registered  in the name of Mr.  Dolan's  children  with
     respect to which Mr.  Dolan has voting and  investment  power and 55 shares
     held for the benefit of Mr.  Dolan under  Lynch  Interactive  Corporation's
     401(k) Savings Plan.


Item 12. Certain Relationships and Related Transactions

         Fortunet Communications, L.P., a limited partnership, was formed in
1997. In 1997, Fortunet Communications, L.P. succeeded to all of the assets and
liabilities of the five partnerships that had won
                                      -23-
<page>
31  personal  communications  service  licenses  in the  Federal  Communications
Commission's C-Block auction. After the succession, the 50.1% general partner of
Fortunet Communications,  L.P. was Fortunet Wireless Communications Corporation,
of which 60% of the stock was owned by Victoria G. Kane.  Lynch PCS Corporation,
an indirect  subsidiary of Lynch  Interactive  Corporation,  was a 49.9% limited
partner of  Fortunet  Communications,  L.P.  These  original  partners  invested
$600,000 in the equity of the  partnerships  and Lynch  Interactive  Corporation
invested a combined  $597,604 as equity in the  partnerships.  Lynch Interactive
Corporation  also  loaned  the  five  partnerships  a  combined  $24.9  million,
primarily  for down  payments and to service  installment  interest  payments on
personal  communications  service licenses won in the C-Block auction.  Fortunet
Communications,  L.P. received back $3.9 million from the Federal Communications
Commission in 1999 in connection with the surrender of 28 of its licenses, which
was then used to pay down a portion of the Lynch  Interactive  Corporation loan.
At  February  14,  2001  (the  date  of  our  restructuring  - See  Below),  our
indebtedness  of  $85,096,724  was  composed  of net cash loans of  $21,007,134,
accrued  interest of  $20,696,280,  and accrued  commitment fees of $43,393,310.
Interest has accrued on the cash loaned,  compounded annually,  at a rate of 15%
per  annum.  Commitment  fees  were  based on the  total  funds  committed  by a
subsidiary of Lynch Interactive  Corporation,  $42 million, at 20% per annum. No
interest or commitment fees have been paid to date.

     On May 4, 2000, Ms. Kane  purchased the remaining 40% of Fortunet  Wireless
Communications  Corporation not owned by her for $600,000,  and gave the selling
stockholders  the right to repurchase that stock through May 4, 2008 for 120% of
her purchase price.  One of these selling  stockholders  was our Chief Executive
Officer, Karen E. Johnson. Under this arrangement,  Ms. Johnson has the right to
repurchase up to 4.167% of our  outstanding  Class B common stock from Ms. Kane,
through  May 4, 2008,  for 120% of the value Ms.  Kane  previously  paid for Ms.
Johnson's stock on May 4, 2000.

     We were incorporated on July 13, 2000, and on February 14, 2001,  succeeded
to the rights and  obligations  of Fortunet  Communications,  L.P. At that time,
Fortunet Wireless  Communications  Corporation  received 2,833,076 shares of our
Class B common stock and Lynch Interactive Corporation received 2,821,766 shares
of our Class A common stock. Lynch Interactive  Corporation then distributed our
Class A common stock to its stockholders.

     As a part of the  reorganization  of Fortunet  Communications,  L.P., Lynch
Interactive  Corporation  made a capital  contribution to us of $63.9 million of
the indebtedness of Fortunet Communications,  L.P. The remaining indebtedness of
Fortunet  Communications,  L.P. to Lynch  Interactive  Corporation was converted
into $16.1 million  principal  amount of  transferable  subordinated  notes.  In
addition,  Lynch  Interactive  Corporation  made a cash  payment of  $250,000 in
exchange for our preferred stock with a liquidation  preference of $10.0 million
and  warrants to purchase  4,300,000  shares of Class A common stock at $.75 per
share.

     We also  separately  issued 235,294 shares of Class A common stock to Lynch
Interactive  Corporation  and 236,237 shares of Class B common stock to Fortunet
Wireless Communication Corporation.

     In November  2002,  the Company  exchanged  the $18.8  million  outstanding
principal amount of its subordinated notes held by Lynch Interactive Corporation
for two series of preferred stock having an aggregate liquidation value of $14.5
million.  The Company issued 12,500 shares of Series A-1 preferred stock,  which
has a total liquidation  value of $12.5 million,  and 2,000 shares of Series A-2
convertible  preferred stock,  which has a liquidation value of $2.0 million and
is convertible  into two million  shares of the Company's  Class A Common Stock.
These two series of preferred  stock pay no dividends  and are  redeemable  upon
certain  triggering  events,  including  a  change  of  control  or  sale of our
licenses.

                                      -24-
<page>

     Robert E. Dolan, our Assistant Secretary and Class A director, is the Chief
Financial Officer of Lynch Interactive Corporation.

     As of May 1, 2001, we entered into an agreement with Gray Florida  Holdings
Inc., d/b/a GrayLink Wireless,  Inc., whose President,  Robert Chomat, serves as
our Chief  Operating  Officer,  to  provide  us with  management  services.  The
agreement  calls for payment of $125,000 for services  rendered  during 2001 and
not less than  $200,000  for services  rendered in 2002.  As of January 1, 2003,
this  agreement was amended and calls for an annual  current  payment of $25,000
and $100,000 payment upon a liquidity event.

Item 13. Exhibits, List And Reports On Form 8-K

     (a)  Exhibits

Exhibit Number                              Description

3.1  Amended  and  Restated   Certificate  of   Incorporation   of  the  Company
     (incorporated  by reference  to Exhibit 3.1 of Sunshine  PCS  Corporation's
     Registration  Statement  on Form  SB-2/A  (File No.  333-50948)  (the "2001
     SB-2")

3.2  Certificate  of  Amendment  to the  Amended  and  Restated  Certificate  of
     Incorporation  of Sunshine PCS  Corporation  (incorporated  by reference to
     Exhibit 3.2 of Sunshine PCS  Corporation's  Registration  Statement on Form
     SB-2 (File No. 333-82116) (the "2002 SB-2"))

3.3  Certificate of Second Amendment of Certificate of Incorporation of Sunshine
     PCS Corporation

3.4  By-laws of Sunshine PCS Corporation  (incorporated  by reference to Exhibit
     3.2 of the 2001 SB-2)

4.1  Form of  Subordinated  Note made by Sunshine PCS  Corporation  to Lynch PCS
     Corporation A (incorporated by reference to Exhibit 4.1 of the 2001 SB-2)

4.2  Warrant issued by Sunshine PCS Corporation to Lynch Interactive Corporation
     (incorporated by reference to Exhibit 4.2 of the 2001 SB-2)

10.1 Form of Option  Agreements  with  Directors  (incorporated  by reference to
     Exhibit 10.2 of the 2001 SB-2)

10.2 Agreement  and Plan of Merger  dated  February  12, 2001 by and between the
     Company and Fortunet  Communications,  L.P.  (incorporated  by reference to
     Exhibit 10.3 of the 2002 SB-2)

10.3 Amended and Restated Securities Issuance Agreement, dated February 1, 2002,
     by and between the Company and Lynch Interactive Corporation  (incorporated
     by reference from exhibit 10.4 of Sunshine PCS  Corporation's  registration
     statement on form SB-2 filed February 4, 2002)

                                      -25-
<page>

10.4 Term Sheet between the Company and GrayLink Wireless Inc.  (incorporated by
     reference  from  exhibit 10.5 of Sunshine  PCS  Corporation's  registration
     statement on form SB-2 filed February 4, 2002)

10.5 Agreement  for Purchase and Sale of Licenses  dated August 18, 2003, by and
     between Sunshine PCS Corporation, Cingular Wireless LLC and for purposes of
     Articles  X and  XII,  certain  stockholders  including  Lynch  Interactive
     Corporation  (incorporated  by  reference  to Exhibit 2.1 to  Sunshine  PCS
     Corporation's Form 8-K dated August 19, 2003)

31.1 Rule 15d-14(a) Certification of the Chief Executive Officer

31.2 Rule 15d-14(a) Certification of the Principal Accounting Officer

32.1 Section 1350 Certification of the Chief Executive Officer

32.2 Section 1350 Certification of the Principal Accounting Officer

Item 14. Principal Accountant Fees and Services.

         Section 3.1 Audit Fees

     The aggregate  fees billed by Deloitte & Touche for  professional  services
rendered for the audit of the Company's  2003  financial  statements was $40,000
and the estimate for 2004 is $25,000.  The  aggregate  fees billed by Deloitte &
Touche for  professional  services  rendered for their  review of the  financial
statements  included in the  Company's  Forms 10-QSB for 2004 was  $15,000.  The
aggregate fees billed by Ernst & Young for  professional  services  rendered for
the reviews of the financial  statements  included in the Company's Forms 10-QSB
for 2003 was $17,000.

Audit-Related Fees

     The  aggregate  fees billed by Deloitte & Touche for  assurance and related
services for 2004 that are reasonably related to the performance of the audit of
the Company's 2004 financial statements and not reported as audit fees above was
$0.  The  aggregate  fees  billed by Ernst & Young  for  assurance  and  related
services for 2003 that are reasonably  related to the  performance of the review
of the Company's  financial  statements and not reported as audit fees above was
$0.

Tax Fees

     The aggregate  fees billed by Deloitte & Touche for  professional  services
rendered to the Company in 2004 for tax compliance, tax advice, and tax planning
was  $0.  These  services  included  miscellaneous   tax-related  research.  The
aggregate fees billed by Ernst & Young for professional services rendered to the
Company in 2003 for tax compliance, tax advice, and tax planning was $0.

All Other Fees

     No fees were  billed by  Deloitte  & Touche or by Ernst & Young for 2004 or
2003 for services other than as set forth above.


                                      -26-
<PAGE>

Board's Pre-Approval Policies and Procedures

     The Board of  Directors  has  established  a  pre-approval  procedure  with
respect  to the  provision  of  services  other  than  audit by its  independent
auditor.  For the years ended 2003 and 2002,  the Board of Directors  considered
that the provisions of all non-audit  services were compatible with  maintaining
the independence of its independent auditor.

<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange  Act of 1934,  the  Company has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  in the City of New
York, State of New York on the 31st day of March, 2005.

                                                     SUNSHINE PCS CORPORATION


                                                     /s/ David S. Ahl
                                                     --------------------
                                                     David S. Ahl
                                                     Chief Executive Officer


                                POWER OF ATTORNEY

     Know all men by these presents,  that each person whose  signature  appears
below  hereby  constitutes  and  appoints  Robert E.  Dolan his true and  lawful
attorney-in-fact  and agent, with full power of substitution and  resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
and all  amendments  to this Form  10-KSB  and to file the same,  with  exhibits
thereto,  and other documents in connection  therewith,  with the Securities and
Exchange  Commission,  granting unto said  attorney-in-fact and agent full power
and  authority  to do and  perform  each and every act and thing  requisite  and
necessary to be done,  as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent or either of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

     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 Company
and in the capacities and on the date indicated.

<TABLE>
<CAPTION>


   Signature                Title                             Date
   ---------               ------                             -----
<S>                   <C>                                <C>

/s/ David S. Ahl      Chairman of the Board, Chief       March 31, 2005
--------------
 David S. Ahl         Executive Officer

/s/ Robert E. Dolan   Director and Assistant Secretary   March 31, 2005
--------------
Robert E. Dolan
</TABLE>

                                      -28-