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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005



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 333-39746



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IWO HOLDINGS, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 14-1818487                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|52 Corporate Circle Albany, New York                           |  | 12203                               
|(Address of principal executive offices)                       |  | (Zip code)                          



(518) 862-6000

(Registrants telephone number, including area code)



N/A

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



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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 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.    Yes  x    No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act).    Yes ̈No  x



Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x



Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed
by a court.    Yes  x    No ̈



As of November 3, 2005, the registrant had only one outstanding class of common stock,
of which there were 100 shares outstanding.



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##### Table of Contents

INDEX



|           |  |                                                                                       |  |     
|---------- |  | ------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                       |  | Page
|Part I     |  | Financial Information                                                                 |  |     
|           |  |                                                                                      
|Item 1.    |  | Financial Statements                                                                  |  |     
|           |  |                                                                                      
|           |  | Condensed Consolidated Balance Sheets                                                 |  | 1   
|           |  |                                                                                      
|           |  | Condensed Consolidated Statements of Operations                                       |  | 2   
|           |  |                                                                                      
|           |  | Condensed Consolidated Statement of Stockholders Equity (Deficit)                    |  | 4   
|           |  |                                                                                      
|           |  | Condensed Consolidated Statements of Cash Flows                                       |  | 5   
|           |  |                                                                                      
|           |  | Notes to Condensed Consolidated Financial Statements                                  |  | 6   
|           |  |                                                                                      
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 16  
|           |  |                                                                                      
|Item 3.    |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 29  
|           |  |                                                                                      
|Item 4.    |  | Controls and Procedures                                                               |  | 29  
|           |  |                                                                                      
|Part II    |  | Other Information                                                                     |  |     
|           |  |                                                                                      
|Item 1.    |  | Legal Proceedings                                                                     |  | 30  
|           |  |                                                                                      
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 30  
|           |  |                                                                                      
|Item 3.    |  | Defaults Upon Senior Securities                                                       |  | 30  
|           |  |                                                                                      
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                   |  | 30  
|           |  |                                                                                      
|Item 5.    |  | Other Information                                                                     |  | 30  
|           |  |                                                                                      
|Item 6.    |  | Exhibits                                                                              |  | 30  
|           | 
|Signatures |  | 31                                                                                   
|           | 
|Exhibits   |  |                                                                                      



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##### Table of Contents

Part I. Financial Information

Item 1. Financial Statements



IWO HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)



|                                                                                                              |  |                                      |         |   |                                       |   |          |  
|------------------------------------------------------------------------------------------------------------- |  | ------------------------------------ | ------- | - | ------------------------------------- | - | -------- | -
|                                                                                                              |  | Successor Company September 30, 2005 |         |   | Predecessor Company December 31, 2004 |  
|                                                                                                              |  | (Unaudited)                          |         |   | (Note 1)                              |  
|Assets                                                                                                        |  |                                      |         |   |                                       |   |          |  
|Current assets:                                                                                               |  |                                      |         |   |                                       |   |          |  
|Cash and cash equivalents                                                                                     |  | $                                    | 31,943  |   |                                       | $ | 33,840   |  
|Subscriber receivables, net                                                                                   |  |                                      | 11,493  |   |                                       |   | 11,381   |  
|Inventory                                                                                                     |  |                                      | 1,927   |   |                                       |   | 1,386    |  
|Prepaid expenses                                                                                              |  |                                      | 4,970   |   |                                       |   | 6,428    |  
|Other assets                                                                                                  |  |                                      | 2,066   |   |                                       |   | 1,373    |  
|                                                                                                              |  |                                      |         |   |                                       |   |          |  
|Total current assets                                                                                          |  |                                      | 52,399  |   |                                       |   | 54,408   |  
|Property and equipment, net                                                                                   |  |                                      | 115,707 |   |                                       |   | 150,796  |  
|Goodwill                                                                                                      |  |                                      | 27,467  |   |                                       |   |         |  
|Intangible assets, net                                                                                        |  |                                      | 117,595 |   |                                       |   | 17,331   |  
|Other assets                                                                                                  |  |                                      | 12,326  |   |                                       |   | 13,643   |  
|                                                                                                              |  |                                      |         |   |                                       |   |          |  
|Total assets                                                                                                  |  | $                                    | 325,494 |   |                                       | $ | 236,178  |  
|                                                                                                              |  |                                      |         |   |                                       |   |          |  
|Liabilities and Stockholders Equity (Deficit)                                                                |  |                                      |         |   |                                       |   |          |  
|Current liabilities:                                                                                          |  |                                      |         |   |                                       |   |          |  
|Accounts payable                                                                                              |  | $                                    | 7,202   |   |                                       | $ | 24,277   |  
|Accrued expenses                                                                                              |  |                                      | 16,446  |   |                                       |   | 40,333   |  
|Payable to related party                                                                                      |  |                                      |        |   |                                       |   | 471      |  
|Current maturities of long-term obligations                                                                   |  |                                      |        |   |                                       |   | 355,275  |  
|                                                                                                              |  |                                      |         |   |                                       |   |          |  
|Total current liabilities                                                                                     |  |                                      | 23,648  |   |                                       |   | 420,356  |  
|Long term obligations, net of current maturities                                                              |  |                                      | 239,324 |   |                                       |   |         |  
|Other                                                                                                         |  |                                      | 1,306   |   |                                       |   | 5,851    |  
|Stockholders equity (deficit):                                                                               |  |                                      |         |   |                                       |   |          |  
|Preferred stock, $0.01 par value per share; 50,000 shares authorized; none issued and outstanding             |  |                                      |        |   |                                       |   |         |  
|Common stock, par value $0.01 per share; 9,950,000 shares authorized; 5,000,005 shares issued and outstanding |  |                                      | 50      |   |                                       |   |         |  
|Common stock (non-voting), $0.01 par value per share; 100,000 shares authorized; none issued and outstanding  |  |                                      |        |   |                                       |   | 1        |  
|Additional paid in capital                                                                                    |  |                                      | 84,950  |   |                                       |   | 446,449  |  
|Retained deficit                                                                                              |  |                                      | (23,784 | ) |                                       |   | (636,479 | )
|                                                                                                              |  |                                      |         |   |                                       |   |          |  
|Total stockholders equity (deficit)                                                                          |  |                                      | 61,216  |   |                                       |   | (190,029 | )
|                                                                                                              |  |                                      |         |   |                                       |   |          |  
|Total liabilities and stockholders equity (deficit)                                                          |  | $                                    | 325,494 |   |                                       | $ | 236,178  |  
|                                                                                                              |  |                                      |         |   |                                       |   |          |  



See
accompanying notes to unaudited condensed consolidated financial statements.



1



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##### Table of Contents

IWO HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)



|                                                 |  |                                               |        |   |                                               |   |         |  
|------------------------------------------------ |  | --------------------------------------------- | ------ | - | --------------------------------------------- | - | ------- | -
|                                                 |  | Successor Company                             |        |   | Predecessor Company                           |  
|                                                 |  | For the Three Months Ended September 30, 2005 |        |   | For the Three Months Ended September 30, 2004 |  
|Revenues:                                        |  |                                               |        |   |                                               |   |         |  
|Subscriber                                       |  | $                                             | 36,504 |   |                                               | $ | 36,278  |  
|Roaming                                          |  |                                               | 15,346 |   |                                               |   | 10,790  |  
|Merchandise sales                                |  |                                               | 1,734  |   |                                               |   | 2,320   |  
|Other revenue                                    |  |                                               | 283    |   |                                               |   | 96      |  
|                                                 |  |                                               |        |   |                                               |   |         |  
|Total revenue                                    |  |                                               | 53,867 |   |                                               |   | 49,484  |  
|                                                 |  |                                              
|Expense:                                         |  |                                               |        |   |                                               |   |         |  
|Cost of service                                  |  |                                               | 28,701 |   |                                               |   | 25,824  |  
|Merchandise cost of sales                        |  |                                               | 3,480  |   |                                               |   | 4,183   |  
|General and administrative                       |  |                                               | 2,329  |   |                                               |   | 4,303   |  
|Sales and marketing                              |  |                                               | 8,394  |   |                                               |   | 7,366   |  
|Depreciation and amortization                    |  |                                               | 12,362 |   |                                               |   | 7,053   |  
|                                                 |  |                                               |        |   |                                               |   |         |  
|Total expense                                    |  |                                               | 55,266 |   |                                               |   | 48,729  |  
|                                                 |  |                                               |        |   |                                               |   |         |  
|Operating loss                                   |  |                                               | (1,399 | ) |                                               |   | 755     |  
|                                                 |  |                                              
|Other income (expense):                          |  |                                               |        |   |                                               |   |         |  
|Interest expense                                 |  |                                               | (5,483 | ) |                                               |   | (10,341 | )
|Interest income                                  |  |                                               | 269    |   |                                               |   | 115     |  
|Loss on sale of assets                           |  |                                               |       |   |                                               |   | (59     | )
|                                                 |  |                                               |        |   |                                               |   |         |  
|Total other expense                              |  |                                               | (5,214 | ) |                                               |   | (10,285 | )
|                                                 |  |                                               |        |   |                                               |   |         |  
|Net loss                                         |  | $                                             | (6,613 | ) |                                               | $ | (9,530  | )
|                                                 |  |                                               |        |   |                                               |   |         |  
|Basic and diluted loss per share of common stock |  | $                                             | (1.32  | ) |                                               |   | n/a     |  
|                                                 |  |                                               |        |   |                                               |   |         |  



See
accompanying notes to unaudited condensed consolidated financial statements.



2



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##### Table of Contents

IWO HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)



|                                                 |  |                                               |         |   |                                      |   |          |                                              |  |   |         |  
|------------------------------------------------ |  | --------------------------------------------- | ------- | - | ------------------------------------ | - | -------- | -------------------------------------------- |  | - | ------- | -
|                                                 |  | Successor Company                             |         |   | Predecessor Company                  |  
|                                                 |  | For the Eight Months Ended September 30, 2005 |         |   | For the Month Ended January 31, 2005 |   |          | For the Nine Months Ended September 30, 2004 | 
|Revenues:                                        |  |                                               |         |   |                                      |   |          |                                              |  |   |         |  
|Subscriber                                       |  | $                                             | 96,308  |   |                                      | $ | 12,302   |                                              |  | $ | 104,396 |  
|Roaming                                          |  |                                               | 35,654  |   |                                      |   | 2,503    |                                              |  |   | 28,504  |  
|Merchandise sales                                |  |                                               | 5,250   |   |                                      |   | 665      |                                              |  |   | 6,774   |  
|Other revenue                                    |  |                                               | 710     |   |                                      |   | 29       |                                              |  |   | 271     |  
|                                                 |  |                                               |         |   |                                      |   |          |                                              |  |   |         |  
|Total revenue                                    |  |                                               | 137,922 |   |                                      |   | 15,499   |                                              |  |   | 139,945 |  
|                                                 |  |                                               |        
|Expense:                                         |  |                                               |         |   |                                      |   |          |                                              |  |   |         |  
|Cost of service                                  |  |                                               | 74,082  |   |                                      |   | 7,772    |                                              |  |   | 73,424  |  
|Merchandise cost of sales                        |  |                                               | 8,560   |   |                                      |   | 1,259    |                                              |  |   | 13,107  |  
|General and administrative                       |  |                                               | 7,877   |   |                                      |   | 675      |                                              |  |   | 11,205  |  
|Gain on reorganization                           |  |                                               |        |   |                                      |   | (113,966 | )                                            |  |   |        |  
|Sales and marketing                              |  |                                               | 22,696  |   |                                      |   | 2,645    |                                              |  |   | 22,609  |  
|Depreciation and amortization                    |  |                                               | 34,010  |   |                                      |   | 2,273    |                                              |  |   | 27,958  |  
|                                                 |  |                                               |         |   |                                      |   |          |                                              |  |   |         |  
|Total expense                                    |  |                                               | 147,225 |   |                                      |   | (99,342  | )                                            |  |   | 148,303 |  
|                                                 |  |                                               |         |   |                                      |   |          |                                              |  |   |         |  
|Operating income (loss)                          |  |                                               | (9,303  | ) |                                      |   | 114,841  |                                              |  |   | (8,358  | )
|                                                 |  |                                               |        
|Other income (expense):                          |  |                                               |         |   |                                      |   |          |                                              |  |   |         |  
|Interest expense                                 |  |                                               | (15,472 | ) |                                      |   | (1,772   | )                                            |  |   | (29,002 | )
|Interest income                                  |  |                                               | 991     |   |                                      |   | 18       |                                              |  |   | 325     |  
|Gain on extinguishment of debt                   |  |                                               |        |   |                                      |   | 76,942   |                                              |  |   |        |  
|Loss on sale of assets                           |  |                                               |        |   |                                      |   |         |                                              |  |   | (84     | )
|                                                 |  |                                               |         |   |                                      |   |          |                                              |  |   |         |  
|Total other income (expense)                     |  |                                               | (14,481 | ) |                                      |   | 75,188   |                                              |  |   | (28,761 | )
|                                                 |  |                                               |         |   |                                      |   |          |                                              |  |   |         |  
|Net income (loss)                                |  | $                                             | (23,784 | ) |                                      | $ | 190,029  |                                              |  | $ | (37,119 | )
|                                                 |  |                                               |         |   |                                      |   |          |                                              |  |   |         |  
|Basic and diluted loss per share of common stock |  | $                                             | (4.76   | ) |                                      |   | n/a      |                                              |  |   | n/a     |  
|                                                 |  |                                               |         |   |                                      |   |          |                                              |  |   |         |  



See
accompanying notes to unaudited condensed consolidated financial statements.



3



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##### Table of Contents

IWO HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT)

(Unaudited)

(In thousands)



|                                                          |  |                                  |    |   |                            |   |          |                  |  |   |          |   |  |   |          |  
|--------------------------------------------------------- |  | -------------------------------- | -- | - | -------------------------- | - | -------- | ---------------- |  | - | -------- | - |  | - | -------- | -
|                                                          |  | IWO Holdings, Inc. Capital Stock |    |   | Additional paid-in Capital |   |          | Retained Deficit |  |   | Total    |  
|Predecessor Company Balance at December 31, 2004          |  | $                                | 1  |   |                            | $ | 446,449  |                  |  | $ | (636,479 | ) |  | $ | (190,029 | )
|Predecessor Company net income                            |  |                                  |   |   |                            |   |         |                  |  |   | 190,029  |   |  |   | 190,029  |  
|                                                          |  |                                  |    |   |                            |   |          |                  |  |   |          |   |  |   |          |  
|Predecessor Companys balance at January 31, 2005         |  |                                  | 1  |   |                            |   | 446,449  |                  |  |   | (446,450 | ) |  |   |         |  
|Elimination of Predecessor Companys stockholders equity |  |                                  | (1 | ) |                            |   | (446,449 | )                |  |   | 446,450  |   |  |   |         |  
|Issuance of Common Stock by Successor Company             |  |                                  | 50 |   |                            |   | 84,950   |                  |  |   |         |   |  |   | 85,000   |  
|Successor Company net loss                                |  |                                  |   |   |                            |   |         |                  |  |   | (23,784  | ) |  |   | (23,784  | )
|                                                          |  |                                  |    |   |                            |   |          |                  |  |   |          |   |  |   |          |  
|Successor Company balance at September 30, 2005           |  | $                                | 50 |   |                            | $ | 84,950   |                  |  | $ | (23,784  | ) |  | $ | 61,216   |  
|                                                          |  |                                  |    |   |                            |   |          |                  |  |   |          |   |  |   |          |  



See
accompanying notes to unaudited condensed consolidated financial statements.



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##### Table of Contents

IWO HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)



|                                                   |  |                                               |         |   |                                      |   |          |                                             |  |   |        |  
|-------------------------------------------------- |  | --------------------------------------------- | ------- | - | ------------------------------------ | - | -------- | ------------------------------------------- |  | - | ------ | -
|                                                   |  | Successor Company                             |         |   | Predecessor Company                  |  
|                                                   |  | For the Eight Months Ended September 30, 2005 |         |   | For the Month Ended January 31, 2005 |   |          | For the NineMonths Ended September 30, 2004 | 
|Cash flows from operating activities               |  |                                               |         |   |                                      |   |          |                                             |  |   |        |  
|Net cash provided (used) by operating activities   |  | $                                             | 8,057   |   |                                      | $ | (1,655   | )                                           |  | $ | (5,128 | )
|                                                   |  |                                               |         |   |                                      |   |          |                                             |  |   |        |  
|Cash flows provided (used) by investing activities |  |                                               |         |   |                                      |   |          |                                             |  |   |        |  
|Purchases of property and equipment                |  |                                               | (9,066  | ) |                                      |   | (2,118   | )                                           |  |   | (7,419 | )
|Release of restricted cash                         |  |                                               |        |   |                                      |   |         |                                             |  |   | 19,279 |  
|Bond collateral related to capital projects        |  |                                               | (1,628  | ) |                                      |   |         |                                             |  |   |       |  
|Proceeds from the sale of assets                   |  |                                               |        |   |                                      |   |         |                                             |  |   | 159    |  
|                                                   |  |                                               |         |   |                                      |   |          |                                             |  |   |        |  
|Net cash provided (used) by investing activities   |  |                                               | (10,694 | ) |                                      |   | (2,118   | )                                           |  |   | 12,019 |  
|                                                   |  |                                               |         |   |                                      |   |          |                                             |  |   |        |  
|Cash flows provided (used) by financing activities |  |                                               |         |   |                                      |   |          |                                             |  |   |        |  
|Principal payments on long-term debt               |  |                                               |        |   |                                      |   | (215,475 | )                                           |  |   |       |  
|Proceeds from long term borrowing                  |  |                                               |        |   |                                      |   | 231,229  |                                             |  |   | 1,816  |  
|Debt issuance costs                                |  |                                               | (301    | ) |                                      |   | (10,940  | )                                           |  |   |       |  
|                                                   |  |                                               |         |   |                                      |   |          |                                             |  |   |        |  
|Net cash provided (used) by financing activities   |  |                                               | (301    | ) |                                      |   | 4,814    |                                             |  |   | 1,816  |  
|                                                   |  |                                               |         |   |                                      |   |          |                                             |  |   |        |  
|Net change in cash and cash equivalents            |  |                                               | (2,938  | ) |                                      |   | 1,041    |                                             |  |   | 8,707  |  
|Cash and cash equivalents at beginning of period   |  |                                               | 34,881  |   |                                      |   | 33,840   |                                             |  |   | 32,337 |  
|                                                   |  |                                               |         |   |                                      |   |          |                                             |  |   |        |  
|Cash and cash equivalents at end of period         |  | $                                             | 31,943  |   |                                      | $ | 34,881   |                                             |  | $ | 41,044 |  
|                                                   |  |                                               |         |   |                                      |   |          |                                             |  |   |        |  



See
accompanying notes to unaudited condensed consolidated financial statements.



5



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##### Table of Contents

IWO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

(unaudited)



1. Business and Basis of Presentation



Nature of Business and Operations



IWO Holdings, Inc. and its subsidiaries (collectively referred to as the
Company, IWO, we and us), is a network partner of Sprint. The Company has the right to provide digital wireless personal communications services, or PCS, under the Sprint brand names in a territory
that includes a total population, or POPs, of approximately 6.2 million. The Companys service area covers upstate New York, including the markets of Albany, Binghamton, Syracuse and Ithaca, substantially all of New Hampshire and Vermont and
portions of Massachusetts and Pennsylvania.



Plan of Reorganization



IWO is a restructured company. On January 4, 2005,
IWO and each of its subsidiaries (collectively, the Debtors) filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court) seeking relief under the provisions of Chapter
11 of title 11 of the United States Code (the Bankruptcy Code) (the Chapter 11 Case). In connection with the Chapter 11 Case, the Debtors also filed with the Bankruptcy Court on January 4, 2005 a proposed
pre-packaged plan of reorganization (the Plan of Reorganization), which was confirmed on February 9, 2005 (effective February 10, 2005) pursuant to an order entered by the Bankruptcy Court.



Pursuant to the Plan of Reorganization, on February 10, 2005, IWO Escrow
Company (IWO Escrow), a special-purpose entity formed to obtain new debt financing and merge with and into IWO upon consummation of the Plan of Reorganization, was merged into IWO. At that time, IWO assumed $150.0 million in Senior
Secured Floating Rate Notes due 2012 and $140.0 million principal amount at maturity of 10.75% Senior Discount Notes due 2015, each of which had been issued by IWO Escrow, resulting in approximately $231.2 million in aggregate net proceeds to IWO.
IWO used these proceeds to repay in full and terminate its existing $215.5 million senior credit facility. The existing common stock of IWO, all of which was owned by US Unwired, was cancelled, with no distributions or payments thereon. In addition,
IWOs existing $160.0 million senior notes were cancelled and exchanged for 5,000,005 shares of new common stock of IWO.



On November 29, 2004, IWO Escrow signed a letter of intent with Sprint PCS, effective on the consummation of the reorganization, under which the
parties agreed to amend our affiliation agreement with Sprint PCS. The amendments were retroactively effective to November 1, 2004 and subject to the right of Sprint PCS to terminate the amendments in the event a reorganization did not occur.
The amendments include a provision for the settlement of all outstanding disputed charges between us and Sprint PCS that had been disputed by us prior to November 1, 2004; the restructuring of costs that Sprint PCS charges us for certain
services, which was adjusted effective November 1, 2004; an increase in the fixed reciprocal roaming rate, which rate was retroactive back to November 1, 2004; a reduction in our coverage area by approximately 100,000 people in certain
portions of New Hampshire and Vermont; and, a modification to the service area build-out requirements.



In connection with the consummation of the Plan of Reorganization, IWO terminated its management agreement with US Unwired, dated April 1, 2004, as
amended on January 3, 2005. The termination of the management agreement was subject to a four-month transition period during which US Unwired provided transitional management and restructuring services as defined in the management agreement.
The transition period, as defined under the management agreement, ended on June 9, 2005.



Fresh Start Accounting



Pursuant to the American Institute of Certified Public Accountants, or the AICPA, Statement of Position 907 (SOP 90-7), Financial Reporting By Entities in Reorganization Under the Bankruptcy Code, the
accounting for the effects of the reorganization occurs once the Plan of Reorganization is confirmed by the Bankruptcy Court and there are no remaining contingencies material to completing the implementation of the Plan of Reorganization. The
fresh-start accounting principles of SOP 90-7 provide, among other things, for the Company to determine the value to be assigned to the assets of reorganized IWO Holdings as of the confirmation date.



For financial reporting purposes, the Company applied fresh-start accounting
as of February 1, 2005 because the results of operations for the nine calendar days prior to February 10, 2005 did not have a material impact on the reorganized Companys financial position, results of operations and cash flows. The
periods as of and prior to January 31, 2005 have been designated Predecessor Company and the periods subsequent to January 31, 2005 have been designated Successor Company.



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Under fresh-start accounting, the Companys reorganization value was allocated to its assets and
liabilities based on their respective fair values in conformity with the purchase method of accounting for business combinations. The excess of reorganization value over the fair value of net assets and liabilities is reported as goodwill. Certain
assets as well as related depreciation and amortization expense set forth on the Companys financial statements give effect to the adjustments that were the result of the adoption of fresh-start accounting. Accordingly, the Companys
financial condition and results of operations subsequent to the reorganization will not be comparable to the Companys financial condition or results of operations prior to the reorganization.



Acquisition by Sprint Nextel Corporation



On August 30, 2005, IWO announced the proposed merger of IWO into a
subsidiary of Sprint Nextel Corporation (Sprint). On September 28, 2005 a proxy statement was sent to IWO stockholders and a stockholders meeting was held on October 19, 2005 approving the transaction. The transaction was
completed on October 20, 2005 at which time Italy Acquisition Corp., a wholly-owned subsidiary of Sprint, was merged with and into IWO, with IWO surviving the merger as a wholly-owned subsidiary of Sprint. In connection with the consummation of
the merger, each share of common stock of IWO that was issued and outstanding immediately prior to the effective time of the merger was cancelled and automatically converted into the right to receive an amount in cash equal to $42.50, less any
required withholding taxes and without interest. All outstanding options to acquire shares of common stock of IWO granted under the IWO 2005 Equity Award Plan that were not exercised before the completion of the merger were terminated immediately
after completion of the merger. In exchange for the cancellation of the holders options (regardless of exercise price or whether or not the options were vested and exercisable), the Company paid each option holder an amount in cash determined
by multiplying the excess, if any, of $42.50 over the applicable exercise price per share of the option by the number of shares of common stock of IWO that the holder could have purchased had the holder exercised the option in full immediately
before completion of the merger, less any required withholding taxes and without interest.



Use of Management Estimates



The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results can vary from these estimates.



Basis of Presentation



The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete
financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the periods presented are not necessarily indicative
of the results that may be expected for the year ending December 31, 2005.



The condensed consolidated balance sheet at December 31, 2004 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for
complete financial statements. The condensed consolidated financial statements contained herein should be read in conjunction with the financial statements and notes included in the Form 10-K for IWO Holdings, Inc. for the year ended
December 31, 2004, filed on March 31, 2005 with the Securities and Exchange Commission. Certain reclassifications have been made to the financial statements for the periods ended September 30, 2004 to conform to the presentation of
the financial statements herein.



2. Summary of Significant Accounting
Policies



Revenue Recognition



The Company earns revenue by providing access to and usage of its network
and sales of merchandise. Subscriber revenue consists primarily of a basic service plan (where the customer purchases a pre-allotted number of minutes for voice and/or data transmission); airtime (which consists of billings for minutes that either
exceed or are not covered by the basic service plan) and long distance. Travel revenue is generated on a per-minute basis when a Sprint subscriber outside of our markets uses the Companys service when traveling through the Companys
markets. Foreign roaming revenue is generated when a non-Sprint customer uses the Companys service when traveling through the Companys markets. The Company recognizes roaming revenue through an agreement that allows a reseller to sell
prepaid wireless services in its markets. Revenues are recognized when amounts are considered to be earned under the respective service plans and collection of such amounts is considered probable.



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Sprint retains 8% of collected service revenues from subscribers based in the Companys service
area, foreign roaming and revenue generated under its reseller agreement. The amount of affiliation fees retained by Sprint PCS is recorded as a cost of services expense. Revenues derived from the sale of handsets and accessories by the Company and
from certain roaming services (outbound roaming and roaming revenues from Sprint and its PCS network partner subscribers) are not subject to the 8% affiliation fee from Sprint.



Revenues from the sales of merchandise, primarily wireless handsets and accessories, represent a separate earnings process
and are recognized at the time of the customer purchase. These revenues and related costs are included in merchandise sales and merchandise cost of sales, respectively. The Company reduces recorded revenue for rebates and discounts given to
subscribers on wireless handsets sales in accordance with Emerging Issues Task Force (EITF) Issue No. 01-9 Accounting for Consideration Given by a Vendor to a Subscriber (Including a Reseller of the Vendors
Products).



The Company recognizes revenues from
activation fees in accordance with EITF Issue No. 00-21. In May 2003, the EITF modified its previous consensus to EITF Issue No. 00-21 to clarify the scope of Issue No. 00-21 and its interaction with other authoritative literature. As permitted
under the modified consensus, the Company adopted this modified consensus effective July 1, 2003 for all revenue arrangements entered into subsequent to June 30, 2003. EITF Issue No. 00-21 addresses the determination of whether an
arrangement involving more than one deliverable contains more than one unit of accounting and how the related revenues should be measured and allocated to the separate units of accounting. In applying this guidance, separate contracts with the same
party, entered into at or near the same time, will be presumed to be a package, and the consideration will be measured and allocated to the separate units based on their relative fair values. The Company believes that the sale of handsets and future
service under contract should be accounted for as separate units under EITF Issue No. 00-21. As a result, the total consideration under these arrangements, including any related activation fees, is allocated between these separate units based on
their relative fair values.



The Company recognizes only a
portion of contract cancellation fees billed to subscribers that disconnect service prior to fulfilling the contractual length of service, as there is significant uncertainty that all contract cancellation fees that are billed will be collected. The
Company has very limited information at a detail level sufficient to perform its own evaluation and relies on Sprint historical trending to make its estimates. If the collections on contract cancellation fees are less than that recognized,
additional allowances may be required.



The Company recognizes
only a portion of late fees billed to subscribers that fail to pay their bills within the required payment period, as there is no assurance that all late fees that are billed will be collected. The Company has very limited information at a detail
level sufficient to perform its own evaluation and relies on Sprint historical trends to make its estimates. If the collections on late fees are less than that recognized, additional allowances may be required.



Inventory and Inventory Reserves



Inventories consist of wireless handsets and related accessories and are
carried at cost. Cost is determined by the moving weighted average method, which approximates the first-in, first-out method.



Accrued Commissions



The Company accrues commissions and other costs related to national retailers based upon their sales to new subscribers. The national retailers receive
both a commission and, because the handset is typically sold below cost, a reimbursement for the difference between the sales price and the cost. The Company bases its accruals on information provided by Sprint on subscriber additions and recognizes
that there are typically timing differences between the point of subscriber activation and the time that the Company is invoiced for commissions by Sprint. The Company periodically and annually evaluates the adequacy of its accruals through analysis
of historical information and discussions with Sprint. Depending on the level of sales and other factors, the Companys estimates of the amounts accrued for commissions and other costs owed to such retailers may require modification of its
previous estimates.



Goodwill and Intangible Assets Impairment Analysis



The excess of the reorganization value over the fair
value of net assets and liabilities has been recorded as goodwill. Goodwill is evaluated for impairment on an annual basis or more often, as required by SFAS No. 142, Goodwill and Other Intangible Assets. On an ongoing basis, the
Company will assess the recoverability of other intangible assets by determining the ability of the specific assets acquired to generate future cash flows sufficient to recover the recorded value over the remaining life. The Company estimates future
cash flows based on the current performance of the acquired assets and our business plan for those assets. Changes in business conditions, major customers or other factors could result in changes in those estimates. Goodwill or other intangible
assets determined to be unrecoverable is written-off in the period in which such determination is made.



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Loss Per Share



Basic and diluted loss per share for the Successor Company are calculated by dividing the net loss available to common stockholders by the weighted
average number of shares of common stock outstanding of the Company. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the Company (such as stock options and warrants). Per share information is not presented for the Predecessor Company.



The following table provides the basis for the calculation of basic and
diluted earnings per share:



|                                                                       |  |                                       |           |  
|---------------------------------------------------------------------- |  | ------------------------------------- | --------- | -
|                                                                       |  | Three months ended September 30, 2005 |          
|                                                                       |  | (In thousands, except share amounts)  |          
|Numerator:                                                             |  |                                       |           |  
|Net loss                                                               |  | $                                     | (6,613    | )
|                                                                       |  |                                       |           |  
|Denominator:                                                           |  |                                       |           |  
|Weighted average number of common shares outstanding-basic and diluted |  |                                       | 5,000,005 |  
|                                                                       |  |                                       |           |  
|                                                                       | 
|                                                                       |  | Eight months ended September 30, 2005 |          
|                                                                       |  | (In thousands, except share amounts)  |          
|Numerator:                                                             |  |                                       |           |  
|Net loss                                                               |  | $                                     | (23,784   | )
|                                                                       |  |                                       |           |  
|Denominator:                                                           |  |                                       |           |  
|Weighted average number of common shares outstanding-basic and diluted |  |                                       | 5,000,005 |  
|                                                                       |  |                                       |           |  



Stock options
outstanding, totaling 331,952 options at September 30, 2005, were excluded in the calculation of diluted loss per share because their impact would have been anti-dilutive.



Stock Compensation



The Company applies the intrinsic value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations including Financial Accounting Standards Board (FASB) Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation an
interpretation of APB Opinion No. 25, to account for its fixed plan stock options. Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise
price. SFAS No. 123, Accounting for Stock-Based Compensation, established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS
No. 123, the Company has elected to continue to apply the intrinsic value-based method of accounting described above, and has adopted the disclosure requirements of SFAS No. 123. The following table illustrates the effect on net loss if
the fair-value-based method had been applied to all outstanding and unvested awards for the three and eight-months ended September 30, 2005:



|                                                                 |  |                                          |         |  
|---------------------------------------------------------------- |  | ---------------------------------------- | ------- | -
|                                                                 |  | Eight months ended September 30, 2005    |        
|                                                                 |  | (In thousands, except per share amounts) |        
|Net loss, as reported                                            |  | $                                        | (23,784 | )
|Add stock-based compensation costs included in net loss          |  |                                          |        |  
|Less non-cash stock compensation in accordance with SFAS No. 123 |  |                                          | (814    | )
|                                                                 |  |                                          |         |  
|Pro-forma                                                        |  | $                                        | (24,598 | )
|                                                                 |  |                                          |         |  
|Basic and diluted loss per share:                                |  |                                          |         |  
|As reported                                                      |  | $                                        | (4.76   | )
|Pro-forma                                                        |  | $                                        | (4.92   | )



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|                                                                 |  |                                          |        |  
|---------------------------------------------------------------- |  | ---------------------------------------- | ------ | -
|                                                                 |  | Three months ended September 30, 2005    |       
|                                                                 |  | (In thousands, except per share amounts) |       
|Net loss, as reported                                            |  | $                                        | (6,613 | )
|Add stock-based compensation costs included in net loss          |  |                                          |       |  
|Less non-cash stock compensation in accordance with SFAS No. 123 |  |                                          | (305   | )
|                                                                 |  |                                          |        |  
|Pro-forma                                                        |  | $                                        | (6,918 | )
|                                                                 |  |                                          |        |  
|Basic and diluted loss per share:                                |  |                                          |        |  
|As reported                                                      |  | $                                        | (1.32  | )
|Pro-forma                                                        |  | $                                        | (1.38  | )



New Accounting Pronouncements



On December 16, 2004, the FASB issued Statement
No. 123 (revised 2004), Share-Based Payment which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. Statement 123R supersedes APB No. 25, Accounting for Stock Issued to
Employees and amends SFAS No. 95, Statement of Cash Flows. SFAS No. 123R is effective for the Company on January 1, 2006.



In March 2005, the SEC staff issued Staff Accounting Bulletin No. 107 (SAB 107), which expresses the SECs views regarding the interaction
between SFAS No. 123R and certain SEC rules and regulations. SAB 107 also provides guidance related to, among other things, share-based payment transactions with non-employees, valuation methods and assumptions, classification of compensation
expense, first-time adoption of SFAS No. 123R and related income tax effects, modification of existing employee stock options and disclosures in SEC filings. The Company will apply the principles of SAB 107 in conjunction with its adoption of
SFAS No. 123R.



3. Liquidity and Capital Resources



Financing Transactions



On January 4, 2005, the Company and its subsidiaries filed voluntary petitions in the Bankruptcy Court seeking relief
under the Bankruptcy Code. Upon filing the petition, the Company continued to operate its businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provision of the Bankruptcy Code and
the orders of the Bankruptcy Court.



As previously discussed in
Note 1, on February 9, 2005, the Bankruptcy Court entered an order confirming the Companys Plan of Reorganization (effective February 10, 2005). Pursuant to the Plan of Reorganization, on February 10, 2005, IWO Escrow was merged
into the Company and the Company assumed new notes for aggregate proceeds of approximately $232.7 million. The Company repaid in full and terminated its existing $215.0 million senior credit facility. The Companys $160.0 million senior notes
were cancelled and exchanged for 5,000,005 shares of new common stock. The existing common stock of the Company, all of which was owned by US Unwired, was cancelled, with no distributions or payments thereon. As a result of the merger, we assumed
all obligations of IWO Escrow, including those under the new notes described below.



On January 6, 2005, IWO Escrow issued $150.0 million aggregate principal amount of Senior Secured Floating Rate Notes due 2012 for proceeds of $145.4 million, net of underwriting and escrow fees. Interest
payments for the Senior Secured Floating Rate Notes are due on each April 15, July 15, October 15 and January 15, commencing on April 15, 2005. As a result of the Companys assuming the obligations under the
Senior Secured Floating Rate Notes, the Company is required to comply with certain covenants that restrict its ability to incur additional indebtedness, pay dividends, make repayments on indebtedness that is subordinated to the Senior Secured
Floating Rate Notes and to make certain other restricted payments, incur certain liens, use proceeds from sales of assets, enter into business combination transactions (including mergers, consolidations and asset sales), enter into transactions with
affiliates and permit restrictions on the payment of dividends by restricted subsidiaries. The indenture governing the Senior Secured Floating Rate Notes does not contain financial maintenance covenants. The Senior Secured Floating Rate Notes rank
equally in right of payment with any of our senior indebtedness and senior in right of payment to any of the Companys subordinated indebtedness. All obligations under the Senior Secured Floating Rate Notes are guaranteed on a senior, secured
basis by the Company and will be guaranteed by future subsidiaries except certain foreign and certain domestic subsidiaries. The Senior Secured Floating Rate Notes and the guarantees are collateralized by a first priority security interest in
substantially all of the Companys assets.



On
January 6, 2005, IWO Escrow also issued $140.0 million aggregate principal amount at maturity of 10.75% Senior Discount Notes due 2015 for proceeds of $80.1 million, net of underwriting and escrow fees. Interest on the 10.75% Senior



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Discount Notes will accrue semi-annually until July 15, 2010, in the form of an increase in the accreted value of
the 10.75% Senior Discount Notes. Thereafter, cash interest on the 10.75% Senior Discount Notes will accrue and be payable semi-annually in arrears on each January 15 and July 15. As a result of the Company assuming the obligations under
the 10.75% Senior Discount Notes, the Company is required to comply with certain covenants that restrict its ability to incur additional indebtedness, pay dividends, make repayments on indebtedness that is subordinated to the Senior Discount Notes
and to make certain other restricted payments, incur certain liens, use proceeds from sales of assets, enter into business combination transactions (including mergers, consolidations and asset sales), enter into transactions with affiliates and
permit restrictions on the payment of dividends by restricted subsidiaries. The indenture governing the Senior Discount Notes does not contain financial maintenance covenants. All obligations under the Senior Discount Notes are guaranteed on a
senior basis by the Company, and will be guaranteed by future subsidiaries except certain foreign and certain domestic subsidiaries.



There are no credit ratings related triggers in the indentures governing new notes that would impact the cost of borrowing, annual amortization of
principal or related indebtedness maturity. The indentures contain customary events of default, which, if triggered, could cause acceleration of the new notes.



Credit Facility



On December 20, 1999, a senior secured credit facility was entered into by and among the Predecessor Companys principal operating subsidiary,
JPMorgan Chase Bank, N.A., as administrative agent, and each of the other entities from time to time party thereto, as lenders. The credit facility was collateralized by substantially all of the tangible and intangible assets, including all of the
issued and outstanding shares. In connection with the consummation of our Plan of Reorganization and pursuant to a payoff letter dated February 10, 2005, all of the liabilities, obligations and indebtedness under the credit facility, which
consisted of $215.0 million in respect of principal outstanding under the credit facility plus accrued interest thereon and fees and expenses, were paid in full. Upon payment in full of the amounts specified in the payoff letter, the credit facility
was terminated.



4. Details of Certain Balance Sheet Accounts



Major categories of property and equipment at September 30, 2005
and December 31, 2004 were as follows:



|                                               |  |                                      |         |   |                                       |   |         |  
|---------------------------------------------- |  | ------------------------------------ | ------- | - | ------------------------------------- | - | ------- | -
|                                               |  | Successor Company September 30, 2005 |         |   | Predecessor Company December 31, 2004 |  
|                                               |  | (In thousands)                       |        
|Land                                           |  | $                                    | 150     |   |                                       | $ | 168     |  
|Buildings and leasehold improvements           |  |                                      | 5,931   |   |                                       |   | 9,390   |  
|Facilities and equipment                       |  |                                      | 116,765 |   |                                       |   | 196,437 |  
|Furniture, fixtures and vehicles               |  |                                      | 2,104   |   |                                       |   | 5,642   |  
|Construction in progress                       |  |                                      | 8,299   |   |                                       |   | 6,626   |  
|                                               |  |                                      |         |   |                                       |   |         |  
|                                               |  |                                      | 133,249 |   |                                       |   | 218,263 |  
|Less accumulated depreciation and amortization |  |                                      | (17,542 | ) |                                       |   | (67,467 | )
|                                               |  |                                      |         |   |                                       |   |         |  
|Total property and equipment, net              |  | $                                    | 115,707 |   |                                       | $ | 150,796 |  
|                                               |  |                                      |         |   |                                       |   |         |  



On February 1, 2005, as a result
of the Companys reorganization and in accordance with the Companys fresh-start accounting under SOP 90-7, the Company reduced its net property and equipment by $27.7 million to their estimated fair values.



Intangible assets at September 30, 2005 and December 31, 2004 were as follows:



|                                                     |  |                                      |         |   |                                       |   |        |  
|---------------------------------------------------- |  | ------------------------------------ | ------- | - | ------------------------------------- | - | ------ | -
|                                                     |  | Successor Company September 30, 2005 |         |   | Predecessor Company December 31, 2004 |  
|                                                     |  | (In thousands)                       |        
|Right to provide service under the Sprint agreements |  | $                                    | 72,000  |   |                                       | $ | 19,766 |  
|Customer base                                        |  |                                      | 62,000  |   |                                       |   |       |  
|                                                     |  |                                      |         |   |                                       |   |        |  
|                                                     |  |                                      | 134,000 |   |                                       |   | 19,766 |  
|Less accumulated amortization                        |  |                                      | (16,405 | ) |                                       |   | (2,435 | )
|                                                     |  |                                      |         |   |                                       |   |        |  
|Intangible assets, net                               |  | $                                    | 117,595 |   |                                       | $ | 17,331 |  
|                                                     |  |                                      |         |   |                                       |   |        |  



With the
implementation of fresh-start accounting the Company recorded its assets to their estimated fair values and recorded intangible assets of $62.0 million related to the fair value of the customer base and $72.0 million relating to the fair value of
the right to provide service under the Sprint agreements. The customer base is being amortized over the estimated average life of a customer, or 40 months. The right to provide service under the Sprint agreements is being amortized over the
remaining term of the agreements, or 14.9 years.



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The amortization of intangible assets for the three and eight months ended September 30, 2005 was
$5.8 million and $16.4 millions, respectively. Estimated aggregate amortization expense relative to intangible assets for the periods shown below will be as follows:



|                        |  |                |       
|----------------------- |  | -------------- | ------
|Year Ended December 31, |  | (In thousands)
|2005                    |  | $              | 22,188
|2006                    |  |                | 23,132
|2007                    |  |                | 23,132
|2008                    |  |                | 12,454
|2009                    |  |                | 4,827 
|Thereafter              |  |                | 48,267



Deferred Financing Costs



In connection with issuance of the Companys Senior
Secured Floating Rate Notes and Senior Discount Notes, the Company incurred $7.3 million and $4.0 million in debt offering costs, respectively. The Company has capitalized these costs as an asset on its balance sheet as deferred financing costs and
is amortizing them over a period of 7 years and 10 years, respectively.



5.
Long-Term Obligations



Long-term obligations at
September 30, 2005 and December 31, 2004 were as follows:



|                                                                                         |  |                                      |         |                                       |   |        
|---------------------------------------------------------------------------------------- |  | ------------------------------------ | ------- | ------------------------------------- | - | -------
|                                                                                         |  | Successor Company September 30, 2005 |         | Predecessor Company December 31, 2004
|                                                                                         |  | (In thousands)                      
|Senior secured credit facility                                                           |  | $                                    |        |                                       | $ | 215,000
|Senior subordinated discount notes, net of unamortized discount of $50.7 million in 2005 |  |                                      | 89,324  |                                       |   | 140,275
|Senior secured floating rate notes                                                       |  |                                      | 150,000 |                                       |   |       
|                                                                                         |  |                                      |         |                                       |   |        
|Long-term obligations                                                                    |  |                                      | 239,324 |                                       |   | 355,275
|Less current maturities, in default                                                      |  |                                      |        |                                       |   | 355,275
|                                                                                         |  |                                      |         |                                       |   |        
|Long-term obligations, excluding current maturities                                      |  | $                                    | 239,324 |                                       | $ |       
|                                                                                         |  |                                      |         |                                       |   |        



On February 10,
2005, in connection with the consummation of our Plan of Reorganization, the Company assumed all obligations of IWO Escrow, including the issuance of Senior Secured Floating Rate Notes due 2012 and the issuance of 10.75% Senior Discount Notes due
2015.



On February 10, 2005, the Company repaid in full
and terminated its $215.0 million senior credit facility. Additionally, the former Senior Subordinated Discount Notes were cancelled and exchanged for all of the new common stock of the Company and the existing common stock of the Company, all of
which was owned by US Unwired, was cancelled.



The gain on the
extinguishment of debt totaling $76.9 million resulting from the cancellation of the former senior subordinated discount notes was calculated as the book value of the debt, and related accrued interest, less the fair value of the new common stock
issued in exchange.



For a detailed discussion of Liquidity and
Capital Resources, refer to Note 3.



6. Commitments and Contingencies



The Company uses Sprint to process all post-pay PCS
subscriber billings including monthly recurring charges, airtime and other charges such as interconnect fees. The Company pays various fees to Sprint for new subscribers as well as recurring monthly fees for services performed for existing customers
including billing and management of customer accounts. Sprints billing for these services is based upon an estimate of the actual costs incurred by Sprint to provide such services. At the end of each calendar year, Sprint PCS compares its
actual costs to provide such services to remittances by the Company for estimated billings and either refunds overpayments or bills for costs in excess of the payments made. Based upon information as provided by Sprint, the Company believes it has
adequately provided for the above-mentioned costs in the accompanying consolidated financial statements.



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7. Legal Proceedings



From time to time, the Company is involved in various legal proceedings relating to claims arising in the ordinary course of business. The Company is not
currently a party to any such legal proceedings, the adverse outcome of which, individually or in the aggregate, is expected to have a material adverse effect on its business, financial condition or results of operations.



8. Income Taxes



At December 31, 2004, the Company had available approximately $371.0 million of net operating loss carry forwards for
federal income tax purposes. This carryforward, which may provide future tax benefits, begins to expire in 2019. Under Section 382 of the Internal Revenue Code, the use of loss carryforwards may be limited if a change in ownership of a company
occurs. The Plan of Reorganization constituted a change of ownership for the Companys tax attributes under IRC Section 382 and will result in limitation to the utilization of the Companys net operating loss carryforwards. The
Company anticipates the loss of approximately $222.5 million in carryforwards associated with the limitation of Section 382. After this reduction, the Company has available approximately $148.5 million of net operating loss carryforwards.



In assessing the possibility of realization of deferred tax
assets at September 30, 2005, the Company considered whether it was more likely than not that some portion or all of the deferred tax assets would not be realized. The ultimate realization of deferred tax assets is dependent upon the generation
of future taxable income during the periods in which those temporary differences become deductible. The Company considered the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this
assessment. Based upon these considerations, the Company provided a valuation allowance equal to the carrying value of its deferred tax assets.



9. Reorganized Condensed Consolidated Balance Sheet at February 1, 2005



The following unaudited condensed consolidated balance sheet as of February 1, 2005 gives the effect to the
reorganization and related transactions. The adjustments are based upon available information and certain assumptions that are believed by management to be reasonable.



Pursuant to SOP 90-7, the accounting for the effects of the reorganization occurs once the Plan of Reorganization is
confirmed by the Bankruptcy Court and there are no remaining contingencies material to completing the implementation of this plan. There were no material conditions precedent to the effectiveness of the Plan of Reorganization existing as of the
February 9, 2005 confirmation date. The fresh-start accounting principles of SOP 90-7 provide, among other things, for the Company to determine the value to be assigned to the assets and liabilities of the Company as of the confirmation date.
For financial reporting purposes, the Company applied fresh-start accounting as of February 1, 2005 because the results of operations for the nine days preceding February 10, 2005 (the effective date of the reorganization), did not have a
material impact on the reorganized Companys financial position, results of operations and cash flows.



Under fresh-start accounting, the reorganization value assigned to assets and liabilities is based on their respective fair values in conformity with the
purchase method of accounting for business combinations. A valuation specialist was engaged to perform the valuations required to determine the fair value of our assets. Any excess of the reorganization equity value over the reorganization value of
net assets and liabilities has been recorded as goodwill. The estimated reorganization equity value of the Company of $85.0 million, which served as the basis for the Plan approved by the Bankruptcy Court, was used to determine the value allocated
to the assets and liabilities of the reorganized Company in proportion to their fair values and is in conformity with SFAS No. 141 Business Combinations. The reorganization equity value was determined utilizing independent
appraisers. While the fresh-start accounting adjustments reflected in the balance sheet below may be subject to further revisions, we do not anticipate our final fresh-start accounting adjustments to vary significantly. We have not recorded any
deferred taxes because a valuation allowance has been provided against deferred tax assets as it is not more likely than not that they will be realized.



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IWO HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheet at February 1, 2005



|                                                     |  |                            |          |   |                                          |   |          |                             |  |   |        
|---------------------------------------------------- |  | -------------------------- | -------- | - | ---------------------------------------- | - | -------- | --------------------------- |  | - | -------
|                                                     |  | Pre-Reorganization Balance |          |   | Reorganization & Fresh Start Adjustments |   |          | Post-Reorganization Balance
|                                                     |  | (In thousands)            
|Cash and cash equivalents                            |  | $                          | 24,983   |   |                                          | $ | 9,898    | (g)(h)(i)                   |  | $ | 34,881 
|Restricted cash                                      |  |                            | 80       |   |                                          |   |         |                             |  |   | 80     
|Subscriber receivables, net                          |  |                            | 11,678   |   |                                          |   |         |                             |  |   | 11,678 
|Inventory                                            |  |                            | 1,605    |   |                                          |   |         |                             |  |   | 1,605  
|Prepaid expenses and other assets                    |  |                            | 12,690   |   |                                          |   | (6,500   | )(j)                        |  |   | 6,190  
|Deferred subscriber activation costs current         |  |                            | 1,148    |   |                                          |   | (1,148   | )(a)                        |  |   |       
|                                                     |  |                            |          |   |                                          |   |          |                             |  |   |        
|Total current assets                                 |  |                            | 52,184   |   |                                          |   | 2,250    |                             |  |   | 54,434 
|Property and equipment, net                          |  |                            | 149,418  |   |                                          |   | (27,706  | )(a)                        |  |   | 121,712
|Deferred subscriber activation costs                 |  |                            | 558      |   |                                          |   | (558     | )(a)                        |  |   |       
|Intangible assets, net                               |  |                            |          |   |                                          |   |          |                             |  |   |        
|Subscriber base                                      |  |                            |          |   |                                          |   | 62,000   | (a)                         |  |   | 62,000 
|Sprint affiliation agreement                         |  |                            | 17,237   |   |                                          |   | 54,763   | (a)                         |  |   | 72,000 
|Other assets                                         |  |                            | 1,673    |   |                                          |   |         |                             |  |   | 1,673  
|Debt issue costs                                     |  |                            | 11,218   |   |                                          |   | (278     | )(a)(b)(h)                  |  |   | 10,940 
|Goodwill                                             |  |                            |          |   |                                          |   | 27,468   | (a)                         |  |   | 27,468 
|                                                     |  |                            |          |   |                                          |   |          |                             |  |   |        
|Total assets                                         |  | $                          | 232,288  |   |                                          | $ | 117,939  |                             |  | $ | 350,227
|                                                     |  |                            |          |   |                                          |   |          |                             |  |   |        
|Accounts payable                                     |  | $                          | 23,484   |   |                                          | $ | (15,789  | )(a)(i)                     |  | $ | 7,695  
|Accrued expenses                                     |  |                            | 17,522   |   |                                          |   | 7,290    | (a)(i)                      |  |   | 24,812 
|Deferred subscriber activation revenue current       |  |                            | 1,148    |   |                                          |   | (1,148   | )(a)                        |  |   |       
|Current maturities of long-term obligations          |  |                            | 215,000  |   |                                          |   | (215,000 | )(f)                        |  |   |       
|                                                     |  |                            |          |   |                                          |   |          |                             |  |   |        
|Total current liabilities                            |  |                            | 257,154  |   |                                          |   | (224,647 | )                           |  |   | 32,507 
|Deferred Lease Non-current                           |  |                            | 5,242    |   |                                          |   | (5,242   | )(a)                        |  |   |       
|Senior secured floating rate notes                   |  |                            |          |   |                                          |   | 150,000  | (g)                         |  |   | 150,000
|Senior discount notes                                |  |                            |          |   |                                          |   | 82,720   | (g)                         |  |   | 82,720 
|Direct subscriber activation revenue                 |  |                            | 609      |   |                                          |   | (609     | )(a)                        |  |   |       
|                                                     |  |                            |          |   |                                          |   |          |                             |  |   |        
|Total liabilities not subject to compromise          |  |                            | 263,005  |   |                                          |   | 2,222    |                             |  |   | 265,227
|                                                     |  |                            |          |   |                                          |   |          |                             |  |   |        
|Liabilities subject to compromise:                   |  |                            |          |   |                                          |   |          |                             |  |   |        
|Accrued interest                                     |  |                            | 21,651   |   |                                          |   | (21,651  | )(b)                        |  |   |       
|Senior notes                                         |  |                            | 140,291  |   |                                          |   | (140,291 | )(b)                        |  |   |       
|                                                     |  |                            |          |   |                                          |   |          |                             |  |   |        
|Total liabilities subject to compromise              |  |                            | 161,942  |   |                                          |   | (161,942 | )                           |  |   |       
|                                                     |  |                            |          |   |                                          |   |          |                             |  |   |        
|Stockholders (deficit) equity                       |  |                            |          |   |                                          |   |          |                             |  |   |        
|Common stock                                         |  |                            | 1        |   |                                          |   | 49       | (d)                         |  |   | 50     
|Additional paid in capital                           |  |                            | 446,449  |   |                                          |   | (446,449 | )(c)                        |  |   | 84,950 
|                                                     |  |                            |          |   |                                          |   | 84,950   | (d)                         |  |   |        
|Retained deficit                                     |  |                            | (639,109 | ) |                                          |   | 9,898    | (g)(h)(i)                   |  |   |       
|                                                     |  |                            |          |   |                                          |   | (1,148   | )(a)                        |  |   |        
|                                                     |  |                            |          |   |                                          |   | (27,706  | )(a)                        |  |   |        
|                                                     |  |                            |          |   |                                          |   | (558     | )(a)                        |  |   |        
|                                                     |  |                            |          |   |                                          |   | (17,237  | )(a)                        |  |   |        
|                                                     |  |                            |          |   |                                          |   | 62,000   | (a)                         |  |   |        
|                                                     |  |                            |          |   |                                          |   | 72,000   | (a)                         |  |   |        
|                                                     |  |                            |          |   |                                          |   | (278     | )(a)(b)                     |  |   |        
|                                                     |  |                            |          |   |                                          |   | (6,500   | )(a)                        |  |   |        
|                                                     |  |                            |          |   |                                          |   | 1,148    | (a)                         |  |   |        
|                                                     |  |                            |          |   |                                          |   | 15,789   | (a)                         |  |   |        
|                                                     |  |                            |          |   |                                          |   | 5,242    | (a)                         |  |   |        
|                                                     |  |                            |          |   |                                          |   | 609      | (a)                         |  |   |        
|                                                     |  |                            |          |   |                                          |   | (7,767   | )(a)                        |  |   |        
|                                                     |  |                            |          |   |                                          |   | 21,651   | (b)                         |  |   |        
|                                                     |  |                            |          |   |                                          |   | 140,291  | (b)                         |  |   |        
|                                                     |  |                            |          |   |                                          |   | (49      | )(c)                        |  |   |        
|                                                     |  |                            |          |   |                                          |   | 446,449  | (c)                         |  |   |        
|                                                     |  |                            |          |   |                                          |   | (84,950  | )(d)                        |  |   |        
|                                                     |  |                            |          |   |                                          |   | (17,720  | )(f)(g)                     |  |   |        
|                                                     |  |                            |          |   |                                          |   | 477      | (i)                         |  |   |        
|                                                     |  |                            |          |   |                                          |   | 27,468   | (a)                         |  |   |        
|                                                     |  |                            |          |   |                                          |   |          |                             |  |   |        
|Total stockholders (deficit) equity                 |  |                            | (192,659 | ) |                                          |   | 277,659  |                             |  |   | 85,000 
|                                                     |  |                            |          |   |                                          |   |          |                             |  |   |        
|Total liabilities and stockholders (deficit) equity |  | $                          | 232,288  |   |                                          | $ | 117,939  |                             |  | $ | 350,227
|                                                     |  |                            |          |   |                                          |   |          |                             |  |   |        

---

|(a) | Reflects fresh-start accounting adjustments to record our assets and liabilities at their fair value in the reorganization.
|--- | ---------------------------------------------------------------------------------------------------------------------------



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|(b) | Reflects the cancellation of our former senior notes.
|--- | -----------------------------------------------------

|(c) | Reflects the elimination of the equity of the Predecessor Company.
|--- | ------------------------------------------------------------------

|(d) | Reflects the restatement of the Successor Company stockholders equity under fresh-start accounting.
|--- | ----------------------------------------------------------------------------------------------------

|(e) | Reflects financing costs for the issuance of the notes offered.
|--- | ---------------------------------------------------------------

|(f) | Reflects the repayment and termination of our former senior credit facility.
|--- | ----------------------------------------------------------------------------

|(g) | Reflects the issuance of the notes offered, net of discount.
|--- | ------------------------------------------------------------

|(h) | Reflects the cash proceeds remaining after repayment of our former senior credit facility and payment of the estimated financing costs for the issuance of the notes offered.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(i) | Reflects the settlement and payment of approximately $5.9 million as resolution of disputed Sprint charges.
|--- | -----------------------------------------------------------------------------------------------------------

|(j) | Reflects the release of funds from escrow that was contingent upon emergence from bankruptcy.
|--- | ---------------------------------------------------------------------------------------------



10. Gain on Reorganization



The following items are included in gain on reorganization in the Predecessor Companys condensed consolidated statement of operations for the month
ended January 31, 2005:



|                                                                |  |                                      |         |  
|--------------------------------------------------------------- |  | ------------------------------------ | ------- | -
|                                                                |  | Predecessor Company                  |        
|                                                                |  | For the Month Ended January 31, 2005 |        
|                                                                |  | (In thousands)                       |        
|Fresh start accounting adjustments                              |  | $                                    | 122,848 |  
|Sprint settlement                                               |  |                                      | 11,093  |  
|Professional fees and other costs related to the reorganization |  |                                      | (8,757  | )
|Write off of debt issuance costs                                |  |                                      | (11,218 | )
|                                                                |  |                                      |         |  
|                                                                |  | $                                    | 113,966 |  
|                                                                |  |                                      |         |  



The fresh-start accounting adjustments
represent the recording of $122.8 million as the result of fresh-start accounting consisting primarily of an increase of $54.8 million associated with the appraised value of the Sprint agreement, $62.0 million associated with the appraised value of
our customer base agreements and $33.7 million of other fair value adjustments offset, in part, by a write-down of property and equipment of $27.7 million.



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



This discussion should be read in conjunction with our unaudited condensed consolidated financial statements included in this report and with the
financial statements, Managements Discussion and Analysis of Financial Condition and Results of Operations and Risk Factors in the Form 10-K for IWO Holdings, Inc. for the year ended December 31, 2004 filed on March 31, 2005 with the
Securities and Exchange Commission (SEC). Some of the statements in the following discussion are forward-looking statements. See Cautionary Note Regarding Forward-Looking Statements.



Cautionary Note Regarding Forward-Looking Statements



This report, and other oral statements made from time to time by our
representatives, contain forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended and the Private Securities Litigation Reform Act of 1995 that are
subject to risks and uncertainties. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and
many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These statements often include words such as
may, believe, expect, anticipate, intend, plan, estimate or similar expressions. These statements are based on assumptions that we have made in light of our industry
experience as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this report, you should understand that these
statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could
affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include but are not limited to:



| |  |  | limited operating history in the wireless market and anticipation of future losses;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | our ability to finance future growth opportunities;
| | - |  | ---------------------------------------------------



| |  |  | our dependence on the personal communications services division of Sprint Nextel Corporation, or Sprint;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | the effects of the acquisition by Sprint Nextel Corporation
| | - |  | -----------------------------------------------------------



| |  |  | the effects of industry consolidation, including the merger of Cingular and AT&T Wireless;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | our ability to expand our Sprint network or to upgrade the Sprint network to accommodate new technologies;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | potential fluctuations in operating results;
| | - |  | --------------------------------------------



| |  |  | changes or advances in technology;
| | - |  | ----------------------------------



| |  |  | changes in law or government regulation;
| | - |  | ----------------------------------------



| |  |  | competition in the industry and markets in which we operate;
| | - |  | ------------------------------------------------------------



| |  |  | future acquisitions;
| | - |  | --------------------



| |  |  | our ability to attract and retain skilled personnel;
| | - |  | ----------------------------------------------------



| |  |  | our potential inability to expand the services and related products we provide in the event of substantial increases in demand in excess of supply for network and handset equipment
and related services and products;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the availability at acceptable terms of sufficient funds to pay for our business plans;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | changes in labor, equipment and capital costs;
| | - |  | ----------------------------------------------



| |  |  | any inability to comply with the indentures that govern our long-term obligations;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | changes in management;
| | - |  | ----------------------



| |  |  | general economic and business conditions; and
| | - |  | ---------------------------------------------



| |  |  | changes related to our reorganization.
| | - |  | --------------------------------------



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You should keep in mind that any forward-looking statement made by us in this report, or elsewhere,
speaks only as of the date on which we make it. New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect us. We have no duty to, and do not intend to, update or revise the
forward-looking statements in this report after the date of this report. In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this report or elsewhere might not occur.



Business



Overview



We are a network partner of Sprint and have the right to provide digital wireless personal communications services, or PCS, under the Sprint brand names
in a territory that includes a total population, or POPs, of approximately 6.2 million. Over service area covers upstate New York, including the markets of Albany, Binghamton, Syracuse and Ithaca, substantially all of New Hampshire and Vermont and
portions of Massachusetts and Pennsylvania.



We are a Delaware
corporation originally formed on August 22, 1997 by a consortium of independent local telephone companies to become a provider of wireless telecommunications and data services. From 1997 through 1999, 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.



In early 2000, under an asset purchase agreement and other agreements with Sprint PCS, we purchased assets, including office equipment and interests in
170 cell sites and other network related leases, from Sprint PCS for approximately $116.7 million. Under the agreements, we also obtained the right to approximately 45,000 subscribers of Sprint PCS service located in our territory that had
previously been managed by Sprint PCS. Beginning in 2000, we significantly expanded our network and operations to increase our covered population and subscriber base.



In April 2002, we were acquired by US Unwired Inc. US Unwired provides PCS services and related products to customers in the
southeastern United States as part of Sprint PCSs network. Upon completion of our reorganization, which is discussed below, the shares of common stock held by US Unwired were cancelled and holders of our cancelled notes acquired all of our
shares.



We are a restructured company. As of December 31,
2004, we were in default of our former senior credit facility. Since March 2004, we had failed to make $13.8 million in principal payments due on our former senior credit facility and were not in compliance with the restrictive covenants under the
senior credit facility. In September 2004, one of the holders of our former senior credit facility elected to fund $1.8 million, which represented that holders remaining obligation of a draw request made in 2002. The holders of our former
senior credit facility denied us access to the remaining $23.4 million in availability.



Additionally, we failed to make scheduled semi-annual interest payments on our former senior notes due July 15, 2004 and January 15, 2005, and the holders of our former senior notes could have placed us in
default of our former senior notes.



On January 4, 2005,
IWO and each of its subsidiaries filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware seeking relief under the provisions of chapter 11 of title 11 of the United States Code. In connection with the Chapter 11
Case, the Debtors also filed with the Bankruptcy Court on January 4, 2005 a proposed pre-packaged Plan of Reorganization, which was confirmed on February 9, 2005 under an order entered by the Bankruptcy Court. Under the Plan of
Reorganization, on February 10, 2005, IWO Escrow Company, a special-purpose entity formed to obtain new debt financing and merge with and into IWO upon completion of the Plan of Reorganization, was merged into IWO, and IWO assumed $150.0
million in initial floating rate notes and $140.0 million principal amount at maturity of initial discount notes, each of which had been issued by IWO Escrow, resulting in approximately $232.7 million in aggregate net proceeds to IWO. IWO repaid in
full and terminated its former $215.0 million senior credit facility, and its former $160.0 million senior notes were cancelled and exchanged for all of the new common stock of IWO. In addition, the common stock of IWO, all of which was owned by US
Unwired, was cancelled, with no distributions or payments thereon. Upon the cancellation of the common stock of IWO on February 10, 2005, US Unwired ceased to have an equity interest in IWO.



In connection with the completion of the Plan of Reorganization, we
terminated our management agreement with US Unwired. This agreement was entered into as of April 1, 2004 for the purpose of documenting certain management services provided to us by US Unwired during the pendency of our restructuring, and
amended on January 3, 2005 to facilitate the immediate cooperation of US Unwired in the transitioning of management services to the new management team contemplated by our Plan of Reorganization. The termination of the US Unwired management
agreement was subject to a



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four-month transition period, during which US Unwired was responsible for providing transitional management and
restructuring services as defined in the US Unwired management agreement. This transition period ended on June 9, 2005, and we now operate as a standalone business entity.



Merger with Sprint Nextel Corporation



On August 30, 2005, we announced our proposed merger into a subsidiary of Sprint Nextel Corporation (Sprint). On September 28, 2005
a proxy statement was sent to our stockholders and a stockholders meeting was held on October 19, 2005 approving the transaction. The transaction was completed on October 20, 2005 at which time Italy Acquisition Corp., a wholly-owned
subsidiary of Sprint, was merged with and into us, with us surviving the merger as a wholly-owned subsidiary of Sprint. In connection with the consummation of the merger, each share of our common stock that was issued and outstanding immediately
prior to the effective time of the merger was cancelled and automatically converted into the right to receive an amount in cash equal to $42.50, less any required withholding taxes and without interest. All outstanding options to acquire our shares
of common stock granted under the IWO 2005 Equity Award Plan that were not exercised before the completion of the merger were terminated immediately after completion of the merger. In exchange for the cancellation of the holders options
(regardless of exercise price or whether or not the options were vested and exercisable), we paid each option holder an amount in cash determined by multiplying the excess, if any, of $42.50 over the applicable exercise price per share of the option
by the number of shares of our common stock that the holder could have purchased had the holder exercised the option in full immediately before completion of the merger, less any required withholding taxes and without interest.



Implementation of Fresh-Start Accounting



Under the American Institute of Certified Public Accountants, or the AICPA,
Statement of Position 90-7, Financial Reporting By Entities in Reorganization Under the Bankruptcy Code, the accounting for the effects of our reorganization occurred once the Plan of Reorganization was confirmed by the Bankruptcy Court
and there were no remaining contingencies material to completing the implementation of the Plan of Reorganization. There were no material conditions precedent to the effectiveness of the Plan of Reorganization existing as of February 9, 2005
confirmation date. For financial reporting purposes, we applied fresh-start accounting as of February 1, 2005 because the results of operations for the nine days through February 9, 2005 did not have a material impact on the reorganized
companys financial position, results of operations and cash flows. The fresh-start accounting principles of SOP 90-7 provide, among other things, for us to determine the value to be assigned to the assets of reorganized IWO as of the
confirmation date, assuming no significant contingencies precedent to emergence.



Under fresh-start accounting, our reorganization value was allocated to our assets and liabilities based on their respective fair values in conformity with the purchase method of accounting for business combinations;
any portion not attributed to specific tangible or identified intangible assets was treated as an indefinite-lived intangible asset referred to as reorganization value in excess of value of identifiable assets and recorded on our balance
sheet as goodwill.



Accordingly, our financial condition and
results of operations from and after the effective date of the Plan of Reorganization will not be fully comparable to our financial condition or results of operations preceding the effective date of the Plan of Reorganization.



Operating Revenue



Our revenue primarily consists of subscriber, roaming and merchandise sales revenue, each of which is described below:



Subscriber Revenue



Subscriber revenue consists primarily of a basic service plan (where the
customer purchases a pre-allotted number of minutes for voice and/or data transmission); airtime (which consists of billings for minutes that either exceed or are not covered by the basic service plan) and long distance.



Roaming Revenue



Roaming revenue consists primarily of Sprint PCS travel revenue and foreign
roaming revenue. Sprint PCS travel revenue is generated on a per minute basis when a Sprint PCS subscriber or another affiliate-managed customer outside of our markets uses our service when traveling through our markets. Sprint PCS travel expense is
generated on a per minute basis when our subscribers travel outside our market area and use the Sprint/affiliate network. Historically, our Sprint PCS travel revenue exceeds our Sprint PCS travel expense. Foreign roaming revenue is generated when a
non-Sprint PCS customer uses our service when traveling through our markets.



18



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##### Table of Contents

Merchandise Sales



Merchandise sales revenue includes sales of wireless equipment and accessories to customers and independent agents.



Operating Expenses



Our operating expenses include cost of service, merchandise cost of sales,
sales and marketing, general and administrative expenses, and depreciation and amortization, each of which is described below:



Cost of Service



Cost of service includes switching and transport expenses and expense associated with the maintenance and operation of our wireless network facilities,
including salaries for employees involved in network monitoring and maintenance, and site costs (including utilities, circuit expense, leasing and licensing costs).



Merchandise Cost of Sales



Merchandise cost of sales includes costs associated with wireless equipment and accessories sold to customers. In recent years, we and other wireless
providers have increased the use of discounts on phone equipment as competition between service providers has intensified. As a result, we have incurred, and expect to continue to incur, losses on equipment sales per gross additional customer. We
expect to continue these discounts and promotions because we believe they will increase the number of our wireless customers and, consequently, increase service revenue.



General and Administrative



General and administrative expenses include salaries, benefits, and operating expenses such as accounting, administration, human resources and legal.



Sales and Marketing



Sales and marketing expenses includes salaries, benefits and commissions of
our marketing and sales team and operating expenses such as media placement, other media promotions and store operating expenses.



Depreciation and Amortization



Depreciation and amortization primarily represents the costs associated with the depreciation of fixed assets and the amortization of our customer base
and Sprint agreements.



Critical Accounting Policies and Estimates



Our discussion and analysis of our financial condition
and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these financial statements requires us to
make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to
bad debts, activation fee revenues and related expense, determination of fair value of separate units for the application of Emerging Issues Task Force (EITF) Issue No. 00-21, revenue recognition of contract cancellation and late fees,
inventory reserves, intangible assets and contingencies. We base our estimates on our historical experience, the historical experience of Sprint and the historical experience of other Sprint affiliates and various other assumptions that we believe
to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may vary from these estimates
under different assumptions or conditions.



We believe the
following critical accounting policies affect our significant judgments and estimates used in the preparation of our consolidated financial statements.



Reliance on Sprint PCS Processing



We rely on Sprint for much of our financial reporting information including: revenues; commissions paid to national retailers; fees paid for customer care
and billing; roaming revenue and roaming expense on the Sprint and Sprint wireless affiliate network; and the maintenance of accounts receivable, including cash collections and the write off of customer balances that are not collectible and the
accuracy of our accounts receivable balance. Where uncertainty exists regarding



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revenues, we do not record these revenues until substantive information has been provided to ensure that such revenues
have been earned. Based upon the timing of the information received from Sprint PCS, we make certain assumptions that the information is accurate and that it is consistent with historical trends. We also rely upon the evaluation of internal controls
as performed by auditors engaged by Sprint PCS that were performed in accordance with AICPA Statement on Auditing Standards (SAS) No. 70.



Bad Debt Expense and Allowance for Doubtful Accounts



We maintain allowances for doubtful accounts for estimated losses resulting from the inability of subscribers to make payments. If the financial
conditions of our subscribers deteriorate, resulting in the subscribers inability to make payments, additional allowances will be required.



Estimates are used in determining our allowance for doubtful accounts and are based on our revenue, historical write-off experience, and the
uncollectibility of accounts receivable by aging category, as well as current information regarding the credit quality of our subscribers. Using this historical information, we estimate allowances for uncollectibility relative to the aging
categories. If our estimates are insufficient for any reason, our operating losses and available cash would be negatively impacted.



Revenue Recognition



We earn revenue by providing access to and usage of our network and sales of merchandise. Subscriber revenue consists primarily of a basic service plan
(where the customer purchases a pre-allotted number of minutes for voice and/or data transmission); airtime (which consists of billings for minutes that either exceed or are not covered by the basic service plan) and long distance. Travel revenue is
generated on a per-minute basis when a Sprint PCS subscriber outside of our markets uses our service when traveling through our markets. Foreign roaming revenue is generated when a non-Sprint wireless customer uses our service when traveling through
our markets. We also recognize revenues through agreements that allow resellers to sell wireless services in our markets. We recognize revenues when amounts are considered to be earned under the respective service plans and collection of such
amounts is considered probable.



Sprint retains 8% of collected
service revenues from subscribers based in our service area, foreign roaming revenues and for revenue generated under our reseller agreements. The amount of affiliation fees retained by Sprint PCS is recorded as a cost of services expense. Revenues
derived from the sale of handsets and accessories by us and from certain roaming services (outbound roaming and roaming revenues from Sprint and its wireless network partner subscribers) are not subject to the 8% affiliation fee from Sprint.



Revenues from the sales of merchandise, primarily wireless
handsets and accessories, represent a separate earnings process and are recognized at the time of the customer purchase. These revenues and related costs are included in merchandise sales and cost of sales, respectively. We reduce recorded revenue
for rebates and discounts given to subscribers on wireless handsets sales in accordance with EITF Issue No. 01-9 Accounting for Consideration Given by a Vendor to a Subscriber (Including a Reseller of the Vendors Products).



We recognize revenues from activation fees in accordance with
EITF Issue No. 00-21. In May 2003, the EITF modified its previous consensus to EITF Issue No. 00-21 to clarify its scope and its interaction with other authoritative literature. As permitted under the modified consensus, we adopted this modified
consensus effective July 1, 2003 for all revenue arrangements entered into subsequent to June 30, 2003. EITF Issue No. 00-21 addresses the determination of whether an arrangement involving more than one deliverable contains more than one
unit of accounting and how the related revenues should be measured and allocated to the separate units of accounting. In applying this guidance, separate contracts with the same party, entered into at or near the same time, will be presumed to be a
package, and the consideration will be measured and allocated to the separate units based on their relative fair values. We believe that the sale of handsets and future service under contract should be accounted for as separate units under EITF
Issue No. 00-21. As a result, the total consideration under these arrangements, including any related activation fees, is allocated between these separate units based on their relative fair values.



We recognize only a portion of contract cancellation fees billed to
subscribers that disconnect service prior to fulfilling the contractual length of service, as there is significant uncertainty that all contract cancellation fees that are billed will be collected. We have very limited information at a detail level
sufficient to perform our own evaluation and rely on Sprint historical trending to make our estimates. If the collections on contract cancellation fees are less than that recognized, additional allowances may be required.



We recognize only a portion of late fees billed to subscribers that fail to
pay their bills within the required payment period, as there is no assurance that all late fees that are billed will be collected. We have very limited information at a detail level sufficient to perform our own evaluation and rely on Sprint
historical trends to make our estimates. If the collections on late fees are less than that recognized, additional allowances may be required.



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Inventory and Inventory Reserves



Inventories consist of wireless handsets and related accessories and are carried at cost. Cost is determined by the moving
weighted average method, which approximates the first-in, first-out method.



Accrued Commissions



We
accrue commissions and other costs related to national retailers based upon their sales to new subscribers. The national retailers receive both a commission and, because the handset is typically sold below cost, a reimbursement for the difference
between the sales price and the cost. We base our accruals on information provided by Sprint on subscriber additions and recognize that there are typically timing differences between the point of subscriber activation and the time that we are
invoiced for commissions by Sprint. We periodically and annually evaluate the adequacy of our accruals through analysis of historical information and discussions with Sprint. Depending on the level of sales and other factors, our estimates of the
amounts accrued for commissions and other costs owed to such retailers may require modification of our previous estimates.



Goodwill and Intangible Assets Impairment Analysis



Goodwill is evaluated for impairment on an annual basis or more often, as required by SFAS No. 142, Goodwill and Other Intangible Assets.
On an ongoing basis, we assess the recoverability of goodwill by determining the ability of the specific assets acquired to generate future cash flows sufficient to recover the unamortized goodwill over the remaining useful life. We estimate future
cash flows based on the current performance of the acquired assets and our business plan for those assets. Changes in business conditions, major customers or other factors could result in changes in those estimates. Goodwill determined to be
unrecoverable based on future cash flows is written-off in the period in which such determination is made.



Valuation of Long-lived Assets



Long-lived assets consist primarily of property and equipment and intangibles. Changes in technology or in our intended use of these assets may cause the
estimated period of use or the value of these assets to be reduced. In addition, changes in general industry conditions could cause the value of certain of these assets to be reduced. We monitor the appropriateness of the estimated useful lives of
these assets. Whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable, we review the respective assets for impairment. As part of our reorganization, our assets and liabilities were
revalued to their fair value. Estimates and assumptions used in both the estimated useful life and evaluating potential impairment issues require a significant amount of judgment.



Results of Operations  For the Three-Month Period Ended September 30, 2005 compared to the Three-Month Period Ended
September 30, 2004



In accordance with SOP 90-7, we
adopted fresh-start accounting as of February 1, 2005, and our emergence from Chapter 11 resulted in a new reporting entity. The periods as of and prior to February 1, 2005 have been designated Predecessor Company and the
periods subsequent to February 1, 2005 have been designated as Successor Company. Under fresh-start accounting, our reorganization equity value was allocated to the assets and liabilities based on their respective fair values in
conformity with SFAS No. 141 Business Combinations. As a result of the implementation of fresh-start accounting, our financial statements after February 1, 2005 are not fully comparable to our financial statements for prior
periods.



Revenues



|                    |  |                                           |        |                                           |   |       
|------------------- |  | ----------------------------------------- | ------ | ----------------------------------------- | - | ------
|                    |  | Successor Company                         |        | Predecessor Company                      
|                    |  | Three-monthperiod endedSeptember 30, 2005 |        | Three-monthperiod endedSeptember 30, 2004
|                    |  | (In thousands)                           
|Subscriber revenues |  | $                                         | 36,504 |                                           | $ | 36,278
|Roaming revenues    |  |                                           | 15,346 |                                           |   | 10,790
|Merchandise sales   |  |                                           | 1,734  |                                           |   | 2,320 
|Other revenues      |  |                                           | 283    |                                           |   | 96    
|                    |  |                                           |        |                                           |   |       
|Total revenues      |  | $                                         | 53,867 |                                           | $ | 49,484
|                    |  |                                           |        |                                           |   |       



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Subscriber revenues



Total subscriber revenues were $36.5 million for the three-month period ended September 30, 2005 as compared to $36.3
million for the three-month period ended September 30, 2004. Subscriber revenues were reasonably consistent for the three-month period ended September 30, 2004 and the three-month period ended September 30, 2005 primarily as a result
of an increase in the subscriber base of approximately 10,500 from prior year offset by the decline in average revenue per user (including roaming) of $3.55.



Roaming revenues



Roaming revenues were $15.3 million for the three-month period ended September 30, 2005 as compared to $10.8 million for the three-month period ended
September 30, 2004. The increase of $4.6 million or 42.2% was primarily as a result of an increase in the reciprocal Sprint travel rate per minute from $.041 to $.058 and an approximate 8% increase in minutes of use volume.



Merchandise sales



Merchandise sales were $1.7 million for the three-month period ended
September 30, 2005 as compared to $2.3 million for the three-month period ended September 30, 2004. The decrease of $0.6 million or 25.3% was primarily the result of an increase in customer discounts given.



Operating expenses



|                              |  |                                           |        |                                           |   |       
|----------------------------- |  | ----------------------------------------- | ------ | ----------------------------------------- | - | ------
|                              |  | Successor Company                         |        | Predecessor Company                      
|                              |  | Three-monthperiod endedSeptember 30, 2005 |        | Three-monthperiod endedSeptember 30, 2004
|                              |  | (In thousands)                           
|Cost of service               |  | $                                         | 28,701 |                                           | $ | 25,824
|Merchandise cost of sales     |  |                                           | 3,480  |                                           |   | 4,183 
|General and administrative    |  |                                           | 2,329  |                                           |   | 4,303 
|Sales and marketing           |  |                                           | 8,394  |                                           |   | 7,366 
|Depreciation and amortization |  |                                           | 12,362 |                                           |   | 7,053 
|                              |  |                                           |        |                                           |   |       
|Total operating expenses      |  | $                                         | 55,266 |                                           | $ | 48,729
|                              |  |                                           |        |                                           |   |       



Cost of service



Cost of service was $28.7 million for the three-month
period ended September 30, 2005 as compared to $25.8 million for the three-month period ended September 30, 2004. The increase of $2.9 million or 11.1% was primarily the result of an increase in the reciprocal Sprint travel rate per minute
from $.041 to $.058, and an increase in the associated travel volume of 10.2%.



Merchandise cost of sales



Merchandise cost of sales was $3.5 million for the three-month period ended September 30, 2005 as compared to $4.2 million for the three-month period ended September 30, 2004. The decrease of $0.7 million, or 16.8%, primarily
resulted from a $0.3 million reduction in the cost of handsets sold and a decrease of $0.4 million in amortization of equipment subsidies.



General and administrative expenses



General and administrative expenses were $2.3 million for the three-month period ended September 30, 2005 as compared to $4.3 million for the
three-month period ended September 30, 2004. The decrease of $2.0 million, or 45.9%, was primarily the result of a $0.7 million reduction in restructuring expenses, a $2.2 million reduction in management fees paid to US Unwired offset, in part,
by an increase of $0.8 million for labor and benefits.



Sales and marketing expenses



Sales and
marketing expenses were $8.4 million for the three-month period ended September 30, 2005 as compared to $7.4 million for the three-month period ended September 30, 2004. The increase of $1.0 million, or 13.9%, resulted primarily from a
$0.6 million increase in advertising expenses and a $0.4 million increase in activation fees paid to Sprint.



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Depreciation and amortization expense



Depreciation and amortization expense was $12.4 million for the three-month
period ended September 30, 2005 as compared to $7.1 million for the three-month period ended September 30, 2004. The increase of $5.3 million, or 75.3%, was primarily the result of a $5.5 million increase in the amortization of intangible
assets as a result of the implementation of fresh start accounting on February 1, 2005, which resulted in us recording intangible assets of $62.0 million related to the fair value of the customer base and $72.0 million related to the fair value
of the Sprint agreement offset by a $0.2 million decrease in depreciation expense.



Other income / (expense)



|                       |  |                                           |        |   |                                           |   |         |  
|---------------------- |  | ----------------------------------------- | ------ | - | ----------------------------------------- | - | ------- | -
|                       |  | Successor Company                         |        |   | Predecessor Company                       |  
|                       |  | Three-monthperiod endedSeptember 30, 2005 |        |   | Three-monthperiod endedSeptember 30, 2004 |  
|                       |  | (In thousands)                            |       
|Interest expense       |  | $                                         | (5,483 | ) |                                           | $ | (10,341 | )
|Interest income        |  |                                           | 269    |   |                                           |   | 115     |  
|Loss on Sale of Assets |  |                                           |       |   |                                           |   | (59     | )
|                       |  |                                           |        |   |                                           |   |         |  
|Total other expense    |  | $                                         | (5,214 | ) |                                           | $ | (10,285 | )
|                       |  |                                           |        |   |                                           |   |         |  



Interest expense was
$5.5 million for the three-month period ended September 30, 2005 as compared to $10.3 million for the three-month period ended September 30, 2004. The decrease of $4.9 million or 47.0% was primarily a result of the restructuring of debt
associated with our Plan of Reorganization. The level of debt has decreased from $354.8 million at September 30, 2004 to $239.3 million at September 30, 2005.



Interest income was $0.3 million for the three-month period ended September 30, 2005 as compared to $0.1 million for
the three-month period ended September 30, 2004, representing an increase of $0.2 million. The increase was primarily the result of increased cash deposit levels associated with the proceeds of our bond offering and an increase in interest
rates.



Results of Operations  For the Eight-Month Period Ended
September 30, 2005, the Month Ended January 31, 2005, the Nine-Month Period Ended September 30, 2005 and the Nine-Month Period Ended September 30, 2004



In accordance with SOP 90-7, we adopted fresh-start accounting as of February 1, 2005, and our emergence from Chapter
11 resulted in a new reporting entity. The periods as of and prior to February 1, 2005 have been designated Predecessor Company and the periods subsequent to February 1, 2005 have been designated as Successor
Company. Under fresh-start accounting, our reorganization equity value was allocated to the assets and liabilities based on their respective fair values in conformity with SFAS No. 141 Business Combinations. As a result of the
implementation of fresh-start accounting, our financial statements after February 1, 2005 are not fully comparable to our financial statements for prior periods. For purposes of comparability to the nine-month period ending September 30,
2004, we have disclosed below the arithmetic combination of the results of operation for the eight-month period ended September 30, 2005 of the Successor Company and for the month ended January 31, 2005 of the Predecessor Company.



Revenues



|                    |  |                                               |         |                                      |   |                                            |                                            |                    |         |  |   |        
|------------------- |  | --------------------------------------------- | ------- | ------------------------------------ | - | ------------------------------------------ | ------------------------------------------ | ------------------ | ------- |  | - | -------
|                    |  | Successor Company                             |         | PredecessorCompany                   |   | For the NineMonths EndedSeptember 30, 2005 |                                            | PredecessorCompany
|                    |  | For the Eight Months Ended September 30, 2005 |         | For the Month Ended January 31, 2005 |   |                                            | For the NineMonths EndedSeptember 30, 2004
|                    |  | (In thousands)                               
|Subscriber revenues |  | $                                             | 96,308  |                                      | $ | 12,302                                     |                                            | $                  | 108,610 |  | $ | 104,396
|Roaming revenues    |  |                                               | 35,654  |                                      |   | 2,503                                      |                                            |                    | 38,157  |  |   | 28,504 
|Merchandise sales   |  |                                               | 5,250   |                                      |   | 665                                        |                                            |                    | 5,915   |  |   | 6,774  
|Other revenues      |  |                                               | 710     |                                      |   | 29                                         |                                            |                    | 739     |  |   | 271    
|                    |  |                                               |         |                                      |   |                                            |                                            |                    |         |  |   |        
|Total revenues      |  | $                                             | 137,922 |                                      | $ | 15,499                                     |                                            | $                  | 153,421 |  | $ | 139,945
|                    |  |                                               |         |                                      |   |                                            |                                            |                    |         |  |   |        



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##### Table of Contents

Subscriber revenues



Total subscriber revenues were $96.3 million for the eight-month period ended September 30, 2005 and $12.3 million for
the month ended January 31, 2005. For the nine-month period ended September 30, 2005, total subscriber revenues were $108.6 million compared to $104.4 million for the nine-month period ended September 30, 2004. The increase of $4.2
million, or 4.0%, primarily resulted from an increase in the number of subscribers we serve from 229,707 at September 30, 2004 to 240,103 at September 30, 2005.



Roaming revenues



Roaming revenues were $35.7 million for the eight-month period ended September 30, 2005 and $2.5 million for the month ended January 31, 2005.
For the nine-month period ended September 30, 2005, total roaming revenues were $38.2 million compared to $28.5 million for the nine-month period ended September 30, 2004. The increase of $9.7 million, or 33.9%, primarily resulted from an
increase in the reciprocal Sprint travel rate per minute from $.041 to $.058 and an approximate 10% increase in minutes of use volume.



Merchandise sales



Merchandise sales were $5.3 million for the eight-month period ended September 30, 2005 and $0.7 million for the month ended January 31, 2005.
For the nine-month period ended September 30, 2005, merchandise sales were $5.9 million compared to $6.8 million for the nine-month period ended September 30, 2004. The decrease of $0.9 million, or 12.7%, primarily resulted from a decrease
in handset and accessory sales of $0.4 million and an increase in $0.4 million in discounts given. The cost of handsets typically exceeds the amount received from our subscribers because we subsidize the price of handsets to remain competitive in
the marketplace.



Operating expenses



|                              |  |                                             |         |                                     |   |          |                                            |                                            |   |                    |   |  |   |        
|----------------------------- |  | ------------------------------------------- | ------- | ----------------------------------- | - | -------- | ------------------------------------------ | ------------------------------------------ | - | ------------------ | - |  | - | -------
|                              |  | Successor Company                           |         | PredecessorCompany                  |   |          | For the NineMonths EndedSeptember 30, 2005 |                                            |   | PredecessorCompany
|                              |  | For the EightMonths EndedSeptember 30, 2005 |         | For the Month EndedJanuary 31, 2005 |   |          |                                            | For the NineMonths EndedSeptember 30, 2004
|                              |  | (In thousands)                             
|Cost of service               |  | $                                           | 74,082  |                                     | $ | 7,772    |                                            |                                            | $ | 81,854             |   |  | $ | 73,424 
|Merchandise cost of sales     |  |                                             | 8,560   |                                     |   | 1,259    |                                            |                                            |   | 9,819              |   |  |   | 13,107 
|General and administrative    |  |                                             | 7,877   |                                     |   | 675      |                                            |                                            |   | 8,552              |   |  |   | 11,205 
|Gain on reorganization        |  |                                             |        |                                     |   | (113,966 | )                                          |                                            |   | (113,966           | ) |  |   |       
|Sales and marketing           |  |                                             | 22,696  |                                     |   | 2,645    |                                            |                                            |   | 25,341             |   |  |   | 22,609 
|Depreciation and amortization |  |                                             | 34,010  |                                     |   | 2,273    |                                            |                                            |   | 36,283             |   |  |   | 27,958 
|                              |  |                                             |         |                                     |   |          |                                            |                                            |   |                    |   |  |   |        
|Total expenses                |  | $                                           | 147,225 |                                     | $ | (99,342  | )                                          |                                            | $ | (47,883            | ) |  | $ | 148,303
|                              |  |                                             |         |                                     |   |          |                                            |                                            |   |                    |   |  |   |        



Cost of service



Cost of service was $74.1 million for the eight-month
period ended September 30, 2005 and $7.8 million for the month ended January 31, 2005. For the nine-month period ended September 30, 2005, cost of service was $81.9 million compared to $73.4 million for the nine-month period ended
September 30, 2004. The increase of $8.4 million, or 11.5%, was primarily due to an increase in the reciprocal Sprint travel rate per minute from $.041 to $.058, and an increase in the associated travel volume of 13.4%.



Merchandise cost of sales



Merchandise cost of sales was $8.6 million for the eight-month period ended
September 30, 2005 and $1.3 million for the month ended January 31, 2005. For the nine-month period ended September 30, 2005, total merchandise cost of sales was $9.8 million compared to $13.1 million for the nine-month period ended
September 30, 2004. The decrease of $3.3 million, or 25.1%, primarily resulted from a $1.6 million reduction in the cost of handsets sold, $0.4 million reduction from the elimination of handset surcharges and a decrease of $1.1 million in
amortization of equipment subsidies.



General and
administrative expenses



General and administrative
expenses were $7.9 million for the eight-month period ended September 30, 2005 and $0.7 million for the month ended January 31, 2005. For the nine-month period ended September 30, 2005, total general and administrative expenses were
$8.6 million compared to $11.2 million for the nine-month period ended September 30, 2004.



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##### Table of Contents

The decrease of $2.7 million, or 23.7%, was primarily the result of a $2.9 million reduction in restructuring expenses, a
$2.5 million reduction in management fees paid to US Unwired offset and a $0.7 million reduction in collection agency fees, offset in part, by an increase of $1.8 million for labor and benefits, a $0.6 million increase in professional fees, a $0.2
million increase in facility fees and an increase of $0.6 million in travel and other general and administrative expenses.



Gain on reorganization



Gain on reorganization income for the period ended January 31, 2005 totaled $114.0 million. Gain on reorganization income consists of those items
incurred as a direct result of our Chapter 11 filing as well as the effects of fresh-start accounting adopted on February 1, 2005. Gain on reorganization income was comprised of $122.8 million as the result of fresh-start accounting and the
revaluation of our assets and liabilities to their fair value, and $11.1 million related to the Sprint simplification settlement, offset, in part, by $11.2 million of expense for the write-off of the unamortized financing fees and $8.8 million of
professional fees and other expenses related to the reorganization. The $122.8 million as the result of fresh-start accounting consisted primarily of an increase of $54.8 million associated with the higher appraised value of the Sprint agreement,
$62.0 million associated with the higher appraised value of our customer base agreements and $33.7 million of other upward fair value adjustments offset, in part, by a write-down of property and equipment of $27.7 million.



Sales and marketing expenses



Sales and marketing expenses were $22.7 million for the eight-month period
ended September 30, 2005 and $2.6 million for the month ended January 31, 2005. For the nine-month period ended September 30, 2005, total sales and marketing expenses were $25.3 million compared to $22.6 million for the nine-month
period ended September 30, 2004. The increase of $2.7 million, or 12.1%, resulted primarily from a net $0.9 million increase in national rebates/handset subsidies, a $0.4 million increase in advertising expense and a $1.3 million increase in
activation fees paid to Sprint.



Depreciation and
amortization expense



Depreciation and amortization
expense was $34.0 million for the eight-month period ended September 30, 2005 and $2.3 million for the month ended January 31, 2005. For the nine-month period ended September 30, 2005, total depreciation and amortization expenses were
$36.3 million compared to $28.0 million for the nine-month period ended September 30, 2004. The increase of $8.3 million, or 29.8%, was primarily the result of an $8.5 million increase in amortization of intangible assets as a result of the
implementation of fresh start accounting on February 1, 2005, which resulted in us recording intangible assets of $62.0 million related to the fair value of the customer base and $72.0 million related to the fair value of the Sprint agreement
offset by a $0.2 million decrease in depreciation expense.



Other
income/(expense)



|                               |  |                                             |         |   |                                      |   |        |                                            |                                            |   |                    |   |  |   |         |  
|------------------------------ |  | ------------------------------------------- | ------- | - | ------------------------------------ | - | ------ | ------------------------------------------ | ------------------------------------------ | - | ------------------ | - |  | - | ------- | -
|                               |  | SuccessorCompany                            |         |   | Predecessor Company                  |   |        | For the NineMonths EndedSeptember 30, 2005 |                                            |   | PredecessorCompany |  
|                               |  | For the EightMonths EndedSeptember 30, 2005 |         |   | For the Month Ended January 31, 2005 |   |        |                                            | For the NineMonths EndedSeptember 30, 2004 |  
|                               |  | (In thousands)                              |        
|Interest expense               |  | $                                           | (15,472 | ) |                                      | $ | (1,772 | )                                          |                                            | $ | (17,244            | ) |  | $ | (29,002 | )
|Interest income                |  |                                             | 991     |   |                                      |   | 18     |                                            |                                            |   | 1,009              |   |  |   | 325     |  
|Gain on extinguishment of debt |  |                                             |        |   |                                      |   | 76,942 |                                            |                                            |   | 76,942             |   |  |   |        |  
|Loss on asset sale             |  |                                             |        |   |                                      |   |       |                                            |                                            |   |                   |   |  |   | (84     | )
|                               |  |                                             |         |   |                                      |   |        |                                            |                                            |   |                    |   |  |   |         |  
|Total other income (expense)   |  | $                                           | (14,481 | ) |                                      | $ | 75,188 |                                            |                                            | $ | 60,707             |   |  | $ | (28,761 | )
|                               |  |                                             |         |   |                                      |   |        |                                            |                                            |   |                    |   |  |   |         |  



Interest expense



Interest expense was $15.5 million for the eight-month
period ended September 30, 2005 and $1.8 million for the month ended January 31, 2005. For the nine-month period ended September 30, 2005 total interest expense was $17.2 million compared to $29.0 million for the nine-month period
ended September 30, 2004. The decrease of $11.8 million, or 40.5%, resulted from the restructuring of debt associated with our Plan of Reorganization. The level of debt has decreased from $354.8 million at September 30, 2004 to $239.3
million at September 30, 2005.



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##### Table of Contents

Interest income



Interest income was $991,000 for the eight-month period ended September 30, 2005 and $18,000 for the month ended
January 31, 2005. For the nine-month period ended September 30, 2005 total interest income was $1,009,000 compared to $325,000 for the nine-month period ended September 30, 2004. The increase of $684,000, resulted from increased cash
deposit levels associated with proceeds of our bond offering and an increase in related interest rates.



Gain on extinguishment of debt



For the period ended January 31, 2005, we recorded income of $76.9 million for the cancellation of debt that was exchanged for equity in the
reorganized company upon our emergence from bankruptcy. The gain on the extinguishment of debt was calculated as the book value of the debt, and related accrued interest, less the fair value of the new common stock issued in exchange.



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##### Table of Contents

Liquidity and Capital Resources



Cash Flows



As of September 30, 2005, we had $31.9 million in cash and indebtedness that consisted of $150.0 million related to our senior secured floating rate
notes and $89.3 million (net of unamortized discount of $50.7 million), related to our senior subordinated discount notes for a total of $239.3 million.



|                                                     |  |                                               |         |   |                                      |   |        |                                            |  |   |        |  
|---------------------------------------------------- |  | --------------------------------------------- | ------- | - | ------------------------------------ | - | ------ | ------------------------------------------ |  | - | ------ | -
|                                                     |  | Successor Company                             |         |   | Predecessor Company                  |  
|                                                     |  | For the Eight Months Ended September 30, 2005 |         |   | For the Month Ended January 31, 2005 |   |        | For the NineMonths EndedSeptember 30, 2004 | 
|                                                     |  | (In thousands)                                |        
|Net cash provided (used) by operating activities     |  | $                                             | 8,057   |   |                                      | $ | (1,655 | )                                          |  | $ | (5,128 | )
|Net cash provided (used) by investing activities     |  |                                               | (10,694 | ) |                                      |   | (2,118 | )                                          |  |   | 12,019 |  
|Net cash provided (used) by financing activities     |  |                                               | (301    | ) |                                      |   | 4,814  |                                            |  |   | 1,816  |  
|                                                     |  |                                               |         |   |                                      |   |        |                                            |  |   |        |  
|Net increase (decrease) in cash and cash equivalents |  | $                                             | (2,938  | ) |                                      | $ | 1,041  |                                            |  | $ | 8,707  |  
|                                                     |  |                                               |         |   |                                      |   |        |                                            |  |   |        |  



Net cash provided by
operating activities for the eight months ended September 30, 2005 was $8.1 million. This primarily consisted of our net loss of $23.8 million and a $10.9 million increase in working capital more than offset by non-cash charges of $34.0 million
in depreciation and amortization, $6.6 million in debt discount accretion and $2.2 million in other miscellaneous non-cash charges. Net cash used by investing activities for the eight months ended September 30, 2005 was $10.7 million. This
primarily consisted of $1.7 million in deposits of restricted cash and $9.1 million in equipment purchases. Management believes that our current cash on hand and cash from operations will be sufficient to fund needs for operating cash and our
capital expenditures for at least the next twelve months.



Liquidity Following the Plan of Reorganization



Our liquidity needs include obligations under the new notes and other long-term obligations. In addition, we expect to have significant capital expenditure requirements in future years. The amended affiliation agreements with Sprint PCS



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require us to construct and operate 103 additional cell sites (50 of which were completed as of September 30, 2005)
in our territory by 2008. We also expect to construct other sites to expand capacity. Additionally, during the next four years we expect to make capital expenditures to upgrade base stations on a majority of towers as a result of the expected
obsolescence of the Lucent Technologies mini-cell and micro-cell technology. Based on current pricing and other assumptions, we estimate that it will be required to spend an aggregate of approximately $23.0 million from 2005 to 2008 to upgrade our
base stations. We expect that during 2005 our total capital expenditures will be approximately $21.0 million, including an estimated $7.0 million for the construction of 29 additional expansion sites.



Financing Transactions



On January 4, 2005, we filed voluntary petitions in the Bankruptcy
Court seeking relief under the Bankruptcy Code. Upon filing the petition, we continued to operate our businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provision of the
Bankruptcy Code and the orders of the Bankruptcy Court.



As
previously discussed, on February 9, 2005, the Bankruptcy Court entered an order confirming the Companys Plan of Reorganization (effective February 10, 2005). Pursuant to the Plan of Reorganization, on February 10, 2005, IWO
Escrow was merged into us and we assumed new notes for aggregate proceeds of approximately $232.7 million. We repaid in full and terminated the existing $215.0 million senior credit facility. Our $160.0 million senior notes were cancelled and
exchanged for 5,000,005 shares of new common stock. Our existing common stock, all of which was owned by US Unwired, was cancelled, with no distributions or payments thereon. As a result of the merger, we assumed all obligations of IWO Escrow,
including those under the new notes described below.



On
January 6, 2005, IWO Escrow issued $150.0 million aggregate principal amount of Senior Secured Floating Rate Notes due 2012 for proceeds of $145.4 million, net of underwriting and escrow fees. Interest payments for the Senior Secured Floating
Rate Notes are due on each April 15, July 15, October 15 and January 15, commencing on April 15, 2005. As a result of our assuming the obligations under the Senior Secured Floating Rate Notes, we are required to
comply with certain covenants that restrict our ability to incur additional indebtedness, pay dividends, make repayments on indebtedness that are subordinated to the Senior Secured Floating Rate Notes and to make certain other restricted payments,
incur certain liens, use proceeds from sales of assets, enter into business combination transactions (including mergers, consolidations and asset sales), enter into transactions with affiliates and permit restrictions on the payment of dividends by
restricted subsidiaries. The indenture governing the Senior Secured Floating Rate Notes does not contain financial maintenance covenants. The Senior Secured Floating Rate Notes rank equally in right of payment with any of our senior indebtedness and
senior in right of payment to any of the subordinated indebtedness. All obligations under the Senior Secured Floating Rate Notes are guaranteed on a senior, secured basis by us and will be guaranteed by future subsidiaries except certain foreign and
certain domestic subsidiaries. The Senior Secured Floating Rate Notes and the guarantees are collateralized by a first priority security interest in substantially all of our assets.



On January 6, 2005, IWO Escrow also issued $140.0 million aggregate principal amount at maturity of 10.75% Senior
Discount Notes due 2015 for proceeds of $80.1 million, net of underwriting and escrow fees. Interest on the 10.75% Senior Discount Notes will accrue semi-annually until July 15, 2010, in the form of an increase in the accreted value of the
10.75% Senior Discount Notes. Thereafter, cash interest on the 10.75% Senior Discount Notes will accrue and be payable semi-annually in arrears on each January 15 and July 15. As a result of our assuming the obligations under the 10.75%
Senior Discount Notes, we are required to comply with certain covenants that restrict our ability to incur additional indebtedness, pay dividends, make repayments on indebtedness that are subordinated to the Senior Discount Notes and to make certain
other restricted payments, incur certain liens, use proceeds from sales of assets, enter into business combination transactions (including mergers, consolidations and asset sales), enter into transactions with affiliates and permit restrictions on
the payment of dividends by restricted subsidiaries. The indenture governing the Senior Discount Notes does not contain financial maintenance covenants. All obligations under the Senior Discount Notes are guaranteed on a senior basis by us, and will
be guaranteed by future subsidiaries except certain foreign and certain domestic subsidiaries.



Liquidity Following the Acquisition by Sprint



Effective with the Merger with Sprint, the Company became a wholly-owner subsidiary of Sprint and is dependent on Sprint to fund its operations.



Seasonality



Like the wireless communications industry in general, there is an increase in subscriber additions in the fourth quarter due to the holiday season. A
greater number of phones sold at holiday promotional prices cause our losses on merchandise sales to increase. Our sales and marketing expenses also increase with holiday promotional activities. We generally have the strongest demand for network
usage and our weakest demand for new wireless services during the summer. We expect these trends to continue based on historical operating results.



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Item 3. Quantitative and Qualitative Disclosures about Market Risk



We do not engage in derivatives or other financial instruments for trading, speculative or hedging purposes, though we may do so from time to time if such
instruments are available to us on acceptable terms and prevailing market conditions are accommodating. We have been subject to some interest rate risk on our senior secured floating rate notes and could be subject to interest rate risk on any
future floating rate financing.



Our primary interest rate risk
exposures relate to (i) the interest rate on long-term borrowings; (ii) our ability to refinance our debt at maturity at market rates; and (iii) the impact of interest rate movements on our ability to meet interest expense
requirements.



Our variable rate debt consists of Senior
Secured Floating Rate Notes ($150.0 million at September 30, 2005). The Senior Secured Floating Rate Notes bear interest at the applicable Eurodollar rate, currently at 7.4%.



A one percent increase (decrease) in the variable interest rate would result in a $1.5 million increase (decrease) in the
related interest expense on an average annual basis based upon borrowings outstanding at September 30, 2005.



Item 4. Controls and Procedures



The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the Companys disclosure controls and procedures, as
such terms are defined in Rule 13a-15(e) under the Securities Exchange Act, as amended. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Companys disclosure controls and procedures were
effective as of the end of the period covered by this report.



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##### Table of Contents

Part II. Other Information



Item 1. Legal Proceedings



From time to time, we are involved in various legal proceedings relating to claims arising in the ordinary course of business. We are not currently a party to any such legal proceedings, the adverse outcome of which, individually or in the
aggregate, is expected to have a material adverse effect on our business, financial condition or results of operations.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds



None.



Item 3. Defaults Upon Senior Securities



None.



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



None.



Item 5. Other Information



None.



Item 6. Exhibits



|      |  |                                                                                                                                                                                                                                                                                                                           
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1   |  | Order of the Bankruptcy Court, dated February 9, 2005, confirming the Companys Joint Plan of Reorganization, together with such Joint Plan of Reorganization, as so confirmed
(incorporated by reference to Exhibit 2.1 to IWO Holdings, Inc.s Form 8-K dated February 14, 2005).                                       
|      | 
|2.2   |  | Agreement and Plan of Merger, dated as of August 29, 2005, by and among IWO Holdings, Inc., Italy Acquisition Corp. and Sprint Nextel Corporation (incorporated by reference to Exhibit 10.1 to
IWO Holdings, Inc.s Form 8-K dated August 31, 2005).                                                                     
|      | 
|3.1   |  | Amended and Restated Certificate of Incorporation of IWO Holdings, Inc. (incorporated by reference to Exhibit 3.1 to IWO Holdings, Inc.s Form 8-K dated October 21, 2005).                                                                                                                                               
|      | 
|3.2   |  | Bylaws of IWO Holdings, Inc. (incorporated by reference to Exhibit 3.2 to IWO Holdings, Inc.s Form 8-K dated October 21, 2005).                                                                                                                                                                                          
|      | 
|10.1  |  | Forbearance Agreement and Release, dated as of August 29, 2005, by and among IWO Holdings, Inc. Independent Wireless One Corporation, Independent Wireless One Leased Realty Corporation and
Sprint Nextel Corporation (incorporated by reference to Exhibit 10.2 to IWO Holdings, Inc.s Form 8-K dated August 31, 2005).
|      | 
|31.1* |  | Certification of Gary D. Forsee pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.                                                                                                                                        
|      | 
|31.2* |  | Certification of Paul N. Saleh pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                         
|      | 
|32.1* |  | Certification of Gary D. Forsee pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                 
|      | 
|32.2* |  | Certification of Paul N. Saleh pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                  

---

|* | Filed herewith
|- | --------------



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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.



|                  |  |                                      
|----------------- |  | -------------------------------------
|November 14, 2005 |  | IWO HOLDINGS, INC.                   
|                  | 
|                  |  | /s/ PAUL N. SALEH                    
|                  |  | Paul N. Saleh Chief
Financial Officer



31