U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

 
                                  FORM 10-QSB/A
 

(Mark One)
[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998

                                       or

[  ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

              For the transition period from              to
                                            --------------  --------------

                         Commission File Number: 0-20999
                                                ---------

                         CHADMOORE WIRELESS GROUP, INC. 
                         ------------------------------
        (Exact name of small business issuer as specified in its charter)

             COLORADO                                       84-1058165
--------------------------------                --------------------------------
(State of other jurisdiction of                 (I.R.S. Employer
  incorporation or organization)                             Identification No.)

             2875 EAST PATRICK LANE SUITE G, LAS VEGAS, NEVADA 89120
             -------------------------------------------------------
                    (Address of principal executive offices)

                                                      
                           (Issuer's telephone number)    (702) 740-5633
                                                      ----------------------

              (Former name, former address and former fiscal year,
                          if changed since last report)

Check  whether  the  issuer  (1) filed all  reports to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter  period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [ ]
                                                       -

          APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                         DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required by Section
12, 13 or 15(d) of the Exchange Act after the distribution of securities under a
plan confirmed by a court. Yes [ ] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

AS OF MAY 11, 1998 ISSUER HAD 34,996,566 SHARES OF COMMON STOCK, .001 PAR VALUE,
OUTSTANDING.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):  Yes [  ] No [X]
<PAGE>

                                      INDEX

PART I - FINANCIAL INFORMATION

       ITEM 1.  FINANCIAL STATEMENTS                                      PAGE

                Unaudited  Consolidated  Financial  Statements of
                Chadmoore  Wireless Group, Inc., and Subsidiaries
                (a development stage company):

                 Consolidated Balance Sheets:
                            As of March 31, 1998 and December 31, 1997      2

                 Consolidated Statements of Operations: 
                    For the Three Months Ended March 31, 1998 and 1997
                    and for the Period from January 1, 1994 
                    (inception) through March 31, 1998                      3

                 Consolidated Statement of Shareholders' Equity 
                    For the Three Months ended March 31, 1998               4

                 Consolidated Statements of Cash Flows: 
                    For the Three Months Ended March 31, 1998 and 1997
                    and for the Period from January 1, 1994
                    (inception) through March 31, 1998                      5-6

                      Notes to Unaudited Consolidated Financial Statements  7-13
 

       ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                AND PLAN OF OPERATION                                      14-21

       PART II - OTHER INFORMATION

       ITEM 1.  LEGAL PROCEEDINGS                                          22-23

       ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS                  24

       ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                            24

       ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS      24

       ITEM 5.  OTHER INFORMATION                                          24

       ITEM 6.  EXHIBITS AND CURRENT REPORTS ON FORM 8-K                   25-26

       SIGNATURES                                                          27



















                                2
<PAGE>
Chadmoore Wireless Group, Inc. and Subsidiaries
(A Development Stage Company)
<TABLE>
<CAPTION>
Consolidated Balance Sheets
March 31, 1998 and December 31, 1997

                                                                                 MARCH 31,     DECEMBER 31,
                                                                                   1998            1997
                                                                                 UNAUDITED
                                                                                  Restated        Restated                
                                 ASSETS                                                     
<S>                                                                           <C>              <C>
Current assets:                                                                               
    Cash                                                                      $    863,703     $    959,390
    Accounts receivable, net of allowance for doubtful accounts of $16,600         293,050          265,935
      and $45,000, respectively                                                               
    Other receivables                                                               73,727           99,223
    Inventory                                                                       84,762           89,133
    Deposits and prepaids                                                          300,697          130,858
                                                                              ------------     ------------
              Total current assets                                               1,615,939        1,544,539
                                                                              ------------     ------------

Property and equipment, net                                                      5,921,004        5,809,168
FCC  licenses,  net of  accumulated  amortization  of $258,338 and $231,917,     9,281,482        6,726,954
respectively
Debt  issuance  costs,  net of  accumulated  amortization  of $3,598 and $0,       141,254               --
respectively
Management agreements                                                           16,623,573       16,623,573
Investment in options to acquire licenses                                        7,508,358        7,156,358
Investment in license options                                                    3,181,600        4,113,995
Non-current deposits and prepaids                                                   56,928           32,928
                                                                              ------------     ------------
              Total assets                                                    $ 44,330,138     $ 42,007,515
                                                                              ============     ============

                    LIABILITIES AND SHAREHOLDERS' EQUITY                                      

Current liabilities:                                                                          
    Current installments of long-term debt and capital lease obligations      $  3,449,354     $  2,638,414
    Accounts payable                                                             1,193,054        1,165,425
    Accrued liabilities                                                          1,089,889        1,106,029
    Unearned revenue                                                               197,342          107,057
    Licenses - options payable                                                     350,000          350,000
    License option commission payable                                            3,412,000        3,412,000
    Accrued interest                                                               296,110          173,686
    Other current liabilities                                                      149,215          131,273
                                                                              ------------     ------------
              Total current liabilities                                         10,136,964        9,083,884
                                                                              ------------     ------------

Long-term debt, excluding current installments                                   7,082,523        4,614,157
Minority interests                                                                 346,524          352,142
                                                                              ------------     ------------
               Total liabilities                                                17,566,011       14,050,183
                                                                               ------------     ------------
                                                                              

Shareholders' equity :                                                                        
    Preferred Stock, $.001 par value. Authorized 40,000,000 shares:                           
       Series A issued and canceled  250,000  shares,  0 shares  outstanding                   
         at March 31, 1998 and December 31, 1997.                                       --               --
       Series B issued and outstanding 139,481 at March 31, 1998 and                             
         219,000 shares at December 31, 1997                                           139              219
    Common stock, $.001 par value.  Authorized  100,000,000  shares;  issued                  
         and outstanding  24,218,917  shares  at March 31,  1998 and
         21,163,847 shares at December 31, 1997                                     24,218           21,164 
    Additional paid-in capital                                                  60,939,355       60,303,498
    Stock subscribed                                                                    --           32,890
    Deficit accumulated during the development stage                           (34,199,585)     (32,400,439)
                                                                              ------------     ------------

              Total shareholders' equity                                        26,764,127       27,957,332
                                                                              ------------     ------------

Total liabilities and shareholders' equity                                    $ 44,330,138     $ 42,007,515
                                                                              ============     ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.


                                3
<PAGE>
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
<TABLE>
<CAPTION>
Unaudited Consolidated Statements of Operations
For the Three  Months  Ended  March 31,  1998 and 1997 and for the  Period  from
January 1, 1994 (inception) through March 31, 1998

                                                                                                    
                                                                                                          PERIOD FROM
                                                                  3 MONTHS ENDED MARCH 31,             JANUARY 1, 1994
                                                             ---------------------------------------        THROUGH
                                                                     1998               1997            MARCH 31, 1998
                                                                                       Restated             Restated  
<S>                                                          <C>                 <C>                  <C>
     Revenues:                                                                                         
         Radio services                                          $   371,578         $   141,491          $  1,683,463
         Equipment sales                                              85,528             251,391             1,716,485
         Maintenance and installation                                 58,740              98,840               674,317
         Management fees                                                  --                  --               472,611
         Other                                                           246               7,127                58,108
                                                                 -----------         -----------          ------------

 
                                                                     516,092             498,849             4,604,984
                                                                 -----------         -----------          ------------

     Costs and expenses:                                                                               
         Cost of sales                                               182,873             272,114             1,949,779
         Salaries, wages and benefits                                453,250             576,040             5,794,308
         General and administrative                                  832,400             760,274            17,494,146
         Cost of settlement of license dispute                            --                  --               143,625
         Depreciation and amortization                               194,134             160,358             1,487,347
                                                                 -----------         -----------          ------------
                                                                   1,662,657           1,768,786            26,869,205
                                                                 -----------         -----------          ------------

     Loss from operations                                         (1,146,565)         (1,269,937)          (22,264,221)
                                                                 -----------         -----------          ------------

     Other income (expense):                                                                           
         Minority interest                                            (9,297)                 --                10,069
         Interest expense (net) (restated Note 1)                   (460,370)           (305,952)           (5,157,837)
         Loss on reduction of management agreements and                                         
          licenses to estimated fair value                                --                  --            (7,166,956)
         Standstill agreement expense                               (182,914)                 --              (182,914)
         Writedown of investment in JJ&D, LLC                             --                  --              (443,474)
         Gain on settlement of debt                                       --                  --               887,402
         Gain on sale of assets                                           --                  --               330,643
         Loss on retirement of note payable                               --                  --               (32,404)
         Other, net                                                       --                  --              (179,893)
                                                                 -----------         -----------          ------------
                                                                    (652,581)           (305,952)          (11,935,364)
                                                                 -----------         -----------          ------------

     Net loss                                                    $(1,799,146)        $(1,575,889)          (34,199,585)
                                                                 -----------         -----------         -------------

   Calculation of net loss applicable to common shareholders:
    Preferred stock preferences                                           --                  --            (1,203,704)
    Series B Preferred Stock dividends                               (10,732)                 --               (10,732)
                                                                 -----------         -----------         -------------
    Net loss applicable to common shares                         $(1,809,878)        $(1,575,889)        $ (35,414,021)
                                                                 ============        ===========         =============

                                                                
    Net loss per basic and diluted shares                        $     (0.08)        $     (0.08)        $       (3.25)
                                                                 ============        ===========         =============

      Weighted average number of commmon shares outstanding        22,339,773          19,151,200            10,892,800
                                                                 ============        ============        =============
</TABLE>


See accompanying notes to unaudited consolidated financial statements.





                                4
<PAGE>
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
<TABLE>
<CAPTION>
Unaudited Consolidated Statements of Shareholders' Equity
 

For the three months ended March 31, 1998

                                                                       
                                                                                           DEFICIT
                               PREFERRED STOCK         COMMON  STOCK                     ACCUMULATED
                            -------------------  ----------------------    ADDITIONAL       DURING                     TOTAL
                            OUTSTANDING           OUTSTANDING               PAID-IN      DEVELOPMENT     STOCK     SHAREHOLDERS'
                              SHARES     AMOUNT     SHARES       AMOUNT     CAPITAL         STAGE      SUBSCRIBED     EQUITY
                              -------    ------  ------------   -------   -----------   -------------  ----------  -------------
<S>                           <C>          <C>     <C>          <C>       <C>           <C>              <C>        <C>        
Balance at December 31, 1997,
  as restated                 219,000      $219    21,163,847   $21,164   $60,303,498   $(32,400,439)    $ 32,890   $27,957,332
Shares issued under employee                                                                                         
  compensation plan                --        --       108,500       108        55,879             --           --        55,987
Shares issued for subscribed 
  stock                            --        --        11,400        11        32,879             --      (32,890)           --
Shares issued for exercise of                                                                                    
  license option                   --        --       800,000       800       351,200             --           --       352,000
Shares issued for conversion of                                                                                        
 preferred stock              (79,519)      (80)    1,803,052     1,803        (1,723)            --           --            --
Shares issued for preferred                                                                                         
 stock dividend                    --        --        22,095        22           (22)            --           --            --
Shares issued for
 standstill agreement              --        --       310,023       310       182,604             --           --       182,914
Compensation expense for 
 options issued                    --        --            --        --        15,040             --           --        15,040
Net loss                           --        --            --        --           --      (1,799,146)         --    (1,799,146)
                              -------    ------  ------------   -------   -----------   -------------  ----------  -------------
Balance at March 31, 1998,     
 as restated                  139,481    $  139    24,218,917   $24,218   $60,939,355   $( 34,199,585) $     --     $26,764,127  
                              =======    ======  ============   =======   ============  =============  ==========  =============
 
</TABLE>
See accompanying notes to unaudited consolidated financial statements.



<PAGE>
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
<TABLE>
<CAPTION>
Unaudited Consolidated Statements of Cash Flows
For the Three  Months  Ended  March 31,  1998 and 1997 and for the  Period  from
January 1, 1994 (inception) through March 31, 1998


                                                                     3 MONTHS ENDED MARCH 31,               PERIOD FROM
                                                           -------------------------------------------    1/1/94 THROUGH
                                                                    1998                   1997           March 31, 1998
                                                                                          Restated            Restated          
                                                           ---------------------  ---------------------  ---------------
<S>                                                        <C>                    <C>                   <C>
 Cash flows from operating activities:
   Net loss                                                     $(1,799,146)           $(1,575,889)        $(34,199,585)
   Adjustments to reconcile net loss to net cash used in                                                 
     operating activities:                                                                               
        Minority interest                                             9,297                     --              (10,069)
        Depreciation and amortization                               194,134                160,358             1,487,347
        Non-cash interest expense (restated Note 1)                      --                242,281             3,802,469
        Writedown of management agreements and licenses to                                             
         estimated fair value                                            --                     --             7,166,956
        Writedown of investment in JJ&D, LLC                             --                     --               443,474
        Release of license options                                       --                     --               330,882
        Writedown of prepaid management rights                           --                     --                81,563
        Gain on extinguishment of debt                                                                          (839,952)
        Gain on sale of assets held for resale                           --                     --              (330,643)
        Shares issued for settlement of license dispute                  --                     --               127,125
        Standstill agreement                                        182,914                     --               182,914
        Amortization of debt discount                               310,392                 37,289               576,904
        Equity in losses from minority investments                       --                     --                 1,322
        Expenses associated with:                                                                        
           Stock issued for services                                     --                     --             2,605,036
           Options issued for services                               15,040                     --             4,052,504
        Changes in operating assets and liabilities:                                                     
           Increase in accounts receivable and other receivables     (1,621)               (63,527)             (198,315)
           Decrease (increase) in inventory                           4,371                (16,688)               (6,781)
           (Increase) decrease in deposits and prepaid expenses    (193,839)                15,439              (314,833)
           Increase in accounts payable and accrued liabilities      67,474                 79,548             2,340,557
           Increase in unearned revenue                              90,285                     --               197,522
           Increase in license options commission payable                --                     --               524,800
           Increase in accrued interest                             122,424                  1,849               614,373
           Increase in other current liabilities                     18,500                  3,439               170,193
                                                                -----------            -----------           -----------
 
 Net cash used in operating activities                             (979,775)            (1,115,901)          (11,194,237)
                                                                -----------            -----------           -----------
  Cash flows from investing activities:                                                                   
   Purchase of assets from General Communications, Inc.                  --                     --              (352,101)
   Investment in JJ&D, LLC                                               --                     --              (100,000)
   Purchase of Airtel Communications, Inc. assets                        --                     --               (50,000)
   Purchase of CMRS and 800 SMR Network, Inc.                            --                     --            (3,547,000)
   Purchase of SMR station licenses                                      --                     --            (1,398,575)
   Purchase of license options                                      (99,999)              (191,700)           (1,786,444)
   Sale of management agreements and options to acquire                                                  
      licenses                                                           --                     --               500,000
   Purchase of property and equipment                              (293,297)              (212,090)           (4,917,472)
   Sale of property and equipment                                        --                     --               827,841
   Purchase of assets held for resale                                    --                     --              (219,707)
   Sale of assets held for resale                                        --                     --               700,000
   Increase in other non-current assets                                  --                     --               (11,123)
                                                                -----------            -----------           -----------
 Net cash used in investing activities                             (393,296)              (403,790)          (10,354,581)
                                                                -----------            -----------           -----------
</TABLE>
         (Continued)

                                       6
<PAGE>
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
<TABLE>
<CAPTION>
Condensed Consolidated  Statements of Cash Flows, Continued For the Three Months
Ended  March  31,  1998  and  1997  and for the  Period  from  January  1,  1994
(inception) through March 31, 1998

                                                                                                
                                                                     3 MONTHS ENDED MARCH 31,               PERIOD FROM
                                                           -------------------------------------------    1/1/94 THROUGH
                                                                    1998                   1997              03/31/98
                                                                                         Restated            Restated
                                                           ---------------------  ---------------------  ---------------
<S>                                                      <C>                 <C>                  <C>
Cash flows from financing activities:                                                              
     Proceeds upon issuance of common stock                     $        --            $        --           $ 4,316,543
     Proceeds upon issuance of preferred stock                           --                     --             3,848,895
     Proceeds upon exercise of options - related parties                 --                     --                62,500
     Decrease in stock subscriptions receivable, net                     --                     --              (637,193)
         of stock subscribed                                                                       
     Proceeds upon exercise of options - unrelated parties               --                     --             3,075,258
     Purchase and conversion of CCI stock                                --                     --                45,000
     Advances from related parties                                       --                     --               767,734
     Payment of advances from related parties                            --                     --               (73,000)
     Debt issuance costs                                           (144,852)                    --              (144,852)
     Payments of long-term debt and capital lease obligations      (190,784)              (120,081)           (1,160,050)
     Proceeds from issuance of notes payable                             --                     --               375,000
     Proceeds from issuance of long-term debt                     1,613,020              1,530,000            11,936,686
                                                                -----------            -----------           -----------
 
Net cash provided by financing activities                         1,277,384              1,409,919            22,412,521
                                                                -----------            -----------           -----------
Net (decrease) increase in cash                                     (95,687)              (109,772)              863,703
Cash at beginning of period                                         959,390              1,463,300                    --
                                                                -----------            -----------           -----------
Cash at end of period                                           $   863,703            $ 1,353,528           $   863,703
                                                                ===========            ===========           ===========
 


Supplemental disclosure of cash paid for:                                                          
     Taxes                                                      $        --            $        --           $        --
     Interest                                                   $    27,578            $     7,332           $   432,557
                                                                ===========            ===========           ===========
</TABLE>

Supplemental disclosure for non-cash investing and financing activities:

1998

* The Company issued 108,500 shares of Common Stock to employees.
* Issuance of $1,548,555 of note payables,  net of discount, to exercise options
to purchase FCC licenses.
* Conversion  of 79,519 shares of  convertible  preferred  stock into  1,803,052
shares of common stock.
* Issuance of 22,095 shares of common stock for preferred stock dividends.
*  Issuance  of 11,400  shares  of common  stock  for  $32,890  of common  stock
previously subscribed.
* Issuance of 800,000 shares of common stock for exercise of license option.
* Reclassification  of minority interest of approximately  $14,915 into property
and equipment.

1997

* Conversion of $1,050,000 of convertible debt to equity.
* Issuance  of  231,744  shares of common  stock for  $255,945  of common  stock
subscribed.
* Exercise of 323,857  options which had $161,929 of prepayment  associated with
them.
* Reclassified $108,027 of deposits to property and equipment.

See accompanying notes to unaudited consolidated financial statements.


                                       7
<PAGE>
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to Unaudited Consolidated Financial Statements
March 31, 1998

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

A.  BASIS OF PRESENTATION
 
The  accompanying  unaudited  consolidated  financial  statements  include   the
accounts  of  Chadmoore  Wireless  Group, Inc. and subsidiaries and consolidated
partnerships (the "Company"), (a  development  stage  company),  and  have  been
prepared  in  accordance  with  the  rules and regulations of the Securities and
Exchange Commission Form 10-QSB. All material adjustments, consisting of  normal
recurring accruals which are, in the opinion of management, necessary to present
fairly the financial condition and related results of operations, cash flows and
shareholders' equity for the respective interim periods presented are reflected.
The  current  period results of operations are not necessarily indicative of the
results for any other interim period or for the full  year  ended  December  31,
1998.  These  unaudited  consolidated  financial  statements  should  be read in
conjunction with the audited consolidated financial statements included  in  the
Annual Report on Form 10-KSB and 10-KSB/A for the years ended December 31, 1997.

As  discussed  in  Note  4,  the Company has restated its previously issued Form
10-QSB for the three months ended March 31, 1997 in  its  March  31,  1998  Form
10-QSB/A  to comply with a SEC announcement with respect to issuing convertible
debentures which are convertible into common stock at a discount.


B.  IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1997, the FASB issued  Statement of Financial  Accounting  Standards No.
130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130 requires companies to
classify  items of other  comprehensive  income by their  nature in a  financial
statement  and display the  accumulated  balance of other  comprehensive  income
separately from retained  earnings and additional  paid-in capital in the equity
section of a statement of financial  position  and is  effective  for  financial
statements  issued for fiscal years  beginning  after  December  15,  1997.  The
Company  adopted SFAS 130 for the quarter  ended March 31, 1998. As of March 31,
1998 the Company has no other comprehensive income amounts.

In June 1997, the FASB issued  Statement of Financial  Accounting  Standards No.
131,  "Disclosure About Segments of an Enterprise and Related Information" (SFAS
131).  SFAS 131  establishes  additional  standards  for  segment  reporting  in
financial  statements and is effective for fiscal years beginning after December
15, 1997. The Company is currently assessing the impact of implementation.
 
Statement of Position  98-5  "Reporting  on Costs of Start-Up  Activities"  (SOP
98-5) requires the costs of start-up  activities and organizational  costs to be
expensed as incurred.  SOP 98-5 is effective  for fiscal years  beginning  after
December 15,  1998.  The adoption of SOP 98-5 is not expected to have a material
effect on the Company's financial position or results from operations.

C.  RECLASSIFICATIONS

Certain  amounts in the first  quarter  1997  Unaudited  Consolidated  Financial
Statements have been reclassified to conform to the 1998 presentation.

D.  LOSS PER SHARE

Basic and diluted loss per share were computed in accordance with  Statement  of
Financial  Accounting  Standards No. 128, "Earnings Per Share" (SFAS 128). Prior
years have been restated to reflect the application of SFAS 128. As discussed in
Note 4, earnings per share for the quarter ended March 31, 1997 was restated  to
comply  with  the  SEC  announcement  regarding  beneficial  conversion features
embedded in convertible securities.

E. CUSTOMER ACQUISITION COSTS

 Customer acquisition costs are expensed in the period they are incurred.

 (2) FCC LICENSES AND LICENSE OPTIONS

The Company has entered into various  option  agreements to acquire FCC licenses
for SMR  channels  ("Option  Agreements").  These  Option  Agreements  allow the
Company to purchase licenses, subject to FCC approval, within a specified period
of time after the  agreement is signed.  During the three months ended March 31,
1998, the Company had exercised Option Agreements for approximately 220 channels
for  consideration of cash, notes payable and Chadmoore  Wireless Group's common
stock ("Common Stock")  totaling  approximately  $2,024,593.  In relation to the
exercise  of the  options  for the  channels,  the  Company  has  also  incurred
commission  costs  totaling  approximately  $503,000,  which are included in FCC
licenses.

In addition  to the above  mentioned  licenses,  in a single  transaction  dated
January 12, 1998,  the Company  exercised  its options to acquire  approximately
3,220 FCC  licenses for SMR channels  with 32 license  holders.  As of March 31,
1998,  all of the  approximately  3,220  licenses  were in the  process of being
transferred to the Company, pending FCC approval.

As of March 31, 1998, of the  approximately  4,800  licenses under the Company's
control,   approximately  670  licenses  had  transferred  to  the  Company  and
approximately  3,360 were in the process of being  transferred  to the  Company,
pending FCC approval.  The remaining  approximately  770 licenses continue to be
maintained under Option and/or Management  Agreements (defined below), for which
the Company has decided to delay exercise based on economic considerations.

The Company  amended  several Option  Agreements  whereby the Company would make
quarterly installment payments toward the purchase of channels.  With respect to
these agreements,  the Company is in default thereof.  Approximately $350,000 of
accrued installment  payments has been recorded at March 31, 1998 in "Licenses -
options  payable".  If the holder requests remedy,  in writing,  the Company has
thirty days to remedy any deficiency by sending monies  totaling all outstanding
installment  payments due such holder.  The Company  addresses each request on a
case by case basis and determines,  based on various factors, whether to pay the
outstanding installment payments, purchase the license in full with a promissory
note or cancel  the  Option  Agreement.  As of March 31,  1998,  holders of such
amended Option  Agreements have not elected to terminate the options or exercise
other available  remedies.  If the Company elects to cancel the Option Agreement
all consideration  paid is retained by the licensee and expensed by the Company.
If the Company were to exercise the remaining  outstanding Option Agreements for
approximately  880 channels as of March 31, 1998,  the  obligations  would total
approximately $17 million.

Upon entering into Option  Agreements,  the Company also entered into management
agreements  with  the  licensees  ("Management   Agreements").   The  Management
Agreements give the Company the right to manage the SMR systems,  subject to the
direction  of the  licensees,  for a period of time prior to the transfer of the
licenses  to the  Company  as  stated in the  agreements,  usually 2 to 5 years.
During  such  period,  revenues  received  by the  Company  are shared  with the
licensee  only after  certain  agreed-upon  costs to construct the channels have
been recovered by the Company.
 
(3)      REVENUES AND COST OF SALES

The Company had revenues  from  equipment  sales of $85,528 and $251,391 for the
three  months  ended  March 31, 1998 and 1997,  respectively.  The cost of sales
associated  with these  revenues  were $75,977 and $189,826 for the three months
ended March 31, 1998 and 1997, respectively.

(4) LONG-TERM DEBT
 
DEBT ISSUANCES

In February 1997, the Company executed a Securities Placement Agreement to place
a minimum of $1,000,000  and maximum of $4,000,000 of the Company's  three year,
8% convertible Debentures. Principal and interest are convertible into shares of
the Company's common stock. In addition, the Securities Purchase Agreement calls
for the issuance of 75,000 warrants to purchase  shares of the Company's  common
stock at an  exercise  price of  $2.50  per  share  for  each  $1,000,000  of 8%
convertible Debentures placed. The warrants are exercisable for three years from
date of grant.  On February 19, 1997,  the Company  placed  $1,000,000 of the 8%
Convertible Debentures and received $860,000, net of $140,000 of placement fees.
The  Company  granted  75,000  warrants in  connection  with the  placement.  In
addition,  the Company granted 30,000 warrants at an exercise price of $1.50 per
share in connection with the placement. On February 24, 1997, the Company placed
an additional  $750,000 of the 8% Convertible  Debentures and received $670,000,
net of $80,000 in  placement  fees.  The  Company  granted  56,250  warrants  in
connection with the placement.  In addition, the Company granted 22,500 warrants
at an  exercise  price of $1.50  per  share in  connection  with the  placement.
Principal and accrued  interest are  convertible at a conversion  price for each
share of common  stock equal to the lesser of (a) $1.37 or (b) a discount of 25%
for principal  and accrued  interest held up to 90 days from the closing date, a
discount of 27-1/2% for principal  and accrued  interest held for 91 to 130 days
from the  closing  date or a  discount  of 30-1/2%  for  principal  and  accrued
interest  held for more than 131 days.  The  discount  will apply to the average
closing  bid  price  for the 5  trading  days  ending  on the  date  before  the
conversion  date,  as  represented  by the National  Association  of  Securities
Dealers and Electronic Bulletin Board.

In  a  1997  announcement,  the  staff of the Securities and Exchange Commission
("SEC") indicated that when convertible debentures are convertible at a discount
from the then current  common  stock  market  price,  a  "beneficial  conversion
feature",  should  be  recognized as a return to the debt holders. The SEC staff
believes any discount resulting from an allocation of the proceeds equal to  the
intrinsic  value  should be allocated to additional paid-in capital and increase
the effective interest rate of the security and should be reflected  as  a  debt
discount and amortized to interest expense over the period beginning on the date
of issuance of the notes and ending on the date the notes are first convertible.
The  beneficial  conversion  feature  of  approximately $767,986 embedded in the
convertible debentures issued during February  1997  was  not  recorded  in  the
Company's  previously  filed  March  31,  1997  Form  10-QSB. Because of the SEC
announcement, the Company has restated its March 31, 1997 Form 10-QSB  unaudited
consolidated financial statements in its March 31, 1998 Form 10-QSB/A to reflect
such announcement.
 
The debt discount of $767,986 associated with the issuance  of  the  convertible
debentures is  being  amortized  to  interest  expense  over  130  days.
Approximately $242,281 was amortized to interest expense for the  quarter  ended
March  31,  1997.  Accordingly, interest expense for the quarter ended March 31,
1997 has been restated from  $63,671  to  $305,952  respectively.  In  addition,
earnings  per  share for the quarter ended March 31, 1997 has been restated from
$.07 to $.08 per share.

During the three  months  ended March 31, 1998 the  Company  entered  into notes
payable with license holders for approximately $1,550,000,  net of a discount of
approximately  $550,000;  these notes  represent  the final  payment to exercise
license options for approximately 220 licenses. As of March 31, 1998 the Company
had  approximately  $4,750,000,  net of a discount of approximately  $1,500,000,
calculated at an imputed interest rate of 15%.

On October 30, 1997, two subsidiaries of the Company,  CCI and CMRS,  ("CCI" and
"CMRS") entered into a First Amendment and Financing and Security Agreement with
MarCap Corporation  ("MarCap") which amended that certain Financing and Security
Agreement dated October 29, 1996 between CCI and Motorola,  Inc. ("Motorola" and
the "Motorola  Loan  Facility"),  the interest of Motorola  therein  having been
assigned  to  MarCap,  pursuant  to  which  MarCap  extended  to CCI and CMRS an
additional  loan  facility  (the  "MarCap  Facility")  in a  maximum  amount  of
$2,000,000.
 
As of March 31, 1998 the total  outstanding  amounts of the MarCap  Facility and
Motorola Loan Facility were $2,049,080 and $363,100,  respectively.  The Company
incurred debt issuance costs related to the drawdowns totaling  $144,852.  These
costs will be amortized over the lives of the loans.

As of March 31, 1998, the Company was not in compliance with its debt covenants,
such as, tangible net worth,  minimum  annualized revenue and cash flow to debt.
However,  the necessary debt waiver was obtained.  The Company has  renegotiated
the  covenants  stipulated  in the  agreement  and the Company is in  compliance
thereof, and has classified the appropriate portion (maturing after one year)
as long-term debt.

(5) EQUITY TRANSACTIONS

A.  PREFERRED STOCK CONVERSIONS

On December  23,  1997,  the Company  completed a private  placement of Series B
Convertible  Preferred  Stock  (the  "Series B  Preferred")  through  Settondown
Capital  International  ("Settondown").  The  Series B  Preferred  provides  for
liquidation  preference of $10.00 per share and cumulative dividends at 8.0% per
annum from the date of issuance,  payable  quarterly in cash or Common Stock, at
the then-current market price, at the option of the Company.

Holders of the Series B  Preferred  are  entitled  to convert any portion of the
Series B Preferred  into Common Stock at the average  market price of the Common
Stock for the five (5) day trading period ending on the day prior to conversion.
If the  difference  between the average  price and the current  market  price is
greater than 20%,  the lookback is increased to 20 days.  The Series B Preferred
also provides that holders are restricted  from converting an amount of Series B
Preferred  which would cause them to exceed  4.99%  beneficial  ownership of the
Common Stock. In the event that any securities remain  outstanding on the second
anniversary of the closing date, all remaining  securities  must be converted on
such date.  During the three months ended March 31, 1998 the holders of Series B
Preferred  Stock  converted  79,519 shares of Series B Preferred  into 1,803,052
shares of Common  Stock.  Dividends  on such shares of Series B  Preferred  were
$10,732, which was paid with 22,095 shares of Common Stock.

B.  EXERCISE OF LICENSE OPTION

On January 12, 1998, the Company consummated an agreement with 32 of 33 licensee
corporations that were due  approximately 8% of the outstanding  common stock of
CMRS as the balance of consideration due for the Company's exercising options to
acquire approximately 3,220 licenses from such licensee  corporations,  for such
licensee  corporations  to accept  $150,000 in lieu of such stock in CMRS.  Upon
signing, the Company had five days to fund such transaction. Due to limited time
and internal  resources,  the Company sought an investor that could  immediately
meet the  $150,000 in  payments.  Already  familiar  with the  Company  from its
earlier  investment,  Settondown agreed to provide the financing and acquire the
approximately  8% minority  interest in CMRS,  provided that the Company in turn
enter into an exchange  agreement  with  Settondown to issue  800,000  shares of
Common Stock in return for the  minority  interest in CMRS.  These  transactions
closed on February 10, 1998, in conjunction with which Settondown also agreed to
limit its selling of such shares of Common  Stock to no more than 50,000  shares
per month for the first six  months  following  issuance  thereof.  An effect of
these  transactions was to eliminate an  approximately  8% minority  interest in
CMRS in return for the issuance of 800,000 shares of Common Stock.  CMRS remains
a wholly owned  subsidiary of the Company with no further  obligations to the 32
licensee corporations. The one remaining licensee continues to operate under the
Company's Management and Option Agreements.  Negotiations are currently underway
to exercise  the option.  If a  satisfactory  resolution  cannot be achieved the
Company  intends to continue to operate under the current  Management and Option
Agreement, subject to the licensee's direction. The Company recorded the 800,000
shares at the fair market  value on the date of the  transaction,  February  10,
1998,  this  amount  was  capitalized  into  investment  in  options  to acquire
licenses.

C.  STANDSTILL AGREEMENT

On February 10, 1998, the Company and several  holders of the Series B Preferred
entered into an  amendment  providing  that such  holders  would not convert any
Series B Preferred  into Common Stock prior to March 11, 1998. In  consideration
for such  amendment,  the  Company  agreed  to issue to the  Series B  Preferred
holders  pursuant to Regulation S an aggregate of 310,023 shares of Common Stock
and warrants to purchase approximately 380,000 shares of Common Stock, the terms
of which are the same as the terms of the  warrants  issued in the  December 23,
1997 private placement described above.

The expense of $182,914  has been  determined  based on the fair market value of
the shares on the date of the  transaction.  The fair value of the  warrants was
less than the exercise  price, as a result no value was allocated to warrants on
the date of the transaction.

 (6) COMMITMENTS AND CONTINGENCIES

A.  LICENSE OPTION AND MANAGEMENT AGREEMENT CONTINGENCIES

Goodman/Chan   Waiver.   Nationwide   Digital   Data  Corp.   and   Metropolitan
Communications Corp. among others (collectively,  "NDD/Metropolitan"), traded in
the selling of SMR  application  preparation  and filing services to the general
public.  Most of the purchasers in these  activities had little or no experience
in the wireless communications industry. Based on evidence that NDD/Metropolitan
had been unable to fulfill their construction and operation  obligations to over
4,000  applicants who had received FCC licenses  through  NDD/Metropolitan,  the
Federal Trade Commission ("FTC") filed suit against NDD/Metropolitan in January,
1993,  in the  Federal  District  Court for the  Southern  District  of New York
("District Court").

The District Court appointed  Daniel R. Goodman (the "Receiver") to preserve the
assets of NDD/Metropolitan.  In the course of the Receiver's duties, he together
with a licensee,  Dr. Robert Chan, who had received several FCC licenses through
NDD/Metropolitan's  services,  filed a request to extend the construction period
for each of 4,000 SMR stations.  At that time, licensees of most of the stations
included in the waiver  request  ("Receivership  Stations")  were  subject to an
eight-month  construction  period.  On May 24, 1995, the FCC granted the request
for extension.  The FCC reasoned that the Receivership  Stations were subject to
regulation  as  commercial  mobile  radio  services  stations,  but had not been
granted the extended  construction  period to be awarded to all CMRS  licensees.
Thus,  in an effort to be  consistent  in its  treatment of  similarly  situated
licensees,  the FCC granted an additional  four months in which to construct and
place the Receivership  Stations in operation (the "Goodman/Chan  Waiver").  The
grant of the Goodman/Chan  Waiver is to become effective upon publication in the
Federal  Register.  As of this  date,  the  Goodman/Chan  Waiver  has  not  been
published in the Federal Register.

The FCC has never  released a list of stations it considers  to be  Receivership
Stations,  in spite of repeated  requests by the  Company.  Nonetheless,  on the
basis of release to the Company, by the Receiver,  of a list of the Receivership
Stations  believed  by the  Receiver  to be  subject  to  Management  and Option
Agreements with or held by the Company,  the Company believes that approximately
800 of the licenses that it owns or manages are Receivership  Stations.  For its
own licenses and under the direction of each licensee for managed stations,  the
Company has proceeded with the  construction of Receivership  Stations.  Because
the FCC has not released its final order for  publication,  no assurance  can be
given that any of such  stations  owned or managed by the  Company  will  obtain
relief with respect to deadlines for timely construction  pursuant to FCC rules.
The Company  believes that the  Goodman/Chan  Waiver  decision will be published
during  1998.   However,   significant  delay  by  the  FCC  in  publishing  the
Goodman/Chan    Waiver   in   the   Federal   Register   would   necessitate   a
re-prioritization of the Company's rollout plan.

The  Receiver  has  requested  that the  Company  replace  some of the  existing
Management and Option  Agreements  with  Goodman/Chan  licensees with promissory
notes. The Company engaged in discussions with the Receiver in this regard,  but
did not reach a final  determination  and concluded that no further  discussions
are  warranted  at this  time.  However,  there  can be no  assurances  that the
Receiver  would not  decide to take  actions  in the  future  to  challenge  the
Company's agreements with Goodman/Chan licensees, including the Company's rights
to  licenses  under such  agreements,  in an effort to enhance  the value of the
Receivership Estate.

B.  LEGAL PROCEEDINGS

The  Company is  involved  in various  claims and legal  actions  arising in the
ordinary  course  of  business.  In the  opinion  of  management,  the  ultimate
disposition  of these  matters  will not have a material  adverse  effect on the
Company's consolidated financial position, results of operations or liquidity.

On June 16, 1995, CCI filed a request for approval of an extended implementation
plan for the  construction  of over two thousand  SMR stations  with the FCC. On
December  15,  1995,  the FCC denied  that  request.  On January 21,  1996,  CCI
appealed  the denial to the U.S.  Court of Appeals for the  District of Columbia
Circuit.  Briefs were filed and oral argument was heard on November 5, 1996. The
Court has not  issued an  opinion.  Based on  relevant  precedent,  the  Company
believes there is substantial  basis for the appeal.  It cannot predict when the
Court will issue an opinion,  or whether  that  opinion will be favorable to the
Company.  If the Court denies the Appeal, the licenses for a small number of the
stations CCI manages may be automatically canceled.  Licenses for other stations
CCI manages have been  preserved by the  Goodman/Chan  Waiver or were  otherwise
timely constructed and not subject to the above.
 
Airnet,  Inc. v. Chadmoore  Wireless Group, Inc. Case No. 768473,  Orange County
Superior Court

On April 3, 1997, Airnet,  Inc. ("Airnet") served a summons and complaint on the
Company,  alleging  claims  related to a proposed  merger between Airnet and the
Company  that never  materialized.  In  particular,  Airnet has  alleged  that a
certain  "letter of intent"  obligated  the  parties to  complete  the  proposed
merger. The Company denies this allegation. In its complaint, Airnet has alleged
the  following  purported  causes  of  action  against  the  Company:  breach of
contract,  breach  of the  implied  covenant  of good  faith  and fair  dealing,
intentional  interference  with  prospective  economic  advantage,   intentional
interference with contractual relationship,  including breach of contract, false
promise and conversion.  Airnet has also purported to seek the following  relief
from the Company:  $28,000,000 in compensatory  damages plus interest,  punitive
damages,  costs  of  suit  and  attorney's  fees.  The  Company  challenged  the
sufficiency of the complaint as to most of the purported causes of action on the
grounds that these purported  causes of action fail to state facts sufficient to
constitute a cause of action. The Company also challenged the sufficiency of the
punitive  damages  allegations on the grounds that the compliant  fails to state
facts  sufficient  to  support  these  allegations.  Rather  than  oppose  these
challenges to its complaint,  Airnet elected to file a first amended  complaint.
Believing  that Airnet's  amendments  were  immaterial  the Company  renewed its
challenges to Airnet's  pleading.  On September 9, 1997, the court sustained the
Company's  demurrers  to  Airnet's  claims for  damages  based on the  Company's
alleged failure to complete the merger and to Airnet's claims for conversion. At
Airnet's  request,  the court allowed Airnet to amend its pleading a second time
to attempt to state these claims,  and Airnet's new complaint asserts claims for
breach of contract,  anticipatory breach of contract,  intentional  interference
with prospective economic advantage, interference with contractual relationship,
inducing breach of contract and false promise. The Company again filed demurrers
challenging certain of the claims in Airnet's pleading. On January 16, 1998, the
Court overruled the Company's demurrers to the Second Amended Complaint.

On February 2, 1998, the Company  answered the Second  Amended  Complaint with a
general denial and by asserting the following affirmative  defenses:  failure to
state a claim, uncertainty,  statutes of limitations,  laches, lack of capacity,
lack of standing, waiver, estoppel,  knowledge and acquiescence,  unclean hands,
unjust  enrichment,  fraud,  misrepresentations,  res  judicata,  justification,
privilege,  no action intended or reasonably calculated to cause injury, lack of
causation,  acts of third parties,  failure to allege a contract,  no meeting of
the minds, statute of frauds, lack of privity, fraud in the inducement, mistake,
lack  of  consideration,   failure  of  consideration,   failure  of  conditions
precedent,  concurrent,   subsequent,  Airnet's  intentional  misrepresentation,
Airnet's negligent  misrepresentations,  performance excused by Airnet's failure
to  perform,   performance   excused  by   recision,   performance   excused  by
modification, antecedent breaches by Airnet, accord and satisfaction, privileged
communications,  justified  communications,  no damages, failure to mitigate and
offset.

On February 2, 1998, the Company filed a Cross-Complaint  against Airnet as well
as  three  other  named  cross-defendants   related  to  Airnet:  Uninet,  Inc.,
("Uninet") Anthony Schatzlein ("Schatzlein") and Dennis Houston ("Houston"). The
Company's  Cross-Complaint  alleges  various causes of action  including  fraud,
breach of oral contract,  fraud and  defamation  which arise out of the proposed
merger and the events surrounding it. On March 2, 1998, cross-defendants Airnet,
Uninet,  Schatzlein  and Houston  answered  the  Cross-Complaint  with a general
denial and a single  affirmative  defense -- that the  Cross-Complaint  does not
state facts sufficient to constitute a cause of action.

The Company  intends to vigorously  defend the Second  Amended  Complaint and to
pursue the claims set forth in the Cross-Complaint. Although the Company intends
to  defend  the  action  vigorously,  it is still  in its  early  stages  and no
substantial  discovery  has  been  conducted  in this  matter,  with  certainty.
Accordingly,  at this time, the Company is unable to predict the outcome of this
matter. A non-binding  mediation is scheduled for June 12, 1998 before a retired
judge of the superior court.

Chadmoore Communications, Inc. v. John Peacock Case No. CV-S-97-00587-HDM (RLH),
United States District Court for the District of Nevada

In  September  1994,  CCI  entered  into a two year  consulting  agreement  (the
"Consulting Agreement") with John Peacock ("Peacock") to act as a consultant and
technical  advisor to CCI concerning  certain  specialized  mobile radio ("SMR")
stations.  In May, 1997 CCI filed a complaint  against  Peacock for  declaratory
relief in the United States District Court for the District of Nevada, seeking a
declaration of the respective rights and obligations of CCI under the Consulting
Agreement.  CCI is  seeking  this  judicial  declaration  based  upon  Peacock's
contention  that  he  is  entitled  to  certain  bonus  compensation  under  the
Consulting  Agreement.  Peacock  contends  that this bonus  compensation  is due
regardless of whether an SMR license is granted  based upon his  activities as a
consultant.  CCI contends that the Consultant Agreement is clear that such bonus
compensation  is only  awarded  upon  the  "grant"  of an SMR  license.  Peacock
contends that he is entitled to bonus compensation of four hundred five thousand
($405,000).  In lieu of answering the complaint,  Peacock filed a motion seeking
dismissal  of the  action  based  on the  assertion  that he is not  subject  to
jurisdiction  in Nevada courts.  After  briefing,  that motion was denied by the
Court, and the parties are now proceeding with discovery.

On September 26, 1997, Peacock answered the Complaint and asserted the following
affirmative defenses: failure to state a claim, failure to perform,  intentional
concealment or failure to disclose material facts, estoppel, unclean hands, lack
of subject  matter,  claims  not  authorized  by  declaratory  relief  statutes,
improper venue, forum non conveniens,  rescission and reformation, and choice of
law.

On or about January 28, 1998,  Peacock filed a motion to add a  counterclaim  to
this litigation.  The counterclaim purported to allege causes of action based on
breach of the  Consultant  Agreement,  fraud and breach of fiduciary  duty.  CCI
objected to Peacock's improper attempt to add tort claims to this litigation and
Peacock  agreed  to  withdrawn   them,   amend  its  proposed   counterclaim  by
stipulating,  and assert only a breach of contract claim based on the Consulting
Agreement.  The Amended  Counterclaim  was deemed filed with the Court, on March
15, 1998. On May 11, 1998 Chadmoore cited its Reply to Peacock's Counsels claim,
denying liability and asserting  Thirty-eight  affirmative  defenses,  including
defenses based on Peacock's alleged fraud and failure to perform.  For then with
its Reply,  Chadmoore  filed a  counterclaim  against  Peacock and two  entities
related to Peacock - Peacock's  Radio and Wild's  Computer  Services,  Inc.  and
Peacock's  Radio, a  Partnership.  Chadmoore's  counterclaim  asserts claims for
Fraud,   Breech  of  Fiduciary   Duty,  and  Breech  of  Contract.   Chadmoore's
counterclaim seeks general and punitive damages.

CCI  intends  to  vigorously   pursue  its  Complaint  and  defend  against  the
counterclaim.  At this time, discovery has not been completed and the Company is
unable to predict the outcome of this matter.

Pursuant  to the FCC's  jurisdiction  over  telecommunications  activities,  the
Company is  involved  in  pending  matters  before the FCC which may  ultimately
affect the Company's operations.

(7)      MANAGEMENT PLANS

The accompanying  unaudited consolidated financial statements have been prepared
assuming  that the Company  will  continue as a going  concern.  The Company has
suffered  recurring  losses from  operations,  has a negative working capital of
$8,521,025,  and has a $34,199,585  deficit  accumulated  during the development
stage that raise  substantial  doubt  about its  ability to  continue as a going
concern.  Management's plans in regard to these matters are described below. The
unaudited  consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

The  Company  believes  that over the next 12 months,  depending  on the rate of
market roll-out during such period, it will require  approximately  $5.0 million
to $7.0 million in additional  funding for full-scale  implementation of its SMR
services and ongoing operating expenses. To meet such funding requirements,  the
Company  anticipates  continued  utilization of its existing  borrowing facility
with  Motorola,  Inc.  ("Motorola"),  a vendor  financing  arrangement  recently
consummated with HSI GeoTrans, Inc. ("GeoTrans"), sales of selected SMR channels
deemed  non-strategic  to its  business  plan,  and  additional  debt funding as
needed. There can be no assurances that the Company will be able to successfully
obtain  the  additional  debt  financings  or will be  otherwise  able to obtain
sufficient financing to consummate the Company's business plan.

Based on the  foregoing,  the  Company  believes  that it should  have  adequate
resources  to  continue  establishing  its SMR  business  and  emerge  from  the
development stage during 1999.  However,  while the Company believes that it has
developed  adequate  contingency  plans,  the failure to obtain  additional debt
financing,  if  needed,  could have a material  adverse  effect on the  Company,
including  the risk of  bankruptcy.  Such  contingency  plans  include  pursuing
similar financing  arrangements with other  institutional  investors and lenders
that have  expressed  interest  in  providing  capital to the  Company,  selling
selected  channels,  and focusing  solely on the 28 markets in which  full-scale
service has already been  implemented.  This latter course might entail  ceasing
further system  expansion in such markets (which in the aggregate are generating
positive cash flow) and reducing  corporate staff to the minimal level necessary
to administer  such  markets.  The Company  believes  that this  strategy  would
provide  sufficient  time and  resources  to raise  additional  capital  or sell
selected  channels  in order to  resume  its  growth.  However,  there can be no
assurances that this or any of the Company's  contingency plans would adequately
address  the  aforementioned  risks,  or that the Company  will  attain  overall
profitability once it has emerged from the developmental stage.

(8) SUBSEQUENT EVENTS

On May 4, 1998, pursuant to an Investment Agreement ("Agreement"), dated May  1,
1998  between  the  Company  and  Recovery Equity II L.P. ("Recovery"), Recovery
purchased, for $7,500,000, from the Company, 8,854,662 shares of  common  stock,
10,119,614  shares  of  mandatorily  redeemable  Series  C  preferred  stock, an
eleven-year warrant to purchase up to 14,612,796 shares of common  stock  at  an
exercise price of $.001, a three-year warrant to purchase up to 4,000,000 shares
of  common  stock  at  an  exercise price of $1.25, and a five and one-half year
warrant to purchase up to 10,119,614 shares of common stock at an exercise price
of $.3953. The warrants contain certain  provisions  which  restrict  conversion
and/or  provide  adjustments  to  the  conversion price and number of shares. In
conjunction with the Agreement, the Company engaged an investment  banking  firm
which  determined  a  fair  value  for  each  security  issued  pursuant  to the
Agreement. Consistent with this determination, the  Company  has  allocated  the
proceeds of $7,500,000 to the securities based on relative fair values.

On May 1, 1998, the Company and Recovery entered into a  Shareholders  Agreement
which  stipulated  that  the Company and each of the Shareholders shall take all
action necessary to cause the Board to consist of two Directors to be designated
by the Recovery Shareholders, two Directors designated by  the  Chief  Executive
Officer of the Company, and two independent Directors.  

On May 1, 1998, the Company and Recovery  entered  into  an  Advisory  Agreement
commencing  on  May  1, 1998 and ending on the fifth anniversary, The Consultant
shall devote such time and efforts to the performance  of  providing  consulting
and  management  advisory  services  for  the  Company.  In consideration of the
consultants provision of the services to the Company, the Company shall pay  the
consultant  an  annual  fee of $312,500 beginning on the first anniversary which
shall be paid in advance, in equal monthly installments.

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
        OPERATION
 
The following is a discussion of the unaudited  consolidated financial condition
and results of operations of Chadmoore Wireless Group,  Inc.,  together with its
subsidiaries  (collectively "Chadmoore" or the "Company"), for the quarter ended
March 31, 1998, and 1997, respectively.
 
Statements  contained herein that are not historical  facts are  forward-looking
statements as that term is defined by the Private  Securities  Litigation Reform
Act of 1995.  Although the Company believes that the  expectations  reflected in
such forward-looking  statements are reasonable,  the forward-looking statements
are subject to risks and uncertainties that could cause actual results to differ
from those projected.  The Company cautions  investors that any  forward-looking
statements made by the Company are not guarantees of future performance and that
actual  results  may  differ  materially  from  those  in  the   forward-looking
statements.   Such  risks  and  uncertainties   include,   without   limitation,
fluctuations in demand, loss of subscribers, the quality and price of similar or
comparable wireless communications  services,  well-established  competitors who
have substantially  greater financial resources and longer operating  histories,
regulatory  delays or denials,  ability to complete  intended  market  roll-out,
access  to  sources  of  capital,  adverse  results  in  pending  or  threatened
litigation, consequences of actions by the FCC, and general economics.

During the year ended December 31, 1997, the Company's  primary  activities were
acquiring  assets (spectrum and  infrastructure),  attempting to secure capital,
performing engineering activities,  and assembling and installing infrastructure
on  antenna  sites.  To  a  far  lesser  degree  the  Company   concentrated  on
establishing  distribution,  marketing  and  building a customer  base.  Planned
principal  operations have commenced,  but there has been no significant revenue
therefrom.  The Company has  determined it is still devoting most of its efforts
to activities such as financial planning,  raising capital,  acquiring operating
assets,  training  personnel,  developing  markets and  building  its network of
licenses.  In  addition,  approximately  45% of 1997  revenue was  derived  from
non-core  business  activities which is not the primary focus of its operations.
The Company's  normal  operations  would be selling air-time to customers in 175
secondary and tertiary  markets  throughout the continental  United States,  not
selling and servicing radio equipment. Management believes the Company continues
to be a  development  stage  company,  as set forth in  Statement  of  Financial
Accounting  Standards No. 7 "Accounting  and  Reporting by  Developmental  Stage
Enterprises".  The Company will emerge from developmental stage when its primary
activities are focused on distribution, marketing and building its customer base
and there is significant  revenue  therefrom,  which the Company  anticipates to
occur during 1999.

(1) PLAN OF OPERATION

INTRODUCTION

The Company is the second-largest  holder of frequencies in the United States in
the 800 megahertz ("MHz") band for commercial  specialized  mobile radio ("SMR")
service.  With control over 4,800 channels in the 800 MHz band through ownership
of the licenses or through  generally  irrevocable  options to acquire  licenses
(see Licenses and Rights to Licenses), the Company's Operating Territory, covers
more than 53 million  people in 168 markets,  throughout  the United States with
focus on secondary and tertiary cities ("Operating Territory").

PRINCIPAL SERVICE AND MARKETS

Also known as dispatch, one-to-many, or push-to-talk, Chadmoore's commercial SMR
service enables reliable,  cost-effective,  real-time communications for smaller
and medium-sized enterprises ("SMEs") that rely on mobile workforces. For a flat
fee of  approximately  $15.00 per radio per  month,  customers  enjoy  unlimited
air-time for communicating instantaneously with their teams.

Dispatch is a two-way  wireless  communication  service  primarily  for business
users who have a need to  communicate  between a  central  dispatch  point and a
mobile  workforce.  Users  can  choose  to  communicate  with a group,  selected
sub-groups or individuals.  The customer base for dispatch  service is typically
stable,   diverse,   and   cost-conscious,   including   general  and  specialty
contractors,  HVAC  service  providers,  security  services,  courier  and other
delivery  services,  distribution  and  transportation  firms,  real  estate and
insurance agents, farmers, and other SMEs that have significant field operations
and need to provide their personnel with the ability to communicate  directly in
real-time  on a  one-to-one  or  one-to-many  basis.  Consequently,  the Company
believes that SMR represents an attractive and affordable communication solution
for  smaller and middle  market  businesses,  especially  in the  secondary  and
tertiary cities in which Chadmoore is focusing.

The  Company's  primary  objectives  are to continue  developing,  operating and
aggressively  loading SMR systems within its Operating Territory and to do so in
a manner that effectively  deploys  capital,  maximizes  recurring  revenues per
dollar of invested capital, and generates positive cash flow at the system level
as quickly as possible. In assessing these objectives and its spectrum position,
the  Company  adopted  its  strategy  to focus  on the  traditional  analog  SMR
business.

Several  key  factors are  believed  by the  Company to support  this  strategy,
including  (i) an  established  market  base of 18.8  million  users in the U.S.
estimated to already rely on analog SMR service for dispatch applications,  (ii)
capacity  constraints  creating pent-up demand, (iii) before the FCC's licensing
freeze, demand for SMR that had expanded consistently at a rate of approximately
15% to 18% per year for the prior 10 years,  (iv) basic businesses of the nature
served  by SMR have  endured  for  decades,  and are  expected  to  continue  to
indefinitely into the future,  particularly in the secondary and tertiary cities
focused on by Chadmoore,  (v) favorable economic and demographic conditions have
stimulated   significant   business   formation,   with  SMR   positioned  as  a
cost-effective  entry-level  productivity  tool for SMEs,  (vi)  outsourcing  to
commercial SMR providers was becoming  economical for users on private  systems,
(vii) analog SMR technology is proven, dependable, and widely available,  (viii)
analog dispatch  service provides  unlimited  one-to-many  communications  for a
known,  flat fee of approximately  $15 per user per month, (ix) excellent system
economics are attainable as analog SMR service is simple and  cost-effective  to
deploy,   (x)  such  system   economics  enable  the  Company  to  add  capacity
incrementally  as  demand  dictates,  resulting  in a  relatively  low  cost  of
infrastructure, (xi) additional services such as sub-fleet billing, interconnect
(telephony),   automatic  vehicle  location,  mobile  data,  voice  mail,  short
messaging (paging),  and telemetry can be offered using the same infrastructure,
thereby  generating  operating  leverage,  (xii) an  experienced,  trained,  and
motivated  distribution  network was already in place  primarily  in the form of
Motorola  Sales and Service  ("MSS")  shops,  and (xiii)  nothing  precludes the
Company  from  migrating  to  digital  or other  technology  as future  capacity
requirements dictate on a market by market basis.

Prior to adopting its analog technology platform, the Company had considered but
decided against  implementing a digital  infrastructure  ("digital  SMR").  This
decision  was based,  in part,  on the  Company's  evaluation  of the  following
factors: (i) competitors  converting to digital SMR were expected by the Company
to create further segmentation and awareness in the marketplace, (ii) full-scale
digital conversion strategies generally require turning off existing SMR systems
in order to utilize frequencies within a digital  architecture,  creating a pool
of established  users which the Company believes to be potentially  available to
other  providers,  (iii) the capital costs per subscriber  associated  with such
digital technology are substantially higher than those for analog systems,  (iv)
the Company  believes that the increasingly  competitive  nature of the wireless
communications  industry  increases the risks associated with the higher capital
costs  of  such  digital  technology,  (v) a four to five  times  lower  pricing
advantage   for  analog   versus   digital   service  can  be  marketed  to  the
cost-conscious  end-user,  (vi)  other  than  digital  encryption,  the  Company
believes  that  essentially  the same feature set can be offered to the customer
using  analog   technology,   (vii)  the  Company   believes  that  it  can  add
infrastructure on an as-needed,  just-in-time  basis and for significantly  less
capital  cost,  and (viii)  nothing  precludes  the Company from  migrating to a
digital SMR  platform  as future  capacity  requirements  dictate on a market by
market basis,  although such a migration would require additional  expenditures.
Because  virtually  all of the channels  acquired by the Company were  initially
unused, with few or no existing customers on such frequencies, Chadmoore did not
need to adopt a  digital  infrastructure  in order to  create  room for  growth.
Rather,  with ample  available  frequencies  at its disposal,  the Company could
continue to offer traditional SMR users the low-cost,  fixed-rate communications
solution to which they are accustomed.

As of March 31,  1998,  the  Company  had  constructed,  and  based on  detailed
criteria relating to engineering, demographics,  competition, market conditions,
and dealer  characteristics,  had  developed a  prioritized  roll-out plan for a
total of 168 markets in the United States  covering more than 53 million people.
This population number, based on estimated 1996 U.S. Census Bureau estimates for
Metropolitan Statistical Area figures,  represents the number of people residing
in the Operating Territory and is not intended to be indicative of the number of
users or potential  penetration rates as the Company  establishes  operating SMR
systems.  Of these 168 markets,  the Company has implemented  full-scale systems
and distribution,  servicing  approximately  13,000  subscribers (an increase in
excess of 50% since December 31, 1997) in the following 28 markets as of May 14,
1998:

Augusta, GA                                Austin, TX
Baton Rouge, LA                            Bay City/Saginaw, MI
Bowling Green, KY                          Charleston, SC
Charlotte, NC                              Corpus Christi, TX
Fayetteville, AR                           Fort Myers, FL
Fort Wayne, IN                             Grand Rapids, MI
Huntsville, AL                             Jacksonville, FL
Lake Charles, LA                           Lexington, KY
Little Rock, AR                            Mankato, MN
Memphis, TN                                Milwaukee, WI
Naples, FL                                 Nashville, TN
Pine Bluff, AR                             Portland, ME
Richmond, VA                               Roanoke, VA
Rockford, IL                               South Bend, IN

Chadmoore generates revenue primarily from monthly billing for dispatch services
on a per  unit  (radio)  basis.  In  selected  markets,  additional  revenue  is
generated from telephone interconnect service based on air-time charges as used,
and in the case of the Memphis and Little Rock markets (in which  direct  rather
than  indirect  distribution  is  used),  from  the  sale  of  radio  equipment,
installation, and equipment service as well.

As  initial  capacity  in a market is  approached,  additional  channels  can be
integrated  into  the  main  system  using  the same  basic  controller  (system
computer),  which  reduces the average  capital  cost per  channel.  The Company
believes  that  such  system  economics  enable  the  Company  to  add  capacity
incrementally as demand dictates and maximize  recurring  revenues per dollar of
capital invested. At the same time, capacity increases geometrically as channels
are  added  due  to the  greater  statistical  probability  of a  channel  being
available  for any user at any given time. In the  Company's  belief,  these two
factors generate strong operating leverage as the system expands.

In general,  the Company  prioritizes  its markets based on five key parameters:
(i) the quality of the  potential  dealer,  (ii) the lack of available  capacity
from  other  SMR  providers  in  the  market,   (iii)  business  and  population
demographics, (iv) channel density, availability of tower space, topography, and
similar engineering considerations,  and (v) the overall business case including
anticipated  pricing,  demand,  infrastructure  and operating  costs,  return on
investment, and potential for value-added services.

DISTRIBUTION

Once  commercial   service  has  been  implemented  in  a  market,   Chadmoore's
executional focus turns to acquiring new users. In general, the Company utilizes
an indirect  distribution  network of  well-established  local dealers,  most of
which are MSS shops,  to penetrate its markets.  The Company  believes that this
distribution   channel   enables  it  to  capitalize  on  substantial   existing
infrastructure,  reduce  capital  requirements,  reduce fixed  operating  costs,
outsource  lower-margin  equipment sales and service,  enhance flexibility,  and
speed roll-out,  while also bringing the Company  immediate market knowledge and
presence,  significant industry experience, and an established base of customers
and  prospects  to sell  into.  Chadmoore  selects  its  dealers on the basis of
loading history,  infrastructure for supporting customers, motivation level, and
references from vendors and customers.  Motorola, Inc. (NYSE: MOT) has been very
helpful to the  Company in  identifying  and  introducing  Chadmoore  to quality
dealers  in  high-priority  markets as well.  In  markets  in which the  Company
operates, but where a suitable dealer or independent agent is not available, the
Company intends to establish its own marketing presence or offer such markets as
expansion  opportunities for top dealers serving the Company in other cities, in
each case to the extent the Company finds practical.  In addition, the Company's
management team  recognizes  that additional  staff will be required to properly
support marketing,  sales, engineering,  accounting,  and similar disciplines to
achieve its 1998 marketing objectives.

Through  corporate and field management,  Chadmoore  supports its dealers with a
range of selling tools and  incentives.  The Company has engaged Moscato Marsh &
Partners,  Inc.  of  New  York  ("Moscato")  for  advertising,   marketing,  and
promotional  services as well as  administering  the local market  launch in the
remaining 140 markets.  Several  elements of  Chadmoore's  customer  acquisition
strategy are incorporated into Moscato's program,  including further development
of "Power To Talk" (PTT) service mark, creation and distribution of local dealer
support kits, design and planning of local market promotional, media, and public
relations programs in all of the Company's 168 markets, production of collateral
materials and national advertisements in trade publications,  and development of
a full-time field marketing administrative program on a local market basis.

During 1997 for selected dealers in priority markets,  the Company implemented a
dealer partner program in order to finance system construction ahead of plan. In
this program,  dealers made substantial direct  contributions that financed 100%
of the initial system build-out.  Depending on the market,  the dealer generally
recoups 60% to 80% of such  investment  from  system  earnings  after  operating
expenses,  and retains a 20% to 40%  interest in the system  thereafter.  Of key
significance, the dealer is repaid only if the system is profitable. The result:
a long-term  partnering  relationship  that motivates the Company to support the
dealers,  and  that the  Company  believes  motivates  dealers  to load  systems
rapidly,   provide  excellent  service  and  customer   retention,   and  market
value-added  services to the installed base.  Company  management  believes that
such emphasis has, in part,  been  responsible  for a Chadmoore  churn rate (the
rate at which customers disconnect service) well below industry average.

To keep the  motivational  aspects of the dealer partner  program but reduce the
effective capital cost to the Company,  in selected markets for which full-scale
roll-out has yet to occur the Company anticipates implementing a modified dealer
partner  arrangement in which the dealer would contribute  approximately  25% to
60% (depending on market size) towards  initial market  roll-out costs in return
for a 10%  interest  in the local  system.  This  investment  would be a capital
contribution,  and not  recouped  from system  earnings.  Based on the speed and
extent of loading  subscribers  onto the system,  the dealer  partner would have
incentive opportunities to earn up to an additional 10% interest in the system.

COMPETITIVE BUSINESS CONDITIONS AND COMPANY'S INDUSTRY POSITION

In management's evaluation,  key factors relevant to competition in the wireless
communication  industry  are  pricing of  service,  size of the  coverage  area,
quality of communication,  reliability and availability of service (i.e. waiting
time for a "clear channel", absence of busy signals, and absence of transmission
disconnects or failures).  The Company's success depends in large measure on its
ability to compete  with  numerous  wireless  service  providers  in each of its
markets,  including  cellular  operators,  PCS  service  providers,  digital SMR
service providers, paging services, and other analog SMR operators. The wireless
communications  industry is highly  competitive and comprised of many companies,
most of  which  have  substantially  greater  financial,  marketing,  and  other
resources than the Company.  While the Company  believes that it has developed a
differentiated  and effective  business plan, there can be no assurances that it
will be able to compete successfully in its industry.

Since the late 1980s,  Nextel  Communications  Inc. ("Nextel") in particular has
acquired a large number of SMR systems and is in the process of  implementing  a
conversion from analog SMR technology to Motorola's digital integrated  Dispatch
Enhanced Network ("iDEN") system. Other cellular operators and PCS providers are
implementing digital transmission  protocols on their systems as well. Chadmoore
believes that Nextel is focusing on higher-end,  cellular-like  telephony users,
thereby creating a market segmentation opportunity for the Company. As a result,
the Company competes with Nextel primarily on the basis of price.

Other potential wireless  competitors for Chadmoore include Southern Company and
Geotek.  Both are implementing  digital  architectures and pursuing  Nextel-like
strategies on a regional or primary  market basis.  Southern  Company is a large
utility  focusing on wide-area  communications  for its own vehicle fleet in the
Southeastern  U.S., while selling excess capacity to other businesses  traveling
the  same  geographic  region.  Geotek  is  deploying  an  advanced  proprietary
technology  developed from Israeli military systems that operates on 900 MHz. As
with  Nextel,  Chadmoore  intends to compete  with  Southern  Company and Geotek
primarily based on price.

Most other analog SMR providers consist of local small businesses,  often passed
from  generation  to  generation,  that  Chadmoore  believes  lack the spectrum,
professional  marketing,  management  expertise,  and  resources  brought to the
marketplace  by  the  Company.   In  fact,   available  capacity  and  operating
capabilities  of existing SMR providers  constitute  key factors in  Chadmoore's
market  prioritization  matrix.  The Company  intends to compete  with  existing
analog SMR  providers  primarily on the basis of customer  service,  capacity to
meet customer growth, and professional marketing and dealer support.

LICENSES AND RIGHTS TO LICENSES

Within its 168 target markets,  Chadmoore controls  approximately 4,800 channels
in the 800 MHz band  through  ownership  of the  licenses  or through  generally
irrevocable five and ten-year options to acquire licenses ("Option Agreements"),
subject  to FCC  rules,  regulations,  and  policies,  coupled  with  management
agreements  ("Management  Agreements")  until such Option  Agreements  have been
exercised or expire.  The  Management  Agreements  give the Company the right to
manage the SMR systems,  subject to the direction of the licensees, for a period
of time prior to the  transfer  of the  licenses to the Company as stated in the
agreements,  usually 2 to 5 years. During such period,  revenues received by the
Company are shared with the licensee  only after  certain  agreed-upon  costs to
construct  the channels  have been  recovered by the  Company.  These  like-term
Management  Agreements  with the  license  holders  are  intended  to enable the
Company to develop, maintain, and operate the corresponding SMR channels subject
to the licensee's  direction.  Any  acquisition of an SMR license by the Company
pursuant to exercise of an Option Agreement is subject,  among other things,  to
approval of the  acquisition by the FCC. Until an Option  Agreement is exercised
and the  corresponding  license is  transferred  to Chadmoore,  the Company acts
under the direction and ultimate control of the license holder and in accordance
with FCC rules and regulations.

Once an SMR station is operating,  the Company may exercise its Option Agreement
to  acquire  the  license  at any time  prior to the  expiration  of the  Option
Agreement. As of March 31, 1998, the Company had exercised Options Agreements on
approximately 4,030 channels,  of which approximately 670 had transferred to the
Company and approximately  3,360 were in the process of being transferred to the
Company,  pending FCC approval.  The remaining approximate 770 channels continue
to be utilized under Option and Management Agreements, for which the Company has
decided to delay exercise based on economic considerations.

The Company presently intends to exercise all such remaining Option  Agreements,
but such  exercise is subject to certain  considerations.  The Company may elect
not to exercise an Option Agreement for various business reasons,  including the
Company's  inability  to acquire  other  licenses in a given  market,  making it
economically  unfeasible  for the Company to offer an SMR system in such market.
If the Company does not exercise an Option Agreement, its grantor may retain the
consideration previously paid by the Company.  Moreover, if the Company defaults
in its  obligations  under an Option  Agreement,  the  grantor  may  retain  the
consideration previously paid by the Company as liquidated damages.  Further, if
the SMR system is devalued by the Company's  direct action,  the Company is also
liable under the Option Agreement for the full Option Agreement price,  provided
the grantor gives timely notice. The Option Agreements also authorize a court to
order  specific  performance  in  favor of the  Company  if a  grantor  fails to
transfer the license in accordance with the Option Agreement. However, there can
be no assurance that a court would order specific performance, since this remedy
is subject to various  equitable  considerations.  To the extent that Option and
Management  Agreements remain in place, no assurance can be given that they will
continue to be accepted by the FCC or will continue in force.

(2) RESULTS OF OPERATION

Total  revenues for the quarter ended March 31, 1998  increased 3.5% to $516,092
from $498,849 in the first quarter of 1997, reflecting increases of $230,087, or
162.6%,  in Radio Services  (recurring  revenues from air-time  subscription  by
customers),  offset by declines of $165,863,  or 66.0%,  in Equipment  Sales and
$40,100, or 40.6% in Maintenance and Installation services.  Consistent with the
Company's  plan of  operation  to focus on  recurring  revenues  by selling  its
commercial SMR service  through  independent  local  dealers,  the proportion of
total  revenues  generated  by Radio  Services  increased  to 72.0% in the first
quarter of 1998 from 28.4% in the first quarter of 1997. Where the Company sells
through  independent  dealers,  the local dealer rather than the Company  sells,
installs,  and services the radio  equipment  and records the revenues and costs
associated  therewith  and the  Company  receives  only  the  recurring  revenue
associated with the sale of airtime. The Company anticipates that the proportion
of total  revenues from  recurring  revenues will continue to increase in future
periods as  additional  markets are rolled out utilizing  indirect  distribution
through such local dealers.

The 162.6% increase in Radio Services revenues, to $371,578 in the first quarter
of 1998 from $141,491 in the first quarter of 1997, was driven by an increase in
the number of  subscribers  utilizing the Company's SMR systems,  which measured
11,260 at March 31,  1998  versus  approximately  2,600 at March  31,  1997,  an
increase  of over 325%  during the twelve  months  ended  March 31,  1998,  with
approximately 70% of the growth occurring in the second half of such period. The
increase in subscribers, in turn, may be attributed to full-scale implementation
of service by the  Company in 17 new  markets  during the  period.  Pricing  per
subscriber unit in service remained comparable over the periods. Further, during
the period  January 1, 1998 through  March 31, 1998,  the number of  subscribers
increased by  approximately  3,000 as compared to  approximately  500 during the
same period in 1997, an increase of approximately 500%.

The 66.0%  decrease in revenues from  Equipment  Sales,  to $85,528 in the first
quarter  of 1998  from  $251,391  in the  first  quarter  of 1997 and the  40.6%
decrease in revenues from Maintenance and Installation  services,  to $58,740 in
the  first  quarter  of 1998 from  $98,840  in the first  quarter  of 1997,  was
attributed to a relatively  lower  increase in new  subscribers  purchasing  new
equipment  in  the  Company's  two  direct  distribution   markets  as  well  as
insufficient  working  capital to maintain  inventory  and a full  complement of
salespeople.

The Company  anticipates  that Equipment Sales and Maintenance and  Installation
service will continue to account for a declining  share of total revenues in the
future,  because  since  acquiring  full-service  operations  in its  first  two
markets,  the Company has  utilized and intends to continue  utilizing  indirect
distribution  through  local  dealers in  substantially  all  markets.  As noted
previously,  in such cases,  the local  dealer  rather  than the Company  sells,
installs,  and services the radio  equipment  and records the revenues and costs
associated therewith.

Cost of sales  decreased by $89,241,  or 32.8%, to $182,873 in the first quarter
of 1998 from  $272,114 in the first  quarter of 1997.  This  decrease was due to
lower  Equipment and Maintenance and  Installation  revenues,  which have higher
cost of sales associated with them,  compared to Radio Services  revenues.  As a
result, gross margin (total revenue less cost of sales, as a percentage of total
revenue)  increased by 19.1 percentage  points, to 64.6% in the first quarter of
1998 from 45.5% in the first quarter of 1997.

Salaries,  wages,  and benefits  expense  decreased by  $122,790,  or 21.3%,  to
$453,250  in the first  quarter of 1998 from  $576,040  in the first  quarter of
1997,  primarily  due to a lower number of employees and  significantly  reduced
relocation expenses.  Relative to total revenues,  salaries, wages, and benefits
expense measured 87.8% in the first quarter of 1998 compared with 115.5% for the
first quarter of 1997. In future years the Company expects salaries,  wages, and
benefits  expense as a percent of total  revenues  to continue to decline as the
Company realizes  operating  leverage gained from an increasing  subscriber base
managed through essentially the same infrastructure.

General and administrative  expense,  increased $72,126, or 9.5%, in to $832,400
in the first quarter of 1998 from  $760,274 in the first  quarter of 1997.  This
increase is primarily attributed to an increase in site expenses for non-revenue
generating sites. The Company expects such general and administrative site costs
to decrease as these sites  generate  revenue and related site costs become cost
of  sales.  Relative  to total  revenues,  general  and  administrative  expense
increased to 161.3% in the first  quarter of 1998  compared  with 152.4% for the
first quarter of 1997. The Company expects general and administrative expense as
a percent of total  revenues to decline in future years as the Company  realizes
operating  leverage  gained from an increasing  subscriber  base managed through
essentially the same infrastructure.

Depreciation and amortization expense increased $33,776, or 21.1% to $194,134 in
the first quarter of 1998 from $160,358 in the first quarter of 1997, reflecting
greater capital expenditures  associated with construction and implementation of
operating systems equipment.

Due to the foregoing,  total operating expenses decreased $106,129,  or 6.0%, to
$1,662,657 in the first quarter of 1998 from  $1,768,786 in the first quarter of
1997, and the Company's loss from operations decreased by $123,372,  or 9.7%, to
$1,146,565 from $1,269,937, for such respective periods.

Net interest  expense  increased  $154,418,  or 50.5%,  to $460,370 in the first
quarter  of 1998  from  $305,952  in the  first  quarter  of 1997,  which may be
attributed to higher  average  balances  outstanding  under loan  facilities and
additional notes payable to licensees,  from the exercise of Option  Agreements,
partially  off-set by a  "beneficial  conversion  feature"  associated  with the
issuance  of  convertible  debentures  convertible  at a discount  from the then
current common stock market price recorded as interest expense in 1997.

Based on the foregoing,  the Company's net loss increased $223,257, or 14.2%, to
$1,799,146,  or $0.08 per basic and diluted share,  in the first quarter of 1998
from  $1,575,889,  or $0.08 per basic and diluted share, in the first quarter of
1997.
 
(3) LIQUIDITY AND CAPITAL RESOURCES

During the three months ended March 30, 1998 and 1997, the Company used net cash
in  operating  activities  of $979,775. The Company continues to fund operations
through financing activities as the Company continues to be in  the  development
stage.  The major use of cash for the three months ended March 30, 1998 and 1997
was the acquisition of communication assets. The major source of cash for three
months ended March 30, 1998 and 1997 are proceeds  from  issuance  of  long-term
debt.

The  Company  believes  that over the next 12 months,  depending  on the rate of
market roll-out during such period, it will require  approximately  $5.0 million
to $7.0 million in additional  funding for full-scale  implementation of its SMR
services and ongoing operating expenses. To meet such funding requirements,  the
Company  anticipates  continued  utilization of its existing  borrowing facility
with  Motorola,  Inc.  ("Motorola"),  a vendor  financing  arrangement  recently
consummated with HSI GeoTrans, Inc. ("GeoTrans"), sales of selected SMR channels
deemed  non-strategic  to its  business  plan,  and  additional  debt funding as
needed. There can be no assurances that the Company will be able to successfully
obtain  the  additional  debt  financings  or will be  otherwise  able to obtain
sufficient financing to consummate the Company's business plan.

On May 4, 1998, pursuant to an Investment Agreement ("Agreement"),  dated May 1,
1998  between the Company and  Recovery  Equity II L.P.  ("Recovery"),  Recovery
purchased, for $7,500,000,  from the Company,  8,854,662 shares of common stock,
10,119,614  shares  of  mandatorily  redeemable  Series C  preferred  stock,  an
eleven-year  warrant to purchase up to  14,612,796  shares of common stock at an
exercise price of $.001, a three-year warrant to purchase up to 4,000,000 shares
of common  stock at an exercise  price of $1.25,  and a five and  one-half  year
warrant to purchase up to 10,119,614 shares of common stock at an exercise price
of $.3953.  The warrants contain certain  provisions  which restrict  conversion
and/or  provide  adjustments to the  conversion  price and number of shares.  In
conjunction with the Agreement,  the Company engaged an investment  banking firm
which  determined  a  fair  value  for  each  security  issued  pursuant  to the
Agreement.  Consistent  with this  determination,  the Company has allocated the
proceeds of $7,500,000 to the securities based on relative fair values.

On  May  1,  1998,  the  Company and Recovery entered into an Advisory Agreement
commencing on May 1, 1998 and ending on the fifth  anniversary,  The  Consultant
shall  devote  such  time and efforts to the performance of providing consulting
and management advisory services  for  the  Company.  In  consideration  of  the
consultants  provision of the services to the Company, the Company shall pay the
consultant an annual fee of $312,500 beginning on the  first  anniversary  which
shall be paid in advance, in equal monthly installments.

In conjunction  with  Recovery's  increased  equity  financing,  the Company has
elected  to  defer  its  previously  announced  effort  to  raise  secured  debt
financing,  but  intends to return to the debt  markets as needed in the future,
presumably with a stronger balance sheet, longer operating history,  and greater
critical  mass.   Consistent  with  that  decision,   Chadmoore  has  terminated
discussions  under its  previously  disclosed  letter of  intent  with  Foothill
Capital  Corporation.  The  Company  contemplates  returning  to the debt market
during the next 12 months, but has not entered into any substantive  discussions
or commitments for additional debt financing as of the date hereof.

On March 9, 1998, the Company entered into a vendor  financing  arrangement with
GeoTrans,  a wholly owned  subsidiary of Tetra Tech,  Inc.,  whereby GeoTrans is
performing  turn-key  implementation of full-scale SMR operating systems for the
Company  in up to 10  markets  per  month and 145 total  markets.  During  1997,
GeoTrans  completed  preliminary  construction  services  for the  Company in 78
markets.  The  financing  mechanism in the Company's  arrangement  with GeoTrans
specifies a $4,000  down-payment  per market by the  Company  and  approximately
$18,000  per  market to be drawn by the  Company  under its  Motorola  financing
facility,  with  GeoTrans  financing  the balance of  approximately  $49,000 per
market on 120-day  payment terms,  with  incentives to the Company of up to a 3%
discount for early payment.  Collateral for such financing  arrangement consists
of 183 channels in nine primarily non-strategic markets with a fair market value
estimated by the Company of $4.4 million.

On January 12, 1998, the Company consummated an agreement with 32 of 33 licensee
corporations that were due  approximately 8% of the outstanding  common stock of
CMRS (as the balance of consideration due for the Company's  exercising  options
to acquire  approximately 3,220 licenses from such licensee  corporations),  for
such  licensee  corporations  to accept  $150,000 in lieu of such stock in CMRS.
Upon signing, the Company had five days to fund such transaction. Due to limited
time  and  internal  resources,  the  Company  sought  an  investor  that  could
immediately  meet the $150,000 in payments.  Already  familiar  with the Company
from its earlier  investment,  Settondown Capital  International  ("Settondown")
agreed to provide  the  financing  and  acquire  the  approximately  8% minority
interest  in CMRS,  provided  that the  Company in turn  enter into an  exchange
agreement with  Settondown to issue 800,000 shares of Common Stock in return for
the minority interest in CMRS. These  transactions  closed on February 10, 1998,
in conjunction  with which  Settondown  also agreed to limit its selling of such
shares of Common Stock to no more than 50,000 shares per month for the first six
months  following  issuance  thereof.  An  effect of these  transactions  was to
eliminate  an  approximately  8%  minority  interest  in CMRS in return  for the
issuance  of  800,000  shares  of Common  Stock.  CMRS  remains  a wholly  owned
subsidiary  of the  Company  with  no  further  obligations  to the 32  licensee
corporations,  considerably  simplifying  the Company's  capital  structure as a
result.  Management  believes the  transactions  were  advantageous  because the
valuation  placed by the  Company on the 8% of CMRS  common  stock  which  would
otherwise  have  been  issued  to the  license  holders  was  greater  than  the
consideration  actually provided by the Company as a result of the transactions.
However,  no assurances can be given that the Company's  valuation of such 8% of
CMRS common stock would be generally accepted, especially given the absence of a
public market in CMRS shares and market uncertainties regarding the valuation of
assets  such as those held by CMRS.  The one  remaining  licensee  continues  to
operate under the Company's  Management and Option Agreements.  Negotiations are
currently  underway to exercise the option. If a satisfactory  resolution cannot
be  achieved  the  Company  intends to  continue  to operate  under the  current
Management and Option Agreement, subject to the licensee's direction.

On October 30, 1997, two subsidiaries of the Company, CCI and CMRS, entered into
a First Amendment and Financing and Security  Agreement with MarCap  Corporation
("MarCap")  which amended that certain  Financing and Security  Agreement  dated
October 29, 1996 between CCI and Motorola (the  "Motorola Loan  Facility"),  the
interest of Motorola  therein having been assigned to MarCap,  pursuant to which
MarCap  extended  to CCI and  CMRS an  additional  loan  facility  (the  "MarCap
Facility")  in a  maximum  amount of  $2,000,000  (plus  certain  fees and legal
expenses  payable to MarCap).  The MarCap Facility is secured by (i) a pledge of
all the  stock of two  subsidiaries  and  assignment  of all  limited  liability
company  membership  interests  in  three  limited  liability  companies,  which
collectively  hold  licenses or rights to  licenses in up to 452  channels in 12
markets having a value (per a third-party appraiser) of approximately $8,800,000
(subsequently  valued  at  approximately  $10,400,000  by the  same  third-party
appraiser),  (ii) a first lien on all non-Motorola equipment used in systems for
such markets,  and (iii) a cross-pledge of all collateral  previously granted in
favor of Motorola relating to the Motorola Facility,  which cross-pledge,  until
modified by letter  agreement  dated  February  25, 1998 between the Company and
MarCap as described  further  below,  would  unwind with  respect to  collateral
pledged  under  either  the  Motorola  Facility  or  MarCap  Facility  upon full
repayment  by  the  Company  of  all  outstanding  balances  under  either  such
respective  Facility.  The MarCap  Facility is further  guaranteed  by Chadmoore
Wireless Group, Inc. and by Chadmoore  Communications of Tennessee,  Inc. to the
extent  of its  interest  in the  collateral  previously  pledged  in  favor  of
Motorola.

On October 31, 1997, the initial draw under the MarCap  Facility was made in the
amount of $481,440  and  evidenced  by a  promissory  note  executed in favor of
MarCap.  Subsequent draws of $250,000,  $650,000 and $663,000 (plus certain fees
and legal  expenses  payable to MarCap) were made on February 6, 1998,  March 6,
1998, and March 27, 1998, respectively.

On February 25,  1998,  the Company and MarCap  entered into a letter  agreement
relating to the Motorola and MarCap  Facilities  which provided for (i) complete
cross-collateralization  of the  Motorola  and  MarCap  Facilities  without  the
aforementioned  unwinding  provision,  (ii) a revised borrowing base formula for
the  Motorola  and  MarCap  Facilities,  (iii)  notification  by the  Company to
Motorola of the modifications being made pursuant to such letter agreement, (iv)
affirmation  by the Company to utilize  its  diligent  best  efforts to raise at
least $5 million of equity and $15 million of  aggregate  financing by April 30,
1998,  (v) waiver of existing  covenants for the Motorola and MarCap  facilities
through April 30, 1998 so long as the Company  continues to utilize its diligent
best efforts to raise at least $5 million of equity and $15 million of aggregate
financing by such date,  (vi)  affirmation  by MarCap that it will not object to
the  Company  incurring  $10  million in  additional  senior debt so long as the
Company is not in material default on the Motorola or MarCap  facilities,  (vii)
new  covenants  for the Motorola and MarCap  facilities,  based on the Company's
business plan as if no additional equity and debt financing were raised by April
30,  1998,  that would  take  effect  after  April 30,  1998.  On March 5, 1998,
Motorola  provided the Company with written  acknowledgment  of the notification
required by the Company as described in clause (iii) above. As a result of these
modifications,  the Company is in full  compliance  with the Motorola and MarCap
facilities, and has classified the appropriate portion (maturing after one year)
as long-term debt.

On April 30,  1998,  the Company and MarCap  agreed  upon  modifications  to the
provisions of the MarCap Facility.  Such  modifications  included (i) a shifting
out of existing  covenants  by one quarter to account for elapsed  time that had
been dedicated to securing  financing  rather than systems  implementation,  and
(ii)  affirmation  by the Company to utilize its diligent best efforts to obtain
the  then-proposed  $7.5  million of equity  financing  without  the $15 million
aggregate financing requirement. The Company remains in full compliance with the
Motorola and MarCap Facilities.

In October  1996,  CCI signed a purchase  agreement  with  Motorola  to purchase
approximately $10,000,000 of Motorola radio communications equipment,  including
Motorola  Smartnet II trunked radio systems.  Such purchase  agreement  required
that the  equipment  be purchased  within 30 months of its  effective  date.  In
conjunction with such purchase agreement, CCI entered into the Motorola Facility
permitting CCI to borrow during the term of the purchase  agreement up to 50% of
the value of Motorola equipment purchased under the purchase agreement, or up to
$5,000,000.  On August  18,  1997,  Motorola,  with the  Company's  concurrence,
assigned  all of its  interest in the  Motorola  Facility  to MarCap.  By way of
letter agreement dated March 10, 1998 among MarCap,  Motorola,  and the Company,
the  effective  period  of the  Motorola  purchase  agreement  and the  Motorola
Facility  was  extended  from 30 months to 42 months  from the  effective  dates
thereof.  Depending on the Company's ability to continue funding its minimum 50%
down-payment  requirement  under the Motorola  purchase  agreement,  the Company
anticipates funding approximately $2.5 million of Motorola equipment for its SMR
systems under the Motorola Facility for the next 12 months.



Based on the  foregoing,  the  Company  believes  that it should  have  adequate
resources  to  continue  establishing  its SMR  business  and  emerge  from  the
development stage during 1998.  However,  while the Company believes that it has
developed  adequate  contingency  plans,  the failure to obtain  additional debt
financing,  if  needed,  could have a material  adverse  effect on the  Company,
including  the risk of  bankruptcy.  Such  contingency  plans  include  pursuing
similar financing  arrangements with other  institutional  investors and lenders
that have  expressed  interest  in  providing  capital to the  Company,  selling
selected  channels,  and focusing  solely on the 28 markets in which  full-scale
service has already been  implemented.  This latter course might entail  ceasing
further system  expansion in such markets (which in the aggregate are generating
positive cash flow) and reducing  corporate staff to the minimal level necessary
to administer  such  markets.  The Company  believes  that this  strategy  would
provide  sufficient  time and  resources  to raise  additional  capital  or sell
selected  channels  in order to  resume  its  growth.  However,  there can be no
assurances that this or any of the Company's  contingency plans would adequately
address  the  aforementioned  risks,  or that the Company  will  attain  overall
profitability once it has emerged from the developmental stage.

The Company's  unaudited  consolidated  financial  statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
7 to the unaudited consolidated  financial statements,  the Company has suffered
recurring  losses from operations,  has a negative  working  capital,  and has a
deficit  accumulated  during the development  stage that raise substantial doubt
about its ability to continue as a going concern.  Management's  plans in regard
to these  matters  are also  described  in Note 7.  The  unaudited  consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

June 16, 1995,  CCI filed a request for  approval of an extended  implementation
plan for the  construction  of over two thousand  SMR stations  with the FCC. On
December  15,  1995,  the FCC denied  that  request.  On January 21,  1996,  CCI
appealed  the denial to the U.S.  Court of Appeals for the  District of Columbia
Circuit.  Briefs were filed and oral argument was heard on November 5, 1996. The
Court has not  issued an  opinion.  Based on  relevant  precedent,  the  Company
believes there is substantial  basis for the appeal.  It cannot predict when the
Court will issue an opinion,  or whether  that  opinion will be favorable to the
Company.  If the Court denies the Appeal, the licenses for a small number of the
stations CCI manages may be automatically canceled.  Licenses for other stations
CCI manages have been  preserved by the  Goodman/Chan  Waiver or were  otherwise
timely constructed and not subject to the above.

Airnet,  Inc. v. Chadmoore  Wireless Group, Inc. Case No. 768473,  Orange County
Superior Court

On April 3, 1997, Airnet,  Inc. ("Airnet") served a summons and complaint on the
Company,  alleging  claims  related to a proposed  merger between Airnet and the
Company  that never  materialized.  In  particular,  Airnet has  alleged  that a
certain  "letter of intent"  obligated  the  parties to  complete  the  proposed
merger. The Company denies this allegation. In its complaint, Airnet has alleged
the  following  purported  causes  of  action  against  the  Company:  breach of
contract,  breach  of the  implied  covenant  of good  faith  and fair  dealing,
intentional  interference  with  prospective  economic  advantage,   intentional
interference with contractual relationship,  including breach of contract, false
promise and conversion.  Airnet has also purported to seek the following  relief
from the Company:  $28,000,000 in compensatory  damages plus interest,  punitive
damages,  costs  of  suit  and  attorney's  fees.  The  Company  challenged  the
sufficiency of the complaint as to most of the purported causes of action on the
grounds that these purported  causes of action fail to state facts sufficient to
constitute a cause of action. The Company also challenged the sufficiency of the
punitive  damages  allegations on the grounds that the compliant  fails to state
facts  sufficient  to  support  these  allegations.  Rather  than  oppose  these
challenges to its complaint,  Airnet elected to file a first amended  complaint.
Believing  that Airnet's  amendments  were  immaterial  the Company  renewed its
challenges to Airnet's  pleading.  On September 9, 1997, the court sustained the
Company's  demurrers  to  Airnet's  claims for  damages  based on the  Company's
alleged failure to complete the merger and to Airnet's claims for conversion. At
Airnet's  request,  the court allowed Airnet to amend its pleading a second time
to attempt to state these claims,  and Airnet's new complaint asserts claims for
breach of contract,  anticipatory breach of contract,  intentional  interference
with prospective economic advantage, interference with contractual relationship,
inducing breach of contract and false promise. The Company again filed demurrers
challenging certain of the claims in Airnet's pleading. On January 16, 1998, the
Court overruled the Company's demurrers to the Second Amended Complaint.

On February 2, 1998, the Company  answered the Second  Amended  Complaint with a
general denial and by asserting the following affirmative  defenses:  failure to
state a claim, uncertainty,  statutes of limitations,  laches, lack of capacity,
lack of standing, waiver, estoppel,  knowledge and acquiescence,  unclean hands,
unjust  enrichment,  fraud,  misrepresentations,  res  judicata,  justification,
privilege,  no action intended or reasonably calculated to cause injury, lack of
causation,  acts of third parties,  failure to allege a contract,  no meeting of
the minds, statute of frauds, lack of privity, fraud in the inducement, mistake,
lack  of  consideration,   failure  of  consideration,   failure  of  conditions
precedent,  concurrent,   subsequent,  Airnet's  intentional  misrepresentation,
Airnet's negligent  misrepresentations,  performance excused by Airnet's failure
to  perform,   performance   excused  by   recision,   performance   excused  by
modification, antecedent breaches by Airnet, accord and satisfaction, privileged
communications,  justified  communications,  no damages, failure to mitigate and
offset.

On February 2, 1998, the Company filed a Cross-Complaint  against Airnet as well
as  three  other  named  cross-defendants   related  to  Airnet:  Uninet,  Inc.,
("Uninet") Anthony Schatzlein ("Schatzlein") and Dennis Houston ("Houston"). The
Company's  Cross-Complaint  alleges  various causes of action  including  fraud,
breach of oral contract,  fraud and  defamation  which arise out of the proposed
merger and the events surrounding it. On March 2, 1998, cross-defendants Airnet,
Uninet,  Schatzlein  and Houston  answered  the  Cross-Complaint  with a general
denial and a single  affirmative  defense -- that the  Cross-Complaint  does not
state facts sufficient to constitute a cause of action.

The Company  intends to vigorously  defend the Second  Amended  Complaint and to
pursue the claims set forth in the Cross-  Complaint.  At this time, the outcome
of this  litigation  cannot be predicted  with  certainty.  Although the Company
intends to defend the action vigorously,  it is still in its early stages and no
substantial  discovery has been conducted in this matter.  Accordingly,  at this
time, the Company is unable to predict the outcome of this matter. A non-binding
mediation is scheduled  for June 12, 1998 before a retired judge of the superior
court.

Chadmoore Communications, Inc. v. John Peacock Case No. CV-S-97-00587-HDM (RLH),
United States District Court for the District of Nevada

In  September  1994,  CCI  entered  into a two year  consulting  agreement  (the
"Consulting Agreement") with John Peacock ("Peacock") to act as a consultant and
technical  advisor to CCI concerning  certain  specialized  mobile radio ("SMR")
stations.  In May, 1997 CCI filed a complaint  against  Peacock for  declaratory
relief in the United States District Court for the District of Nevada, seeking a
declaration of the respective rights and obligations of CCI under the Consulting
Agreement.  CCI is  seeking  this  judicial  declaration  based  upon  Peacock's
contention  that  he  is  entitled  to  certain  bonus  compensation  under  the
Consulting  Agreement.  Peacock  contends  that this bonus  compensation  is due
regardless of whether an SMR license is granted  based upon his  activities as a
consultant.  CCI contends that the Consultant Agreement is clear that such bonus
compensation  is only  awarded  upon  the  "grant"  of an SMR  license.  Peacock
contends that he is entitled to bonus compensation of four hundred five thousand
($405,000).  In lieu of answering the complaint,  Peacock filed a motion seeking
dismissal  of the  action  based  on the  assertion  that he is not  subject  to
jurisdiction  in Nevada courts.  After  briefing,  that motion was denied by the
Court, and the parties are now proceeding with discovery.

On September 26, 1997, Peacock answered the Complaint and asserted the following
affirmative defenses: failure to state a claim, failure to perform,  intentional
concealment or failure to disclose material facts, estoppel, unclean hands, lack
of subject  matter,  claims  not  authorized  by  declaratory  relief  statutes,
improper venue, forum non conveniens,  rescission and reformation, and choice of
law.

On or about January 28, 1998,  Peacock filed a motion to add a  counterclaim  to
this litigation.  The counterclaim purported to allege causes of action based on
breach of the  Consultant  Agreement,  fraud and breach of fiduciary  duty.  CCI
objected to Peacock's improper attempt to add tort claims to this litigation and
Peacock  agreed  to  withdrawn   them,   amend  its  proposed   counterclaim  by
stipulating,  and assert only a breach of contract claim based on the Consulting
Agreement.  The Amended  Counterclaim  was deemed filed with the Court, on March
15, 1998. On May 11, 1998 Chadmoore cited its Reply to Peacock's Counsels claim,
denying liability and asserting  Thirty-eight  affirmative  defenses,  including
defenses based on Peacock's alleged fraud and failure to perform.  For then with
its Reply,  Chadmoore  filed a  counterclaim  against  Peacock and two  entities
related to Peacock - Peacock's  Radio and Wild's  Computer  Services,  Inc.  and
Peacock's  Radio, a  Partnership.  Chadmoore's  counterclaim  asserts claims for
Fraud,   Breech  of  Fiduciary   Duty,  and  Breech  of  Contract.   Chadmoore's
counterclaim seeks general and punitive damages.

CCI  intends  to  vigorously   pursue  its  Complaint  and  defend  against  the
counterclaim.  At this time, discovery has not been completed and the Company is
unable to predict the outcome of this matter.

Pursuant  to the FCC's  jurisdiction  over  telecommunications  activities,  the
Company is  involved  in  pending  matters  before the FCC which may  ultimately
affect the  Company's  operations.  These pending  matters  include the "Goodman
Chan" decision and the Company's pending Finders  Preference  requests.  Details
concerning the status of these proceedings at the FCC are given above.  (Part I,
Item 1 Footnote 5A).

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM 5.  OTHER INFORMATION.

None.

ITEM 6.  EXHIBITS AND CURRENT REPORTS ON FORM 8-K

    (a)(1) A list of the financial  statements and schedules thereto as filed in
this report reside at Item 1.

    (a)(2)     The following exhibits are submitted herewith:

      4.1  Certificate  of  Designation  of Rights and  Preferences  of Series C
        Preferred Stock of the Registrant  (incorporated by reference to Exhibit
        4.1 of Registrant's Current Report on Form 8-K filed with the Securities
        and Exchange Commission on May 15, 1998 (the "Form 8-K")).

      4.2  Form  of  Series  C  Preferred  Stock  Certificate  (Incorporated  by
        reference to Exhibit 4.2 of the Form 8-K).

     10.20 Form of Amendment No. 1 to Offshore Subscription Agreement for Series
        B 8% Convertible Preferred Stock dated on or about February 17, 1998 (1)

     10.21 Investment  Agreement  dated May 1, 1998,  between the Registrant and
        Recovery  Equity  Investors  II,  L.P.  ("Recovery")   (incorporated  by
        reference to Exhibit 10.1 of the Form 8-K).

     10.22  Registration  Rights  Agreement,  dated  May 1,  1998,  between  the
        Registrant  and Recovery  (incorporated  by reference to Exhibit 10.2 of
        the Form 8-K).

     10.23 Stock Purchase Warrant, dated May 1, 1998, issued to Recovery for the
        purchase of 4,000,000 shares of Common Stock  (incorporated by reference
        to Exhibit 10.2 of the Form 8-K).

     10.24 Stock Purchase Warrant, dated May 1, 1998, issued to Recovery for the
        purchase of 14,612,796 shares of Common Stock (incorporated by reference
        to Exhibit 10.2 of the Form 8-K).

     10.25 Stock Purchase Warrant, dated May 1, 1998, issued to Recovery for the
        purchase of 10,119,614 shares of Common Stock (incorporated by reference
        to Exhibit 10.2 of the Form 8-K).

     10.26  Shareholders  Agreement,  dated  May  1,  1998,  by  and  among  the
        Registrant  Recovery and Robert W. Moore  (incorporated  by reference to
        Exhibit 10.2 of the Form 8-K).

     10.27 Advisory  Agreement,  dated May 1, 1999,  between the  Registrant and
        Recovery (incorporated by reference to Exhibit 10.2 of the Form 8-K).

     10.28  Indemnification  Letter  Agreement,  dated May 1, 1998,  between the
        Registrant  and Recovery  (incorporated  by reference to Exhibit 10.2 of
        the Form 8-K).

     11 Computation of per share amounts (2)

     27.1 Financial Data Schedule 1998 (2)

     27.2 Financial Data Schedule 1997 (2)

(1) Incorporated  by reference to Exhibit 10.16 to the Company's Form 8-K, under
    Item 9, date of earliest event reported - February 17, 1998

(2) Filed herewith.

(b) Current Reports on Form 8-K

(i) Current Report on Form 8-K filed on February 24, 1998,  reported pursuant to
    the SEC's Division of Corporation Finance's interpretation of the disclosure
    requirements  set  forth  in SEC  Release  No.  34-37801,  reporting  (a) On
    December 23, 1997, the Company  concluded a private  placement  conducted in
    accordance with Regulation S in which the Company sold (i) 219,000 shares of
    Series B  Convertible  Preferred  Stock  (the  "Preferred  Stock")  and (ii)
    warrants  ("Warrants")  to purchase  300,000 shares of the Company's  Common
    Stock,  with the  Company  receiving  proceeds of  $1,650,000;  and (b) with
    respect to certain  conversions of the Preferred  Stock,  the Company issued
    shares of its  Common  Stock to various  holders  of some of such  Preferred
    Shares.

(ii) Current  Report on Form 8-K filed on March 16, 1998 reporting (a) the terms
     of  amendments  (the  "Amendments")  of the terms of the private  placement
     described in the Company's Current Report on Form 8-K filed on February 24,
     1998 (the "Prior  8-K"),  which  Amendments  extended  the  holding  period
     applicable to  purchasers  of the Preferred  Stock (as defined in the Prior
     8-K) and provided for the issuance of  additional  shares of Common  Stock,
     Warrants (as defined in the Prior 8-K) and Common Stock underlying Warrants
     to such purchaser; (b) with respect to certain conversions of the Preferred
     Stock,  the Company issued shares of its Common Stock to various holders of
     some of such  Preferred  Shares;  and (c) the Company's  agreement to issue
     800,000  shares of its Common Stock in  accordance  with  Regulation S to a
     single investor (the "Investor") who is not a U.S. Person,  in exchange for
     the delivery to the Company of 5,032  shares of common stock of CMRS.  CMRS
     had previously  agreed to issue the CMRS Shares to the Investor in exchange
     for the agreement of the Investor to pay, on behalf of CMRS, a fee to a LDC
     Consulting, Inc.

(iii)Current  report  on Form 8-K on April 1,  1998  reporting  (a) the sales of
     equity securities pursuant to Regulation S and (b) the conversion of Series
     B Convertible Preferred Stock.

(iv) Current  report on Form 8-K on April 14,  1998  reporting  (a) the sales of
     equity securities pursuant to Regulation S and (b) the conversion of Series
     B Convertible Preferred Stock.

(v) Current  report on Form 8-K on April  29,  1998  reporting  (a) the sales of
    equity securities  pursuant to Regulation S and (b) the conversion of Series
    B Convertible Preferred Stock.

(vi)Current report on Form 8-K filed on May 15, 1998, reporting a $7.5 million 
    equity investment which closed on May 4, 1998.



<PAGE>
                                   SIGNATURES

In accordance  with Section 13 or 15(d) of the Exchange Act, the  registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                    Chadmoore Wireless Group, Inc.
                                    (formerly CapVest International, Ltd.)

 
                                   By: /s/ Robert W. Moore                  
                                        Robert W. Moore
                                        President and CEO

                                   By: /s/ Richard C. Leto 
                                        Richard C. Leto
                                        Chief Financial Officer

                                   By: /s/ Rick D. Rhodes          
                                        Rick D. Rhodes
                                        Chief Regulatory Officer

                                   By: /s/ Jan S. Zwaik                     
                                        Jan S. Zwaik
                                        Chief Operating Officer

                                   Date: November 24, 1998
 
























                                       28
<PAGE>
                                  EXHIBIT INDEX

   EXHIBIT         
   NUMBER                    DESCRIPTION

   11             Computation of per share amounts (2)

   27.1           Financial Data Schedule 1998 (2)

   27.2           Financial Data Schedule 1997 (2)

(1) Incorporated  by reference to Exhibit 10.16 to the Company's Form 8-K, under
    Item 9, date of earliest event reported - February 17, 1998

(2)      Filed herewith.

<PAGE>

(11) COMPUTATION OF PER SHARE AMOUNTS


                                                  Three Months Ended March 31
                                                  ---------------------------
                                                      1998           1997
                                                  ------------   ------------

Net income (loss)                                  (1,799,146)    (1,575,889)
Series B preferred stock dividend                     (10,732)            --
                                                  ------------   ------------
Net loss applicable to common shares               (1,809,878)    (1,575,889)
                                                  ============   ============

Weighted average common shares outstanding         22,339,773     19,151,200

Common equivalent shares  representing  shares      5,061,275      8,377,133
issuable upon exercise of stock options

Less common equivalents shares due to              (5,061,275)    (8,377,133)
antidilution

Adjusted dilutive weighted average shares 
  outstanding                                      22,339,773     19,151,200
                                                  ============   ============
Basic net income(loss) per share                        (0.08)         (0.08)
                                
Diluted net income (loss) per share                     (0.08)         (0.08)