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, 2002

                                       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.)

                              359 West 11th Street
                                    Suite 7B
                            New York, New York 10014
              (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 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, 2002 was $0.

     As of March 24, 2003,  the aggregate  market value of the Company's  voting
and  nonvoting  common  equity  held  by   non-affiliates  of  the  Company  was
approximately  US$618,000,   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 and Class B Common Stocks
issued and outstanding as of March 24, 2003 was 4,588,653 and 3,069,313.


<PAGE>

                            SUNSHINE PCS CORPORATION

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                      Page No.


<S>        <C>
Item 1.    Business..................................................


Item 2.    Properties................................................

Item 3.    Legal Proceedings.........................................


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


Item 5.    Market For Company's Common Equity and
           Related Stockholder Matters...............................


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


Item 7.    Financial Statements......................................


Item 8.    Changes in and Disagreements with Accountants
           on Accounting and Financial Disclosure....................


Item 9.    Directors, Executive Officers, Promoters and
           Control Persons; Compliance with Section 16(a)
           of the Exchange Act.......................................


Item 10.   Executive Compensation....................................


Item 11.   Security Ownership of Certain Beneficial Owners
           and Management............................................


Item 12.   Certain Relationships and Related Transactions............


Item 13.   Exhibits and Reports on Form 8-K..........................

Item 14.    Controls and Procedures..................................

</TABLE>


<PAGE>

                                     PART I

Item 1. Business

     We  were   incorporated   in  July  2000,  as  the  successor  to  Fortunet
Communications,  L.P.  We  currently  hold three  licenses,  which  grant 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.

     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 presently do not have the funds
necessary  to fully build out a  robustsystem  necessary  to provide  commercial
operations,  which we estimate to cost between $10.0 and $15.0  million.  We may
seek to raise the funds  necessary to fully build out our system  through a debt
financing,  a public or private  equity  offering,  or by entering  into a joint
venture.  We are a development stage company with no operating history.  We have
not yet adopted a business plan or settled on a business strategy.

We are the successor to Fortunet  Communications,  L.P., itself the successor to
five partnerships that were awarded 31 personal  communications service licenses
in the Federal Communication  Commission's 1996 C-Block auction.  Following this
auction,  Fortunet  Communications,  L.P.  was  unable to  service  the debt its
predecessors  had incurred to acquire these licenses,  forcing it to seek relief
from the  Federal  Communications  Commission,  return  28 of its  licenses  and
surrender  15 megahertz of its three  remaining  30 megahertz  licenses.  As the
Federal   Communications   Commission's   proposed  relief   required   Fortunet
Communications,   L.P.  to  surrender   30%  of  its  down   payment,   Fortunet
Communications, L.P. recorded a charge of $6.6 million to reflect the impairment
in the value of its  licenses.  In the quarter  ended March 31,  1999,  Fortunet
Communications,  L.P.  recorded an additional charge of $18.5 million to further
write down its investment in the licenses.

The following table identifies our predecessor  entities and illustrates how our
licenses have been held:

   1995                      1997                                2001

Aer Force
Communications, L.P.

Fortunet Wireless
Communications, L.P.

High Country
Communications, L.P.    Fortunet
                        Communications, L.P.       Sunshine PCS Corporation
New England Wireless
Communications, L.P.

SoutheastWireless
Communications, L.P.

<page>

Growing Demand for Wireless Services

     Demand for wireless  communications has grown rapidly over the past decade.
According  to  the   Cellular   Telecommunications   &  Internet   Association's
Semi-Annual   Wireless   Industry  Survey  the  number  of  wireless   telephone
subscribers  in the United  States grew from 128.4  million in December  2001 to
140.8 million in December  2002, a 10% growth rate and  representing  a national
wireless  penetration  rate of about  49%.  We  believe  that this  growth  will
continue as service costs decline,  more services are offered,  and awareness of
the productivity increases.

Limitations  of Cellular  Telephone  Industry  and the  Personal  Communications
Services Solution

     As the demand for wireless  communications  services increases,  we believe
that personal  communications  service will gain an increasing market share over
cellular competitors.  Despite their widespread availability and growth to date,
analog  cellular  services  have  several  limitations,  including  inconsistent
service quality, lack of privacy, limited capacity, and currently, the inability
to transfer data without a modem. In contrast,  personal  communications service
networks use digital  technology,  which offers  greater  call  privacy,  single
number  service,  more robust  data  transmission  features,  and the ability to
include  enhanced  capabilities,   such  as  advanced  calling  features,   data
transmissions to and from portable computers,  and short messaging and facsimile
services without the need for a modem.

     Cellular  providers,   however,  do  have  some  advantages  over  personal
communications  service networks.  For instance,  cellular  competitors have had
many years of lead time in offering  wireless  communications  services,  use 25
megahertz of spectrum compared to our 15 megahertz,  enabling them to offer more
services than we. Personal  communications  service networks may require the use
of more towers than cellular providers to deliver services,  resulting in higher
developmental costs for our networks.

Competition

     The wireless communications market in the United States is very competitive
and is expected to become even more so in the  future.  Cellular  operators  and
other  wireless  service  providers  are already  exploiting  existing  wireless
technology   and   have   established   and   continue   to   augment   wireless
telecommunications networks that will directly compete with many of the services
that would be offered by us. Additionally, other personal communications service
operators are expected to compete in our markets.  If we build out our networks,
our success will depend  largely  upon our ability to satisfy the mass  consumer
and  business  markets,  which we  believe  have not been  adequately  served by
existing cellular service operators.  If we develop our licenses,  we would have
to compete with cellular and other personal  communications service operators on
the  basis  of  affordable   pricing,   predictable  monthly  bills,  and  voice
transmission quality.  Even though we expect demand for personal  communications
service  to  increase,  in  the  near  future  we  expect  to  face  significant
competition from a number of wireless  providers  including  incumbent  cellular
companies,  other personal  communications  service providers,  and both new and
undeveloped technologies.

     Cellular  Operators.   If  we  commence  commercial  operations  using  our
licenses,  we would have to compete with established  cellular telephone service
operators in the markets we intend to enter.  Principal  wireless  communication
providers  in our markets are the Alltel  Corp.,  Cellular  One Group,  Cingular
Wireless  LLC,  Nextel  Communications  Inc.,  Sprint PCS Corp.,  United  States
Cellular  Corporation,  Verizon Wireless Inc. and VoiceStream  Wireless Corp. In
addition,  the  introduction  of digital  transmission  technologies to supplant
traditional  analog  cellular  systems is increasing the capacity and quality of
existing  cellular  telephone  systems.  Cellular  licensees  have also acquired
personal  communications service spectrum in the D and E-Blocks,  providing them
with greater  capacity and the ability to offer more advanced  services in their
markets. However, we believe that upgrading from analog to digital is expensive,
and that it will likely be several  years  before  cellular  networks  are fully
converted to digital technology.  Thus, we believe that by providing  low-priced
services  and new  wireless  features  on our  digital  networks,  we  would  be
competitive with cellular operators.

     Other  Personal   Communications  Service  Operators.  If  we  develop  our
licenses,   we  would  compete  with  A,  B,  C,  D,  E,  and  F-Block  personal
communications service licensees, many of whom are cellular-affiliated companies
that can  utilize  personal  communications  service  spectrum in new markets to
expand their national or regional  coverage.  Principal  wireless  communication
providers  in our markets are the Alltel  Corp.,  Cellular  One Group,  Cingular
Wireless  LLC,  Nextel  Communications  Inc.,  Sprint PCS Corp.,  United  States
Cellular Corporation, Verizon Wireless Inc. and VoiceStream Wireless Corp. These
competitors  have all had substantial  lead-time to develop their networks,  and
some of these  parties,  particularly  the A, B, D and E-Block  licensees,  have
significantly greater financial,  technical,  marketing and other resources than
we.  Although  the D, E and F-Block  licenses  are for only 10  megahertz  each,
entities can,  subject to the Federal  Communication  Commission's  spectrum cap
rules  limiting  entities  to  45  megahertz  of  cellular,  broadband  personal
communications  service  spectrum (55 megahertz in certain  rural  markets) in a
given market, acquire 10 megahertz licenses and consolidate them so as to design
20 or 30 megahertz systems which have more capacity than ours.

     Other  Competition.  As a result of  advances in digital  technology,  some
service  providers have begun to design and deploy digital mobile  networks that
may be competitive  with us. While it is presently  unclear  whether the quality
and capacity of these networks will be able to compete effectively with cellular
and personal  communications  service networks,  Nextel  Communications Inc. has
begun  successfully  offering  a  competitive  wireless  service  based  on such
advances in digital technology.

     In addition,  the Federal  Communications  Commission's  general  policy in
recent years has been to promote wireless  telecommunications  competition.  For
example, among other actions, the Federal Communications Commission has

o    authorized  the use of new bands of spectrum for the provision of fixed and
     mobile communications services;

o    created  rules and  assigned  licenses  to permit  wireless  communications
     service providers to provide a broad range of fixed, mobile, radio location
     and satellite broadcasting services;

o    created rules and assigned licenses to permit local multipoint distribution
     service providers to provide fixed and mobile broadband services; and

o    authorized  "wireless  cable"  providers  to use their  spectrum to provide
     two-way broadband wireless services.

     The Federal  Communications  Commission is expected to continue  making new
spectrum  available,  and to allow for existing  spectrum to be developed,  in a
fashion that will continue to expand competition in the wireless marketplace.

Government Regulation

     As a recipient  of licenses  acquired  through  the  C-Block  Auction,  our
ownership  structure  and  operations  are and will  continu  to be  subject  to
substantial Federal Communications Commission regulation.

     Federal  Communications  Commission  Authority.  The  Communications Act of
1934, as amended, grants the Federal Communications  Commission the authority to
regulate the licensing and operation of all non-federal  government  radio-based
services  in  the  United  States.  The  scope  of  the  Federal  Communications
Commission's authority includes:

o    allocating radio frequencies, or spectrum, for specific services,

o    establishing  qualifications  for applicants  seeking  authority to operate
     such services, including personal communications service applicants,

o    assigning  initial licenses,  approving  modifications  thereto,  approving
     license  renewals,  and  approving  the  transfer  or  assignment  of  such
     licenses,

o    creating  and  enforcing  rules and policies  that govern the  operation of
     spectrum licenses,

o    the   technical    operation   of   wireless   services,    interconnection
     responsibilities  between and among personal  communications service, other
     wireless services such as cellular, and landline carriers, and

o    imposing  fines  and  forfeitures  for any  violations  of those  rules and
     regulations.

     Under its broad  oversight  authority  with respect to market entry and the
promotion  of a  competitive  marketplace  for wireless  providers,  the Federal
Communications   Commission   regularly  conducts  rulemaking  and  adjudicatory
proceedings  to determine and enforce rules and policies  potentially  affecting
broadband  personal  communications  service  operations.  These proceedings may
affect us as a personal communications service licensee.

     Build  Out  Requirements.  Each of our  licenses  is  subject  to a Federal
Communications  Commission requirement that we construct personal communications
service networks that provide  adequate  service to at least  one-quarter of the
population in the related  personal  communications  service  market,  or make a
showing of  substantial  service in a licensed  area,  within  five years of the
license grant date. As our licenses were granted to us on September 17, 1996, we
were  required to satisfy this build out  requirement  by September 17, 2001. We
have  constructed  a system  and met this  build  out  requirement,  and have so
certified to the Federal Communications  Commission.  In general, any failure to
comply with Federal Communications Commission build out requirements could cause
the  revocation  of our  licenses  and/or  the  imposition  of  fines  or  other
sanctions.

     Commercial  Mobile Radio Service Spectrum  Ownership  Limit.  Under certain
prior Federal  Communications  Commission's  rules affecting  commercial  mobile
radio  services,   including  personal   communications   service  and  cellular
licensees, no entity could hold attributable interests in licenses for more than
55 megahertz of personal  communications service spectrum,  cellular and certain
specialized  mobile radio  services  where at least 10% of the population of the
personal  communications  service licenses service area fell within the cellular
and/or  specialized  mobile radio service areas(s).  The Federal  Communications
Commission  eliminated this spectrum "cap" effective  January 1, 2003. We cannot
predict  what,  if  any,  effect  this  action  will  have  on our  business  or
operations.

     Other  Federal   Communications   Commission   Requirements.   The  Federal
Communications   Commission  has  a  number  of  rules,   policies  and  ongoing
proceedings that affect us as a personal  communications  service licensee,  and
that are  likely to affect us as we  continue  to build out our  licenses.  Such
requirements include:

o    a series of  compliance  deadlines to ensure that  commercial  mobile radio
     service providers have implemented  enhanced  emergency 911 capabilities in
     their networks or handsets;

o    rules that  require  most  commercial  mobile  radio  service  providers to
     program their  networks such that  customers can change  service  providers
     without changing telephone numbers, referred to as number portability;

o    rules that require personal  communications service providers to provide at
     least  manual  roaming  service on their  systems to  subscribers  of other
     carriers,  through which  traveling  subscribers of other carriers may make
     calls after establishing a method of payment with the host carrier; and

o    rules requiring personal communications service carriers to comply with the
     requirements and compliance deadlines of the Communications  Assistance for
     Law  Enforcement  Act,  which was  enacted by  Congress in 1994 to preserve
     electronic  surveillance  capabilities by law enforcement  officials in the
     face of rapidly changing telecommunications technology.

     In general, failure to comply with such rules could cause the imposition of
significant  fines  or other  sanctions,  or in  extreme  cases,  revocation  of
non-renewal of our licenses.

     Other Federal Regulations. Wireless networks are subject to certain Federal
Aviation   Administration  and  Federal  Communications   Commission  guidelines
regarding the location,  lighting,  and  construction of transmitter  towers and
antennas. In addition,  the Federal  Communications  Commission has authority to
enforce  certain  provisions  of the National  Environmental  Policy Act as they
would apply to our facilities.  If we complete the build-out of our licenses, we
intend to use common carrier  point-to-point  microwave and traditional landline
facilities  to connect base station  sites and to link them to their  respective
main  switching  offices.  Although the Federal  Communications  Commission  has
proposed to auction  certain such  licenses,  these  microwave  facilities  have
historically been separately licensed by the Federal  Communications  Commission
on a first-come, first-served basis, and are subject to specific service rules.

     Wireless  providers  also must satisfy a variety of Federal  Communications
Commission  requirements  relating  to the  payment  of  regulatory  user  fees,
technical and reporting  matters.  One such  requirement is the  coordination of
proposed frequency usage with adjacent wireless users, permittees, and licensees
in  order  to  avoid  electrical  interference  between  adjacent  networks.  In
addition, the height and power of base station transmitting facilities,  and the
type of signals they emit, must fall within specified parameters.

     State and Local Regulation.  State regulations currently cover such matters
as the terms and conditions of  interconnection  between local exchange carriers
and  wireless  carriers  under  Federal  Communications   Commission  oversight,
customer billing  information and practices,  billing  disputes,  other consumer
protection  matters,   certain  facilities  construction  issues,  transfers  of
control, and the bundling of services and equipment and requirements relating to
making capacity available to third party carriers on a wholesale basis. In these
areas,  particularly the terms and conditions of  interconnection  between local
exchange carriers and wireless providers, the Federal Communications  Commission
and state regulatory authorities share regulatory  responsibilities with respect
to interstate and intrastate issues.

     The  Federal  Communications  Commission  and a number of state  regulatory
authorities have initiated proceedings,  or indicated their intention to examine
access charge obligations, mutual compensation arrangements for interconnections
between local exchange carriers and wireless  providers,  the  implementation of
"number  portability"  rules to  permit  telephone  customers  to  retain  their
telephone numbers when they change telephone service providers,  and alterations
in the structure of universal service funding, among other matters.

     Proceedings  with respect to the foregoing policy issues before the Federal
Communications   Commission  and  state  regulatory  authorities  could  have  a
significant  impact on the competitive market structure among wireless providers
and the relationships between wireless providers and other carriers.

General Personal Communications Service Regulations

     In June 1994, the Federal Communications  Commission allocated spectrum for
broadband personal  communications  service services from 1850 to 1900 megahertz
bands.  Of the 140  megahertz  available  for  personal  communications  service
services, the Federal  Communications  Commission created six separate blocks of
spectrum  identified  as the A, B, C, D, E and  F-Blocks.  The A, B and C-Blocks
were each  allocated  30  megahertz  of  spectrum,  the D, E and  F-Blocks  were
allocated  10  megahertz  each.  For  each  block,  the  Federal  Communications
Commission adopted a 10-year personal  communications  service license term with
an opportunity to renew after its  expiration.  20 megahertz of spectrum  within
the personal communications service band was reserved for unlicensed use.

     The Federal  Communications  Commission adopted a "rebuttable  presumption"
that all personal communications service licensees are common carriers,  subject
to  Title  II of the  Communications  Act of 1934.  Accordingly,  each  personal
communications  service  licensee  deemed to be a common  carrier  must  provide
services upon reasonable  request,  and the rates,  terms and conditions of such
service must not be unreasonably discriminatory.

     Structure of Personal Communications Service Block Allocations. The Federal
Communications Commission defines the geographic contours of the licenses within
each personal  communications service block based on the major trading areas and
basic trading areas  developed by Rand McNally & Co. The Federal  Communications
Commission awarded A and B-Block licenses in 51 major trading areas. The C, D, E
and F-Block  spectrum  were  allocated on the basis of 493 smaller basic trading
areas.

     All but three of the 102 total  A-Block  licenses and all B-Block  licenses
were  auctioned  in 1995.  The three  remaining  A-Block  licenses  were awarded
separately  pursuant  to  the  Federal  Communications  Commission's  "Pioneer's
Preference" program. The C and F-Block spectrums are reserved for Entrepreneurs.
See  "C-Block  License  Requirements."  The  Federal  Communications  Commission
completed  its auction for C-Block  licensees in May,  1996 and  reallocated  18
C-Block licenses on which initial auction winners defaulted in a re-auction that
ended in July 1996. The Federal Communications  Commission completed its auction
for the D, E, and  F-Block  licenses  in  January  1997.  Another  reauction  of
personal communications service licenses is currently ongoing.

     In December  1996,  the Federal  Communications  Commission  adopted  rules
permitting broadband personal  communications  service carriers to partition any
service  areas within their  license  areas  and/or  disaggregate  any amount of
spectrum  within their  spectrum  blocks to entities  that meet the  eligibility
requirements for the spectrum blocks. The purpose of the Federal  Communications
Commission's rule change was to permit existing personal  communications service
licensees  and new  personal  communications  service  entrants to have  greater
flexibility  to determine  how much  spectrum and  geographic  area they need or
desire.  Thus, A, B, D, and E-Block  licensees may sell or lease  partitioned or
disaggregated  portions of their  licenses at any time to entities that meet the
minimum  eligibility  requirements of the  Communications  Act of 1934.  C-Block
licensees,  such as us,  may only  sell or lease  partitioned  or  disaggregated
portions of our licenses to other qualified  Entrepreneurs during the first five
years  of  our  license  terms,   or  pursuant  to  recent  changes  in  Federal
Communications  Commission  rules, to a  non-Entrepreneur  if the license's five
year construction  deadline has been met.  Thereafter,  if we sell, partition or
disaggregate  to  non-Entrepreneurs,  we  may  need  to  repay  to  the  Federal
Communications  Commission a proportional  share of any bidding  credits that we
received.

Telecommunications Act of 1996

     On February 8, 1996, the  Telecommunications Act of 1996 was enacted, which
effectively  overhauled the Communications Act of 1934, to increase competition.
In particular,  the  Telecommunications  Act of 1996 attempts to eliminate state
and local barriers to competition and preempts all inconsistent  state and local
laws. The  Telecommunications Act of 1996 also requires incumbent wireline local
exchange carriers to open their networks to competition through  interconnection
and access to unbundled network elements.

     The   provisions   of  the   Telecommunications   Act  of  1996,   and  the
implementation by the Federal Communications Commission and state public service
commissions  of  these  provisions,   significantly  affects  telecommunications
providers,  including  providers of wireless  telecommunications  services.  For
example, wireless providers are subject to certain interconnection  obligations,
as   well   as   universal   service   payment   obligations   imposed   by  the
Telecommunications  Act of 1996, and these obligations continue to be subject to
complicated  regulatory and judicial proceedings.  The Telecommunications Act of
1996 and its  implementation  and  interpretation  also  affect the  competitive
environment  in the wireline and wireless  telecommunications  industry.  All of
these obligations,  implementation proceedings and competitive effects resulting
from the  enactment  of the  Telecommunications  Act of 1996  could  affect  our
business and results of operations if we choose to build out our licenses.

Relocation of Incumbent Fixed Microwave Licensees

     The Federal  Communications  Commission  has adopted a  transition  plan to
relocate fixed microwave  operators that currently are operating in the personal
communications  service  spectrum,  and a  cost  sharing  plan  so  that  if the
relocation  of an  incumbent  benefits  more  than one  personal  communications
service licensee, the benefiting personal  communications service licensees will
help defray the costs of relocation.  Personal  communications service licensees
will only be required  to relocate  fixed  microwave  incumbents  if they cannot
share  the same  spectrum,  and they  will be  responsible  for  their  costs to
relocate to alternate spectrum locations.

     Relocation  generally involves a personal  communications  service operator
compensating an incumbent for costs associated with system modifications and new
equipment  required to move to an alternate,  readily available  spectrum.  This
transition  plan  allows  most  microwave  users  to  operate  in  the  personal
communications  service spectrum for a two-year voluntary negotiation period and
an additional one-year mandatory  negotiation period. For public safety entities
dedicating  a majority  of their  system  communications  for police,  fire,  or
emergency medical service operations,  the voluntary negotiation period is three
years. The Federal Communications Commission currently is considering whether to
shorten the voluntary negotiation period by one year. Parties unable to reach an
agreement  within  these  time  periods  may  refer the  matter  to the  Federal
Communications  Commission for  resolution,  but the existing  microwave user is
permitted  to  continue  its  operations  until  final  Federal   Communications
Commission resolution of the matter.

     The Federal Communications  Commission's  cost-sharing plan allows personal
communications  service licensees that relocate fixed microwave links outside of
their  license  areas to  receive  reimbursements  from  later-entrant  personal
communications  service  licensees  that  benefit  from  the  clearing  of their
spectrum.

C-Block License Requirements

     When the Federal  Communications  Commission allocated spectrum to personal
communications   service   providers,   it   designated   the   C-Block   as  an
"Entrepreneurs' Block." Federal Communications  Commission rules require C-Block
Entrepreneurs to meet qualifications such as:

o    various structural requirements concerning equity in investments, including
     the Entrepreneurs'  Requirements,  Small Business  Requirements and Control
     Group Requirements,  all of which apply specifically to Entrepreneurs,  and
     the  Foreign  Ownership  Limitations,  which  apply to most  communications
     entities governed by the Federal Communications Commission;

o    transfer  restrictions  limiting,  among other things,  the sale of C-Block
     licenses; and

o    other  ongoing  requirements  that mandate  network build out schedules and
     limit cross-ownership of cellular and other wireless investments.

     In order to ensure  continued  compliance  with the Federal  Communications
Commission  rules,  the Federal  Communications  Commission  has  announced  its
intention  to  conduct  random  audits  during  the  initial  10-year   personal
communications  service  license terms.  There can be no assurance that we do or
will  continue  to  satisfy  any  of  the  Federal  Communications  Commission's
qualifications  or requirements,  and the failure to do so would have a material
adverse effect.

Structural Requirements

Entrepreneurs' Requirements. In order to hold an Entrepreneur's C-Block license,
an entity must meet the  Entrepreneurs'  Revenues Limit by having less than $125
million in gross revenues and meet the Entrepreneurs' Asset Limit by having less
than $500 million in total assets,  excluding the value of C-Block licenses.  To
qualify for the C-Block  auction,  an entity had to have met the  Entrepreneurs'
Revenues  Limit  for  each  of the  two  years  prior  to the  auction  and  the
Entrepreneurs'  Asset  Limit at the time it filed its Short  Form.  For at least
five years after winning a C-Block license, a licensee must continue to meet the
Entrepreneurs'  Requirements,  which are modified  during this period to exclude
certain assets and revenues from being counted toward the  Entrepreneurs'  Asset
Limit and the Entrepreneurs'  Revenues Limit. Additional amounts are excluded if
the licensee  maintains an  organizational  structure that satisfies the Control
Group  Requirements  described below. In calculating a licensee's gross revenues
for  purposes of the  Entrepreneurs'  Requirements,  the Federal  Communications
Commission  includes  the gross  revenues of the  licensee's  affiliates,  those
persons or entities that hold an interest in the licensee, and the affiliates of
such persons or entities.

     By claiming  status as an  Entrepreneur,  we qualified to enter the C-Block
auction. If the Federal Communications  Commission were to determine that we did
not satisfy the  Entrepreneurs'  Requirements at the time we participated in the
C-Block   auction,   or  that  we  fail  to  meet  the  ongoing   Entrepreneurs'
Requirements,  the Federal Communications  Commission could revoke our licenses,
fine us, or take other enforcement  actions including imposing unjust enrichment
penalties.  There can be no assurance  that we do or will continue to meet these
requirements  or that  if we fail to  continue  to meet  such  requirement,  the
Federal  Communications  Commission  will not  take  action  against  us such as
revoking our personal communications service licenses.

     Small  Business  Requirements.  An entity  that  meets  the  Entrepreneurs'
Requirements  may also  qualify for a 25%  bidding  credit if it meets the Small
Business Requirements.  To meet the Small Business Requirements, a licensee must
have had annual  average  gross  revenues  of not more than $40  million for the
three calendar years  preceding the date it filed its Short Form. In calculating
a licensee's gross revenues for purposes of the Small Business Requirements, the
Federal Communications  Commission includes the gross revenues of the licensee's
affiliates, those persons or entities that hold an interest in the licensee, and
the affiliates of such person or entities.

     By  claiming  status as a Small  Business,  we  qualified  for the  bidding
credit.  If the Federal  Communications  Commission were to determine that we do
not qualify as a Small Business,  we could, at a minimum, be forced to repay the
portion  of the  bidding  credit  to which we were not  entitled.  Further,  the
Federal  Communications  Commission  could  revoke our  personal  communications
service licenses,  fine us, or take other enforcement actions including imposing
unjust enrichment penalties. There can be no assurance that we have been, are or
will  remain  in  compliance  with  those  requirements,  or  that if we fail to
continue to meet such requirements,  the Federal Communications  Commission will
not take action against us such as revoking our licenses.

     Control Group  Requirements.  If a C-Block licensee meets the Control Group
Requirements,  the Federal Communications Commission excludes certain assets and
revenues from its total revenue and assets, making it easier for the licensee to
meet the Entrepreneurs'  Requirements and the Small Business  Requirements.  The
Control Group  Requirements  mandate that the Control Group, among other things,
have both actual and legal  control of the  licensee.  Until  August  2000,  the
Federal  Communications  Commission  required  licensees  to  qualify  under the
Control Group  Requirements  pursuant to the Qualifying  Investor  Option if its
Control Group is comprised of the following:

o    Qualifying  investors  that own at least 15% of the  equity  interest  on a
     fully diluted basis and 50.1% of the voting power in the C-Block licensee,

o    Additional  Control  Group  Members  that hold at least  10% of the  equity
     interest in the C-Block licensee.  Additional Control Group Members must be
     either the same Qualifying  Investors in the Control Group,  members of the
     licensee's management or non-controlling institutional investors, and

o    including venture capital firms.

To take advantage of the Federal Communications Commission's Qualifying Investor
Option,  a  C-Block  licensee  must  have  met the  Qualifying  Investor  Option
requirements  at the time it filed its Short Form and must  continue to meet the
Qualifying  Investor Option  requirements  for three years following the License
Grant  Date.  Commencing  the  fourth  year of the  license  term,  the  Federal
Communications  Commission  rules eliminate the requirement  that the Additional
Control Group Members hold any of the licensee's  equity  interest and allow the
licensee  to reduce the minimum  required  equity  interest  held by the Control
Group's Qualifying Investors from 15% to 10%.

     In August 2000, the Federal  Communications  Commission amended its Control
Group  requirements  to eliminate  specific  equity  requirements,  provided the
entity's  controlling interest holders exercise both legal and actual control of
the licensee;  however,  the amount or the  percentage of equity  investment may
still be used as an indicium of control.

     In  order  to meet the  Control  Group  Requirements,  our  certificate  of
incorporation  provides  that  our  Class  B  common  stock,  as a  class,  must
constitute  50.1% of our voting power. See "Description of Capital Stock." There
can be no assurance  that we are or will remain in  compliance  with the Control
Group  Requirements or, if we fail to continue to meet such  requirements,  that
the Federal  Communications  Commission  will not take action  against us, which
could include revocation of our licenses.

     Asset and Revenue  Calculation.  In determining whether an entity qualifies
as an  Entrepreneur  and/or  as a Small  Business,  the  Federal  Communications
Commission counts the gross revenues and total assets of the entity's affiliates
toward the entity's total gross revenues and total assets.  Such affiliation can
arise from common investments,  familial or spousal  relationships,  contractual
relationships,  voting trusts, joint venture agreements,  stock ownership, stock
options,   convertible  debentures,  and  agreements  to  merge.  Affiliates  of
noncontrolling  investors  with  ownership  interests  that  do not  exceed  the
applicable   Federal   Communications   Commission  passive  investor  ownership
thresholds are not  attributed to C-Block  licensees for purposes of determining
whether these licensees  financially  qualify for the applicable C-Block auction
preferences. The Entrepreneurs' Requirements and the Small Business Requirements
provide that, to qualify as a passive investor,  an entity may not own more than
25% of our total equity on a fully diluted basis,  unless the Control Group owns
at least 50.1% of our total  equity on a fully  diluted  basis.  There can be no
assurance  that we will not exceed these  passive  investor  limits or otherwise
violate the Entrepreneur Requirements and/or the Small Business Requirements.

     In addition, if an entity makes bona fide loans to a C-Block licensee,  the
assets and  revenues of the  creditor  would not be  attributed  to the licensee
unless the  creditor  is deemed an  affiliate  of the  licensee,  or the loan is
treated by the Federal  Communications  Commission as an equity  investment  and
such  treatment  would  cause the  creditor/investor  to exceed  the  applicable
ownership interest threshold for purposes of both the financial  affiliation and
foreign ownership rules. Although the Federal Communications  Commission permits
a creditor/investor  to use standard terms to protect its investments in C-Block
licensees such as covenants,  rights of first refusal, and super-majority voting
rights on specified  issues,  the Federal  Communications  Commission has stated
that it will be guided,  but not bound, by criteria used by the Internal Revenue
Service to determine  whether a debt  investment is bona fide debt.  The Federal
Communications  Commission's  application of its financial  affiliation rules is
largely untested,  and there can be no assurance that the Federal Communications
Commission  or the courts will not treat  certain of our lenders or investors as
financial affiliates.

     Foreign Ownership Limitations. The Communications Act of 1934 requires that
non-U.S. citizens, their representatives,  foreign governments,  or corporations
otherwise subject to domination and control by non-U.S.  citizens may not own of
record  or  vote  more  than  20%  of the  capital  contribution  to a  personal
communications  service  provider  directly,  or more  than  25% of the  capital
contribution to the parent corporation if the Federal Communications  Commission
determines such holdings are not within the public interest.  Congress  recently
eliminated restrictions on non-U.S.  citizens serving as members on the board of
directors  and  officers of a personal  communications  service  provider or its
parent.  The Federal  Communications  Commission  also has  adopted  rules that,
subject to a public interest finding by the Federal  Communications  Commission,
could allow  additional  indirect foreign  ownership of commercial  mobile radio
service  companies  to the  extent  that  the  relevant  foreign  states  extend
reciprocal treatment to U.S. investors.  If our foreign ownership were to exceed
25% in the  future,  the  Federal  Communications  Commission  could  revoke our
licenses or impose other  penalties.  Further,  our certificate of incorporation
enables us to redeem  shares from holders of common stock whose  acquisition  of
shares result in a violation of this  limitation.  The  restrictions  on foreign
ownership  could  adversely  affect our  ability to  attract  additional  equity
financing from entities that are, or are owned by, non-U.S. entities. The recent
World Trade Organization  agreement on basic  telecommunications  services could
eliminate or loosen  foreign  ownership  limitation  but could also increase our
competition.  Under this  agreement,  the United States and other members of the
World   Trade    Organization    committed    themselves    to   opening   their
telecommunications markets to foreign competition, effective as early as January
1, 1998.

Transfer Restrictions

     License Transfer  Restrictions.  Until the five year build out requirements
have been met, assignment and transfer of a C-Block license is prohibited to any
entity that fails to satisfy the Entrepreneurs' Requirements. If such a transfer
occurs to an entity  that is an  Entrepreneur  but does not qualify for the same
level of bidding  credits as the assigning or transferring  licensee,  this sale
would be subject to unjust enrichment penalties. After five years, all transfers
and assignments of the license remain subject to unjust enrichment penalties, if
applicable.  We have now met the  Federal  Communications  Commission  five year
build out requirement, such that we are free to sell our licenses to any entity,
regardless of size.

     In  addition,  if we wish to make any  changes in our  ownership  structure
during the initial license term involving our actual and legal control,  we must
seek Federal  Communications  Commission approval and may be subject to the same
costs and reimbursement conditions indicated above.

<PAGE>

                                  RISK FACTORS

Risks Relating To Our Business

We are a  development  stage  company  with  no  operating  history.  We have no
revenues and a history of  operating  losses,  which we expect to continue.  The
likelihood of future success is therefore highly uncertain.

     We are a  development  stage  company  with no operating  history.  Through
December  31, 2002,  we had no revenues,  cumulative  net losses  applicable  to
common  shares of  $84,063,345  and we do not know when,  if ever,  we will have
revenues or achieve a positive cash flow.  Our only  significant  assets are our
personal  communications  service licenses and equipment to provide service. The
services offered through these licenses,  however, have had a limited history in
the United States,  and we cannot predict if there will ever be enough demand to
make profitable developing our licenses. The likelihood of our future success is
therefore highly uncertain.

The report of our independent  auditors contains an explanatory  paragraph as to
our ability to continue as a going  concern.  This opinion may adversely  affect
our ability to obtain new financing on reasonable terms or at all.

     Because we have incurred losses since inception and have not yet determined
how to finance our operations,  the report of Ernst & Young LLP, our independent
auditors,  with respect to our financial  statements as of December 31, 2001 and
2002 and for each of the three years in the period  ended  December 31, 2002 and
for the period from July 27, 1995  (inception)  to December 31, 2002 contains an
explanatory  paragraph  which expresses  substantial  doubt as to our ability to
continue as a going concern.  This opinion  indicates that our auditors  believe
that  substantial  doubt exists  regarding  our ability to continue to remain in
business.  Such an  opinion  may  adversely  affect  our  ability  to obtain new
financing on  reasonable  terms or at all.  Certain  factors  considered  by our
auditors in making this  determination  have been  included in their  report and
have been disclosed in Note 1 to our financial statements.

As we do not know when we will have  revenues,  in order to commence  commercial
operations,  we will need to incur more debt in the future. Given our history of
losses,  our ability to secure this needed financing on reasonable  terms, or at
all, is questionable.

     We currently  have $431,737 in cash.  While this money will pay our current
liabilities and allow us to fund working  capital needs for the  short-term,  we
will  need  additional  capital  to  build  out  our  licenses  and to  commence
commercial  operations.  We believe that it would cost  between  $10.0 and $15.0
million to fully build out our licenses.

     Our potential to secure new financing through  traditional  lending sources
is  questionable.   We  have  redeemable  preferred  stock  with  a  liquidation
preference of $25.9 million at December 31, 2002 (including accrued  dividends),
and our assets consist almost  entirely of licenses and equipment that currently
provides limited service.  Should we succeed in obtaining future financing,  any
such loans are likely to contain  restrictions that limit or prohibit our future
actions,  and allow the lender to accelerate the loan upon a default.  Thus, any
failure or delay in repaying our future debt could  terminate our  business.  We
are unable to predict whether our operations will ever generate  sufficient cash
flow to repay any current or future  debt.  Alternatively,  we might  attempt to
borrow from vendors providing the capital equipment used in providing  services,
or conduct either a public or private equity offering to raise these funds,  the
results of which are highly uncertain.

Our predecessor, Chief Executive Officer and largest stockholder have been named
as defendants in a lawsuit which could  distract our  management and result in a
material adverse effect on our business.

     An  action  was  commenced  against  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 March 24, 2003, owned 47.2% of our equity on a fully
diluted basis,  accusing the defendants of improperly  participating  in certain
Federal  Communications  Commission  spectrum auctions and improperly  obtaining
certain bidding credits. There can be no assurance that this litigation will not
distract our officers and directors from their  responsibilities  in running our
day to day  operations.  An unfavorable  decision could have a material  adverse
effect on our business, plan of operation and financial condition.  (See Item 3:
Legal Procedings)

There  are  substantial  risks to any of the  alternatives  we may  pursue  with
respect to our  licenses.  Selling  these  licenses may be difficult  due to the
limited number of potential purchasers.  Building out our licenses independently
would require us to borrow  significant  amounts,  which may not be available on
reasonable  terms,  or at all.  A joint  venture  would  expose us to  potential
unknown risks associated with our partners and/or suppliers.

     To obtain any value with  respect to our  licenses,  we have to either sell
them, enter into a joint venture, or build them out independently. If we were to
sell our licenses,  the Federal  Communications  Commission,  and possibly other
regulatory  agencies,  must  consent.  If one or more of our license is sold for
cash, we are obligated to use any such proceeds to redeem preferred stock having
an  aggregate  liquidation  value of $25.9  million.  If we were to enter into a
joint venture,  or were to sell our licenses for securities of another  personal
communications  services  entity,  we  would  be  exposed  to many of the  risks
associated with  independently  developing our licenses  discussed below,  along
with  any  risks  associated  with  the  operations  of our  joint  venturer  or
purchaser.

     Although we have commenced the build out of our licenses, if we continue to
build out our licenses independently in order to commence commercial operations,
we would need to raise between $10 and $15 million.  Whether we would be able to
raise this amount of money is highly uncertain.  We also would have to implement
a business  plan,  create  additional  infrastructure,  and  attract  and retain
qualified individuals to serve as managers and employees. Our current management
has very little experience in the personal  communications  service industry. We
cannot assure you as to the timing,  cost,  or even our ability to  successfully
accomplish  these  tasks.  Under  any  development   scenario,   we  will  incur
significant operating losses for the foreseeable future, as we seek to construct
our licenses and build a customer  base.  Such losses could be  substantial  and
jeopardize  our  ability  to  service  our debt,  thus  placing  us in danger of
default.

Our potential competitors have substantially greater access to capital and other
resources and  significantly  more  experience in providing  wireless  services.
Successfully competing with these entities may therefore be impracticable.

     The wireless telecommunications industry is very competitive. Most of these
competitors have substantially greater resources than we do and operate wireless
telecommunications  networks  covering most of the United States.  Their earlier
entry,  greater  resources and broader  presence in the United States could make
competing  against  these  entities  impracticable.   Furthermore,  the  Federal
Communications Commission is actively pursuing policies intended to increase the
number of wireless competitors in each of our markets.

     If we were to commence  commercial  operations  in our licensed  areas,  we
would also compete with companies that use other communications technologies and
offer additional services that we may not be able to provide. These technologies
and services may have  advantages  over what we would provide and may ultimately
be more attractive to customers.

Our licenses  are only for 15  megahertz of spectrum.  Our cellular and personal
communications  service  competitors  use  25-30  megahertz,  placing  us  at  a
competitive disadvantage, because licenses with greater bandwidth can offer more
services and, therefore, better meet growing demand.

     Holders of  cellular  telephone  licenses  are  authorized  by the  Federal
Communications  Commission  to use 25  megahertz of spectrum  each,  and certain
personal  communications  service  licensees  in  the  A  and  B-Blocks  use  30
megahertz. By contrast, our C-Block licenses have only 15 megahertz of spectrum.
This shortfall may limit our growth opportunities as demand increases for mobile
personal communications  services,  because we may not be able to offer the same
services as our competitors.  In addition, the cost to build out our networks to
an  equivalent  standard may be greater  with a 15  megahertz  license than with
either a 25 megahertz cellular or 30 megahertz personal  communications  service
license.  Potential  lenders may also require that 15 megahertz  licensees  have
arrangements in place to procure  additional  spectrum.  As a result,  we may be
required,  either initially or at a later time, to enter into a joint venture or
make other  arrangements  with  holders of  additional  spectrum  to provide the
amount  or  breadth  of  service  needed to be or  remain  competitive.  Federal
Communications  Commission regulations and other factors, however, may limit our
ability to enter into these arrangements on favorable terms or at all.

Our licenses  only permit us to offer  personal  communications  services in the
Florida cities of Tallahassee, Panama City and Ocala. As potential customers may
want  the  ability  to make  calls  outside  of  these  areas,  we might be at a
disadvantage  against  competitors with wider coverage areas,  unless we entered
into joint venture or affiliation agreements.

     If we were to develop our licenses, our service areas would be limited to a
population of about 960,000 in the Florida  cities of  Tallahassee,  Panama City
and Ocala.  As potential  customers may desire the ability to make calls outside
of these areas, we could be at a substantial  disadvantage  against  competitors
with wider coverage  areas,  unless we entered into joint venture or affiliation
agreements.  However,  we cannot  predict  whether  we could  enter  into  these
agreements on favorable terms or at all.

We have had a troubled history in servicing the debt entered into to acquire our
licenses and the value of our licenses has been written down.

     Fortunet Communications,  L.P., our predecessor,  was the successor to five
partnerships  that were awarded 31 personal  communications  service licenses in
the 1996 C-Block auction. Fortunet Communications,  L.P. experienced substantial
problems in servicing the debt  incurred to acquire its licenses,  forcing it to
return 28 of its licenses  and 15 megahertz of its three  remaining 30 megahertz
licenses.  Because the  proposed  relief  offered by the Federal  Communications
Commission  would have required the  forfeiture  of 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 1999, Fortunet  Communications,
L.P.  recorded a further charge of $18.5 million to write down its investment in
the licenses due to considerably lower amounts bid for returned C-Block licenses
at a reauction.

Risks Relating To The Telecommunications Industry

We are unsure if our licenses  will be renewed  after they expire in 2006. If we
build out our licenses  and they are later not  renewed,  the value of our stock
would  be  materially  adversely  affected,  as  these  licenses  are  our  only
significant assets.

     Although our licenses are renewable  after the  expiration of their 10-year
terms, there can be no assurance that they will be renewed.  If we build out our
licenses  and they are  later  not  renewed,  the  value of our  stock  would be
materially  adversely  affected,  as these  licenses  are our  only  significant
assets.


We are subject to various  license  requirements  and the failure to comply with
any of them could result in the revocation of our licenses and/or the imposition
of fines and sanctions.

     The Federal  Communications  Commission  requires  all  license  holders to
exercise actual and legal control over their licenses, and any change in control
of a license requires express Federal  Communications  Commission  consent.  The
Federal Communications Commission has also historically required C-Block license
holders to continuously  satisfy various other  requirements as to ownership and
control.   For  example,  we  have  been  required  to  satisfy   Entrepreneurs'
Requirements,  Small  Business  Requirements,  Control  Group  Requirements  and
Transfer  Restrictions.  See Item 1,  "Business -  Government  Regulation."  For
certain matters, such as the structure of our board of directors and management,
we rely on informal public and private interpretations of Federal Communications
Commission regulations.  The Federal Communications Commission,  however, is not
bound by these informal interpretations, and we are unable to predict whether it
or the courts  will agree with them now or in the future.  We cannot  assure you
that we or our investors have satisfied,  satisfy,  or will continue to satisfy,
these  requirements  during  the term of any of our  licenses,  or that we could
successfully  cure any breach of these  requirements.  Any  non-compliance  with
these requirements could lead to serious penalties,  including the revocation of
our licenses and/or the imposition of fines and sanctions.

Personal communications service licensees may be required to share spectrum with
existing  fixed  microwave  licensees or relocate them to new spectrum  paths or
transmission  technologies.  If we are required to relocate microwave licensees,
it may delay our ability to commence timely commercial operations.

     For up to five years after the grant of a personal  communications  service
license,  the licensee may be required to share  spectrum  with  existing  fixed
microwave   licensees   also  operating  on  personal   communications   service
frequencies.  If we build  out our  networks  to secure a  sufficient  amount of
unencumbered  spectrum  to operate  them  efficiently,  we may need to  relocate
existing  microwave  paths  to  alternate  spectrum  locations  or  transmission
technologies. The obligation to relocate incumbent microwave licenses expires on
April 4, 2005. Any delay in the relocation of licensees may adversely affect our
ability to commence timely commercial operation.  Furthermore,  depending on the
terms of such agreements,  our ability to operate our networks profitably may be
materially adversely affected.

Risks Relating To Our Common Stock

There is a very limited trading market for our common stock, because we have not
listed  or  registered  it on any  national  securities  exchange  or  automated
quotation system.

     There is a very limited  trading  market for our Class A common  stock.  We
have not listed or registered, and do not intend to list or register, our common
stock  on any  national  securities  exchange  or  automated  quotation  system.
Accordingly,  we are unable to predict whether a trading market will develop for
our Class A common stock.

Victoria  G.  Kane  controls  us  and  such  control  could  dissuade  potential
acquirers.

     Victoria G. Kane,  through Fortunet  Wireless  Communications  Corporation,
currently has at least 50.1% of the voting power of our outstanding  equity. She
may also elect up to three members of our board of directors,  who  collectively
control  three of the five votes of the board of  directors.  Ms.  Kane may also
replace any such directors at her will. This control of us by Ms. Kane may deter
potential acquirers.

As our common stock is junior to our preferred  stock,  we would need to receive
net proceeds of more than $25.9 million from any sale of our licenses before any
portion of such sale proceeds could be received by holders of our common stock.

     Our common stock is junior to preferred  stock. As a result,  we would need
to  receive  net  proceeds  of more  than  $25.9  million  from  any sale of our
licenses,  before any portion of such sale proceeds could be received by holders
of our common stock.  Our common stock would also be junior to any  indebtedness
we may incur in the future.

A  subsidiary  of Lynch  Interactive  Corporation  holds  warrants  to  purchase
4,300,000  shares of our Class A common stock at $.75 per share and  convertible
preferred stock  convertible  into 2,000,000 shares of our Class A Common Stock,
which could  adversely  affect the value of our common  stock or, if  exercised,
dilute the ownership percentage of the then holders of our Class A common stock.

     A subsidiary of Lynch  Interactive  Corporation  holds warrants to purchase
4,300,000  shares  of our Class A common  stock at $.75 per share and  preferred
stock convertible into 2,000,000 shares of our Class A Common Stock. Some or all
of these warrants and preferred stock may be exercised and/or  converted,  which
could  adversely  affect the value of our common  stock.  That  exercise  and/or
conversion  would  also  dilute  the  then-existing   stockholders'   percentage
ownership of our common stock,  and any sales in the public market of the common
stock issued upon such exercise could adversely affect  prevailing market prices
for our common stock.  The full exercise of these warrants and conversion of the
preferred   stock  would  result  in  the  issuance  of  Class  A  common  stock
representing approximately 45.1% of our total outstanding common stock and 57.9%
of our Class A common  stock.  Upon such  exercise and  conversion,  the Class A
common stock held by the current stockholders would be reduced from 59.9% of the
total  common  stock and 100% of the Class A common  stock to 32.9% of the total
common stock and 42.1% of the Class A common stock.

Our  common  stock is subject to "Penny  Stock"  regulations,  which may make it
difficult to obtain timely and accurate  quotes for the stock or execute  trades
in it.

     Our Class A common stock is  considered  a penny  stock,  which may make it
difficult to obtain timely and accurate  quotes for the stock or execute  trades
in it. The rules of the Securities and Exchange  Commission define a penny stock
to be any equity security that has a market price or exercise price of less than
$5.00 per share,  subject to some  exceptions.  The penny  stock  rules  require
broker-dealers to deliver a standardized risk disclosure  document prescribed by
the Securities and Exchange Commission,  to provide the customer with additional
information, including the current bid and offer quotations for the penny stock,
the  compensation of the  broker-dealer  and its salesperson in the transaction,
monthly account  statements showing the market value of each penny stock held in
the customer's  account,  and to make a special written  determination  that the
penny  stock  is a  suitable  investment  for  the  purchaser  and  receive  the
purchaser's written agreement to the transaction.  These requirements may reduce
the level of trading  activity  in any  secondary  market for our Class A common
stock  and may  adversely  affect  the  ability  of  broker-dealers  to sell our
securities.

Federal  Communications  Commission limitations on foreign ownership could deter
foreign  investors or subject us to revocation of our licenses and/or  sanctions
if these limitations are violated.

     Non-U.S.   citizens,   their  representatives,   foreign  governments,   or
corporations  controlled by non-U.S.  citizens may not own or vote more than 20%
of the capital contribution to a personal  communications  services licensee, or
more than 25% of the  capital  contribution  to the  parent  corporation  if the
Federal  Communications  Commission determines that such holdings are not within
the public  interest.  Thus, if our foreign  ownership were to exceed 25% in the
future,  the Federal  Communications  Commission  could  revoke our  licenses or
impose  other  penalties.  This  restriction  on  foreign  ownership  could also
adversely  affect our  ability  to  attract  additional  equity  financing  from
entities that are, or are owned by, non-U.S. entities.

Item 2. Properties

     Our only significant assets are our three personal  communications  service
licenses and equipment.

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 currently  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 United States 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.  The lawsuit seeks to
recover an  unspecified  amount of damages,  which would be subject to mandatory
trebling under the statute.

     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 of 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,  we filed a
reply in support of its motion to dismiss.

     We strongly  believe that this lawsuit is  completely  without  merit,  and
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 financial condition.

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


     On November 29, 2002,  the holder of our Class B common  stock,  $.0001 par
value,  by  written  consent,  approved  an  amendment  to  our  certificate  of
incorporation authorizing two new series of preferred stock, one, the Series A-1
preferred stock, having an aggregate  liquidation value of $12.5 million and the
other, the Series A-2 preferred  stock, a convertible  preferred stock having an
aggregate  liquidation value of $2 million.  Both series of preferred stock have
no dividends and are  redeemable  at  liquidation  value upon the  occurrence of
certain  triggering  events.  The Series A-2 preferred stock is convertible into
our Class A Common  Stock at a conversion  price of $1.00 per share.  The Series
A-1  preferred  stock and the Series A-2  preferred  stock were  issued to Lynch
Interactive  Corporation in November 2002, in exchange for  approximately  $18.8
million of our subordinated notes held by Lynch Interactive.

                                     PART II

Item 5. Market For Company's Common Equity and Related Stockholder Matters

     The Class A common stock commenced trading 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
2002 Fiscal Year
<S>                                                                             <C>     <C>
First Quarter ..................................................................$1.06   $2.90
Second Quarter .................................................................$0.75   $1.30
Third Quarter ..................................................................$0.35   $0.65
Fourth Quarter .................................................................$0.17   $0.40
</TABLE>
<TABLE>
<CAPTION>

                                                                                Low     High
2001 Fiscal Year
<S>                                                                             <C>     <C>
First Quarter ..................................................................$0.30   $4.00
Second Quarter .................................................................$1.50   $3.50
Third Quarter ..................................................................$1.75   $3.00
Fourth Quarter .................................................................$1.60   $2.50
</TABLE>

     As of March 24, 2003, there were approximately 812 holders of record of our
Class A common stock.

     On February 12, 2002, the Securities and Exchange  Commission  declared the
Company's  Registration  Statement on Form SB-2 (File No. 333-82116)  effective.
Pursuant  to  such  Registration  Statement,  On  April  5,  2002,  the  Company
consummated a rights  offering for 1,531,593  shares of its Class A Common Stock
at $1.00 per share, raising net proceeds of $1.4 million,  after payment of fees
and  expenses.  No discount or  commission  was payable in  connection  with the
rights offering.

     Approximately  $0.8 million of the funds from the rights offering were used
to repay current  liabilities of the Company  existing at the time of the rights
offering.  An  additional  $0.6  million of the  proceeds  were used for working
capital and general corporate purposes during the remainder of 2002.

     We have  never  declared a cash  dividend  on our Class A or Class B common
stock  and our  Board of  Directors  does not  anticipate  that we will pay cash
dividends in the foreseeable future.

Item 6. Management's  Discussion and Analysis of Financial Condition and 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.  Such
uncertainties  include,  among others,  the following:  (i)  competition and the
pricing and mix of products offered by us and our competitors; (ii) difficulties
of few product development;  (iii) technology changes; (iv) market acceptance of
our products;  (v) the ability to attract and retain qualified  personnel;  (vi)
changes in our  development  plans;  (vii) larger than expected  fluctuations in
demand for our products;  (viii) general economic conditions;  (ix) economic and
business  conditions  specific to the photonics  market;  and (x) the other risk
factors referenced in this Form 10-KSB.

Background

     We are a  development  stage company with limited  operations to date.  Our
ability to develop a  profitable  personal  communications  service  business is
subject to substantial risks enumerated under "Risk Factors" in item 1.

     We  were   incorporated   in  July  2000,  as  the  successor  to  Fortunet
Communications,  L.P., a combination of five  partnerships  that were awarded 31
personal   communications   service  licenses  in  the  Federal   Communications
Commission's  1996 C-Block  auction.  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 at December 31, 1999.

     Because we have incurred losses since inception and have not yet determined
how to finance our operations,  the report of Ernst & Young LLP, our independent
auditors,  with respect to our financial  statements as of December 31, 2001 and
2002 and for each of the three years in the period  ended  December 31, 2002 and
for the period from July 27, 1995  (inception)  to December 31, 2002 contains an
explanatory  paragraph  which expresses  substantial  doubt as to our ability to
continue as a going concern.  This opinion  indicates that our auditors  believe
that  substantial  doubt exists  regarding  our ability to continue to remain in
business.  Such an  opinion  may  adversely  affect  our  ability  to obtain new
financing on reasonable  terms or at all.  Certain of the factors  considered by
our auditors in making this determination have been included in their report and
have been disclosed in Note 1 to our financial statements.

Results of Operations

     Neither  we,  nor our  predecessors,  have  had any  operating  history  or
revenues.  Through  December 31, 2002, we had a deficit  accumulated  during the
development  stage of  $84,157,651,  resulting  principally  from  net  interest
charges  of  $60,768,955,  including  commitment  fees,  and  the  write-off  of
$25,032,989  to reflect the  impairment of our personal  communications  service
licenses.

     During the year ended  December 31, 2002,  our net profit was $2,065,103 as
compared to a net loss of $3,299,415  for the year ended  December 31, 2001. The
change was primarily due to the forgiveness of debt of $4,323,746 as a result of
the exchange of our  subordinated  notes for preferred  stock in November  2002.
Interest expense was also reduced due to this exchange and the  restructuring of
our  limited  partner  loan to  subordinated  notes in February  2001.  We began
offering services on August 31, 2001,  accordingly other expenses,  depreciation
expense of our equipment and amortization  expense of our licenses was higher in
2002 than 2001.

     During the year ended  December 31, 2001,  our net loss was  $3,299,415  as
compared to a net loss of $13,699,645  for the year ended December 31, 2000. The
reduction in net loss of $10,400,230  was primarily due to reduction of interest
and commitment fee expenses due to the  restructuring of our subordinated  notes
to Lynch Interactive  Corporation on February 14, 2001. Offsetting these reduced
expenses  were various  costs and expenses we incurred in building and providing
telecommunications   services,   including   depreciation   of   equipment   and
amortization of our licenses. We began offering services on August 31, 2001.

Liquidity and Capital Resources

     At December  31,  2002,  we had  $431,737  in cash and current  payables of
$146,994.  At the current level of operating  activity,  operations will require
approximately $200,000 to $300,000 of cash flow on an annual basis. If we decide
to commercially  develop our licenses,  significantly higher levels of cash flow
will be required.

     During 2002, the Company sold 1,531,593  shares of its Class A common stock
to its  shareholders  by way of a rights  offering.  The gross proceeds from the
exercise  of rights  was  $1,531,593  and the costs  associated  with the rights
offering  were $96,508.  The net proceeds  were used to pay current  liabilities
which  primarily  consisted of costs of  equipment  and allow us to fund working
capital needs for the short-term,  we will need additional  capital to build out
our licenses  and to commence  commercial  operations.  We believe that it would
cost between $10.0 and $15.0 million to fully build out our licenses.

     Our potential to secure new financing through  traditional  lending sources
is questionable. Should we succeed in obtaining future financing, any such loans
are likely to contain  restrictions  that limit or prohibit our future  actions,
and allow the lender to accelerate the loan upon a default. Thus, any failure or
delay in  repaying  our  current or future debt could  terminate  our  business.
Alternatively,  we might  attempt to borrow from vendors  providing  the capital
equipment  used in  providing  services,  or conduct  either a public or private
equity offering to raise these funds, the results of which are highly uncertain.

     To obtain any value with  respect to our  licenses,  we have to either sell
them, enter into a joint venture, or build them out independently. If we were to
sell our licenses,  the Federal  Communications  Commission  and possibly  other
regulatory  agencies  must  consent.  If one or more of our licenses is sold for
cash, we are obligated to use any such proceeds to redeem our preferred stock of
$25.9  million.  If we were to enter into a joint  venture,  or were to sell our
licenses for securities of another personal  communications  services entity, we
would be exposed to many of the risks associated with  independently  developing
our licenses, along with any risks associated with other operations of the joint
venturer or purchaser.  The following table  summarizes our current  contractual
commitment:
<TABLE>
<CAPTION>
   <S>    <C>

   2003   $108,940
   2004    113,278
   2005    117,793
   2006     68,311
   2007       --
          --------
Total     $408,322
          ========
</TABLE>


     Although we have commenced the build out of our licenses, if we continue to
build out our licenses independently in order to commence commercial operations,
we would  need to raise over  $10.0  million.  Whether we would be able to raise
this  amount of money is highly  uncertain.  We would also have to  implement  a
business  plan,  create  additional  infrastructure,   and  attract  and  retain
qualified individuals to serve as managers and employees. Our current management
has very little experience in the personal  communications  service industry. We
cannot assure you as to the timing,  cost,  or even our ability to  successfully
accomplish  these  tasks.  Under  any  development   scenario,   we  will  incur
significant operating losses for the foreseeable future, as we seek to construct
our licenses and build a customer  base.  Such losses could be  substantial  and
jeopardize  our  ability  to  service  our debt,  thus  placing  us in danger of
default.

     On January 1, 2002, we adopted Financial  Accounting Standards Board issued
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.  While the Company expects renewal
of its licenses by the granting authorities which would allow it to classify its
licenses as indefinite  lived assets,  because of its lack of operating  history
and  our  current  cash  flow  deficit,  the  Company  has not  implemented  the
non-amortization  provisions of SFAS 142 and is amortizing its licenses over ten
years. Under these standards at least annually,  the Company is required to test
for the impairment of its indefinitive  lived assets.  The Company has completed
its  transition and its first annual test of impairment and found there to be no
impairment at this time.

Critical Accounting Policies and Estimates - Intangible Impairment

     In assessing the  recoverability of our investment in our PCS Licenses,  we
must make assumptions regarding estimated future cash flows and other factors to
determine  the fair  value of the asset.  If these  estimates  or their  related
assumptions  change in the  future,  we may be  required  to  record  impairment
charges for this asset not previously recorded.



<PAGE>



Item 7. Financial Statements

                                      INDEX
                            Sunshine PCS Corporation
    (A Development Stage Enterprise, formerly Fortunet Communications, L.P.)

Report of Independent Auditors..........................................

Balance Sheets at December 31, 2001 and 2002............................

Statements of Operations for each of the three years in the
 period ended December 31, 2002 and the period from July 27,
 1995 (inception) to December 31, 2002..................................

Statements of Cash Flows for each of the three years in the
 period ended December 31, 2002 and the period from July 27,
 1995 (inception) to December 31, 2002..................................

Statement of Changes in Partners'/Stockholders' Equity/(Deficit)
 for the period from July 27, 1995 (inception) through December 31,
 2002...................................................................

    Notes to Financial Statements.......................................

<PAGE>




                         Report of Independent Auditors


Board of Directors and Stockholders
Sunshine PCS Corporation

We have audited the accompanying balance sheets of Sunshine PCS Corporation (the
"Company") a development  stage enterprise,  formerly  Fortunet  Communications,
L.P.,  as of  December  31,  2001  and  2002,  and  the  related  statements  of
operations, cash flows, and changes in partners'/stockholders'  equity/(deficit)
for each of the three years in the period  ended  December  31, 2002 and for the
period from July 27, 1995  (inception)  to December  31, 2002.  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 financial  position of Sunshine PCS  Corporation at
December 31, 2001 and 2002, and the results of its operations and its cash flows
for each of the three years in the period ended  December 31, 2002,  and for the
period from July 27, 1995  (inception) to December 31, 2002, in conformity  with
accounting principles generally accepted in the United States.

The accompanying  financial statements have been prepared assuming that Sunshine
PCS  Corporation  will continue as a going concern.  As more fully  described in
Note 1, the Company has incurred losses since  inception,  has not yet adopted a
business  plan or determined  how to finance its  operations.  These  conditions
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  The financial statements do not include any adjustments to reflect the
possible future effects on the  recoverability  and  classification of assets or
the amounts and  classification  of liabilities that may result from the outcome
of this uncertainty.

                                                   /s/  Ernst & Young LLP

Stamford, Connecticut
March 27, 2003

<PAGE>

                            Sunshine PCS Corporation
                         (A Development Stage Enterprise
                     Formerly Fortunet Communications, L.P.)
                                 Balance Sheets
<TABLE>
<CAPTION>

                                                                              December 31,    December 31,
                                                                                 2001           2002
                                                                           ---------------- ---------------
Assets

<S>                                                                         <C>             <C>
Assets
Cash and cash equivalents ...............................................   $    103,525    $    431,737

Equipment at Cost .......................................................      1,002,684       1,002,684
Less: Accumulated Depreciation ..........................................        (47,747)       (204,518)
                                                                            ------------    ------------
    Net Equipment .......................................................        954,937         798,166

PCS Licenses, less accumulated amortization of
    $44,767 at December 31, 2001 and $179,067 at
    December 31, 2002 ...................................................      2,641,245       2,506,945
Other Assets ............................................................          2,425          14,653
                                                                            ------------    ------------

Total Assets ............................................................   $  3,702,132    $  3,751,501
                                                                            ============    ============

Liabilities and stockholders' deficiency

Accounts payable and accrued expenses ...................................   $    728,272    $    146,994
Subordinated Notes ......................................................     17,428,603            --

Preferred Stock, $1.00 par value per share, $1,000
    liquidation preference per share, 30,000 shares
    authorized; 10,000 shares outstanding at December 31,
    2001 and 10,700 shares outstanding at December 31, 2002..............        863,698       1,606,657

Series A-1 Preferred Stock, par value $1.00 per share, $1,000 liquidation
preference per share, 12,500 shares
authorized and outstanding ..............................................           --        12,500,000

Series A-2 Preferred Stock, par value $1.00
per share, $1,000 liquidation preference per share,
2,000 shares authorized and outstanding .................................           --         2,000,000

Stockholders' deficiency

Common Stock, $0.0001 par value

Class A: Authorized shares-20,000,000;
3,057,600 shares outstanding at December 31, 2001 and
4,588,653 shares outstanding at December 31, 2002                                   --              --
Class B:  Authorized shares-9,000,000;
3,069,313 shares outstanding at December 31, 2001 and
2002                                                                                --              --

Additional paid-in capital ..............................................     70,161,354      71,655,501
Deficit accumulated during the development stage ........................    (85,479,795)    (84,157,651)

    Stockholders' deficit accumulated during the
     development stage ..................................................    (15,318,441)    (12,502,150)
                                                                            ------------    ------------

Total  liabilities and stockholders' deficiency .........................   $  3,702,132    $  3,751,501
                                                                            ============    ============
See accompanying notes
</TABLE>


<page>
                            Sunshine PCS Corporation
                         (A Development Stage Enterprise
                     Formerly Fortunet Communications, L.P.)

                            Statements of Operations
<TABLE>
<CAPTION>

                                                                                                     July 27, 1995
                                                                                                    (inception) to
                                                           Years Ended December 31,                   December 31,
                                              2000                2001                 2002               2002
                                        -----------------    ----------------     ---------------    --------------

<S>                                  <C>                  <C>                 <C>                  <C>
Interest income ..................   $             --     $           5,651   $            6,253   $     11,904
Interest expense (including
commitment fees) .................          (13,699,645)         (2,934,425)          (1,395,143)   (79,928,845)
Other expenses ...................                 --              (278,127)            (578,682)      (856,809)
Forgiveness of interest expense ..                 --                  --                   --       19,159,890
Forgiveness of debt ..............                 --                  --              4,323,746      4,323,746
Impairment of PCS Licenses .......                 --                  --                   --      (25,032,989)
Depreciation and amortization ....                 --               (92,514)            (291,071)      (383,585)
                                     ------------------   -----------------   ------------------   ------------

Net Income (Loss) ................          (13,699,645)         (3,299,415)           2,065,103    (82,706,688)

Dividend requirement on
   preferred stock ...............                 --              (613,698)            (742,959)    (1,356,657)
                                     ------------------   -----------------   ------------------   ------------
Income (loss) applicable to common
   shares ........................   $      (13,699,645)  $      (3,913,113)  $        1,322,144   $(84,063,345)
                                     ==================   =================   ==================   ============
Net income (loss) allocated to
   general partner.................  $         (136,996)  $         (16,368)  $             --     $       --
                                     ==================   =================   ==================   ============
Net income (loss) allocated to
   limited partner ...............   $      (13,562,649)  $      (1,620,571)  $             --     $       --
                                     ==================   =================   ==================   ============
Basic income (loss) per common
   share.........................    $            (2.24)  $           (0.64)  $             0.19   $     (13.42)
                                     ==================   =================   ==================   ============
Diluted income (loss) per common
   shares ........................   $            (2.24)  $           (0.64)  $             0.18   $     (13.42)
                                     ==================   =================   ==================   ============
Weighted average shares used in
   basic computation..............            6,126,373           6,126,373            7,141,840      6,262,840
                                     ==================   =================   ==================   ============
Weight average shares and
   equivalents used in diluted
   computation...................             6,126,373           6,126,373            7,393,895      6,262,840
                                     ==================   =================   ==================   ============

Forgiveness of debt per share:

  Basic ..........................   $             --     $            --     $             0.61   $       0.69
                                     ==================   =================   ==================   ============

  Diluted ........................   $             --     $            --     $             0.58   $       0.69
                                     ==================   =================   ==================   ============
</TABLE>

See Accompanying notes



<PAGE>

                            Sunshine PCS Corporation
                         (A Development Stage Enterprise
                     Formerly Fortunet Communications, L.P.)


                            Statements of Cash Flows

<TABLE>
<CAPTION>


                                                                                                     July 27,
                                                                                                      1995
                                                                                                   (inception)
                                                           Years Ended December 31,                to December 31,
                                                 2000               2001             2002             2002
                                             --------------     -------------    ---------------   ------------
<S>                                          <C>             <C>                 <C>             <C>
Operating activities
Net income (loss) .........................  $(13,699,645)   $ (3,299,415)       $  2,065,103    $(82,706,688)

Adjustments to reconcile net income (loss)
   to cash (used in) provided by operating
   activities:
Depreciation and amortization ............           --            92,514             291,071         383,585
Compensation expense relating to
   executive's stock options .............           --            65,336              59,062         124,398
Impairment of PCS licenses ...............           --              --                  --        25,032,989
Net change in accrued interest and
   commitment fees .......................     13,699,645       2,934,425           1,395,143      63,104,155
Forgiveness of debt ......................           --              --            (4,323,746)     (4,323,746)
Net change in accounts payable and
accrued expenses .........................           --           728,272            (581,278)        146,994
Net change in other assets ...............           --            (2,425)            (12,228)        (14,653)
                                              --------------    ------------       ------------    ------------
Net cash (used in) provided by
   operating activities ..................           --           518,707          (1,106,873)      1,747,034

Investing Activities
Deposits with the FCC ....................           --              --                  --        (4,200,000)
Purchase of PCS Licenses .................           --              --                  --        (4,698,398)
Capital expenditures .....................           --          (665,182)               --          (665,182)
Other ....................................           --              --                  --          (215,710)
                                              --------------    ------------       ------------   ------------
Net cash used in investing ...............
  activities..............................           --          (665,182)               --        (9,779,290)

Financing activities
Net proceeds from (repayments of)
   Limited Partner loans .................           --              --                  --         6,080,305
Capital contributions ....................           --              --                  --           698,603

Sale of preferred stock and warrants .....           --           250,000                --           250,000
Proceeds from Rights Offering, net
of expenses ..............................           --              --             1,435,085       1,435,085
                                               ------------    ------------         -----------    ------------
Net cash provided by financing
activities ...............................           --           250,000           1,435,085       8,463,993

Net change in cash .......................           --           103,525             328,212         431,737

Cash and cash equivalents at
   beginning of period ...................           --              --               103,525            --
                                              ------------    ------------        ------------      ------------

Cash and cash equivalents at end of
   period ................................   $       --       $   103,525        $    431,737      $  431,737
                                              ============    ============        ============     ============
</TABLE>
See accompanying notes



<PAGE>



                            Sunshine PCS Corporation
                         (A Development Stage Enterprise
                     Formerly Fortunet Communications, L.P.)

         Statement of Changes in Partners'/Stockholders' Equity(Deficit)

     For the period from July 27, 1995 (inception) through December 31, 2002
<TABLE>
<CAPTION>

                                                                                                                Stockholders'
                                                                                                  Deficit         deficit
                                                                                                accumulated     accumulated
                                   General         Limited           Total        Additional     during the      during the
                                  partner's       partner's        partners'       paid-in      development      development
                                equity(deficit) equity(deficit)  equity(deficit)   capital         stage            stage
                                --------------  ---------------  --------------  -------------  -------------   --------------
<S>                             <C>             <C>                <C>             <C>            <C>             <C>
Capital contributions ........  $ 350,000       $ 348,603          $698,603        $   --         $    --         $    --
    Net loss ................      (4,605)       (455,894)         (460,499)           --              --              --
                               ---------------  ---------------  --------------  -------------  -------------   --------------
Balance at December 31, 1995 .    345,395        (107,291)          238,104            --              --              --
    Net loss .................   (850,414)     (6,474,655)       (7,325,069)           --              --              --
                               --------------   ---------------    ------------    ------------    -----------   -----------
Balance at December 31, 1996 .   (505,019)     (6,581,946)       (7,086,965)           --              --              --
    Net loss ..................(9,211,211)    (19,800,154)      (29,011,365)           --              --              --
                               --------------  ---------------    ------------    ------------    -----------   -----------
Balance at December 31, 1997 . (9,716,230)    (26,382,100)      (36,098,330)           --              --              --
  Net profit (loss) ..........  6,472,834      (5,992,670)          480,164            --              --              --
                               ------------    ---------------  --------------    ------------    -----------   -----------
Balance at December 31, 1998 . (3,243,396)    (32,374,770)      (35,618,166)           --              --              --
  Net Loss ....................(9,375,529)    (22,080,433)      (31,455,962)           --              --              --
                               --------------  ---------------  --------------    ------------    -----------   -----------
Balance at December 31, 1999 .(12,618,925)    (54,455,203)      (67,074,128)           --              --              --
  Net loss ....................  (136,996)    (13,562,649)      (13,699,645)           --              --              --
                              --------------  ----------------  --------------    ------------    -----------   -----------
Balance at December 31, 2000  (12,755,921)    (68,017,852)      (80,773,773)           --              --              --
  Net loss through February
  14, 2001 ....................   (16,368)     (1,620,571)       (1,636,939)           --              --              --
  Capital contribution of Loan
  from Limited Partner ........      --        68,965,607        68,965,607            --              --              --
  Merger of Sunshine and
  Fortunet ................... 12,772,289         672,816        13,445,105        69,664,210     (83,109,315)  (13,445,105)
  Value of equity from stock
  compensation:
  153,410 options issued on
  May 1, 2001 ...............        --              --              --               337,502          --           337,502
  130,000 options issued on
  February 14, 2002 .......          --              --              --                65,336            --          65,336
  Net loss ................          --              --              --                --        (1,662,476)     (1,662,476)
  Common stock dividends .           --              --              --                94,306       (94,306)             --
  Dividend requirement on
    Preferred stock                  --              --              --                --          (613,698)       (613,698)
                              ------------    ---------------    -------------     ------------  -------------  ------------
Balance at December 31, 2001         --              --              --            70,161,354   (85,479,795)    (15,318,441)
50,000 options issued on
   January 18, 2002 ......           --              --              --               100,000            --          100,000
Change in value of CEO
   Options................           --              --              --              (40,938)            --          (40,938)
Sale of Common Shares, net of
   $96,508 in expenses ........      --              --              --             1,435,085            --        1,435,085
Net income ....................      --              --              --                 --         2,065,103       2,065,103
Dividend requirement on
   Preferred stock....... .....      --              --              --                 --          (742,959)       (742,959)
                              ------------    --------------    -------------    ------------    -----------   ---------------
Balance at December 31, 2002  $      --       $     --          $    --           $71,655,501    $(84,157,651)  $(12,502,150)
                              ============    ==============    ==============    ============   ============   ==============
</TABLE>
See accompanying notes




<PAGE>


                            Sunshine PCS Corporation
                        (A Development Stage Enterprise,
                     formerly Fortunet Communications, L.P.)

                          Notes to Financial Statements

                                December 31, 2002


1.   Accounting Policies

Description of Business

Sunshine PCS Corporation  ("Sunshine"),  was 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").  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.

PCS is a  second-generation  digital wireless service utilizing voice,  video or
data devices that allow people to communicate at anytime and virtually anywhere.
The FCC  auctioned  off PCS  licenses,  a total of 120 MHz of spectrum,  falling
within six separate frequency blocks labeled A through F. Frequency Blocks C and
F were designated by the FCC as  "entrepreneurial  blocks".  Certain  qualifying
small businesses including the Partnerships were afforded bidding credits in the
auctions  as  well  as  government  financing  of  the  licenses  acquired.  The
Partnerships won 31 licenses in 1996 to provide personal communications services
over 30 MHz of spectrum  to a  population  of  approximately  7.0 million  (1990
Census Data).

On  February  14,  2001,  Sunshine  succeeded,  by  merger,  to the  rights  and
obligations  of Fortunet.  The merger was accounted  for at  historical  cost as
Sunshine and Fortunet are entities under common control.

Fortunet Wireless  Communications  Corporation ("Fortunet Wireless"),  an entity
controlled  by Victoria  Kane, a private  investor,  was the General  Partner of
Fortunet with a 50.1% equity interest.  Subsequent to the Transfers, Victoria F.
Kane  owned 60% of the stock of  Fortunet  Wireless.  On May 4, 2000,  Ms.  Kane
purchased  the remaining  40% of Fortunet  Wireless for  $600,000,  and gave the
selling  stockholders  the right to repurchase the stock so acquired through May
4, 2008, for 120% of her purchase price. Lynch PCS Corporation A, a wholly-owned
subsidiary of Lynch PCS Corporation,  which in turn is a wholly-owned subsidiary
of Lynch Interactive  Corporation  ("Lynch"),  a publicly held company,  was the
Limited Partner of Fortunet with a 49.9% equity interest.  Lynch PCS Corporation
A had agreements to provide a total of $41.8 million of funding to Fortunet,  of
which a total of $21  million  was  funded  through  December  31,  2000.  These
agreements terminated at the time of the merger.

The common stock outstanding of Sunshine consists of 4,588,653 shares of Class A
Common Stock,  which are entitled to one vote per share, and 3,069,313 shares of
Class B Common  Stock,  which will be entitled  to five votes per share.  In all
economic  terms,  the Class A and Class B shares are equal.  The General Partner
received 100% of the Class B shares representing 50.1% of the outstanding common
stock and the Limited Partner received 100% of Class A shares representing 49.9%
of the common stock.

As part of the  reorganization,  Lynch PCS  Corporation A ("Lynch")  contributed
$69.0 million of the debt owed to it as a capital contribution to Sunshine.  The
remaining  indebtedness  of $16.1  million  was  restructured  into eight  equal
Subordinated  Notes  totaling $16.1  million,  at 9% interest per annum,  due in
three-month increments beginning three years from the date of issuance,  subject
to acceleration in certain circumstances. (See Note 4)

In addition,  Sunshine sold to Lynch, for a total of $250,000,  10,000 shares of
preferred stock with a total liquidation  value of $10 million,  and warrants to
acquire  4.3  million  shares  of Class A Common  Stock at $.75 per  share.  The
preferred  stock and warrants were recorded at their  respective  estimated fair
values at the time of sale to Lynch.  The Limited  Partner then  distributed its
shares in  Sunshine  to Lynch,  and then Lynch  distributed  such  shares to its
shareholders.

As described in note 8, as of February  22,  2001,  it was agreed that  Sunshine
would issue an  additional  235,294  shares of Class A Common Stock to Lynch and
236,237  shares  of Class B Common  Stock to the  holders  of the Class B Common
Stock.

Basis of Presentation

The financial  statements  are prepared in conformity  with  generally  accepted
accounting principles applicable to a development stage enterprise.

The Transfers from the Partnerships, with the exception of the transfer from Aer
Force, were accounted for as business combinations at fair value resulting in an
increase in the carrying value of the PCS licenses of $9.9 million. The transfer
from Aer Force was accounted  for in a manner  similar to a pooling of interests
at  historical  cost since  Fortunet  and Aer Force are  entities  under  common
control.  Accordingly, the accompanying financial statements include the results
of Aer Force from  inception,  July 27, 1995,  and the results of the  remaining
four partnerships from the date of the transfer, April 18, 1997.

Sunshine's  financial  statements have been prepared on a  going-concern  basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business and does not include any adjustments to reflect
the possible future effects on the  recoverability  and classification of assets
and the  amounts and  classifications  of  liabilities  that may result from the
possible inability of Sunshine to continue as a going concern.

Under FCC  regulations,  Sunshine  was  required to construct a PCS network that
provides adequate service to at least one-quarter of the population in the areas
covered by the licenses by September 17, 2001, or make a showing of  substantial
service  in the  areas  covered  by the  licenses  by that  date.  Sunshine  has
implemented a system to provide service to its three licensed areas and preserve
our licenses.  Further significant  buildout is required in order to establish a
viable business plan.  Currently,  we have spent  approximately  $1.0 million to
fund the construction of these facilities.

Sunshine has incurred losses since inception and, as noted,  will need to obtain
capital for further  build-out of  facilities.  There can be no  assurance  that
Sunshine  can raise  sufficient  capital  to  finance  the  construction  of its
networks.  Accordingly,  as a result  of the  items  discussed  above,  there is
substantial doubt about Sunshine's ability to continue as a going concern.

Throughout Sunshine's brief history and that of its predecessors,  servicing the
debt  entered into to acquire its  licenses  has been very  difficult.  In 1996,
these  difficulties  forced  Fortunet  to  return 28 of its 31  licenses  and 15
megahertz of spectrum of its three 30 megahertz licenses.

Sunshine has not yet adopted a business  plan or  determined  how to finance its
operations.  Therefore,  Sunshine  has not yet  determined  whether  to  further
develop  its PCS  licenses  on its  own,  enter  into a joint  venture  with its
licenses, or sell some or all of its licenses, all of which the Company believes
are alternative strategies.

Administrative Services

Sunshine  has no  employees.  The  Limited  Partner  provided  Fortunet  and its
predecessors,  at their request,  with certain  services in connection  with the
Partnerships'  bidding for PCS licenses in the FCC auctions in 1996.  Aside from
that  matter,  neither the General  Partner  nor the  Limited  Partner  provided
Fortunet  with  a  substantial  amount  of  services.  Neither  partner  charged
Fortunet, for the services provided, as such amounts are not significant.

Intangible Assets

On January 1, 2002,  the Company  adopted  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.  While the  Company  expects  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 and current
cash  flow  deficit,  the  Company  has  not  implemented  the  non-amortization
provisions  of SFAS 142 and the Company is  amortizing  its licenses over twenty
years. Under these standards, the Company is required to test for the impairment
of its  intangible  assets.  The Company has completed its testing of impairment
and found there to be no impairment at this time.

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.

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 is recorded at cost and is being  depreciated  using the straight-line
method based upon an estimated useful life of seven years.

Capitalized Costs/PCS Licenses Amortization

Certain  direct costs of acquiring the PCS licenses  (such as legal,  filing and
other regulatory fees) have been capitalized and included in PCS licenses in the
accompanying balance sheets,  amounting to $0.1 million at December 31, 2002 and
2001. These costs,  and the costs of the PCS licenses,  are being amortized over
20 years,  which  began on August  31,  2001 when  Sunshine  commenced  offering
service. The annual amortization of these licenses will be $0.1 million for each
of the next five years.

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 due to the nature of these  instruments,
approximates fair value at the balance sheet dates.

Intangible Impairment

In assessing the  recoverability  of the  Company's  investment in PCS Licenses,
Management must make assumptions regarding estimated future cash flows and other
factors to determine  the fair value of the asset.  If these  estimates or their
related  assumptions change in the future, the Company may be required to record
impairment charges for this asset not previously recorded.

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.  In addition,  the Company recorded
additional  tax losses since the  reorganization.  These  adjustments  created a
deferred tax asset of  approximately  $4.3 million ($4.6 million at December 31,
2001),  for  which a  valuation  allowanc  has been  provided  in the  financial
statements, as the realization of such asset is dependent upon the generation of
future taxable income during a period when such losses would be utilizable.  The
Company  currently  has $0.5  million of net  operating  tax loss  carryfowards,
generated in 2001, which will expire in 2021.

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.

2.   PCS Licenses

In the C-Block  auction,  which  ended in May 1996,  the  combined  Partnerships
acquired 31 licenses at net cost, after bidding credits, of $216 million.  These
licenses were awarded in September  1996.  The FCC provided 90% of the financing
of the cost of these  licenses at an interest rate of 7% per annum with interest
due quarterly for years one through six and principal  amortization and interest
due quarterly in years seven through ten.

Events during and subsequent to the auction,  as well as other externally driven
technological  and  market  forces,  made  financing  the  development  of these
licenses  through  the  capital  markets  much more  difficult  than  originally
anticipated.  In 1997,  Fortunet,  as well, as many of the other license holders
from this auction,  petitioned the FCC for relief in order to afford these small
businesses the opportunity to more realistically restructure and build-out their
systems.  The response from the FCC,  which was announced on September 26, 1997,
afforded  license  holders  a  choice  of four  options,  one of  which  was the
resumption of current debt payments,  which had been  suspended  earlier in 1997
for all such  license  holders.  The  ramifications  of choosing the other three
courses of action would result in Fortunet  ultimately  forfeiting  30%, 50%, or
100%  of  the  down  payments  on  these  licenses.  Accordingly,  during  1997,
subsequent  to the  Transfers,  Fortunet  recorded  a charge  of 30% of the down
payments (10% of net cost) as this represented Fortunet's estimate, at the time,
of the impairment of this investment given the then available  alternatives.  On
March 24,  1998,  the FCC modified the four options and provided a July 8, 1998,
deadline for a decision.

On June 8, 1998,  Fortunet elected to apply its eligible credits relating to its
original  down  payment  to the  purchase  of three  licenses  for 15 MHz of PCS
spectrum in Tallahassee,  Panama City and Ocala, Florida.  Fortunet returned all
the  remaining  licenses and forfeited 30% of its original down payment on these
licenses in full  satisfaction  of the  government  debt and  forgiveness of all
accrued interest. Accordingly, Fortunet retained 15 MHz of spectrum in the three
Florida markets covering a population ("POP") of approximately  962,000 at a net
auction cost of $15.8 million or $16.40 per POP, based on 2000 census data.

On April 15, 1999,  the FCC  completed a reauction  of all the C-Block  licenses
that were returned to it subsequent  to original  auction,  including the 15 MHz
licenses  that  Fortunet  returned  on June 8,  1998.  In  that  reauction,  the
successful  bidders paid a total of $2.7 million for those three 15 MHz licenses
returned by Fortunet,  as compared to the $21.2  million  carrying  value of the
licenses  at that  time.  Accordingly,  Fortunet  recorded  a write  down of its
investment,  including  capitalized costs, to reflect the amount bid for similar
licenses in the reauction.

3.   Partnership Agreement

Each of Fortunet's predecessor Partnerships, including Aer Force, were formed in
1995 to bid for PCS licenses in the FCC's "C-Block" auction. The general partner
of Aer Force  contributed  a total of $350,000  to Aer Force for a 50.1%  equity
interest in the partnership and the limited partner contributed  $348,603 to Aer
Force for a 49.9% equity interest.

Under the terms of all of the predecessor Partnership Agreements,  including Aer
Force,  and  subsequently  Fortunet,  all items of  deduction  with  respect  to
interest  expense and commitment  fees incurred in connection with the loan from
the Limited  Partner  were  allocated  99% to the Limited  Partner and 1% to the
General Partner.  All other deductions were allocated to the Limited and General
Partner  on the  basis  of 49.9%  and  50.1%,  respectively.  All  profits  were
allocated  99% to the Limited  Partner and 1% to the General  Partner  until the
aggregate  amount of all profits  allocated  to the Limited  Partner and General
Partner  equaled the items of  deduction  with  respect to interest  expense and
commitment fees, except for all profits that result from the exchange of the PCS
licenses  with the FCC,  which were to be allocated  to the Limited  Partner and
General Partner on the basis of 49.9% and 50.1%, respectively. Subsequently, all
profits  and losses  were to be  allocated  to the  Limited  Partner and General
Partner in proportion to their interests, 49.9% and 50.1%, respectively.

4.   Long-Term Debt

In connection  with the PCS "C-Block"  auction,  $4.2 million was deposited with
the FCC of which $3.5 million was borrowed from the Limited Partner under a line
of credit which is due and payable on December 1, 2006.  On September  27, 1996,
an additional  $4.4 million was advanced to cover the remaining  down payment on
the licenses won. The interest rate on the outstanding borrowings under the line
is fixed at 15% per annum;  additionally,  a commitment  fee of 20% per annum is
being  charged  on the total line of credit,  which was $25.0  million  prior to
April 18,  1997 and $41.8  million  thereafter.  The  amounts due to the Limited
Partner,  including  accrued  interest and commitment fees, at December 31, 2000
was $83.5 million.  On March 31, 1997, $1.6 million was advanced to Aer Force to
cover the first  interest  payment  under the FCC debt.  Also, on that date $2.3
million  was  advanced  to the other  four  partnerships  to cover  their  first
interest payment  bringing the total advanced to $3.9 million.  As a part of the
FCC restructuring  plan, the $3.9 million was returned in September 1998 and the
loan to the Limited Partner was repaid to that extent.

Under the  recapitalization  that was  implemented  on February  14,  2001,  the
Limited Partner  contributed  $69.0 million of the outstanding debt as a capital
contribution  and the remaining  $16.1  million was  converted  into eight newly
created  Subordinated  Notes of equal  amount.  The  Subordinated  Notes  mature
equally in three-month  increments from February 2004 to November 2005. Interest
is payable at a rate of 9% per  annum,  semiannually  through  the  issuance  of
additional  principal  amounts of  subordinated  notes.  In November  2002,  the
Company exchanged the $18.8 million  outstanding balance (principal plus accrued
interest) of its subordinated  notes held by Lynch  Interactive  Corporation for
two series of preferred  stock having an  aggregate  liquidation  value of $14.5
million. (See note 5)

5.   Preferred Stock

The terms of the Preferred Stock are as follows:

o    dividends in kind at an annual rate of seven shares of additional preferred
     stock for each one hundred shares of preferred  stock  outstanding  for the
     first five years and thereafter dividends in cash at the annual rate of 7%,
     and

o    no voting rights except as provided by law, and

o    must be redeemed at $1,000 per share, plus accrued and unpaid dividends, on
     a change in  control  of the Class A or Class B common  stock,  or upon the
     sale of one or more PCS  licenses  for  cash or a  non-cash  sale  which is
     subsequently  converted into or redeemed for cash in an amount proportional
     to that number of persons covered by the sale of such licenses for cash, or
     that portion of a non-cash sale subsequently converted into or redeemed for
     cash,  compared  to the total  persons  covered  by our three  initial  PCS
     licenses,  in each case based on the 1998 or most recent  estimates  by the
     United States Bureau of Census, and

o    may be redeemed at $1,000 per share plus accrued and unpaid  dividends,  if
     funds are lawfully available, and the board of directors consents.

As noted above in note 4, in November  2002, 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 on the same basis as the Preferred  Stock described
above.

6.   Income (Loss) Per Share

For the  period  prior  to  February  14,  2001,  the loss  per  share  has been
calculated  on a basis  assuming  that the  6,126,373  shares of common stock of
Sunshine  (3,057,060 Class A and 3,069,313 Class B shares) issued at the time of
the  reorganization,  including the shares  subsequently issued to Lynch and the
holders of the Class B common stock as described in Note 8, had been outstanding
from the  beginning of the periods  presented.  Subsequent to February 14, 2001,
the income (loss) per share has been calculated based on actual number of shares
outstanding.  Warrants  options (see note 7) and the convertible  preferred (See
note 8) 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 year ended December 31, 2002, the
Company  recorded Net 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 portion of the year ended
December 31, 2002, that it was outstanding.

7.   Options

On February 14, 2001, Sunshine granted its directors options to purchase 280,000
shares,  including  options for 130,000 shares issued to the non-employee  Chief
Executive Officer,  of Class A Common Stock at $.75 per share. The fair value at
the date of the grant was  estimated  at $0.20 per share.  Such  options  are to
become exercisable three years from the date of grant and expire five years from
the date of grant. The 130,000 shares issued to the Chief Executive Officer have
been  accounted  for at fair value in  accordance  with the  provisions  of EITF
96-18,  "Accounting  for  Equity  Instruments  That Are  Issued  to  Other  Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services." The
fair value of such awards which was calculated  using the  Black-Scholes  Option
Pricing  Model,  (approximately  $223,600  at  December  31, 2001 and $39,000 at
December 31,  2002),  will be  recognized as expense over the three year vesting
period of the options.  The remaining  150,000  options issued to directors have
been accounted for under the  provisions of APB 25 "Accounting  for Stock Issued
to  Employees."  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,  the effect Net Income (Loss) for the years ended December
31, 2001 and 2002 and the period from July 27, 1995  (inception) to December 31,
2002, would have been immaterial.

As of May 1, 2001,  Sunshine  granted to its Chief Operating  Officer options to
purchase  306,819 of its Class A common  stock at $1.50 per  share.  50% of such
options  became  exercisable  on  Sunshine's  meeting  its  first  FCC  mandated
build-out requirement,  which occurred on August 31, 2001, and the remaining 50%
will become  exercisable on the occurrence of certain defined  events.  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.

On January 18, 2002, the Company's Board of Directors authorized the issuance of
options for 50,000 shares of Class A common stock to a third party in connection
with the  construction of equipment.  The exercise price of the options is $2.50
per share and the option expires in five years. The estimated fair value of such
award,  of $0.1  million  which was  capitalized  at the time of  issuance,  was
expensed during the fourth quarter of 2002.

In valuing all the above  options,  utilizing the  Black-Scholes  Option Pricing
Model, the following was assumed: a 4.5% risk free interest rate, an expectation
that the options would be held until their  expiration  date, 0% dividend  rate,
and a volatility factor of 3.0.



<PAGE>

8.   Stockholders Equity

During 2002,  the Company sold  1,531,593  shares of its Class A common stock to
its  shareholders  by way of a rights  offering.  The  gross  proceeds  from the
exercise  of rights  was  $1,531,593  and the costs  associated  with the rights
offering  were $96,508.  The net proceeds  were used to pay current  liabilities
which  primarily  consisted of costs of equipment  and allow the Company to fund
working capital needs for the short-term.

On  February  1, 2001  Sunshine  also  agreed with Lynch that if the holder of a
convertible  note of  Lynch  converts  all or a  portion  of its  note  prior to
December 10, 2004, Sunshine will issue:

o    to the  holder,  one  share of our Class A common  stock for each  share of
     Lynch  stock to be  received  by the  holder,  up to a maximum  of  235,294
     shares;

o    to the holders of our Class B common  stock,  1.0040  shares of  additional
     Class B common  stock for each share of Class A common  stock issued to the
     holder; and

o    to Lynch Interactive Corporation, warrants to purchase 1.9125 shares of our
     Class A common  stock for each share of Class A common  stock issued to the
     holder.

As of February  22,  2001,  Sunshine and Lynch agreed that the above Class A and
Class  B  common  shares  would  be  issued  currently  and  the  warrants  were
eliminated. The issuance of the additional Class A and Class B common shares was
accounted for as a dividend at the fair value of $94,306.

Subject  to certain  conditions,  the  holders  of the Class B common  stock can
convert their shares to Class A common stock.

9.   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  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. As of December 31, 2002, we have an amount payable of $116,667.

10.  Lease Commitment

The Company has entered into leases covering antenna space on four towers (total
rental expenses were for the year ended December 31, 2002 was $103,102,  and for
the year ended  December  31,  2001 was  $43,740).  The leases  call for monthly
payments totaling $8,925 per month. The leases have a minimum term of five years
and are subject to annual escalation  clauses.  Minimum rental costs under these
leases  for the next five  years is as  follows:  2003-$108,940,  2004-$113,278,
2005-$117,793, and 2006-$68,311.

11.  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 Chief Executive Officer,
and Lynch Interactive  Corporation,  which through February 25, 2001 owned 49.9%
of our equity and  currently  owns 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. Although the complaint was filed under seal with the court on February
14,  2001,  and the seal was  lifted.  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.  The lawsuit seeks to recover
an unspecified  amount of damages,  which would be subject to mandatory trebling
under the statute.

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 of 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,  we filed a
reply in support of its motion to dismiss.

We strongly believe that this lawsuit is completely without merit, and 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 financial conditions.

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

         Not applicable.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) Of The Exchange Act

     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, 2003 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>
Karen E. Johnson       44      Class B director and Chief Executive Officer(1)

David S. Ahl           56      Class B director(1)

Robert E. Dolan        51      Class A director(1) and Assistant Secretary

Robert Chomat          54      Chief Operating Officer

----------------------
<FN>

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

     Karen E.  Johnson  has been our Chief  Executive  Officer,  Chairman of the
Board and a Class B director  since  November 2000. Ms. Johnson is an investment
professional, and since 1996, she has been a Fundamental Equity Analyst for M.J.
Meehan & Co. Prior to that, Ms. Johnson was a Research  Analyst and later a Vice
President for Smith Barney,  Inc.  (1986 to 1995).  Also,  from 1997 to 2000 Ms.
Johnson served as President of Fortunet Communications, L.P., our predecessor.

     David S. Ahl 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).

     Robert  Chomat has been our Chief  Operating  Officer  since May 2001.  Mr.
Chomat has been in the wireless  communications  business for over 25 years, and
for the last 5 years has been  President  and Chief  Executive  Officer  of Gray
Florida  Holdings Inc.,  d/b/a GrayLink  Wireless,  Inc., a provider of wireless
services  with 15 offices  and 70  employees.  He serves as our Chief  Operating
Officer  under the terms of a management  agreement  with Gray Florida  Holdings
Inc., d/b/a GrayLink Wireless, Inc., described below.

Item 10. Executive Compensation

     The  following  table  sets  forth all  compensation  awarded  to our Chief
Executive  Officer during the year ended December 31, 2002. No executive officer
received compensation in excess of $100,000 during fiscal 2001.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                  Long Term
                                                    Annual Compensation          Compensation
                                                                                   Securities
                                                             Other Annual       Underlying Options
<S>                              <C>   <C>        <C>       <C>                    <C>
  Name and Principal Position    Year  Salary($)  Bonus ($) Compensation($)(1)      (Shares)
  Karen E. Johnson ........      2002   --        --             --                   --
  Chief Executive Officer        2001   --        --             --                180,000(2)
                                 2000   --        --             --                   --
<FN>

(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)  In February  2001,  in  consideration  for her  serving as Chief  Executive
     Officer and a Class B director,  Karen E.  Johnson was granted an option to
     purchase an aggregate of 180,000  shares of Class A common stock,  of which
     50,000  shares  relate to her service as a Class B  director.  The terms of
     exercise  of this  option are  identical  to those  described  below  under
     "Directors' Compensation."
</FN>
</TABLE>

     During the year ended  December 31, 2002,  no stock options were awarded to
any of our  executive  officers and no  executive  officer  exercised  any stock
options.  The  Company  has not  awarded  any stock  appreciation  rights to any
executive  officer  and  has no  long-term  incentive  plan  for  its  executive
officers.

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

     The  following  table sets forth  information  concerning  ownership of our
common  stock  as of  March  25,  2002  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>

                                 Class A Common Stock             Class B Common Stock               Total Common Stock
                                Beneficially Owned(1)           Beneficially Owned(1)(2)            Beneficially Owned(1)
                                Shares        Percentage         Shares         Percentage          Shares         Percentage
<S>                             <C>             <C>              <C>             <C>               <C>             <C>
Fortunet Wireless
Communications Corporation        767,328        16.7%           3,069,313        100%             3,836,641        50.1%
Victoria G. Kane(3) ......        767,328        16.7%           3,069,313        100%             3,836,641        50.1%
Mario J. Gabelli(4) ......      5,029,981(5)     56.6%               --            --              5,029,981(5)     42.1%

Lynch Interactive
Corporation ..............      4,594,217(6)     51.7%               --            --              4,594,217(6)     38.4%

Robert E. Dolan ..........         470             *                 --            --                    470(7)       *

Karen E. Johnson .........        --              --               127,898(8)      4.2%              127,898(8)      1.7%
David S. Ahl .............        --              --                 --             --                    --          --
Robert Chomat ............       153,410(9)       3.2%               --             --               153,410(9)      2.0%
All Directors and
Executive Officers as a
Group (4 in total) .......       153,998          3.2%             127,898         4.2%              281,896         2.6%

-------------
*Less than 1%
<FN>


(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)  As a holder of a share of Class B common  stock is  entitled  to five votes
     for every one vote to which the  holder of a share of Class A common  stock
     is entitled,  except on the election of  directors,  the holders of Class B
     common stock presently control 77.0% of our voting interest.

(3)  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.

(4)  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.

(5)  Includes (i) 250,014 shares owned directly by Mr. Gabelli  (including 8,027
     held for the benefit of Mr. Gabelli under the 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,  (iv)  294,117  shares  of  Class A common  stock  owned by Lynch
     Interactive  Corporation,  (v)  4,300,000  shares  of Class A common  stock
     subject to a  presently  exercisable  warrant  issued to Lynch  Interactive
     Corporation and (vi) 2,000,000 shares of Class A common stock issuable upon
     conversion  of the  Company's  Series  A-2  preferred  stock  held by Lynch
     Interactive. 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.

(6)  Includes  (i)  294,217  shares  of  Class A  common  stock  owned  by Lynch
     Interactive  Corporation,  (ii)  4,300,000  shares of Class A common  stock
     subject  to  a  presently   exercisable   warrant.  The  address  of  Lynch
     Interactive  Corporation is 401 Theodore Fremd Avenue,  Rye, New York 10580
     and (iii) 2,000,000 shares of Class A common stock issuable upon conversion
     of the Company's Series A-2 preferred stock held by Lynch Interactive.

(7)  Includes 70 shares  registered  in the name of Mr.  Dolan's  children  with
     respect to which Mr. Dolan has voting and investment.

(8)  Represents  a pro  rata  share of Class B  common  stock  held by  Fortunet
     Wireless Communications Corporation.  Ms. Johnson has an option to purchase
     up to 4.167% of Fortunet Wireless Communications  Corporation from Victoria
     G. Kane  through  May 4,  2008.  See  "Certain  Relationships  and  Related
     Transactions."

(9)  Represents  options that are currently  exercisable  into 153,410 shares of
     Class A common  stock at $1.50 per share.  The address of Robert  Chomat is
     c/o GrayLink Wireless, Inc., is 1306 Thomasville Road, Tallahassee, Florida
     32303.
</FN>
</TABLE>

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 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.

     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 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)

      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)

      99.1        Chief Executive Officer Section 906 Certification+

      99.2        Chief Financial Officer Section 906 Certification+



     (b)  Reports on Form 8-K filed in the fourth  quarter of the period covered
          by this Report.

         None

     Item 14. Controls And Procedures.

     (a)  Evaluation of disclosure controls and procedures.

          Our chief executive officer and chief financial officer have evaluated
          the  effectiveness  of  the  Registrant's   disclosure   controls  and
          procedures  (as  defined  in  Rules  13a-14(c)  and  15d-14(c)  of the
          Securities  Exchange  Act of 1934 (the  "Act")) as of a date within 90
          days of the filing date of this annual report  (Evaluation Date). They
          have  concluded  that, as of the  Evaluation  Date,  the  Registrant's
          disclosure  controls and  procedures  were  adequate and  effective to
          ensure that information  required to be disclosed by the Registrant in
          the  reports  that if  files or  submits  under  the Act is  recorded,
          processed,  summarized and reported, within the time periods specified
          in the rules and forms of the Securities and Exchange Commission.


     (b)  Changes in internal controls.

          There  were  no  significant  changes  in  the  Registrant's  internal
          controls or in other  factors  that could  significantly  affect these
          controls  subsequent  to the  Evaluation  Date,  nor  were  there  any
          significant  deficiencies  or material  weaknesses  in these  controls
          requiring corrective actions.




<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 __th day of March, 2003.



                                   SUNSHINE PCS CORPORATION

                                   By:      /s/ Karen E. Johnson
                                            --------------------
                                            Karen E. Johnson
                                            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.


             Signature                 Title                             Date
                         Chairman of the Board, Chief             March 26, 2003
/s/ Karen E. Johnson     Executive Officer and Director
---------------------
Karen E. Johnson
/s/ Robert E. Dolan      Director and Assistant Secretary         March 26, 2003
---------------------
Robert E. Dolan
/s/ David S. Ahl         Director                                 March 26, 2003
---------------------
David S. Ahl





<PAGE>




                                 CERTIFICATIONS

I, Karen E. Johnson, certify that:


1.   I  have   reviewed  this  annual  report  on  Form  10-K  of  Sunshine  PCS
     Corporation;


2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;


3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;


4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:


a)   designed such  disclosure  controls and  procedures to ensure that material
     information   relating  to  the  registrant,   including  its  consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the  period  in which  this  annual  report  is being
     prepared;


b)   evaluated the  effectiveness  of the registrant's  disclosure  controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     annual report (the "Evaluation Date"); and


c)   presented in this annual report our conclusions  about the effectiveness of
     the disclosure  controls and  procedures  based on our evaluation as of the
     Evaluation Date;


5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):


a)   all  significant  deficiencies  in the  design  or  operation  of  internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and


b)   any fraud,  whether or not  material,  that  involves  management  or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls; and


6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.

Date:  March 26, 2003



/s/ Karen E. Johnson
--------------------
KAREN E. JOHNSON,
Chief Executive Officer of
Sunshine PCS Corporation


<PAGE>

I, Robert E. Dolan, certify that:


1.   I  have   reviewed  this  annual  report  on  Form  10-K  of  Sunshine  PCS
     Corporation;


2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;


3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;


4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:


a)   designed such  disclosure  controls and  procedures to ensure that material
     information   relating  to  the  registrant,   including  its  consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the  period  in which  this  annual  report  is being
     prepared;


b)   evaluated the  effectiveness  of the registrant's  disclosure  controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     annual report (the "Evaluation Date"); and


c)   presented in this annual report our conclusions  about the effectiveness of
     the disclosure  controls and  procedures  based on our evaluation as of the
     Evaluation Date;


5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):


a)   all  significant  deficiencies  in the  design  or  operation  of  internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and


b)   any fraud,  whether or not  material,  that  involves  management  or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls; and


6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.

Date:  March 26, 2003



/s/ Robert E. Dolan
-------------------
ROBERT E. DOLAN,
Assistant Secretary of
Sunshine PCS Corporation
(principal accounting officer)

<PAGE>

           Supplemental Information to be Furnished With Reports Filed
  Pursuant to Section 15(d) of the Act by Registrants Which Have Not Registered
                  Securities Pursuant to Section 12 of the Act

(a)(2) Proxy statement and form of proxy sent to registratnt's  security holders
     with respect to annual meeting of stockholders:

<page>
                            SUNSHINE PCS CORPORATION
                             ----------------------
                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                             TO BE HELD MAY 30, 2002
                             ----------------------

To the Stockholders:

     NOTICE IS HEREBY GIVEN that the 2002 Annual  Meeting of  Stockholders  (the
     "Meeting")  of  SUNSHINE  PCS  CORPORATION,  a  Delaware  corporation  (the
     "Company"),  will be held at 4:30 p.m.,  local time,  on Thursday,  May 30,
     2002,  at The Penn Club,  30 W. 44th Street,  New York,  New York,  for the
     following purposes:

(1)  To elect one Class A member of the Board of  Directors  to serve  until the
     next annual meeting of  stockholders  and until his successor has been duly
     elected and qualifies;


(2)  To ratify the  appointment  of Ernst & Young LLP as auditors of the Company
     for the year ending December 31, 2002; and


(3)  To  transact  such other  business as may  properly  be brought  before the
     Meeting or any adjournment thereof.


     The Board of Directors  has fixed the close of business on May 2, 2002,  as
     the record date for the Meeting.  Only  stockholders of record on the stock
     transfer  books of the  Company at the close of  business  on that date are
     entitled to notice of, and to vote at, the Meeting.

                                             By Order of the Board of Directors


                                             Robert E. Dolan
                                             Assistant Secretary
Dated: May 3, 2002


<page>

         WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE URGED
TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE THAT IS
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.


<PAGE>


                            SUNSHINE PCS CORPORATION
                         359 West 11th Street, Suite 7B
                            New York, New York 10014
                             ----------------------

                                 PROXY STATEMENT
                                       FOR
                         ANNUAL MEETING OF STOCKHOLDERS

                                  MAY 30, 2002
                             ----------------------

                                  INTRODUCTION

     This proxy statement is being furnished to you by the Board of Directors of
Sunshine PCS Corporation,  a Delaware corporation (the "Company"), in connection
with the  solicitation  of the  accompanying  Proxy  for use at the 2002  Annual
Meeting of  Stockholders of the Company (the "Meeting") to be held at 4:30 p.m.,
local time, on Thursday May 30, 2002,  at The Penn Club, 30 W. 44th Street,  New
York, New York, or any adjournment thereof.

     The principal executive offices of the Company are located at 359 West 11th
Street,  Suite 7B, New York, New York 10014.  The approximate date on which this
Proxy  Statement  and the  accompanying  Proxy  will  first  be sent or given to
stockholders is May 3, 2002.

                        RECORD DATE AND VOTING SECURITIES

     Only  stockholders  of record at the close of  business on May 2, 2002 (the
"Record  Date"),  will be entitled to notice of, and to vote at, the Meeting and
any adjournment  thereof.  As of the close of business on the Record Date, there
were  6,126,373  outstanding  shares of the Company's  common stock,  $.0001 par
value (the "Common Stock"). Such shares consisted of 3,057,060 shares of Class A
Common Stock and 3,069,313 shares of Class B Common Stock.  Each holder of Class
A Common  Stock is entitled to one vote per share.  The shares of Class A Common
Stock may not represent more than 49.9% of the Company's  voting  interest.  The
holders  of the Class A Common  Stock,  as a class,  are  entitled  to elect any
number of members to the Board of Directors who collectively  will represent two
of the five total votes of the Board of  Directors  (the  "Class A  Directors").
Except for the  election of  directors  and as  provided by law,  each holder of
Class  B  Common  Stock  is  entitled  to  five  votes  per  share  (subject  to
adjustments,  if  necessary  in order to ensure  that the  Class B Common  Stock
represents at least 50.1% of the Company's voting interest).  The holders of the
Class B Common Stock are  entitled to elect up to three  members to the Board of
Directors who  collectively  will represent three of the five total votes of the
Board of  Directors  (the  "Class B  Directors").  Holders of a majority  of the
outstanding shares of Common Stock present in person or by proxy is required for
a quorum.

                                VOTING OF PROXIES

     Shares of Common Stock represented by Proxies, which are properly executed,
duly returned and not revoked, will be voted in accordance with the instructions
contained therein.  If no specification is indicated on the Proxy, the shares of
Common Stock  represented  thereby will be voted (i) for the election as Class A
Director of the person who has been nominated by the Board of Directors, (ii) to
ratify the  appointment  of Ernst & Young LLP as  independent  auditors  for the
fiscal year ending  December  31,  2002;  and (iii) on any other matter that may
properly be brought  before the Meeting in  accordance  with the judgment of the
person or persons voting the Proxies.

     The  execution  of a Proxy will in no way affect a  stockholder's  right to
attend the  Meeting and vote in person.  Any Proxy  executed  and  returned by a
stockholder  may  be  revoked  at any  time  thereafter  if  written  notice  of
revocation is given to the Assistant  Secretary of the Company prior to the vote
to be taken at the  Meeting,  or by  execution  of a  subsequent  proxy  that is
presented at the Meeting, or if the stockholder attends the Meeting and votes by
ballot,  except as to any  matter or  matters  upon which a vote shall have been
cast pursuant to the authority conferred by such Proxy prior to such revocation.

     Broker  "non-votes" and the shares as to which a stockholder  abstains from
voting are included for  purposes of  determining  whether a quorum of shares is
present at a meeting.  A broker  "non-vote" occurs when a nominee holding shares
for a  beneficial  owner  does not vote on a  particular  proposal  because  the
nominee does not have  discretionary  voting power with respect to that item and
has not received instructions from the beneficial owner.

     A  plurality  of the  votes  cast by  holders  of Class A  Common  Stock is
required  for the  election  of  Robert  E.  Dolan  as a Class  A  Director.  In
tabulating  the vote on the  election  of Robert E. Dolan as a Class A Director,
withholding of authority and broker  "non-votes"  will be  disregarded  and will
have no effect on the outcome of such vote.

     The  affirmative  vote of a majority of the votes cast by holders of Common
Stock is required to approve the appointment of Ernst & Young LLP. In tabulating
the votes on this proposal,  abstentions and broker non-votes are not considered
shares  entitled to vote and will not be included in  determining  whether  this
proposal is approved.

     The cost of  solicitation  of the Proxies being  solicited on behalf of the
Board of Directors  will be borne by the Company.  In addition to the use of the
mails,  proxy  solicitation  may be made by  telephone,  telegraph  and personal
interview by officers, directors and employees of the Company. The Company will,
upon request, reimburse brokerage houses and persons holding Common Stock in the
names of their  nominees  for their  reasonable  expenses in sending  soliciting
material to their principals.

Recent Developments

     On February 26, 2002 the Company  commenced a rights  offering (the "Rights
Offering"),  pursuant  to which  each  holder  of our Class A and Class B common
stock, as of February 19, 2002, was granted one right for every share of Class A
or Class B common  stock held on  February  19,  2002.  Every  four such  rights
entitle  the holder  thereof to purchase  one share of Class A common  stock for
$1.00. An aggregate of 6,126,373 rights, exercisable to purchase an aggregate of
1,531,593  shares of Class A common stock,  have been  distributed in connection
with the Rights Offering. The Rights Offering, which was originally scheduled to
terminate on April 5, 2002, will now expire on May 3, 2002.

                               SECURITY OWNERSHIP

The following table sets forth information concerning ownership of the Company's
Common Stock as of April 25, 2002, by each person known by the Company to be the
beneficial  owner of more than five percent of the Common Stock,  each director,
each  executive  officer,  each  nominee for  election as a director  and by all
directors and executive officers of the Company as a group. The Company believes
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>

                                 Class A Common Stock             Class B Common Stock               Total Common Stock
                                Beneficially Owned(1)            Beneficially Owned(1)              Beneficially Owned(1)
                                Shares        Percentage         Shares         Percentage         Shares          Percentage
<S>                            <C>             <C>               <C>              <C>            <C>                 <C>
Fortunet Wireless
Communications Corporation     767,329(2)      20.1%             3,069,313        100%           3,836,642           55.7%(3)

Victoria G. Kane(4) ......     767,329(2)      20.1%             3,069,313        100%           3,836,642           55.7%(3)

Mario J. Gabelli(5) ......   5,030,007(6)      67.6%                --            --             5,030,007(6)        47.8%
Lynch Interactive
Corporation ..............   4,594,243(7)      62%                  --            --             4,594,243(7)        43.8%

Robert E. Dolan ..........         588(8)    *                      --            --                    588(8)           *

Karen E. Johnson .........        --            --                  118,054.3(9)     3.8%          118,054.3(9)       1.9%

David S. Ahl .............        --            --                  --            --                   --              --
Cascade Investment LLC ...     235,294(10)      7.7%                --            --               235,294(10)        3.8%


ert Chomat ............        153,410(11)      4.8%                --            --               153,410(11)        2.4%

All Directors and
Executive Officers as a
Group (4 in total) .......   153,998(8)(11      4.8%                118,054.3(9)     3.8%          272,061.3(8)(9)(11)4.3%


---------

*Less than 1%
<FN>


(1)  A person is deemed to be the beneficial owner of voting securities that can
     be acquired by such person  within 60 days after April 25,  2002,  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 after April 25, 2002) have been exercised or converted.

(2)  Represents  rights to purchase  767,329  shares of our Class A common stock
     for $1.00 per share pursuant to the Rights Offering.

(3)  As a holder of a share of Class B common  stock is  entitled  to five votes
     for every one vote to which the  holder of a share of Class A common  stock
     is  entitled,  except  on the  election  of  directors,  Fortunet  Wireless
     Communications  Corporation presently controls 83.4% of our voting interest
     (80.8% of our  voting  interest  assuming  a  subscription  for all  rights
     distributed in the Rights Offering).

(4)  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.

(5)  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.  The address of Mr. Gabelli is 401 Theodore Fremd Avenue, Rye,
     New York 10580.

(6)  Includes (i) 200,011 shares owned directly by Mr. Gabelli  (including 6,421
     held for the benefit of Mr. Gabelli under the Corporation's  401(k) Savings
     Plan),  (ii) 8,600  shares owned by a  charitable  foundation  of which Mr.
     Gabelli is a trustee,  (iii) 140,000 shares owned by a limited  partnership
     in which Mr.  Gabelli is the  general  partner and has  approximately  a 5%
     interest, (iv) rights to purchase 87,153 shares of our Class A common stock
     for $1.00 per share  that were  received  by Mr.  Gabelli  pursuant  to the
     Rights  Offering,  (v) 100  shares of Class A common  stock  owned by Lynch
     Interactive  Corporation,  (vi)  rights  to  purchase  25 shares of Class A
     common  stock  received  by Lynch  Interactive  Corporation  as part of the
     Rights Offering,  (vii) 4,300,000 shares of Class A common stock subject to
     a presently  exercisable  warrant issued to Lynch Interactive  Corporation,
     (viii)  235,294  shares of Class A common  stock held by Lynch  Interactive
     Corporation as escrow agent (See Note 10 below) and (ix) rights to purchase
     58,824  shares  of  Class A  common  stock  that  were  received  by  Lynch
     Interactive  Corporation  as a result of the shares of Class A common stock
     it is holding as escrow agent. Mr. Gabelli disclaims  beneficial  ownership
     of the shares owned by Lynch Interactive Corporation, the foundation and by
     the  partnership,  except for his  approximate  5%  interest  therein.  The
     address of Mr.  Gabelli is 401 Theodore Fremd Avenue,  Corporate  Center at
     Rye, Rye, NY 10580.

(7)  Includes (i) 100 shares of Class A common stock owned by Lynch  Interactive
     Corporation,  (ii)  rights to  purchase  25 shares of Class A common  stock
     received as part of the Rights Offering (iii)  4,300,000  shares of Class A
     common stock  subject to a presently  exercisable  warrant,  (iii)  235,294
     shares of Class A common stock held as escrow agent (See Note 10 below) and
     (iii)  rights to purchase  58,824  shares of Class A common stock that were
     received  by Lynch  Interactive  Corporation  as a result of the  shares of
     Class A common stock it is holding as escrow agent.  See Note 10 below. The
     address of Lynch Interactive Corporation is 401 Theodore Fremd Avenue, Rye,
     New York 10580.

(8)  Includes (i) 70 shares  registered in the name of Mr. Dolan's children with
     respect to which Mr. Dolan has voting and investment  power and (ii) rights
     to  purchase  118  shares of our  Class A common  stock for $1.00 per share
     pursuant to the Rights Offering.

(9)  Represents  a pro  rata  share of Class B  common  stock  held by  Fortunet
     Wireless Communications Corporation.  Ms. Johnson has an option to purchase
     up to 4.167% of Fortunet Wireless Communications  Corporation from Victoria
     G. Kane  through  May 4,  2008.  See  "Certain  Relationships  and  Related
     Transactions."

(10) Represents 235,294 shares of Class A common stock,  currently being held by
     Lynch Interactive  Corporation as escrow agent, that are to be delivered to
     Cascade  Investment  LLC in the event of full  conversion  of a convertible
     promissory  note  issued to  Cascade  Investment  LLC by Lynch  Interactive
     Corporation.  The actual number of shares of Class A common stock that will
     be delivered to Cascade  Investment  LLC is dependent  upon how much of the
     principal  amount of such note is converted by Cascade  Investment LLC into
     shares of Lynch Interactive Corporation.  The address of Cascade Investment
     LLC is 2365 Carillon Point, Kirkland, Washington 98052.

(11) Represents  options that are currently  exercisable  into 153,410 shares of
     Class A common  stock at $1.50 per share.  The address of Robert  Chomat is
     c/o GrayLink Wireless, Inc., is 1306 Thomasville Road, Tallahassee, Florida
     32303.
</FN>
</TABLE>

<PAGE>



                                   MANAGEMENT

               The directors and executive officers of the Company
                                are as follows:
<TABLE>
<CAPTION>
<S>                 <C>         <C>
Name                 Age        Position

Karen E. Johnson     42         Class B director and Chief Executive Officer(1)

David S. Ahl         54         Class B director(1)

Robert E. Dolan      50         Class A director(1) and Assistant Secretary

Robert Chomat        52         Chief Operating Officer

----------------------
<FN>

(1)  The Class B directors  together  have three votes and the Class A directors
     together  have  two  votes  on  each  matter  acted  upon by the  Board  of
     Directors.
</FN>
</TABLE>

     Karen E.  Johnson  has been our Chief  Executive  Officer,  Chairman of the
Board and a Class B director  since  November 2000. Ms. Johnson is an investment
professional, and since 1996, she has been a Fundamental Equity Analyst for M.J.
Meehan & Co. Prior to that, Ms. Johnson was a Research  Analyst and later a Vice
President for Smith Barney,  Inc. (1986 to 1995).  Also,  from 1997 to 2000, Ms.
Johnson served as President of Fortunet Communications, L.P., our predecessor.

     David S. Ahl 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).

     Robert  Chomat has been our Chief  Operating  Officer  since May 2001.  Mr.
Chomat has been in the wireless  communications  business for over 25 years, and
for the last 5 years has been  President  and Chief  Financial  Officer  of Gray
Florida  Holdings Inc.,  d/b/a GrayLink  Wireless,  Inc., a provider of wireless
services  with 15 offices  and 70  employees.  He serves as our Chief  Operating
Officer  under the terms of a management  agreement  with Gray Florida  Holdings
Inc., d/b/a GrayLink Wireless, Inc., described below.

     On April 26, 2002,  the holders of the Company's  Class B common stock,  by
unanimous written consent, elected Karen E. Johnson and David S. Ahl to serve as
Class B members  of the Board of  Directors  until the next  annual  meeting  of
stockholders and until their successors have been duly elected and qualify. Such
holders also ratified the appointment of the Company's independent auditors.

                              ELECTION OF DIRECTORS

Nominees

Unless otherwise  specified,  all Proxies received will be voted in favor of the
election of Robert E. Dolan as a Class A Director of the Company, to serve until
the next Annual Meeting of  Stockholders  of the Company and until his successor
shall be duly elected and  qualified.  Mr. Dolan is currently a Class A Director
of the Company.  Mr.  Dolan's term expires at the Meeting and when his successor
is duly  elected and  qualifies.  Management  has no reason to believe  that Mr.
Dolan will be unable or unwilling to serve as a director, if elected. Should Mr.
Dolan not  remain a  candidate  for  election  at the date of the  Meeting,  the
Proxies  may  be  voted  for a  substitute  nominee  selected  by the  Board  of
Directors.

Vote Required

     A  plurality  of the  votes  cast by  holders  of Class A  Common  Stock is
required for the election of Robert E. Dolan as a Class A Director.

Recommendation of the Board of Directors

    THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEE.

Directors' Meetings and Compensation

     The Board of Directors met five times during 2001.  From time to time,  the
members of the Board of Directors may act by unanimous  written consent pursuant
to the laws of the  State of  Delaware.  The  Company  does not have a  standing
audit,  compensation or nominating  committee of the Board, or other  committees
performing similar functions.


     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.


                             EXECUTIVE COMPENSATION

     The following  table sets forth all  compensation  awarded to the Company's
Chief  Executive  Officer  during the year ended December 31, 2001. No executive
officer of the Company received compensation in excess of $100,000 during fiscal
2001.

Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                                   Long Term
                                                                Annual Compensation              Compensation
                                                                                                  Securities
                                                                         Other Annual          Underlying Options
Name and Principal Position        Year     Salary($)     Bonus ($)     Compensation($)(1)         (Shares)
<S>                                <C>         <C>           <C>              <C>                  <C>
Karen E. Johnson ......            2002        --           --                --                       --
Chief Executive Officer            2001        --           --                --                   180,000(2)
                                   2000        --           --                --                       --
<FN>

(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)  In February  2001,  in  consideration  for her  serving as Chief  Executive
     Officer and a Class B director,  Karen E.  Johnson was granted an option to
     purchase an aggregate of 180,000  shares of Class A common stock,  of which
     50,000  shares  relate to her service as a Class B  director.  The terms of
     exercise  of this  option are  identical  to those  described  above  under
     "Directors' Meetings and Compensation."
</FN>
</TABLE>

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Fortunet  Communications,  L.P., a limited  partnership  and the  Company's
predecessor,  was  formed  in  1997.  In  1997,  Fortunet  Communications,  L.P.
succeeded to all of the assets and liabilities of five partnerships that had won
31   personal   communications   service   ("PCS")   licenses   in  the  Federal
Communications  Commission's (the "FCC") 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 the  purchase  price of PCS  licenses  won in the C-Block
auction. In 1999, the FCC returned to Fortunet Communications, L.P. $3.9 million
in connection  with the surrender of 28 of its licenses.  This sum was then used
to pay down a portion of the Lynch  Interactive  Corporation  loan. At September
30, 2000,  Fortunet  Communications  L.P.'s  indebtedness  consisted of net cash
loans of $21,007,134,  accrued interest of $18,619,873,  and accrued  commitment
fees of $40,358,333.  Interest 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 were ever paid.

     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 Karen E. Johnson, the
Company's  President,  Chief Executive Officer and Principal Financial and Chief
Accounting  Officer.  Under  this  arrangement,  Ms.  Johnson  has the  right to
repurchase up to 4.167% of Fortunet Wireless Communications Corporation, or such
pro rata portion of the Company's  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.

     The Company was  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
the Company's Class B Common Stock and Lynch  Interactive  Corporation  received
2,821,766  shares  of the  Company's  Class A Common  Stock.  Lynch  Interactive
Corporation then distributed the Class A Common Stock to its stockholders.

     As a part of this  reorganization of Fortunet  Communications,  L.P., Lynch
Interactive  Corporation  made a capital  contribution  to the  Company 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 the  Company's  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.

     The Company 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.  Lynch Interactive Corporation has
placed these shares of Class A Common Stock in an escrow  account,  for which it
serves as the escrow  agent.  Should  Cascade  Investment  LLC,  the holder of a
convertible  promissory  note  issued  to it by Lynch  Interactive  Corporation,
convert  all or a portion of the  principal  amount of such note into  shares of
Lynch  Interactive  Corporation  common stock prior to December 10, 2004,  Lynch
Interactive  Corporation  shall  transfer a pro rata  portion  of those  235,294
shares of Class A Common Stock, depending on how much of the principal amount of
such note is converted, to Cascade Investment LLC. Should Cascade Investment LLC
fail to convert any or all of the  principal  amount of such note into shares of
Lynch Interactive Corporation common stock prior to December 10, 2004, ownership
of any shares of Class A Common  Stock then  remaining  in that  escrow  account
shall be retained by Lynch Interactive Corporation for its own account.

     Robert E. Dolan, the Company's Assistant Secretary and Class A Director, is
the Chief Financial Officer of Lynch Interactive Corporation.

     As of May 1, 2001, the Company  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.  Although the Company
has not yet made any payments under this agreement,  it expects to make payments
using the proceeds from the Rights Offering.

     On February 19, 2002, Lynch  Interactive  Corporation  advanced the Company
$550,000,  which was used to pay the vendor who  installed the equipment for the
partial build-out of the Company's system.

          RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

     The Board of Directors  has  appointed  Ernst & Young LLP, as the Company's
independent  public  accountants  for the fiscal year ending  December 31, 2002.
Although the appointment of auditors does not require ratification, the Board of
Directors has directed that such  appointment be submitted to  stockholders  for
ratification due to its significance to the Company. A representative of Ernst &
Young LLP is expected to be present at the Annual Meeting.  Such  representative
will have an  opportunity to make a statement if he desires to do so and will be
available to respond to appropriate questions from stockholders.

     The  Company's  auditors for the year ended  December 31, 2001 were Ernst &
Young LLP.

     Audit Fees:  The aggregate  fees billed for  professional  services for the
audit of the Company's annual  financial  statements for the year ended December
31,  2001,  and for the  reviews of the  financial  statements  included  in the
Company's Quarterly Reports on Form 10-Q filed during 2001 was $34,500.

Financial Information Systems Design and Implementation Fees: None

     All Other Fees: The aggregate fees billed for services  rendered by Ernst &
Young LLP,  other than audit fees,  for the year ended  December 31,  2001,  was
$30,000.

     Vote Required

     The  affirmative  vote of a majority of the votes cast by holders of Common
Stock  is  required  to  approve   the   appointment   of  Ernst  &  Young  LLP.

     Recommendation of the Board of Directors


     THE  BOARD  OF  DIRECTORS  OF  THE  COMPANY  RECOMMENDS  A VOTE  "FOR"  THE
RATIFICATION  OF  THE  APPOINTMENT  OF  ERNST  &  YOUNG  LLP  AS  THE  COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2002.

ANNUAL REPORT

     The Company is concurrently sending all of its stockholders of record as of
May 2, 2002,  a copy of its Form 10-KSB for the fiscal year ended  December  31,
2001. Such report contains the Company's  consolidated  financial statements for
the fiscal year ended December 31, 2001.

OTHER MATTERS

     So far as now known,  there is no business other than that described  above
to be  presented  for  action  by the  stockholders  at the  Meeting,  but it is
intended  that the proxies  will be voted upon any other  matters and  proposals
that may  legally  come  before  the  Meeting  or any  adjournment  thereof,  in
accordance with the discretion of the persons named therein.

                                                     Robert E. Dolan
                                                     Assistant Secretary



Dated: May 3, 2002