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, 2003

                                       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, 2003 was
$150,667.

     As of March 25, 2004,  the aggregate  market value of the Company's  voting
and  nonvoting  common  equity  held  by   non-affiliates  of  the  Company  was
approximately  US  $897,246,  which  value,  solely  for  the  purposes  of this
calculation,  excludes  shares held by the Company's  officers,  directors,  and
their  affiliates.  Such exclusion  should not be deemed a  determination  or an
admission by the issuer that all such  individuals  are, in fact,  affiliates of
the issuer.

     The number of shares of the  Registrant's  Class A Common  Stock issued and
outstanding as of March 25, 2004 was 4,588,653.


<PAGE>




                            SUNSHINE PCS CORPORATION

                                TABLE OF CONTENTS

                                                                        Page No.


Item 1.    Business.........................................................3


Item 2.    Properties......................................................3


Item 3.    Legal Proceedings...............................................3-4


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


Item 5.    Market For Company's Common Equity and
           Related Stockholder Matters.....................................4-5


Item 6.    Management's Discussion and Analysis of
           Financial Condition and Plan of Operation.......................5-7


Item 7.    Financial Statements............................................8-25


Item 8.    Changes in and Disagreements with Accountants
           on Accounting and Financial Disclosure...........................26


Item 9.    Directors, Executive Officers, Promoters and
           Control Persons; Compliance with Section 16(a)
           of the Exchange Act.............................................26-27


Item 10.   Executive Compensation..........................................27-28


Item 11.   Security Ownership of Certain Beneficial Owners
           and Management..................................................28-29


Item 12.   Certain Relationships and Related Transactions..................29-36


Item 13.   Exhibits and Reports on Form 8-K................................30-31

Item 14.   Principal Accountant Fees and Services..........................31-32






<PAGE>
                                     PART I

Item 1. Business

Sale of Licenses

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

     We are  currently  in the  process of winding  down our  activities  in the
Florida  Panhandle.  We also  continue to  evaluate  all  options  available  to
Sunshine  at this  time.  One  option is to make a further  distribution  of any
remaining cash after all accounts  payable and other  liabilities are satisfied,
effectively liquidating the Company.

Background

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

     On  February  22,  2001,  Lynch  Interactive  Corporation  ("Interactive"),
distributed 2,821,766 of Sunshine's Class A Common Stock, representing its 49.9%
ownership it received from our incorporation,  to its shareholders, on the basis
of one share of Sunshine's  Class A Common Stock for each share of Interactive's
Common Stock outstanding.

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

                                      -3-
<page>

Regulatory Matters

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

 Item 2. Properties

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

Item 3. Legal Proceedings

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

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

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

We were  formally  served with the  complaint on July 10, 2002. On September 19,
2002, we joined Lynch  Interactive  and certain  other  defendants in filing two
motions with the United States  District  Court for the District of Columbia:  a
motion to  dismiss  the  lawsuit  and a motion  to  transfer  the  action to the
Southern  District  of New York.  On November  25,  2002,  the relator  filed an
opposition  reply to our motion to dismiss and on December 5, 2002,  Interactive
filed a reply in support of its motion to dismiss.  On September  30, 2003,  the
Court granted our motion to transfer the action to the Southern  District of New
York. A scheduling  conference was held on February 10, 2004, at which the judge
approved a scheduling order.  Discovery has now commenced as the parties await a
ruling on the defendants' motion to dismiss the case.

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

     None during the fourth quarter.

                                     PART II

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

     The Class A common stock commenced trading, under the symbol: SUNPA, on the
over-the-counter  market on March 13, 2001.  The following  table sets forth the
high  and low  closing  prices  of the  Class A  common  stock  for the  periods
indicated, as reported by published sources.


                                      -4-
<PAGE>
<TABLE>
<CAPTION>

                                                                Low       High

                                                          <C>        <c>
2002 Fiscal Year
First Quarter ............................................   $   1.06   $   2.90
Second Quarter ...........................................   $   0.75   $   1.30
Third Quarter ............................................   $   0.35   $   0.65
Fourth Quarter ...........................................   $   0.17   $   0.40

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

     As of March 24, 2004, there were approximately 802 holders of record of our
Class A common stock.

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

Item 6. Management's  Discussion and Analysis 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.

Sale of Licenses

     On December  31,  2003,  we  completed  the sale of our three 15  megahertz
C-Block personal  communications  services licenses to Cingular Wireless LLC for
$13,600,000  in cash.  In related  transactions,  we used a portion of the sales
proceeds  to  acquire  all of our  preferred  stock and  warrants  held by Lynch
Interactive  Corporation  for an aggregate  amount of $7,587,000  and all of our
outstanding  Class B Common Stock for an aggregate amount of $613,863.  On March
19,  2004,  we made a cash  distribution  of $0.83 per share on our  outstanding
Class A Common Stock.

     We are  currently  in the  process of winding  down our  activities  in the
Florida  Panhandle.  We also  continue to  evaluate  all  options  available  to
Sunshine  at this  time.  One  option is to make a further  distribution  of any
remaining cash after all accounts  payable and other  liabilities are satisfied,
effectively liquidating the company.

History

     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

                                      -5-
<page>
exchange for credits,  which were used to pay all remaining  indebtedness to the
Federal Communications Commission. On April 15, 1999, the Federal Communications
Commission  completed a reauction of all the C-Block licenses that were returned
to it. Due to considerably lower amounts bid for these licenses,  in the quarter
ended March 31, 1999, Fortunet Communications, L.P. recorded a further charge of
$18.5 million to write down its  investment in the licenses,  plus an additional
$0.1  million of  capitalized  expenses,  leaving a net  carrying  value of $2.7
million subsequent to the write down.

Results of Operations

     Neither  we,  nor our  predecessors,  have  had any  operating  history  or
material  revenues.  Through  December 31, 2003, we had a cumulative net loss of
$73,214,399,  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, 2003, our net income was $9.0 million as
compared to net income of $2.1  million for the year ended  December  31,  2002.
During 2003,  the Company  recorded a $11.1  million gain on the sale of our PCS
licenses  (proceeds of $13.6 million less $0.2 million expenses of sale over the
remaining carrying value of the licenses of $2.4 million),  a $654,926 provision
for impairment on our equipment,  and a $302,951 accrual for our remaining lease
liabilities.  Also during  2003,  the Company  accrued $0.5 million for Director
Compensation that was attributable to their efforts in 2003,  primarily the sale
of the PCS licenses to Cingular.  In addition, as noted above, prior to the sale
of the PCS Licenses to  Cingular,  we leased the use of the spectrum to Cingular
and during 2003 we recorded lease income of $150,667 on the lease.  During 2002,
the Company  recorded $4.3 million gain as a result of  forgiveness of debt when
we exchanged our subordinated debt for preferred stock in November 2002. Through
November 2002, the Company recorded $1.4 million of interest expense in 2002.

     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.

Liquidity and Capital Resources

     At December 31, 2003, we had $5.7 million in cash.

     With  the  $13.6  million  of  proceeds  we  received  from  Cingular,   we
repurchased  all of our classes of preferred  stock for a total of $7.2 million,
all of our class B common stock outstanding for a total of $0.6 million, and 4.3
million warrants of our Class A warrant for $0.4 million.

     On March 2, 2004, we declared a cash distribution of $0.83 per share on our
Class A common stock which will reduce our outstanding cash of $3.8 million.

     As of December 31, 2003, the minimum payment required on our lease of tower
space totaled $0.3 million,  payable through 2005. As the Company has no further
use for theses leases,  it is negotiating a termination  amount.  As of December
31, 2003, the Company accrued the full liability under these leases.

Critical Accounting Policy

     The preparation of the financial statements requires Sunshine's  management
to make  estimates  and  judgments  that effect the reported  amounts of assets,
liabilities  and  expenses,  and related  disclosures  of  contingent  asset and
liabilities.  On an ongoing basis,  Sunshine evaluates its estimates,  including
the  carrying  value of its  investment  in PCS  Licenses.  Sunshine  bases  its
estimates on historical  experience and on various assumptions that are believed
to be reasonable  under the  circumstances,  the results of which form the basis
for making  judgments about the carrying  values of assets and liabilities  that
are not readily  apparent  from other  sources.  Actual  results may differ from
these estimates under different assumptions and conditions. Interactive believes
the following critical accounting policies affect its more significant judgments
and estimates used in the preparation of its financial statements.

     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.  SFAS No.  142  prohibits  the
amortization of goodwill and assets with indefinite  lives, but instead requires
that these  assets be reviewed  for  impairment  at least  annually.  Intangible
assets with finite  lives will  continue to be  amortized  over their  estimated
useful  lives.  While the Company  expected  the 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,  our current
cash flow deficit and the inability to obtain the  necessary  funding to build a
network, the Company continued amortizing its licenses over twenty years.

                                       -6-
<page>
     Amortization  expense  was  $134,000  per  year  for the two  years  ending
December  31,  2003 and  $41,000  for the year ended  December  31,  2001 as the
licenses were not amortized  prior to August 31, 2001, the point we were able to
provide PCS service.

     Sunshine tests its  investments in PCS licenses  whenever events or changes
in  circumstances  indicate  that the  carrying  value of such assets may not be
recoverable.  Significant  judgment is required to determine if  impairment  has
occurred and whether such impairment is other than temporary.

Recently Issued Accounting Pronouncements

     In  November  2002,  the FASB  issued  Interpretation  No.  45 ("FIN  45"),
"Guarantor's  Accounting  and  Disclosure  Requirements".  FIN  45  expands  the
disclosures  made  by  a  guarantor  in  its  financial   statements  about  its
obligations  under certain  guarantees and requires the guarantor to recognize a
liability for the fair value of the obligation assumed under certain guarantees.
FIN 45 clarifies the requirements of SFAS No. 5, "Accounting for Contingencies,"
relating  to   guarantees.   In  general,   FIN  45  applies  to   contracts  or
indemnification  agreements  that  contingently  require the  guarantor  to make
payments to the guaranteed party based on changes in a specified  interest rate,
security  price,  foreign  exchange rate or other variable that is related to an
asset,  liability  or equity  security of the  guaranteed  party,  or failure of
another party to perform under an obligating agreement (performance guarantees).
Interactive adopted FIN 45 effective January 1, 2003. Such adoption did not have
a material effect on the Company's results of operations,  financial position or
cash flows.

     The FASB issued FIN 46,  "Consolidation of Variable Interest  Entities,  an
Interpretation  of ARB No. 51" in January 2003 and revised it in December  2003.
FIN 46 requires  certain  variable  interest  entities to be consolidated by the
primary  beneficiary of the entity if the equity  investors in the entity do not
have the  characteristics  of a  controlling  financial  interest or do not have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional  subordinated financial support from other parties. The provisions of
FIN 46 must be applied  for the first  interim  or annual  period  ending  after
December 15, 2003 for both new and existing variable interest entities. Sunshine
adopted FIN 46  effective  for  December  31,  2003  financial  reporting.  Such
adoption  had no  effect  on the  Company's  results  of  operations,  financial
position or cash flows.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No.  4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections,"  or SFAS No. 145.  SFAS No. 145  provides  for the  rescission  of
several previously issued accounting standards,  new accounting guidance for the
accounting for certain lease  modifications  and various  technical  corrections
that are not  substantive  in nature to  existing  pronouncements.  The  Company
adopted SFAS No. 145 on January 1, 2003.  The adoption of this statement did not
have a material effect on our results of operations,  financial position or cash
flows.
                                      -7-
<page>


     In July  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
Associated  with Exit or Disposal  Activities"  ("SFAS No.  146").  SFAS No. 146
replaces Emerging Issues Task Force Issue No. 94-3,  "Liability  Recognition for
Certain  Employee  Termination  Benefits  and  Other  Costs to Exit an  Activity
(including  Certain Costs Incurred in a  Restructuring)."  SFAS No. 146 requires
companies to recognize costs  associated  with exit or disposal  activities when
they are incurred rather than at the date of a commitment to an exit or disposal
plan.  Examples of costs covered by SFAS No. 146 include lease termination costs
and certain  employee  severance costs that are associated with a restructuring,
discontinued operation,  plant closing, or other exit or disposal activity. SFAS
No. 146 is to be applied  prospectively to exit or disposal activities initiated
after December 31, 2002, with early application encouraged. The adoption of this
statement  had no effect  on the  Company's  results  of  operations,  financial
position or cash flows.

         In April 2003, the FASB issued SFAS No. 149, "Amendments of Statement
133 on Derivative Instruments and Hedging Activities" ("SFAS No. 149"). SFAS No.
149 serves as an amendment and clarifies financial accounting and reporting for
derivative instruments, including derivative instruments embedded in other
contracts and for hedging activities under SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The Company does not engage in
hedging activities and therefore, this statement does not apply.

     In May  2003,  the  FASB  issued  SFAS No.  150,  "Accounting  for  Certain
Financial  Instruments  with  Characteristics  of Both  Liabilities  and Equity"
("SFAS  No.  150").  SFAS  No.  150  establishes  standards  for  how an  issuer
classifies and measures certain financial  instruments with  characteristics  of
both  liabilities  and equity.  SFAS No. 150 requires that an issuer  classify a
financial  instrument  that is within its scope as a  liability  (or an asset in
some  circumstances).  The Company had no such  instruments  as of December  31,
2003,  therefore  this  statement has had no effect on the  Company's  financial
position.

Quantative and Qualitative Analysis of Market Risk

     The Company is  minimally  exposed to changes in market risk  because as of
December 31, 2003 the Company has no market sensitive assets or liabilities.

Off Balance Sheet Arrangements

     None.

Item 7. Financial Statements


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

Reports of Independent Auditors............................................9-10

Balance Sheets at December 31, 2002 and 2003...............................11

Statements of Operations for each of the three years in the period
 ended December 31, 2003 and the period from July 27, 1995
 (inception) to December 31, 2003..........................................12

Statements of Cash Flows for each of the three years in the period
 ended December 31, 2003 and the period from July 27, 1995
 (inception) to December 31, 2003..........................................13

Statement of Changes in Partners'/Stockholders' Equity/(Deficiency)
 for the period from July 27, 1995 (inception) through December 31,
 2003......................................................................14

Notes to Financial Statements..............................................15-25


                                      -8-
<PAGE>

INDEPENDENT AUDITORS' REPORT

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

     We have audited the accompanying  balance sheet of Sunshine PCS Corporation
(the "Company") a development stage enterprise, as of December 31, 2003, and the
related  statements of operations,  changes in partners' / stockholders'  equity
(deficiency) and cash flows for the year then ended and for the period from July
27, 1995  (inception) to December 31, 2003,  except for the period from July 27,
1995  (inception) to December 31, 2002. The financial  statements for the period
July 27, 1995  (inception) to December 31, 2002,  were audited by other auditors
whose  report  was  furnished  to  us.  These   financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

     We conducted our audit in  accordance  with  auditing  standards  generally
accepted in the United States of America.  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  audit  provides  a
reasonable basis for our opinion.


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


/s/ DELOITTE & TOUCHE LLP

New York, New York
April 20, 2004



                                      -9-
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS



Board of Directors and Stockholders
Sunshine PCS Corporation

We have audited the accompanying  balance sheet of Sunshine PCS Corporation (the
"Company") a development  stage enterprise,  formerly  Fortunet  Communications,
L.P., as of December 31, 2002, and the related statements of operations, changes
in partners'/stockholders'  equity/(deficiency),  and cash flows for each of the
two 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, 2002, and the results of its operations and its cash flows for each
of the two 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.


                                                           /s/ Ernst & Young LLP

Stamford, Connecticut
March 27, 2003


                                      -10-
<PAGE>


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

                                                                                December 31,     December 31,
                                                                                    2002             2003
                                                                                ------------    -------------
 Assets

Assets
<S>                                                                             <C>             <C>
Cash and cash equivalents ...................................................   $    431,737    $  5,722,523

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

PCS Licenses, less accumulated amortization of $179,067 .....................      2,506,945            --
Other Assets ................................................................         14,653            --
                                                                                ------------    ------------

Total Assets ................................................................   $  3,751,501    $  5,722,523
                                                                                ============    ============

Liabilities and stockholders' equity (deficiency)

Accounts payable and accrued expenses .......................................   $    146,994    $  1,224,149

Preferred Stock, $1.00 par value per share, $1,000 liquidation
     preference per share, 30,000 shares authorized; 10,700 shares
     outstanding at December 31, 2002 and no shares outstanding at
     December 31, 2003 ......................................................      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 at December 31, 2002, and no shares outstanding at .........     12,500,000            --
     December 31, 2003

Series A-2 Preferred Stock, par value $1.00 per share, $1,000
     liquidation preference per share, 2,000 shares authorized and
     outstanding at December 31, 2002 and no shares outstanding at ..........      2,000,000            --
     December 31, 2003

Stockholders' equity(deficiency)

Common Stock, $0.0001 par value

Class A: Authorized shares-20,000,000;
4,588,653 shares outstanding at December 31, 2002 and 2003 ..................           --              --

Class B:  Authorized shares-9,000,000;
3,069,313 shares outstanding at December 31, 2002 and no shares
outstanding at December 31, 2003 ............................................           --              --

Additional paid-in capital ..................................................     71,655,501      80,496,506
Deficit accumulated during the development stage ............................    (84,157,651)    (75,998,132)
                                                                                ------------    ------------

    Stockholders' equity(deficiency) ........................................    (12,502,150)      4,498,374
                                                                                ------------    ------------

Total  liabilities and stockholders' equity(deficiency) .....................   $  3,751,501    $  5,722,523
                                                                                ============    ============
</TABLE>

See accompanying notes to financial statements.

                                      -11-
<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,
                                        ------------------------------------------ --------------
                                           2001            2002           2003          2003
                                        -----------------------------------------  --------------

<S>                                  <C>             <C>             <C>             <C>
Lease revenues ...................   $       --      $       --      $    150,667    $    150,667
Interest income ..................          5,651           6,253           3,023          14,927
Interest expense (including
commitment fees) .................     (2,934,425)     (1,395,143)           --       (79,928,845)
Other expenses ...................       (278,127)       (578,682)     (1,033,780)     (1,890,589)
Forgiveness of interest expense ..           --              --              --        19,159,890
Forgiveness of debt ..............           --         4,323,746            --         4,323,746
Provision for impairment on
equipment ........................           --              --          (654,926)       (654,926)
Accrual of lease liability .......           --              --          (302,951)       (302,951)
Impairment of PCS Licenses .......           --              --              --       (25,032,989)
Gain on sale of PCS license ......           --              --        11,067,796      11,067,796
Depreciation and amortization ....        (92,514)       (291,071)       (277,540)       (661,125)
                                     ------------    ------------    ------------    ------------

Net Income (Loss) ................     (3,299,415)      2,065,103       8,952,289     (73,754,399)

Dividend requirement on
   preferred stock ...............       (613,698)       (742,959)       (792,770)     (2,149,427)
                                     ------------    ------------    ------------    ------------
Income (loss) applicable to common
   shares ........................   $ (3,913,113)   $  1,322,144    $  8,159,519     (75,903,826)
                                     ============    ============    ============    ============
Net income (loss) allocated to ...
   general partner                   $    (16,368)   $       --      $       --      $       --
                                     ============    ============    ============    ============
Net income (loss) allocated to
   limited partner ...............   $ (1,620,571)   $       --      $       --      $       --
                                     ============    ============    ============    ============
Basic income (loss) per common
   share..........................   $      (0.64)   $       0.19    $       1.07    $     (11.81)
                                     ============    ============    ============    ============
Diluted income (loss) per common
   shares ........................   $      (0.64)   $       0.18    $       0.84    $     (11.81)
                                     ============    ============    ============    ============
Weighted average shares used in
   basic computation..............      6,126,373       7,141,840       7,657,966       6,428,118
                                     ============    ============    ============    ============
Weight average shares and
   equivalents used in diluted
   computation...................       6,126,373       7,393,895       9,657,966       6,428,118
                                     ============    ============    ============     ===========

Forgiveness of debt per share:

Basic                                $        --     $       0.61    $        --      $      0.61
                                     ============    ============    ============     ===========
Diluted                              $        --     $       0.58    $        --      $      0.58
                                     ============    ============    ============     ===========
</TABLE>

See accompanying notes to financial statements


                                      -12-
<PAGE>


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

                            Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                                                   July 27,
                                                                                                     1995
                                                                                                (inception)( to
                                                          Years Ended December 31,               December 31,
                                                    2001            2002           2003              2003
                                               --------------  -------------   --------------- --------------
<S>                                            <C>             <C>             <C>             <C>
Operating activities

Net income (loss) ..........................   $ (3,299,415)   $  2,065,103    $  8,952,289    $(73,754,399)

Adjustments to reconcile net income
  (loss) to cash (used in) provided by
   operating activities:
Depreciation and amortization ..............         92,514         291,071         277,540         661,125
Compensation expense relating to
   executive's stock options ...............         65,336          59,062         142,441         266,839
Impairment of PCS licenses .................           --              --              --        25,032,989
Net change in accrued interest and
   commitment fees .........................      2,934,425       1,395,143            --        63,104,155
Provision for impairment of
equipment ..................................           --              --           654,926         654,926
Gain on sale of PCS Licenses ...............           --              --       (11,067,796)    (11,067,796)
Forgiveness of debt ........................           --        (4,323,746)           --        (4,323,746)
Increase(decrease) in accounts
payable and accrued expenses ...............        728,272        (581,278)      1,077,155       1,224,149
Net change in other assets .................         (2,425)        (12,228)         14,653            --
                                               ------------    ------------    ------------    ------------
   Net cash (used in) provided by
   operating activities ....................        518,707      (1,106,873)         51,208       1,798,242
Investing Activities
Proceeds of sale of PCS Licenses ...........           --              --        13,599,333      13,599,333
Expenses of sale of PCS Licenses ...........           --              --          (158,892)       (158,892)
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 .................       (665,182)           --        13,440,441       3,661,151
activities

Financing activities
Redemption of Preferred stock ..............           --              --        (7,200,000)     (7,200,000)
Purchase of Class B Common stock ...........           --              --          (613,863)       (613,863)
Purchase of stock options ..................           --              --          (387,000)       (387,000)
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      (8,200,863)        263,130
Net change in cash .........................        103,525         328,212       5,290,786       5,722,523
Cash and cash equivalents at
   beginning of period .....................           --           103,525         431,737            --
                                               ------------    ------------    ------------    ------------

Cash and cash equivalents at end of
   period ..................................   $    103,525    $    431,737    $  5,722,523    $  5,722,523
                                               ============    ============    ============    ============
See accompanying notes to financial statements
</TABLE>

                                      -13-
<PAGE>


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

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

     For the period from July 27, 1995 (inception) through December 31, 2003
<TABLE>
<CAPTION>

                                                                                                               Stockholders'
                                                                                                                   equity
                                                    )                                    )      Deficit         (deficiency)
                                                                                               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 to Chief Operating
  Officer .......................           --              --              --       337,502            --           337,502
  130,000 options issued on
  February 14, 2001 to Chief
  Executive Officer .............           --              --              --        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 to a vendor..           --              --              --       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)
Change in value of CEO Options ..           --              --              --         142,441            --          142,441
Dividend requirement on
preferred stock .................           --              --              --              --      (792,770)       (792,770)
Redemption of Preferred stock               --              --              --       9,699,427            --       9,699,427
Purchase of Class B Common Stock.           --              --              --        (613,863)           --        (613,863)
Purchase of Stock Warrants ......           --              --              --        (387,000)           --        (387,000)
Net income for year ended
December 31, 2003 ...............           --              --              --              --       8,952,289      8,952,289
                                  ------------    ------------    ------------  --------------    ------------    -----------
                                  $        --     $         --    $         --   $  80,496,506    $(75,998,132)   $ 4,498,374
                                 =============    ============    ============  ==============    ============    ===========
</TABLE>

See accompanying notes

                                      -14-
<PAGE>


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

                          Notes to Financial Statements

                                December 31, 2003

1.   Recent Development

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

     Pursuant  to  the  sale   agreement,   we  have  agreed  to  the  customary
indemnification  of  Cingular  Wireless,  including  indemnification  for losses
resulting  from certain  regulatory  matters and losses  resulting from the "qui
tam" lawsuit that is described in Note 13. Sunshine considers it highly unlikely
that Cingular will incur losses,  however,  in accordance with the provisions of
FIN 45, see  "Recently  Issued  Accounting  Pronouncements"  below,  the Company
recorded an immaterial  liability which  represented the Company's best estimate
of the fair value of such indemnification.

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

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

     In  connection  with  the  Sale  Agreement,   Sunshine  agreed  with  Lynch
Interactive Corporation,  which owned all of the outstanding shares of the three
series of Preferred  Stock of Sunshine,  to acquire  those shares for a total of
approximately  $7.2  million.  Sunshine  also has reached an agreement  with the
holder of its 3,069,313  shares of Class B Common Stock to reacquire such shares
for $.20 per share,  for a total of $0.6 million.  The  acquisition  of both the
Preferred  Stock and Class B Common Stock were  contingent  upon the closing and
sale of the licenses to Cingular and the  acquisition  was also  consummated  on
December 31, 2003. The closing of these  transactions  also occurred on December
31, 2003. In addition,  on that date,  Sunshine purchased all of our outstanding
warrants to purchase  4.3 million  shares of Class A common stock for a total of
$0.4 million.  With regard to the remaining sale proceeds,  on March 2, 2004, we
declared a dividend  of $0.83 per share on our Class A common  stock  which will
reduce our cash by $3.8 million,  and is in the process of evaluating all of its
alternatives  and will consider all options with regard to their  potential use.
Sunshine's  system  equipment,   which  had  a  current  net  book  value  after
accumulated depreciation of $654,000 at the time of the consummation of the sale
agreement  was not part of the Sale  Agreement  and was not being used under the
Operating  Agreement.  Accordingly,  Sunshine  will have no further  use for the
equipment and believes that this equipment will have minimal value on the resale
market and as a result has written all such  equipment off during the year ended
December 31, 2003.

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

                                      -15-
<page>
2.   Organization

     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 allows  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 6)

     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.

     On February 22, 2001, Lynch Interactive  Corporation  ("Interactive"),  the
parent  of Lynch  distributed  2,821,766  of  Sunshine's  Class A Common  Stock,
representing its 49.9% ownership, to its shareholders, on the basis of one share
of Sunshine's Class A Common Stock for each share of Interactive's  Common Stock
outstanding.

                                      -16-
<page>
     As  described  in note 10, 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.

3.   Accounting and Reporting Policies

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 were
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.

     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 its licenses.  Sunshine  spent  approximately  $1.0 million to fund the
construction of the necessary facilities.

Administrative Services

     Sunshine has no employees.  While Sunshine was a  partnership,  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.  SFAS No. 142  prohibits  the  amortization  of goodwill and assets with
indefinite  lives,  but  instead  requires  that these  assets be  reviewed  for
impairment at least annually.  Intangible assets with finite lives will continue
to be amortized over their estimated  useful lives.  While the Company  expected
renewal of its  licenses by the granting  authorities  which would allow for the
classification  of its licenses as indefinite lived assets,  because of its lack
of operating history,  the Company's current cash flow deficit and the inability
to obtain the  necessary  funding to build a network,  the Company  continued to
amortized its licenses over twenty years.

     Amortization  expense  was  $134,000  per  year  for the two  years  ending
December  31,  2003 and  $41,000  for the year ended  December  31,  2001 as the
licenses were not amortized  prior to August 31, 2001, the point we were able to
provide PCS service.

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.
These costs, and the costs of the PCS licenses, were being amortized over twenty
years, which began on August 31, 2001 when Sunshine commenced offering service.

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

                                      -17-
<page>
estimates or their related  assumptions change in the future, the Company may be
required to record impairment charges for this asset not previously recorded.


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.

Fair Values of Financial Instruments

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


Income Taxes

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

     Since the reorganization, Sunshine has only recorded additional tax losses.
Valuation allowances have been provided for deferred tax assets of approximately
$1.4  million at December  31, 2003 and $4.8 million at December 31, 2002 as the
realization  of such assets is dependent  upon the  generation of future taxable
income  during a period  when  such  losses  would be  utilizable.  The  Company
currently  has $3.0  million of net federal  operating  tax loss  carryforwards,
generated in 2001 through  2003,  expiring in the years 2021  through  2023.  In
addition, the Company has approximately $3.0 million of state net operating loss
carryforwards expiring in the years 2021 through 2023.


                                      -18-
<PAGE>

     Cumulative  temporary  differences  at  December  31,  2002 and 2003 are as
follows:
<TABLE>
<CAPTION>


                                        December 31, 2002  December 31, 2003
Deferred tax assets:
<S>                                           <C>           <C>
Impairment reserves on PCS
Licenses and tax  amortization
and depreciation  in excess of book ...   $ 4,587,000

Net operating losses...................       257,000       $ 1,164,000
Other..................................       (23,000)          289,000
                                          -----------       -----------
                                            4,821,000         1,453,000
Valuation allowance ..................     (4,821,000)       (1,453,000)
                                          -----------       -----------
                                          $       --        $      --
                                          ===========       ===========
</TABLE>


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

<TABLE>
<CAPTION>

                                         2001             2002          2003
                                         ----             ----          ----
<S>                                   <C>             <C>           <C>
Tax at statutory rate ............... $(1,122,000)    $  702,000    $ 3,044,000

Increases(decreases):

State taxes, net of federal benefit..   (120,000)         75,000        325,000
Increase  (decrease)  in  valuation
allowance...........................   1,242,000        (777,000)    (3,369,000)
                                      -----------    -----------    -----------
                                      $       --     $       --     $       --
                                      ===========    ===========    ===========
</TABLE>

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

Stock Options

     On February 14, 2001,  which was prior to a public  trading  market for our
stock,  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 vest over a three
year period from the date of grant and expire five years from the date of grant.
The 130,000  options 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,  ($78,000 at
December  31, 2003,  $39,000 at December 31, 2002,  and $223,600 at December 31,
2001),  will be recognized as expense over the three year vesting  period of the
options.  The remaining 150,000 options,  which vest over three years, issued to
directors have been accounted for under the provisions of APB 25 "Accounting for
Stock Issued to Employees" and  consequently  no expense  recognition.  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,  2002 and 2003
and the period from July 27, 1995  (inception) to December 31, 2002,  would have
been as follows:

                                      -19-

<page>
<TABLE>
<CAPTION>

                                     --------------------------------------------------------------
                                                       Years Ended December 31,     July 27, 1995
                                                       ------------------------
                                                                                   (inception) to
                                                                                    December 31,
                                          2001            2002            2003           2003
                                     -------------------------------------------------------------
<S>                                  <C>             <C>             <C>             <C>
Net income (loss) as reported ....   $ (3,299,415)   $  2,065,103    $ 8,952,289    $(73,754,399)

Add (deduct):
Total stock-based employee
compensation (expense) income
determined under fair value based
method for all awards ............         (8,766)        (10,002)        (9,999)        (28,767)
                                     ------------    ------------    ------------    ------------
Pro forma net income (loss) ......     (3,308,181)      2,055,101       8,942,290     (73,783,166)
Dividend requirement on preferred
stock ............................       (613,698)       (742,959)       (792,770)     (2,149,427)
                                     ------------    ------------    ------------    ------------
Pro forma income (loss) applicable
to common shares .................   $ (3,921,879)   $  1,312,142    $  8,149,520    $(75,932,593)
                                     ============    ============    ============    ============

Basic and diluted loss per common
share:
As reported:
  Basic ..........................   $      (0.64)   $       0.19    $       1.07    $     (11.81)
  Diluted ........................   $      (0.64)   $       0.18    $       0.84    $     (11.81)
Pro forma:
  Basic ..........................   $      (0.64)   $       0.18    $       1.06    $     (11.81)
  Diluted ........................   $      (0.64)   $       0.18    $       0.84    $     (11.81)

</TABLE>

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

     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.

Recently Issued Accounting Pronouncements

     In  November  2002,  the FASB  issued  Interpretation  No.  45 ("FIN  45"),
"Guarantor's  Accounting  and  Disclosure  Requirements".  FIN  45  expands  the
disclosures  made  by  a  guarantor  in  its  financial   statements  about  its
obligations  under certain  guarantees and requires the guarantor to recognize a
liability for the fair value of the obligation assumed under certain guarantees.
FIN 45 clarifies the requirements of SFAS No. 5, "Accounting for Contingencies,"
relating  to   guarantees.   In  general,   FIN  45  applies  to   contracts  or
indemnification  agreements  that  contingently  require the  guarantor  to make
payments to the guaranteed party based on changes in a specified  interest rate,
security  price,  foreign  exchange rate or other variable that is related to an
asset,  liability  or equity  security of the  guaranteed  party,  or failure of
another party to perform under an obligating agreement (performance guarantees).

                                      -20-
<page>
Interactive adopted FIN 45 effective January 1, 2003. Such adoption did not have
a any effect on the Company's results of operations,  financial position or cash
flows.

     The FASB issued FIN 46,  "Consolidation of Variable Interest  Entities,  an
Interpretation  of ARB No. 51" in January 2003 and revised it in December  2003.
FIN 46 requires  certain  variable  interest  entities to be consolidated by the
primary  beneficiary of the entity if the equity  investors in the entity do not
have the  characteristics  of a  controlling  financial  interest or do not have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional  subordinated financial support from other parties. The provisions of
FIN 46 must be applied  for the first  interim  or annual  period  ending  after
December 15, 2003 for both new and existing variable interest entities. Sunshine
adopted FIN 46  effective  for  December  31,  2003  financial  reporting.  Such
adoption  had no  effect  on the  Company's  results  of  operations,  financial
position or cash flows.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No.  4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections,"  or SFAS No. 145.  SFAS No. 145  provides  for the  rescission  of
several previously issued accounting standards,  new accounting guidance for the
accounting for certain lease  modifications  and various  technical  corrections
that are not  substantive  in nature to  existing  pronouncements.  The  Company
adopted SFAS No. 145 on January 1, 2003.  The adoption of this statement did not
have a material effect on our results of operations,  financial position or cash
flows.

     In July  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
Associated  with Exit or Disposal  Activities"  ("SFAS No.  146").  SFAS No. 146
replaces Emerging Issues Task Force Issue No. 94-3,  "Liability  Recognition for
Certain  Employee  Termination  Benefits  and  Other  Costs to Exit an  Activity
(including  Certain Costs Incurred in a  Restructuring)."  SFAS No. 146 requires
companies to recognize costs  associated  with exit or disposal  activities when
they are incurred rather than at the date of a commitment to an exit or disposal
plan.  Examples of costs covered by SFAS No. 146 include lease termination costs
and certain  employee  severance costs that are associated with a restructuring,
discontinued operation,  plant closing, or other exit or disposal activity. SFAS
No. 146 is to be applied  prospectively to exit or disposal activities initiated
after December 31, 2002, with early application encouraged. The adoption of this
statement  had no effect  on the  Company's  results  of  operations,  financial
position or cash flows.

     In April 2003,  the FASB issued SFAS No. 149,  "Amendments of Statement 133
on Derivative Instruments and Hedging Activities" ("SFAS No. 149"). SFAS No. 149
serves as an amendment  and  clarifies  financial  accounting  and reporting for
derivative  instruments,  including  derivative  instruments  embedded  in other
contracts  and for  hedging  activities  under  SFAS No.  133,  "Accounting  for
Derivative  Instruments and Hedging  Activities." The Company does not engage in
hedging activities and therefore, this statement does not apply.

     In May  2003,  the  FASB  issued  SFAS No.  150,  "Accounting  for  Certain
Financial  Instruments  with  Characteristics  of Both  Liabilities  and Equity"
("SFAS  No.  150").  SFAS  No.  150  establishes  standards  for  how an  issuer
classifies and measures certain financial  instruments with  characteristics  of
both  liabilities  and equity.  SFAS No. 150 requires that an issuer  classify a
financial  instrument  that is within its scope as a  liability  (or an asset in
some circumstances). The Company had no such instruments as of December 31, 2003
and  therefore,  this  statement  has had no effect on the  Company's  financial
position.

4.   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

                                      -21-
<page>
for  relief  in  order  to  afford  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 in 1999,  including  capitalized costs, to reflect the amount bid for
similar licenses in the reauction.

5.   Partnership Agreement (for period prior to Sunshine's reorganization)

     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.

6. 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.

                                      -22-
<page>
     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 previously
matured  equally in three-month  increments from February 2004 to November 2005.
Interest  was  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 7)

7.   Preferred Stock

     As discussed  in footnote 1, on December  31, 2003,  we redeemed all of our
three classes of preferred  stock.  Prior to the  redemption,  the terms of each
series of the preferred were 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 6, 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.

8.   Income (Loss) Per Share

     For the  period  prior to  February  14,  2001  (that is,  the  period  the
activities of Sunshine were conducted as a partnership),  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  10,  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 9) and  the  convertible
preferred (See note 10) have been excluded from the  computation of diluted loss
per share for all  periods  for which there are losses  because  their  issuance
would  have the  effect of  reducing  the loss per  share.  For the years  ended
December 31, 2003 and 2002,  the Company  recorded  income  applicable to common
shareholders.  Warrants and options were excluded from the diluted  earnings per
share computation because,  utilizing the treasury stock method, their inclusion
would have been anti-dilutive.  Assumed conversion of the convertible  preferred
was

                                      -23-
<page>
included in the  computation  of diluted  earnings  per share for the year ended
December 31, 2003 and the portion of the year ended  December 31, 2002,  that it
was outstanding.

10.  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.

11.  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, due to a lower level of required  service.  As of December 31,
2003, we have an amount payable of $242,000.

                                      -24-
<page>
12.  Lease Commitment

     The Company has entered into leases  covering  antenna space on four towers
(total rental  expenses were for the years ended  December 31, 2003,  2002,  and
2001 were $110,401,  $103,102, and $43,740,  respectively).  The leases call for
monthly  payments  totaling $9,280 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:  2004-$113,135,
2005-$117,645,  and 2006-$72,171 for a remaining liability under these leases of
$302,951 as of December  31,  2003.  As the Company has no further use for these
leases it is  currently  negotiating  a  termination  amount it incurred and has
recorded the full remaining liability as of December 31, 2003.

13.  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,  among others, have been
named  as  defendants  in a  lawsuit  brought  under  the  so-called  "qui  tam"
provisions of the federal False Claims Act in the United States  District  Court
for the District of Columbia.  The complaint was filed under seal with the court
on February  14, 2001,  and the seal was lifted on January 11,  2002.  Under the
False  Claims Act, a private  plaintiff,  termed a  "relator,"  may file a civil
action on the U.S.  government's  behalf against  another party for violation of
the  statute.  In return,  the  relator  receives a  statutory  bounty  from the
government's litigation proceeds if he is successful.

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

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

     We were  formally  served with the complaint on July 10, 2002. On September
19, 2002, we joined Lynch Interactive and certain other defendants in filing two
motions with the United States  District  Court for the District of Columbia:  a
motion to  dismiss  the  lawsuit  and a motion  to  transfer  the  action to the
Southern  District  of New York.  On November  25,  2002,  the relator  filed an
opposition  reply to our motion to dismiss and on December 5, 2002,  Interactive
filed a reply in support of its motion to dismiss.  On September  30, 2003,  the
Court granted our motion to transfer the action to the Southern  District of New
York. A scheduling  conference was held on February 10, 2004, at which the judge
approved a scheduling order.  Discovery has now commenced as the parties await a
ruling on the defendants' motion to dismiss the case.

     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.

                                      -25-
<page>
Item 8.  Changes  In  And  Disagreements  With  Accountants  On  Accounting  And
         Financial Disclosure

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

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

Item 8A. Controls And Procedures

     (a)  Information required by Item 307

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

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

     (b) Information required by Item 308

     This disclosure is not yet required.

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, 2004 for our executive officers and
directors.  Members  of the board are  elected  and serve for one year  terms or
until their successors are elected and qualify.


<TABLE>
<CAPTION>

      Name         Age                Position

<S>                <C>  <C>
Karen E. Johnson   45   Class B director and Chief Executive Officer(1)

David S. Ahl       57   Class B director(1)

Robert E. Dolan    52   Class A director(1) and Assistant Secretary

Robert Chomat      55   Chief Operating Officer

</TABLE>

----------------------
(1)  The Class B directors  together  have three votes and the Class A directors
     together have two votes.

                                      -26-
<page>
     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, 2003. No executive officer
received compensation in excess of $100,000 during fiscal 2003.
<TABLE>
<CAPTION>

                           Summary Compensation Table

                                                                                           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 ........        2003        --           --             --                  --
  Chief Executive Officer        2002        --           --             --                  --
                                 2001        --           --             --               180,000(2)
</TABLE>


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

(2)  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."

                                      -27-
<page>
Directors's Compensation

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

Item 11. Security Ownership of Certain Beneficial Owners and Management

     The  following  table sets forth  information  concerning  ownership of our
common  stock  as of  March  25,  2004  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
                                                     Beneficially Owned(1)
                                                     ---------------------
                                                      Shares      Percentage
                                                      ------      ----------
<S>                                                  <C>            <C>
Fortunet Wireless Communications Corporation .....   767,328        16.7%
Victoria G. Kane(2) ..............................   767,328        16.7%
Mario J. Gabelli(3) ..............................   829,981(4)     18.1%
Lynch Interactive Corporation(5) .................   294,217         6.4%
Robert E. Dolan ..................................    50,525(6)      1.1%
Karen E. Johnson .................................   180,000(7)      3.8%
David S. Ahl .....................................    50,000(8)      1.1%
Robert Chomat ....................................   153,410(9)      3.2%
All Directors and Executive Officers as a Group (4
in total) ........................................   433,935         8.6%
</TABLE>
------------
*Less than 1%

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

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

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

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

                                      -28-
<page>
     except for his interest therein. The address of Mr. Gabelli is 401 Theodore
     Fremd Avenue, Corporate Center at Rye, Rye, NY 10580.

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

(6)  Includes options to purchase 50,000 Class A shares at $.75 per share and 70
     shares registered in the name of Mr. Dolan's children with respect to which
     Mr.  Dolan has  voting  and  investment  power  and 55 shares  held for the
     benefit of Mr. Dolan under Lynch Interactive  Corporation's  401(k) Savings
     Plan.

(7)  Option to purchase 180,000 Class A Common shares at $.75 per share.

(8)  Option to purchase 50,000 Class A Common shares at $.75 per share.

(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.

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

                                      -29-
<page>
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)

                                      -30-
<page>
     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)

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

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

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

     32.1 Section 1350 Certification of the Chief Executive Officer

     32.2 Section 1350 Certification of the Principal Accounting Officer


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

         Form 8-K filed on November 14, 2003 regarding the resignation of Ernst
& Young LLP.

Item 14.   Principal Accountant Fees and Services.

Section 3.1 Audit Fees

     The aggregate  fees billed by Deloitte & Touche for  professional  services
rendered for the audit of the Company's 2003  financial  statements was $40,000.
The aggregate fees billed by Ernst & Young for  professional  services  rendered
for the reviews of the financial statements included in the Company's Forms 10-Q
for  2003  was  $17,000.  The  aggregate  fees  billed  by  Ernst  &  Young  for
professional  services  rendered for the audit of the Company's  2002  financial
statements and the reviews of the financial statements included in the Company's
Forms 10-Q for 2002 was $37,500.

Audit-Related Fees

     The  aggregate  fees billed by Deloitte & Touche for  assurance and related
services for 2003 that are reasonably related to the performance of the audit of
the Company's 2003 financial statements and not reported as audit fees above was
$0.  The  aggregate  fees  billed by Ernst & Young  for  assurance  and  related
services for 2003 that are reasonably  related to the  performance of the review
of the Company's  financial  statements and not reported as audit fees above was
$0.  The  aggregate  fees  billed by Ernst & Young  for  assurance  and  related
services for 2002 that are reasonably related to the performance of the audit or
review of the  Company's  financial  statements  and not  reported as audit fees
above was $0.

Tax Fees

     The  aggregate  fees  billed  by Ernst & Young  for  professional  services
rendered to the Company in 2003 for tax compliance, tax advice, and tax planning
was  $0.  These  services  included  miscellaneous   tax-related  research.  The
aggregate fees billed by Ernst & Young for professional services rendered to the
Company in 2002 for tax compliance,  tax advice,  and tax planning was $0. These
services included miscellaneous tax-related research.

                                      -31-
<page>
All Other Fees

     No fees were  billed by  Deloitte  & Touche or by Ernst & Young for 2003 or
2002 for services other than as set forth above.

Board's Pre-Approval Policies and Procedures

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


                                      -32-
<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 20th day of April, 2004.




                                            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
     ---------                                  -----                 ----
/s/ Karen E. Johnson       Chairman of the Board, Chief           April 20, 2004
---------------------
Karen E. Johnson
/s/ Robert E. Dolan        Director and Assistant Secretary       April 20, 2004
---------------------
Robert E. Dolan
/s/ David S. Ahl           Director                               April 20, 2004
---------------------
David S. Ahl


                                      -33-