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

                                    FORM 10-K

                                   (Mark One)

                    [X] ANNUAL REPORT PURSUANT TO SECTION 13
                       OR 15(D) OF THE SECURITIES EXCHANGE
                         ACT OF 1934 FOR THE FISCAL YEAR
                                     ENDED:
                                DECEMBER 31, 2002

                                       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: 333-51240

                                HORIZON PCS, INC.
             (Exact name of registrant as specified in its charter)

            DELAWARE                                    31-1707839
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

  68 EAST MAIN STREET, CHILLICOTHE, OH                  45601-0480
(Address of principal executive offices)                (Zip Code)


      (Registrant's telephone number, including area code): (740) 772-8200

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

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

Indicate by check mark whether the registrant (1) has filed all reports 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 if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

As of  March  1,  2003,  there  were  26,646  shares  of  class A  common  stock
outstanding and 58,445,288 shares of class B common stock outstanding.


<PAGE>




                                TABLE OF CONTENTS
<TABLE>
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<S>        <C>                                                                                        <C>
                                                                                                     PAGE

PART I                                                                                                  1
ITEM 1.    Business.....................................................................................2
ITEM 2.    Properties..................................................................................20
ITEM 3.    Legal Proceedings...........................................................................20
ITEM 4.    Submission of Matters to a Vote of Security Holders.........................................20

PART II                                                                                                20
ITEM 5.    Market for Registrant's Common Equity and Related Stockholder Matters.......................20
ITEM 6.    Selected Financial Data.....................................................................22
ITEM 7.    Management's Discussion and Analysis of Financial Condition and Results of Operation........23
ITEM 7A    Quantitative and Qualitative Disclosures About Market Risk..................................56
ITEM 8.    Financial Statements and Supplementary Data.................................................56
ITEM 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure........56

PART III                                                                                               57
ITEM 10.   Directors and Executive Officers of the Registrant..........................................57
ITEM 11.   Executive Compensation......................................................................59
ITEM 12.   Security Ownership of Certain Beneficial Owners and Management..............................62
ITEM 13.   Certain Relationships and Related Transactions..............................................64
ITEM 14.   Controls and Procedures.....................................................................68

PART IV                                                                                                69
ITEM 15.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K............................69

</TABLE>

     Horizon  PCS,  Inc.  ("Horizon  PCS") is the issuer of 14% Senior  Discount
Notes due 2010 (the  "discount  notes").  In March 2001, the discount notes were
the subject of an exchange  offer which was  registered  with the Securities and
Exchange Commission ("SEC") (Registration No. 333-51238). The Co-Registrants are
Horizon Personal Communications, Inc. ("HPC") and Bright Personal Communications
Services, LLC ("Bright PCS"), collectively, the "Operating Companies," which are
wholly-owned  subsidiaries  of Horizon PCS. Each of the Operating  Companies has
provided a full,  unconditional,  joint and  several  guaranty  of Horizon  PCS'
obligations  under the discount  notes.  Horizon PCS has no operations  separate
from its  investment in the Operating  Companies.  Pursuant to Rule 12h-5 of the
Securities Exchange Act, no separate financial  statements and other disclosures
concerning the Operating Companies other than narrative disclosures set forth in
the Notes to the Consolidated  Financial  Statements have been presented herein.
Concurrent with the offering of the discount notes discussed above,  Horizon PCS
issued 295,000 warrants to purchase up to 3,805,000 shares of Horizon PCS' class
A common stock.  The warrants were  registered  with the SEC  (Registration  No.
333-51240).  As used herein and except as the context otherwise may require, the
"Company," "we," "us," "our" or "Horizon PCS" means, collectively,  Horizon PCS,
Inc., and the Operating Companies.



                                      -i-
<PAGE>



                                     PART I

                           FORWARD-LOOKING STATEMENTS

     This annual report on Form 10-K includes forward-looking  statements within
the  meaning of  Section  27A of the  Securities  Act of 1933,  as amended  (the
Securities  Act),  and Section 21E of the  Securities  Exchange Act of 1934,  as
amended  (the   Exchange   Act),   which  can  be   identified  by  the  use  of
forward-looking   terminology  such  as:  "may",  "might",   "could",   "would",
"believe",   "expect",  "intend",  "plan",  "seek",  "anticipate",   "estimate",
"project" or "continue" or the negative thereof or other  variations  thereon or
comparable terminology.  All statements other than statements of historical fact
included in this annual report on Form 10-K,  including without limitation,  the
statements  under "ITEM 1.  Business" and "ITEM 7.  Management's  Discussion and
Analysis of Financial  Condition and Results of Operation" and located elsewhere
herein  regarding  our  financial  position and  liquidity  are  forward-looking
statements.  These forward-looking  statements also include, but are not limited
to:

     o    estimates of current and future population for our markets;

     o    forecasts of growth in the number of consumers  and  businesses  using
          personal communication services;

     o    estimates for churn and ARPU (defined below);

     o    statements  regarding  our plans for and costs of the build-out of our
          PCS network;

     o    statements  regarding  our  anticipated   revenues,   expense  levels,
          liquidity  and  capital  resources  and  projections  of  when we will
          achieve break-even or positive EBITDA and operating cash flow; and

     o    the anticipated impact of recent accounting pronouncements.

     Although  we believe the  expectations  reflected  in such  forward-looking
statements are reasonable, we can give no assurance such expectations will prove
to have been correct. Important factors with respect to any such forward-looking
statements,  including certain risks and  uncertainties  that could cause actual
results to differ materially from our expectations (Cautionary Statements),  are
disclosed in this annual report on Form 10-K, including,  without limitation, in
conjunction with the  forward-looking  statements included in this annual report
on Form 10-K.  Important  factors  that  could  cause  actual  results to differ
materially from those in the forward-looking statements included herein include,
but are not limited to:

     o    our ability to continue as a going concern;

     o    our significant level of indebtedness;

     o    the likelihood  that we will fail to comply with debt covenants in our
          senior secured credit facility;

     o    the  nature  and  amount of the fees that  Sprint  charges us for back
          office services;

     o    our potential need for additional  capital or the need for refinancing
          existing indebtedness;

     o    our  dependence on our  affiliation  with Sprint and our dependence on
          Sprint's back office services;

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

     o    changes or advances in technology and the acceptance of new technology
          in the marketplace;

     o    competition in the industry and markets in which we operate;

     o    the  potential  to  continue  to  experience  a high rate of  customer
          turnover;



                                       1
<PAGE>

     o    our lack of operating history and anticipation of future losses;

     o    potential fluctuations in our operating results;

     o    our ability to attract and retain skilled personnel;

     o    changes in government regulation; and

     o    general political, economic and business conditions.

     These   forward-looking   statements   involve  known  and  unknown  risks,
uncertainties and other factors which may cause our actual results,  performance
or achievements to be materially different from any future results,  performance
or achievements  expressed or implied by such  forward-looking  statements.  All
subsequent  written and oral  forward-looking  statements  attributable to us or
persons  acting on our behalf are expressly  qualified in their  entirety by the
Cautionary  Statements.  See "Item  7.Management's  Discussion  and  Analysis of
Financial Condition and Results of Operation" for further information  regarding
several of the risks and uncertainties.

ITEM 1. BUSINESS

     References  in this  annual  report  on Form  10-K to us as a  provider  of
wireless personal  communications  services ("PCS") or similar phrases generally
refer to our  building,  owning  and  managing  our  portion  of the  Sprint PCS
wireless network pursuant to our PCS affiliation  agreements with Sprint. Sprint
holds the spectrum licenses and controls the network through its agreements with
us.

OVERVIEW

     As a PCS affiliate of Sprint,  we have an exclusive  right to market Sprint
PCS products and services to a total  population of over 10.2 million  people in
portions of twelve contiguous  states.  Our territory covers 54 markets in parts
of Indiana, Kentucky,  Maryland, Michigan, New Jersey, New York, North Carolina,
Ohio,  Pennsylvania,  Tennessee,  Virginia, and West Virginia. These territories
are located between Sprint's Chicago,  New York and  Raleigh/Durham  markets and
connect  or are  adjacent  to 15 major  Sprint  PCS  markets  that  have a total
population  of over 59 million  people.  We  believe  that  connecting  or being
adjacent  to  existing  Sprint PCS  markets is  important  to  Sprint's  and our
strategy to provide  seamless,  nationwide PCS. As a PCS affiliate of Sprint, we
market digital personal  communications services under the Sprint and Sprint PCS
brand names. At December 31, 2002, we had approximately  270,900 PCS subscribers
in our territory.

     Horizon  PCS is a  majority-owned  subsidiary  of Horizon  Telcom.  Horizon
Telcom is a holding  company which, in addition to its common stock ownership in
Horizon  PCS,  owns  100% of:  1) The  Chillicothe  Telephone  Company,  a local
telephone  company;  2)  Horizon  Services,  Inc.  ("Horizon  Services"),  which
provides  administrative  services  to  Horizon  PCS and  other  Horizon  Telcom
affiliates;  and 3) Horizon  Technology,  Inc.  ("Horizon  Technology"),  a long
distance and Internet services business.

RECENT DEVELOPMENTS

     As of December 31, 2002,  the Company was in compliance  with its covenants
with regards to its outstanding  debt.  However,  we believe that it is probable
that the Company will  violate one or more  covenants  under its secured  credit
facility in 2003.  The  failure to comply  with a covenant  would be an event of
default under our secured credit facility,  and would give the lenders the right
to pursue  remedies.  These remedies could include  acceleration  of amounts due
under the facility.  If the lenders elected to accelerate the indebtedness under
the facility,  this would also  represent a default under the indentures for our
senior  notes and  discount  notes (see "Note 11" in the "Notes to  Consolidated
Financial  Statements") and would give Sprint certain remedies under our Consent
and Agreement  with Sprint.  See "The Sprint  Agreements."  The Company does not
have  sufficient  liquidity  to  repay  all  of  the  indebtedness  under  these
obligations.  Horizon  PCS's  independent  auditors'  report dated March 4, 2003
states that these matters raise substantial doubt about the Company's ability to
continue as a going concern.


                                       2
<PAGE>


     In addition,  without the  additional  borrowing  capacity under the senior
credit  facility,  significant  modifications  in the amounts  charged by Sprint
under  the  management  agreements,  significant  modifications  in the  amounts
charged  by  the  Alliances  under  the  Network  Service   Agreement  and/or  a
restructuring  of our  capital  structure,  the  Company  likely  does  not have
sufficient  liquidity to fund its  operations  so that it can pursue its desired
business plan and achieve positive cash flow from operations.

     The Company plans to take the following steps (some of which it has already
commenced)  within  the next six  months to  achieve  compliance  under its debt
facilities and to fund its operations:

     o    Entering into  negotiations  with Sprint to adjust the amounts charged
          by Sprint to the Company  under the Sprint  management  agreements  to
          improve the Company's cash flow from operations.

     o    Entering  into  negotiations  with the lenders under our senior credit
          facility to modify our debt  covenants  and, if  necessary,  to obtain
          waivers and/or a forbearance  agreement with respect to defaults under
          the senior credit facility.

     o    Entering  into  negotiations  with the lenders under our senior credit
          facility to obtain the right to borrow  under the $95 million  line of
          credit and to modify the repayment terms of this facility.

     o    If the lenders under the senior credit facility  accelerate the senior
          secured  debt,  negotiating  a waiver or  forbearance  agreement  with
          representatives of the holders of our senior notes and discount notes.

     o    Entering into negotiations or arbitration with the Alliances to reduce
          the amounts  charged by  Alliances  to the  Company  under the network
          agreements to improve the Company's cash flow from operations.

     o    Pursuing means to reduce  operating  expenses by critically  analyzing
          all expenses and entering into pricing negotiations with key vendors.

     The Company  would need to be successful in these efforts to be in position
to execute its business  plan and achieve  positive  cash flow.  The Company can
give no assurance  that it will be  successful  in these  efforts.  In its early
discussions  with Sprint,  Sprint has indicated  reluctance in modifying the fee
structure as needed under the first item listed above.

     The Company has engaged Berenson & Company,  an investment banking firm, to
assist in its efforts to renegotiate or restructure  its equity,  debt and other
contractual obligations.

     If the  Company  is  unable  to  restructure  its  current  debt and  other
contractual obligations as discussed above, it would need to:

     o    obtain financing to satisfy or refinance its current obligations;

     o    find a purchaser or strategic  partner for the  Company's  business or
          otherwise dispose of its assets; and/or

     o    seek bankruptcy protection.

CURRENT OPERATING ENVIRONMENT AND OUR BUSINESS STRATEGY

     Since  the  beginning  of  2002,  the  wireless  communications   industry,
including Sprint and its PCS affiliates, has experienced significant declines in
per share  equity  prices  and debt  ratings.  We believe  that this  decline in
wireless  stocks and debt ratings results from a weaker outlook for the wireless
industry than previously  expected.  Reasons for a weaker operating  environment
include:

     o    declining  rates of  subscriber  growth in the United States caused by
          the  lack of  availability  of new  quality  subscribers,  as  overall
          penetration rates in the wireless industry approximate 50%;


                                       3
<PAGE>


     o    concerns that intense  competition among wireless service providers in
          the  United  States  will  continue  to lead to service  offerings  of
          increasingly large bundles of minutes at lower prices;

     o    higher rates of churn resulting from intense  competition and programs
          for lower credit rating ("sub-prime") subscribers; and

     o    the highly leveraged capital structures of many wireless providers and
          a lack of viable financing alternatives.

     Our business has been and continues to be affected by these general  market
conditions.  In addition,  as a result of our dependence on Sprint,  we are also
confronted  with  additional  factors  that  have had a  negative  impact on our
operations such as:

     o    At Sprint's direction,  we offered a no deposit account spending limit
          ("NDASL") program that attracted sub-prime subscribers and contributed
          to high rates of churn.  Sprint has discontinued the NDASL program and
          replaced it with Clear Pay, which tightened credit  restrictions,  and
          Clear Pay II, which re-instituted  deposit requirements for most lower
          credit quality  customers and introduces  additional  controls on loss
          exposure;

     o    The amount of the  affiliation  and back  office  fees and roaming and
          other  charges that we pay to Sprint  expressed as a percentage of our
          service  revenues has  increased  over the years to a level of 42% for
          2002. Consequently,  our ability to control costs through our own cost
          cutting measures is more limited;

     o    Over  the past  year,  Sprint  has  taken a number  of  actions  which
          resulted  in  unanticipated  charges  or  increases  in charges to the
          Company.  Some of these charges  resulted from prior billing errors by
          Sprint, while others were charges to which we had little or no advance
          notice.  The effect of these  actions was to reduce our  liquidity and
          interject  a  greater  degree  of  uncertainty  to  our  business  and
          financial planning;

     o    Our dependence on Sprint to provide  customer care provides us limited
          tools to improve the quality of customer care, which may contribute to
          higher churn; and

     o    Our dependence on Sprint to provide  services,  including  back-office
          services, gives us a more limited control of our own working capital.

     In reaction to these changes,  we have implemented a variety of operational
management initiatives, including:

     o    We have  reorganized our sales group and added strategic  positions to
          better manage our sales team;

     o    We have reduced  planned  capital  expenditures  and preserved cash by
          delaying or eliminating  plans to expand our network of  company-owned
          retail  stores,  and have held headcount  steady to control  operating
          expenses within the retail channel;

     o    We  have  implemented   several  network  cost  control   initiatives,
          including  a  reduction  of  engineering  and  operations  staffing in
          recognition of a transition from network deployment  activities toward
          steady-state network operations;

     o    We are  reducing  advertising  expenditures  to  preserve  cash  while
          concurrently increasing sales productivity through the use of outbound
          local marketing,  business development and community relations efforts
          directed through our retail stores and local marketing support staff;

     o    We  have  implemented  a churn  reduction  initiative  as a  proactive
          response to keep  valuable  customers  and to assist the customer care
          services provided by Sprint;

     o    We reinstituted  the deposit on sub-prime  subscribers in an effort to
          focus  on  value  added,  long-term  subscribers.  As  a  result,  our
          percentage  of  higher  credit  rating  ("prime")   customers  in  our


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<PAGE>

          subscriber portfolio increased to 74% at December 31 2002, from 65% at
          its lowest point on March 31, 2002; and

     o    We have commenced  negotiations  with Sprint for a modification in the
          manner that we are charged for back office services.

     As a result  of the  industry  trends  discussed  above  and the fact  that
wireless industry acquisitions subsequent to the Company's acquisition of Bright
PCS have been valued substantially lower on a price per population and price per
subscriber basis, the Company believed that the fair value of Bright PCS and its
assets  had  been  reduced.  The  Company  recorded  a  goodwill  impairment  of
approximately  $13.2  million  during the quarter  ended  December 31, 2002 (See
"Note 7" under "Notes to Consolidated Financial Statements").

HISTORY AND BACKGROUND

     In November  1996,  we acquired PCS licenses in the Federal  Communications
Commissions'  ("FCC")  C-Block auction giving us the right to provide service to
five markets in Ohio,  West  Virginia and Kentucky  with a total  population  of
approximately 1.0 million  residents.  In August 1997,  approximately ten months
after receiving our licenses,  we launched PCS service as an independent service
provider  operating under the "Horizon Personal  Communications"  brand name. We
were the third  C-Block  licensee to launch PCS service in the United States and
the first to use CDMA technology.

     In June 1998,  we returned all of our FCC licenses  except for a portion of
the  license  covering  our  Chillicothe,  Ohio,  market  in  exchange  for  the
forgiveness of our FCC debt. In connection  with the return of our FCC licenses,
we agreed to become one of five charter PCS  affiliates  of Sprint.  Our initial
grant of markets from Sprint  consisted of seven markets in Ohio,  West Virginia
and Kentucky with a total  population of  approximately  1.6 million  residents.
This grant included the five markets for which we originally  held licenses.  In
November 1998, we began offering PCS service under the Sprint licenses. However,
we continued to use "Horizon Personal  Communications"  as the primary brand for
marketing our PCS service.

     In August 1999, Sprint granted us 17 additional  markets in Virginia,  West
Virginia,  Tennessee,  Maryland,  Kentucky, North Carolina and Ohio with a total
population of  approximately  3.3 million  residents.  In conjunction  with this
second grant,  we also entered into a network  services  agreement with the West
Virginia  PCS  Alliance  and  Virginia  PCS  Alliance,  which we refer to as the
Alliances.  The Alliances are two related,  independent  PCS providers  offering
services under the NTELOS brand. Under this agreement,  we obtained the right to
use their  wireless  network to provide  Sprint PCS services to our customers in
most of these new markets. At December 31, 2002, the Alliances' network provided
coverage  to 1.8 million  residents,  or 62% of their  network's  portion of our
total population.

     In September 1999,  Horizon Telcom sold its interest in the towers it owned
to SBA Communications,  Corp. ("SBA"),  and invested the net proceeds in Horizon
PCS. Prior to the sale, we had been leasing the towers from Horizon  Telcom.  We
now lease those towers from SBA.

     In September 1999, we became one of the founders of Bright PCS, receiving a
26% equity interest in exchange for an equity contribution of approximately $3.1
million.  Shortly  after our  investment,  Bright PCS became the  exclusive  PCS
affiliate of Sprint for 13 markets in Indiana,  Ohio and Michigan,  with a total
population of approximately 2.4 million residents. At that time, we also entered
into a  management  agreement  with  Bright PCS under  which we agreed to manage
Bright  PCS'  network   build-out  and  operations.   We  launched   service  in
substantially all of the Bright PCS markets in October 2000.

     In December  1999,  we completed a two-month  transition  from a co-branded
marketing  strategy to  marketing  and selling all of our  products and services
exclusively  under the  "Sprint  PCS" brand  name,  which gave us full access to
Sprint's major national retailers.

     In May 2000,  Sprint  granted us an additional 17 markets in  Pennsylvania,
New York,  Ohio and New Jersey  with a total  population  of  approximately  2.9
million residents.

     In June 2000,  we acquired the  remaining 74% of Bright PCS that we did not
already own to become a 100% owner. As consideration for the outstanding  Bright
PCS equity,  we exchanged 4.7 million shares of our class B common stock,  equal
to 8% of our outstanding  shares of all classes of our common stock prior to the


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<PAGE>

acquisition,  and 31,912 shares of Horizon  Telcom common stock,  equal to 8% of
the outstanding shares of Horizon Telcom, which we acquired in February 2000.

     On September 26, 2000, an investor group led by Apollo Management purchased
$126.5  million  of our  convertible  preferred  stock in a  private  placement.
Concurrently,  holders of a $14.1 million short-term convertible note (including
accrued  interest  of $1.1  million)  converted  it into  the  same  convertible
preferred  stock  purchased by the  investor  group.  Concurrently,  the Company
received  $149.7  million  from the  issuance of $295.0  million of 14% discount
notes and negotiated a $225.0 million secured credit  facility (later  increased
to a $250.0 million facility) with a bank group. The discount notes were subject
to an exchange offer filed with the SEC which was completed.

     In December  2001, we received  $175.0  million from our offering of 13.75%
senior  notes.  The senior  notes were  subject to an  exchange  offer which was
completed.

     The Sprint PCS agreements  require the Company to interface with the Sprint
PCS  wireless  network  by  building  the  Company's  network  to operate on PCS
frequencies  licensed  to Sprint in the 1900 MHz  range.  Under the  Sprint  PCS
agreements, we have agreed to:

     o    construct and manage a network in HPCS'  territory in compliance  with
          Sprint's PCS licenses and the terms of the management agreement;

     o    distribute,  during the term of the management  agreement,  Sprint PCS
          products and services; and

     o    conduct advertising and promotion activities in HPCS' territory.

     The  Company  must  comply  with  Sprint's  PCS  program  requirements  for
technical   standards,   customer  service  standards,   national  and  regional
distribution  and  national  accounts  programs to the extent that Sprint  meets
these  requirements.  For further  discussion of the Sprint PCS agreements,  see
"The Sprint PCS Agreements" below.

OPERATIONAL ANALYSIS

     We focused a significant  amount of our  operational  efforts over the past
twelve months on upgrading our wireless  network to be able to provide the first
level of third generation  ("3G") network services marketed by Sprint nationally
as "PCS Vision." In conjunction with Sprint's  nationwide  launch of PCS Vision,
we  began  providing  3G  services  across  our  network  in  mid-August   2002.
Subscribers are now able to connect to the Internet with their handsets,  PDA's,
and laptops at speeds of up to 144  kilobits  per second  ("kbps").  The average
user will  experience  peak  rates of 75-80  kbps,  which is two to three  times
faster than historical dial-up speeds. We can now offer several new products and
services to our subscribers.

     In  addition  to the 3G  upgrades,  253  cell  sites  were  added  to  both
substantially  complete  our  build-out  requirements  with  Sprint  and  expand
coverage and capacity where  necessary.  At December 31, 2002, we covered 73% of
the total population 10.2 million in our territory.

SPRINT

     Sprint operates the nation's largest all-digital, all-PCS wireless network,
serving more than 4,000 cities and  communities  across the country.  Sprint has
licensed PCS coverage of more than 280 million  people in all 50 states,  Puerto
Rico and the U.S.  Virgin  Islands.  In August  2002,  Sprint  became  the first
wireless  carrier in the country to launch next generation  services  nationwide
delivering faster speeds and advanced  applications on Vision-enabled phones and
devices.

     Sprint  Affiliation.  We have the  exclusive  right to use the  Sprint  and
Sprint PCS brand names for the sale of Sprint PCS  products  and services in our
territory.  Additionally,  we believe that Sprint,  using CDMA  technology,  has
developed a path to wireless  high-speed data that will ultimately benefit us as
customer  demand  for robust  data  enabled  services  increases.  In  addition,
Sprint's national  advertising  campaigns,  national  distribution  channels and
developed marketing programs are provided to us under our Sprint PCS agreements.
We offer the same strategic pricing plans, promotional campaigns and handset and
accessory promotions as Sprint.


                                       6
<PAGE>

     Marketing  and pricing.  Our use of the Sprint  national  pricing  strategy
offers our subscribers  standardized  service plans.  Sprint's pricing plans are
typically structured with monthly recurring charges,  large local calling areas,
bundles of minutes  and  service  features  such as  voicemail,  caller ID, call
waiting,  call forwarding and three-way calling. We also feature Sprint Free and
Clear  plans,  which offer plans for  consumer  and  business  subscribers,  and
include  long  distance  calling  from  anywhere  on the Sprint  PCS  nationwide
network. In addition, Sprint national Free and Clear plans include the option to
choose free long  distance  calling  from  anywhere  on Sprint  PCS'  nationwide
network, a package of off-peak minutes or the Sprint PCS Wireless Web.

     Local focus.  Our local focus enables us to supplement  Sprint's  marketing
strategies  with our own  strategies  tailored to each of our specific  markets.
These include attracting local businesses to diversify our distribution channels
and using  local  radio  and  newspaper  advertising  to sell our  products  and
services in each of our markets.  We also enhance our local focus with  specific
service  plans  called  Area-wide  Plans.  These  plans  are  designed  for  our
territories  to create a more  competitive  product  to those  offered  by other
regional or local providers.  We have established a local sales force to execute
our  marketing  strategy  through  company-owned  Sprint PCS stores and employ a
direct sales force targeted to business sales.  Our PCS affiliation  with Sprint
provides us with access to major  national  retailers  under  Sprint's  existing
sales and  distribution  agreements and other  national  sales and  distribution
channels,  including  Radio Shack,  Best Buy,  Circuit City and Office Depot. In
addition to the Sprint provided  channels above, we own and manage 44 Sprint PCS
retail stores  throughout our  territory.  For the year ended December 31, 2002,
our retail stores provided approximately 40% of our gross customer additions.

NETWORK BUILD-OUT

    Our  network  build-out  strategy  is to  provide  service  to  the  largest
communities in our markets and to cover interstates and primary roads connecting
these  communities  to each other,  and to the adjacent  major markets owned and
operated  by  Sprint.  We  believe  that we  have  substantially  completed  our
build-out requirements. Our network now offers service to 7.4 million residents,
or 73% of the total population in our territory.

     Switching.  We  currently  use three  switching  centers in  Johnson  City,
Tennessee,  Erie, Pennsylvania,  and Fort Wayne, Indiana, to provide services to
our network.  We also utilize the  Alliance's  two  switching  centers under our
network services agreement (see "Alliances Network Services Agreement" below). A
switching center serves several purposes, including routing calls, managing call
handoff, managing access to the public telephone network and providing access to
voice mail.  We believe the  capacity  of our  switching  centers is adequate to
accommodate our planned growth.

     CDMA (Code  Division  Multiple  Access)  Technology.  Sprint's  network and
Sprint's network partners' networks all use CDMA technology.  CDMA technology is
fundamental to  accomplishing  our business  objective of providing high volume,
high  quality  airtime at a low cost.  We believe that CDMA  provides  important
system performance benefits.  CDMA systems offer more powerful error correction,
less  susceptibility to fading and less interference than analog systems.  Using
enhanced  voice coding  techniques,  CDMA systems  achieve voice quality that is
comparable  to  that  of the  typical  wireline  telephone.  This  CDMA  vocoder
technology  also  employs  adaptive  equalization,  which  filters out  annoying
background  noise more effectively  than existing  wireline,  analog cellular or
other digital PCS phones.  CDMA technology also allows a greater number of calls
within one allocated  frequency and reuses the entire frequency spectrum in each
cell.  In addition,  CDMA  technology  combines a coding scheme with a low power
signal to enhance  security and privacy.  As a subscriber  travels from one cell
site to another  cell site,  the call must be  "handed  off" to the second  cell
site.  CDMA systems  transfer  calls  throughout  the network  using a technique
referred to as soft hand-off,  which connects a mobile  subscriber's call with a
new cell site while  maintaining  a connection  with the cell site  currently in
use.

     CDMA  standards and products allow existing CDMA networks to be upgraded to
the next generation of wireless  technology.  This technology offers data speeds
of up to 144 kbps voice capacity  improvements of over 50% and improved  battery
life in the handset.

ALLIANCES NETWORK SERVICES AGREEMENT

    The Alliances are two related,  independent PCS providers  offering  service
under the NTELOS brand name. In August 1999, we entered into a network  services
agreement  with  the  Alliances  for 13 of our  markets  in  Virginia  and  West
Virginia.  Under this agreement,  we are entitled to use the Alliances' wireless


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<PAGE>

network and equipment to provide services to our customers in these markets. The
Alliances  are  required  to  maintain  their  network to Sprint  PCS  technical
standards.  We pay the Alliances a minimum  monthly charge for a fixed number of
minutes and a per minute of use charge for minutes in excess of the fixed number
of minutes.

    As of December 31, 2002,  the  Alliances  had deployed 510 cell sites within
our markets in West Virginia and Virginia and provided coverage to approximately
62% of the total  population of 2.9 million  residents in the markets covered by
our network services agreement.

    In the event we terminate  our agreement  with the Alliances  because of the
Alliances'  breach of the  agreement,  we have the right to  continue to use the
Alliances'  network  for up to 36 months  after the  termination  at rates which
reflect  a  significant  discount  from the  standard  pricing  terms  under our
agreement.  This is intended to enable us to continue to provide services to our
customers  while we build-out our own network.  In addition,  after December 31,
2003,  we  have  the  right  to  overbuild   the   Alliances'   markets,   on  a
market-by-market basis, at any time for any reason.

     On March 4, 2003, NTELOS and certain of its subsidiaries  filed voluntarily
petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the
U.S.  Bankruptcy  Court for the  Eastern  District of  Virginia.  The results of
NTELOS'  restructuring  could have a material  adverse impact on our operations.
Pursuant to bankruptcy law, the Alliances have the right to assume or reject the
network  services  agreement.  If the  Alliances  reject  the  network  services
agreement,  we will lose the ability to provide  service to our  subscribers  in
Virginia and West Virginia  through the  Alliances'  Network and Sprint may take
the  position  that we would be in  breach  of our  management  agreements  with
Sprint.

     Prior to the Alliances'  bankruptcy  filing,  Horizon had asserted that the
Alliances had overcharged Horizon approximately $4,799,000 for charges that were
neither  authorized nor  contemplated by the network  services  agreement.  As a
result  of the  Alliances'  bankruptcy  filing,  Horizon  was at risk  that  any
subsequent  payments that it would make for services under the network  services
agreement could impair its setoff or recoupment rights with respect to its claim
for a repayment of the unauthorized charges.  Consequently,  Horizon declined to
make a scheduled  payment of $3 million to the  Alliances  on March 11, 2003 for
services  rendered by the  Alliances in January 2003 and, on that date,  filed a
motion in the Alliances' bankruptcy case to protect its rights.

     On March 12, 2003, the Alliances  telecopied to Horizon a letter  notifying
Horizon of the failure to make payment on the January 2003 invoice, which letter
purported to be a ten-business day notice under the network  services  agreement
that  would give the  Alliances  the right to  terminate  the  agreement  at the
conclusion of such ten-day period.

     On March 24, 2003,  Horizon and the  Alliances  entered into a  Stipulation
which  provided  that  Horizon  would pay the  January  2003 and  February  2003
invoices,  the bankruptcy court would provide procedural protection of Horizon's
claim,  the Alliances  would  withdraw the default  notice and the parties would
move forward to settle or arbitrate the merits of Horizon's  claim. On March 26,
2003, the Court in the NTELOS bankruptcy case approved the Stipulation.

COMPETITION

    Given the broad  geographic  coverage of our territory,  we face substantial
competition  from a large number of other  wireless  providers.  We compete,  to
varying  degrees,  with regional and national  cellular,  PCS and other wireless
service  providers.  Currently,  we believe our  strongest  competition  is from
cellular  providers,  many of which  have  been  operating  in our  markets  and
building their customer base for a number of years.

    Our largest single competitor is Verizon  Wireless,  which offers service in
the  majority of our markets.  We also face  significant  competition  from AT&T
Wireless,  T-Mobile  and  Nextel,  which  operates  in  conjunction  with  their
affiliates  in  almost  all of our  markets.  Our  primary  competitors  offer a
wireless  service that is generally  comparable to our PCS service.  The intense
competition  among wireless  service  providers in the United States will likely
continue to lead to service  offerings of increasingly  large bundles of minutes
at lower prices.

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<PAGE>

    In   addition,   we  compete   with   paging,   dispatch  and  other  mobile
telecommunications  companies in our markets. Potential users of PCS systems may
find their  communications  needs  satisfied  by other  current  and  developing
technologies.  One or  two-way  paging or beeper  services  that  feature  voice
messaging  and data  display as well as  tone-only  service may be adequate  for
potential customers who do not need immediate two-way voice communications.

    In the  future,  we  expect  to face  increased  competition  from  entities
providing similar services using other  communications  technologies,  including
satellite-based  telecommunications  and fixed wireless providers.  While few of
these  technologies  and services are  currently  operational,  others are being
developed or may be developed in the near future.

INTELLECTUAL PROPERTY

    "Sprint," the Sprint  diamond  design logo,  "Sprint PCS," "Sprint  Personal
Communications  Services,"  "The Clear  Alternative to Cellular" and "Experience
the Clear  Alternative to Cellular Today" are service marks  registered with the
United  States  Patent and  Trademark  Office.  These service marks are owned by
Sprint.  Pursuant to the trademark and service mark license agreements,  we have
the right to use,  royalty-free,  the Sprint and Sprint PCS brand  names and the
Sprint diamond design logo and other service marks of Sprint in connection  with
marketing,  offering and providing licensed services to end-users and resellers,
solely within our territory.

    Except in  limited  instances,  Sprint  has agreed not to grant to any other
person a right or license  to provide or resell,  or act as agent for any person
offering,  licensed services under the licensed marks in our market areas except
as to Sprint's  PCS  marketing  to national  accounts  and the limited  right of
resellers of Sprint PCS to sell their products and services in our market areas.
In all other instances,  Sprint reserves for itself and its affiliates the right
to use the licensed marks in providing its services,  subject to its exclusivity
obligations described above, whether within or without our territory.

     The trademark license agreements contain numerous restrictions with respect
to the use and  modification of any of the licensed  marks.  See "The Sprint PCS
Agreements: The Trademark and Service Mark License Agreements."

     This annual report on Form 10-K  includes  product  names,  trade names and
trademarks of other  companies.  We do not have any rights with respect to these
product names, trade names and trademarks.

SUPPLIERS AND EQUIPMENT VENDORS

     We do not  manufacture  any of the handsets or network  equipment we use in
our  operations.  We purchase our network  equipment  and  handsets  pursuant to
various Sprint vendor arrangements that provide us with volume discounts.  These
discounts have reduced the overall capital required to build our network.

     We currently  purchase our handsets  from Sprint and our  accessories  from
Sprint and certain other third-party vendors. Our agreements with Sprint require
us to pay Sprint $4.00 for each 3G handset that we purchase either directly from
Sprint  or from a  Sprint  authorized  distributor.  We  agreed  to pay this fee
starting  with  purchases  on July 1, 2002 and ending on the earlier of December
31, 2004 or the date on which the  cumulative 3G handset fees received by Sprint
from all  Sprint  network  partners  equal  $25,000,000.  We  further  agreed to
purchase 3G handsets only from Sprint or a Sprint authorized  distributor during
this period.

EMPLOYEES

     As of December 31, 2002, we employed 580 full-time employees, including 418
in sales  and  marketing,  136  technicians  and 26 in  executive,  finance  and
administration.  None of our  employees  are  represented  by a labor union.  We
believe we have good relations with our employees.



                                       9
<PAGE>

                            THE SPRINT PCS AGREEMENTS

     The  following is a summary of the  material  terms and  provisions  of the
Sprint PCS agreements. The summary applies to the Sprint PCS agreements for both
Horizon Personal Communications and Bright PCS except where otherwise indicated.
The Sprint PCS agreements,  in their entirety,  are included as exhibits to this
annual report of Form 10-K.

OVERVIEW OF SPRINT RELATIONSHIP AND PCS AGREEMENTS

    We have eight major  agreements with Sprint  (collectively,  the "Sprint PCS
Agreements").  Under the  Sprint  PCS  agreements,  we  exclusively  market  PCS
services under the Sprint and Sprint PCS brand names in our markets.  The Sprint
PCS agreements  require us to interface with the Sprint PCS wireless  network by
building  our  network to operate on PCS  frequencies  licensed to Sprint in the
1900 MHz  range.  The  Sprint  PCS  agreements  also give us access to  Sprint's
equipment  discounts,  roaming revenue from Sprint PCS customers  traveling into
our territory, and various other back office services. The Sprint PCS agreements
have initial  terms of twenty  years with three  ten-year  renewals  which would
lengthen the contracts to a total of fifty years. The Sprint PCS agreements will
automatically  renew  for each  additional  ten-year  term  unless  Sprint or we
provide the other with two years' prior  written  notice to terminate the Sprint
PCS agreements. The initial term of the agreements will expire in 2018.

     The agreements consist of one of each of the following for Horizon Personal
Communications and one of each for Bright PCS:

     o    the management agreement;

     o    the services agreement; and

     o    the trademark and service mark license agreement with Sprint.

THE MANAGEMENT AGREEMENT

     Under our Sprint PCS agreements, we have agreed to:

     o    construct  and manage a network in our  territory in  compliance  with
          Sprint's PCS licenses and the terms of the management agreement;

     o    distribute,  during the term of the management  agreement,  Sprint PCS
          products and services; and

     o    conduct advertising and promotion activities in our territory.

     Sprint will monitor our network operations and has unconditional  access to
our network.

     Exclusivity. We are designated as the only person or entity that can manage
or operate a PCS network for Sprint in our territory.  Sprint is prohibited from
owning, operating, building or managing another wireless mobility communications
network in our territory while our management agreement is in place and no event
has occurred that would permit the  agreement to terminate.  Sprint is permitted
under our agreement to make national sales to companies in our territory, and as
required by the FCC, to permit resale of the Sprint PCS products and services in
our territory. We accrue the financial benefits of either of these activities.

     Network build-out.  The management agreement specifies the terms of the PCS
affiliation with Sprint,  including the required network build-out plan. We have
agreed to  operate  our  network to  provide  for a  seamless  handoff of a call
initiated in our territory to a neighboring Sprint PCS network.


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<PAGE>


     Our long-term affiliation  agreements with Sprint, which we refer to as the
Sprint PCS agreements, require us to build and operate the portion of the Sprint
PCS network  located in our  territory in  accordance  with  Sprint's  technical
specifications  and coverage  requirements.  The  agreements  also require us to
provide  minimum network  coverage to the population  within each of the markets
that make up our territory by specified dates.

     Under our original Sprint PCS agreements,  we were required to complete the
build-out in several of our markets in Pennsylvania and New York by December 31,
2000. Sprint and HPC agreed to an amendment of the build-out requirements, which
extended the dates by which we were to launch coverage in several  markets.  The
amended Sprint PCS agreement provides for monetary penalties to be paid by us if
coverage is not launched by these extended contract dates.

     Products and services. The management agreement identifies the products and
services that we can offer in our territory.  These services  include Sprint PCS
consumer  and business  products  and  services  available as of the date of the
agreements,  or as modified by Sprint.  We are allowed to sell wireless products
and services  that are not Sprint PCS products and services if those  additional
products and services do not otherwise violate the terms of the agreement, cause
distribution channel conflicts,  materially impede the development of the Sprint
PCS network, cause consumer confusion with Sprint's PCS products and services or
violate the  trademark  lease  agreements.  We may  cross-sell  services such as
Internet access,  customer premise equipment and prepaid phone cards with Sprint
and other PCS affiliates of Sprint. If we decide to use third parties to provide
these  services,  we must give Sprint an  opportunity to provide the services on
the same terms and  conditions.  We cannot offer  wireless  local loop  services
specifically  designed for the competitive  local exchange market in areas where
Sprint owns the local  exchange  carrier  unless we name the Sprint  owned local
exchange  carrier as the exclusive  distributor or Sprint approves the terms and
conditions.  Subject to agreements  existing before we became a PCS affiliate of
Sprint,  we are required to use Sprint's long distance  service which we can buy
at wholesale rates.

     Service  pricing.  We  must  offer  Sprint  PCS  subscriber  pricing  plans
designated for regional or national  offerings,  including Sprint Free and Clear
plans.  We are permitted to establish our own local price plans for Sprint's PCS
products and services offered only in our territory, subject to the terms of the
agreement,  consistency  with Sprint's PCS regional and national  pricing plans,
regulatory  requirements,  capability and cost of implementing the rate plans in
Sprint's systems and Sprint's approval.

     Fees.  We are  entitled to receive  from  Sprint an amount  equal to 92% of
collected  revenues under the Sprint PCS agreements.  Collected revenues include
revenue from Sprint PCS subscribers based in our territory,  excluding  outbound
roaming, and inbound non-Sprint PCS roaming. Except in the case of taxes, we are
entitled to 100% of the  following  revenues that are not  considered  collected
revenues:

     o    outbound non-Sprint PCS roaming revenue;

     o    inbound Sprint PCS roaming fees;

     o    proceeds  from the  sales of  handsets  and  accessories  through  our
          distribution channels; and

     o    proceeds from sales not in the ordinary course of business.

     Roaming.  Although  many  Sprint PCS  subscribers  will  purchase a bundled
pricing  plan that allows  roaming  anywhere  on the Sprint PCS network  without
incremental  roaming  charges,  we will earn roaming  revenues from every minute
that a Sprint PCS  subscriber  not based in our territory and any non-Sprint PCS
subscriber  uses our  network.  We will earn  revenues  from Sprint  based on an
established  per-minute  rate for  Sprint's PCS or its  affiliates'  subscribers
roaming  in our  territory.  Similarly,  we will pay for  every  minute  our own
subscribers  use the Sprint PCS nationwide  network  outside our territory.  The
analog  roaming  rate onto a  non-Sprint  PCS  provider's  network  is set under
Sprint's third-party roaming agreements.

     Advertising  and  promotions.   Sprint  is  responsible  for  all  national
advertising  and  promotion  of the Sprint PCS  products  and  services.  We are
responsible for  advertising  and promotion in our territory,  including the pro
rata cost of any promotion or advertising  done by any third-party  retailers in
our territory  pursuant to a national  cooperative  advertising  agreement  with


                                       11
<PAGE>


Sprint.  Sprint's  PCS  service  area  includes  the urban  markets  around  our
territory. Sprint will pay for advertising in these markets. Given the proximity
of these markets to ours, we expect  considerable  spill-over  from Sprint's PCS
advertising in surrounding urban markets.

     Program requirements. We must comply with Sprint's PCS program requirements
for  technical  standards,  customer  service  standards,  national and regional
distribution  and  national  accounts  programs to the extent that Sprint  meets
these  requirements.  Sprint can adjust the  program  requirements  from time to
time. We have the right to appeal to Sprint's management adjustments which could
cause an unreasonable increase in cost to us if the adjustment: (1) causes us to
incur  a cost  exceeding  5% of  the  sum of our  equity  plus  our  outstanding
long-term  debt, or (2) causes our long-term  operating  expenses to increase by
more than 5% (10% for Bright PCS) on a net present value basis. If Sprint denies
our appeal, we must then comply with the program  adjustment,  or Sprint has the
right  to  exercise  the  termination   rights  described  below.  There  is  no
cross-default  provision  between the Sprint PCS agreements for Horizon Personal
Communications and the Sprint PCS agreements for Bright PCS.

     Non-competition.  We may not offer Sprint PCS products and services outside
our territory without the prior written approval of Sprint. Within our territory
we may offer,  market or promote  telecommunications  products and services only
under the Sprint PCS brands, our own brand, brands of related parties of ours or
other products and services approved under the management agreement, except that
no brand of a significant competitor of Sprint PCS or its related parties may be
used for those products and services.  To the extent we have or obtain  licenses
to provide PCS services  outside our  territory,  we may not use the spectrum to
offer  Sprint PCS  products  and services  without  prior  written  consent from
Sprint.

     Termination  of  management  agreement.  The  management  agreement  can be
terminated as a result of:

     o    termination of Sprint's PCS licenses;

     o    an uncured breach under the management agreement;

     o    bankruptcy of a party to the management agreement;

     o    the management  agreement not complying with any applicable law in any
          material respect;

     o    the  termination  of either of the  trademark and service mark license
          agreements; or

     o    our failure to obtain the financing necessary for the build-out of our
          network and for our working capital needs.

     The  termination  or  non-renewal  of either of the  management  agreements
triggers our rights and those of Sprint, as described below.

     If we have the right to terminate the  management  agreement  because of an
event of termination  caused by a Sprint breach under the management  agreement,
we may generally:

     o    require  Sprint  to  purchase  all of our  operating  assets  used  in
          connection with our network for an amount equal to at least 80% of our
          Entire Business Value as defined below;

     o    if Sprint  was the  licensee  for 20MHz or more of the  spectrum  in a
          particular  market on the date the management  agreement was executed,
          require Sprint to sell to us, subject to governmental  approval, up to
          10MHz of licensed  spectrum  for an amount equal to the greater of (1)
          the  original  cost  to  Sprint  of the  license  plus  any  microwave
          relocation  costs  paid by  Sprint  or (2) 9% of our  Entire  Business
          Value; or

     o    sue Sprint for damages or submit the matter to arbitration and thereby
          not terminate the management agreement.



                                       12
<PAGE>

     If Sprint has the right to terminate the management agreement because of an
event of termination caused by us, Sprint may generally:

     o    require us to sell our operating  assets to Sprint for an amount equal
          to 72% of our Entire Business Value;

     o    require us to purchase,  subject to governmental approval, up to 10MHz
          of  licensed  spectrum  for an amount  equal to the greater of (1) the
          original cost to Sprint of the license plus any  microwave  relocation
          costs paid by Sprint or (2) 10% of our Entire Business Value;

     o    take any action as Sprint  deems  necessary  to cure our breach of the
          management  agreement,   including  assuming  responsibility  for  and
          operating our network; or

     o    sue us for damages or submit the matter to arbitration and thereby not
          terminate the management agreement.

     Non-renewal.  If Sprint  gives us timely  notice that it does not intend to
renew the management agreement, we may:

     o    require  Sprint  to  purchase  all of our  operating  assets  used  in
          connection  with our network for an amount  equal to 80% of our Entire
          Business Value; or

     o    if Sprint  was the  licensee  for 20MHz or more of the  spectrum  in a
          particular  market on the date the management  agreement was executed,
          require Sprint to sell to us, subject to governmental  approval, up to
          10MHz of licensed  spectrum  for an amount equal to the greater of (1)
          the  original  cost  to  Sprint  of the  license  plus  any  microwave
          relocation  costs  paid by  Sprint or (2) 10% of our  Entire  Business
          Value.

     If we give Sprint timely notice of  non-renewal,  or we both give notice of
non-renewal, or the management agreement can be terminated for failure to comply
with legal requirements or regulatory considerations, Sprint may:

     o    purchase all of our operating assets for an amount equal to 80% of our
          Entire Business Value; or

     o    require us to purchase, subject to governmental approval, up to 10 MHz
          of  licensed  spectrum  for an amount  equal to the greater of (1) the
          original cost to Sprint of the license plus any  microwave  relocation
          costs paid by Sprint or (2) 10% of our Entire Business Value.

     Determination  of Entire Business Value. If the Entire Business Value is to
be determined,  we and Sprint will each select one independent appraiser and the
two  appraisers  will  select  a third  appraiser.  The  three  appraisers  will
determine the Entire Business Value on a going concern basis using the following
guidelines:

     o    the Entire  Business Value is based on the price a willing buyer would
          pay a willing seller for the entire on-going business;

     o    then-current customary means of valuing a wireless  telecommunications
          business will be used;

     o    the business is  conducted  under the Sprint and Sprint PCS brands and
          the Sprint PCS agreements;

     o    that we own the spectrum  and  frequencies  presently  owned by Sprint
          that we use and are subject to the Sprint PCS agreements; and

     o    the valuation  will not include any value for  businesses not directly
          related to the Sprint PCS products and services,  and these businesses
          will not be included in the sale.

     Indemnification.  We have  agreed to  indemnify  Sprint and its  directors,
employees  and  agents  and  related  parties  of Sprint  and  their  directors,
employees  and agents  against any and all claims  against any of these  parties
arising  from our  violation  of any law, a breach by us of any  representation,
warranty  or  covenant  contained  in the  management  agreement  or  any  other
agreement  between us and Sprint,  our ownership of the operating  assets or the


                                       13
<PAGE>

actions or the  failure to act of anyone who is  employed  or hired by us in the
performance  of any work  under  the  management  agreement,  except we will not
indemnify  Sprint for any claims arising solely from their negligence or willful
misconduct.  Sprint has agreed to indemnify us and our directors,  employees and
agents  against all claims  against any of these  parties  arising from Sprint's
violation of any law, from Sprint's  breach of any  representation,  warranty or
covenant  contained in the management  agreement or any other agreement  between
Sprint and us, or the actions or the failure to act of anyone who is employed or
hired by Sprint in the  performance of any work under the  management  agreement
except  Sprint  will not  indemnify  us for any claims  arising  solely from our
negligence or willful misconduct.

     Sprint PCS warrants. In connection with Sprint's grant to us of our markets
in  Pennsylvania,  New York,  Ohio and New Jersey,  we agreed to grant to Sprint
warrants to acquire shares of the Company's  class A common stock (See "Note 17"
under "Notes to Consolidated Financial Statements" included herein).

THE SERVICES AGREEMENTS

     The services agreements outline back office services provided by Sprint and
available  to us at  established  rates.  Sprint  can  change  any or all of the
service  rates  one time in each  twelve  month  period.  Some of the  available
services include:  billing,  customer care,  activation,  credit checks, handset
logistics,  home  locator  record,  voice  mail,  prepaid  services,   directory
assistance,   operator  services,  roaming  fees,  roaming  clearinghouse  fees,
interconnect fees and  inter-service  area fees. Sprint offers three packages of
available  services.  Each package  identifies  which services must be purchased
from  Sprint  and which may be  purchased  from a vendor or  provided  in-house.
Essentially,  services such as billing, activation and customer care must either
all be purchased from Sprint or we may provide those services ourselves. When we
signed our  original  Sprint  PCS  agreements,  we  elected to provide  billing,
activation  and customer care  services on our own. In  connection  with the May
2000  grant by  Sprint of  additional  markets  to us,  we agreed to change  our
arrangement under the services agreement so that Sprint will provide activation,
billing and customer care. Accordingly, in June 2001, we discontinued the use of
our own activation,  billing,  and customer care  capabilities.  We now purchase
those services from Sprint.  For our Bright PCS markets and our newer markets in
Pennsylvania,  New York and New Jersey, we launched these markets using Sprint's
billing and customer  care  services.  Sprint may contract with third parties to
provide  expertise  and  services  identical  or  similar  to  those  to be made
available  or provided to us. We have  agreed not to use the  services  received
under the services  agreement in connection  with any other  business or outside
our territory.  We may  discontinue  use of any service upon three months' prior
written notice.  Sprint may discontinue a service  provided that Sprint provides
us with nine months' prior notice.

    We have  agreed  with Sprint to  indemnify  each other as well as  officers,
directors, employees and other related parties and their officers, directors and
employees  for  violations  of law or the  services  agreement  except  for  any
liabilities  resulting from the indemnitee's  negligence or willful  misconduct.
The services  agreement  also provides  that no party to the  agreement  will be
liable  to  the  other  party  for  special,  indirect,  incidental,  exemplary,
consequential  or  punitive  damages,  or  loss  of  profits  arising  from  the
relationship  of the parties or the conduct of business under, or breach of, the
services  agreement  except as may otherwise be required by the  indemnification
provisions.  The services agreement automatically terminates upon termination of
the management  agreement and neither party may terminate the services agreement
for any reason other than the termination of the management agreement.

THE TRADEMARK AND SERVICE MARK LICENSE AGREEMENTS

     We have  non-transferable,  royalty-free  licenses  to use the  Sprint  and
Sprint PCS brand names and "diamond" symbol,  and several other U.S.  trademarks
and service marks such as "The Clear  Alternative to Cellular" and "Clear Across
the Nation" on Sprint PCS  products  and services We believe that the Sprint and
Sprint  PCS brand  names and  symbols  enjoy a very  high  degree of  awareness,
providing us an immediate  benefit in the market place.  Our use of the licensed
marks is subject to our adherence to quality standards  determined by Sprint and
use of the licensed  marks in a manner which would not reflect  adversely on the
image of quality  symbolized by the licensed  marks.  We have agreed to promptly
notify  Sprint of any  infringement  of any of the  licensed  marks  within  our
territory  of which we  become  aware  and to  provide  assistance  to Sprint in
connection with Sprint's  enforcement of its' respective  rights. We have agreed
with Sprint to indemnify  each other for losses  incurred in  connection  with a
material breach of the trademark license agreements. In addition, we have agreed
to indemnify  Sprint from any loss suffered by reason of our use of the licensed
marks or marketing, promotion, advertisement, distribution, lease or sale of any
Sprint  products and services other than losses arising solely out of our use of
the licensed marks in compliance with the contractual guidelines.


                                       14
<PAGE>


     Sprint can terminate  the trademark and service mark license  agreements if
we file for  bankruptcy,  materially  breach  the  agreement  or our  management
agreement is terminated. We can terminate the trademark and service mark license
agreements  upon Sprint's  abandonment  of the licensed marks or if Sprint files
for bankruptcy, or the management agreement is terminated.

CONSENT  AND  AGREEMENT  FOR THE  BENEFIT OF THE  HOLDERS OF THE SENIOR  SECURED
CREDIT FACILITY

     On September 26, 2000,  the Company  entered into a senior  secured  credit
facility (the "secured credit facility") with a group of financial  institutions
to provide an aggregate commitment, subject to certain conditions, of up to $250
million.  The secured credit facility is collateralized by a perfected  security
interest in substantially all of the Company's  tangible and intangible  current
and  future  assets,  including  an  assignment  of  the  Company's  affiliation
agreements  with Sprint and a pledge of all of the capital  stock of the Company
and its subsidiaries.

     Sprint entered into a consent and agreement (the "senior secured  consent")
for the benefit of the holders of the  indebtedness  under the Company's  senior
secured credit  facility.  This agreement was  acknowledged  by us, and modified
Sprint's rights and remedies under our Sprint PCS agreements, for the benefit of
the existing and future holders of indebtedness  under our senior secured credit
facility and any refinancing of the senior secured credit facility,  which was a
condition  to the  funding  of any  amounts  under  our  senior  secured  credit
facility.

     The senior secured consent principally provides for the following:

     o    Sprint's  consent to the pledge of  substantially  all of our  assets,
          including our rights in the Sprint PCS agreements;

     o    Sprint's  consent to the pledge of all our equity interests in Horizon
          Personal  Communications  and  Bright  PCS and the  pledge by  Horizon
          Personal Communications and Bright PCS of all equity interests in each
          of their subsidiaries;

     o    for  redirection of payments due to us under our Sprint PCS agreements
          to the  administrative  agent during the  continuation  of our default
          under our senior secured credit facility;

     o    for Sprint to  maintain  10 MHz of PCS  spectrum in all of our markets
          until our senior secured credit facility is satisfied or our operating
          assets are sold after our  default  under our  senior  secured  credit
          facility;

     o    for Sprint  and the  administrative  agent to provide  each other with
          notices  of default  by us under the  Sprint  PCS  agreements  and the
          senior secured credit facility, respectively; and

     o    the ability to appoint  interim  replacements,  including  Sprint or a
          designee of the  administrative  agent,  to operate our portion of the
          Sprint  PCS  network  under  the  Sprint  PCS   agreements   after  an
          acceleration  of or event of default under our senior  secured  credit
          facility or an event of termination under the Sprint PCS agreements.

     Sprint's right to purchase on acceleration of amounts outstanding under our
senior secured credit  facility.  Subject to the requirements of applicable law,
so long as our senior secured credit facility  remains  outstanding,  the senior
secured  consent  provides  that Sprint may  purchase  our  operating  assets or
pledged equity of our operating  subsidiaries,  upon its receipt of notice of an
acceleration of our senior secured credit facility upon the following terms:

     o    Sprint elects to make such a purchase of our operating assets within a
          specified period;

     o    the purchase price of our operating assets is the greater of an amount
          equal to 72% of our "Entire Business Value" or the amount we owe under
          our senior secured credit facility;

     o    if Sprint has given  notice of its  intention to exercise the purchase
          right  for our  operating  assets,  then the  administrative  agent is
          prohibited  from  enforcing  its  security  interest for a time period
          after the  acceleration  or until  Sprint  rescinds  its  intention to
          purchase; and


                                       15
<PAGE>

     o    if we receive a written offer within a time period after  acceleration
          that is acceptable  to us to purchase our operating  assets or pledged
          equity of our  operating  subsidiaries  after the  acceleration,  then
          Sprint  has the right to  purchase  our  operating  assets or  pledged
          equity of our operating subsidiaries on terms at least as favorable to
          us as the offer we receive.

     Sale of operating assets to third parties.  If Sprint does not purchase our
operating  assets  after an  acceleration  of the  obligations  under our senior
secured credit facility,  then the administrative agent will be able to sell the
operating assets,  subject to the requirements of applicable law,  including the
law relating to foreclosures of security  interests.  The  administrative  agent
will have two options:

     o    to sell the assets to an entity that meets the  requirements to be our
          successor under the Sprint agreements; or

     o    to sell the assets to any other third-party  (including competitors of
          Sprint),  principally  subject to the  condition  that Sprint does not
          have to accept the third  party as a PCS  affiliate  of Sprint and may
          terminate our Sprint PCS agreements.

             REGULATION OF THE WIRELESS TELECOMMUNICATIONS INDUSTRY

     The FCC regulates the licensing,  construction,  operation, acquisition and
interconnection  arrangements  of  wireless  telecommunications  systems  in the
United States. As an FCC licensee in our Chillicothe,  Ohio,  market,  and as an
entity facilitating PCS operations on Sprint's PCS spectrum under our Sprint PCS
agreements,  we  must  ensure  that  all  of  our  operations  comply  with  FCC
requirements.

     The FCC has adopted,  or is in the process of adopting,  a series of rules,
regulations and policies to, among other things:

     o    grant or deny licenses for PCS frequencies;

     o    grant or deny PCS license renewals;

     o    rule on assignments and/or transfers of control of PCS licenses;

     o    govern the  interconnection of PCS networks with the networks of other
          wireless and wireline carriers;

     o    possibly  facilitate  the offering of a "calling  party pays"  service
          which would require that a party who calls a subscriber  would pay for
          the call;

     o    establish access and universal service funding provisions in an effort
          to raise funds to help defray the cost of providing telecommunications
          services to rural and other high-cost areas;

     o    possibly permit  commercial  mobile radio service  spectrum to be used
          for  transmission  of  programming  material  targeted  to  a  limited
          audience;

     o    impose fines and forfeitures for violations of any of the FCC's rules;
          and

     o    regulate the technical standards of PCS networks.

     The FCC had  previously  prohibited a single  entity from having a combined
attributable  interest  of  20% or  greater  in  broadband  PCS,  cellular,  and
specialized mobile radio service licenses totaling more than 55 MHz in any urban
areas or rural areas.  This  "spectrum  cap" was raised from 45 MHz to 55 MHz in
urban  areas as the  result of recent  FCC  action.  Interests  held by  passive
institutional  investors,  small companies and rural telephone companies are not
usually deemed  attributable for purposes of this prohibition if these interests
do not exceed  40%.  The FCC  eliminated  this  restriction  on January 1, 2003.
Instead  the  FCC  will  consider  competitive  factors  when  licenses  seek to
aggregate  large amounts of spectrum in an area. We cannot predict  whether this
action  will  lead  to  more  consolidation  in the  wireless  telecommunication
industry generally, or in any of our PCS service areas.


                                       16
<PAGE>


TRANSFERS AND ASSIGNMENTS OF PCS LICENSES

     The FCC must  give  prior  approval  to the  assignment  of,  or  transfers
involving,  substantial  changes  in  ownership  or  control  of a PCS  license.
Non-controlling  interests in an entity that holds a PCS license or operates PCS
networks  generally  may be  bought  or sold  without  prior  FCC  approval.  In
addition,  a recent FCC order requires only  post-consummation  notification  of
certain pro forma assignments or transfers of control.

CONDITIONS OF PCS LICENSES

     All PCS  licenses are granted for ten-year  terms  conditioned  upon timely
compliance  with  the  FCC's  build-out  requirements.  Pursuant  to  the  FCC's
build-out  requirements,  all 30 MHz  broadband  PCS  licensees  must  construct
facilities that offer coverage to one-third of the population  within five years
and to two-thirds of the population  within ten years,  and all 10MHz and 15 MHz
broadband PCS licensees  must  construct  facilities  that offer  coverage to at
least  one-quarter  of the  population  within  five  years or make a showing of
"substantial  service"  within  that  five-year  period.  Failure  to meet these
build-out  requirements  can result in license  cancellation  without a hearing.
Other rule violations could result in license revocations and/or monetary fines.
The FCC also  requires  licensees  to maintain a certain  degree of control over
their  licenses.  The Sprint PCS  agreements  reflect  an  arrangement  that the
parties  believe  meets the FCC  requirements  for licensee  control of licensed
spectrum.  However,  the FCC  decides  whether a  licensee  has  maintained  the
requisite degree of control on a case-by-case  basis, upon  consideration of the
"totality of  circumstances."  It is  therefore  difficult to predict in advance
with absolute  certainty whether a particular  arrangement will pass FCC muster.
If the FCC were to determine that our agreements with Sprint need to be modified
to increase  the level of licensee  control,  the Sprint PCS  agreements  may be
modified to cure any  purported  deficiency  regarding  licensee  control of the
licensed spectrum. However the business arrangement between the parties may have
to be restructured.

PCS LICENSE RENEWAL

     PCS licensees can renew their licenses for additional  ten-year terms.  PCS
renewal  applications  are not  subject to  auctions.  However,  under the FCC's
rules,  third  parties may oppose  renewal  applications  and/or file  competing
applications.  If one or  more  competing  applications  are  filed,  a  renewal
application will be subject to a comparative  renewal  hearing.  The FCC's rules
afford PCS renewal  applicants  involved in comparative  renewal hearings with a
"renewal  expectancy." The renewal expectancy is the most important  comparative
factor in a  comparative  renewal  hearing and is  applicable if the PCS renewal
applicant has: (1) provided  "substantial  service" during its license term; and
(2) substantially  complied with all applicable laws and FCC rules and policies.
The FCC's rules define "substantial  service" in this context as service that is
sound,  favorable  and  substantially  above the level of mediocre  service that
might minimally warrant renewal.

INTERCONNECTION

     The FCC has the  authority  to  order  interconnection  between  commercial
mobile  radio  providers  and any  other  common  carrier.  The FCC has  ordered
traditional  telephone  companies to provide  compensation to commercial  mobile
radio providers for the  termination of traffic.  Using these new rules, we have
negotiated  interconnection  agreements for the Sprint PCS network in our market
area with the major regional Bell operating  companies,  GTE, Sprint and several
smaller  independent  local exchange  carriers.  Interconnection  agreements are
negotiated on a state-wide basis. If an agreement cannot be reached,  parties to
interconnection   negotiations   can  submit   outstanding   disputes  to  state
authorities for arbitration.  Negotiated  interconnection agreements are subject
to state approval.  On July 18, 2000, the FCC adopted an order denying  requests
for mandatory  interconnection between resellers' switches and commercial mobile
radio  providers'  networks,  and  declining to impose  general  interconnection
obligations between these networks.



                                       17
<PAGE>


ALLOCATION OF ADDITIONAL PCS AND OTHER WIRELESS LICENSES

     The FCC from time to time  re-auctions  PCS licenses that it has re-claimed
from other carriers,  or PCS licenses that carriers have voluntarily returned to
the agency. The FCC also periodically allocates and assigns new spectrum for the
provision of wireless  services.  It is possible  that such actions could create
new  competitors  in our current PCS service  areas,  and we cannot  predict the
effect that such actions would have on our business.

OTHER FCC REQUIREMENTS

     The FCC adopted  rules in June 1996 that  require  local  exchange and most
commercial  mobile radio carriers,  to program their networks to allow customers
to  change  service  providers  without  changing  telephone  numbers,  which is
referred to as service provider number portability. Most commercial mobile radio
carriers are required to implement  nationwide  roaming by November 24, 2002, as
well. The FCC currently  requires most  commercial  mobile radio providers to be
able to deliver  calls from their  networks to numbers  anywhere in the country,
and to contribute to the Local Number Portability Fund.

     The FCC has adopted rules  permitting  broadband  PCS and other  commercial
mobile radio  providers to provide  wireless local loop and other fixed services
that would  directly  compete  with the  wireline  services  of local  telephone
companies. In June 1996, the FCC adopted rules requiring broadband PCS and other
commercial  mobile radio  providers to implement  enhanced  emergency 911 (E911)
automatic location  identification (ALI) capabilities within 18 months after the
effective date of the FCC's rules.  Sprint's initial compliance with these rules
occurred  on or before  October  1,  2001.  In  addition,  the FCC has  required
implementation  of Phase II  emergency  911  capabilities  by  October  1, 2002,
including  the ability to provide ALI of  subscribers  by latitude and longitude
with a specified  accuracy.  Sprint has  obtained  waivers of the  relevant  ALI
enhanced 911 requirements based on a modified  deployment plan, which includes a
number of  interim  benchmarks  and other  conditions,  and  would  provide  for
completing  Phase II E911  deployment  by 2005.  The Company's  Chillicothe  PCS
system,  the licenses to which the Company owns,  is currently  exempt from E911
ALI requirements.

     On  June  10,  1999,  the  FCC  initiated  a  regulatory   proceeding  (the
competitive  networks proceeding) seeking comment from the public on a number of
issues related to competitive access to multiple-tenant buildings, including the
following:

     o    the FCC's tentative conclusion that the Communications Act of 1934, as
          amended,  requires  utilities  to permit  telecommunications  carriers
          access to rooftop and other rights-of-way in multiple tenant buildings
          under  just,  reasonable  and   nondiscriminatory   rates,  terms  and
          conditions; and

     o    whether   building   owners   that   make   access   available   to  a
          telecommunications carrier should be required to make access available
          to all other telecommunications carriers on a nondiscriminatory basis,
          and whether the FCC has the authority to impose such a requirement.

     On October 25, 2000, the FCC issued an order that addressed  certain of the
issues in the competitive networks proceeding. Notably, the FCC:

     o    prohibits  carriers from entering into contracts that restrict  owners
          of commercial  office buildings from permitting  access from competing
          carriers;

     o    clarifies the FCC's rules governing control of in-building wiring;

     o    concludes that utilities that own conduits or  rights-of-way  within a
          building must give non-discretionary access thereto; and

     o    concludes  that  parties  with  a  direct  or  indirect  ownership  or
          leasehold  interest in property,  including  building tenants,  should
          have the ability to place  antennas one meter or less in diameter used
          to receive or transmit any fixed wireless service in other areas.

     This proceeding  could affect the availability and pricing of sites for our
antennae  and  those  of our  competitors.


                                       18
<PAGE>

COMMUNICATIONS  ASSISTANCE  FOR  LAW ENFORCEMENT ACT

     The  Communications  Assistance  for Law  Enforcement  Act,  or CALEA,  was
enacted  in  1994  to  preserve  electronic  surveillance  capabilities  by  law
enforcement  officials  in  the  face  of  rapidly  changing  telecommunications
technology.  CALEA requires telecommunications carriers, including us, to modify
their  equipment,  facilities,  and services to allow for authorized  electronic
surveillance  based on either  industry  or FCC  standards.  The FCC has adopted
rules  implementing  this  statute and has  established  various  implementation
deadlines. Like other wireless carriers, Sprint has sought certain extensions of
the deadlines,  and these requests remain pending.  We may be subjected to fines
of as much as  $10,000  per day if we are unable to comply  with a  surveillance
request from law enforcement due to the lack of a required CALEA  capability for
which we or Sprint have not sought or received an extension.

OTHER FEDERAL REGULATIONS

     Wireless  systems must comply with FCC and FAA  regulations  regarding  the
siting,  lighting  and  construction  of  transmitter  towers and  antennas.  In
addition,  FCC  environmental  regulations may cause some cell site locations to
become subject to regulation under the National Environmental Policy Act (NEPA).
The FCC is required to implement this Act by requiring carriers to meet land use
and radio frequency standards.

     Carriers must comply with certain other FCC requirements:

     o    payment of annual regulatory user fees;

     o    submission of FCC Form 499A and 499Q  reports,  providing the FCC with
          information  needed  to  calculate  universal  service,  local  number
          portability and other contribution amounts owed by the carrier;

     o    compliance with the FCC's 711 hearing-impaired  access requirements by
          October 1, 2001;

     o    compliance   with  the  FCC's   digital  TTY  (access  for  the  deaf)
          requirements,  including  purchase of necessary software and equipment
          by December 31, 2001,  implementation  by June 30, 2002, and filing of
          quarterly progress reports during the interim;

     o    submission of an annual Form 395 employment report;

     o    periodic filing of Form 602 ownership report; and

     o    submission of other required  reports,  as applicable,  including Form
          502 Number Utilization and Forecast Report, Form 477 Local Competition
          and Broadband Reporting Worksheet, Form 478 Slamming Complaint Report,
          International Traffic Data Report, and Annual Financial Report.

REVIEW OF UNIVERSAL SERVICE REQUIREMENTS

     The FCC and the  states are  required  to  establish  a  universal  service
program to ensure  that  affordable,  quality  telecommunications  services  are
available  to all  Americans.  Sprint is required to  contribute  to the Federal
universal  service  program  as well as  existing  state  programs.  The FCC has
determined that Sprint  contribution to the Federal universal service program is
a variable percentage of "end-user  telecommunications  revenues." Although many
states are likely to adopt a similar assessment methodology, the states are free
to calculate  telecommunications  service  provider  contributions in any manner
they choose as long as the process is not inconsistent  with the FCC's rules. At
the present  time it is not  possible to predict the extent of the Sprint  total
Federal and state universal  service  assessments or its ability to recover from
the universal service fund.

WIRELESS FACILITIES SITING

     States and  localities  are  allowed to apply  zoning  requirements  to PCS
facility and tower proposals, but are not permitted to regulate the placement of
wireless  facilities so as to prohibit the provision of wireless  services or to
discriminate  among  providers  of these  services.  In  addition,  so long as a
wireless  system  complies  with the FCC's  rules,  states  and  localities  are


                                       19
<PAGE>

prohibited from using radio frequency  health effects as a basis to regulate the
placement,  construction  or  operation  of  wireless  facilities.  The  FCC  is
considering numerous requests for preemption of local actions affecting wireless
facilities  siting.  The Federal courts have been  inconsistent in deciding such
disputes.

STATE REGULATION OF WIRELESS SERVICE

     Section 332 of the  Communications  Act preempts states from regulating the
rates and entry of commercial mobile radio providers,  like us. However,  states
may attempt to regulate  other  aspects of our service  provision.  In addition,
states may petition the FCC to regulate these  providers and the FCC may grant a
state's petition if the state  demonstrates  that (1) market  conditions fail to
protect  subscribers  from  unjust  and  unreasonable  rates or  rates  that are
unjustly or unreasonably discriminatory,  or (2) when commercial mobile radio is
a replacement for landline  telephone service within the state. To date, the FCC
has granted no petition  of this type.  To the extent that we may provide  fixed
wireless  service  in  the  future,  we  may  be  subject  to  additional  state
regulation.

ITEM 2. PROPERTIES

     Our  principal  executive  offices are leased from a subsidiary  of Horizon
Telcom and are located at 68 E. Main Street, Chillicothe, Ohio 45601-0480, which
is also the location of our first retail store. We lease an additional 42 retail
stores  throughout  our  territory.  We own three  switching  facilities in Fort
Wayne, Indiana, Erie,  Pennsylvania and Johnson City, Tennessee.  As of December
31, 2002, we leased 828 on-air  towers.  We believe our  facilities are adequate
for our current operations and are in good condition and additional leased space
can be obtained if needed on commercially reasonable terms.

ITEM 3. LEGAL PROCEEDINGS

     On July 3, 2002 the Federal Communications  Commission (the "FCC") issued a
declaratory  ruling on issues  referred to it by a U.S.  District  Court, in the
case of Sprint  Spectrum  L.P.  v.  AT&T  Corp.  The FCC held that PCS  wireless
carriers could not unilaterally  impose terminating long distance access charges
pursuant  to FCC rules.  This FCC ruling  order did not  preclude a finding of a
contractual  basis for these charges,  nor did it rule whether or not Sprint had
such a contract with carriers such as AT&T. This ruling has been appealed to the
U.S. Circuit Court of Appeals for the District of Columbia.  The underlying case
remains  pending in the trial court,  but has been stayed pending the outcome of
the  appeal.  Because the appeal of the FCC ruling and the  underlying  case are
both still pending, we cannot predict, with certainty, the final outcome of this
action. As a result, we recorded a reduction in revenue in the second quarter of
2002 of approximately $1.3 million representing previously billed and recognized
access revenue.  The Company plans to cease  recognition of this type of revenue
in future quarters,  unless there is ultimately a favorable ruling by the courts
or the FCC on this  issue.  Sprint  has  asserted  the  right to  recover  these
revenues  from us. We will  continue  to assess  the  ability of Sprint or other
carriers  to  recover  these  charges.  We are also  continuing  to  review  the
availability  of defenses we may have against  Sprint's  claim to recover  these
revenues from us.

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

     No  matters  were  submitted  to a vote of  shareholders  during the fourth
quarter of 2002.

                                     PART II

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

     There is no  established  public  trading  market for the Company's  common
stock or for the Company's  convertible  preferred  stock.  The following  table
summarizes the Company's capital stock as of December 31, 2002:

                                              NUMBER OF SHARES
CAPITAL STOCK                           AUTHORIZED       OUTSTANDING
-------------                         ---------------  ---------------
Convertible preferred stock........       175,000,000       30,432,329
Preferred stock....................        10,000,000               --
Class A common stock...............       300,000,000           26,646
Class B common stock...............        75,000,000       58,445,288
                                      ---------------  ---------------
  Total............................       560,000,000       88,904,263
                                      ===============  ===============



                                       20
<PAGE>

     An  additional  148.0 million  shares of  convertible  preferred  stock are
reserved  for  issuance as  dividends on the  convertible  preferred  stock,  if
necessary.

     We intend to retain our future  earnings,  if any, to fund the  development
and  growth of our  business  and,  therefore,  do not  anticipate  paying  cash
dividends in the foreseeable future. Our future decisions concerning the payment
of  dividends  on the common  stock will depend upon our results of  operations,
financial  condition and capital expenditure plans, as well as any other factors
that the board of directors,  in its sole discretion,  may consider relevant. In
addition,  provisions of the senior  secured  credit  agreement  and  indentures
governing  the senior  discount  notes and the  senior  notes  restrict,  and we
anticipate our future indebtedness may restrict, our ability to pay dividends.

EQUITY COMPENSATION PLAN INFORMATION

    The  following  table  provides  information  as of  December  31, 2002 with
respect to shares of Horizon PCS common stock that may be issued under  existing
equity compensation plans.

<TABLE>
<CAPTION>
<S>                                   <C>                    <C>                       <C>
                                            NUMBER OF
                                        SECURITIES TO BE                                NUMER OF SECURITIES
                                           ISSUED UPON          WEIGHTED-AVERAGE        REMAINING AVAILABLE
                                           EXERCISE OF         EXERCISE PRICE OF        FOR FUTURE ISSUANCE
                                       OUTSTANDING OPTIONS,   OUTSTANDING OPTIONS,          UNDER EQUITY
                                       WARRANTS AND RIGHTS    WARRANTS AND RIGHTS       COMPENSATION PLANS
                                      ====================   ======================    ======================
Equity plans approved by
  stockholders....................            4,513,854       $               0.51                 7,183,029
                                      ====================   ======================    ======================
</TABLE>

RECENT SALES OF UNREGISTERED SECURITIES:

     During  the past  year,  the  Company  has  sold or  issued  the  following
unregistered securities:

          (1)  On March 1, 2002,  the Company  granted to an  executive  officer
               incentive  stock  options  to  purchase  200,000  shares  of  the
               Company's  class B common stock at an exercise price of $5.60 per
               share.

          (2)  In May 2002 and November  2002,  the Company issued an additional
               1,060,201  and 1,099,958  shares,  respectively,  of  convertible
               preferred  stock  as a  dividend-in-kind  to the  holders  of the
               outstanding convertible preferred stock.

     Exemption  from the  registration  provisions of the Securities Act for the
transactions described in paragraph (2) above was claimed on the basis that such
transaction did not constitute an "offer," "offer to sell," "sale," or "offer to
buy" under Section 5 of the  Securities  Act.  Exemption  from the  registration
provisions of the Securities Act for the transactions described in paragraph (1)
above was claimed  under  Section 4(2) of the  Securities  Act and the rules and
regulations  promulgated  thereunder on the basis that such transactions did not
involve any public offering,  the purchasers were  sophisticated  with access to
the kind of  information  registration  would  provide and that such  purchasers
acquired  such  securities  without  a view  towards  distribution  thereof.  In
addition,  exemption from the registration  provisions of the Securities Act for
the transactions  described in paragraph 2 was claimed under Section 3(b) of the
Securities Act on the basis that such securities were sold pursuant to a written
compensatory  benefit  plan  or  pursuant  to a  written  contract  relating  to
compensation  and not for  capital  raising  purposes  and  exemption  from  the
registration  provisions of the Securities Act for the transactions described in
paragraph (2) above was claimed under Rule 144A of the Securities Act.



                                       21
<PAGE>



ITEM 6. SELECTED FINANCIAL DATA

     On April 26, 2000,  Horizon Telcom formed Horizon PCS and on June 27, 2000,
transferred  its 100%  ownership  of Horizon  Personal  Communications,  Inc. to
Horizon PCS in exchange  for 53.8  million  shares of Horizon PCS class B common
stock, representing 100% of the outstanding shares of Horizon PCS. This transfer
was accounted for in the financial  statements as a reorganization  of companies
under  common  control in a manner  similar to a  pooling-of-interests.  We have
reflected  the  reorganization  and the  adjusted  number of shares  outstanding
retroactively  and we have presented the prior  financial  statements of Horizon
Personal Communications, Inc. as those of Horizon PCS.

     The following tables present  selected  consolidated  historical  financial
data for Horizon PCS, as of and for the five years ended  December 31, 2002.  We
derived the balance sheet and  statements  of operations  data as of and for the
five  years  ended   December  31,  2002,  for  Horizon  PCS  from  the  audited
consolidated  financial  statements  of Horizon PCS. The  following  information
should be read together with "ITEM 7.  Management's  Discussion  and Analysis of
Financial Condition and Results of Operation," and "ITEM 8. Financial Statements
and Supplementary Data":

<TABLE>
<CAPTION>
       <S>                                  <C>         <C>         <C>          <C>        <C>
                                                             YEAR ENDED DECEMBER 31,
                                            -----------------------------------------------------------
                                                  1998       1999        2000       2001       2002
                                               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)
       STATEMENTS OF OPERATIONS DATA:
       Operating revenues:
         Subscriber revenues................  $    456    $  3,665   $  17,725   $  77,658   $ 152,409
         Roaming revenues...................        18         642       8,408      38,540      55,782
         Equipment revenues.................       309         600       3,061       7,106       7,847
                                             ----------  ---------- -----------  ----------  ----------
           Total revenues...................       783       4,907      29,194     123,304     216,038
       Operating expenses:
         Cost of service (exclusive of items
           shown below).....................     4,404       8,204      27,452     100,516     167,128
         Cost of equipment..................       994       2,444       9,775      14,872      19,189
         Selling and marketing..............     1,440       3,475      18,026      48,993      52,601
         General and administrative
           (exclusive of items shown below).     1,852       3,944      12,477      28,384      41,650
         Non-cash compensation expense......        --         291         490       1,434         681
         Depreciation and amortization......     1,748       2,685       6,135      18,519      40,271
         Loss (gain) on sale of PCS assets..        --      (1,388)         --       1,297         632
         Impairment of goodwill and impact
           of acquisition-related deferred
           taxes............................        --          --          --          --      13,222
                                             ----------  ---------- -----------  ----------  ----------
           Total operating expenses.........    10,438      19,655      74,355     214,015     335,374
                                             ----------  ---------- -----------  ----------  ----------
             Operating loss.................    (9,655)    (14,748)    (45,161)    (90,711)   (119,336)
       Gain (Loss) on exchange of stock.....        --          --      11,551        (400)         --
       Interest income and other, net.......    (1,690)         52       4,804       5,063       2,989
       Interest expense, net................      (838)     (1,529)    (10,318)    (27,434)    (60,601)
                                             ----------  ---------- -----------  ----------  ----------
             Loss from continuing
               operations before income
               taxes........................   (12,183)    (16,225)    (39,124)   (113,482)   (176,948)
       Income tax benefit (expense).........     4,145       5,275      (1,075)         --          --
                                             ----------  ---------- -----------  ----------  ----------
             Loss from continuing
               operations...................    (8,038)    (10,950)    (40,199)   (113,482)   (176,948)
       Preferred stock dividend.............        --          --      (2,782)    (10,930)    (11,756)
             Loss from continuing operations
               available to common
               stockholders.................  $ (8,038)   $(10,950)  $ (42,981)  $(124,412)  $(188,704)
                                             ==========  ========== ===========  ==========  ==========

          Basic and diluted loss per share
           from continuing operations         $  (0.15)   $  (0.20)  $   (0.76)  $   (2.13)  $   (3.23)
          Basic and diluted loss per share
           available to common stockholders   $  (0.15)   $  (0.20)  $   (0.77)  $   (2.13)  $   (3.23)

</TABLE>


                                       22
<PAGE>

<TABLE>
<CAPTION>
         <S>                                  <C>       <C>        <C>        <C>         <C>

                                                             YEAR ENDED DECEMBER 31,
                                              -----------------------------------------------------
                                                1998       1999       2000       2001       2002
                                             (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)
         BALANCE SHEET DATA:
         Cash and cash equivalents(3)....     $     27  $    147   $ 191,417   $ 123,776   $  86,137
         Total property and equipment, net      17,880    22,894     109,702     214,868     239,536
         Total assets....................       26,862    32,879     385,295     481,338     443,125
         Long-term debt(4)...............       21,180    24,590     185,283     384,056     516,284
         Total liabilities...............       24,919    35,042     238,300     447,957     585,567
         Convertible preferred stock.....           --        --     134,422     145,349     157,105
         Total stockholders' equity
           (deficit).....................        1,943    (2,163)     12,573    (111,967)   (299,547)

         OTHER DATA:
         Number of PCS subscribers(1).....       2,100    13,700      66,400     194,100     270,900
         Total population in our markets
           (millions).....................         1.6       4.9        10.2        10.2        10.2
         ARPU (including roaming)(2)......    $     46  $     64   $      75   $      83   $      75
         ARPU (excluding roaming)(2)......    $     44  $     55   $      51   $      56   $      55

</TABLE>

-------------
(1)  Represents  the  approximate  number of PCS  subscribers at the end of each
     period.
(2)  Represents average monthly revenue per unit  (subscriber).  For more detail
     on how ARPU is computed, see "ITEM 7. Management's  Discussion and Analysis
     of Financial Condition and Results of Operation."
(3)  Excludes  restricted  cash of $24,063 and $48,660 at December  31, 2002 and
     2001, respectively
(4)  If the Company violates a covenant in the senior secured credit  agreement,
     is declared to be in default of the credit agreement, and does not cure the
     default, then the debt will be reclassified to current liabilities.


ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
     OF OPERATION

RESULTS OF  OPERATIONS  YEAR ENDED  DECEMBER  31,  2002  COMPARED  TO YEAR ENDED
DECEMBER 31, 2001

OVERVIEW

     We have focused a significant  amount of our  operational  efforts over the
past twelve  months  upgrading  our  wireless  network to be able to provide the
first  level of third  generation  ("3G")  network  services  marketed by Sprint
nationally as "PCS Vision." In conjunction  with Sprint's  nationwide  launch of
PCS Vision,  we began  providing  3G services  across our network in  mid-August
2002.  Subscribers  are now able to connect to the Internet with their handsets,
PDA's,  and  laptops at speeds of up to 144  kilobits  per second  ("kbps").  We
believe the average user will experience peak rates of 75-80 kbps,  which is two
to three times faster than historical dial-up speeds.

     During the second half of 2001 and first half of 2002, a significant number
of our  customer  additions  were under the NDASL  program.  These lower  credit
quality  customers  activated  under the NDASL program led to higher churn rates
and an  increased  amount  of bad  debt  during  the  second  half  of 2002 as a
significant number of these customers were disconnected and written-off.

     Sprint has  discontinued  the NDASL  program and replaced it with Clear Pay
and Clear Pay II which re-institutes  deposit requirements for most lower credit
quality  customers  and  introduces  additional  controls on loss  exposure.  In
addition, we have focused our marketing efforts toward recruiting higher quality
customers.  As a  result,  our  percentage  of  prime  credit  customers  in our
subscriber  portfolio  increased  to 74% at December  31,  2002,  from 65% at it
lowest point on March 31, 2002.

     In response to  increased  competition  from other  carriers and to improve
focus on penetrating our markets with PCS Vision,  we reorganized our operations
groups on October 1, 2002.  We  realigned  our internal  geographic  markets and
added a vice president to oversee our marketing and retail  operations teams. We
look forward to the benefits of this new organizational alignment and believe it
will result in higher gross subscriber additions and a better customer retention
effort.

SPRINT AGREEMENTS

     Under the  Sprint  Agreements,  Sprint  provides  the  Company  significant
support  services such as billing,  collections,  long distance,  customer care,
network operations support,  inventory logistics support,  use of the Sprint and
Sprint PCS brand names, national advertising,  national distribution and product
development.  Additionally,  the Company derives substantial roaming revenue and


                                       23
<PAGE>

expenses when Sprint's and Sprint's network  partners' PCS wireless  subscribers
incur  minutes  of use in the  Company's  territories  and  when  the  Company's
subscribers  incur minutes of use in Sprint and other Sprint  network  partners'
PCS territories.  These  transactions  are recorded in roaming revenue,  cost of
service,  cost of equipment  and selling and marketing  expense  captions in the
accompanying consolidated statements of operations.  Cost of service and roaming
transactions  include,  long distance charges,  roaming expense and the costs of
services  such  as  billing,   collections,   and  customer  service  and  other
pass-through  expenses.  Cost of  equipment  transactions  relate  to  inventory
purchased by the Company from Sprint  under the Sprint  Agreements.  Selling and
marketing  transactions  relate to subsidized  costs on handsets and commissions
paid  by the  Company  under  Sprint's  national  distribution  program.  The 8%
management  fee is  included  in general and  administrative.  Amounts  recorded
relating  to the Sprint  Agreements  for the years ended  December  31, 2002 and
2001, are approximately as follows:

<TABLE>
<CAPTION>
<S>                                                     <C>              <C>
      TOTAL REVENUES AND EXPENSES PROVIDED BY
                  SPRINT AGREEMENTS                          2002             2001
---------------------------------------------------     ---------------  ---------------
Roaming revenue....................................      $  51,688,000    $  37,734,000
                                                        ===============  ===============

Cost of Service:
 Roaming.............................................    $  40,883,000    $  27,007,000
 Billing and customer care...........................       20,587,000       10,475,000
 Long distance.......................................       10,470,000        6,640,000
                                                        ---------------  ---------------
  Total cost of service..............................       71,940,000       44,122,000
 Selling and marketing...............................        2,566,000        1,460,000
 General and administrative:
 Management fee......................................       12,027,000        5,923,000
                                                        ---------------  ---------------
   Total expense.....................................    $  86,533,000    $  51,505,000
                                                        ===============  ===============
</TABLE>

KEY METRICS

     The following  discussion  details key operating metrics and focuses on the
details of our financial  performance  over the last quarter and current  fiscal
year.

     Customer  Additions.   As  of  December  31,  2002,  we  provided  personal
communication service directly to approximately 270,900 customers.  For the year
ended  December  31, 2002 and 2001,  Horizon PCS net  subscribers  increased  by
approximately  76,800 and 127,700  customers,  respectively.  Gross  activations
during  2002 were 12% higher  than 2001.  However,  an  increase in the churn of
NDASL and Clear Pay subscribers resulted in overall lower net customer additions
for the year ended  December 31, 2002,  compared to the year ended  December 31,
2001.

     Cost Per Gross  Addition.  CPGA  summarizes the average cost to acquire new
customers  during the period.  CPGA is  computed by adding the income  statement
components  of selling and  marketing,  cost of equipment and  activation  costs
(which are included as a component of cost of service) and reducing  that amount
by the equipment  revenue  recorded,  then dividing that net amount by the total
new customers  acquired  during the period.  CPGA increased to $342 for the year
ended  December 31, 2002,  compared to $339 for the year ended December 31, 2001
due primarily to an increase in commissions.

     Churn.  Churn is the monthly rate of customers  that both  voluntarily  and
involuntarily  discontinued  service  during the  month.  Churn is  computed  by
dividing the number of customers that discontinued service during the month, net
of 30-day returns, by the beginning customer base for the period.  Churn for the
year is an average of the  twelve  months in the year.  Churn for the year ended
December 31,  2002,  was 3.5%  compared to 2.4% for the year ended  December 31,
2001.  This  increase  in churn is a result  of an  increase  in the  amount  of
sub-prime  credit  quality   customers  the  Company  added  whose  service  was
involuntarily  discontinued during the period. We believe that it is likely that
churn will remain at or slightly below this level during 2003.

     Average  Revenue Per Unit.  ARPU summarizes the average monthly revenue per
customer.  ARPU is computed by dividing service revenue and roaming revenues for
the period by the average subscribers for the period.

     The following summarizes ARPU for the year ended December 31:



                                       24
<PAGE>

                                                      2002            2001
                                                 -------------   -------------
      Service revenues
         Recurring..........................     $       40      $       43
         Minute sensitive...................             12              14
         Features and other.................              3              (1)
                                                 -------------   -------------
           Total service revenues...........             55              56
                                                 -------------   -------------

      Roaming revenues......................             20              27
                                                 -------------   -------------
             ARPU...........................     $       75      $       83
                                                 -------------   -------------

     Recurring service ARPU has declined as more customers activated or migrated
to  service  plans in the  $29.99  to $39.99  monthly  recurring  charge  range.
Additionally,  recent service plans are offering more minutes at a lower monthly
charge due to increased  competition in the wireless industry.  These additional
minutes have driven down the ARPU received when  customers use more minutes than
their plan allows.  We anticipate  this trend to continue on voice-only  service
plans,  but we  anticipate  higher  service  ARPU in the  future as  subscribers
activate on data and voice  plans,  which offer more  features,  but at a higher
monthly  charge.  ARPU from  features and other has increased as we are offering
fewer  promotional  credits and have charged more contract  termination  fees in
2002 as a result of higher deactivation and churn rates.

     The  reduction in the  reciprocal  roaming rate has caused a decline in the
roaming  ARPU.  On April  27,  2001,  Sprint  and its  affiliates  announced  an
agreement  on a new  Sprint  PCS  roaming  rate;  the  reciprocal  roaming  rate
decreased from $0.20 per minute to $0.15 per minute  effective June 1, 2001, and
decreased  further to $0.12 per minute effective October 1, 2001. The reciprocal
roaming rate changed to $0.10 per minute on January 1, 2002. Sprint has notified
the Company that it intends to reduce the reciprocal  roaming rate to $0.058 per
minute of use in 2003.  Based upon 2002 historical  roaming data, a reduction in
the  reciprocal  roaming  rate to $0.058  per minute  would  have  substantially
reduced roaming  revenue and expense.  Had the lower rate been in effect for all
of 2002, roaming revenue would have been approximately 40-50% lower.

     Earnings Before Interest, Taxes, Depreciation and Amortization. EBITDA is a
financial  metric used to estimate cash flow  available to service debt.  EBITDA
can be calculated from our income statement as follows:


<TABLE>
<CAPTION>
     <S>                                             <C>                  <C>
                                                           YEAR ENDED DECEMBER 31,
                                                     --------------------------------------
                                                            2002                 2001
                                                     -----------------    -----------------
     Operating Loss.................................  $     (119,336)      $    (90,711)
     Plus: Depreciation and amortization............          40,271             18,519
           Non-cash compensation....................             681              1,434
           Loss on sale of PCS assets...............             631              1,297
           Impairment of goodwill and impact of
             acquisition-related deferred taxes.....          13,222                 --
                                                     -----------------    -----------------

              EBITDA................................  $      (64,531)      $    (69,461)
                                                     =================    =================
</TABLE>


     We believe that EBITDA is useful for lenders and  shareholders in assessing
cash  flow  and  liquidity.  However,  EBITDA  is  not a  measure  of  financial
performance  presented under  accounting  principles  generally  accepted in the
United  States of America and should not be  considered  an  alternative  to net
income  (loss)  as a measure  of  performance  or to cash  flow as a measure  of
liquidity.  However,  the  Company's  secured  credit  facility  has a  covenant
requiring EBITDA to be controlled to a certain threshold.



                                       25
<PAGE>



RESULTS OF OPERATIONS

    The following table sets forth a breakdown of our revenues by type.

<TABLE>
<CAPTION>
 <S>                                         <C>         <C>         <C>         <C>         <C>         <C>
                                                                FOR THE YEARS ENDED DECEMBER 31,
 (DOLLARS IN THOUSANDS)                                 2002                   2001                   2000
                                             ----------------------- ----------------------- -----------------------
                                               AMOUNT          %        AMOUNT         %       AMOUNT         %
                                             ----------- ----------- ----------- ----------- ----------- -----------
    Subscriber revenues...................    $ 152,410       71%     $  77,658        63%    $  17,725      61%
    Roaming revenues......................       55,782       26%        38,540        31%        8,408      29%
    Equipment revenues....................        7,846        3%         7,106         6%        3,061      10%
                                             ----------- ----------- ----------- ----------- ----------- -----------
      Total revenues......................    $ 216,038      100%     $ 123,304       100%    $  29,194     100%
                                             =========== =========== =========== =========== =========== ===========
</TABLE>

     Subscriber  revenues.  Subscriber  revenues for the year ended December 31,
2002, were $152.4 million, compared to $77.7 million for the year ended December
31, 2001, an increase of $74.7  million.  The growth in  subscriber  revenues is
primarily the result of the growth in our customer  base.  We had  approximately
270,900 PCS customers at December 31, 2002, compared to approximately 194,100 at
December  31,  2001.  Our  customer  base has  grown  because  we have  launched
additional markets and increased our sales force.

     Roaming revenues.  Roaming revenues increased from $38.5 million during the
year ended  December 31, 2001, to $55.8 million for the year ended  December 31,
2002, an increase of $17.3  million.  This increase  resulted from the continued
expansion of our service territory as well as expanding roaming  agreements with
wireless carriers.

     Equipment revenues.  Equipment revenues consist of handsets and accessories
sold to  customers  through  our stores and  through  our  direct  sales  force.
Equipment  revenues for the year ended  December 31,  2002,  were $7.8  million,
compared to $7.1 million for the year ended December 31, 2001,  representing  an
increase of approximately  $700,000.  The increase in equipment  revenues is the
result of an increase  in the number of  handsets  sold by our stores and direct
sales force, somewhat offset by a lower sales price per unit.

     Cost of service.  Cost of service  includes costs associated with operating
our network,  including site rent,  utilities,  engineering  personnel and other
expenses  related to operations.  Cost of service also includes  interconnection
expenses,  customer care, Sprint charges, Sprint PCS roaming fees and non-Sprint
roaming  fees.  We pay Sprint PCS roaming fees to Sprint when our  customers use
Sprint's PCS network  outside of our  territory.  We pay  non-Sprint PCS roaming
fees to other wireless service providers when our customers use their networks.

     Also  included  in cost of service  are costs  incurred  under our  network
services agreement with the Alliances. In the third quarter of 2001, Horizon PCS
negotiated  an  amendment  to its  agreement  with the  Alliances  and a related
amendment to its Sprint agreements.  Under the Alliances amendment,  Horizon PCS
is obligated to pay a minimum monthly fee for a stated minimum  period.  Horizon
PCS expects to incur lower overall fees under this new  arrangement  at expected
usage  levels as  compared  to the  previous  agreement  that was based on a per
minute fee.  The  Alliances  are also  obligated  to upgrade  their  networks to
provide 3G technology.

     Sprint provides  back-office  and other services to the Company.  Recently,
Sprint has sought to increase service fees in connection with its development of
3G-related back-office systems and platforms.  The Company, along with the other
Sprint affiliates, is currently disputing the validity of Sprint's right to pass
through this fee to the affiliates.  If this dispute is resolved  unfavorably to
the Company, then Horizon PCS will incur additional expenses, which could have a
material adverse impact on our liquidity and financial  results.  As of December
31,  2002,  the Company has been  billed by Sprint for 3G  development  costs of
approximately  $600,000,  which the Company has not recorded or paid due to this
dispute.

     Cost of service for the year ended December 31, 2002,  was $167.1  million,
compared to $100.5  million for the year ended December 31, 2001, an increase of
$66.6 million.  This increase  reflects an increase in roaming  expense and long
distance  charges of $16.7 million and the increase in costs  incurred under our
network services agreement with the Alliances of $13.7 million, both as a result
of our subscriber  growth during 2002.  Additionally,  at December 31, 2002, our
network  covered  approximately  7.4 million  people  versus  approximately  6.9
million  people at December 31, 2001.  As a result,  cost of service in 2002 was
higher than 2001 due to the increase in network  operations  expense,  including
tower  lease  expense, circuit costs and payroll expense, of approximately $22.3


                                       26
<PAGE>



million.  Growth in our  customer  base  resulted in  increased  customer  care,
activations,  and  billing  expense of  approximately  $11.2  million  and other
variable expenses,  including interconnection and national platform expenses, of
approximately  $2.7  million.  Overall,  the average  monthly  cost of providing
service per the average  subscriber on our network decreased from $72 to $60 for
the year ended  December 31, 2001 and 2002,  respectively,  as we have increased
our subscriber base. In the aggregate,  we expect to have substantial  increases
in 2003 in  charges  from  Sprint,  both  as a  result  of  volume  and  pricing
increases.

     Cost of  equipment.  Cost of  equipment  includes  the cost of handsets and
accessories sold by our stores and direct sales force to our customers.  Cost of
equipment for the year ended December 31, 2002,  was $19.2 million,  compared to
$14.9 million for the year ended December 31, 2001, an increase of $4.3 million.
The  increase  in the cost of  equipment  is the  result  of the  growth  in our
wireless  customers,  partially  offset  by  the  decreasing  unit  cost  of the
handsets.  For competitive and marketing  reasons,  we have sold handsets to our
customers  below our cost and expect to  continue  to sell  handsets  at a price
below our cost for the foreseeable future.

     Selling and marketing  expenses.  Selling and marketing expenses consist of
costs  associated  with  operating  our  retail  stores,   including  marketing,
advertising,  payroll and sales commissions.  Selling and marketing expense also
includes  commissions  paid to  national  and  local  third  party  distribution
channels  and  subsidies on handsets  sold by third  parties for which we do not
record  revenue.  Selling and  marketing  expenses rose to $52.6 million for the
year ended  December  31,  2002,  compared  to $49.0  million for the year ended
December 31,  2001,  an increase of $3.6  million.  This  increase  reflects the
increase  in the  costs of  operating  our 44  retail  stores,  6 of which  were
launched during 2002. The costs include an increase in marketing and advertising
in our sales  territory of $6.5  million,  the increase in  commissions  paid to
third  parties of $1.4  million and is offset by the  decrease in  subsidies  on
handsets sold by third parties of $4.3 million.  We expect selling and marketing
expense to increase in the aggregate as we compete to add new customers.

     General  and  administrative  expenses.  General and  administrative  costs
include  the Sprint  management  fee  (which is 8% of  "collected  revenues"  as
described  under the "Sprint PCS  Agreements"  above),  a provision for doubtful
accounts  and costs  related to corporate  support  functions,  including  costs
associated  with  functions  performed  for us by  Horizon  Services  under  our
services  agreement.  These  include  finance  functions,  accounting  services,
computer access and administration, executive, supervisory, consulting, customer
relations,  human resources and other administrative services. Horizon Services'
costs for these functions are charged to us using a standard FCC cost allocation
methodology.  Under  this  methodology,  all  costs  that  can  be  specifically
identified to us are directly charged to us, and all costs that are specifically
identified to other  subsidiaries  of Horizon Telcom are charged to them.  Costs
incurred by Horizon Services that cannot be specifically identified to a company
for which Horizon Services  provides  service are apportioned  among the Horizon
Telcom subsidiaries based on appropriate  measures.  Because of the economies of
scale  inherent  in a  centralized  service  company,  we believe we are able to
receive these  services less  expensively  through this  arrangement  than if we
provided them ourselves.

     General and  administrative  expenses for the year ended December 31, 2002,
were  approximately  $41.7 million  compared to  approximately  $28.4 million in
2001,  an increase of  approximately  $13.3  million.  The increase  reflects an
increase in the provision for doubtful  accounts of approximately  $9.1 million,
primarily due to the write-off of NDASL and ClearPay customers,  and an increase
in the Sprint  management  fee of  approximately  $6.1  million,  as a result of
higher  subscriber  revenues  in 2002,  offset by a  decrease  in other  general
expenses of approximately $1.9 million due primarily to a decrease in the use of
professional services.

     Non-cash  compensation  expense.  For the year ended  December 31, 2002 and
2001, we recorded stock-based compensation expense of approximately $700,000 and
$1.4 million,  respectively. The expense recorded in 2001 includes approximately
$725,000  related to the distribution of 7,249 shares of Horizon Telcom stock to
employees of Horizon PCS and  approximately  $709,000 for certain  stock options
granted in November 1999.  Stock-based  compensation expense will continue to be
recognized  through the  conclusion  of the vesting  period for these options in
2005. The annual  non-cash  compensation  expense  expected to be recognized for
these stock options is  approximately  $620,000 in 2003,  $193,000 in 2004,  and
$71,000 in 2005.

     Depreciation  and  amortization  expense.   Depreciation  and  amortization
expenses  increased by $21.8  million to a total of $40.3  million in 2002.  The
increase  reflects  the  continuing  construction  of our  network  as we funded
approximately $63.1 million of capital expenditures during 2002.



                                       27
<PAGE>

     During 2002, the Company  launched  switches in Tennessee and  Pennsylvania
and  disconnected  some switching  equipment in Chillicothe,  Ohio. As a result,
approximately  $6.2 million of switching  equipment  is  considered  an impaired
asset as defined by Statements of Financial  Accounting  Standards  ("SFAS") No.
144.  Accordingly,  depreciation  and  amortization  expense  for the year ended
December 31, 2002,  includes  approximately  $3.5 million of expense  related to
accelerated depreciation on the impaired asset.

     Amortization  expense of the  intangible  asset  related to the Bright PCS'
acquisition was  approximately  $1.7 million during the years ended December 31,
2002 and 2001. Goodwill amortization was approximately  $400,000 during the year
ended December 31, 2001.  Goodwill  amortization ceased as of December 31, 2001,
with the adoption of SFAS No. 142.

     Amortization  expense also includes  amortization  of an  intangible  asset
recorded in September 2000 related to the new markets granted to us by Sprint in
September  2000. We agreed to grant warrants to Sprint in exchange for the right
to provide service in additional markets.  The warrants will be issued to Sprint
at the earlier of an initial  public  offering of the Company's  common stock or
July 31, 2003. The intangible  asset is being  amortized over the remaining term
of the Sprint  management  agreement,  resulting  in  approximately  $800,000 of
amortization  expense per year.  Amortization expense related to this intangible
asset was approximately $800,000 for the years ended December 31, 2002 and 2001.

     Loss on disposal of PCS assets. During the year ended December 31, 2002, we
incurred  a loss of  approximately  $600,000  related  to the  sale  of  network
equipment  and  corporate-owned  vehicles.  These sales  resulted in proceeds of
approximately $1.6 million.  The vehicles were subsequently leased back from the
purchaser.

     Impairment of goodwill and impact of acquisition-related deferred taxes. On
December 31, 2002,  the Company  performed  the annual  valuation  assessment of
goodwill. As a result of this valuation the Company recorded goodwill impairment
of approximately $13.2 million,  which eliminates the entire balance of goodwill
at December 31, 2002. The fair value was measured based on projected  discounted
future  operating  cash flows using a discount  rate  reflecting  the  Company's
average cost of funds.

     Gain (Loss) on exchange of stock. On April 2, 2001, the Company distributed
7,249 shares of Horizon Telcom stock to employees of Horizon PCS. In conjunction
with  this  transaction,   the  Company   recognized  a  non-operating  loss  of
approximately  $400,000  representing the reduced fair market value of the stock
at the time of the  transaction  compared to the original  holding  value of the
investment.

     Interest  income and  other,  net.  Interest  income and other for the year
ended  December  31,  2002,   was   approximately   $3.0  million   compared  to
approximately  $5..1 million in 2001. This decrease was due primarily to a lower
average balance of cash investments  during 2002, as compared to the same period
in 2001 and due to a lower short-term interest rate environment in 2002.

     Interest  expense,  net.  Interest  expense for the year ended December 31,
2002, was approximately  $60.6 million,  compared to approximately $27.4 million
in 2001.  The  increase  in  interest  expense  was a result  of our  additional
indebtedness.  We will incur  additional  interest expense and do not anticipate
lower debt levels in 2003.

     Interest on the outstanding  balance of our secured credit facility accrues
at LIBOR plus a specified margin. On June 29, 2002, we agreed to several changes
in the secured credit facility including a 25 basis point increase in the margin
on the annual  interest  rate.  At December 31, 2002,  the interest  rate on the
$105.0 million term loan A borrowed under our secured credit facility was 5.40%,
while the interest  rate on the $50.0  million  term loan B was 6.33%.  Interest
expense on the secured credit  facility was $9.3 million and $4.8 million during
the year ended December 31, 2002 and 2001, respectively.

     We accrue  interest  at a rate of 14.00%  annually  on our  discount  notes
issued in September 2000 and will pay interest  semi-annually  in cash beginning
in  October  2005.  Unaccreted  interest  expense  on  the  discount  notes  was
approximately  $108.7  million at December  31,  2002.  Interest  expense on the
discount notes was approximately $27.2 million and $23.8 million during the year
ended December 31, 2002 and 2001, respectively.



                                       28
<PAGE>

     On June 15, 2002,  we began  making  semi-annual  interest  payments on our
senior  notes  issued in  December  2001 at an annual  rate of 13.75%.  Interest
expense  accrued on the senior notes was  approximately  $24.1  million and $1.5
million during the years ended December 31, 2002 and 2001,  respectively.  Under
the terms of the senior notes, cash to cover the first four semi-annual interest
payments was placed in an escrow account.

     Interest expense also includes  approximately $2.8 million and $1.1 million
during the year ended December 31, 2002 and 2001, respectively,  of amortization
from the deferred  financing  fees related to our secured credit  facility,  our
discount notes and our senior notes.  Also  contributing to interest expense was
approximately  $1.6 million and $2.8 million during the year ended December 2002
and 2001,  respectively,  in commitment  fees paid on the unused  portion of our
secured credit facility.

     Capitalized  interest during the year ended December 31, 2002 and 2001, was
approximately $4.4 million and $6.6 million, respectively.

     Income tax (expense) benefit.  We did not record any income tax benefit for
the years  ended  December  31,  2002 and 2001,  because of the  uncertainty  of
generating  future taxable income to be able to recognize  current net operating
loss carryforwards.

     Loss on continuing  operations.  Our loss on continuing  operations for the
year ended December 31, 2002, was $176.9 million  compared to $113.5 million for
the year  ended  December  31,  2001.  The  increase  in our loss  reflects  the
continued  expenses  related to launching  our markets and building our customer
base, as well as the factors discussed in "Business - Current  Developments" and
"Business - Current Operating  Environment and Our Business Strategy." We expect
to incur significant  operating losses and to generate significant negative cash
flow from operating activities due to these factors.

     Preferred  stock  dividend.  Our  convertible  preferred stock pays a stock
dividend at the rate of 7.5% per annum, payable semi-annually  commencing May 1,
2001. The dividends are paid with  additional  shares of  convertible  preferred
stock.  Through December 31, 2002, we have issued an additional 4,345,092 shares
of  convertible  preferred  stock in payment of dividends,  including  1,060,201
shares on May 1, 2002 and 1,099,958 shares on November 1, 2002.

     Other  comprehensive  income  (loss).  During  2001,  we  entered  into two
two-year interest rate swaps,  effectively fixing $50.0 million of the term loan
B borrowed  under the secured  credit  facility.  We do not expect the effect of
these swaps to have a material  impact to interest  expense for the remainder of
their lives. Other comprehensive income of approximately  $400,000 and a loss of
approximately  $800,000 were recorded for the years ended  December 31, 2002 and
2001, respectively.

RESULTS OF  OPERATIONS  YEAR ENDED  DECEMBER  31,  2001  COMPARED  TO YEAR ENDED
DECEMBER 31, 2000

SPRINT AGREEMENTS

     Amounts  recorded  relating  to the Sprint  Agreements  for the years ended
December 31, 2001 and 2000, are approximately as follows:

      TOTAL REVENUES AND EXPENSES PROVIDED BY
                  SPRINT AGREEMENTS                    2001            2000
-----------------------------------------------   --------------  -------------
Roaming revenue................................    $ 37,734,000    $ 7,662,000
                                                  ==============  =============

Cost of Service:
 Roaming.......................................    $ 27,007,000    $ 5,180,000
 Billing and customer care.....................      10,475,000        960,000
 Long distance.................................       6,640,000        574,000
                                                  --------------  -------------
   Total cost of service.......................      44,122,000      6,714,000
Selling and marketing..........................       1,460,000        322,000
General and administrative:
 Management fee................................       5,923,000      1,302,000
                                                  --------------  -------------
   Total expense...............................    $ 51,505,000    $ 8,338,000
                                                  ==============  =============

                                       29
<PAGE>

KEY METRICS

     The following  discussion  details key operating metrics and focuses on the
details of our financial performance during 2001.

     Customer  Additions.   As  of  December  31,  2001,  we  provided  personal
communication service directly to approximately 194,100 customers.  For the year
ended  December  31, 2001 and 2000,  Horizon PCS net  subscribers  increased  by
approximately  127,700 and 52,700  customers,  respectively.  Gross  activations
during  2001  were  153%  higher  than  2000  due in  part to the  launching  of
additional  markets  and  changes  in  deposit  requirements  for new low credit
quality subscribers.

     Cost Per Gross  Addition.  CPGA was $339 for the year  ended  December  31,
2001,  compared to $373 for the year ended  December 31, 2000.  This decrease is
primarily the result of more gross activations in 2001 compared to 2000.

     Churn.  Churn for the year ended  December 31, 2001,  was 2.4%  compared to
2.6% for the year ended December 31, 2000.

     Average Revenue Per Unit. The following  summarizes ARPU for the year ended
December 31:

                                                     2001           2000
                                               --------------  -------------
     Service revenues
        Recurring..........................     $       43      $      38
        Minute sensitive...................             14             13
        Features and other.................             (1)            --
                                               --------------  -------------
          Total service revenues...........             56             51
                                               -------------   -------------

     Roaming revenues......................             27             24
                                               -------------   -------------
            ARPU...........................     $       83      $      75
                                               -------------   -------------

     Recurring  service  ARPU  has  increased  as more  customers  activated  or
migrated to service plans carrying higher monthly recurring charges.

     Earnings Before Interest, Taxes, Depreciation and Amortization. EBITDA is a
financial  metric used to estimate cash flow  available to service debt.  EBITDA
can be calculated from our income statement as follows:

                                                     YEAR ENDED DECEMBER 31,
                                             -----------------------------------
                                                    2001                2000
                                             ----------------    ---------------
Operating Loss.........................       $  (90,711)         $  (45,161)
Plus:   Depreciation and amortization..           18,519               6,134
        Non-cash compensation..........            1,434                 490
        Loss on sale of PCS assets.....            1,297                  --
                                            ----------------    ----------------

           EBITDA......................       $  (69,461)         $  (38,537)
                                            ================    ================

     EBITDA is not a measure of financial performance presented under accounting
principles  generally accepted in the United States of America and should not be
considered an alternative to net income (loss) as a measure of performance or to
cash flow as a measure of  liquidity.  However,  the  Company's  secured  credit
facility  has  a  covenant  requiring  EBITDA  to  be  controlled  to a  certain
threshold.

     Subscriber  revenues.  Subscriber  revenues for the year ended December 31,
2001, were $77.7 million,  compared to $17.7 million for the year ended December
31, 2000, an increase of $60.0  million.  The growth in  subscriber  revenues is
primarily the result of the growth in our customer  base.  We had  approximately
194,100 PCS customers at December 31, 2001, compared to approximately  66,400 at
December  31,  2000.  Our  customer  base has  grown  because  we have  launched


                                       30
<PAGE>

additional  markets  and  increased  our sales  force.  ARPU  excluding  roaming
increased  in 2001 to $56 from $51 in 2000 as customers  chose plans  carrying a
higher monthly recurring charge.

     Roaming revenues.  Roaming revenues  increased from $8.4 million during the
year ended  December 31, 2000, to $38.5 million for the year ended  December 31,
2001, an increase of $30.1 million. ARPU including roaming increased from $75 to
$83 for the year ended December 31, 2000,  and December 31, 2001,  respectively.
This increase  primarily  resulted from the continued  build-out of our network,
including highways covering northwest Ohio, northern Indiana and Pennsylvania.

     Equipment revenues.  Equipment revenues consist of handsets and accessories
sold to  customers  through  our stores and  through  our  direct  sales  force.
Equipment  revenues for the year ended  December 31,  2001,  were $7.1  million,
compared to $3.1 million for the year ended December 31, 2000,  representing  an
increase of $4.0 million. The increase in equipment revenues is the result of an
increase in the number of handsets  sold by our stores and direct  sales  force,
somewhat offset by a lower sales price per unit.

     Cost of service.  Cost of service for the year ended December 31, 2001, was
$100.5 million,  compared to $27.5 million for the year ended December 31, 2000,
an  increase of $73.0  million.  This  increase  reflects an increase in roaming
expense and long  distance  charges of $29.9  million and the  increase in costs
incurred  under our  network  services  agreement  with the  Alliances  of $12.4
million,  both as a result of our subscriber  growth during 2001.  Additionally,
cost of  service  in 2001 was higher  than 2000 due to the  increase  in network
operations, including tower lease expense, circuit costs and payroll expense, of
$18.1 million, increased customer care, activations, and billing expense of $9.6
million and the increase in other  variable  expenses,  including  switching and
national platform expenses, of $3.0 million.

     Cost of  equipment.  Cost of  equipment  includes  the cost of handsets and
accessories sold by our stores and direct sales force to our customers.  Cost of
equipment for the year ended December 31, 2001,  was $14.9 million,  compared to
$9.8 million for the year ended  December 31, 2000, an increase of $5.1 million.
The  increase  in the cost of  equipment  is the  result  of the  growth  in our
wireless  customers,  partially  offset  by  the  decreasing  unit  cost  of the
handsets.  For competitive and marketing  reasons,  we have sold handsets to our
customers  below our cost and expect to  continue  to sell  handsets  at a price
below our cost for the foreseeable future.

     Selling and marketing  expenses.  Selling and marketing expenses consist of
costs  associated  with  operating  our  retail  stores,   including  marketing,
advertising,  payroll and sales commissions.  Selling and marketing expense also
includes  commissions  paid to  national  and  local  third  party  distribution
channels  and  subsidies on handsets  sold by third  parties for which we do not
record  revenue.  Selling and  marketing  expenses rose to $49.0 million for the
year ended  December  31,  2001,  compared  to $18.0  million for the year ended
December 31, 2000,  an increase of $31.0  million.  This  increase  reflects the
increase  in the costs of  operating  our 38  retail  stores,  22 of which  were
launched  during 2001. The costs include  marketing and advertising in our sales
territory of $17.6 million,  the increase in subsidies on handsets sold by third
parties of $10.1 million and the increase in  commissions  paid to third parties
of $3.3  million.  We expect  selling and  marketing  expense to increase in the
aggregate as we expand our coverage, launch additional stores and add customers.

     General and administrative expenses General and administrative expenses for
the year ended December 31, 2001,  were $28.4 million  compared to $12.5 million
in 2000, an increase of $15.9 million.  The increase reflects an increase in the
provision  for  doubtful  accounts  of $5.0  million,  an increase in the Sprint
management  fee of $4.6  million as a result of higher  subscriber  revenues  in
2001,  increased  professional fees,  including  non-recurring  costs related to
pursuing strategic business  alternatives of $1.3 million,  increased  headcount
and professional  services at Horizon Services of $1.8 million needed to support
our growth, and other general expenses,  including property and franchise taxes,
of $3.2 million.

     Non-cash  compensation  expense.  For the year ended  December 31, 2001 and
2000, we recorded stock-based compensation expense of approximately $1.4 million
and $500,000,  respectively.  The $1.4 million includes  approximately  $725,000
related to the distribution of 7,249 shares of Horizon Telcom stock to employees
of Horizon PCS and  approximately  $709,000 for certain stock options granted in
November 1999.  Stock-based  compensation expense will continue to be recognized
through the conclusion of the vesting period for these options in 2005.



                                       31
<PAGE>

     Depreciation  and  amortization  expense.   Depreciation  and  amortization
expenses  increased by $12.4  million to a total of $18.5  million in 2001.  The
increase  reflects  the  continuing  construction  of our  network  as we funded
approximately  $116.6 million of capital  expenditures during 2001. In addition,
because  our  acquisition  of  Bright  PCS  was  accounted  for  as  a  purchase
transaction,  amortization  has increased as a result of amortizing  the related
goodwill and intangible assets. Amortization expense of the intangible asset was
approximately  $1.7  million and  $900,000  during 2001 and 2000,  respectively.
Related goodwill  amortization was  approximately  $400,000 and $200,000 in 2001
and 2000,  respectively.  Goodwill  amortization ceased as of December 31, 2001,
with the adoption of SFAS No. 142.

     Amortization  expense also includes  amortization  of an  intangible  asset
recorded in September 2000 related to the new markets granted to us by Sprint in
September  2000.  Amortization  expense  related  to this  intangible  asset was
approximately  $800,000 and  $200,000 for the years ended  December 31, 2001 and
2000, respectively.

     Loss  on  disposal  of PCS  assets.  During  2001,  we  incurred  a loss of
approximately  $1.3  million  related to the upgrade of network  equipment to 3G
technology.  The loss  represents the net book value of the assets  disposed of,
less proceeds received for the equipment.

     Gain (Loss) on exchange of stock. On April 2, 2001, the Company distributed
7,249 shares of Horizon Telcom stock to employees of Horizon PCS. In conjunction
with  this  transaction,   the  Company   recognized  a  non-operating  loss  of
approximately  $400,000  representing the reduced fair market value of the stock
at the time of the  transaction  compared to the original  holding  value of the
investment.  The related  compensation  expense is  recorded  as a component  of
non-cash compensation expense in 2001. In 2000, the Company recognized a gain of
approximately  $11.6 million on Horizon Telcom stock used in the  acquisition of
Bright PCS.

     Interest  income and  other,  net.  Interest  income and other for the year
ended  December 31, 2001, was $5.0 million.  Interest  income was generated from
the  short-term  investment  of cash  proceeds  from our private  equity  sales,
discount notes and drawings under the secured credit facility,  all completed on
September 26, 2000.  Additionally,  in  conjunction  with our offering of $175.0
million  in  senior  notes  in  December   2001,  we  were  required  to  escrow
approximately $48.7 million of the proceeds (in an interest bearing account) for
the first four interest payments due under the notes' terms. We recorded $69,000
of interest income on the escrow funds.

     Interest  expense,  net.  Interest  expense for the year ended December 31,
2001,  was $27.4  million,  compared to $10.3  million in 2000.  Interest on the
outstanding  balance  of our  secured  credit  facility  accrues at LIBOR plus a
specified  margin. On June 29, 2001, we agreed to several changes in the secured
credit facility including a 25 basis point increase in the annual interest rate.
At December 31, 2001,  the interest  rate on the amount  borrowed on our secured
credit facility was 6.16%.  Interest  expense on the secured credit facility was
$4.8 million and $1.2 million during 2001 and 2000, respectively.

     We accrue  interest  at a rate of 14.00%  per annum on our  discount  notes
through October 1, 2005, and will pay interest semi-annually in cash thereafter.
Unaccreted interest expense on the discount notes was $135.9 million at December
31,  2001.  Interest  expense on the discount  notes was $23.8  million and $5.1
million during 2001 and 2000, respectively.

     On June 15, 2002,  we began  making  semi-annual  interest  payments on our
senior  notes  issued in  December  2001 at an annual  rate of 13.75%.  Interest
expense  accrued on the senior  notes was $1.5 million  during  2001.  Under the
terms of the senior  notes,  cash to cover the first four  semi-annual  interest
payments was placed in an escrow account.

     Interest expense also includes  approximately $1.1 million and $1.0 million
in 2001 and 2000, respectively, of amortization from the deferred financing fees
related to our secured credit facility, our discount notes and our senior notes.
Also  contributing  to the  increase  in interest  expense  during 2001 was $2.8
million in commitment  fees we paid on the unused  portion of our secured credit
facility.

     The increase in interest expense as a result of our additional indebtedness
was somewhat offset by capitalized  interest  related to our network  build-out.
Capitalized  interest  during 2001 and 2000 was  approximately  $6.6 million and


                                       32
<PAGE>

$1.5 million,  respectively.  We expect our interest  expense to increase in the
future as we borrow  under  our  secured  credit  facility  to fund our  network
build-out and operating losses.

     Income tax (expense) benefit. Until September 26, 2000, we were included in
the  consolidated  Federal income tax return of Horizon Telcom.  We provided for
Federal  income  taxes  on a pro  rata  basis,  consistent  with a  consolidated
tax-sharing  agreement.  As a result  of the sale of the  convertible  preferred
stock  on  September  26,  2000,  we  will  not be able  to  participate  in the
tax-sharing  agreement.  Additionally,  we will not be able to recognize any net
operating loss benefits until we generate taxable income.  We did not record any
income  tax  benefit  for the year  ended  December  31,  2001,  because  of the
uncertainty of generating  future taxable income to be able to recognize current
net operating loss carryforwards.

     In 2000, we recorded an income tax expense of $1.1 million from  continuing
operations,  resulting  primarily from the recognition of an excess loss account
on the deconsolidation  from the Horizon Telcom affiliated group, reduced by the
benefit of the carryback  net operating  losses and an increase in the valuation
allowance.  In addition,  we generated a tax of $4.3 million on a stock dividend
of 10% of Horizon  Telcom  stock held by us to  Horizon  Telcom.  The tax on the
stock dividend was charged  directly to equity and not recorded as an income tax
expense.

     Loss on continuing  operations.  Our loss on continuing  operations for the
year ended December 31, 2001,  was $113.5 million  compared to $40.2 million for
the year  ended  December  31,  2000.  The  increase  in our loss  reflects  the
continued  expenses  related to launching  our markets and building our customer
base.

     Discontinued  operations.  In April 2000, we transferred our Internet, long
distance and other  businesses  unrelated to PCS wireless  operations to Horizon
Technology  (formerly United  Communications),  a separate subsidiary of Horizon
Telcom,  at net book value.  Accordingly,  the results of  operations  for these
business  units  have been  reported  as  discontinued  operations  in the prior
period, net of tax benefits.

     Extraordinary loss. As a result of the September 26, 2000,  financings,  we
retired  long-term  debt payable to financial  institutions.  As a result of the
debt  extinguishments,  we  expensed  the  unamortized  portion  of the  related
financing costs, as well as fees associated with the debt extinguishments. These
fees and  expenses  amounted  to  approximately  $748,000  and are  shown on the
statement of operation net of a tax benefit of $262,000.

     Preferred  stock  dividend.  Our  convertible  preferred stock pays a stock
dividend at the rate of 7.5% per annum, payable semi-annually  commencing May 1,
2001. The dividends are paid with  additional  shares of  convertible  preferred
stock.  On May 1, 2001,  we issued an additional  1,163,051  shares of preferred
stock in payment of the stock dividends  through April 30, 2001, and on November
1, 2001, we issued an additional  1,021,882 shares of preferred stock in payment
of the stock dividends through October 31, 2001.

     Other comprehensive income (loss). In the first quarter of 2001, we entered
into a two-year interest rate swap, effectively fixing $25.0 million of our term
loan borrowed under the secured credit  facility at a rate of 9.4%. In the third
quarter  of  2001,  we  entered  into  another  two-year   interest  rate  swap,
effectively  fixing the remaining  $25.0 million of our term loan borrowed under
the secured credit facility at 7.65%. Other  comprehensive  income may fluctuate
based on changes in the fair value of the swap instrument.  Other  comprehensive
loss of approximately  $800,000 and an other expense of  approximately  $200,000
were recorded for the year ended  December 31, 2001. We do not expect the effect
of these swaps to have a material  impact to interest  expense for the remainder
of their lives.

LIQUIDITY AND CAPITAL RESOURCES

     As of December 31, 2002,  the Company was in compliance  with its covenants
with regards to its outstanding  debt.  However,  we believe that it is probable
that the Company will  violate one or more  covenants  under its secured  credit
facility in 2003.  The  failure to comply  with a covenant  would be an event of
default under our secured credit facility,  and would give the lenders the right
to pursue  remedies.  These remedies could include  acceleration  of amounts due
under the facility.  If the lenders elected to accelerate the indebtedness under
the facility,  this would also  represent a default under the indentures for our
senior  notes and  discount  notes (see "Note 11" in the "Notes to  Consolidated
Financial  Statements") and would give Sprint certain remedies under our Consent


                                       33
<PAGE>

and Agreement  with Sprint.  See "The Sprint  Agreements."  The Company does not
have  sufficient  liquidity  to  repay  all  of  the  indebtedness  under  these
obligations.  Horizon  PCS's  independent  auditors'  report dated March 4, 2003
states that these matters raise substantial doubt about the Company's ability to
continue as a going concern.

     In addition,  without the  additional  borrowing  capacity under the senior
credit  facility,  significant  modifications  in the amounts  charged by Sprint
under  the  management  agreements,  significant  modifications  in the  amounts
charged  by  the  Alliances  under  the  Network  Service   Agreement  and/or  a
restructuring  of our  capital  structure,  the  Company  likely  does  not have
sufficient  liquidity to fund its  operations  so that it can pursue its desired
business plan and achieve positive cash flow from operations.

     The Company plans to take the following steps (some of which it has already
commenced)  within  the next six  months to  achieve  compliance  under its debt
facilities and to fund its operations:

     o    Entering into  negotiations  with Sprint to adjust the amounts charged
          by Sprint to the Company  under the Sprint  management  agreements  to
          improve the Company's cash flow from operations.

     o    Entering  into  negotiations  with the lenders under our senior credit
          facility to modify our debt  covenants  and, if  necessary,  to obtain
          waivers and/or a forbearance  agreement with respect to defaults under
          the senior credit facility.

     o    Entering  into  negotiations  with the lenders under our senior credit
          facility to obtain the right to borrow  under the $95 million  line of
          credit and to modify the repayment terms of this facility.

     o    If the lenders under the senior credit facility  accelerate the senior
          secured  debt,  negotiating  a waiver or  forbearance  agreement  with
          representatives of the holders of our senior notes and discount notes.

     o    Entering into negotiations or arbitration with the Alliances to reduce
          the amounts  charged by  Alliances  to the  Company  under the network
          agreements to improve the Company's cash flow from operations.

     o    Pursuing means to reduce  operating  expenses by critically  analyzing
          all expenses and entering into pricing negotiations with key vendors.

     The Company  would need to be successful in these efforts to be in position
to execute its business  plan and achieve  positive  cash flow.  The Company can
give no assurance  that it will be  successful  in these  efforts.  In its early
discussions  with Sprint,  Sprint has indicated  reluctance in modifying the fee
structure as needed under the first item listed above.

     The Company has engaged Berenson & Company,  an investment banking firm, to
assist in its efforts to renegotiate or restructure  its equity,  debt and other
contractual obligations.

     If the  Company  is  unable  to  restructure  its  current  debt and  other
contractual obligations as discussed above, it would need to:

     o    obtain financing to satisfy or refinance its current obligations;

     o    find a purchaser or strategic  partner for the  Company's  business or
          otherwise dispose of its assets; and/or

     o    seek bankruptcy protection.

     Financing Overview. In 2000, Horizon Telcom formed Horizon PCS, to which it
transferred  its  subsidiary  Horizon  Personal  Communications.  In June  2000,
Horizon PCS acquired the remaining  74% of Bright PCS.  Horizon PCS also entered
into several major financing transactions in September 2000 and December 2001.

     On September 26, 2000, an investor group led by Apollo Management purchased
$126.5  million  of  Horizon  PCS'  convertible  preferred  stock  in a  private
placement. Concurrent with the closing, the holder of Horizon PCS' $14.1 million
short-term  convertible  note  (including  accrued  interest  of  $1.1  million)
converted the note into the same  convertible  preferred  stock purchased by the
investor group.


                                       34
<PAGE>


     On  September  26,  2000,  Horizon PCS  received  $149.7  million  from the
issuance  of $295.0  million of senior  discount  notes due October 1, 2010 (the
"discount notes"). The discount notes accrete in value until October 1, 2005, at
a rate of 14.00% compounded semi-annually.  The discount notes do not require us
to pay cash interest until the fifth year after they are issued,  at which point
we will pay semi-annual interest until maturity.  The discount notes are general
unsecured  obligations  and are  guaranteed by our existing and future  domestic
restricted  subsidiaries.  The guarantees are senior subordinated obligations of
our  existing and future  domestic  restricted  subsidiaries.  The rights of the
holders of our discount notes to receive payments pursuant to the guarantees are
subordinated  in right of payment  to the  holders  of our  existing  and future
senior  indebtedness,  including  our $250.0  million  secured  credit  facility
described below.

     Also on September 26, 2000, Horizon PCS received $50.0 million as part of a
$225.0  million  secured  credit  facility  with a bank group led by First Union
National  Bank.  The  borrowing  capacity of the  secured  credit  facility  was
increased  to $250.0  million in  November  2000.  The secured  credit  facility
consists of the following two loans:

     o    a $155.0 million term loan, available in a $50.0 million tranche and a
          $105.0 million  tranche,  under which we may borrow to finance (i) the
          direct cost of the  construction  and operation of a regional  digital
          wireless  telecommunications  network on the Sprint PCS  system;  (ii)
          transaction  costs and expenses;  and (iii) working  capital and other
          general corporate purposes; and

     o    a $95.0 million  revolving credit facility,  the proceeds of which may
          be used to fund working capital.

     The $50.0  million  tranche was drawn on  September  26,  2000,  and had an
interest rate of 6.33% at December 31, 2002. As required,  we drew the remaining
$105.0 million  tranche in March,  2002. The interest rate on the $105.0 million
tranche was 5.40% at December 31, 2002.

     On December 7, 2001,  Horizon PCS received $175.0 million from the issuance
of unsecured senior notes (the "senior notes") due on June 15, 2011. Interest is
paid semi-annually on June 15 and December 15 at 13.75% annually,  with interest
payments commencing June 15, 2002. Approximately $48.7 million of the offering's
proceeds  were  placed in an escrow  account to fund the first four  semi-annual
interest  payments.  The first of these payments were made on June 15, 2002, and
December 15, 2002.  The senior notes were subject to an exchange  offer that was
completed in 2002.

     The following  table presents the estimated  future  outstanding  long-term
debt at the end of each year and future required annual  principal  payments for
each year then ended associated with our financing based on contractual level of
long-term indebtedness:

<TABLE>
<CAPTION>
<S>                                <C>          <C>           <C>           <C>           <C>          <C>
(Dollars in millions)                                    Years Ending December 31,
                                   -------------------------------------------------------------------
                                       2003         2004          2005          2006          2007      Thereafter
                                   ------------ ------------  ------------- ------------  ------------ -------------
Secured credit facility,
  due 2008.....................     $   155.0    $   146.7     $    126.5    $    99.7     $    71.6     $      --
     Variable interest rate (1)          5.70%        5.70%          5.70%        5.70%         5.70%         5.70%
     Principal payments........     $      --    $     8.3     $     20.2    $    26.8     $    28.1     $    71.6
Discount notes, due 2010 (2)...     $   217.5    $   253.1     $    283.7    $   286.1     $   288.5     $      --
     Fixed interest rate.......         14.00%       14.00%         14.00%       14.00%        14.00%        14.00%
     Principal payments........     $      --    $      --     $       --    $      --     $      --     $   295.0
Senior notes, due 2011.........     $   175.0    $   175.0     $    175.0    $   175.0     $   175.0     $      --
     Fixed interest rate.......         13.75%       13.75%         13.75%       13.75%        13.75%        13.75%
     Principal payments........     $      --    $      --     $       --    $      --     $      --     $   175.0

</TABLE>
______________________
(1)  Interest  rate on the secured  credit  facility  equals LIBOR plus a margin
     that  varies from 400 to 450 basis  points.  At December  31,  2002,  $50.0
     million was  effectively  fixed at 8.53%  through two  interest  rate swaps
     discussed in "ITEM 3. Quantitative and Qualitative Disclosures About Market
     Risk".  The nominal interest rate is assumed to equal 5.70% for all periods
     ($50.0 million at 6.33% and $105.0 million at 5.40%).
(2)  Face value of the discount  notes is $295.0  million.  End of year balances
     presented  herein are net of the  discount  and net of the related  warrant
     value and assume accretion of the discount as interest expense at an annual
     rate of 14.00%.



                                       35
<PAGE>

     Statement  of Cash  Flows.  At  December  31,  2002,  we had  cash and cash
equivalents of approximately  $86.1 million and working capital of approximately
$87.6  million.  At  December  31,  2001,  we had cash and cash  equivalents  of
approximately  $123.8  million  and  working  capital  of  approximately  $117.0
million.  The  decrease  in cash and cash  equivalents  of  approximately  $37.7
million is  primarily  attributable  to the funding of our loss from  continuing
operations of approximately  $176.9 million (this loss includes certain non-cash
charges) and funding our capital  expenditures  of  approximately  $63.1 million
during 2002, offset by the $105.0 million draw on the secured credit facility.

     The Company was also required to escrow funds sufficient to cover the first
four  interest  payments  on the senior  notes.  These  funds are  presented  as
restricted cash on the  consolidated  balance sheet.  Net cash used in operating
activities  for the year  ended  December  31,  2002,  was  approximately  $78.8
million.  This reflects the  continuing  use of cash for our operations to build
our customer base, including but not limited to providing service in our markets
and the costs of acquiring new customers.  The net loss of approximately  $176.9
million was partially offset by increases to depreciation,  increases in accrued
liabilities and offset by increases to accounts receivable.

     Net cash used in investing activities for the year ended December 31, 2002,
was approximately $61.5 million.  Our capital  expenditures for that period were
approximately $63.1 million,  reflecting the continuing build-out and upgrade of
our network.  At December 31, 2002, we operated  approximately 828 cell sites in
our network (an  additional 510 cell sites were operated by the Alliances in our
territories).  This represents an addition of approximately 224 sites during the
year ended  December 31, 2002. In addition to the sites,  we have  increased the
number of switching  stations in our territory and have  increased our number of
retail  stores from 38 at the end of 2001 to 44 at December 31, 2002.  We expect
future  capital  expenditures  to be much  less  than  2002 as we focus  more on
operational  and maintenance of our network and less on build out and expansion.
During 2002,  the Company  entered  into a  sale-leaseback  transaction  with an
unrelated  third  party on vehicles  used in the  network  and sales  operations
teams. As a result of this transaction,  the Company recorded a loss on disposal
of approximately  $300,000.  The vehicles  disposed had a net book value of $1.5
million.

     Net cash provided by financing  activities  for the year ended December 31,
2002,  was $102.7 million  consisting  mostly of the March 2002 draw on the term
loan A required under our secured credit facility of $105.0 million. We incurred
$2.3  million  of  deferred  financing  fees  related  to the  amendment  of our
covenants under the secured credit facility discussed above.

     Debt  Covenants.  Horizon PCS' secured credit facility  includes  financial
covenants  that must be met each quarter.  The Company did not meet the covenant
for EBITDA for the first  quarter of 2002.  As a result of higher than  expected
gross and net additions to Horizon PCS subscribers for that quarter, the Company
incurred  additional  expenses  to add those  customers.  Although  the  Company
ultimately benefits from the revenues generated by new subscribers,  the Company
incurs one-time expenses associated with new subscribers, including commissions,
handset  subsidies,  set up costs for the network and marketing  expenses.  As a
result,  these new subscriber costs  negatively  affect EBITDA in the short-term
during  the  period  of  the   addition  of  new   subscribers,   which  led  to
non-compliance with the EBITDA covenant for the first quarter of 2002.

     On June 27,  2002,  the  Company  entered  into a fourth  amendment  to its
secured credit  agreement  with the bank group.  The amendment  adjusts  certain
financial  covenants  and  increases  the margin on the base interest rate by 25
basis points to LIBOR plus 400 to 450 basis points, while also providing for the
payment of fees to the  banking  group,  an increase  in  post-default  interest
rates, a new financial  covenant  regarding minimum  available cash,  additional
prepayment  requirements,  restrictions  on Horizon  PCS'  borrowings  under the
remaining  $95.0 million line of credit and deposit  requirements  on the $105.0
million we borrowed under the secured credit facility in March 2002.



                                       36
<PAGE>

     The following table details the maximum amount  available to be borrowed on
the line of credit for the period then ended:

                                                        MAXIMUM  AMOUNT
                                                       AVAILABLE  TO BE
                                                           BORROWED
                                                       ----------------

         December 31,  2002..........................                --
         March 31, 2003..............................                --
         June 30, 2003...............................     $  16,000,000
         September 30, 2003..........................        26,000,000
         December 31, 2003...........................        33,000,000
         March 31, 2004..............................        52,000,000
         April 1, 2004...............................        95,000,000

     The following table details the minimum balance requirements placed on cash
and cash equivalents under the amended terms of the secured credit facility:

                                                        DEPOSIT BALANCE
                                                          REQUIREMENT
                                                        ---------------

         November 16, 2002, through December 31, 2002.    $  55,000,000
         January 1, 2003, through February 15, 2003...       33,000,000
         February 16, 2003, through March 31, 2003....       11,000,000
         April 1, 2003, through May 15, 2003..........        5,500,000

     As of  December  31,  2002,  the Company is in  compliance  with all of the
applicable  covenants,  as  amended.  However as  described  above,  the Company
believes it is probable the Company  will  violate one or more of the  covenants
during 2003.

     Contractual   Obligations.   The  following  table  summarizes  contractual
principal  maturities of long-term  debt  outstanding  (which is recorded net of
unaccreted  interest on the balance sheet) and minimum  payments  required under
operating leases and other long-term commitments as of December 31, 2002:

<TABLE>
<CAPTION>
<S>                       <C>            <C>               <C>              <C>
                              LONG-TERM
                              DEBT AND                         ALLIANCES
                               CURRENT        OPERATING         NETWORK
YEAR                         MATURITIES        LEASES          AGREEMENT          TOTAL
-------------------------  -------------- --------------    --------------   --------------
2003...................... $         --   $  16,122,000     $  38,600,000    $  54,722,000
2004......................     8,250,000     15,295,000                --       23,545,000
2005......................    20,187,500     12,590,000                --       32,777,500
2006......................    26,750,000      7,783,000                --       34,533,000
2007......................    28,062,500      3,320,000                         31,382,500
Thereafter................   541,750,000      7,027,000                --      548,777,000
                           -------------- --------------    --------------   --------------
   Total.................. $ 625,000,000  $  62,137,000     $  38,600,000    $ 725,737,000
                           ============== ==============    ==============   ==============
</TABLE>

     Credit  Ratings.  At December  31, 2002,  the discount  notes were rated by
Standard  and Poors  ("S&P") as "CCC+" with a negative  outlook,  which means an
obligation  "is  currently  vulnerable  to  nonpayment  and  is  dependent  upon
favorable business,  financial,  and economic conditions for the obligor to meet
its financial  commitment on the obligation.  In the event of adverse  business,
financial,  or  economic  conditions,  the  obligor  is not  likely  to have the
capacity to meet its financial  commitment on the  obligation."  At December 31,
2002,  Moody's Investors  Services  ("Moody's") rated the notes as "C", which is
Moody's lowest bond rating. The CUSIP on the discount notes is 44043UAC4.

     At December 31,  2002,  the senior notes were rated by S&P as "CCC+" with a
negative outlook. Moody's rated the senior notes as "C," which is Moody's lowest
bond rating. The CUSIP on the senior notes is 44043UAH3.

     Funding Requirements.  At December 31, 2002, we had a $95.0 million line of
credit, with certain restrictions  discussed above,  committed under our secured
credit facility. However, if we violate our debt covenants this line will not be


                                       37
<PAGE>

available.  We  believe  the  increase  in churn and  subsequent  write-offs  of
involuntary NDASL  deactivations  combined with a slow down in activation growth
during the second and third  quarters of 2002 has extended the time it will take
to reach positive EBITDA.

     EBITDA  is  not  a  measure  of  financial   performance  under  accounting
principles  generally accepted in the United States of America and should not be
considered an alternative to net income (loss) as a measure of performance or to
cash flows as a measure of liquidity.

     For the year ended  December 31, 2003, we anticipate our funding needs will
be between $80.0 and $90.0 million,  including  projected operating cash losses,
cash interest  payments and capital  expenditures.  The actual funds required to
build-out and upgrade our network and to fund operating losses,  working capital
needs and other  capital  needs may vary  materially  from these  estimates  and
additional  funds may be required because of unforeseen  delays,  cost overruns,
unanticipated  expenses,  regulatory  changes,  engineering  design  changes and
required  technological  upgrades and other technological  risks.  Additionally,
Sprint is planning to  continually  upgrade their  nationwide  network to deploy
higher  data  rate  speeds  that may  require  us to outlay  additional  capital
expenditures in future years that have not been determined at this point. Should
the Company be required to upgrade its network to provide additional 3G services
that meet Sprint's standards, we may need to obtain additional financing to fund
those capital expenditures.

     If we are  unable to obtain any  necessary  additional  financing  or if we
incur further restrictions on the availability of our current funding and we are
unable to  complete  our  network  upgrades  and  build-out  as  required by the
management agreements, Sprint may terminate our agreements; we will no longer be
able to offer  Sprint PCS  products  and  services.  In this  event,  Sprint may
purchase  our  operating  assets or capital  stock  under  terms  defined in our
agreements  with  Sprint.  Also,  any  delays  in our  build-out  may  result in
penalties under our Sprint agreements, as amended.

     Other risk factors that may impact liquidity are:

     o    We may not be able to sustain our growth or obtain sufficient  revenue
          to  achieve  and  sustain   positive  cash  flow  from  operations  or
          profitability;

     o    We may  experience  a higher  churn rate,  which could result in lower
          revenue;

     o    New  customers  may be of lower  credit  quality,  which may require a
          higher provision for doubtful accounts;

     o    Increased competition causing declines in ARPU;

     o    Our  failure to comply  with  restrictive  financial  and  operational
          covenants under the secured credit facility; and

     o    Our upgrade to 3G services,  due to which we have incurred significant
          capital expenditures, may not be successful in the marketplace and may
          not result in incremental revenue.

SEASONALITY

     Our business is subject to  seasonality  because the wireless  industry has
historically  been heavily  dependent on calendar fourth quarter results.  Among
other things, the industry relies on significantly higher customer additions and
handset  sales in the  calendar  fourth  quarter as  compared to the other three
calendar quarters. A number of factors contribute to this trend, including:

     o    the  increasing  use of retail  distribution,  which is more dependent
          upon the year-end holiday shopping season;

     o    the timing of new product and service announcements and introductions;

     o    competitive pricing pressures; and



                                       38
<PAGE>

     o    aggressive marketing and promotions.

INFLATION

     We believe that inflation has not had and will not have a material  adverse
effect on our results of operation.

CRITICAL ACCOUNTING POLICIES & ESTIMATES

     Allowance  for Doubtful  Accounts.  Estimates are used in  determining  our
allowance for doubtful accounts  receivable,  which are based on a percentage of
our  accounts  receivables  by aging  category.  The  percentage  is  derived by
considering our historical  collections and write-off experience,  current aging
of our accounts receivable and credit quality trends, as well as Sprint's credit
policy.  However,  our  historical  write-off  and  receivables  trends  for our
wireless  customers  are limited due to the recent  launch of new  markets.  The
following  table  provides  certain  statistics  on our  allowance  for doubtful
accounts receivable for the year ended December 31:

<TABLE>
<CAPTION>
<S>                                                     <C>              <C>              <C>
                                                             2002             2001             2000
                                                        -------------    -------------    -------------
Provision as a % of subscriber revenue...............        10%               8%              8%
Write-offs, net of recoveries as a % of subscriber
  revenue............................................        10%               7%              5%
Allowance for doubtful accounts as a % of
  accounts receivable................................        11%              11%             22%

</TABLE>

     Under Sprint's  service plans,  wireless  customers who do not meet certain
credit  criteria  can select  any plan  offered  subject to an account  spending
limit,  referred to as ASL, to control  credit risk exposure.  Account  spending
limits range from $125 to $200  depending on the credit quality of the customer.
Prior to May 2001,  all of these  customers were required to make a deposit that
could be credited against future billings.  In May 2001, the deposit requirement
was  eliminated  on certain,  but not all,  credit  classes ("No Deposit ASL" or
"NDASL").  As a  result,  a  significant  amount  of our new  wireless  customer
additions  (approximately  59%) were  NDASL  subscribers  during  the  program's
available period.

     This increase in sub-prime credit customers under the NDASL program has led
to higher  churn rates  (defined  below) and an increase in account  write-offs.
While the average  balance  written-off  for an NDASL customer is lower than the
average write-off balances of non-account  spending limit customers,  the number
of NDASL write-offs has caused an increase in the total amount  written-off each
quarter, resulting in the need for a higher allowance and provision for doubtful
accounts receivable.

     Beginning in November  2001, the NDASL program was replaced by "Clear Pay",
which had tightened credit  criteria.  In April 2002, we replaced Clear Pay with
"Clear  Pay II," which  re-instated  the  deposit  requirement  for most  credit
classes with account spending limits and featured increased back-office controls
with respect to credit qualification and account collections.  We anticipate the
implementation  of the Clear Pay II  program  will  reduce  our  future bad debt
exposure. If the deposit requirement is later removed or if these allowances for
doubtful  accounts  receivable  estimates are insufficient  for any reason,  our
operating income and available cash could be reduced.  At December 31, 2002, the
allowance  for  doubtful   accounts  was  $2,308,000.   At  December  31,  2002,
approximately  30% of the subscribers in our markets were account spending limit
customers with no deposit paid.

     Revenue Recognition. The Company records equipment revenue from the sale of
handsets  and  accessories  to  subscribers  in our  retail  stores and to local
distributors  in our  territories  upon  delivery.  The Company  does not record
equipment   revenue  on  handsets  and   accessories   purchased  from  national
third-party  retailers or directly from Sprint by  subscribers in our territory.
After  the  handset  has been  purchased,  the  subscriber  purchases  a service
package,  revenue from which is recognized monthly as service is provided and is
included in subscriber  revenue,  net of credits  related to the billed revenue.
The  Company  believes  the  equipment  revenue and  related  cost of  equipment
associated  with the sale of wireless  handsets  and  accessories  is a separate
earnings process from the sale of wireless services to subscribers. For industry
competitive reasons, the Company sells wireless handsets at a loss. Because such
arrangements  do not require a customer to subscribe to the  Company's  wireless
services and because the Company sells wireless  handsets to existing  customers
at  a  loss,  the  Company  accounts  for  these  transactions  separately  from
agreements to provide  customers  wireless  service.



                                       39
<PAGE>

     The Company's  accounting  policy for the  recognition  of  activation  fee
revenue is to record the  revenue  over the  periods  such  revenue is earned in
accordance with the current  interpretations  of SEC Staff  Accounting  Bulletin
("SAB") No. 101,  "Revenue  Recognition in Financial  Statements."  Accordingly,
activation fee revenue and direct  customer  activation  expense is deferred and
will be recorded over the average life for those  customers (30 months) that are
assessed an activation fee.

     A  management  fee  of  8%  of  collected  PCS  revenues  from  Sprint  PCS
subscribers  based in the  Company's  territory,  is  accrued  as  services  are
provided  and  remitted to Sprint and  recorded  as general and  administrative.
Revenues  generated  from the sale of  handsets  and  accessories,  inbound  and
outbound  Sprint PCS roaming fees, and roaming  services  provided to Sprint PCS
customers who are not based in the Company's territory are not subject to the 8%
management fee.

     Impairment of  Long-Lived  Assets and  Goodwill.  The Company  accounts for
long-lived assets and goodwill in accordance with the provisions of Statement of
Financial  Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment
or  Disposal  of  Long-Lived  Assets"  and SFAS No.  142,  "Goodwill  and  Other
Intangible  Assets."  SFAS No. 144 requires that  long-lived  assets and certain
identifiable  intangibles be reviewed for impairment  whenever events or changes
in  circumstances  indicate  that the  carrying  amount  of an asset  may not be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison of the carrying  amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired,  the
impairment  to be  recognized  is measured  by the amount by which the  carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying  amount or fair value less costs to
sell. As a result,  the Company recorded  approximately  $3.5 million related to
accelerated  depreciation  on an impaired  asset for the year ended December 31,
2002.  SFAS No.  142  requires  annual  tests for  impairment  of  goodwill  and
intangible  assets that have  indefinite  useful lives and interim tests when an
event has occurred  that more likely than not has reduced the fair value of such
assets.  The Company recorded a goodwill  impairment of $13.2 million during the
year ended December 31, 2002.

RECENT ACCOUNTING PRONOUNCEMENTS

     In December 2002, the Financial  Accounting Standards Board ("FASB") issued
SFAS  No.  148,  "Accounting  for  Stock-Based  Compensation  -  Transition  and
Disclosure - an amendment of FASB  Statement No. 123." This  Statement  provides
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
Statement  requires  prominent  disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee  compensation
and the effect of the method used on reported  results.  The Company adopted the
disclosure  requirements  of SFAS No. 148 on December 31, 2002, but continues to
account for stock  compensation costs in accordance with APB Opinion No. 25 (See
Note 18 in the "Notes to Consolidated Financial Statements").

     In June 2002 the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." This Statement addresses financial accounting
and reporting for costs associated with exit or disposal activities by requiring
that  expenses  related to the exit of an activity  or  disposal  of  long-lived
assets be recorded when they are incurred and measurable. Prior to SFAS No. 146,
these  charges were accrued at the time of  commitment  to exit or dispose of an
activity.  The  Company  will adopt  SFAS 146 on January 1, 2003,  and it is not
expected to have a material effect on the Company's financial position,  results
of operations or cash flows.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No.  4,  44  and  64,   Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections."  SFAS No. 145 addresses the  accounting  for gains and losses from
the  extinguishment  of debt,  economic  effects  and  accounting  practices  of
sale-leaseback   transactions  and  makes  technical   corrections  to  existing
pronouncements.  The Company will adopt SFAS No. 145 on January 1, 2003,  and it
is not expected to have a material effect on the Company's  financial  position,
results of operations or cash flows.

     In June  2001,  the  FASB  issued  SFAS  No.  143,  "Accounting  for  Asset
Retirement  Obligations."  This  statement  addresses  financial  accounting and
reporting for obligations associated with the retirements of tangible long-lived
assets  and  the  associated  asset  retirement   costs.  It  applies  to  legal
obligations  associated  with the  retirement  of long- lived assets that result


                                       40
<PAGE>

from the  acquisition,  construction,  development and the normal operation of a
long-lived  asset.  The Company will adopt this statement  effective  January 1,
2003.  Management  is currently in the process of  evaluating  its impact on the
Company's financial position, results of operations or cash flows.

                                  RISK FACTORS

WE DO NOT HAVE SUFFICIENT  CASH AND CASH  COMMITMENTS TO ENABLE US TO PURSUE OUR
DESIRED BUSINESS PLAN TO ACHIEVE POSITIVE CASH FLOW.

     Our business and prospects have been significantly  adversely affected by a
number of factors.  These factors include the general economic  recession in the
U.S.,  the  significant  slow down in subscriber  acquisition  over the past two
quarters throughout most of the wireless telecommunications industry, aggressive
pricing  competition which has developed within the wireless  telecommunications
industry,  the greater than  expected  churn which we have  suffered and several
factors which arise from our relationship  with Sprint. As a result of these and
other factors,  we likely will not have sufficient cash and cash  commitments to
enable us to pursue our desired business plan to achieve positive cash flow.

     As a result of this situation,  we have embarked on a number of initiatives
to attempt to:

     o    reduce operating expenses,

     o    reduce churn,

     o    negotiate a modification in the fees we pay to Sprint,

     o    negotiate  or  otherwise  achieve  a  reduction  in the fees we pay to
          NTELOS,

     o    negotiate  modifications  to the  covenants  and payment  terms of our
          senior secured facility, and

     o    negotiate the right to obtain funding under our $95 million  revolving
          line of credit under our senior secured facility.

     There can be no  assurance  that we will achieve any of these goals or that
we will be able to  develop a  business  plan which is  reasonably  designed  to
achieve positive cash flow.

     Because  of the  status  of the  financing  market  for  telecommunications
companies,  we believe  that it is  unlikely  that we could  raise a  sufficient
amount of financing to cure our anticipated cash shortfall.

     We have retained Berenson & Company,  a financial  advisory firm, to assist
us in analyzing and  developing  our business  plan, in addressing our strategic
relationships with Sprint and NTELOS and in considering potential restructurings
of our capital structure.

WE ANTICIPATE THAT DURING 2003 WE WILL BECOME IN NON-COMPLIANCE WITH ONE OR MORE
OF THE FINANCIAL COVENANTS UNDER OUR SENIOR SECURED FACILITY.

     Our secured  credit  facility  provides for aggregate  borrowings of $250.0
million of which $155.0  million was  borrowed as of December 31, 2002.  Horizon
PCS' secured credit facility includes financial  covenants that must be met each
quarter.

     We anticipate that, during 2003, we will become in non-compliance  with one
or more of the financial  covenants under our senior secured facility.  This may
occur as soon as the  determination of our covenant  compliance as of the end of
the  first  quarter  of 2003.  If we do so, we will not have the right to borrow
under our revolving line of credit. In addition,  the banks would have the right
to accelerate the  indebtedness  under the senior secured facility and to pursue
remedies.  In the event  that the  lenders  under the  senior  secured  facility
accelerate  our  indebtedness,  such an  acceleration  would  cause  an event of
default under the indentures for our senior discount notes and our senior notes.

                                       41
<PAGE>

     We did not meet the covenant for EBITDA for the first  quarter of 2002.  On
June 27,  2002,  Horizon PCS  obtained a waiver of the  non-compliance  with the
EBITDA  covenant for the first  quarter of 2002 and entered into an amendment of
the secured credit  facility.  The amended  facility  primarily  adjusts certain
financial  covenants  and  increases the margin on the base interest by 25 basis
points,  while also providing for the payment of fees to the banking  group,  an
increase in  post-default  interest  rates, a new financial  covenant  regarding
minimum  available cash,  additional  prepayment  requirements,  restrictions on
Horizon PCS'  borrowings  under the  remaining  $95.0 million  revolving  credit
facility  and deposit  requirements  on the $105.0  million  borrowed  under the
secured credit facility in March 2002.

OUR SUBSTANTIAL  INDEBTEDNESS  COULD ADVERSELY  AFFECT OUR FINANCIAL  HEALTH AND
PREVENT US FROM FULFILLING OUR LONG-TERM DEBT OBLIGATIONS.

     As of December 31, 2002,  our total debt  outstanding  was $625.0  million,
comprised of $155.0 million borrowed under our secured credit  facility,  $175.0
million due under our senior  notes issued in December  2001 and $295.0  million
represented  by our discount  notes (which are reported on our balance  sheet at
December 31, 2002, net of a discount of approximately $108.7 million).

     Our  substantial  debt  will  have  a  number  of  important  consequences,
including the following:

     o    we may not have sufficient funds to pay interest on, and principal of,
          our debt;

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

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

     o    some  borrowings  likely will be at variable rates of interest,  which
          will result in higher  interest  expense in the event of  increases in
          market interest rates;

     o    due to the liens on substantially all of our assets and the pledges of
          equity  ownership of our  subsidiaries  that secure our secured credit
          facility, our lenders may control our assets upon a default;

     o    our debt increases our  vulnerability  to general adverse economic and
          industry conditions;

     o    our debt  limits our  flexibility  in planning  for,  or reacting  to,
          changes in our business and the industry in which we operate; and

     o    our debt  places  us at a  competitive  disadvantage  compared  to our
          competitors that have less debt.

TO SERVICE OUR INDEBTEDNESS,  WE WILL REQUIRE A SIGNIFICANT  AMOUNT OF CASH. OUR
ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL.

     Our ability to make payments on and to refinance our  indebtedness,  and to
fund our network  build-out,  anticipated  operating  losses and working capital
requirements will depend on our ability to generate cash in the future. This, to
a certain  extent,  is  subject  to general  economic,  financial,  competitive,
legislative, regulatory and other factors that are beyond our control.

     We cannot be certain that our business will generate  sufficient  cash flow
from  operations  or that future  borrowings  will be  available to us under our
secured  credit  facility  in an  amount  sufficient  to  enable  us to pay  our
indebtedness or to fund our other liquidity  needs. We may need to refinance all
or a portion of our indebtedness, including the notes, on or before maturity. We
may not be able to refinance any of our indebtedness on commercially  reasonable
terms, or at all.



                                       42
<PAGE>


IF WE FAIL TO PAY OUR DEBT,  OUR  LENDERS  MAY SELL OUR  LOANS TO SPRINT  GIVING
SPRINT THE RIGHTS OF A CREDITOR TO FORECLOSE ON OUR assets.

     If the  lenders  accelerate  the  amounts  due  under  our  secured  credit
facility,  Sprint has the right to purchase our obligations  under that facility
and become a senior lender.  To the extent Sprint  purchases these  obligations,
Sprint's interests as a creditor could conflict with ours.  Sprint's rights as a
senior lender would enable it to exercise  rights with respect to our assets and
Sprint's  continuing  relationship in a manner not otherwise permitted under the
Sprint PCS agreements.

IF WE FAIL TO COMPLETE THE  BUILD-OUT OF OUR NETWORK,  SPRINT MAY  TERMINATE THE
SPRINT  PCS  AGREEMENTS  AND WE WOULD NO  LONGER  BE ABLE TO  OFFER  SPRINT  PCS
PRODUCTS AND SERVICES FROM WHICH WE GENERATE SUBSTANTIALLY ALL OUR REVENUES.

     Our long-term affiliation  agreements with Sprint, which we refer to as the
Sprint PCS agreements, require us to build and operate the portion of the Sprint
PCS network  located in our  territory in  accordance  with  Sprint's  technical
specifications  and coverage  requirements.  The  agreements  also require us to
provide  minimum network  coverage to the population  within each of the markets
that make up our territory by specified dates.

     Under our original Sprint PCS agreements,  we were required to complete the
build-out in several of our markets in Pennsylvania and New York by December 31,
2000. Sprint and HPC agreed to an amendment of the build-out requirements, which
extended the dates by which we were to launch coverage in several  markets.  The
amended Sprint PCS agreement provides for monetary penalties to be paid by us if
coverage is not launched by these extended  contract  dates.  The amounts of the
penalties  depends on the  market  and  length of delay in  launch,  and in some
cases,  whether  the  shortfall  relates to an  initial  launch in the market or
completion of the remaining build-out. The penalties must be paid in cash or, if
both Horizon PCS and Sprint agree, in shares of Horizon PCS stock.

     Under the amended Sprint PCS agreement,  portions of the New York, Sunbury,
Williamsport,  Oil City, Dubois,  Erie,  Meadville,  Sharon,  Olean,  Jamestown,
Scranton,  State College,  Stroudsburg,  Allentown and  Pottsville  markets were
required to be completed and launched by October 31, 2001.  Although we launched
service in portions of each of these  markets,  we did not  complete  all of the
build-out  requirements.  We notified  Sprint in  November  2001 that it was our
position that the reasons for the delay constitutes events of "force majeure" as
described  in the Sprint PCS  agreements  and that,  consequently,  no  monetary
penalties or other remedies were applicable.  The delay was primarily caused due
to delays in  obtaining  the  required  backhaul  services  from local  exchange
carriers  and zoning  and other  approvals  from  governmental  authorities.  On
January 30, 2002,  Sprint  notified us that,  as a result of these force majeure
events,  it does not consider our  build-out  delay to be a breach of the Sprint
PCS agreement.  We agreed to use commercially reasonable efforts to complete the
build-out by June 30, 2002.  Although we have not been able to complete  some of
the sites in some markets due to  continuing  force majeure  issues,  we believe
that we are in substantial compliance with our build-out requirements.

     We will  require  additional  expenditures  of  significant  funds  for the
continued development,  construction,  testing,  deployment and operation of our
network.  These  activities  are  expected to place  significant  demands on our
managerial, operational and financial resources. A failure to meet our build-out
requirements for any of our markets, or to meet Sprint's technical requirements,
would  constitute a breach of the Sprint PCS agreements that could lead to their
termination if not cured.  If Sprint  terminates  these  agreements,  we will no
longer be able to offer Sprint PCS products and services.

IF SPRINT TERMINATES THE SPRINT PCS AGREEMENTS,  THE BUY-OUT PROVISIONS OF THOSE
AGREEMENTS MAY DIMINISH THE VALUATION OF OUR COMPANY.

     Provisions  of the Sprint PCS  agreements  could affect our  valuation  and
decrease our ability to raise  additional  capital.  If Sprint  terminates these
agreements,  the Sprint PCS  agreements  provide  that Sprint may  purchase  our
operating  assets or capital  stock for 80% of the  "Entire  Business  Value" as
defined by the agreement.  If the termination is due to our breach of the Sprint
PCS  agreements,  the percent is reduced to 72% instead of 80%. Under our Sprint
PCS agreements,  the Entire Business Value is generally the fair market value of
our  wireless  business  valued on a going  concern  basis as  determined  by an
independent appraiser and assumes that we own the FCC licenses in our territory.
In  addition,  the Sprint PCS  agreements  provide  that Sprint must approve any


                                       43
<PAGE>

change of control of our ownership  and consent to any  assignment of the Sprint
PCS  agreements.  Sprint also has a right of first  refusal if we decide to sell
our operating assets in our Bright PCS markets.  We are also subject to a number
of  restrictions  on the transfer of our  business  including a  prohibition  on
selling our company or our operating assets to a number of identified and yet to
be identified  competitors of Sprint. These and other restrictions in the Sprint
PCS agreements may limit the  marketability  of and reduce the price a buyer may
be willing to pay for the Company and may operate to reduce the Entire  Business
Value of the Company.

THE TERMINATION OF OUR STRATEGIC  AFFILIATION WITH SPRINT OR SPRINT'S FAILURE TO
PERFORM ITS OBLIGATIONS  UNDER THE SPRINT PCS AGREEMENTS WOULD SEVERELY RESTRICT
OUR ABILITY TO CONDUCT OUR BUSINESS.

     Because  Sprint owns the FCC  licenses  that we use in our  territory,  our
ability to offer Sprint PCS products and services on our network is dependent on
the Sprint PCS agreements  remaining in effect and not being terminated.  Sprint
may terminate the Sprint PCS agreements for breach by us of any material  terms.
We also depend on Sprint's  ability to perform its obligations  under the Sprint
PCS  agreements.  The termination of the Sprint PCS agreements or the failure of
Sprint to perform its obligations under the Sprint PCS agreements would severely
restrict our ability to conduct our wireless digital communications business.

IF THE WEST  VIRGINIA PCS  ALLIANCE  AND  VIRGINIA PCS ALLIANCE  FAIL TO PROVIDE
THEIR NETWORK TO US IN THEIR MARKETS,  OR IF OUR NETWORK SERVICES AGREEMENT WITH
THE  ALLIANCES  IS  OTHERWISE  TERMINATED,  WE WILL LOSE THE  ABILITY TO USE THE
ALLIANCES' NETWORKS.

     West Virginia PCS Alliance and Virginia PCS Alliance,  which we refer to as
the  Alliances,  are two related,  independent  PCS  providers  whose network is
managed by  NTELOS.  On March 4, 2003,  NTELOS and  certain of its  subsidiaries
filed  voluntarily  petitions  for  reorganization  under Chapter 11 of the U.S.
Bankruptcy  Code in the  U.S.  Bankruptcy  Court  for the  Eastern  District  of
Virginia.  The results of NTELOS'  restructuring  could have a material  adverse
impact on our  operations.  Pursuant to bankruptcy  law, the Alliances  have the
right to assume or reject  the  network  services  agreement.  If the  Alliances
reject  the  network  services  agreement,  we will lose the  ability to provide
service to our subscribers in Virginia and West Virginia  through the Alliances'
Network,  and  Sprint  may take the  position  that we would be in breach of our
management agreements with Sprint.

     Prior to the Alliances'  bankruptcy  filing,  Horizon had asserted that the
Alliances had overcharged Horizon approximately $4,799,000 for charges that were
neither  authorized nor  contemplated by the network  services  agreement.  As a
result  of the  Alliances'  bankruptcy  filing,  Horizon  was at risk  that  any
subsequent  payments that it would make for services under the network  services
agreement could impair its setoff or recoupment rights with respect to its claim
for a repayment of the unauthorized charges.  Consequently,  Horizon declined to
make a scheduled  payment of $3 million to the  Alliances  on March 11, 2003 for
services  rendered by the  Alliances in January 2003 and, on that date,  filed a
motion in the Alliances' bankruptcy case to protect its rights.

     On March 12, 2003, the Alliances  telecopied to Horizon a letter  notifying
Horizon of the failure to make payment on the January 2003 invoice, which letter
purported to be a ten-business day notice under the network  services  agreement
that  would give the  Alliances  the right to  terminate  the  agreement  at the
conclusion of such ten-day period.

     On March 24, 2003,  Horizon and the  Alliances  entered into a  Stipulation
which  provided  that  Horizon  would pay the  January  2003 and  February  2003
invoices,  the bankruptcy court would provide procedural protection of Horizon's
claim,  the Alliances  would  withdraw the default  notice and the parties would
move forward to settle or arbitrate the merits of Horizon's  claim. On March 26,
2003, the Court in the NTELOS bankruptcy case approved the Stipulation.

     Under our network services agreement, the Alliances provide us with the use
of and  access to key  components  of their  network  in most of our  markets in
Virginia  and West  Virginia.  We directly  compete  with the  Alliances  in the
markets  where we use their  network.  If the  Alliances  fail to  maintain  the
standards for their network as set forth in our network services  agreement with
them or  otherwise  fail to provide  their  network for our use,  our ability to
provide wireless services in these markets may be adversely affected, and we may
not be able to provide  seamless  service  for our  customers.  If we breach our
obligations  to the  Alliances,  or if the  Alliances  otherwise  terminate  the
network services agreement, we will lose our right to use the Alliances' network
to provide service in these markets. In that event, it is likely that we will be


                                       44
<PAGE>

required  to build our own network in those  markets  and incur the  substantial
costs associated with doing so.

IF OTHER SPRINT  NETWORK  PARTNERS HAVE FINANCIAL  DIFFICULTIES,  THE SPRINT PCS
NETWORK COULD BE DISRUPTED.

     Sprint's  national  network  is  a  combination  of  networks.   The  large
metropolitan  areas are owned and  operated by Sprint,  and the areas in between
them are  owned  and  operated  by  Sprint  network  partners,  all of which are
independent  companies  like we are. We believe that most,  if not all, of these
companies have incurred  substantial  debt to pay the large cost of building out
their networks.  If other network partners  experience  financial  difficulties,
Sprint's  PCS network  could be  disrupted.  If Sprint's  agreements  with those
network partners are like ours,  Sprint would have the right to exercise various
remedies  in the  event of such  disruptions.  In such  event,  there  can be no
assurance that Sprint or the network partner could restore the disrupted service
in a timely and seamless manner.

     One of the  network  partners,  iPCS,  Inc.,  recently  filed a chapter  11
bankruptcy  petition.  In connection  with its bankruptcy  filing,  iPCS filed a
Complaint  against  Sprint  Corporation  and Sprint PCS alleging that Sprint PCS
breached its management  agreement and services  agreement with iPCS, seeking an
equitable  accounting of alleged  overcharges and underpayments by Sprint PCS to
iPCS, and seeking specific performance of (i) Sprint PCS' obligation to purchase
the  operating  assets  of iPCS by  virtue of iPCS'  purported  exercise  of its
contractual "put" right as a result of the alleged material  breaches,  and (ii)
Sprint's  obligation to pay an increased share of Collected  Revenue as a result
of iPCS' lenders issuing a notice of  acceleration.  Finally,  iPCS alleges that
Sprint  Corporation  is  liable  on  each of the  claims  because  it  allegedly
controls,  authorizes,  directs and/or  ratifies the conduct of Sprint PCS under
the  management  agreement and services  agreement.  Because we believe that the
iPCS claims  allege  conduct  under  agreements  which are similar to our Sprint
agreements,  we are  reviewing the iPCS lawsuit to determine the extent to which
the factual and legal  assertions of iPCS have  similarities to our relationship
with Sprint.

IF SPRINT DOES NOT COMPLETE THE  CONSTRUCTION OF ITS NATIONWIDE PCS NETWORK,  WE
MAY NOT BE ABLE TO ATTRACT AND RETAIN  CUSTOMERS,  WHICH WOULD ADVERSELY  AFFECT
OUR REVENUES.

     Sprint's PCS network may not provide nationwide coverage to the same extent
as its  competitors'  networks,  which  could  adversely  affect our  ability to
attract  and retain  customers.  Sprint is  creating a  nationwide  PCS  network
through its own construction efforts and those of its affiliates. Today, neither
Sprint  nor any other PCS  provider  offers  service in every area of the United
States.  Sprint has entered  into  affiliation  agreements  similar to ours with
companies  in  other  territories  pursuant  to  its  nationwide  PCS  build-out
strategy. Our business and results of operations depend on Sprint's national PCS
network and, to a lesser extent, on the networks of its other affiliates. Sprint
and its  affiliate  program are subject,  in varying  degrees,  to the economic,
administrative,  logistical,  regulatory  and  other  risks  described  in  this
document. Sprint and its other affiliates' PCS operations may not be successful,
which in turn could adversely affect our ability to generate revenues.

OUR REVENUES MAY BE LESS THAN WE  ANTICIPATE  WHICH COULD  MATERIALLY  ADVERSELY
AFFECT OUR LIQUIDITY, FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Revenue growth is primarily  dependent on the size of our subscriber  base,
average  monthly  revenues per user and roaming  revenue.  During the year ended
December  31,  2002,  we  experienced  slower net  subscriber  growth rates than
planned,  which we believe is due in large part to  increased  churn,  declining
rates of wireless  subscriber  growth in general,  the re-imposition of deposits
for most  sub-prime  credit  subscribers  during the last half of the year,  the
current economic  slowdown and increased  competition.  Other carriers also have
reported slower subscriber growth rates compared to prior periods.  We have seen
a  continuation  of  competitive  pressures in the  wireless  telecommunications
market  causing  some major  carriers  to offer  plans with  increasingly  large
bundles of minutes of use at lower  prices  which may  compete  with the calling
plans we  offer,  including  the  Sprint  calling  plans we  support.  While our
business plan anticipates  lower subscriber  growth,  it assumes average monthly
revenues per user will remain relatively stable. Increased price competition may
lead to lower average monthly revenues per user than we anticipate. In addition,
the lower reciprocal roaming rate that Sprint has announced for 2003 will reduce
our roaming  revenue,  which may not be offset by the  reduction  in our roaming
expense.  If our  revenues  are less  than we  anticipate,  it could  materially
adversely affect our liquidity, financial condition and results of operation.

                                       45
<PAGE>

WE ARE DEPENDENT UPON SPRINT'S BACK OFFICE SERVICES AND ITS THIRD-PARTY VENDORS'
BACK OFFICE  SYSTEMS.  PROBLEMS  WITH THESE  SYSTEMS,  OR  TERMINATION  OF THESE
ARRANGEMENTS, COULD DISRUPT OUR BUSINESS AND POSSIBLY INCREASE OUR COSTS.

     Because Sprint  provides our back office systems such as billing,  customer
care and  collections,  our operations could be disrupted if Sprint is unable to
maintain and expand its back office services,  or to efficiently outsource those
services  and  systems  through  third-party  vendors.  The rapid  expansion  of
Sprint's business will continue to pose a significant  challenge to its internal
support systems.  Additionally,  Sprint has relied on third-party  vendors for a
significant number of important functions and components of its internal support
systems and may  continue to rely on these  vendors in the future.  We depend on
Sprint's  willingness  to continue to offer these  services to us and to provide
these services at competitive costs. We paid Sprint  approximately $20.6 million
for these services  during 2002. The Sprint PCS  agreements  provide that,  upon
nine months'  prior written  notice,  Sprint may elect to terminate any of these
services.  If Sprint  terminates  a service  for which we have not  developed  a
cost-effective  alternative,   our  operating  costs  may  increase  beyond  our
expectations and restrict our ability to operate successfully.

     Further,  our ability to replace Sprint in providing  back office  services
may  be  limited.  While  the  services  agreements  allow  the  Company  to use
third-party  vendors to provide certain of these services instead of Sprint, the
high startup costs and necessary  cooperation  associated with  interfacing with
Sprint's system may significantly  limit our ability to use back office services
provided by anyone other than Sprint.  This could limit our ability to lower our
operating costs.

WE DEPEND ON OTHER  TELECOMMUNICATIONS  COMPANIES  FOR SOME  SERVICES  THAT,  IF
DELAYED,  COULD  DELAY OUR  PLANNED  NETWORK  BUILD-OUT  AND DELAY OUR  EXPECTED
INCREASES IN CUSTOMERS AND REVENUES.

     We depend on other  telecommunications  companies to provide facilities and
transport  to  interconnect  portions  of our network and to connect our network
with the landline telephone system.  American Electric Power,  Ameritech,  AT&T,
Verizon and Sprint (long  distance) are our primary  suppliers of facilities and
transport. Without these services, we could not offer Sprint PCS services to our
customers  in some  areas.  From  time to time,  we have  experienced  delays in
obtaining  facilities  and  transport  from  some  of  these  companies,  and in
obtaining local telephone numbers for use by our customers,  which are sometimes
in short supply,  and we may continue to experience  delays and interruptions in
the  future.  Delays in  obtaining  facilities  and  transport  could  delay our
build-out  and capacity  plans and our  business  may suffer.  Delays could also
result in a breach of our Sprint PCS agreements,  subjecting these agreements to
potential termination by Sprint.

MATERIAL  RESTRICTIONS  IN OUR DEBT  INSTRUMENTS MAY MAKE IT DIFFICULT TO OBTAIN
ADDITIONAL  FINANCING OR TAKE OTHER NECESSARY ACTIONS TO REACT TO CHANGES IN OUR
BUSINESS.

     The indenture  governing the senior notes contains  various  covenants that
limit our  ability  to engage in a variety of  transactions.  In  addition,  the
indenture  governing our discount  notes and the secured  credit  agreement both
impose  additional  material  operating and financial  restrictions on us. These
restrictions,  subject to  ordinary  course of  business  exceptions,  limit our
ability to engage in some transactions, including the following:

     o    designated types of mergers or consolidations;

     o    paying dividends or other distributions to our stockholders;

     o    making investments;

     o    selling assets;

     o    repurchasing our common stock;

     o    changing lines of business;

     o    borrowing additional money; and


                                       46
<PAGE>


     o    transactions with affiliates.

     In addition,  our secured credit facility  requires us to maintain  certain
ratios, including:

     o    leverage ratios;

     o    an interest coverage ratio; and

     o    a fixed charges ratio,

     and to satisfy certain tests, including tests relating to:

     o    minimum covered population;

     o    minimum number of PCS subscribers in our territory;

     o    minimum total revenues; and

     o    minimum EBITDA.

     These  restrictions  could  limit our  ability  to obtain  debt  financing,
repurchase  stock,  refinance or pay  principal  or interest on our  outstanding
debt,  consummate  acquisitions  for  cash or debt or react  to  changes  in our
operating environment. An event of default under the secured credit facility may
prevent the  Company and the  guarantors  of the senior  notes and the  discount
notes from paying those notes or the guarantees of those notes.

THE TERMS OF THE CONVERTIBLE PREFERRED STOCK MAY AFFECT OUR FINANCIAL RESULTS.

     The  terms of the  convertible  preferred  stock  give the  holders  of the
preferred stock the following principal rights:

     o    to initially designate two members of our board of directors,  subject
          to reduction based on future percentage ownership;

     o    to  approve  or   disapprove   fundamental   corporate   actions   and
          transactions;

     o    to  receive  dividends  in  the  form  of  additional  shares  of  our
          convertible  preferred stock, which may increase and accelerate upon a
          change in control; and

     o    to require us to redeem the convertible preferred stock in 2005.

     If we  become  subject  to  the  repurchase  right  or  change  of  control
redemption  requirements under the convertible preferred stock while our secured
credit facility, our discount notes or the senior notes are outstanding, we will
be  required  to seek the  consent  of the  lenders  under  our  secured  credit
facility,  the holders of the discount notes and the holders of the senior notes
to repurchase or redeem the convertible preferred stock, or attempt to refinance
the secured credit facility, the discount notes and the senior notes. If we fail
to obtain  these  consents,  there will be an event of  default  under the terms
governing our secured credit facility.  In addition,  if we do not repurchase or
redeem  the  convertible  preferred  stock and the  holders  of the  convertible
preferred  stock  obtain a judgment  against us, any  judgment in excess of $5.0
million would constitute an event of default under the indentures  governing the
discount notes and the senior notes.

IF WE  BREACH  OUR  AGREEMENT  WITH  SBA  COMMUNICATIONS  CORP.  ("SBA"),  OR IT
OTHERWISE  TERMINATES  ITS  AGREEMENT  WITH US,  OUR RIGHT TO  PROVIDE  WIRELESS
SERVICE FROM MOST OF OUR CELL SITES WILL BE LOST.

     We lease cell sites from SBA. We rely on our  contract  with SBA to provide
us with  access to most of our cell  sites and to the  towers  located  on these
sites. If SBA were to lose its underlying  rights to these sites, our ability to


                                       47
<PAGE>

provide  wireless  service  from these sites would end,  subject to our right to
cure defaults by SBA. If SBA terminates our agreement as a result of our breach,
we may lose our right to provide wireless services from most of our cell sites.

WE MAY HAVE DIFFICULTY OBTAINING  INFRASTRUCTURE  EQUIPMENT AND HANDSETS,  WHICH
COULD RESULT IN DELAYS IN OUR NETWORK  BUILD-OUT,  DISRUPTION OF SERVICE OR LOSS
OF CUSTOMERS.

     If we cannot acquire the equipment required to build or upgrade our network
in a timely manner, we may be unable to provide wireless communications services
comparable to those of our competitors or to meet the requirements of the Sprint
PCS agreements.  Manufacturers  of this equipment could have  substantial  order
backlogs.  Accordingly,  the lead-time for the delivery of this equipment may be
longer than  anticipated.  In  addition,  the  manufacturers  of specific  types
handsets may have to  distribute  their limited  supply of products  among their
numerous  customers.  Some  of our  competitors  purchase  large  quantities  of
communications  equipment  and  may  have  established  relationships  with  the
manufacturers of this equipment.  Consequently, they may receive priority in the
delivery  of this  equipment.  If we do not obtain  equipment  or  handsets in a
timely  manner,  we  could  suffer  delays  in the  build-out  of  our  network,
disruptions in service and a reduction in customers.

SPRINT'S  VENDOR  DISCOUNTS  MAY  BE  DISCONTINUED,  WHICH  COULD  INCREASE  OUR
EQUIPMENT  COSTS AND REQUIRE MORE CAPITAL THAN WE HAD  PROJECTED TO BUILD-OUT OR
UPGRADE OUR NETWORK.

     We intend to  continue  to  purchase  our  infrastructure  equipment  under
Sprint's vendor agreements that include significant volume discounts.  If Sprint
were unable to continue to obtain vendor discounts for its affiliates,  the loss
of  vendor  discounts  could  increase  our  equipment  costs  for  our  network
build-out.

CONFLICTS WITH SPRINT MAY NOT BE RESOLVED IN OUR FAVOR, WHICH COULD RESTRICT OUR
ABILITY TO MANAGE OUR  BUSINESS AND PROVIDE  SPRINT PCS  PRODUCTS AND  SERVICES,
ADVERSELY AFFECTING OUR RELATIONSHIPS WITH OUR CUSTOMERS,  INCREASE OUR EXPENSES
OR DECREASE OUR REVENUES.

     Under the Sprint PCS agreements, Sprint has a substantial amount of control
over the conduct of our business.  Conflicts between us may arise, and as Sprint
owes us no duties  except  as set  forth in the  Sprint  PCS  agreements,  these
conflicts may not be resolved in our favor.  The conflicts and their  resolution
may harm our business. For example:

     o    Sprint may price its national  plans based on its own  objectives  and
          may set price  levels and  customer  credit  policies  that may not be
          economically sufficient for our business;

     o    Sprint may  increase  the prices we pay for our back office  services;
          and

     o    Sprint may make decisions that adversely  affect our use of the Sprint
          and Sprint PCS brand names, products or services.

WE MAY NOT BE ABLE TO COMPETE WITH LARGER,  MORE ESTABLISHED  WIRELESS PROVIDERS
WHO HAVE RESOURCES TO  COMPETITIVELY  PRICE THEIR  PRODUCTS AND SERVICES,  WHICH
COULD IMPAIR OUR ABILITY TO ATTRACT AND RETAIN CUSTOMERS.

     Our ability to compete will depend in part on our ability to anticipate and
respond  to  various  competitive   factors  affecting  the   telecommunications
industry,  including  new services that may be  introduced,  changes in consumer
preferences,  demographic  trends,  economic  conditions  and  discount  pricing
strategies by competitors. In each market, we compete with at least two cellular
providers that have had their  infrastructure in place and have been operational
for a number  of  years.  They  may have  significantly  greater  financial  and
technical  resources than we do, they could offer attractive pricing options and
they may have a wider variety of handset  options.  We expect existing  cellular
providers  will continue to upgrade their systems and provide  expanded  digital
services to compete with the Sprint PCS products and services we offer.  Many of
these  wireless  providers  generally  require  their  customers  to enter  into
long-term  contracts,  which  may  make  it  more  difficult  for us to  attract
customers away from them.

     We will  also  compete  with  several  PCS  providers  and  other  existing
communications  companies in our markets and expect to compete with new entrants
as the FCC licenses additional  spectrum to mobile services providers.  A number
of our cellular, PCS and other wireless competitors have access to more licensed
spectrum  than the  amount  licensed  to  Sprint  in most of our  territory  and


                                       48
<PAGE>

therefore will be able to provide  greater network call volume capacity than our
network to the extent that network  usage begins to reach or exceed the capacity
of our licensed spectrum.  Our inability to accommodate increases in call volume
could result in more dropped or disconnected calls. In addition, any competitive
difficulties that Sprint may experience could also harm our competitive position
and success.

     We anticipate  that market prices for two-way  wireless  voice services and
products   generally   will  continue  to  decline  as  a  result  of  increased
competition.  Consequently we may be forced to increase spending for advertising
and promotions.  Increased  competition also may lead to continued  increases in
customer churn. Those trends could cause further delays in our expected dates to
achieve positive EBITDA.

WE MAY NOT BE ABLE TO OFFER COMPETITIVE ROAMING  CAPABILITY,  WHICH COULD IMPAIR
OUR ABILITY TO ATTRACT AND RETAIN CUSTOMERS.

     We rely  on  agreements  with  competitors  to  provide  automatic  roaming
capability  to our PCS  customers in many of the areas of the United  States not
covered by the Sprint PCS network,  which primarily serves  metropolitan  areas.
Some competitors may be able to offer coverage in areas not served by the Sprint
PCS  network  or may be able to offer  roaming  rates  that are lower than those
offered by Sprint and its  affiliates.  Some of our  competitors  are seeking to
reduce access to their networks through actions pending with the FCC.  Moreover,
the engineering standard for the dominant air interface upon which PCS customers
roam is  currently  being  considered  for  elimination  by the FCC as part of a
streamlining  proceeding.  If the FCC eliminates  this standard,  our Sprint PCS
customers may have difficulty roaming in some markets.

THERE IS NO UNIFORM SIGNAL TRANSMISSION TECHNOLOGY AND IF WE DECIDE TO USE OTHER
TECHNOLOGIES  IN THE FUTURE,  THIS  DECISION  COULD  SUBSTANTIALLY  INCREASE OUR
EQUIPMENT EXPENDITURES TO REPLACE THE TECHNOLOGY USED ON OUR NETWORK.

     The wireless  telecommunications industry is experiencing evolving industry
standards.  We have employed code division  multiple  access (CDMA)  technology,
which is the digital wireless  communications  technology selected by Sprint for
its network.  CDMA may not provide the advantages  expected by us and by Sprint.
In  addition  to  CDMA,  there  are  two  other  principal  signal  transmission
technologies,  time division  multiple  access,  or TDMA, and global systems for
mobile communications,  or GSM. These three signal transmission technologies are
not  compatible  with  each  other.  If one of  these  technologies  or  another
technology becomes the preferred  industry standard,  we may be at a competitive
disadvantage and competitive  pressures may require Sprint to change its digital
technology  which,  in turn,  may  require us to make  changes at  substantially
increased costs.

WE MAY NOT RECEIVE AS MUCH SPRINT PCS ROAMING  REVENUE AS WE ANTICIPATE  AND OUR
NON-SPRINT PCS ROAMING REVENUE IS LIKELY TO BE LOW.

     We are paid a fee from Sprint or a PCS affiliate of Sprint for every minute
that a Sprint PCS  subscriber  based outside of our territory  uses our network.
Similarly,  we pay a fee to Sprint  PCS or a PCS  affiliate  of Sprint for every
minute that our customers use the Sprint PCS network outside our territory.  Our
customers may use the Sprint PCS network  outside our territory more  frequently
than we anticipate,  and Sprint PCS subscribers  based outside our territory may
use our network less frequently than we anticipate.  As a result, we may receive
less Sprint PCS roaming revenue in the aggregate, than we previously anticipated
or we may have to pay more  Sprint PCS  roaming  fees in the  aggregate  than we
anticipate.  The fee for each Sprint PCS roaming  minute used was decreased from
$0.20 per minute  before  June 1, 2001,  to $0.15 per minute  effective  June 1,
2001, and further  decreased to $0.12 per minute effective  October 1, 2001. The
Sprint PCS roaming rate was changed to $0.10 per minute in 2002. After 2002, the
rate will be changed to "a fair and reasonable  return."  Sprint has notified us
that it intends to reduce the  reciprocal  roaming  rate to $0.058 per minute of
use in 2003. As a result,  we may receive less Sprint PCS roaming revenue in the
aggregate,  than we  previously  anticipated.  Furthermore,  we do not expect to
receive substantial non-Sprint PCS roaming revenue.


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<PAGE>

IF SPRINT PCS CUSTOMERS ARE NOT ABLE TO ROAM INSTANTANEOUSLY OR EFFICIENTLY ONTO
OTHER WIRELESS NETWORKS, WE MAY SUFFER A REDUCTION IN OUR REVENUES AND NUMBER OF
CUSTOMERS.

     The Sprint PCS network  operates at a different  frequency  and uses or may
use a different  signal  transmission  technology  than many analog cellular and
other digital systems. To access another provider's analog cellular, TDMA or GSM
digital  system when outside the territory  served by the Sprint PCS network,  a
Sprint  PCS  customer  is  required  to  utilize a  dual-band/dual-mode  handset
compatible with that provider's system. Generally,  because  dual-band/dual-mode
handsets incorporate two radios rather than one, they are more expensive, larger
and heavier than  single-band/single-mode  handsets. The Sprint PCS network does
not allow for call hand-off  between the Sprint PCS network and another wireless
network, so a customer must end a call in progress on the Sprint PCS network and
initiate a new call when outside the territory served by the Sprint PCS network.
In addition,  the quality of the service provided by a network provider during a
roaming call may not approximate the quality of the service  provided by Sprint.
The price of a roaming call may not be competitive with prices of other wireless
companies for roaming calls,  and Sprint customers may not be able to use Sprint
PCS advanced  features,  such as voicemail  notification,  while roaming.  These
roaming  issues may cause us to suffer a reduction in our revenues and number of
customers.

PARTS OF OUR TERRITORIES  HAVE LIMITED  LICENSED  SPECTRUM,  WHICH MAY ADVERSELY
AFFECT THE QUALITY OF OUR SERVICE.

     In the majority of our markets,  Sprint has licenses  covering 20 MHz or 30
MHz of spectrum.  However,  Sprint has licenses covering only 10 MHz in parts of
our  territory  covering  approximately  3.8  million  residents  out of a total
population of over 10.2 million  residents.  In the future,  as our customers in
those areas increase in number,  this limited licensed  spectrum may not be able
to accommodate  increases in call volume and may lead to increased dropped calls
and may limit our ability to offer enhanced services.

NON-RENEWAL  OR  REVOCATION  BY  THE  FCC  OF  THE  SPRINT  PCS  LICENSES  WOULD
SIGNIFICANTLY  HARM OUR  BUSINESS  BECAUSE WE WOULD NO LONGER  HAVE THE RIGHT TO
OFFER WIRELESS SERVICE THROUGH OUR NETWORK.

     We are dependent on Sprint's PCS licenses, which are subject to renewal and
revocation  by the FCC.  Sprint's PCS licenses in many of our  territories  will
expire as early as 2005 but may be renewed for additional  ten-year terms. There
may be opposition to renewal of Sprint's PCS licenses upon their  expiration and
the  Sprint  PCS  licenses  may not be  renewed.  The FCC has  adopted  specific
standards  to apply to PCS license  renewals.  For  example,  if Sprint does not
demonstrate  to  the  FCC  that  Sprint  has  met  the  five-year   construction
requirements for each of its PCS licenses,  it can lose those licenses.  Failure
to comply with these  standards in our territory  could cause the  imposition of
fines on Sprint by the FCC or the  revocation  or  forfeiture  of the Sprint PCS
licenses for our territory,  which would  prohibit us from providing  service in
our markets.

IF THE SPRINT PCS  AGREEMENTS  DO NOT COMPLY WITH FCC  REQUIREMENTS,  SPRINT MAY
TERMINATE  THE SPRINT PCS  AGREEMENTS,  WHICH COULD  RESULT IN OUR  INABILITY TO
PROVIDE SERVICE.

     The FCC  requires  that  licensees  like Sprint  maintain  control of their
licensed spectrum and not delegate control to third-party  operators or managers
like us.  Although the Sprint PCS  agreements  reflect an  arrangement  that the
parties  believe  meets the FCC  requirements  for licensee  control of licensed
spectrum, we cannot be certain the FCC will agree with us. If the FCC determines
that the Sprint PCS  agreements  need to be modified  to  increase  the level of
licensee  control,  we have agreed with Sprint to use our best efforts to modify
the Sprint PCS agreements to comply with applicable law. If we cannot agree with
Sprint to modify the  Sprint  PCS  agreements,  they may be  terminated.  If the
Sprint PCS agreements are terminated, we would no longer be a part of the Sprint
PCS network and we would have extreme difficulty in conducting our business.

WE MAY NEED MORE CAPITAL THAN WE CURRENTLY  ANTICIPATE TO COMPLETE THE BUILD-OUT
AND UPGRADE OF OUR NETWORK,  AND A DELAY OR FAILURE TO OBTAIN ADDITIONAL CAPITAL
COULD DECREASE OUR REVENUES.

     The completion of our network build-out will require  substantial  capital.
Additional funds would be required in the event of:

     o    significant departures from our current business plan;

     o    unforeseen delays, cost overruns, unanticipated expenses; or


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<PAGE>


     o    regulatory, engineering design and other technological changes.

     For example,  it is possible that we will need substantial funds if we find
it necessary or desirable to overbuild the territory  currently  served  through
our  arrangements  with  the  Alliances.  Due to our  highly  leveraged  capital
structure,  additional financing may not be available or, if available,  may not
be obtained on a timely basis or on terms acceptable to us or within limitations
permitted  under our  existing  debt  covenants.  Failure  to obtain  additional
financing,  should  the  need  for it  develop,  could  result  in the  delay or
abandonment of our development and expansion plans, and we may be unable to fund
our ongoing operations.

BECAUSE SPRINT HAS RECENTLY REQUIRED US TO UPGRADE OUR NETWORK TO PROVIDE "THIRD
GENERATION" TECHNOLOGY, WE WILL FACE ADDITIONAL CAPITAL EXPENSES.

     The wireless  industry is seeking to implement new "third  generations," or
"3G", technology. Sprint has selected a version of 3G technology (1XRTT) for its
own networks and required us to upgrade our network to provide  those  services.
We currently  estimate the network upgrade to 1XRTT will cost  approximately $35
million, but actual costs could exceed this estimate. Sprint launched the new 3G
technology  in August  2002.  We  participated  in that launch  along with other
Sprint PCS affiliates. We still have additional expenditures pending to complete
the full  implementation of 3G in all of our markets. If other wireless carriers
implement  their  3G  upgrades  on a more  rapid  timetable,  or on a more  cost
efficient basis, or on a more advanced  technology  basis, we will likely suffer
competitive  disadvantages in our markets.  While there are potential advantages
with  3G  technology,   such  as  increased   network  capacity  and  additional
capabilities for wireless data applications,  the technology has not been proven
in  the  marketplace   and  has  the  risks  inherent  in  other   technological
innovations.

     Recently,  Sprint has sought to increase  service fees during the remainder
of 2002 and beyond in connection with its development of 3G-related  back-office
systems and platforms.  The Company,  along with other PCS affiliates of Sprint,
is currently  disputing the validity of Sprint's  right to pass through this fee
to the affiliates.  If this dispute is resolved unfavorably to the Company, then
Horizon PCS will incur additional expenses.

UNAUTHORIZED  USE OF OUR  NETWORK  AND OTHER  TYPES OF FRAUD  COULD  DISRUPT OUR
BUSINESS AND INCREASE OUR COSTS.

     We will likely  incur costs  associated  with the  unauthorized  use of our
network,  including  administrative and capital costs associated with detecting,
monitoring  and reducing the incidence of fraud.  Fraud impacts  interconnection
costs, capacity costs, administrative costs, fraud prevention costs and payments
to other carriers for unbillable  fraudulent  roaming.  Although we believe that
Sprint has  implemented  appropriate  controls to  minimize  the effect to us of
fraudulent usage, our efforts may not be successful.

EXPANDING OUR TERRITORY MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

     As part of our business  strategy,  we may expand our territory through the
grant of additional markets from Sprint or through  acquisitions of other Sprint
PCS  affiliates.   We  will  evaluate   strategic   acquisitions  and  alliances
principally  relating to our current operations.  These transactions may require
the approval of Sprint and commonly involve a number of risks, including:

     o    difficulty assimilating acquired operations and personnel;

     o    diversion of management attention;

     o    disruption of ongoing business;

     o    inability to retain key personnel;

     o    inability to successfully  incorporate acquired assets and rights into
          our service offerings;

     o    inability to maintain  uniform  standards,  controls,  procedures  and
          policies; and

     o    impairment of relationships with employees, customers or vendors.


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<PAGE>


     Failure to overcome these risks or any other problems  encountered in these
transactions could have a material adverse effect on our business. In connection
with these  transactions,  we may also issue  additional  equity  securities and
incur additional debt.

THE SPRINT PCS AGREEMENTS AND OUR RESTATED CERTIFICATE OF INCORPORATION  INCLUDE
PROVISIONS  THAT MAY  DISCOURAGE,  DELAY OR RESTRICT  ANY SALE OF OUR  OPERATING
ASSETS OR COMMON STOCK TO THE POSSIBLE DETRIMENT OF OUR NOTEHOLDERS.

     The Sprint PCS agreements restrict our ability to sell our operating assets
and common  stock.  Generally,  Sprint  must  approve a change of control of our
ownership and consent to any assignment of the Sprint PCS agreements. The Sprint
PCS  agreements  also give Sprint a right of first  refusal if we decide to sell
the  operating  assets of our Bright PCS markets to a third party.  In addition,
provisions of our restated  certificate of  incorporation  could also operate to
discourage, delay or make more difficult a change in control of our company. For
example, our restated certificate of incorporation provides for:

     o    two classes of common stock,  with our class B common stock having ten
          votes per share;

     o    the issuance of preferred stock without stockholder approval; and

     o    a classified board, with each board member serving a three-year term.

     The  restrictions  in the Sprint PCS  agreements  and the provisions of our
restated certificate of incorporation could discourage any sale of our operating
assets or common stock.

HORIZON  TELCOM  WILL BE ABLE TO  CONTROL  THE  OUTCOME OF  SIGNIFICANT  MATTERS
PRESENTED TO  STOCKHOLDERS  AS A RESULT OF ITS OWNERSHIP  POSITION,  WHICH COULD
POTENTIALLY IMPAIR OUR ATTRACTIVENESS AS A TAKEOVER TARGET.

     Horizon Telcom  beneficially  owns  approximately  56.3% of our outstanding
common stock on fully diluted  basis as of December 31, 2002.  In addition,  the
shares  held by  Horizon  Telcom  are class B shares,  which  have ten votes per
share.  The class A shares  have only one vote per share.  As a result,  Horizon
Telcom holds approximately 83.1% of the voting power on a fully diluted basis at
December  31,  2002.  Horizon  Telcom will have the voting  power to control the
election of our board of directors  and it will be able to cause  amendments  to
our restated certificate of incorporation or our restated bylaws. Horizon Telcom
also may be able to cause changes in our business  without  seeking the approval
of any other party.  These changes may not be to the advantage of our company or
in the best interest of our other  stockholders or the holders of our notes. For
example,  Horizon Telcom will have the power to prevent, delay or cause a change
in control of our company and could take other  actions  that might be favorable
to Horizon Telcom, but not necessarily to other stockholders.  This may have the
effect of  delaying or  preventing  a change in control.  In  addition,  Horizon
Telcom is  controlled  by members of the McKell  family,  who  collectively  own
approximately  60.7% of the voting interests of Horizon Telcom.  Therefore,  the
McKell family,  acting as a group, may be able to exercise indirect control over
us.

WE MAY FACE  CONFLICTS  OF  INTEREST  WITH  HORIZON  TELCOM,  WHICH MAY HARM OUR
BUSINESS.

     Conflicts of interest may arise between Horizon Telcom, and us or its other
affiliates,  in  areas  relating  to past,  ongoing  and  future  relationships,
including:

     o    corporate opportunities;

     o    tax and intellectual property matters;

     o    potential acquisitions;

     o    financing transactions,  sales or other dispositions by Horizon Telcom
          of shares of our common stock held by it; and

     o    the  exercise  by  Horizon  Telcom  of  its  ability  to  control  our
          management and affairs.


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<PAGE>


     Horizon  Telcom  controls  approximately  83.1% of the voting  power of our
shares on a fully diluted basis. Horizon Telcom is engaged in a diverse range of
telecommunications-related  businesses,  such as local  telephone  services  and
Internet  services,  and these  businesses  may have  interests that conflict or
compete in some manner with our business.  Horizon Telcom is under no obligation
to share any  future  business  opportunities  available  to it with us,  unless
Delaware law requires it to do so. Any  conflicts  that may arise between us and
Horizon Telcom or any of its affiliates or any loss of corporate  opportunity to
Horizon  Telcom that may  otherwise be available to us may impact our  financial
condition or results of operations because these conflicts of interest or losses
of corporate  opportunities  could result in a loss of customers and, therefore,
business.  Because  Horizon  Telcom  will be able to control the outcome of most
conflicts upon which stockholders could vote and because it will have the voting
power to control our board of  directors,  conflicts  may not be resolved in our
favor.

PRESENT AND FUTURE TRANSACTIONS WITH HORIZON TELCOM MAY BE ON TERMS THAT ARE NOT
AS FAVORABLE AS COULD BE OBTAINED FROM THIRD PARTIES.

     In the  past,  we  have  entered  into  transactions  with  Horizon  Telcom
including  the leasing of towers by Horizon  Telcom to us and the  advancing  of
cash  to  us to  finance  our  operations.  In  addition,  Horizon  Services,  a
subsidiary of Horizon Telcom  provides  administrative  services to us including
finance and accounting services,  computer access and human resources.  Although
these  transactions  were on terms that we  believe  are fair,  because  Horizon
Telcom  currently owns 56.3% of our outstanding  common stock on a fully diluted
basis,  third  parties  with  whom we  wish  to  enter  into  agreements  or the
marketplace in general may not perceive these  transactions  with Horizon Telcom
to be fair.  In addition,  because  Horizon  Telcom has the power to control our
board  of  directors,  we may not be able to  renew  these  agreements  on terms
favorable to us.

WE MAY  EXPERIENCE A HIGH RATE OF CUSTOMER  TURNOVER,  WHICH WOULD  INCREASE OUR
COSTS OF OPERATIONS AND REDUCE OUR REVENUE AND PROSPECTS FOR GROWTH.

     Our strategy to minimize  customer  turnover,  commonly known as churn, may
not be  successful.  As a result  of  customer  turnover,  we lose  the  revenue
attributable  to these  customers  and  increase the costs of  establishing  and
growing our customer  base.  The PCS industry has  experienced  a higher rate of
customer turnover as compared to cellular industry averages. We have experienced
an increase in churn during 2002, primarily caused by NDASL customers' inability
to pay for services  billed.  Current and future  strategies to reduce  customer
churn may not be successful.

     The rate of customer turnover is affected by the following factors, several
of which are not within our ability to address:

     o    credit worthiness of customers;

     o    extent of network coverage;

     o    reliability  issues such as blocked  calls,  dropped calls and handset
          problems;

     o    non-use of phones;

     o    change of employment;

     o    a lack of affordability;

     o    price competition;

     o    Sprint's PCS customer credit policies;

     o    customer care concerns; and

     o    other competitive factors.


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<PAGE>


     A high rate of customer  turnover could  adversely  affect our  competitive
position,  results  of  operations  and our costs of,  or  losses  incurred  in,
obtaining new customers, especially because we subsidize some of the cost of the
handsets purchased by our customers.

OUR ALLOWANCE FOR DOUBTFUL ACCOUNTS MAY NOT BE SUFFICIENT TO COVER UNCOLLECTIBLE
ACCOUNTS.

     On an ongoing basis, we estimate the amount of customer receivables that we
may not collect to reflect  the  expected  loss on such  accounts in the current
period.  However,  our allowance for doubtful accounts may underestimate  actual
unpaid receivables for various reasons, including:

     o    adverse changes in our churn rate exceeding our estimates;

     o    adverse changes in the economy  generally  exceeding our expectations;
          or

     o    unanticipated changes in Sprint's PCS products and services.

     If our allowance for doubtful  accounts is  insufficient to cover losses on
our receivables, our business, financial position or results of operations could
be materially adversely affected.

BECAUSE THE WIRELESS  INDUSTRY HAS  EXPERIENCED  HIGHER  CUSTOMER  ADDITIONS AND
HANDSET  SALES IN THE FOURTH  CALENDAR  QUARTER AS  COMPARED  TO THE OTHER THREE
CALENDAR  QUARTERS,  A FAILURE BY US TO ACQUIRE  SIGNIFICANTLY MORE CUSTOMERS IN
THE FOURTH QUARTER COULD HAVE A DISPROPORTIONATE  NEGATIVE EFFECT ON OUR RESULTS
OF OPERATIONS.

     The wireless industry is historically  dependent on fourth calendar quarter
results. Our overall results of operations could be significantly  reduced if we
have a worse than expected fourth calendar quarter for any reason, including the
following:

     o    our inability to match or beat pricing plans offered by competitors;

     o    our failure to adequately promote Sprint's PCS products,  services and
          pricing plans;

     o    our inability to obtain an adequate supply or selection of handsets;

     o    a  downturn  in the  economy  of  some  or all of the  markets  in our
          territory; or

     o    a generally poor holiday shopping season.

REGULATION BY GOVERNMENT AGENCIES MAY INCREASE OUR COSTS OF PROVIDING SERVICE OR
REQUIRE US TO CHANGE OUR SERVICES, WHICH COULD IMPAIR OUR FINANCIAL PERFORMANCE.

     The  licensing,  construction,  use,  operation,  sale and  interconnection
arrangements  of wireless  telecommunications  systems are  regulated to varying
degrees by the FCC, the Federal Aviation  Administration  and,  depending on the
jurisdiction,  state and  local  regulatory  agencies  and  legislative  bodies.
Adverse  decisions  regarding these  regulatory  requirements  could  negatively
impact our operations and our cost of doing business.

USE OF HAND-HELD  PHONES MAY POSE HEALTH RISKS,  REAL OR PERCEIVED,  WHICH COULD
RESULT IN THE  REDUCED USE OF OUR  SERVICES OR  LIABILITY  FOR  PERSONAL  INJURY
CLAIMS.

     Media reports have suggested that radio  frequency  emissions from wireless
handsets may be linked to various health  problems,  including  cancer,  and may
interfere with various  electronic  medical devices,  including hearing aids and
pacemakers.  Concerns  over radio  frequency  emissions  may  discourage  use of
wireless handsets or expose us to potential  litigation.  Any resulting decrease
in demand for our services,  or costs of  litigation  and damage  awards,  could
impair our ability to profitably operate our business


                                       54
<PAGE>


REGULATION BY GOVERNMENT OR POTENTIAL LITIGATION RELATING TO THE USE OF WIRELESS
PHONES WHILE DRIVING COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS

     Some studies have  indicated  that some  aspects of using  wireless  phones
while driving may impair  drivers'  attention in certain  circumstances,  making
accidents  more likely.  These  concerns  could lead to  litigation  relating to
accidents,  deaths  or  serious  bodily  injuries,  or to  new  restrictions  or
regulations on wireless phone use, any of which also could have material adverse
effects  on our  results  of  operations.  A number  of U.S.  states  and  local
governments  are  considering or have recently  enacted  legislation  that would
restrict or prohibit the use of a wireless  handset  while driving a vehicle or,
alternatively,  require the use of a hands-free  telephone.  Legislation of this
sort, if enacted, would require wireless service providers to provide hands-free
enhanced services, such as voice activated dialing and hands-free speaker phones
and headsets,  so that they can keep generating  revenue from their subscribers,
who make many of their  calls  while on the road.  If we are  unable to  provide
hands-free  services  and products to our  subscribers  in a timely and adequate
fashion,  the volume of  wireless  phone usage would  likely  decrease,  and our
ability to generate revenues would suffer.



                                       55
<PAGE>



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We do not engage in commodity  futures trading  activities and do not enter
into derivative financial  instruments for speculative trading purposes. We also
do not engage in  transactions  in foreign  currencies  that would  expose us to
additional  market  risk.  We manage the interest  rate risk on our  outstanding
long-term debt through the use of fixed and variable-rate debt and interest rate
swaps.

     In the normal course of business,  our  operations  are exposed to interest
rate  risk.  Our  primary  interest  rate  risk  exposure  relates  to  (i)  the
variable-rate  secured  credit  facility,  (ii) our  ability  to  refinance  our
fixed-rate  discount and senior notes at maturity at market rates, and (iii) the
impact of  interest  rate  movements  on our  ability to meet  interest  expense
requirements and meet financial covenants under our debt instruments.

     In the first  quarter of 2001,  we entered  into a two-year  interest  rate
swap, effectively fixing $25.0 million of term loan B borrowed under the secured
credit facility.  In the third quarter of 2001, we entered into another two-year
interest rate swap,  effectively fixing the remaining $25.0 million of term loan
B. The table below compares  current market rates on the balances subject to the
swap agreements:

           (Dollars in millions)                  At December 31, 2002
                                        ---------------------------------------
                                           Balance   Market rate    Swap rate
                                        ------------ ------------  ------------
           Swap 1.................           $25.0       6.33%        9.40%
           Swap 2.................           $25.0       6.33%        7.65%

     Since  our swap  interest  rates  are  currently  greater  than the  market
interest rates on our underlying  debt,  our results from  operations  currently
reflect a higher  interest  expense  than had we not  hedged  our  position.  At
December  31,  2002,  the  Company  recorded  approximately  $395,000  in  other
comprehensive losses on the balance sheet.

     While we cannot predict our ability to refinance existing debt, we continue
to evaluate our interest rate risk on an ongoing  basis.  If we do not renew our
swaps,  or, if we do not hedge  incremental  variable-rate  borrowings under our
secured credit  facility,  we will increase our interest rate risk,  which could
have a  material  impact  on our  future  earnings.  As of  December  31,  2002,
approximately  83% of our long-term  debt is fixed rate or is variable rate that
has been swapped under fixed-rate hedges, thus reducing our exposure to interest
rate risk.  Currently,  a 100 basis  point  increase  in  interest  rates  would
increase our interest expense approximately $1.1 million.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Financial  statements  and  supplementary  data  required  by this item are
submitted as a separate  section of this annual report on Form 10-K.  See "Index
to Consolidated Financial Statements" commencing on page F-1 herein.

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

     Horizon  PCS  engaged  the  services  of  KPMG  LLP  ("KPMG")  as  its  new
independent  auditors to replace Arthur  Andersen LLP,  effective June 26, 2002.
For  additional  information,  see Horizon PCS' Current Report on Form 8-K dated
June 28, 2002.



                                       56
<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The following are our directors and executive officers:

<TABLE>
<CAPTION>
    <S>                            <C>    <C>

     NAME                          AGE     POSITION
     ----                          ---     --------
     William A. McKell.........    42      Chairman of the Board, President and
                                             Chief Executive Officer
     Peter M. Holland..........    37      Director, Chief Financial Officer
     Alan G. Morse.............    44      Chief Operating Officer
     Joseph E. Corbin..........    47      Vice President, Engineering and Operations
     Joseph J. Watson..........    37      Vice President, Sales and Marketing
     Monesa S. Skocik..........    41      Vice President, External Affairs
     Robert A. Katz............    36      Director
     Thomas McKell.............    67      Director
     Lonnie D. Pedersen........    45      Director
     Eric L. Zinterhofer.......    31      Director
</TABLE>

     William A. McKell has served as Chairman of the Board,  President and Chief
Executive  Officer  of  Horizon  PCS since its  inception  in April 2000 and has
served as  President,  Chief  Executive  Officer  and  Chairman  of the Board of
Horizon  Personal  Communications  since May 1996 and as President of Bright PCS
since  its   formation  in  September   1999.   Mr.   McKell  has  14  years  of
telecommunications  experience.  Mr. McKell served as Vice  President of Network
Services  from January 1996 to April 1996 and Director of Network  Services from
August  1994  to  December  1995  for  The  Chillicothe   Telephone  Company,  a
traditional local telephone  company.  Mr. McKell is a graduate of Ohio Northern
University and is the son of Thomas McKell.

     Peter M. Holland has served as the Chief  Financial  Officer of Horizon PCS
since its inception in April 2000 and has served as the Chief Financial  Officer
of Horizon Personal  Communications  since November 1999. Mr. Holland has served
as Vice  President  of Finance and  Treasurer of Horizon  Telcom since  November
1999. Mr.  Holland has been a member of the  management  committee of Bright PCS
since its  formation  in  September  1999.  Mr.  Holland  has nearly 14 years of
telecommunications experience. From May 1996 to December 1999, Mr. Holland was a
principal  and owner of The  Pinnacle  Group  located  in  Langley,  Washington.
Pinnacle provides strategic business planning and regulatory consulting services
to independent wireless and wireline companies,  including Horizon PCS. Prior to
joining   Pinnacle   in  May  1996,   Mr.   Holland  was  a  manager  in  Nextel
Communications'  Business Development and Corporate Strategy groups. Mr. Holland
started his career in telecommunications with Ernst & Young's telecommunications
consulting group and was a Certified Public Accountant. Mr. Holland received his
Bachelor  of  Business  Administration  with an  accounting  concentration  from
Pacific Lutheran University.

     Alan G. Morse was appointed Chief Operating Officer of the Company on March
1, 2002.  Previously,  Mr.  Morse was chief  operating  officer  of  TelePacific
Communications,  Inc., an integrated  telecommunications  provider  operating in
California and Nevada. Prior to that, he was area vice president for Sprint PCS,
where he managed the buildout,  launch and operation of Sprint PCS businesses in
Cleveland,  Cincinnati,  Columbus  and  Indianapolis.  He  has  held  management
positions with Nextel Communications, Inc., Lightbridge, Inc., and New Par, Inc.
(Cellular  One of Ohio and  Michigan).  Mr.  Morse  earned a Bachelor of Arts in
social and  behavioral  sciences  and a minor in  marketing  from The Ohio State
University.

     Joseph E. Corbin has served as Vice  President,  Engineering and Operations
since June 2001. He previously served as Vice President of Technology of Horizon
PCS from its  inception  in April  2000 and of Horizon  Personal  Communications
since May 1996. He is responsible for the engineering,  build-out and operations
of our PCS network.  Mr. Corbin also was Manager of  Information  Technology for
The Chillicothe Telephone Company and then Horizon Services from January 1993 to
April  2000  and  has  been  in the  telecommunications  industry  for 23  years
including  various  management  and  technical   positions  at  The  Chillicothe
Telephone Company.

     Joseph J. Watson has served as Vice President of Sales, since October 2002.
Mr. Watson is currently  responsible for all sales efforts for the company. From
May 1996 to October 2002,  Mr. Watson held various senior  management  positions
with Horizon Personal Communications,  including the positions of Vice President
of Sales and Marketing,  Vice President of Business Development,  Vice President


                                       57
<PAGE>

of  Administration,  Director  of Finance and  General  Manager -- Horizon  Long
Distance. Mr. Watson has been in the  telecommunications  industry for more than
twelve years including various management positions at The Chillicothe Telephone
Company and began his career with Cincinnati  Bell. Mr. Watson holds a bachelors
degree in Communication Systems Management and an MBA from Ohio University..

     Monesa S.  Skocik has served as a Vice  President  of Horizon PCS since its
inception  in April 2000 and of Horizon  Personal  Communications  since  August
1999.  Ms.  Skocik has over four  years of  telecommunications  experience.  Ms.
Skocik is responsible for our  coordination,  management and  implementation  of
Sprint PCS new  product  launches,  compliance  monitoring  and other  corporate
customer service functions.  Since March 1997, Ms. Skocik held various positions
with  Horizon  Personal  Communications,  including  Vice  President of Customer
Operations,  Director-Customer  Service and  Manager-Customer  Care. From August
1995  to  February  1997,  Ms.  Skocik  was  the   Administrator  for  Riverside
Professional  Corporation,  Inc., a physician  medical  facility,  where she was
responsible  for all  operational  aspects  of the  practice.  Ms.  Skocik  is a
graduate  of The Ohio  State  University  and  received  a  master's  degree  in
Communications from Ohio University.

     Robert A. Katz was  appointed a director of Horizon PCS in September  2000.
Mr. Katz is also a director of Vail  Resorts,  Inc. and  Sprectrasite,  Inc. Mr.
Katz has been  associated  with Apollo  Advisors  since 1990.  Apollo  Advisors,
together with  affiliated  investment  managers,  manages the Apollo  investment
funds,  including  Apollo  Investment Fund IV, LP. Mr. Katz was appointed to the
board pursuant to the terms of the Investors Rights and Voting Agreement entered
into in connection  with the sale of  convertible  preferred  stock in September
2000. See "ITEM 13. Certain  Relationships and Related  Transactions."  Mr. Katz
received a Bachelor of Science in Economics from the University of Pennsylvania.

     Thomas McKell has served as the President and a Director of Horizon  Telcom
since its inception in 1996 and of The Chillicothe Telephone Company since 1988.
Mr. McKell has 46 years of telecommunications experience and received a Bachelor
of Science in  Electrical  Engineering.  Mr.  McKell is the father of William A.
McKell.

     Lonnie D.  Pedersen has served as President  of Telephone  Service  Company
since 1993. Mr. Pedersen has 23 years of telecommunications experience. He began
his  career  in the Air Force and has since  held  management  positions  in the
independent  telephone  industry in Iowa and Ohio.  Mr.  Pedersen  has served as
President of the Rural Iowa Independent  Telephone  Association and is currently
on the board of the Ohio  Telecommunications  Industry  Association.  He is also
director  and  president  of Com Net, a  consortium  of  companies  that provide
Internet service (bright.net), long distance resale and other telecommunications
services.  Mr.  Pedersen  has served as a director of Minster  Bank, a community
bank based in Minster,  Ohio since 1995. Mr. Pedersen was appointed to the board
pursuant to the terms of our  agreement to purchase the  remaining 74% of Bright
PCS.  Prior to the Bright PCS  acquisition,  Mr.  Pedersen was Vice President of
Bright PCS and served as a member of the Bright PCS  management  committee.  Mr.
Pedersen  received  his Bachelor of Arts in business  administration  from Buena
Vista  University and has an associate degree in Technology from Fort Steilacoom
Community College.

     Eric L.  Zinterhofer  was  appointed  a director of Horizon PCS in November
2001. Mr. Zinterhofer is a principal of Apollo Advisors,  with which he has been
associated since 1998, and which,  together with affiliated investment managers,
manages the Apollo investment  funds,  including Apollo Investment Fund IV, L.P.
Prior to joining Apollo, he was a member of the corporate finance  department at
Morgan Stanley and Co. and the investment  management group at J.P. Morgan.  Mr.
Zinterhofer  also serves on the board of directors of Clark Retail  Enterprises,
Inc. Mr.  Zinterhofer  was  appointed to the board  pursuant to the terms of the
Investors Rights and Voting  Agreement  entered into in connection with the sale
of  convertible  preferred  stock in  September  2000.  See  "ITEM  13.  Certain
Relationships and Related  Transactions." Mr. Zinterhofer holds Bachelor of Arts
degrees in Economics and European  History from the University of  Pennsylvania.
He received his Masters in Business Administration from Harvard University.

BOARD OF DIRECTORS

     There are  presently  six  members of the board of  directors.  Pursuant to
Horizon PCS'  Certificate  of  Incorporation,  the board of directors is divided
into  three  classes  of  directors  -- Class I,  Class II and Class  III.  Eric


                                       58
<PAGE>

Zinterhofer serves as Class I. Peter M. Holland and Thomas McKell serve as Class
II directors.  Robert A. Katz,  William A. McKell and Lonnie  Pedersen  serve as
Class III  directors.  Directors  in each  class  will serve for a term of three
years, or until their successors have been elected and qualified.  Directors may
be compensated at the discretion of the board of directors.  Executive  officers
are  ordinarily  elected  annually and serve at the  discretion  of the board of
directors. On February 20, 2003, Phoebe McKell resigned as a class I director.

BOARD COMMITTEES

     The Company has an audit committee which is responsible for recommending to
the board of directors the engagement of our independent  auditors and reviewing
with the independent  auditors the scope and results of the audits, our internal
accounting controls,  audit practices and the professional services furnished by
the independent auditors. The current members of the audit committee are Messrs.
Pedersen,  Holland  and  Zinterhofer  .  Horizon  will  maintain  at  least  two
independent directors.

LIMITATION ON LIABILITY AND INDEMNIFICATION

     Our certificate of  incorporation  limits the liability of directors to the
maximum  extent  permitted by Delaware  law. Our  certificate  of  incorporation
provides that we shall  indemnify  our directors and executive  officers and may
indemnify  our other  officers and  employees and agents and other agents to the
fullest extent permitted by law. Our certificate of  incorporation  also permits
us to secure  insurance  on behalf of any officer,  director,  employee or other
agent for any liability arising out of actions in his or her official capacity.

     We have entered into  agreements to indemnify our directors and officers in
addition to  indemnification  provided for in our certificate of  incorporation.
These  agreements  indemnify our  directors  and officers for certain  expenses,
including attorneys' fees,  judgments,  fines and settlement amounts incurred by
any of these persons in any action or proceeding,  including any action by us or
in our right,  arising out of that person's services as a director or officer of
ours,  any  subsidiary  of ours, or any other company or enterprise to which the
person  provides  services at our request.  In addition,  we have directors' and
officers'  insurance  providing  indemnification  for certain of our  directors,
officers and  employees  for these types of  liabilities.  We believe that these
provisions,  agreements  and  insurance  are  necessary  to  attract  and retain
qualified directors and officers.

     At present,  there is no pending  litigation  or  proceeding  involving any
director,  officer,  employee  or agent of ours  where  indemnification  will be
required  or  permitted.  We are  not  aware  of any  threatened  litigation  or
proceeding that might result in a claim for indemnification.

ITEM 11. EXECUTIVE COMPENSATION

     The  following  table  presents  summary  information  with  respect to the
compensation paid to our Chief Executive Officer and our four other highest paid
executive  officers  whose salary and bonus  exceeded  $100,000  during the year
ended December 31, 2002.

<TABLE>
<CAPTION>
<S>                             <C>          <C>         <C>             <C>                      <C>
                                                                              LONG-TERM
                                                                             COMPENSATION
      NAME AND PRINCIPAL                       ANNUAL COMPENSATION       SECURITIES UNDERLYING          ALL OTHER
          POSITION                  YEAR       SALARY($)   BONUS($)           OPTIONS(#)              COMPENSATION($)
----------------------------    -----------  ----------- -----------     ----------------------   --------------------
William A. McKell...........        2002     $  207,500  $  50,103                     --          $    13,075 (1)
  Chairman of the Board,            2001        195,833     65,935                     --              116,885 (2)
    President and Chief             2000        154,167     21,458                     --               12,497 (3)
    Executive Officer

Peter M. Holland............        2002     $  181,562  $  43,819                     --          $    12,676 (5)
  Chief Financial Officer(4)        2001        170,833     57,479                     --              129,032 (6)
                                    2000        150,000     20,625                     --               11,971 (7)

Alan G. Morse...............        2002     $  150,000  $  36,627                200,000          $    10,193 (8)
  Chief Operating Officer           2001             --         --                     --                       --
                                    2000             --         --                     --                       --
</TABLE>


                                       59
<PAGE>


<TABLE>
<CAPTION>
<S>                             <C>          <C>         <C>             <C>                      <C>
                                                                              LONG-TERM
                                                                             COMPENSATION
      NAME AND PRINCIPAL                       ANNUAL COMPENSATION       SECURITIES UNDERLYING          ALL OTHER
          POSITION                  YEAR       SALARY($)   BONUS($)           OPTIONS(#)              COMPENSATION($)
----------------------------    -----------  ----------- -----------     ----------------------   --------------------
Joseph E. Corbin............        2002     $  129,688  $  33,752                     --          $    8,631  (9)
  Vice President,                   2001        121,667     44,428                     --             126,797 (10)
    Engineering/Operations          2000        105,000     14,438                     --              20,254 (11)

Monesa S. Skocik............        2002     $  129,688  $  33,119                     --          $   11,171 (12)
  Vice President,                   2001        121,667     40,733                     --             126,501 (13)
    External Affairs                2000        105,000     14,438                     --              12,692 (14)

</TABLE>
----------

(1)  Includes a yearly car  allowance  of $9,368  and a 401(k)  contribution  of
     $3,707.
(2)  Includes an award of Horizon  Telcom  shares valued at $100,900 at the date
     of the award,  a yearly car allowance of $10,985 and a 401(k)  contribution
     of $5,000.
(3)  Includes a yearly car  allowance  of $7,784  and a 401(k)  contribution  of
     $4,713.
(4)  Mr.  Holland became Chief  Financial  Officer on November 17, 1999, but did
     not receive any  compensation in 1999. See "ITEM 13. Certain  Relationships
     and Related  Transactions"  for a discussion of consulting fees received by
     the Pinnacle Group, a company that was 50% owned by Mr.  Holland.  Pinnacle
     received consulting fees of $267,000 in 1999, $204,000 in 1998 and $419,000
     in 1997.
(5)  Includes a yearly car  allowance  of $8,103  and a 401(k)  contribution  of
     $4,573.
(6)  Includes an award of Horizon  Telcom  shares valued at $116,000 at the date
     of the award, a yearly car allowance of $7,892 and a 401(k) contribution of
     $5,140.
(7)  Includes a yearly car  allowance  of $7,578  and a 401(k)  contribution  of
     $4,393.
(8)  Includes a yearly car  allowance  of $6,443  and a 401(k)  contribution  of
     $3,750.
(9)  Includes a yearly car allowance of $8,631.
(10) Includes an award of Horizon  Telecom shares valued at $116,000 at the date
     of the award, a yearly car allowance of $7,839 and a 401(k) contribution of
     $2,958
(11) Includes a yearly car  allowance  of $9,981  and a 401(k)  contribution  of
     $10,273.
(12) Includes a yearly car  allowance  of $7,211  and a 401(k)  contribution  of
     $3,960.
(13) Includes an award of Horizon  Telcom  shares valued at $116,000 at the date
     of the award, a yearly car allowance of $6,807 and a 401(k) contribution of
     $3,694.
(14) Includes a yearly car  allowance  of $6,330  and a 401(k)  contribution  of
     $6,362.

     Grant of Options. During 2002, options were granted to Alan Morse. No stock
appreciation rights (SARs) have been granted by the Company. The following table
sets forth information regarding the grants of options in 2002:

                                 OPTION/SAR GRANTS IN LAST FISCAL YEAR (2002)
<TABLE>
<CAPTION>
<S>                                <C>          <C>          <C>          <C>          <C>              <C>
                                    NUMBER OF
                                   SECURITIES
                                   UNDERLYING    % OF TOTAL                              POTENTIAL REALIZABLE VALUE
                                   OPTIONS/     OPTIONS/SARS                             AT ASSUMED ANNUAL RATES OF
                                     SARS         GRANTED TO     EXERCISE               APPRECIATION FOR OPTION TERM
                                    GRANTED      EMPLOYEES IN     PRICE     EXPIRATION  -----------------------------
              NAME                    (#)        FISCAL YEAR      ($/SH)      DATE           5%($)          10%($)
 -------------------------------- ------------  ------------- ------------ ------------ -----------------------------
 Alan Morse......................   200,000         100%          $5.60      3/01/12      $704,362       $1,784,992

</TABLE>

2000 STOCK OPTION PLAN

     The 2000 Stock Option Plan has been  adopted by our board of directors  and
stockholders.  The option plan  permits the  granting  of both  incentive  stock
options and  nonqualified  stock options to employees.  The aggregate  number of
shares of common stock that may be issued  pursuant to options granted under the
option plan is 7,500,000  shares of class A common stock and 4,196,883 shares of
class B common stock,  subject to adjustments in the event of certain changes in
the  outstanding  shares of common stock.  On December 1, 1999, our  subsidiary,
Horizon Personal Communications, granted options to purchase 3,588,000 shares of
its class B common  stock  with an  exercise  price of  $0.1414  per share to 13
individuals  under its 1999 Stock Option Plan.  After we were  incorporated,  we
issued  options to replace those  initial  options,  on the same economic  terms
adjusted for the fact that Horizon Personal  Communications  was our subsidiary.
After  taking  into  account the  adjustment,  we issued  4,196,883  substituted
options on class B common  stock at an exercise  price of $0.1209.  In 2000,  we
granted  options  to  purchase  116,971  shares  of class A  common  stock at an
exercise price of $5.88 per share. In March,  2002,  Horizon PCS granted options
to purchase  shares of Horizon PCS' class A common stock at an exercise price of
$5.60 per share.



                                       60
<PAGE>

     The option  plan will be  administered  by our board of  directors  or by a
compensation  committee  appointed  by our  board of  directors,  which  will be
authorized,  subject to the  provisions of the option plan, to grant options and
establish   rules  and   regulations  as  it  deems  necessary  for  the  proper
administration  of the  option  plan  and to make  whatever  determinations  and
interpretations it deems necessary or advisable.

     An  incentive  option  may not have an  exercise  price  less than the fair
market value of the common stock on the date of grant or an exercise period that
exceeds ten years from the date of grant. In the case of option holders that own
more than 10% of Horizon PCS' stock,  the exercise price for an inactive  option
cannot be less than 110% of the fair  market  value of the  common  stock on the
date of grant and the exercise  period cannot exceed five years from the date of
grant.  Incentive  options are also subject to other limitations which allow the
option holder to qualify for favorable tax treatment.  Nonqualified  options may
have an exercise  price of less than,  equal to or greater  than the fair market
value of the underlying  common stock on the date of grant but are limited to an
exercise  period  of no  longer  than ten  years.  However,  we will  not  grant
non-qualified  options with an exercise price less than 85% of fair market value
of the common stock on the date of the grant.

     The board of directors or the  compensation  committee  will  determine the
persons to whom options will be granted and the terms,  provisions,  limitations
and performance  requirements of each option granted,  and the exercise price of
an option.

     An option will not be transferable except by will or by the laws of descent
or distribution or unless determined  otherwise by our board of directors or the
compensation committee.

     Unless previously exercised,  a vested option granted under the option plan
will terminate automatically:

     o    twelve months after the employee's termination of employment by reason
          of disability or death; and

     o    three months after an employee's termination of employment for reasons
          other than disability or death.

     The plan contains  provisions that give the  compensation  committee or our
board of directors or the acquiring  entity's  board of directors  discretion to
take specified actions if Horizon PCS is acquired,  unless the individual option
grants  provide  otherwise.  Those  actions  can include  the  authorization  to
purchase  option  grants  from  plan   participants,   or  make  adjustments  or
modifications to outstanding  options granted to protect and maintain the rights
and interests of the plan  participants or accelerate the vesting of outstanding
options.  To date, all  individual  option grants have provided that the options
will accelerate and become fully exercisable upon an acquisition of Horizon PCS.

     The board of directors  has  undertaken  not to grant  options  (other than
under the 2000 Stock  Option  Plan) with a term of longer than 5 years until the
class A common  stock is listed  on  either  the New York  Stock  Exchange,  the
American Stock Exchange, or the NASDAQ National Market.

     None of our named executive  officers exercised stock options in the fiscal
year ended  December  31,  2002.  The  following  table  sets forth  information
concerning the number and value of unexercised options held by each of our named
executive  officers on December  31,  2002.  There was no public  market for our
common stock as of December 31, 2002. Accordingly,  the fair market value of the
Company on December  31,  2002,  based on the  valuation  analysis  performed in
conjunction with SFAS 142, was assumed to be less than $0.12 per share.




                                       61
<PAGE>


                 AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2002
                          FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
<S>                                         <C>             <C>               <C>               <C>
                                                NUMBER OF SECURITIES               VALUE OF UNEXERCISED
                                               UNDERLYING UNEXERCISED                  IN-THE-MONEY
                                               OPTIONS AT YEAR END (#)            OPTIONS AT YEAR END ($)
  NAME                                       EXERCISABLE      UNEXERCISABLE     EXERCISABLE      UNEXERCISABLE
  ----                                      --------------- ----------------   ---------------- ---------------
  William A. McKell.....................        1,008,866           605,320     $         --     $          --
  Peter M. Holland......................        1,008,866           605,320               --                --
  Alan G. Morse.........................               --           200,000               --                --
  Joseph E. Corbin......................          153,011            35,310               --                --
  Monesa S. Skocik......................          153,011            35,310               --                --
</TABLE>

COMPENSATION OF DIRECTORS

     Currently,  we do not compensate our directors.  We do reimburse  directors
for their expenses incurred in connection with attending board meetings.

EMPLOYMENT AGREEMENTS

     We entered into employment  agreements with Mr. McKell, Mr. Holland and Mr.
Morse,  Horizon PCS' Chief Executive Officer,  Chief Financial Officer and Chief
Operating Officer, respectively. The employment agreements provide for an annual
base salary of $200,000 to Mr.  McKell,  $175,000 to Mr. Holland and $180,000 to
Mr. Morse beginning in 2002. In addition to their base salary,  Mr. McKell,  Mr.
Holland and Mr. Morse are eligible to receive an annual bonus up to 40% of their
base salary. In addition,  Mr. McKell, Mr. Holland and Mr. Morse are eligible to
participate in all of our employee benefit plans.

     The employment  agreements provide that Mr. McKell's,  Mr. Holland's or Mr.
Morse's  employment may be terminated  with or without cause,  as defined in the
agreements. If Mr. McKell, Mr. Holland or Mr. Morse is terminated without cause,
he is  entitled to receive 24 months of base  salary,  the vesting of all of his
stock  options  on the date of  termination  and 24 months of health  and dental
benefits. Under the employment agreements, Mr. McKell, Mr. Holland and Mr. Morse
have agreed to a restriction on their present and future  employment.  They have
agreed not to compete in the  business  of  wireless  telecommunications  either
directly or indirectly  within our markets while employed by us and for a period
of twelve months after termination of employment.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     For the year ended  December  31,  2002,  the entire  board of directors of
Horizon Personal Communications, Inc. determined executive compensation. None of
our  executive  officers  served as a  director  or  member of the  compensation
committee or other board committee  performing  equivalent  functions of another
corporation.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table  sets  forth  information  regarding  the  beneficial
ownership of our voting securities, as of December 31, 2002, by:

     o    each person who, to our knowledge,  is the  beneficial  owner of 5% or
          more of a class of our outstanding common stock;

     o    each of our directors;

     o    each of the executive officers; and

     o    all executive officers and directors as a group.





                                       62
<PAGE>



     Beneficial  ownership is determined  in  accordance  with Rule 13d-3 of the
Securities  Exchange Act. A person is deemed to be the  beneficial  owner of any
shares of common stock if that person has or shares  voting power or  investment
power with respect to the common stock,  or has the right to acquire  beneficial
ownership at any time within 60 days of the date of the table. "Voting power" is
the power to vote or direct the voting of shares and  "investment  power" is the
power to dispose or direct the disposition of shares.

<TABLE>
<CAPTION>
<S>                                    <C>           <C>          <C>           <C>          <C>
                                                 CLASS A                    CLASS B
                                              COMMON STOCK               COMMON STOCK
                                       -------------------------- --------------------------  PERCENTAGE OF TOTAL VOTING
NAME AND ADDRESS                          NUMBER        PERCENT      NUMBER        PERCENT     POWER (ALL CLASSES)(2)
----------------                       ------------  ------------ ------------  ------------  --------------------------
Horizon Telcom (1)...................           --         --      53,806,200       92.0%               87.5%
Apollo Management VI, L.P. (3).......   24,610,412       80.8%             --         --                 4.0%
Ares Management II L.P. (4)..........    2,801,550        9.2%             --         --                   *
First Union (5)......................    3,054,397       10.0%             --         --                   *
William A. McKell (6)................           --         --       1,008,866        1.7%                1.6%
Peter M. Holland (6).................           --         --       1,008,866        1.7%                1.6%
Alan G. Morse (6)....................           --         --              --         --                  --
Joseph E. Corbin (6).................           --         --         153,011          *                   *
Joseph J. Watson (6).................           --         --         153,011          *                   *
Monesa S. Skocik (6).................           --         --         153,011          *                   *
Thomas McKell (7)....................           --         --      53,806,200       92.0%               87.5%
Lonnie D. Pedersen (8)...............           --         --       1,519,907        2.6%                2.5%
Robert A. Katz (9)...................           --         --              --         --                  --
Eric L. Zinterhofer (9)..............           --         --              --         --                  --
All Executive Officers and
  Directors as a Group (10
  persons)(9)(10)....................           --         --      57,802,872       94.8%               90.3%
----------
* Less than one percent.
</TABLE>

(1)  The address for Horizon Telcom and each  executive  officer and director is
     68 E. Main Street, Chillicothe, Ohio, 45601-0480.
(2)  Holders  of class A common  stock  are  entitled  to one vote per share and
     holders  of class B common  stock are  entitled  to ten  votes  per  share.
     Holders of both  classes of common  stock  will vote  together  as a single
     class on all matters presented for a vote, except as otherwise  required by
     law.  Each share of class B common stock is  convertible  into one share of
     class A common stock.
(3)  Represents  24,610,403  shares of common stock issuable upon the conversion
     of  the  convertible  preferred  stock.  Assuming  conversion  of  all  the
     convertible preferred stock held by the Apollo stockholders,  the shares of
     common  stock  would   consist  of   23,315,909   shares  of  common  stock
     beneficially owned by Apollo Investment Fund IV, L.P., and 1,294,503 shares
     of common stock  beneficially  owned by Apollo  Overseas  Partners IV, L.P.
     Apollo  Management IV, L.P.  manages these two Apollo funds. The holders of
     the  convertible  preferred  stock  are  entitled  to one vote per share of
     convertible  preferred stock.  Messrs.  Katz and Zinterhofer,  directors of
     Horizon  PCS  and  associated  with  Apollo  Advisers  IV,  L.P.,  disclaim
     beneficial  ownership  of the shares held by the Apollo  stockholders.  The
     managing general partner of the Apollo funds is Apollo Advisors, a Delaware
     limited  partnership,  the  general  partner  of  which is  Apollo  Capital
     Management,  Inc.,  a  Delaware  corporation.  The  address  for the Apollo
     stockholders  is 1301 Avenue of the  Americas,  38th Floor,  New York,  New
     York, 10019.
(4)  Includes  2,776,550  shares of common stock issuable upon the conversion of
     the convertible preferred stock. Assuming conversion of all the convertible
     preferred stock held by the Ares  stockholders,  the shares of common stock
     would  consist of 1,388,275  shares of common stock  beneficially  owned by
     Ares Leveraged  Investment Fund, L.P., and 1,388,275 shares of common stock
     beneficially  owned by Ares Leveraged  Investment Fund II, L.P. The holders
     of the  convertible  preferred  stock are entitled to one vote per share of
     convertible preferred stock. The managing general partner of the Ares funds
     is Ares  Management II, L.P., a Delaware  corporation,  which together with
     its affiliate investment manager,  serves as investment manager of the Ares
     funds.  Also  includes  warrants to purchase  12,500 shares held by each of
     these two funds  which  are not  exercisable  within 60 days of the date of
     this Annual Report on Form 10-K. The address for the Ares  stockholders  is
     1999 Avenue of the Stars, Suite 1900, Los Angeles, California, 90067.
(5)  Includes  3,045.367  shares  issuable  upon the assumed  conversion  of the
     convertible  preferred  stock and 9,030  shares  issuable  upon the assumed
     exercise of warrants  issued with the September 2000 discount  notes.  Each
     share of convertible preferred stock is convertible into one share of class
     A common  stock and each  warrant  may be  exercised  at $5.88 per share of
     class A  common  stock.  Each  holder  of  convertible  preferred  stock is
     entitled  to one vote per share.  The  address for First Union is 301 South
     College Street, Charlotte, North Carolina, 28288.
(6)  Reflects  shares of class B common stock  issuable  upon  exercise of stock
     options that are presently exercisable or exercisable within 60 days of the
     date of this Annual Report on Form 10-K.
(7)  Includes  53,806,200  shares held by Horizon  Telcom.  Thomas McKell is the
     President of Horizon  Telcom,  and shares voting and investment  power with
     regard to these shares. Mr. McKell disclaims  beneficial ownership of these
     shares.
(8)  Includes 1,455,678 shares of class B common stock held by Telephone Service
     Company.  Mr.  Pedersen is the President of Telephone  Service  Company and
     shares  voting  and  investment  power  with  regard to these  shares.  Mr.
     Pedersen disclaims beneficial ownership of these shares.
(9)  Does  not  include  shares  held  by  Apollo.  Each  of  Messrs.  Katz  and
     Zinterhofer,  directors of Horizon PCS and associated with Apollo Advisors,
     L.P., disclaims beneficial ownership of the securities held by Apollo.
(10) Includes 2,476,765 shares of class B common stock issuable upon exercise of
     stock options that are presently  exercisable or exercisable within 60 days
     of the date of this Annual Report on Form 10-K.



                                       63
<PAGE>



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

SERVICE AGREEMENTS WITH HORIZON TELCOM SUBSIDIARIES

     Horizon  Personal  Communications  and Bright PCS, our  subsidiaries,  have
entered  into service  agreements  with  Horizon  Services,  Inc. and a separate
services  agreement with Horizon  Technology  (formerly  United  Communications,
Inc.).   Horizon   Services  and  Horizon   Technology  are  both   wholly-owned
subsidiaries of Horizon Telcom.

     Under our  agreement  with  Horizon  Services,  Horizon  Services  provides
services to Horizon Personal  Communications and Bright PCS including  insurance
functions,  billing  services,  accounting  services,  computer access and other
customer  relations,  human resources,  and other  administrative  services that
Horizon  Personal  Communications  and Bright PCS would otherwise be required to
undertake on their own. These  agreements  have a term of three years,  with the
right to renew the agreement for additional one-year terms each year thereafter.
We have the right to terminate  each  agreement  during its term by providing 90
days written  notice to Horizon  Services.  Horizon  Services may  terminate the
agreement  prior to its  expiration  date only in the event  that we breach  our
obligations under the services agreement and we do not cure the breach within 90
days after we receive  written notice of breach from Horizon  Services.  Horizon
Services  is  entitled  to the  following  compensation  from  Horizon  Personal
Communications for services provided:

     o    direct labor charges at cost; and

     o    expenses and costs which are directly  attributable  to the activities
          covered by the agreement on a direct allocation basis.

     The agreement  provides that Horizon  Services'  obligations do not relieve
Horizon Personal  Communications of any of their rights and obligations to their
customers  and  to  regulatory   authorities  having   jurisdiction  over  them.
Additionally,  Horizon  Services,  upon request,  is required to provide Horizon
Personal Communications with access to Horizon Services' records with respect to
the  provision of  services,  and Horizon  Services is also  required to provide
regular reports to Horizon Personal  Communications,  as it may request. Horizon
Services  received   compensation   from  Horizon  Personal   Communications  of
approximately  $5.2  million,  $6.2 million and $4.4 million in the years ending
December 31, 2002, 2001 and 2000, respectively. As of December 31, 2002, Horizon
Personal  Communications,  Inc.  had  a  receivable  from  Horizon  Services  of
approximately $8,000. As of December 31, 2002, Horizon Personal  Communications,
Inc. did not have a receivable from Horizon Telcom.

     Horizon Personal  Communications,  our subsidiary,  entered into a services
agreement with Horizon  Technology,  Inc., a wholly-owned  subsidiary of Horizon
Telcom. Under the services agreement,  Horizon Personal  Communications provided
services to Horizon Technology  including customer  activation and deactivation,
customer care support and other administrative  services that Horizon Technology
would otherwise have been required to undertake on its own. Under the agreement,
Horizon Technology paid Horizon Personal Communications $4,000 each month of the
term of the services  agreement.  This  agreement was terminated in August 2001.
Horizon Technology paid a total of $32,000 to the Company during 2001.

OFFICE LEASE

     Horizon PCS leases its  principal  office  space,  the space for one of our
retail  locations  and the  space for  certain  equipment  from The  Chillicothe
Telephone Company, a wholly-owned subsidiary of Horizon Telcom. Under the lease,
Horizon  PCS paid The  Chillicothe  Telephone  Company  $120,000,  $120,000  and
$97,500 in 2002, 2001 and 2000,  respectively.  We believe the lease was made on
terms no less  favorable  to Horizon  PCS than would have been  obtained  from a
non-affiliated  third party. The lease term expires in May 2005. Horizon PCS has
the option to renew the lease for an  additional  two year  period.  The Company
expects that the lease will be renewed.

STOCK DIVIDEND

     Prior to September  2000, we owned 46,988 shares of common stock of Horizon
Telcom,  representing  approximately 12% of the total outstanding Horizon Telcom
stock. In September  2000, we distributed  39,890 of these shares to the Horizon


                                       64
<PAGE>

PCS  stockholders  as a  dividend,  retaining  approximately  2%  of  the  total
outstanding Horizon Telcom stock. We made this distribution so that our existing
stockholders could receive the full value of the distributed shares prior to the
issuance of the convertible  preferred stock. This distribution  resulted in the
recognition  of a gain of $1.0  million.  In  April  2001,  we  distributed  the
remaining  2% of the Horizon  Telcom  stock that we owned to a group of officers
and key employees in the form of a bonus. The officer group included each of the
named executive officers. See "ITEM 11. Executive Compensation."

TAX-SHARING AGREEMENT

     In 1997, HPC entered into a tax-sharing agreement with Horizon Telcom. This
agreement  provides  that  Horizon  Telcom  and  its  subsidiaries  will  file a
consolidated tax return as long as they are eligible to do so, and that HPC will
be paid for the  amount of its  taxable  net  operating  losses  used by Horizon
Telcom to offset taxable  income.  For 2000, HPC had taxable net income of $18.6
million.  For the years ended December 31, 2000 and 1999, Horizon Telcom paid an
aggregate  of $4.5  million  and $5.2  million,  respectively,  to HPC under the
agreement. Due to the sale of the convertible preferred stock in September 2000,
the Company will no longer be included in the consolidated tax return of Horizon
Telcom.  This change in our tax status is referred to as a tax  deconsolidation.
The tax-sharing  agreement  provides that Horizon Telcom will indemnify  Horizon
PCS to the extent of any  aggregate  tax  liability  in excess of $11.5  million
related to the tax deconsolidation and the dividend of the Horizon Telcom stock.
For the year ended  December 31, 2001 and 2000,  the Company  paid  $338,000 and
$5.2 million, respectively, to Horizon Telcom for taxes. As of December 31, 2001
and 2000, we had a receivable and a payable to Horizon  Telcom of  approximately
$484,000 and  $338,000,  respectively,  for Federal  income  taxes  attributable
primarily to the tax liability for the tax  deconsolidation  and the dividend of
the Horizon Telcom stock offset by the utilization of net operating losses.

POLICY REGARDING RELATED PARTY TRANSACTIONS

     We have  established a policy that all future  related  party  transactions
(including transactions with Horizon Telcom and its affiliates) will be reviewed
by our board of  directors.  Our policy is that all related  party  transactions
will be on terms no less  favorable  to Horizon  PCS than a similar  transaction
with  unrelated  parties,  and must be approved by a majority of the  directors,
including a majority of the disinterested directors.

     Horizon believes that the terms of the related party transactions disclosed
above were as favorable as those  generally  available from  unaffiliated  third
parties.  Each  transaction  was  approved by the entire  board of  directors of
Horizon  PCS.  However,  at those  times our board did not  include at least two
"disinterested   directors,"  as  defined  by  the  North  American   Securities
Administrators  Association,  and  therefore  lacked the  required  directors to
ratify the transactions  under their policy on such related party  transactions.
The board of directors has adopted a policy that all future material  affiliated
transactions  and loans will be made or entered  into on terms that are not less
favorable to Horizon  than those that can be obtained  from  unaffiliated  third
parties.  In  addition,  all future  material  affiliated  transactions  and any
forgiveness  of loans must be approved by Horizon's  independent  directors  who
have no interest in the transactions and who have access, at Horizon's  expense,
to Horizon's counsel.

ISSUANCE OF CONVERTIBLE PREFERRED STOCK

     In September  2000, an investor  group led by Apollo  Management  purchased
approximately  $126.5 million of our  convertible  preferred  stock in a private
placement.  Prior to the investment this group had no relationship  with Horizon
PCS.  This  investment  consisted of 9.2 million  shares of Series A Convertible
Preferred Stock, with an issue price of $5.88 per share, and 14.3 million shares
of Series A-1  Convertible  Preferred  Stock,  with an issue  price of $5.07 per
share. The convertible preferred stock is convertible into shares of our class A
common stock (on a share-for-share  basis subject to anti-dilution  adjustments)
at any time by the holders  thereof.  The  convertible  preferred  stock also is
convertible automatically upon the occurrence of a public offering of our common
stock  with  aggregate  gross  proceeds  of at least  $65.0  million in which we
receive a per share price that exceeds 1.75  multiplied by the conversion  price
of the convertible preferred stock or the consummation of a business combination
transaction that results in a change in control of the Company.

     Assuming full conversion of the convertible  preferred stock outstanding at
December 31, 2002, the investor group or its successors  will  beneficially  own
approximately  34.2% of our  outstanding  class A and class B common  stock on a
combined  basis,  based  on the  number  of  class A and  class B  common  stock


                                       65
<PAGE>

outstanding at December 31, 2002. This percentage represents  approximately 5.0%
of the  combined  voting  power of our class A and class B common  stock.  These
percentages  do not give  effect to the  warrants  to be issued to  Sprint,  the
warrants issued as part of the discount note offering and the options which have
been granted under the 2000 stock option plan.

     Securities  Purchase  Agreement.  The Securities Purchase Agreement between
the investor group and us limits actions  relating to our business,  our capital
stock and other  aspects of our  operations  without  the prior  approval of the
investor  group.  Among  the  types  of  actions  that we  cannot  take  are the
following:

     o    the declaration or payment of dividends or distributions;

     o    entering into business combination transactions,  including mergers or
          consolidations;

     o    amending the terms of our class B common stock or issue any new shares
          of our class B common  stock,  other than  pursuant to the exercise of
          outstanding options;

     o    engaging in any business  other than the business we currently  engage
          in;

     o    entering  into  transactions  with  affiliates  or  making  disallowed
          payments to related parties under existing services agreements;

     o    acquiring or disposing of assets or a business with an aggregate value
          in excess of $5.0 million;

     o    adopting a new employee option or incentive plan;

     o    issuing or selling shares of our capital stock or the capital stock of
          our  subsidiaries,  other  than in a public  offering  of our  class A
          common  stock,  pursuant to an employee  benefit plan or in connection
          with mergers and acquisitions;

     o    increasing the size of our board of directors;

     o    incurring any indebtedness for borrowed money;

     o    subject to fiduciary duties, retaining or terminating senior executive
          officers including the chief executive officer and the chief financial
          officer; and

     o    making capital  expenditures,  unless  permitted by the senior secured
          credit facility.

     If we have not completed either (i) a public offering of our class A common
stock  in  which  we  receive  at  least  $50.0  million  or  (ii) a  merger  or
consolidation with a publicly listed company that has a market capitalization of
at least $100.0 million,  in each case by September 26, 2005, the investor group
may request  that we  repurchase  all of their shares of  convertible  preferred
stock  at  fair  market  value,  as  determined  by  three  investment   banking
institutions.   If  the  investor  group  requests  that  we  repurchase   their
convertible  preferred  stock and we  decline,  we will be  required  to auction
Horizon PCS. If no bona fide offer is received upon an auction,  the  repurchase
right of the investor group expires.  If, however, a bona fide offer is received
upon  the  auction,  we  must  sell  Horizon  PCS or the  dividend  rate  on the
convertible  preferred  stock  will  increase  from 7.5% to 18.0% and we will be
required to re-auction  the Company  annually  until the  convertible  preferred
stock is  repurchased  or the  repurchase  right  expires.  The  secured  credit
facility  and the senior notes  prohibit us from  repurchasing  any  convertible
preferred stock.

     The approval  rights of the investor  group under the  securities  purchase
agreement  relating to its  ownership of our  convertible  preferred  stock will
terminate upon the earlier to occur of (a) the closing of an underwritten public
offering  of our  class A  common  stock in which  we  receive  aggregate  gross
proceeds  of at least  $65.0  million  and in which we receive a price per share
that  exceeds  1.75  multiplied  by the  conversion  price  of  the  convertible
preferred stock (at which time the convertible preferred stock will convert into
class A common  stock),  and (b) the date upon  which no  convertible  preferred
stock remains outstanding.



                                       66
<PAGE>

     Investors' Rights and Voting Agreement. In connection with the purchase and
sale of our convertible  preferred  stock, we entered into an Investors'  Rights
and Voting Agreement with the investor group and Horizon Telcom.  This agreement
principally provides for the following:

     o    rights in favor of the investor  group  allowing it to  participate in
          sales of our capital stock by Horizon Telcom;

     o    rights in favor of Horizon Telcom requiring the investor group to sell
          all of their shares of Horizon PCS stock if Horizon  Telcom accepts an
          offer to sell all of its shares of Horizon PCS stock;

     o    rights in favor of Horizon Telcom requiring the investor group to sell
          all of our capital  stock owned by them if Horizon  Telcom  accepts an
          offer to sell all of our capital  stock  owned by Horizon  Telcom to a
          non-affiliated purchaser;

     o    as long as the  investor  group  beneficially  owns at least 5% of our
          fully  diluted  common  stock,  the  right  of the  investor  group to
          designate at least one member of our board of directors;

     o    as long as the investor group  beneficially owns at least 12.5% of our
          fully  diluted  common  stock,  the  right  of the  investor  group to
          designate up to two members of our board of directors; and

     o    as long as the  investor  group  beneficially  owns at least 5% of our
          fully diluted common stock,  the requirement  that Horizon Telcom vote
          all of our  capital  stock  owned by it to ensure that the size of our
          board of  directors is set and remains at seven  directors  unless the
          designee members of the investor group of our board of directors agree
          to an increase in the size of our board of directors.

     Under  the  terms of this  agreement,  we  appointed  Robert  Katz and Eric
Zinterhofer  as  Apollo's  designees  to our board of  directors.  See "ITEM 10.
Directors and Executive Officers of the Registrant."

     Registration  rights agreement.  We also entered into a registration rights
agreement in connection with the purchase and sale of our convertible  preferred
stock in which we  granted to holders  of our  convertible  preferred  stock the
following registration rights:

     o    demand  registration  rights  that  entitle  them  to  require  us  to
          register,  at our  expense,  the  resale  of their  shares  under  the
          Securities Act; and

     o    piggyback  registration  rights  that  entitle  them to  require us to
          include, at our expense,  their shares in a registration of any of our
          equity  securities  for  sale  by us or by any of our  other  security
          holders,  other than in connection with an initial public offering and
          other than  pursuant to the  registration  of the warrants  comprising
          part of the units or the warrants to be issued to Sprint.

     Policy  regarding  preferred stock. All future issuances of preferred stock
must be approved by a majority of  Horizon's  independent  directors  who do not
have an interest in the transaction and who have access,  at Horizon's  expense,
to Horizon's counsel.

OTHER FEES PAID TO STOCKHOLDERS

     An affiliate of  Donaldson,  Lufkin & Jenrette,  now known as Credit Suisse
First Boston, entered into an engagement letter with us in late July 2000 to act
as placement  agent for the placement of private equity.  The commitment  letter
provided  that the  affiliate of Credit  Suisse First Boston would be paid a fee
upon the closing of our private  equity  offering.  We paid the placement fee of
$3.6 million on September  26, 2000.  Credit Suisse First Boston and First Union
Securities were also initial  purchasers under our sale of units of warrants and
senior discount notes in September  2000, for which they received  approximately
$5.2 million for performing  these services.  In September 2000, an affiliate of
First Union Securities acted as sole lead arranger for our senior secured credit
facility and received fees totaling $7.0 million for these services.  Donaldson,
Lufkin & Jenrette Securities  Corporation,  a predecessor of Credit Suisse First
Boston,  and First  Union  Securities  also  acted as the lead  managers  of our
proposed  initial public offering.  In 2000, we entered into engagement  letters
with  Credit  Suisse  First  Boston  and First  Union  Securities  to act as our
co-advisors  in  possible  strategic  transactions,  for which they  expected to


                                       67
<PAGE>

receive fees customarily charged by investment bankers of international standing
in similar  transactions.  We have paid a total of  $450,000  in fees under this
arrangement.  Credit Suisse First Boston,  First Union  Securities and two other
firms  acted as initial  purchasers  under our sale of senior  notes in December
2001, for which they received  approximately  $5.3 million for performing  these
services.

ITEM 14. CONTROL AND PROCEDURES

     Our Chief Executive Officer and Chief Financial Officer are responsible for
establishing and maintaining "disclosure controls and procedures" (as defined in
the  Securities  Exchange Act of 1934 Rules  13a-14(c)  and  15d-14(c))  for the
Company.  With the  participation  of management,  the Company's Chief Executive
Officer and Chief Financial Officer evaluated the Company's  disclosure controls
and  procedures  within 90 days preceding the filing date of this annual report.
Based upon this  evaluation,  the Chief  Executive  Officer and Chief  Financial
Officer  concluded  that the Company's  disclosure  controls and  procedures are
effective  in ensuring  that  material  information  required to be disclosed is
included  in the  reports  that  it  files  with  the  Securities  and  Exchange
Commission.

     Under  our  agreements  with  Sprint,  Sprint  provides  us  with  billing,
collections,  customer care and other back office services.  As a result, Sprint
remits  approximately 96% of our revenues to us. In addition,  approximately 43%
of cost of service in our consolidated  financial  statements  relate to charges
for services provided under our agreements with Sprint such as billing, customer
care, roaming expense, and long-distance.  The Company, as a result, necessarily
relies on Sprint to provide accurate, timely and sufficient data and information
to properly record our revenues, expenses and accounts receivable which underlie
a substantial  portion of our periodic financial  statements and other financial
disclosures.  The relationship  with Sprint is established by our agreements and
our flexibility to use a service provider other than Sprint is limited.

     Because of our reliance on Sprint for  financial  information,  the Company
must depend on Sprint to design adequate  internal  controls with respect to the
processes  established  to provide this data and  information to the Company and
Sprint's  other  network  partners.  To address this issue,  Sprint  engages its
independent  auditors to perform a periodic  evaluation of these controls and to
provide  a  "Report  on  Controls  Placed in  Operation  and Tests of  Operating
Effectiveness  for Affiliates"  under guidance provided in Statement of Auditing
Standards No. 70. These reports are provided  annually to the Company and covers
the Company's entire fiscal year.

     There were no significant changes in the Company's internal controls or, to
the  knowledge of the  management  of the Company,  in other  factors that could
significantly affect these controls subsequent to the evaluation date.



                                       68
<PAGE>



                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A)  THE  FOLLOWING  DOCUMENTS  ARE FILED AS PART OF THIS ANNUAL  REPORT ON FORM
     10-K:

     1.   Financial Statements

          Reports of Independent Public Accountants, Consolidated Balance Sheets
          as  of  December  31,  2002  and  2001,   Consolidated  Statements  of
          Operations  for the Years  Ended  December  31,  2002,  2001 and 2000,
          Consolidated  Statements of Comprehensive  Income (Loss) for the Years
          Ended  December 31, 2002,  2001 and 2000,  Consolidated  Statements of
          Stockholders'  Equity (Deficit) for the Years Ended December 31, 2002,
          2001 and 2000,  Consolidated  Statements  of Cash  Flows for the Years
          Ended  December 31,  2002,  2001 and 2000,  and Notes to  Consolidated
          Financial Statements.

     2.   Exhibits

          See the Index to Exhibits  immediately  preceding  the exhibits  filed
          with this Report.

(B)  REPORTS ON FORM 8-K

          On November 12, 2002,  the Company filed a Current  Report on Form 8-K
     regarding its earnings press release for the third quarter of 2002.



                                       69
<PAGE>



                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

         HORIZON PCS, INC.


By:      /s/ WILLIAM A. MCKELL
         -------------------------------
         William A. McKell
         Chairman of the Board, President
         and Chief Executive Officer

Date:    March 28, 2002

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

<TABLE>
<CAPTION>
<S>                                 <C>                                   <C>
              NAME                             TITLE                              DATE
              ----                             -----                              ----

/s/ WILLIAM A. MCKELL               Chairman of the Board,                 March 28, 2003
-------------------------------     President, Chief Executive Officer
William A. McKell
(Principal Executive Officer)

/s/ PETER M. HOLLAND                Chief Financial Officer,               March 28, 2003
-------------------------------     Director
Peter M. Holland
(Principal Financial and
Accounting Officer)

/s/ THOMAS MCKELL                   Director                               March 28, 2003
-------------------------------
Thomas McKell

/s/ LONNIE D. PEDERSEN              Director                               March 28, 2003
-------------------------------
Lonnie D. Pedersen

/s/ ROBERT A. KATZ                  Director                               March 28, 2003
-------------------------------
Robert A. Katz

/s/ ERIC L. ZINTERHOFER             Director                               March 28, 2003
-------------------------------
Eric L. Zinterhofer

</TABLE>








                                       70
<PAGE>



         Horizon PCS, Inc., Certification for Annual Report on Form 10-K


     I, William A. McKell, certify that:

     1.   I have reviewed this annual report on Form 10-K of Horizon PCS, Inc.;

     2.   Based on my knowledge,  this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this annual report;

     4.   The  registrants  other  certifying  officer and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c)   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officer and I have disclosed,  based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The registrant's other certifying officer and I have indicated in this
          annual  report  whether  or not  there  were  significant  changes  in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.

Date:  March 28, 2003
       ----------------------------------
                                                /s/  William A McKell
                                                --------------------------------
                                                William A. McKell
                                                Chairman of the Board, President
                                                and Chief Executive Officer





                                       71
<PAGE>



         Horizon PCS, Inc., Certification for Annual Report on Form 10-K


     I, Peter M. Holland, certify that:

     1.   I have reviewed this annual report on Form 10-K of Horizon PCS, Inc.;

     2    Based on my knowledge,  this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this annual report;

     4.   The  registrants  other  certifying  officer and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c)   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officer and I have disclosed,  based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The registrant's other certifying officer and I have indicated in this
          annual  report  whether  or not  there  were  significant  changes  in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.

Date:  March 28, 2003
      ----------------------------------
                                                     /s/  Peter M. Holland
                                                     --------------------------
                                                     Peter M. Holland
                                                     Chief Financial Officer



                                       72
<PAGE>




                                INDEX TO EXHIBITS

     EXHIBIT
     NUMBER                   DESCRIPTION
     --------                 -----------

     1.1*      Purchase  Agreement dated September 18, 2000 between Horizon PCS,
               Inc. and Donaldson,  Lufkin & Jenrette Securities Corporation and
               First Union Securities, Inc.
     2.1**(1)  Asset  Purchase  Agreement,  dated May 19,  2000,  by and between
               Sprint PCS, Inc. and Horizon Personal Communications, Inc.
     2.2**(1)  Contribution  and Exchange  Agreement,  as amended,  dated May 4,
               2000, by and among Horizon Personal Communications, Inc., Horizon
               Telcom,  Inc.,  the  Registrant  and those persons  listed on the
               attachment to the Contribution and Exchange Agreement.
     3.1**     Amended and Restated of Certificate of  Incorporation  of Horizon
               PCS.
     3.2**     Bylaws of Horizon PCS.
     4.1**     Specimen Common Stock Certificate.
     4.2*      Indenture  dated as of September  26, 2000  between  Horizon PCS,
               Inc. , Horizon  Personal  Communications,  Inc.,  Bright Personal
               Communications,  Inc.  and Wells Fargo Bank  Minnesota,  National
               Association.
     4.3*      A/B Exchange  Registration  Rights Agreement made as of September
               26, 2000 by and among Horizon PCS, Inc. and  Donaldson,  Lufkin &
               Jenrette Securities Corporation and First Union Securities, Inc.
     4.4*      Form of Registered Note (included in Exhibit 4.2).
     4.5*      Note Guarantee of Horizon Personal Communications, Inc.
     4.6*      Note Guarantee of Bright Personal Communications Services, LLC
    10.1*      Form of Employment  Agreement,  dated  September 26, 2000, by and
               between Registrant and William A. McKell.
    10.2*      Form of Employment  Agreement,  dated  September 26, 2000, by and
               between Registrant and Peter M. Holland.
    10.3**+    Sprint PCS Management  Agreement  between Sprint Spectrum,  L.P.,
               SprintCom, Inc. and Horizon Personal Communications,  Inc., dated
               June 8, 1998.
    10.3.1**   Letter  Agreement,  dated July 3, 2000,  between Sprint Spectrum,
               L.P., SprintCom, Inc. and Horizon Personal Communications, Inc.
    10.3.2     Addendum  VI to  Sprint  PCS  Management  Agreement  between  the
               Registrant and Sprint PCS, Inc. (incorporated herein by reference
               to the  Registrant's  Current  Report on Form 8-K filed on August
               24, 2001).
    10.3.3+    Addendum V to Sprint PCS Management Agreement between Horizon PCS
               and  Sprint  PCS,  Inc.  as of  June  1,  2001  (incorporated  by
               reference Exhibit 10.3.3 to the Registrant's  Quarterly Report on
               Form 10-Q for the quarter ended June 30, 2002).
    10.4**+    Sprint PCS Services  Agreement  between Sprint  Spectrum L.P. and
               Horizon Personal Communications, Inc., dated June 8, 1998.
    10.5**     Sprint  Trademark  and Service  Mark  License  Agreement  between
               Sprint   Communications   Company,   L.P.  and  Horizon  Personal
               Communications, Inc., dated June 8, 1998.
    10.6**     Sprint  Spectrum  Trademark  and Service Mark  License  Agreement
               between Sprint Spectrum L.P. and Horizon Personal Communications,
               Inc., dated June 8, 1998.
    10.7**+    Sprint  PCS  Management   Agreement  between  Wirelessco,   L.P.,
               SprintCom,  Inc.,  Sprint  Spectrum,  L.P.  and  Bright  Personal
               Communications Services, LLC, dated October 13, 1999.
    10.8**+    Sprint PCS Services  Agreement between Sprint Spectrum,  L.P. and
               Bright Personal  Communications  Services, LLC, dated October 13,
               1999.
    10.9**     Sprint  Trademark  and Service  Mark  License  Agreement  between
               Sprint   Communications   Company,   L.P.  and  Bright   Personal
               Communications Services, LLC, dated October 13, 1999.
    10.10**    Sprint  Spectrum  Trademark  and Service Mark  License  Agreement
               between Sprint Spectrum,  L.P. and Bright Personal Communications
               Services, LLC, dated October 13, 1999.



                                       73
<PAGE>


    EXHIBIT
    NUMBER                   DESCRIPTION
    --------                 -----------

    10.18**    Registration Rights Agreement,  dated June 27, 2000, by and among
               the  Registrant and those persons listed on the attachment to the
               Contribution and Exchange Agreement.
    10.19**+   Network  Services  Agreement  by and between  West  Virginia  PCS
               Alliance,  L.C., Virginia PCS Alliance, L.C. and Horizon Personal
               Communications, Inc., dated August 12, 1999.
    10.19.1+   Amendment  to  Network  Services   Agreement  by  and  among  the
               Registrant,  West  Virginia PCS  Alliance,  L.C. and Virginia PCS
               Alliance,   L.C.   (incorporated   herein  by  reference  to  the
               Registrant's  Current  Report  on Form 8-K  filed on  August  24,
               2001).
    10.21**+   PCS CDMA Product Supply  Contract by and between  Motorola,  Inc.
               and Horizon Personal Communications, Inc.
    10.25**    Form of Horizon PCS, Inc. 2000 Stock Option Plan.
    10.26**+   Site  Development  Agreement  by  and  between  Horizon  Personal
               Communications, Inc. and SBA Towers, Inc., dated August 17, 1999.
    10.27**+   Master Site Agreement by and between SBA Towers, Inc. and Horizon
               Personal Communications, Inc., dated July 1999.
    10.28**+   Master  Design Build  Agreement by and between  Horizon  Personal
               Communications, Inc. and SBA Towers, Inc., dated August 17, 1999.
    10.29**+   Master Site Agreement by and between SBA Towers,  Inc. and Bright
               Personal Communications Services, LLC, dated October 1, 1999.
    10.30**+   Master  Design  Build  Agreement by and between  Bright  Personal
               Communications  Services, LLC and SBA Towers, Inc., dated October
               1, 1999.
    10.31**    Services  Agreement,  dated May 1, 2000, between Horizon Personal
               Communication, Inc. and Horizon Services, Inc.
    10.32**    Lease Agreement,  dated May 1, 2000 between Chillicothe Telephone
               Company and Horizon Personal Communications, Inc.
    10.33**    Services  Agreement,  dated May 1, 2000 between Horizon  Personal
               Communications, Inc. and United Communications, Inc.
    10.34**    Form of Indemnification Agreement.
    10.35**    Amended and Restated Tax Allocation  Agreement  dated May 1, 2000
               by and among Horizon Telcom, Inc., Chillicothe Telephone Company,
               Horizon Personal  Communications,  Inc.,  United  Communications,
               Inc., Horizon Services, Inc., and Horizon PCS, Inc.
    10.35.1*   First  Amendment  to the  Amended  and  Restated  Tax  Allocation
               Agreement  dated as of  September  26, 2000 by and among  Horizon
               Telcom,  Inc.,  Chillicothe  Telephone Company,  Horizon Personal
               Communications,   Inc.,  United  Communications,   Inc.,  Horizon
               Services, Inc., and Horizon PCS, Inc.
    10.37*     Securities  Purchase  Agreement  dated  September 26, 2000 by and
               among Horizon PCS, Inc. Apollo  Investment Fund IV, L.P.,  Apollo
               Overseas Partners IV, L.P., Ares Leveraged Investment Fund, L.P.,
               Ares Leveraged  Investment  Fund II, L.P. and First Union Capital
               Partners, LLC.
    10.38*     Investors Rights and Voting Agreement dated September 26, 2000 by
               and among  Horizon PCS,  Inc.  Apollo  Investment  Fund IV, L.P.,
               Apollo  Overseas  Partners IV, L.P.,  Ares  Leveraged  Investment
               Fund,  L.P.,  Ares Leveraged  Investment  Fund II, L.P. and First
               Union Capital Partners, LLC.
    10.39*     Registration  Rights  Agreement  dated  September 26, 2000 by and
               among Horizon PCS, Inc. Apollo  Investment Fund IV, L.P.,  Apollo
               Overseas Partners IV, L.P., Ares Leveraged Investment Fund, L.P.,
               Ares Leveraged  Investment  Fund II, L.P. and First Union Capital
               Partners, LLC.



                                       74
<PAGE>

    EXHIBIT
    NUMBER                   DESCRIPTION

    --------                 -----------
    10.40*     Credit  Agreement,  dated as of September  26, 2000, by and among
               Horizon  Personal  Communications,   Inc.,  and  Bright  Personal
               Communications  Services,  LLC,  Horizon PCS, Inc. (the "Parent")
               and certain  Subsidiaries  of the Parent,  the several  banks and
               other  financial  institutions  as may from  time to time  become
               parties  to  this  Agreement,   First  Union  National  Bank,  as
               Administrative Agent,  Westdeutsche Landesbank  Girozentrale,  as
               Syndication  Agent and  Arranger  and Fortis  Capital  Corp.,  as
               Documentation Agent.
    10.40.1**  First Amendment to Credit Agreement and Assignment dated November
               20, 2000, by and among Horizon Personal Communications,  Inc. and
               Bright Personal  Communications  Services, LLC, Horizon PCS, Inc.
               (the "Parent") and certain  subsidiaries of the Parent,  Existing
               Lenders,   New   Lenders,   First   Union   National   Bank,   as
               Administrative agent,  Westdeutsche Landesbank  Girozentrale,  as
               Syndication  Agent and  Arranger  and Fortis  Capital  Corp.,  as
               Documentation Agent.
    10.40.2    Second Amendment to Credit  Agreement and Assignment,  dated June
               29, 2001, by and among Horizon Personal Communications,  Inc. and
               Bright Personal  Communications  Services, LLC, Horizon PCS, Inc.
               (the "Parent") and certain  Subsidiaries of the Parent,  Existing
               Lenders,   New   Lenders,   First   Union   National   Bank,   as
               Administrative Agent,  Westdeutsche Landesbank  Girozentrale,  as
               Syndication  Agent and Arranger,  and Fortis  Capital  Corp.,  as
               Documentation  Agent  (incorporated  herein by  reference  to the
               Registrant's Current Report on Form 8-K filed on July 3, 2001).
    10.40.3    Third  Amendment  to  Credit  Agreement  and  Waiver  dated as of
               November 26, 2001 by and among Horizon  Personal  Communications,
               Inc., and Bright Personal  Communications  Services, LLC, Horizon
               PCS, Inc. (the "Parent") and certain  Subsidiaries of the Parent,
               the several banks and other  financial  institutions  as may from
               time  to  time  become  parties  to the  Agreement,  First  Union
               National Bank, as Administrative Agent,  Westdeutsche  Landesbank
               Girozentrale,  as  Syndication  Agent  and  Arranger  and  Fortis
               Capital Corp., as Documentation  Agent (incorporated by reference
               to Exhibit 10.40.3 filed with the Registrant's  Current Report on
               Form 8-K filed on November 28, 2001).
    10.40.4    Waiver  Agreement dated May 9, 2002 by and among Horizon Personal
               Communications,    Inc.   (the   "Company"),    Bright   Personal
               Communications  Services,  LLC, an Ohio limited liability company
               ("Bright")  (each  of the  Company  and  Bright,  individually  a
               "Borrower" and collectively, the "Borrowers"), Horizon PCS, Inc.,
               a Delaware corporation (the "Parent"),  those Subsidiaries of the
               Parent listed on the signature  pages hereto  (together  with the
               Parent,   individually  a  "Guarantor"   and   collectively   the
               "Guarantors";  the  Guarantors,   together  with  the  Borrowers,
               individually  a  "Credit  Party"  and  collectively  the  "Credit
               Parties"), the lenders party hereto (the "Lenders"),  First Union
               National  Bank,  as  Administrative  Agent  (the  "Administrative
               Agent"),  Westdeutsche  Landesbank  Girozentrale,  as Syndication
               Agent and Arranger (the "Syndication  Agent"), and Fortis Capital
               Corp.,  as  Documentation  Agent  (the   "Documentation   Agent")
               (incorporated  by reference  Exhibit 10.40.3 to the  Registrant's
               Quarterly  Report on Form 10-Q for the  quarter  ended  March 31,
               2002).
    10.40.5    Second  Waiver  Agreement  dated as of June 7, 2002, by and among
               Horizon  Personal  Communications,   Inc.,  and  Bright  Personal
               Communications  Services,  LLC,  Horizon PCS, Inc. (the "Parent")
               and certain  Subsidiaries  of the Parent,  the several  banks and
               other  financial  institutions  as may from  time to time  become
               parties  to  the   Agreement,   First  Union  National  Bank,  as
               Administrative Agent,  Westdeutsche Landesbank  Girozentrale,  as
               Syndication  Agent and  Arranger  and Fortis  Capital  Corp.,  as
               Documentation   Agent.   (incorporated   by   reference   to  the
               Registrant's Current Report on Form 8-K filed on June 10, 2002).


                                       75
<PAGE>



    EXHIBIT
    NUMBER                   DESCRIPTION
    --------                 -----------

    10.40.6    Fourth  Amendment to Credit Agreement and Waiver dated as of June
               27, 2002 by and among Horizon Personal Communications,  Inc., and
               Bright Personal  Communications  Services, LLC, Horizon PCS, Inc.
               (the  "Parent")  and  certain  Subsidiaries  of the  Parent,  the
               several banks and other  financial  institutions as may from time
               to time become parties to the Agreement,  Wachovia Bank, National
               Association   (successor  to  First  Union  National   Bank),  as
               Administrative Agent,  Westdeutsche Landesbank  Girozentrale,  as
               Syndication  Agent and  Arranger  and Fortis  Capital  Corp.,  as
               Documentation   Agent   (incorporated   by   reference   to   the
               Registrant's Current Report on Form 8-K filed on June 27, 2002).
    10.40.7*** Consent and Agreement  for Benefit of Holders of Senior  Security
               Facility  dated as of September  26, 2000,  by and among  Horizon
               Personal Communications,  Inc. and Bright Personal Communications
               Services,  LLC,  Horizon PCS,  Inc.  (the  "Parent")  and certain
               Subsidiaries of the Parent,  Existing Lenders, New Lenders, First
               Union  National  Bank,  as  Administrative  Agent,   Westdeutsche
               Landesbank  Girozentrale,  as Syndication Agent and Arranger, and
               Fortis Capital Corp., as Documentation Agent.
    10.41*     Warrant  Agreement dated as of September 26, 2000 between Horizon
               PCS, Inc. and Wells Fargo Bank Minnesota, National Association.
    10.42*     Warrant  Registration  Rights  Agreement made as of September 26,
               2000 by and among  Horizon  PCS,  Inc.  and  Donaldson,  Lufkin &
               Jenrette Securities Corporation and First Union Securities, Inc.
    10.43*     Pledge and Escrow  Agreement  dated December 7, 2001 by and among
               Horizon PCS, Inc., Bright Personal Communications  Services, LLC,
               Wells Fargo and Minnesota, National Association, as Escrow Agent.
    10.44*     Registration Rights Agreement dated December 7, 2001 by and among
               Horizon PCS, Inc., Horizon Personal Communications,  Inc., Bright
               Personal  Communications  Services,  LLC, and Credit Suisse First
               Boston Corporation, First Union Securities, Inc., Bear, Stearns &
               Co., Inc. and Lehman Brothers, Inc.
    10.45*     Indenture  dated December 7, 2001 by and among Horizon PCS, Inc.,
               as Issuer,  Horizon  Personal  Communications,  Inc.,  and Bright
               Personal Communications  Services, LLC, as Guarantors,  and Wells
               Fargo Bank Minnesota, National Association, as Trustee.
    10.46*     Purchase  Agreement  dated December 4, 2001 between  Horizon PCS,
               Inc.,  Horizon  Personal  Communications,  Inc.,  Bright Personal
               Communications  Services,  LLC,  and Credit  Suisse  First Boston
               Corporation,  First Union Securities,  Inc., Bear, Stearns & Co.,
               Inc., Lehman Brothers, Inc.
    10.47      Employment Agreement between Horizon PCS, Inc., and Alan G. Morse
               (incorporated  by  reference  Exhibit  10.47 to the  Registrant's
               Quarterly  Report on Form  10-Q for the  quarter  ended  June 30,
               2002).
    21.1**     Subsidiaries of Horizon.
    99.1***    Certification,  under  Section 906 of the  Sarbanes-Oxley  Act of
               2002.
    99.2***    Certification,  under  Section 906 of the  Sarbanes-Oxley  Act of
               2002.

*    Incorporated by reference to the same exhibit number  previously filed with
     the  Registration  Statement  on  Form  S-1 of  the  Registrant  (File  No.
     333-51240).
**   Incorporated by reference to the same exhibit number  previously filed with
     the  Registration  Statement  on  Form  S-1 of  the  Registrant  (File  No.
     333-37516).
***  Filed herewith.
(1)  In accordance  with Item  601(b)(2) of Regulation  S-K, the schedules  have
     been omitted and a list briefly  describing  the schedules is at the end of
     the  Exhibit.  The  Registrant  will furnish  supplementally  a copy of any
     omitted schedule to the commission upon request.
+    The Registrant has requested confidential treatment for certain portions of
     this  exhibit  pursuant  to Rule  406 of the  Securities  Act of  1933,  as
     amended.




                                       76
<PAGE>



                                HORIZON PCS, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                            PAGE

 Independent Auditors' Report.........................................      F-2

 Report of Independent Public Accountants.............................      F-3

 Consolidated Balance Sheets as of December 31, 2002 and 2001.........      F-4

 Consolidated Statements of Operations for the Years Ended
   December 31, 2002, 2001 and 2000...................................      F-6

 Consolidated Statements of Comprehensive Income (Loss)
   for the Years Ended December 31, 2002, 2001 and 2000...............      F-7

 Consolidated Statements of Stockholders' Equity (Deficit)
   for the Years Ended December 31, 2002, 2001 and 2000...............      F-8

 Consolidated Statements of Cash Flows for the Years Ended
   December 31, 2002, 2001 and 2000...................................      F-9

 Notes to Consolidated Financial Statements...........................     F-11



                                      F-1

<PAGE>




                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Stockholders
Horizon PCS, Inc.:

     We have audited the accompanying consolidated balance sheet of Horizon PCS,
Inc. and  subsidiaries  as of December 31,  2002,  and the related  consolidated
statements of  operations,  comprehensive  income (loss),  stockholders'  equity
(deficit) and cash flows for the year then ended. These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.  The  consolidated  balance sheet of Horizon PCS,
Inc. and  subsidiaries  as of December 31,  2001,  and the related  consolidated
statements of  operations,  comprehensive  income (loss),  stockholders'  equity
(deficit)  and cash flows for the years  ended  December  31, 2001 and 2000 were
audited by other auditors who have ceased  operations.  Those auditors expressed
an  unqualified  opinion on those  financial  statements,  before  the  revision
described in Note 7 to the financial statements,  in their report dated February
12, 2002.

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

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the financial position of Horizon PCS,
Inc.  and  subsidiaries  as of  December  31,  2002,  and the  results  of their
operations  and their  cash  flows for the year then  ended in  conformity  with
accounting principles generally accepted in the United States of America.

     The  accompanying  consolidated  financial  statements  have been  prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the consolidated  financial statements,  the Company has suffered recurring
losses from operations,  has a stockholders'  deficit,  and management  believes
that it is  probable  that  the  Company  will  violate  one or more of its debt
covenants in 2003 which raise substantial doubt about its ability to continue as
a going  concern.  Management's  plans  in  regard  to  these  matters  are also
described in Note 1. The  consolidated  financial  statements do not include any
adjustments that might result from the outcome of this uncertainty.

     As discussed above, the consolidated balance sheet of Horizon PCS, Inc. and
subsidiaries as of December 31, 2001, and the related consolidated statements of
operations, comprehensive income (loss), stockholders' equity (deficit) and cash
flows for the years  ended  December  31,  2001 and 2000 were  audited  by other
auditors who have ceased  operations.  As  described in Note 7, these  financial
statements have been revised to include the transitional disclosures required by
Statement  of  Financial  Accounting  Standards  No.  142,  Goodwill  and  Other
Intangible  Assets,  which was adopted by the Company as of January 1, 2002.  In
our  opinion,  the  disclosures  for 2001  and  2000 in Note 7 are  appropriate.
However,  we were not engaged to audit,  review,  or apply any procedures to the
2001 and 2000 financial  statements of Horizon PCS, Inc. and subsidiaries  other
than with respect to such  disclosures  and,  accordingly,  we do not express an
opinion or any other form of assurance on the 2001 and 2000 financial statements
taken as a whole.

/s/ KPMG LLP
Columbus, Ohio
March 4, 2003



                                      F-2
<PAGE>



THE  FOLLOWING  REPORT OF ARTHUR  ANDERSEN,  LLP  ("ANDERSEN")  IS A COPY OF THE
REPORT  PREVIOUSLY  ISSUED BY  ANDERSEN  ON  FEBRUARY  12,  2002.  THE REPORT OF
ANDERSEN IS INCLUDED IN THIS ANNUAL REPORT ON FORM 10-K PURSUANT TO RULE 2-02(E)
OF REGULATIONS  S-X. AFTER  REASONABLE  EFFORTS THE COMPANY HAS NOT BEEN ABLE TO
OBTAIN  REISSUED  REPORT  FROM  ANDERSEN.  ANDERSEN  HAS  NOT  CONSENTED  TO THE
INCLUSION  OF ITS REPORT IN THIS  ANNUAL  FORM 10-K.  BECAUSE  ANDERSEN  HAS NOT
CONSENTED  TO THE  INCLUSION  OF ITS  REPORT IN THIS  ANNUAL  REPORT,  IT MAY BE
DIFFICULT FOR SHAREHOLDERS TO SEEK REMEDIES  AGAINST ANDERSEN AND  SHAREHOLDERS'
ABILITY TO SEEK RELIEF AGAINST ANDERSEN MAY BE IMPAIRED.


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Shareholders of Horizon PCS, Inc.:

     We have audited the  accompanying  consolidated  balance  sheets of Horizon
PCS, Inc. (a Delaware  corporation) and Subsidiaries as of December 31, 2001 and
2000,  and the related  consolidated  statements  of  operations,  comprehensive
income (loss), changes in stockholders' equity (deficit) and cash flows for each
of the three years in the period ended  December 31,  2001.  These  consolidated
financial  statements and the schedule referred to below are the  responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements and schedule based on our audits.

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

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the financial position of Horizon PCS,
Inc. and Subsidiaries as of December 31, 2001 and 2000, and the results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted in
the United States.

     Our audit was made for the  purpose  of  forming  an  opinion  on the basic
financial  statements  taken as a whole.  The  schedule  listed  in the index to
consolidated  financial  statements is presented for purposes of complying  with
the  Securities  and  Exchange  Commission's  rules and is not part of the basic
financial  statements.   This  schedule  has  been  subjected  to  the  auditing
procedures  applied in the audit of the basic  financial  statements and, in our
opinion,  fairly states in all material  respects the financial data required to
be set forth therein in relation to the basic  financial  statements  taken as a
whole.




                                                ARTHUR ANDERSEN LLP

Columbus, Ohio
February 12, 2002




                                      F-3
<PAGE>


HORIZON PCS, INC.

Consolidated Balance Sheets
As of December 31, 2002 and 2001
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                                                           <C>                <C>
                                                                                 DECEMBER 31,      DECEMBER 31,
                                                                                     2002              2001
                                                                               ----------------  ----------------
ASSETS
------
CURRENT ASSETS:
  Cash and cash equivalents (includes $55,000,000 on deposit in
    accordance with covenant amendment in 2002)...............................  $   86,137,284    $  123,775,562
  Restricted cash.............................................................      24,063,259        24,597,222
  Accounts receivable-- subscriber, less allowance for
    doubtful accounts of approximately $2,308,000 and $1,804,000 at
    December 31, 2002 and 2001, respectively..................................      19,524,527        14,293,771
  Receivable from affiliate and Parent........................................           8,497           584,222
  Equipment inventory.........................................................       4,082,795         3,845,433
  Prepaid expenses and other current assets...................................       2,671,458           840,970
                                                                               ----------------  ----------------
        Total current assets..................................................     136,487,820       167,937,180
                                                                               ----------------  ----------------

OTHER ASSETS:
  Restricted cash.............................................................              --        24,062,500
  Intangible asset-- Sprint PCS licenses, net of amortization.................      40,381,201        42,840,534
  Goodwill, net of amortization...............................................              --         7,191,180
  Debt issuance costs, net of amortization                                          19,995,818        20,437,556
  Deferred activation expense and other assets................................       6,723,827         4,001,436
                                                                               ----------------  ----------------
        Total other assets....................................................      67,100,846        98,533,206
                                                                               ----------------  ----------------

PROPERTY AND EQUIPMENT, NET                                                        239,536,593       214,867,858
                                                                               ----------------  ----------------

            Total assets......................................................  $  443,125,259    $  481,338,244
                                                                               ================  ================

</TABLE>




(Continued on next page)



                                      F-4

<PAGE>


HORIZON PCS, INC.

Consolidated Balance Sheets (Continued)
As of December 31, 2002 and 2001
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                                                                           <C>                <C>
                                                                                 DECEMBER 31,      DECEMBER 31,
                                                                                     2002              2001
                                                                               ----------------  ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES:
  Accounts payable............................................................  $   23,280,465    $   26,444,888
  Accrued liabilities.........................................................       6,903,055         8,182,461
  Accrued real estate and personal property taxes.............................       3,438,037         2,401,044
  Payable to Sprint...........................................................       9,910,262        10,244,529
  Deferred service revenue....................................................       5,308,457         3,712,734
                                                                               ----------------  ----------------
        Total current liabilities.............................................      48,840,276        50,985,656
                                                                               ----------------  ----------------

OTHER LONG-TERM LIABILITIES:
  Long-term debt..............................................................     516,284,349       384,055,643
  Other long-term liabilities.................................................      14,350,141         9,106,625
  Deferred activation revenue.................................................       6,092,645         3,808,618
                                                                               ----------------  ----------------
        Total other long-term liabilities.....................................     536,727,135       396,970,886
                                                                               ----------------  ----------------
          Total liabilities...................................................     585,567,411       447,956,542
                                                                               ----------------  ----------------

COMMITMENTS AND CONTINGENCIES (Note 14)

CONVERTIBLE PREFERRED STOCK...................................................     157,105,236       145,349,043

STOCKHOLDERS' EQUITY (DEFICIT):
  Preferred stock, 10,000,000 shares authorized, none issued
    or outstanding, at $0.0001 par value......................................              --                --
  Common stock-- class A, 300,000,000 shares authorized,
    26,646 issued and outstanding in 2001 and 2002, at $0.0001 par value......               3                 3
  Common stock-- class B, 75,000,000 shares authorized,
    58,458,354 issued and 58,445,288 outstanding in 2001 and 2002, at
    $0.0001 par value.........................................................           5,846             5,846
  Treasury stock-- class B, 13,066 shares, at $8.50 per share.................        (111,061)         (111,061)
  Accumulated other comprehensive income (loss)...............................        (394,575)         (837,851)
  Additional paid-in capital..................................................      91,852,117        91,852,117
  Deferred stock option compensation..........................................        (885,747)       (1,566,496)
  Retained deficit............................................................    (390,013,971)     (201,309,899)
                                                                               ----------------  ----------------
          Total stockholders' equity (deficit)................................    (299,547,388)     (111,967,341)
                                                                               ----------------  ----------------
            Total liabilities and stockholders' equity (deficit)..............  $  443,125,259    $  481,338,244
                                                                               ================  ================

</TABLE>



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


                                      F-5
<PAGE>


HORIZON PCS, INC.

Consolidated Statements of Operations
For the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                                                <C>                <C>                <C>
                                                                         2002               2001               2000
                                                                   ----------------   ----------------   -----------------
OPERATING REVENUES:
  Subscriber revenues.............................................  $  152,409,453     $   77,657,971     $   17,724,816
  Roaming revenues................................................      55,781,574         38,540,276          8,408,102
  Equipment revenues..............................................       7,846,573          7,105,457          3,061,021
                                                                   ----------------   ----------------   -----------------
         Total operating revenues.................................     216,037,600        123,303,704         29,193,939
                                                                   ----------------   ----------------   -----------------

OPERATING EXPENSES:
  Cost of service (exclusive of items shown below)................     167,128,087        100,515,780         27,452,382
  Cost of equipment...............................................      19,188,975         14,871,647          9,774,881
  Selling and marketing...........................................      52,601,068         48,992,817         18,025,868
  General and administrative (exclusive of items shown below).....      41,650,367         28,384,548         12,477,034
  Non-cash compensation...........................................         680,749          1,433,848            490,202
  Depreciation and amortization...................................      40,271,034         18,518,948          6,134,458
  Loss on disposal of PCS assets..................................         631,417          1,296,834                 --
  Impairment of goodwill and impact of acquisition-related
    deferred taxes................................................      13,222,180                 --                 --
                                                                   ----------------   ----------------   -----------------
         Total operating expenses.................................     335,373,877        214,014,422         74,354,825
                                                                   ----------------   ----------------   -----------------

OPERATING LOSS....................................................    (119,336,277)       (90,710,718)       (45,160,886)

Gain (Loss) on exchange of stock..................................              --           (399,673)        11,550,866
Interest income and other, net....................................       2,989,026          5,062,780          4,803,820
Interest expense, net of capitalized interest.....................     (60,600,568)       (27,434,076)       (10,317,473)
                                                                   ----------------   ----------------   -----------------

LOSS ON CONTINUING OPERATIONS BEFORE INCOME TAX (EXPENSE) BENEFIT.    (176,947,819)      (113,481,687)       (39,123,673)

INCOME TAX (EXPENSE) BENEFIT......................................              --                 --         (1,075,711)
                                                                   ----------------   ----------------   -----------------

LOSS ON CONTINUING OPERATIONS.....................................    (176,947,819)      (113,481,687)       (40,199,384)

DISCONTINUED OPERATIONS:
  Income from discontinued operations, net of tax
    expense of $73,000 in 2000....................................              --                 --            141,245
                                                                   ----------------   ----------------   -----------------

LOSS BEFORE EXTRAORDINARY ITEM....................................    (176,947,819)      (113,481,687)       (40,058,139)

EXTRAORDINARY LOSS, NET OF TAX
  BENEFIT OF $262,000 in 2000.....................................              --                 --           (486,323)
                                                                   ----------------   ----------------   -----------------

NET LOSS..........................................................    (176,947,819)      (113,481,687)       (40,544,462)

PREFERRED STOCK DIVIDEND..........................................     (11,756,253)       (10,929,852)        (2,782,048)
                                                                   ----------------   ----------------   -----------------

NET LOSS AVAILABLE TO COMMON STOCKHOLDERS.........................  $ (188,704,072)    $ (124,411,539)    $  (43,326,510)
                                                                   ================   ================   =================

Basic and diluted loss per share on continuing operations
  available to common stockholders................................  $        (3.23)    $        (2.13)    $        (0.76)
Basic and diluted income per share from discontinued operations...              --                 --                 --
Basic and diluted loss per share from extraordinary item..........              --                 --              (0.01)
                                                                   ----------------   ----------------   -----------------
Basic and diluted net loss per share available to common
  stockholders....................................................  $        (3.23)    $        (2.13)    $        (0.77)
                                                                   ================   ================   =================
Weighted-average common shares outstanding........................      58,471,934         58,471,934         56,177,948
                                                                   ================   ================   ================

</TABLE>

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

                                      F-6
<PAGE>


HORIZON PCS, INC.

Consolidated Statements of Comprehensive Income (Loss)
For the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                                                         <C>               <C>                 <C>
                                                                   2002              2001                2000
                                                            -----------------  -----------------  ----------------

NET LOSS................................................     $ (176,947,819)    $ (113,481,687)    $  (40,544,462)

OTHER COMPREHENSIVE INCOME (LOSS):
  Net unrealized gain (loss) on hedging activities......            443,276           (837,851)                --
                                                            -----------------  -----------------  ----------------

COMPREHENSIVE INCOME (LOSS).............................     $ (176,504,543)    $ (114,319,538)    $  (40,544,462)
                                                            ================   ================   ================
</TABLE>





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

                                      F-7

<PAGE>


HORIZON PCS, INC.

Consolidated Statements of Stockholders' Equity (Deficit)
For the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                    <C>         <C>       <C>        <C>      <C>         <C>          <C>             <C>         <C>

                                                                 ACCUMULATED
                                                                    OTHER
                                                                    COMPRE-                                               TOTAL
                                   CLASS A   CLASS B                HENSIVE   ADDITIONAL     DEFERRED                  STOCKHOLDERS'
                       PREFERRED   COMMON    COMMON     TREASURY    INCOME     PAID-IN     STOCK OPTION    RETAINED       EQUITY
                         STOCK      STOCK     STOCK      STOCK      (LOSS)     CAPITAL     COMPENSATION     DEFICIT      (DEFICIT)
                       ---------   -------  --------  --------    ----------  -----------  ------------ -------------   ------------

Balance,
 December 31, 1999....       --        --    5,381           --          --    21,916,312  (1,803,723)   (22,281,259)    (2,163,289)
                        -------   -------   -------   ---------   ----------  ------------ ----------- --------------   ------------
 Equity contribution..       --        --       --           --          --     1,373,703          --             --      1,373,703
 Acquisition of
  Bright PCS..........       --        --      468           --          --    33,999,532          --             --     34,000,000
 Issuance of
  warrants............       --        --       --           --          --    33,600,647          --             --     33,600,647
 Acquisition of
  treasury stock......       --        --       --     (111,061)         --            --          --             --       (111,061)
 Deferred stock
  option compensation.       --        --       --           --          --       961,923    (961,923)            --             --
 Stock option
  compensation expense       --        --       --           --          --            --     490,202             --        490,202
 Dividends............       --        --       --           --          --            --          --     (7,033,773)    (7,033,773)
 Tax on dividend......       --        --       --           --          --            --          --     (4,256,818)    (4,256,818)
 Net loss.............       --        --       --           --          --            --          --    (40,544,462)   (40,544,462)
 Preferred dividend...       --        --       --           --          --            --          --     (2,782,048)    (2,782,048)
                        -------   -------   -------   ----------  ----------  ------------ ----------- -------------- --------------
Balance,
 December 31, 2000....       --        --    5,849     (111,061)         --    91,852,117  (2,275,444)   (76,898,360)    12,573,101
                        -------   -------   -------   ----------  ----------  ------------ ----------- -------------- --------------
 Stock option
  compensation expense       --        --       --           --          --            --     708,948             --        708,948
 Net loss.............       --        --       --           --          --            --          --   (113,481,687)  (113,481,687)
 Other comprehensive
  income (loss).......       --        --       --           --    (837,851)           --          --             --       (837,851)
 Conversion of class
  B common stock......       --         3       (3)          --          --            --          --             --             --
 Preferred dividend...       --        --       --           --          --            --          --    (10,929,852)   (10,929,852)
                        -------   -------   -------   ----------  ----------  ------------ ----------- -------------- --------------
Balance,
 December 31, 2001....       --         3    5,846     (111,061)   (837,851)   91,852,117  (1,566,496)  (201,309,899)  (111,967,341)
                        -------   -------   -------   ----------  ----------  ------------ ----------- -------------- --------------
 Stock option
  compensation expense       --        --       --           --          --            --     680,749             --        680,749
 Net loss.............       --        --       --           --          --            --          --   (176,947,819)  (176,947,819)
 Other comprehensive
  income (loss).......       --        --       --           --     443,276            --          --             --        443,276
 Preferred dividend...       --        --       --           --          --            --          --    (11,756,253)   (11,756,253)
                        -------   -------   -------   ----------  ----------  ------------ ----------- -------------- --------------
Balance,
 December 31, 2002....  $    --   $     3   $5,846    $(111,061)  $(394,575)  $91,852,117  $ (885,747) $(390,013,971) $(299,547,388)
                        =======   =======   ========  ==========  ==========  ============ =========== ============== ==============

</TABLE>


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

                                   F-8

<PAGE>

HORIZON PCS, INC.

Consolidated Statements of Cash Flows
For the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                                               <C>                 <C>                <C>
                                                                         2002               2001             2000
                                                                   ----------------   ----------------   ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss..................................................       $  (176,947,819)   $  (113,481,687)   $   (40,544,462)
                                                                   ----------------   ----------------   ----------------
Adjustments to reconcile net loss to net cash used in
  operating activities, net of effect of acquisition:
  Depreciation and amortization.............................            40,271,034         18,518,948          6,189,073
  Impairment of goodwill and impact of acquisition related
    deferred taxes..........................................            13,222,180                 --                 --
  Extraordinary loss........................................                    --                 --            486,323
  Non-cash compensation expense.............................               680,749          1,433,848            490,202
  Non-cash interest expense.................................            27,986,604         19,344,515          5,635,498
  Non-cash loss (gain) on exchange of stock.................                    --            399,673        (11,550,866)
  Bad debt expense..........................................            15,518,084          6,409,561          1,407,028
  Loss on hedging activities................................                48,536            176,322                 --
  Loss on disposal of PCS assets............................               631,417          1,296,834                 --
  Change in:
    Accounts receivable.....................................           (20,748,840)       (17,443,698)        (6,075,589)
    Equipment inventory.....................................              (237,362)             4,902         (1,712,998)
    Interest receivable and other...........................            (1,830,488)         3,732,072         (2,316,514)
    Accounts payable........................................            (3,164,423)        (4,867,437)        26,692,915
    Accrued liabilities and deferred service revenue........            25,330,341          7,805,642          8,081,565
    Payable to Sprint.......................................              (334,267)         5,285,401          4,959,128
    Receivable/payable from affiliates and Parent...........               575,725         (1,577,577)         2,837,997
    Other assets and liabilities, net.......................               189,283             97,028           (167,593)
                                                                   ----------------   ---------------    ----------------
     Total adjustments......................................            98,138,573         40,616,034         34,956,169
                                                                   ----------------   ---------------    ----------------
         Net cash used in operating activities..............           (78,809,246)       (72,865,653)        (5,588,293)
                                                                   ----------------   ---------------    ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures, net.................................           (63,082,910)      (116,574,323)       (83,629,782)
  Decrease (increase) in restricted cash....................                    --        (48,659,722)                --
  Proceeds from redemption of RTFC capital certificates.....                    --          2,895,646                 --
  Investment in Parent......................................                    --                 --        (11,835,000)
  Investment in joint venture...............................                    --                 --         (1,032,000)
  Proceeds from the sale of property and equipment..........             1,563,970                 --            734,000
  Dividends received........................................                    --             (4,311)          (160,923)
  Cash acquired in acquisition of Bright PCS................                    --                 --          4,926,803
  Equity loss in investments, net...........................                    --                 --             28,555
                                                                   ----------------   ---------------    ----------------
         Net cash used in investing activities..............           (61,518,940)      (162,342,710)       (90,968,347)
                                                                   ----------------   ----------------   ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Convertible preferred stock...............................                    --                 --        126,500,000
  Cash dividends paid.......................................                    --                 --            (18,309)
  Capital contributions.....................................                    --                 --          1,373,703
  Stock issuance costs......................................                    --                 --         (9,161,242)
  Deferred financing fees...................................            (2,310,092)        (7,433,469)       (15,410,327)
  Intercompany advances (repayments) to Parent..............                    --                 --         (3,927,545)
  Notes payable-- borrowings, net of repayments.............           105,000,000        175,000,000        188,470,948
                                                                   ----------------   ----------------   ----------------
         Net cash provided by financing activities..........           102,689,908        167,566,531        287,827,228
                                                                   ----------------   ----------------   ----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........           (37,638,278)       (67,641,832)       191,270,588
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR................           123,775,562        191,417,394            146,806
                                                                   ----------------   ----------------   ----------------
CASH AND CASH EQUIVALENTS, END OF YEAR......................       $    86,137,284    $   123,775,562    $   191,417,394
                                                                   ================   =============-==   ================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest, net of amounts capitalized......................       $    33,081,907    $     6,571,184  $     2,579,986
  Income taxes..............................................                    --            338,141        5,174,949


</TABLE>

(Continued on next page)


                                      F-9
<PAGE>



HORIZON PCS, INC.

Consolidated Statements of Cash Flows (Continued)
For the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

     During 2002,  the Company paid  $24,596,463 of interest on the senior notes
with restricted cash (Notes 4 and 11).

     During 2002 and 2001,  the Company  paid  $11,636,969  and  $11,775,917  of
dividends, respectively, on convertible preferred stock. The dividends were paid
in additional shares of convertible  preferred stock.  During 2002 and 2001, the
Company accrued $2,055,267 and $1,935,983,  respectively, to be paid in 2003 and
2002, respectively.

     The purchase of Horizon  Telcom,  Inc. (the "Parent")  common stock in 2000
(Note 6) was financed  through a  $13,000,000,  one year,  unsecured  13% senior
subordinated  promissory note to a third party lender. The lender converted 100%
of the outstanding  principal and unpaid interest into the Company's convertible
preferred stock valued at $14,066,611 (Note 15).

     The  proceeds  from the  issuance of the  discount  notes in 2000 have been
allocated to long-term debt and the value of the warrants  ($20,245,000 or $5.32
per share) has been allocated to additional paid-in capital (Note 11).

     During  2000,  the  Company  agreed to grant to Sprint  warrants to acquire
2,510,460 shares of class A common stock,  valued at approximately  $13,356,000,
in  exchange  for the right to service  PCS  markets in  additional  areas.  The
warrants will be issued to Sprint at the earlier of an initial  public  offering
of the Company's common stock or July 31, 2003 (Note 17).


                                      F-10
<PAGE>


HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 1 - LIQUIDITY

     As of December 31, 2002,  Horizon PCS was in compliance  with its covenants
with regards to all outstanding debt.  However,  the Company believes that it is
probable that Horizon PCS will violate one or more  covenants  under the secured
credit facility in 2003. The failure to comply with a covenant would be an event
of default  under the secured  credit  facility,  and would give the lenders the
right to pursue remedies.  These remedies could include  acceleration of amounts
due under the  facility.  If the lender  elected to  accelerate  the amounts due
under the facility, this would also represent a default under the indentures for
the  senior  notes and  discount  notes  (Note  11).  Horizon  PCS'  independent
auditors'  report  states  these  matters  raise  substantial  doubt  about  the
Company's  ability to continue as a going concern.  The  consolidated  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

     To address the liquidity and going concern  issue,  management has embarked
on a number of initiatives to attempt to:

     o    reduce operating expenses,

     o    reduce churn,

     o    negotiate a modification in the fees the Company pays to Sprint,

     o    negotiate a reduction in the fees the Company pays to NTELOS,

     o    negotiate  modifications  to  the  covenants  in  the  senior  secured
          facility, and

     o    negotiate the right to obtain  funding under the Company's $95 million
          revolving line of credit under its senior secured facility (Note 14).

     The Company's  ability to raise funding at this time may be dependent  upon
other factors including,  without limitation,  market conditions, and such funds
may not be  available  or be  available  on  acceptable  terms.  There can be no
assurance  that the Company will achieve  these goals or that it will be able to
develop a business  plan which is reasonably  designed to achieve  positive cash
flow.

NOTE 2 - ORGANIZATION

     On April 26, 2000, Horizon Telcom,  Inc. (the "Parent") formed Horizon PCS,
Inc.  (the  "Company"  or  "HPCS").  On June  27,  2000,  Horizon  Telcom,  Inc.
transferred its 100% ownership of Horizon Personal Communications,  Inc. ("HPC")
to HPCS in exchange for 53,806,200  shares of stock of HPCS (as adjusted for the
1.1697-for-one  stock  split  in the  form  of a  stock  dividend  effective  on
September 8, 2000).  This  transfer was  accounted  for as a  reorganization  of
companies  under common control in a manner similar to  pooling-of-interests  in
the consolidated financial statements.  Accordingly,  the reorganization and the
adjusted number of shares outstanding have been reflected  retroactively and the
prior  financial  statements  of  Horizon  Personal  Communications,   Inc.  are
presented as those of HPCS. HPC will continue to exist and conduct business as a
wholly-owned subsidiary of the Company.

     The accompanying  consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries, including HPC and Bright Personal
Communications Services, LLC ("Bright PCS"), from the date of its acquisition in
June  2000.  All  material  intercompany  transactions  and  balances  have been
eliminated.

NOTE 3 - BUSINESS OPERATIONS

     The Company primarily  provides wireless personal  communications  services
("PCS") as a PCS  affiliate  of Sprint.  At  December  31,  2002,  approximately
270,900 (unaudited) PCS subscribers were in the Company's territory.



                                      F-11
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 3 - BUSINESS OPERATIONS (CONTINUED)

In October 1996, the Federal  Communications  Commission  ("FCC")  conditionally
granted the  Company  licenses to provide  personal  communications  services in
various parts of Ohio,  West  Virginia and Kentucky (a total of five  licenses).
The FCC  financed  the  licenses.  According  to FCC rules,  the  licenses  were
conditional upon the full and timely payment of the licenses' cost. The licenses
were subject to a requirement that the Company construct and operate  facilities
that offer coverage to a defined  population  within the relevant  license areas
within a defined  period.  The Company began the engineering and design phase in
1996 and began the construction of the personal  communications network in early
1997. The Company began  providing  personal  communications  services in August
1997.

     In 1997,  the FCC offered  four  options to certain PCS license  holders to
change  the  payment  terms  of the  FCC  financed  debt.  These  options  were:
continuing with the current  installment  plan (status quo);  return half of the
spectrum  from  any or  all of the  licenses  in  exchange  for a  proportionate
reduction  in debt  (disaggregation);  turning in all  licenses in exchange  for
total debt forgiveness (amnesty);  or prepay for as many licenses as the Company
can afford at face value while  returning  other  licenses in exchange  for debt
forgiveness (prepayment).

     During 1998,  the Company  elected to return all of the spectrum  from four
licenses and half of the spectrum from the fifth license. In connection with the
return of the spectrum,  the Company  entered into  management  agreements  with
Sprint  during 1998.  These  agreements  provide the Company with the  exclusive
right to build,  own and manage a wireless  voice and data  services  network in
certain markets located in Ohio, West Virginia,  Kentucky,  Virginia,  Tennessee
and  Maryland  under the Sprint PCS brand.  HPCS is  required to  build-out  the
wireless  network  according  to Sprint's  PCS  specifications.  The term of the
agreements is 20 years with three  successive  10-year  renewal  periods  unless
terminated  by  either  party  under  provisions   outlined  in  the  management
agreements.  The management  agreements  commenced in June 1998, but payments of
the  management  fee (Note 9) did not commence  until HPCS  converted to a fully
branded PCS  affiliate  of Sprint in October  1999.  The  management  agreements
included  indemnification  clauses  between the Company and Sprint to  indemnify
each party against  claims  arising from  violations  of laws or the  management
agreements,   other  than  liabilities  resulting  from  negligence  or  willful
misconduct of the party seeking to be indemnified.

     In May 2000,  the Company  expanded its  management  agreement with Sprint.
This allows the Company to have the exclusive  right to build,  own and manage a
wireless voice and data services network in markets located in Pennsylvania, New
York, Ohio and New Jersey.

     The Sprint  agreements  require  the Company to  interface  with the Sprint
wireless network by building the Company's network to operate on PCS frequencies
licensed to Sprint in the 1900 MHz range. Under the Sprint agreements,  HPCS has
agreed to:

     o    construct and manage a network in HPCS'  territory in compliance  with
          Sprint's PCS licenses and the terms of the management agreement;

     o    distribute,  during the term of the management  agreement,  Sprint PCS
          products and services;

     o    conduct advertising and promotion activities in HPCS' territory; and

     o    manage that portion of Sprint's PCS  customer  base  assigned to HPCS'
          territory.

                                       F-12
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ESTIMATES

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

CASH AND CASH EQUIVALENTS

    Cash and cash equivalents include cash on hand, money market accounts,  U.S.
treasury  bills,  corporate  bonds and  investments  in  commercial  paper  with
original maturities of three months or less.

     The breakout of cash and cash equivalents at December 31, 2002, is detailed
below;

                                                                   2002
                                                            ---------------
         Cash on hand...................................    $   17,533,118
         Money market accounts..........................           100,080
         U.S. treasury bills............................           349,696
         Corporate bonds and commercial paper...........        68,154,390
                                                            ---------------
         Cash and cash equivalents......................    $   86,137,284
                                                            ===============

RESTRICTED CASH

     In connection with the Company's  December 2001 offering of $175,000,000 of
senior notes due in 2011 (Note 11), approximately  $48,660,000 of the offering's
proceeds  were  placed in an escrow  account  to be used  toward  the first four
semi-annual interest payments due under the terms of the notes. During 2002, the
Company paid approximately  $24,596,000 representing the first two installments.
The remaining two interest  payments have been classified as short-term and will
be paid in 2003.  The funds are invested in a government  security  money market
account.  Interest earned on the escrow funds totaled approximately $673,000 and
$69,000 in 2002 and 2001, respectively.

ALLOWANCE FOR ACCOUNTS RECEIVABLE

     Estimates  are used in  determining  our  allowance  for doubtful  accounts
receivable,  which is based on a percentage of our accounts  receivable by aging
category.  The percentage is derived by considering  our historical  collections
and write-off  experience,  current aging of our accounts  receivable and credit
quality trends, as well as Sprint's credit policy.  The breakout of the activity
recorded to the allowance for accounts receivable is detailed below:
<TABLE>
<CAPTION>
     <S>                                       <C>               <C>             <C>
                                                           YEAR ENDED DECEMBER 31,
                                               ------------------------------------------------
                                                  2002             2001             2000
                                               ---------------   --------------  --------------
                                                              (IN THOUSANDS)
     Balance at beginning of year...........   $         1,804   $         901   $        371
     Provisions charged to expense..........            15,518           6,410          1,382
     Write-offs, net of recoveries..........           (15,014)         (5,507)          (852)
                                               ---------------   --------------  --------------
     Balance at end of year.................   $         2,308   $       1,804   $         901
                                               ===============   ==============  ==============
</TABLE>


                                       F-13
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

EQUIPMENT INVENTORY

     Equipment   inventory   consists  of  handsets  and  related   accessories.
Inventories are carried at the lower of cost (determined by the weighted average
method) or market (replacement cost).

PROPERTY AND EQUIPMENT

     Property and equipment,  including  improvements  that extend useful lives,
are  stated at cost (Note 8),  while  maintenance  and  repairs  are  charged to
operations as incurred.  Construction work in progress includes expenditures for
the purchase of capital equipment, construction and items such as direct payroll
and related benefits and interest capitalized during  construction.  The Company
capitalizes  interest  pursuant to Statement of Financial  Accounting  Standards
("SFAS")  No. 34,  "Capitalization  of Interest  Cost." The Company  capitalized
interest of  approximately  $4,437,000,  $6,579,000 and $1,476,000 for the years
ended December 31, 2002, 2001 and 2000,  respectively.  In addition, the Company
capitalized  labor costs of approximately  $2,339,000for the year ended December
31, 2002.

DEPRECIATION AND AMORTIZATION OF PROPERTY AND EQUIPMENT

     The Company  provides for  depreciation  and  amortization  of property and
equipment under the straight-line  method,  based on the estimated service lives
of the various classes of property. Estimated useful lives are as follows:

                                                             YEARS
                                                             -----
          Network Assets................................      5-15
          Switching Equipment...........................       5-8
          Furniture, vehicles and office equipment......       3-5

DEBT ISSUANCE COSTS

     In  connection  with the issuance of long-term  debt (Note 11), the Company
has incurred  approximately  $24,072,000  in deferred  financing  costs  through
December 31, 2002,  including  approximately  $2,310,000 during 2002. These debt
issuance costs are amortized  using the effective  interest method over the term
of the  underlying  obligation,  ranging from eight to ten years.  For the years
ended December 31, 2002, 2001 and 2000, approximately $2,752,000, $1,120,000 and
$690,000 of amortization of debt issuance costs,  including subsequently retired
financings, was included in interest expense.

GOODWILL

     On January 1, 2002, the Company  adopted SFAS No. 142,  "Goodwill and other
intangible  assets"  (Note 7). Prior to January 1, 2002,  the Company  amortized
goodwill on a straight-line basis over a 20 year period. Under SFAS No. 142, the
Company ceased  amortization of goodwill and conducted an impairment test of the
goodwill balance.  As of January 1, 2002, the goodwill balance was deemed not to
be impaired. However, the December 31, 2002 goodwill balance was deemed impaired
and was  written off during the fourth  quarter of 2002.  See Note 7 for further
details on the impairment of goodwill.


                                       F-14
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

IMPAIRMENT OF LONG-LIVED ASSETS

     Long-lived  assets such as property,  plant and  equipment,  and  purchased
intangibles subject to amortization, are reviewed for impairment whenever events
or changes in  circumstances  indicate that the carrying  amount of an asset may
not be recoverable.  Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset to estimated undiscounted future
cash flows expected to be generated by the asset.  If the carrying  amount of an
asset  exceeds  its  estimated  future  cash  flows,  an  impairment  charge  is
recognized  by the amount by which the carrying  amount of the asset exceeds the
fair value of the asset.  Assets to be disposed of are  reported at the lower of
the carrying amount or fair value less costs to sell, and depreciation ceases.

     Goodwill  and  intangible  assets not  subject to  amortization  are tested
annually for impairment. An impairment loss is recognized to the extent that the
carrying amount exceeds the asset's fair value (Note 7).

     During 2002, the Company  launched  switches in Tennessee and  Pennsylvania
and  disconnected  some switching  equipment in Chillicothe,  Ohio. As a result,
approximately  $6.2 million of switching  equipment  is  considered  an impaired
asset as defined by SFAS No. 144,  "Accounting for the Impairment or Disposal of
Long-Lived Assets."  Accordingly,  depreciation and amortization expense for the
year ended December 31, 2002,  includes  approximately  $3.5 million  related to
accelerated depreciation on the impaired asset. The total amount of depreciation
recorded to date on this equipment is approximately  $5.8 million.  The residual
book value of $400,000  approximates  fair market  value at December  31,  2002,
based  on  quoted  market  price,  and  is  included  in  other  assets  in  the
accompanying balance sheet

DERIVATIVE FINANCIAL INSTRUMENTS

     The  Company's  policies  do not  permit  the use of  derivative  financial
instruments  for speculative  purposes.  The Company uses interest rate swaps to
manage  interest  rate risk.  The net amount paid or  received on interest  rate
swaps is recognized as an adjustment to interest income and other (Note 21).

     The  Company  has  adopted  SFAS  No.  133,   "Accounting   for  Derivative
Instruments and Hedging Activities," as amended by SFAS No. 138, "Accounting for
Derivative Instruments and Certain Hedging Activities." These statements require
an entity to recognize  all  derivative  and hedging  activities  as an asset or
liability  measured  at  fair  value.  Depending  on  the  intended  use  of the
derivative,  changes in its fair value will be  reported in the period of change
as either a component of earnings or a component of other comprehensive  income.
The Company uses interest rate swaps,  designated as cash flow hedges, to manage
interest  rate risk.  The net amount paid or received on interest  rate swaps is
recognized as an adjustment to interest expense.  Changes in the fair value of a
derivative  that is highly  effective and that is designated  and qualifies as a
cash-flow  hedge are recorded in other  comprehensive  income to the extent that
the  derivative  is  effective  as a hedge,  until  earnings are affected by the
variability in cash flows of the designated hedged item. The ineffective portion
of the change in fair value of a derivative  instrument that qualifies as either
a fair-value hedge or a cash-flow hedge is reported in earnings.  Changes in the
fair value of  derivative  trading  instruments  are reported in current  period
earnings.  Outstanding  temporary gains and losses are netted together and shown
as either a component of other assets or accrued liabilities.

REVENUE RECOGNITION

     The  Company  records  equipment  revenue  from  the sale of  handsets  and
accessories to subscribers in its retail stores and to local distributors in its
territories  upon  delivery.  The Company does not record  equipment  revenue on
handsets and accessories  purchased or sold by national third-party retailers or
directly from Sprint by subscribers in our territory. After the handset has been
purchased,  the subscriber  purchases a service  package,  revenue from which is
recognized monthly as service is provided and is included in subscriber revenue,


                                       F-15
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

net of credits related to the billed revenue. The Company believes the equipment
revenue  and  related  cost of  equipment  associated  with the sale of wireless
handsets  and  accessories  is a  separate  earnings  process  from  the sale of
wireless services to subscribers.  For industry competitive reasons, the Company
sells wireless  handsets at a loss.  Because such  arrangements do not require a
customer to subscribe to the Company's wireless services and because the Company
sells wireless  handsets to existing  customers at a loss, the Company  accounts
for these transactions  separately from agreements to provide customers wireless
service.

     The Company's  accounting  policy for the  recognition  of  activation  fee
revenue is to record the  revenue  over the  periods  such  revenue is earned in
accordance with the current  interpretations  of SEC Staff  Accounting  Bulletin
("SAB") No. 101,  "Revenue  Recognition in Financial  Statements."  Accordingly,
activation fee revenue and direct  customer  activation  expense is deferred and
will be recorded over the average life for those  customers (30 months) that are
assessed an activation  fee. The Company  recognized  approximately  $2,992,000,
$695,000  and $47,000 of both  activation  fee revenue and  customer  activation
expense during 2002, 2001 and 2000, respectively, and had deferred approximately
$6,093,000  and  $3,809,000  of  activation  fee  revenue  and  direct  customer
activation expense at December 31, 2002 and 2001, respectively.

     A  management  fee  of  8%  of  collected  PCS  revenues  from  Sprint  PCS
subscribers  based in the  Company's  territory,  is  accrued  as  services  are
provided  and  remitted to Sprint and  recorded  as general and  administrative.
Revenues  generated  from the sale of  handsets  and  accessories,  inbound  and
outbound  Sprint PCS roaming fees, and roaming  services  provided to Sprint PCS
customers who are not based in the Company's territory are not subject to the 8%
management  fee.  Expense  related  to the  management  fees  charged  under the
agreement was approximately $12,027,000, $5,923,000 and $1,302,000 for the years
ended December 31, 2002, 2001 and 2000 respectively.

ADVERTISING COSTS

     Costs  related  to  advertising  and  other  promotional  expenditures  are
expensed as incurred.  Advertising and promotional  costs totaled  approximately
$10,632,000,  $10,345,000  and $4,506,000 for the years ended December 31, 2002,
2001 and 2000, respectively.

STOCK-BASED 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  FASB
Interpretation  No. 44,  "Accounting  for Certain  Transactions  involving Stock
Compensation an  interpretation  of APB Opinion No. 25" issued in March 2000, 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. 148 "Accounting
for Stock-Based  Compensation - Transition and Disclosure - an amendment of FASB
Statement No. 123." The following table  illustrates the effect on net income if
the  fair-value-based  method had been applied to all  outstanding  and unvested
awards in each period.


                                       F-16
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

<TABLE>
<CAPTION>
<S>                                                       <C>                <C>              <C>
                                                                2002              2001             2000
                                                          ----------------   ---------------   --------------
Net loss available to common stockholders, as
  reported.............................................   $  (188,704,072)   $ (124,411,539)   $ (43,326,510)
Add: Stock-based employee compensation expense
  included in reported net loss........................           680,749         1,433,848          490,202
Deduct: Total stock-based employee compensation
  expense determined under fair value base method
  for all awards, net of related tax effects...........        (1,150,666)       (1,797,868)      (1,184,070)
                                                          ----------------   ---------------   --------------
 Pro Forma net loss available to common
  stockholders.........................................   $  (189,173,989)   $ (124,775,559)   $  44,020,378)
                                                          ================   ===============   ==============

Basic and diluted loss per share available to common
  stockholders - as reported                              $         (3.23)   $        (2.13)           (0.77)
                                                          ================   ===============   ==============
Basic and diluted loss per share available to common
  stockholders - pro forma                                $         (3.24)   $        (2.13)           (0.78)
                                                          ================   ===============   ==============
</TABLE>

     The Company  accounts for equity  instruments  issued to  non-employees  in
accordance  with the  provisions of SFAS No. 123 and Emerging  Issues Task Force
("EITF") Issue No. 96-18,  "Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring,  or in  Conjunction  with Selling,  Goods or
Services."  All  transactions  in which goods or services are the  consideration
received for the issuance of equity  instruments  are accounted for based on the
fair  value  of the  consideration  received  or the fair  value  of the  equity
instrument issued,  whichever is more reliably measurable.  The measurement date
of the fair value of the equity  instrument issued is the earlier of the date on
which the  counter-party's  performance  is  complete or the date on which it is
probable that performance will occur.

SITE BONUSES

     During  2001 and  2000,  the  Company  received  $740,000  and  $7,220,000,
respectively,  for site bonuses from SBA, which constructs  towers leased by the
Company.  The Company  defers and  amortizes the site bonus over the life of the
respective lease. During 2002, 2001 and 2000, the Company recorded approximately
$941,000  and  $916,000  and  $320,000,  respectively,  as a reduction  to lease
expense.

OTHER POSTRETIREMENT PLANS

     The Company  sponsors a defined benefit health care plan for  substantially
all retirees and  employees.  The Company  measures the costs of its  obligation
based on its best  estimate.  The net periodic costs are recognized as employees
render the services necessary to earn the postretirement benefits.

INCOME TAXES

     Income  taxes are  accounted  for under  the  asset and  liability  method.
Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases and operating loss and tax credit  carryforwards.  Deferred tax assets and
liabilities  are measured  using enacted tax rates  expected to apply to taxable
income in the years in which  those  temporary  differences  are  expected to be
recovered  or settled.  The effect on deferred tax assets and  liabilities  of a
change in tax rates is  recognized  in income in the period  that  includes  the
enactment date.


                                       F-17
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CONCENTRATION OF CREDIT RISK

     The  Company  maintains  cash and cash  equivalents  in an  account  with a
financial  institution  in excess of the amount  insured by the Federal  Deposit
Insurance Corporation.  The financial institution is one of the largest banks in
the United States and management  does not believe there is  significant  credit
risk associated with deposits in excess of Federally insured amounts.

     Restricted  cash is invested in short-term  government  money market funds.
The Company does not believe there is significant  credit risk  associated  with
the  funds  as  the  underlying  securities  are  issued  by the  U.S.  Treasury
Department.

     The  Company  maintains  accounts  with  nationally  recognized  investment
managers.  The  Federal  Deposit  Insurance  Corporation  does not  insure  such
deposits.   Management  does  not  believe  there  is  significant  credit  risk
associated with these uninsured deposits.

     Other  financial  instruments  that  potentially  subject  the  Company  to
concentrations  of credit risk  consist  primarily of accounts  receivable  from
subscribers.  Management  believes  the risk is  limited  due to the  number  of
customers comprising the Company's customer base and its geographic diversity.

     A significant amount of the Company's  financial  transactions  result from
the Company's relationship with Sprint. Additionally, Sprint holds approximately
four to  eleven  days of the  Company's  subscriber  lockbox  receipts  prior to
remitting  those  receipts to the Company  weekly.  The Company  does not record
these lockbox receipts until Sprint remits them.

NET LOSS PER SHARE

     The Company  computes net loss per common share in accordance with SFAS No.
128,  "Earnings per Share" and SAB No. 98. Basic and diluted loss per share from
continuing  operations is computed by dividing  loss on  continuing  operations,
less  preferred  stock  dividends,  for  each  period  by  the  weighted-average
outstanding  common  shares.  Basic and diluted net loss per share  available to
common  stockholders  is  computed  by  dividing  net loss  available  to common
stockholders for each period by the weighted-average  outstanding common shares.
No  conversion of common stock  equivalents  (options,  warrants or  convertible
securities)  has been  assumed in the  calculations  since the  effect  would be
antidilutive.  As a result,  the number of  weighted-average  outstanding common
shares  as well as the  amount  of net loss per  share is the same for basic and
diluted net loss per share  calculations  for all periods  presented.  There are
three  items that  could  potentially  dilute  basic  earnings  per share in the
future.  These  items  include the common  stock  options  (Note 18),  the stock
purchase  warrants (Notes 11 and 17) and the  convertible  preferred stock (Note
15). These items will be included in the diluted earnings per share  calculation
when dilutive.

RECENT ACCOUNTING PRONOUNCEMENTS

     In December 2002, the Financial  Accounting Standards Board ("FASB") issued
SFAS  No.  148,  "Accounting  for  Stock-Based  Compensation  -  Transition  and
Disclosure - an amendment of FASB  Statement No. 123." This  Statement  provides
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
Statement  requires  prominent  disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee  compensation
and the effect of the method used on reported  results.  The Company adopted the
disclosure  requirements  of SFAS No. 148 as of December 31, 2002, but continues
to account for stock  compensation  costs in accordance  with APB Opinion No. 25
(Note 18).


                                       F-18
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     In June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
Associated with Exit or Disposal Activities." This Statement addresses financial
accounting and reporting for costs  associated with exit or disposal  activities
by  requiring  that  expenses  related to the exit of an activity or disposal of
long-lived  assets be recorded when they are incurred and  measurable.  Prior to
SFAS No. 146,  these  charges were accrued at the time of  commitment to exit or
dispose of an activity.  The Company will adopt SFAS 146 on January 1, 2003, and
it is not  expected  to  have a  material  effect  on  the  Company's  financial
position, results of operations or cash flows.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No.  4,  44  and  64,   Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections."  SFAS No. 145 addresses the  accounting  for gains and losses from
the  extinguishment  of debt,  economic  effects  and  accounting  practices  of
sale-leaseback   transactions  and  makes  technical   corrections  to  existing
pronouncements.  The Company will adopt SFAS No. 145 on January 1, 2003,  and it
is not expected to have a material effect on the Company's  financial  position,
results of operations or cash flows.

     In June  2001,  the  FASB  issued  SFAS  No.  143,  "Accounting  for  Asset
Retirement  Obligations."  This  statement  addresses  financial  accounting and
reporting for obligations associated with the retirements of tangible long-lived
assets  and  the  associated  asset  retirement   costs.  It  applies  to  legal
obligations  associated  with the  retirement  of long- lived assets that result
from the  acquisition,  construction,  development and the normal operation of a
long-lived  asset.  The Company will adopt this statement  effective  January 1,
2003.  Management  is currently in the process of  evaluating  its impact on the
Company's financial position, results of operations and cash flows.

RECLASSIFICATIONS

     Certain prior year amounts have been  reclassified to conform with the 2002
presentation.

NOTE 5 - ACQUISITIONS

    During 1999, the Company entered into a joint venture  agreement through the
purchase  of 25.6% of Bright  Personal  Communications  Services,  LLC  ("Bright
PCS").  The  investment  was  accounted for under the equity  method.  The joint
venture  was  established  in October  1999 to provide  personal  communications
services in Ohio, Indiana and Michigan.

     On June 27, 2000, the Company acquired the remaining 74.4% of Bright PCS in
exchange for  approximately  8% of the Company's class B common stock (4,678,800
shares valued at approximately $34,000,000) and approximately 40% of the Horizon
Telcom,  Inc.  common stock owned by HPC (31,912 shares valued at  approximately
$15,300,000) (Note 6). This acquisition was treated as a purchase for accounting
purposes.  The  consolidated  statements  of  operations  include the results of
Bright PCS from June 28, 2000.

     In conjunction with this transaction,  the Company also acquired the Bright
PCS  management  agreement  with Sprint and, with it, the right to operate using
Sprint PCS  licenses in Bright PCS'  markets.  The  Company  has  recognized  an
intangible asset totaling  approximately  $33,000,000  related to this licensing
agreement  which is being  amortized  over 20  years,  the  initial  term of the
underlying management agreement (Note 7). Amortization commenced in June 2000.

     The  purchase  price  exceeded  the fair  market  value  of the net  assets
acquired by approximately $7,778,000. The resulting goodwill was being amortized
on a  straight-line  basis over 20 years.  Amortization  commenced in June 2000.
Amortization  expense  for the years  ended  December  31,  2001 and  2000,  was
$389,000 and $198,000,  respectively.  Accumulated  amortization of goodwill was
approximately $587,000 and $198,000 at December 31, 2001 and 2000, respectively.
The  Company  adopted  SFAS No.  142 on  January  1,  2002.  As a result  of the
adoption,  goodwill amortization ceased as of December 31, 2001, and the Company
is now required to complete an impairment test of the remaining goodwill balance

                                      F-19
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 5 - ACQUISITIONS (CONTINUED)

annually (or more frequently if impairment  indicators  arise).  On December 31,
2002, the Company  completed its annual impairment test of goodwill and recorded
an impairment charge for the full amount of unamortized  goodwill as a result of
this acquisition.  As required by SFAS 109, goodwill should be increased for the
deferred taxes arising from assets  recorded in excess of their tax basis for an
acquisition.  This amounted to $6,031,000 for this  acquisition  and accordingly
the goodwill impairment of $13,232,180 included such amounts (Note 7).

NOTE 6 - INVESTMENTS

     In February  2000, the Company  purchased  78,900 shares of common stock of
its  parent,  Horizon  Telcom,  Inc.  from  the  Parent's  largest  unaffiliated
stockholder for approximately $11,835,000. This represented a 19.78% interest in
Horizon  Telcom,  Inc. The Company  exchanged  40% of the shares  owned  (31,912
shares) to the former members as consideration for the acquisition of Bright PCS
(Note 5). This transaction  resulted in a gain of approximately  $10,513,000 and
reduced the ownership in Horizon Telcom, Inc. to 11.78%.

     On September 26, 2000, the Company  distributed 10% of its 11.78% ownership
of Horizon  Telcom,  Inc.  in the form of a  dividend,  payable  pro rata to the
stockholders  of record on September 26, 2000.  This  transaction  resulted in a
gain of approximately $1,038,000, as part of the stock was distributed to owners
other than the Parent.

     During 2001, the Company  distributed its remaining 7,249 shares of Horizon
Telcom,  Inc. to employees of HPC as an award. As a result, the Company recorded
non-cash compensation expense of approximately $725,000 and a non-operating loss
of  approximately  $400,000  representing  the reduced  fair market value of the
stock at the time of the transaction  compared to the original  holding value of
the investment.

     As part of the term loan  facility  for the  construction  of the  personal
communications  network  (Note 11), the Company was  required to purchase  Rural
Telephone  Finance   Cooperative's   (RTFC,  the  lender)  subordinated  capital
certificates  with each draw on the loan. The balance of these  certificates  at
December 31, 2000, was approximately $2,896,000.  The certificates were redeemed
in March 2001 for  approximately  $2,896,000  with no recognized gain or loss on
the redemption.

NOTE 7 - GOODWILL AND INTANGIBLE ASSETS

    During 1999, the Company entered into a joint venture  agreement through the
purchase of 25.6% of Bright  PCS. On June 27,  2000,  the Company  acquired  the
remaining  74.4% of Bright  PCS.  The  total  purchase  price was  approximately
$49,300,000  and was treated as a purchase  method  acquisition  for  accounting
purposes.  The purchase  price  exceeded the fair market value of the net assets
acquired by approximately $7,778,000.  The resulting goodwill was amortized on a
straight-line basis over 20 years until December 31, 2001.

    The  Company  adopted  SFAS No.  142 on  January  1, 2002 (See Note 4). As a
result of the adoption,  goodwill  amortization  ceased as of December 31, 2001,
and the Company was  required to complete an  impairment  test on its  remaining
goodwill  balance as of the date of adoption.  The Company  completed  the first
step required by SFAS No. 142 and determined  the goodwill  remaining at January
1, 2002, was not impaired.

    On December 31, 2002, the Company performed the annual valuation  assessment
of goodwill.  This valuation determined that the carrying amount of the goodwill
exceeded the fair value of the assets. As a result the Company recorded goodwill
impairment of  $13,222,180,  related to the impairment of goodwill and impact of
acquisition-related deferred taxes. The impairment eliminated the entire balance
of  goodwill as of  December  31,  2002.  The fair value was  measured  based on
projected   discounted  future  operating  cash  flows  using  a  discount  rate
reflecting the Company's average cost of funds.

                                      F-20
<PAGE>


HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 7 - GOODWILL AND INTANGIBLE ASSETS (CONTINUED)

    The following pro forma  disclosure  reconciles net loss available to common
stockholders,  as  presented  on the  accompanying  consolidated  statements  of
operations, excluding the effect of goodwill amortization:

<TABLE>
<CAPTION>
<S>                                                  <C>                 <C>                 <C>
                                                                      YEAR ENDED DECEMBER 31,
                                                     ---------------------------------------------------------
                                                           2002              2001                2000
                                                     ----------------    ----------------    -----------------
Reported net loss.................................   $   (176,947,819)   $   (113,481,687)   $    (40,544,462)
Goodwill amortization.............................                 --             388,887             197,685
                                                     -----------------   -----------------    ----------------
    Adjusted net loss.............................       (176,947,819)       (113,092,800)        (40,346,777)
Preferred stock dividend..........................        (11,756,253)        (10,929,852)         (2,782,048)
                                                     -----------------   -----------------    ----------------
    Adjusted net loss available to common
      stockholders................................   $   (188,704,072)   $   (124,022,652)   $    (43,128,825)
                                                     =================   =================    ================
</TABLE>

     In  conjunction  with the  acquisition  discussed  in Note 5,  the  Company
recognized an intangible asset totaling approximately $33,000,000 related to the
licensing  agreement  which will be amortized on a  straight-line  basis over 20
years, the initial term of the underlying management agreement. In addition, the
Company  agreed to grant  Sprint  warrants to acquire  shares of common stock in
exchange for the right to service  additional  PCS markets.  These warrants were
recorded  as an  intangible  asset of  approximately  $13,356,000  and are being
amortized on a straight-line  basis over  approximately  18 years (Note 17). The
breakout of these intangible assets is detailed below:

<TABLE>
<CAPTION>
<S>                                              <C>               <C>               <C>              <C>

                                                            SPRINT LICENSES                    SPRINT WARRANTS
                                                 ----------------------------------  --------------------------------
                                                       2002              2001              2002             2001
                                                 ----------------  ----------------  ---------------  ---------------
Gross intangible value...................        $    33,000,000   $    33,000,000   $    13,355,647   $  13,355,647
Amortization expense recognized..........             (1,706,897)       (1,706,897)         (752,436)       (752,436)
Beginning accumulated amortization.......             (2,574,569)         (867,672)         (940,544)       (188,108)
                                                 ----------------  ----------------  ----------------  --------------
 Net intangible value....................        $    28,718,534   $    30,425,431   $    11,662,667   $   12,415,103
                                                 ================  ================  ================  ===============
</TABLE>

     Estimated  amortization  expense  for the next five years is  approximately
$2,459,000 each year.

NOTE 8 - PROPERTY AND EQUIPMENT

    Property and equipment consists of the following at December 31:
<TABLE>
<CAPTION>
<S>                                                      <C>               <C>
                                                               2002              2001
                                                         ----------------  ----------------
Network assets........................................   $   196,548,216   $   134,257,789
Switching equipment...................................        63,294,413        35,253,986
Furniture, vehicles and office equipment..............        10,348,364        10,137,175
Land..................................................           966,689           966,689
                                                         ----------------  ----------------
  Property and equipment in service, cost.............       271,157,682       180,615,639
Accumulated depreciation..............................       (46,273,707)      (22,478,698)
                                                         ----------------  ----------------
    Property and equipment in service, net............       224,883,975       158,136,941
Construction work in progress.........................        14,652,618        56,730,917
                                                         ----------------  ----------------
      Total property and equipment, net...............   $   239,536,593   $   214,867,858
                                                         ================  ================
</TABLE>

     During  2002 and 2001,  the  Company  retired  certain  network  assets and
replaced  them with  equipment  required to upgrade the network.  As a result of
these  retirements,  the Company  recorded a loss on  disposal  of $631,417  and
$1,296,834 for the years ended December 31, 2002 and 2001, respectively.

                                      F-21
<PAGE>


HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 9 - SPRINT AGREEMENTS

     Under the  Sprint  Agreements,  Sprint  provides  the  Company  significant
support  services such as billing,  collections,  long distance,  customer care,
network operations support,  inventory logistics support,  use of the Sprint and
Sprint PCS brand names, national advertising,  national distribution and product
development.  Additionally,  the Company derives substantial roaming revenue and
expenses when Sprint's and Sprint's network  partners' PCS wireless  subscribers
incur  minutes  of use in the  Company's  territories  and  when  the  Company's
subscribers  incur minutes of use in Sprint and other Sprint  network  partners'
PCS territories.  These  transactions  are recorded in roaming revenue,  cost of
service,  cost of equipment  and selling and marketing  expense  captions in the
accompanying consolidated statements of operations.  Cost of service and roaming
transactions  include,  long distance charges,  roaming expense and the costs of
services  such  as  billing,   collections,   and  customer  service  and  other
pass-through  expenses.  Cost of  equipment  transactions  relate  to  inventory
purchased by the Company from Sprint  under the Sprint  Agreements.  Selling and
marketing  transactions  relate to subsidized  costs on handsets and commissions
paid  by the  Company  under  Sprint's  national  distribution  program.  The 8%
management  fee is  included  in general and  administrative.  Amounts  recorded
relating to the Sprint  Agreements  for the year ended  December 31,  2002,  are
approximately as follows:

      TOTAL REVENUES AND EXPENSES PROVIDED BY
                  SPRINT AGREEMENTS                       2002
--------------------------------------------------  ---------------
     Roaming revenue..............................  $    51,688,000
                                                    ===============

     Cost of Service:
     Roaming.....................................   $    40,883,000
     Billing and customer care...................        20,587,000
     Long distance...............................        10,470,000
                                                    ---------------
       Total cost of service......................       71,940,000
     Selling and marketing........................        2,566,000
     General and administrative:
     Management fee..............................        12,027,000
                                                    ---------------
       Total expense.............................   $    86,533,000
                                                    ===============

     The Sprint  Agreements  require  the Company to  maintain  certain  minimum
network performance  standards and to meet other performance  requirements.  The
Company was in compliance in all material  respects with these  requirements  at
December 31, 2002.

NOTE 10 - LINES OF CREDIT

     On September  26, 2000,  the Company  entered  into a  $95,000,000  line of
credit that expires on September 30, 2008, as part of its senior  secured credit
facility  agreement  (Note 11). As of  December  31,  2002,  the Company had not
borrowed on this line of credit.

     As  discussed  in Note 11 below the Company did not meet the  covenant  for
earnings before  interest,  taxes,  depreciation  and amortization for the first
quarter of 2002.  The Company  obtained a waiver of  non-compliance  and entered
into an amendment of the secured credit facility.  This amendment restricted the
maximum amount available to be borrowed for certain periods (Note 14)


                                      F-22
<PAGE>


HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 11 - LONG-TERM DEBT

     On December 7, 2001, the Company received $175,000,000 from the issuance of
unsecured  senior notes (the "senior  notes") due on June 15, 2011.  Interest is
paid semi-annually on June 15 and December 15 at an annual rate of 13.75%,  with
interest  payments  commencing June 15, 2002.  Approximately  $48,660,000 of the
offering's  proceeds  was  placed in an escrow  account  to fund the first  four
semi-annual interest payments. The senior notes may be redeemed at the Company's
election on or after  December 15, 2006,  at  redemption  prices  defined in the
senior note agreement. Additionally, on or before December 15, 2004, the Company
may  redeem up to 35% of the  aggregate  principal  amount of the  senior  notes
originally  issued at a  redemption  price of 113.75%,  plus  accrued and unpaid
interest to the date of redemption with the proceeds of certain equity offerings
as long as 65% of the  aggregate  principal  amount  originally  issued  remains
outstanding after that redemption.

     On September 26, 2000, the Company received  $149,680,050 from the issuance
of $295,000,000  of unsecured  senior discount notes due on October 1, 2010 (the
"discount notes"). The discount notes accrete in value until October 1, 2005, at
a rate of 14% compounded  semi-annually.  Cash interest on the notes will become
payable on April 1 and October 1 of each year,  beginning on April 1, 2006.  The
discount notes may be redeemed at the Company's  election on or after October 1,
2005, at redemption prices defined in the discount note agreement. Additionally,
on or before  October 1, 2003, the Company may redeem up to 35% of the aggregate
principal amount of the discount notes  originally  issued at a redemption price
of 114%,  plus accrued and unpaid  interest to the date of  redemption  with the
proceeds of certain equity  offerings as long as 65% of the aggregate  principal
amount originally issued remains outstanding after that redemption. The discount
notes include  warrants to purchase  3,805,500  shares of the Company's  class A
common stock at $5.88 per share. The warrants represent the right to purchase an
aggregate of  approximately  4.0% of the issued and outstanding  common stock of
the Company on a fully diluted basis,  assuming the exercise of all  outstanding
options  and  warrants  to  purchase  common  stock  and the  conversion  of the
convertible  preferred stock (Note 15) into shares of class A common stock.  The
proceeds  from the  issuance of the discount  notes were  allocated to long-term
debt  and the  value  of the  warrants  ($20,245,000  or $5.32  per  share)  was
allocated  to  additional  paid-in  capital.  The fair value of the warrants was
estimated on the date of the grant using the Black-Scholes  option-pricing model
with the following  weighted  average  assumptions:  expected  dividend yield of
0.0%, a risk-free interest rate of 6.5%, expected life of 10 years (equal to the
term of the warrants) and a volatility of 95%.

     On September 26, 2000, and concurrent  with the issuance of the convertible
preferred  stock (Note 15) and the discount notes described  above,  the Company
entered into a senior secured credit  facility (the "secured  credit  facility")
with a financial  institution  to provide an  aggregate  commitment,  subject to
certain  conditions,  of up to  $250,000,000  (including a  $95,000,000  line of
credit  described in Note 10, a $50,000,000  term note and a  $105,000,000  term
note) expiring on September 30, 2008. The secured credit facility bears interest
at various floating rates,  which  approximate one to six month LIBOR rates plus
400 to 450 basis points.  The secured  credit  facility is  collateralized  by a
perfected  security interest in substantially all of the Company's  tangible and
intangible  current and future assets,  including an assignment of the Company's
affiliation  agreements  with Sprint and a pledge of all of the capital stock of
the Company and its subsidiaries.  At December 31, 2002, the outstanding balance
on the secured credit facility was  $155,000,000.  The Company pays a commitment
fee of 1.375% on the unused portion of the $250,000,000  note.  Amounts recorded
relating to this  commitment  fee expense for the year ended  December 31, 2002,
are as follows:


                                                           2002
                                                    ---------------
     Secured credit facility - term loan A.......   $       325,000
     Line of credit..............................         1,324,000
                                                    ---------------
       Total commitment fee expense                 $     1,649,000
                                                    ===============


                                      F-23
<PAGE>


HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 11 - LONG-TERM DEBT (CONTINUED)

The components of long-term debt outstanding are as follows:

<TABLE>
<CAPTION>
    <S>                                           <C>                   <C>                  <C>
                                                  INTEREST RATE AT
                                                  DECEMBER 31, 2002     DECEMBER 31, 2002    DECEMBER 31, 2001
                                                  -----------------     -----------------    -----------------
     Discount notes..............................    14.00%              $  295,000,000       $  295,000,000
     Senior notes................................    13.75%                 175,000,000          175,000,000
     Secured credit facility - term loan A.......     5.40%                 105,000,000                   --
     Secured credit facility - term loan B.......     6.33%                  50,000,000           50,000,000
                                                                        -----------------    -----------------
     Long-term debt, face value..................                           625,000,000          520,000,000
     Less: unaccreted interest portion of
        discount notes...........................                          (108,715,651)        (135,944,357)
                                                                        -----------------    -----------------
          Total long-term debt, net..............                        $  516,284,349       $  384,055,643
                                                                        =================    =================
</TABLE>

     Scheduled  maturities of long-term  debt  outstanding at December 31, 2002,
are as follows:

                   YEAR                                          AMOUNT
                   ----                                   ----------------
              2003.....................................   $            --
              2004.....................................         8,250,000
              2005.....................................        20,187,500
              2006.....................................        26,750,000
              2007.....................................        28,062,500
              Thereafter...............................       541,750,000
                                                           ---------------
                Total maturities of long-term debt.....       625,000,000
              Less: Unaccreted interest portion of
                long-term debt.........................      (108,715,651)
                                                           ---------------
                   Total long-term debt................    $  516,284,349
                                                           ===============

     As of December 31, 2002,  Horizon PCS had $95.0 million committed under the
Company's  secured credit facility in the form of a line of credit at a variable
interest  rate equal to the London  Interbank  Offered Rate  ("LIBOR")  plus 400
basis points (Notes 10 and 14).

     The senior  notes,  discount  notes and  secured  credit  facility  contain
various  financial  covenants.  Among other  restrictions,  the most restrictive
covenants  relate to maximum  capital  expenditures,  minimum EBITDA  ("earnings
before interest,  taxes, depreciation and amortization")  requirements,  maximum
financial  leverage ratios and minimum  revenues.  There are also limitations on
restricted  payments,   asset  sales,  additional  debt  incurrence  and  equity
issuance.  In June 2001,  December 2001 and June 2002,  the Company  amended its
secured credit  facility with the bank group.  These  modifications  amended and
restated certain financial covenants.

     The Company did not meet the covenant for earnings before interest,  taxes,
depreciation  and  amortization  ("EBITDA")  for the first quarter of 2002. As a
result  of  higher  than  expected  gross  and  net  additions  to  Horizon  PCS
subscribers for that quarter,  the Company incurred  additional  expenses to add
those  customers.  Although the Company  ultimately  benefits  from the revenues
generated by new subscribers,  the Company incurs one-time  expenses  associated
with new subscribers, including commissions, handset subsidies, set up costs for
the network and marketing  expenses.  As a result,  these new  subscriber  costs
negatively  affect EBITDA in the short-term during the period of the addition of
new subscribers,  which led to  non-compliance  with the EBITDA covenant for the
first quarter of 2002.



                                      F-24

<PAGE>


HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 11 - LONG-TERM DEBT (CONTINUED)

     On June 27, 2002, the Company obtained a waiver of the non-compliance  with
the EBITDA  covenant for the first quarter of 2002 and entered into an amendment
of the secured credit facility.  The amended facility  primarily adjusts certain
financial  covenants  and  increases  the margin on the base interest rate by 25
basis points to LIBOR plus 400 to 450,  while also  providing for the payment of
fees to the banking group,  an increase in  post-default  interest  rates, a new
financial  covenant  regarding  minimum  available cash,  additional  prepayment
requirements,  restrictions  on the  Company's  borrowings  committed  under the
remaining $95.0 million  revolving  credit facility and deposit  requirements on
the use of the $105.0  million  borrowed  under the secured  credit  facility in
March 2002 (Note 14).

     As of December 31,  2002,  the Company was in  compliance  with the amended
covenants  under each  agreement,  therefore,  debt was classified as long-term.
However as  described  in Note 1, the Company  believes it is probable  that the
Company will violate one or more of its  covenants  during 2003.  If the Company
violates a covenant,  is declared to be in default of the credit agreement,  and
does not cure  the  default,  then the  debt  will be  reclassified  to  current
liabilities.

NOTE 12 - INCOME TAXES

     The Company's Federal income tax expense (benefit) consists of:

<TABLE>
<CAPTION>
<S>                                                  <C>               <C>             <C>
                                                                 YEAR ENDED DECEMBER 31,
                                                     -----------------------------------------------
                                                          2002              2001            2000
                                                     -------------     --------------  -------------
Continuing Operations:
 Current...............................              $            --   $           --  $   1,075,711
 Deferred..............................                           --               --             --
                                                     ---------------   --------------  -------------
                                                                  --               --      1,075,711
Discontinued Operations:
 Current...............................                           --               --         72,762
 Deferred..............................                           --               --             --
                                                     ---------------   --------------  -------------
                                                                                              72,762
Extraordinary Loss:
 Current...............................                           --               --       (261,863)
 Deferred..............................                           --               --             --
                                                     ---------------   --------------  -------------
                                                                  --               --       (261,863)
                                                     ---------------   --------------  -------------
Tax expense (benefit)..................              $            --   $           --  $     886,610
                                                     ===============   ==============  =============
</TABLE>

     The  effective  income tax expense  (benefit)  from  continuing  operations
varies from the statutory rate as follows:

<TABLE>
<CAPTION>
<S>                                                 <C>               <C>             <C>
                                                                  YEAR ENDED DECEMBER 31,
                                                    -------------------------------------------------
                                                          2002             2001            2000
                                                    ----------------  --------------- ---------------
Tax at statutory rate applied to pretax book
 loss from continuing operations................     $ (60,162,258)    $ (38,583,774)  $ (13,693,286)
Increase in tax from:
 Non-deductible goodwill amortization...........                --           444,227         302,968
 Goodwill impairment............................         4,495,519                --              --
 Non-deductible interest........................         2,221,649                --              --
 Tax on excess loss account.....................                --                --      11,463,395
 Change in valuation allowance..................        53,399,909        37,163,536       2,484,155
 Tax on rate difference.........................                --                --         116,296
 Other, net.....................................            45,181           976,011         402,183
                                                    ---------------   --------------   --------------
     Total tax expense from continuing
       operations...............................     $          --     $          --    $  1,075,711
                                                    ===============   ===============  ==============
</TABLE>



                                      F-25
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 12 - INCOME TAXES (CONTINUED)

     Deferred  income  taxes  result  from  temporary  differences  between  the
financial   reporting  and  the  tax  basis  amounts  of  existing   assets  and
liabilities.  The  source  of these  differences  and tax  effect of each are as
follows, as of December 31:

<TABLE>
<CAPTION>
<S>                                               <C>             <C>

                                                       2002             2001
                                                  --------------   --------------
Deferred income tax assets:
 Deferred income -- site bonuses................  $   1,965,993    $   2,285,961
 Unrealized loss on hedging activity............        210,607          284,869
 Allowance for doubtful accounts................        784,720          662,084
 Accrued vacation...............................        279,076          142,427
 Net operating loss carryforwards...............     99,465,755       36,089,387
 Interest expense...............................     14,690,303        9,523,013
 Other..........................................      3,291,770          965,141
                                                  --------------   --------------
     Total deferred income tax assets...........  $ 120,688,224    $  49,952,882
                                                  ==============   ==============

Deferred income tax liabilities:
 Property and equipment.........................  $ (20,725,719)   $  (7,469,716)
 Sprint PCS Licenses - Bright acquisition.......     (6,273,286)              --
 Capitalized interest...........................     (4,244,207)      (2,723,264)
 Other..........................................       (136,065)        (172,667)
                                                  --------------   --------------
     Total deferred income tax liabilities......  $ (31,379,277)   $ (10,365,647)
                                                  ==============   ==============
Deferred income taxes, net......................  $  89,308,947    $  39,587,235
Less: valuation allowance.......................    (95,339,882)     (39,587,235)
                                                  --------------   --------------
     Total deferred income taxes, net...........  $  (6,030,935)   $          --
                                                  ==============   ==============
</TABLE>

     Until  September 26, 2000,  HPCS was included in the  consolidated  Federal
income tax return of the Horizon  Telcom  affiliated  group.  HPCS  provided for
Federal  income  taxes  on a  pro-rata  basis,  consistent  with a  consolidated
tax-sharing  agreement.  As a result  of the sale of the  convertible  preferred
stock, HPCS will not be able to participate in the tax-sharing agreement nor the
filing of a  consolidated  Federal  income tax return  with the  Horizon  Telcom
affiliated group.  Thus, HPCS filed a separate Federal income tax return for the
period after deconsolidation through December 31, 2000, and will file a separate
return for all subsequent periods.

     HPCS  recorded  income tax expense of $886,610 for the year ended  December
31, 2000.  This expense was primarily a result of the  recognition by HPCS of an
excess loss account on the  deconsolidation  from the Horizon Telcom  affiliated
group,  reduced by the benefit of net operating losses,  and the increase in the
valuation reserve.

     HPCS  generated a tax of $4,256,818 on the stock dividend of 10% of Horizon
Telcom stock held by HPCS to Horizon  Telcom.  The tax on the stock dividend was
charged directly to equity and not recorded as income tax expense during 2000.

     The Company has generated net operating  losses ("NOL") that may be used to
offset future taxable income. Each year's NOL has a maximum  carryforward period
of twenty years. The Company's ability to use its NOL carryforwards is dependent
on the future taxable  income of the Company.  At December 31, 2002, the Company
has NOL  carryforwards  of approximately  $293,000,000  expiring in 2021 through
2022.  The  future  tax  benefit  of these NOL  carryforwards  of  approximately
$99,000,000  has been  recorded  as a  deferred  tax  asset.  As a result of the
Company's  operating  losses and its  deconsolidation  from the  Horizon  Telcom
affiliated group for tax purposes,  the Company does not expect to record future
tax  benefits of  operating  losses and other net deferred tax assets until such
time its  operations  become  profitable  and,  accordingly,  has  recognized  a
valuation allowance of $95,339,882.



                                      F-26

<PAGE>


HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 13 - POSTRETIREMENT BENEFITS

     Certain employees of the Company participate in the Parent's postretirement
plan.  The plan is  maintained by the Parent and the Company is charged based on
its employee  participation  in the plan. The Company applies the accounting and
measurement  practices  prescribed by SFAS No. 106,  "Employers'  Accounting for
Postretirement  Benefits Other Than Pensions" and the disclosure requirements of
SFAS No. 132,  "Employers'  Disclosures about Pensions and Other  Postretirement
Benefits,"  which  superceded  the disclosure  requirements  of SFAS No. 106. As
permitted by SFAS No. 106,  the Company has elected to amortize the  accumulated
postretirement  benefit  obligation  existing  at  the  date  of  adoption  (the
transition obligation) over a the estimated remaining service life of employees.
The  accrued  benefit  cost is included in other  long-term  liabilities  in the
accompanying consolidated balance sheets.

     The plan provides coverage of postretirement  medical,  prescription  drug,
telephone service and life insurance benefits to eligible retirees whose status,
at retirement from active  employment,  qualifies for  postretirement  benefits.
Coverage of postretirement  benefits is also provided to totally and permanently
disabled  active   employees  whose  status,   at  disablement,   qualified  for
postretirement  benefits as a retiree from active employment (retired disabled).
Certain eligible retirees are required to contribute toward the cost of coverage
under the  postretirement  health care and telephone  service benefits plans. No
contribution  is required for coverage under the  postretirement  life insurance
benefits  plan.  Unrecognized  prior  service cost is being  amortized  over the
estimated remaining service life of employees.

     The funding  status of the Company's  participation  in the  postretirement
benefit plan as of December 31, 2002 and 2001, is as follows:


                                                        2002          2001
                                                     -----------   -----------
                                                          (IN THOUSANDS)
CHANGE IN BENEFIT OBLIGATION
Benefit obligation, beginning of year...........     $      457    $       90
 Service cost...................................            247           183
 Interest cost..................................             34            17
 Actuarial loss.................................            149           167
                                                     -----------   -----------
Benefit obligation, end of year.................     $      887    $      457
                                                     -----------   -----------
CHANGE IN PLAN ASSETS
Fair value of plan assets, beginning of                      --            --
 year...........................................
 Employer contributions.........................             --            --
 Benefits paid..................................             --            --
                                                     -----------   -----------
Fair value of plan assets, end of year..........             --            --
                                                     -----------   -----------
Funded status...................................           (887)         (457)
Unrecognized transition obligation..............             65            71
Unrecognized prior service cost.................             70            75
Unrecognized actuarial (gain) or loss...........            192            42
                                                     -----------   -----------
Accrued benefit cost............................     $     (560)   $     (269)
                                                     ===========   ===========

WEIGHTED-AVERAGE ASSUMPTIONS AT DECEMBER 31:
Discount rate....................................          6.50%         6.50%

     The  assumed  medical  benefit  cost  trend  rate  used  in  measuring  the
accumulated  postretirement benefit obligation for the under age 65 retirees and
their  spouses  was  10.0%  in 2002,  8.0% in 2001  and 7.0% in 2000,  declining
gradually to 5.0% for all periods presented.  For the over 65 retirees and their
spouses,  the assumed medical benefit cost trend rate was 10.0% in 2002, 7.0% in
2001 and 6.5% in 2000,  declining  gradually to 5.0% for all periods  presented.
The assumed  dental and vision  benefit cost trend rates used in  measuring  the
accumulated  postretirement benefit obligation was 5.8% in 2002 and 6.0% in 2001
and 2000,  declining  gradually to 5.0%,  for retirees  and their  spouses.  The
telephone  service  benefit cost trend rate for  retirees  and their  spouses in
2002, 2001 and 2000, was estimated at 5% for all future years.



                                      F-27

<PAGE>


HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 13 - POSTRETIREMENT BENEFITS (CONTINUED)

     The following  summarizes the  components of net periodic  benefit costs of
the Company's  participation  in the  postretirement  benefit plan for the years
ended December 31:

                                                    2002       2001       2000
                                                 ---------  ---------  -------
 COMPONENTS OF NET PERIODIC BENEFIT COST                 (IN THOUSANDS)

Service cost.................................    $    247   $    104   $     15
Interest cost................................          34         17          5
Amortization of transition obligation........           5          5          5
Amortization of prior service cost...........           4          4         --
Recognized net actuarial gain (loss).........          --         (2)        (8)
                                                 ---------  ---------  ---------
Net periodic benefit cost....................    $    290   $    128   $     17
                                                 =========  =========  =========

     Assumed  health  care cost  trend  rates have a  significant  effect on the
amounts  reported for the health care plans.  A  one-percentage-point  change in
assumed health care cost trend rates would have the following effects:
<TABLE>
<CAPTION>
<S>                                                                   <C>             <C>
                                                                      1-PERCENTAGE-   1-PERCENTAGE-
                                                                         POINT            POINT
                                                                        INCREASE         DECREASE
                                                                      -------------   -------------
                                                                               (IN THOUSANDS)
Effect on total of service and interest cost components.............     $   93            $  (67)
Effect on postretirement benefit obligation.........................     $  275            $ (204)

</TABLE>

     In May 1999,  the  Company  adopted a defined  contribution  plan  covering
certain  eligible  employees.  The plan provides for participants to defer up to
15% of the annual  compensation,  as defined under the plan, as contributions to
the  plan.  The  Company  has the  option,  at the  direction  of the  Board  of
Directors,  to  make a  matching  contribution  to the  plan  of up to 50% of an
employee's  contribution  to  the  plan,  limited  to a  maximum  of 3%  of  the
employee's salary. A matching contribution of approximately  $361,000,  $309,000
and $115,000 was recognized during 2002, 2001 and 2000, respectively.

NOTE 14 - COMMITMENTS AND CONTINGENCIES

SPRINT 3G DEVELOPMENT FEES

     Recently,  Sprint increased service fees in connection with its development
of 3G-related  back-office systems and platforms.  The Company, along with other
PCS affiliates of Sprint, is currently  disputing the validity of Sprint's right
to pass  through  this  fee to the  affiliates.  If  this  dispute  is  resolved
unfavorably to the Company,  then Horizon PCS will incur additional expenses. As
of December  31, 2002,  the Company has not  recorded or paid amounts  billed by
Sprint for 3G development costs of approximately $591,000.

OPERATING LEASES

     The  Company  leases  office  space and  various  equipment  under  several
operating leases. In addition, the Company has tower lease agreements with third
parties whereby the Company leases towers for substantially all of the Company's
cell sites.  The tower  leases are  operating  leases with a term of five to ten
years with three consecutive five-year renewal option periods.



                                      F-28
<PAGE>


HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 14 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

     The Company also leases space for its retail stores.  At December 31, 2002,
the  Company  leased  43 of  its  44  retail  stores  operating  throughout  its
territories.

     The following table summarizes the annual lease payments required under the
Company's existing lease agreements at December 31, 2002.

                                                             PERIOD ENDING
                  YEAR                                         DECEMBER 31
                  ----                                     -----------------
                  2003..................................    $    16,122,000
                  2004..................................         15,295,000
                  2005..................................         12,590,000
                  2006..................................          7,783,000
                  2007..................................          3,320,000
                  Thereafter............................          7,027,000
                                                           -----------------
                  Future operating lease obligation.....    $    62,137,000
                                                           =================

     Rental  expense for all  operating  leases was  approximately  $15,241,000,
$8,461,000  and  $3,056,000  for years ended  December 31, 2002,  2001 and 2000,
respectively.

LEGAL MATTERS

     On July 3, 2002 the Federal Communications Commission (the "FCC") issued an
order in Sprint v.  AT&T for  declaratory  judgment  holding  that PCS  wireless
carriers could not unilaterally  impose terminating long distance access charges
pursuant  to FCC  rules.  This  FCC  order  did  not  preclude  a  finding  of a
contractual  basis for these charges,  nor did it rule whether or not Sprint had
such a contract  with  carriers  such as AT&T.  This case has been remanded to a
U.S. District Court for further proceedings.  Because the case is still pending,
the Company cannot predict, with certainty, the final outcome of this action. As
a result,  the Company  recorded a reduction in revenue in the second quarter of
2002 of approximately $1.3 million representing previously billed and recognized
access revenue.  The Company plans to cease  recognition of this type of revenue
in future quarters,  unless there is ultimately a favorable ruling by the courts
or the FCC on this  issue.  Sprint  has  asserted  the  right to  recover  these
revenues  from the Company.  The Company will  continue to assess the ability of
Sprint  or  other  carriers  to  recover  these  charges.  The  Company  is also
continuing to review the  availability of defenses it may have against  Sprint's
claim to recover these revenues from the Company.

GUARANTEES

     The  discount  notes and the senior notes (Note 11) are  guaranteed  by the
Company's  existing  subsidiaries,  Horizon Personal  Communications,  Inc., and
Bright  Personal  Communications  Services,  LLC, and will be  guaranteed by the
Company's  future  domestic   restricted   subsidiaries.   The  Company  has  no
independent assets or operations apart from its subsidiaries. The guarantees are
general  unsecured  obligations.   Each  guarantor  unconditionally  guarantees,
jointly and severally,  on a senior  subordinated  basis,  the full and punctual
payment of principal premium and liquidated damages, if any, and interest on the
discount  notes  when due.  If the  Company  creates  or  acquires  unrestricted
subsidiaries and foreign restricted subsidiaries, these subsidiaries need not be
guarantors.

NTELOS NETWORK AGREEMENT

     In August  1999,  the Company  entered  into a wholesale  network  services
agreement with the West Virginia PCS Alliance and the Virginia PCS Alliance (the
"Alliances"), two related, independent PCS providers whose network is managed by
NTELOS. Under the network services agreement,  the Alliances provide the Company


                                      F-29

<PAGE>


HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 14 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

with the use of and access to key  components  of their network in most of HPCS'
markets in Virginia  and West  Virginia.  The initial  term was through  June 8,
2008, with four automatic ten-year renewals.

     This  agreement  was amended in the third  quarter of 2001 to provide for a
minimum  monthly fee to be paid by the Company  through  December 31, 2003.  The
minimum  monthly  fee  includes  a fixed  number  of  minutes  to be used by the
Company's  subscribers.  The Company  incurs  additional  per minute charges for
minutes used in excess of the fixed number of minutes  allotted each month.  The
aggregate  amount  of future  minimum  payments  through  December  31,  2003 is
$38,600,000.  Total costs recorded, for both fixed and variable charges incurred
by the NTELOS  agreement,  were  approximately  $33,036,000,  for the year ended
December 31, 2002.

     On March 4, 2003, NTELOS and certain of its subsidiaries  filed voluntarily
petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the
U.S.  Bankruptcy  Court for the  Eastern  District of  Virginia.  The results of
NTELOS'  restructuring  could have a material  adverse impact on our operations.
Pursuant to bankruptcy law, the Alliances have the right to assume or reject the
network  services  agreement.  If the  Alliances  reject  the  network  services
agreement,  we will lose the ability to provide  service to our  subscribers  in
Virginia and West  Virginia and will be in breach of our  management  agreements
with Sprint.

LONG-TERM DEBT COVENANTS

     As  discussed  in  Note 11  above,  the  Company  entered  into a  covenant
amendment  under its  secured  credit  facility  in June 2002.  In addition to a
number of changes to the secured credit  facility,  including an increase in the
margin on the base interest rate,  this  amendment  placed  restrictions  on the
Company's  ability  to draw on the  $95.0  million  line of credit  and  deposit
requirements on the $105.0 million term loan A borrowed under the secured credit
facility in March 2002. These amounts are summarized below.

     The following table details the maximum amount  available to be borrowed on
the line of credit for the period then ended:

                                                              MAXIMUM AMOUNT
                                                             AVAILABLE TO BE
                                                                 BORROWED
                                                             ---------------
December 31,  2002.....................................                   --
March 31, 2003.........................................                   --
June 30, 2003..........................................           16,000,000
September 30, 2003.....................................           26,000,000
December 31, 2003......................................           33,000,000
March  31, 2004........................................           52,000,000
April 1, 2004..........................................           95,000,000


     The following table details the minimum balance requirements placed on cash
and cash equivalents under the amended terms of the secured credit facility:

                                                               DEPOSIT BALANCE
                                                                 REQUIREMENT
                                                               ---------------
November 16, 2002, through December 31, 2002..........              55,000,000
January 1, 2003, through February 15, 2003............              33,000,000
February 16, 2003, through March 31, 2003.............              11,000,000
April 1, 2003, through May 15, 2003...................               5,500,000



                                      F-30
<PAGE>


HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 15 - CONVERTIBLE PREFERRED STOCK

     The Company has  authorized  175,000,000  shares of  convertible  preferred
stock at $0.0001 par value.  On  September  26, 2000,  an investor  group led by
Apollo Management purchased 23,476,683 shares of convertible preferred stock for
approximately $126,500,000 in a private placement offering.  Concurrent with the
closing,  holders of the $14,100,000  short-term  convertible note converted the
principal and unpaid  interest  into  2,610,554  shares of the same  convertible
preferred  stock  purchased by the investor  group.  Holders of the  convertible
preferred  stock have the option to convert  their  shares (on a share for share
basis)  into class A common  stock at any time.  In  addition,  the  convertible
preferred stock converts  automatically upon the completion of a public offering
of class A common stock  meeting  specified  criteria or upon the  occurrence of
certain business combination transactions.  The convertible preferred stock pays
a 7.5% stock dividend  semi-annually,  commencing  April 30, 2001. The dividends
are payable in  additional  preferred  stock.  Through  December 31,  2002,  the
Company paid a cumulative total $23,412,886 of dividends in additional shares of
convertible  preferred stock. At December 31, 2002, there were 30,432,329 shares
of convertible preferred stock outstanding.

     If the Company has not completed  either (i) a public offering of its class
A common  stock in which the  Company  receives at least  $50,000,000  or (ii) a
merger  or  consolidation  with a  publicly-listed  company  that  has a  market
capitalization of at least $100,000,000 by the fifth anniversary of the date the
Company issued the convertible  preferred  stock, the investor group may request
that the Company  repurchase all of their shares of convertible  preferred stock
at fair market value, as determined by three investment banking institutions. If
the investor group requests the Company  repurchase their convertible  preferred
stock and the Company declines,  the Company will be required to auction Horizon
PCS. If no bona fide offer is received upon an auction,  the repurchase right of
the investor group expires.  If, however, a bona fide offer is received upon the
auction,  the  Company  must  sell  Horizon  PCS or  the  dividend  rate  on the
convertible  preferred  stock will  increase  from 7.5% to 18.0% and the Company
will be  required  to  re-auction  Horizon PCS  annually  until the  convertible
preferred  stock is repurchased.  The Company's  secured credit facility and the
discount   notes,   both  described  in  Note  11,  prohibit  the  Company  from
repurchasing  any convertible  preferred  stock.  Due to a mandatory  redemption
clause,  this stock is considered a mezzanine  financing and is recorded outside
of stockholders' equity (deficit).

     Holders of the Company's  convertible  preferred stock are entitled to vote
on all matters on an  as-converted  basis.  In addition,  the vote of at least a
majority of the outstanding shares of convertible  preferred stock,  voting as a
single  class,  shall be  necessary  for  effecting  or  validating  significant
corporate actions specified in the certificate of incorporation.

     The Company has agreed that until the  conversion of the  preferred  stock,
the  Company  will  adhere  to  certain  restrictive   covenants.   Among  other
restrictions,  the most significant  covenants  relate to capital  expenditures,
asset  sales,  restricted  payments,   additional  debt  incurrence  and  equity
issuance.  As of December  31,  2002,  the Company  was in  compliance  with the
covenants under the agreement.

NOTE 16 - COMMON STOCK

     Due to the  reorganization  discussed in Note 2, the Company has authorized
300,000,000  shares of class A common stock at $0.0001 par value.  Additionally,
the Company has authorized  75,000,000 shares of class B common stock at $0.0001
par value. Each holder of class A common stock is entitled to one vote per share
and each holder of class B common stock is entitled to ten votes per share. Both
classes of common stock have equal dividend rights. As of December 31, 2002, the
Company had issued  26,646 and  58,458,354  shares of class A and class B stock,
respectively,  and had granted  warrants to acquire  6,315,960 shares of class A
common stock (Notes 11 and 17).


                                      F-31
<PAGE>


HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 16 - COMMON STOCK (CONTINUED)

     In June 2000,  in  conjunction  with the Bright PCS purchase  (Note 5), the
Company  received  a  distribution  of its own stock  from a former  Bright  PCS
stockholder,  valued at  $111,061.  The  13,066  shares of class B common  stock
distributed by the former Bright PCS  stockholder are held in treasury stock. At
December 31, 2002, 58,445,288 shares of class B common stock remain outstanding.

     In September  2001, a previous  owner of Bright PCS gifted 26,646 shares of
the Company's class B common stock. This transaction  resulted in the conversion
of the class B shares into 26,646 shares of the Company's class A common stock.

NOTE 17 - SPRINT PCS WARRANTS

     The Company agreed to grant to Sprint warrants to acquire  2,510,460 shares
of class A common  stock in  exchange  for the right to service  PCS  markets in
additional areas. By September 30, 2000, Sprint had substantially  completed its
obligations  under the agreement and the Company completed the required purchase
of certain  Sprint  assets.  The Company  valued the  warrants  and  recorded an
intangible asset of approximately  $13,356,000  (based on a share price of $5.88
per share,  valued  using the  Black-Scholes  pricing  model  using an  expected
dividend yield of 0.0%, a risk-free  interest rate of 6.5%,  expected life of 10
years and a volatility of 95%). The intangible asset is being amortized over the
remaining term of the Sprint  management  agreement  resulting in  approximately
$752,000 of amortization expense per year. The warrants will be issued to Sprint
at the earlier of an initial  public  offering of the Company's  common stock or
July 31, 2003.

NOTE 18 - STOCK OPTION PLANS

     In 1999, the Company  adopted a stock option plan (the "Plan")  pursuant to
which the Company's Board of Directors may grant stock options to officers,  key
employees and certain  non-employees.  The Plan authorizes  grants of options to
purchase up to 11,696,883 shares authorized but unissued common stock (7,500,000
shares of class A common stock and  4,196,883  shares of class B common  stock).
Stock  options are  granted  with an  exercise  price equal to the stock's  fair
market value at the date of grant. All stock options have 10-year terms and vest
and become fully exercisable after four to six years from the date of grant.

     At December 31, 2002, there were 7,183,030  additional shares available for
grant under the Plan. The per share weighted-average fair value of stock options
granted  during 2002 and 2000 was $5.02 and $4.75 on the date of grant using the
Black  Scholes   option-pricing   model  with  the  following   weighted-average
assumptions:  2002 - expected dividend yield 0%, risk-free  interest rate of 5%,
volatility  of 95% and an expected  life of 10 years;  2000 - expected  dividend
yield 0%,  risk-free  interest  rate of 5.5%,  volatility of 95% and an expected
life of 10 years.

     The  Company  applies  APB  Opinion  No. 25 in  accounting  for the options
granted to officers and key employees  under its Plan. The Company  applies SFAS
No. 123 in accounting for the options granted to certain non-employees under its
Plan. Pursuant to this, the Company will recognize  approximately  $3,057,000 in
compensation expense over the exercise period of the options (through 2005). The
accompanying  consolidated  financial statements reflect a non-cash compensation
charge relating to the Plan of approximately $631,000, $709,000 and $490,000 for
the years ended December 31, 2002, 2001 and 2000, respectively.


                                      F-32
<PAGE>


HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 18 - STOCK OPTION PLANS (CONTINUED)

    Stock option activity during the periods indicated is as follows:

<TABLE>
<CAPTION>
<S>                                                   <C>             <C>             <C>             <C>
                                                        NUMBER OF        WEIGHTED-       NUMBER OF        WEIGHTED-
                                                          CLASS A         AVERAGE          CLASS B         AVERAGE
                                                          OPTIONS     EXERCISE PRICE       OPTIONS     EXERCISE PRICE
                                                      --------------  --------------  --------------   --------------

Balance at December 31, 1999.........................            --    $         --       4,196,883     $      0.12
 Granted.............................................       116,971            5.88              --              --
 Exercised...........................................            --              --              --              --
 Forfeited...........................................            --              --              --              --
                                                       ------------    -------------    ------------   -------------
Balance at December 31, 2000.........................       116,971            5.88       4,196,883            0.12
                                                       ------------    -------------   -------------   -------------
 Granted.............................................            --              --              --              --
 Exercised...........................................            --              --              --              --
 Forfeited...........................................            --              --              --              --
                                                       ------------    -------------    ------------   -------------
Balance at December 31, 2001.........................       116,971            5.88       4,196,883            0.12
                                                       ------------    -------------   -------------   -------------
 Granted.............................................       200,000            5.60              --              --
 Exercised...........................................            --              --              --              --
 Forfeited...........................................            --              --              --              --
                                                       ------------    -------------    ------------   -------------
Balance at December 31, 2002.........................       316,971    $       5.70       4,196,883     $      0.12
                                                       ============    =============   =============   =============
</TABLE>

     The  following  table   summarizes   information   about  employee  options
outstanding at December 31, 2002:

<TABLE>
<CAPTION>
<S>                  <C>                <C>               <C>                    <C>               <C>
                                     OPTIONS OUTSTANDING                               OPTIONS EXERCISABLE
                     -----------------------------------------------------       ----------------------------------
                                                               WEIGHTED-
                                                                AVERAGE
                                             WEIGHTED-         REMAINING                                WEIGHTED-
RANGE OF                                      AVERAGE         CONTRACTUAL                                AVERAGE
EXERCISE PRICE             NUMBER         EXERCISE PRICE         LIFE                  NUMBER        EXERCISE PRICE
-------------------  ----------------   ----------------------------------       ----------------  ----------------
  $      0.12(1)            4,196,883   $           0.12              5.88              2,804,648  $           0.12
  5.60 - 5.88(2)              316,971               5.70              8.58                 51,175              5.88
                     ----------------   ----------------  ----------------       ----------------  ----------------
                            4,513,854   $           0.51              6.07              2,855,823  $           0.22
                     ================   ================  ================       ================  ================
</TABLE>

(1)      class B common stock
(2)      class A common stock

NOTE 19 - DISCONTINUED OPERATIONS

     Effective  April 1,  2000,  the  Company  transferred  its  Internet,  long
distance and other  businesses  unrelated to its wireless  operations to Horizon
Technology (formerly United Communications,  Inc.), a wholly-owned subsidiary of
the Parent. Accordingly, the results of operations for these business units have
been reported as discontinued operations.  At December 31, 2000, the Company had
an interest  bearing note  receivable  of  approximately  $700,000  from Horizon
Technology which was repaid during 2001.

     Operating results for the year ended December 31, 2000 for these businesses
are as follows:

                                                                    2000
                                                              --------------
Total revenue..........................................       $   1,046,313
Operating income before income taxes...................             214,008

Earnings before income taxes...........................             214,008
Income tax expense.....................................             (72,763)
                                                              --------------
Net income from discontinued operations................       $     141,245
                                                              ==============


                                      F-33
<PAGE>


HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 20 - EXTRAORDINARY LOSS

     As a result of the September 26, 2000, financings described in Note 11, the
Company retired long-term debt payable to financial institutions. As a result of
these early debt  extinguishments,  the Company expensed the unamortized portion
of the  related  financing  costs  as well  as fees  associated  with  the  debt
extinguishments.  These fees and  expenses  amounted to  approximately  $748,000
during 2000 and are shown on the consolidated  statements of operations net of a
tax benefit of approximately $262,000.

NOTE 21 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

     SFAS  No.  107  requires  disclosure  of the fair  value  of all  financial
instruments.  For  purposes  of this  disclosure,  the fair value of a financial
instrument is the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale.
Fair  value  may be based  on  quoted  market  prices  for the  same or  similar
financial  instruments or on valuation  techniques  such as the present value of
estimated  future cash flows using a discount rate  commensurate  with the risks
involved.

     The  estimates  of fair  value  required  under SFAS No.  107  require  the
application of broad assumptions and estimates. Accordingly, any actual exchange
of such financial instruments could occur at values significantly different from
the  amounts  disclosed.  As cash and  cash  equivalents,  current  receivables,
current  payables and certain other  short-term  financial  instruments  are all
short term in  nature,  their  carrying  amounts  approximate  fair  value.  The
carrying  values of restricted  cash  approximate  fair value as the  investment
funds  are  short-term.  The  Company's  secured  credit  facility  is  based on
market-driven rates and, therefore,  its carrying value approximates fair value.
The fair values of the senior and discount notes, set forth below, were based on
market rates for the Company's notes.

                                                                  RECORDED
                                              FAIR VALUE            VALUE
                                         ----------------   ---------------
December 31, 2002...................     $     18,100,000   $   361,284,349
December 31, 2001...................          316,600,000       334,055,642

     In the first quarter of 2001, the Company entered into a two-year  interest
rate swap,  effectively  fixing  $25,000,000  of a term loan  under the  secured
credit  facility  (Note 11) at a rate of 9.4%. In the third quarter of 2001, the
Company  entered  into a two-year  interest  rate swap,  effectively  fixing the
remaining  $25,000,000  borrowed under the secured credit facility at 7.65%. The
swaps  have been  designated  as a hedge of a  portion  of the  future  variable
interest  cash flows  expected  to be paid  under the  secured  credit  facility
borrowings. A gain of approximately $443,000 was recorded in other comprehensive
income during the year ended  December 31, 2002.  The Company also  recognized a
loss of  approximately  $49,000 and $176,000,  as interest  income and other and
other in the statement of operations during 2002 and 2001, respectively, related
to the  ineffectiveness of the hedge. Other  comprehensive  income may fluctuate
based on changes  in the fair  value of the swap  instrument.  The  Company  has
recorded a liability in accrued  liabilities  in the  accompanying  consolidated
balance  sheet of  approximately  $619,000 at December 31, 2002,  related to the
swaps. These mature in 2003.

NOTE 22 - RELATED PARTIES

     The Company has non-interest bearing receivables from and payables to other
subsidiaries  of the Parent related to advances made to and received from or for
services  received from those affiliated  companies.  As a result of the sale of
convertible preferred stock (Note 15), the Company is not able to participate in
the  tax-sharing  agreement  discussed  in Note 12. At December  31,  2001,  the
Company had a net receivable  from the Parent for Federal  income taxes.  During
2002,  the Company  received  payment from the Parent for this  receivable.  The
balances due to and due from  related  parties as of December 31, 2002 and 2001,
are as follows:


                                      F-34

<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2002 and 2001,
And for the Years Ended December 31, 2002, 2001 and 2000
--------------------------------------------------------------------------------


NOTE 22 - RELATED PARTIES (CONTINUED)


<TABLE>
<CAPTION>
<S>                                                          <C>              <C>
                                                               DECEMBER 31,       DECEMBER 31,
                                                                   2002               2001
                                                             ---------------  -----------------
Receivable from affiliates............................       $        8,497   $       100,437
Receivable from Parent................................                   --           483,785
</TABLE>

     During  2002,  2001 and 2000,  affiliated  companies  provided  the Company
management,   supervision  and  administrative   services  including  financial,
regulatory,  human resource and other administrative and support services. These
agreements have a term of three years, with the right to renew the agreement for
additional  one-year  terms  each year  thereafter.  The cost of the  management
services,  excluding amounts allocated to discontinued operations, for the years
ended  December  31,  2002,  2001,  and  2000  was   approximately   $5,244,000,
$6,217,000, and $4,444,000, respectively.

NOTE 23 - SUPPLEMENTARY FINANCIAL INFORMATION (UNAUDITED)

    The quarterly  results of operations for the years ended  December,  31 2002
and 2001:

<TABLE>
<CAPTION>
<S>                                                 <C>            <C>              <C>             <C>
                                                                     FOR THE THREE MONTHS ENDED
                                                    -----------------------------------------------------------
                                                     MARCH 31           JUNE 30     SEPTEMBER 30     DECEMBER 31
                                                    -------------   -------------   -------------   -------------
                                                            (Dollars in thousands, except per share data)
Fiscal Year 2002:
----------------
  Total revenues................................     $    48,210    $     51,814     $    56,061     $    59,953
  Operating loss................................         (24,755)        (28,215)        (25,142)        (41,224)
  Impairment of goodwill and impact of
    acquisition-related deferred taxes..........              --              --              --         (13,222)
  Net loss available to common shareholders.....         (39,607)        (45,526)        (43,318)        (60,253)
  Basic and diluted net loss per share available
    to common shareholders......................     $     (0.68)   $      (0.78)    $     (0.74)    $     (1.03)

Fiscal Year 2001:
----------------
  Total revenues................................     $    19,254    $     24,771     $    35,204     $    44,075
  Operating loss................................         (16,194)        (21,739)        (23,271)        (29,507)
  Net loss available to common shareholders.....         (22,094)        (30,004)        (31,503)        (40,811)
  Basic and diluted net loss per share available
   to common shareholders.......................     $     (0.38)   $      (0.51)    $     (0.54)    $     (0.70)

</TABLE>






                                      F-35


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