---

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-Q



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

| |  | SECURITIES EXCHANGE ACT OF 1934
| |  | -------------------------------



| |  | FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003 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



---



IWO HOLDINGS, INC.

(Exact name of registrant as specified in its charter)



|Delaware                                                       |  | 14-1818487                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|901 Lakeshore Drive Lake Charles, LA     |  | 70601     
|---------------------------------------- |  | ----------
|(Address of principal executive offices) |  | (Zip code)



(337) 436-9000

(Registrants telephone number, including area code)



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



---



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



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

---



---

|                             |  |                                                                                      
|---------------------------- |  | -------------------------------------------------------------------------------------
|                             |  |                                                                                      
|                             | 
|Part IFinancial Information |  |                                                                                      
|                             |  |                                                                                      
|Item 1.                      |  | Financial Statements                                                                 
|                             |  |                                                                                      
|                             |  | Condensed Consolidated Balance Sheets                                                
|                             |  |                                                                                      
|                             |  | Condensed Consolidated Statements of Operations                                      
|                             |  |                                                                                      
|                             |  | Condensed Consolidated Statements of Cash Flows                                      
|                             |  |                                                                                      
|                             |  | Notes to Condensed Consolidated Financial Statements                                 
|                             |  |                                                                                      
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations
|                             |  |                                                                                      
|Item 4.                      |  | Controls and Procedures                                                              
|                             | 
|Part IIOther Information    |  |                                                                                      
|                             |  |                                                                                      
|Item 5.                      |  | Other Information                                                                    
|                             |  |                                                                                      
|Item 6.                      |  | Exhibits and Reports on Form 8-K                                                     
|                             | 
|Signatures                   |  | 27                                                                                   



2



---

Part I  Financial Information

|Item 1. |  | Financial Statements
|------- |  | --------------------



IWO HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)



|                                                                              |  | June 30, 2003 |          |   | December 31,2002 |  
|----------------------------------------------------------------------------- |  | ------------- | -------- | - | ---------------- | -
|                                                                              |  | (Unaudited)   |          |   | (Note 1)         |  
|Assets                                                                        |  |               |          |   |                  |  
|Current assets:                                                               |  |               |          |   |                  |  
|Cash and cash equivalents                                                     |  | $             | 21,251   |   |                  | $
|Restricted cash and US Treasury securities at amortized costheld to maturity |  |               | 30,346   |   |                  |  
|Subscriber receivables, net                                                   |  |               | 11,696   |   |                  |  
|Inventory                                                                     |  |               | 1,971    |   |                  |  
|Prepaid expenses and other assets                                             |  |               | 6,448    |   |                  |  
|Receivables from related parties                                              |  |               | 217      |   |                  |  
|                                                                              |  |               |          |   |                  |  
|Total current assets                                                          |  |               | 71,929   |   |                  |  
|Property and equipment, net                                                   |  |               | 174,122  |   |                  |  
|Restricted cash                                                               |  |               |         |   |                  |  
|Intangible assets, net                                                        |  |               | 40,579   |   |                  |  
|Note receivable                                                               |  |               | 160      |   |                  |  
|Other assets                                                                  |  |               | 17,600   |   |                  |  
|                                                                              |  |               |          |   |                  |  
|Total assets                                                                  |  | $             | 304,390  |   |                  | $
|                                                                              |  |               |          |   |                  |  
|Liabilities and Stockholders deficit                                         |  |               |          |   |                  |  
|Current liabilities:                                                          |  |               |          |   |                  |  
|Accounts payable                                                              |  | $             | 8,500    |   |                  | $
|Accrued expenses                                                              |  |               | 34,024   |   |                  |  
|Current maturities of long-term obligations in default                        |  |               | 350,921  |   |                  |  
|                                                                              |  |               |          |   |                  |  
|Total current liabilities                                                     |  |               | 393,445  |   |                  |  
|Long term obligations in default                                              |  |               |         |   |                  |  
|Other                                                                         |  |               | 562      |   |                  |  
|Stockholders deficit:                                                        |  |               |          |   |                  |  
|Common stock                                                                  |  |               | 1        |   |                  |  
|Additional paid in capital                                                    |  |               | 446,449  |   |                  |  
|Retained deficit                                                              |  |               | (536,067 | ) |                  |  
|                                                                              |  |               |          |   |                  |  
|Total stockholders deficit                                                   |  |               | (89,617  | ) |                  |  
|                                                                              |  |               |          |   |                  |  
|Total liabilities and stockholders deficit                                   |  | $             | 304,390  |   |                  | $
|                                                                              |  |               |          |   |                  |  



See accompanying notes
to condensed consolidated financial statements.



3



---

IWO HOLDINGS, INC.AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(Unaudited)



|                               |  | Three month periods             |         |   | Six month periods               |  
|------------------------------ |  | ------------------------------- | ------- | - | ------------------------------- | -
|                               |  | Three months endedJune 30, 2003 |         |   | Three months endedJune 30, 2002 |  
|Revenues:                      |  |                                 |         |   |                                 |  
|Subscriber                     |  | $                               | 32,670  |   |                                 | $
|Roaming                        |  |                                 | 8,303   |   |                                 |  
|Merchandise sales              |  |                                 | 1,478   |   |                                 |  
|Other revenue                  |  |                                 | 162     |   |                                 |  
|                               |  |                                 |         |   |                                 |  
|Total revenue                  |  |                                 | 42,613  |   |                                 |  
|Expense:                       |  |                                 |         |   |                                 |  
|Cost of service                |  |                                 | 16,760  |   |                                 |  
|Merchandise cost of sales      |  |                                 | 2,364   |   |                                 |  
|General and administrative     |  |                                 | 11,756  |   |                                 |  
|Sales and marketing            |  |                                 | 6,585   |   |                                 |  
|Depreciation and amortization  |  |                                 | 13,591  |   |                                 |  
|Asset abandonment charge       |  |                                 |        |   |                                 |  
|                               |  |                                 |         |   |                                 |  
|Total operating expense        |  |                                 | 51,056  |   |                                 |  
|                               |  |                                 |         |   |                                 |  
|Operating loss                 |  |                                 | (8,443  | ) |                                 |  
|Other expense:                 |  |                                 |         |   |                                 |  
|Interest expense, net          |  |                                 | (9,000  | ) |                                 |  
|                               |  |                                 |         |   |                                 |  
|Loss before income tax benefit |  |                                 | (17,443 | ) |                                 |  
|Income tax benefit             |  |                                 |        |   |                                 |  
|                               |  |                                 |         |   |                                 |  
|Net loss                       |  | $                               | (17,443 | ) |                                 | $
|                               |  |                                 |         |   |                                 |  



See accompanying notes
to condensed consolidated financial statements



4



---

IWO HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)



|                                                      |  | For the sixmonths endedJune 30, 2003 |         |   | January 1, 2002through March 31, 2002 |   |         | April 1, 2002through June 30, 2002 | 
|----------------------------------------------------- |  | ------------------------------------ | ------- | - | ------------------------------------- | - | ------- | ---------------------------------- | 
|Cash flows from operating activities                  |  |                                      |         |   |                                       |   |         |                                    | 
|Net cash used in operating activities                 |  | $                                    | (14,866 | ) |                                       | $ | (14,868 | )                                  | 
|Cash flows from investing activities                  |  |                                      |         |   |                                       |   |         |                                    | 
|Release of restricted cash and US Treasury securities |  |                                      | 10,871  |   |                                       |   | 10,717  |                                    | 
|Proceeds on maturities of marketable securities       |  |                                      |        |   |                                       |   | 6,000   |                                    | 
|Purchases of property and equipment                   |  |                                      | (9,762  | ) |                                       |   | (29,144 | )                                  | 
|                                                      |  |                                      |         |   |                                       |   |         |                                    | 
|Net cash provided (used in) by investing activities   |  |                                      | 1,109   |   |                                       |   | (12,427 | )                                  | 
|Cash flows from financing activities                  |  |                                      |         |   |                                       |   |         |                                    | 
|Proceeds from long-term debt                          |  |                                      |        |   |                                       |   | 40,000  |                                    | 
|Principal payments of long-term debt                  |  |                                      |        |   |                                       |   | (15,000 | )                                  | 
|Other financing activities                            |  |                                      |        |   |                                       |   |        |                                    | 
|                                                      |  |                                      |         |   |                                       |   |         |                                    | 
|Net cash provided by financing activities             |  |                                      |        |   |                                       |   | 25,000  |                                    | 
|                                                      |  |                                      |         |   |                                       |   |         |                                    | 
|Net change in cash and cash equivalents               |  |                                      | (13,757 | ) |                                       |   | (2,295  | )                                  | 
|Cash and cash equivalents at beginning of period      |  |                                      | 35,008  |   |                                       |   | 3,394   |                                    | 
|                                                      |  |                                      |         |   |                                       |   |         |                                    | 
|Cash and cash equivalents at end of period            |  | $                                    | 21,251  |   |                                       | $ | 1,099   |                                    | 
|                                                      |  |                                      |         |   |                                       |   |         |                                    | 



See accompanying notes
to condensed consolidated financial statements.



5



---

IWO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2003

(Unaudited)



|1. |  | Basis of Presentation
|-- |  | ---------------------



The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in
the United States 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 accounting principles generally accepted
in the United States 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 three and
six-month periods ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003.



The condensed consolidated balance sheet at December 31, 2002 has been derived from the audited financial statements at that date but does not include all
of the information and footnotes required by accounting principles generally accepted in the United States 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, 2002, filed on March 31, 2003 with the Securities and Exchange Commission.



Recent Accounting Pronouncements



In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities-An
Interpretation of Accounting Research Bulletin (ARB) No. 51 (FIN 46). This interpretation clarifies how to identify variable interest entities and how a company should assess its interests in a variable interest entity to decide
whether to consolidate the entity. FIN 46 applies to variable interest entities created after January 31, 2003, in which a company obtains an interest after that date. Also, FIN 46 applies in the first fiscal quarter or interim period beginning
after June 15, 2003, to variable interest entities in which a company holds a variable interest that it acquired before February 1, 2003. The Company is in the process of evaluating the effect of this pronouncement on its operations.



In November 2002, the FASB issued FASB Interpretation No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. This interpretation expands the disclosures to be made by a guarantor about its obligations under certain
guarantees and requires that, at the inception of a guarantee, a guarantor recognize a liability for the fair value of the obligation undertaken in issuing the guarantee. The disclosure requirements are effective immediately. As disclosed in Note 5
to the Consolidated Financial Statements, Independent Wireless One Corporation has fully and unconditionally guaranteed the Companys obligations under the IWO 14% senior notes. The initial recognition and measurement provisions of this
interpretation are effective for guarantees issued or modified after December 31, 2002. The adoption of the initial recognition and measurement provisions of this interpretation did not have a material effect on the Companys financial
position, results of operations or cash flows.



|2. |  | Description of the Organization
|-- |  | -------------------------------



IWO Holdings, Inc. (the Company or IWO) is a wholly owned subsidiary of US Unwired Inc. (US Unwired) and is
principally engaged in the ownership and operation of wireless personal communications systems (PCS) in the northeastern region of the United States.



Certain reclassifications have been made to the financial statements for periods prior to the April 1, 2002 acquisition by
US Unwired in order to conform the presentation to the six-month period ended June 30, 2003.



|3. |  | Liquidity
|-- |  | ---------



The Company has been unable to develop a business plan that provides sufficient liquidity for operations,



6



---

capital expenditures and debt servicing obligations in 2003 and has engaged in discussions with the
holders of its senior bank credit facility regarding the restructuring of the Company.



As of June 30, 2003, the Company had $21.3 million in cash and cash equivalents, $30.3 million in restricted cash and indebtedness that consisted of $213.2 million related to its senior bank credit facility and $137.7
million related to its senior notes for a total of $350.9 million. A portion of the original proceeds of the senior notes offering was set aside as restricted cash to make the first six scheduled interest payments on the senior notes through January
2004. Repayment of the senior bank credit facility is scheduled to begin in March 2004.



On June 4, 2003, the Company failed to make a $3.2 million scheduled interest payment on its $240 million senior bank credit facility. Additionally, the Company was not in compliance with its restrictive covenants
under its senior bank credit facility at June 30, 2003. As a result of the failure to make the scheduled interest payment and the covenant violations, the Company was in default of its senior bank credit facility at June 30, 2003. The holders of the
senior bank credit facility have denied the Company access to the remaining $25.2 million of availability and have the right to demand payment in full of the $213.2 million in outstanding debt related to the senior bank credit facility. The Company
is in discussions with its banking group to arrive at an acceptable restructuring to preserve its liquidity but it is probable that no plan will be forthcoming, and the Company will soon be forced to seek protection under bankruptcy.



As a result of liquidity challenges, the Company has made the decision to
reduce capital expenditures for network expansion and abandon the construction of cell sites that do not provide a sufficient level of enhanced coverage. The Company recorded an asset abandonment charge of $12.4 million during the six-month period
ended June 30, 2003 for the cell sites and the related property leases of these abandoned cell sites. Included in this asset abandonment charge are cell sites that the Company is required to construct to meet the build out requirements under its
Sprint management agreement. Failure to complete the build out of the Companys service area will place it in violation of its Sprint management agreement. As a result, Sprint PCS could declare the Company in default and take action up to and
including termination of its Sprint management agreement. At June 30, 2003, construction in progress included $8.8 million primarily related to cell sites that the Company plans to complete and management estimates that completion of these cell
sites will require approximately $9.3 million in additional costs to complete construction and place these sites in operation. The Company anticipates that only a portion of these sites will be completed in 2003.



Due to restrictions in the US Unwired debt instruments, US Unwired cannot
provide any capital or other financial support to the Company. Further, the Companys creditors, lenders and note holders cannot place any liens or encumbrances on the assets of US Unwired. Since the holders of the senior bank credit facility
have placed the Company in default, US Unwireds relationship with the Company may change and several alternatives exist ranging from US Unwired working for the holders of the senior bank credit facility and the holders of the senior notes as a
manager of the Companys territory, possibly subject to the approval by Sprint PCS, to no involvement with the Company at all.



Considering the Companys default of the loan agreements as discussed above, there is substantial doubt about IWOs ability to continue as a
going concern.



The Companys Business Strategy



The Company has undertaken several initiatives designed to
improve liquidity and reduce losses for 2003.



The Company
has:



| |  |  | reinstated a deposit requirement for higher credit risk subscribers and will request not to participate in any Sprint PCS programs where the Companys analysis indicates
adversely impacted levels of customer turnover or unsatisfactory economic returns.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | restructured sales employees programs to pay higher commissions on subscribers with better credit ratings.
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | revised the local agent commission structure. The Company no longer offers handset discounts to its local agents and pays higher commissions for subscribers with good credit
ratings. The Company has cancelled and continues to cancel agreements with local agents that continue to target higher credit risk subscribers or provide low economic value.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



7



---

| |  |  | introduced a pre-pay program that requires advance payment for minutes of use. The Company believes that this program offers higher credit risk subscribers a less stressful
environment in which to subscribe to the Companys service by providing an opportunity to better manage their expenditures for the service provided.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | supplemented Sprint PCSs customer service function with its own staff that focuses on subscriber retention.
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | limited its capital expenditures to: (1) capacity and required technical upgrades of existing equipment, and (2) only adding additional cell site coverage in areas that the Company
expects will produce positive cash returns as a result of either new subscriber growth or decreases in subscriber turnover.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | undertook a corporate wide evaluation of expenses. This includes the consolidation of functions, divesting of unused and under utilized facilities, renegotiation of vendor
contracts, extension of vendor payment terms and other cost cutting measures.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | evaluated its markets and is reducing sales staffing levels and closing retail outlets that do not meet its minimum internal rates of returns.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | continued to work with Sprint PCS to improve the detail, timeliness and accuracy of information processed by Sprint PCS on the Companys behalf.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



While the Company believes that these initiatives will have a positive
impact on operating results, the Company cannot state with certainty that these initiatives will result in its ability to sustain operations or liquidity beyond or even to the end of 2003, given the information as discussed above regarding the
Companys indebtedness.



|4. |  | Details of Certain Balance Sheet Accounts
|-- |  | -----------------------------------------



Major categories of property and equipment consisted of the following:



|                                     |  | June 30, 2003  |         | December 31, 2002
|------------------------------------ |  | -------------- | ------- | -----------------
|                                     |  | (In thousands)
|Land                                 |  | $              | 168     |                  
|Buildings and leasehold improvements |  |                | 9,361   |                  
|Facilities and equipment             |  |                | 177,611 |                  
|Furniture, fixtures and vehicles     |  |                | 5,850   |                  
|Construction in progress             |  |                | 8,819   |                  
|                                     |  |                |         |                  
|                                     |  |                | 201,809 |                  
|Less accumulated depreciation        |  |                | 27,687  |                  
|                                     |  |                |         |                  
|                                     |  | $              | 174,122 |                  
|                                     |  |                |         |                  



Intangibles assets consisted of the following:



|                                |  | June 30, 2003  |        | December 31,2002
|------------------------------- |  | -------------- | ------ | ----------------
|                                |  | (In thousands)
|Sprint PCS management agreement |  | $              | 19,766 |                 
|Subscriber base                 |  |                | 57,500 |                 
|                                |  |                |        |                 
|                                |  |                | 77,266 |                 
|Less: accumulated amortization  |  |                | 36,687 |                 
|                                |  |                |        |                 
|Intangible assets, net          |  | $              | 40,579 |                 
|                                |  |                |        |                 



8



---

|5. |  | Long-Term Obligations
|-- |  | ---------------------



Long-term obligations consisted of the following:



|                                                    |  | June 30, 2003  |         | December 31,2002
|--------------------------------------------------- |  | -------------- | ------- | ----------------
|                                                    |  | (In thousands)
|Senior bank credit facility, in default             |  | $              | 213,184 |                 
|Senior subordinated discount notes                  |  |                | 137,737 |                 
|                                                    |  |                |         |                 
|Long-term obligations                               |  |                | 350,921 |                 
|Less current maturities, in default                 |  |                | 350,921 |                 
|                                                    |  |                |         |                 
|Long-term obligations, excluding current maturities |  | $              |        |                 
|                                                    |  |                |         |                 



The Company is an
unrestricted subsidiary of US Unwired. As a result, funds available under the Companys senior bank credit facility can only be used by the Company to finance the operations of the Company and, funds available under US Unwireds senior
bank credit facility can only be used by US Unwired to finance operations of US Unwired.



On June 4, 2003, the Company failed to make a $3.2 million scheduled interest payment on the its $240 million senior bank credit facility and was not in compliance with its restrictive covenants under its senior bank
credit facility at June 30, 2003. As a result of the failure to make a scheduled interest payment and the covenant violations, the Company was in default of its senior bank credit facility at June 30, 2003 and the holders of the senior bank credit
facility have denied the Company access to the remaining $25.2 million of availability. As a result of this and those issues as discussed in Note 3 above, the Company has classified all outstanding indebtedness of both the senior bank credit
facility and the senior notes as a current liability.



Senior Bank Credit Facility  $240 million



Effective December 2000, Independent Wireless One Corporation, a wholly owned subsidiary of the Company, entered into amended and restated secured bank credit facility (senior bank credit facility) under which it may borrow up
to $240 million in the aggregate consisting of up to $70 million in revolving loans and $170 million in term loans. The senior bank credit facility matures in 2008. The term loans are due to be repaid in quarterly installments beginning in March
2004 and the reducing revolver matures in March 2008. All loans under the senior bank credit facility, effective with the date of the default, bear interest at the prime rate plus four percent. The senior bank credit facility is collateralized by
all of the assets of the Company and its subsidiaries.



Senior Notes  14%



In February 2001, the
Company issued 160,000 units, each consisting of $1,000 principal amount of 14% Senior Notes (senior notes) due January 15, 2011 and one warrant to purchase 12.50025 shares of the Companys class C common stock at an exercise price
of $7.00 per share. As a result of US Unwireds acquisition of the Company in April 2002, this warrant was converted to a US Unwired warrant to purchase 12.96401 shares of the US Unwireds common stock at $6.75 per share. Interest is
payable semi-annually on January 15 and July 15 of each year. Independent Wireless One Corporation, a wholly owned subsidiary of the Company, is the sole guarantor of the senior notes. All of the Companys restricted subsidiaries formed or
acquired after the issuance of the senior notes that guarantee the Companys senior bank credit facility will also be required to guarantee the senior notes. The senior notes are not guaranteed by Independent Wireless One Realty Corporation, a
wholly owned subsidiary of the Company. Effective April 1, 2002, with the acquisition by US Unwired, the Companys senior notes were revalued to a fair value of $136.0 million. The discount is being accreted over the remaining life of the notes
using the effective interest method.



A portion of the
original proceeds of the senior notes were used to purchase a portfolio of U.S. government securities which will generate sufficient proceeds to make the first six scheduled interest payments on the senior notes through January 2004. The account
holding the investment securities and all of the securities and other items contained in the account have been pledged to the trustee for the benefit of the holders of the senior notes.



9



---

|6. |  | Commitments and Contingencies
|-- |  | -----------------------------



The PCS licenses that the Company operates for Sprint PCS are subject to a requirement that the Company construct network facilities that offer coverage
to 25% of the population or have substantial service in each of its Basic Trading Areas (BTAs) within five years from the grant of the licenses. As of June 30, 2003, management believes that Sprint PCS has met the requirements necessary
for the licenses that the Company operates for Sprint PCS under its Sprint PCS management agreements.



The Company uses Sprint PCS to process all PCS subscriber billings including monthly recurring charges, airtime and other charges such as interconnect
fees. The Company pays various fees to Sprint PCS for new subscribers as well as recurring monthly fees for services performed for existing customers including billing and management of customer accounts. Sprint PCSs billing for these services
is based upon an estimate of the actual costs incurred by Sprint PCS 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 PCS, the Company believes it has adequately provided for the above-mentioned costs in the accompanying consolidated financial
statements. Additionally, Sprint PCS has contracted with national retailers that sell handsets and service to new PCS subscribers in the Companys markets. Sprint PCS pays these national retailers a new subscriber commission and provides
handsets to such retailers below cost. Sprint PCS passes these costs of commissions and the handset subsidies to the Company.



On July 11, 2003, US Unwired and two of its subsidiaries, Louisiana Unwired, LLC and Texas Unwired, filed suit in the U.S. District Court for the Western
District of Louisiana, against Sprint Corporation, Sprint Spectrum, L.P., Wireless, L.P. and Sprintcom, Inc. (collectively, Sprint). The suit alleges violations of the Racketeer Influenced and Corrupt Organizations Act, breach of
fiduciary duty and fraud, arising out of Sprints conduct in its dealings with the plaintiff companies. It seeks treble actual damages in unspecified amounts and appointment of a receiver over property and assets controlled by Sprint in
Louisiana. The Company is not a plaintiff in this suit.



The
Company periodically reviews all charges from Sprint PCS and from time to time, the Company may dispute certain of these charges. As of June 30, 2003, the Company had disputed approximately $2.9 million of charges. Based upon the information
provided to the Company by Sprint PCS to date, the Company believes the accompanying condensed consolidated balance sheet adequately reflects its obligations that may be to Sprint PCS for these charges.



|7. |  | Income Taxes
|-- |  | ------------



The Companys effective income tax rate for the interim periods presented is based on managements estimate of the Companys effective tax
rate for the applicable year and differs from the federal statutory income tax rate primarily due to nondeductible permanent differences, state income taxes and changes in the valuation allowance for deferred tax assets. The Companys income or
loss for tax purposes is included in the income tax return of the parent. However, the Companys income tax provision is computed on a separate basis.



|8. |  | Condensed Consolidating Financial Information
|-- |  | ---------------------------------------------



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



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



The information which follows presents the condensed consolidating balance sheet as of June 30, 2003 and December 31, 2002 and the condensed consolidating statements of operations and cash flows for the three and
six-month periods ended June 30, 2003 and 2002 of (a) the Parent Company, IWO Holdings, Inc., (b) the Guarantor, Independent Wireless One Corporation, and (c) the Non-Guarantor, Independent Wireless One



10



---

Leased Realty Corporation, and includes consolidating entries and the Company on a consolidated basis.



Condensed Consolidating Balance Sheet



|                                                                              |  | June 30, 2003             |         
|----------------------------------------------------------------------------- |  | ------------------------- | --------
|                                                                              |  | IWOHoldings,Inc. (Parent) |         
|                                                                              |  | (In thousands)            |         
|ASSETS                                                                        |  |                           |         
|Current assets:                                                               |  |                           |         
|Cash and cash equivalents                                                     |  | $                         |        
|Restricted cash and US Treasury securities at amortized costheld to maturity |  |                           | 22,346  
|Subscriber receivables, net                                                   |  |                           |        
|Intercompany receivable (payable)                                             |  |                           | 160,000 
|Inventory                                                                     |  |                           |        
|Prepaid expenses and other assets                                             |  |                           |        
|                                                                              |  |                           |         
|Total current assets                                                          |  |                           | 182,346 
|Restricted cash and US Treasury securities at amortized costheld to maturity |  |                           |        
|Investment in subsidiary                                                      |  |                           | (123,959
|Property and equipment, net                                                   |  |                           |        
|Intangible assets, net                                                        |  |                           |        
|Note receivable                                                               |  |                           |        
|Other assets                                                                  |  |                           |        
|                                                                              |  |                           |         
|Total assets                                                                  |  | $                         | 58,387  
|                                                                              |  |                           |         
|LIABILITIES AND STOCKHOLDERS DEFICIT                                         |  |                           |         
|Current liabilities:                                                          |  |                           |         
|Accounts payable                                                              |  | $                         |        
|Accrued expenses                                                              |  |                           | 10,267  
|Current maturities of long-term obligations                                   |  |                           | 137,737 
|                                                                              |  |                           |         
|Total current liabilities                                                     |  |                           | 148,004 
|Long-term obligations                                                         |  |                           |        
|Other                                                                         |  |                           |        
|                                                                              |  |                           |         
|Stockholders deficit:                                                        |  |                           |         
|Common stock                                                                  |  |                           | 1       
|Additional paid in capital                                                    |  |                           | 446,449 
|Retained deficit                                                              |  |                           | (536,067
|                                                                              |  |                           |         
|Total stockholders equity (deficit)                                          |  |                           | (89,617 
|                                                                              |  |                           |         
|Total liabilities and stockholders equity (deficit)                          |  | $                         | 58,387  
|                                                                              |  |                           |         



11



---

Condensed Consolidating Balance Sheet



|                                                                              |  | December 31, 2002         |         
|----------------------------------------------------------------------------- |  | ------------------------- | --------
|                                                                              |  | IWOHoldings,Inc. (Parent) |         
|                                                                              |  | (In thousands)            |         
|ASSETS                                                                        |  |                           |         
|Current assets:                                                               |  |                           |         
|Cash and cash equivalents                                                     |  | $                         |        
|Investment securities at amortized costheld to maturity                      |  |                           |        
|Restricted cash and US Treasury securities at amortized costheld to maturity |  |                           | 33,218  
|Subscriber receivables, net                                                   |  |                           |        
|Intercompany receivable (payable)                                             |  |                           | 160,000 
|Inventory                                                                     |  |                           |        
|Prepaid expenses and other assets                                             |  |                           |        
|                                                                              |  |                           |         
|Total current assets                                                          |  |                           | 193,218 
|Restricted cash                                                               |  |                           |        
|Investment in subsidiary                                                      |  |                           | (80,975 
|Property and equipment, net                                                   |  |                           |        
|Intangible assets, net                                                        |  |                           |        
|Note receivable                                                               |  |                           |        
|Other assets                                                                  |  |                           |        
|                                                                              |  |                           |         
|Total assets                                                                  |  | $                         | 112,243 
|                                                                              |  |                           |         
|LIABILITIES AND STOCKHOLDERS DEFICIT                                         |  |                           |         
|Current liabilities:                                                          |  |                           |         
|Accounts payable                                                              |  | $                         |        
|Accrued expenses                                                              |  |                           | 10,267  
|                                                                              |  |                           |         
|Total current liabilities                                                     |  |                           | 10,267  
|Long-term debt                                                                |  |                           | 137,023 
|Other                                                                         |  |                           |        
|Stockholders deficit:                                                        |  |                           |         
|Common stock                                                                  |  |                           | 1       
|Additional paid in capital                                                    |  |                           | 446,449 
|Retained deficit                                                              |  |                           | (481,497
|                                                                              |  |                           |         
|Total Stockholders equity (deficit)                                          |  |                           | (35,047 
|                                                                              |  |                           |         
|Total liabilities and stockholders equity (deficit)                          |  | $                         | 112,243 
|                                                                              |  |                           |         



12



---

Condensed Consolidating Statement of Operations



|                                              |  | Three-month period ended June 30, 2003 |        
|--------------------------------------------- |  | -------------------------------------- | -------
|                                              |  | IWOHoldings,Inc.(Parent)               |        
|                                              |  | (In thousands)                         |        
|Revenues                                      |  | $                                      |       
|Operating expenses                            |  |                                        |       
|                                              |  |                                        |        
|Operating loss                                |  |                                        |       
|Other income (expense), net                   |  |                                        | (5,794 
|Equity in losses of wholly-owned subsidiaries |  |                                        | (11,649
|                                              |  |                                        |        
|Net loss                                      |  | $                                      | (17,443
|                                              |  |                                        |        



Condensed Consolidating Statement of
Operations



|                                              |  | Three-month period ended June 30, 2002 |        
|--------------------------------------------- |  | -------------------------------------- | -------
|                                              |  | IWOHoldings,Inc.(Parent)               |        
|                                              |  | (In thousands)                         |        
|Revenues                                      |  | $                                      |       
|Operating expenses                            |  |                                        |       
|                                              |  |                                        |        
|Operating loss                                |  |                                        |       
|Other income (expense), net                   |  |                                        | (5,683 
|Equity in losses of wholly-owned subsidiaries |  |                                        | (17,434
|                                              |  |                                        |        
|Net loss before income benefit                |  |                                        | (23,117
|Income tax benefit                            |  |                                        |       
|                                              |  |                                        |        
|Net loss                                      |  | $                                      | (23,117
|                                              |  |                                        |        



13



---

Condensed Consolidating Statement of Operations



|                                              |  | Six-month period ended June 30, 2003 |        
|--------------------------------------------- |  | ------------------------------------ | -------
|                                              |  | IWOHoldings,Inc.(Parent)             |        
|                                              |  | (In thousands)                       |        
|Revenues                                      |  | $                                    |       
|Operating expenses                            |  |                                      |       
|                                              |  |                                      |        
|Operating loss                                |  |                                      |       
|Other income (expense), net                   |  |                                      | (11,586
|Equity in losses of wholly-owned subsidiaries |  |                                      | (42,984
|                                              |  |                                      |        
|Net loss                                      |  | $                                    | (54,570
|                                              |  |                                      |        



14



---

Condensed Consolidating Statement of Operations



|                                   |  | January 1, 2002 through March 31, 2002 |        
|---------------------------------- |  | -------------------------------------- | -------
|                                   |  | IWOHoldings,Inc.(Parent)               |        
|                                   |  | (In thousands)                         |        
|Revenues                           |  | $                                      |       
|Operating expenses                 |  |                                        |       
|                                   |  |                                        |        
|Operating loss                     |  |                                        |       
|Other income (expense), net        |  |                                        | (4,613 
|Equity in losses of subsidiaries   |  |                                        | (22,223
|                                   |  |                                        |        
|Net loss before income tax benefit |  |                                        | (26,836
|Income tax benefit                 |  |                                        |       
|                                   |  |                                        |        
|Net loss                           |  | $                                      | (26,836
|                                   |  |                                        |        



Condensed Consolidating Statement
Operations



|                                   |  | April 1, 2002 through June 30, 2002 |        
|---------------------------------- |  | ----------------------------------- | -------
|                                   |  | IWOHoldings,Inc.(Parent)            |        
|                                   |  | (In thousands)                      |        
|Revenues                           |  | $                                   |       
|Operating expenses                 |  |                                     |       
|                                   |  |                                     |        
|Operating loss                     |  |                                     |       
|Other income (expense), net        |  |                                     | (5,683 
|Equity in losses of subsidiaries   |  |                                     | (17,434
|                                   |  |                                     |        
|Net loss before income tax benefit |  |                                     | (23,117
|Income tax benefit                 |  |                                     |       
|                                   |  |                                     |        
|Net loss                           |  | $                                   | (23,117
|                                   |  |                                     |        



15



---

Condensed Consolidating Statement of Cash Flows



|                                                        |  | Six-month period ended June 30, 2003 |        
|------------------------------------------------------- |  | ------------------------------------ | -------
|                                                        |  | IWOHoldings,Inc.(Parent)             |        
|                                                        |  | (In thousands)                       |        
|Cash flows from operating activities:                   |  |                                      |        
|Net cash provided by (used in) operating activities     |  | $                                    | (10,871
|                                                        |  |                                      |        
|Cash flows from investing activities:                   |  |                                      |        
|Release of restricted cash and U.S. Treasury securities |  |                                      | 10,871 
|Payments for the purchase of equipment                  |  |                                      |       
|Maturities of marketable securities                     |  |                                      |       
|                                                        |  |                                      |        
|Net cash provided by (used in) investing activities     |  |                                      | 10,871 
|                                                        |  |                                      |        
|Cash flows from financing activities:                   |  |                                      |        
|Proceeds from long-term debt                            |  |                                      |       
|Proceeds from promissory notes                          |  |                                      |       
|                                                        |  |                                      |        
|Net cash provided by (used in) financing activities     |  |                                      |       
|                                                        |  |                                      |        
|Net increase in cash and cash equivalents               |  |                                      |       
|Cash and cash equivalents at beginning of period        |  |                                      |       
|                                                        |  |                                      |        
|Cash and cash equivalents at end of period              |  | $                                    |       
|                                                        |  |                                      |        



Condensed Consolidating Statement of
Cash Flows





|                                                        |  | January 1, 2002 through March 31, 2002 |        
|------------------------------------------------------- |  | -------------------------------------- | -------
|                                                        |  | IWOHoldings,Inc.(Parent)               |        
|                                                        |  | (In thousands)                         |        
|Cash flows from operating activities:                   |  |                                        |        
|Net cash provided by (used in) operating activities     |  | $                                      | (10,717
|                                                        |  |                                        |        
|Cash flows from investing activities:                   |  |                                        |        
|Release of restricted cash and U.S. Treasury securities |  |                                        | 10,717 
|Payments for the purchase of equipment                  |  |                                        |       
|Maturities of marketable securities                     |  |                                        |       
|                                                        |  |                                        |        
|Net cash provided by (used in) investing activities     |  |                                        | 10,717 
|                                                        |  |                                        |        
|Cash flows from financing activities:                   |  |                                        |        
|Proceeds from long-term debt                            |  |                                        |       
|Principal payments of long-term debt                    |  |                                        |       
|                                                        |  |                                        |        
|Net cash provided by financing activities               |  |                                        |       
|                                                        |  |                                        |        
|                                                        |  |                                        |        
|Net decrease in cash and cash equivalents               |  |                                        |       
|Cash and cash equivalents at beginning of period        |  |                                        |       
|                                                        |  |                                        |        
|Cash and cash equivalents at end of period              |  | $                                      |       
|                                                        |  |                                        |        



16



---

Condensed Consolidating Statement of Cash Flows



|                                                        |  | April 1, 2002 through June 30, 2002 |     
|------------------------------------------------------- |  | ----------------------------------- | ----
|                                                        |  | IWOHoldings,Inc.(Parent)            |     
|                                                        |  | (In thousands)                      |     
|Cash flows from operating activities:                   |  |                                     |     
|Net cash provided by (used in) operating activities     |  | $                                   | 284 
|                                                        |  |                                     |     
|Cash flows from investing activities:                   |  |                                     |     
|Release of restricted cash and U.S. Treasury securities |  |                                     | (284
|Payments for the purchase of equipment                  |  |                                     |    
|Maturities of marketable securities                     |  |                                     |    
|                                                        |  |                                     |     
|Net cash provided by (used in) investing activities     |  |                                     | (284
|                                                        |  |                                     |     
|Cash flows from financing activities:                   |  |                                     |     
|Proceeds from long-term debt                            |  |                                     |    
|Proceeds from promissory notes                          |  |                                     |    
|                                                        |  |                                     |     
|Net cash provided by financing activities               |  |                                     |    
|                                                        |  |                                     |     
|                                                        |  |                                     |     
|Net decrease in cash and cash equivalents               |  |                                     |    
|Cash and cash equivalents at beginning of period        |  |                                     |    
|                                                        |  |                                     |     
|Cash and cash equivalents at end of period              |  | $                                   |    
|                                                        |  |                                     |     



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



This report contains forward-looking statements, which are statements about future business strategy, operations and capabilities,
construction plan, construction schedule, financial projections, plans and objectives of management, expected actions of third parties and other matters. Forward-looking statements often include words like believes, belief, expects, plans,
anticipates, intends, projects, estimates, may, might, would or similar words. Forward-looking statements speak only as of the date of this report. They involve known and unknown risks, uncertainties and other factors that may cause actual results
to be materially different. In addition to the investment considerations described elsewhere, specific factors that might cause such a difference include, but are not limited to (i) our ability to integrate operations and finance future growth
opportunities; (ii) our dependence on Sprint PCS; (iii) our ability to expand our Sprint PCS network or to upgrade the Sprint PCS network to accommodate new technologies; (iv) limited operating history in the PCS market and anticipation of future
losses; (v) potential fluctuations in operating results; (vi) changes or advances in technology; (vii) changes in law or government regulation; (viii) competition in the industry and markets in which we operate; (ix) future acquisitions; (x) our
ability to attract and retain skilled personnel; (xi) our dependence on contractor and consultant services, network implementation and information technology support; (xii) 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; (xiii) the availability at acceptable terms of sufficient funds to pay for our business plans; (xiv)
changes in labor, equipment and capital costs; (xv) any inability to comply with the indentures that govern our senior notes or credit agreements; (xvi) changes in management; and (xvii) general economic and business conditions.



You should not rely too heavily on any forward-looking statement. We cannot assure you that
our forward-looking statements will prove to be correct. We have no obligation to update or revise publicly any forward-looking statement based on new information, future events or otherwise. This discussion should be read in conjunction with our
financial statements included in this report and with the financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations in the Form 10-K for IWO Holdings, Inc. for the year ended December 31,
2002, filed on March 31, 2003 with the Securities and Exchange Commission (SEC).



Critical Accounting Policies and Estimates



Our discussion and analysis of our financial condition and results of operations is based upon our consolidated



17



---

financial statements, which have been prepared in accordance with accounting principles generally accepted in the United
States. 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, revenue recognition of credit challenged subscribers, contract cancellation fees, inventory reserves, intangible assets and
contingencies. We base our estimates on our historical experience, the historical experience of Sprint PCS and the historical experience of other Sprint PCS affiliates and various other assumptions that are believed 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 PCS for much of our financial reporting information including: revenues; commissions and handset subsidies paid to national retailers; fees paid for
customer care and billing; roaming revenue and roaming expense on the Sprint PCS and Sprint PCS affiliate network; and the maintenance of accounts receivable, including cash collections, the write off of customer balances that are not collectible
and the accuracy of our accounts receivable balance. 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 Sprint PCSs external auditors that were performed in accordance with AICPA Statement on Auditing Standards (SAS) No. 70.



Bad Debt Expense



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.



We estimate our allowance by examining the components of our revenue. We establish a general reserve of all accounts receivable that are estimated to be uncollectible. In
addition, we do not recognize 100% of our late fees or cancellation fees as revenue because of high uncertainty of the collectibility of these amounts. Reserves for these amounts are recorded to our allowance for doubtful accounts. Our evaluation of
the adequacy of these amounts includes our own historical experience and discussions with Sprint PCS and other Sprint PCS affiliates.



Revenue Recognition



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 PCS 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 PCS historical trending to make our estimates. If the collections on late fees are less than that recognized, additional allowances may be required.



We defer revenues collected for activation fees over the estimated life of the subscriber
relationship, which we believe to be 15-24 months, based upon our historical trends of average customer lives and discussions with Sprint PCS. We also defer an activation expense in an amount equal to the activation fee revenue and amortize this
expense in an amount equal to the activation fee revenue over the life of the subscriber relationship. If the estimated life of the subscriber relationship increases or decreases, the amounts of deferred revenue and deferred expense will be adjusted
over the revised estimated life of the subscriber relationship.



18



---

Inventory Reserves



We review our inventory quarterly and write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference
between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be
necessary.



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 PCS 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 PCS. We periodically and annually
evaluate the adequacy of our accruals through analysis of historical information and discussions with Sprint PCS. 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



We perform impairment tests of goodwill and indefinite lived assets as required by Statements of Financial Accounting Standards No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible
Assets. The impairment analysis requires numerous subjective assumptions and estimates to determine fair value of the respective reporting units as required by FAS No. 142. Depending on level of sales, our liquidity and other factors, we may be
required to recognize impairment charges in the future.



Overview



IWO Holdings, Inc. (IWO)
is a wholly owned subsidiary of US Unwired Inc. (US Unwired).



Through our subsidiary, Independent Wireless One Corporation, we provide wireless personal communication services, commonly referred to as PCS, to an area containing 6.3 million residents in the northeastern United States. Our territory
extends from suburban New York City (Orange and Sullivan Counties) north to the Canadian border and reaches from the eastern suburbs of Rochester to Syracuse, Ithaca, Binghamton and Elmira in central New York State (and extending into a small
portion of north central Pennsylvania), east to include all of Vermont and New Hampshire (except Nashua, New Hampshire) and a portion of western Massachusetts. We are a network partner of Sprint PCS, the personal communications services group of
Sprint Corporation. Sprint PCS, directly and through affiliates like us, provides wireless services in more than 4,000 cities and communities across the country. We have the exclusive right to provide digital PCS services under the Sprint® and Sprint PCS® brand names in our service area.



Our statements of operations and cash flows for the six months ended June 30, 2002 are
presented as two distinct periods; the three months ended March 31, 2002 that are prior to our acquisition by US Unwired and the three months ended June 30, 2002 that are subsequent to the acquisition. Certain reclassifications have been made to our
financial statements for periods prior to the acquisition in order to conform to the post-acquisition presentation.



For discussion purposes, we have combined the three-month period of January 1, 2002 to March 31, 2002 (pre-acquisition period) and the three-month period of April 1, 2002
to June 30, 2002 (post-acquisition period) for comparison to the six-month period ended June 30, 2003.



19



---

|                               |  | For the three months ended June 30, |         |   | For the six months ended June 30, |  
|------------------------------ |  | ----------------------------------- | ------- | - | --------------------------------- | -
|                               |  | 2003                                |         |   | 2002                              |  
|Revenues:                      |  |                                     |         |   |                                   |  
|Subscriber                     |  | $                                   | 32,670  |   |                                   | $
|Roaming                        |  |                                     | 8,303   |   |                                   |  
|Merchandise sales              |  |                                     | 1,478   |   |                                   |  
|Other revenue                  |  |                                     | 162     |   |                                   |  
|                               |  |                                     |         |   |                                   |  
|Total revenue                  |  |                                     | 42,613  |   |                                   |  
|Expense:                       |  |                                     |         |   |                                   |  
|Cost of service                |  |                                     | 16,760  |   |                                   |  
|Merchandise cost of sales      |  |                                     | 2,364   |   |                                   |  
|General and administrative     |  |                                     | 11,756  |   |                                   |  
|Sales and marketing            |  |                                     | 6,585   |   |                                   |  
|Depreciation and amortization  |  |                                     | 13,591  |   |                                   |  
|Asset abandonment charge       |  |                                     |        |   |                                   |  
|                               |  |                                     |         |   |                                   |  
|Total operating expense        |  |                                     | 51,056  |   |                                   |  
|                               |  |                                     |         |   |                                   |  
|Operating loss                 |  |                                     | (8,443  | ) |                                   |  
|Other expense:                 |  |                                     |         |   |                                   |  
|Interest expense, net          |  |                                     | (9,000  | ) |                                   |  
|                               |  |                                     |         |   |                                   |  
|Loss before income tax benefit |  |                                     | (17,443 | ) |                                   |  
|Income tax benefit             |  |                                     |        |   |                                   |  
|                               |  |                                     |         |   |                                   |  
|Net loss                       |  | $                                   | (17,443 | ) |                                   | $
|                               |  |                                     |         |   |                                   |  



|                                                    |  | For the six months endedJune 30, |        
|--------------------------------------------------- |  | -------------------------------- | -------
|                                                    |  | 2003                             |        
|Cash flows from operating activities                |  |                                  |        
|Net cash used in operating activities               |  | $                                | (14,866
|                                                    |  |                                 
|Cash flows from investing activities                |  |                                  |        
|Release of restricted and US Treasury securities    |  |                                  | 10,871 
|Payments for the purchase of equipment              |  |                                  | (9,762 
|Proceeds on maturities of marketable securities     |  |                                  |       
|                                                    |  |                                  |        
|Net cash provided by (used in) investing activities |  |                                  | 1,109  
|                                                    |  |                                 
|Cash flows from financing activities                |  |                                  |        
|Proceeds from long-term debt                        |  |                                  |       
|Principal payments of long-term debt                |  |                                  |       
|Other financing activities                          |  |                                  |       
|                                                    |  |                                  |        
|Net cash provided by financing activities           |  |                                  |       
|                                                    |  |                                  |        
|Net change in cash and cash equivalents             |  |                                  | (13,757
|Cash and cash equivalents at beginning of period    |  |                                  | 35,008 
|                                                    |  |                                  |        
|Cash and cash equivalents at end of period          |  | $                                | 21,251 
|                                                    |  |                                  |        



20



---

Liquidity and Capital Resources



For a discussion on Liquidity, refer to Note 3 to our Condensed Consolidated Financial
Statements that is included in this filing and which is incorporated by this reference.



Cash Flows



Net cash used in operating activities during the six-month period ended June 30, 2003 was $14.9 million. Net cash provided by investing activities during the six-month
period ended June 30, 2003 was $1.1 million and included $10.9 million in proceeds of restricted cash offset by $9.8 million for capital expenditures. Net cash provided by financing activities during the six-month period ended June 30, 2003 was $0.



Three Month Period Ended June 30, 2003
Compared to the Three Month Period Ended June 30, 2002



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 accounting
principles generally accepted in the United States. When we use these terms, they may not be comparable to similar terms used by other wireless telecommunications companies.



|                                              |  | Three-month period ended |        
|--------------------------------------------- |  | ------------------------ | -------
|                                              |  | June 30, 2003            |        
|Ending Subscribers                            |  |                          | 210,300
|                                              |  |                          |        
|Gross additions                               |  |                          | 21,500 
|                                              |  |                          |        
|Net additions                                 |  |                          | 4,500  
|                                              |  |                          |        
|Churn                                         |  |                          | 2.5    
|                                              |  |                          |        
|Average revenue per subscriber before roaming |  | $                        | 52.30  
|                                              |  |                          |        
|Cost per gross addition                       |  | $                        | 348    
|                                              |  |                          |        



Subscriber Additions



As of June 30, 2003, we provided personal
communication services to 210,300 customers as compared to 181,800 customers at June 30, 2002. Our overall subscriber count increased by 4,500 subscribers in the three-month period ended June 30, 2003 as compared to a 12,600 increase during the
three-month period ended June 30, 2002. The decline in the growth rate is related to our efforts of directing our selling and marketing efforts toward lower credit risk subscribers.



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 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 PCS 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.



Effective January 1, 2003, Sprint PCS reduced the
reciprocal travel rate from $0.10 per minute in 2002 to $0.058 per minute in 2003. For the three-month period ended June 30, 2003, the reduction in the travel rate has resulted in a $4.0 million decrease to our revenues, a $3.6 million decrease to
our expenses and a reduction to our cash flow of $.4 million.



21



---

Average Revenue per User



Average revenue per user (ARPU) is the average monthly service revenue per user (subscriber) and is calculated by dividing total
subscriber revenue for the period by the average number of subscribers during the period. ARPU not including roaming was $52.30 for the three-month period ended June 30, 2003 as compared to $54.05 for the three-month period ended June 30, 2002. The
decrease was primarily due to a decrease in charges for minutes over plan caused by the increase in the number of minutes that are included in basic service plans.



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 not continue 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; and, (iii) adding back those customers that reactivate their service, by our overall average customers for the reporting
period. Churn was 2.5% for the three-month period ended June 30, 2003 as compared to 3.0% for the three-month period ended June 30, 2002. The decrease was due to a continuing improvement in the credit quality of our subscriber base.



Cost per Gross Addition



Cost per gross addition (CPGA) summarizes the average cost to acquire all
customers during the reporting period. CPGA is computed by adding selling and marketing expenses, cost of equipment and activation costs and reducing the amount by the revenue from handset and accessory sales. The net amount is divided by the number
of total new subscribers added for the period. CPGA was $348 for the three-month period ended June 30, 2003 as compared to $310 for the three-month period ended June 30, 2002. The increase in CPGA was primarily due to the allocation of expenses over
a smaller number of subscriber additions.



Revenues



|                    |  | Three-month period ended June 30,
|------------------- |  | ---------------------------------
|                    |  | 2003                             
|                    |  | (In thousands)                   
|Subscriber revenues |  | $                                
|Roaming revenues    |  |                                  
|Merchandise sales   |  |                                  
|Other revenues      |  |                                  
|                    |  |                                  
|Total revenues      |  | $                                
|                    |  |                                  



Subscriber revenues



Total subscriber revenues were $32.7 million for
the three-month period ended June 30, 2003 as compared to $28.4 million for the three-month period ended June 30, 2002, representing an increase of $4.3 million and was primarily the result of an increase in subscribers.



Roaming revenues



Roaming revenues were $8.3 million for the three-month period ended June 30, 2003 as
compared to $9.1 million for the three-month period ended June 30, 2002, representing a decrease of $0.8 million and was primarily the result of an increase of $3.8 million related to a higher volume of PCS subscribers traveling though our service
area offset by a decrease of $4.3 million related to our decrease in the reciprocal travel rate as discussed in Subscriber and Roaming Revenue above.



Merchandise sales



Merchandise sales were $1.5 million for the three-month period ended June 30, 2003 as compared to $2.0 million for the three-month period ended June 30, 2002,
representing an decrease of $0.5 million and related to fewer subscriber additions and higher discounts offered to new subscribers. The cost of handsets typically exceeds the



22



---

amount received from our subscribers because we subsidize the price of handsets to remain competitive in the marketplace.



Operating Expenses



|                            |  | Three-month period ended June 30,
|--------------------------- |  | ---------------------------------
|                            |  | 2003                             
|                            |  | (In thousands)                   
|Cost of service             |  | $                                
|Merchandise cost of sales   |  |                                  
|General & administrative    |  |                                  
|Sales & marketing           |  |                                  
|Depreciation & amortization |  |                                  
|                            |  |                                  
|Total operating expenses    |  | $                                
|                            |  |                                  



Cost
of service



Cost of service was $16.8 million for the three-month period ended
June 30, 2003 as compared to $18.8 million for the three-month period ended June 30, 2002, representing a decrease of $2.0 that consisted primarily of a $.9 million decrease in interconnect usage and a $1.1 million decrease in roaming expense. The
overall decrease in roaming expense consisted of an increase $3.0 million related to a higher volume of our subscribers traveling though other Sprint PCS and Sprint PCS affiliate service area offset by a decrease of $4.1 million related to our
decrease in the reciprocal travel rate as discussed in Subscriber and Roaming Revenue above.



Merchandise cost of sales



Merchandise cost of sales was $2.4 million for the three-month period ended June 30, 2003 as compared to $2.7 million for the three-month period ended June 30, 2002,
representing a decrease of $.3 million that was primarily related to fewer subscribers additions. 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.



General and administrative
expenses



General and administrative expenses were $11.8 million for the
three-month period ended June 30, 2003 as compared to $12.0 million for the three-month period ended June 30, 2002, representing a decrease of $.2 million and was primarily related to a $1.2 million decrease in bad debt expense offset an increase of
$1.1 million in professional services related to debt restructuring as discussed in Liquidity above.



Sales and marketing expenses



Sales and marketing expenses were $6.6 million for the three-month period ended June 30, 2003 as compared to $8.6 million for the three-month period ended June 30, 2002,
representing a decrease of $2.0 million and was primarily related to a $1.1 million decrease in advertising expense, a $.5 million decrease in handset subsidies and a $.3 million decrease in agent commissions.



Depreciation and amortization expense



Depreciation and amortization expense was $13.6 million for the three-month period ended
June 30, 2003 as compared to $14.7 million for the three-month period ended June 30, 2002, representing a decrease of $1.1 million and was primarily due to a $2.7 million decrease in the amortization of intangible assets offset by a $1.6 million
increase in depreciation expense. Property and equipment increased to $201.8 million at June 30, 2003 from $174.8 million at June 30, 2002, and intangibles assets decreased to $77.3 million at June 30, 2003 from $272.5 million at June 30, 2002
principally as a result of a $188.3 million impairment charge recorded in the fourth quarter of 2002.



23



---

Other Income/(Expense)



|                    |  | Three-month periodended June 30, |       
|------------------- |  | -------------------------------- | ------
|                    |  | 2003                             |       
|                    |  | (In thousands)                   |       
|Interest expense    |  | $                                | (9,246
|Interest income     |  |                                  | 246   
|                    |  |                                  |       
|Total other expense |  | $                                | (9,000
|                    |  |                                  |       



Interest expense was $9.2 million for
the three-month period ended June 30, 2003 as compared to $9.3 million for the three-month period ended June 30, 2002, representing a decrease of $.1 million. Our outstanding debt was $350.9 million at June 30, 2003 as compared to $326.4 million at
June 30, 2002.



Interest income was $0.2 million for the three-month period
ended June 30, 2003 as compared to $.8 million for the three-month period ended June 30, 2002, representing a decrease of $.6 million. The decrease was primarily due to less cash and cash equivalents available for investment and a decrease in
interest rates.



Six-Month Period Ended June 30, 2003 Compared to the Six-Month
Period Ended June 30, 2002



|                   |  | Three-month period ended
|------------------ |  | ------------------------
|                   |  | June 30, 2003           
|Ending Subscribers |  | 210,300                 
|                   |  |                         
|Gross additions    |  | 48,000                  
|                   |  |                         
|Net additions      |  | 9,200                   
|                   |  |                         



Subscriber Additions



As of June 30, 2003, we provided personal
communication services to 210,300 customers as compared to 181,800 customers at June 30, 2002. Our overall subscriber count increased by 9,200 subscribers in the three-month period ended June 30, 2003 as compared to a 26,500 increase during the
three-month period ended June 30, 2002. The decline in the growth rate is related to our efforts of directing our selling and marketing efforts toward lower credit risk subscribers.



Roaming Revenue



As discussed above, Sprint PCS reduced our reciprocal travel effective January 1, 2003. For the six-month period ended June 30, 2003, the change in the reciprocal
travel rate has resulted in approximately a $8.7 million decrease to our revenues, a $7.7 million decrease to our expenses and decreased cash flow from operations by $1.0 million.



Revenues



|                    |  | Six-month period ended June 30,
|------------------- |  | -------------------------------
|                    |  | 2003                           
|                    |  | (In thousands)                 
|Subscriber revenues |  | $                              
|Roaming revenues    |  |                                
|Merchandise sales   |  |                                
|Other revenues      |  |                                
|                    |  |                                
|Total revenues      |  | $                              
|                    |  |                                



Subscriber revenues



24



---

Total subscriber revenues were $62.7 million for the six-month period ended June 30, 2003 as compared to $54.4 million
for the six-month period ended June 30, 2002, representing an increase of $8.3 million and was primarily the result of an increase in subscribers.



Roaming revenues



Roaming revenues were $15.4 million for the six-month period ended June 30, 2003 as compared to $16.1 million for the six-month period ended June 30, 2002, representing a
decrease of $0.7 million and was primarily the result of an increase of $7.6 million related to a higher volume of PCS subscribers traveling though our service area offset by a decrease of $8.7 million related to our decrease in the reciprocal
travel rate as discussed in Subscriber and Roaming Revenue above.



Merchandise sales



Merchandise sales were $3.2
million for the six-month period ended June 30, 2003 as compared to $4.6 million for the six-month period ended June 30, 2002, representing an decrease of $1.4 million and related to fewer subscriber additions and higher discounts offered to new
subscribers. 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



|                            |  | Six-month period ended June 30,
|--------------------------- |  | -------------------------------
|                            |  | 2003                           
|                            |  | (In thousands)                 
|Cost of service             |  | $                              
|Merchandise cost of sales   |  |                                
|General & administrative    |  |                                
|Sales & marketing           |  |                                
|Depreciation & amortization |  |                                
|Asset abandonment charge    |  |                                
|                            |  |                                
|Total operating expenses    |  | $                              
|                            |  |                                



Cost
of service



Cost of service was at $34.2 million for the six-month period
ended June 30, 2003 as compared to $36.4 for the six-month period ended June 30, 2002, representing a decrease of $2.2 that consisted primarily of a $2.0 million decrease in circuit expense and interconnect usage and a $1.9 million decrease in
roaming expense offset by a $1.2 million increase in new cell site lease expenses and escalators of existing leases and a $.6 million increase in repairs and maintenance. The overall decrease in roaming expense consisted of an increase $6.1 million
related to a higher volume of our subscribers traveling though other Sprint PCS and Sprint PCS affiliate service area offset by a decrease of $7.7 million related to our decrease in the reciprocal travel rate as discussed in Subscriber and Roaming
Revenue above and a decrease of $.3 million related to our subscribers using non-Sprint PCS services.



Merchandise cost of sales



Merchandise cost of sales was $4.9 million for the six-month period ended June 30, 2003 as compared to $7.3 million for the six-month period ended June 30, 2002,
representing a decrease of $2.4 million that was primarily related to fewer subscribers additions. 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.



General and administrative
expenses



General and administrative expenses were $24.7 million for the
six-month period ended June 30, 2003 as compared to $31.3 million for the six-month period ended June 30, 2002, representing a decrease of $6.6 million was primarily related to a $2.1 million decrease in bad debt expense offset by $2.5 million in
professional services related to debt restructuring as discussed in Liquidity above and other decreases related to the consolidation of general and administrative functions as a result of the acquisition by US Unwired. The six-month period ended
June 30, 2002 also included $7.7 million of merger related expenses.



25



---

Sales and marketing expenses



Sales and marketing expenses were $15.1 million for the six-month period ended June 30, 2003
as compared to $17.2 million for the six-month period ended June 30, 2002, representing a decrease of $2.1 million and was primarily related to a $.6 million decrease in advertising expense, a $.7 million decrease in handset subsidies and a $.8
million decrease in agent commissions.



Depreciation and amortization expense



Depreciation and amortization
expense was $27.0 million for the six-month period ended June 30, 2003 as compared to $20.4 million for the six-month period ended June 30, 2002, representing an increase of $6.6 million and was primarily due to a $3.9 million increase in the
amortization of intangible assets and a $2.5 million increase in depreciation expense. Property and equipment increased to $201.8 million at June 30, 2003 from $174.8 million at June 30, 2002, and intangibles assets decreased to $77.3 million at
June 30, 2003 from $272.5 million at June 30, 2002 principally as a result of a $188.3 million impairment charge recorded in the fourth quarter of 2002. The six-month period ended June 30, 2003 reflects six months of intangible amortization as
compared to only three months of intangible amortization in the six-month period ended June 30, 2002 as the acquisition by US Unwired occurred in April 2002.



Asset abandonment



As discussed in Liquidity above, we recorded a $12.4 million write off of construction in progress and related lease expense due to abandoned cell site construction.



Other Income/(Expense)



|                    |  | Six-month period ended June 30, |        
|------------------- |  | ------------------------------- | -------
|                    |  | 2003                            |        
|                    |  | ( In thousands)                 |        
|Interest expense    |  | $                               | (18,415
|Interest income     |  |                                 | 544    
|                    |  |                                 |        
|Total other expense |  | $                               | (17,871
|                    |  |                                 |        



Interest expense was $18.4 million for
the six-month period ended June 30, 2003 as compared to $17.3 million for the six-month period ended June 30, 2002, representing an increase of $1.1 million. The increase in interest expense resulted from the increase in outstanding debt. Our
outstanding debt was $350.9 million at June 30, 2003 as compared to $326.4 million at June 30, 2002.



Interest income was $0.5 million for the six-month period ended June 30, 2003 as compared to $2.2 million for the six-month period ended June 30, 2002, representing a decrease of $1.7 million. The decrease was
primarily due to less cash and cash equivalents available for investment and a decrease in interest rates.



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 increase also with holiday promotional activities. We generally have the weakest demand for new wireless services during
the summer. We expect these trends to continue based on historical operating results.



|Item 4. |  | Controls and Procedures
|------- |  | -----------------------



As of June 30, 2003, an evaluation was performed under the supervision and with the participation of the Companys management, including the CEO and CFO, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures. Based on that evaluation, the Companys management, including the CEO and CFO, concluded that the Companys disclosure controls and procedures were effective as of June 30, 2003. There
have been no changes in the Companys internal control over financial reporting during the fiscal



26



---

quarter ended June 30, 2003 that have materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.



Part II Other Information



|Item 5. |  | Other Information
|------- |  | -----------------



None.



|Item 6. |  | Exhibits and Reports on Form 8-K.
|------- |  | ---------------------------------



|a. |  | The following exhibits are filed as part of this report:
|-- |  | --------------------------------------------------------



|           | 
|---------- | 
|(3)(i)     | 
|           | 
|(3)(ii)    | 
|           | 
|(4)        | 
|           | 
|(10)(i)(a) | 
|           | 
|(10)(i)(b) | 
|           | 
|(10)(i)(c) | 
|           | 
|(31.1)     | 
|           | 
|(31.2)     | 
|           | 
|(32.1)     | 
|           | 
|(32.2)     | 



|b. |  | Reports on Form 8-K
|-- |  | -------------------



On June 2, 2003, we filed a Current Report on Form 8-K to disclose that we would not make a scheduled interest payment on our $240 million credit facility
on June 4, 2003.



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 5, 2003 |  |  |  | IWO HOLDINGS, INC.
|-------------- |  |  |  | ------------------
|               |  |  |  |                   
|               |  |  |  |                   
|               |  |  |  |                   
|               |  |  |  |                   



27