<PAGE>

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                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                               -----------------

                                   FORM 10-Q

(Mark One)
   [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

         For the quarterly period ended September 30, 2001

                                      OR

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

         For the transition period from ______________ to ______________

                     Commission file number ______________

                               -----------------

                              IWO HOLDINGS, INC.
            (Exact name of Registrant as specified in its charter)

                      Delaware                 14-1818487
                   (State or other          (I.R.S. Employer
                   jurisdiction of         Identification No.)
                  incorporation or                12203
                    organization)              (Zip Code)
                 52 Corporate Circle
                  Albany, New York
                (Address of Principal
                      Executive
                      Offices)
      Registrant's telephone number, including area code: (518) 862-6000

               319 Great Oaks Boulevard, Albany, New York, 12203
                 Former Address, if Changed Since Last Report

                               -----------------

   Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), Yes [X]  No [_] and (2)
has been subject to such filing requirements for the past 90 days. Yes  [X] No
[_]

   As of October 31, 2001, there were 37,618,060.8568 shares of the
Registrant's common stock outstanding (consisting of 15,000,000.0000 shares of
Class A Common Stock, 13,458,775.8595 shares of Class B Common Stock,
3,555,630.4609 shares of Class C Common Stock, 60,000.0000 shares of Class D
Common Stock and 5,543,654.5364 shares of Class E Common Stock).

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<PAGE>

                              IWO HOLDINGS, INC.

                         QUARTERLY REPORT ON FORM 10-Q
                                     INDEX

<TABLE>
<CAPTION>
                                                                                                 Page
                                                                                                Number
                                                                                                ------
<C>     <S>                                                                                     <C>
Part I  Financial Information

Item 1  Financial Statements (unaudited).......................................................    3
         Consolidated Balance Sheets as of December 31, 2000 and September 30, 2001............    3
         Consolidated Statements of Operations for the three months and nine months ended
           September 30, 2000 and September 30, 2001...........................................    5
         Consolidated Statements of Cash Flows for the nine months ended September 30, 2000 and
           September 30, 2001..................................................................    6
         Notes to Consolidated Financial Statements............................................    7

Item 2  Management's Discussion and Analysis of Financial Condition and Results of Operations..   23

Item 3  Quantitative and Qualitative Disclosures About Market Risk.............................   40

Part II Other Information

Item 1   Legal Proceedings.....................................................................   41

Item 2   Changes in Securities and Use of Proceeds.............................................   41

Item 3   Defaults Upon Senior Securities.......................................................   41

Item 4   Submission of Matters to a Vote of Security Holders...................................   42

Item 5   Other Information.....................................................................   42

Item 6   Exhibits and Reports on Form 8-K......................................................   42
</TABLE>

                                      2

<PAGE>

                                    PART I

                             FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                      IWO HOLDINGS, INC. AND SUBSIDIARIES

                    CONSOLIDATED BALANCE SHEETS (Unaudited)

                As of December 31, 2000 and September 30, 2001
                       (In thousands except share data)

<TABLE>
<CAPTION>
                                                                                  December 31, September 30,
                                                                                      2000         2001
                                                                                  ------------ -------------
                                     ASSETS
                                     ------
<S>                                                                               <C>          <C>
Current assets:
   Cash and cash equivalents.....................................................   $ 36,313     $ 22,550
   Accounts receivable, net of allowances of $312 and $511 at December 31,
     2000 and September 30, 2001, respectively...................................      4,218        7,372
   Short-term investments at amortized cost--held to maturity....................         --       42,393
   Inventory.....................................................................      2,567        4,263
   Prepaid expenses..............................................................      1,072        2,459
   Other current assets..........................................................        199        1,685
   Prepaid management fee--related party.........................................      1,000        1,000
   Restricted cash and U.S. Treasury obligations at amortized cost--held to
     maturity....................................................................         --       22,649
                                                                                    --------     --------
       Total current assets......................................................     45,369      104,371
Restricted cash..................................................................      8,000        8,000
Restricted cash and U.S. Treasury obligations at amortized cost--held to maturity         --       30,409
Investment securities at amortized cost--held to maturity........................                  34,230
Prepaid management fee--related party............................................      2,970        2,220
Property and equipment, net......................................................     69,555      109,003
Construction in progress.........................................................     33,009       47,082
Deferred costs, net..............................................................     14,898       20,017
Intangible assets, net...........................................................     58,874       54,245
Other............................................................................         24            4
                                                                                    --------     --------
       Total assets..............................................................   $232,699     $409,581
                                                                                    ========     ========
</TABLE>


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

                                      3

<PAGE>

                      IWO HOLDINGS, INC. AND SUBSIDIARIES

             CONSOLIDATED BALANCE SHEETS (Unaudited)--(Continued)

                As of December 31, 2000 and September 30, 2001
                       (In thousands except share data)

<TABLE>
<CAPTION>
                                                                                     As of         As of
                                                                                  December 31, September 30,
                                                                                      2000         2001
                                                                                  ------------ -------------
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
<S>                                                                               <C>          <C>
Current liabilities:
   Accounts payable..............................................................   $  6,388     $  2,950
   Accounts payable--related parties.............................................        213           86
   Due to Sprint.................................................................      7,711        5,373
   Accrued expenses..............................................................     12,432       22,337
   Accrued expenses--related parties.............................................        463          491
   Unearned revenue..............................................................      1,652        2,798
                                                                                    --------     --------
       Total current liabilities.................................................     28,859       34,035
Term loan........................................................................     80,000      140,000
Senior notes.....................................................................         --      152,308
                                                                                    --------     --------
       Total liabilities.........................................................    108,859      326,343
                                                                                    --------     --------
Redeemable common stock..........................................................        346          173
                                                                                    --------     --------
Commitments and contingencies

Stockholders' equity:
   Preferred stock (nonvoting)--$.01 par value, 500,000 shares authorized, none
     issued and outstanding......................................................         --           --
   Common stock, Class A (nonvoting)--$.01 par value, 15,000,000 shares
     authorized, issued and outstanding..........................................        150          150
   Common stock, Class B (voting)--$.01 par value, 18,750,000 shares
     authorized, 13,274,171 and 13,532,710 shares issued at
     December 31, 2000 and September 30, 2001, respectively......................        133          136
   Common stock, Class C (nonvoting)--$.01 par value, 18,750,000 shares
     authorized, 3,555,630 shares issued and outstanding.........................
                                                                                          35           35
   Common stock, Class D (voting)--$.01 par value, 60,000 shares authorized,
     issued and outstanding......................................................          1            1
   Common stock, Class E (nonvoting)--$.01 par value, 5,545,000 shares
     authorized, 5,543,654 shares issued and outstanding.........................         55           55
   Common stock (voting)--$.01 par value, 58,105,000 shares authorized, none
     issued and outstanding......................................................         --           --
   Additional paid-in capital....................................................    175,271      184,129
   Deficit accumulated during development stage..................................     (1,076)      (1,076)
   Retained deficit..............................................................    (50,080)     (99,593)
                                                                                    --------     --------
                                                                                     124,489       83,837
Treasury stock at cost (43,856 and 73,935 Class B shares at December 31, 2000 and
  September 30, 2001), respectively..............................................       (252)        (425)
Promissory notes receivable......................................................       (743)        (347)
                                                                                    --------     --------
       Total stockholders' equity................................................    123,494       83,065
                                                                                    --------     --------
       Total liabilities and stockholders' equity................................   $232,699     $409,581
                                                                                    ========     ========
</TABLE>

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

                                      4

<PAGE>

                      IWO HOLDINGS, INC. AND SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF OPERATIONS--(Unaudited)

    For the Three Months and Nine Months Ended September 30, 2000 and 2001
                       (In thousands except share data)

<TABLE>
<CAPTION>
                                          For the            For the            For the            For the
                                        Three Months       Three Months       Nine Months        Nine Months
                                           Ended              Ended              Ended              Ended
                                     September 30, 2000 September 30, 2001 September 30, 2000 September 30, 2001
                                     ------------------ ------------------ ------------------ ------------------
<S>                                  <C>                <C>                <C>                <C>
Net revenues........................    $    17,387        $    32,245        $    39,803        $    76,951
                                        -----------        -----------        -----------        -----------
Operating expenses:
   Costs of services and
     equipment (exclusive of
     depreciation and
     amortization shown below)......         13,727             25,408             32,026             61,254
   Selling and marketing............          4,776              8,705             11,762             19,944
   General and administrative:
       Noncash stock-based
         compensation...............            213                 26                844                334
       Related parties..............            832                380              1,593              1,405
       Other general and
         administrative.............          4,135              5,066             11,217             14,024
   Depreciation and amortization....          3,687              4,924              8,459             13,492
                                        -----------        -----------        -----------        -----------
       Total operating expenses.....         27,370             44,509             65,901            110,453
                                        -----------        -----------        -----------        -----------
Operating loss......................         (9,983)           (12,264)           (26,098)           (33,502)
   Interest income..................            238              1,807              1,536              5,975
   Interest expense.................         (1,041)            (6,124)            (2,055)           (16,731)
   Interest expense--related
     parties........................           (207)              (378)              (401)            (1,145)
   Amortization of debt issuance
     and offering costs.............           (790)              (709)            (2,047)            (2,605)
   Other debt financing fees........         (1,089)              (418)            (2,843)            (1,505)
                                        -----------        -----------        -----------        -----------
       Net loss.....................    $   (12,872)       $   (18,086)       $   (31,908)       $   (49,513)
                                        ===========        ===========        ===========        ===========
Loss per share
   Basic............................    $      (.42)       $      (.48)       $     (1.05)       $     (1.32)
   Diluted..........................    $      (.42)       $      (.48)       $     (1.05)       $     (1.32)
Weighted average shares
  outstanding
   Basic............................     30,261,000         37,618,000         30,261,000         37,540,000
   Diluted..........................     30,261,000         37,618,000         30,261,000         37,540,000
</TABLE>


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

                                      5

<PAGE>

                      IWO HOLDINGS, INC. AND SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF CASH FLOWS--(Unaudited)

             For the Nine Months Ended September 30, 2000 and 2001
                                (In thousands)

<TABLE>
<CAPTION>
                                                                               For the            For the
                                                                             Nine Months        Nine Months
                                                                                Ended              Ended
                                                                          September 30, 2000 September 30, 2001
                                                                          ------------------ ------------------
<S>                                                                       <C>                <C>
Net cash used in operating activities....................................     $  (9,853)         $ (32,165)
                                                                              ---------          ---------
Cash flows from investing activities:....................................
   Deferred acquisition costs............................................          (740)                --
   Purchase of Sprint assets.............................................      (116,405)                --
   Purchase of investment securities--held to maturity...................            --           (105,328)
   Proceeds from maturities of investment securities.....................            --             28,079
   Restricted cash.......................................................        (8,000)                --
   Restricted cash and U.S. Treasury obligations at amortized cost--held
     to maturity.........................................................            --            (53,057)
   Purchase of property and equipment....................................        (8,406)            (8,645)
   Construction in progress..............................................       (15,475)           (55,543)
                                                                              ---------          ---------
          Net cash used in investing activities..........................      (149,026)          (194,494)
                                                                              ---------          ---------
Cash flows from financing activities:
   Gross proceeds received from equity investors for payment of
     promissory notes....................................................            --                396
   Stock option exercises................................................           272                397
   Proceeds received from issuance of debt...............................        80,000             60,000
   Proceeds received from issuance of senior notes and warrants..........            --            160,000
   Purchase of treasury stock............................................          (169)              (173)
   Payment for offering costs............................................        (1,015)            (7,724)
   Payment of debt issuance costs........................................        (2,221)                --
                                                                              ---------          ---------
          Net cash provided by financing activities......................        76,867            212,896
                                                                              ---------          ---------
Net decrease in cash and cash equivalents................................       (82,012)           (13,763)
Cash and cash equivalents, beginning of period...........................       104,752             36,313
                                                                              ---------          ---------
Cash and cash equivalents, end of period.................................     $  22,740          $  22,550
                                                                              =========          =========
Non-cash:
   Offering costs included in accrued expenses...........................     $     480          $      --
   Property and equipment included in accounts payable...................             4                245
   Property and equipment included in accrued expenses...................            --              1,109
   Construction in progress included in accounts payable.................         2,701                622
   Construction in progress included in accrued expenses.................            --              2,523
</TABLE>



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

                                      6

<PAGE>

                              IWO HOLDINGS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  (Unaudited)


1. Basis of Presentation

   The accompanying consolidated financial statements are unaudited and have
been prepared by management. The consolidated financial statements included
herein include the accounts of IWO Holdings, Inc. and its wholly-owned
subsidiaries, Independent Wireless One Corporation and Independent Wireless One
Leased Realty Corporation (collectively "IWO" or the "Company") for all periods
presented. In the opinion of management, all adjustments, consisting of normal
recurring adjustments, considered necessary for fair presentation have been
included. The results of operations for the three and nine months ended
September 30, 2001 are not indicative of the results that may be expected for
the full fiscal year of 2001. The financial information presented herein should
be read in conjunction with the Company's Form S-1 and Form S-4 registration
statements which include information and disclosures not included herein. All
significant intercompany accounts or balances have been eliminated in
consolidation. Certain amounts have been reclassified to conform to the current
period presentation.

2. Description of the Organization

   Independent Wireless One, LLC, (the "LLC") a limited liability company, was
formed on August 22, 1997 by a consortium of independent local telephone
companies (the "Founders") to become a provider of wireless telecommunications
and data services. On September 9, 1998 the LLC changed its status to a
C-corporation and changed its name to Independent Wireless One Corporation.

   On October 29, 1999, IWO Holdings, Inc. was formed to hold an investment in
Independent Wireless One Corporation ("Corp"). On December 20, 1999, the
Founders of Independent Wireless One Corporation exchanged their equity
ownership, representing in the aggregate 100% of the outstanding capital stock
of Corp for an aggregate of 6,300,000 shares of Class B common stock of IWO
Holdings, Inc. Further, certain investors and management invested approximately
$135,000,000 into IWO Holdings, Inc., for approximately 79% of the equity of
the Company. IWO Holdings, Inc. exchanged common stock, warrants and options to
purchase the non-monetary assets of Corp. As a result of the transaction,
Independent Wireless One Corporation became a wholly-owned subsidiary of IWO
Holdings, Inc. (collectively referred to as "IWO" or the "Company").

   In February 2000, the Company formed Independent Wireless One Leased Realty
Corporation to hold all leasehold interests in the retail stores,
administrative offices and cell site leases.

3. Net Loss Per Share

   The Company computes net loss per common share in accordance with SFAS No.
128 "Earnings per Share". Basic and diluted loss available to common
stockholders per share of common stock is computed by dividing net loss
available to common stockholders for each period by the weighted-average
outstanding common shares. No conversion of common stock equivalents (options
or warrants) has been assumed in the calculations since the effect would be
antidilutive. As a result, the number of weighted-average outstanding common
shares as well as the amount of net loss per share are the same for basic and
diluted loss per share calculations for all periods presented. There are two
items that could potentially dilute basic earnings per share in the future.
These items include the common stock options and warrants. These items will be
included in the diluted earnings per share calculation when dilutive.

4. Investments

   The Company's investments consist of debt securities (U.S. Treasury
obligations and corporate debt securities). In accordance with SFAS No. 115,
debt securities have been classified in the accompanying

                                      7

<PAGE>

                              IWO HOLDINGS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                                  (Unaudited)

consolidated balance sheets as held-to-maturity securities and are reported at
amortized cost because the Company has the positive intent and the ability to
hold these debt securities to maturity. Market value is determined by quoted
market prices.

   The amortized cost and approximate fair value of restricted investment
securities held to maturity at September 30, 2001 by contractual maturity
(which are restricted for future interest payments on the Senior Notes) are
summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                      Gross      Gross
                          Amortized Unrealized Unrealized Market
                            Cost      Gains      Losses   Value
                          --------- ---------- ---------- -------
<S>                       <C>       <C>        <C>        <C>
U.S. Treasury obligations  $50,975    $1,192      $--     $52,167
</TABLE>

<TABLE>
<CAPTION>
                             Amortized Market
                               Cost    Value
                             --------- -------
<S>                          <C>       <C>
Due in one year or less.....  $20,945  $21,171
Due in one year through five   30,030   30,996
                              -------  -------
                              $50,975  $52,167
                              =======  =======
</TABLE>

   The above table excludes $2,083,000 of cash and accrued interest receivable
restricted for future interest payments on the Senior Notes.

   The amortized cost and approximate fair value of investment securities held
to maturity at September 30, 2001 by contractual maturity (excluding restricted
securities) are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                             Gross      Gross
                                 Amortized Unrealized Unrealized Market
                                   Cost      Gains      Losses   Value
                                 --------- ---------- ---------- -------
       <S>                       <C>       <C>        <C>        <C>
       U.S. Treasury obligations  $22,124    $  333      $--     $22,457
       Corporate debt securities   54,499       964       --      55,463
                                  -------    ------      ---     -------
                                  $76,623    $1,297      $--     $77,920
                                  =======    ======      ===     =======
</TABLE>


<TABLE>
<CAPTION>
                                              Amortized Market
                                                Cost    Value
                                              --------- -------
                 <S>                          <C>       <C>
                 Due in one year or less.....  $42,393  $42,903
                 Due in one year through five   34,230   35,017
                                               -------  -------
                                               $76,623  $77,920
                                               =======  =======
</TABLE>

   There were no sales of investment securities held to maturity during the
nine months ended September 30, 2001.


                                      8

<PAGE>

                              IWO HOLDINGS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                                  (Unaudited)


5. Property and Equipment

   Property and equipment consist of the following at December 31, 2000 and
September 30, 2001 (in thousands):

<TABLE>
<CAPTION>
                                                     2000      2001
                                                    -------  --------
          <S>                                       <C>      <C>
          Land..................................... $   169  $    169
          Building and building improvements.......   5,943     5,943
          Network equipment........................  62,779   107,410
          Furniture and office equipment...........   3,871     4,396
          Computer software........................   1,261     1,660
          Vehicles.................................     926     1,149
          Leasehold improvements...................   1,419     3,948
                                                    -------  --------
                                                     76,368   124,675
          Accumulated depreciation and amortization  (6,813)  (15,672)
                                                    -------  --------
                                                    $69,555  $109,003
                                                    =======  ========
</TABLE>

6. Deferred Costs

   Deferred costs consist of the following at December 31, 2000 and September
30, 2001 (in thousands):

<TABLE>
<CAPTION>
                                                               2000     2001
                                                              -------  -------
 <S>                                                          <C>      <C>
 Debt issuance costs......................................... $15,591  $15,591
 Deferred offering costs.....................................   2,234    9,958
                                                              -------  -------
                                                               17,825   25,549
 Accumulated amortization of debt issuance and offering costs  (2,927)  (5,532)
                                                              -------  -------
                                                              $14,898  $20,017
                                                              =======  =======
</TABLE>

7. Sprint Payable

   The Sprint payable consists of amounts owed to Sprint PCS for services
provided directly by Sprint PCS such as customer care, customer billing and the
8% affiliation fee, or passed through items from various third party vendors
such as purchases of handsets and accessories, indirect equipment subsidies,
advertising and various network operation expenses. At December 31, 2000 and
September 30, 2001, the amount payable to Sprint PCS totaled $7,711,000 and
$5,373,000, respectively.

8. Long-Term Debt

   Long-term debt consists of the following at December 31, 2000 and September
30, 2001 (in thousands):

<TABLE>
<CAPTION>
                                              2000     2001
                                             ------- --------
                   <S>                       <C>     <C>
                   Senior Credit Facility... $80,000 $140,000
                   14% Senior Notes due 2011      --  152,308
                                             ------- --------
                                             $80,000 $292,308
                                             ======= ========
</TABLE>

                                      9

<PAGE>

                              IWO HOLDINGS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                                  (Unaudited)


  (a) Senior Credit Facility

   In December, 1999, the Company entered into a secured credit facility (the
Senior Credit Facility) which was amended on June 30, and December 8, 2000,
respectively, with a group of commercial lenders, under which the Company may
borrow up to $240,000,000 in the aggregate consisting of (i) up to $70,000,000
in revolving loans (the Senior Revolving Credit Facility) with a maturity date
eight years from the effective date of the loan, (ii) a $120,000,000 term loan
(the Tranche A Term Loan) with a maturity date of March 2008, and (iii) a
$50,000,000 term loan (the Tranche B Term Loan) with a maturity date of
September 2008. The Senior Credit Facility, as amended, provides that, subject
to certain conditions, the Company may request an additional tranche of loans
in the amount of $25,000,000 in the aggregate on or prior to March 31, 2002
from the lenders. No lender is obligated to subscribe to the new commitment
and, in the event that the total commitment from the lenders is less than
$25,000,000, the Company has the right to arrange the financing of the deficit
amount with other financial institutions (subject to the approval of the
administrative agent).

   Beginning in March 2004, principal repayments will be made in 17 quarterly
installments for the Tranche A Term Loan and 19 quarterly installments for the
Tranche B Term Loan. Quarterly principal repayments for the Tranche A Term Loan
will range from $2,000,000 on March 31, 2004 to $12,000,000 on March 31, 2008.
Quarterly principal payments for the Tranche B Term Loan will range from
$250,000 on March 31, 2004 to $31,000,000 on September 30, 2008. Interest
payments on the Senior Credit Facility are due quarterly.

   The Senior Credit Facility contains a prepayment provision whereby certain
amounts borrowed must be repaid upon the occurrence of certain specified events
and conditions, including issuance of capital stock, proceeds from certain
additional indebtedness, certain asset sales and excess cash flows as defined
in the agreement.

   The interest rate applicable to the Senior Credit Facility is based on, at
the Company's option, (i) LIBOR (Eurodollar Loans) plus the Applicable Margin,
as defined, or (ii) the higher of the administrative agent's prime rate or the
Federal Funds Effective Rate (ABR Loans), plus the Applicable Margin, as
defined. The Applicable Margin for Eurodollar Loans will range from 1.5% to
3.75% based on certain events involving the Company, as specified. The
Applicable Margin for ABR Loans will range from 0.50% to 2.75% based on certain
events by the Company, as specified.

   The loans from the Senior Credit Facility are subject to a quarterly
commitment fee on the unborrowed portion, which ranges from 0.75% to 1.25% of
the available portion of the Tranche A Term Loan, the Tranche B Term Loan, and
the Senior Revolving Credit Facility.

   The Company must comply with certain financial and operating covenants. The
most restrictive financial covenants include debt to equity, debt to EBITDA,
interest coverage and fixed charge coverage ratios, as defined in the Senior
Credit Facility.

  (b) Senior Notes

   In February 2001, IWO Holdings, Inc. issued 160,000 units, each consisting
of $1,000 principal amount of 14% Senior Notes due January 15, 2011 and one
warrant to purchase 12.50025 shares of class C common stock at an exercise
price of $7.00 per share. Interest is payable semi-annually on January 15 and
July 15 of each year. The gross proceeds from the offering were $160,000,000,
which have been allocated to the fair value of the Senior Notes ($152,042,000)
and warrants ($7,958,000). Significant terms of the Senior Notes are:

   Guarantee--Independent Wireless One Corporation is the sole guarantor of the
Senior Notes. All of the Company's restricted subsidiaries formed or acquired
after the issuance of the notes that guarantee the Company's senior credit
facility will also guarantee the notes.

                                      10

<PAGE>

                              IWO HOLDINGS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                                  (Unaudited)


   Ranking--The Senior Notes are senior unsecured obligations of IWO Holdings,
Inc., rank equally with all its existing and future senior debt and rank senior
to all its future subordinated debt.

   Interest Reserve--Concurrently with the closing of the Senior Notes, a
portion of the proceeds of the offering was used to purchase a portfolio of
U.S. government securities which will generate sufficient proceeds to make the
first six scheduled interest payments on the Senior Notes. The account holding
the investment securities and all of the securities and other items contained
in the account have been pledged to the trustee for the benefit of the holders
of the notes.

   Optional Redemption--During the first thirty six (36) months after the
Senior Notes offering, the Company may use net proceeds of an equity offering
to redeem up to 35% of the notes originally issued at a redemption price of
114% of the value of the notes as of the date of redemption.

   Change of Control--Upon a change of control as defined by the senior note
indenture, the Company will be required to make an offer to purchase the Senior
Notes at a price equal to 101% of the principal amount together with accrued
and unpaid interest.

   Restrictive Covenants--The indenture governing the Senior Notes contains
covenants that, among other things and subject to certain exceptions, limit the
ability of IWO Holdings, Inc. and the ability of its restricted subsidiaries to
incur additional debt, pay dividends, redeem capital stock or make other
restrictive payments or investments as defined by the Senior Notes offering,
create liens on assets, merge, consolidate, or dispose of assets, or enter into
certain transactions with affiliates or into certain sales and leaseback
transactions.

   The Senior Notes have cross default provisions whereby an event of default
which results in acceleration of the maturity on other indebtedness of the
Company triggers a default of the Senior Notes.

   The warrants will become exercisable on February 2, 2002 and expire on
January 15, 2011.

9. Recent Accounting Pronouncements

   In June 2001, Statement of Financial Accounting Standards (SFAS) No. 141,
"Business Combinations," was issued by the Financial Accounting Standards Board
(FASB). SFAS No. 141 requires the purchase method of accounting to be used for
all business combinations initiated after June 30, 2001. The Company does not
expect the adoption of this standard to have a material effect on its financial
statements.

   In June 2001, SFAS No. 142, "Goodwill and Other Intangible Assets," was
issued by the FASB. SFAS No. 142 changes the accounting for goodwill from an
amortization method to an impairment-only approach. Amortization of goodwill,
including goodwill recorded in past business combinations, will cease upon
adoption of this statement. The Company plans to adopt SFAS No. 142 on its
effective date of January 1, 2002. The Company expects annual amortization
expense to decrease by approximately $2.5 million due to the effect of this
statement.

   In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 requires the fair value of a liability for
an asset retirement obligation to be recognized in the period in which it is
incurred if a reasonable estimate of fair value can be made. The associated
asset retirement costs are capitalized as part of the carrying amount of the
long-lived asset. SFAS No. 143 is effective for fiscal years beginning after
June 15, 2002. The Company believes the adoption of this Statement will not
have a material impact on its financial statements.

   In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets, which supersedes SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of, and the accounting and reporting provisions of APB No. 30. SFAS No. 144
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets and is effective for fiscal years beginning after December
15, 2001, and interim periods within those fiscal years. The Company is
currently reviewing this statements to determine its effect on the Company's
financial statements.

                                      11

<PAGE>

                              IWO HOLDINGS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                                  (Unaudited)


10. Condensed Consolidating Financial Information

   Independent Wireless One Leased Realty Corporation (the "Non-Guarantor"), a
100% wholly-owned subsidiary of Independent Wireless One Corporation, is
precluded from guaranteeing the debt of IWO Holdings, Inc. based on current
agreements in effect. Independent Wireless One Corporation is not restricted
from serving as a guarantor of the IWO Holdings, Inc. debt.

   Independent Wireless One Leased Realty Corporation holds all of the cell
site leases and certain leases related to the administrative office facilities
and retail stores. Operating expenses are comprised of rent expense from these
leases. Independent Wireless One Leased Realty Corporation has charged
Independent Wireless One Corporation a fee equal to its rent expense for use of
its leased cell sites, office and retail space.

   The information which follows presents the condensed consolidating financial
position as of December 31, 2000 and September 30, 2001 and the condensed
consolidating results of operations for the three months and nine months ended
September 30, 2000 and September 30, 2001 and condensed consolidating cash
flows for the nine months ended September 30, 2000 and September 30, 2001 of
(a) the Parent Company, IWO Holdings, Inc., (b) the "Guarantor", Independent
Wireless One Corporation, and (c) the "Non-Guarantor", Independent Wireless One
Leased Realty Corporation, and includes eliminating entries and the Company on
a consolidated basis.

                                      12

<PAGE>

                      IWO HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                     CONDENSED CONSOLIDATING BALANCE SHEET

                            As of December 31, 2000
                       (In thousands except share data)

<TABLE>
<CAPTION>
                                                                       Independent
                                                                        Wireless
                                                                           One
                                                                         Leased
                                                          Independent    Realty
                                                IWO       Wireless One Corporation
                                           Holdings, Inc. Corporation     (Non-
                                              (Parent)    (Guarantor)  Guarantor)  Eliminations Consolidated
                                           -------------- ------------ ----------- ------------ ------------
                 ASSETS
                 ------
<S>                                        <C>            <C>          <C>         <C>          <C>
Current assets:
   Cash and cash equivalents..............    $     --      $ 36,313     $   --     $      --     $ 36,313
   Accounts receivable, net of allowances
     of $312..............................          --         4,218         --            --        4,218
   Intercompany receivable................         272           906        350        (1,528)          --
   Inventory..............................          --         2,567         --            --        2,567
   Prepaid expenses.......................          --           418        654            --        1,072
   Other current assets...................          --           199         --            --          199
   Prepaid management fee--related party..          --         1,000         --            --        1,000
                                              --------      --------     ------     ---------     --------
       Total current assets...............         272        45,621      1,004        (1,528)      45,369

Restricted cash...........................          --         8,000         --            --        8,000
Investment in subsidiaries................     136,594            --         --      (136,594)          --
Prepaid management fee--related party.....          --         2,970         --            --        2,970
Property and equipment, net...............          --        69,555         --            --       69,555
Construction in progress..................          --        33,009         --            --       33,009
Deferred costs, net.......................          --        14,898         --            --       14,898
Intangible assets, net....................          --        58,874         --            --       58,874
Other.....................................          --            24         --            --           24
                                              --------      --------     ------     ---------     --------
       Total assets.......................    $136,866      $232,951     $1,004     $(138,122)    $232,699
                                              ========      ========     ======     =========     ========
</TABLE>






                                      13

<PAGE>

                      IWO HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              CONDENSED CONSOLIDATING BALANCE SHEET--(Continued)

                            As of December 31, 2000
                       (In thousands except share data)

<TABLE>
<CAPTION>
                                                                                       Independent
                                                                        Independent   Wireless One
                                                              IWO       Wireless One  Leased Realty
                                                         Holdings, Inc. Corporation    Corporation
                                                            (Parent)    (Guarantor)  (Non-Guarantor) Eliminations Consolidated
                                                         -------------- ------------ --------------- ------------ ------------
         LIABILITIES AND STOCKHOLDERS' EQUITY
         ------------------------------------
<S>                                                      <C>            <C>          <C>             <C>          <C>
Current liabilities:
   Accounts payable.....................................    $     --      $  6,388       $   --       $      --     $  6,388
   Accounts payable--related parties....................          --           213           --              --          213
   Intercompany payable.................................         252           622          654          (1,528)          --
   Due to Sprint........................................          --         7,711           --              --        7,711
   Accrued expenses.....................................          --        12,082          350              --       12,432
   Accrued expenses--related parties....................          --           463           --              --          463
   Unearned revenue.....................................          --         1,652           --              --        1,652
                                                            --------      --------       ------       ---------     --------
       Total current liabilities........................         252        29,131        1,004          (1,528)      28,859
Term loan...............................................          --        80,000           --              --       80,000
                                                            --------      --------       ------       ---------     --------
Total liabilities.......................................         252       109,131        1,004          (1,528)     108,859
                                                            --------      --------       ------       ---------     --------
Redeemable common stock.................................         346            --           --              --          346
                                                            --------      --------       ------       ---------     --------
Commitments and contingencies
Stockholders' equity:
   Preferred stock (nonvoting)--$.01 par value, 500,000
     shares authorized, none issued and outstanding.....          --            --           --              --           --
   Common stock, Class A (nonvoting)--$.01 par value,
     15,000,000 shares authorized, issued and
     outstanding........................................         150            --           --              --          150
   Common stock, Class B (voting) $.01 par value,
     18,750,000 shares authorized, and 13,274,171
     shares issued......................................         133            --           --              --          133
   Common stock, Class C (nonvoting)--$.01 par value,
     18,750,000 shares authorized, 3,555,630 shares
     issued and outstanding.............................          35            --           --              --           35
   Common stock, Class D (voting)--$.01 par value,
     60,000 shares authorized, issued and outstanding...           1            --           --              --            1
   Common stock, Class E (nonvoting)--$.01 par value,
     5,545,000 shares authorized, 5,543,654 shares
     issued and outstanding.............................          55            --           --              --           55
   Common stock, (voting)--$.01 par value, 58,105,000
     shares authorized, none issued and outstanding.....          --            --           --              --           --
Capital stock...........................................          --         2,750           --          (2,750)          --
Additional paid-in capital..............................     187,302       172,969           --        (185,000)     175,271
Deficit accumulated during developmental stage..........      (1,076)       (1,076)          --           1,076       (1,076)
Retained deficit........................................     (50,080)      (50,080)          --          50,080      (50,080)
                                                            --------      --------       ------       ---------     --------
                                                             136,520       124,563           --        (136,594)     124,489
Treasury stock at cost (43,856 Class B shares)..........        (252)           --           --              --         (252)
Promissory notes receivable.............................          --          (743)          --              --         (743)
                                                            --------      --------       ------       ---------     --------
       Total stockholders' equity.......................     136,268       123,820           --        (136,594)     123,494
                                                            --------      --------       ------       ---------     --------
       Total liabilities and stockholders' equity.......    $136,866      $232,951       $1,004       $(138,122)    $232,699
                                                            ========      ========       ======       =========     ========
</TABLE>

                                      14

<PAGE>

                      IWO HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET

                           As of September 30, 2001
                       (In thousands except share data)

<TABLE>
<CAPTION>
                                                                     Independent
                                                      Independent   Wireless One
                                             IWO      Wireless One  Leased Realty
                                        Holdings,Inc. Corporation    Corporation
                                          (Parent)    (Guarantor)  (Non-Guarantor) Eliminations Consolidated
                                        ------------- ------------ --------------- ------------ ------------
<S>                                     <C>           <C>          <C>             <C>          <C>
                ASSETS
------
Current assets:
   Cash and cash equivalents...........   $     --      $ 22,550       $   --       $      --     $ 22,550
   Accounts receivable net of
     allowances of $511................         --         7,372           --              --        7,372
   Short-term investments at
     amortized cost--held to maturity..         --        42,393           --              --       42,393
   Intercompany receivable.............    154,921        55,249          365        (210,535)          --
   Inventory...........................         --         4,263           --              --        4,263
   Prepaid expenses....................         --           693        1,766              --        2,459
   Other current assets................         --         1,685           --              --        1,685
   Prepaid management fee--related
     party.............................         --         1,000           --              --        1,000
   Restricted cash and US Treasury
     obligations at amortized cost-
     held to maturity..................     22,649            --           --              --       22,649
                                          --------      --------       ------       ---------     --------
       Total current assets............    177,570       135,205        2,131        (210,535)     104,371
Restricted cash........................         --         8,000           --              --        8,000
Restricted cash and US Treasury
  obligations at amortized cost-held to
  maturity.............................     30,409            --           --              --       30,409
Investment securities at amortized
  cost--held to maturity...............         --        34,230           --              --       34,230
Investment in subsidiary...............     97,761            --           --         (97,761)          --
Prepaid management fee--related party..         --         2,220           --              --        2,220
Property and equipment, net............         --       109,003           --              --      109,003
Construction in progress...............         --        47,082           --              --       47,082
Deferred costs, net....................         --        20,017           --              --       20,017
Intangible assets, net.................         --        54,245           --              --       54,245
Other..................................         --             4           --              --            4
                                          --------      --------       ------       ---------     --------
       Total assets....................   $305,740      $410,006       $2,131       $(308,296)    $409,581
                                          ========      ========       ======       =========     ========
</TABLE>

                                      15

<PAGE>

                      IWO HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

         UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET--(Continued)

                           As of September 30, 2001
                       (In thousands except share data)

<TABLE>
<CAPTION>
                                                                     Independent   Independent
                                                                      Wireless    Wireless One
                                                            IWO          One      Leased Realty
                                                       Holdings,Inc. Corporation   Corporation
                                                         (Parent)    (Guarantor) (Non-Guarantor) Eliminations Consolidated
                                                       ------------- ----------- --------------- ------------ ------------
<S>                                                    <C>           <C>         <C>             <C>          <C>
       LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
   Accounts payable...................................   $     --     $  2,950       $   --       $      --     $  2,950
   Accounts payable--related parties..................         --           86           --              --           86
   Intercompany payable...............................     53,483      155,286        1,766        (210,535)          --
   Due to Sprint......................................         --        5,373           --              --        5,373
   Accrued expenses...................................      4,667       17,305          365              --       22,337
   Accrued expenses--related parties..................         --          491           --              --          491
   Unearned revenue...................................         --        2,798           --              --        2,798
                                                         --------     --------       ------       ---------     --------
       Total current liabilities......................     58,150      184,289        2,131        (210,535)      34,035
Term loan.............................................         --      140,000           --              --      140,000
Senior notes..........................................    152,308           --           --              --      152,308
                                                         --------     --------       ------       ---------     --------
       Total liabilities..............................    210,458      324,289        2,131        (210,535)     326,343
                                                         --------     --------       ------       ---------     --------
Redeemable common stock...............................        173           --           --              --          173
                                                         --------     --------       ------       ---------     --------
Commitments and contingencies
Stockholders' Equity:
   Preferred stock (nonvoting)--$.01 par value,
     500,000 shares authorized, none issued and
     outstanding......................................         --           --           --              --           --
   Common stock, Class A (nonvoting)--$.01 par
     value, 15,000,000 shares authorized, issued
     and outstanding..................................        150           --           --              --          150
   Common stock, Class B (voting)--$.01 par
     value, 18,750,000 shares authorized and
     13,532,710 shares issued.........................        136           --           --              --          136
   Common stock, Class C (nonvoting)--$.01 par
     value, 18,750,000 shares authorized,
     3,555,630 shares issued and outstanding..........         35           --           --              --           35
   Common stock, Class D (voting)--$.01 par
     value, 60,000 shares authorized, issued and
     outstanding......................................          1           --           --              --            1
   Common stock, Class E (non-voting)--$.01 par
     value, 5,545,000 shares authorized, 5,543,654
     shares issued and outstanding....................         55           --           --              --           55
   Common stock (voting)--$.01 par value,
     58,105,000 shares authorized, none issued and
     outstanding......................................         --           --           --              --           --
Capital stock.........................................         --        2,750           --          (2,750)          --
Additional paid-in capital............................    195,826      173,303           --        (185,000)     184,129
Deficit accumulated during developmental stage........     (1,076)      (1,076)          --           1,076       (1,076)
Retained deficit......................................    (99,593)     (88,913)          --          88,913      (99,593)
                                                         --------     --------       ------       ---------     --------
                                                           95,534       86,064           --         (97,761)      83,837
Treasury stock at cost (73,935 Class B Shares)........       (425)          --           --              --         (425)
Promissory notes receivable...........................         --         (347)          --              --         (347)
                                                         --------     --------       ------       ---------     --------
       Total stockholders' equity.....................     95,109       85,717           --         (97,761)      83,065
                                                         --------     --------       ------       ---------     --------
       Total liabilities and stockholders' equity.....   $305,740     $410,006       $2,131       $(308,296)    $409,581
                                                         ========     ========       ======       =========     ========
</TABLE>

                                      16

<PAGE>

                      IWO HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

           UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

                 For the Three Months Ended September 30, 2000
                                (In thousands)

<TABLE>
<CAPTION>
                                                                      Independent
                                                IWO    Independent   Wireless One
                                             Holdings, Wireless One  Leased Realty
                                               Inc.    Corporation    Corporation
                                             (Parent)  (Guarantor)  (Non-Guarantor) Eliminations Consolidated
                                             --------- ------------ --------------- ------------ ------------
<S>                                          <C>       <C>          <C>             <C>          <C>
Net revenues................................ $     --    $ 17,387        $941         $  (941)     $ 17,387
                                             --------    --------        ----         -------      --------
Operating expenses:
   Costs of services and equipment
     (exclusive of depreciation and
     amortization shown below)..............       --      13,024         703              --        13,727
   Selling and marketing....................       --       4,662         114              --         4,776
   General and administrative:
       Noncash stock-based
         compensation.......................       --         213          --              --           213
       Related parties......................       --         832          --              --           832
       Other general and administrative
         expenses...........................       --       4,011         124              --         4,135
   Depreciation and amortization............       --       3,687          --              --         3,687
   Intercompany expenses....................       --         941          --            (941)           --
                                             --------    --------        ----         -------      --------
       Total operating expenses.............       --      27,370         941            (941)       27,370
                                             --------    --------        ----         -------      --------
Operating loss..............................       --      (9,983)         --              --        (9,983)
   Interest income..........................       --         238          --              --           238
   Interest expense.........................       --      (1,041)         --              --        (1,041)
   Interest expense--related parties........       --        (207)         --              --          (207)
   Amortization of debt issuance costs......       --        (790)         --              --          (790)
   Other debt financing fees................       --      (1,089)         --              --        (1,089)
   Equity in losses of wholly-owned
     subsidiaries...........................  (12,872)         --          --          12,872            --
                                             --------    --------        ----         -------      --------
       Net loss............................. $(12,872)   $(12,872)       $ --         $12,872      $(12,872)
                                             ========    ========        ====         =======      ========
</TABLE>

                                      17

<PAGE>

                      IWO HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

    UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS--(Continued)

                 For the Three Months Ended September 30, 2001
                                (In thousands)
<TABLE>
<S>                                     <C>              <C>           <C>              <C>            <C>
                                                          Independent    Independent
                                                           Wireless      Wireless One
                                              IWO             One       Leased Realty
                                         Holdings, Inc.   Corporation    Corporation
                                            (Parent)      (Guarantor)  (Non-Guarantor)   Eliminations   Consolidated
                                        ---------------  ------------  ---------------- -------------  -------------
Net revenues........................... $            --  $     32,245  $          2,483 $      (2,483) $      32,245
                                        ---------------  ------------  ---------------- -------------  -------------
Operating expenses:
   Costs of services and equipment
     (exclusive of depreciation and
     amortization shown below).........              --        23,430             1,978            --         25,408
   Selling and marketing...............              --         8,321               384            --          8,705
   General and administrative:
       Noncash stock-based
         compensation..................              --            26                --            --             26
       Related parties.................              --           380                --            --            380
       Other general and
         administrative expenses.......              --         4,945               121            --          5,066
Depreciation and amortization..........              --         4,924                --            --          4,924
Intercompany expenses..................              --         2,483                --        (2,483)            --
                                        ---------------  ------------  ---------------- -------------  -------------
   Total operating expenses............              --        44,509             2,483        (2,483)        44,509
                                        ---------------  ------------  ---------------- -------------  -------------
Operating loss.........................              --       (12,264)               --            --        (12,264)
   Interest income.....................             628         1,179                --            --          1,807
   Interest expense....................          (4,716)       (1,408)               --            --         (6,124)
   Interest expense--related parties...              --          (378)               --            --           (378)
   Amortization of debt issuance costs.              --          (709)               --            --           (709)
   Other debt financing fees...........              --          (418)               --            --           (418)
   Equity in losses of wholly-owned
     subsidiaries......................         (13,998)           --                --        13,998             --
                                        ---------------  ------------  ---------------- -------------  -------------
       Net loss........................ $       (18,086) $    (13,998) $             -- $      13,998  $     (18,086)
                                        ===============  ============  ================ =============  =============
</TABLE>

                                      18

<PAGE>

                      IWO HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

    UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS--(Continued)

                 For the Nine Months Ended September 30, 2000
                                (In thousands)

<TABLE>
<CAPTION>
                                                                           Independent
                                                            Independent   Wireless One
                                                  IWO       Wireless One  Leased Realty
                                             Holdings, Inc. Corporation    Corporation
                                                (Parent)    (Guarantor)  (Non-Guarantor) Eliminations Consolidated
                                             -------------- ------------ --------------- ------------ ------------
<S>                                          <C>            <C>          <C>             <C>          <C>
Net revenues................................    $     --      $ 39,803       $1,922        $(1,922)     $ 39,803
                                                --------      --------       ------        -------      --------
Operating expenses:
   Costs of services and equipment
     (exclusive of depreciation and
     amortization shown below)..............          --        30,660        1,366             --        32,026
   Selling and marketing....................          --        11,529          233             --        11,762
   General and administrative:
       Noncash stock-based
         compensation.......................          --           844           --             --           844
       Related parties......................          --         1,593           --             --         1,593
       Other general and administrative
         expenses...........................          --        10,894          323             --        11,217
   Depreciation and amortization............          --         8,459           --             --         8,459
   Intercompany expenses....................          --         1,922           --         (1,922)           --
                                                --------      --------       ------        -------      --------
       Total operating expenses.............          --        65,901        1,922         (1,922)       65,901
                                                --------      --------       ------        -------      --------
Operating loss..............................          --       (26,098)          --             --       (26,098)
   Interest income..........................          --         1,536           --             --         1,536
   Interest expense.........................          --        (2,055)          --             --        (2,055)
   Interest expense--related parties........          --          (401)          --             --          (401)
   Amortization of debt issuance costs......          --        (2,047)          --             --        (2,047)
   Other debt financing fees................          --        (2,843)          --             --        (2,843)
   Equity in losses of wholly-owned
     subsidiaries...........................     (31,908)           --           --         31,908            --
                                                --------      --------       ------        -------      --------
       Net loss.............................    $(31,908)     $(31,908)      $   --        $31,908      $(31,908)
                                                ========      ========       ======        =======      ========
</TABLE>

                                      19

<PAGE>

                      IWO HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

    UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS--(Continued)

                 For the Nine Months Ended September 30, 2001
                                (In thousands)

<TABLE>
<CAPTION>
                                                                           Independent
                                                            Independent   Wireless One
                                                  IWO       Wireless One  Leased Realty
                                             Holdings, Inc. Corporation    Corporation
                                                (Parent)    (Guarantor)  (Non-Guarantor) Eliminations Consolidated
                                             -------------- ------------ --------------- ------------ ------------
<S>                                          <C>            <C>          <C>             <C>          <C>
Net revenues................................    $     --      $ 76,951       $6,045        $(6,045)     $ 76,951
                                                --------      --------       ------        -------      --------
Operating expenses:
   Costs of services and equipment
     (exclusive of depreciation and
     amortization shown below)..............          --        56,400        4,854             --        61,254
   Selling and marketing....................          --        19,115          829             --        19,944
   General and administrative:
       Noncash stock-based
         compensation.......................          --           334           --             --           334
       Related parties......................          --         1,405           --             --         1,405
       Other general and administrative
         expenses...........................          --        13,662          362             --        14,024
   Depreciation and amortization............          --        13,492           --             --        13,492
   Intercompany expenses....................          --         6,045           --         (6,045)           --
                                                --------      --------       ------        -------      --------
       Total operating expenses.............          --       110,453        6,045         (6,045)      110,453
                                                --------      --------       ------        -------      --------
Operating loss..............................          --       (33,502)          --             --       (33,502)
   Interest income..........................       1,747         4,228           --             --         5,975
   Interest expense.........................     (12,427)       (4,304)          --             --       (16,731)
   Interest expense--related parties........          --        (1,145)          --             --        (1,145)
   Amortization of debt issuance costs......          --        (2,605)          --             --        (2,605)
   Other debt financing fees................          --        (1,505)          --             --        (1,505)
   Equity in losses of wholly-owned
     subsidiaries...........................     (38,833)           --           --         38,833            --
                                                --------      --------       ------        -------      --------
       Net loss.............................    $(49,513)     $(38,833)      $   --        $38,833      $(49,513)
                                                ========      ========       ======        =======      ========
</TABLE>

                                      20

<PAGE>

                      IWO HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

           UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

                 For the Nine Months Ended September 30, 2000
                                (In thousands)

<TABLE>
<CAPTION>
                                                                          Independent
                                                    IWO    Independent   Wireless One
                                                 Holdings, Wireless One  Leased Realty
                                                   Inc.    Corporation    Corporation
                                                 (Parent)  (Guarantor)  (Non-Guarantor) Eliminations Consolidated
                                                 --------- ------------ --------------- ------------ ------------
<S>                                              <C>       <C>          <C>             <C>          <C>
Net cash used in operating activities...........   $(103)   $  (9,750)        $--           $--       $  (9,853)
                                                   -----    ---------         ---           ---       ---------
Cash flows from investing activities:
  Deferred acquisition costs....................      --         (740)         --            --            (740)
  Purchase of Sprint assets.....................      --     (116,405)         --            --        (116,405)
  Restricted cash...............................      --       (8,000)         --            --          (8,000)
  Purchase of property and equipment............      --       (8,406)         --            --          (8,406)
  Construction in progress......................      --      (15,475)         --            --         (15,475)
                                                   -----    ---------         ---           ---       ---------
    Net cash used in investing activities.......      --     (149,026)         --            --        (149,026)
                                                   -----    ---------         ---           ---       ---------
Cash flows from financing activities:
   Stock option exercises.......................     272           --          --            --             272
   Proceeds received from issuance of debt......      --       80,000          --            --          80,000
   Purchase of treasury stock...................    (169)          --          --            --            (169)
   Payment for offering costs...................      --       (1,015)         --            --          (1,015)
   Payment for debt issuance costs..............      --       (2,221)         --            --          (2,221)
                                                   -----    ---------         ---           ---       ---------
    Net cash provided by financing activities...     103       76,764          --            --          76,867
                                                   -----    ---------         ---           ---       ---------
Net decrease in cash and cash equivalents.......      --      (82,012)         --            --         (82,012)
Cash and cash equivalents, beginning of period..      --      104,752          --            --         104,752
                                                   -----    ---------         ---           ---       ---------
Cash and cash equivalents, end of period........   $  --    $  22,740         $--           $--       $  22,740
                                                   =====    =========         ===           ===       =========
Non-cash:
  Offering costs included in accrued expenses...   $  --    $     480         $--           $--       $     480
  Property and equipment included in accounts
   payable......................................      --            4          --            --               4
  Construction in progress included in accounts
   payable......................................      --        2,701          --            --           2,701
</TABLE>

                                      21

<PAGE>

                      IWO HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

    UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS--(Continued)

                 For the Nine Months Ended September 30, 2001
                                (In thousands)

<TABLE>
<CAPTION>
                                                                                       Independent   Independent
                                                                                        Wireless    Wireless One
                                                                             IWO           One      Leased Realty
                                                                        Holdings, Inc. Corporation   Corporation
                                                                           (Parent)    (Guarantor) (Non-Guarantor) Eliminations
                                                                        -------------- ----------- --------------- ------------
<S>                                                                     <C>            <C>         <C>             <C>
Net cash (used in) provided by operating activities....................   $(107,167)    $  75,002        $ --          $ --
                                                                          ---------    ----------       -----          ----
Cash flows from investing activities:
   Purchase of investment securities at amortized cost--held to
    maturity...........................................................          --      (105,328)         --            --
   Proceeds from maturities of investment securities...................          --        28,079          --            --
   Restricted cash and U.S. Treasury obligations, at amortized cost--
    held to maturity...................................................     (53,057)           --          --            --
   Purchase of property and equipment..................................          --        (8,645)         --            --
   Construction in progress............................................          --       (55,543)         --            --
                                                                          ---------    ----------       -----          ----
         Net cash used in investing activities.........................     (53,057)     (141,437)         --            --
                                                                          ---------    ----------       -----          ----
Cash flows from financing activities:
   Gross proceeds received from equity investors for payment of
    promissory notes...................................................          --           396          --            --
   Stock option exercises..............................................         397            --          --            --
   Proceeds received from issuance of debt.............................          --        60,000          --            --
   Proceeds received from issuance of senior notes.....................     160,000            --          --            --
   Purchase of treasury stock..........................................        (173)           --          --            --
   Payment for offering costs..........................................          --        (7,724)         --            --
                                                                          ---------    ----------       -----          ----
         Net cash provided by financing activities.....................     160,224        52,672          --            --
                                                                          ---------    ----------       -----          ----
Net decrease in cash and cash equivalents..............................                   (13,763)         --            --
Cash and cash equivalents, beginning of period.........................          --        36,313          --            --
                                                                          ---------    ----------       -----          ----
Cash and cash equivalents, end of period...............................   $      --     $  22,550        $ --          $ --
                                                                          =========    ==========       =====          ====
Non-cash:
   Property and equipment included in accounts payable.................   $      --     $     245        $ --          $ --
   Property and equipment included in accrued expenses.................          --         1,109          --            --
   Construction in progress included in accounts payable...............          --           622          --            --
   Construction in progress included in accrued expenses...............          --         2,523          --            --
</TABLE>
<TABLE>
<CAPTION>




                                                                        Consolidated
                                                                        ------------
<S>                                                                     <C>
Net cash (used in) provided by operating activities....................  $ (32,165)
                                                                         ---------
Cash flows from investing activities:
   Purchase of investment securities at amortized cost--held to
    maturity...........................................................   (105,328)
   Proceeds from maturities of investment securities...................     28,079
   Restricted cash and U.S. Treasury obligations, at amortized cost--
    held to maturity...................................................    (53,057)
   Purchase of property and equipment..................................     (8,645)
   Construction in progress............................................    (55,543)
                                                                         ---------
         Net cash used in investing activities.........................   (194,494)
                                                                         ---------
Cash flows from financing activities:
   Gross proceeds received from equity investors for payment of
    promissory notes...................................................        396
   Stock option exercises..............................................        397
   Proceeds received from issuance of debt.............................     60,000
   Proceeds received from issuance of senior notes.....................    160,000
   Purchase of treasury stock..........................................       (173)
   Payment for offering costs..........................................     (7,724)
                                                                         ---------
         Net cash provided by financing activities.....................    212,896
                                                                         ---------
Net decrease in cash and cash equivalents..............................    (13,763)
Cash and cash equivalents, beginning of period.........................     36,313
                                                                         ---------
Cash and cash equivalents, end of period...............................  $  22,550
                                                                         =========
Non-cash:
   Property and equipment included in accounts payable.................  $     245
   Property and equipment included in accrued expenses.................      1,109
   Construction in progress included in accounts payable...............        622
   Construction in progress included in accrued expenses...............      2,523
</TABLE>

                                      22

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Forward-Looking Statements

   This quarterly report on Form 10-Q contains statements about future events
and expectations which are "forward-looking statements." Any statement in this
report that is not a statement of historical fact may be deemed to be a
forward-looking statement. These forward-looking statements include:

  .  forecasts of growth in the number of consumers using wireless personal
     communications services and in estimated number of residents;

  .  statements regarding our plans for, and costs of, the build-out of our
     portion of the Sprint PCS network;

  .  statements regarding our future revenues, expense levels, liquidity and
     capital resources, operating losses and projections of when we will launch
     commercial wireless personal communications services and products and
     distribution channels in particular markets;

  .  statements regarding expectations or projections about markets in our
     territory; and

  .  other statements, including statements containing words such as "may,"
     "might," "could," "would," "anticipate," "believe," "plan," "estimate,"
     "project," "expect," "seek," "intend" and other similar words that signify
     forward-looking statements.

   These forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by these forward-looking statements.
Specific factors that might cause such a difference include, but are not
limited to:

  .  our dependence on our affiliation with Sprint PCS;

  .  the need to successfully complete the build-out of our portion of the
     Sprint PCS network on our anticipated schedule;

  .  our dependence on Sprint PCS' back office services;

  .  our limited operating history and anticipation of future losses;

  .  our potential need for additional capital;

  .  the continued ability to borrow under our senior credit facility;

  .  our dependence on contractor and consultant services, network
     implementation and information technology support;

  .  our competition;

  .  our potential inability to expand our services and related products in the
     event of substantial increases in demand in excess of supply for network
     and handset equipment and related services and products; and

  .  changes or advance in technology.

   Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the date hereof. We
do not undertake any obligation to publicly revise these forward-looking
statements to reflect events or circumstances that arise after the date hereof.
Readers should carefully review the risk factors described below.

Overview

   In February 1999, we entered into a management agreement with Sprint PCS
whereby we became the Sprint PCS affiliate with the exclusive right to provide
100% digital, 100% PCS services under the Sprint and Sprint

                                      23

<PAGE>

PCS brand names in our territory in the northeastern United States comprising
approximately 6.1 million residents. This territory extends from suburban New
York City (Orange and Sullivan Counties) north to the Canadian border and
reaches from the eastern suburbs of Rochester to Syracuse, Ithaca, Binghamton
and Elmira in central New York State (and extending into a small portion of
north central Pennsylvania), east to include all of Vermont and New Hampshire
(except Nashua, New Hampshire) and a portion of western Massachusetts. In March
2000, we completed the acquisition from Sprint PCS of certain assets, primarily
network assets, and obtained the right to manage approximately 45,000
subscribers in the aforementioned territory at a purchase price of
approximately $116.4 million. Sprint PCS had developed an operating network in
seven markets within our territory which serves as the foundation of our
network. In 2000, we expanded coverage of the markets acquired from Sprint PCS.
As of September 30, 2001, we provided Sprint PCS services to 125,832
subscribers.

   Sprint PCS has invested approximately $90.0 million to purchase the PCS
licenses in our territory and incurred additional costs for microwave clearing.
Under our long-term agreements with Sprint PCS, we manage the network on Sprint
PCS' licensed spectrum and use the Sprint and Sprint PCS brand names
royalty-free during the term of our affiliation with Sprint PCS. We also have
access to Sprint PCS' national marketing support and distribution programs and
are entitled to buy network and subscriber equipment and handsets at the same
discounted rates offered by vendors to Sprint PCS based on its large volume
purchases. In exchange for these and other benefits, we are entitled to receive
92%, and Sprint PCS is entitled to retain 8%, of collected service revenues
from customers in our Sprint PCS territory. We are entitled to 100% of revenues
collected from the sale of handsets and accessories and on roaming revenues.

   As of September 30, 2001, our network covered 3.5 million of the 6.1 million
residents in our territory.

Results of Operations

  The Three Months Ended September 30, 2001 Compared to the Three Months Ended
  September 30, 2000:

  Customer Additions

   As of September 30, 2001, we provided personal communication services to
125,832 customers, a net increase of 23,234 during the three months then ended,
compared to a net increase of 8,240 new customers during the three months ended
September 30, 2000. The increased customers are attributable to the expansion
of the network within our existing markets as well as the expansion into new
markets within our territory.

  Average Revenue Per User (ARPU)

   An important operating metric in the wireless industry is Average Revenue
Per User (ARPU). ARPU summarizes the average monthly service revenue per
customer. ARPU is computed by dividing service revenues by the average
subscribers for the period. For the three months ended September 30, 2001, ARPU
(including roaming) was $89 compared to $91 for the three months ended
September 30, 2000, a decrease of $2. The decrease in ARPU primarily resulted
from a decrease in roaming rates partially offset by higher average prices in
service plans. Service revenues include the service revenues billed to our
subscribers plus inbound roaming revenues. Excluding inbound roaming revenues,
our subscriber service ARPU for the three months ended September 30, 2001, was
$57 compared to $55 for the three months ended September 30, 2000, an increase
of $2. The increase in subscriber service ARPU primarily resulted from new
customers purchasing higher priced service plans.

  Revenues

   Net revenues were $32.2 million for the three months ended September 30,
2001 compared to $17.4 million for the three months ended September 30, 2000,
an increase of $14.8 million. This is primarily attributable to the increase in
our customer base and the inbound roaming revenues associated with the
expansion of our network.

  Costs of Services and Equipment

   The costs of services and equipment were $25.4 million for the three months
ended September 30, 2001 compared to $13.7 million for the three months ended
September 30, 2000, an increase of $11.7 million. The costs incurred related to
our agreement with Sprint PCS were $18.5 million, or 73% of total costs of
services and

                                      24

<PAGE>

equipment, for the three months ended September 30, 2001 and $11.2 million, or
82% of total costs of services and equipment, for the three months ended
September 30, 2000. The comparative change was comprised of the following
elements:

   Operations expense was $10.3 million for the three months ended September
30, 2001 compared to $4.7 million for the three months ended September 30,
2000, an increase of $5.6 million. This increase was a result of our network
expansion, which led to increases in site lease costs and costs related to
utilities and maintenance, engineering personnel and transport facilities, and
the increase in our customer base, which led to more interconnect charges, long
distance charges and off network roaming expenses which are incurred when an
IWO customer roams on another carrier's network.

   Roaming expense on Sprint PCS networks was $8.0 million for the three months
ended September 30, 2001 compared to $6.7 million for the three months ended
September 30, 2000, an increase of $1.3 million. The increased roaming minutes
resulted from the increase in our customer base.

   Cost of equipment was $4.4 million for the three months ended September 30,
2001 compared to $0.8 million for the three months ended September 30, 2000, an
increase of $3.6 million. This increase is largely attributable to the increase
in the number of customer additions over the same period in the prior year, as
cost of equipment includes the cost of handsets and accessories sold primarily
to new customers. The cost of handsets exceeds the retail price received from
customers because we subsidize the price of handsets to remain competitive in
the marketplace.

   Customer services and billing related expenses were $2.7 million for the
three months ended September 30, 2001 and $1.6 million for the three months
ended September 30, 2000, an increase of $1.1 million. This increase is
attributable to the increase in the number of customers over the same period.
These expenses include the cost of rendering customer bills and of customer
care.

  Selling and Marketing

   We incurred selling and marketing expenses of $8.7 million during the three
months ended September 30, 2001 compared to $4.8 million during the three
months ended September 30, 2000, an increase of $3.9 million. The increase was
a result of an increase in new subscribers. These amounts include retail store
costs such as salaries and rent in addition to promotion, advertising and
commission costs, and handset subsidies on units sold by third parties for
which we do not take title. The costs incurred related to our agreement with
Sprint PCS were $3.1 million, or 36% of total selling and marketing expenses,
for the three months ended September 30, 2001 and $2.5 million, or 52% of total
selling and marketing expenses, for the three months ended September 30, 2000.

  General and Administrative

   For the three months ended September 30, 2001, we incurred expenses of $5.5
million compared to $5.2 million for the three months ended September 30, 2000,
an increase of $0.3 million. The increase is primarily attributable to an
increase in our Sprint PCS affiliation fee resulting from growth in net
revenues. Noncash stock option compensation expense was $26 thousand for the
three months ended September 30, 2001 compared to $213 thousand for the three
months ended September 30, 2000, a decrease of $187 thousand. The costs
incurred related to our agreement with Sprint PCS were $1.4 million, or 25% of
total general and administrative expenses, for the three months ended September
30, 2001 and $0.9 million, or 17% of total general and administrative expenses,
for the three months ended September 30, 2000.
  Depreciation and Amortization

   For the three months ended September 30, 2001, depreciation and amortization
expense increased to $4.9 million compared to $3.7 million for the three months
ended September 30, 2000, an increase of $1.2 million.

                                      25

<PAGE>

The increase in depreciation and amortization expense relates primarily to the
expansion of our network. Depreciation and amortization will continue to
increase substantially as additional portions of our network are placed into
service. We incurred capital expenditures of $15.1 million in the three months
ended September 30, 2001, which included approximately $1.4 million of
capitalized interest. We incurred capital expenditures of $13.6 million and
capitalized interest of $0.2 million in the three months ended September 30,
2000.

  Interest Income

   For the three months ended September 30, 2001, interest income was $1.8
million compared to $0.2 million for the three months ended September 30, 2000,
an increase of $1.6 million. We had higher average invested balances partially
offset by decreasing interest rates for the three months ended September 30,
2001 compared to the three months ended September 30, 2000, as a result of the
proceeds from our December 2000 equity offering and February 2001 debt
offering. As capital expenditures are required to complete the build-out of our
PCS network, and as working capital and operating losses are funded, decreasing
average invested balances are expected to result in lower interest income for
the remainder of fiscal 2001.

  Interest Expense

   For the three months ended September 30, 2001, interest expense was $6.5
million compared to $1.2 million for the three months ended September 30, 2000,
an increase of $5.3 million. The increase is primarily attributable to
increased borrowings under the senior credit facility and issuance of the
senior notes. We had borrowings of $292.3 million as of September 30, 2001,
compared to $80.0 million as of December 31, 2000.

  Amortization of Debt Issuance and Offering Costs

   For the three months ended September 30, 2001, amortization of debt issuance
and offering costs was $0.7 million compared to $0.8 million for the three
months ended September 30, 2000, a decrease of $0.1 million.

  Other Debt Financing Fees

   For the three months ended September 30, 2001, other debt financing fees
were $0.4 million compared to $1.1 million for the three months ended September
30, 2000, a decrease of $0.7 million. The decrease was primarily attributable
to the elimination of the commitment fee payable on the bridge loan that was
replaced with our senior notes offering.

  The Nine Months Ended September 30, 2001 Compared to the Nine Months Ended
  September 30, 2000:

  Customer Additions

   As of September 30, 2001, we provided personal communication services to
125,832 customers, a net increase of 44,205 during the nine months then ended,
compared to a net increase of 21,359 new customers during the nine months ended
September 30, 2000. The increased customers are attributable to the expansion
of the network within our existing markets as well as the expansion into new
markets within our territory.

  Average Revenue Per User (ARPU)

   For the nine months ended September 30, 2001, ARPU (including roaming) was
$82 compared to $78 for the nine months ended September 30, 2000, an increase
of $4. The increase in ARPU primarily resulted from higher inbound roaming
revenues as we expanded our network. Service revenues include the service
revenues billed to our subscribers plus inbound roaming revenues. Excluding
inbound roaming revenues, our subscriber service ARPU for the nine months ended
September 30, 2001 and 2000, was $55.

                                      26

<PAGE>

  Revenues

   Net revenues were $77.0 million for the nine months ended September 30, 2001
compared to $39.8 million for the nine months ended September 30, 2000, an
increase of $37.2 million. The increased revenue reflects the increase in
customer base and the growth in inbound roaming revenues associated with our
network expansion.

  Costs of Services and Equipment

   The costs of services and equipment were $61.3 million for the nine months
ended September 30, 2001 compared to $32.0 million for the nine months ended
September 30, 2000, an increase of $29.3 million. Operations expense was $25.1
million for the nine months ended September 30, 2001 and $14.7 million for the
nine months ended September 30, 2000. Roaming expense on Sprint PCS networks
was $21.1 million for the nine months ended September 30, 2001 and $11.3
million for the nine months ended September 30, 2000. Cost of equipment was
$8.1 million for the nine months ended September 30, 2001 and $1.9 million for
the nine months ended September 30, 2000. Customer services and billing related
expenses were $7.0 million for the nine months ended September 30, 2001 and
$4.1 million for the nine months ended September 30, 2000. These increases
correspond with the network expansion and increase in subscribers since
September 30, 2000. The costs incurred related to our agreement with Sprint PCS
were $45.8 million, or 75% of total costs of service and equipment, for the
nine months ended September 30, 2001 and $26.7 million, or 83% of total costs
of service and equipment, for the nine months ended September 30, 2000.

  Selling and Marketing

   We incurred selling and marketing expenses of $19.9 million during the nine
months ended September 30, 2001 compared to $11.8 million during the nine
months ended September 30, 2000, an increase of $8.1 million. The costs
incurred related to our agreement with Sprint PCS were $7.9 million, or 40% of
total selling and marketing expenses, and $7.1 million, or 60% of total selling
and marketing expenses, for the nine months ended September 30, 2001 and 2000,
respectively.

  General and Administrative

   For the nine months ended September 30, 2001, we incurred expenses of $15.8
million compared to $13.7 million for the nine months ended September 30, 2000,
an increase of $2.1 million. The increase is primarily attributable to an
increase in our Sprint PCS affiliation fee resulting from growth in net
revenues. Noncash stock option compensation expense was $0.3 million for the
nine months ended September 30, 2001 compared to $0.8 million for the nine
months ended September 30, 2000, a decrease of $0.5 million. The costs incurred
related to our agreement with Sprint PCS were $3.7 million, or 23% of total
general and administrative expenses, for the nine months ended September 30,
2001 and $2.2 million, or 16% of total general and administrative expenses, for
the nine months ended September 30, 2000.

  Depreciation and Amortization

   For the nine months ended September 30, 2001, depreciation and amortization
expense increased to $13.5 million compared to $8.5 million for the nine months
ended September 30, 2000, an increase of $5.0 million. The increase in
depreciation and amortization expense relates to the expansion of the operating
network. Depreciation and amortization will continue to increase substantially
as additional portions of our network are placed into service. We incurred
capital expenditures of $62.4 million in the nine months ended September 30,
2001, which included approximately $3.8 million of capitalized interest. We
incurred capital expenditures of $81.2 million, which includes the purchase of
assets from Sprint PCS and capitalized interest of $0.3 million in the nine
months ended September 30, 2000.

                                      27

<PAGE>

  Interest Income

   For the nine months ended September 30, 2001, interest income was $6.0
million compared to $1.5 million for the nine months ended September 30, 2000,
an increase of $4.5 million. We had higher average invested balances partially
offset by decreasing interest rates for the nine months ended September 30,
2001 as compared to the nine months ended September 30, 2000, as a result of
the proceeds from our December 2000 equity offering and February 2001 debt
offering. As capital expenditures are required to complete the build-out of our
PCS network, and as working capital and operating losses are funded, decreasing
average invested balances are expected to result in lower interest income for
the remainder of fiscal 2001.

  Interest Expense

   For the nine months ended September 30, 2001, interest expense was $17.9
million compared to $2.5 million for the nine months ended September 30, 2000,
an increase of $15.4 million. The increase is primarily attributable to
increased borrowings under the senior credit facility and issuance of the
senior notes.

  Amortization of Debt Issuance and Offering Costs

   For the nine months ended September 30, 2001, amortization of debt issuance
and offering costs was $2.6 million compared to $2.0 million for the nine
months ended September 30, 2000, an increase of $0.6 million. The increase was
primarily attributable to amortization of the costs incurred to issue our
$160.0 million senior notes in February 2001.

  Other Debt Financing Fees

   For the nine months ended September 30, 2001, other debt financing fees were
$1.5 million compared to $2.8 million for the nine months ended September 30,
2000, a decrease of $1.3 million. The decrease was primarily attributable to
the elimination of the commitment fee payable on the bridge loan that was
replaced with the issuance of our $160.0 million senior notes in February 2001.

Liquidity and Capital Resources

   During our developmental stage, our activities consisted principally of
raising capital, consummating and supporting our agreements with Sprint PCS,
developing the initial design of our network and adding to our management team.
We commenced operations on January 5, 2000. Since then, our activities have
consisted primarily of building our customer base and expanding our network
coverage. We have relied on the proceeds from equity and debt financing, rather
than revenues, as our primary sources of capital. Specifically, these
activities to date have been funded through equity investments of $188.0
million as well as borrowings of $140.0 million under our senior credit
facility and net proceeds from the issuance of $160.0 million of senior notes
and warrants.

   Our $240.0 million senior secured credit facilities include:

  .  a $70.0 million eight-year revolving credit facility;

  .  a $120.0 million delayed draw, eight-year term loan facility; and

  .  a $50.0 million eight and one-half year term loan facility.

   We borrowed the full amount available under the $50.0 million term loan
facility in March 2000 at the closing of our purchase from Sprint PCS of the
network assets in our territory and, as of September 30, 2001, had borrowed
$90.0 million under the $120.0 million term loan facility. Quarterly principal
payments commence on both term loans in March 2004. The $120.0 million delayed
draw term loan requires 17 quarterly payments ranging from $2,000,000 on March
31, 2004 to $12,000,000 on March 31, 2008. The $50.0 million term loan requires
19 quarterly payments ranging from $0.25 million on March 31, 2004 to $31.0
million on September 30, 2008.

                                      28

<PAGE>

   In February 2001, we issued 160,000 units, each consisting of $1,000
principal amount of 14% Senior Notes due January 15, 2011 and one warrant to
purchase 12.50025 shares of class C common stock at an exercise price of $7.00
per share. The gross proceeds from the offering were $160.0 million.
Concurrently with the closing of the offering, a portion of the proceeds of the
offering was used to purchase a portfolio of U.S. government securities (the
"Interest Reserve") that will generate sufficient proceeds to make the first
six scheduled interest payments on the senior notes.

   As of September 30, 2001, we had $22.6 million in cash and cash equivalents,
compared to $36.3 million in cash and cash equivalents as of December 31, 2000.
Working capital was $70.3 million as of September 30, 2001 as compared to
working capital of $16.5 million as of December 31, 2000. As of September 30,
2001, we held $76.6 million in investment securities, of which $42.4 million
was included in current assets, and $53.1 million in the Interest Reserve
account for the senior notes, of which $22.6 million was included in current
assets.

   We used $32.2 million of cash in operating activities during the nine months
ended September 30, 2001. This was the result of our $49.5 million net loss and
a net $0.2 million in cash used from changes in working capital, partially
offset by depreciation and amortization and other non-cash items totaling $17.5
million.

   The $194.5 million of cash used in investing activities during the nine
months ended September 30, 2001 includes cash outlays of $64.2 million for
capital expenditures, purchases of $105.3 million of investment securities, and
the establishment of the $53.1 million Interest Reserve related to the senior
notes, reduced by $28.1 million in proceeds from matured investments.

   The $212.9 million in cash provided by financing activities during the nine
months ended September 30, 2001 consisted primarily of proceeds of $160.0
million on the 14% senior notes less offering costs of approximately $7.7
million, $60.0 million drawn under the senior credit facility, $0.4 million
from the exercise of stock options, and $0.4 million from the repayment of
promissory notes, reduced by $0.2 million in treasury stock purchases.

   As of September 30, 2001, $100.0 million remained available under the senior
credit facility. Such borrowings are subject to meeting specified conditions
under the senior credit facility agreement. We expect that cash and cash
equivalents and our investments in securities, together with future advances
under the senior credit facility, will fund our capital expenditures and our
working capital requirements through 2003, at which time we anticipate we will
be cash flow positive. The senior credit facility and senior notes are subject
to certain restrictive covenants including maintaining certain financial
ratios, attaining defined subscriber growth and network coverage goals, and
limiting annual capital expenditures. Further, the senior credit facility and
senior note indenture restrict the payment of dividends on our common stock.

   As of September 30, 2001, management believes that we are in compliance with
all financial and operational covenants associated with our senior credit
facility, senior notes and agreements with Sprint PCS.

Recent Accounting Pronouncements

   In June 2001, Statement of Financial Accounting Standards (SFAS) No. 141,
"Business Combinations" was issued by the Financial Accounting Standards Board
(FASB). SFAS No. 141 requires the purchase method of accounting to be used for
all business combinations initiated after June 30, 2001. We do not expect the
adoption of this standard to have a material effect on our financial statements.

   In June 2001, SFAS No. 142, "Goodwill and Other Intangible Assets" was
issued by the FASB. SFAS No. 142 changes the accounting for goodwill from an
amortization method to an impairment-only approach. Amortization of goodwill,
including goodwill recorded in past business combinations, will cease upon
adoption of this statement. We plan to adopt SFAS No. 142 on its effective date
of January 1, 2002. We expect annual amortization expense to decrease by
approximately $2.5 million due to the effect of this statement.

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   In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 requires the fair value of a liability for
an asset retirement obligation to be recognized in the period in which it is
incurred if a reasonable estimate of fair value can be made. The associated
asset retirement costs are capitalized as part of the carrying amount of the
long-lived asset. SFAS No. 143 is effective for fiscal years beginning after
June 15, 2002. We believe the adoption of this Statement will not have a
material impact on our financial statements.
   In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets", which supersedes SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of ", and the accounting and reporting provisions of APB No. 30. SFAS
No. 144 addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and is effective for fiscal years beginning after
December 15, 2001, and interim periods within those fiscal years. We are
currently reviewing this statement to determine its effect on our financial
statements.

Seasonality

   Our business is subject to seasonality because the wireless industry is
heavily dependent on fourth calendar quarter results. Among other things, the
industry relies on significantly higher customer additions and handset sales in
the fourth calendar quarter as compared to the other three calendar quarters. A
number of factors contribute to this trend, including: the increasing use of
retail distribution, which is heavily dependent upon the year-end holiday
shopping season; the timing of new product and service introductions;
competitive pricing pressures; and aggressive marketing and promotions. The
increased level of activity requires a greater use of our available financial
resources during this period.

Factors That May Affect Our Business, Future Operating Results and Financial
Condition

Risks Particular to Our Relationship with Sprint PCS

  If Sprint PCS does not renew our management agreement, our ability to conduct
  our business would be severely restricted.

   Our management agreement with Sprint PCS is not perpetual. Sprint PCS can
choose not to renew the agreement at the expiration of the 20-year initial term
or any ten-year renewal term. Our agreement with Sprint PCS terminates in all
events in 50 years. If Sprint PCS decides not to renew the management agreement
or terminates it in accordance with its terms, we would no longer be a part of
the Sprint PCS network and it would severely restrict our ability to conduct
our business.

  If we materially breach our management agreement, Sprint PCS may terminate
  the agreement and purchase our operating assets at a discount to market value
  without further stockholder approval, and we would no longer be able to offer
  Sprint PCS services.

   Since we do not own any licenses to operate a wireless network, our ability
to offer Sprint PCS products and services and our network's operation are
dependent on our agreements with Sprint PCS not being terminated.

   We must comply with our obligations under the management agreement. For
example, we must meet stringent build-out criteria requiring us to provide
network coverage to a minimum network coverage area within specified time
frames. We must also meet strict technical program requirements such as:

  .  the percentage of time our network is up;

  .  the percentage of dropped calls;

  .  the ratio of blocked call attempts to total call attempts;

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  .  the ratio of call origination to termination failures; and

  .  transport requirements for links between our cell sites and switches and
     between our switches and the public telephone system.

   Any material breach of our obligations under the management agreement could
lead to a termination. If the management agreement is terminated, we will no
longer be able to offer Sprint PCS products and services, and we may be
required to sell our operating assets to Sprint PCS. This sale may take place
without further stockholder approval and for a price equal to 72% of our entire
business value. Our entire business value includes the value of our right to
use the spectrum licenses in our markets, our business operations and other
assets. The provisions of our management agreement that allow Sprint PCS to
purchase our operating assets at a discount could adversely affect the value of
our common stock, may limit our ability to sell our business and may reduce the
price a buyer would be willing to pay for our business.

  We may encounter difficulties in completing the build-out of our network
  required under our management agreement, which could increase costs and delay
  completion of our build-out.

   We may experience difficulty in obtaining access to radio communications
sites, commonly referred to as cell sites, due to difficulty in obtaining local
regulatory approvals or other reasons. This may delay the build-out of our
portion of the Sprint PCS network. As part of our build-out, we must
successfully lease or otherwise retain rights to a sufficient number of cell
sites and switching facilities, build out the physical infrastructure and
complete the purchase and installation of equipment. We expect a majority of
our cell sites to be located on facilities shared with one or more wireless
providers. The termination of these cell site agreements would significantly
increase the costs of our build-out. Some of the cell sites are likely to
require us to obtain zoning variances or other local governmental or third
party approvals. The local governmental authorities in various locations in our
markets have, at times, placed moratoriums on the construction of additional
cell sites. Moreover, we may have to make changes to our network design as a
result of difficulties in the site acquisition process. We must also meet the
technical standards described in our management agreement in connection with
the build-out of our network. Additionally, the Federal Communications
Commission requires that our network must not interfere with the operations of
microwave radio systems, and we and Sprint PCS may be required to relocate
incumbent microwave operations to enable us to complete our build-out. Any
difficulty in constructing our portion of the Sprint PCS network may increase
our costs, affect our ability to provide services in our markets on a schedule
consistent with our current business plan, limit our network capacity or reduce
the number of new Sprint PCS subscribers. Any significant delays resulting from
this difficulty may constitute a breach of our management agreement with Sprint
PCS that could lead to a termination.

  We would suffer from any failure of Sprint PCS to perform its obligations
  under our management agreement. In addition, if we terminate the agreement
  because of this failure or because of any other event of termination caused
  by Sprint PCS, we have only limited rights upon a termination.

   We are dependent on Sprint PCS' ability to perform its obligations under our
agreements. The failure of Sprint PCS to perform its obligations under our
management agreement would substantially reduce our revenues, create difficulty
in obtaining important financial or subscriber information or severely restrict
our ability to conduct our business. In addition, if we terminate the agreement
because of this failure or because of any other event of termination caused by
Sprint PCS, we will no longer be able to offer Sprint PCS products and
services, and our only remedy would be to require Sprint PCS to purchase our
operating assets for a price equal to 80% of our entire business value or to
require Sprint PCS to assign to us up to 10 megahertz of its licensed spectrum
for a price equal to 10% of our entire business value or Sprint PCS' original
cost plus microwave relocation costs, whichever is greater.

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  We may not receive as much Sprint PCS net travel revenue as we anticipate
  because more of our subscribers may travel on other networks, fewer of Sprint
  PCS' and its affiliates' subscribers may travel on our network or Sprint PCS
  may change the rate we receive.

   We are paid a fee from Sprint PCS for every minute that a Sprint PCS
subscriber based outside of our markets uses the Sprint PCS network in our
markets. Similarly, we pay a fee to Sprint PCS for every minute that a Sprint
PCS subscriber based in our markets uses the Sprint PCS network outside our
markets. Sprint PCS customers from our markets may spend more time in other
Sprint PCS coverage areas than we anticipate and Sprint PCS customers from
outside our markets may spend less time in our markets or may use our services
less than we anticipate. As a result, we may receive less Sprint PCS inbound
travel revenue than we anticipate or we may have to pay more Sprint PCS
outbound travel fees than the inbound travel revenue we collect. For the year
ended December 31, 2000, our inbound travel revenues represented 31% of our
total revenues, and for the nine months ended September 30, 2001, our inbound
travel revenues represented 30% of our total revenues. We expect this
percentage to decrease significantly as we complete our network build and
acquire more subscribers. To the extent our outbound travel expenses exceed our
inbound travel revenues, Sprint PCS has agreed not to charge us for any excess
until January 1, 2003, after which we will incur losses to the extent of the
excess. In addition, under our agreements with Sprint PCS, Sprint PCS can
change the current fee we receive and pay for each Sprint PCS travel minute.

  The inability to use Sprint PCS' support services could disrupt our business
  and increase our operating costs.

   We rely on Sprint PCS' internal support systems, including customer care,
customer activation, billing and other administrative support. Our operations
could be disrupted if Sprint PCS is unable to maintain and expand these back
office services or to efficiently outsource those services and systems through
third-party vendors. It is likely that problems with Sprint PCS' internal
support systems could cause:

  .  delays or problems in our own operations or service;

  .  delays or difficulty in gaining access to customer and financial
     information;

  .  a loss of Sprint PCS customers; and

  .  an increase in the costs of those services.

   Our services agreement with Sprint PCS provides that, upon nine months'
prior written notice, Sprint PCS may terminate any service that we purchase
from Sprint PCS. We do not have a contingency plan if Sprint PCS terminates any
service it provides. If Sprint PCS terminates a service for which we have not
developed a cost-effective alternative or increases the amount it charges us
for these services, our operating costs may increase beyond our expectations
and our operations may be interrupted or restricted.

  We rely on the use of the Sprint PCS brand name and logo to market our
  services, and a loss of use of this brand and logo or a decrease in the
  market value of this brand and logo would hinder our ability to market our
  products.

   The Sprint PCS brand and logo is highly recognizable. If we lose our rights
to use the Sprint PCS brand and logo under our trademark and service mark
license agreements, or if Sprint PCS makes business decisions which adversely
affect the Sprint PCS brand and logo, we would lose the advantages associated
with marketing efforts conducted by Sprint PCS. Potential customers may not
recognize our brand readily and we may have to spend significantly more money
on advertising to create brand recognition.

  Sprint PCS' roaming arrangements may not be competitive with other wireless
  service providers, which may restrict our ability to attract and retain
  customers.

   We rely on Sprint PCS' roaming arrangements with other wireless service
providers for coverage in some areas. Some risks related to these arrangements
are as follows:

  .  the quality of the service provided by another provider during a roaming
     call may not approximate the quality of the service provided by the Sprint
     PCS network;

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  .  the price of a roaming call may not be competitive with prices of other
     wireless companies for roaming calls;

  .  customers may have to use a more expensive dual-frequency handset that is
     both digital and analog capable and has diminished standby and talk-time
     capacities;

  .  customers must end a call in progress and initiate a new call when leaving
     the Sprint PCS network and entering another wireless network; and

  .  Sprint PCS customers may not be able to use Sprint PCS' advanced features,
     such as voicemail notification, while roaming.

   If Sprint PCS customers are not able to roam instantaneously or efficiently
onto other wireless networks, we may lose current Sprint PCS subscribers and
our Sprint PCS services will be less attractive to new customers.

  Sprint PCS may make business decisions that would not be in our best interest.

   Under our management agreement, Sprint PCS has a substantial amount of
control over the conduct of our business. Conflicts between us and Sprint PCS
may arise, and because Sprint PCS owes us no duties except as set forth in the
management agreement, these conflicts may not be resolved in our favor.
Accordingly, Sprint PCS may make decisions that adversely affect our business,
such as the following:

  .  Sprint PCS prices its national plans based on its own objectives and could
     set price levels that may not be economically sufficient for our business;

  .  Sprint PCS could change the amount it charges us to perform support
     services;

  .  we must obtain Sprint PCS' consent to sell non-Sprint PCS approved
     equipment, which consent could be withheld;

  .  Sprint PCS may alter its network and technical requirements, which could
     result in increased equipment and build-out costs; and

  .  Sprint PCS may request that we build out additional areas within our
     markets, which if we undertake, could result in less return on investment,
     and which if we decline to undertake, could result in Sprint PCS
     terminating the management agreement and forcing us to sell our operating
     assets to Sprint PCS at a discount to market value without further
     stockholder approval.

  Provisions of our management agreement with Sprint PCS may diminish our value
  and restrict the sale of our business.

   Sprint PCS must approve any change of control of our ownership and consent
to any assignment of our management agreement with Sprint PCS. Sprint PCS has a
right of first refusal if we decide to sell our operating assets to a third
party. We are also subject to a number of restrictions on the transfer of our
business including a prohibition on the sale of us or our operating assets to
competitors of Sprint or Sprint PCS. These restrictions and other restrictions
in our management agreement with Sprint PCS could adversely affect the value of
our common stock, may limit our ability to sell the business, may reduce the
price a buyer would be willing to pay for our business and may reduce our
entire business value.

  If Sprint PCS does not maintain control over its licensed spectrum, our
  management agreement with Sprint PCS may be terminated.

   Sprint PCS, not us, owns the licenses necessary to provide wireless services
in our markets. The Federal Communications Commission requires that licensees
like Sprint PCS maintain control of their licensed systems and not delegate
control to third-party operators or managers like us. If the Federal
Communications Commission were to determine that our management agreement with
Sprint PCS needs to be modified to increase the level of

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<PAGE>

licensee control, we have agreed with Sprint PCS to use our best efforts to
modify the agreement to comply with applicable law. If we cannot agree with
Sprint PCS to modify the agreement, it may be terminated. If the agreement is
terminated, we would no longer be a part of the Sprint PCS network and we would
be unable to conduct our business.

  The Federal Communications Commission may not renew the Sprint PCS licenses,
  which would prevent us from providing wireless services.

   We do not own any licenses to operate wireless networks. We are dependent on
Sprint PCS' licenses, which are subject to renewal and revocation. Sprint PCS'
licenses in our markets will expire in June 2005, but may be renewed for
additional ten-year terms. The Federal Communications Commission has adopted
specific standards that apply to wireless personal communications services
license renewals which, in the event of a comparative proceeding with competing
applications, includes the award of a renewal expectancy to Sprint PCS upon its
showing of "substantial service" during the past license term. Any failure by
Sprint PCS or us to comply with these standards could cause nonrenewal of the
Sprint PCS licenses for our markets. Additionally, if Sprint PCS does not
demonstrate to the Federal Communications Commission that Sprint PCS has met
the five-year and ten-year construction requirements for each of its wireless
personal communications services licenses, it can lose the affected licenses
and be ineligible to regain them.

  If Sprint PCS does not complete the construction of its nationwide personal
  communications services network, we may not be able to attract and retain
  customers.

   Sprint PCS currently intends to cover a significant portion of the
population of the United States, Puerto Rico and the U.S. Virgin Islands by
creating a nationwide personal communications services network through its own
construction efforts and those of its affiliates. Sprint PCS is still
constructing its nationwide network and does not offer personal communications
services, either on its own network or through its roaming agreements, in every
city in the United States. Sprint PCS has entered into, and anticipates
entering into, management agreements similar to ours with companies in other
markets under its nationwide personal communications services build-out
strategy. Our results of operations are dependent on Sprint PCS' network and,
to a lesser extent, on the networks of its other affiliates. Sprint PCS' and
its affiliates' networks may not provide nationwide coverage to the same extent
as its competitors which could adversely affect our ability to attract and
retain customers.

Other Risks Particular to Us

  If we do not successfully manage our anticipated rapid growth, we may not be
  able to complete our entire network by our target date, if at all.

   Our performance as a personal communications services provider will depend
on our ability to manage successfully the network build-out process, implement
operational and administrative systems, expand our base of employees, and train
and manage our employees, including engineering, marketing and sales personnel.
We will require expenditures of significant funds for the development,
construction, testing and deployment of our personal communications services
network before expanding commercial operations. These activities are expected
to place significant demands on our managerial, operational and financial
resources.

   The management of our anticipated growth will require, among other things:

  .  continued development of our operational and administrative systems;

  .  control of costs of network build-out;

  .  integration of our network infrastructure with the rest of the Sprint PCS
     network;

  .  increased marketing activities;

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  .  the ability to attract and retain qualified management, technical and
     sales personnel; and

  .  the training of new personnel.

   Failure to successfully manage our expected rapid growth and development
could impair our ability to achieve profitability and expand the coverage in
our markets.

  We will have substantial debt which may have a number of important
  consequences for our operations.

   We currently have a $240.0 million senior credit facility and as of
September 30, 2001 borrowed $140.0 million under this facility. In December
2000 we amended our $240.0 million senior credit facility to provide that,
subject to specified conditions, we may request an increase of $25.0 million in
available borrowings on or prior to March 31, 2002. No lender is obligated to
subscribe to this new commitment. We also have $160.0 million in outstanding
14% senior notes due 2011. As a result, we have a substantial amount of
long-term debt.

   The substantial amount of our debt has a number of important consequences
for our operations, including the following:

  .  we will have to dedicate a substantial portion of any cash flow from
     operations to the payment of interest on, and principal of, our debt,
     which will reduce funds available for other purposes;

  .  we may not be able to obtain additional financing for currently
     unanticipated capital expenditures, working capital requirements and other
     corporate purposes;

  .  our senior credit facility places restrictions on our ability to incur
     additional debt or issue additional equity without our lenders' consent;

  .  borrowings under our senior credit facility will be at variable rates of
     interest, which would result in higher interest expense in the event of
     increases in market interest rates; and

  .  we may be unable to refinance our senior credit facility on terms
     reasonably satisfactory to us.

  We may not achieve or sustain operating profitability or positive cash flow
  from operating activities.

   We expect to incur significant operating losses and to generate significant
negative cash flow until at least 2003 while we develop and construct our
personal communications services network and build our customer base. Our
operating profitability will depend upon many factors, including, among others,
our ability to market our services successfully, achieve our projected market
penetration and manage customer turnover rates effectively. Our expectation of
becoming cash flow positive during 2003 is based upon our current business
model. Our business model is based, in large part, upon our expectations as to
future events, including future costs and revenues. We are a new company with a
limited operating history upon which to base our model. We may not become cash
flow positive during 2003 for numerous reasons, including the risks identified
in this report. If we do not achieve and maintain operating profitability and
positive cash flow on a timely basis, we may not be able to meet our debt
service requirements.

  We may need more capital than we currently project to build out our portion
  of the Sprint PCS network and fund our business plan.

   The build-out of our portion of the Sprint PCS network will require
substantial capital. Additional funds could be required for a variety of
reasons, including unanticipated capital expenditures, expenses or operating
losses. In addition, we may need additional funding if we bring in new
customers more quickly than expected because the up-front costs associated with
new customers will likely exceed the initial revenue generated by these
customers. Additional funds may not be available. Even if those funds are
available, we may not be able to obtain them on a timely basis, on terms
acceptable to us or within limitations permitted by the covenants under our
senior credit facility. Failure to obtain additional funds, should the need for
them develop, could result in the

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delay or abandonment of our development and expansion plans. If we do not have
sufficient funds to complete our build-out, we may be in breach of our
management agreement with Sprint PCS or in default under our senior credit
facility.

  Our lenders could control our assets if we default on our debt.

   Due to the liens on substantially all of our assets that secure our senior
credit facility, our lenders may control our assets upon a default. Our failure
to make payments on our debt would constitute a default. Our ability to make
these payments depends upon our future operating performance which is subject
to general economic and competitive conditions and to financial, business and
other factors, many of which we cannot control. If our cash flow is
insufficient, we may be forced to take actions such as delaying or reducing
capital expenditures, attempting to restructure or refinance our debt, selling
assets or operations or seeking additional equity capital. None of these
actions may be sufficient to allow us to service our debt obligations. Further,
we may be unable to take any of these actions on satisfactory terms, in a
timely manner or at all. Our senior credit facility limits our ability to take
several of these actions. Under our current business plan, we expect to incur
substantial debt before achieving positive cash flow. Our failure to generate
sufficient funds to pay our debts or to successfully undertake any of these
actions could, among other things, result in our lenders controlling our assets.

  If we do not meet all of the conditions required under our senior credit
  facility, we may not be able to borrow all of the funds we anticipate
  receiving and may not be able to complete the build-out of our portion of the
  Sprint PCS network.

   Our anticipated future borrowings under our senior credit facility will be
subject at each funding date to several conditions, including:

  .  acquiring minimum numbers of Sprint PCS subscribers and achieving minimum
     network coverage on schedule; and

  .  adhering to financial and performance related covenants.

   If we do not meet these conditions, among others, at each funding date, our
lenders may choose not to lend any or all of the remaining amounts. If other
sources of funds are not available, we may be unable to complete the build-out
of our portion of the Sprint PCS network. If we do not have sufficient funds to
complete our network build-out, we may be in breach of our management agreement
with Sprint PCS and be in default under our senior credit facility.

  If we default under our senior credit facility, our lenders may declare our
  debt immediately due and payable and Sprint PCS may force us to sell our
  assets without stockholder approval.

   Our senior credit facility requires that we comply with specified financial
ratios and other performance covenants. If we fail to comply with these
covenants or we default on our obligations under our senior credit facility,
our lenders may accelerate the maturity of our debt. If our lenders accelerate
our debt, Sprint PCS has the option to purchase our operating assets at a
discount to market value and assume our obligations under the senior credit
facility, without further stockholder approval. If Sprint PCS does not exercise
this option, our lenders may sell our assets to third parties without approval
of our stockholders. If Sprint PCS provides notice to our lenders that we are
in breach of our management agreement with Sprint PCS and, as a result, our
obligations under the senior credit facility are accelerated and Sprint PCS
does not elect to operate our business, our lenders may designate a third party
to operate our business without the approval of our stockholders.

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<PAGE>

  Our indebtedness will place restrictions on us which may limit our operating
  flexibility and our ability to engage in some transactions.

   The indenture governing the notes and our senior credit facility both impose
material operating and financial restrictions on us. These restrictions,
subject to exceptions in the ordinary course of business, may limit our ability
to engage in some transactions, including the following:

  .  designated types of mergers or consolidations;

  .  creating liens;

  .  paying dividends or other distributions to our stockholders;

  .  making investments;

  .  selling assets;

  .  repurchasing our common stock;

  .  changing lines of business;

  .  borrowing additional money; and

  .  transactions with affiliates.

   These restrictions could limit our ability to obtain debt financing,
repurchase stock, refinance or pay principal or interest on our outstanding
debt, consummate acquisitions for cash or debt or react to changes in our
operating environment.

  We will be in default under our indebtedness if we fail to pass financial and
  business tests.

   Our senior credit facility requires us to maintain specified financial
ratios and to satisfy specified tests, including tests relating to:

  .  minimum covered population;

  .  minimum number of subscribers to our services; and

  .  minimum annualized revenues.

   If we fail to satisfy any of the financial ratios and tests, we could be in
default under our senior credit facility.

  Because we depend heavily on outsourcing, the inability of third parties to
  fulfill their contractual obligations to us may disrupt our services or the
  build-out of our portion of the Sprint PCS network.

   Because we outsource portions of our business, we depend heavily on
third-party vendors, suppliers, consultants, contractors and local telephone
and utility companies. We have retained those persons to:

  .  design and engineer our systems;

  .  design and construct retail stores;

  .  obtain permits for the construction of base stations, switch facilities
     and towers;

  .  construct cell sites and switching facilities;

  .  obtain cell site leases;

  .  install transmission lines; and

  .  deploy our wireless personal communications services network systems.

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   The failure by any of our vendors, suppliers, consultants, contractors or
local telephone and utility companies to fulfill their contractual obligations
to us could materially delay construction and disrupt the operations of our
portion of the Sprint PCS network.

   In addition, we lease a portion of the cell sites for our network systems
through master lease agreements with communication site management companies.
Many of the companies, in turn, have separate leasing arrangements with each of
the owners of the sites. If these companies were to become insolvent or were to
breach those arrangements, we may lose access to those cell sites and
experience extended service interruption in the areas serviced by those sites.

  We may not be able to respond effectively to the significant competition in
  the wireless communications services industry or keep pace with our
  competitors in the introduction of new products, services and equipment,
  which could impair our ability to attract new customers.

   Our dependence on Sprint PCS to develop competitive products and services
and the requirement that we obtain Sprint PCS' consent to sell non-Sprint PCS
approved equipment may limit our ability to keep pace with our competitors in
the introduction of new products, services and equipment. Additionally, we
expect existing cellular providers will upgrade their systems and provide
expanded, digital services to compete with the Sprint PCS products and services
we offer. These wireless providers require their customers to enter into
long-term contracts, which may make it more difficult for us to attract
customers away from them. Sprint PCS generally does not require its customers
to enter into long-term contracts, which may make it easier for other wireless
providers to attract customers away from us.

  We may not be able to compete with larger, more established wireless
  providers who have resources to competitively price their products and
  services, which could result in a reduction of our subscribers.

   We compete with several wireless providers, some of which have an
infrastructure in place and have been operational for a number of years. Our
major competitors include Verizon Wireless, Cingular Wireless (a joint venture
formed by SBC Communications and BellSouth), AT&T Wireless, Nextel
Communications/Nextel Partners and VoiceStream Wireless. Some of our
competitors:

  .  have substantially greater financial, technological, marketing and sales
     and distribution resources than us;

  .  have more extensive coverage in specific areas of our markets and have
     broader regional coverage than us;

  .  have or may obtain access to more licensed spectrum than the amount
     licensed to Sprint PCS in most of our territory and therefore will be able
     to provide greater network call volume capacity than our network to the
     extent that network usage begins to reach or exceed the capacity of our
     licensed spectrum; and

  .  may market other services, such as traditional telephone service, cable
     television access and access to the Internet, with their wireless
     communications services.

   We may be unable to compete successfully with these larger competitors who
have substantially greater resources or who offer more services than we do to a
larger subscriber base, which could result in a reduction in new subscribers.

  We may not be able to respond to the recent trend toward consolidation of the
  wireless communications industry or compete with potential acquirers for
  acquisitions, which could result in a reduction of our subscribers, decline
  in prices for our products and services and dilution to our stockholders if
  we issue our common stock in acquisitions.

   There has been a recent trend in the wireless communications industry toward
consolidation of wireless service providers through joint ventures, mergers and
acquisitions. We expect this consolidation to lead to larger

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<PAGE>

competitors over time. We may not be able to respond to pricing pressures that
may result from a consolidation in our industry, which could result in a
reduction of new subscribers or cause market prices for our products and
services to continue to decline.

   If we expand our operations through acquisitions, we will compete with other
potential acquirers, some of which may have greater financial or operational
resources than us. If we issue shares of our common stock in connection with
any acquisition, this may result in dilution to our stockholders. In addition,
we may not be able to participate in any Sprint PCS affiliate consolidation,
which may adversely affect the value of our common stock.

  We may have difficulty in obtaining handsets and equipment, which could cause
  delays and increased costs in the build-out of our network.

   We currently purchase all our handsets through Sprint PCS. The demand for
specific types of handsets is strong and the manufacturers of those handsets
may have to distribute their limited supply or products among the
manufacturers' numerous customers. If Sprint PCS modifies its handset logistics
and delivery plan or if we are not able to continue to rely on Sprint PCS'
relationships with suppliers and vendors, some of which provide us with vendor
discounts on handsets, we could have difficulty obtaining specific types of
handsets in a timely manner and our handset costs could increase.

   The demand for the equipment we require to construct our portion of the
Sprint PCS network is considerable and manufacturers of this equipment have
substantial order backlogs. As a result, we could suffer delays in the
build-out of our portion of the Sprint PCS network, disruptions in service and
a reduction in subscribers.

  The technology we use has limitations and could become obsolete, which would
  require us to implement new technology at substantially increased costs and
  limit our ability to compete effectively.

   We intend to employ digital wireless communications technology selected by
Sprint PCS for its network. Code division multiple access, known as CDMA, is a
relatively new technology. CDMA may not provide the advantages expected by
Sprint PCS. If another technology becomes the preferred industry standard, we
may be at a competitive disadvantage and competitive pressures may require
Sprint PCS to change its digital technology which, in turn, may require us to
make changes at substantially increased costs.

   The wireless telecommunications industry is experiencing significant
technological change, as evidenced by the increasing pace of digital upgrades
in existing analog wireless systems, evolving industry standards, ongoing
improvements in the capacity and quality of digital technology, shorter
development cycles for new products and enhancements and changes in end-user
requirements and preferences. If we are unable to keep pace with these
technological changes, the technology used on our network may become obsolete.
In addition, wireless carriers are seeking to implement a new "third
generation," or "3G," technology throughout the industry. The 3G technology
would support new wireless services, including multimedia mobile applications.
We may not be able to implement the 3G technology successfully on a timely or
cost-effective basis.

  We may experience a high rate of customer turnover which would increase our
  costs of operations and reduce our revenue.

   Our strategy to reduce customer turnover may not be successful. The rate of
customer turnover may be the result of several factors, including network
coverage, reliability issues such as blocked calls and dropped calls, handset
problems, non-use of phones, change of employment, the non-use of customer
contracts, affordability, customer care concerns and other competitive factors.
Price competition and other competitive factors could also cause increased
customer turnover. A high rate of customer turnover could adversely affect our
competitive position, results of operations and our costs of, or losses
incurred in, obtaining new subscribers, especially because we subsidize some of
the costs of initial purchases of handsets by customers.

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<PAGE>

  Unauthorized use of our network could disrupt our business.

   We will likely incur costs associated with the unauthorized use of our
personal communications services network, including administrative and capital
costs associated with detecting, monitoring and reducing the incidence of
fraud. Fraud impacts interconnection costs, capacity costs, administrative
costs, fraud prevention costs and payments to other carriers for unbillable
fraudulent roaming.

  Our projected build-out plan does not cover all of our territory, which could
  make it difficult to maintain a profitable customer base.

   Our projected build-out plan for our territory does not cover all areas of
our territory. By the end of 2003, we expect to cover 77% of the resident
population in our territory. As a result, our plan may not adequately serve the
needs of the potential customers in our territory or attract enough subscribers
to operate our business successfully. To correct this potential problem, we may
have to cover a greater percentage of our territory than we anticipate, which
we may not have the financial resources to complete or may be unable to do
profitably.

  Investcorp S.A. and co-investors arranged by Investcorp which control us may
  take actions that conflict with your interests.

   Approximately 64.7% of the voting power of our outstanding common stock is
held by Investcorp S.A. and co-investors arranged by Investcorp. Accordingly,
the Investcorp investors control the power to elect our directors, to appoint
new management and to approve many actions requiring the approval of our
stockholders, such as adopting most amendments to our certificate of
incorporation and approving mergers or sales of all or substantially all of our
assets. The elected directors have the authority, subject to the terms of our
debt, to issue additional stock, implement stock repurchase programs, declare
dividends and make other decisions about our capital stock.

   Holders of our common stock will be unable to exercise voting control over
matters requiring stockholder approval, including election of directors and
approval of corporate transactions. The controlling stockholders may have no
duty to protect the interests of the minority stockholders. In addition, the
interests of the Investcorp investors could conflict with the interests of
holders of our senior notes. For example, if we encounter financial
difficulties or are unable to pay our debts as they mature, the interests of
the Investcorp investors, as equity holders, might conflict with the interests
of note holders. The Investcorp investors may also have an interest in pursing
acquisitions, divestitures, financings or other transactions that, in their
judgment, could enhance their equity investments, even though these
transactions might involve risks to the holders of the notes.

                                      40

<PAGE>

Risks Particular to Our Industry

  Use of hand-held phones may pose health risks, which could result in a
  reduction in subscribers and increased exposure to litigation.

   Some media reports have suggested that certain radio frequency emissions
from wireless handsets may be linked to various health concerns, including
cancer, and may interfere with various electronic medical devices, including
hearing aids and pacemakers. The actual or perceived risk of radio frequency
emissions from portable telephones could adversely affect us through a reduced
subscriber growth rate, a reduction in subscribers, reduced network usage per
subscriber and increased exposure to potential litigation.

  Regulation by government agencies and taxing authorities may increase our
  costs of providing service, require us to change our services or increase
  competition.

   The licensing, construction, use, operation, sale and interconnection
arrangements of wireless telecommunication systems are regulated to varying
degrees by the Federal Communications Commission, the Federal Trade Commission,
the Federal Aviation Administration, the Environmental Protection Agency, the
Occupational Safety and Health Administration and, depending on the
jurisdiction, state and local regulatory agencies and legislative bodies.
Adverse decisions regarding these regulatory requirements could negatively
impact Sprint PCS' operations and our costs of doing business. For example,
changes in tax laws or the interpretation of existing tax laws by state and
local authorities could subject us to increased income, sales, gross receipts
or other tax costs or require us to alter the structure of our relationship
with Sprint PCS. In addition, the Federal Communications Commission may license
additional spectrum for new carriers, which would increase the competition we
face.

  Several state and local governments are considering, or have recently
  adopted, legislation that restricts the use of wireless handsets while
  driving.

   A number of U.S. state and local governments are considering or have
recently enacted, legislation that would restrict or prohibit the use of a
wireless handset while driving a vehicle or, alternatively, require the use of
a hands-free telephone. The state of New York has recently enacted legislation,
effective November 1, 2001, that bans the use of handheld wireless handsets
while driving a vehicle except in the case of emergencies. The legislation also
provides that, effective December 1, 2001, persons who violate this ban are
subject to fines of up to $100 per violation. Legislation of this sort, if
continued to be enacted, would require wireless service providers to provide
hands-free enhanced services such as voice activated dialing and hands-free
speaker phones and headsets so that they can keep generating revenue from their
subscribers, who make many of their calls while on the road. If we are unable
to provide hands-free services and products to our subscribers in a timely and
adequate fashion, the volume of wireless phone usage would likely decrease, and
our ability to generate revenues would suffer.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   For the nine months ended September 30, 2001, we did not experience any
material change in market risk exposures that affect the quantitative and
qualitative disclosures presented in our Registration Statements on Form S-1
(File No. 333-58890) and Form S-4 (File No. 333-58902), as filed and declared
effective by the Securities and Exchange Commission on July 30, 2001.

   In the normal course of business, our operations are exposed to interest
rate risk with respect to our senior credit facility. Our fixed rate debt
consists of our 14% senior notes. Our primary interest rate risk exposures
related to the interest rate on our senior credit facilities and the impact of
interest rate movements on our ability to meet our interest expense
requirements and financial covenants under our debt instruments.

   We manage the interest rate risk on our outstanding long-term debt through
the use of fixed and variable rate debt and may use interest rate swaps in the
future to the extent provided by our senior credit facility. While we cannot
predict our ability to refinance existing debt or the impact interest rate
movements will have on our existing debt, we continue to evaluate our interest
rate risk on an ongoing basis.

                                      41

<PAGE>

                                    PART II

                               OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

   None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

   (a) None.

   (b) None.

   (c) Set forth below is a description of our recent sales of unregistered
securities:

   During the quarter ended September 30, 2001, we granted options to purchase
an aggregate of 20,000 shares of class B common stock to one individual under
our Management Stock Incentive Plan at an exercise price of $7.00 per share.
The foregoing transactions were undertaken in reliance upon the exemption from
the registration requirements of the Securities Act afforded by Section 4(2) of
the Securities Act as transactions not involving any public offering. No
underwriters were engaged in connection with any of the foregoing transactions.

   (d) From July 30, 2001, the effective date of the Registration Statement on
Form S-4, file no. 333-58890, relating to 160,000 warrants to purchase shares
of our class C common stock and 2,000,040 shares of class C common stock
issuable upon exercise of the warrants, until the date hereof, we did not incur
any expenses for underwriting discounts and commissions, finders fees or
expenses paid to or for underwriters in connection with the issuance and
distribution of securities. During this period, we estimate that we incurred
less than $0.1 million for printing expenses related to the registration. None
of the other expenses were direct or indirect payments to our directors or
officers or our associates, or persons owning 10% or more of any class of our
equity securities or the equity securities of our affiliates. As the warrants
are not exercisable until February 15, 2002, we have received no proceeds from
the offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

   None.

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<PAGE>

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

   None.

ITEM 5. OTHER INFORMATION.

   None.

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

   (a) Exhibits.

<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S>         <C>
  10.12.3   Amendment to Employment Agreement, dated as of November 15, 2000, to
            Employment Agreement, between IWO Holdings, Inc., Independent Wireless One
            Corporation and Steven M. Nielsen

  10.16.8   Stock Option Agreement, dated as of November 15, 2000, between IWO Holdings,
            Inc. and Steven M. Nielsen
</TABLE>

   (b) No current reports on Form 8-K were filed during the quarter ended
September 30, 2001.

                                      43

<PAGE>

                                  SIGNATURES

   Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                IWO HOLDINGS, INC.
Date: November 7, 2001          By:  /s/ Steven M. Nielsen
                                    ---------------------------------------
                                    Steven M. Nielsen
                                    President and Chief Executive Officer
Date: November 7, 2001          By:  /s/ Timothy J. Medina
                                    ---------------------------------------
                                    Timothy J. Medina
                                    Vice President, Chief Financial Officer
                                    and Treasurer

                                      44