##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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



FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005



OR



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



FOR THE TRANSITION PERIOD FROM              TO
            .



Commission file number 333-39746



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IWO HOLDINGS, INC.

(Exact name of registrant as specified in its charter)



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



(518) 862-6000

(Registrants telephone number, including area code)



N/A

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



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



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



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



As of August 11, 2005, the registrant had only one outstanding class of common stock, of which there were 5,000,005 shares outstanding.



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##### Table of Contents

INDEX



|           |  |                                                                                       |  |     
|---------- |  | ------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                       |  | Page
|Part I     |  | Financial Information                                                                 |  |     
|           |  |                                                                                      
|Item 1.    |  | Financial Statements                                                                  |  |     
|           |  |                                                                                      
|           |  | Condensed Consolidated Balance Sheets                                                 |  | 3   
|           |  |                                                                                      
|           |  | Condensed Consolidated Statements of Operations                                       |  | 4   
|           |  |                                                                                      
|           |  | Condensed Consolidated Statement of Stockholders Equity (Deficit)                    |  | 6   
|           |  |                                                                                      
|           |  | Condensed Consolidated Statements of Cash Flows                                       |  | 7   
|           |  |                                                                                      
|           |  | Notes to Condensed Consolidated Financial Statements                                  |  | 8   
|           |  |                                                                                      
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 20  
|           |  |                                                                                      
|Item 3.    |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 37  
|           |  |                                                                                      
|Item 4.    |  | Controls and Procedures                                                               |  | 38  
|           |  |                                                                                      
|Part II    |  | Other Information                                                                     |  |     
|           |  |                                                                                      
|Item 1.    |  | Legal Proceedings                                                                     |  | 39  
|           |  |                                                                                      
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 39  
|           |  |                                                                                      
|Item 3.    |  | Defaults Upon Senior Securities                                                       |  | 39  
|           |  |                                                                                      
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                   |  | 39  
|           |  |                                                                                      
|Item 5.    |  | Other Information                                                                     |  | 39  
|           |  |                                                                                      
|Item 6.    |  | Exhibits                                                                              |  | 39  
|           | 
|Signatures |  | 40                                                                                   
|           | 
|Exhibits   |  |                                                                                      



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##### Table of Contents

Part I. Financial Information

Item 1. Financial Statements



IWO HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)



|                                                                                                              |  |                               |         |   |                                     |   |          |  
|------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ------- | - | ----------------------------------- | - | -------- | -
|                                                                                                              |  | SuccessorCompanyJune 30, 2005 |         |   | PredecessorCompanyDecember 31, 2004 |  
|                                                                                                              |  | (Unaudited)                   |         |   | (Note 1)                            |  
|Assets                                                                                                        |  |                               |         |   |                                     |   |          |  
|Current assets:                                                                                               |  |                               |         |   |                                     |   |          |  
|Cash and cash equivalents                                                                                     |  | $                             | 28,748  |   |                                     | $ | 33,840   |  
|Subscriber receivables, net                                                                                   |  |                               | 13,768  |   |                                     |   | 11,381   |  
|Inventory                                                                                                     |  |                               | 1,511   |   |                                     |   | 1,386    |  
|Prepaid expenses                                                                                              |  |                               | 4,716   |   |                                     |   | 6,428    |  
|Other assets                                                                                                  |  |                               | 1,995   |   |                                     |   | 1,373    |  
|                                                                                                              |  |                               |         |   |                                     |   |          |  
|Total current assets                                                                                          |  |                               | 50,738  |   |                                     |   | 54,408   |  
|Property and equipment, net                                                                                   |  |                               | 116,717 |   |                                     |   | 150,796  |  
|Goodwill                                                                                                      |  |                               | 27,467  |   |                                     |   |         |  
|Intangible assets, net                                                                                        |  |                               | 123,378 |   |                                     |   | 17,331   |  
|Other assets                                                                                                  |  |                               | 12,309  |   |                                     |   | 13,643   |  
|                                                                                                              |  |                               |         |   |                                     |   |          |  
|Total assets                                                                                                  |  | $                             | 330,609 |   |                                     | $ | 236,178  |  
|                                                                                                              |  |                               |         |   |                                     |   |          |  
|Liabilities and Stockholders Equity (Deficit)                                                                |  |                               |         |   |                                     |   |          |  
|Current liabilities:                                                                                          |  |                               |         |   |                                     |   |          |  
|Accounts payable                                                                                              |  | $                             | 7,028   |   |                                     | $ | 24,277   |  
|Accrued expenses                                                                                              |  |                               | 17,891  |   |                                     |   | 40,333   |  
|Payable to related party                                                                                      |  |                               |        |   |                                     |   | 471      |  
|Current maturities of long-term obligations                                                                   |  |                               |        |   |                                     |   | 355,275  |  
|                                                                                                              |  |                               |         |   |                                     |   |          |  
|Total current liabilities                                                                                     |  |                               | 24,919  |   |                                     |   | 420,356  |  
|Long term obligations, net of current maturities                                                              |  |                               | 237,000 |   |                                     |   |         |  
|Other                                                                                                         |  |                               | 861     |   |                                     |   | 5,851    |  
|Stockholders equity (deficit):                                                                               |  |                               |         |   |                                     |   |          |  
|Preferred stock, $0.01 par value per share; 50,000 shares authorized; none issued and outstanding             |  |                               |        |   |                                     |   |         |  
|Common stock, par value $0.01 per share; 9,950,000 shares authorized; 5,000,005 shares issued and outstanding |  |                               | 50      |   |                                     |   |         |  
|Common stock (non-voting), $0.01 par value per share; 100,000 shares authorized; issued and outstanding       |  |                               |        |   |                                     |   | 1        |  
|Additional paid in capital                                                                                    |  |                               | 84,950  |   |                                     |   | 446,449  |  
|Retained deficit                                                                                              |  |                               | (17,171 | ) |                                     |   | (636,479 | )
|                                                                                                              |  |                               |         |   |                                     |   |          |  
|Total stockholders equity (deficit)                                                                          |  |                               | 67,829  |   |                                     |   | (190,029 | )
|                                                                                                              |  |                               |         |   |                                     |   |          |  
|Total liabilities and stockholders equity (deficit)                                                          |  | $                             | 330,609 |   |                                     | $ | 236,178  |  
|                                                                                                              |  |                               |         |   |                                     |   |          |  



See accompanying notes to unaudited
condensed consolidated financial statements.



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##### Table of Contents

IWO HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)



|                                                 |  |                                        |        |   |                                          |   |        |  
|------------------------------------------------ |  | -------------------------------------- | ------ | - | ---------------------------------------- | - | ------ | -
|                                                 |  | Successor Company                      |        |   | Predecessor Company                      |  
|                                                 |  | For the ThreeMonth Ended June 30, 2005 |        |   | For the Three Months Ended June 30, 2004 |  
|Revenues:                                        |  |                                        |        |   |                                          |   |        |  
|Subscriber                                       |  | $                                      | 36,493 |   |                                          | $ | 35,147 |  
|Roaming                                          |  |                                        | 12,512 |   |                                          |   | 9,117  |  
|Merchandise sales                                |  |                                        | 2,234  |   |                                          |   | 2,169  |  
|Other revenue                                    |  |                                        | 384    |   |                                          |   | 91     |  
|                                                 |  |                                        |        |   |                                          |   |        |  
|Total revenue                                    |  |                                        | 51,623 |   |                                          |   | 46,524 |  
|                                                 |  |                                       
|Expense:                                         |  |                                        |        |   |                                          |   |        |  
|Cost of service                                  |  |                                        | 27,112 |   |                                          |   | 24,910 |  
|Merchandise cost of sales                        |  |                                        | 3,041  |   |                                          |   | 4,782  |  
|General and administrative                       |  |                                        | 3,287  |   |                                          |   | 3,949  |  
|Sales and marketing                              |  |                                        | 8,917  |   |                                          |   | 7,694  |  
|Depreciation and amortization                    |  |                                        | 13,006 |   |                                          |   | 6,909  |  
|                                                 |  |                                        |        |   |                                          |   |        |  
|Total expense                                    |  |                                        | 55,363 |   |                                          |   | 48,244 |  
|                                                 |  |                                        |        |   |                                          |   |        |  
|Operating loss                                   |  |                                        | (3,740 | ) |                                          |   | (1,720 | )
|                                                 |  |                                       
|Other income (expense):                          |  |                                        |        |   |                                          |   |        |  
|Interest expense                                 |  |                                        | (5,178 | ) |                                          |   | (7,255 | )
|Interest income                                  |  |                                        | 204    |   |                                          |   | 118    |  
|                                                 |  |                                        |        |   |                                          |   |        |  
|Total other expense                              |  |                                        | (4,974 | ) |                                          |   | (7,137 | )
|                                                 |  |                                        |        |   |                                          |   |        |  
|Net loss                                         |  | $                                      | (8,714 | ) |                                          | $ | (8,857 | )
|                                                 |  |                                        |        |   |                                          |   |        |  
|Basic and diluted loss per share of common stock |  | $                                      | (1.74  | ) |                                          |   | n/a    |  
|                                                 |  |                                        |        |   |                                          |   |        |  



See accompanying notes to unaudited
condensed consolidated financial statements.



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##### Table of Contents

IWO HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)



|                                                 |  |                                       |         |   |                                     |   |          |                                      |  |   |         |  
|------------------------------------------------ |  | ------------------------------------- | ------- | - | ----------------------------------- | - | -------- | ------------------------------------ |  | - | ------- | -
|                                                 |  | Successor Company                     |         |   | Predecessor Company                 |  
|                                                 |  | For the FiveMonths EndedJune 30, 2005 |         |   | For the Month EndedJanuary 31, 2005 |   |          | For the SixMonths EndedJune 30, 2004 | 
|Revenues:                                        |  |                                       |         |   |                                     |   |          |                                      |  |   |         |  
|Subscriber                                       |  | $                                     | 59,805  |   |                                     | $ | 12,302   |                                      |  | $ | 68,118  |  
|Roaming                                          |  |                                       | 20,308  |   |                                     |   | 2,503    |                                      |  |   | 17,714  |  
|Merchandise sales                                |  |                                       | 3,516   |   |                                     |   | 665      |                                      |  |   | 4,454   |  
|Other revenue                                    |  |                                       | 426     |   |                                     |   | 29       |                                      |  |   | 175     |  
|                                                 |  |                                       |         |   |                                     |   |          |                                      |  |   |         |  
|Total revenue                                    |  |                                       | 84,055  |   |                                     |   | 15,499   |                                      |  |   | 90,461  |  
|                                                 |  |                                       |        
|Expense:                                         |  |                                       |         |   |                                     |   |          |                                      |  |   |         |  
|Cost of service                                  |  |                                       | 45,381  |   |                                     |   | 7,772    |                                      |  |   | 47,600  |  
|Merchandise cost of sales                        |  |                                       | 5,079   |   |                                     |   | 1,259    |                                      |  |   | 8,924   |  
|General and administrative                       |  |                                       | 5,548   |   |                                     |   | 675      |                                      |  |   | 6,902   |  
|Gain on reorganization                           |  |                                       |        |   |                                     |   | (113,966 | )                                    |  |   |        |  
|Sales and marketing                              |  |                                       | 14,302  |   |                                     |   | 2,645    |                                      |  |   | 15,242  |  
|Depreciation and amortization                    |  |                                       | 21,648  |   |                                     |   | 2,273    |                                      |  |   | 20,906  |  
|                                                 |  |                                       |         |   |                                     |   |          |                                      |  |   |         |  
|Total expense                                    |  |                                       | 91,958  |   |                                     |   | (99,342  | )                                    |  |   | 99,574  |  
|                                                 |  |                                       |         |   |                                     |   |          |                                      |  |   |         |  
|Operating income (loss)                          |  |                                       | (7,903  | ) |                                     |   | 114,841  |                                      |  |   | (9,113  | )
|                                                 |  |                                       |        
|Other income (expense):                          |  |                                       |         |   |                                     |   |          |                                      |  |   |         |  
|Interest expense                                 |  |                                       | (9,989  | ) |                                     |   | (1,772   | )                                    |  |   | (18,662 | )
|Interest income                                  |  |                                       | 721     |   |                                     |   | 18       |                                      |  |   | 210     |  
|Gain on extinguishment of debt                   |  |                                       |        |   |                                     |   | 76,942   |                                      |  |   |        |  
|Loss on sale of assets                           |  |                                       |        |   |                                     |   |         |                                      |  |   | (25     | )
|                                                 |  |                                       |         |   |                                     |   |          |                                      |  |   |         |  
|Total other income (expense)                     |  |                                       | (9,268  | ) |                                     |   | 75,188   |                                      |  |   | (18,477 | )
|                                                 |  |                                       |         |   |                                     |   |          |                                      |  |   |         |  
|Net income (loss)                                |  | $                                     | (17,171 | ) |                                     | $ | 190,029  |                                      |  | $ | (27,590 | )
|                                                 |  |                                       |         |   |                                     |   |          |                                      |  |   |         |  
|Basic and diluted loss per share of common stock |  | $                                     | (3.43   | ) |                                     |   | n/a      |                                      |  |   | n/a     |  
|                                                 |  |                                       |         |   |                                     |   |          |                                      |  |   |         |  



See accompanying notes to unaudited
condensed consolidated financial statements.



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##### Table of Contents

IWO HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT)

(Unaudited)

(In thousands)



|                                                          |  |                                  |    |   |                          |   |          |                 |  |   |          |   |  |   |          |  
|--------------------------------------------------------- |  | -------------------------------- | -- | - | ------------------------ | - | -------- | --------------- |  | - | -------- | - |  | - | -------- | -
|                                                          |  | IWO Holdings, Inc. Capital Stock |    |   | Additionalpaid-inCapital |   |          | RetainedDeficit |  |   | Total    |  
|Predecessor Company Balance at December 31, 2004          |  | $                                | 1  |   |                          | $ | 446,449  |                 |  | $ | (636,479 | ) |  | $ | (190,029 | )
|Predecessor Company net income                            |  |                                  |   |   |                          |   |         |                 |  |   | 190,029  |   |  |   | 190,029  |  
|                                                          |  |                                  |    |   |                          |   |          |                 |  |   |          |   |  |   |          |  
|Predecessor Companys balance at January 31, 2005         |  |                                  | 1  |   |                          |   | 446,449  |                 |  |   | (446,450 | ) |  |   |         |  
|Elimination of Predecessor Companys stockholders equity |  |                                  | (1 | ) |                          |   | (446,449 | )               |  |   | 446,450  |   |  |   |         |  
|Issuance of Common Stock by Successor Company             |  |                                  | 50 |   |                          |   | 84,950   |                 |  |   |         |   |  |   | 85,000   |  
|Successor Company net loss                                |  |                                  |   |   |                          |   |         |                 |  |   | (17,171  | ) |  |   | (17,171  | )
|                                                          |  |                                  |    |   |                          |   |          |                 |  |   |          |   |  |   |          |  
|Successor Company balance at June 30, 2005                |  | $                                | 50 |   |                          | $ | 84,950   |                 |  | $ | (17,171  | ) |  | $ | 67,829   |  
|                                                          |  |                                  |    |   |                          |   |          |                 |  |   |          |   |  |   |          |  



See accompanying notes to unaudited
condensed consolidated financial statements.



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IWO HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)



|                                                   |  |                                        |        |   |                                    |   |          |                                      |  |   |        |  
|-------------------------------------------------- |  | -------------------------------------- | ------ | - | ---------------------------------- | - | -------- | ------------------------------------ |  | - | ------ | -
|                                                   |  | Successor Company                      |        |   | Predecessor Company                |  
|                                                   |  | For the Five MonthsEnded June 30, 2005 |        |   | For the MonthEndedJanuary 31, 2005 |   |          | For the SixMonths EndedJune 30, 2004 | 
|Cash flows from operating activities               |  |                                        |        |   |                                    |   |          |                                      |  |   |        |  
|Net cash provided (used) by operating activities   |  | $                                      | (1,303 | ) |                                    | $ | (1,655   | )                                    |  | $ | 1,918  |  
|Cash flows provided (used) by investing activities |  |                                        |        |   |                                    |   |          |                                      |  |   |        |  
|Purchases of property and equipment                |  |                                        | (3,197 | ) |                                    |   | (2,118   | )                                    |  |   | (5,194 | )
|Release of restricted cash                         |  |                                        |       |   |                                    |   |         |                                      |  |   | 11,160 |  
|Bond collateral related to capital projects        |  |                                        | (1,633 | ) |                                    |   |         |                                      |  |   |       |  
|Proceeds from the sale of assets                   |  |                                        |       |   |                                    |   |         |                                      |  |   | 5      |  
|                                                   |  |                                        |        |   |                                    |   |          |                                      |  |   |        |  
|Net cash provided (used) by investing activities   |  |                                        | (4,830 | ) |                                    |   | (2,118   | )                                    |  |   | 5,971  |  
|                                                   |  |                                        |        |   |                                    |   |          |                                      |  |   |        |  
|Cash flows provided (used) by financing activities |  |                                        |        |   |                                    |   |          |                                      |  |   |        |  
|Principal payments on long-term debt               |  |                                        |       |   |                                    |   | (215,475 | )                                    |  |   |       |  
|Proceeds from long term borrowing                  |  |                                        |       |   |                                    |   | 231,229  |                                      |  |   |       |  
|Debt issuance costs                                |  |                                        |       |   |                                    |   | (10,940  | )                                    |  |   |       |  
|                                                   |  |                                        |        |   |                                    |   |          |                                      |  |   |        |  
|Net cash provided (used) by financing activities   |  |                                        |       |   |                                    |   | 4,814    |                                      |  |   |       |  
|                                                   |  |                                        |        |   |                                    |   |          |                                      |  |   |        |  
|Net change in cash and cash equivalents            |  |                                        | (6,133 | ) |                                    |   | 1,041    |                                      |  |   | 7,889  |  
|Cash and cash equivalents at beginning of period   |  |                                        | 34,881 |   |                                    |   | 33,840   |                                      |  |   | 32,337 |  
|                                                   |  |                                        |        |   |                                    |   |          |                                      |  |   |        |  
|Cash and cash equivalents at end of period         |  | $                                      | 28,748 |   |                                    | $ | 34,881   |                                      |  | $ | 40,226 |  
|                                                   |  |                                        |        |   |                                    |   |          |                                      |  |   |        |  



See accompanying notes to unaudited
condensed consolidated financial statements.



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##### Table of Contents

IWO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005

(unaudited)



1. Business and Basis of Presentation



Nature of Business and Operations



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



Plan of Reorganization



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



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



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



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



Fresh Start Accounting



Pursuant to the American Institute of Certified Public Accountants, or the AICPA, Statement of Position 907 (SOP 90-7), Financial
Reporting By Entities in Reorganization Under the Bankruptcy Code, the accounting for the effects of the reorganization occurs once the Plan of Reorganization is confirmed by the Bankruptcy Court and there are no remaining contingencies
material to completing the implementation of the Plan of Reorganization.



8



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##### Table of Contents

The fresh-start accounting principles of SOP 90-7 provide, among other things, for the Company to determine the value to
be assigned to the assets of reorganized IWO Holdings as of the confirmation date.



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



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



Use of
Management Estimates



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



Basis of Presentation



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



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



2. Summary of Significant Accounting Policies



Revenue Recognition



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



Sprint retains 8% of collected service revenues from subscribers based in the Companys service area, foreign roaming and revenue generated under its
reseller agreement. The amount of affiliation fees retained by Sprint PCS is



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recorded as a cost of services expense. Revenues derived from the sale of handsets and accessories by the Company and
from certain roaming services (outbound roaming and roaming revenues from Sprint and its PCS network partner subscribers) are not subject to the 8% affiliation fee from Sprint.



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



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



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



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



Inventory and Inventory Reserves



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



Accrued Commissions



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



Goodwill and Intangible Assets Impairment Analysis



The excess of the reorganization value over the fair value of net assets and liabilities has been recorded as goodwill. Goodwill is evaluated for
impairment on an annual basis or more often, as required by SFAS No. 142, Goodwill and Other Intangible Assets. On an ongoing basis, the Company will assess the recoverability of other intangible assets by determining the ability of the
specific assets acquired to generate future cash flows sufficient to



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recover the recorded value over the remaining life. The Company estimates future cash flows based on the current
performance of the acquired assets and our business plan for those assets. Changes in business conditions, major customers or other factors could result in changes in those estimates. Goodwill or other intangible assets determined to be
unrecoverable is written-off in the period in which such determination is made.



Loss Per Share



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



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



|                                                                       |  |                                      |           |  
|---------------------------------------------------------------------- |  | ------------------------------------ | --------- | -
|                                                                       |  | Three months endedJune 30, 2005      |          
|                                                                       |  | (In thousands,except share amounts)  |          
|Numerator:                                                             |  |                                      |           |  
|Net loss                                                               |  | $                                    | (8,714    | )
|                                                                       |  |                                      |           |  
|Denominator:                                                           |  |                                      |           |  
|Weighted average number of common shares outstanding-basic and diluted |  |                                      | 5,000,005 |  
|                                                                       |  |                                      |           |  
|                                                                       | 
|                                                                       |  | Five months endedJune 30, 2005       |          
|                                                                       |  | (In thousands, except share amounts) |          
|Numerator:                                                             |  |                                      |           |  
|Net loss                                                               |  | $                                    | (17,171   | )
|                                                                       |  |                                      |           |  
|Denominator:                                                           |  |                                      |           |  
|Weighted average number of common shares outstanding-basic and diluted |  |                                      | 5,000,005 |  
|                                                                       |  |                                      |           |  



Stock options
outstanding, totaling 329,174 options at June 30, 2005, were excluded in the calculation of diluted loss per share because their impact would have been anti-dilutive.



Stock Compensation



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



|                                                                 |  |                                                    |         |  
|---------------------------------------------------------------- |  | -------------------------------------------------- | ------- | -
|                                                                 |  | Five months endedJune 30, 2005                     |        
|                                                                 |  | (In thousands, exceptper share amounts) (restated) |        
|Net loss, as reported                                            |  | $                                                  | (17,171 | )
|Add stock-based compensation costs included in net loss          |  |                                                    |        |  
|Less non-cash stock compensation in accordance with SFAS No. 123 |  |                                                    | (504    | )
|                                                                 |  |                                                    |         |  
|Pro-forma                                                        |  | $                                                  | (17,675 | )
|                                                                 |  |                                                    |         |  
|Basic and diluted loss per share:                                |  |                                                    |         |  
|As reported                                                      |  | $                                                  | (3.43   | )
|Pro-forma                                                        |  | $                                                  | (3.53   | )



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|                                                                 |  |                                         |        |  
|---------------------------------------------------------------- |  | --------------------------------------- | ------ | -
|                                                                 |  | Three months endedJune 30, 2005         |       
|                                                                 |  | (In thousands, exceptper share amounts) |       
|Net loss, as reported                                            |  | $                                       | (8,714 | )
|Add stock-based compensation costs included in net loss          |  |                                         |       |  
|Less non-cash stock compensation in accordance with SFAS No. 123 |  |                                         | (303   | )
|                                                                 |  |                                         |        |  
|Pro-forma                                                        |  | $                                       | (9,017 | )
|                                                                 |  |                                         |        |  
|Basic and diluted loss per share:                                |  |                                         |        |  
|As reported                                                      |  | $                                       | (1.74  | )
|Pro-forma                                                        |  | $                                       | (1.80  | )



New Accounting Pronouncements



On December 16, 2004, the FASB issued Statement No. 123
(revised 2004), Share-Based Payment which is a revision of SFAS No. 123, Accounting for Stock-Based Corporation. Statement 123R supersedes APB No. 25, Accounting for Stock Issued to Employees and amends SFAS No.
95, Statement of Cash Flows. The Company intends to adopt SFAS No. 123R on January 1, 2006 and is analyzing the method by which the new statement will be adopted and its impact.



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



3.
Liquidity and Capital Resources



Financing Transactions



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



As previously discussed in Note 1, on February 9, 2005, the Bankruptcy Court entered an order confirming the Companys Plan of Reorganization (effective February 10, 2005). Pursuant to the Plan of Reorganization,
on February 10, 2005, IWO Escrow was merged into the Company and the Company assumed new notes for aggregate



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proceeds of approximately $232.7 million. The Company repaid in full and terminated its existing $215.0 million senior
credit facility. The Companys $160.0 million senior notes were cancelled and exchanged for 5,000,005 shares of new common stock. The existing common stock of the Company, all of which was owned by US Unwired, was cancelled, with no
distributions or payments thereon. As a result of the merger, we assumed all obligations of IWO Escrow, including those under the new notes described below.



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



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



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



Credit Facility



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



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4. Details of Certain Balance Sheet Accounts



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



|                                               |  |                                |         |   |                                      |   |         |  
|---------------------------------------------- |  | ------------------------------ | ------- | - | ------------------------------------ | - | ------- | -
|                                               |  | Successor CompanyJune 30, 2005 |         |   | Predecessor CompanyDecember 31, 2004 |  
|                                               |  | (In thousands)                 |        
|Land                                           |  | $                              | 150     |   |                                      | $ | 168     |  
|Buildings and leasehold improvements           |  |                                | 5,931   |   |                                      |   | 9,390   |  
|Facilities and equipment                       |  |                                | 112,354 |   |                                      |   | 196,437 |  
|Furniture, fixtures and vehicles               |  |                                | 2,052   |   |                                      |   | 5,642   |  
|Construction in progress                       |  |                                | 7,203   |   |                                      |   | 6,626   |  
|                                               |  |                                |         |   |                                      |   |         |  
|                                               |  |                                | 127,690 |   |                                      |   | 218,263 |  
|Less accumulated depreciation and amortization |  |                                | (10,973 | ) |                                      |   | (67,467 | )
|                                               |  |                                |         |   |                                      |   |         |  
|Total property and equipment, net              |  | $                              | 116,717 |   |                                      | $ | 150,796 |  
|                                               |  |                                |         |   |                                      |   |         |  



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



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



|                                                     |  |                                |         |   |                                      |   |        |  
|---------------------------------------------------- |  | ------------------------------ | ------- | - | ------------------------------------ | - | ------ | -
|                                                     |  | Successor CompanyJune 30, 2005 |         |   | Predecessor CompanyDecember 31, 2004 |  
|                                                     |  | (In thousands)                 |        
|Right to provide service under the Sprint agreements |  | $                              | 72,000  |   |                                      | $ | 19,766 |  
|Customer base                                        |  |                                | 62,000  |   |                                      |   |       |  
|                                                     |  |                                |         |   |                                      |   |        |  
|                                                     |  |                                | 134,000 |   |                                      |   | 19,766 |  
|Less accumulated amortization                        |  |                                | (10,622 | ) |                                      |   | (2,435 | )
|                                                     |  |                                |         |   |                                      |   |        |  
|Intangible assets, net                               |  | $                              | 123,378 |   |                                      | $ | 17,331 |  
|                                                     |  |                                |         |   |                                      |   |        |  



With the
implementation of fresh-start accounting the Company recorded its assets to their estimated fair values and recorded intangible assets of $62.0 million related to the fair value of the customer base and $72.0 million relating to the fair value of
the right to provide service under the Sprint agreements. The customer base is being amortized over the estimated average life of a customer, or 36 months. The right to provide service under the Sprint agreements is being amortized over the
remaining term of the agreements, or 14.9 years.



The
amortization of intangible assets for the three and five months ended June 30, 2005 was $6.4 million and $10.6 millions, respectively. Estimated aggregate amortization expense relative to intangible assets for the periods shown below will be as
follows:



|                        |  |                |       
|----------------------- |  | -------------- | ------
|Year Ended December 31, |  | (in thousands)
|2005                    |  | $              | 23,370
|2006                    |  |                | 25,493
|2007                    |  |                | 25,493
|2008                    |  |                | 6,549 
|2009                    |  |                | 4,827 
|Thereafter              |  |                | 48,268



Deferred Financing Costs



In connection with issuance of the Companys Senior
Secured Floating Rate Notes and Senior Discount Notes, the Company incurred $7.1 million and $3.9 million in debt offering costs, respectively. The Company has capitalized these costs as an asset on its balance sheet as deferred financing costs and
is amortizing them over a period of 7 years and 10 years, respectively.



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5. Long-Term Obligations



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



|                                                                                         |  |                                 |         |                                      |   |        
|---------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | ------------------------------------ | - | -------
|                                                                                         |  | Successor Company June 30, 2005 |         | Predecessor CompanyDecember 31, 2004
|                                                                                         |  | (In thousands)                 
|Senior secured credit facility                                                           |  | $                               |        |                                      | $ | 215,000
|Senior subordinated discount notes, net of unamortized discount of $53.0 million in 2005 |  |                                 | 87,000  |                                      |   | 140,275
|Senior secured floating rate notes                                                       |  |                                 | 150,000 |                                      |   |       
|                                                                                         |  |                                 |         |                                      |   |        
|Long-term obligations                                                                    |  |                                 | 237,000 |                                      |   | 355,275
|Less current maturities, in default                                                      |  |                                 |        |                                      |   | 355,275
|                                                                                         |  |                                 |         |                                      |   |        
|Long-term obligations, excluding current maturities                                      |  | $                               | 237,000 |                                      | $ |       
|                                                                                         |  |                                 |         |                                      |   |        



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



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



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



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



6. Commitments and Contingencies



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



7. Legal Proceedings



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



8. Income Taxes



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



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operating loss carryforwards. The Company anticipates the loss of approximately $222.5 million in carryforwards
associated with the limitation of Section 382. After this reduction, the Company has available approximately $148.5 million of net operating loss carryforwards.



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



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



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



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



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



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IWO HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheet at February 1, 2005



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

---

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



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

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

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

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

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

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

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

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

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



10. Gain on Reorganization



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



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



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



11. Sprint Merger with Nextel Communications



On December 15, 2004, Sprint Corporation and Nextel Communications, Inc. announced that their boards of directors unanimously approved a definitive
agreement for a merger of equals. Nextel Communications currently operates a wireless mobility communications network in certain territories in which the Company also provides digital wireless mobility communications network services under the
Sprint or affiliated brands.



The Company and Sprint have had
communications regarding the potential impact on the Company of the pending Sprint-Nextel transaction. The Company believes that, based on currently available information, and assuming that no changes are effected with respect to Sprints
agreements with the Company, Sprint could be in violation of the exclusivity and other provisions of certain of the Companys agreements with Sprint upon completion of the Sprint-Nextel transaction, and Sprint could be in violation of the
exclusivity and other provisions of the other agreements with Sprint at some point following completion of the Sprint-Nextel transaction.



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Sprints agreements with the Company provide for various remedies in the event of a material
violation by Sprint of such agreements. Neither we nor any of our executives have made any definitive determination as to the impact on the value to us or our business of any of such remedies or whether any such remedy would be more or less
favorable to us or our shareholders than our existing arrangements with Sprint or any possible renegotiated arrangement with Sprint.



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



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



Cautionary Note Regarding Forward-Looking Statements



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



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



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



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



| |  |  | the effects of the announced merger agreement between Sprint Corporation and Nextel Communications, Inc. (or any other business combination involving Sprint or the combined Sprint
Nextel Corporation);
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



Business



Overview



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



We are a Delaware corporation originally formed on August 22, 1997 by a consortium of independent local telephone companies to become a provider of
wireless telecommunications and data services. From 1997 through 1999, our activities consisted principally of raising capital, consummating and supporting our agreements with Sprint PCS, developing the initial design of our network and adding to
our management team.



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



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



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



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



On January 4, 2005, IWO and each of its subsidiaries filed voluntary petitions in the United States Bankruptcy Court for the
District of Delaware seeking relief under the provisions of chapter 11 of title 11 of the United States Code. In connection with the Chapter 11 Case, the Debtors also filed with the Bankruptcy Court on January 4, 2005 a proposed
pre-packaged Plan of Reorganization, which was confirmed on February 9, 2005 under an order entered by the Bankruptcy Court. Under the Plan of Reorganization, on February 10, 2005, IWO Escrow Company, a special-purpose entity formed to
obtain new debt financing and merge with and into IWO upon



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completion of the Plan of Reorganization, was merged into IWO, and IWO assumed $150.0 million in initial floating rate
notes and $140.0 million principal amount at maturity of initial discount notes, each of which had been issued by IWO Escrow, resulting in approximately $232.7 million in aggregate net proceeds to IWO. IWO repaid in full and terminated its former
$215.0 million senior credit facility, and its former $160.0 million senior notes were cancelled and exchanged for all of the new common stock of IWO. In addition, the common stock of IWO, all of which was owned by US Unwired, was cancelled, with no
distributions or payments thereon. Upon the cancellation of the common stock of IWO on February 10, 2005, US Unwired ceased to have an equity interest in IWO.



In connection with the completion of the Plan of Reorganization, we terminated our management agreement with US Unwired. This agreement was entered
into as of April 1, 2004 for the purpose of documenting certain management services provided to us by US Unwired during the pendency of our restructuring, and amended on January 3, 2005 to facilitate the immediate cooperation of US Unwired in the
transitioning of management services to the new management team contemplated by our Plan of Reorganization. The termination of the US Unwired management agreement was subject to a four-month transition period, during which US Unwired was responsible
for providing transitional management and restructuring services as defined in the US Unwired management agreement. This transition period ended on June 9, 2005, and we now operate as a standalone business entity.



Sprint Merger with Nextel Communications



On December 15, 2004, Sprint Corporation and Nextel Communications, Inc.
announced that their boards of directors unanimously approved a definitive agreement for a merger of equals. Nextel Communications currently operates a wireless mobility communications network in certain territories in which we also provide digital
wireless mobility communications network services under the Sprint or affiliated brands.



We and Sprint have had communications regarding the potential impact on the Company of the pending Sprint-Nextel transaction. We believe that, based on currently available information, and assuming that no changes are
effected with respect to Sprints agreements with us, Sprint could be in violation of the exclusivity and other provisions of certain of our agreements with Sprint upon completion of the Sprint-Nextel transaction, and Sprint could be in
violation of the exclusivity and other provisions of the other agreements with Sprint at some point following completion of the Sprint-Nextel transaction.



Sprints agreements with us provide for various remedies in the event of a material violation by Sprint of such agreements. Neither we nor any of our
executives have made any definitive determination as to the impact on the value to us or our business of any of such remedies or whether any such remedy would be more or less favorable to us or our shareholders than our existing arrangements with
Sprint or any possible renegotiated arrangement with Sprint.



We are committed to working toward mutually agreeable arrangements with respect to these matters. However, there can be no assurances that we and Sprint will be able to reach mutually acceptable arrangements or as to the terms of any such
arrangements or the likely impact on us of any such arrangement.



Implementation of Fresh-Start Accounting



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



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



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



Operating Revenue



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



Subscriber Revenue



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



Roaming Revenue



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



Merchandise Sales



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



Operating Expenses



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



Cost of
Service



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



Merchandise Cost of Sales



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



General and Administrative



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



Sales and Marketing



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



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Depreciation and Amortization



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



Critical
Accounting Policies and Estimates



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



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



Reliance on Sprint PCS Processing



We rely on Sprint for much of our financial reporting information including:
revenues; commissions paid to national retailers; fees paid for customer care and billing; roaming revenue and roaming expense on the Sprint and Sprint wireless affiliate network; and the maintenance of accounts receivable, including cash
collections and the write off of customer balances that are not collectible and the accuracy of our accounts receivable balance. Where uncertainty exists regarding revenues, we do not record these revenues until substantive information has been
provided to ensure that such revenues have been earned. Based upon the timing of the information received from Sprint PCS, we make certain assumptions that the information is accurate and that it is consistent with historical trends. We also rely
upon the evaluation of internal controls as performed by auditors engaged by Sprint PCS that were performed in accordance with AICPA Statement on Auditing Standards (SAS) No. 70.



Bad Debt Expense and Allowance for Doubtful Accounts



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



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



Revenue Recognition



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



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



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



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



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



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



Inventory and Inventory Reserves



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



Accrued Commissions



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



Goodwill and Intangible Assets Impairment Analysis



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



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Valuation of Long-lived Assets



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



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



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



Revenues



|                    |  |                                      |        |                                      |   |       
|------------------- |  | ------------------------------------ | ------ | ------------------------------------ | - | ------
|                    |  | SuccessorCompany                     |        | PredecessorCompany                  
|                    |  | Three-monthperiod endedJune 30, 2005 |        | Three-monthperiod endedJune 30, 2004
|                    |  | (In thousands)                      
|Subscriber revenues |  | $                                    | 36,493 |                                      | $ | 35,147
|Roaming revenues    |  |                                      | 12,512 |                                      |   | 9,117 
|Merchandise sales   |  |                                      | 2,234  |                                      |   | 2,169 
|Other revenues      |  |                                      | 384    |                                      |   | 91    
|                    |  |                                      |        |                                      |   |       
|Total revenues      |  | $                                    | 51,623 |                                      | $ | 46,524
|                    |  |                                      |        |                                      |   |       



Subscriber
revenues



Total subscriber revenues were $36.5 million for the three-month
period ended June 30, 2005 as compared to $35.1 million for the three-month period ended June 30, 2004. The increase of $1.3 million, or 3.8% was primarily the result of an increase in the number of subscribers we serve from 226,037 at June 30, 2004
to 237,172 at June 30, 2005.



Roaming revenues



Roaming revenues were $12.5 million for the three-month period ended June 30,
2005 as compared to $9.1 million for the three-month period ended June 30, 2004. The increase of $3.4 million, or 37.2% was primarily as a result of an increase in the reciprocal Sprint travel rate per minute from $.041 to $.058 and an approximate
9% increase in minutes of use volume.



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##### Table of Contents

Merchandise sales



Merchandise sales were $2.23 million for the three-month period ended June 30, 2005 as compared to $2.17 million for the three-month period
ended June 30, 2004. Merchandise sales remained reasonably consistent for the three-month period ended June 30, 2005 and the three-month period ended June 30, 2004.



Operating expenses



|                              |  |                                      |        |                                      |   |       
|----------------------------- |  | ------------------------------------ | ------ | ------------------------------------ | - | ------
|                              |  | SuccessorCompany                     |        | PredecessorCompany                  
|                              |  | Three-monthperiod endedJune 30, 2005 |        | Three-monthperiod endedJune 30, 2004
|                              |  | (In thousands)                      
|Cost of service               |  | $                                    | 27,112 |                                      | $ | 24,910
|Merchandise cost of sales     |  |                                      | 3,041  |                                      |   | 4,782 
|General and administrative    |  |                                      | 3,287  |                                      |   | 3,949 
|Sales and marketing           |  |                                      | 8,917  |                                      |   | 7,694 
|Depreciation and amortization |  |                                      | 13,006 |                                      |   | 6,909 
|                              |  |                                      |        |                                      |   |       
|Total operating expenses      |  | $                                    | 55,363 |                                      | $ | 48,244
|                              |  |                                      |        |                                      |   |       



Cost of service



Cost of service was $27.1 million for the three-month period ended June 30,
2005 as compared to $24.9 million for the three-month period ended June 30, 2004. The increase of $2.2 million or 8.8% was primarily the result of an increase in the reciprocal Sprint travel rate per minute from $.041 to $0.58, an increase in
customer care expenses and an increase in the Sprint affiliate fees due to an increase in revenue.



Merchandise cost of sales



Merchandise cost of sales was $3.0 million for the three-month period ended June 30, 2005 as compared to $4.8 million for the three-month period ended June 30, 2004. The
decrease of $1.7 million, or 36.4%, resulted from a $1.0 million reduction in the cost of handsets sold, a decrease of $0.4 million in equipment subsidies and a $0.2 million reduction from the elimination of handset carrying charges.



General and administrative expenses



General and administrative expenses were $3.3 million for the three-month period ended June
30, 2005 as compared to $3.9 million for the three-month period ended June 30, 2004. The decrease of $0.7 million, or 16.7%, was primarily the result of a $1.4 million reduction in restructuring expenses present in 2004 which were not present in
2005, a $0.6 million reduction in management fees paid to US Unwired, offset, in part, by an increase of $0.8 million for labor and benefits and a $0.4 million increase in professional services.



Sales and marketing expenses



Sales and marketing expenses were $8.9 million for the three-month period ended June 30,
2005 as compared to $7.7 million for the three-month period ended June 30, 2004. The increase of $1.2 million, or 15.9%, was primarily the result of an increase in National commissions and mail-in rebates offset, in part, by a decrease in handset
subsidies.



Depreciation and amortization expense



Depreciation and amortization expense was $13.0 million for the three-month
period ended June 30, 2005 as compared to $6.9 million for the three-month period ended June 30, 2004. The increase of $6.1 million, or 88.2%, was primarily the result of the increase in the amortization of intangible assets as a result of the
implementation of fresh start accounting on February 1, 2005, which resulted in us recording intangible assets of $62.0 million related to the fair value of the customer base and $72.0 million related to the fair value of the Sprint agreement.



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##### Table of Contents

Other income / (expense)



|                    |  |                                      |        |   |                                      |   |        |  
|------------------- |  | ------------------------------------ | ------ | - | ------------------------------------ | - | ------ | -
|                    |  | SuccessorCompany                     |        |   | PredecessorCompany                   |  
|                    |  | Three-monthperiod endedJune 30, 2005 |        |   | Three-monthperiod endedJune 30, 2004 |  
|                    |  | (In thousands)                       |       
|Interest expense    |  | $                                    | (5,178 | ) |                                      | $ | (7,255 | )
|Interest income     |  |                                      | 204    |   |                                      |   | 118    |  
|                    |  |                                      |        |   |                                      |   |        |  
|Total other expense |  | $                                    | (4,974 | ) |                                      | $ | (7,137 | )
|                    |  |                                      |        |   |                                      |   |        |  



Interest expense was $5.2 million for
the three-month period ended June 30, 2005 as compared to $7.3 million for the three-month period ended June 30, 2004. The decrease of $2.1 million or 28.6% was primarily a result of the restructuring of debt associated with our Plan of
Reorganization. The level of debt has decreased from $352.5 million at June 30, 2004 to $237.0 million at June 30, 2005.



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



Results of Operations  For the Five-Month Period Ended June 30, 2005, the Month Ended January 31, 2005, the Six-Month Period Ended
June 30, 2005 and the Six-Month Period Ended June 30, 2004



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



Revenues



|                    |  |                                         |        |                                    |   |                                      |                                      |                    |        |  |   |       
|------------------- |  | --------------------------------------- | ------ | ---------------------------------- | - | ------------------------------------ | ------------------------------------ | ------------------ | ------ |  | - | ------
|                    |  | Successor Company                       |        | PredecessorCompany                 |   | For the SixMonths EndedJune 30, 2005 |                                      | PredecessorCompany
|                    |  | For the Five Months Ended June 30, 2005 |        | For the MonthEndedJanuary 31, 2005 |   |                                      | For the SixMonths EndedJune 30, 2004
|                    |  | (In thousands)                         
|Subscriber revenues |  | $                                       | 59,805 |                                    | $ | 12,302                               |                                      | $                  | 72,107 |  | $ | 68,118
|Roaming revenues    |  |                                         | 20,308 |                                    |   | 2,503                                |                                      |                    | 22,811 |  |   | 17,714
|Merchandise sales   |  |                                         | 3,516  |                                    |   | 665                                  |                                      |                    | 4,181  |  |   | 4,454 
|Other revenues      |  |                                         | 426    |                                    |   | 29                                   |                                      |                    | 455    |  |   | 175   
|                    |  |                                         |        |                                    |   |                                      |                                      |                    |        |  |   |       
|Total revenues      |  | $                                       | 84,055 |                                    | $ | 15,499                               |                                      | $                  | 99,554 |  | $ | 90,461
|                    |  |                                         |        |                                    |   |                                      |                                      |                    |        |  |   |       



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##### Table of Contents

Subscriber revenues



Total subscriber revenues were $59.8 million for the five-month period ended June 30, 2005 and $12.3 million for the month
ended January 31, 2005. For the six-month period ended June 30, 2005, total subscriber revenues were $72.1 million compared to $68.1 million for the six-month period ended June 30, 2004. The increase of $4.0 million, or 5.9%, primarily resulted from
an increase in the number of subscribers we serve from 226,037 at June 30, 2004 to 237,172 at June 30, 2005.



Roaming revenues



Roaming revenues were $20.3 million for the five-month period ended June 30, 2005 and $2.5 million for the month ended January 31, 2005. For the six-month
period ended June 30, 2005, total roaming revenues were $22.8 million compared to $17.7 million for the six-month period ended June 30, 2004. The increase of $5.1 million, or 28.8%, primarily resulted from an increase in the reciprocal Sprint travel
rate per minute from $.041 to $.058 and an approximate 11% increase in minutes of use volume.



Merchandise sales



Merchandise sales were $3.5 million for the five-month period ended June 30, 2005 and $0.7 million for the month ended January 31, 2005. For the six-month period ended June 30, 2005, merchandise sales were $4.2 million compared to $4.5
million for the six-month period ended June 30, 2004. The decrease of $0.3 million, or 6.1%, primarily resulted from a decrease in handset sales offset, in part, by an increase in accessory sales. The cost of handsets typically exceeds the amount
received from our subscribers because we subsidize the price of handsets to remain competitive in the marketplace.



Operating expenses



|                              |  |                                       |        |                                    |   |          |                                      |                                      |   |                    |   |  |   |       
|----------------------------- |  | ------------------------------------- | ------ | ---------------------------------- | - | -------- | ------------------------------------ | ------------------------------------ | - | ------------------ | - |  | - | ------
|                              |  | SuccessorCompany                      |        | PredecessorCompany                 |   |          | For the SixMonths EndedJune 30, 2005 |                                      |   | PredecessorCompany
|                              |  | For the FiveMonths EndedJune 30, 2005 |        | For the MonthEndedJanuary 31, 2005 |   |          |                                      | For the SixMonths EndedJune 30, 2004
|                              |  | (In thousands)                       
|Cost of service               |  | $                                     | 45,381 |                                    | $ | 7,772    |                                      |                                      | $ | 53,153             |   |  | $ | 47,600
|Merchandise cost of sales     |  |                                       | 5,079  |                                    |   | 1,259    |                                      |                                      |   | 6,338              |   |  |   | 8,924 
|General and administrative    |  |                                       | 5,548  |                                    |   | 675      |                                      |                                      |   | 6,223              |   |  |   | 6,902 
|Gain on reorganization        |  |                                       |       |                                    |   | (113,966 | )                                    |                                      |   | (113,966           | ) |  |   |      
|Sales and marketing           |  |                                       | 14,302 |                                    |   | 2,645    |                                      |                                      |   | 16,947             |   |  |   | 15,242
|Depreciation and amortization |  |                                       | 21,648 |                                    |   | 2,273    |                                      |                                      |   | 23,921             |   |  |   | 20,906
|                              |  |                                       |        |                                    |   |          |                                      |                                      |   |                    |   |  |   |       
|Total expenses                |  | $                                     | 91,958 |                                    | $ | (99,342  | )                                    |                                      | $ | (7,384             | ) |  | $ | 99,574
|                              |  |                                       |        |                                    |   |          |                                      |                                      |   |                    |   |  |   |       



Cost of service



Cost of service was $45.4 million for the five-month period
ended June 30, 2005 and $7.8 million for the month ended January 31, 2005. For the six-month period ended June 30, 2005, cost of service was $53.2 million compared to $47.6 million for the six-month period ended June 30, 2004. The increase of $5.6
million, or 11.7%, was primarily due to an increase in the reciprocal Sprint travel rate per minute from $.041 to $.058, an increase in customer care expenses and an increase in the Sprint affiliate fees due to an increase in revenue.



Merchandise cost of sales



Merchandise cost of sales was $5.1 million for the five-month period ended
June 30, 2005 and $1.2 million for the month ended January 31, 2005. For the six-month period ended June 30, 2005, total merchandise cost of sales was $6.3 million compared to $8.9 million for the six-month period ended June 30, 2004. The decrease
of $2.6 million, or 28.9%, resulted from a $1.3 million reduction in the cost of handsets sold, $0.3 million reduction from the elimination of handset surcharges and a decrease of $0.7 million in equipment.



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##### Table of Contents

General and administrative expenses



General and administrative expenses were $5.5 million for the five-month period ended June 30, 2005 and $0.7 million for the
month ended January 31, 2005. For the six-month period ended June 30, 2005, total general and administrative expenses were $6.2 million compared to $6.9 million for the six-month period ended June 30, 2004. The decrease of $0.7 million, or 9.8%, was
primarily the result of a $2.3 million reduction in restructuring expenses present in 2004 which were not present in 2005, a $0.3 million reduction in management fees paid to US Unwired partially offset, in part, by an increase of $1.0 million for
labor and benefits and a $0.6 million increase in professional services.



Gain on reorganization



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



Sales and marketing expenses



Sales and marketing expenses were $14.3 million for the five-month period ended June 30, 2005 and $2.6 million for the month ended January 31, 2005. For
the six-month period ended June 30, 2005, total sales and marketing expenses were $16.9 million compared to $15.2 million for the six-month period ended June 30, 2004. The increase of $1.7 million, or 11.2%, resulted primarily from a $1.0 million
increase in national rebates/handset subsidies and a $0.9 million increase in activation fees.



Depreciation and amortization expense



Depreciation and amortization expense was $21.6 million for the five-month period ended June 30, 2005 and $2.3 million for the month ended January 31, 2005. For the six-month period ended June 30, 2005, total
depreciation and amortization expenses were $23.9 million compared to $20.9 million for the six-month period ended June 30, 2004. The increase of $3.0 million, or 14.4%, was primarily the result of the increase in amortization of intangible assets
as a result of the implementation of fresh start accounting on February 1, 2005, which resulted in us recording intangible assets of $62.0 million related to the fair value of the customer base and $72.0 million related to the fair value of the
Sprint agreement.



Other income/(expense)



|                               |  |                                       |        |   |                                      |   |        |                                      |                                      |   |                    |   |  |   |         |  
|------------------------------ |  | ------------------------------------- | ------ | - | ------------------------------------ | - | ------ | ------------------------------------ | ------------------------------------ | - | ------------------ | - |  | - | ------- | -
|                               |  | SuccessorCompany                      |        |   | Predecessor Company                  |   |        | For the SixMonths EndedJune 30, 2005 |                                      |   | PredecessorCompany |  
|                               |  | For the FiveMonths EndedJune 30, 2005 |        |   | For the Month Ended January 31, 2005 |   |        |                                      | For the SixMonths EndedJune 30, 2004 |  
|                               |  | (In thousands)                        |       
|Interest expense               |  | $                                     | (9,989 | ) |                                      | $ | (1,772 | )                                    |                                      | $ | (11,761            | ) |  | $ | (18,662 | )
|Interest income                |  |                                       | 721    |   |                                      |   | 18     |                                      |                                      |   | 739                |   |  |   | 210     |  
|Gain on extinguishment of debt |  |                                       |       |   |                                      |   | 76,942 |                                      |                                      |   | 76,942             |   |  |   |        |  
|Loss on asset sale             |  |                                       |       |   |                                      |   |       |                                      |                                      |   |                   |   |  |   | (25     | )
|                               |  |                                       |        |   |                                      |   |        |                                      |                                      |   |                    |   |  |   |         |  
|Total other income (expense)   |  | $                                     | (9,268 | ) |                                      | $ | 75,188 |                                      |                                      | $ | 65,920             |   |  | $ | (18,477 | )
|                               |  |                                       |        |   |                                      |   |        |                                      |                                      |   |                    |   |  |   |         |  



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Interest expense



Interest expense was $10.0 million for the five-month period ended June 30, 2005 and $1.8 million for the month ended
January 31, 2005. For the six-month period ended June 30, 2005 total interest expense was $11.8 million compared to $18.7 million for the six-month period ended June 30, 2004. The decrease of $6.9 million, or 37.0%, resulted from the restructuring
of debt associated with our Plan of Reorganization. The level of debt has decreased from $352.5 million at June 30, 2004 to $237.0 million at June 30, 2005.



Interest income



Interest income was $721,000 for the five-month period ended June 30, 2005 and $18,000 for the month ended January 31, 2005. For the six-month period
ended June 30, 2005 total interest income was $739,000 compared to $210,000 for the six-month period ended June 30, 2004. The increase of $529,000, resulted from increased cash deposit levels associated with proceeds of our bond offering and an
increase in related interest rates.



Gain on extinguishment
of debt



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



Performance Measurements and Metrics



The wireless telecommunications industry uses terms such as subscriber additions, average revenue per user, churn and cost per gross addition as performance measurements or metrics. None of these terms are measures of
financial performance under GAAP. When we use these terms, they may not be comparable to similar terms used by other wireless telecommunications companies. These industry metrics are disclosed below.



|                                       |  |                                   |         |      |                                 |   |         |      |  |   |         |      |  |   |         |  
|-------------------------------------- |  | --------------------------------- | ------- | ---- | ------------------------------- | - | ------- | ---- |  | - | ------- | ---- |  | - | ------- | -
|                                       |  | Three-month period ended June 30, |         |      | Six-month period ended June 30, |  
|                                       |  | 2005                              |         |      | 2004                            |   |         | 2005 |  |   | 2004    |     
|Subscribers                            |  |                                   |         |      |                                 |   |         |      |  |   |         |      |  |   |         |  
|Gross Additions                        |  |                                   | 25,506  |      |                                 |   | 24,493  |      |  |   | 52,961  |      |  |   | 51,767  |  
|Net Additions                          |  |                                   | (5,485  | )(1) |                                 |   | 5,963   |      |  |   | (239    | )(1) |  |   | 11,026  |  
|Total Customers                        |  |                                   | 237,172 |      |                                 |   | 226,037 |      |  |   | 237,172 |      |  |   | 226,037 |  
|Churn, Monthly                         |  |                                   | 4.3     | %    |                                 |   | 2.5     | %    |  |   | 3.5     | %    |  |   | 2.8     | %
|Churn, Post Pay                        |  |                                   | 2.3     | %    |                                 |   | 2.4     | %    |  |   | 2.4     | %    |  |   | 2.8     | %
|                                       |  |                                   |         |     
|Average Revenue Per User, Monthly      |  |                                   |         |      |                                 |   |         |      |  |   |         |      |  |   |         |  
|Including Roaming                      |  | $                                 | 67.38   |      |                                 | $ | 66.15   |      |  | $ | 65.64   |      |  | $ | 64.87   |  
|Without Roaming                        |  | $                                 | 50.17   |      |                                 | $ | 52.52   |      |  | $ | 49.86   |      |  | $ | 51.48   |  
|                                       |  |                                   |         |     
|Cash Cost Per User, Monthly            |  |                                   |         |      |                                 |   |         |      |  |   |         |      |  |   |         |  
|Including Roaming                      |  | $                                 | 41.80   |      |                                 | $ | 41.03   |      |  | $ | 41.06   |      |  | $ | 39.48   |  
|Without Roaming                        |  | $                                 | 28.43   |      |                                 | $ | 31.56   |      |  | $ | 28.83   |      |  | $ | 30.08   |  
|                                       |  |                                   |         |     
|Cost Per Gross Addition                |  | $                                 | 381     |      |                                 | $ | 421     |      |  | $ | 361     |      |  | $ | 381     |  
|                                       |  |                                   |         |     
|Reseller subscribers                   |  |                                   | 104,912 |      |                                 |   | 65,229  |      |  |   | 104,912 |      |  |   | 65,229  |  
|                                       |  |                                   |         |     
|Average Monthly MOUs Per Subscriber(2) |  |                                   |         |      |                                 |   |         |      |  |   |         |      |  |   |         |  
|Home                                   |  |                                   | 642     |      |                                 |   | 586     |      |  |   | 613     |      |  |   | 542     |  
|Roaming off our Network                |  |                                   | 181     |      |                                 |   | 170     |      |  |   | 177     |      |  |   | 167     |  
|                                       |  |                                   |         |     
|System MOUs (Millions)(2)              |  |                                   |         |      |                                 |   |         |      |  |   |         |      |  |   |         |  
|Subscriber                             |  |                                   | 467     |      |                                 |   | 392     |      |  |   | 887     |      |  |   | 717     |  
|Roaming                                |  |                                   | 181     |      |                                 |   | 154     |      |  |   | 352     |      |  |   | 295     |  
|                                       |  |                                   |         |     
|Licensed POPs (Millions)               |  |                                   | 6.2     |      |                                 |   | 6.3     |      |  |   | 6.2     |      |  |   | 6.3     |  
|Covered POPs (Millions)                |  |                                   | 4.8     |      |                                 |   | 4.8     |      |  |   | 4.8     |      |  |   | 4.8     |  
|Towers (owned and leased)              |  |                                   | 730     |      |                                 |   | 697     |      |  |   | 730     |      |  |   | 697     |  

---

|(1) | Reflects the elimination of the Chat-Pak prepaid program.
|--- | ---------------------------------------------------------

|(2) | 2004 has been updated based on a revised analysis of actual minutes.
|--- | --------------------------------------------------------------------



31



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##### Table of Contents

Subscribers



We refer to our customers as subscribers. Gross additions refer to the total number of new subscribers added
during the period. Net subscribers refer to the total number of new subscriber additions during the period reduced by any subscribers that have cancelled or terminated their service with us during this same period.



Churn



Churn is the monthly rate of customer turnover expressed as a percentage of our overall average customers for the reporting
period. Customer turnover includes both customers that elected voluntarily to discontinue using our service and customers that were involuntarily terminated from using our service because of non-payment. Churn is calculated by dividing the sum of
(i) the number of customers that discontinue service; (ii) less those customers discontinuing their service within 30 days of their original activation date (customer returns); and (iii) adding back those customers that reactivate their service, by
our overall average customers for the reporting period; and dividing the result by the number of months in the period. Pastpay churn excludes activity of subscribers on

prepaid plans.



Subscriber
and Roaming Revenue



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



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



Average Revenue per User



Average revenue per user (ARPU) is the average monthly
service revenue per subscriber and is calculated by dividing total subscriber revenue for the period by the average number of subscribers during the period. We present ARPU excluding and including roaming revenue.



Cash Cost per User



Cash cost per user (CCPU) is a measure of the costs to operate
our business on a per subscriber basis consisting of costs of service and operations, including handset subsidies on equipment sold to existing subscribers, and general and administrative expenses but excluding restructuring expenses. We present
CCPU both including and excluding roaming expenses. These roaming charges are paid to Sprint PCS, Sprint PCS affiliates and other carriers when our subscribers use their networks.



32



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##### Table of Contents

Cost per Gross Addition



Cost per gross addition (CPGA) summarizes the average cost to acquire new customers during the reporting period.
CPGA is computed by adding sales and marketing expenses and merchandise cost of sales and reducing the amount by the revenue from merchandise sales. The net amount is divided by the total of subscriber gross additions for the period.



Average Monthly Minutes of Use per Subscriber



We calculate average monthly minutes of use (MOUs) per
subscriber to provide us with an indication of the effectiveness of our basic service plans. We calculate average monthly MOUs per subscriber by dividing total subscriber minutes with and without roaming by the average number of our subscribers.



Reseller Subscribers



We participate in reseller programs in our service area through Sprint PCS
as part of the partnership with Sprint PCS. The agreement allows various resellers to sell wireless services (pre and post pay) and pay us for use of our network on a per minute basis.



System Minutes of Use



System MOUs provide an indication of total network (system) usage. We track and evaluate network usage for our subscribers as well as other
Sprint PCS, Sprint PCS affiliates and non-Sprint PCS subscribers using our network in order to assess network capacity.



Resident Population/Service Area



Our service area comprises a population (Licensed POPs) of approximately 6.2 million residents. When we use the term Covered POPs,
we refer to that portion of residents in our service area that have service available as a result of our network build out. The number of people in our service area does not represent the number of Sprint PCS subscribers that we expect to have in
our service area.



EBITDA and Adjusted EDITDA



Earnings before interest, taxes, depreciation and
amortization, or EBITDA, is defined as net loss plus taxes, interest expense net of interest income, depreciation expense, amortization expense. Adjusted EBITDA is defined as EBITDA plus gain on extinguishment of debt, gain on reorganization and
gain (loss) on disposal of assets. EBITDA and Adjusted EBITDA are non-GAAP financial measures used by the investment community for comparability. Our management believes that EBITDA and Adjusted EBITDA, as presented, represent useful measures for
assessing the performance of our ongoing operating activities, as it reflects our earnings trends without the impact of certain non-cash and non-recurring charges. Targets and positive trends in EBITDA and Adjusted EBITDA are used as performance
measures for determining certain compensation of management. EBITDA, with certain adjustments, is also a primary component in the calculation used by some of our creditors in assessing debt covenant compliance.



We understand that, although security analysts frequently use EBITDA in the
evaluation of companies, it is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the method of calculation. EBITDA and Adjusted EBITDA should not, however, be considered an
alternative to, or more meaningful than, net loss, cash flow or operating loss as determined in accordance with GAAP.



33



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##### Table of Contents

IWO HOLDINGS INC. AND SUBSIDIARIES

(UNAUDITED)

(Dollars in thousands, except per user and per add amounts)



Reconciliation of Non-GAAP Financial Measures



|                                                    |  |                                 |         |   |                                 |   |         |  
|--------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------- | - | ------- | -
|                                                    |  | Three MonthsEnded June 30, 2005 |         |   | Three MonthsEnded June 30, 2004 |  
|ARPU                                                |  |                                 |         |   |                                 |   |         |  
|Subscriber Revenue                                  |  | $                               | 36,493  |   |                                 | $ | 35,147  |  
|Roaming Revenue                                     |  |                                 | 12,512  |   |                                 |   | 9,117   |  
|                                                    |  |                                 |         |   |                                 |   |         |  
|Total service revenue                               |  | $                               | 49,005  |   |                                 | $ | 44,264  |  
|                                                    |  |                                 |         |   |                                 |   |         |  
|Average subscribers                                 |  |                                 | 242,442 |   |                                 |   | 223,056 |  
|Average revenue per user including roaming, monthly |  | $                               | 67.38   |   |                                 | $ | 66.15   |  
|Average revenue per user without roaming, monthly   |  | $                               | 50.17   |   |                                 | $ | 52.52   |  
|                                                    |  |                                
|CCPU                                                |  |                                 |         |   |                                 |   |         |  
|Cost of service and roaming                         |  | $                               | 27,112  |   |                                 | $ | 24,910  |  
|plus: General and administrative expenses           |  |                                 | 3,287   |   |                                 |   | 3,949   |  
|less: Restructuring costs                           |  |                                 |        |   |                                 |   | (1,404  | )
|                                                    |  |                                 |         |   |                                 |   |         |  
|Total cash costs including roaming                  |  |                                 | 30,399  |   |                                 |   | 27,455  |  
|less: Roaming expense                               |  |                                 | (9,719  | ) |                                 |   | (6,337  | )
|                                                    |  |                                 |         |   |                                 |   |         |  
|Total cash costs without roaming                    |  | $                               | 20,680  |   |                                 | $ | 21,118  |  
|                                                    |  |                                 |         |   |                                 |   |         |  
|Average subscribers                                 |  |                                 | 242,442 |   |                                 |   | 223,056 |  
|Cash cost per user, monthly                         |  | $                               | 41.80   |   |                                 | $ | 41.03   |  
|Cash cost per user without roaming, monthly         |  | $                               | 28.43   |   |                                 | $ | 31.56   |  
|                                                    |  |                                
|CPGA                                                |  |                                 |         |   |                                 |   |         |  
|Sales and marketing                                 |  | $                               | 8,917   |   |                                 | $ | 7,694   |  
|less: Equipment revenue, net of upgrade revenue     |  |                                 | (2,234  | ) |                                 |   | (2,169  | )
|plus: Cost of equipment, net of cost of upgrades    |  |                                 | 3,041   |   |                                 |   | 4,782   |  
|                                                    |  |                                 |         |   |                                 |   |         |  
|Total costs of acquisition                          |  | $                               | 9,724   |   |                                 | $ | 10,307  |  
|                                                    |  |                                 |         |   |                                 |   |         |  
|Gross adds                                          |  |                                 | 25,506  |   |                                 |   | 24,493  |  
|Cost per gross add                                  |  | $                               | 381     |   |                                 | $ | 421     |  
|                                                    |  |                                
|EBITDA                                              |  |                                 |         |   |                                 |   |         |  
|Net income (loss)                                   |  | $                               | (8,714  | ) |                                 | $ | (8,857  | )
|Interest expense, net of interest income            |  |                                 | 4,974   |   |                                 |   | 7,137   |  
|Depreciation and amortization                       |  |                                 | 13,006  |   |                                 |   | 6,909   |  
|                                                    |  |                                 |         |   |                                 |   |         |  
|EBITDA                                              |  |                                 | 9,266   |   |                                 |   | 5,189   |  
|Restructuring expense                               |  |                                 |        |   |                                 |   | 1,404   |  
|                                                    |  |                                 |         |   |                                 |   |         |  
|Adjusted EBITDA                                     |  | $                               | 9,266   |   |                                 | $ | 6,593   |  
|                                                    |  |                                 |         |   |                                 |   |         |  



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##### Table of Contents

|                                                    |  |                               |          |   |                               |   |         |  
|--------------------------------------------------- |  | ----------------------------- | -------- | - | ----------------------------- | - | ------- | -
|                                                    |  | Six MonthsEnded June 30, 2005 |          |   | Six MonthsEnded June 30, 2004 |  
|ARPU                                                |  |                               |          |   |                               |   |         |  
|Subscriber Revenue                                  |  | $                             | 72,107   |   |                               | $ | 68,118  |  
|Roaming Revenue                                     |  |                               | 22,811   |   |                               |   | 17,714  |  
|                                                    |  |                               |          |   |                               |   |         |  
|Total service revenue                               |  | $                             | 94,918   |   |                               | $ | 85,832  |  
|                                                    |  |                               |          |   |                               |   |         |  
|Average subscribers                                 |  |                               | 241,014  |   |                               |   | 220,524 |  
|Average revenue per user including roaming, monthly |  | $                             | 65.64    |   |                               | $ | 64.87   |  
|Average revenue per user without roaming, monthly   |  | $                             | 49.86    |   |                               | $ | 51.48   |  
|                                                    |  |                              
|CCPU                                                |  |                               |          |   |                               |   |         |  
|Cost of service and roaming                         |  | $                             | 53,153   |   |                               | $ | 47,600  |  
|plus: General and administrative expenses           |  |                               | 6,223    |   |                               |   | 6,902   |  
|less: Restructuring costs                           |  |                               |         |   |                               |   | (2,261  | )
|                                                    |  |                               |          |   |                               |   |         |  
|Total cash costs including roaming                  |  |                               | 59,376   |   |                               |   | 52,241  |  
|less: Roaming expense                               |  |                               | (17,687  | ) |                               |   | (12,436 | )
|                                                    |  |                               |          |   |                               |   |         |  
|Total cash costs without roaming                    |  | $                             | 41,689   |   |                               | $ | 39,805  |  
|                                                    |  |                               |          |   |                               |   |         |  
|Average subscribers                                 |  |                               | 241,014  |   |                               |   | 220,524 |  
|Cash cost per user, monthly                         |  | $                             | 41.06    |   |                               | $ | 39.48   |  
|Cash cost per user without roaming, monthly         |  | $                             | 28.83    |   |                               | $ | 30.08   |  
|                                                    |  |                              
|CPGA                                                |  |                               |          |   |                               |   |         |  
|Sales and marketing                                 |  | $                             | 16,947   |   |                               | $ | 15,242  |  
|less: Equipment revenue, net of upgrade revenue     |  |                               | (4,181   | ) |                               |   | (4,454  | )
|plus: Cost of equipment, net of cost of upgrades    |  |                               | 6,338    |   |                               |   | 8,924   |  
|                                                    |  |                               |          |   |                               |   |         |  
|Total costs of acquisition                          |  | $                             | 19,104   |   |                               | $ | 19,712  |  
|                                                    |  |                               |          |   |                               |   |         |  
|Gross adds                                          |  |                               | 52,961   |   |                               |   | 51,767  |  
|Cost per gross add                                  |  | $                             | 361      |   |                               | $ | 381     |  
|                                                    |  |                              
|EBITDA                                              |  |                               |          |   |                               |   |         |  
|Net income (loss)                                   |  | $                             | 172,858  |   |                               | $ | (27,590 | )
|Interest expense, net of interest income            |  |                               | 11,022   |   |                               |   | 18,452  |  
|Depreciation and amortization                       |  |                               | 23,921   |   |                               |   | 20,906  |  
|Loss on sale of assets                              |  |                               |         |   |                               |   | 25      |  
|                                                    |  |                               |          |   |                               |   |         |  
|EBITDA                                              |  |                               | 207,801  |   |                               |   | 11,793  |  
|Gain on extinguishment of debt                      |  |                               | (76,942  | ) |                               |   |        |  
|Reorganization income                               |  |                               | (113,966 | ) |                               |   |        |  
|Restructuring expense                               |  |                               |         |   |                               |   | 2,261   |  
|                                                    |  |                               |          |   |                               |   |         |  
|Adjusted EBITDA                                     |  | $                             | 16,893   |   |                               | $ | 14,054  |  
|                                                    |  |                               |          |   |                               |   |         |  



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##### Table of Contents

Liquidity and Capital Resources



Cash Flows



As of June 30, 2005, we had $28.7 million in cash and indebtedness that consisted of $150.0 million related to our senior secured floating rate notes and
$87.0 million (net of unamortized discount of $53.0 million), related to our senior subordinated discount notes for a total of $237.0 million.



|                                                     |  |                                        |        |   |                                    |   |        |                                      |  |   |      
|---------------------------------------------------- |  | -------------------------------------- | ------ | - | ---------------------------------- | - | ------ | ------------------------------------ |  | - | -----
|                                                     |  | Successor Company                      |        |   | Predecessor Company               
|                                                     |  | For the Five MonthsEnded June 30, 2005 |        |   | For the MonthEndedJanuary 31, 2005 |   |        | For the SixMonths EndedJune 30, 2004
|                                                     |  | (In thousands)                        
|Net cash provided (used) by operating activities     |  | $                                      | (1,303 | ) |                                    | $ | (1,655 | )                                    |  | $ | 1,918
|Net cash provided (used) by investing activities     |  |                                        | (4,830 | ) |                                    |   | (2,118 | )                                    |  |   | 5,971
|Net cash provided by financing activities            |  |                                        |       |   |                                    |   | 4,814  |                                      |  |   |     
|                                                     |  |                                        |        |   |                                    |   |        |                                      |  |   |      
|Net increase (decrease) in cash and cash equivalents |  | $                                      | (6,133 | ) |                                    | $ | 1,041  |                                      |  | $ | 7,889
|                                                     |  |                                        |        |   |                                    |   |        |                                      |  |   |      



Net cash used in
operating activities for the five months ended June 30, 2005 was $1.3 million. This primarily consisted of our net loss of $17.2 million that was partially offset by non-cash charges of $21.7 million in depreciation and amortization, $4.3 million in
debt discount accretion and $1.4 million in other miscellaneous non-cash charges, offset, in part, by an $11.5 million increase in working capital. Net cash used by investing activities for the five months ended June 30, 2005 was $4.8 million. This
primarily consisted of $1.7 million in deposits of restricted cash and $3.2 million in equipment purchases. Management believes that our current cash on hand and cash from operations will be sufficient to fund needs for operating cash and our
capital expenditures for at least the next twelve months.



Liquidity Following the Plan of Reorganization



Our liquidity needs include obligations under the new notes and other long-term obligations. In addition, we expect to have significant capital expenditure requirements in future years. The amended affiliation agreements with Sprint PCS
require us to construct and operate 103 additional cell sites (43 of which were completed as of June 30, 2005) in our territory by 2008. We also expect to construct other sites to expand capacity. Additionally, during the next four years we expect
to make capital expenditures to upgrade base stations on a majority of towers as a result of the expected obsolescence of the Lucent Technologies mini-cell and micro-cell technology. Based on current pricing and other assumptions, we estimate that
it will be required to spend an aggregate of approximately $23.0 million from 2005 to 2008 to upgrade our base stations. We expect that during 2005 our total capital expenditures will be approximately $21.0 million, including an estimated $7.0
million for the construction of 30 additional expansion sites.



Financing Transactions



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



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



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##### Table of Contents

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



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



Seasonality



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



Item 3. Quantitative and Qualitative Disclosures about Market Risk



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



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



Our variable rate debt consists of Senior Secured Floating Rate Notes
($150.0 million at June 30, 2005). The Senior Secured Floating Rate Notes bear interest at the applicable Eurodollar rate, currently at 7.35%.



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



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##### Table of Contents

Item 4. Controls and Procedures



We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports filed under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported
within the time periods specified in the SECs rules and forms. Our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures.



On June 14, 2005, our management and
the Audit Committee of our Board of Directors concluded that our financial statements for the interim periods ending January 31, 2005 and March 31, 2005 should be restated to correct certain errors relating to accounting for depreciation and general
and administrative expenses, and that such previously filed interim financial statements should no longer be relied upon. Ernst & Young LLP, our independent registered public accounting firm, has advised us that it concurs with our conclusion.



Based on the Public Company Accounting Oversight Boards
Auditing Standard No. 2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction With an Audit of Financial Statements, restatement of financial statements in prior filings with the SEC is a strong indicator of the existence
of a material weakness in the design or operation of internal control over financial reporting. Although we were not an accelerated filer within the meaning of the rules implementing Section 404 of the Sarbanes-Oxley Act of
2002 and therefore were not required to include in our annual report on Form 10-K managements assessment of the effectiveness of our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities
Exchange Act of 1934, as amended), management has concluded that, because we were required to restate our financial statements as a result of errors described above, a material weakness existed in our internal control over financial reporting as of
March 31, 2005. In connection with correcting our methodology of accounting for depreciation and general and administrative expenses, we have instituting procedures to remediate this material weakness.



Pursuant to the expiration of our management agreement with US Unwired and
transition of our financial systems to the corporate headquarters in Albany, N.Y., there were changes in our internal controls over financial reporting that materially affected or are reasonably likely to materially affect the methods and procedures
used for internal control over financial reporting, including:



| |  | implementing new accounting systems and procedures including, but not limited to, the establishment of our accounting process and related controls over recording revenue, cash
disbursements, accounts receivable, accounts payable, fixed assets, corporate accounting, treasury management and financial reporting;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | staffing all areas that support the corporate accounting and financial reporting functions;
|- |  | -------------------------------------------------------------------------------------------



| |  | adopting practices to complete and review account reconciliations on a regular basis in order to identify and correct any unusual items;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  | creating documentation of our accounting process and public disclosures to assist management with its responsibilities to ensure key accounting controls have been established;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | creating processes and conducting regular meetings of our Disclosure Committee to review and discuss accounting and operational issues to ensure the completeness and accuracy of our
public disclosures;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | retaining outside consultants, as appropriate, to review our corporate accounting, financial reporting and public disclosures; and
|- |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  | conducting regular meetings of the Audit Committee of the Board of Directors, members of which are financial experts in order to review and discuss internal controls and accounting
and operational issues to ensure the completeness and accuracy.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



38



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##### Table of Contents

Part II. Other Information



Item 1. Legal Proceedings



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



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



None.



Item 3. Defaults Upon Senior Securities



None.



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



None.



Item 5. Other Information



None.



Item 6. Exhibits



|      |  |                                                                                                                                                                                                                                                                                    
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1   |  | Order of the Bankruptcy Court, dated February 9, 2005, confirming the Companys Joint Plan of Reorganization, together with such Joint Plan of Reorganization, as so confirmed
(incorporated by reference to Exhibit 2.1 to IWO Holdings, Inc.s Form 8-K dated February 14, 2005).
|      | 
|3.1   |  | Amended and Restated Certificate of Incorporation of IWO Holdings, Inc. (incorporated by reference to Exhibit 3.1 to IWO Holdings, Inc.s Form 8-K dated February 14,
2005).                                                                                                       
|      | 
|3.2   |  | Amended and Restated Bylaws of IWO Holdings, Inc. (incorporated by reference to Exhibit 3.2 to IWO Holdings, Inc.s Form 8-K dated February 14, 2005).                                                                                                                             
|      | 
|31.1* |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.                                                                                        
|      | 
|31.2* |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.                                                                                        
|      | 
|32.1* |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                 
|      | 
|32.2* |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                 

---

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



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##### Table of Contents

SIGNATURES



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



|                |  |                                       
|--------------- |  | --------------------------------------
|August 11, 2005 |  | IWO HOLDINGS, INC.                    
|                | 
|                |  | /s/ RICHARD HARRIS                    
|                |  | Richard Harris Chief Financial
Officer



40