<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549


                               Amendment No 1 to
                                    FORM 10-K


[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]

                   For the fiscal year ended December 31, 1999

                                       or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]

               For the transition period from ________ to ________

                         CORDILLERA COMMUNICATIONS CORP.
                   (Formerly Centennial Communications Corp.)
             (Exact name of Registrant as specified in its charter)

                State of Delaware                          84-1324155
        (State or other jurisdiction of                 (I.R.S. Employer
         incorporation or organization)                Identification No.)

         1528 Wazee St., Suite 200                           80202
             Denver, Colorado                              (Zip Code)
   (Address of principal executive offices)

       Registrant's telephone number, including area code: (303) 405-0475

        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None

         Indicate by check mark whether the Registrant (1) has filed all reports
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X  No
   ---   ---

         The aggregate market value of the voting stock held by nonaffiliates of
the Registrant is not available as there is no established trading market.

         The number of shares outstanding of the Registrant's common stock as of
March 24, 2000 was:

                  Common stock - 3,502,750 shares


<PAGE>   2



                                GLOSSARY OF TERMS

         Set forth below are certain technical terms defined as they are used in
this Document:

800 MHz SMR:               A two-way radio service (normally dispatch with
                           limited mobile-telephone usage) provided within a
                           designated portion of the 800 MHz frequency band.

900 MHz SMR:               A two-way radio service (normally dispatch with
                           limited mobile-telephone usage) provided within a
                           designated portion of the 900 MHz frequency band.

Analog:                    A transmission method employing a continuous (rather
                           than pulsed or digital) electrical signal that varies
                           in amplitude or frequency in response to changes in
                           sound impressed on a transducer in the sending
                           device.

Channel:                   A wireless pathway for the transmission of
                           information between a sending point and a receiving
                           point (often "channel" refers to a paired set of send
                           and receive pathways). Channels are often measured in
                           terms of the amount of spectrum they occupy
                           (bandwidth), measured in Hertz.

Churn                      Rate: The rate at which subscribers terminate
                           service, which is calculated by dividing the number
                           of subscribers disconnected by the average number of
                           subscribers on the network expressed as a percentage
                           and calculated for a given measurement period.

Digital:                   A transmission method employing a sequence of
                           discrete, distinct pulses to indicate specific
                           information.

Dispatch:                  A service provided to clients who want to transmit
                           and receive short messages to and from a group of
                           users operating within range of the system's
                           transmission site. Dispatch is normally structured in
                           a one-to-many format between a fixed base station and
                           mobile units, but can also be structured in a
                           one-to-one format.

ESMR:                      Enhanced Specialized Mobile Radio. Radio
                           communications systems that employ digital technology
                           with a multi-site configuration that permits
                           frequency reuse.

FCC:                       United States Federal Communications Commission.

Hertz/Hz:                  Industry convention for measuring frequency. One
                           Hertz (abbreviate Hz) equals one cycle per second;
                           kHz (kiloHertz) stands for thousands of Hertz; MHz
                           (megaHertz) stands for millions of Hertz.

iDEN(TM):                  Integrated digital enhanced network. A digital
                           wireless technology developed by Motorola Inc. for
                           the provision of ESMR service. A trademark of
                           Motorola Inc.

Interconnect:              With respect to SMR, interconnect refers to the
                           service provided to a subscriber which allows such
                           subscriber to have the capability to connect to the
                           public switched telephone network and thereby
                           communicate with a party that can be reached over the
                           local public telephone network.

POPs:                      The approximate number of persons in a market
                           potentially served by telecommunications services,
                           including SMR.

Repeater:                  A stationary transmitter device which retransmits
                           received signals on an outbound circuit in amplified
                           form.

Site:                      The location of a transmission station. In a
                           multi-site configuration with call hand-off between
                           stations, stations are located so that the coverage
                           areas of the individual stations overlap in order to
                           facilitate coverage over a wide coverage area. The
                           geographic coverage area of a transmission site
                           typically has a radius of 15 to 30 miles depending on
                           the height of the antenna and the topography of the
                           market.

SMR:                       Specialized Mobile Radio. SMR refers to third-party,
                           two-way radio communications networks which operate
                           on a repeater which "repeats" an incoming
                           transmission on one channel onto an appropriate
                           outgoing designated or available channel. In this
                           manner, a message can be sent by one user in a group
                           to all the other users in the same group at the same
                           time ("one-to-many" communications). This
                           communications format is well-suited to the dispatch
                           market.

Spectrum:                  A term generally applied to radio frequencies.

Subscriber:                An individual utilizing a subscriber unit on an SMR
                           network.

Subscriber Unit (Radio):   An SMR portable, vehicle-mounted or base station
                           radio receiver/transmitter.



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<PAGE>   3

                         CORDILLERA COMMUNICATIONS CORP.
                   (Formerly Centennial Communications Corp.)
                         1999 ANNUAL REPORT ON FORM 10-K

                                     PART I

<TABLE>
<CAPTION>
                                                                                                      Page
<S>           <C>                                                                                     <C>
Item 1.       Business.............................................................................     4
Item 2.       Properties...........................................................................    16
Item 3.       Legal Proceedings....................................................................    17
Item 4.       Submission of Matters to a Vote of Security Holders..................................    17

                                     PART II

Item 5.       Market for Registrant's Common Equity and Related Stockholder
              Matters..............................................................................    18
Item 6.       Selected Financial Data..............................................................    19
Item 7.       Management's Discussion and Analysis of Financial Condition and Results of
              Operations...........................................................................    21
Item 7a.      Quantitative and Qualitative Disclosures About Market Risk...........................    30
Item 8.       Financial Statements and Supplementary Data..........................................    30
Item 9.       Changes in and Disagreements with Accountants on Accounting and Financial
              Disclosure...........................................................................    30

                                    PART III

Item 10.      Directors and Executive Officers of the Registrant...................................    31
Item 11.      Executive Compensation...............................................................    33
Item 12.      Security Ownership of Certain Beneficial Owners and Management.......................    37
Item 13.      Certain Relationships and Related Transactions.......................................    41

                                     PART IV

Item 14.      Exhibits, Financial Statement Schedules and Reports on Form 8-K (No exhibits
              are furnished with this report)......................................................    43
</TABLE>




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                                     PART I


RISKS RELATING TO FORWARD-LOOKING STATEMENTS

         Certain statements contained in this report including, without
limitation, statements containing the words "believes," "anticipates,"
"intends," "expects," "projects," and words of similar import constitute
"forward-looking statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of the Company or industry
results to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following:

o        general economic and business conditions, both nationally,
         internationally and in the regions in which the Company operates
o        demographic changes
o        existing government regulations and changes in, or the failure to
         comply with, government regulations
o        the intensity of competitive activity and its resulting impact on
         pricing strategies and product offerings
o        the loss of any significant subscribers or suppliers
o        changes in business strategy or development plans
o        technological developments
o        the ability to attract and retain qualified personnel
o        the significant indebtedness of the Company
o        the availability and terms of capital to fund the expansion of the
         Company's business, including the construction and deployment of the
         Company's networks
o        and other factors referenced in this report

Given these uncertainties, prospective investors are cautioned not to place
undue reliance on such forward-looking statements. The Company disclaims any
obligations to update any such factors or publicly announce the result of any
revisions to any of the forward-looking statements contained herein to reflect
future events or developments.

ITEM 1.  BUSINESS

         Cordillera Communications Corp., formerly known as Centennial
Communications Corp., together with its consolidated subsidiaries (the
"Company"), is a provider of analog specialized mobile radio ("SMR") services in
Latin America. The Company operates in Latin American markets that have
approximately 28.3 million people ("POPs") and, as of December 31, 1999, the
Company had 17,252 subscribers. The Company provided SMR service in the United
States until 1997 when it made the strategic decision to sell its United States
SMR operations and related assets (the "U.S. Operations") and focus its ongoing
efforts solely in Latin America. The sale of the U.S. operations was completed
during 1998 and 1999. See "Developments During 1999 - Divestiture of the United
States Operations."

         The Company was founded in October 1995, and at December 31, 1999,
operates under the name(s) (i) "Radio Trunking del Peru," "SMR Direct Peru,
S.R.L.," "Telecom Supply S.R.L.," "Pompano, S.R.L.," "C-Comunica S.R.L.,"
"Transnet del Peru, S.A." and "Peru Tel S.A." in Peru, (ii) "Radio Trunking del
Ecuador," "Brunacci Compania Ltda.," and "Comovec S.A." in Ecuador, (iii)
"Telecommunicaciones y Servicios S.A.," "Centennial Cayman Corp. Chile Ltda."
and "Trunking, S.A." in Chile and (iv) "Radio Trunking de El Salvador, S.R.L.,"
and "Centennial Communications de El Salvador, S.R.L., C.V." in El Salvador. As
of December 31, 1999, the Company is (i) the largest SMR operator in Peru, Chile
and El Salvador in terms of the number of channels with 321, 767 and 170
channels, respectively, and (ii) the largest SMR operator in Ecuador, in terms
of the number of subscribers and channels with over 4,200 subscribers and 365
channels.

         The Company's strategy is (i) to consolidate its channel positions in
the markets in which it operates; (ii) to maximize cash flow; (iii) to add
incremental services using its spectrum and networks, as appropriate; and (iv)
to evaluate technological developments in order to most effectively utilize its
spectrum. In December 1999, the



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<PAGE>   5

Company decided to focus on its Chile and Peru operations. Accordingly, the
Company entered into a letter of intent to sell its Ecuador operations and to
acquire two companies in Chile which together hold 765 channels in the 800 MHz
frequency band. The purchase and sale agreement for this transaction was
consummated on January 27, 2000. In February 2000, the Company entered into an
agreement for the sale of all of its El Salvador assets, except for its 800 MHz
licenses. As part of this transaction, the Company also entered into a
management arrangement with the purchaser whereby the purchaser will manage the
Company's SMR system in El Salvador and will be entitled to all revenues of such
system and will be responsible for all liabilities and expenses of such system
for a period of two years.

SMR

         SMR, also referred to as "trunked radio" or wireless dispatch
communications, is primarily a business communications tool which provides
cost-effective, "one-to-many" voice communications. SMR was originally developed
in the United States in order to provide an efficient mobile communications
service for businesses that required internal communications capabilities.

         SMR service traditionally has emphasized radio dispatch service, which
involves shorter duration communications than mobile telephone service and
places less demand on system capacity. The traditional SMR market, therefore,
has been oriented primarily to business customers such as construction
contractors, service companies, security firms and delivery service companies
that have significant field operations and need to provide their personnel with
the ability to communicate directly with one another, either on a one-to-one or
on a one-to-many basis.

         SMR networks receive transmissions from a subscriber unit and
re-transmit the signal through the channel to other subscriber units. A
multi-channel trunked network automatically searches for an open channel for
each transmission. Once the system has assigned a user (or group) a channel per
transmission, no other unauthorized user (or group) can access that channel.
Channels are licensed per geographic area and, using analog technology, each
channel generally can serve up to 125 SMR subscribers in a given area.

         SMR service employs a simplex or half-duplex ("push-to-talk") mode.
Dispatch entails short bursts of communication, with a new transmission
initiated with each pause in the communication. Each voice transmission occurs
on the then available channel. In contrast, cellular communications utilizes two
dedicated channels, one for each side of the conversation. Once a cellular call
is initiated the channel pair remains utilized throughout the entire duration of
the call, thereby potentially blocking channels for an extended period of time.
Cellular and SMR networks differ significantly in terms of the complexity of
network architecture, costs of network construction, subscriber capacity and
operating costs. SMR networks are similar to cellular networks in that both
utilize site locations to receive and rebroadcast transmission to and from
subscriber units. Unlike cellular, however, SMR utilizes networks of one to four
towers per geographic coverage area, which broadcast a high-powered signal,
generally between 75 and 175 watts. Cellular networks use anywhere from 20 to 90
antennae towers per geographic coverage area, that broadcast a low-powered
signal and area networked with expensive and complex switching equipment. SMR
network construction also differs from cellular in that the network build-out is
modular. Because SMR infrastructure is designed to allow for modular expansion,
network capacity increases are easily and economically accomplished, by adding
repeaters in increments that closely match growth in subscriber demand.

         Traditionally, SMR service has employed analog technology, which has
proven to be a reliable, cost-effective technology. As in the wireline telephone
industry, analog technologies have largely given way to digital technologies. In
digital technology, the user's voice signal is digitized and transmitted to the
called party as bits. At the receiving end, the digital signal is converted back
to voice for presentation to the human ear. As in the computing industry,
digital telephone system operators are riding a steep learning curve, with
respect to the provision of digital services which allows higher capacities and
lower costs than with older analog technology.

         In the SMR or trunking business, digital technology is known as "ESMR"
(Enhanced Specialized Mobile Radio). ESMR is based upon the division of a given
geographical area into a number of cells and the simultaneous reuse of radio
channels in non-contiguous cells within the network. ESMR allows a greater
number of subscribers (typically 3 or 6 to 1) to be placed on a single radio
channel, provides the capability to offer integrated wireless



                                        5
<PAGE>   6

communications services utilizing common cell and digital switching
infrastructure and allows the use of multi-functional subscriber units.

         A key advantage to ESMR systems is that in addition to higher
capacities, a new suite of revenue producing features are available to be
offered to customers. The basic SMR feature, dispatch, with its one-to-one and
one-to-many communication capability remains a bedrock feature. In addition, by
appropriate interconnection to the public telephone network, mobile calling
services that are identical in function to those offered by cellular providers
are made available. In addition, paging and short messaging services, can be
offered. The fourth new feature provides limited internet access from a mobile
handset.

         In summary, ESMR opens up new business opportunities by providing four
key features to the mobile customer all from a single, wireless handset. This
single device replaces a two-way radio, a cell phone, a pager, and a laptop with
a modem.

         CHANNEL HOLDINGS

         The table below sets forth the Company's channel holdings and
subscriber information in its Latin American markets.

<TABLE>
<CAPTION>
                            (1) POPs       (2)Total      Subscribers as of   Subscribers as of
                           (millions)  Channel Holdings  December 31, 1999   December 31, 1998
                           ----------  ----------------  -----------------   -----------------
<S>                        <C>         <C>               <C>                 <C>
PERU
     Lima/Callao                  7.5            176             7,770                7,735
     Other                        3.5            145                13                 --
                           ----------     ----------        ----------           ----------
         Total                   11.0            321             7,783                7,735
                           ----------     ----------        ----------           ----------
ECUADOR (4)
     Guayaquil                    1.9            150             2,598                2,841
     Quito                        1.4            150             1,612                1,804
     Cuenca                       0.2             40              --                   --
     Other                        0.5             25              --                   --
                           ----------     ----------        ----------           ----------
         Total                    4.0            365             4,210                4,645
                           ----------     ----------        ----------           ----------
CHILE (5)
     Metropolitan Region
          of Santiago             5.8            150             4,281                1,507
     Other                        1.7            617                84                 --
                           ----------     ----------        ----------           ----------
                                  7.5            767             4,365                1,507
                           ----------     ----------        ----------           ----------
EL SALVADOR (6)
     Nationwide                   5.8            170               894                  838
                           ----------     ----------        ----------           ----------
     TOTAL (3)                   28.3          1,623            17,252               14,725
                           ==========     ==========        ==========           ==========
</TABLE>

(1)      Represents the approximate number of people ("POPs") in the markets in
         which the Company has channels.
(2)      Channels are voice paths on which mobile communications are
         transmitted. Channels are licensed per geographic area and, using
         analog technology, each channel can generally serve up to 125
         subscribers in a given area. All of the Company's channels are in the
         800 MHz spectrum except 20 in each of Guayaquil and Quito, which are in
         the 900 MHz spectrum.
(3)      The Company also had channels and subscribers in the United States that
         were under management agreements through October 1999 when it completed
         the sale of its U.S. Operations. See "Developments During 1999 -
         Divesture of the United States Operations."
(4)      In January 2000, the Company sold its Ecuador business and the related
         spectrum.
(5)      In January 2000, the Company acquired 765 channels in Chile.
(6)      In February 2000, the Company sold its El Salvadoran operations, but
         retained its spectrum, which is being managed by a third party.

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CORPORATE STRUCTURE

The chart below sets forth the corporate ownership structure of the Company and
its subsidiaries and the date each such entity was formed or acquired as of
December 31, 1999. Each of the Company's subsidiaries is wholly-owned, either
directly or indirectly, by the Company. Unless otherwise noted, each entity is
100% owned by its parent.



                    [CENTENNIAL COMMUNICATIONS CORP. CHART]


-----------------
(1)      SMR Direct Cayman Corp. is a nominee shareholder in this company
         holding no more than 1% of the equity of this company.
(2)      Centennial Cayman Corp. is a nominee shareholder in this company
         holding no more than 1% of the equity of this company.

DEVELOPMENTS DURING 1999

         Acquisitions During 1999

         On April 14, 1998, the Company executed a purchase agreement with Radio
Movil Digital Americas Inc., a non-operating Chilean company, for the
acquisition of certain assets in Chile for a purchase price of approximately
$400,000 in cash. On May 12, 1999, the Company completed this acquisition,
consisting of 65 800 MHZ channels: 20 in Santiago, 20 in Valparaiso/Vina del
Mar, and 25 in Concepcion/Talcahuano.

         On October 15, 1998, the Company signed a purchase agreement for the
acquisition of certain Chilean assets, including a license for 20 800 MHz
channels in Santiago, certain infrastructure and subscribers. On July 26, 1999,
the Company completed this acquisition for approximately $2.1 million in cash.

          On October 22, 1998, the Company signed an agreement to purchase 100%
of the shares of Trunking S.A. a Chilean non-operating company having 800 MHz
channels (i) 20 in Santiago and (ii) 176 in various Chilean cities. This
acquisition closed on July 26, 1999 for approximately $700,000 in cash.

         Auctions

         The Company submitted a proposal to build out 40 nationwide 800 MHz
channels in the Chilean SMR concurso which was held in July 1997 (the "Chile
Concurso"). On October 29, 1997, the Company received written notice from the
Chilean Ministry of Transportation and Telecommunications (the "Chilean
Ministry") that its proposal had been accepted and awarded. Certain parties
appealed this award; however, such appeals were denied and the legal appeal
process has been exhausted. The Chilean Ministry made the final award in
November 1999.

         Divestiture of the United States Operations

         In August 1997, the Company decided to sell its United States SMR
operations and related assets (the "U.S. Operations") and focus its ongoing
efforts solely in Latin America and other emerging markets. As of December 31,
1997, the Company had executed purchase agreements to sell substantially all of
the assets related to the U.S. Operations, including the Company's SMR licenses
in each of the 20 United States Major Trading Areas ("MTAs") in which it had
operations. These agreements also provided for the transfer of operating control
to the purchasing entity until the purchase agreements were consummated.

         The completion of the sale was based upon the approval from the Federal
Communications Commission (the "FCC"). The Company received approval for the
majority of the MTA's as of December 31, 1998. The approval for the three
remaining MTA's to two purchasers was received in September and October 1999.
During the period of time between the execution of the purchase agreement and
the receipt of FCC approval to transfer the SMR licenses and related debt
provided by the United States government for the purpose of acquiring spectrum



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licenses in the FCC Auction (the "FCC Debt"), the Company entered into
management agreements (the "Management Agreements") with the purchasers, whereby
the purchasers were responsible, subject to the Company's control, for all
management aspects of the U.S. Operations being purchased, were obligated to
reimburse the Company for all required payments under the FCC Debt, and received
most of the economic benefits of managing such U.S. Operations.



         Registration Statement

 On January 15, 1998, the Company finalized a $40 million financing of Senior
Discount Notes (the "Private Notes") due 2005. The financing consisted of 40,000
units, each unit consisting of $1,000 in principal at maturity and one warrant
to purchase 64 shares of common stock of the Company at an exercise price of
$.01 per share. The Private Notes were issued at a substantial discount from
their principal amount and interest does not accrue on the Private Notes prior
to January 1, 2003. Thereafter, interest accrues at 14% per annum, payable
semi-annually in arrears on January 1 and July 1 of each year commencing July 1,
2003. Pursuant to the Registration Rights Agreement, the Company filed a
registration statement with the Securities and Exchange Commission with respect
to an offer and, in August 1999 completed the exchange of Exchange Notes for the
Private Notes, whereby the Exchange Notes have terms substantially identical to
those of the Private Notes.

POST FISCAL YEAR-END TRANSACTIONS AND DEVELOPMENTS

         On January 27, 2000, the Company sold 100% of the shares of its Ecuador
subsidiary for $2.0 million. In a related transaction with the same party, the
Company purchased 100% of the shares of two Chilean companies having a combined
total 800 MHz channels (i) 40 in Santiago and (ii) 725 in various Chilean cities
for approximately $4.0 million. Of this amount, $2.0 million was offset by the
$2.0 million sale price of the Ecuador subsidiary.

         In February 2000, the Company entered into a purchase agreement for the
sale of all of its El Salvador assets, except for its 800 MHz licenses, for
approximately $200,000. As part of this transaction, the Company also entered
into a management arrangement with the purchaser whereby the purchaser will
manage the Company's SMR system in El Salvador and will be entitled to all
revenues of such system and will be responsible for all liabilities and expenses
of such system for the earlier of two years, or the date of a sale of the
Company's 800 MHz licenses in El Salvador.

         On January 20, 2000, the Company named Karl Maier as its President and
Chief Executive Officer. Previously Mr. Maier served as President and Chief
Operating Officer.

         On March 18, 2000 the Company also announced its decision to
consolidate its Latin American operations in Denver and to close the Miami
office.

COUNTRY-BY-COUNTRY OPERATIONS

Overview

         As of December 31, 1999, the Company had acquired an aggregate of 1,623
channels in Peru, Ecuador, Chile and El Salvador covering an aggregate of
approximately 28.3 million POPs and provided service to 17,252 subscribers. For
specific financial information about each operation, see the consolidated
financial statements of the Company included elsewhere herein.

         The Company's principal strategy is to grow by continuing to upgrade
and expand its existing analog SMR wireless communications operations and to
incorporate digital wireless communications services which will enable the
Company to increase its subscriber base and revenues.

         The Company holds licenses covering more SMR channels than any other
SMR or ESMR system operator in Peru, Chile, Ecuador and El Salvador and believes
it is among the largest SMR (and potential ESMR) service



                                        8
<PAGE>   9

providers, based on its channel position in these countries. The Company is
investigating an upgrade of its analog SMR networks to digital ESMR networks.
The upgrade to digital networks could allow the Company to increase capacity and
quality and to provide additional services.

Sales and Marketing

         General. The Company focuses its sales and marketing efforts on
businesses that require reliable, cost-effective group communications solutions,
a high degree of mobility or that have multiple work locations. Such customers
include, but are not limited to, trucking concerns, bus companies, construction
companies, security firms, messenger service companies, sales and distribution
operations, repair operations, and utilities. In addition, the Company has been
successful in extending the reach of its SMR services to non-traditional users
such as financial institutions and other "white collar" organizations. The
Company markets its analog SMR services as a low cost, high quality, wireless
communications solution that enables businesses to lower their operating costs
and improve productivity by providing two-way, real-time group communications.

         The Company sells its products and services through three distinct
channels; (i) its own direct sales force, (ii) independent sales representatives
and (iii) equipment dealers. The Company's sales people are compensated on a
salary and commission basis whereas the independent representatives and
equipment dealers receive commissions only.

         Pricing Strategy. The Company's pricing strategy differs from country
to country. In certain markets, the Company focuses on subscriber growth and
recurring revenues, whereas in other markets, the focus is on equipment sales.
The Company's pricing strategy includes a fixed monthly network access fee and
unlimited airtime usage. The monthly network access fees vary in each Latin
American market depending on the competition, economic environment and
availability of competing wireless communications solutions. In order to satisfy
local market demand, the Company also offers subscribers the option to either
(i) purchase; (ii) rent; or (iii) lease subscriber units with an option to
purchase the unit at the end of the service contract. The Company has designed
each of these programs to provide subscribers with units at a lower price than
that offered by the Company's competitors (i.e. the Company subsidizes the cost
of the radios it sells). In order to mitigate the risk of inflation and currency
devaluation, the Company's contracts specify dollar prices payable in the local
currency at the then prevailing exchange rate.

         Additional Programs and Products. The Company offers equipment
maintenance and insurance programs, which the Company self-insures, to its
subscribers. The Company also offers additional technical support services, and
wide area coverage or multiple site linkage programs to its subscribers. The
Company offers its subscribers ancillary products such as base stations,
antennae and other complementary products.

         Churn Management. The Company recognizes that managing subscriber churn
is an important factor in maximizing revenues and cash flow. In order to
minimize subscriber churn caused by subscribers voluntarily terminating service,
the Company has implemented a number of programs and seeks to ensure that its
service is high quality and its prices are competitive. The Company has
instituted a program requiring subscribers to enter into a service contract
having a term of at least one-year, which provides for penalties for early
termination. In addition, the Company now (i) conducts more thorough credit
checks; and (ii) requires subscribers to pay in advance and/or make a
significant deposit with the Company if a customer has a questionable or lower
than desirable credit history. The average monthly churn for 1999 was
approximately 4%.

Long-lived Assets

         The Company reviews its long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. The Company continuously evaluates the recoverability of
its long-lived assets based on estimated future cash flows from and the
estimated liquidation value of such long-lived assets, and provides for
impairment if such undiscounted cash flows are insufficient to recover the
carrying amount of the long-lived asset. If an impairment is indicated, the
amount of the charge is calculated as the amount by which the carrying amount of
the asset exceeds the fair value of the asset. During 1998, the Company
determined that its spectrum licenses and other long-lived assets related to its
El Salvador subsidiary was impaired based upon third party offers, and recorded
a write down of $2.4 million to their estimated fair value. During 1999, the
Company determined that its spectrum licenses and other long-lived assets
related to its Ecuadorian subsidiary was impaired based upon third party offers,
and recorded a write down of




                                        9
<PAGE>   10

approximately $280,000 to their estimated fair value. At December 31, 1999, the
Company determined that there were no other impairments of long-lived assets.

PERU

         Country Overview. Peru currently has a population of over 24.3 million
and had an annual population growth rate of approximately 1.7% from 1995 through
1999. Approximately 70% of Peru's population live in urban areas. In the early
1990s, the Peruvian government implemented a number of programs designed to
improve the economy, including liberalizing trade and privatizing state-owned
enterprises. Peru's gross domestic product ("GDP") measures approximately $58
billion, equivalent to approximately $2,259 per capita. The economy was expected
to grow 2.4% in 1999 and is expected to grow 6% in 2000 as the external and
political environment improves.

         The lack of telecommunications infrastructure has left many Peruvian
businesses without access to telephones and has created a demand for alternative
communications solutions. Demand by businesses for reliable communications
services is growing as the Peruvian government continues its aggressive
privatization plan and investment in infrastructure projects. Currently,
existing telephone service in Peru is not capable of serving this demand. Peru's
telephone density of 6.8 lines per 100 POPs is one of the lowest number of lines
per capita in any Latin American country with a publicly traded telephone
company.

         Operating Overview. The Company operates in Peru through six indirect
wholly-owned subsidiaries: SMR Direct Peru, S.R.L. (formerly Mobil Line Peru,
S.A.); Pompano, S.R.L.; C-Comunica S.R.L.; Telecom Supply, S.R.L. (formerly
Beacon Supply Comunicaciones S.A.); Transnet del Peru, S.A; and Peru Tel S.A.
These companies hold an aggregate of 176 800 MHz channels in Lima/Callao and an
aggregate of 145 800 MHz channels in 11 other cities. C-Comunica S.R.L. also has
a contractual application pending before OSIPTEL to obtain an additional 40
channels covering Lima/Callao; however there can be no assurance that such
application will be granted. The Company has centralized the management and
operation of its Peruvian SMR networks in SMR Direct Peru, S.R.L. The Company
filed an application with the Peruvian government seeking approval for the
merger of its operating companies into a single entity in order to consolidate
its operations. The Peruvian government granted the approval of the merger in
February of 2000 and the merger was completed on March 4, 2000. This merger and
the attendant MEP will become final upon the approval by the Peru Ministry of
Communictions (defined below), which is expected to take place, however there
can be no assurance of such outcome.

         The Company is the largest SMR operator in Peru in terms of number of
channels and the second largest operator in terms of subscribers. As of December
31, 1999, the Company was operating 216 channels and provided service to 7,783
subscribers through seven sites. In Peru, the Company's average monthly revenue
per subscriber unit (consisting of fixed monthly network access fees and
ancillary service revenue ) ("ARPU") for the year ended December 31, 1999 was
approximately $31.

         Competition. The Company believes that its primary SMR competitor in
Peru is Nextel del Peru, of which Nextel International owns a majority share in
a joint venture with Motorola, Inc. ("Motorola") and a local Peruvian company
(the "Nextel JV"). The Company believes that the Nextel JV currently owns 130
SMR channels in Lima/Callao and has approximately 18,000 analog subscribers. The
Nextel JV deployed an iDENtm network (integrated digital enhanced network - a
trademark of Motorola, Inc.) in Lima/Callao for the provision of ESMR service in
January 1999. Nextel JV is currently offering dispatch services and
interconnected one-to-one voice, as well as data services. There is another
smaller analog SMR operator, CEMA Comunicaciones, in Peru that competes with the
Company. CEMA owns 10 channels in Lima/Callao and provides service to
approximately 300 subscribers. The Company's SMR service also competes with the
cellular and paging services offered to businesses by Telefonica del Peru and
BellSouth. The Company believes that the demand in Peru for high quality
telecommunications services will be able to accommodate both low cost analog SMR
service as well as the more expensive alternatives being offered by certain of
the Company's competitors, although there can be no assurance in this regard.

         Regulatory and Legal Overview. The regulatory agencies in Peru are the
Organismo Supervisor de Inversion Privada en Telecomunicaciones de Peru
("OSIPTEL") and the Ministry of Transportation, Communications, Housing and
Construction of Peru (the "Peru Ministry of Communications"). OSIPTEL is



                                       10
<PAGE>   11

responsible for overseeing private investments in the telecommunications
industry, and the Peruvian Ministry of Communications grants Telecommunications
licenses and issues regulations governing the telecommunications industry. The
Telecommunications Law of Peru (the "Peruvian Telecommunications Law"), the
general regulations thereunder (the "Peruvian General Regulations") and the
specific regulations governing trunking services outline the rules for the
operation of SMR services in Peru.

         In 1994, Peru established, by Ministerial Resolution 412-94-MTC/15, a
regulatory framework for the SMR industry. This framework has been amended by
Ministerial Resolution 120-95-MTC/15.04 published on March 29, 1995 and by
Ministerial Resolution 373-97-MTC, published on August 6, 1997. The
Telecommunications Law passed by Supreme Decree No. 013-93-TCC dated April 28,
1993, and the adjoining Regulation, approved by Supreme Decree No. 06-94-TCC
dated February 11, 1994 and modified by Supreme Decree No. 005-98-MTC on March
28,1998 by Supreme Decree No. 003-99-MTC, by Supreme Decree No. 022-98-MTC
published on January 21, 1999, the Telecom Market Opening Regulations, passed by
Supreme Decree No. 020-98-MTC and the Public Mobil Services Use Conditions and
Contract General Clauses, passed by OSIPTEL Board Resolution
002-2000-CD/OSIPTEL, are the source of Peruvian SMR regulations.

         Pursuant to the Telecommunications Law, the Ministry is responsible for
general oversight and regulation of the Telecommunications industry, and
governmental entity, OSIPTEL, is responsible for regulating the activities of
companies holding public services concessions, such as SMR concessions, as well
as supervising the quality of services provided to end users, and the fairness
of tariffs. Each SMR concession sets forth expansion, penetration and service
quality mandates, each of which is monitored by OSIPTEL. The Ministry has the
authority to grant or revoke concessions, permits and licenses for public
telecommunication services.

         Under Peruvian law, telecommunications concessions are subject to
private law and may not be modified, amended or terminated unilaterally by the
Peruvian government except as set forth in each concession. Telecommunications
concessions are granted for a maximum term of 20 years, and may be renewed
without limitation.

         In Peru, it is presumed that 720 channels have been reserved in each
market in the 800 MHz frequency band for SMR use, including 535 channels for
public service and 185 channels for private service. An applicant for a
concession must indicate the specific geographic area it expects the concession
to cover.

         The holders of concessions must submit a five-year Minimum Expansion
Plan (a "MEP") to the Ministry at the time of application for a concession. Each
MEP must outline the number of repeaters and subscribers the concession holder
will have loaded on its network by the end of each of the initial five years of
operation. Failure to comply with such requirements may subject the licenses
relating to such channels to punitive measures. In January of each year, the
concession holder must file a report with the Ministry and OSIPTEL indicating
compliance with its MEP. MEPs may be amended at the end of the first and second
years of operation by petitioning OSIPTEL and the Ministry. Each concession
holder must pay an annual commercial exploitation fee, an annual canon for the
use of the spectrum, a fee to OSIPTEL for supervision of the SMR system and a
special contribution to the Telecommunications investment Fund ("FiTEL"). The
obligation of posting a performance bond in guarantee of commencing operations
has been eliminated. Concession holders must also complete construction of their
networks and commence operations within 12 months of execution of a concession
contract, otherwise the concession will be canceled. The Company failed to meet
certain minimum subscriber loading requirements with respect to a portion of its
channels in Peru in 1997 and 1998, but filed requests for modification of such
loading requirements. In October 1999, the Peru Ministry of Communications
approved the Company's modified MEP. In addition, the Company filed an
application with the Peruvian government seeking approval for the merger of its
operating companies into 3 entities in order to consolidate its operations in
SMR for Lima/ Callao; in SMR for 9 other cities inside the country; and in
paging for Lima/Callao, which included a further request to amend the MEP in
conjunction with the merger. The Peruvian government granted the approval of the
merger in February of 2000 and the merger was completed on March 4, 2000,
subject to final approval by the Peru Ministry of Communications, which is
expected to take place, however there can be no assurance of such outcome.

         The Company was at a certain point also not in compliance with certain
terms of the concession agreements including, homologation of equipment
(certifying the equipment before entering Peru) and site to site transmission of
signal (currently allowed only site to handset). The Company has applied to
correct the non-



                                       11
<PAGE>   12

compliance issues and is waiting on approval from the Ministry. Currently the
Company has obtained the issuance of the Equipment Homologation Certificates.
The Company believes that the applications will be approved and result only in
monetary fines, if any; however, there can be no assurance of such outcome.

         Concessions may not be transferred or assigned except with the prior
approval of the Ministry, which may not be unreasonably withheld. There are
currently no restrictions on foreign ownership and investment in Peru's
telecommunications sector, except for broadcast services. Under current Peruvian
law, SMR operators are permitted to provide interconnection to the public
switched telephone network. The Company may also acquire other companies as
necessary to increase the value of its spectrum holdings.

CHILE

         Country Overview. Chile has a population of approximately 15 million
and had an annual population growth rate of approximately 1.5% from 1995 to
1999. Approximately 84% of Chile's population live in urban areas, 5.8 million
of which reside in the greater metropolitan Santiago area. Twenty-four years of
market-led reforms have resulted in 14 years of uninterrupted economic growth,
which has averaged 13.6% per year from 1992 to 1997. In 1990, Chile emerged from
17 years of military government with an overall consensus about the general
parameters of economic management, and since then has experienced a rise in
productivity, an increase in domestic savings and a more efficient use of labor.

         The telecommunications sector was privatized in 1989 when the sale of
all state-owned telecommunications companies was completed, and competition was
allowed in long distance telephone services. Teledensity in Chile is
approximately 18 lines per 100 POPs. The privatization of the telecommunications
sector paved the way for private investment in telecommunications services and
allowed for the introduction of the commercial SMR industry. Today, about 30
companies have been awarded SMR licenses. The Subtel (as defined) is not
currently planning to allocate any more frequencies to SMR use.

         Operating Overview. At December 31, 1999, the Company operates in under
the trade name Centennial Radio Trunking de Chile through three wholly-owned
subsidiaries, Telecommunicaciones y Servicios S.A., Trunking S.A. and Centennial
Cayman Corp. Chile Ltda.,which hold 150 800 MHz channels in the greater
metropolitan region of Santiago, 75 800 MHz channels in Valparaiso/Vina del Mar
region, 75 800 MHz channels in Concepcion region and 487 800 MHz channels in 18
other cities.

         The Company acquired its first operating company in Santiago in January
1998 and began providing service at that time. Following additional
acquisitions, the Company initiated its formal service launch in August 1998.
The Company is the largest SMR operator in Chile in terms of channel holdings.
As of December 31, 1999, the Company provided SMR service to 4,365 subscribers
in Santiago, Valparaiso/Vina del Mar and Concepcion from 43 sites and had 222
constructed channels. In Chile, the Company's ARPU for the year ended December
31, 1999 was approximately $33.

         Competition. The Company's main competitors in Chile are Multikom Ltda.
(100%-owned by Motorola), Telecommunicaciones Gallyas S.A., and CTC-Startel S.A.
These three companies have 70, 90 and 20 800 MHz channels and approximately
2,000, 4,500, and 1,900 subscribers in Santiago, respectively. The Company also
competes with cellular, PCS and paging services provided by CTC-Startel,
BellSouth, Entel and SmartCom. The Company believes that the demand for high
quality telecommunications services will be able to accommodate a wide range of
service offerings.

         Regulatory and Legal Overview. The regulating entity for
telecommunications in Chile is the Chilean Ministry of Telecommunications, which
acts through the Subsecretary of Telecommunications (the "Subtel"). The Chilean
Ministry of Telecommunications and Subtel are responsible for general oversight
and regulation of the telecommunications industry, regulating the activities of
companies holding public service concessions, such as SMR concessions, as well
as supervising the quality of services provided to end users, and the fairness
of tariffs.

         Each SMR concession sets forth expansion, penetration and service
quality mandates, each of which is monitored by the Subtel. The Chilean Ministry
of Telecommunications has the authority to grant or revoke



                                       12
<PAGE>   13

concessions for public telecommunication services pursuant to the provisions of
the Chilean Telecommunications law, and the Subtel has the authority to grant or
revoke permits for limited telecommunications services.

         The holders of concessions must submit a technical proposal with each
application for a concession. Concession holders must complete construction of
their networks and commence operations within the time frames set forth in their
technical proposal. Failure to comply with the terms set forth in a technical
proposal can result in sanctions, including the cancellation of the concession.

         Concessions, which may only be granted to legal entities incorporated
and domiciled in Chile, are not limited as to their number, type of service or
geographical area. Therefore, it is possible to grant two or more concessions
for the provision of the same service in the same location, except where
technical limitations exist, such as in the case of mobile telephony, for which
only two concessions may be granted for a single service area.
Telecommunications concessions are granted for a maximum term of 30 years, and
may be renewed for identical periods if so requested by the concessionaire.

         Concessions and permits cannot be assigned, transferred or leased
without the prior authorization of the Subtel, which cannot be denied without a
reasonable basis.

         Chilean telecommunications law establishes the grounds upon which the
concessions or permits may be terminated by a decree of the Chilean Ministry of
Telecommunications or a resolution of the Subtel. The grounds for termination
include the following: (a) expiration of the term of the concession; (b)
dissolution of the holder of the concession, or (c) noncompliance with the terms
and conditions specified in Chilean telecommunications law, the regulations
enacted thereunder or the concession itself. The holder of a concession may
appeal against a decree effecting such a termination if it believes that such
decree is illegal.

         There are currently no restrictions on foreign ownership and investment
in Chile's telecommunications sector. Under current Chilean law, SMR operators
are permitted to provide interconnection with other public concessions of the
same type.

ECUADOR

         On January 27, 2000, the Company sold 100% of the shares of its Ecuador
subsidiary.

         Country Overview. Ecuador currently has a population of approximately
12.4 million people and had an annual population growth rate of approximately
1.7% from 1995 to 1999. Approximately 60% of Ecuador's population live in urban
areas, 3.3 million of which reside in Guayaquil and Quito. Ecuador's GDP
measures approximately $13.6 billion, equivalent to $1,153 per capita and grew
at a compound annual growth rate of 8.5% from 1992 to 1997.

         During 1999, the Ecuadorian operations were faced with a devaluing
sucre and a volatile political and economic situation. When the Company launched
service in Ecuador in 1997, the exchange rate was approximately 4,300 sucres to
one U.S. dollar. As of December 31, 1999, it was approximately 19,500 sucres to
one U.S. dollar and since that date, the Ecuadorian government has frozen the
exchange rate to 25,000 sucres per one U.S. dollar. The devaluation has a direct
impact on customer's ability to pay due to the fact that the Company bills in
U.S. dollars. During 1999, the declining sucre sparked a run on banks in
Ecuador, causing the Ecuadorian government to impose limits on withdrawals, and
causing a number of banks, including Ecuador's second-largest bank, to close its
doors. In January 2000, there was an attempted coup in Ecuador, which eventually
resulted in a peaceful change in government. Nevertheless, the situation remains
highly volatile. Partially as a result of this volatility, the Company made a
decision to concentrate on its markets in Peru and Chile.

         Operating Overview. The Company operated in Ecuador through its
wholly-owned indirect subsidiaries Brunacci Compania Ltda., and Comovec S.A.
which together hold (i) concession and frequency contracts for 150 channels in
each of the cities of Quito and Guayaquil; (ii) a concession and frequency
contract for 40 channels in the city of Cuenca; (iii) a concession and frequency
contract for five channels in each of the cities of Machala,



                                       13
<PAGE>   14

Portoviejo/Manta and Quevedo; and (iv) a concession for five channels in each of
the cities of Salinas and Santo Domingo de los Colorados.

         The Company commenced service in Guayaquil in March 1997 and in Quito
in July 1997. As of December 31, 1999, the Company had constructed and was
operating an aggregate of 90 channels in such cities and provided service to
4,210 subscribers through five sites. In Ecuador, the Company's ARPU for the
year ended December 31, 1999 was approximately $27.

         Competition. The Company believes that the only other companies
currently providing SMR service in Ecuador are Multicom (Grupo Isaias and
Motorola) which has 190 channels and approximately 2,800 subscribers, and Grupo
Marconi which currently has approximately 70 channels and approximately 700
subscribers and Fleetcall (Monttcashire) which currently has approximately 240
channels and approximately 1,400 subscribers. The Company also competed with
cellular services offered by CONECEL and OTECEL.

         Regulatory and Legal Overview. The Superintendency of
Telecommunications (the "Superintendency"), was the governmental entity
responsible for administration of the SMR industry. In August 1995, the
Ecuadorian government created two new government entities, the Consejo Nacional
de Telecomunicaciones ("CONATEL") and the Secretaria Nacional de
Telecomunicaciones (the "Secretariat") which, together with the Superintendency,
administer and regulate the country's telecommunications sector. The
Superintendency continues to exist with limited functions, including the
supervision of SMR operators and compliance with concession contracts.

         SMR licenses and channels are granted in two stages. First, an
applicant is granted an SMR license, and then must apply for, and be granted, an
SMR frequency contract which enumerates the granted channels. Concessions have a
term of five years and may be renewed for similar five year periods without
limitation by submission of an application to the Secretariat. Under Ecuadorian
law, there are no minimum subscriber requirements. The Secretariat and the
Superintendency are charged with enforcing the operating standards contained in
each individual concession and frequency contract. Concession holders must post
a performance bond to guarantee performance of their obligations under the
concession and the frequency contract and pay monthly spectrum usage fees.

         Each frequency contract contains subscriber loading restrictions which
limit the number of subscribers the licensee is permitted to load onto its SMR
network. The minimum number of subscribers that the CONATEL will authorize for
loading onto a five channel system is 100, and the maximum number is generally
500. However, the Secretariat is empowered to permit the loading of a larger
number of subscribers if it is demonstrated that transmission quality and
service will not suffer.

         The Secretariat may unilaterally revoke a concession which is
transferred by the original holder without CONATEL consent and failure to meet
concession requirements may result in the early termination of the concession or
in the imposition of penalties. Equity interests in the original concession
holder may be transferred upon notification to the Superintendency of Companies
(the Ecuadorian governmental agency responsible for supervising domestic
corporations and branches of foreign companies domiciled in Ecuador).

         Current Ecuadorian telecommunications regulations do not permit SMR
operators to interconnect to the public switched telephone network.

         Ecuadorian telecommunications regulations expressly allow for foreign
investment in the SMR industry. However, foreign investors are required to
register their investments with the Central Bank of Ecuador.

EL SALVADOR

         In February 2000, the Company entered into an agreement for the sale of
all of its El Salvador assets, except for its 800 MHz licenses. As part of this
transaction, the Company also entered into a management arrangement with the
purchaser whereby the purchaser will manage the Company's SMR system in El
Salvador and will be entitled to all revenues of such system and will be
responsible for all liabilities and expenses of such system for the earlier of
two years, or the date of a sale of the Company's 800 MHz licenses in El
Salvador.



                                       14
<PAGE>   15

         Country Overview. El Salvador has a population of approximately 5.8
million and has experienced an annual population growth rate of approximately
2.1% from 1992 to 1997. Approximately 50% of El Salvador's population live in
urban areas, 1.2 million of which reside in the greater San Salvador area. El
Salvador's GDP measures approximately $12 billion, equivalent to approximately
$1,954 per capita. The spectrum awarded in the 800 MHz and other frequency bands
is not restrictive as to the types of services that may be offered. To date,
approximately 545 nationwide commercial channels have been awarded to
approximately twelve companies in the 800 MHz band.

         In spite of the government's efforts to modernize the telephone
infrastructure, the demand for communications services continues to grow at a
rapid rate in El Salvador. Thousands of individuals have been waiting for years
for phone service and teledensity stands at 7.2 lines per 100 POPs.

         Operating Overview. The Company operates in El Salvador through its
wholly-owned subsidiary, Radio Trunking de El Salvador Ltda., and holds 170
nationwide channels.

         The Company acquired its leading license position in El Salvador
through two acquisitions and by participating in a number of auctions. The
Company launched service in El Salvador in August 1998. The Company is currently
the largest SMR operator in El Salvador in terms of channel holdings. As of
December 31, 1999, the Company provided SMR service to 894 subscribers in San
Salvador from six sites and 23 constructed channels. In El Salvador, the
Company's ARPU for the year ended December 31, 1999 was approximately $20.

         Competition. As of December 31, 1999, several small, local operators
compete with the Company for SMR customers in El Salvador. The Company also
competes with cellular and paging services provided by Telemovil and the
state-owned phone company, Antel.

         Regulatory and Legal Overview. The entities regulating El Salvador's
spectrum licenses are part of the Division Radioelectrico, which reports to the
President of the country. The Department of Authorizations grants permission to
use the licenses, and the Department of Technical Analysis of Frequencies is
responsible for spectrum planning and frequency allocation. The regulatory body
known as the Superintendency of Electricity and Telecommunications ("SIGET")
authorizes the spectrum allocation and is responsible for applications and
auctions, as well as for resolving license-related disputes. The new licenses
have been granted for a period of 20 years, and the Company believes that the
licenses are renewable upon request. There are no revocation provisions in the
Company's concessions. The Company believes that it is in compliance with all
regulations and requirements under its licenses.

SMR EQUIPMENT AND NETWORK DESIGN AND IMPLEMENTATION

         SMR Equipment. SMR equipment is comprised of infrastructure equipment
(repeaters, towers and associated equipment) and subscriber units. The primary
vendors of SMR equipment are Motorola, E.F. Johnson (which was acquired by
Transcrypt International, Inc. in 1997), Ericsson, Inc., Uniden America
Corporation and Maxon. Motorola and Ericsson provide equipment which uses a
proprietary protocol while Uniden, E.F. Johnson and Maxon provide equipment
which conforms to the Logic Trunked Radio ("LTR") standard, the industry's only
open protocol standard. SMR networks such as the Company's that use LTR
infrastructure equipment can use subscriber equipment from diverse suppliers
while SMR networks based on a proprietary protocol, such as Motorola or
Ericsson, can only use subscriber equipment based on the same proprietary
standard.

         SMR Network Design and Expansion. The Company has established its
networks utilizing proven analog SMR equipment. The Company believes that analog
technology permits the Company to offer high quality SMR service at a relatively
low cost. The Company's analog SMR networks consist of multiple channels in a
single site linked together to form what is known as a trunked system, employing
one or more antennae and associated equipment. The Company secures a site for a
tower (often co-locating with other providers on existing sites), generally
through leasing the site, and then installs the necessary infrastructure
equipment. The Company deploys one to four high-powered sites per geographic
coverage area in its analog SMR networks. To optimize SMR network design and
location of sites, the Company has at its disposal state-of-the-art
computer-based radio frequency propagation tools. As of December 31, 1999, the
Company had 61 sites with 551 channels in operation in Latin America. Each SMR
network is planned and constructed to meet a certain volume of subscriber
traffic



                                       15
<PAGE>   16

demand within its geographic coverage area. When the Company initially
establishes SMR service in a given market, it typically deploys a ten channel
system which represents an installed cost of approximately $150,000.

         The Company currently deploys single site systems with a coverage
radius ranging from 15 to 30 miles, depending on the height of the antennae and
the topography of the market. Once a system is activated, the Company can begin
offering commercial services in the coverage area. The initial ten channel
system can then be expanded by adding additional repeaters to the existing
installation. Modular increments are usually done in blocks of five channels.
System expansions are done when system capacity is approached and market demand
is expected to exceed installed capacity.

         The initial ten channel trunked system can service, on average, 100
subscriber units per channel without any material service degradation. When the
system is expanded to 20 channels, the system can provide service to
approximately 125 subscriber units per channel without material service
degradation. Repeater sharing efficiency is improved as more trunked channels
are added. LTR systems are expandable to a maximum of 20 channels, each
requiring its own repeater control manager. Once a system is fully constructed,
another system (of five to 20 channels) can be installed using the same site and
facilities.

         Capacity Management. The Company closely monitors channel loading in
order to ensure high quality service. The primary limit on channel capacity is
usage during peak hours, which usually occurs around the middle of the business
day. Excess loading during the peak hours can result in service degradation in
the form of busy signals or interference. The Company believes that active
management of the network will result in maximizing the Company's revenue per
channel. In addition, while the Company believes, based on current customer
usage patterns, that its analog SMR channels could each service as many as 125
subscribers, it does not presently intend to add in excess of 100 subscribers
per channel in order to protect service quality.

ADDITIONAL INFORMATION

         Unless otherwise indicated, industry and demographic data used
throughout this report have been obtained from the following industry
publications and have not been independently verified by the Company:
International Data Corp.; Pyramid Research, Wireless Strategies in Emerging
Markets: 4th Quarter 1999, Communications markets in Peru: November 1999;
ABN-AMRO, Latin American Equity Monitor: August 1999 and International Mobile
Telecommunications Association (IMTA), The Global Digest for Commercial Trunked
Radio Systems (SMR, PAMR, TRS) (as updated).

         The population data set forth herein are estimates. ARPU is estimated
by the Company. Population data does not represent the current number of the
Company's subscribers and is not necessarily indicative of potential subscribers
of the Company in the future.

         The Company was incorporated in Delaware on October 25, 1995. Its
principal executive offices are located at 1528 Wazee Street, Suite 200, Denver,
CO 80202, and its telephone number is (303) 405-0475.

EMPLOYEES

         As of December 31, 1999, the Company employed a total of 120 employees.
In the United States, the Company employed six employees: (i) five were located
at the Company's principal executive offices in Denver, Colorado; and (ii) one
was located in Miami, Florida. In the Company's Latin American subsidiaries, the
Company employed 50 employees in Peru, 32 employees in Ecuador, 26 employees in
Chile and six employees in El Salvador. The Company is not a party to any
collective bargaining agreements and the Company believes its relationship with
its employees is good.

ITEM 2.  PROPERTIES

         The Company currently leases 1,000 square feet for its principal
executive and administrative offices in Denver, Colorado and payments under such
lease are approximately $24,000 per year. The Company also currently leases (i)
2,400 square feet of office space in Miami, Florida (a portion of which is
subleased to an unrelated third



                                       16
<PAGE>   17

party), (ii) 11,838 square meters in Lima for its Peruvian operations, and (iii)
8,756 square meters in Santiago for its Chilean operations. In addition, the
Company has an aggregate of 51 leases for tower sites.

ITEM 3.  LEGAL PROCEEDINGS

         On March 31, 1997, Telefonica del Peru S.A. ("Telefonica"), petitioned
Instituto Nacional de Defensa de la Competencia y de la Proteccion de la
Propriedad Intelectual (the "INDECOPI"), the Peruvian trademark authority, to
nullify the trademark "Radio Trunking del Peru" previously granted to the
Company's subsidiary, SMR Direct Peru, S.R.L. (formerly Mobil Line Peru, S.A.)
("SMR Direct Peru"), by INDECOPI on the grounds that such trademark is not
distinctive. At the same time Telefonica challenged SMR Direct Peru's
application to use the trademark "Radio Trunking" with a corresponding logo. The
Company responded to these petitions on May 15, 1997 and June 12, 1997,
respectively. The Company was successful in defending Telefonica's claim with
regard to the use of the trademark "Radio Trunking" with the corresponding logo
but Telefonica prevailed with regard to the trademark "Radio Trunking del Peru"
without the logo. The Company does not believe that the outcome of the lost
trademark will have a material adverse effect on the Company's operations in
Peru. The Company successfully opposed the registration of the trademark
"INSTACOM Radio Trunking" requested by Telefonica del Peru S.A.

         Maxon America, Inc. ("Maxon") filed suit against the Company on
December 31, 1998 in the Platte County, Missouri Circuit Court based upon claims
that the Company failed to meet its contractual obligations under two purchase
orders executed in 1996 and 1997. The Company was served on February 18, 1999.
The Maxon litigation was settled in September 1999 and did not have a material
impact on the Company's financial position.

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

         None




                                       17
<PAGE>   18

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Currently there is no established public trading market for the
Company's common stock (the "Common Stock").

         As of March 20, 2000, there were seven holders of record of the Common
Stock.

         The Company has not paid any dividends since its inception and does not
intend to pay any dividends on its capital stock in the foreseeable future
except in respect of the Series C Preferred. Certain covenants in the Company's
indenture prohibit or limit the ability of the Company to declare or pay cash
dividends.

During 1997 and 1998, the Company sold securities which were not registered
under the Securities Act of 1933 (the "Securities Act") in reliance on the
exemption found in Section 4(2) of the Securities Act. On October 3, 1997 the
Company consummated $11.1 million of financing with existing stockholders and
one new accredited investor. In connection therewith, the Company issued Senior
Secured Convertible Notes due 2002 which were converted into 7,955,691 shares of
the Company's Series C Preferred shares on January 15, 1998 (including accrued
interest). The securities were converted in accordance with their terms upon
consummation of a qualified debt offering by the Company which was completed in
August 1999. In addition, during 1999 and 1998, the Company issued 1,095,604 and
783,478, respectively, additional shares of Series C Preferred Shares for a 12%
dividend at $1.45 per share. All Series C Preferred shares are currently
convertible into the Company's Common Stock at a conversion price of $1.45 per
share.



                                       18
<PAGE>   19

ITEM 6.  SELECTED FINANCIAL DATA

         The following selected consolidated historical financial data for the
Company as of and for the periods ended December 31, 1995, 1996, 1997, 1998 and
1999, with the exception of data presented under Other Financial Data, were
derived from the consolidated financial statements and the notes thereto of the
Company, which have been audited by Arthur Andersen LLP, independent public
accountants. The selected consolidated historical financial data should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's consolidated financial statements
and the related notes thereto appearing elsewhere herein.

<TABLE>
<CAPTION>
                                           October 26, 1995
                                             (Inception)                              Year Ended December 31,
                                          through December 31,           (In thousands except share and per share data)
                                          -------------------------------------------------------------------------------
                                              1995             1996             1997             1998             1999
                                          -----------      -----------      -----------      -----------      -----------
<S>                                       <C>              <C>              <C>              <C>              <C>
STATEMENT OF OPERATIONS DATA:
Revenue                                   $        --      $       296      $     4,826      $     7,286      $     6,466
Costs and expenses related to revenue              --              513            3,737            3,506            1,541
                                          -----------      -----------      -----------      -----------      -----------
Gross profit                                       --             (217)           1,089            3,780            4,925
Operating costs and expenses                       62            4,590           12,711           12,958            9,380
Loss on Divesture/Impairment of assets             --               --            2,945            2,404              280
                                          -----------      -----------      -----------      -----------      -----------
Operating loss                                    (62)          (4,807)         (14,567)         (11,582)          (4,735)
Other income (expense)                              4              (79)          (1,148)          (3,851)          (4,845)
                                          -----------      -----------      -----------      -----------      -----------
Net loss before minority interest                 (58)          (4,886)         (15,715)         (15,433)          (9,580)
Minority interest (1)                              --              111               --               --               --
                                          -----------      -----------      -----------      -----------      -----------
Net loss                                  $       (58)          (4,775)         (15,715)         (15,433)          (9,580)
Dividends on and accretion of
    mandatorily redeemable preferred
    shares to redemption value                     --              (15)            (142)          (1,536)          (1,763)
                                          -----------      -----------      -----------      -----------      -----------
Net loss applicable to common
    stockholders                          $       (58)     $    (4,790)     $   (15,857)     $   (16,969)     $   (11,343)
                                          ===========      ===========      ===========      ===========      ===========

Basic and diluted net loss per share      $     (0.09)     $     (1.38)     $     (4.53)     $     (4.84)     $     (3.24)
Weighted average shares outstanding           639,091        3,480,466        3,502,534        3,502,749        3,502,750

BALANCE SHEET DATA:
Cash and  cash equivalents                $     2,503      $    14,821      $     7,730      $     5,245      $     4,013
Restricted cash (3)                                --            3,890            1,350           11,771            6,543
Working capital                                 3,203           17,573           10,892           17,124           11,044
Total assets                                    3,265           34,916           29,872           47,582           39,274
Total long-term debt                               --            4,897           16,157           29,122           33,167
Mandatorily redeemable convertible
    preferred stock                                --           28,829           29,252           42,066           43,724
Stockholder's equity (deficit)                  3,212           (1,348)         (17,169)         (28,208)         (40,169)
</TABLE>




                                       19
<PAGE>   20

<TABLE>
<CAPTION>
                                        October 26, 1995
                                           (Inception)                     Year Ended December 31,
                                        through December 31,   (In thousands except share and per share data)
                                        ---------------------------------------------------------------------
<S>                                     <C>           <C>           <C>           <C>           <C>
OTHER FINANCIAL DATA:
EBITDA(2) (operating loss before
depreciation, amortization, loss on
impairment/divesture, interest
income and other income/loss)           $    (62)     $ (4,299)     $ (9,363)     $ (7,013)     $ (1,753)
Cash flows used in operating
activities                                    (8)       (3,568)      (13,113)       (5,663)         (945)
Cash flows (used in) provided by
investing activities                        (759)      (13,025)       (4,210)      (26,008)          484
Cash flows  provided by (used in)
financing activities                       3,270        28,918        10,220        29,054          (126)
Depreciation and amortization                  1           508         2,259         2,166         2,702
Capital expenditures (4)                       5         7,087        10,383         6,820         2,604
</TABLE>

-------------
(1)      Reflects the acquisition of the capital stock of SMR Direct Peru,
         S.R.L. (formerly Mobil Line Peru, S.A.), 51% of which was acquired in
         February 1996 and the remaining 49% of which was acquired in July 1996.
(2)      EBITDA is not a measurement under U.S. Generally Accepted Accounting
         Principles. The Company's definition of EBITDA may not be comparable to
         similarly titled measures reported by other companies, since other
         companies may not calculate EBITDA in the same way. The Company has
         included information concerning EBITDA herein because it provides
         relevant and useful information to the Company's investors in that it
         provides representation of the cash flow that is generated by the
         Company's operating lines of business. EBITDA should not be considered
         a substitute for net income as a measure of the Company's operating
         results or for cash flow as a measure of the Company's liquidity. The
         Company and its subsidiaries are subject to certain restrictions
         related to payment or distributions of funds pursuant to the Indenture.
         In addition, beginning July 2000, any funds depicted by EBITDA are
         restricted in the amount of the interest due on the Convertible Notes.
(3)      The majority of this amount is related to money which has been escrowed
         under one of the Company's financing arrangements and is to be used in
         Latin America only. It includes cash pledged by the Company to secure
         its obligations in connection with the Company's bid for spectrum in
         the Chile Concurso and the purchase of certain assets from a Chilean
         company. In March 2000, most of the remaining restricted amounts were
         released for the Company's use, in accordance with the related
         financing agreement.
(4)      Represents cash used for purchases of property and inventory
         (subscriber units).


                                       20
<PAGE>   21

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

         The following discussion and analysis should be read in conjunction
with the Company's consolidated financial statements and the notes thereto
appearing elsewhere in this document.

OVERVIEW

         GENERAL

         As of December 31, 1999, the Company provided wireless communications
services in four Latin American countries. The Company currently holds the
largest SMR channel position in Peru, Chile and El Salvador. The Company's
strategy is focused on identifying and then deploying the most efficient
utilization of its leading channel positions in its principal markets. The
Company continually evaluates technological developments in order to assess
alternative uses for the spectrum while continuing operations of its analog
dispatch or SMR businesses as long as adequate capacity permits. The Company has
developed its operations in Latin America through (i) acquisitions of license
holding companies whose primary assets were spectrum, (ii) acquisitions of
operating entities, and (iii) acquisition of channels at government auctions and
bids. The following table sets forth the name of each entity acquired since
inception by the Company or the entity in which the channels have been granted
or acquired and the date of occurrence in each of its Latin American markets as
of December 31, 1999:

<TABLE>
<CAPTION>
        NAME                                  DATE OF ACQUISITION
<S>                                           <C>
SMR Direct Peru, S.R.L. (Peru)                (1)
Pompano, S.R.L. (Peru)                        November 22, 1996
Brunacci Compania Ltda. (Ecuador)             November 22, 1996 (2)
Telecom Supply S.R.L. (Peru)                  December 9, 1996
C-Comunica S.R.L. (Peru)                      January 22, 1997
Transnet del Peru, S.A. (Peru)                July 31, 1997
Telecomunaciones y Servicios  (Chile)         January 2, 1998
Comovec S.A. (Ecuador)                        May 13, 1998 (2)
Peru Tel S.A. (Peru)                          May 22, 1998
El Salvador                                   June 9, August 17, September 2 and 11, 1998 (3)
Trunking S.A. (Chile)                         July 29, 1999
</TABLE>

(1)      The Company purchased 51% of the capital stock of SMR Direct Peru,
         S.R.L. (formerly Mobil Line Peru, S.A.) in February 1996 and the
         remaining 49% in July 1996. These transactions were accounted for as a
         step acquisition purchase.
(2)      The Company sold these entities as of January 27, 2000. See Part I,
         Item 1 "Business".
(3)      In February 2000, the Company sold all of its El Salvador assets,
         except for its 800 Mhz licenses. See Part I, Item 1 "Business".




                                       21
<PAGE>   22

     CONSOLIDATED RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                     1998       1999
                                                                                      vs.        vs.
                                                       1997      1998      1999      1997       1998
                                                      -------   -------   -------   -------    -------
<S>                                                   <C>       <C>       <C>       <C>        <C>
Total Operating Revenues Latin America                $ 3,715   $ 7,286   $ 6,466   $ 3,571    $  (820)
Total Operating Revenues U.S. Operations                1,111      --        --      (1,111)      --
                                                      -------   -------   -------   -------    -------
TOTAL OPERATING REVENUES                                4,826     7,286     6,466     2,460       (820)

Costs & Expenses Related to Revenue Latin America       2,284     3,506     1,541     1,222     (1,965)
Costs & Expenses Related to Revenue U.S. Operations     1,453      --        --      (1,453)      --
                                                      -------   -------   -------   -------    -------
TOTAL COSTS & EXPENSES RELATED TO REVENUES              3,737     3,506     1,541      (231)    (1,965)

Selling, General & Admin. Expenses Latin America        4,246     6,384     4,619     2,138     (1,765)
Selling, General & Admin. Expenses U.S. Operations      3,082      --        --      (3,082)      --
Selling, General & Admin. Expenses Corporate            3,124     4,408     2,059     1,284     (2,349)
                                                      -------   -------   -------   -------    -------
TOTAL SELLING, GENERAL & ADMIN. EXPENSES               10,452    10,792     6,678       340     (4,114)

Depreciation & Amortization Latin America               1,015     1,775     2,526       760        751
Depreciation & Amortization U.S. Operations             1,143      --        --      (1,143)      --
Depreciation & Amortization Corporate                     101       391       176       290       (215)
                                                      -------   -------   -------   -------    -------
TOTAL DEPRECIATION & AMORTIZATION                       2,259     2,166     2,702       (93)       536

Loss on Impairment of Assets                             --       2,404       280     2,404     (2,124)
Loss on Divesture of U.S. Operations                    2,945      --        --      (2,945)      --
Interest Expense                                          887     4,832     5,156     3,945        324
Interest Income                                           350     1,342       649       992       (693)
</TABLE>

     REVENUES

         The Company derives its revenues primarily from (i) monthly network
access fees, which vary depending on the plan chosen by the subscriber, (ii) the
sale and rental of subscriber units to subscribers, (iii) ancillary service
revenue, consisting of fees charged for maintenance and loss and damage
insurance, and (iv) ancillary equipment revenue, consisting of the sale of base
stations, antennae, and other complementary products. The Company sets the
pricing of the different components of its service, in accordance with its
marketing plans in each of the countries in which it operates, taking into
account, among other things, competitive factors (i.e. the Company subsidizes
the cost of the radios it sells). Monthly fixed network access fees as well as
ancillary service charges are billed in advance; revenues are recognized for the
measurement of income in the period in which service is delivered. Subscriber
unit and ancillary equipment sales are recognized at the time of sale.

         Total revenue decreased $820,000 in 1999, as compared to 1998, and
increased $2.5 million in 1998, as compared to 1997. The decrease in 1999 is
mainly due to the decrease in equipment sales. During 1999, the Company sold
3,918 units as compared to 4,649 units in 1998. In addition, the average sales
price for each radio decreased because the Company began selling used radios in
1999. This equipment revenue decrease was partially offset by an increase in the
Company's total Latin American subscriber base by 2,527 from December 31, 1998
to December 31, 1999. This increase is due mainly to the Company's growth of the
business in Chile.

          The increase in 1998 was due to an increase in subscribers in Latin
America of 4,057. This increase was due in large part, to the acquisitions
completed throughout 1997 and 1998. This increase in Latin America was offset by
a decline in the U.S. due to the sale of the U.S. Operations, which had revenue
of $1.1 million in 1997 and none during 1998 (see Part I - Item 1 "Developments
During 1999 - Divesture of the United States Operations").



                                       22
<PAGE>   23

         The Company expects revenues to increase slightly in the future as it
adds subscribers to its networks (primarily in Chile). This increase in
subscribers will be mitigated by the elimination of business in Ecuador and El
Salvador, (see Part I - Item 1 "Business" and "Post Fiscal Year-End Transactions
and Developments").

         COSTS AND EXPENSES RELATED TO REVENUES

         Costs and expenses related to revenues include both the cost of service
and the cost of equipment sold, and is exclusive of depreciation and
amortization. The cost of service represents the cost of maintaining the
Company's analog SMR networks, site lease costs, technical expenses and
utilities.

         Total costs and expenses related to revenues decreased $2.0 million in
1999, as compared to 1998, and decreased $231,000 in 1998, as compared to 1997.
The decrease in 1999 is due to the decrease in equipment sales and due to the
fact that the Company began selling used radios in 1999, as noted above. These
factors are partially offset by an increase in maintenance and network and site
expense related to the increased number of operating sites in 1999. In 1998,
total costs and expenses related to revenues decreased in total, despite the
fact that revenues in Latin America increased from an increase in subscribers,
as noted above with a similar increase in costs and expenses related to revenue.
This increase was offset by the sale of the U.S. Operations.

         The Company expects costs and expenses related to revenues to increase
in the future because of the expansion of the Company's analog SMR networks in
Chile that were completed in November 1999. This increase will be impacted by
the decrease in the cost of subscriber units and because of the Company's
decision to focus on its Chile and Peru operations (see Part I - Item 1
"Business" and "Post Fiscal Year-End Transactions and Developments").

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling, general and administrative expenses consist primarily of
compensation expenses but also includes expenses such as marketing, rent,
professional fees and other general corporate expenses. At the operating
companies, selling, general and administrative expenses consist primarily of
subscriber acquisition costs, marketing and advertising, salaries and office
expenses.

         Total selling, general and administrative expenses decreased
approximately $4.1 million in 1999, as compared to 1998, and increased $340,000
in 1998, as compared to 1997. Selling, general and administrative expenses
decreased in 1999 due to the Company's ongoing effort to reduce overhead
expenses both at the corporate level and in Latin America. Also, with the
completion of its sales of the U.S. Operations, the Company determined that
approximately $268,000 of its initial impairment reserve was no longer required,
and thus, was reflected as a reduction of selling, general and administrative
expenses in 1999. Selling, general and administrative expenses increased in 1998
due to growth of the business in Latin America and due to acquisitions in 1997
and 1998. In addition, the Company's corporate general and administrative
expenses increased in 1998 due to additional employees as the business grew, and
additional development costs incurred as the Company pursued additional
opportunities throughout Latin America. This increase was offset by the
Company's decision to sell the U.S. Operations, which had selling, general and
administrative expenses of $3.1 million in 1997 (see "Developments During 1999 -
Divesture of the United States Operations").

         The Company allocates a portion of its corporate overhead to Latin
American operations based on the estimated level of services performed by the
Company on behalf of the Latin American operations. Such allocations of indirect
expenses totaled approximately $1.7 million, $3.4 million and $936,000 for the
years ended December 31, 1999, 1998 and 1997, respectively.

         The Company expects that selling, general and administrative expenses
will decrease in the future. This decrease is due to the Company's ongoing
effort to minimize overhead expenses and due to the Company's decision to focus
on its Chile and Peru operations (see Part I - Item 1 "Business" and "Post
fiscal year-end Transactions and Developments").



                                       23
<PAGE>   24

         DEPRECIATION AND AMORTIZATION

         The Company depreciates its infrastructure equipment over 10 years and
its radios (subscriber units) over 5 years using the straight-line method.
Subscriber units represent the equipment which is used by a customer to access
the SMR service (i.e. portable and mobile radios). The Company retains title to
the subscriber units it rents and leases as part of the subscriber agreement.
Upon termination of service under a rental or lease contract, the subscriber is
required to return the unit to the Company and the unit is placed into service
with another subscriber. Spectrum is amortized over the term of the licenses
(including expected renewal periods), generally 40 years, using the
straight-line method.

         Depreciation and amortization expense increased $536,000 in 1999, as
compared to 1998, and decreased $93,000 in 1998, as compared to 1997.
Depreciation in the Corporate and Latin American operations increased in 1999
and 1998 due to the Company's growth of the business resulting in an increase in
infrastructure and equipment, and due to acquisitions in Peru, Ecuador, Chile
and El Salvador in mid-1998. The increase in these geographic operations in 1998
was offset by the decision to sell the U.S. Operations, which had depreciation
and amortization expense of $1.1 million during 1997 and none during 1998 (see
Part I - Item 1 "Developments During 1999 - Divesture of the United States
Operations").

         OTHER INCOME (EXPENSE)

         Other income (expense) is comprised primarily of interest expense and
interest income. The Company currently incurs non-cash interest expense on the
Exchange Notes and the Convertible Notes (as defined), and in 1997 it incurred
interest expense on debt provided by the United States government for the
purpose of acquiring spectrum licenses in the FCC Auction (the "FCC Debt"), a
portion of which relates to the accretion to fair market value, and vendor
financing (capital leases payable). The Company sold all of its U.S. Operations
and, in connection therewith, transferred the FCC Debt to the buyers relating to
the U.S. Operations. See Part I - Item 1 "Business - Divestiture of United
States Operations."


         Interest Expense. Interest expense increased approximately $324,000 in
1999, as compared to 1998, and $3.9 million in 1998 as compared to 1997. This
increase is due to interest on the Exchange and Convertible Notes. As of
December 31, 1999, the Company had $21.4 million outstanding of its 14% Exchange
Notes and $11.8 million of its 9% Convertible Notes. In 1999 interest expense
reflects the application of a compounded, effective interest rate of
approximately 20% on the Exchange Notes. Accretion of discount on the Exchange
Notes will cause the interest expense to increase in the future. Cash payments
of interest on such debt will begin in 2000.


         Interest Income. Interest income decreased $693,000 during 1999, as
compared to 1998, and increased $992,000 in 1998, as compared to 1997. The
decrease during 1999 is due to the decrease in the Company's cash balance,
(including restricted cash), resulting from the Company's use of the proceeds
from the 1998 and 1997 sale of the Senior Notes, the Private Notes and the
Convertible Notes. The Company's cash balance decreased from approximately $17.0
million as of December 31, 1998 to $10.5 million as of December 31, 1999. The
increase during 1998 was due to the increase in the Company's cash balance from
the sale of the Senior Notes, the Private Notes and the Convertible Notes at the
end of fiscal 1997 and in January 1998.

         LOSS ON IMPAIRMENT OF INVESTMENTS

         In October 1998, the Company made a strategic decision to sell its
investment in El Salvador. The Company signed a letter of intent in November
1998 for the sale of these assets. Due to this letter of intent, the Company
wrote down its investment in El Salvador to the fair market value of $1.5
million and recognized a loss of approximately $2.4 million. The letter of
intent expired in the first quarter of 1999.

         In the quarter ending December 1999, the Company made the decision to
concentrate on its Chile and Peru operations. As a result, the Company entered
into a letter of intent to sell its Ecuador operations and to acquire two
companies in Chile which together hold 765 channels in the 800 MHz frequency
band. Based on the fair value of the Ecuadorian assets indicated by this letter
of intent, the Company wrote down its investment in Ecuador to the indicated
fair market value of $2.0 million and recognized a loss of approximately
$280,000.



                                       24
<PAGE>   25

         LOSS ON DIVESTITURE OF U.S. OPERATIONS

         In August 1997, the Company made a strategic decision to sell the U.S.
Operations and began to seek purchasers for these operations, consisting of
licenses and related assets and liabilities in 20 United States MTA's.
Accordingly, the Company's management estimated the fair value of such assets,
and determined that a write-down to fair market value was necessary as of August
1997. The amount of the write-down recorded by management was approximately $1.9
million. The Company's estimates were based upon, in part, sales agreements
subsequently entered into and management's estimate of fair market value of the
assets not under contract.

         Additionally, the Company recorded a charge of approximately $1.3
million to provide for certain projected costs to exit its U.S. Operations, and
included such charge in the caption "Loss on Divestiture of U.S. Operations" in
the accompanying statement of operations for the year ended December 31, 1997.
These amounts were accrued at the date the Company committed to the disposal
plan and relate to severance payments associated with work force reductions,
lease termination costs, costs to terminate certain contractual obligations,
taxes, legal and other professional fees and other costs to exit this activity.
The amount of the liabilities established and costs incurred are as follows as
of December 31, 1997, 1998 and 1999:

<TABLE>
<CAPTION>
                                             Costs Incurred   Costs Incurred  Costs Incurred
                                 Accrued     during the Year  during the Year during the Year    Accrued
                                  Costs           Ended           Ended           Ended           Costs
                               December 31,    December 31,     December 31,    December 31,   December 31,
                                   1997            1997            1998            1999            1999
                               -----------   ---------------  --------------- ---------------  -----------
<S>                            <C>           <C>              <C>             <C>              <C>
(In thousands)
Accrued office lease costs     $        84     $        28     $        56     $        --     $        --
Accrued warehouse lease                 98              39              59              --              --
    costs
Severance                              354             215             139              --              --
Termination of contractual
    obligations                        375             375              --              --              --
Legal and other
    professional fees                  121              --              75              34              12
Taxes                                  135              --              49              66              20
Penalty for prepayment on
    capital lease                       17               3              14              --              --
    obligations
Other selling costs (1)                 77              19              42              16              --
                               -----------     -----------     -----------     -----------     -----------
Total                          $     1,261     $       679     $       434     $       116     $        32
                               ===========     ===========     ===========     ===========     ===========
</TABLE>
         ------------
         (1)      Other selling costs include equipment lease costs, contract
                  breakage fees and moving and shipping costs.

         Major actions taken by the Company as part of the exit plan (the
"Plan") included the following: (1) ceasing all sales and marketing efforts in
the United States, (2) reducing the United States-related workforce to a small,
administrative-oriented group, (3) ceasing all capital expenditures in the
United States, (4) minimizing fixed and variable expenses, (5) liquidating
office assets to third party buyers, (6) terminating office leases and warehouse
leases and (7) liquidating excess radio inventories to the buyers or other third
parties.

         The Plan resulted in the termination of 15 employees. These employees
are primarily those who were directly responsible for managing the U.S.
Operations. At December 31, 1998 and 1997, 15 and 12 employees, respectively,
had been terminated under the plan to divest the U.S. Operations. The Company
periodically reviewed the adequacy of the fair market value write-down and exit
costs discussed above. Because the sale of the last MTA was completed on October
7, 1999, the Company made a final determination of the adequacy of the
write-down (originally recorded at $1.9 million, as discussed above) and exit
costs, and determined that approximately $268,000 of such amount was no longer
required, and such liability was reversed in September 1999. The Company expects
that the remaining accrual of approximately $32,000 above will be utilized
during fiscal year 2000.



                                       25
<PAGE>   26

         INCOME TAX BENEFIT - NET OPERATING LOSS CARRYFORWARDS

         The Company is subject to income taxes in the United States and in each
of the jurisdictions in which it operates. Although the Company has not paid
income taxes in the United States because of its significant losses, it has been
precluded from recognizing an income tax benefit under Statement of Financial
Accounting Standards No. 109, because it is not currently considered more likely
than not that the Company will have significant future taxable income due to its
history of operating losses.

         At December 31, 1999, the Company had net operating loss carry forwards
("NOLs") for United States Federal income tax purposes of approximately $26.9
million which will expire through the year 2019. These NOLs are available to
offset future taxable income. The Company's foreign consolidated subsidiaries in
Peru, Ecuador, El Salvador and Chile are considered pre-operating entities for
income tax purposes, and therefore the losses are deferred for income tax
purposes and amortized against future taxable income or loss over a period of
four years commencing in 1996. The Company may be limited in its ability to use
the NOLs in any one year depending on the Company's ability to generate
sufficient taxable income.

         LIQUIDITY AND CAPITAL RESOURCES

         Since inception, the Company has been primarily engaged in development
and expansion activities requiring substantial expenditures. Consequently, the
Company has reported operating losses before interest of approximately $4.7
million, $11.6 million and $14.6 million and net cash outflows from operating
and investing activities of $0.5 million, $31.7 million and $17.3 million for
the years ended December 31, 1999, 1998 and 1997, respectively. These amounts
are net of the change in restricted cash of $5.2 million, ($10.4) million and
$2.5 million in 1999, 1998 and 1997, respectively. The decrease in restricted
cash was used for additional acquisitions and capital expenditures.

         During 1999, the Company's subsidiaries had positive operating cash
flows. The Company believes that its subsidiaries will continue to be operating
cash flow positive during 2000. Prior to 1999, the Company's subsidiaries
experienced negative operating cash flow. In addition, during 1998 and 1997 the
Company had additional corporate expenditures related to the sale of the U.S.
operations (see "Management's Discussion and Analysis of Financial Condition and
Results of Operations" - Loss on Divesture of the U.S. Operations").

           The Company has had significant investing cash outflows since
inception. Substantially all of the cash used in investing activities was for
acquisitions and for expenditures related to the construction of the Company's
analog SMR networks and for the purchase of analog SMR radios in the countries
in which it operates. To date, the funds necessary to finance the Company's
operating and investing activities have been obtained by the Company through the
sale of its Common Stock, Series A Preferred, Series B Preferred, Series C
Preferred, Exchange Notes, Convertible Notes, and from cash flow from
operations.

         During the three years ended December 31, 1999 the Company received the
proceeds from the following: (i) the sale of Series C Preferred Stock, (ii) the
sale of Exchange Notes financing; and (iii) the sale of Convertible Notes.

         On October 3, 1997, the Company consummated an approximate $11.1
million financing (the "Series C Offering") with an investor group led by the
Company's existing stockholders and Prudential Securities Incorporated and its
affiliates. In connection therewith, the Company issued the Senior Notes which
were convertible into shares of the Company's Common Stock at a price of $1.45
per share. On January 15, 1998, the outstanding principal amount of the Senior
Notes and all accrued and unpaid interest thereon was converted into 7,955,691
shares of Series C Preferred Stock which are convertible into common shares at a
price of $1.45 per share. The Series C Preferred bears a 12% dividend per annum
payable on a semi-annual basis, at the Company's option in cash or in additional
shares of Series C Preferred. The Indenture restricts the ability of the Company
to pay cash dividends on the Series C Preferred. During 1999 and 1998, the
Company issued additional 1,095,604 and 783,478 shares of Series C Preferred
Stock, respectively, as payment for the 12% dividend on the Series C Preferred.



                                       26
<PAGE>   27

         Pursuant to the Exchange Notes agreement, on or after January 31, 2006,
at the option of the holders holding at least 5% of the outstanding shares of
Series C Preferred, the Company is obligated to redeem shares of Series C
Preferred tendered to the Company at a redemption price currently equal to the
redemption price discussed below, plus all declared, accrued and unpaid
dividends. The Company is only required to redeem shares of Series C Preferred
on four occasions in each 12-month period. The Company is obligated to redeem
the Series A Preferred and the Series B Preferred annually in one-third
increments beginning on March 1, 2006, at the redemption price discussed below,
plus all declared, accrued and unpaid dividends.

         The redemption price for the Series A Preferred Stock is $25,000 per
share ($8,800,000 in total), the redemption price for the Series B Preferred
Stock is $3.65 per share ($20,933,666 in total), and the redemption price for
the Series C Preferred Stock is $1.45 per share ($14,260,411 in total). The
holders of Preferred Stock have an option into convert any or all of the
redeemable shares of Preferred Stock to common stock prior to each scheduled
annual redemption.

         On January 15, 1998, the Company raised total gross proceeds of
approximately $20.5 million from the sale of Private Notes and Warrants. This
offering consisted of 40,000 units each consisting of $1,000 in principal amount
at maturity of the Private Notes and one Initial Warrant (as defined) to
purchase 64 shares of Common Stock at an exercise price of $0.01 per share. The
Notes mature January 1, 2005. Interest is payable, in cash, at a rate of 14% per
annum, semi-annually in arrears on January 1 and July 1 of each year commencing
July 1, 2003. For accounting purposes, the Notes accrete at a rate of
approximately 20% per annum compounding semi-annually. Pursuant to a
Registration Rights Agreement, the Company filed a registration statement with
the Securities and Exchange Commission with respect to an offer and, in August
1999 completed the exchange of Exchange Notes for the Private Notes, whereby the
Exchange Notes have terms substantially identical to those of the Private Notes.
Because the Company completed the Exchange Offer later than required by certain
provisions of the arrangement, it incurred approximately $160,000 in liquidated
damages which were accrued in 1999 and are payable on July 1, 2003.

         In addition, on January 15, 1998 the Company issued $10.0 million in
aggregate principal amount of Convertible Notes pursuant to a purchase agreement
dated January 15, 1998. Cash interest will not accrue on the Convertible Notes
prior to January 1, 2000. Thereafter, interest on the Convertible Notes is
payable in cash at a rate of 9% per annum on January 1 and July 1 of each year,
commencing on July 1, 2000. The Convertible Notes are convertible into shares of
Common Stock at a conversion price of $2.25 per share, subject to adjustments in
certain circumstances.

         The Company believes that cash on hand (including restricted cash of
$6.5 million, which was released in March 2000, for the Company's use pursuant
to Board approval and the related financing agreement) of $10.6 million at
December 31, 1999, together with the cash generated from operations, will be
sufficient to satisfy the Company's liquidity needs for at least the succeeding
12 months. The Company believes that its forecast cash on hand at December 31,
2000, together with the cash generated from operations, will be sufficient to
satisfy the Company's liquidity needs for the succeeding 6 months from January
1, 2001. The Company intends to use its cash on hand and cash generated by
operations primarily to fund:

    o    capital expenditures (capital expenditures will include the purchase of
         equipment including subscriber units)
    o    the cost of enhancing/completing the Company's analog SMR networks -
         corporate expenses
    o    acquisitions of licenses and companies holding licenses
    o    debt service requirements; and
    o    other general corporate expenditures.


         The ability of the Company to make scheduled payments with respect to
its indebtedness will depend upon, among other things, (1) its ability (i) to
implement its business plan, (ii) to expand its operations and (iii) to
successfully develop its subscriber base in its target markets, (2) the ability
of the Company's subsidiaries to remit cash to the Company in a timely manner
and (3) the future operating performance of the Company and its subsidiaries.
Each of these factors is, to a large extent, subject to economic, financial,
competitive, regulatory, political and other factors, many of which are beyond
the Company's control. The Company expects that it will continue to incur cash
losses for the foreseeable future. No assurance can be given that the Company
will be successful in developing and maintaining a level of cash flow from
operations sufficient to permit it to pay the



                                       27
<PAGE>   28

principal of, and interest on, its indebtedness, including the Notes and the
Convertible Notes. If the Company is unable to generate sufficient cash flow
from operations to service its indebtedness, it may modify its growth plans,
restructure or refinance its indebtedness or seek additional capital. There can
be no assurance that (i) any of these strategies could be effected on
satisfactory terms, if at all, in light of the Company's high leverage or (ii)
any such strategy would yield sufficient proceeds to service the Company's
indebtedness, including the Notes and the Convertible Notes. Any failure by the
Company to satisfy its obligations with respect to the Notes and the Convertible
Notes at maturity or prior thereto would constitute a default under the
Indenture governing the Notes and the agreement governing the Convertible Notes.

         In January 2000, the Company completed the acquisition of two Chilean
companies. This acquisition required a cash payment of approximately $2.0
million. Assuming that the Company consummates certain development projects, the
aggregate cash outlay in respect of underlying assets will be approximately $3.8
million. In addition, the Company anticipates funding approximately $400,000 to
build-out channels and other capital expenditures. The Company continually
evaluates opportunities for acquisition of spectrum and other assets that are
consistent with its strategy. The Company currently has no other commitments for
acquisitions.

         FOREIGN INVESTMENT RISK

         The Company's foreign operating subsidiaries are all directly affected
by their respective countries' governmental, economic, fiscal and monetary
policies and other political factors. The Company believes that its operating
subsidiaries' financial conditions or operating results have not, historically
been materially adversely affected by these factors.

         INFLATION AND FOREIGN CURRENCY EXCHANGE

         The net monetary assets of certain of the Company's subsidiaries are
subject to foreign currency exchange risks since they are maintained in local
currency. Certain of the Company's subsidiaries operate in countries in which
the rate of inflation is significantly higher than that of the United States.
The Company will attempt to protect its earnings from inflation and possible
currency devaluation by setting prices in direct relation to the dollar and in
some cases by periodically adjusting prices in local currencies. However, there
can be no assurance that any significant devaluation against the dollar could be
offset, in whole or in part, by a corresponding price increase. As of December
31, 1999, the Company has not established any hedge or risk reduction strategies
related to its foreign currency exchange rate exposure

         The economic and political situation in Ecuador continued to worsen
during 1999. The sucre fluctuated from 6,880:1 in January to 25,000:1 in
December against the dollar - the exchange rate was approximately 3:000:1 when
the Company launched its Ecuadorian operations in early 1997. Since March of
1999 approximately 2,000 companies have closed and the government now owns 60%
of the banks. In January 2000, there was an attempted coup in Ecuador, which
eventually resulted in a peaceful change in government. Nevertheless, the
situation remains highly volatile. Partially as a result of this volatility, the
Company made a decision to sell its Ecuador business in 1999, and recorded an
impairment charge of approximately $280,000.

         YEAR 2000 DISCLOSURE

         In 1998, the Company initiated a company-wide program to ensure that
its date-sensitive information, telephony and business systems, and other
equipment would properly recognize the Year 2000 as a result of the century
change on January 1, 2000. The program focused on the hardware, software,
embedded chips, third-party vendors and suppliers as well as third-party
networks that were associated with the identified systems. The Company
substantially completed the program during third quarter 1999, and its systems
did not experience any significant disruptions as a result of the century
change. However, it is possible that the full impact of the date change, which
was of concern due to computer programs that use two digits instead of four
digits to define years, has not been fully recognized. For example, it is
possible that Year 2000 or similar issues such as leap-year related problems may



                                       28
<PAGE>   29

occur with data processing errors or miscalculations, and consequently,
interruption in services, operations, customer billing and other date-sensitive
processes. The Company believes that any such problems are likely to be minor
and correctable. Currently the Company is not aware of any significant Year 2000
or similar problems that have arisen for our customers and suppliers.

         The Company did not separately track the internal costs incurred for
this project. These costs were principally payroll costs for personnel involved
in the project. The Company does not expect to incur any significant costs
related to Year 2000 compliance subsequent to 1999.

         NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities" the effective date for which was delayed
(via the issuance of SFAS No. 137 in June 1999) until all fiscal quarters of all
fiscal years beginning after June 15, 2000. Among its provisions, it requires
that entities recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
Gains and losses resulting from changes in the fair values of those derivatives
should be accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. To date, the Company has not entered into any
derivative financial instruments or hedging activities.

         In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position ("SOP") No. 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use," Which provides
guidance on accounting for the cost of such software. SOP No. 98-1 is effective
for financial statements for fiscal years beginning after December 15, 1998. The
adoption of SOP No. 98-1 had no impact on the Company's financial statements.

         In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5"). SOP 98-5 requires that all non-governmental entities
expense the costs of start-up activities, including organization costs, as those
costs are incurred, and is effective for fiscal years beginning after December
15, 1998. The Company adopted the provisions of SOP 98-5 for the year ended
December 31, 1999. The adoption did not have a material impact on the Company's
consolidated results of operations or financial position.

         In December 1999, the Securities and Exchange Commission("SEC") issued
Staff Accounting Bulletin No. 101, Revenue Recognition ("SAB 101"). SAB 101
provides guidance on the recognition, presentation, and disclosures related to
revenue in the financial statements. The Company is required to adopt this
standard in the quarter ending June 30, 2000, and the Company's management is
still evaluating the impact of such adoption.




                                       29
<PAGE>   30

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Market risk represents the risk of loss that may impact the financial
position, results of operations or cash flows of the Company due to adverse
changes in financial market prices and rates. The Company is exposed to market
risk in the area of changes in foreign currency exchange rates as measured
against the United States dollar. These exposures are directly related to its
normal operating activities

         All of the Company's revenues during 1999, 1998 and 1997 are from
foreign subsidiaries while a significant portion of its operations were financed
through the financial instruments noted above. The Company has attempted to
protect its earnings from inflation and possible currency devaluation by setting
prices in direct relation to the dollar and by periodically adjusting prices in
local currencies. However, there can be no assurance that any significant
devaluation against the dollar could be offset, in whole or in part, by a
corresponding price increase. In the near term, the Company's foreign currency
exchange rate exposure is limited, as the terms of the Exchange Notes and the
Convertible Notes do not require payments until the year 2003 and 2000,
respectively. Additionally, the Company has been transferring available cash
generated by its foreign subsidiaries to the United States frequently to
minimize the risk of foreign exchange loses. Accordingly, as of December 31,
1999, the Company has not established any hedge or risk reduction strategies
related to its foreign currency exchange rate exposure.

The Company has used mandatorily redeemable preferred stock, private notes and
convertible notes to finance its operations. The Company is required to redeem
its mandatorily redeemable preferred stock beginning January 31, 2006, as
defined by the Exchange Note Agreement. These financial instruments are all at a
fixed rates and therefore do not expose the Company to any interest rate market
risk. The table presented below provides information about the Company's
financial instruments that are sensitive to changes in interest rates (amounts
in thousands):


<TABLE>
<CAPTION>
                                                 2000      2001         2002         2003         2004     Thereafter    Total *
                                                -----      -----        -----        -----        -----    ----------    -------
<S>                                             <C>        <C>          <C>          <C>          <C>      <C>           <C>
Exchange Notes (principal only)                    --         --           --           --           --        40,000     40,000
Convertible Notes (principal only)                 --         --           --           --           --        10,000     10,000
Total Debt Service (principal & interest)         535      1,069        1,069        3,869        6,669        56,287     69,498
Average Interest Rate %                          17.1%      17.6%        18.1%        18.6%        19.0%         19.3%
</TABLE>

* The total carrying amount of the Company's debt as of December 31, 1999 was
$33,167.

The total fair market value of the Company's Exchange Notes and Convertible
Notes as of December 31, 1999 was $8.7 million and $8.4 million, respectively.


ITEM 8.   CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          For a discussion of the information required by this item, you should
refer to pages F-1 through F-31.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.



                                       30
<PAGE>   31

                                    PART III

ITEM 10.  EXECUTIVE OFFICERS AND DIRECTORS

         The executive officers, key employees and directors of the Company as
of March 30, 2000 are as follows:

<TABLE>
<CAPTION>
NAME                           AGE       POSITIONS
----                           ---       ---------
<S>                            <C>       <C>
Steven C. Halstedt (4)         52        Chairman of the Board
Karl Maier                     32        President and Chief Executive Officer
Barbara H. Vonderheid          44        Senior Vice President - Business Development
Rafael Luces                   44        Senior Vice President and General Manager - Latin America
Nanny Laverde                  31        Controller
Stephen W. Schovee (1)(4)      40        Director
Robert F. McKenzie (3)(4)      56        Director
William W. Sprague (1)(3)      42        Director
William D. Stanfill (2)        63        Director
Mark A. Leavitt (2)            40        Director
Bernard G. Dvorak (1)(4)       39        Director
Chris J. DeMarche              43        Director
</TABLE>

--------------------------
(1) Member of Finance Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee
(4) Member of Executive Committee

Steven C. Halstedt has been the Chairman of the Board of the Company since May
13, 1999. Previously, he was executive vice president and director of Daniels &
Associates, Inc., a private communications service company involved in cable
television system operations, from 1976 to 1981. Mr. Halstedt is chairman of
Verio Inc., a publicly traded company, and is currently a member of the Board of
Directors of VIA NET.WORKS Inc., Formus Communications, Inc., VeloCom, Inc.,
Gabriel Communications, Inc. and ViViD Connections, Inc. He is former chairman
of the board of OneComm Corporation, PageAmerica Group, Inc., and Orion Network
Systems, Inc., all of which became publicly traded telecommunications companies.
He is a former member of the Board of Directors of Cencom Cable Associates, Inc.
and Comlinear Corporation. Mr. Halstedt co-founded the Centennial Funds, a
venture capital fund, in 1981. Mr. Halstedt received a B.S. with distinction in
Management Engineering from Worcester Polytechnical Institute and an M.B.A. from
the Amos Tuck School of Business Administration at Dartmouth College.

Karl Maier has been President and Chief Executive Officer of the Company since
January 20, 2000, and prior to that was President and Chief Operating Officer
since May 13, 1999, Vice President - Finance and Secretary of the Company since
March 1998, Director of Finance from March 1997 to March 1998, and Director of
Business Planning from September 1996 to March 1997. From 1995 to 1996, Mr.
Maier was a Vice President at Freyberg Hambros GmbH, an investment banking firm
in Frankfurt, Germany. From 1993 to 1995, Mr. Maier was Chief Financial Officer
of Berlin Cosmetics, a cosmetics manufacturer in Berlin, Germany. From 1989 to
1993, Mr. Maier was an Assistant Vice President in the First National Bank of
Boston's Foreign Multinational Division. Mr. Maier received his B.A. in History
and German from Bowdoin College in 1989.

Barbara H. Vonderheid has been Senior Vice President - Business Development of
the Company since May 13, 1999. Prior to that she was Vice President - Business
Development of the Company since February 1996. From January 1993 through
January 1996, Ms. Vonderheid was Vice President of Acquisitions at Alert Centre,
Inc., a security alarm company. From June 1990 until January 1993, Ms.
Vonderheid was Assistant General Counsel and Acquisitions Staff Counsel at Alert
Centre, Inc. Ms. Vonderheid received her B.A. from Colorado State University in
Political Science in 1977 and her J.D. from the University of Denver in 1986.

Rafael Luces has been Senior Vice President - General Manager Latin America
since May 13, 1999. Prior to that date he was the Director of Operations -
Andean Region from July 1998 to May 1999, and was Director of Sales and
Marketing - Latin America from August 1996 to July 1998. From 1994 to 1996, Mr.
Luces was Sales Marketing Manager for RMD. From 1990 to 1994, Mr. Luces was
Special Product Division Manager for Moore Business



                                       31
<PAGE>   32

Forms. Mr. Luces received his Bachelor in International Commerce from
Universidad Simon Rodriguez in 1983. Mr. Luces also speaks Spanish and
Portuguese.

Nanny Laverde has been Controller of the Company since April 26, 1999. From
September 1996 to April 1999 she worked at Arthur Andersen LLP in the audit
division. She received her B.S. in Accounting from the University of Colorado -
Denver in 1995. Ms. Laverde is a native of Colombia.

Stephen W. Schovee is a co-founder of the Company and has been a Director of the
Company since October 1995. Mr. Schovee is a Managing Member of the General
Partner of Telecom Partners L.P., and Telecom Partners II, L.P., venture capital
funds focused on early stage telecommunication services companies. Mr. Schovee
joined The Centennial Funds, a telecommunications-oriented venture capital firm,
in 1987 and became a general partner in 1991. In 1989, Mr. Schovee co-founded
OneComm, and served as its Chief Executive Officer from 1992 to 1995. Mr.
Schovee is a director of Verio, Inc., Formus Communications, Inc., Product
Partners, Inc., InfoBeat, Inc., Intergram Corporation and VeloCom, Inc. Mr.
Schovee received his B.S. in engineering from Bucknell University in 1981 and
his M.B.A. from The Wharton School in 1986.

Robert F. McKenzie has been a Director of the Company since December 1995. Mr.
McKenzie was a founder and a director of OneComm and was President and Chief
Operating Officer from 1990 to 1994. Currently, Mr. McKenzie serves on the
Executive Board of the University of Colorado Interdisciplinary
Telecommunications Program and is on the board of the Crown Castle Tower
Corporation and VeloCom, Inc. Mr. McKenzie received his B.S. in Business
Administration from the University of Colorado in 1966.

William W. Sprague has been a Director of the Company since December 1996 and is
co-founder and President of Crest International Holdings L.L.C., a private
equity fund. Prior to founding Crest International Holdings L.L.C., Mr. Sprague
was employed by Smith Barney Inc. where he was a Managing Director and the Head
of the MediaCom Group from November 1994 to February 1996 and Co-Head of the
Mergers and Acquisitions Group from April 1992 to November 1994. Mr. Sprague is
also a director of Ethan Allen, Inc., Orb Image, One-on-One Sports Radio, Inc.
and Communication Resources, Inc. Mr. Sprague received his B.A. in Political
Economy from Williams College in 1980 and his M.B.A. from The Wharton School in
1984.

William D. Stanfill has been a Director of the Company since October 1996 and is
a general partner of Trailhead Ventures, L.P., a venture capital fund. Mr.
Stanfill is also President of Larimer Venture Advisors, Inc., which manages a
$38 million fund-of-funds activity. In 1974, Mr. Stanfill co-founded the
investment advisory firm of Morrill, Stanfill and Co. Mr. Stanfill serves on the
advisory boards of several United States venture capital partnerships,
including: American Health Care Fund, Glenwood Ventures, O'Donnell and Masur,
Technology Partners West, The Woodlands Venture Fund, Utah Ventures, and Arizona
Growth Partners. Mr. Stanfill also serves on the advisory board of Euro Venture,
Geneva and on several non-profit boards including the University of Denver's
Social Science Foundation and the Colorado Outward Bound School. In addition,
Mr. Stanfill serves on the endowment committee of the University of Denver. Mr.
Stanfill received his B.A. from the University of Colorado in 1962.

Mark A. Leavitt has been a Director of the Company since October 1997. Since
August 1996, Mr. Leavitt has been a Managing Director and Head of the Media and
Telecommunications Investment Banking Group at Prudential Securities
Incorporated. Prior to joining Prudential Securities Incorporated, Mr. Leavitt
was at Oppenheimer & Co., Inc. for approximately ten years, where he headed the
Media and Communications Group. Mr. Leavitt received his A.B. in Economics from
Trinity College in 1980, and M.B.A. from the University of Chicago Graduate
School of Business in 1983.

Bernard G. Dvorak has been a Director of the Company since February 1998. From
February 9, 1998 to May 13, 1999, he was President and Chief Executive Officer
of the Company and prior to that was Chief Financial Officer of the Company
since February 3, 1997. From 1989 to 1996, Mr. Dvorak was Chief Financial
Officer and one of the founders of UIH. Mr. Dvorak received his B.S. in
accounting from Ferris State University in 1981.

Chris J. DeMarche has been a Director of the Company since November 10, 1999.
Mr. DeMarche has been the Chief Technical Officer of Verio Inc. since 1996. From
1995 to 1996, Mr. DeMarche was CTO and Senior Vice President of Nextel, where he
is credited with developing solutions to critical network and telecommunications
technology barriers. From 1993 to 1995, he was Senior Vice President of
Engineering and Technology at



                                       32
<PAGE>   33

OneComm, where he was responsible for building a national engineering team and
designing and implementing wireless communication networks.

BOARD OF DIRECTORS MEETINGS AND COMMITTEES

The Board held six meetings during 1999, including both regularly scheduled and
special meetings and actions by unanimous written consent.

Executive Committee. The Board established an Executive Committee in July, 1999
to exercise all the powers and authority of the Board in the management of the
Company, except as prohibited by the Delaware General Corporation Law. Steven
Halstedt, Bernard Dvorak, Stephen Schovee and Robert McKenzie serve on the
Executive Committee.

Finance Committee. The Board established a Finance Committee to review with
management of the Company the annual budget, financial obligations and capital
structure of the Company. Bernard Dvorak, William Sprague and Stephen Schovee
serve on the Finance Committee.

Audit Committee. The Board established an Audit Committee to: (i) make
recommendations concerning the engagement of independent public accountants;
(ii) review with the Company's management and the independent public accountants
the plans for, and scope of, the audit procedures to be utilized and results of
audits; (iii) approve the professional services provided by the independent
public accountants; (iv) review the adequacy and effectiveness of the Company's
internal accounting controls; and (v) perform any other duties and functions
required by any regulatory body or other organization. Mark Leavitt and William
Stanfill serve on the Audit Committee.

Compensation Committee: Robert McKenzie and William Sprague serve on the
Compensation Committee. The Compensation Committee determines the salaries, cash
bonuses and fringe benefits of the executive officers, reviews the salary
administration and benefit policies of the Company and administers the Incentive
Stock Option Plan.

Each Director attended more than 75% of the aggregate number of Board and/or
applicable committee meetings in 1999.

ITEM 11. EXECUTIVE COMPENSATION

         The following table provides a summary of compensation for fiscal 1997,
1998 and 1999 with respect to the Chief Executive Officer and the other most
highly compensated officers of the Company whose annual salary and bonus during
the calendar year ended December 31, 1999 exceeded $100,000 (collectively, the
"Named Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                         LONG-TERM
                                                                                        COMPENSATION
                                                                                           AWARDS
NAME AND                                                             OTHER ANNUAL   SECURITIES UNDERLYING   ALL OTHER COMPENSATION
PRINCIPAL POSITION                 YEAR      SALARY        BONUS    COMPENSATION(9)       OPTIONS(#)             COMPENSATION
------------------                 ----      ------        -----    --------------- ---------------------   ----------------------
<S>                                <C>      <C>          <C>        <C>             <C>                     <C>
Karl Maier (1)                     1999     $138,354     $ 58,021     $   --                300,000               $   --
    President and Chief            1998       96,614       16,875        1,320               20,000                   --
    Executive Officer              1997       81,667       20,000        1,365               50,000                   --
Bernard G. Dvorak (2)              1999       65,879         --           --                   --
    President and Chief            1998      218,981       50,000        1,320              250,000(10)               --
    Executive Officer              1997      160,417         --          2,082              250,000(10)               --
Fred A. Gallart (7)                1999       95,332       95,174         --                   --                     --
    Senior Vice President -        1998      169,063       34,609         --                   --                     --
    Business Development and       1997      144,792       81,250         --                212,000(11)               --
    General Manager - Latin
    America
Barbara H. Vonderheid              1999      154,217       38,542         --                225,000                   --
    Senior Vice President -        1998      147,069       30,000        1,320                 --                     --
    Business Development           1997      100,000       50,000        2,028               95,000                   --
</TABLE>



                                       33
<PAGE>   34

<TABLE>
<S>                                <C>      <C>          <C>        <C>             <C>                     <C>
Rafael Luces (8)                   1999      127,812       52,750         --                100,000                   --
     Senior Vice President and     1998       96,800        6,605         --                   --                     --
     General Manager - Latin       1997       85,917       20,900         --                 77,500                   --
     America
Michael N. Simkin (5)              1999         --           --           --                   --                     --
     Chief Executive Officer       1998      143,828         --            220                 --                   25,000
     and Director                  1997      105,000       50,000        1,132              500,000(6)              22,223
</TABLE>

--------------------------
(1)      Mr. Maier was the Vice President - Finance of the Company until May 13,
         1999 at which time he became the President and Chief Operating Officer.
         Mr. Maier was named President and Chief Executive Officer on January
         20, 2000.
(2)      Mr. Dvorak was the Chief Financial Officer of the Company until
         February 9, 1998 at which time he became the President and Chief
         Executive Officer. Mr. Dvorak resigned his employment with the Company
         effective May 13, 1999, although he was elected as a director of the
         Company on that date, and continues to serve as a director.
(3)      Consists of moving expenses.
(4)      Ms. Vonderheid's bonus consisted of: $20,750 in cash and $20,750 in the
         Company's Series B Preferred Stock. Mr. Maier's bonus consisted of :
         $2,917 in cash and $2,916 in the Company's Series B Preferred Stock.
(5)      Mr. Simkin's employment with the Company ended February 19, 1998.
(6)      Mr. Simkin was granted 500,000 options during fiscal 1997, however, due
         to his resignation, he vested in only 100,000 of such options.
(7)      Mr. Gallart's employment with the Company ended May 28, 1999.
(8)      Mr. Luces was the Director of Operations - Andean Region until May 13,
         1999 at which time he became Senior Vice President and General Manager
         - Latin America.
(9)      Yearly parking fee.
(10)     Mr. Dvorak was granted 250,000 options in 1997 and 250,000 options in
         1998, however, due to his resignation, he vested in only 150,000 of
         such options.
(11)     Mr. Gallart was granted 212,000 options in 1997, however, due to his
         departure, he vested in only 107,600 of such options.


OPTION GRANTS IN LAST FISCAL YEAR

               The following table contains information concerning the grant of
stock options to the Named Officers during the fiscal year ended December 31,
1999.



<TABLE>
<CAPTION>
                          NUMBER OF     % OF TOTAL                                     POTENTIAL REALIZABLE VALUE
                          SECURITIES     OPTIONS                                         AT ASSUMED ANNUAL RATES
                          UNDERLYING    GRANTED TO       EXERCISE OR                  OF STOCK PRICE APPPRECIATION
                           OPTIONS     EMPLOYEES IN       BASE PRICE    EXPIRATION          FOR OPTION TERM (1)
NAME                       GRANTED      FISCAL YEAR       ($/SHARE)        DATE            5%             10%
---------------------     ----------     ----------      ----------     ----------     ----------     ----------
<S>                       <C>          <C>               <C>            <C>            <C>            <C>
Karl Maier                   300,000             77%     $     0.01       11/10/09     $    1,887     $    4,781
Bernard G. Dvorak(3)            --             --              --             --             --             --
Fred A. Gallart(4)              --             --              --             --             --             --
Barbara H. Vonderheid        225,000             64%     $     0.01       11/10/09     $    1,415     $    3,586
Rafael Luces                 100,000             50%     $     0.01       11/10/09     $      629     $    1,594
Michael N. Simkin (2)           --             --              --             --             --             --
</TABLE>

--------------------------
(1)      The potential realizable value is calculated based on the term of the
         option at the date of grant (10 years). It is calculated assuming that
         the options are granted with exercise prices equal to fair market value
         and that the fair market value of the Company's stock on the date of
         grant appreciates at the indicated annual rate compounded annually for
         the entire term of the option and that the option is exercised and sold
         on the last day of its term for the appreciated stock price. The fair
         market value of the Company's Common Stock on the date of grant of
         these options (November 10, 1999) was determined by the Company's Board
         of Directors to be $0.01 per share.
(2)      Mr. Simkin's employment with the Company ended February 19, 1998.
(3)      Mr. Dvorak's employment with the Company ended May 13, 1999, although
         he was elected as a director of the Company on that date, and continues
         to serve as a director.
(4)      Mr. Gallart's employment with the Company ended May 28, 1999.


OPTION EXERCISES AND FISCAL YEAR-END VALUES

         The following table sets forth certain information as to options
exercised during the fiscal year ended December 31, 1998 and as to unexercised
options held at the end of such fiscal year by the Named Officers.




                                       34
<PAGE>   35

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
                                            NUMBER OF SECURITIES UNDERLYING      VALUE OF UNEXERCISED IN-THE-
                                                  UNEXERCISED OPTIONS              MONEY OPTIONS AT FISCAL
                              SHARES              AT FISCAL YEAR-END                     YEAR-END (1)
                            ACQUIRED ON     -------------------------------     -------------------------------
NAME                         EXERCISE        EXERCISABLE      UNEXERCISABLE      EXERCISABLE      UNEXERCISABLE
---------------------     -------------     -------------     -------------     -------------     -------------
<S>                       <C>               <C>               <C>               <C>               <C>
Karl Maier                         --              96,000           294,000     $        --       $        --
Bernard G. Dvorak(3)               --             150,000              --                --                --
Fred Gallart(4)                    --             107,600              --                --                --
Barbara H. Vonderheid              --             101,000           249,000              --                --
Rafael Luces                       --              64,500           135,500              --                --
Michael N. Simkin (2)              --             100,000              --                --                --
</TABLE>

------------------
(1)      Based on the estimated fair market value of the Company's common stock
         of $0.01 as of December 31, 1999, there were no options in the money at
         year end.
(2)      Mr. Simkin's employment with the Company ended February 19, 1998.
(3)      Mr. Dvorak's employment with the Company ended May 13, 1999, although
         he was elected as a director of the Company on that date, and continues
         to serve as a director.
(4)      Mr. Gallart's employment with the Company ended May 28, 1999.


DIRECTORS' COMPENSATION

               During the year ended December 31, 1999, except for Mr. McKenzie,
Mr. Dvorak and Mr. DeMarche, who each received $1,000 in cash for each board of
directors meeting attended and $500 in cash for each telephonic board of
director meeting participated in, members of the Board of Directors did not
receive cash compensation for acting as members of the Board or Committees of
the Board, other than reimbursement for reasonable out-of-pocket expenses
incurred in connection with their attendance at meetings of the Board and its
committees. Currently, Mr. McKenzie, Mr. DeMarche and Mr. Dvorak are the only
directors entitled to receive cash compensation for attendance at board
meetings.

               Directors' Stock Options

               From time to time the Board has granted options to purchase
shares of Common Stock to various members of the Board who are not officers of
the Company in consideration for their service as directors. For the year ended
December 31, 1999, 50,000 were granted to Mr. DeMarche in consideration for
serving on the Board.

EMPLOYMENT AGREEMENTS

               The Company currently has no employment agreements with any
officer or employee.

               On November 17, 1997, the Company entered into an agreement (the
"Rhodes Agreement") with Jeff E. Rhodes, the former President of the Company,
pursuant to which, among other things, Mr. Rhodes resigned from his position as
President of the Company and from the Board of Directors of the Company and each
of the Company's Subsidiaries, but agreed to stay on as a part-time employee of
the Company for a period of six months for the purpose of providing assistance
on certain corporate development projects. Mr. Rhodes was paid a monthly salary
of $16,667 during this period. The Rhodes Agreement also provides for the
immediate vesting of 80% of Mr. Rhodes' unvested options, contains
non-competition, non-solicitation and confidentiality covenants on behalf of Mr.
Rhodes, contains a limited right of first refusal giving the Company the right
to pursue certain business opportunities identified by Mr. Rhodes, and contains
mutual releases by Mr. Rhodes and the Company.

               On February 19, 1998, the Company entered into an agreement (the
"Simkin Agreement") with Michael N. Simkin, the former Chief Executive Officer
of the Company, pursuant to which, among other things, Mr. Simkin resigned from
his position as Chief Executive Officer of the Company and from the Board of
Directors of the Company and each of the Company's Subsidiaries. Mr. Simkin
received (i) a payment equal to six months salary, paid in one lump sum in the
amount of $105,000 and (ii) a relocation payment in the amount of $25,000. The
Simkin Agreement also provides for the immediate vesting of 20% of Mr. Simkin's
unvested options, contains non-competition, non-solicitation and confidentiality
covenants on Mr. Simkin's behalf, contains a no-change provision



                                       35
<PAGE>   36

with regard to a Promissory Note under which Mr. Simkin was obligated to pay to
the Company $72,500 on or before October 3, 1999. On September 30, 1999 Mr.
Simkin agreed to return the shares of Series C Preferred Stock previously issued
to him for cancellation of the loan.

               On May 13, 1999, the Company reached an oral agreement with
Bernard G. Dvorak to allow Mr. Dvorak's options to continue to vest until
December 31, 1999, provided that Mr. Dvorak continued to serve on the Company's
Board of Directors through that date. In addition, the Company agreed that Mr.
Dvorak's vested options would be exercisable for a period lasting until the year
following the date Mr. Dvorak ceases to be a director of the Company.

               On May 31, 1999, the Company entered into an agreement (the
"Gallart Agreement") with Federico A. Gallart, the former Senior Vice President
of the Company, pursuant to which, among other things, Mr. Gallart resigned from
his position as Senior Vice President of the Company. Mr. Gallart received a
payment equal to $100,000, composed of (i) a bonus equal to 25% of Mr. Gallart's
annual salary ($42,500) for achieving certain goals in Lima, Peru, and (ii)
$57,500 as additional severance. In addition, Mr. Gallart is entitled to the
following compensation: (i) 25% of the accounts receivable collected on accounts
that are more than 60 days past due customer accounts in Peru and Ecuador for
the period ending May 31, 1999; (ii) 10% of the amount actual EBITDA exceeded
budgeted 1999 EBITDA for all Latin American operations for the months of March,
April and May 1999; and (iii) $24,397 representing 298.5 hours of vacation paid.
The Gallart Agreement also provides for the accelerated vesting of Mr. Gallart's
Stock Options. These options will continue to vest through December 31, 1999.

1996 STOCK OPTION PLAN

               The Company's 1996 Stock Option Plan (the "Option Plan") was
adopted by the Board of Directors in January 1996. A total of 1,250,000 shares
of Common Stock were originally authorized for issuance under the Option Plan.
The Option Plan was amended in February 1997 to authorize the Company to grant
up to 1,488,000 shares of Common Stock and on October 3, 1997, the Board of
Directors increased the shares of Common Stock authorized for issuance under the
Option Plan to 2,307,972 shares. In November 1999, the Board of Directors
approved an increase in the authorized shares to 3,600,000. At December 31,
1999, 2,115,970 shares of Common Stock were the subject of outstanding stock
options granted under the Option Plan and 1,484,030 shares remained available
for future grants. The Board of Directors may suspend or terminate the Option
Plan at any time. Unless sooner terminated, the Option Plan will terminate on
the 10th anniversary of its adoption by the Board of Directors.

               The Option Plan provides for the grant of (i) options intended to
qualify as incentive stock options under the Internal Revenue Code of 1986 (as
amended) (the "Code") and (ii) nonstatutory stock options. Incentive stock
options may be granted only to employees of the Company and its Affiliates.
Nonstatutory options may be granted only to employees or consultants of the
Company or its Affiliates, or members of the Board of Directors of the Company.

               The Option Plan is administered by the Board of Directors or a
committee appointed by the Board (the "Committee"). Subject to the terms of the
Option Plan, the Board of Directors or the Committee determines which of the
eligible persons shall be granted options and the types of options to be
granted, including the exercise price, the number of shares subject to the
option and the exercisability thereof.

               The terms of options granted under the Option Plan may not exceed
10 years. The exercise price of options granted under the Option Plan is
determined by the Board of Directors; provided that (i) the exercise price for
an incentive stock option cannot be less than 100% of the fair market value of
the Common Stock on the date of the option grant, and (ii) the exercise price
for a nonstatutory stock option cannot be less than 85% of the fair market value
of the Common Stock on the date of the option grant. Options granted under the
Option Plan vest at the rate specified in each individual option agreement. No
option may be transferred by the optionee other than by will or the laws of
descent or distribution or, in certain limited instances, pursuant to a
qualified domestic relations order; provided that an optionee may designate a
beneficiary who may exercise the option following the optionee's death. An
optionee whose relationship with the Company or any of its Affiliates ceases for
any reason, other than by death or permanent disability, may (to the extent that
such optionee was entitled to exercise the option on the date of the
termination) exercise options during the three month period following such
cessation (unless such options expire sooner by their terms) or in such longer
period as may be provided in the option agreement. If an optionee's relationship
with the Company or any of its Affiliates ceases due to death or disability, his
or her options may be exercised during the 12 month period following such
cessation due to disability and during the 18 month period following such
cessation due to death (unless in each case, the option sooner expires by its
terms).



                                       36
<PAGE>   37

               The Option Plan provides that no incentive stock option may be
granted to any person who, at the time of grant, owns (or is deemed to own)
stock possessing more than 10% of the total combined voting power of the Company
or any of its Affiliates, unless the exercise price is at least 110% of the fair
market value of the stock subject to the option on the date of grant, and the
term of the option does not exceed five years from the date of the grant. To the
extent that the aggregate fair market value, determined at the date of grant of
the shares of Common Stock with respect to which incentive stock options are
exercisable for the first time by an optionee during any calendar year (under
all such plans of the Company and its Affiliates), exceeds $100,000, such
options (or portion thereof) shall be treated as nonstatutory options.

               Shares subject to options that expire or otherwise terminate
without having been exercised in full become available again for the grant of
options under the Option Plan.

               Under the terms of the Option Plan, the Board of Directors or the
Committee has the authority to re-price options outstanding under the Option
Plan and to reduce the exercise price of such options. In addition, the Board of
Directors or the Committee may, with the consent of affected option holders,
provide for the cancellation of outstanding options and the substitution of new
options therefor. Such new options may be exercisable for the same or different
number of shares, and shall have an exercise price of not less than 50% of fair
market value of such shares in the case of nonstatutory options, or not less
than 100% of fair market value of such shares in the case of incentive stock
options (or 110% of the fair market value of such shares in the case of
incentive stock options granted to a 10% stockholder).

               The Option Plan provides that upon the occurrence of a
dissolution, liquidation, merger, consolidation, sale of substantially all of
the assets of the Company, or other similar corporate event as provided in the
Option Plan, the right to exercise under all outstanding options under the
Option Plan will be accelerated to permit the optionee to exercise such options
in full prior to such event.

ADJUSTMENT OF EXERCISE PRICE OF OUTSTANDING OPTIONS

               On October 3, 1997, the Board of Directors authorized the
reduction of the exercise price to $1.45 of the outstanding options held by
certain employees and directors granted under the Option Plan with an exercise
price greater than $1.45 (the "Qualified Options"). Each Qualified Option was
amended and replaced with a new option with an exercise price of $1.45 (the "New
Options"). Each New Option (i) automatically vested to the extent that the
Qualified Option it amended and replaced was vested; (ii) continues to vest upon
each anniversary of the Qualified Option; and (iii) has a term of 10 years from
the date of the grant of the New Option.

               PRINCIPAL STOCKHOLDERS

               The following table sets forth certain information regarding
beneficial ownership of the voting securities of the Company as of March 20,
2000 by (i) each person (or group of affiliated persons) who is known by the
Company to own beneficially more than 5% of the Company's voting securities,
(ii) each of the Company's directors and executive officers, and (iii) all of
the Company's executive officers and directors as a group. See "Certain
Relationships and Related Transactions."


<TABLE>
<CAPTION>
                                                                                                              Fully Diluted Common
                                                                                                             Shares Upon Conversion
                                                                                                                      (6)
                                                                                Aggregate                   ------------------------
                                                  Number of                     Principal     Number of
                                                  Shares of     Number of       Amount of     Shares of
                                     Number of     Series A     Shares of      Convertible     Series C                   Percentage
                                     Shares of    Preferred     Series B          Notes       Preferred                   of Voting
         Beneficial Owner(1)       Common Stock      (2)       Preferred (3)       (4)           (5)          Number        Stock
         ------------------        ------------   ----------   -------------   -----------    ----------     --------     ----------
<S>                                <C>            <C>          <C>             <C>            <C>            <C>          <C>
EXECUTIVE OFFICERS AND DIRECTORS:
Karl Maier (7)(8)                        --          --              799           --              563         99,370       0.28%
Barbara H. Vonderheid (7)(9)             --          --            5,685           --            2,698        122,358       0.32%
Rafael Luces (7)(10)                     --          --             --             --             --           64,500       0.01%
Steven C. Halstedt (7)                   --          --             --             --             --             --         --
Bernard G. Dvorak (7)(11)                --          --           13,700           --            5,685        182,032       0.50%
Mark A. Leavitt (7)                      --          --             --             --             --             --         --
Robert McKenzie (7)(12)                30,000           3         10,000           --           26,756        219,096       0.38%
</TABLE>




                                       37
<PAGE>   38

<TABLE>
<S>                                                     <C>          <C>        <C>         <C>         <C>         <C>      <C>
Stephen Schovee (7)(13)                                       --        --           --         --          --          --     --
William Sprague (7)(14)                                       --        --           --         --          --          --     --
Chris J. DeMarche (7)
William Stanfill (7)(15)                                      --        --           --         --          --          --     --

All directors and executive officers as a group (eleven
      persons)                                              30,000         3       30,184       --        65,886     687,356   1.96%
5% SHAREHOLDERS:
Centennial Fund IV, L.P. (16)(17)(21)                    1,638,000       175      274,000       --     1,051,816   5,138,149  14.67%
Centennial Fund V, L.P. (16)(18)(21)                          --        --      2,391,787       --     1,643,676   5,001,377  14.28%
Centennial Entrepreneurs Fund V, L.P. (16)(19)(21)
                                                              --        --         73,973       --        50,840     154,687   0.44%
Centennial Holdings, I, LLC. (16)(20)(21)                   95,381        10       43,157       --        95,921     371,181   1.06%
Crest Funding Partners, L.P. (22)                             --        --        700,000       --       331,877   1,314,570   3.75%
Crest SMR, LLC (22)                                           --        --        669,863       --       317,590   1,257,974   3.59%
Banc Boston Ventures Incorporated (23)                        --        --        821,918       --       260,466   1,414,312   4.04%
Telecom Partners, L.P. (24)                              1,500,000        30       68,493       --       957,295   2,907,222   8.30%
Trailhead Ventures, L.P. (25)                                 --          80      136,986       --       401,830   1,537,534   4.39%
Prudential Securities Incorporated (26)                       --        --           --         --     4,211,628   4,211,628  12.03%
MGVF II Ltd. (27)                                             --          26      205,479       --       205,638     800,703   2.29%
FG-CC (28)                                                    --        --           --         --        46,796      46,796   0.13%
Merrill Lynch Global Allocation Fund Inc. (29)
                                                              --        --           --   10,000,000        --     7,841,061  22.39%
</TABLE>

------------------
(1)      "Beneficial owner" means generally any person who, directly or
         indirectly, has or shares voting power or investment power with respect
         to a security, as well as the voting power of Common Stock subject to
         dividends on the Series C Preferred to be issued within 60 days of such
         date and options which were exercisable as of April 30, 2000, or which
         will become exercisable within 60 days of such date, held by each
         individual or entity listed.
(2)      Each share of Series A Preferred is convertible into Common Stock at
         any time in accordance with the following formula, subject to
         adjustment for dilutive sales and corporate reorganizations:


              (Number of Shares of Series A Preferred) x ($25,000)
              ----------------------------------------------------
                                      $2.12


         Holders of shares of Series A Preferred vote with the Series B
         Preferred, the Series C Preferred, and the Common Stock on an
         as-converted basis and also have certain separate voting rights in
         their capacity as holders of Series A Preferred.


(3)      Each share of Series B Preferred is convertible into Common Stock at
         any time in accordance with the following formula, subject to
         adjustment for dilutive sales and corporate reorganizations:


               (Number of Shares of Series B Preferred) x ($3.65)
               --------------------------------------------------
                                      $2.60


         Holders of shares of Series B Preferred vote with the Series A
         Preferred, the Series C Preferred, and the Common Stock on an
         as-converted basis and also have certain separate voting rights in
         their capacity as holders of Series B Preferred.


(4)      The Convertible Notes plus all accrued and unpaid interest thereon are
         convertible at any time directly into Common Stock in accordance with
         the following formula, subject to adjustment for dilutive sales and
         corporate reorganizations.


            (Outstanding principal of each Convertible Note plus all
                      accrued and unpaid interest thereon)
           ---------------------------------------------------------
                                      $2.25


(5)      Each share of Series C Preferred is convertible into Common Stock at
         any time in accordance with the following formula, subject to
         adjustment for dilutive sales and corporate reorganizations:


               (Number of Shares of Series C Preferred) x ($1.45)
               --------------------------------------------------
                                      $1.45


         Holders of shares of Series C Preferred vote with the Series A
         Preferred, the Series B Preferred, and the Common Stock on an
         as-converted basis and also have certain separate voting rights in
         their capacity as holders of Series C Preferred.


(6)      Assumes (a) conversion into Common Stock of all outstanding shares of
         Series A Preferred, Series B Preferred, Series C Preferred and of the
         Convertible Notes, (b) exercise of all options which were exercisable
         on April 30, 2000 or will become exercisable within 60 days after that
         date. Does not include the accrued and unpaid interest component of the
         Convertible Notes.


(7)      The address of all of the officers and directors of the Company is c/o
         Centennial Communications Corp., 1528 Wazee Street, Suite 200, Denver,
         CO 80202.



                                       38
<PAGE>   39

(8)      The fully diluted number of shares includes 96,000 shares of Common
         Stock issuable upon exercise of stock options exercisable within 60
         days of April 30, 2000.


(9)      The fully diluted number of shares includes 101,000 shares of Common
         Stock issuable upon exercise of stock options exercisable within 60
         days of April 30, 2000.


(10)     The fully diluted number of shares includes 64,500 shares of Common
         Stock issuable upon exercise of stock options exercisable within 60
         days of April 30, 2000.


(11)     The fully diluted number of shares includes 150,000 shares of Common
         Stock issuable upon exercise of stock options exercisable within 60
         days of April 30, 2000.


(12)     The fully diluted number of shares includes 24,000 shares of Common
         Stock issuable upon exercise of stock options exercisable within 60
         days of April 30, 2000.

(13)     Excludes Shares owned directly by Telecom Partners. Mr. Schovee may be
         deemed to have an indirect pecuniary interest in an intermediate
         portion of the Shares beneficially owned by Telecom Partners. Mr.
         Schovee disclaims beneficial ownership of these Shares within the
         meaning of Rule 13d-3 under the Exchange Act.

(14)     Excludes Shares owned directly by Crest Funding and Crest SMR. Mr.
         Sprague may be deemed to have an indirect pecuniary interest in an
         intermediate portion of the Shares beneficially owned by Crest Funding
         and Crest SMR. Mr. Sprague disclaims beneficial ownership of these
         Shares within the meaning of Rule 13d-3 under the Exchange Act.

(15)     Excludes Shares owned directly by Trailhead Ventures. Mr. Stanfill may
         be deemed to have an indirect pecuniary interest in an intermediate
         portion of the Shares beneficially owned by Trailhead Ventures. Mr.
         Stanfill disclaims beneficial ownership of these Shares within the
         meaning of Rule 13d-3 under the Exchange Act.


(16)     The address of Centennial Fund IV, L.P., Centennial Fund V, L.P.,
         Centennial Entrepreneurs Fund V, L.P., and Centennial Holdings I, LLC
         is 1428 15th Street, Denver, CO 80202.


(17)     Centennial IV is the direct beneficial owner of the shares of Common
         Stock, Series A Preferred, Series B Preferred and Series C Preferred
         (the "Shares") set forth beside its name in the table above. Centennial
         Holdings IV, L.P. ("Holdings IV"), the sole General Partner of
         Centennial IV, may be deemed to indirectly beneficially own Centennial
         IV's Shares and Senior Notes by virtue of its authority to make
         decisions regarding the voting and disposition of Shares beneficially
         owned by Centennial IV. Steven C. Halstedt, Jeffrey H. Schutz, Adam
         Goldman, Donald H. Parsons, Jr., and David C. Hull, Jr. are the sole
         general partners of Holdings IV (the "Individual Partners"). By virtue
         of the relationships described above and their roles with Centennial IV
         and Holdings IV, each of the Individual Partners may be deemed to
         control Centennial IV and Holdings IV and may be deemed to possess
         indirect beneficial ownership of the Shares held by Centennial IV.
         However, none of the Individual Partners, acting alone, has voting or
         investment power with respect to the Shares directly beneficially held
         by Centennial IV and, as a result, each Individual Partner disclaims
         beneficial ownership of the Shares and Senior Notes held by Centennial
         IV.

(18)     Centennial V is the direct beneficial owner of the shares of Series B
         Preferred and Series C Preferred set forth beside its name in the table
         above. Centennial Holdings V, L.P ("Holdings V") is the sole general
         partner of Centennial V and may be deemed to indirectly beneficially
         own Centennial V's Shares by virtue of its authority to make decisions
         regarding the voting and disposition of Shares beneficially owned by
         Centennial V. The Individual Partners are also the sole general
         partners of Holdings V. By virtue of the relationships described above
         and their roles with Centennial V and Holdings V, each of the
         Individual Partners may be deemed to control Centennial V and Holdings
         V and may be deemed to possess indirect beneficial ownership of the
         Shares held by Centennial V. However, none of the Individual Partners,
         acting alone, has voting or investment power with respect to the Shares
         directly beneficially held by Centennial V and, as a result, each
         Individual Partner disclaims beneficial ownership of the held by
         Centennial V.

(19)     Centennial Entrepreneurs Fund V, L.P. ("Entrepreneurs Fund") is the
         direct beneficial owner of the shares of Series B Preferred and Series
         C Preferred set forth beside its name in the able above. Holdings V is
         the sole general partner of Entrepreneurs Fund and may be deemed to
         indirectly beneficially own Entrepreneurs Fund's Shares by virtue of
         its authority to make decisions regarding the voting and disposition of
         Shares beneficially owned by Entrepreneurs Fund. The Individual
         Partners are also the sole general partners of Holdings V. By virtue of
         the relationships described above and their roles with Entrepreneurs
         Fund and Holdings V, each of the Individual Partners may be deemed to
         control Entrepreneurs Fund and Holdings V and may be deemed to possess
         indirect beneficial ownership of the Shares held by Entrepreneurs Fund.
         However, none of the Individual Partners, acting alone, has voting or
         investment power with respect to the Shares directly beneficially held
         by Entrepreneurs Fund, and as a result, each Individual Partner
         disclaims beneficial ownership of the Shares and Senior Notes held by
         Entrepreneurs Fund.

(20)     Each of the Individual Partners are officers and stockholders, and two
         of the Individual Partners are directors, of Centennial Holdings, I,
         L.L.C. ("Holdings I"). Holdings I is the Managing Member and each of
         the Individual Partners is a unit holder of Centennial Holdings I,
         L.L.C. ("Holdings LLC"). Holdings I is the direct beneficial owner of
         95,381 shares of Common Stock, 10 shares of Series A Preferred (which
         are convertible into 119,292 shares of Common Stock), 43,157 shares of
         Series B Preferred (which are convertible into 60,586 shares of Common
         Stock) and 95,921 of Series C Preferred (which are convertible into
         95,921 shares of Common Stock). Holdings LLC is the direct beneficial
         owner of shares of Series B Preferred and Series C Preferred. By virtue
         of being the Managing Member of Holdings LLC, Holdings I may be deemed
         to beneficially own Shares directly beneficially owned by Holdings LLC.
         However, no Individual Partner or other person, acting alone, has
         voting or investment power with respect to any of the Shares directly
         held by either Holdings I or Holdings LLC, and, as a result, each
         Individual Partner disclaims beneficial ownership of the Shares held by
         Holdings I and Holdings LLC.



                                       39
<PAGE>   40

(21)     Centennial V, Holdings V, the Individual Partners, Entrepreneurs Fund,
         Holdings I and Holdings LLC each disclaim beneficial ownership of the
         Shares held by Centennial IV. Centennial IV, Holdings IV, the
         Individual Partners, Entrepreneurs Fund, Holdings I and Holdings LLC
         each disclaim beneficial ownership of the Shares held by Centennial V.
         Centennial V, Centennial IV, Holdings IV, the Individual Partners,
         Holdings I and Holdings LLC each disclaim beneficial ownership of the
         Shares held by Entrepreneurs Fund. Centennial V, Holdings V, Centennial
         IV, Holdings IV, the Individual Partners, Entrepreneurs Fund and
         Holdings LLC each disclaim beneficial ownership of the Shares held by
         Holdings I Centennial V, Holdings V, Centennial IV, Holdings IV, the
         Individual Partners and Entrepreneurs Fund each disclaim beneficial
         ownership of the Shares held by Holdings LLC.


(22)     The address of Crest Funding Partners, L.P. and Crest SMR, L.L.C. is
         320 Park Avenue, 17th Floor, New York, NY 10022.


(23)     The address of BancBoston Ventures Incorporated is 100 Federal St.,
         32nd Floor, Boston, MA 02110.


(24)     The address of Telecom Partners, L.P. is 6400 South Fidler's Green
         Circle, Suite 720, Englewood, CO 80111.


(25)     The address of Trailhead Ventures, L.P. is 730 17th Street, Suite 690,
         Denver, CO 80202.


(26)     The address of Prudential Securities Incorporated is One New York
         Plaza, 18th Floor, New York, NY 10292.


(27)     The address of MGVF II Ltd. is 910 Travis, Suite 2400, Houston, TX
         77002.


(28)     FG-CC is the direct beneficial owner of the Series C Preferred Shares
         set forth beside its name in the table above. FG-CC is a Florida
         general partnership, the address of FG-CC is c/o FG II, 72 Cummings
         Point Road, Stamford, CT 06902.


(29)     Included in the fully diluted number of shares is 2,560,000 shares
         issuable upon exercise of the warrants issued in connection with the
         Senior Discount Notes. The address of Merrill Lynch Global Allocation
         Fund, Inc. is 800 Scudders Mill Road, Plainsboro, New Jersey, 08536.




                                       40
<PAGE>   41


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

               In connection with these transactions, the Company, the
purchasers of the Series A Preferred, the Series B Preferred, the Senior Notes
and the holders of the Company's Common Stock, entered into a Stockholders
Agreement (as amended to the date hereof, the "Stockholders Agreement").
Pursuant to the Stockholders Agreement, each of Centennial IV, Centennial V,
Telecom Partners, Crest Funding and PSI (so long as it holds 15% of the
Company's Common Stock on a fully diluted basis) is entitled to designate one
director to the Company's board of directors (in each case, so long as such
person holds at least 5% of the Company's Common Stock on a fully diluted
basis). The total number of directors is set at eleven, which cannot be changed
without the consent of the parties to the Stockholders Agreement. Under the
terms of the Stockholders Agreement, any holder of Senior Notes, Series
Preferred or Common Stock issued upon conversion of Senior Notes or Series
Preferred that desires to transfer its securities, must first offer to sell its
securities to the Company and then to the other holders of Series Preferred and
Senior Notes, subject to exceptions for transfers to affiliates or family
members. In any private sale of 25% or more of the total holdings of Series
Preferred and Common Stock (in the aggregate) held by Centennial IV and
Centennial V (and their respective affiliates and subsidiaries), such holders
are obligated to offer the other holders of Senior Notes or Series Preferred the
opportunity to participate in such sale on a pro rata basis. In addition, PSI is
entitled to participate on a pro rata basis in any private sale by holders of
more than 25% of the shares of Series C Preferred or Common Stock issued on the
conversion of the Series C Preferred. The restrictions on transfer in the
Stockholders Agreement will terminate upon the earlier of (i) any sale of Series
Preferred, Senior Notes or Common Stock issued upon the conversion of Series
Preferred or Senior Notes pursuant to a registered offering under the Securities
Act of 1933, as amended (the "Securities Act") or in a transaction pursuant to
Rule 144 under the Securities Act; (ii) the transfer of such securities pursuant
to the transfer provisions in the Stockholders Agreement; (iii) a Sale (as
defined in the Stockholders Agreement) of the Company; or (iv) closing of an
underwritten public offering by the Company, at a per share price paid by the
public of at least $6 a share (subject to adjustment for stock splits, stock
dividends, reverse stock splits and similar recapitalizations) and an aggregate
price paid by the public of at least $20 million.

               The purchasers of the Senior Notes and the Series Preferred also
received certain registration rights in connection with their purchase of such
securities. At any time after the earlier of October 3, 2000 or the completion
of an initial public offering by the Company, the holders of at least 20% of the
Common Stock underlying the Series Preferred or otherwise held by the Series
Preferred holders party to the registration rights agreement with the Company
(subject to adjustment for stock splits, stock dividends, reverse stock splits
and similar recapitalizations) (the "Registrable Securities") may make four
demands that the Company register their Registrable Securities on Form S-1 under
the Securities Act. Two of the demand registrations are to be paid for by the
Company and two are to be paid for by the holders requesting registration. In
addition, the holders of Registrable Securities may request an unlimited number
of registrations on Form S-2 or Form S-3, which shall be paid for by the
Company. The holders also have piggyback registration rights so that if the
Company proposes to register any of its securities under the Securities Act,
either for its own account or for the account of other security holders, the
Company is required to include the Registrable Securities requested to be
included in such registration, subject to certain cut backs required by
underwriters.

               In addition to the registration rights granted to the holders of
the Series Preferred, PSI, so long as it holds at least 33% of the Registrable
Securities held by PSI on October 3, 1997, is entitled to two demand
registrations which are to be paid for by the Company (the "PSI Demand Right").
The PSI Demand Right is exercisable at any time after 120 days following the
date the Company has completed a public offering of its equity securities.

               Pursuant to a registration rights agreement (the "Senior Discount
Notes Registration Rights Agreement") among the Company and the purchasers of
the Senior Discount Notes, the Company agreed: (i) to file with the Commission
on or prior to the earlier to occur of (a) an offering of securities of the
Company pursuant to which the Company is thereafter subject to the reporting
requirements of the Exchange Act and (b) 300 days after the closing of the
Senior Discount Notes offering, a registration statement with respect to an
offer to exchange (the "Exchange Offer") the Senior Discount Notes for a new
issue of senior discount notes of the Company (the "New Notes") with terms
substantially identical to those of the Senior Discount Notes and (ii) to use
its best efforts to cause such registration statement to become effective within
60 days following the date of this filing. . The liquidated damages are due and
payable with the first interest payment on July 1, 2003. The liquidated damages
were charged on a weekly basis per $1,000 bond and increase every 90 days for a
fee of $2,000 up to $10,000 per week during 1999 until the registration
statement was declared effective.



                                       41
<PAGE>   42

               The Company will be required under the terms of the Warrant
Agreement with the Purchasers of the Senior Discount Notes to (i) file and use
its best efforts to cause to become effective prior to the Exercise Commencement
Date a shelf registration statement (the "Warrant Shelf Registration Statement")
with respect to the Warrant Shares issuable upon the exercise of the Warrants
and (ii) keep the Warrant Shelf Registration Statement continuously effective
until the earlier of such time as the Warrants have been exercised and the
expiration date there of.

               Holders of the Warrant Shares will also be entitled to piggyback
registration rights, subject to customary pro rata cut backs and to certain
registration rights of the Company's existing stockholders.




                                       42
<PAGE>   43

                                     PART IV

Exhibits, financial Statements, and Reports on Form 8-K


(a)      Reports on Form 8-K

         Not applicable

(b)      Exhibits



                                       43
<PAGE>   44

                                 Exhibit Index

<TABLE>
<CAPTION>
Exhibit
  No.               Description
-------             -----------
<S>            <C>
3.1*     Amended and Restated Certificate of Incorporation of the Company, as
         amended
3.2*     Bylaws of the Company
4.1*     Purchase Agreement dated January 12, 1998 between the Company and
         Salomon Brothers Inc and Prudential Securities Incorporated
4.2*     Indenture dated January 15, 1998 between the Company and State Street
         Bank and Trust Company
4.3*     Form of Private Note
4.4*     Form of Exchange Note
4.5*     Notes Registration Rights Agreement dated January 15, 1998 by and among
         the Company and Solomon Brothers Inc and Prudential Securities Inc and
         Prudential Securities Incorporated
4.6*     Collateral Pledge Agreement dated January 15, 1998 between the Company
         and State Street Bank and Trust Company
4.7*     Escrow Agreement dated January 15, 1998 between the Company and Morgan
         Stanley, Dean Witter and Discover & Co.
10.1*    Founders Round Purchase Agreement dates as of December 8, 1995 between
         the Company and the persons listed on the Schedule of Purchasers
         attached hereto
10.2*    Founds round Stockholders Agreement dated as of December 8, 1995
         between the Company and the Investors listed on the Schedule of
         Purchasers attached hereto
10.3*    Series A Purchase Agreement dated as of June 27, 1996 between the
         Company and the persons listed on the Schedule of Purchasers attached
         hereto
10.4*    Series B Purchase Agreement dated as of November 22, 1996 between the
         Company and the persons listed on the Schedule of Purchasers attached
         hereto
10.5*    Series C Purchase Agreement dated as of October 3, 1997 between the
         Company and the Purchasers set for therein
10.6*    Second Amended and Restated Stockholders Agreement dated as of October
         3, 1997 between the Company and each of the Investors listed on the
         Schedule of Investors attached thereto
10.7*    Convertible Note Purchase Agreement dated as of January 15, 1998
         between the Company and the Purchasers set forth therein
10.8*    Third Amended and Restated Registration Agreement dated January 15,
         1998 between the Company and the persons listed as Investors on the
         schedule attached thereto
10.9*    Centennial Communications Corp. 1996 Stock Option Plan including
         amendments and forms of Incentive Stock Option Agreement and
         Non-statutory Stock Option Agreement
10.10*   Warrant Agreement dated as of January 15, 1998 between Centennial
         Communications Corp. and State Street Bank and Trust Company
10.11*   Confidential Termination and Release Agreement dated February 19, 1998
         between the Company and Michael N. Simkin
10.12*   Confidential Termination and Release Agreement dated November 19, 998
         between the Company and Jeff E. Rhodes
10.13*   Confidential Termination and Release Agreement dated as of May 31, 1999
         between the Company and Federico A. Gallart
10.14**  Management Agreement dated as of February 25, 2000 between Radio
         Trunking de El Salvador Ltda. And Salcom S.A. Portions of this Exhibit
         have been omitted and filed separately with the Commission as
         confidential information
21.1*    Statement re Computation of Ratio of Earnings to Fixed Charges
21.1*    List of Subsidiaries of the Company
27**     Financial Data Schedule
</TABLE>

* Imported by reference to Registration Statement on Form S-4 as declared
effective on August 13, 1999 (file No. 333-62815).

** previously filed


                                       44
<PAGE>   45

                        CONSOLIDATED FINANCIAL STATEMENTS
                  AND REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                         Page
                                                                                         ----
<S>                                                                                      <C>
CORDILLERA COMMUNICATIONS CORP. (formerly Centennial Communications Corp.) AND
         SUBSIDIARIES:

         Report of Independent Public Accountants......................................   F-2
         Consolidated Balance Sheets as of December 31, 1998 and 1999..................   F-3
         Consolidated Statements of Operations and Comprehensive Loss
              For the Years Ended December 31, 1997, 1998 and 1999 ....................   F-4
         Consolidated Statements of Mandatorily Redeemable, Convertible
              Preferred Stock and Stockholders' Equity (Deficit) for the Years
              Ended December 31, 1997, 1998 and 1999...................................   F-5
         Consolidated Statements of Cash Flows for the Years Ended.....................
              December 31, 1997, 1998 and 1999                                            F-7
         Notes to Consolidated Financial Statements....................................   F-9

CENTENNIAL CAYMAN CORP. AND SUBSIDIARIES:
         Consolidated Financial Statements.............................................   F-29 - F-44
</TABLE>



                                      F-1
<PAGE>   46
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Cordillera Communications Corp. (formerly, Centennial Communications Corp.):

We have audited the accompanying consolidated balance sheets of Cordillera
Communications Corp. (a Delaware corporation, formerly Centennial Communications
Corp.) and subsidiaries as of December 31, 1998 and 1999, and the related
consolidated statements of operations and comprehensive loss; mandatorily
redeemable, convertible preferred stock and stockholders' equity (deficit); and
cash flows for each of the three years in the period ended December 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Cordillera Communications Corp. and subsidiaries as of December 31, 1998 and
1999, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.



                                                   /s/ Arthur Andersen LLP
                                                   -----------------------
                                                   ARTHUR ANDERSEN LLP

Denver, Colorado,
    March 29, 2000.



                                      F-2
<PAGE>   47
                CORDILLERA COMMUNICATIONS CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                              ------------------------------
                                                                                  1998              1999
<S>                                                                           <C>               <C>
ASSETS

CURRENT ASSETS:
     Cash and cash equivalents                                                $  5,245,119      $  4,012,507
     Restricted cash (Note 2)                                                   11,770,859         6,542,816
     Accounts receivable, net of allowances for doubtful
                   accounts of $830,000  and $827,000, respectively                886,494           890,668
     Radios and accessories inventory                                            2,328,755           793,122
     Prepaid licenses and other current assets                                   1,443,316         1,197,281
     Current assets held for sale (Note 3)                                          53,011                --
                                                                              ------------      ------------
                           Total current assets                                 21,727,554        13,436,394
PROPERTY AND EQUIPMENT, net (Note 5)                                             8,937,917         8,955,716
LICENSES, net of accumulated amortization of $802,000
     and $1,456,000, respectively  (Note 4)                                     13,287,358        14,888,617
LONG-TERM ASSETS - HELD FOR SALE (Note 3)                                        1,166,962                --
OTHER NONCURRENT ASSETS, net                                                     2,462,517         1,993,471
                                                                              ------------      ------------
                           Total assets                                       $ 47,582,308      $ 39,274,198
                                                                              ============      ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
     Accounts payable                                                         $  2,144,964      $  1,265,749
     Accrued liabilities                                                         1,450,014         1,094,338
     Deposits on assets held for sale (Note 3)                                     454,108                --
     Payable to seller (Note 4)                                                    400,000                --
     Current liabilities related to assets held for sale (Note 3)                  154,170            32,212
                                                                              ------------      ------------
                           Total current liabilities                             4,603,256         2,392,299

LONG-TERM LIABILITIES                                                                   --           160,000
CAPITAL LEASES PAYABLE  (Note 6)                                                    24,607                --
CONVERTIBLE NOTES  (Note 6)                                                     10,881,063        11,795,049
EXCHANGE NOTES (Note 6)                                                         17,829,506        21,372,449
LONG-TERM LIABILITIES RELATED TO ASSETS HELD FOR SALE (Note 3)                     386,694                --
                                                                              ------------      ------------
                           Total liabilities                                    33,725,126        35,719,797
                                                                              ------------      ------------
COMMITMENTS AND CONTINGENCIES

MANDATORILY REDEEMABLE, CONVERTIBLE
   PREFERRED STOCK (NOTE 10):
   Series A, $.01 par value, 352 authorized, issued and outstanding              8,780,242         8,788,138
   Series B, $.01 par value, 6,399,648 authorized, 5,735,251  issued and
       outstanding                                                              20,541,125        20,675,033
   Series C, $.01 par value, 11,000,000 authorized, 8,789,169
       and 9,834,773 issued and outstanding, respectively                       12,744,286        14,260,411
                                                                              ------------      ------------
                                                                                42,065,653        43,723,582
                                                                              ------------      ------------
STOCKHOLDERS' EQUITY (DEFICIT):
   Common stock, $.01 par value, 40,000,000 authorized,
       3,502,750 issued and outstanding, respectively                               35,028            35,028
   Additional paid-in capital                                                    7,599,298         5,864,542
   Accumulated deficit                                                         (35,981,330)      (45,561,490)
   Accumulated other comprehensive income                                          138,533          (507,261)
                                                                              ------------      ------------
              Total stockholders' equity (deficit)                             (28,208,471)      (40,169,181)
                                                                              ------------      ------------
              Total liabilities and stockholders' deficit                     $ 47,582,308      $ 39,274,198
                                                                              ============      ============
</TABLE>


          The accompanying notes to consolidated financial statements
           are an integral part of these consolidated balance sheets.



                                       F-3
<PAGE>   48
                CORDILLERA COMMUNICATIONS CORP. AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF OPERATION AND COMPREHENSIVE LOSS



<TABLE>
<CAPTION>
                                                                             Years Ended December 31,
                                                                 ------------------------------------------------
                                                                     1997              1998              1999
                                                                 ------------      ------------      ------------
<S>                                                              <C>               <C>               <C>
REVENUE:
    Radio service revenue                                        $  2,880,414      $  5,215,243      $  5,533,303
    Equipment sales                                                 1,672,388         1,922,659           760,520
    Other                                                             273,553           147,921           171,804
                                                                 ------------      ------------      ------------
                                                                    4,826,355         7,285,823         6,465,627
                                                                 ------------      ------------      ------------
COSTS AND EXPENSES RELATED TO REVENUE
       Network and site expenses                                      612,632            99,130           218,824
       Cost of equipment sold                                       2,437,177         2,790,528           913,038
       Maintenance and other                                          686,785           616,622           409,038
                                                                 ------------      ------------      ------------
                                                                    3,736,594         3,506,280         1,540,900
                                                                 ------------      ------------      ------------
OPERATING COSTS AND EXPENSES:
    Selling, general and administrative                            10,452,459        10,792,222         6,678,018
    Depreciation and amortization                                   2,258,982         2,166,179         2,701,714
    Loss on divestiture of U.S. operations                          2,945,410              --                --
    Loss on impairment of assets                                         --           2,403,700           280,393
                                                                 ------------      ------------      ------------
                                                                   15,656,851        15,362,101         9,660,125
                                                                 ------------      ------------      ------------
OPERATING LOSS                                                    (14,567,090)      (11,582,558)       (4,735,398)
                                                                 ------------      ------------      ------------

OTHER INCOME (EXPENSE):
    Interest expense                                                 (887,324)       (4,832,475)       (5,156,112)
    Interest income                                                   349,662         1,341,811           649,286
    Other                                                            (610,279)         (360,173)         (337,936)
                                                                 ------------      ------------      ------------
                                                                   (1,147,941)       (3,850,837)       (4,844,762)
                                                                 ------------      ------------      ------------
NET LOSS                                                          (15,715,031)      (15,433,395)       (9,580,160)

DIVIDENDS ON AND ACCRETION  OF MANDATORILY REDEEMABLE
    PREFERRED STOCK TO REDEMPTION VALUE                              (141,808)       (1,535,504)       (1,762,731)
                                                                 ------------      ------------      ------------
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS                        (15,856,839)      (16,968,899)      (11,342,891)

OTHER COMPREHENSIVE INCOME (LOSS):
    Foreign currency translation adjustments                           13,004           131,998          (645,794)
                                                                 ------------      ------------      ------------
COMPREHENSIVE LOSS                                               $(15,843,835)     $(16,836,901)     $(11,988,685)
                                                                 ============      ============      ============
BASIC AND DILUTED NET LOSS PER COMMON SHARE
                                                                 $      (4.53)     $      (4.84)     $      (3.24)
                                                                 ============      ============      ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC
    AND DILUTED                                                     3,502,534         3,502,749         3,502,750
                                                                 ============      ============      ============
</TABLE>



          The accompanying notes to consolidated financial statements
             are an integral part of these consolidated statements.


                                      F-4
<PAGE>   49
                CORDILLERA COMMUNICATIONS CORP. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF MANDATORILY REDEEMABLE, CONVERTIBLE
               PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)



<TABLE>
<CAPTION>
                                           Mandatorily Redeemable, Convertible Preferred Stock
                                  -----------------------------------------------------------------------------------------------

                                         Series A               Series B               Series C               Common Stock
                                  ----------------------  --------------------   ----------------------  ------------------------
                                    Shares       Amount    Shares      Amount     Shares       Amount      Shares        Amount
                                    ------       ------    ------      ------     ------       ------      ------        ------



<S>                               <C>         <C>        <C>         <C>           <C>          <C>       <C>             <C>
BALANCES, December 31, 1996            352    8,764,448  5,670,851  20,064,668          --          --    3,502,500        35,025
Exercise of stock options               --           --         --          --          --          --          150             2
Preferred stock issued as bonus        -             --     40,241     146,890          --          --           --            --
Preferred stock issued for              --           --     24,159      61,749          --          --           --            --
       services, net of expenses
    Preferred stock issued for          --           --         --          --      50,000      72,500           --            --
note receivable          (Note 10)
Accretion of preferred stock to         --        7,898         --     133,910          --          --           --            --
    redemption value
Stock based compensation                --           --         --          --          --          --           --            --
Net loss                                --           --         --          --          --          --           --            --
Cumulative translation adjustment       --           --         --          --          --          --           --            --
                                     -----   ----------  --------- -----------   --------- -----------    ---------      --------
BALANCES, December 31, 1997            352   $8,772,346  5,735,251 $20,407,217      50,000     $72,500    3,502,650        35,027
                                     =====   ==========  ========= ===========   ========= ===========    =========      ========
Exercise of stock options               --           --         --          --          --          --          100             1
Conversion of Convertible Notes         --           --         --          --   7,955,691  11,535,746           --            --
    to Series C Preferred Stock                                                         --
Warrants issued in connection           --           --         --          --          --          --           --            --
    with Exchange Notes
Dividends payable on the Series         --           --         --          --          --          --           --            --
    C Preferred Stock
Payment of dividends on the             --           --         --          --     783,478   1,136,040           --            --
    Series C Preferred Stock in                                                         --
    additional shares
Accretion of preferred stock to         --        7,896         --     133,908          --          --           --            --
    redemption value
Stock based compensation                --           --         --          --          --          --           --            --
Net loss                                --           --         --          --          --          --           --            --
Cumulative translation adjustment       --           --         --          --          --          --           --            --
                                     -----   ----------  --------- -----------   --------- -----------    ---------      --------
BALANCES, December 31, 1998            352   $8,780,242  5,735,251 $20,541,125   8,789,169 $12,744,286    3,502,750      $ 35,028
                                     =====   ==========  ========= ===========   ========= ===========    =========      ========
</TABLE>



<TABLE>
<CAPTION>
                                                      Stockholders Equity (Deficit)
                                                  -----------------------------------------------------


                                                                                Accumulated
                                                                                  Other
                                                   Additional                   Comprehen-        Total
                                                    Paid-In      Accumulated    Sive Income   Stockholders'
                                                    Capital        Deficit        (Loss)     Equity (Deficit)
                                                  -----------    -----------    -----------  ----------------
<S>                                                <C>           <C>            <C>          <C>
BALANCES, December 31, 1996                         3,456,530     (4,832,904)        (6,469)       (1,347,818)
Exercise of stock options                                 373             --             --               375
Preferred stock issued as bonus                            --             --             --                --
Preferred stock issued for                                 --             --             --                --
       services, net of expenses
    Preferred stock issued for                             --             --             --                --
note receivable          (Note 10)
Accretion of preferred stock to                      (141,808)            --             --          (141,808)
    redemption value
Stock based compensation                               22,000             --             --            22,000
Net loss                                                   --    (15,715,031)            --       (15,715,031)
Cumulative translation adjustment                          --             --         13,004            13,004
                                                  -----------    -----------         ------      ------------
BALANCES, December 31, 1997                       $ 3,337,095    (20,547,935)        $6,535      $(17,169,278)
                                                  ===========    ===========         ======      ============
Exercise of stock options                                 249             --             --               250
Conversion of Convertible Notes                            --             --             --                --
    to Series C Preferred Stock
Warrants issued in connection                       5,760,000             --             --         5,760,000
    with Exchange Notes
Dividends payable on the Series                    (1,393,700)            --             --        (1,393,700)
    C Preferred Stock
Payment of dividends on the                                --             --             --                --
    Series C Preferred Stock in
    additional shares
Accretion of preferred stock to                      (141,804)            --             --          (141,804)
    redemption value
Stock based compensation                               37,458             --             --            37,458
Net loss                                                   --    (15,433,395)            --       (15,433,395)
Cumulative translation adjustment                          --             --        131,998           131,998
                                                  -----------    -----------       --------      ------------
BALANCES, December 31, 1998                       $ 7,599,298    (35,981,330)      $138,533      $(28,208,471)
                                                  ===========    ===========       ========      ============
</TABLE>



          The accompanying notes to consolidated financial statements
             are an integral part of these consolidated statements.


                                      F-5
<PAGE>   50
                CORDILLERA COMMUNICATIONS CORP. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF MANDATORILY REDEEMABLE, CONVERTIBLE
         PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)


<TABLE>
<CAPTION>
                                                     Mandatorily Redeemable, Convertible Preferred Stock
                                    -------------------------------------------------------------------------------------------

                                         Series A               Series B               Series C               Common Stock
                                    -------------------    ------------------     -------------------      --------------------
                                    Shares       Amount    Shares      Amount     Shares       Amount      Shares        Amount
                                    ------       ------    ------      ------     ------       ------      ------        ------



<S>                               <C>         <C>        <C>        <C>          <C>         <C>          <C>           <C>
BALANCES, December 31, 1998            352    $8,780,242 5,735,251  $20,541,125  8,789,169   $12,744,286  3,502,750     $ 35,028
Payment of dividends on the             --            --        --           --  1,095,604     1,588,625         --           --
    Series C Preferred Stock in
    additional shares
Shares Forfeited for Notes
    Receivable                          --            --        --           --    (50,000)      (72,500)                     --
Dividends payable on the Series         --            --        --           --         --            --         --           --
    C Preferred Stock
Accretion of preferred stock to         --         7,896        --      133,908         --            --         --           --
    redemption value
Stock based compensation                --            --        --           --         --            --         --           --
Net loss                                --            --        --           --         --            --         --           --
Cumulative translation adjustment       --            --        --           --         --            --         --           --
                                   -------    ---------- ---------  -----------  ---------   -----------  ---------     --------
BALANCES, December 31, 1999            352    $8,788,138 5,735,251  $20,675,033  9,834,773   $14,260,411  3,502,750     $ 35,028
                                   =======    ========== =========  ===========  =========   ===========  =========     ========
</TABLE>


<TABLE>
<CAPTION>
                                                 Stockholders Equity (Deficit)
                                             -----------------------------------------------------

                                              Additional
                                               Paid-In  Accumulated     Accumulated
                                               Capital    Deficit         Other
                                               -------    -------        Comprehen-      Total
                                                                        Sive Income  Stockholders'
                                                                          (Loss)     Equity (Deficit)
                                                                        -----------  ----------------
<S>                                           <C>        <C>            <C>          <C>
BALANCES, December 31, 1998                   $7,599,298 $(35,981,330)    $138,533    $(28,208,471)
Payment of dividends on the                           --           --           --              --
    Series C Preferred Stock in
    additional shares
Shares Forfeited for Notes
    Receivable                                        --           --           --              --
Dividends payable on the Series               (1,620,927)          --           --      (1,620,927)
    C Preferred Stock
Accretion of preferred stock to                 (141,804)          --           --        (141,804)
    redemption value
Stock based compensation                          27,975           --           --          27,975
Net loss                                              --   (9,580,160)          --      (9,580,160)
Cumulative translation adjustment                     --           --     (645,794)       (645,794)
                                              ---------- ------------    ---------    ------------
BALANCES, December 31, 1999                   $5,864,542 $(45,561,490)   $(507,261)   $(40,169,181)
                                              ========== ============    =========    ============
</TABLE>

          The accompanying notes to consolidated financial statements
             are an integral part of these consolidated statements.


                                      F-6
<PAGE>   51
                CORDILLERA COMMUNICATIONS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                     Years Ended December 31,
                                                                        ------------------------------------------------
                                                                            1997              1998              1999
                                                                        ------------      ------------      ------------
<S>                                                                     <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                            $(15,715,031)     $(15,433,395)     $ (9,580,160)
    Adjustments to reconcile net loss to net cash
       used in operating activities-
          Depreciation and amortization                                    2,258,982         2,166,179         2,701,714
          Loss on impairment of assets                                            --         2,403,700           280,393
          Loss on divesture of U.S. Operations                             2,945,410                --                --
          Write-off of accounts receivable and inventory related to
              the divestiture of U.S. Operations                             223,862                --                --
          Write-off of Argentine investment                                  615,588                --                --
          Stock based compensation                                            83,761            37,458            27,975
          Allowance for doubtful accounts                                    597,751           348,087           131,865
          Accretion of interest on discount and convertible notes                 --         4,029,311         4,456,929
          Amortization of deferred debt offering costs                            --           266,820           283,560
          Accretion of spectrum license debt                                  72,091                --                --
          Changes in operating assets and liabilities-
              (Increase) decrease in accounts receivable                  (1,761,812)           48,828          (136,039)
              (Increase) decrease in inventory                              (833,714)         (956,993)        1,535,633
              (Increase) decrease in other assets                         (2,370,381)         (201,009)          460,017
              Increase (decrease) in accounts payable and other              331,054         1,147,780          (719,215)
              Increase (decrease) in accrued liabilities                     438,956           480,198          (387,978)
                                                                        ------------      ------------      ------------
              Net cash used in operating activities                      (13,113,483)       (5,663,036)         (945,306)
                                                                        ------------      ------------      ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment, net                               (6,877,907)       (5,406,995)       (2,113,260)
    Acquisition of businesses and other assets, net of cash acquired      (4,482,325)       (7,386,203)       (2,755,905)
    Payment of contingent payable to seller                                       --        (2,390,000)         (400,000)
    Cash deposits received related to sale of U.S. operations              4,609,077                --                --
    (Increase) decrease in restricted cash                                 2,540,726       (10,421,323)        5,228,043
    Change in net assets held for sale                                            --          (403,417)          525,213
                                                                        ------------      ------------      ------------
              Net cash (used in) provided by investing activities         (4,210,429)      (26,007,938)          484,091
                                                                        ------------      ------------      ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from offering of Exchange Notes and warrants                         --        20,441,258                --
    Proceeds from offering of Convertible Notes                                   --        10,000,000                --
    Proceeds from issuance of common stock                                       375               250                --
    Proceeds from issuance of Senior Notes                                11,144,703                --                --
    Payment of deferred debt offering costs                                 (713,356)       (1,369,964)         (100,996)
    Payments on capital leases                                              (211,256)          (17,590)          (24,607)
                                                                        ------------      ------------      ------------
              Net cash provided by (used in)  financing activities        10,220,466        29,053,954          (125,603)
                                                                        ------------      ------------      ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                       13,004           131,998          (645,794)
                                                                        ------------      ------------      ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS                                 (7,090,442)       (2,485,022)       (1,232,612)
CASH AND CASH EQUIVALENTS, beginning of year                              14,820,583         7,730,141         5,245,119
                                                                        ------------      ------------      ------------
CASH AND CASH EQUIVALENTS, end of year                                  $  7,730,141      $  5,245,119      $  4,012,507
                                                                        ============      ============      ============
</TABLE>

          The accompanying notes to consolidated financial statements
             are an integral part of these consolidated statements.


                                      F-7
<PAGE>   52
                CORDILLERA COMMUNICATIONS CORP. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<CAPTION>
                                                                                     Years Ended December 31,
                                                                          -------------------------------------------
                                                                              1997            1998            1999
                                                                          -----------     -----------     -----------
<S>                                                                       <C>             <C>             <C>
SUPPLEMENTAL DISCLOSURES OF CASH
    FLOW INFORMATION:
       Cash paid for-
          Interest                                                        $   561,725     $   372,169          68,877
       Supplemental schedule of noncash
          investing and financing activities-
              Stock issued for services and notes receivable                  219,390              --              --
              Accretion of preferred stock to redemption value                141,808         141,804         141,804
              Dividends payable on preferred stock                                 --       1,393,700       1,620,927
              Series C Preferred Stock issued in payment of dividends              --       1,136,040       1,588,625
              Conversion of Senior Notes and related accrued                       --      11,535,746              --
                 interest to Series C Preferred Stock
              Contingent payment on acquisition of Chilean channels                --         400,000              --
              Shares forfeited for note receivable                                 --              --          72,500
              Equipment acquired through capital lease                        716,464              --              --
              Reversal of impairment on U.S. Operations                            --              --         268,000
</TABLE>



           The accompanying notes to consolidated financial statements
             are an integral part of these consolidated statements.


                                      F-8
<PAGE>   53

                CORDILLERA COMMUNICATIONS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 1998 AND 1999
            AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999


NOTE 1. ORGANIZATION AND OWNERSHIP

Cordillera Communications Corp. and subsidiaries (formerly, Centennial
Communications Corp., collectively, the "Company") is a Delaware corporation
engaged in the acquisition, development and operation of specialized mobile
radio ("SMR") and other low-cost, wireless communications networks, the sale of
communications services using those networks, and the sale and servicing of
related accessories and equipment in certain countries of Latin America. Prior
to August, 1997, the Company also had operations in the United States. The
Company has acquired SMR licenses through direct applications to governments and
through acquisitions of interests in other entities (all of which are wholly
owned) that have been granted or have applied for SMR licenses.

The Company commenced significant operations during 1996. The Company's business
model is subject to significant modification to address rapid change in
telecommunications technology and newly emerging market places which the Company
believes offer significant opportunity. Reflecting such circumstances, in August
1997, the Company reached the conclusion that its wireless communications
investment opportunities in Latin America and other emerging markets were more
attractive than its opportunities in the United States. As a result, the Company
decided to sell its United States SMR operations and related assets (the "U.S.
Operations") and focus its ongoing efforts solely in Latin America (See Note 3).

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       Risks and Other Important Factors

For each of the three years in the period ended December 31, 1999, the Company's
operations have generated net losses and negative operating cash flows. As of
December 31, 1999, the Company had an accumulated deficit of $45.6 million. The
Company has historically financed its operations with various debt and equity
placements (as discussed in Notes 6 and 10), as well as cash flows from
operations.

The ability of the Company to make scheduled payments with respect to its
indebtedness will depend upon, among other things: (1) its ability (i) to
successfully implement its business plan, (ii) to expand its operations and
(iii) to successfully develop its subscriber base in its target markets; (2) by
the ability of the Company's subsidiaries to remit cash to the Company in a
timely manner; and (3) the future operating performance of the Company and its
subsidiaries. Each of these factors is, to a large extent, subject to economic,
financial, competitive, regulatory, political and other factors, many of which
are beyond the Company's control. The Company expects that it will continue to
incur cash losses for the foreseeable future. No guarantee can be given that the
Company will be successful in developing and maintaining a level of cash flow
from operations sufficient to permit it to pay the principal of, and interest
on, its indebtedness, including the Notes and the Convertible Notes. If the
Company is unable to generate sufficient cash flow from operations to service
its indebtedness, it may modify its growth plans, restructure or refinance its
indebtedness or seek additional capital. There can be no assurance that (i) any
of these strategies could be effected on satisfactory terms, if at all, in light
of the Company's high leverage or (ii) any such strategy would yield sufficient
proceeds to service the Company's indebtedness, including the Notes and the
Convertible Notes. Any failure by the Company to satisfy its obligations with
respect to the Notes and the Convertible Notes at maturity or prior thereto
would constitute a default under the Indenture governing the Notes and the
agreement governing the Convertible Notes. The Company believes that its cash
and cash equivalents at December 31, 1999 will be sufficient to fund its
operations through at least December 31, 2000.

The Company is subject to various risks in connection with the operations of its
business. These risks include, but are not limited to, U.S. and foreign
regulations, dependence on operating agreements with foreign suppliers,
significant foreign-based customers and suppliers, and international economic
and political instability. Many of the Company's competitors are significantly
larger and have substantially greater financial, technical and marketing
resources than the Company.




                                      F-9
<PAGE>   54

       Basis of Presentation

The consolidated financial statements include the accounts of Cordillera
Communications Corp. and its subsidiaries, all of which are wholly owned. All
subsidiaries are consolidated and all significant intercompany accounts and
transactions have been eliminated in consolidation.

       Foreign Currency Translation

For subsidiaries not operating in highly inflationary economies and whose
functional currency is the local currency, all assets and liabilities are
translated at the current exchange rates at the balance sheet date, and revenues
and expenses are translated at the weighted average rate for the period. The
resulting translation adjustments are included in stockholders' equity as a
component of other comprehensive income.. The Company's Peruvian and Ecuadorian
subsidiaries functional currency is the United States dollar because the revenue
stream is earned in the United States dollar. As of December 31, 1999, Ecuador
is the only hyper-inflationary economy in which the Company has operations. In
the quarter ending December 31, 1999, the Company made a decision to sell its
Ecuador operations. This transaction was consumated in January 2000 (see Note
15).

       Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include
short-term, highly liquid investments with original maturities of three months
or less which are readily convertible into cash and are not subject to
significant risk from fluctuations in interest rates.

       Restricted Cash

Restricted cash includes approximately $11.8 million and $6.5 million on deposit
with financial institutions at December 31, 1998 and 1999, respectively. As of
December 31, 1999, approximately $6.1 million of restricted cash is related to
money which has been escrowed under one of the Company's financing arrangements
and is to only be used in Latin America. This escrow is invested in highest
obtainable Moody's rated commercial paper. Amounts can be released upon board
approval. The remainder of the balance is for a performance bond for the build
out of certain channels in Peru. As of March 29, 2000, substantially all of the
restricted cash (excluding the Peru performance bond portion) had been released
for the Company's use pursuant to Board approval and the related financing
agreement.

       Credit Risk and Concentration of Operations

The Company typically does not require collateral from its customers. Accounts
receivable are comprised of small balances due from numerous customers located
primarily in Peru, Ecuador, Chile and El Salvador. Accordingly, while the
Company believes that it has minimized its exposure to any single customer, the
Company is exposed to credit risk resulting from adverse general economic
conditions, which may affect these countries and Latin America. The Company has
not entered into any foreign currency contracts, hedges or options. The Company
sweeps all excess cash from its Latin American operations on to its U.S. bank
accounts a monthly basis. The Company deposits its cash, cash equivalents and
restricted cash with financial institutions that the Company believes to be of
high credit quality.

       Radios and Accessories Inventory

Radios and accessories inventory represents radio accessories that are held for
sale to the Company's subscribers. Radios and accessories inventory are stated
at the lower of their cost or market. Cost is determined using the first-in,
first-out method.

       Deferred Debt Offering Costs

Deferred debt offering costs, included in other noncurrent assets, net, consist
of direct offering costs incurred in connection with various debt offerings.
Such amounts are amortized to interest expense using the effective interest
method over the life of the related debt. Deferred debt offering costs, net were
approximately $1.9 million and $1.7 million as of December 31, 1998 and 1999,
respectively.



                                      F-10
<PAGE>   55

       Revenue Recognition

Radio service fees, as well as charges for maintenance and loss and damage
insurance coverage, are recognized in the period service is provided. Equipment
sales are recognized when the equipment is delivered and title passes to the
subscriber.

       Property and Equipment

Property and equipment are comprised of network equipment, infrastructure,
computer equipment and software, and other property. Property and equipment are
recorded at cost. Maintenance and repair expenditures are charged to expense as
incurred and expenditures for improvements which increase the expected useful
lives of the assets are capitalized. Depreciation expense is computed using the
straight-line method over the useful lives of the respective assets (See Note
5).

Direct costs associated with the construction of SMR networks are capitalized
and amortized over the system's expected useful life upon placing the system in
service. Such costs include amounts incurred in securing tower sites, site
preparation, procurement and installation of infrastructure, and equipment
costs.

Also included in property and equipment are radios owned by the Company which
are leased to the Company's subscribers under operating lease agreements. The
Company retains title to these radios as part of the subscriber agreement and
generally depreciates the radios over 5 years. Upon termination of service, the
subscribers are required to return the radios to the Company. Certain
subscribers desire to own their radios; therefore, the cost or depreciated net
book value of radios sold to such subscribers is recorded as a charge to cost of
equipment sold at the time of sale.

       SMR Licenses

Direct and certain indirect costs of obtaining SMR licenses, such as
application, legal and consulting fees, as well as the fair market value of
licenses obtained in certain acquisitions, are capitalized and amortized using
the straight-line method over the period of the related license (generally 10 to
40 years) upon commencement of service (See Note 4). SMR licenses in the
countries in which the Company operates are issued conditionally for various
periods of time. The SMR licenses are generally renewable providing the licensee
has complied with applicable rules and policies. In most instances, the Company
believes it has complied and intends to comply with these standards and is
amortizing the related costs using the straight line method over their estimated
useful life, generally 40 years, which includes the renewal period. In some
cases, the Company currently is not in compliance with applicable requirements
and, where appropriate, has filed requests for extensions with the appropriate
government agency. The Company expects that such extension requests will be
granted and the risk of having these or any other licenses revoked is remote.

The Company amortizes the SMR licenses over the expected life of the license,
which may include extension periods if extensions are considered probable.
Amortization expense was $456,699, $366,796 and $654,253 for the years ended
December 31, 1997, 1998 and 1999, respectively.

       Income Taxes

Due to the Company's net losses in 1997, 1998 and 1999, there was no provision
for income taxes. The current provision for income taxes represents actual or
estimated amounts payable on tax return filings each year. Deferred tax assets
and liabilities are recorded for the estimated future tax effects of temporary
differences between the tax basis of assets and liabilities and amounts reported
in the accompanying balance sheets, and for operating loss and tax credit
carryforwards. The change in deferred tax assets and liabilities for the period
measures the deferred tax provision or benefit for the period. Effects of
changes in enacted tax laws on deferred tax assets and liabilities are reflected
as adjustments to the tax provision or benefit in the period of enactment. The
Company's deferred tax assets have been reduced by a valuation allowance to the
extent it is more likely than not, that some or all of the deferred tax assets
will not be realized (See Note 8). Accordingly, there was no deferred tax
provision for 1997, 1998 and 1999.




                                      F-11
<PAGE>   56

       Net Loss Per Common Share

Net loss per share is calculated in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share." Basic loss per
share is computed by dividing net loss applicable to common stockholders by the
weighted average number of common shares outstanding for the period. Diluted net
loss per share reflects the potential dilution assuming the issuance of common
shares for all dilutive potential common shares outstanding during the period.
As a result of the Company's net losses, all potentially dilutive securities
(21,834,380, 30,159,849 and 31,994,171 of common stock equivalents for the years
ended December 31, 1997, 1998 and 1999 respectively) would be anti-dilutive.
Potentially dilutive securities include the Convertible Notes (See Note 6),
Mandatorily Redeemable Convertible Preferred Stock (See Note 10), and options
and warrants for the Company's common stock.

       Mandatorily Redeemable Preferred Stock

The Company's mandatorily redeemable preferred stock is recorded at its issuance
price less offering costs. The carrying value of the Preferred Stock is being
increased to the redemption value at January 31, 2006, the date of the earliest
mandatory redemption, by a charge to stockholders' deficit ratably over the
period from issue date to the earliest redemption date. The redemption date
provision was defined by the Exchange Notes agreement, which precludes any
redemption until the related debt is repaid.

       Debt Discounts

Debt discounts recorded in connection with the Exchange Notes are amortized to
interest expense over the life of the related notes using the effective interest
method.

       Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
Such estimates and assumptions affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.

The Company is subject to the laws and regulations governing telecommunication
services in effect in each of the countries in which it operates. These laws and
regulations can have a significant influence on the Company's results of
operations and are subject to change by the responsible governmental agencies.
The financial statements as presented reflect certain assumptions based on laws
and regulations currently in effect in each of the various countries. The
Company cannot predict what future laws and regulations might be passed that
could have a material effect on the Company's results of operations. The Company
assesses the impact of significant changes in laws and regulations on a regular
basis and updates the assumptions used to prepare its financial statements
accordingly.

       Long-lived Assets

Long-lived assets and certain identifiable intangibles, including SMR licenses,
to be held and used by the Company are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. The Company continuously evaluates the recoverability of its
long-lived assets based on estimated future cash flows from and the estimated
liquidation value of such long-lived assets, and provides for impairment if such
undiscounted cash flows are insufficient to recover the carrying amount of the
long-lived asset. If an impairment is indicated, the amount of the charge is
calculated as the amount by which the carrying amount of the asset exceeds the
fair value of the asset. During 1998, the Company determined that its spectrum
licenses and other long-lived assets related to its El Salvador subsidiary was
impaired based upon third party offers, and recorded a write down of $2.4
million to their estimated fair value. During 1999, the Company determined that
its spectrum licenses and other long-lived assets related to its Ecuadorian
subsidiary were impaired based upon third party offers, and recorded a write
down of approximately $280,000 to their estimated fair value. At December 31,
1999, the Company determined that there were no other impairments of its
long-lived assets.



                                      F-12
<PAGE>   57

         Advertising Costs

Advertising costs are expensed as incurred within the fiscal year.

         Comprehensive Income

Effective January 1, 1998, the Company adopted the provisions of SFAS No. 130,
"Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 establishes
standards for reporting comprehensive income and its components in financial
statements. Comprehensive income, as defined, includes all changes in equity
(net assets) during a period from non-owner sources. From its inception through
December 31, 1999, the change in the cumulative translation adjustment is the
sole material item of other comprehensive income or loss.

         Stock-Based Compensation

The Company accounts for its stock incentive plan in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
Accordingly, the Company uses intrinsic value method under which no expense is
recognized for grants with an exercise price equal to or greater than the fair
value of the underlying security on the measurement date. Effective January 1,
1996, the Company adopted the disclosure-only provisions of Statement of
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (See
Note 11).

The Company accounts for equity instruments issued to non-employees under the
provisions of Statement 123 and its related interpretations.

       Fair Value of Financial Instruments

The carrying amounts of the Company's financial instruments other than long-term
debt and mandatorily redeemable, convertible Preferred Stock, approximate their
fair value, due to their short-term nature (see Note 7).

       Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". Among other
provisions, it requires that entities recognize all derivatives as either assets
or liabilities in the statement of financial position and measure those
instruments at fair value. Gains and losses resulting from changes in the fair
values of those derivatives would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. The effective date of
this standard was delayed (via the issuance of SFAS No. 137 in June 1999). The
effective date for SFAS No. 133 is now for all fiscal quarters of all fiscal
years beginning after June 15, 2000, though earlier adoption is encouraged and
retroactive application is prohibited. This means that the standard must be
adopted by the Company no later than January 1, 2001. To date, the Company has
not entered into any derivative financial instruments or hedging activities.

In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position ("SOP") No. 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use," which provides
guidance on accounting for the cost of such software. SOP No. 98-1 is effective
for financial statements for fiscal years beginning after December 15, 1998. The
adoption of SOP No. 98-1 had no material impact on the Company's financial
statements.

In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities"
("SOP 98-5"). SOP 98-5 requires that all non-governmental entities expense the
costs of start-up activities, including organization costs, as those costs are
incurred, and is effective for fiscal years beginning after December 15, 1998.
The Company adopted the provisions of SOP 98-5 for the year ended December 31,
1999. The adoption did not have a material impact on the Company's consolidated
results of operations or financial position.

In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101, Revenue Recognition ("SAB 101"). SAB 101 provides
guidance on the recognition, presentation, and disclosures related to revenue in
the financial statements. The Company is required to adopt this standard in the
quarter ending June 30, 2000, and the Company's management is still evaluating
the impact of such adoption.



                                      F-13
<PAGE>   58

NOTE 3. SALE OF THE U.S. OPERATIONS

         In August 1997, the Company made a strategic decision to sell the U.S.
Operations and began to seek purchasers for these operations, consisting of
licenses and related assets and liabilities in 20 metropolitan trading areas
("MTAs"). In November and December 1997, the Company entered into management
agreements with several purchasers ("the Buyers") whereby the Company
transferred substantially all of the risks and rewards of ownership to the
Buyers, including the ability to operate the MTA's purchased and perform all the
necessary functions of operating the wireless networks, billing the customers,
collecting cash receipts and servicing its customer base. The rights and
obligations related to these operations were transferred to the Buyers via
management agreements which provide for the following: (1) the Buyers provide
complete system management services, including all marketing materials,
managerial and administrative functions, (2) the Buyers are responsible for and
are required to pay all expenses incurred in the operation of the MTA from and
after the date of the management agreement (including the payments due under the
site licenses as well as the Federal Communications Commission (the "FCC") debt
agreement payments) and collect all revenue generated by the MTA from and after
the date of the management agreement, (3) the term of the management agreement
is the duration of the period from signing the management agreement to the
obtaining the final FCC approval of the transfer, or the term can be extended if
the Company and the Buyer mutually agree, (4) the Company retains legal title to
the licenses and related assets until final FCC approval is obtained, at which
time, legal title to the licenses and related assets transfers to the Buyer and
(5) the Company can only terminate the agreement in the event that the Buyers
take an action, or fail to take an action, which could reasonably be expected to
result in the revocation, cancellation or termination of the licenses in the
MTA. As a result of the management agreements, the Company no longer had rights
in the revenues of the MTA's nor obligations with respect to the expenses of the
MTA's. Accordingly, beginning from the effective dates of the management
agreements, no revenues nor expenses related to the MTA's have been recorded in
the financial statements of the Company. These transactions were not recognized
as a sale until all of the risks, rewards of ownership and full control of such
licenses and the related assets and liabilities were transferred to the
purchasers. The final approval of the transfer of the licenses from the FCC was
received during 1999, in connection with the completion of the sale of the two
remaining MTA's.

At December 31, 1998 and 1999 and for each of the three years ended December 31,
1999, financial information related to the U.S. Operations included in the
financial statements was as follows:

<TABLE>
<CAPTION>
                                           December 31,     December 31,    December 31,
                                               1997             1998            1999
                                           -----------      -----------     -----------
<S>                                        <C>              <C>             <C>
Revenue                                    $ 1,111,651      $        --     $        --
Costs and expenses related to revenue        1,452,356               --              --
                                           -----------      -----------     -----------
     Gross loss                               (340,705)              --              --
Selling, general and administrative          3,082,579               --              --
Depreciation and amortization                1,143,346               --              --
                                           -----------      -----------     -----------
                                            (4,566,630)              --              --
Loss on Divestiture of U.S. Operations      (2,945,410)              --              --
                                           -----------      -----------     -----------
      Operating Loss                       $(7,512,040)     $        --     $        --
                                           ===========      ===========     ===========


Current assets                                              $    53,011     $        --
Property and equipment                                          935,477              --
SMR licenses                                                    231,485              --
                                                            -----------     -----------
     Total Operating Assets                                   1,219,973              --

Current liabilities                                             154,170          32,212
Capital leases                                                  173,035              --
Spectrum license debt                                           213,659              --
                                                            -----------     -----------
     Total Liabilities                                          540,864          32,212
                                                            -----------     -----------
     Net assets of the U.S. Operations                      $   679,109     $   (32,212)
                                                            ===========     ===========
</TABLE>

Effective August 1997, the property, equipment and SMR licenses related to the
U.S. Operations were considered assets to be disposed of, as that term has been
defined by Statement of Financial Accounting Standards No. 121,



                                      F-14
<PAGE>   59

because management, having the authority to do so, has committed to the sale of
these assets based upon executed sales contracts. Accordingly, the Company's
management estimated the fair value less selling costs of such assets, based
upon executed sales contracts and determined that a write-down was necessary as
of August 1997. The amount of the write-down recorded by management was
approximately $1.9 million.

Additionally, the Company recorded a charge of approximately $1.3 million for
certain costs to exit its U.S. Operations, and has included such charges in the
caption "Loss on Divestiture of U.S. Operations" in the accompanying statement
of operations for the year ended December 31, 1997. These amounts were accrued
at the date the Company committed to the disposal plan and relate to severance
associated with work force reductions, lease termination costs, costs to
terminate certain contractual obligations, legal and other professional fees and
taxes and other. The amount of the liabilities established are as follows:

<TABLE>
<CAPTION>
                                            Costs Incurred  Costs Incurred   Costs Incurred
                                 Accrued    during the Year during the Year  during the Year   Accrued
                                  Costs          Ended         Ended             Ended          Costs
                               December 31,   December 31,   December 31,      December 31,   December 31,
                                  1997            1997          1998              1999           1999
                               ----------     ----------     ----------        ----------     ----------
<S>                            <C>          <C>             <C>              <C>              <C>
Accrued office lease costs     $   84,000     $   28,000     $   56,000        $       --     $       --
Accrued warehouse lease            98,000         39,200         58,800                --             --
costs
Severance                         354,323        214,526        139,797                --             --
Termination of contractual
obligations                       375,250        375,250           --                  --             --
Legal and other
professional fees                 120,569             --         74,908            34,139         11,522
Taxes                             135,380             --         48,685            66,005         20,690
Penalty for prepayment on
capital lease obligations          16,532          3,006         13,526                --             --
Other selling costs (1)            77,261         19,047         41,774            16,440             --
                               ----------     ----------     ----------        ----------     ----------
Total                          $1,261,315     $  679,029     $  433,490        $  116,584     $   32,212
                               ==========     ==========     ==========        ==========     ==========
</TABLE>
-------------
(1)      Other selling costs include equipment lease costs, contract breakage
         fees and moving and shipping costs.

Major actions taken by the Company as part of the exit plan (the "Plan") include
the following: (1) ceasing all sales and marketing efforts in the United States;
(2) reducing the United States-related workforce to a small,
administrative-oriented group; (3) ceasing all capital expenditures in the
United States; (4) minimizing fixed and variable expenses; (5) liquidating
office assets to third party buyers; (6) terminating office leases and warehouse
lease; and (7) liquidating excess radio inventories to the Buyers or other third
parties.

The Plan resulted in the termination of 15 employees. These employees are
primarily those who were directly responsible for managing the U.S. Operations.

The Company periodically reviewed the adequacy of the fair market value
writedown discussed above. When the sale of the last MTA was completed on
October 7, 1999, the Company made a final determination of the adequacy of the
writedown (originally recorded as $1.9 million as discussed above), and
determined that from the approximate $300,000 of the remaining liability,
approximately $268,000 was no longer required, and was reflected as a reduction
of selling, general and administrative expenses during the quarter ended
September 30, 1999. The Company expects that the remaining accrual of
approximately $32,000 will be utilized during fiscal year 2000.




                                      F-15
<PAGE>   60

NOTE 4. ACQUISITIONS

The Company has completed several acquisitions of non-operating entities whose
primary assets were SMR licenses as well as the acquisition of operating
entities and spectrum. Included in the accompanying consolidated financial
statements, from the date of their acquisition, are the results of operations
for these entities as follows:


<TABLE>
<CAPTION>
NAME                                                DATE OF ACQUISITION
<S>                                                 <C>
C-Comunica S.R.L. (Peru)                            January 22, 1997
Transnet del Peru, S.A. (Peru)                      July 31, 1997
Telecomunicaciones y Servicios  (Chile)             January 2, 1998
Comovec S.A. (Ecuador)                              May 13, 1998,         (1)
Peru Tel S.A. (Peru)                                May 22, 1998
El Salvador                                         September 11, 1998,    (2)
Trunking S.A.                                       July 29, 1999
</TABLE>

(1)      The Company sold this entity as of January 27, 2000.
(2)      In February 2000, the Company sold all of its El Salvador assets,
         except for its 800 Mhz licenses.

Except as indicated in the following, all of the acquisitions were for 100% of
the voting shares of the acquired company. The acquisitions were accounted for
as a purchase and accordingly the results of their operations were included in
the consolidated results of operations from the date of acquisition. The
purchase price was financed by the Company with available cash.

In January 1997, the Company acquired all of the common stock of C-Comunica S.A.
("C-Comunica"), a Peruvian SMR operating company. The total consideration given
and liabilities assumed was approximately $2.9 million, of which approximately
$800,000 represented the fair value of the net tangible assets as of the date of
acquisition and the excess purchase price over the fair value of the net
tangible assets acquired was approximately $2.1 million, which was allocated to
SMR licenses. SMR licenses are amortized over 40 years.

In July 1997, the Company acquired all of the common stock of Transnet del Peru
S.A. ("Transnet"), a Peruvian SMR operating company. The total consideration
given and liabilities assumed for Transnet was approximately $1.5 million, of
which approximately $300,000 represented the fair value of the net tangible
assets as of the date of acquisition and the excess purchase price over the fair
value of the net tangible assets acquired was approximately $1.2 million, which
was allocated to SMR licenses. SMR licenses are amortized over 40 years.

Also in July 1997, the Company pledged $1.3 million to secure its obligations in
connection with the Company's bid for additional spectrum with Chile Concurso.
On October 29, 1997, the Company received written notice from the Chilean
Ministry of Transportation and Telecommunications (the "Ministry") that its
proposal had been accepted and awarded. During 1997 and 1998 appeals were filed
by other participants in the Concurso; the Ministry has denied such appeals. The
Company received final award in November 1999. These licenses are being
amortized over 30 years.

In September 1997, the Company acquired all of the common stock of Fastcom S.A.
("Fastcom") and Radioservicios Moviles, S.A. ("Radioservicios"), Argentine
non-operating development stage companies which owned an Argentine paging
concession. The total consideration given and liabilities assumed for Fastcom
was approximately $526,000. The Company paid $110,000 cash at closing and signed
a note to the seller for the remainder of the purchase price due December 2,
1997. The Company pledged the shares of Fastcom and Radioservicios to the
previous owners and related parties (the "Lienholders") to secure certain
payment obligations of the Company. The Company did not satisfy these payment
obligations on December 2, 1997, and as such, the Lienholders foreclosed on the
shares of Fastcom and Radioservicios. This resulted in the Company taking an
approximately $600,000 (included in general and administrative expenses) charge
in December 1997, which consists of the $110,000 initial purchase price and
approximately $490,000 in capitalized costs made in connection with the
Radioservicios transaction during 1997 consisting of legal fees, due diligence
costs, closing costs, professional fees and other costs directly related to the
acquisition.



                                       F-16
<PAGE>   61

On January 2, 1998, the Company purchased 100% of the outstanding capital stock
of Telecomunicaciones y Servicios S.A. ("TyS"), a Chilean operating company. TyS
holds 10 800 MHz channels in the metropolitan region of Santiago, Chile. The
total consideration given and liabilities assumed for the Chilean company was
approximately $3,200,000, of which $800,000 was paid at closing, approximately
$2,040,000 was paid June 29, 1998 and $350,000 on July 8, 1998 upon the transfer
of 290 additional channels (40 of which are in the metropolitan region of
Santiago) to the operating company. Approximately $80,000 represented the fair
value of the net tangible assets as of the date of acquisition and the excess
purchase price of approximately $3,120,000, which was allocated to SMR licenses.
SMR licenses are amortized over 40 years.

On April 14, 1998 the Company executed a purchase agreement with certain
non-operating subsidiaries of International Wireless Communications Holdings,
Inc. ("IWC") for the acquisition of certain assets in Peru, Ecuador and Chile
for a purchase price of approximately $3,500,000. On May 13, 1998 the Company
completed the first part of the acquisition and acquired a non-operating entity
in Ecuador (Comovec S.A.) for approximately $300,000. On May 22, 1998, the
Company completed the second part of the acquisition and acquired a
non-operating entity in Peru (Peru Tel S.A.) for approximately $2,800,000. On
May 12, 1999, the Company completed the last part of the IWC closing, and
acquired for $400,000 the Chilean assets of RMD Agencia Chile, consisting of its
800 MHZ channels: 20 channels in Santiago, 20 channels in Valparaiso/Vina del
Mar, and 25 channels in Concepcion/Talcahuano. In addition to acquisitions, the
Company was awarded 40 nationwide channels of 800 MHz spectrum on June 9, 1998
in El Salvador. The Company paid $620,000 for the licenses, which have a 20 year
term.

On October 15, 1998, the Company signed a purchase agreement for the acquisition
of certain Chilean assets, including a license for 20 800 MHz channels in
Santiago, certain infrastructure and subscribers. On July 26, 1999, the Company
completed this acquisition for approximately $2,100,000. Approximately $220,000
represented the fair value of the net tangible assets. The excess purchase price
over the fair value of the net tangible assets acquired was approximately
$1,880,000, which was allocated to SMR licenses. These licenses will be
amortized over 23 years, the remaining term of the license.

On October 22, 1998, the Company signed an agreement to purchase 100% of the
shares of Trunking S.A. a Chilean non-operating development stage company
holding 800 MHz channels (i) 20 in Santiago and (ii) 176 in various other
Chilean cities. This acquisition closed on July 26, 1999. Total consideration
paid by the Company was $700,000, which was allocated entirely to SMR licenses.
These licenses will be amortized over 26 years, the remaining term of the
license.

In August 1998, the Company completed the acquisition of a concession for 10
nationwide channels of 800 MHz spectrum in El Salvador for approximately
$300,000. The acquisition of assets included certain infrastructure and
approximately 140 subscribers. Also, in September 1998, the Company acquired a
concession for 30 nationwide channels of 800 MHz spectrum in El Salvador for
approximately $949,000. The acquisition of assets also included certain
infrastructure and approximately 600 subscribers. In addition to acquisitions,
the Company was awarded licenses for 800 MHz channels in El Salvador as follows:
(i) 40 nationwide, the Company paid $620,000 for the channels, which have a 20
year term; (ii) 65 nationwide, the Company paid approximately $2.0 million for
the channels, which have a 20 year term; (iii) 25 nationwide, the Company paid
approximately $10,000. Of the total amount paid for the license acquisitions and
awards, approximately $200,000 represents the fair value of the net tangible
assets as of the date of acquisition and the excess purchase price of
approximately $3.7 million was allocated to SMR licenses. In October 1998, the
Company made a strategic decision to sell its investment in El Salvador. The
Company signed a letter of intent on November 11, 1998 for the sale of these
assets. Due to this letter of intent, the Company wrote down its investment in
El Salvador to the fair market value of $1.5 million and recognized a loss of
approximately $2.4 million. This letter of intent expired and the Company
decided to continue its operations in El Salvador during 1999.

Toward the end of 1999, the Company decided to focus on its Chile and Peru
operations. The Company entered into a letter of intent to sell its Ecuador
operations for approximately $2.0 million and, accordingly, wrote down its
investment in Ecuador to the fair market value of $2.0 million and recognized a
loss of approximately $280,000. The sale was consummated in January 2000 (see
Note 15).



                                      F-17
<PAGE>   62

NOTE 5.   PROPERTY AND EQUIPMENT

The composition of property and equipment is as follows:

<TABLE>
<CAPTION>
                                    December 31,      December 31,
                                        1998              1999
                                    ------------      ------------
<S>                                 <C>               <C>
Network infrastructure              $  6,975,994      $  7,573,469
Radios                                 3,321,641         3,901,015
Computer equipment and software          723,746           850,633
Furniture and fixtures                   397,775           554,639
Leasehold improvements                   303,754           186,922
                                    ------------      ------------
                                      11,722,910        13,066,678
Accumulated depreciation              (2,784,993)       (4,110,962)
                                    ------------      ------------
Property and equipment, net         $  8,937,917      $  8,955,716
                                    ============      ============
</TABLE>

The Company depreciates network infrastructure over 10 years, radios over 5
years, computer equipment and software over 3 years, furniture and fixtures over
5 years, and leasehold improvements over the life of the lease. The Company had
no assets under capital lease at December 31, 1999.

Depreciation expense was $1,802,283, $1,799,383, and $2,047,461 for the years
ended December 31, 1997, 1998 and 1999, respectively.


NOTE 6. LONG-TERM DEBT AND CAPITAL LEASES PAYABLE

In April 1996, the Company acquired 430 channels in MTA's in the United States
through the Federal Communications Commission's ("FCC") 900 MHz spectrum auction
for a purchase price of approximately $5.1 million. In connection with such
auction, the Company qualified for "small business" status under the FCC's
regulations which allowed the Company to (i) make a 10% down payment; (ii)
receive a 15% bidding credit against its spectrum purchase price; and (iii)
receive United States government financing at 7% per annum on the balance of the
purchase price to be paid by the Company over a 10-year period. The note
provides for interest payments only in the first five years and quarterly
principal and interest payments thereafter. In accordance with Accounting
Principles Board Opinion No. 21, "Interest on Receivables and Payables", the
Company determined that the market rate for such debt is 12%. The contractual
principal amount on this debt totaled approximately $214,000 as of December 31,
1998. As of December 31, 1999, all of the debt related to the FCC was either
cancelled or assigned to third parties as required per the management agreements
related to the sale of the U.S. Operations.

The Company entered into an agreement with E.F. Johnson regarding the purchase
of infrastructure equipment and subscriber units. E.F. Johnson has made
available to the Company a $1.5 million credit line associated with the purchase
of infrastructure equipment for build-out in Chile. The amounts financed were
payable quarterly over a one year period and no interest was charged. The
Company determined the market rate for this debt to be 14%. The Company was
required to make a down payment in the amount of 25% of the cost of the
purchased equipment pursuant to the agreement. The amount outstanding on this
financing at December 31, 1998 was approximately $873,000 which was included in
current liabilities. The Company made the final payment pursuant to this
agreement in September 1999.

       Senior Notes Financing

On October 3, 1997, the Company finalized an approximate $11.1 million financing
of Senior Secured Convertible Notes, due 2002 (the "Senior Secured Notes"),
which were convertible into shares of the Company's common stock



                                      F-18
<PAGE>   63

at an initial conversion price of $1.45 per share. The Senior Secured Notes were
secured by 66% of the Company's shares of its holding companies for its Latin
American operations, with interest at 12% (payable semi-annually beginning on
April 30, 1998). Due to the Exchange Notes offering completed on January 15,
1998, the principal amount of the Senior Secured Notes and related accrued
interest were automatically converted into 7,955,691 shares of the Company's
Series C Preferred Stock at a conversion price of $1.45 per share (see Note 10).

On January 15, 1998, the Company finalized a $40 million financing of Senior
Discount Notes (the "Exchange Notes") due 2005. The financing consisted of
40,000 units, each unit consisting of $1,000 in principal at maturity and one
warrant to purchase 64 shares of common stock of the Company at an exercise
price of $.01 per share. The Exchange Notes mature January 1, 2005. The Exchange
Notes were issued at a substantial discount from their principal at maturity
amount and interest does not accrue on the Exchange Notes prior to January 1,
2003. Thereafter, interest accrues at 14% per annum, payable semi-annually in
arrears on January 1 and July 1 of each year commencing July 1, 2003. For
accounting purposes, the Exchange Notes accrete at a rate of approximately 20%
per annum compounding semi-annually. Net proceeds to the Company were $19.1
million, after deducting $19.5 million of debt discount (including the amount
ascribed to the value of the warrants)and $1.4 million in offering expenses. The
warrants issued in connection with the notes were valued at $5.8 million and
were recorded directly to additional paid-in capital. The Exchange Notes are
secured by 66% of the Company's shares of its Cayman Island holding companies
for its Latin American operations. The Exchange Notes are also secured by 100%
of the Company's stock in SMR Direct USA, Inc., a wholly-owned subsidiary of the
Company. This entity has no operations and its financial position consists only
of a nominal capitalization. Pursuant to a registration rights agreement (the
"Exchange Notes Registration Rights Agreement") among the Company and the
purchasers of the Exchange Notes, the Company agreed: (i) to file with the
Commission on or prior to the earlier to occur of (a) an offering of securities
of the Company pursuant to which the Company is thereafter subject to the
reporting requirements of the Exchange Act and (b) 300 days after the closing of
the Exchange Notes offering, a registration statement with respect to an offer
to exchange (the "Exchange Offer") the Exchange Notes for a new issue of senior
discount notes of the Company with terms substantially identical to those of the
previously issued notes and (ii) to use its best efforts to cause such
registration statement to become effective within 60 days following the date of
such filing. The Company completed the registration process for the Exchange
Offer on August 12, 1999 and incurred approximately $160,000 in liquidated
damages through August 12, 1999. The liquidated damages are due and payable with
the first interest payment on July 1, 2003.

In addition, on January 15, 1998 the Company issued $10.0 million in aggregate
principal amount of convertible notes (the "Convertible Notes"). Cash interest
does not accrue on the Convertible Notes prior to January 1, 2000. Thereafter,
interest on the Convertible Notes will be payable in cash at a rate of 9% per
annum on January 1 and July 1 of each year, commencing on July 1, 2000. The
Convertible Notes are convertible into shares of common stock at a conversion
price of $2.25 per share, subject to adjustments in certain circumstances.




                                      F-19
<PAGE>   64

Notes and capital leases payable consist of the following at December 31, 1998
and 1999:

<TABLE>
<CAPTION>
                                                                                     December 31,       December 31,
                                                                                         1998               1999
                                                                                     ------------       ------------
<S>                                                                                  <C>                <C>
Capital lease, payable in monthly principal and interest payments of $6,395, for
     60 months beginning on various dates from July 1, 1996 through October 31,
     1996, effective interest rate of 12%, secured by infrastructure equipment (*)   $    173,035         $       --

Capital lease, payable in monthly principal and interest payments of $1,736 for
     48 months beginning July 28, 1996, effective interest rate of 10.1%,
     secured by a phone system                                                             24,607                 --

Notes payable for purchase of SMR license, quarterly payments of $4,823 are
     interest-only (at the stated rate) through March 2001, after which
     quarterly payments of $16,454 include principal and interest for the next
     five years, imputed interest rate of 12%, secured by related SMR licenses (*)        213,659                 --

14% Exchange Notes due 2005 (the "Exchange Notes"), net of unamortized discount
     of $22,170,494 and $18,627,551, interest payable semi-annually in arrears
     commencing July 1, 2003                                                           17,829,506         21,372,449

9% Convertible Notes due 2005 (the "Convertible Notes"), interest payable
     annually commencing July 1, 2000                                                  10,881,063         11,795,049
                                                                                     ------------       ------------
                                                                                       29,121,870         33,167,498
Less amount classified as liabilities related to Assets Held for Sale (*)                (386,694)              --
                                                                                     ------------       ------------
                                                                                     $ 28,735,176       $ 33,167,498
                                                                                     ============       ============
</TABLE>


Contractual maturities of debt outstanding at December 31, 1999, are as follows:

<TABLE>
<CAPTION>
                                     Debt
                                ------------
<S>                             <C>
2000                            $    534,707
2001                               1,069,415
2002                               1,069,415
2003                               3,869,415
2004                               6,669,415
Thereafter                        56,286,510
                                ------------
                                  69,498,877
Less interest                    (17,703,828)
Less: accretion                  (18,627,551)
                                ------------
Total long-term debt            $ 33,167,498
                                ============
</TABLE>

Certain of the Company's long-term debt contain restrictive covenants regarding
the Company's ability to pay dividends, incur additional debt and issue
additional equity securities, as well as other restrictions. At December 31,
1999 the Company was in compliance with such covenants.

NOTE 7. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair values of cash equivalents and other current amounts receivable and payable
approximate their carrying amount due to their short-term nature.



                                      F-20
<PAGE>   65

The fair market value of the Exchange Notes was estimated based upon comparable,
publicly traded debt. The fair market value of the Convertible Notes was
estimated based upon the present value of the estimated future cash flows, based
upon the Company's incremental borrowing rate.

Mandatorily redeemable, convertible preferred stock is carried on the Company's
consolidated balance sheet at $42.1 and $43.7 million as of December 31, 1998
and 1999, respectively. The fair value of the Company's mandatorily redeemable,
convertible preferred stock is based upon the applicable liquidation amounts, as
follows:

<TABLE>
<CAPTION>
                           1998            1999
                       -----------     -----------
<S>                    <C>             <C>
Exchange Notes         $11,800,000     $ 8,640,000
Convertible Notes        7,300,000       8,400,000
Series A Preferred       8,800,000       8,800,000
Series B Preferred      20,933,666      20,933,666
Series C Preferred      12,744,286      14,260,410
</TABLE>


NOTE 8. INCOME TAXES

The Company is subject to local national, U.S. federal, state and foreign income
taxes but has incurred minimal liability for such taxes due to losses it has
incurred since inception. At December 31, 1999, the Company had net operating
loss carryforwards for U.S. federal tax purposes of approximately $26.9 million
which expire through the year 2019. These carryforwards are available to offset
future taxable income, if any. The Company's foreign consolidated subsidiaries
in Peru, Ecuador, Chile and El Salvador are considered pre-operating entities
for income tax purposes and therefore the losses are deferred for income tax
purposes and amortized against future taxable income or loss over a period of
approximately four years commencing in 1996.

The Company's net deferred tax assets result primarily from the future benefit
of net operating loss carryforwards and deferred pre-operating losses.

Net deferred tax assets by country as of December 31, 1998 and 1999 are as
follows (in thousands):

<TABLE>
<CAPTION>
                                 U.S.         Peru         Ecuador       Chile         Other         Total
                              --------      --------      --------      --------      --------      --------
<S>                           <C>           <C>           <C>           <C>           <C>           <C>
December 31, 1998:
Net operating losses and
   deferred pre-operating
   losses                     $ 10,435      $  1,482      $    804      $    436      $     27      $ 13,184
Valuation allowance            (10,435)       (1,482)         (804)         (436)          (27)      (13,184)
                              --------      --------      --------      --------      --------      --------
                                $   --        $   --        $   --        $   --        $   --        $   --
                              ========      ========      ========      ========      ========      ========
December 31, 1999:
Net operating losses and
   deferred pre-operating
   losses                     $ 12,972      $  1,761      $  1,049      $    760      $     81      $ 16,623
Valuation allowance            (12,972)       (1,761)       (1,049)         (760)          (81)      (16,623)
                              --------      --------      --------      --------      --------      --------
                                $   --        $   --        $   --        $   --        $   --        $   --
                              ========      ========      ========      ========      ========      ========
</TABLE>

The reconciliation of income taxes computed at the various country statutory
rates to the income tax benefit is as follows:

<TABLE>
<CAPTION>
                                                Years Ended December 31,
                                          ---------------------------------
                                           1997         1998         1999
                                          -------      -------      -------
<S>                                       <C>          <C>          <C>
Income tax benefit at statutory rates     $(5,661)     $(5,687)     $(3,439)
Increase in valuation allowance             5,661        5,687        3,439
                                          -------      -------      -------
Tax benefit                                 $  --        $  --        $  --
                                          =======      =======      =======
</TABLE>

The expected income tax benefit at the statutory rate is based upon a combined
Federal and state income tax rate of 38%, and foreign income tax rates, ranging
from 32% to 40%, depending on the country. There are no significant permanent
differences other than the increase in valuation allowance.




                                      F-21
<PAGE>   66
Due to the Company's history of operating losses, management of the Company has
not been able to conclude that it is more likely than not that the deferred tax
assets will be realized in future periods. Accordingly, the Company has provided
a full valuation allowance of these assets.

NOTE 9. COMMITMENTS AND CONTINGENCIES

       Recovery of Investments

Since its inception, the Company's efforts have been primarily directed towards
raising capital and acquiring, developing and operating SMR and other low-cost,
wireless communications networks. Further, the Company has made significant
investments in pre-operating entities in various Latin American countries whose
primary assets were SMR licenses. The Company began operations and
revenue-generating activity in the various countries as follows: Peru in May
1996, Ecuador in March 1997, Chile in January 1998 and El Salvador in September
1998. The ability of the Company to recover its investment in property,
equipment and spectrum and to generate positive cash flow and operating profits
is contingent upon a number of factors, including the Company's ability to
continue to build out and develop the SMR and other low-cost, wireless
communications networks it currently owns and to attract and retain sufficient
profitable subscribers on its existing systems and those which are under
development in sufficient numbers.

       Recoverability of Licenses

The terms of the Company's SMR license agreements contain provisions whereby the
Company must achieve certain levels of subscriber load and network build out. If
such commitments are not met, the Company could be subject to the revocation of
the applicable licenses.

Compliance with the terms of SMR licenses and certain regulatory requirements,
such as construction deadlines and minimum subscriber requirements, can be
difficult to meet. In addition, there can be no guarantee that in the future all
regulatory requirements will be met or that the Company will not lose any
applicable licenses as a result of its failure to meet such requirements.

The Company is not in compliance with certain terms of the concession agreements
in Peru including, homologation of equipment (certifying the equipment before
entering Peru), site to site transmission of signal (currently allowed only site
to handset), unauthorized transfer and use of channels between the Peruvian
companies and unauthorized use of certain frequencies granted. The Company has
applied to correct these non-compliance issues and is waiting for approval from
the Ministry. The Company believes that the applications will be approved and
result only in minimal fines, if any; however, there can be no assurance of such
outcome. The Company is currently not in compliance with certain minimum
subscriber loading requirements with respect to its licenses in the provinces
outside Lima/Callao and the Company's paging license. Failure to comply with
such requirements may subject the licenses relating to such channels to punitive
measures. The Company filed an amendment for each of the Company's two Peruvian
subsidiaries relating to these minimum subscriber loading requirements with the
Peruvian Ministry of Transportation, Communications, Housing and Construction
(the "Ministry"). The Company, based on its own discussions with the Peruvian
authorities and based on advice from the Company's outside legal advisors in
such matters, believes that the outcome of the items raised by the regulators
will not result in an impairment of the carrying amount of the Peruvian
licenses.



                                      F-22
<PAGE>   67

Operating Lease Commitments

The Company leases certain office facilities and transmission sites under
operating leases. Lease terms for office facilities range from one to five
years. Lease terms for transmission sites on buildings range from one to two
years, with varying renewal terms. Future minimum rental payments for such
office facilities and antenna site leases are as follows as of December 31,
1999.

<TABLE>
<S>                                       <C>
                     2000                 $     523,670
                     2001                       436,304
                     2002                        55,137
                     2003                        14,154
                     2004                         8,256
                     Thereafter                      --
                                          -------------
                                          $   1,037,521
                                          =============
</TABLE>

Lease expense for the years ended December 31, 1997, 1998 and 1999 was $279,972,
$426,154 and $439,281, respectively.

         Litigation

In the normal course of business, the Company is subject to, and may become a
party to, litigation. In management's opinion, none of the matters currently in
litigation will have a material impact on the Company's financial position or
results of operations.

NOTE 10. PREFERRED STOCK

The Company is authorized to issue 17,400,000 shares of preferred stock. Shares
of preferred stock may be issued from time to time in one or more series with
designations, rights, preferences and limitations established by the Company's
Board of Directors.

Holders of preferred stock are entitled to dividends in amounts determined by
the Board of Directors. No distributions may be made to holders of common stock
until all dividends declared, if any, on the preferred stock have been paid. The
indenture related to the Exchange Notes (the "Indenture") restricts the
Company's ability to pay cash dividends.

In the event of the liquidation of the Company, holders of Series C Preferred
Stock have a preference of $14,260,411 over all other stock. Holders of Series B
Preferred Stock have a preference of $20,933,666 plus any declared and unpaid
dividends, if any, over holders of Series A Preferred Stock and common stock.
Holders of Series A Preferred Stock have a preference of $8,800,000 plus any
declared and unpaid dividends, if any, over holders of common stock. All such
series of preferred stock are collectively referred to as "Preferred Stock."
After all such payments have been made, any remaining assets will be distributed
to holders of all Preferred Stock and common stock ratably based on the number
of common shares outstanding, assuming the holders of Preferred Stock had
converted their shares into common stock.

Each share of Preferred Stock is convertible, at the option of the holder, into
shares of the Company's common stock at the rate of 11,792 shares of common
stock for each share of Series A Preferred Stock, 1.4 shares of common stock for
each share of Series B Preferred Stock and 1 share of common stock for each
share of Series C Preferred Stock. This conversion rate is subject to adjustment
based on a formula to mitigate the effects of dilution. Each share of Preferred
Stock is automatically convertible into common stock immediately prior to the
closing of a public offering which meets certain conditions.

Pursuant to the Exchange Notes agreement, on or after January 31, 2006, at the
option of the holders holding at least 5% of the outstanding shares of Series C
Preferred, the Company is obligated to redeem shares of Series C Preferred
tendered to the Company at a redemption price currently equal to the redemption
price discussed below, plus all declared, accrued and unpaid dividends. The
Company is only required to redeem shares of Series C Preferred on four
occasions in each 12-month period. The Company is obligated to redeem the Series
A Preferred and the Series B Preferred annually in one-third increments
beginning on March 1, 2006, at the redemption price discussed below, plus all
declared, accrued and unpaid dividends.



                                      F-23
<PAGE>   68

The redemption price for the Series A Preferred Stock is $25,000 per share
($8,800,000 in total), the redemption price for the Series B Preferred Stock is
$3.65 per share ($20,933,666 in total), and the redemption price for the Series
C Preferred Stock is $1.45 per share ($14,260,411 in total). The holders of
Preferred Stock have an option into convert any or all of the redeemable shares
of Preferred Stock to common stock prior to each scheduled annual redemption. In
connection with the issuance of the Exchange Notes and the Convertible Notes,
this obligation has been extended past the maturity of the Exchange Notes and
the Convertible Notes.

On October 3, 1997, the Company loaned Michael N. Simkin, a former Chief
Executive Officer of the Company, $72,500 to purchase 50,000 shares of the
Company's Series C Preferred Stock (the "Simkin Loan") with a maturity date of
October 3, 1999. Interest was payable annually on the principal amount of this
loan at 6.5% per annum. Principal and interest was secured by a pledge of the
purchased shares. On September 30, 1999 Mr. Simkin agreed to return the shares
of Series C Preferred Stock previously issued to him for cancellation of the
loan.

On January 15, 1998, the Senior Secured Notes and related accrued interest were
automatically converted into 7,955,691 shares of Series C Preferred Stock at a
conversion price of $1.45 per share. The Series C Preferred Stock bears a 12%
dividend per annum and is payable semi-annually in each April and October in
either cash or additional shares of Series C Preferred stock at the option of
the Company. The Indenture restricts the ability of the Company to pay cash
dividends on the Series C Preferred. During 1999 and 1998, the Company issued
additional 1,095,604 and 783,478 shares of Series C Preferred Stock,
respectively, as payment for the 12% dividend on the Series C Preferred.

NOTE 11. STOCKHOLDERS' EQUITY (DEFICIT)

       Stock Option Plan

During 1996, the Company adopted the 1996 Stock Option Plan ("the Plan") under
which the Company is authorized to grant options for up to 1,250,000 shares of
the Company's common stock to employees and directors of the Company. The Plan
was amended in 1997 to increase the number of authorized shares available for
grant to 2,307,972 . In November 1999, the Board of Directors approved an
increase in the number of shares available for grant to 3,600,000. The Company
had outstanding options for 2,115,970 shares of the Company's common stock at
December 31, 1999. Under the Plan, the option exercise price equals the market
price of the stock on date of grant. Options granted generally provide for
vesting over a period of four to five years and expire after a maximum of 10
years.

The Company accounts for the Plan under Accounting Principles Board Opinion No.
25 ("APB Opinion No. 25") under which $22,000, $37,458 and $27,975 of
compensation expense was recognized during the years ended December 31, 1997,
1998 and 1999, respectively as discussed below.

In October 1995, the FASB issued Statement of Financial Accounting Standards No.
123 ("SFAS No. 123") which defines a fair value-based method of accounting for
employee stock options and similar equity instruments. However, it also allows
an entity to continue to measure compensation cost for those plans using the
intrinsic value-based method of accounting prescribed by APB Opinion No. 25.
Entities electing to remain with the accounting prescribed in APB Opinion No. 25
must make pro forma disclosures of net income and earnings per share, as if the
fair value-based method of accounting defined in SFAS No. 123 had been applied.
The Company has elected to make the pro forma disclosures in accordance with
SFAS No. 123 set forth below.

The fair value of each option grant is estimated on the date of grant using the
Black Scholes option pricing model with the following weighted average
assumptions used for grants in 1997, 1998 and 1999, respectively; risk-free
interest rate of 5.9%, 5.6%, 6.1%; expected dividend yield of 0%; expected lives
of 4.7, 5.0 and 4.0 years; and, expected volatility of 0.001%.



                                      F-24
<PAGE>   69

Had compensation cost for the Plan been determined consistent with SFAS 123,
based on the assumptions above, the Company's net loss and net loss per common
and common equivalent share would have been increased to the following pro forma
amounts:

<TABLE>
<CAPTION>
                                                                   1997              1998                1999
                                                              --------------    --------------      --------------
<S>                                                           <C>               <C>                 <C>
Net loss applicable to common    As Reported                  $  (15,856,839)   $  (16,968,899)     $  (11,342,891)
  stockholders:                                               ==============    ==============      ==============
                                 Pro Forma                    $  (15,870,576)   $  (17,058,000)     $  (11,381,503)
                                                              ==============    ==============      ==============
Basic loss per common and        As Reported                  $        (4.53)   $        (4.84)     $        (3.24)
                                                              ==============    ==============      ==============
     Common equivalent share:
                                 Pro Forma                    $        (4.53)   $        (4.87)     $        (3.25)
                                                              ==============    ==============      ==============
</TABLE>

A summary of the status of the Plan as of December 31, 1997, 1998 and 1999 and
the changes during the years then ended are presented in the tables and
narrative below:

<TABLE>
<CAPTION>
                                                    1997                           1998                            1999
                                         -------------------------       -------------------------       --------------------------
                                                          Weighted                        Weighted                        Weighted
                                                            Avg.                            Avg.                             Avg.
                                                          Exercise                        Exercise                        Exercise
                                           Shares          Price           Shares          Price           Shares           Price
                                         ----------      ----------      ----------      ----------      ----------      ----------
<S>                                      <C>             <C>             <C>             <C>             <C>             <C>
Outstanding at beginning of year            572,750      $     1.89       1,896,011      $     1.46       1,772,285      $     1.46
Granted                                   2,438,750            1.96         559,000            1.65       1,020,000            0.01
Exercised                                      (150)          (2.50)           (100)          (2.50)             --              --
Forfeited or canceled                    (1,115,339)          (2.77)       (682,626)          (1.61)       (676,315)          (1.45)
                                         ----------      ----------      ----------      ----------      ----------      ----------
Outstanding at end of year                1,896,011            1.46       1,772,285            1.46       2,115,970            0.76
                                         ==========      ==========      ==========      ==========      ==========      ==========
Exercisable at end of year                  254,604            1.64         587,106            1.53       1,021,997            1.19
                                         ==========      ==========      ==========      ==========      ==========      ==========
Weighted average fair value of
     options granted                     $     0.44                      $     0.35                      $    0.002
                                         ==========                      ==========                      ==========
</TABLE>

The status of total stock options outstanding and exercisable under the Plan as
of December 31, 1999 follows:


<TABLE>
<CAPTION>
                                      Stock Options Outstanding                      Stock Options Exercisable
                      -----------------------------------------------------------    -------------------------------------
                                                Weighted
                                                Average             Weighted                                Weighted
      Range of             Number of           Remaining            Average                                 Average
      Exercise              Options           Contractual           Exercise           Number of            Exercise
       Prices             Outstanding         Life (Years)           Price               Shares              Price
       ------             -----------         ------------          --------           ---------            --------
<C>                       <C>                 <C>                   <C>                <C>                  <C>
$0.01                      1,020,000                9.9              $0.01               204,000              $0.01
$1.00 - $1.45              1,014,770                7.8              $1.37               736,797              $1.36
$2.25 - $2.50                 62,000                7.1              $2.42                62,000              $2.42
$3.25                         19,200                7.1              $3.25                19,200              $3.25
                          ----------              -----              -----             ---------              -----
Totals                     2,115,970                8.8              $0.76             1,021,997              $1.19
                          ==========              =====              =====             =========              =====
</TABLE>


During 1997 and 1998 the Company modified the terms of 200,000 and 100,000 stock
options to purchase the Company's common stock held by officers of the Company.
The terms were modified to allow for immediate vesting of a portion of these
options to purchase shares of common stock. The Company recorded compensation
expense related to this modification.

During 1999, the Company modified the terms of 72,600 stock options to purchase
the Company's common stock held by two officers of the Company. The terms were
modified to allow for immediate vesting of these options to purchase shares of
common stock. The fair market value of the Company's common stock at the time of
modification was equal to the exercise price of the associated options, and no
compensation expense was recorded.

During 1999, the Company granted options to purchase 100,000 shares of common
stock with an exercise price of $0.01 to two consultants for services rendered.
Such options were recorded at the fair value of such services, and the amount
was expensed in selling, general and administrative expenses.



                                      F-25
<PAGE>   70

On November 10, 1999 and on January 20, 2000, the Board of Directors authorized
the issuance of new options to certain employees, directors and consultants with
an exercise price of $0.01 per share.

The Company has outstanding 2,560,000 warrants to purchase common shares,
exercisable at $0.01 per share, which were issued in connection with the Senior
Notes. When issued, the warrants were valued at $5,760,000, which amount was
recorded as additional paid-in capital and debt discount. The warrants were
valued using the Black-Scholes option pricing model and the following
assumptions: Risk-free interest rate of 5.9%, expected dividend yield of 0%,
expected lives of 3 years and expected volatility of 50%.

NOTE 12.  SEGMENT INFORMATION AND GEOGRAPHIC DATA

In accordance with the provisions of SFAS No. 131, the Company has determined
that its reportable segments are strategic geographic units that develop and
operate SMR networks as well as the corporate unit which oversees all
operations. The Company is managed by country as each country may require a
slightly different business strategy. The accounting policies of the segments
are the same as those for the Company on a consolidated basis. The segments are
evaluated based upon gains in subscribers and based upon EBITDA. EBITDA
represents operating loss before depreciation and amortization and is not a
measurement under U.S. generally accepted accounting principles and may not be
similar to EBITDA measures of other companies.

The following information presents certain summarized balance sheet and
statement of operations data by geographic region as of December 31, 1997, 1998
and 1997 and for the years then ended (in 000's).


<TABLE>
<CAPTION>
                                                  Latin America
                                   -------------------------------------------
                         United                                          El
                       States (1)     Peru      Ecuador     Chile     Salvador   Corporate  Elimination    Total
                       ----------  ----------   --------   --------   --------   ---------  -----------  ---------
<S>                   <C>          <C>          <C>        <C>        <C>        <C>        <C>          <C>
December 31, 1999
Revenues              $        --  $    3,127   $  1,723   $  1,264   $    352   $      --  $        --  $   6,466
EBITDA                         --         383        458       (462)       (80)         --           --     (1,753)
                                                                                                            (1,753)
Depreciation and
    amortization               --       1,100        781        570         74         177           --      2,702
Operating income
    (loss)                     --        (717)      (603)    (1,032)      (154)     (2,229)          --     (4,735)
Property, plant and
    equipment, net             --       3,681        945      4,252          6          72           --      8,956
Spectrum, net                  --       7,463        711      5,424      1,291          --           --     14,889
Total assets          $        --  $   13,258   $  2,243   $ 10,714   $  1,415   $  52,446  $   (40,802) $  39,274
Capital expenditures                                                                                            --
                                          268         41      2,283         --          12           --      2,604
December 31, 1998
Revenues              $        --  $    4,251   $  2,538   $    415         82   $      --  $        --  $   7,286
EBITDA                         --        (928)      (586)      (976)       (29)     (4,494)          --     (7,013)
Depreciation and
    amortization               --         915        663        116         81         391           --      2,166
Operating income
    (loss)                     --      (1,843)    (1,249)    (1,092)    (2,515)     (4,884)          --    (11,583)
Property, plant  and
    equipment, net             --       3,886      1,777      2,726          3         546           --      8,938
Spectrum, net                  --       7,569      1,203      3,218      1,298          --           --     13,288
Total assets          $     1,220  $   16,103   $  4,041   $  6,754   $  1,496   $  54,408  $   (36,440) $  47,582
Capital expenditures
                               --       1,917      1,924      2,844         --         135           --      6,820
</TABLE>



                                      F-26
<PAGE>   71

<TABLE>
<CAPTION>
                                                 Latin America
                                   -----------------------------------------
                         United                                       El
                       States (1)    Peru      Ecuador    Chile     Salvador   Corporate  Elimination    Total
                       ----------    ----      -------    -----     --------   ---------  -----------    -----
<S>                    <C>         <C>        <C>        <C>        <C>        <C>        <C>            <C>
December 31, 1997
Revenues               $  1,112   $  2,939    $   775    $   --     $     --   $     --   $        --    $  4,826
EBITDA                   (3,162)    (1,916)      (855)       --           --     (3,430)           --      (9,363)
Depreciation and
    amortization          1,143        734        278        --           --        104            --       2,259
Operating loss           (7,512)    (2,698)    (1,132)       --           --     (3,225)           --     (14,567)
Property, plant and
    equipment, net           --      3,690      1,066        32            0        217            --       5,005
Spectrum, net                --      4,859      1,351        --           --         --            --       6,210
Total assets           $ 11,017   $ 11,440    $ 3,181    $   --     $     --   $ 27,452   $   (23,218)   $ 29,872
Capital expenditures
                          4,681      4,615        802        --           --        285            --      10,383
</TABLE>
-----------
(1)      In August 1997 the Company made the decision to sell its U.S.
         operations (see Note 3).

As of December 31, 1999, the Company conducted a significant portion of its
business in Peru, Ecuador and Chile. Accordingly, the Company's cash flow and
its ability to service its indebtedness is significantly dependent upon the cash
flow of its Peruvian and Chilean subsidiaries. The Company's ability to recover
its investment in these subsidiaries, to fund operations in other countries, and
to service its indebtedness, among other things, depends to a significant degree
on its ability to transfer funds from such subsidiaries to the United States
parent (the "Parent").

In January and February 2000, the Company sold its Ecuador and El Salvador
operations (see Note 15).

The ability of the Company's subsidiaries to pay dividends or make loans or
advances to the Parent is subject to regulation within their respective
jurisdictions of organization and operations. While the existing laws and
regulations of these jurisdictions generally do not prohibit the Company's
subsidiaries from paying dividends or making loans or advances to the Parent,
there can be no guarantee that such laws will continue to permit such payments.

Note 13. PRO FORMA INFORMATION (UNAUDITED)

The following pro forma information for the year ended December 31, 1997 gives
effect to the disposition of U.S. Operations and the acquisitions of C-Comunica
and Transnet, as if each had occurred on January 1, 1997. The majority of the
1998 and 1999 acquisitions were of spectrum and non-operating entities, with no
revenue, and the impact on net loss applicable to common shareholders is not
significant. The pro forma financial information does not purport to represent
what the Company's results of operations would actually have been if such
transactions had in fact occurred on such date. The pro forma results presented
below are based upon currently available information and upon certain
assumptions that management believes are current circumstances.

<TABLE>
<CAPTION>
                               For the Year Ended     Pro Forma       Pro Forma Combined
                               December 31, 1997     Adjustments          (Unaudited)
                               ------------------   ------------      ------------------
<S>                            <C>                  <C>               <C>
Revenues                          $  4,826,355      $ (1,019,194)(a)     $  3,807,161
Net loss applicable to common
    stockholders                  $(15,856,839)     $  7,153,381(b)      $ (8,703,458)
Net loss per share                       (4.53)     $         --         $      (2.48)
</TABLE>
-----------
(a)      For the year ended December 31, 1997 revenues for the U.S. Operations
         were approximately $1,111,000 and revenues for C-Comunica and Transnet
         were approximately $92,000 for the seven-month period ended July 31,
         1997.
(b)      For the year ended December 31, 1997 the net loss for the U.S.
         Operations was approximately $7,512,000 and the net loss for C-Comunica
         and Transnet was approximately $359,000 for the seven-month period
         ended July 31, 1997 (includes amortization expenses related to the
         step-up in value of the spectrum licenses acquired of $17,500).

Note 14. RETIREMENT PLAN

The Company has a 401(k) Plan which covers all eligible employees who have
completed one year of service, as defined in the 401(k) Plan, and are age 18 or
older. Participants may defer from 2% to 15% of their compensation,



                                      F-27
<PAGE>   72
as defined, up to a maximum limit determined by law. Participants are always
fully vested in their contributions. The Company did not match any employee
contributions in 1997, 1998, and 1999.


Note 15. SUBSEQUENT EVENTS

On January 27, 2000, Company sold 100% of the shares of its Ecuador subsidiary
for $2.0 million. In a related transaction with the same party, the Company
purchased 100% of the shares of two Chilean companies having a combined total
800 MHz channels (i) 40 in Santiago and (ii) 725 in various Chilean cities for
approximately $4.0 million. Of this purchase price amount, $2.0 million was
offset by the $2.0 million sale price of the Ecuador subsidiary.

In February 2000, the Company entered into an agreement for the sale of all of
its El Salvador assets for approximately $200,000, except for its 800 MHz
licenses. As part of this transaction, the Company also entered into a
management arrangement with the purchaser whereby the purchaser will manage the
800 MHz licenses for a period of two years.




                                      F-28
<PAGE>   73


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Centennial Cayman Corp. and Subsidiaries:

We have audited the accompanying consolidated balance sheets of Centennial
Cayman Corp. (a Cayman Islands corporation) and subsidiaries as of December 31,
1998 and 1999, and the related consolidated statements of operations and
comprehensive loss, and stockholders' equity (deficit); and cash flows for each
of the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Centennial Cayman Corp. and subsidiaries as of December 31, 1998 and 1999, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.



                                                  /s/ Arthur Andersen LLP
                                                  -----------------------
                                                  ARTHUR ANDERSEN LLP

Denver, Colorado,
      March 29, 2000.



                                      F-29
<PAGE>   74





                    CENTENNIAL CAYMAN CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                        December 31,         December 31,
                                                                            1998                 1999
                                                                        ------------         ------------
<S>                                                                     <C>                  <C>
                                     ASSETS
 CURRENT ASSETS:
 Cash and cash equivalents                                              $    559,789         $     94,935
 Restricted cash                                                             386,562              406,094
 Accounts receivable - trade, net of allowance for doubtful
    Accounts of $830,000 and $827,000, respectively                          886,494              890,668
 Inventory                                                                 1,896,822              695,478
 VAT receivable                                                              754,000              713,221
 Prepaid licenses and other current assets                                   483,702              417,859
                                                                        ------------         ------------
                 Total current assets                                      4,967,369            3,218,255

 PROPERTY AND EQUIPMENT, net                                               8,392,841            8,884,204
SMR LICENSES, net of accumulated amortization
   of $802,000 and $1,456,000, respectively                               13,287,358           14,888,617
 OTHER NONCURRENT ASSETS, net                                                354,618              151,044
                                                                        ------------         ------------

                 Total assets                                           $ 27,002,186         $ 27,142,120
                                                                        ============         ============

                      LIABILITIES AND STOCKHOLDER'S EQUITY

 CURRENT LIABILITIES:
       Accounts payable - trade                                         $    443,382         $    739,735
       Accounts payable - affiliates                                      20,870,243           26,433,460
       Payable to seller                                                     400,000                 --
       Accrued liabilities                                                   898,623              740,493
                                                                        ------------         ------------

                 Total liabilities                                        22,612,248           27,913,688

 COMMITMENTS AND CONTINGENCIES (Notes 1, 2 and 6)

STOCKHOLDER'S  EQUITY :
       Common stock, $1 par value, 50,000 authorized,
           2 issued and outstanding, respectively                                  2                    2
      Additional paid-in capital                                          20,858,377           20,858,377
      Accumulated deficit                                                (16,606,974)         (21,122,686)
      Accumulated other comprehensive income                                 138,533             (507,261)
                                                                        ------------         ------------

               Total stockholder's equity                                  4,389,938             (771,568)
                                                                        ------------         ------------

               Total liabilities and stockholder's equity               $ 27,002,186         $ 27,142,120
                                                                        ============         ============
</TABLE>


           The accompanying notes to consolidated financial statements
              are an integral part of these consolidated statements



                                      F-30
<PAGE>   75
                    CENTENNIAL CAYMAN CORP. AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS



<TABLE>
<CAPTION>
                                                                                      Year              Year              Year
                                                                                      Ended             Ended             Ended
                                                                                   December 31,      December 31,      December 31,
                                                                                   ------------      ------------      ------------
                                                                                       1997              1998              1999
<S>                                                                                <C>               <C>               <C>
REVENUE:
  Radio service revenue                                                            $  2,247,494      $  5,215,243      $  5,533,303
  Equipment sales                                                                     1,376,396         1,922,659           760,520
  Other                                                                                  65,587           147,921           171,804
                                                                                   ------------      ------------      ------------
                                                                                      3,689,477         7,285,823         6,465,627
                                                                                   ------------      ------------      ------------

COSTS AND EXPENSES RELATED
  TO REVENUE (exclusive of depreciation
   Shown below):
  Network and site expense                                                               79,492            99,130           218,824
  Cost of equipment sold                                                              2,038,116         2,790,528           913,038
  Maintenance and other                                                                 176,380           616,622           409,038
                                                                                   ------------      ------------      ------------
                                                                                      2,293,988         3,506,280         1,540,900
                                                                                   ------------      ------------      ------------

OPERATING COSTS AND EXPENSES:
  Selling, general and administrative
    (including $936,000, $3,486,000 and $1,748,000 in allocations from Parent,
respectively)
                                                                                      5,181,796        10,014,313         6,366,914
  Loss on Impairment of Assets                                                             --           2,403,700           280,393
  Depreciation and amortization                                                       1,014,885         1,780,091         2,525,660
                                                                                   ------------      ------------      ------------
                                                                                      6,196,681        14,198,104         9,172,967
                                                                                   ------------      ------------      ------------

OPERATING LOSS                                                                       (4,801,192)      (10,418,561)       (4,248,240)
                                                                                   ------------      ------------      ------------

OTHER INCOME (EXPENSE):
  Interest expense                                                                       (3,894)         (241,244)         (175,541)
  Other                                                                                  61,858          (233,941)          (91,931)
                                                                                   ------------      ------------      ------------
                                                                                         57,964          (475,185)         (267,472)
                                                                                   ------------      ------------      ------------

NET LOSS                                                                             (4,743,228)      (10,893,746)       (4,515,712)

OTHER COMPREHENSIVE INCOME (LOSS):
  Foreign currency translation adjustments                                               13,004           131,998          (645,794)
                                                                                   ------------      ------------      ------------

COMPREHENSIVE LOSS                                                                 $ (4,730,224)     $(10,761,748)     $ (5,161,506)
                                                                                   ============      ============      ============
</TABLE>


                                      F-31
<PAGE>   76
                    CENTENNIAL CAYMAN CORP. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)



<TABLE>
<CAPTION>
                                                             Stockholder's Equity (Deficit)
                                  ---------------------------------------------------------------------------------------
                                                                                            Accumulated
                                                               Additional                     Other          Total
                                         Common Stock           Paid-in      Accumulated   Comprehensive  Stockholder's
                                     Shares        Amount       Capital        Deficit     Income (Loss) Equity (Deficit)
                                  ------------  ------------  ------------  ------------   ------------  ----------------
<S>                               <C>           <C>           <C>           <C>            <C>            <C>
Balances, December 31, 1996                  2             2     4,820,585      (970,000)        (6,469)     3,844,118

Equity contributions from parent            --            --    16,037,792            --             --     16,037,792

Net loss                                    --            --            --    (4,743,228)            --     (4,743,228)

Cumulative translation
  adjustment                                --            --            --            --         13,004         13,004
                                  ------------  ------------  ------------  ------------   ------------   ------------
Balances, December 31, 1997                  2             2    20,858,377    (5,713,228)         6,535     15,151,686

Net loss                                    --            --            --   (10,893,746)            --    (10,893,746)

Cumulative translation
  adjustment                                --            --            --            --        131,998        131,998
                                  ------------  ------------  ------------  ------------   ------------   ------------
Balances, December 31, 1998                  2  $          2  $ 20,858,377  $(16,606,974)  $    138,533   $  4,389,938

Net loss                                    --            --            --    (4,515,712)            --     (4,515,712)
Cumulative translation
  adjustment                                --            --            --            --       (645,794)      (645,794)
                                  ------------  ------------  ------------  ------------   ------------   ------------
Balances, December 31, 1999                  2  $          2  $ 20,858,377  $(21,122,686)  $   (507,261)  $   (771,568)
                                  ============  ============  ============  ============   ============   ============
</TABLE>



                                      F-32
<PAGE>   77
                    CENTENNIAL CAYMAN CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                Year           Year           Year
                                                                                Ended          Ended          Ended
                                                                             December 31,   December 31,   December 31,
                                                                             ------------   ------------   ------------
                                                                                 1997           1998           1999
                                                                             ------------   ------------   ------------
<S>                                                                          <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss                                                                     $ (4,743,228)  $(10,893,746)  $ (4,515,712)
Adjustments to reconcile net loss to net cash used in operating activities-
      Depreciation and amortization                                             1,014,885      1,780,091      2,525,660
      Loss on impairment of asset                                                    --        2,403,700        280,393
      Write-off of Argentine investment                                           615,598           --             --
      Allowance for doubtful accounts                                             517,986        348,087        131,865
      Changes in operating assets and liabilities-
      (Increase) decrease in accounts receivable - trade                       (1,331,582)        48,828        (68,972)
      (Increase) decrease  in accounts receivable - affiliates
                                                                                   25,000           --             --
      Increase in inventory                                                     2,177,991       (525,060)     1,201,344
      Increase  in other assets                                                (2,183,481)       (43,543)       310,196
      Increase in accounts payable and other                                      525,409        111,675        296,353
      Increase in accrued liabilities                                             162,620        563,343       (158,130)
                                                                             ------------   ------------   ------------
Net cash used in operating activities                                          (3,218,802)    (6,206,625)         2,997
                                                                             ------------   ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchase of property and equipment                                         (975,289)    (5,025,646)    (2,209,837)
      Acquisition of businesses, net of cash acquired                          (4,482,325)    (7,386,203)    (2,755,905)
      Payment of contingent payable to seller                                        --       (2,390,000)      (400,000)
      (Increase) decrease in restricted cash                                       41,464       (342,026)       (19,532)
                                                                             ------------   ------------   ------------

      Net cash used in investing activities                                    (5,416,150)   (15,143,875)    (5,385,274)
                                                                             ------------   ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Contribution from parent                                                 10,695,769           --             --
      Advances (payments) from affiliates                                      (1,336,846)    20,870,243      5,563,217
                                                                             ------------   ------------   ------------
      Net cash provided by financing activities
                                                                                9,358,923     20,870,243      5,563,217
                                                                             ------------   ------------   ------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH
                                                                                   13,004        131,998       (645,794)
                                                                             ------------   ------------   ------------

NET CHANGE IN CASH AND CASH EQUIVALENTS
                                                                                  736,975       (348,259)      (464,854)

CASH AND CASH EQUIVALENTS, beginning of period
                                                                                  171,073        908,048        559,789
                                                                             ------------   ------------   ------------

CASH AND CASH EQUIVALENTS, end of period                                     $    908,048   $    559,789   $     94,935
                                                                             ============   ============   ============
</TABLE>



                                      F-33
<PAGE>   78
                    CENTENNIAL CAYMAN CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                             Year          Year           Year
                                                                            Ended          Ended          Ended
                                                                         December 31,   December 31,   December 31,
                                                                          ----------     ----------     ----------
                                                                             1997           1998           1999
                                                                          ----------     ----------     ----------
<S>                                                                      <C>            <C>            <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for-
   Interest                                                               $   24,562     $    1,647     $   41,465
Supplemental schedule of non-cash investing and financing activities-
 Equipment contributed by parent                                          $5,342,023     $     --       $     --
Contingent payment of acquisition
     of Chilean channels                                                        --          400,000           --
</TABLE>



                                      F-34
<PAGE>   79
                    CENTENNIAL CAYMAN CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 1998 AND 1999
            AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999


NOTE 1. ORGANIZATION AND OWNERSHIP

Centennial Cayman Corp. was incorporated in June 1996 as a wholly owned
subsidiary of Cordillera Communications Corp.(formerly Centennial Communications
Corp., the "Parent Company"). Centennial Cayman Corp. and subsidiaries
(collectively, the "Company") is a Cayman Islands corporation engaged in the
acquisition, development and operation of specialized mobile radio ("SMR") and
other low-cost, wireless communications networks, the sale of communications
services using those networks, and the sale and servicing of related accessory
equipment in certain countries of Latin America. The Company has acquired SMR
licenses through direct applications to governments, contributions from the
Parent Company and through acquisitions of interests in other entities (all of
which are wholly owned at December 31, 1998 and 1999) that have been granted or
have applied for SMR licenses. As more fully discussed in Note 6, the Company is
subject to various risks and uncertainties, primarily those of an enterprise in
the early stage of operations.

To date, the Company has been primarily dependent on funds provided by the
Parent Company, however, during the end of 1999, certain of the subsidiaries
have been paying back receivables owed. The Company has received equity
contributions as well as extensions of credit from the Parent Company to fund
its activities and anticipates that the Parent Company will make additional
equity contributions to the Company. The Parent Company is under no obligation
to provide additional advances or loans to the Company; however, if the
Company's operating cash flow is not sufficient to meet its needs, the Parent
Company has committed that it will continue to make advances to the Company as
necessary, through at least December 31, 2000.

In October 1997, the Parent Company completed a financing which resulted in
proceeds of the Parent of approximately 11.1 million.

In January 1998, the Parent Company completed financings which resulted in
proceeds to the Parent Company of approximately $30.4 million.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

           Basis of Presentation

The consolidated financial statements have been prepared in conformity with
United States generally accepted accounting principles which are substantially
the same as Cayman Islands generally accepted accounting principles.

The consolidated financial statements include the accounts of Centennial Cayman
Corp. and its subsidiaries, all of which are wholly owned. All subsidiaries are
consolidated and all significant intercompany accounts and transactions have
been eliminated in consolidation. Minority interest share of loss results from
minority ownership interests in entities now wholly owned by the Company.

The Company's Parent incurs certain direct and indirect expenses on behalf of
the Company including management, financing and other corporate overhead items.
Items directly identifiable to the Company's operations are charged to the
Company by the Parent. The Parent also allocates a portion of its corporate
overhead based on the estimated level of activity performed by the Parent on
behalf of the Company. Such allocations of indirect expenses totaled
approximately $936,000, $3,486,000 and $1,748,000 for the years ended December
31, 1997, 1998 and 1999, respectively, and management believes that such amounts
reasonably represent the costs that would have been incurred on a stand alone
basis. Management believes that the method used to allocate a portion of the
Parent Company's corporate overhead is reasonable.

           Foreign Currency Translation

For subsidiaries not operating in highly inflationary economies and whose
functional currency is the local currency, all assets and liabilities are
translated at the current exchange rates at the balance sheet date, and revenues
and expenses are translated at the weighted average rate for the period. The
resulting translation adjustments are included in stockholders' equity as a
component of other comprehensive income.. The Company's Peruvian and Ecuadorian
subsidiaries functional currency is the United States dollar because the revenue
stream is earned in the United States dollar. As the quarter ending December 31,
1999, Ecuador is the only hyper-inflationary economy in which the Company has
operations. In the quarter ending December 31, 1999, the Company made a decision
to sell its Ecuador operations. This transaction was consumated in January 2000
(see Note 9).

           Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include
short-term, highly liquid investments with original maturities of three months
or less which are readily convertible into cash and are not subject to
significant risk from fluctuations in interest rates.

           Restricted Cash



                                      F-35
<PAGE>   80
Restricted cash includes approximately $387,000 and $406,000 on deposit with
financial institutions at December 31, 1998 and 1999, respectively, held as
guarantees for performance bonds for the build out of certain channels in Peru.

           Credit Risk and Concentration of Operations

The Company typically does not require collateral from its customers. Accounts
receivable are comprised of small balances due from numerous customers located
primarily in Peru, Ecuador, Chile and El Salvador. Accordingly, while the
Company believes that it has minimized its exposure to any single customer, the
Company is exposed to credit risk resulting from adverse general economic
conditions, which may affect these countries and Latin America. The Company has
not entered into any foreign currency contracts, hedges or options. The Company
sweeps all excess cash from its Latin American operations on to its U.S. bank
accounts a monthly basis. The Company deposits its cash, cash equivalents and
restricted cash with financial institutions that the Company believes to be of
high credit quality.

           Radios and Accessories Inventory

Radios and accessories inventory represents radio accessories that are held for
sale to the Company's subscribers. Radios and accessories inventory are stated
at the lower of their cost or market. Cost is determined using the first-in,
first-out method.

           Revenue Recognition

Radio service fees, as well as charges for maintenance and loss and damage
insurance coverage, are recognized in the period service is provided. Equipment
sales are recognized when the equipment is delivered and title passes to the
subscriber.

           Property and Equipment

Property and equipment are comprised of network equipment, infrastructure,
computer equipment and software, and other property. Property and equipment are
recorded at cost. Maintenance and repair expenditures are charged to expense as
incurred and expenditures for improvements which increase the expected useful
lives of the assets are capitalized. Depreciation expense is computed using the
straight-line method over the useful lives of the respective assets (See Note
4).

Direct costs associated with the construction of SMR networks are capitalized
and amortized over the system's expected useful life upon placing the system in
service. Such costs include amounts incurred in securing tower sites, site
preparation, procurement and installation of infrastructure, and equipment
costs.

Also included in property and equipment are radios owned by the Company which
are leased to the Company's subscribers under operating lease agreements. The
Company retains title to these radios as part of the subscriber agreement and
generally depreciates the radios over 5 years. Upon termination of service, the
subscribers are required to return the radios to the Company. Certain
subscribers desire to own their radios; therefore, the cost or depreciated net
book value of radios sold to such subscribers is recorded as a charge to cost of
equipment sold at the time of sale.

           SMR Licenses

Direct and certain indirect costs of obtaining SMR licenses, such as
application, legal and consulting fees, as well as the fair market value of
licenses obtained in certain acquisitions, are capitalized and amortized using
the straight-line method over the period of the related license (generally 10 to
40 years) upon commencement of service (See Note 3). SMR licenses in the
countries in which the Company operates are issued conditionally for various
periods of time. The SMR licenses are generally renewable providing the licensee
has complied with applicable rules and policies. In most instances, the Company
believes it has complied and intends to comply with these standards and is
amortizing the related costs using the straight line method over their estimated
useful life, generally 40 years, which includes the renewal period. In some
cases, the Company currently is not in compliance with applicable requirements
and, where appropriate, has filed requests for extensions with the appropriate
government agency. The



                                      F-36
<PAGE>   81
Company expects that such extension requests will be granted and the risk of
having these or any other licenses revoked is remote.

The Company amortizes the SMR licenses over the expected life of the license,
which may include extension periods if extensions are considered probable.
Amortization expense was $379,750, $355,125 and $654,253 for the years ended
December 31, 1997, 1998 and 1999, respectively.

           Income Taxes

The Company is not subject to income taxes under the laws of the Cayman Islands.
The Company's foreign participant subsidiaries are subject to foreign income
taxes in their respective tax jurisdictions. Due to the Company's net losses in
1997, 1998 and 1999, there was no provision for income taxes. The current
provision for income taxes represents actual or estimated amounts payable on tax
return filings each year. Deferred tax assets and liabilities are recorded for
the estimated future tax effects of temporary differences between the tax basis
of assets and liabilities and amounts reported in the accompanying balance
sheets, and for operating loss and tax credit carryforwards. The change in
deferred tax assets and liabilities for the period measures the deferred tax
provision or benefit for the period. Effects of changes in enacted tax laws on
deferred tax assets and liabilities are reflected as adjustments to the tax
provision or benefit in the period of enactment. The Company's deferred tax
assets have been reduced by a valuation allowance to the extent it is more
likely than not, that some or all of the deferred tax assets will not be
realized (See Note 5). Accordingly, there was no deferred tax provision for
1997, 1998 and 1999.

           Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
Such estimates and assumptions affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.

The Company is subject to the laws and regulations governing telecommunication
services in effect in each of the countries in which it operates. These laws and
regulations can have a significant influence on the Company's results of
operations and are subject to change by the responsible governmental agencies.
The financial statements as presented reflect certain assumptions based on laws
and regulations currently in effect in each of the various countries. The
Company cannot predict what future laws and regulations might be passed that
could have a material effect on the Company's results of operations. The Company
assesses the impact of significant changes in laws and regulations on a regular
basis and updates the assumptions used to prepare its financial statements
accordingly.

           Long-lived Assets

Long-lived assets and certain identifiable intangibles, including SMR licenses,
to be held and used by the Company are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. The Company continuously evaluates the recoverability of its
long-lived assets based on estimated future cash flows from and the estimated
liquidation value of such long-lived assets, and provides for impairment if such
undiscounted cash flows are insufficient to recover the carrying amount of the
long-lived asset. If an impairment is indicated, the amount of the charge is
calculated as the amount by which the carrying amount of the asset exceeds the
fair value of the asset. During 1998, the Company determined that its spectrum
licenses and other long-lived assets related to its El Salvador subsidiary was
impaired based upon third party offers, and recorded a write down of $2.4
million to their estimated fair value. During 1999, the Company determined that
its spectrum licenses and other long-lived assets related to its Ecuadorian
subsidiary were impaired based upon third party offers, and recorded a write
down of approximately $280,000 to their estimated fair value. At December 31,
1999, the Company determined that there were no other impairments of its
long-lived assets.

               Comprehensive Income



                                      F-37
<PAGE>   82
Effective January 1, 1998, the Company adopted the provisions of SFAS No. 130,
"Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 establishes
standards for reporting comprehensive income and its components in financial
statements. Comprehensive income, as defined, includes all changes in equity
(net assets) during a period from non-owner sources. From its inception through
December 31, 1999, the change in the cumulative translation adjustment is the
sole material item of other comprehensive income or loss.

           Fair Value of Financial Instruments

The carrying amounts of the Company's financial instruments approximate their
fair value, due to their short-term nature.

           Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". Among other
provisions, it requires that entities recognize all derivatives as either assets
or liabilities in the statement of financial position and measure those
instruments at fair value. Gains and losses resulting from changes in the fair
values of those derivatives would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. The effective date of
this standard was delayed (via the issuance of SFAS No. 137 in June 1999). The
effective date for SFAS No. 133 is now for all fiscal quarters of all fiscal
years beginning after June 15, 2000, though earlier adoption is encouraged and
retroactive application is prohibited. This means that the standard must be
adopted by the Company no later than January 1, 2001. To date, the Company has
not entered into any derivative financial instruments or hedging activities.

In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position ("SOP") No. 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use," which provides
guidance on accounting for the cost of such software. SOP No. 98-1 is effective
for financial statements for fiscal years beginning after December 15, 1998. The
adoption of SOP No. 98-1 had no material impact on the Company's financial
statements.

In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities"
("SOP 98-5"). SOP 98-5 requires that all non-governmental entities expense the
costs of start-up activities, including organization costs, as those costs are
incurred, and is effective for fiscal years beginning after December 15, 1998.
The Company adopted the provisions of SOP 98-5 for the year ended December 31,
1999. The adoption did not have a material impact on the Company's consolidated
results of operations or financial position.

In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101, Revenue Recognition ("SAB 101"). SAB 101 provides
guidance on the recognition, presentation, and disclosures related to revenue in
the financial statements. The Company is required to adopt this standard in the
quarter ending June 30, 2000, and the Company's management is still evaluating
the impact of such adoption.

NOTE 3. ACQUISITIONS

The Company has completed several acquisitions of non-operating entities whose
primary assets were SMR licenses as well as the acquisition of operating
entities and spectrum. Included in the accompanying consolidated financial
statements, from the date of their acquisition, are the results of operations
for these entities as follows:

<TABLE>
<CAPTION>
NAME                                          DATE OF ACQUISITION
<S>                                           <C>
C-Comunica S.R.L. (Peru)                      January 22, 1997
Transnet del Peru, S.A. (Peru)                July 31, 1997
Telecomunicaciones y Servicios  (Chile)       January 2, 1998
Comovec S.A. (Ecuador)                        May 13, 1998,         (1)
Peru Tel S.A. (Peru)                          May 22, 1998
El Salvador                                   September 11, 1998,    (2)
Trunking S.A.                                 July 29, 1999
</TABLE>

(1)      The Company sold this entity as of January 27, 2000.



                                      F-38
<PAGE>   83
(2)      In February 2000, the Company sold all of its El Salvador assets,
         except for its 800 Mhz licenses.

Except as indicated in the following, all of the acquisitions were for 100% of
the voting shares of the acquired company. The acquisitions were accounted for
as a purchase and accordingly the results of their operations were included in
the consolidated results of operations from the date of acquisition. The
purchase price was financed by the Company with available cash.

In January 1997, the Company acquired all of the common stock of C-Comunica S.A.
("C-Comunica"), a Peruvian SMR operating company. The total consideration given
and liabilities assumed was approximately $2.9 million, of which approximately
$800,000 represented the fair value of the net tangible assets as of the date of
acquisition and the excess purchase price over the fair value of the net
tangible assets acquired was approximately $2.1 million, which was allocated to
SMR licenses. SMR licenses are amortized over 40 years.

In July 1997, the Company acquired all of the common stock of Transnet del Peru
S.A. ("Transnet"), a Peruvian SMR operating company. The total consideration
given and liabilities assumed for Transnet was approximately $1.5 million, of
which approximately $300,000 represented the fair value of the net tangible
assets as of the date of acquisition and the excess purchase price over the fair
value of the net tangible assets acquired was approximately $1.2 million, which
was allocated to SMR licenses. SMR licenses are amortized over 40 years.

Also in July 1997, the Company pledged $1.3 million to secure its obligations in
connection with the Company's bid for additional spectrum with Chile Concurso.
On October 29, 1997, the Company received written notice from the Chilean
Ministry of Transportation and Telecommunications (the "Ministry") that its
proposal had been accepted and awarded. During 1997 and 1998 appeals were filed
by other participants in the Concurso; the Ministry has denied such appeals. The
Company received final award in November 1999. These licenses are being
amortized over 40 years.

In September 1997, the Company acquired all of the common stock of Fastcom S.A.
("Fastcom") and Radioservicios Moviles, S.A. ("Radioservicios"), Argentine
non-operating development stage companies which owned an Argentine paging
concession. The total consideration given and liabilities assumed for Fastcom
was approximately $526,000. The Company paid $110,000 cash at closing and signed
a note to the seller for the remainder of the purchase price due December 2,
1997. The Company pledged the shares of Fastcom and Radioservicios to the
previous owners and related parties (the "Lienholders") to secure certain
payment obligations of the Company. The Company did not satisfy these payment
obligations on December 2, 1997, and as such, the Lienholders foreclosed on the
shares of Fastcom and Radioservicios. This resulted in the Company taking an
approximately $600,000 (included in general and administrative expenses) charge
in December 1997, which consists of the $110,000 initial purchase price and
approximately $490,000 in capitalized costs made in connection with the
Radioservicios transaction during 1997 consisting of legal fees, due diligence
costs, closing costs, professional fees and other costs directly related to the
acquisition.

On January 2, 1998, the Company purchased 100% of the outstanding capital stock
of Telecomunicaciones y Servicios S.A. ("TyS"), a Chilean operating company. TyS
holds 10 800 MHz channels in the metropolitan region of Santiago, Chile. The
total consideration given and liabilities assumed for the Chilean company was
approximately $3,200,000, of which $800,000 was paid at closing, approximately
$2,040,000 was paid June 29, 1998 and $350,000 on July 8, 1998 upon the transfer
of 290 additional channels (40 of which are in the metropolitan region of
Santiago) to the operating company. Approximately $80,000 represented the fair
value of the net tangible assets as of the date of acquisition and the excess
purchase price of approximately $3,120,000, which was allocated to SMR licenses.
SMR licenses are amortized over 40 years.

On April 14, 1998 the Company executed a purchase agreement with certain
non-operating subsidiaries of International Wireless Communications Holdings,
Inc. ("IWC") for the acquisition of certain assets in Peru, Ecuador and Chile
for a purchase price of approximately $3,500,000. On May 13, 1998 the Company
completed the first part of the acquisition and acquired a non-operating entity
in Ecuador (Comovec S.A.) for approximately $300,000. On May 22, 1998, the
Company completed the second part of the acquisition and acquired a
non-operating entity in Peru (Peru Tel S.A.) for approximately $2,800,000. On
May 12, 1999, the Company completed the last part of the IWC closing, and
acquired for $400,000 the Chilean assets of RMD Agencia Chile, consisting of its
800 MHZ channels: 20 channels in Santiago, 20 channels in Valparaiso/Vina del
Mar, and 25 channels in Concepcion/Talcahuano. In addition to acquisitions, the
Company was awarded 40 nationwide channels of 800 MHz spectrum on June 9, 1998
in El Salvador. The Company paid $620,000 for the licenses, which have a 20 year
term.



                                      F-39
<PAGE>   84
On October 15, 1998, the Company signed a purchase agreement for the acquisition
of certain Chilean assets, including a license for 20 800 MHz channels in
Santiago, certain infrastructure and subscribers. On July 26, 1999, the Company
completed this acquisition for approximately $2,100,000. Approximately $220,000
represented the fair value of the net tangible assets. The excess purchase price
over the fair value of the net tangible assets acquired was approximately
$1,880,000, which was allocated to SMR licenses. These licenses will be
amortized over 23 years, the remaining term of the license.

On October 22, 1998, the Company signed an agreement to purchase 100% of the
shares of Trunking S.A. a Chilean non-operating development stage company
holding 800 MHz channels (i) 20 in Santiago and (ii) 176 in various other
Chilean cities. This acquisition closed on July 26, 1999. Total consideration
paid by the Company was $700,000, which was allocated entirely to SMR licenses.
These licenses will be amortized over 26 years, the remaining term of the
license.

In August 1998, the Company completed the acquisition of a concession for 10
nationwide channels of 800 MHz spectrum in El Salvador for approximately
$300,000. The acquisition of assets included certain infrastructure and
approximately 140 subscribers. Also, in September 1998, the Company acquired a
concession for 30 nationwide channels of 800 MHz spectrum in El Salvador for
approximately $949,000. The acquisition of assets also included certain
infrastructure and approximately 600 subscribers. In addition to acquisitions,
the Company was awarded licenses for 800 MHz channels in El Salvador as follows:
(i) 40 nationwide, the Company paid $620,000 for the channels, which have a 20
year term; (ii) 65 nationwide, the Company paid approximately $2.0 million for
the channels, which have a 20 year term; (iii) 25 nationwide, the Company paid
approximately $10,000. Of the total amount paid for the license acquisitions and
awards, approximately $200,000 represents the fair value of the net tangible
assets as of the date of acquisition and the excess purchase price of
approximately $3.7 million was allocated to SMR licenses. In October 1998, the
Company made a strategic decision to sell its investment in El Salvador. The
Company signed a letter of intent on November 11, 1998 for the sale of these
assets. Due to this letter of intent, the Company wrote down its investment in
El Salvador to the fair market value of $1.5 million and recognized a loss of
approximately $2.4 million. This letter of intent expired and the Company
decided to continue its operations in El Salvador during 1999.

Toward the end of 1999, the Company decided to focus on its Chile and Peru
operations. The Company entered into a letter of intent to sell its Ecuador
operations for approximately $2.0 million and, accordingly, wrote down its
investment in Ecuador to the fair market value of $2.0 million and recognized a
loss of approximately $280,000. The sale was consummated in January 2000 (see
Note 9).

NOTE 4. PROPERTY AND EQUIPMENT

The composition of property and equipment is as follows:

<TABLE>
<CAPTION>
                                    December 31,      December 31,
                                        1998              1999
                                    ------------      ------------
<S>                                 <C>               <C>
Network infrastructure              $  6,392,786      $  7,573,469
Radios                                 3,321,641         3,901,015
Computer equipment and software          515,225           675,483
Furniture and fixtures                   310,284           480,031
Leasehold improvements                   210,706           186,922
                                    ------------      ------------
                                      10,750,642        12,816,920
Accumulated depreciation              (2,357,801)       (3,932,716)
                                    ------------      ------------
Property and equipment, net         $  8,392,841      $  8,884,204
                                    ============      ============
</TABLE>

The Company depreciates network infrastructure over 10 years, radios over 5
years, computer equipment and software over 3 years, furniture and fixtures over
5 years, and leasehold improvements over the life of the lease. The Company had
no assets under capital lease at December 31, 1999.


                                      F-40
<PAGE>   85

Depreciation expense was $635,135, $1,424,966, and $1,871,407 for the years
ended December 31, 1997, 1998 and 1999, respectively.


NOTE 5. INCOME TAXES


The Company is not subject to income taxes under the laws of the Cayman Islands.
The Company's foreign participant subsidiaries are subject to foreign income
taxes in their respective taxing jurisdictions but have incurred no liability
for such taxes due to losses that have been incurred since inception. At
December 31, 1999, the Company's foreign participants have net operating and
deferred pre-operating loss carryforwards for income tax purposes of
approximately $13.1 million that expire starting in the year 2002. These
carryforwards are available to offset future taxable income in the respective
taxing jurisdictions in which they were incurred. The Company's foreign
participants in Peru, Ecuador, Chile and El Salvador are considered
pre-operating entities for income tax purposes, and therefore, the losses are
deferred for income tax purposes. The losses may be utilized against future
taxable income generated in the respective taxing jurisdictions over a period of
approximately four years commencing in 1998.


The Company's net deferred tax assets result primarily from the future benefit
of net operating loss carryforwards and deferred pre-operating losses.

Net deferred tax assets by country as of December 31, 1998 and 1999 are as
follows (in thousands):

<TABLE>
<CAPTION>
                                  Peru         Ecuador        Chile         Other         Total
                                --------      --------      --------      --------      --------
<S>                             <C>           <C>           <C>           <C>           <C>
December 31, 1998:
Net operating losses and
   deferred pre-operating
   losses                       $  1,482      $    804      $    436      $     27      $  2,749
Valuation allowance               (1,482)         (804)         (436)          (27)       (2,749)
                                --------      --------      --------      --------      --------
                                $   --        $   --        $   --        $   --        $   --
                                ========      ========      ========      ========      ========
December 31, 1999:
Net operating losses and
   deferred pre-operating
   losses                       $  2,439      $  1,049      $    760      $     81      $  4,329
Valuation allowance               (2,439)       (1,049)         (760)          (81)       (4,329)
                                $   --        $   --        $   --        $   --        $   --
                                ========      ========      ========      ========      ========
</TABLE>
The reconciliation of income taxes computed at the various country statutory
rates to the income tax benefit is as follows:

<TABLE>
<CAPTION>
                                               Years Ended December 31,
                                          ---------------------------------
                                            1997         1998         1999
                                          -------      -------      -------
<S>                                       <C>          <C>          <C>
Income tax benefit at statutory rates     $(1,660)     $(3,813)     $(1,580)
Increase in valuation allowance             1,660        3,813        1,580
                                          -------      -------      -------
Tax benefit                               $  --        $  --        $  --
                                          =======      =======      =======
</TABLE>

The expected income tax benefit at the statutory rate is based upon the
applicable foreign income tax rates, ranging from 32% to 40%, depending on the
country. There are no significant permanent differences other than the increase
in valuation allowance.

Due to the Company's history of operating losses, management of the Company has
not been able to conclude that it is more likely than not that the deferred tax
assets will be realized in future periods. Accordingly, the Company has provided
a full valuation allowance of these assets.

NOTE 6. COMMITMENTS AND CONTINGENCIES

           Recovery of Investments

Since its inception, the Company's efforts have been primarily directed towards
raising capital and acquiring, developing and operating SMR and other low-cost,
wireless communications networks. Further, the Company has made significant
investments in pre-operating entities in various Latin American countries whose
primary assets were SMR licenses. The Company began operations and
revenue-generating activity in the various countries as



                                       F-41
<PAGE>   86

follows: Peru in May 1996, Ecuador in March 1997, Chile in January 1998 and El
Salvador in September 1998. The ability of the Company to recover its investment
in property, equipment and spectrum and to generate positive cash flow and
operating profits is contingent upon a number of factors, including the
Company's ability to continue to build out and develop the SMR and other
low-cost, wireless communications networks it currently owns and to attract and
retain sufficient profitable subscribers on its existing systems and those which
are under development in sufficient numbers.

           Recoverability of Licenses

The terms of the Company's SMR license agreements contain provisions whereby the
Company must achieve certain levels of subscriber load and network build out. If
such commitments are not met, the Company could be subject to the revocation of
the applicable licenses.

Compliance with the terms of SMR licenses and certain regulatory requirements,
such as construction deadlines and minimum subscriber requirements, can be
difficult to meet. In addition, there can be no guarantee that in the future all
regulatory requirements will be met or that the Company will not lose any
applicable licenses as a result of its failure to meet such requirements.

The Company is not in compliance with certain terms of the concession agreements
in Peru including, homologation of equipment (certifying the equipment before
entering Peru), site to site transmission of signal (currently allowed only site
to handset), unauthorized transfer and use of channels between the Peruvian
companies and unauthorized use of certain frequencies granted. The Company has
applied to correct these non-compliance issues and is waiting for approval from
the Ministry. The Company believes that the applications will be approved and
result only in minimal fines, if any; however, there can be no assurance of such
outcome. The Company is currently not in compliance with certain minimum
subscriber loading requirements with respect to its licenses in the provinces
outside Lima/Callao and the Company's paging license. Failure to comply with
such requirements may subject the licenses relating to such channels to punitive
measures. The Company filed an amendment for each of the Company's two Peruvian
subsidiaries relating to these minimum subscriber loading requirements with the
Peruvian Ministry of Transportation, Communications, Housing and Construction
(the "Ministry"). The Company, based on its own discussions with the Peruvian
authorities and based on advice from the Company's outside legal advisors in
such matters, believes that the outcome of the items raised by the regulators
will not result in an impairment of the carrying amount of the Peruvian
licenses.

Operating Lease Commitments

The Company leases certain office facilities and transmission sites under
operating leases. Lease terms for office facilities range from one to five
years. Lease terms for transmission sites on buildings range from one to two
years, with varying renewal terms. Future minimum rental payments for such
office facilities and antenna site leases are as follows as of December 31,
1999.

<TABLE>
<S>                                         <C>
           2000                             $     485,361
           2001                                   433,120
           2002                                    55,137
           2003                                    14,154
           2004                                     8,256
           Thereafter                                   -
                                            -------------
                                            $     996,028
                                            =============
</TABLE>

Lease expense for the years ended December 31, 1997, 1998 and 1999 was $113,295,
$281,290 and $324,939, respectively.

               Litigation

In the normal course of business, the Company is subject to, and may become a
party to, litigation. In management's opinion, none of the matters currently in
litigation will have a material impact on the Company's financial position or
results of operations.



                                       F-42
<PAGE>   87

NOTE 7. SEGMENT INFORMATION AND GEOGRAPHIC DATA

In accordance with the provisions of SFAS No. 131, the Company has determined
that its reportable segments are strategic geographic units that develop and
operate SMR networks as well as the corporate unit which oversees all
operations. The Company is managed by country as each country may require a
slightly different business strategy. The accounting policies of the segments
are the same as those for the Company on a consolidated basis. The segments are
evaluated based upon gains in subscribers and based upon EBITDA. EBITDA
represents operating loss before depreciation and amortization and is not a
measurement under U.S. generally accepted accounting principles and may not be
similar to EBITDA measures of other companies.

The following information presents certain summarized balance sheet and
statement of operations data by geographic region as of December 31, 1999, 1998
and 1997 and for the years then ended (in 000's).


<TABLE>
<CAPTION>
                                                         Latin America
                                       --------------------------------------------------
                                                                                   El
                                         Peru         Ecuador        Chile       Salvador       Other      Elimination      Total
                                       --------      --------      --------      --------      --------    -----------     --------
<S>                                    <C>           <C>           <C>           <C>           <C>         <C>             <C>
December 31, 1999
Revenues                               $  3,127      $  1,723      $  1,264      $    352      $   --        $   --        $  6,466
EBITDA                                      383           458          (462)          (80)       (1,741)         --          (1,442)
Depreciation and amortization
                                          1,100           781           570            74             1          --           2,526
Operating income (loss)
                                           (717)         (603)       (1,032)         (154)       (1,742)         --          (4,248)
Property, plant and equipment, net        3,681           945         4,252             6          --            --           8,884

Spectrum, net                             7,463           711         5,424         1,291          --            --          14,889
Total assets                           $ 13,258      $  2,243      $ 10,714      $  1,415      $   --        $   (488)     $ 27,142
Capital expenditures
                                            268            41         2,283          --              12          --           2,604
December 31, 1998
Revenues                               $  4,251      $  2,538      $    415      $     82      $   --        $   --        $  7,286
EBITDA                                     (928)         (586)         (976)          (29)       (3,716)         --          (6,235)
Depreciation and amortization
                                            915           663           116            81             5          --           1,780
Operating income (loss)
                                         (1,843)       (1,249)       (1,092)       (2,515)       (3,720)         --         (10,419)
Property, plant and equipment, net        3,886         1,777         2,726             3          --            --           8,392

Spectrum, net                             7,569         1,203         3,218         1,298          --            --          13,288
Total assets                           $ 16,103      $  4,041      $  6,754      $  1,496      $     59      $ (1,451)     $ 27,002
Capital expenditures
                                          1,917         1,924         2,844          --            --            --           6,685
   December 31, 1997
Revenues                               $  2,939      $    775      $   --        $   --        $    (25)     $   --        $  3,689
EBITDA                                   (1,916)         (855)         --            --          (1,015)         --          (3,786)
Depreciation and amortization
                                            734           278          --            --               3          --           1,015
Operating loss                           (2,698)       (1,132)         --            --            (971)         --          (4,801)
Property, plant and equipment, net        3,690         1,066            32          --            --            --           4,788

Spectrum, net                             4,859         1,351          --            --            --            --           6,210
Total assets                           $ 11,440      $  3,181      $   --        $   --        $  1,091          --        $ 15,712
Capital expenditures
                                          4,615           802          --            --            --            --           5,417
</TABLE>

The Company conducts a significant portion of its business in Peru, Ecuador and
Chile. Accordingly, the Company's cash flow and its ability to make
distributions to the Parent Company is significantly dependent upon the cash
flow of its Peruvian and Ecuadorian subsidiaries. The Company's ability to
recover its investment in these subsidiaries, to fund operations in other
countries and to make distributions to the Parent Company, among other things,
depends to a significant degree on its ability to transfer funds from such
subsidiaries to the Parent Company.

The ability of the Company's subsidiaries to pay dividends or make loans or
advances to the Parent Company is subject to regulation within their respective
jurisdictions of organization and operation. While the existing laws and
regulations of these jurisdictions generally do not prohibit the Company's
subsidiaries from paying dividends or making loans or advances to the Parent
Company, there can be no assurance that such laws will continue to permit or
will not restrict such payments to be made.

Further, the Company is exposed to credit risk related to receivables
denominated in non-United States dollar currencies in these foreign countries.

                                       F-43
<PAGE>   88


In January and February 2000, the Company sold its Ecuador and El Salvador
operations (see Note 9).


Note 8.    PRO FORMA INFORMATION (UNAUDITED)

The following pro forma information for the year ended December 31, 1997 gives
effect to the disposition of U.S. Operations and the acquisitions of C-Comunica
and Transnet, as if each had occurred on January 1, 1997. The majority of the
1998 and 1999 acquisitions were of spectrum and non-operating entities, with no
revenue, and the impact on net loss applicable to common shareholders is not
significant. The pro forma financial information does not purport to represent
what the Company's results of operations would actually have been if such
transactions had in fact occurred on such date. The pro forma results presented
below are based upon currently available information and upon certain
assumptions that management believes are current circumstances.


<TABLE>
<CAPTION>
                                            For the Year Ended         Pro Forma       Pro Forma Combined
                                            December 31, 1997         Adjustments          (Unaudited)
                                            ------------------      ----------------   ------------------
<S>                                         <C>                     <C>                <C>
Revenues                                       $  3,689,477         $     92,457 (a)      $  3,781,934
Net loss applicable to common
  stockholders                                 $ (4,743,228)        $   (358,659)(b)      $ (5,101,887)
</TABLE>


(a)      For the seven-month period ended July 31, 1997 the revenues for
         C-Communica and Transnet were approximately $92,000.
(b)      For the seven-month period ended July 31, 1997 the net loss related to
         C-Comunica and Transnet was approximately $359,000 (includes additional
         amortization expense related to the step-up in value of the spectrum
         licenses acquired of $17,500).

Note 9. SUBSEQUENT EVENTS

On January 27, 2000, Company sold 100% of the shares of its Ecuador subsidiary
for $2.0 million. In a related transaction with the same party, the Company
purchased 100% of the shares of two Chilean companies having a combined total
800 MHz channels (i) 40 in Santiago and (ii) 725 in various Chilean cities for
approximately $4.0 million. Of this purchase price amount, $2.0 million was
offset by the $2.0 million sale price of the Ecuador subsidiary.

In February 2000, the Company entered into an agreement for the sale of all of
its El Salvador assets for approximately $200,000, except for its 800 MHz
licenses. As part of this transaction, the Company also entered into a
management arrangement with the purchaser whereby the purchaser will manage the
800 MHz licenses for a period of two years.




                                      F-44
<PAGE>   89

                                    SIGNATURE


Pursuant to the requirements of Securities Exchange Act of 1934, this report to
be signed by the following persons on behalf of the registrant and in capacities
and on the dates indicated.




                                     CENTENNIAL COMMUNICATIONS CORP.
                                     a Delaware corporation


                                     By: /s/Karl Maier
                                        ----------------------------------
                                         Karl Maier
                                         Director, President and
                                         Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

                                   Signatures

<TABLE>
<CAPTION>
SIGNATURES                      TITLE                                     DATE
----------                      -----                                     ----
<S>                             <C>                                       <C>
/s/ Nanny G. Laverde            Controller (Principal Financial and       March 28, 2000
----------------------------
Nanny G. Laverde                            Accounting Officer)

/s/ Steve C. Halstedt           Chairman of the Board                     March 28, 2000
----------------------------
Steve C. Halstedt

/s/ Steven W. Schovee           Director                                  March 28, 2000
----------------------------
Steven W. Schovee

/s/ Robert F. Mckenzie          Director                                  March 28, 2000
----------------------------
Robert F. Mckenzie

                                Director
----------------------------
Bernard G. Dvorak

/s/ William W. Sprague          Director                                  March 28, 2000
----------------------------
William W. Sprague

/s/ William D. Stanfill         Director                                  March 28, 2000
----------------------------
William D. Stanfill

/s/ Mark A. Leavitt             Director                                  March 28, 2000
----------------------------
Mark A. Leavitt

                                Director
----------------------------
Chris J. DeMarche
</TABLE>



                                       45