Form 10-KSB

The Issuer’sRegistration Statement on Form SB-2 (Registration Number 333-50948) becameeffective on February 14, 2001 and did not contain certified financialstatements for the fiscal year ended December 31, 2001, the Issuer’s lastfull fiscal year. This special financial report is filed pursuant to Rule 15d-2and contains only financial statements for the fiscal year ended December 31,2000. 

Commission File Number 333-8234--------                                                       Sunshine PCS Corporation                                            (Name of small business issuer in its charter)                               Delaware                                                             13-4141279             (State or other jurisdiction of                      (I.R.S. Employer         incorporation or organization)                       Identification No.)421 Hudson Street, New York, New York   10014         (Address of principal executive offices)           (Zip Code)Issuer's telephone number: (212) 675-1920Securities registered under Section 12(b) of the Exchange Act: None         Securities registered under Section 12(g) of the Exchange Act: None
Check whether the issuer(1) filed all reports required to be filed by Section 13 or 15(d) of theExchange Act during the past 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes ____ No  X__ (Issuer onlybecame subject to Section 15(d) filing requirements on February 14, 2001,pursuant to the filing of a Registration Statement on Form SB-2 which wasdeclared effective on such date (Commission File No. 333-8234)) 

Check if there is nodisclosure of delinquent filers in response to Item 405 of Regulation S-B is notcontained in this form, and no disclosure will be contained, to the best ofregistrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-KSB or any amendment tothis Form 10-KSB. ( X ) 

Issuer's revenues for its most recent fiscal year were $0.
The aggregate market value of the voting common equity held by non-affiliates of the Issuer was approximately $5.9 million as of May1, 2001.
As of May 1, 2001, there were 2,821,766 shares of Class A common equity outstanding.
This annual report on Form 10-KSB for the fiscal year ended December 31, 2000 is being filed pursuant to Rule 15d-2 under the Securities Exchange Act of 1934, as amended, and contains only certifiedfinancial statements as required by Rule 15d-2.  Rule 15d-2 provides generally that, if a registrant files a registration statement under the Securities Act of 1933, as amended, which does not contain certified financial statements for the registrant'slast full fiscal year (or the life of the registrant if less than a full fiscal year), then the registrant shall, within 90 days of the effective date of the registration statement, file a special report furnishing certified financial statements for suchlast fiscal year or other period, as the case may be, meeting the requirements of the form appropriate for annual reports of the registrant.  Rule 15d-2 further provides that such special financial report is to be filed under cover of the facing sheetapropriatefor the annual report of the registrant.  Sunshine PCS Corporation's Registration on Form SB-2 referenced above did not contain certified financial statements for the year ended December 31, 2000, Registrant's last full fiscal year.  Therefore, asrequired by Rule 15d-2, certified financial statements for the year ended December 31, 2000 are filed herewith under cover of the facing page of an Annual Report on Form 10-KSB.
Item 7. Financial Statements.PartnersFortunet Communications, L.P.
We have audited theaccompanying balance sheets of Fortunet Communications, L.P. (the“Partnership”) a development stage enterprise and predecessor toSunshine PCS Corporation, as of December 31, 1999 and 2000, and the relatedstatements of operations, changes in partners’ equity/(deficit), and cashflows for each of the three years in the period ended December 31, 2000, and forthe period from July 27, 1995 (inception) to December 31, 2000. These financialstatements are the responsibility of the Partnership’s management. Ourresponsibility is to express an opinion on these financial statements based onour audits. 

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

In our opinion, thefinancial statements referred to above present fairly, in all material respects,the financial position of Fortunet Communications, L.P. at December 31, 1999 and2000, and the results of its operations and its cash flows for each of the threeyears in the period ended December 31, 2000, and the period from July 27, 1995(inception) to December 31, 2000, in conformity with accounting principlesgenerally accepted in the United States. 

The accompanying financialstatements have been prepared assuming Fortunet Communications, L.P. willcontinue as a going concern. As more fully described in Note 1, the Partnershiphas incurred losses since inception, has not yet adopted a business plan,determined how to finance its operations and may forfeit its licenses or besubject to the imposition of fines and sanctions if it does not meet certainbuild-out requirements. These conditions raise substantial doubt about thePartnership’s ability to continue as a going concern. The financialstatements do not include any adjustments to reflect the possible future effectson the recoverability and classification of assets or the amounts andclassification of liabilities that may result from the outcome of thisuncertainty. 

/s/ Ernst & Young LLPStamford, ConnecticutApril 30, 2001FortunetCommunications, L.P.(ADevelopment Stage Enterprise andPredecessorto Sunshine PCS Corporation)BalanceSheets                                                                                                      Pro Forma                                                                                                     (Unaudited)                                                                          December 31,               December 31,                                                                                                         2000                                                                     1999              2000            (Note 5)                                                                     ----              ----            --------                            AssetsCash                                                           $         -         $       -          $ 250,000PCS Licenses                                                      2,686,012         2,686,012         2,686,012                                                                  ---------         ---------         ---------Total Assets                                                    $ 2,686,012       $ 2,686,012       $ 2,936,012                                                                ===========       ===========       ===========Liabilities and partners'/stockholders' equity/(deficit)Long-term debt:  Loan from Limited Partner                                     $69,760,140       $83,459,785       $         -  Subordinated Notes                                                                                 16,131,117Preferred Stock, $1.00 par value Authorized shares - 30,000                                             250,000Partners'/stockholders' equity/(deficit)Common Stock, $0.0001 par value  Class A: Authorized shares - 20,000,000  Class B: Authorized shares - 9,000,000Additional paid-in capital                                                                           68,027,271Deficit accumulated during the development stage                                                    (81,472,376)General partner's deficit accumulated during the developmentstage                                                          (12,618,925)      (12,755,921)                 -Limited partner's deficit accumulated during the developmentstage                                                          (54,455,203)      (68,017,852)                                                               ------------      ------------                                                                                                                  -Total partners'/stockholders' deficit  accumulated during the development stage                     (67,074,128)      (80,773,773)      (13,445,105)                                                               ------------      ------------      ------------Total liabilities and  partners'/stockholders' equity/(deficit)                     $ 2,686,012       $ 2,686,012       $ 2,936,012                                                                ===========       ===========       ===========See accompanying notes.FortunetCommunications, L.P.(ADevelopment Stage Enterprise andPredecessorto Sunshine PCS Corporation)Statementsof Operations                                                                                                July 27, 1995                                                    Years Ended December 31,                   (inception) to                                                                                                December 31,                                           1998              1999               2000                2000                                           ----              ----               ----                ----Interest expense (includingcommitment fees)                         $(18,679,726)    $(13,001,850)       $(13,699,645)        $(75,599,277)Forgiveness of interest expense            19,159,890                -                   -           19,159,890Impairment of PCS Licenses                                 (18,454,112)                             (25,032,989)                                     -----------------  ----------------  ---------------------      ------------                                                    -                                 -Net profit (loss)                           $ 480,164     $(31,455,962)       $(13,699,645)        $(81,472,376)                                            =========     =============       =============        =============Net profit (loss) allocated to             $6,472,834      $(9,375,529)          $(136,996)        $(13,105,920)general partner                           ==========      ============          ==========        =============Net loss allocated to limited            $(5,992,670)     $(22,080,433)       $(13,562,649)        $(68,366,456)partner                                  ============     =============       =============        =============Pro-forma basic and dilutedearnings (loss) per share                        $.08           $(5.56)             $(2.42)                    -                                                 ====           =======             =======Weighted average shares used incomputation                                 5,654,842         5,654,842           5,654,842                    -                                            =========         =========           =========See accompanying notes.FortunetCommunications, L.P.(ADevelopment Stage Enterprise andPredecessorto Sunshine PCS Corporation)Statement ofChanges in Partners’ Equity/(Deficit)For the period from July 27, 1995 (inception) through December 31, 2000                                                General Partners      Limited Partners       Total Partners                                                     equity/(deficit)      equity/(deficit)       equity/(deficit)                                                     ----------------      ----------------       ----------------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)                                                       ============         =============         =============See accompanying notes.FortunetCommunications, L.P.(ADevelopment Stage Enterprise andPredecessorto Sunshine PCS Corporation)Statementsof Cash Flows                                                                                         July 27, 1998                                                                                        (inception) to                                                    Year Ended December 31               December 31,                                              1998          1999           2000              2000                                              ----          ----           ----              ----Operating activitiesNet profit (loss)                           $480,164    $(31,455,962)    $(13,699,645)     $(81,472,376)Net change in accrued interest and         3,437,852      13,001,850       13,699,645        58,774,587commitment feesImpairment of PCS licenses                         -      18,454,112                -        25,032,989                                         -----------    -------------    -------------       ----------                                                                                    -Net cash provided by operating activities  3,918,016               -                          2,335,200                                         -----------    ------------     -------------       ----------Investing activities                                                                -Deposits with the FCC                              -               -                -       (4,200,000)Purchase of PCS licenses                    (164,798)              -                        (4,698,398)Other                                        (61,300)         (813)                           (215,710)                                            ---------   -------------    -------------       ----------Net cash used in investing activities       (226,098)         (813)                 -       (9,114,108)                                              --------- -------------    -------------      -----------Financing activitiesNet proceeds from (repayments of)Limited Partner loans                       (3,691,918)        813                  -         6,080,305Capital contributions                               -              -                -           698,603                                         -------------- --------------   --------------      ---------- Net cash (used in) provided by financing  activities                                (3,691,918)        813                  -         6,778,908                                         -------------- --------------   --------------      ----------Net change in cash                                  -              -                -                 -Cash at beginning of period                         -              -                -                 -                                          ------------- --------------   --------------       ---------Cash at end of period                      $        -     $        -      $         -         $       -                                          ============= ==============   ==============       =========                                                     Fortunet Communications, L.P.                                                  (A Development Stage Enterprise and                                               Predecessor to Sunshine PCS Corporation)                                                     Notes to Financial Statements                                                      December 31, 1999 and 2000
**1.       Accounting Policies**
Description of Business
Fortunet  Communications,  L.P.  ("Fortunet")  was formed on April 18, 1997 to hold personal  communications  services ("PCS") licensesthat had been acquired in the Federal  Communications  Commission's  ("FCC") C-Block auction.  At that date,  Fortunet succeeded to theassets and assumed the liabilities (the "Transfers") of five partnerships  ("Partnerships")  that were the high bidders for licenses inthe auction.  The Partnerships that transferred  their assets and liabilities to Fortunet,  were Aer Force  Communications,  L.P. ("AerForce"),  Fortunet Wireless  Communications,  L.P., High Country Communications,  L.P., New England Wireless  Communications,  L.P. andSoutheast Wireless  Communications L.P., all of which were formed on July 27, 1995. The Partnerships  received a proportional  interestin Fortunet based upon the relative market values of the assets and liabilities transferred.
Sunshine PCS Corporation  ("Sunshine")  was incorporated on July 13, 2000, with capital of $1.00, and on February 14, 2001 succeeded tothe rights and obligations of Fortunet (See Note 5).
PCS is a  second-generation  digital  wireless  service  utilizing  voice,  video or data devices that allow people to  communicate  atanytime and  virtually  anywhere.  The FCC  auctioned off PCS  licenses,  a total of 120 MHz of spectrum,  falling  within six separatefrequency  blocks  labeled A through F.  Frequency  Blocks C and F were  designated  by the FCC as  "entrepreneurial  blocks".  Certainqualifying small businesses  including the Partnerships  were afforded bidding credits in the auctions as well as government  financingof the  licenses  acquired.  The  Partnerships  won 31  licenses in 1996 to provide  personal  communications  services  over 30 MHz ofspectrum to a population of approximately 7.0 million (1990 Census Data).
Fortunet Wireless Communications  Corporation ("Fortunet Wireless"),  an entity controlled by Victoria Kane, a private investor, is theGeneral  Partner of Fortunet  with a 50.1% equity  interest.  Subsequent to the  transfers,  Victoria F. Kane owned 60% of the stock ofFortunet  Wireless.  On May 4, 2000,  Ms. Kane  purchased  the remaining  40% of Fortunet  Wireless for $600,000,  and gave the sellingstockholders  the right to repurchase the stock so acquired  through May 4, 2008 for 120% of her purchase price.  Lynch PCS CorporationA, 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,  is the Limited  Partner of Fortunet with a 49.9% equity  interest.  Lynch PCS  Corporation A hasagreements  to provide a total of $41.8  million of funding to Fortunet,  of which a total of $21 million was funded  through  December31, 2000.Basis of Presentation
The Transfers from the  partnerships,  with the exception of the transfer from Aer Force,  were accounted for as business  combinationsat fair value  resulting in an increase in the  carrying  value of the PCS licenses of $9.9  million.  The transfer  from Aer Force wasaccounted for in a manner  similar to a pooling of interests at historical  cost since Fortunet and Aer Force are entities under commoncontrol.  Accordingly,  the accompanying  financial statements include the results of Aer Force from inception,  July 27, 1995, and theremaining four partnerships from the date of the transfer, April 18, 1997.
The financial  statements are prepared in conformity with generally accepted  accounting  principles  applicable to a development stageenterprise.
Fortunet's  financial  statements  have been prepared on a going concern basis which  contemplates  the  realization  of assets and thesatisfaction  of  liabilities  in the normal  course of business and does not include any  adjustments  to reflect the possible  futureeffects on the  recoverability  and  classification of assets and the amounts and  classifications  of liabilities that may result fromthe possible inability of Fortunet to continue as a going concern.
Fortunet has not yet adopted a business plan or determined how to finance its  operations.  Therefore,  Fortunet has not yet determinedwhether to 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.
Under FCC regulations,  Fortunet is required to construct a PCS network that provides  adequate service to at least  one-quarter of thepopulation in the areas covered by the licenses by September  17, 2001, or make a showing of  substantial  service in the areas coveredby the  licenses  by that date.  Failure  to do so could  result in the  forfeiture  of the  licenses  or the  imposition  of fines andsanctions.  Unless  Fortunet  sells  the  licenses  or  enters  into a joint  venture,  it must  raise  significant  funds to meet thisrequirement.  Fortunet has incurred  losses since  inception and, as noted,  will need to obtain  capital for the initial  build-out offacilities.  There can be no  assurance  that  Fortunet  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  Fortunet's  ability to continue as a goingconcern.
Thus far, Fortunet had not evaluated its strategic  alternatives due to a number of factors.  Throughout Fortunet's history and that ofits predecessors,  servicing the debt entered into to acquire its licenses has been very difficult.  In 1996, these difficulties forcedFortunet to return 28 of its 31 licenses  and 15  megahertz of spectrum of its three 30  megahertz  licenses.  In addition,  Fortunet'spartners have not reached a consensus on exactly which course to pursue.
More  recently,  Fortunet has been  restricted  from  exploring the  possibility  of a sale or joint venture of its licenses due to FCCanti-collusion  rules.  Under these rules, both participants in ongoing FCC PCS reauctions,  and their related parties,  are prohibitedfrom  negotiating  with other  participants  for the  acquisition of additional PCS licenses.  Because related parties of Fortunet wereparticipating  in such a reauction,  Fortunet was  restricted  from exploring the idea of selling its licenses or entering into a jointventure with any other  auction  participants  from  November 6, 2000 until  February 12, 2001,  and those other  participants  are theentities most likely to be interested in its licenses.
We have been advised that it is highly uncertain that the FCC will extend Fortunet's  deadline for its build out  requirements.  If theFCC were to revoke  Fortunet's  licenses  for failure to meet its build out  requirements,  it would  effectively  put  Fortunet out ofbusiness because the licenses are its only significant  assets.  If the FCC were merely to impose fines on Fortunet for failing to meetits build out  requirements,  the  ramifications  would depend on the amount of the sanctions in relation to the value of its licenses.If these sanctions were substantial, it might force Fortunet to seek protection under the bankruptcy laws or go out of business.Administrative Services
Fortunet has no employees.  The Limited Partner  provided  Fortunet and its  predecessors,  at their request,  with certain services inconnection with the  Partnerships'  bidding for PCS licenses in the FCC auctions in 1996.  Aside from that matter,  neither the GeneralPartner nor the Limited Partner provided  Fortunet with a substantial  amount of services.  Neither partner charged  Fortunet,  for theservices provided, as such amounts are not significant.Use of Estimates
The  preparation of financial  statements in conformity  with accounting  principles  generally  accepted in the United States requiresmanagement to make estimates and  assumptions  that affect the carrying  amounts of assets and  liabilities and disclosures at the dateof the financial  statements and the reported amounts of expenses during the reporting  period.  Actual results could differ from thoseestimates.Capitalized Costs/PCS Licenses Amortization
Certain  direct costs of  acquiring  the PCS licenses  (such as legal,  filing and other  regulatory  fees) have been  capitalized  andincluded in PCS licenses in the  accompanying  balance  sheets,  amounting to $0.1 million at December 31, 1999 and 2000.  These costs,and the costs of the PCS licenses,  will be amortized over the remaining  life of the  respective PCS licenses when, and if,  Fortunet,commences operations.Income Taxes
The results of operations of the Partnerships  and Fortunet are included in the taxable income or loss of the individual  partners and,accordingly, no tax provision has been recorded (See Note 5).
**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 licensesat an interest rate of 7% per annum with interest due quarterly for years one through six and principal  amortization  and interest duequarterly in years seven through ten.
Events during and subsequent to the auction,  as well as other externally driven  technological  and market forces,  made financing thedevelopment of these licenses  through the capital  markets much more difficult than  originally  anticipated.  In 1997,  Fortunet,  aswell,  as many of the  other  license  holders  from this  auction,  petitioned  the FCC for  relief  in order to  afford  these  smallbusinesses  the  opportunity  to more  realistically  restructure  and build-out  their  systems.  The response from the FCC, which wasannounced on September 26, 1997,  afforded  license  holders a choice of four options,  one of which was the resumption of current debtpayments,  which had been  suspended  earlier in 1997 for all such  license  holders.  The  ramifications  of choosing  the other threecourses  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 provided for a 30% reserve on the down payments (10% of net cost) asthis  represented  Fortunet's  estimate,  at the time, of the impairment of this investment given the then available  alternatives.  OnMarch 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 threelicenses for 15 MHz of PCS spectrum in Tallahassee,  Panama City and Ocala,  Florida.  Fortunet returned all the remaining licenses andforfeited 30% of its original  down payment on these  licenses in full  satisfaction  of the  government  debt and  forgiveness  of allaccrued  interest.  Accordingly,  Fortunet is currently  the  licensee of 15 MHz of spectrum in the three  Florida  markets  covering apopulation ("POP") of approximately 785,000 at a net cost at auction of $20.09 per POP, based on 1990 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 $2.7million for those three 15 MHz licenses  returned by Fortunet,  as compared to the $21.2 million carrying value of the licenses at thattime.  Accordingly,  Fortunet  recorded a write down of its  investment,  including  capitalized  costs,  to reflect the amount bid forsimilar 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 thepartnership 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 ofdeduction  with respect to interest  expense and  commitment  fees  incurred in connection  with the loan from the Limited  Partner areallocated  99% to the Limited  Partner and 1% to the General  Partner.  All other  deductions  are allocated to the Limited and GeneralPartner on the basis of 49.9% and 50.1%,  respectively.  All profits  are  allocated  99% to the Limited  Partner and 1% to the GeneralPartner until the aggregate  amount of all profits  allocated to the Limited  Partner and General Partner equals the items of deductionwith respect to interest  expense and  commitment  fees,  except for all profits that result from the exchange of the PCS licenses withthe FCC,  which  will be  allocated  to the  Limited  Partner  and  General  Partner  on the  basis of 49.9% and  50.1%,  respectively.Subsequently,  all profits and losses will 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 theLimited  Partner  under a line of credit  which is due and payable on December  1, 2006.  On  September  27,  1996 an  additional  $4.4million was advanced to cover the remaining  down payment on the licenses won. The interest rate on the  outstanding  borrowings  underthe 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,  includingaccrued  interest and commitment  fees, at December 31, 1999 and 2000 are $69.8 million and $83.5 million,  respectively.  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,  $2.3million was  advanced  to the other four  partnerships  to cover  their first  interest  payment  bringing  the total  advanced to $3.9million.  As a part of the FCC  restructuring  plan,  the $3.9  million  was  returned  in  September  1998 and the loan to the LimitedPartner was repaid to that extent.
Under a  recapitalization  of the Partnership that was implemented on February 14, 2001, the Limited Partner  contributed $69.0 millionof the outstanding  debt as a capital  contribution and the remaining $16.1 million was converted to newly created  Subordinated  Notes(See Note 5).
**5.       Subsequent Events/Pro Forma Basis of Accounting  (Unaudited)**
On February 14, 2001, Sunshine (a "C" Corporation),  which was incorporated on July 13, 2000,  succeeded,  by merger, to the rights andobligations  of Fortunet (the "Spin Off").  The merger is expected to be accounted for at historical  cost as Fortunet and Sunshine areentities under common  control.  The common stock  outstanding of Sunshine  consists of 2,821,766  shares of Class A Common Stock whichare  entitled to one vote per share and  2,833,076  shares of Class B Common  Stock which will be entitled to five votes per share.  Inall economic  terms,  the Class A and Class B shares are equal.  The General Partner  received 100% of the Class B shares  representing50.1% of the  outstanding  common  stock and the  Limited  Partner  received  100% of Class A shares  representing  49.9% of the commonstock.  As part of the  reorganization,  Lynch  PCS  Corporation  A  contributed  $69.0  million  of the debt  owed to it as a  capitalcontribution to Sunshine.  The remaining  indebtedness of $16.1 million was restructured into eight equal  Subordinated  Notes totaling$16.1 million, at 9% interest,  due in three month increments beginning three years from the date of issuance,  subject to accelerationin certain circumstances.  In addition,  Sunshine sold to Lynch for a total of $250,000,  10,000 shares of Preferred Stock with a totalliquidation  value of $10 million and Warrants to acquire 4.3 million  shares of Class A Common Stock at $.75 per share.  The PreferredStock and warrants will be recorded at their  respective  estimated fair values at the time of sale to Lynch.  The Limited Partner thendistributed its shares in Sunshine to Lynch, and then Lynch distributed such shares to its shareholders.
Fortunet is expected to have cash of $250,000 at the time of the spin off.
The terms of the Preferred Stock are as follows:-         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%,        no voting rights except as provided by law, and        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        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 a result of the above merger,  Sunshine will file a U.S. Federal income tax return.  Accordingly at the date of the  reorganization,the company will provide 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.  At December 31, 2000 such  adjustment  wouldcreate a deferred tax asset of  approximately  $4.6  million,  which is fully  reserved in the pro forma  financial  statements  due touncertainty regarding its realization.
Pro-forma  earnings  (loss) per share has been  calculated  assuming that the 5,654,842  shares of common stock of Sunshine  (2,821,766Class A and 2,833,076 Class B) have been outstanding from the beginning of the periods presented.
Sunshine has also agreed with Lynch Interactive  Corporation that if the holder of a convertible note of Lynch Interactive  Corporationconverts all or a portion of its note prior to December 10, 2004, Sunshine will issue:- to the holder,  one share of our Class A common stock for each share of Lynch Interactive  Corporation stock to be received by         the holder, up to a maximum of 235,294 shares;        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        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.
The  conversion  by the holder of any or all of the Lynch  Interactive  Corporation  notes would result in dilution in the ownership ofour common stock by the current holders of the Class A common stock.
On February 14, 2001,  Sunshine  granted its directors  options to purchase  280,000  shares of Class A Common Stock at $.75 per share.Such options become exercisable three years from the date of grant and expire five years from the date of grant.SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, Sunshine PCS Corporation caused this report to be signed on itsbehalf by the undersigned, thereunto duly authority.Sunshine PCS Corporation                                                             By: /s/ Karen E. Johnson                                                                  --------------------                                                                     Karen E. Johnson                                                                     President
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the SunshinePCS Corporation and in the capacities and on the dates indicated:
By: /s/ Karen E. Johnson--------------------Karen E. JohnsonPresident (Chief Executive, PrincipalFinancial and Chief Accounting Officer)And Director       May 15, 2001
/s/ David Ahl        Director      May 15, 2001-------------David Ahl
/s/ Robert E. Dolan                 Director                                            May 15, 2001-------------------Robert E. Dolan**