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


                                  FORM 10-QSB


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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 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)

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

              (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 NOVEMBER 13, 1998 ISSUER HAD 36,111,282 SHARES OF COMMON STOCK, $.001 PAR
VALUE, OUTSTANDING.

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

<PAGE>
                                      INDEX

     PART I - FINANCIAL INFORMATION                                        PAGE

 ITEM 1.  FINANCIAL STATEMENTS

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

     Consolidated Balance Sheets:
         As of September 30, 1998 and December 31, 1997                    3

     Consolidated Statements of Operations:
       For the Nine Months Ended September 30, 1998 and 1997 and for 
       the Period January 1, 1994 (inception) through September 30, 1998   4

     Consolidated Statements of Operations:
       For the Three Months Ended September 30, 1998 and 1997              5

     Consolidated Statement of Non-Redeemable Preferred Stocks, Common
       Stocks and other Shareholders' Equity
       for the Nine Months ended September 30, 1998                        6

     Consolidated Statements of Cash Flows:
       For the Nine Months Ended September 30, 1998 and 1997 and for the
       Period  January 1, 1994 (inception) through September 30, 1998     7-8
 
     Notes to Unaudited Consolidated Financial Statements                 9-16

 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
          AND PLAN OF OPERATION                                          17-26

 PART II - OTHER INFORMATION                                               27

 ITEM 1.  LEGAL PROCEEDINGS                                                27

 ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS                        27

 ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                                  27

 ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS            27

 ITEM 5.  OTHER INFORMATION                                                27

 ITEM 6.  EXHIBITS AND CURRENT REPORTS ON FORM 8-K                       28-29

 SIGNATURES                                                                30















                                       2

<PAGE>
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
<TABLE>
<CAPTION>
Consolidated Balance Sheets
September 30, 1998 and December 31, 1997

                                                                               SEPTEMBER 30,      DECEMBER 31,
                                                                                    1998              1997
                                                                                 UNAUDITED           RESTATED
                                   ASSETS                                                        
<S>                                                                           <C>                 <C>
Current assets:                                                                                  
    Cash and cash equivalents                                                 $  1,514,858        $    959,390
    Accounts receivable, net of allowance for doubtful accounts of $13,300
      and $45,000, respectively                                                    522,977             265,935
    Other receivables                                                               92,996              99,223
    Inventory                                                                      136,479              89,133
    Deposits and prepaids                                                          244,666             130,858
                                                                              ------------        ------------
              Total current assets                                               2,511,976           1,544,539

Property and equipment, net                                                     10,047,616           5,809,168
FCC  licenses,  net of  accumulated  amortization  of $436,384 and $231,917,    
   respectively                                                                 33,281,799           6,726,954
Rights to acquire FCC licenses                                                   7,817,518          27,893,926
Debt issuance  costs,  net of  accumulated  amortization  of $27,742 and $0,    
   respectively                                                                    117,110                  --
Non-current deposits and prepaids                                                   32,928              32,928
                                                                              ------------        ------------
              Total assets                                                    $ 53,808,947        $ 42,007,515
                                                                              =============       ============
                   LIABILITIES, REDEEMABLE PREFERRED STOCK AND NON REDEEMABLE 
                 PREFERRED STOCKS, COMMON STOCKS AND OTHER SHAREHOLDERS' EQUITY                                          

Current liabilities:                                                                             
    Current installments of long-term debt and capital lease obligations      $  6,682,981        $  2,638,414
    Accounts payable                                                             2,346,650           1,165,425
    Accrued liabilities                                                          1,070,890           1,106,029
    Unearned revenue                                                               395,842             107,057
    Licenses - options payable                                                     350,000             350,000
    License option commission payable                                            3,412,000           3,412,000
    Accrued interest                                                               425,000             173,686
    Other current liabilities                                                      887,178             131,273
                                                                              ------------        ------------
              Total current liabilities                                         15,570,541           9,083,884

Long-term debt, excluding current installments                                   8,244,638           4,614,157
Minority interests                                                                 506,615             352,142
                                                                              ------------        ------------
              Total liabilities                                                 24,321,794          14,050,183

Redeemable preferred stock:
    Series C 4% cumulative, 10,119,614 shares issued and outstanding 
     outstanding, net of discount of $3,272,784                                    821,234                  --

Non-Redeemable Preferred Stocks, Common Stocks, and other Shareholders Equity:
    Preferred Stock, $.001 par value. Authorized 40,000,000 shares:                              
     Series A issued and canceled  250,000 shares,  0 shares  outstanding at                     
        September 30, 1998 and December 31, 1997                                        --                  --
     Series B issued and outstanding 36,218 shares at September 30, 1998 and                     
        219,000 shares at December 31, 1997                                             36                 219
    Common stock, $.001 par value.  Authorized 100,000,000 shares; issued                     
        and outstanding 35,915,676 shares at September 30, 1998 and                     
        21,163,847 shares at December 31, 1997                                      35,915              21,164
    Additional paid-in capital                                                  67,099,401          60,303,498
    Stock subscribed                                                                    --              32,890
    Deficit accumulated during the development stage                           (38,469,433)        (32,400,439)
                                                                              --------------      ------------
              Total Non-Redeemable Preferred Stocks, Common Stocks, and        
                other Shareholders Equity                                       28,655,919          27,957,332

              Total liabilities, Redeemable Preferred Stock and Non-Redeemable    
               Preferred Stocks, Common Stocks, and other Shareholders Equity $ 53,808,947        $ 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 Nine Months  Ended  September  30, 1998 and 1997 and for the Period from
January 1, 1994 (inception) through September 30, 1998

                                                                                                         
                                                                                                              PERIOD FROM
                                                                      9 MONTHS ENDED SEPTEMBER 30,          JANUARY 1, 1994
                                                                      ----------------------------              THROUGH
                                                                        1998                1997          SEPTEMBER 30, 1998
                                                                                           RESTATED             RESTATED
                                                                ------------------- -------------------  -------------------
<S>  Revenues:                                                       <C>                 <C>                  <C>
         Radio services                                              $ 1,504,684         $   490,789          $ 2,816,569
         Equipment sales                                                 409,553             731,370            2,040,510
         Maintenance and installation                                    226,377             276,213              841,954
         Management fees                                                      --                  --              472,611
         Other                                                                --               4,053               57,862
                                                                    ------------         ------------         ------------
                                                                       2,140,614           1,502,425            6,229,506
                                                                    ------------         ------------         ------------

     Costs and expenses:                                                                                  
         Cost of sales                                                   704,938             781,050            2,471,844
         Salaries, wages, and benefits                                 2,092,797           1,868,647            7,433,855
         General and administrative                                    3,116,063           2,275,827           19,777,809
         Depreciation and amortization                                   830,558             591,940            2,123,771
         Cost of settlement of license dispute                                --                  --              143,625
                                                                    ------------         ------------         ------------
                                                                       6,744,356           5,517,464           31,950,904
                                                                    ------------         ------------         ------------

     Loss from operations                                             (4,603,742)         (4,015,039)         (25,721,398)
                                                                    ------------         ------------         ------------
     Other income (expense):                                                                              
         Minority interest                                               (69,543)             16,184              (50,177)
         Interest expense (net)                                       (1,212,795)         (1,061,646)          (5,910,262)
         Standstill agreement expense                                   (182,914)                 --             (182,914)
         Loss on reduction of management agreements and                                            
            licenses to estimated fair value                                  --          (7,166,956)          (7,166,956)
         Gain on settlement of debt                                           --             169,764              887,402
         Writedown of investment in JJ&D, LLC                                 --                  --             (443,474)
         Gain on sale of assets                                               --                  --              330,643
         Loss on retirement of note payable                                   --                  --              (32,404)
         Other, net                                                           --                 315             (179,893)
                                                                    ------------         ------------         ------------
                                                                      (1,465,252)         (8,042,339)          (12,748,035)
                                                                    ------------         ------------         ------------

     Net loss                                                       $ (6,068,994)        $(12,057,378)        $(38,469,433)
                                                                    ------------         ------------         ------------

     Calculation of net loss applicable to common shareholders:
        Preferred stock preferences                                 $        --          $         --         $ (1,203,704)
        Series B Preferred stock dividend                              (131,503)                   --             (131,503)
        Series C Preferred stock dividend and accretion of 
          amount payable upon redemption                               (109,179)                   --             (109,179)


                                                                    ------------         ------------         ------------
     Net loss applicable to common shares                             (6,309,676)         (12,057,378)         (39,913,819)
                                                                    ============         ============         ============
     Net loss per basic and diluted shares                          $      (0.21)        $      (0.61)        $      (2.99)
                                                                    ============         ============         ============
     Basic and diluted weighted average number of common                                            
       shares outstanding                                             30,184,770           19,664,951           13,335,983
                                                                    ============         ============         =============
</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 Operations
For the Three Months Ended September 30, 1998 and 1997



                                                                      3 MONTHS ENDED SEPTEMBER 30,
                                                                ---------------------------------------
                                                                        1998                1997
                                                                                          RESTATED
                                                               ------------------- -------------------
<S>  Revenues:                                                      <C>                 <C>
         Radio services                                             $   635,324         $   194,259
         Equipment sales                                                173,543             151,534
         Maintenance and installation                                    84,124              74,320
         Other                                                               --                 428             
                                                                    -----------         -----------
                                                                        892,991             420,541
                                                                    -----------         -----------
     Costs and expenses:                                                             
         Cost of sales                                                  303,233             235,560
         Salaries, wages and benefits                                   803,686             698,291
         General and administrative                                   1,356,901             868,212
         Depreciation and amortization                                  357,186             268,598
                                                                    -----------         -----------
                                                                      2,821,006           2,070,661
                                                                    -----------         -----------

     Loss from operations                                            (1,928,015)         (1,650,120)
                                                                    -----------         -----------

     Other income (expense):                                                         
         Minority interest                                              (34,946)             16,184
         Interest expense (net)                                        (399,607)            (96,431)
         Gain on settlement of debt                                          --             169,764
                                                                    -----------         -----------
                                                                       (434,553)             89,517
                                                                    -----------         -----------

     Net loss                                                       $(2,362,568)        $(1,560,603)
                                                                    ===========         ===========
     Calculation of net loss applicable to common shareholders:
       Series B Preferred Stock dividend                                (48,147)                 --
       Series C Preferred Stock accretion payable upon redemption       (66,992)                 --
                                                                    -----------         -----------
                                                                    $(2,477,707)        $(1,560,603)
                                                                    ===========         ===========   
     Basic  and  diluted  weighted  average  number  of 
       common shares outstanding                                     35,817,198          19,966,574
                                                                    -----------         -----------
     Net loss per basic and diluted shares                          $     (0.07)        $     (0.08)
                                                                    ===========         ===========
</TABLE>

See accompanying notes to unaudited consolidated financial statements.


                                       5
<PAGE>
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
<TABLE>
<CAPTION>

Unaudited Consolidated Statements of Non-Redeemable Preferred Stocks, Common Stocks, and other Shareholders' Equity
For the Nine months ended September 30, 1998

                                                                                                                       TOTAL    
                                                                                           DEFICIT                 NON-REDEEMABLE
                               PREFERRED STOCK         COMMON  STOCK                     ACCUMULATED               PREFERRED STOCKS,
                            -------------------  ----------------------    ADDITIONAL       DURING                COMMON STOCKS, AND
                            OUTSTANDING           OUTSTANDING               PAID-IN      DEVELOPMENT     STOCK   OTHER SHAREHOLDERS'
                              SHARES     AMOUNT     SHARES       AMOUNT     CAPITAL         STAGE      SUBSCRIBED     EQUITY
                              -------    ------  ------------   -------   -----------   -------------  ----------  -------------
<S>                           <C>          <C>     <C>          <C>       <C>           <C>              <C>        <C>        
Balance at December 31,       219,000      $219    21,163,847  $21,164    $60,303,498   $ (32,400,439)   $ 32,890   $27,957,332
  1997, as restated
Shares issued under employee                                                                                             
  compensation plan                --        --       123,500      124         63,572              --          --        63,696
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         (182,782)     (183)    3,912,225    3,912         (3,729)             --          --            --
Shares issued for preferred                                                                                             
  stock dividend                   --        --        83,254       83            (83)             --          --            --
Shares issued for standstill
  agreement                        --        --       310,023      310         182,604             --          --       182,914
Compensation expense for                                                                                             
  options issue                    --        --            --       --          15,040             --          --        15,040
Shares issued for services         --        --       290,765      291         160,634             --          --       160,925
Shares issued for  exercise
  of license option                --        --        31,000       31          15,159             --          --        15,190
Shares  issued for purchase
  of fixed assets                  --        --       335,000      335         188,715             --          --       189,050
Shares issued for cash             --        --     8,854,662    8,854       5,925,833             --          --     5,934,687
Accretion of amounts payable
 upon redemption                   --        --            --       --        (109,179)            --          --      (109,179)  
Accrued dividends                  --        --            --       --         (26,742)            --          --       (26,742)

Net loss                           --        --            --       --              --     (6,068,994)         --    (6,068,994)
                              -------    ------  ------------  -------     -----------  -------------  ----------  -------------
Balance at September 30, 1998  36,218    $   36    35,915,676  $35,915     $67,099,401  $ (38,469,433) $       --   $28,665,919
                              =======    ======  ============  =======     ===========  =============  ==========  =============
</TABLE>


See accompanying notes to unaudited consolidated financial statements.




















                                       6
<PAGE>
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
<TABLE>
<CAPTION>
Unaudited Consolidated Statements of Cash Flows
For the Nine Months  Ended  September  30, 1998 and 1997 and for the Period from
January 1, 1994 (inception) through September 30, 1998

                                                                                                              PERIOD FROM
                                                                   9 MONTHS ENDED SEPTEMBER 30,            JANUARY 1, 1994
                                                           -------------------------------------------         THROUGH
                                                                    1998                   1997           SEPTEMBER 30, 1998
                                                           ---------------------  --------------------- --------------------
<S>                                                             <C>                    <C>                   <C>
 Cash flows from operating activities:                                                                   
   Net loss                                                     $(6,068,994)          $(12,057,378)         $(38,469,433)
   Adjustments to reconcile net loss to net cash used in                                                 
     operating activities:                                                                               
        Minority interest                                            69,543                (16,184)               50,177
        Depreciation and amortization                               830,558                541,536             2,123,771
        Non-cash interest expense                                        --                767,986             3,802,469
        Writedown of management agreements and licenses to                                                
          estimated fair value                                           --              7,166,956             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                                   --               (169,764)             (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                               849,968                165,911             1,116,480
        Equity in losses from minority investments                       --                     --                 1,322
        Stock compensation                                            7,710                     --                 7,710
        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   (204,491)               (23,225)             (401,185)
           Increase in inventory                                    (47,346)                88,717               (58,498)
           Increase in deposits and prepaid expenses                (58,322)                16,834              (179,317)
           Increase in accounts payable and accrued liabilities   1,027,071              1,142,069             3,300,335
           Increase in unearned revenue                             288,785                     --               395,842
           Increase in license options commission payable                --                     --               524,800
           Increase in accrued interest                             251,314                 73,973               743,263
           Increase in other current liabilities                    850,462                128,824             1,002,155
                                                                -----------            -----------           -----------
 Net cash used in operating activities                           (2,005,788)            (2,173,745)          (12,220,250)
                                                                ------------           -----------           -----------

 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                                     (195,124)              (121,250)           (1,881,569)
   Sale of management agreements and options to acquire                                                  
      licenses                                                           --                     --               500,000
   Purchase of property and equipment                            (4,440,894)              (657,435)           (9,065,069)
   Sale of property and equipment                                        --                430,649               827,841
   Purchase of assets held for resale                                    --                     --              (219,707)
   Sale of assets held for resale                                        --                     --               700,000
   Increase in other non-current assets                                  --                  6,000               (11,123)
                                                                -----------            -----------           -----------
 Net cash used in investing activities                           (4,636,018)              (342,036)          (14,597,303)
                                                                ------------           -----------           -----------
</TABLE>

         (Continued)









                                       7
<PAGE>
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
<TABLE>
<CAPTION>
Unaudited  Consolidated  Statements of Cash Flows, Continued For the Nine Months
Ended  September  30,  1998 and 1997 and for the  Period  from  January  1, 1994
(inception) through September 30, 1998

                                                                                                       PERIOD FROM
                                                                                                     JANUARY 1, 1994
                                                               9 MONTHS ENDED SEPTEMBER 30,              THROUGH
                                                                 1998                1997          SEPTEMBER 30, 1998
                                                         ------------------- -------------------   ------------------
<S>                                                           <C>                 <C>                 <C>
Cash flows from financing activities:                                                              
     Proceeds upon issuance of securities                     $7,500,000          $       --          $11,816,543
     Equity issuance costs                                      (705,000)                 --             (705,000)
     Proceeds upon issuance of preferred stock                        --                  --            3,848,895
     Proceeds upon exercise of options - related parties              --                  --               62,500
     Proceeds upon exercise of options - unrelated parties            --                  --            3,075,258
     Decrease in stock subscriptions receivable, net                                               
         of stock subscribed                                          --                  --             (637,193)
     Purchase and conversion of CCI stock                             --                  --               45,000
     Advances from related parties                                    --                  --              767,734
     Payment of advances from related parties                         --                  --              (73,000)
     Increase in debt issuance costs                            (144,852)                 --             (144,852)
     Payments of long-term debt and capital lease 
       obligations                                            (1,435,225)           (273,258)          (2,404,491)
     Proceeds from issuance of notes payable                          --                  --              375,000
     Proceeds from issuance of long-term debt                  1,982,351           1,555,000           12,306,017
                                                              ----------          ----------          -----------
Net cash provided by financing activities                      7,197,274           1,281,742           28,332,411
                                                              ----------          ----------          -----------
Net increase (decrease) in cash and cash equivalents             555,468          (1,234,039)           1,514,858
Cash and cash equivalents at beginning of period                 959,390           1,463,300                   --
                                                              ----------          ----------          -----------
Cash and cash equivalents at end of period                    $1,514,858          $  229,261          $ 1,514,858
                                                              ==========          ==========          ===========

See Note 8 for supplemental disclosure on non-cash investing and financing activities
</TABLE>



















 

                                       8
<PAGE>
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 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), which  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  Non-Redeemable  Preferred   Stocks,   Common   stocks   and   other
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
period ending December 31, 1997.

As discussed in Note 5 the Company has  restated  its  previously  issued  Form
10-QSB  for  the  nine monts ended September 30, 1997 in its September 30, 1998
Form 10-QSB  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  September
30, 1998 the Company has no 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 adoption of SFAS 131 is not expected to have a material effect on
the Company's financial position or results from operations.

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. CASH EQUIVALENTS

For  the  purposes  of  the  statement  of cash flows the Company considers all
highly liquid debt instruments with original maturities of three months or less
to be cash equivalents.

D. RECLASSIFICATIONS

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

E. 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 5, earnings per share for the three months  ended  September  30,  1997
were restated to comply with a SEC announcement regarding beneficial conversion
features embedded in convertible securities.


F. CUSTOMER ACQUISITION COSTS

All customer acquisition costs are expensed in the period they are incurred.


(2) FCC LICENSES AND RIGHTS TO ACQUIRE FCC LICENSES

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  nine  months  ended
September   30,   1998,   the  Company  had  exercised  Option  Agreements  for
approximately 760 channels for consideration of cash,  notes  payable  and  the
Company's  common  stock ("Common Stock") totaling approximately $7,163,678. In
relation to the exercise of the options for the licenses, the Company has  also
incurred commission costs totaling approximately $1,564,000, which are included
in FCC licenses.

As  of  September  30,  1998,  of  the  approximately  4,800 licenses under the
Company's control, approximately 3,750 licenses had transferred to the  Company
and  approximately 820 were in the process of being transferred to the Company,
pending FCC approval. The remaining approximately 230 licenses continue  to  be
maintained under Option and/or Management Agreements (defined below), for which
the  Company  has  decided  to  delay  exercise  based  on various economic and
operating 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  September  30,  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 September 30,
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 accordingly by the Company. If the Company were  to  exercise  the
remaining  outstanding  Option Agreements for approximately 230 channels, as of
September 30, 1998, the obligations would total approximately $5.5 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 COSTS OF SALES

The Company had revenues from equipment sales of $409,553 and $731,370 for  the
nine  months ended September 30, 1998 and 1997, respectively. The cost of sales
associated with these revenues were $278,574 and $509,005 for the  nine  months
ended  September 30, 1998 and 1997, respectively. The Company had revenues from
equipment sales of $173,543 and $151,534 for the three months  ended  September
30,  1998  and  1997,  respectively.  The  cost  of sales associated with these
revenues were $103,345 and $108,255 for the three months  ended  September  30,
1998 and 1997, respectively.

(4) PROPERTY AND EQUIPMENT

Property  and  equipment,  which  is  recorded at cost and depreciated over its
estimated useful lives, generally 5-10 years, consists primarily of SMR  system
components,  which  have  an  estimated  useful  life of 10 years. The recorded
amount of property  and  equipment  capitalized  and  the  related  accumulated
depreciation is as follows:


                                                  SEPTEMBER 30,     DECEMBER 31,
                                                      1998              1997
                                                  -------------     ------------
    SMR systems and equipment                      $9,532,187        $5,768,117
    SMR systems in process                            967,200                --
    Buildings and improvements                        335,900           335,900
    Land                                              102,500           102,500
    Furniture and office equipment                    285,925           249,164
    Automobiles                                        18,766                --
    Leasehold improvements                             59,759             9,759
                                                   ----------        ----------
                                                   11,302,237         6,465,440
    Less accumulated depreciation                  (1,254,621)         (656,272)
                                                   -----------       ----------
                                                   $10,047,616       $5,809,168
                                                   ===========       ==========


(5) LONG-TERM DEBT

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  convertible
debenture  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.  A  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
September 30, 1997 Form 10-QSB. Because of the SEC  announcement,  the  Company
has  restated  its Form 10-QSB for September 30, 1997 in its September 30, 1998
Form 10-QSB to reflect such announcement.

The debt discount of $767,986  associated  with  the  issuance  of  convertible
debentures  has  been  amortized  to interest expense for the nine months ended
September 30, 1997. For the three months ended September 30, 1997 there was  no
amortization  of  the debt discount. Interest expense for the nine months ended
September 30, 1997 has been restated from $293,660 to $1,061,646. There was  no
effect  on  earnings  per  share  for the nine months ended September 30, 1997.
Earnings per share for the three months  ended  September  30,  1997  has  been
restated from a loss per common share of $0.12 to $0.08.

During  the nine months ended September 30, 1998 the Company entered into notes
payable with license holders for approximately $6,200,000, net of a discount of
approximately $2,180,000; these notes represent the final payment  to  exercise
license  options  for  approximately 760 licenses. As of September 30, 1998 the
Company had entered into notes payable totaling approximately  $9,390,000,  net
of  a  discount  of approximately $3,150,000, calculated at an imputed interest
rate of 15%.

As of September 30, 1998 the total outstanding amounts of the  MarCap  Facility
and  Motorola  Loan  Facility  were  $1,792,896 and $645,748, 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 reported in the Company's Form  10-KSB  and  10-KSB/A  for  the  year  ended
December  1997, the Company restructured a Convertible Debenture and the holder
accepted a new debenture. The holder of the new  debenture  has  presented  the
Company  with  a default and acceleration notice. However, the Company believes
such note holder does not have the right to cause acceleration pursuant to such
purported notice. The Company is currently in discussions with the holder  with
respect to this matter.


(6) 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 beginning 45 days from  the  closing  date
and  up  to  two  years 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 nine months ended September 30, 1998 the holders  of  the
Series  B  Preferred  Stock converted 182,782 shares of Series B Preferred into
3,912,225 shares of  Common  Stock.  Dividends  on  such  shares  of  Series  B
Preferred  were  $42,561, which was paid with 83,254 shares of Common Stock. In
addition, dividends of $22,306 have accrued on the Series  B  Preferred  as  of
September 30, 1998.

B. EQUITY INVESTMENT

On May 4, 1998, pursuant to an Investment Agreement ("Agreement"), dated May 1,
1998  between  the  Company and Recovery Equity Investors 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 $0.3953.  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  commissioned  an
appraisal 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  as
follows:


               Common Stock                         $ 2,055,936
               Series C Preferred Stock                 685,312
               Eleven year warrants                   3,251,528
               Three year warrants                       38,698
               Five and one-half year warrants        1,468,526  
                                                    ------------
                                TOTAL               $ 7,500,000
                                                    ============        


(7)      MANDATORILY REDEEMABLE PREFERRED STOCK

As  discussed  in Note 6B, on May 1, 1998, the Company issued 10,119,614 shares
of 4% cumulative Series C Preferred Stock, which is  madatorily  redeemable  by
written  notice  to  the  Company  on  the  earlier  of  (i) May 1, 2003 or the
occurrence of (ii) the listing of the Company's  common  stock  on  a  National
Securities Exchange or an equity financing by the Company that results in gross
proceeds in excess of $2 million. The Series C Preferred Stock has a redemption
price  equal  to $.3953 and is entitled to cumulative annual dividends equal to
4% payable semi-annually. Dividends on  the  Series  C  preferred  Stock  shall
accrue  from  the  issue  date, without interest, whether or not dividends have
been declared. Unpaid  dividends,  whether  or  not  declared,  shall  compound
annually  at  the  dividend  rate  from the dividend payment date on which such
dividend was payable. As long as any shares of  Series  C  Preferred  Stock  is
outstanding,  no  dividend  or  distribution,  whether  in cash, stock or other
property, shall be paid, declared and set apart  for  payment  for  any  junior
securities. 

The  difference  between  the  relative  fair value of the Redeemable Preferred
Stock at the issue date and the mandatory redemption amount is  being  accreted
by  charges  to  additional  paid-in-capital, using the interest method. At the
redemption date, the carrying amount of such shares will  equal  the  mandatory
redemption  amount  plus  accumulated dividends unless the shares are exchanged
prior to the redemption date. Since the Company had no retained  earnings  such
amount is charged to additional paid-in capital.

For the nine months ended September 30, 1998 the Company has accrued  dividends
and  recorded  accretion  of  amounts  payable  upon  redemption of $26,742 and
$109,179 respectively.

(8) NON-CASH EVENTS


During the nine months ended September 30, 1998 the Company had  the  following
non-cash  investing and financing activities. The issuance of 108,500 shares of
Common Stock to employees. The issuance of $6,220,589 of notes payable, net  of
discount,  to  exercise options to purchase FCC licenses. Conversion of 182,782
shares of Series B convertible preferred stock into 3,912,225 shares of  common
stock.  Issuance  of 83,254 shares of common stock for Series B 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 with a
value of $352,000, for exercise of license option. Reclassification of minority
interest of approximately $14,915 into  property  and  equipment.  Issuance  of
31,000  shares  of  common  stock  with a value of $15,190 to a license holder.
Issuance of 290,765 shares of common stock for  prepaid  professional  services
with  a  value  of  $160,925. Issuance of 335,000 shares of common stock with a
value of $189,050 and licenses with a cost of $100,000 for fixed assets.

During the nine months ended September 30, 1997 the Company had  the  following
non-cash  investing  and  financing activities. The conversion of $1,150,000 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 to purchase
common stock which had $161,929 of  prepaid  exercise  price.  Reclassification
$108,027 of deposits to property and equipment.

During  the  nine  months  ended  September 30, 1998 and 1997, and inception to
date, the Company paid  no  cash  for  taxes.  During  the  nine  months  ended
September  30, 1998 and 1997, and inception to date, the Company paid $168,113,
$107,339, and $600,670, respectively for interest.


(9) RELATED PARTY TRANSACTIONS

The Company paid $633,642 to Private Equity Partners ("PEP"), for  professional
services  associated with equity and debt financings, for the nine months ended
September 30, 1998. The managing partner of PEP is a director of the Company.

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 Advisory
Agreement stipulates the Consultant shall devote such time and  effort  to  the
performance  of  providing  consulting and management advisory services for the
Company as deemed necessary by Recovery. 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,  reduced  by the Series C
preferred stock dividends paid in the preceding twelve months.

(10) 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
Goodman/Chan Waiver became effective upon publication in the  Federal  Register
on August 27, 1998.

The  FCC  has never released a list of stations it considers to be Receivership
Stations, despite repeated requests by the Company. On November 16, 1998, by  a
Public  Notice  the  Commission  announced  that  it  would  release  a list of
receivership stations to the public in ten days; provided that no objection  to
the  release is posed on behalf of receivership licenses by the Receiver. As of
the date of this report, the FCC had not yet released the list as the  ten  day
period  for  publication  and for potential appeals by the Receiver had not yet
expired. However, on the basis of a previous request  to  the  Receiver  and  a
seperate request for assistance to the FCC's licensing division by the Company,
the  FCC  and  the Receiver examined and marked a list provided by the Company.
The FCC's and the Receiver's  markup  indicated  those  stations  held  by  the
Company  or  subject  to Management and Option Agreements, which the FCC and/or
the Receiver considered to be,  at  that  time,  Receivership  Stations  and/or
stations considered "similarly situated" and thus elgible for releif. From that
unofficial   communication   from   the  Receiver  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 is now proceeding  with  timely  construction  of
those  stations  which  the  Company  feels reasonably certain are Receivership
Stations. From the official communication from the FCC,  the  Company  believes
that approximately 650 licenses are considered "similarly situated".

Initial review of the Commissions's Goodman/Chan Order indicated a  potentially
favorable  outcome  for  the  Company  as it pointed to a grant of relief for a
significant number of the Company's owned and/or managed  licenses  which  were
subject  to  the  outcome  of the Goodman/Chan decision. At present, Management
believes that a substantial number of these licenses will  be  afforded  relief
pursuant  to  the Order. However, on October 9, 1998 a release from the Offices
of the Commercial Service Division of the  FCC's
Wireless  Telecommunication  Bureau  announced  that  because of a technicality
relating to the  actual  filing  dates  of  the  construction  deadline  waiver
requests by certain of the subject licensees, some licenses which the FCC staff
earlier  had stated would be eligible for construction extension waivers due to
the similarity of circumstances between those licensees  and  the  Goodman/Chan
licensees, would not actually be granted final construction waivers.  The
Commission has subsequently begun a process of deleting certain of the
Company's licenses from this category from its official licensing database. 
Prior to the release of the October 9, 1998, Public Notice, the Company
contructed and placed into operation certain licenses from this category based
on information received from the FCC and the Receiver.  The Company is in the
process of determining which licenses have in fact been deleted; however, due
to the disparity between the FCC's lists and its subsequent treatment of such
lists, the Company is uncertain as to which, if any, will remain deleted under
the FCC's current procedures.

In   response,   on   November   9,   1998,  Chadmoore  filed  a  Petition  for
Reconsideration at the FCC seeking reversal of  the  action  announced  in  the
Commercial  Wireless  Division's  Public Notice, and the Company has asked that
relief be reinstated for its affected licenses. Additionally,  on  October  28,
1998, the Company filed motions with the United States Court of Appeals for the
District  of  Columbia  Circuit  as  well as the United States Federal District
Court of the District of Columbia seeking a stay of Commission  action  on  the
subject  licenses  and the release of an accurate and complete list of stations
until reconsideration proceedings at the  FCC,  and  if  ultimately  necessary,
appeal proceedings through the federal courts may be completed. Other similarly
situated  licensees also have filed petitions for relief. No specific timetable
is available in order to assist the Company's management to  predict  with  any
reasonable  degree  of  accuracy when final action on these proceedings will be
forthcoming. The Company does not believe it to be probable that they will  not
be  provided  relief  on all of the licenses potentially subject to the Goodman
Chan Proceedings. However there  can  be  no  assurance  that  relief  will  be
granted.

Approximately  650 of those licenses purchased by or under management contracts
with the Company are among those which the FCC now states will not be  afforded
relief  pursuant  to  the  Commercial Division's October 9, 1998 Public Notice.
Thus, it is possible that the Company's owned and/or managed licenses which are
encompassed within the denial of relief pursuant to the October 9, 1998  Public
Notice, could be permanently canceled by the FCC for failure to comply with its
construction  requirements. If these licenses are in fact cancelled by the FCC,
it would result in the loss of licenses with  a  book  value  of  approximately
$6,200,000 and the loss of certain subscribers to the Company's services, which
while not considered probable, could result in a material adverse effect on the
Company's  financial  condition,  results of operations and liquidity and could
result in possible fines and/or forfeitures levied by the FCC. The Company  has
prepared these estimates based on the best information available at the time of
this  filing.  Once again, there has been no list published by the FCC, in this
matter, which the Company feels it may rely upon. Therefore,  the  Company  has
commenced  the  above described litigation to clarify this matter. Based on the
preceding,  no  provision  has  been  made  in   the   accompanying   unaudited
consolidated  financial statements for the ultimate outcome of the Goodman/Chan
proceeding.

B. LEGAL PROCEEDINGS

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. Accordingly,  at  this
time,  the  Company  is  unable  to  predict  the  outcome  of  this  matter. A
non-binding mediation was conducted before a  retired  judge  of  the  superior
court  on  August  21, 1998. Although a confidential settlement in principal of
all of the claims in the lawsuit was reached it has not been finalized.

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. On October 20, 1998, the court
ordered  the parties to appear before a magistrate for a settlement conference,
which is currently scheduled for December 1, 1998.

If the case is not settled, 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.

(11) 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
$13,058,565  , and has a $38,469,433 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  $14  million
to  $16  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 with HSI
GeoTrans,  Inc.  ("GeoTrans"),  sales   of   selected   SMR   channels   deemed
non-strategic  to  its  business  plan,  and additional debt funding as needed.
During the third quarter of 1998, the Company pursued discussions with  several
institutional  debt  funding sources and has since reached the letter of intent
stage, but has yet to enter into any commitments for additional debt  financing
as of the date of this filing. There can be no assurances that the Company will
be  able  to  successfully  obtain additional debt funding 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 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 82 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.

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

The  following  is  a  discussion  of  the consolidated financial condition and
results of operations of Chadmoore Wireless  Group,  Inc.,  together  with  its
subsidiaries  (collectively "Chadmoore" or the "Company"), for the three months
ended and nine months ended September 30, 1998, and 1997.

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,  risks  associated
with  the year 2000 issues and general economics. See the Company's Form 10-KSB
and 10-KSB/A for the year ended December 1997.

During the  nine  months  ended  September  30,  1998,  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 30%  of  1998  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   the
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

A. 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 of approximately 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
frequencies,  cover  approximately  55 million people in 180 markets throughout
the United States, with focus on  secondary  and  tertiary  cities  ("Operating
Territory").

B. 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 subscriber unit 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 on 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 approximately 20 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 is 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 September 30, 1998, the Company had constructed, and based on detailed As
of  September  30,  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  180  markets  in the United States covering approximately 55 million
people. This population number, based on 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  180  markets,  the Company has implemented full-scale
systems  and  distribution,  servicing  approximately  23,000  subscribers  (an
increase in excess of 177% since December 31, 1997) in the following 82 markets
as of November 13, 1998:

<TABLE>
<CAPTION>
<S>                          <C>             <C>                         <C>            <C>                         <C>
Abilene                      TX              Grand Rapids                MI             Murrells Inlet              SC
Ashville                     NC              Greenville                  NC             Myrtle Beach                SC
Atlantic City                NJ              Greenville                  SC             Naples                      FL
Augusta                      GA              Gulfport                    MS             Nashville                   TN
Austin                       TX              Harrisburg                  PA             Norfolk/Chesapeake          VA
Bangor                       ME              Hilton Head                 SC             Omaha                       NE
Baraboo                      WI              Huntsville                  AL             Pine Bluff                  AR
Baton Rouge/Port Allen       LA              Jackson                     MS             Portland                    ME
Bay City                     MI              Jackson                     TN             Quincy                      IL
Beaumont                     TX              Jacksonville                FL             Richmond                    VA
Biloxi                       MS              Jacksonville                NC             Roanoke                     VA
Binghamton                   NY              Kankakee/Bradley            IL             Roanoke Rapids              NC
Birmingham                   AL              Lafayette                   IN             Rochester                   MN
Bowling Green                KY              Lafayette                   LA             Rockford                    IL
Brentwood                    TN              Lake Charles                LA             Saint Cloud                 MN
Champaign                    IL              Lexington                   KY             Savannah                    GA
Charleston                   SC              Lincoln                     NE             Silverhill                  AL
Charlotte                    NC              Little Rock                 AR             South Bend                  IN
Charlotteville               VA              Louisville                  KY             Springfield                 IL
Chattanooga                  TN              Macon                       GA             St. Paul                    MN
Columbia                     SC              Madison                     WI             Syracuse                    NY
Corpus Christi               TX              Mankato                     MN             Tallahassee                 FL
Decatur                      IL              Maui                        HI             Tucson                      AZ
Eugene                       OR              Memphis                     TN             Tyler                       TX
Fayetteville                 AR              Milwaukee                   WI             Victoria                    TX
Florence                     SC              Mobile                      AL             Waco                        TX
Fort Myers                   FL              Montgomery                  AL             Wilmington                  NC
Fort Wayne                   IN
</TABLE>

Chadmoore generates revenue primarily from 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,  the  Company  can  integrate
additional channels under its control 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.

C. 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.  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 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  98  markets.  Several  elements  of Chadmoore's customer acquisition
strategy are incorporated into Moscato's program, including further development
of its "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 180  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 has implemented a modified dealer partner
arrangement in which the dealer contributes 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 is a  capital  contribution,  and
not  recouped  from  system  earnings. Based on the speed and extent of loading
subscribers  onto  the  system,  the  dealer   partner   also   has   incentive
opportunities to earn up to an additional 10% interest in the system.

D. 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 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  targeted
end-user and price.

Another  potential  wireless  competitor  for  Chadmoore  is  Southern Company.
Southern  Company  is  implementing  a  digital  architecture  and  pursuing  a
Nextel-like strategy 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.  Chadmoore  intends  to  compete  with
Southern  Company  primarily based on targeted end-user, price and to a certain
extent, geographic differentiation.

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 Management's  opinion,  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,
available  spectrum,  capacity  to  meet  customer  growth,  and   professional
marketing and dealer support.

E. LICENSES AND RIGHTS TO LICENSES

Within  its 180 target markets, Chadmoore controls approximately 4,800 channels
in the 800  MHz  band  through  ownership  of  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")  that remain in effect 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  September  30,  1998,  the  Company  had  exercised  Option
Agreements on approximately 4,570 channels, of which  approximately  3,750  had
transferred  to  the Company and approximately 820 were in the process of being
transferred to the Company, pending FCC approval. The remaining approximate 340
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

A. NINE MONTHS ENDED SEPTEMBER 30, 1998 VERSUS NINE MONTHS ENDED SEPTEMBER  30,
   1997

Total  revenues for the nine months ended September 30, 1998 increased 42.5% to
$2,140,614 from $1,502,425 for  the  nine  months  ended  September  30,  1997,
reflecting  increases  of  $1,013,895,  or 206.6%, in Radio Services (recurring
revenues from air-time subscription by customers), offset in part  by  declines
of $321,817, or 44.0%, in Equipment Sales and $49,836, or 18.0%, 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 70.3% for the nine months ended September 30,  1998  from
32.7%  for  the  nine  months  ended September 30, 1997. In the majority of its
markets 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 206.6% increase in Radio Services revenues,  to  $1,504,684  for  the  nine
months  ended  September  30,  1998  from  $490,789  for  the nine months ended
September 30, 1997, was driven by an increase  in  the  number  of  subscribers
utilizing the Company's SMR systems. During the nine months ended September 30,
1998,  the  number  of  subscriber units increased 12,116, or 146.0%, to 20,413
from  8,297.  The  increase  in  subscribers,  was  attributed  to   full-scale
implementation  of  service  by the Company in 55 new markets during the period
and continued subscriber growth in existing  markets.  Pricing  per  subscriber
unit in service remained comparable over the periods.

The  44.0%  decrease in revenues from Equipment Sales, to $409,553 for the nine
months ended September 30,  1998  from  $731,370  for  the  nine  months  ended
September  30,  1997,  and  the 18.0% decrease in revenues from Maintenance and
Installation services, to $226,377 for the nine months ended September 30, 1998
from $276,213 for the nine months ended September 30, 1997, was  attributed  to
the  Company's continued focus on Radio Service revenue as well as insufficient
working capital during the first quarter of 1998.

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 $76,112, or 9.7%, to $704,938 for  the  nine  months
ended  September 30, 1998 from $781,050 for the nine months ended September 30,
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, the gross margin (total revenue less cost
of  sales,  as  a  percentage  of  total  revenue) increased by 19.1 percentage
points, to 67.1% for the nine months ended September 30, 1998  from  48.0%  for
the nine months ended September 30, 1997.

Salaries,  wages,  and  benefits  expense  increased  by $224,150, or 12.0%, to
$2,092,797 for the nine months ended September 30, 1998 from $1,868,647 for the
nine months ended September 30, 1997, primarily  due  to  a  higher  number  of
employees  to  support  the  Company's  expansion  into  additional  markets as
discussed above. Relative to total  revenues,  salaries,  wages,  and  benefits
expense  measured  97.8%  for the nine months ended September 30, 1998 compared
with 124.4% for the nine months ended September 30, 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  economies  of  scale
gained  from an increasing subscriber base managed through essentially the same
infrastructure.

General  and  administrative  expenses,  increased  $840,236,  or   36.9%,   to
$3,116,063 for the nine months ended September 30, 1998 from $2,275,827 for the
nine  months ended September 30, 1997. This increase is partially attributed to
an increase in site expenses for non-revenue generating sites as  the  majority
of  these site expenses, for 1997, were incurred in the second half of the year
when the Company initiated  the  construction  of  its  channels.  The  Company
expects  such  general and administrative site costs to decrease as these sites
generate revenue and related site costs become  cost  of  sales.  Additionally,
general and administrative expenses increased in conjunction with the Company's
expansion  into  additional  markets.  Relative  to total revenues, general and
administrative expenses measured 145.6% for the nine months ended September 30,
1998 compared with 151.5% for the nine months ended  September  30,  1997.  The
Company  expects  general  and  administrative  expenses  as a percent of total
revenues to decline in future years as the Company realizes economies of  scale
gained  from an increasing subscriber base managed through essentially the same
infrastructure.

Depreciation and amortization expense increased $238,618, or 40.3% to  $830,558
for  the nine months ended September 30, 1998 from $591,940 for the nine months
ended September 30, 1997, reflecting greater  capital  expenditures  associated
with construction and implementation of operating systems equipment.

Due to the foregoing, total operating expenses increased $1,226,892 , or 22.2%,
to  $6,744,356 for the nine months ended September 30, 1998 from $5,517,464 for
the nine  months  ended  September  30,  1997,  and  the  Company's  loss  from
operations increased by $588,703 , or 14.7%, to $4,603,742 from $4,015,039, for
such respective periods.

Net  interest  expense increased $151,149, or 14.2%, to $1,212,795 for the nine
months ended September 30, 1998 from  $1,061,646  for  the  nine  months  ended
September  30,  1997, The increase is attributed to additional notes payable to
licensees from the exercise  of  Option  Agreements  aggregating  approximately
$919,135 off-set by a beneficial conversion feature of $767,986 embedded in the
convertible debenture issued during February 1997.

Based  on  the  foregoing, the Company's net loss, excluding the recording of a
one-time charge of $7,166,956 during the  second  quarter  of  1997,  increased
$1,178,572  ,  or  24.1%, to $6,068,994 , or $0.21 per basic and diluted share,
for the nine months ended September 30, 1998  from  $4,890,422,  or  $0.25  per
basic  and  diluted  share,  for  the  nine  months  ended  September 30, 1997.
Including such one-time charge during the second quarter of 1997, the Company's
net loss decreased  $5,988,384  ,  or  49.7%,  during  the  nine  months  ended
September  30, 1998 from $12,057,378, or $0.61 per basic and diluted share, for
the nine months ended September 30, 1997.


B. THREE MONTHS ENDED SEPTEMBER 30, 1998 VERSUS THREE  MONTHS  ENDED  SEPTEMBER
   30, 1997

Total  revenues  for the three months ended September 30, 1998 increased 112.3%
to $892,991 from $420,541 for  the  three  months  ended  September  30,  1997,
reflecting increases of $441,065, or 227.0% in Radio Services, $9,804, or 13.2%
in  Maintenance  and  Installation  services and $22,009, or 14.5% in Equipment
Sales. 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 71.1% for the three months ended September 30, 1998 from 46.2% for the three
months ended September 30, 1997. 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 227.0% increase in Radio Services  revenues,  to  $635,324  for  the  three
months  ended  September  30,  1998  from  $194,259  for the three months ended
September 30, 1997, was driven by an increase  in  the  number  of  subscribers
utilizing  the  Company's SMR systems in both new and existing markets. Pricing
per subscriber unit in service remained comparable over the periods.

The 14.5% increase in revenues from Equipment Sales, to $173,543 for the  three
months  ended  September  30,  1998  from  $151,534  for the three months ended
September 30, 1997, was partially attributed to the rebuilding of  an  adequate
sales  force in the Company's direct distribution markets as well as sufficient
working capital.

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 increased by $67,673, or 28.7%, to $303,233 for the three  months
ended September 30, 1998 from $235,560 for the three months ended September 30,
1997.  This increase is primarily due to the commercialization of 55 additional
markets since September 30, 1997. This is partially offset by  lower  Equipment
Sales,  which have higher cost of sales associated with them, compared to Radio
Services revenues. Gross margin increased by 22.0 percentage points,  to  66.0%
for  the  three months ended September 30, 1998 from 44.0% for the three months
ended September 30, 1997. This is attributable to the increased  percentage  to
total  revenues  of  Radio  Services,  which  has  a  higher  gross margin than
Equipment Sales.

Salaries, wages, and benefits  expense  increased  by  $105,395  or  15.1%,  to
$803,686  for  the  three months ended September 30, 1998 from $698,291 for the
three months ended September 30, 1997, primarily due  to  a  higher  number  of
employees  to support the Company's expansion into additional markets. Relative
to total revenues, salaries, wages, and benefits expense measured 90.0% for the
three months ended September 30, 1998 compared with 166.0% for the three months
ended September 30, 1997. In future years the Company expects salaries,  wages,
and  benefits  expense as a percent of total revenues to decline as the Company
realizes economies of scale gained from an increasing subscriber  base  managed
through essentially the same infrastructure.

General  and  administrative  expenses,  increased  $488,689  ,  or  56.3%,  to
$1,356,901  for the three months ended September 30, 1998 from $868,212 for the
three months ended September 30, 1997. This increase is partially 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.  Additionally,
general and administrative expenses increased in conjunction with the Company's
expansion  into  additional  markets.  Relative  to total revenues, general and
administrative expense measured 152.0% for the three months ended September 30,
1998 compared with 206.5% for the three months ended September  30,  1997.  The
Company  expects  general  and  administrative  expenses  as a percent of total
revenues to decline in future years as the Company realizes economies of  scale
gained  from an increasing subscriber base managed through essentially the same
infrastructure.

Depreciation and amortization expense increased $88,588, or 33.0%, to  $357,186
for  the  three  months  ended  September  30, 1998 from $268,598 for the three
months ended  September  30,  1997,  reflecting  greater  capital  expenditures
associated with construction and implementation of operating systems equipment.

Due  to the foregoing, total operating expenses increased $750,345 or 36.2%, to
$2,821,006 for the three months ended September 30, 1998  from  $2,070,661  for
the  three  months  ended  September  30,  1997,  and  the  Company's loss from
operations increased by $277,895 , or 16.8%, to $1,928,015 from $1,650,120, for
such respective periods.

Net interest expense increased $303,176, or 314.4%, to $399,607 for  the  three
months  ended  September  30,  1998  from  $96,431  for  the three months ended
September 30, 1997, which is attributable additional notes payable to licensees
resulting from the exercise of Option Agreements.

Based on the foregoing, the Company's net loss increased $801,965 ,  or  51.4%,
to $2,362,568, or $0.07 per basic and diluted share, for the three months ended
September  30,  1998 from $1,560,603, or $0.08 per basic and diluted share, for
the three months ended September 30, 1997.


(3) LIQUIDITY AND CAPITAL RESOURCES

During the nine months ended September 30, 1998 and 1997, the Company used  net
cash  in  operating  activities of $2,005,788 and $2,173,745, respectively. 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
nine  months  ended  September  30,  1998  and  1997  was  the  acquisition  of
communication  assets.  The  major  source  of  cash for the nine months ended
September 30, 1998 and 1997 were proceeds from the issuance of  long-term  debt
and equity.

The  Company  believes  that  over the next 12 months, depending on the rate of
market roll-out during such period, it will require approximately  $14  million
to  $16  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 with HSI
GeoTrans,  Inc.  ("GeoTrans"),  sales   of   selected   SMR   channels   deemed
non-strategic to its business plan, and additional financing as needed.

During the third quarter of 1998, the Company pursued discussions with  several
institutional  debt  funding sources and has since reached the letter of intent
stage, but has yet to enter into any binding commitments  for  additional  debt
financing  as of the date of this filing. In the event the Company is unable to
secure  the  aforementioned  debt  funding,  it  will  pursue  other  financing
opportunities. However, there can be no assurance that the Company will be able
to obtain financin in a timely manner, or at all. If the Company is  unable  to
obtain  additional  financing,  when  needed,  it  would  likely be required to
substantially curtail its plans for implementation  of  its  SMR  services.  If
additional  financing  is  not  available at all, it could cause the Company to
liquidate assets  or  seek  bankruptcy  protection.  In  addition,  any  equity
financing  or  convertible  debt financing may involve substantial dilution the
the Company's then-existing security holders.

In the Company's 1997  Form  10-KSB  and  10-KSB/A  the  Company's  independent
auditors  opinion included an explanatory paragraph which expressed substantial
doubt about the Company's ability to continue as a going concern. As  discussed
in  Note 11 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  11.  The  unaudited
consolidated  financial  statements  do  not include any adjustments that might
result from the outcome of this uncertainty.


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.  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 October 30, 1997, two subsidiaries of the Company,  CCI  and  CMRS,  entered
into  a  First  Amendment  to  the 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 by the Company
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 July 16, 1998, a draw under the Motorola  Loan  Facility  was  made  in  the
amount of $369,331. As of the date of this filing the Company has drawn a total
of $867,517 under this facility.

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  as  of
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, and as a result, 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  SMR systems implementation, and (ii) a covenant 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, and
has classified the appropriate portion (maturing after one year)  as  long-term
debt.

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 $2.0 million to-$2.5  million  of
Motorola equipment for its SMR systems under the Motorola Facility for the next
12 months.


YEAR 2000 ISSUES

The  Company  is  currently  awaiting  a proposal from a large computer systems
vendor about acquiring  a  fully  integrated  and  scalable  system  (hardware,
software  and  service  contract)  ("System") to load subscribers, capture call
records and generate customer bills. The System will be Year 2000 compliant and
the Company expects it to be fully implemented in the second quarter  of  1999.
If  the  Company  does  not  acquire  the  System, it has a contingency plan to
upgrade its current computer systems or purchase individual  software  products
to address its needs. The Company has contacted the necessary software vendors,
about its contingency plan, and Management believes that all the necessary Year
2000  compliant software is currently available and can be implemented quickly.
At the current time Management is unable to estimate the cost  of  the  System,
however  the  Company  estimates  the  cost  of  its  contingency  plans  to be
approximately $50,000.

The Company's current accounting software is  not  Year  2000  compliant.  This
problem  will be addressed either by Phase II of the System or by upgrading its
current accounting software, a Year 2000 compliant version which  is  currently
available.  The  Company  exclusively uses Microsoft products for internal data
storage and communications. The Company has contacted Microsoft  and  has  been
assured that these products are Year 2000 compliant.

The  Company  relies  on  third  party switching systems to monitor its systems
usage, these systems are primarily manufactured by Motorola.  The  company  has
contacted Motorola and has been assured that the Motorola switching systems are
Year  2000  compliant.  Also,  to  a lesser extent, the Company relies on third
party communication  lines,  such  as  internet  providers  and  long  distance
providers,  to transfer data. The Company has not contacted these providers and
is unable to assess the impact of Year 2000 issues related to these systems.



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 could have a material adverse effect on the Company. 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  82  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.




<PAGE> PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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,  with certainty. A non-binding mediation was conducted before a retired
judge of the superior  court  on  August  21,  1998.  Although  a  confidential
settlement  in principal of all of the claims in the lawsuit was reached it has
not been finalized.

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. On October 20, 1998, the court
ordered  the parties to appear before a magistrate for a settlement conference,
which is currently scheduled for December 1, 1998.

If the case is not settled, 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.

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
Goodman/Chan Waiver became effective upon publication in the  Federal  Register
on August 27, 1998.

The  FCC  has never released a list of stations it considers to be Receivership
Stations, despite repeated requests by the Company. On November 16, 1998, by  a
Public  Notice  the  Commission  announced  that  it  would  release  a list of
receivership stations to the public in ten days; provided that no objection  to
the  release is posed on behalf of receivership licenses by the Receiver. As of
the date of this report, the FCC had not yet released the list as the  ten  day
period  for  publication  and for potential appeals by the Receiver had not yet
expired. However, on the basis of a previous request  to  the  Receiver  and  a
seperate request for assistance to the FCC's licensing division by the Company,
the  FCC  and  the Receiver examined and marked a list provided by the Company.
The FCC's and the Receiver's  markup  indicated  those  stations  held  by  the
Company  or  subject  to Management and Option Agreements, which the FCC and/or
the Receiver considered to be,  at  that  time,  Receivership  Stations  and/or
stations considered "similarly situated" and thus elgible for releif. From that
unofficial   communication   from   the  Receiver  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 is now proceeding  with  timely  construction  of
those  stations  which  the  Company  feels reasonably certain are Receivership
Stations. From the official communication from the FCC,  the  Company  believes
that approximately 650 licenses are considered "similarly situated".

Initial review of the Commissions's Goodman/Chan Order indicated a  potentially
favorable  outcome  for  the  Company  as it pointed to a grant of relief for a
significant number of the Company's owned and/or managed  licenses  which  were
subject  to  the  outcome  of the Goodman/Chan decision. At present, Management
believes that a substantial number of these licenses will  be  afforded  relief
pursuant  to  the Order. However, on October 9, 1998 a release from the Offices
of the Commercial Service Division of the  FCC's
Wireless  Telecommunication  Bureau  announced  that  because of a technicality
relating to the  actual  filing  dates  of  the  construction  deadline  waiver
requests by certain of the subject licensees, some licenses which the FCC staff
earlier  had stated would be eligible for construction extension waivers due to
the similarity of circumstances between those licensees  and  the  Goodman/Chan
licensees, would not actually be granted final construction waivers.  The
Commission has subsequently begun a process of deleting certain of the
Company's licenses from this category from its official licensing database. 
Prior to the release of the October 9, 1998, Public Notice, the Company
contructed and placed into operation certain licenses from this category based
on information received from the FCC and the Receiver.  The Company is in the
process of determining which licenses have in fact been deleted; however, due
to the disparity between the FCC's lists and its subsequent treatment of such
lists, the Company is uncertain as to which, if any, will remain deleted under
the FCC's current procedures.

In   response,   on   November   9,   1998,  Chadmoore  filed  a  Petition  for
Reconsideration at the FCC seeking reversal of  the  action  announced  in  the
Commercial  Wireless  Division's  Public Notice, and the Company has asked that
relief be reinstated for its affected licenses. Additionally,  on  October  28,
1998, the Company filed motions with the United States Court of Appeals for the
District  of  Columbia  Circuit  as  well as the United States Federal District
Court of the District of Columbia seeking a stay of Commission  action  on  the
subject  licenses  and the release of an accurate and complete list of stations
until reconsideration proceedings at the  FCC,  and  if  ultimately  necessary,
appeal proceedings through the federal courts may be completed. Other similarly
situated  licensees also have filed petitions for relief. No specific timetable
is available in order to assist the Company's management to  predict  with  any
reasonable  degree  of  accuracy when final action on these proceedings will be
forthcoming. The Company does not believe it to be probable that they will  not
be  provided  relief  on all of the licenses potentially subject to the Goodman
Chan Proceedings. However there  can  be  no  assurance  that  relief  will  be
granted.

Approximately  650 of those licenses purchased by or under management contracts
with the Company are among those which the FCC now states will not be  afforded
relief  pursuant  to  the  Commercial Division's October 9, 1998 Public Notice.
Thus, it is possible that the Company's owned and/or managed licenses which are
encompassed within the denial of relief pursuant to the October 9, 1998  Public
Notice, could be permanently canceled by the FCC for failure to comply with its
construction  requirements. If these licenses are in fact cancelled by the FCC,
it would result in the loss of licenses with  a  book  value  of  approximately
$6,200,000 and the loss of certain subscribers to the Company's services, which
while not considered probable, could result in a material adverse effect on the
Company's  financial  condition,  results of operations and liquidity and could
result in possible fines and/or forfeitures levied by the FCC. The Company  has
prepared these estimates based on the best information available at the time of
this  filing.  Once again, there has been no list published by the FCC, in this
matter, which the Company feels it may rely upon. Therefore,  the  Company  has
commenced  the  above described litigation to clarify this matter. Based on the
preceding,  no  provision  has  been  made  in   the   accompanying   unaudited
consolidated  financial statements for the ultimate outcome of the Goodman/Chan
proceeding.

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.


<PAGE>


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:

     4.10 Original Articles of Incorporation

     4.11  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 Subscrption  Agreement for Series
        B 8%  Convertible  Preferred  Stock dated on or about  February 17, 1998
        (Incorporated by reference to Exhibit 10.16 of the form 8-K)

    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 (1)

    27.1       Financial Data Schedule 1998 (1)

    27.2       Financial Data Schedule 1997 (1)

(1)      Filed herewith.

<PAGE>
(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.

(vii) Current report on Form 8-K on May 27, 1998 reporting  (a)  the  sales  of
    equity securities pursuant to Regulation S and (b) the conversion of Series
    B Convertible Preferred Stock.

(viii)  Current  report on Form 8-K on October 19, 1998 reporting (a) the sales
    of equity securities pursuant to Regulation S and  (b)  the  conversion  of
    Series B Convertible Preferred Stock


<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 23, 1998
8



<PAGE>
                                  EXHIBIT INDEX

   EXHIBIT         
   NUMBER                    DESCRIPTION

     11           Computation of per share amounts (1)

   27.1           Financial Data Schedule 1998 (1)

   27.2           Financial Data Schedule 1997 (1)


(1)      Filed herewith.


(11) COMPUTATION OF PER SHARE AMOUNTS
<TABLE>
<CAPTION>
                                              Nine Months Ended                         Three Months Ended
                                        ------------------------------           ------------------------------
                                                September 30                                        September 30
                                        ------------------------------           ------------------------------
                                            1998               1997                  1998                1997
                                        -----------        -----------           -----------        -----------
<S>                                      <C>               <C>                    <C>                <C>        
Net income (loss)                        (6,068,994)       (12,057,378)           (2,362,568)        (1,560,603)
Series B Preferred stock dividend          (131,503)                 -               (48,147)                 -
Series C Preferred stock dividend and
 accretion of amount payable upon
 redemption                                (109,179)                 -               (66,992)                 -         
                                        -----------        -----------           -----------        -----------
Adjusted net income (loss)               (630906767)       (12,057,378)           (2,477,707)        (1,560,603)
                                        ===========        ===========           ===========        ===========

Weighted average common shares 
 outstanding                             30,184,770         19,664,951            35,817,198         19,966,574

Common equivalent shares representing    24,833,495                  -            24,833,495                  -
shares issuable upon exercise of stock
options

Less common equivalents shares          (24,833,495)                 -           (24,833,495)                 -
due to antidilutive shares
                                        -----------        -----------           -----------        -----------
Dilutive adjusted weighted average       30,184,770         19,664,951            35,817,198         19,966,574
shares
                                        -----------        -----------           -----------        -----------
Basic net income(loss) per share                                                                                         
                                              (0.21)             (0.61)                (0.07)             (0.08)
Diluted net income (loss) per share                                                                                      
                                              (0.21)             (0.61)                (0.07)             (0.08)

</TABLE>