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

                                    FORM 10-K

                                   (Mark One)

[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                     ACT OF 1934 FOR THE FISCAL YEAR ENDED:
                                December 31, 2001

                                       OR

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

                             Commission File Number:

                                Horizon PCS, Inc.
             (Exact name of registrant as specified in its charter)

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

         68 East Main Street, Chillicothe, OH                    45601-0480
       (Address of principal executive offices)                  (Zip Code)

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

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

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

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

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

As of  March  1,  2002,  there  were  26,646  shares  of  class A  common  stock
outstanding and 58,445,288 shares of class B common outstanding.

<PAGE>

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>                                                                                       <C>
                                                                                          Page
PART I                                                                                    ----
     ITEM 1.      Business............................................................       2
     ITEM 2.      Properties..........................................................      29
     ITEM 3.      Legal Proceedings...................................................      29
     ITEM 4.      Submission of Matters to a Vote of Security Holders.................      29

PART II
     ITEM 5.      Market for Registrant's Common Equity and Related  Stockholder
                  Matters.............................................................      29
     ITEM 6.      Selected Financial Data.............................................      32
     ITEM 7.      Management's  Discussion  and Analysis  of Financial Condition
                  and Results of Operation............................................      33
     ITEM 7A.     Quantitative and Qualitative Disclosures About Market Risk..........      55
     ITEM 8.      Financial Statements and Supplementary Data.........................      56
     ITEM 9.      Changes  in  and  Disagreements With Accountants on Accounting
                  and Financial Disclosure............................................      56

PART III
     ITEM 10.     Directors and Executive Officers of the Registrant..................      56
     ITEM 11.     Executive Compensation..............................................      59
     ITEM 12.     Security Ownership of Certain Beneficial Owners and Management......      62
     ITEM 13.     Certain Relationships and Related Transactions......................      63

PART IV
     ITEM 14.     Exhibits, Financial Statement Schedules, and Reports  on  Form
                  8-K.................................................................      68
</TABLE>


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

                                       i
<PAGE>


                                     PART I

                           FORWARD-LOOKING STATEMENTS

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

     o    estimates of current and future population for our markets;

     o    forecasts of growth in the number of consumers  and  businesses  using
          personal communication services ("PCS");

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

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

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

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

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

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

     o    changes or advances in technology;

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

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

     o    potential fluctuations in our operating results;

     o    our potential inability to expand our services and related products in
          the event of  substantial  increase in demand for these  services  and
          related products;

     o    our ability to attract and retain skilled personal;

     o    changes in government regulation; and

     o    general economic and business conditions.

<PAGE>

     These   forward-looking   statements   involve  known  and  unknown  risks,
uncertainties and other factors which may cause our actual results,  performance
or achievements to be materially different from any future results,  performance
or achievements  expressed or implied by such  forward-looking  statements.  All
subsequent  written and oral  forward-looking  statements  attributable to us or
persons  acting on our behalf are expressly  qualified in their  entirety by the
Cautionary Statements.

ITEM 1. Business

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

Overview

     We are one of the  largest  Sprint PCS  affiliates  based on our  exclusive
right to market  Sprint PCS products and services to a total  population of over
10.2 million  people in portions of twelve  contiguous  states.  Our markets are
located  between Sprint PCS' Chicago,  New York and  Raleigh/Durham  markets and
connect  or are  adjacent  to 15 major  Sprint  PCS  markets  that  have a total
population  of over 59  million  people.  As a Sprint PCS  affiliate,  we market
digital personal  communications  services under the Sprint and Sprint PCS brand
names.  At  December  31,  2001,  we managed  approximately  194,100  Sprint PCS
subscribers in our territory.

History and Background

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

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

     During 1998,  HPC elected to return all of the spectrum  from four licenses
and half of the spectrum from the fifth license.  In connection  with the return
of the spectrum, HPC entered into management agreements with Sprint PCS, the PCS
group of Sprint Corporation, during 1998. These agreements provided HPC with the
exclusive  right to build,  own and  manage a wireless  voice and data  services
network in certain markets located in Ohio, West Virginia,  Kentucky,  Virginia,
Tennessee and Maryland under the Sprint PCS brand.

     During 1999 HPC entered into a joint venture agreement through the purchase
of 25.6% of Bright PCS.  The joint  venture was  established  in October 1999 to
provide personal communications services in Ohio, Indiana and Michigan.

     On April 26, 2000,  Horizon  Telcom,  Inc.  (the "Horizon  Telcom")  formed
Horizon PCS, Inc. (the "Company",  or "HPCS").  On June 27, 2000, Horizon Telcom
transferred its 100% ownership of HPC to HPCS in exchange for 53,806,200  shares
of stock of HPCS (as adjusted for the 1.1697-for-one  stock split in the form of
a stock dividend effective on September 8, 2000).

                                       2
<PAGE>

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

     On June 27, 2000, the Company acquired the remaining 74.4% of Bright PCS in
exchange  for  approximately  8% of the  Company's  class  B  common  stock  and
approximately 40% of the Horizon Telcom, Inc. common stock owned by the Company.
In conjunction with this  transaction,  the Company also acquired the Bright PCS
management  agreement  with Sprint PCS and,  with it, the right to operate using
Sprint PCS licenses in Bright PCS' markets.

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

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

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

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

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

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

Sprint PCS

    Sprint PCS, a wholly-owned subsidiary of Sprint, operates the largest 100%
digital, 100% PCS wireless network in the United States. The digital technology
that Sprint PCS uses is code division multiple access technology, referred to as
CDMA. Sprint PCS has licenses to provide PCS nationwide. Sprint PCS operates its
PCS network in major metropolitan markets throughout the United States and has
entered into agreements with affiliates, such as ourselves, to build and manage
networks in smaller metropolitan areas and along major highways.

     Sprint first  launched its  commercial  PCS network in the United States in
November 1995. By combining its brand name,  national  footprint,  competitively
priced plans and extensive product  offerings,  Sprint PCS has experienced rapid
customer  growth.  In the fourth  quarter of 2001,  Sprint PCS reported its 14th
consecutive industry-leading quarter of customer growth, adding over 1.1 million
direct  customers  and 381,000  affiliate  customers.  As of December  31, 2001,
Sprint PCS had more than 13.6 million direct  customers  and,  together with its
affiliates, provided service to 15.8 million customers on an all-digital network
covering  almost 247  million  people with  licenses to provide  coverage to 285
million people in all 50 states, Puerto Rico and the U.S. Virgin Islands.

Competitive Strengths

     Our long-term  strategic  affiliation with Sprint PCS provides us with many
business, operational and marketing advantages including the following:

     Sprint  PCS'  national  brand name  recognition  and  national  advertising
support.  We have the  exclusive  right to use the  Sprint  and Sprint PCS brand
names for the sale of Sprint PCS  products  and  services in our  territory.  We
benefit  from the  strength  and the  reputation  of the  Sprint  and Sprint PCS
brands.  Sprint PCS' national  advertising  campaigns  and  developed  marketing
programs are provided to us at little or no additional cost under our Sprint PCS
agreements. We offer the same strategic pricing plans, promotional campaigns and
handset and  accessory  promotions as Sprint PCS, and we have the ability to add
pricing plans and marketing promotions that target local market needs.

                                       3
<PAGE>

     Established and available  distribution channels. We benefit from immediate
access  to major  national  retailers  under  Sprint  PCS'  existing  sales  and
distribution  agreements  and other national  sales and  distribution  channels,
including:

     o    a sales and distribution agreement with RadioShack,  which provides us
          with access to approximately 178 stores in our territory;

     o    the  sales and  distribution  agreements  with  other  major  national
          third-party retailers such as Best Buy, Circuit City, Office Depot and
          Wal-Mart,  which collectively  provide us with access to approximately
          277 additional retail outlets in our territory;

     o    Sprint PCS' national inbound telemarketing sales force;

     o    Sprint PCS' national accounts sales team; and

     o    Sprint PCS' electronic commerce sales platform.

     Sprint PCS' nationwide digital PCS network. As of December 31, 2001, Sprint
PCS,  together with its affiliates,  operated PCS systems  providing  service to
nearly 247 million people nationwide,  or 87% of Sprint PCS' licensed population
of 285 million people, including all of the 50 largest metropolitan markets. Our
network  operates  with Sprint  PCS'  national  network and extends  Sprint PCS'
coverage into our markets, which we believe is important to Sprint PCS' national
strategy. We believe our ability to provide customers with access to Sprint PCS'
nationwide  network  represents a competitive  advantage over other national and
regional providers of wireless services.

     Sprint PCS Wireless Web. Our network  supports and we market the Sprint PCS
Wireless Web. The Sprint PCS Wireless Web allows customers with  data-capable or
web  browser-enabled  handsets to connect to the Internet  and browse  specially
designed text-based web sites, including AOL, Yahoo!, Amazon.com, Bloomberg.com,
CNN  Interactive,   MapQuest.com,  Fox  Sports,  Ameritrade,  InfoSpace.com  and
Weather.com.  For more information on the Sprint PCS Wireless Web, see "Products
and  Services:  Access to the  Sprint  PCS  Wireless  Web"  below.  Sprint  PCS'
investment to upgrade its network to third generation  wireless network services
("3G") is expected to result in up to a doubling  of voice  capacity  nationwide
and dramatically increased data transmission speeds. The migration to 3G is also
expected to provide better  economies for Sprint PCS and its affiliates  through
improved spectrum efficiency.

     Sprint PCS' extensive research and development. We benefit from Sprint PCS'
extensive research and development effort,  which provides ongoing access to new
technological   products  and  enhanced  service  features  without  significant
research and  development  expenditures of our own. We have prompt access to any
developments produced by Sprint PCS for use in our network.

     Better  equipment  availability  and  pricing.  We are able to acquire  our
network equipment,  handsets and accessories more quickly and at a significantly
lower cost than we would without our strategic  relationship with Sprint PCS. We
purchase  our network  equipment,  handsets  and  accessories  under Sprint PCS'
vendor arrangements that provide volume discounts. These discounts significantly
reduce the overall  capital  required  to build our  network  and  significantly
reduce our costs of handsets and accessories.

     Sprint PCS licenses and long-term commitments.  We have the exclusive right
to use Sprint PCS' licensed spectrum to provide Sprint PCS products and services
in our  territory.  Sprint PCS has funded the purchase of the licenses  covering
our  territory  at a cost  of  approximately  $57.0  million  and  has  incurred
additional  expenses for microwave clearing.  As a Sprint PCS affiliate,  we did
not have to fund  the  acquisition  of  these  licenses,  thereby  reducing  our
start-up costs. The Sprint PCS agreements are for a total of 50 years, including
an initial  term of 20 years,  which will  expire June 2018,  and three  10-year
renewal terms. These agreements will automatically renew for each renewal period
unless,  at least two years prior to the  commencement  of any  renewal  period,
either  party  notifies  the  other  party  that it does not  wish to renew  the
agreement.

     Sprint  PCS'  back  office  services.   When  we  initially   launched  our
independent PCS operations,  we provided our own back office  services,  such as
customer services and billing  services.  In May 2000, we amended the Sprint PCS
agreements so that Sprint PCS will provide these back office  services to us. We
completed  conversion of our existing  customers to these services in June 2001.


                                       4
<PAGE>

We expect the cost of these  services  will be at or below the cost of providing
the services  ourselves,  due to  anticipated  rate  reductions  and Sprint PCS'
ability to economically manage the support of new services. We also believe this
arrangement  will allow us to more  quickly roll out new Sprint PCS products and
services in our markets.

Other Competitive Strengths of Our Business

     In addition to the advantages  provided by our strategic  affiliation  with
Sprint PCS, we have the following additional competitive strengths:

     Attractive markets.  Our markets,  with a total population of approximately
10.2 million people, are in areas with attractive  demographic  characteristics,
including the following:

     o    Fewer competitors in our markets compared to major metropolitan areas.
          We face  fewer  competitors  in our  markets  than is the  case in the
          surrounding  urban markets.  In addition,  we were the first or second
          PCS provider in a majority of our markets.

     o    High volume of commuter  and  long-distance  travel.  Our  territories
          include more than 2,600  interstate  miles and numerous  other Federal
          and major state  highways.  We believe  coverage  along these highways
          will generate significant roaming revenues.

     o    Significant overlap with Sprint PCS and Horizon Telcom local telephone
          service  areas.  Approximately  20% of the people in our territory are
          residents in Sprint Local Telephone Division markets.  We believe that
          we can take  advantage  of  Sprint  PCS'  local  telephone  customers'
          familiarity  with Sprint PCS' brand and product quality when marketing
          our wireless service. Similarly, we benefit from local brand awareness
          of Horizon Telcom,  the majority owner of Horizon PCS.  Horizon Telcom
          provides local telephone service in our Chillicothe, Ohio market where
          we  have  a  company  record   penetration  of  covered  residents  of
          approximately  17%.  The former  owners of Bright PCS also offer local
          telephone  service  in  northwestern  Ohio,  and we expect to  benefit
          positively  from  their  long-term   relationships  with  their  local
          telephone customers.

     o    Large student  population.  There are over 240,000 students  attending
          more  than 60  four-year  colleges  and  universities  located  in our
          territories,  including Notre Dame, Penn State,  Ohio University,  the
          University of Virginia,  Virginia  Tech and West Virginia  University.
          There are also numerous other colleges and universities throughout our
          markets.  We believe college  students are among the heaviest users of
          wireless services.

     o    Popular resorts and day-trip destinations.  There are more than 25 ski
          resorts,  three major NASCAR speedways,  popular resorts,  state parks
          and other tourist destinations in our service areas.

     Potential for significant  roaming  revenue.  We receive Sprint PCS roaming
revenue from Sprint PCS subscribers  based outside our territory who roam on our
network.  Our  territory is adjacent to or connects 15 major  markets  owned and
operated by Sprint  PCS,  including  Buffalo,  Chicago,  Cincinnati,  Cleveland,
Columbus, Detroit, Indianapolis,  Knoxville,  Lexington, New York, Philadelphia,
Pittsburgh, Raleigh/ Durham, Richmond and Washington, D.C. These markets include
five of the ten largest  metropolitan  areas in the United States,  which have a
total  population of  approximately  59 million  residents.  Our territory  also
contains more than 2,600 interstate miles, as follows:

                                       5
<PAGE>

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



                                                                    Estimated Total Interstate Miles (1):
                                                                          Between              In Our
     Interstate                 Major Destination Cities               Destinations          Territory
----------------------   ---------------------------------------   -----------------------------------------
      I-80/I-90               Chicago, IL to New York, NY                     787                 478
        I-90                  Cleveland, OH to Buffalo, NY                    188                 117
        I-75                 Detroit, MI to Cincinnati, OH                    264                  57
        I-77                 Cleveland, OH to Charlotte, NC                   510                 314
        I-79                   Erie, PA to Charleston, WV                     337                 234
        I-81                 Syracuse, NY to Knoxville, TN                    790                 419
        I-64                 Lexington, KY to Richmond, VA                    473                 350
        I-69                Indianapolis, IN to Lansing, MI                   241                 106
        I-476               Scranton, PA to Philadelphia, PA                  124                  60
  Other interstates                                                            --                 519
                                                                           ------              ------
                                                                           3,714                2,654
</TABLE>

----------
(1)  Source: Rand McNally.

     Our  territory  also  includes  numerous  other  Federal  and  major  state
highways.  The  proximity  of our  markets to major  Sprint PCS  markets and the
concentration  of  major  interstates  and  highways  in  our  territory  create
significant potential for roaming revenue.

     High-capacity, spectrum efficient network. We have built an all-digital PCS
network that we believe is  high-quality.  Our strategy is to provide service to
the largest  communities  in our markets and the  interstates  and primary roads
connecting  these  communities  to one another and to the adjacent major markets
owned and  operated by Sprint PCS. We believe our network  design will allow our
network to handle more  customers  with fewer dropped  calls and better  clarity
than our  competitors.  In accordance  with Sprint PCS' national plan, we are in
the process of  upgrading  most of our  network to 1XRTT,  a 3G  technology,  by
mid-year 2002. Because we believe our CDMA technology is more efficient than GSM
or TDMA,  we  believe  that,  unlike our GSM and TDMA  competitors,  we will not
require additional  spectrum in order to operate our 3G network.  We believe our
early nationwide  deployment of 3G technology will provide us with a competitive
advantage in the market for wireless data services.

     Fully-funded business plan. We are currently fully-funded under our revised
business plan,  which includes  completing the build-out of a network which will
cover  approximately  7.9 million residents and operating up to 50 company-owned
retail stores.  At December 31, 2001, our network covered 6.9 million people and
38 company owned retail stores were in operation.  We expect to achieve positive
earnings before  interest,  taxes,  depreciation  and  amortization in the third
quarter of 2003. Our current  projections of operating results are a function of
a number of factors, many of which are beyond our control.

     Proven track record;  strong  management  and  sponsorship.  We entered the
wireless industry in 1997 to capitalize on the strong growth  opportunities that
we believed  existed and launched  independent PCS service before Sprint PCS was
offering  affiliation  opportunities.   To  successfully  offer  service  as  an
independent provider, we were required to finance,  build and launch our initial
markets without any of the benefits of  affiliation.  As a result of our success
as an  independent  PCS  provider  we were able to become a charter  Sprint  PCS
affiliate.  Since then we have expanded our territory from a total population of
less than 1.0 million in 1998 to a total  population of 10.2 million  today.  We
have  accomplished  this by  developing  our  relationship  with the  Alliances,
investing in and subsequently acquiring Bright PCS, and establishing a strategic
partnership with Sprint PCS.

Business Strategy

     We believe the following  elements of our business  strategy will enable us
to rapidly complete our network, distinguish our wireless service offerings from
those of our competitors and compete successfully in the wireless communications
marketplace:

                                       6
<PAGE>

     Taking full advantage of the benefits of our affiliation with Sprint PCS.
The benefits of our affiliation with Sprint PCS include:

     o    Sprint PCS brand awareness and national marketing programs;

     o    access to established  Sprint PCS  distribution  channels and outlets,
          national marketing plans and marketing strategies;

     o    Sprint PCS nationwide coverage;

     o    availability of discount  prices for network and subscriber  equipment
          under Sprint PCS' vendor contracts;

     o    revenues from Sprint PCS subscribers traveling onto our network;

     o    use of Sprint PCS' back office services including customer activation,
          billing and customer care; and

     o    use  of  Sprint  PCS'  national   network   control  center  which  is
          responsible for continually  monitoring the performance of our network
          and providing rapid response for systems maintenance needs.

     Rapidly  completing  the  expanded  build-out  of  our  network.   We  have
successfully  developed several key relationships  which allow us to efficiently
launch our markets.  For the build-out in our Bright PCS markets and for fill-in
coverage in our initial markets, we rely on our build-to-suit  arrangements with
SBA Communications  Corporation ("SBA"). These arrangements allow us to minimize
capital costs and take  advantage of SBA's  expertise in quickly  completing the
site  acquisition  process.  For markets with a high  concentration  of existing
towers or zoning challenges,  we employ a co-location  strategy. In our Virginia
and West  Virginia  markets,  we use our  network  services  agreement  with the
Alliances (See "Alliances  Network  Services  Agreement"  below) to increase our
coverage  to those  markets  with a total  population  of 2.9  million.  For our
markets in  Pennsylvania,  New York, Ohio and New Jersey,  we purchased  network
assets under  construction  from Sprint PCS, enabling us to launch these markets
much earlier than if we had to complete  the entire  build-out of these  markets
independently.

     Executing an integrated local marketing strategy. Our marketing strategy is
to take full advantage of Sprint's and Sprint PCS' nationwide presence and brand
names while at the same time establishing a strong local presence in each of our
markets.  We emphasize the improved clarity and quality,  enhanced  features and
favorable  pricing  of Sprint  PCS  products  and  services  and  replicate  the
marketing  strategies  that have  resulted  in Sprint PCS  becoming  the fastest
growing  wireless  service  provider in the country.  In addition,  on the local
level, we are or soon will be:

     o    establishing up to 50 Sprint PCS stores within our territory;

     o    establishing local third-party sales and distribution relationships on
          an as-needed basis;

     o    directing our media efforts at the community  level by  advertising in
          local publications and radio;

     o    sponsoring local and regional events; and

     o    using the local  telephone  offices of Sprint and the former owners of
          Bright PCS that are located in our markets to offer our  products  and
          services.

     Continuing  to explore  opportunities  to expand our  territory and provide
complementary products and services.  Since the initial grant of our markets, we
have significantly  expanded the geographic scope of our territory through three
separate  transactions.  We expect to continually evaluate ways to strategically
expand our territory.  Similarly,  we expect to consider offering  complementary
products and services.

Markets

     Our territory  covers 54 markets in parts of Indiana,  Kentucky,  Maryland,
Michigan, New Jersey, New York, North Carolina, Ohio,  Pennsylvania,  Tennessee,
Virginia,  and  West  Virginia.  Sprint  PCS has  launched  service  in 15 major
metropolitan  areas that are  adjacent to our markets and have a combined  total


                                       7
<PAGE>

population  of  approximately  59 million.  We believe that  connecting or being
adjacent to  existing  Sprint PCS  markets is  important  to Sprint PCS' and our
strategy to provide seamless, nationwide PCS. The following chart identifies our
markets:

<TABLE>
<CAPTION>
<S>                                                    <C>                  <C>           <C>
                                                       Sprint PCS            MHz of            Estimated
         Market                                         Grant(1)            Spectrum      Total Population(2)
         ------                                         --------            --------      -------------------
         Fort Wayne, IN                                  Bright                10                689,200
         Kingsport (Tri-Cities), TN                        2nd                 20                689,100
         Scranton, PA                                      3rd                 30                664,700
         Roanoke, VA                                       2nd                 10                645,200
         Charleston, WV                                    1st                 20                492,700
         Huntington, WV                                    1st                 20                369,700
         South Bend, IN                                  Bright                10                348,800
         Erie, PA                                          3rd                 10                280,200
         Elkhart, IN                                     Bright                10                256,900
         Lima, OH                                        Bright                30                251,800
         Olean, NY                                         3rd                 30                240,200
         Charlottesville, VA                               2nd                 30                218,600
         Clarksburg, WV                                    2nd                 30                195,600
         Sunbury, PA                                       3rd                 30                194,300
         Zanesville, OH                                    1st                 20                187,200
         Kokomo, IN                                      Bright                30                186,000
         Williamson, WV                                    2nd                 20                183,900
         Parkersburg, WV                                   1st                 20                182,000
         Jamestown, NY                                     3rd                 30                180,100
         Bluefield, WV                                     2nd                 20                176,200
         New York, NY (Partial)(3)                         3rd                 30                169,673
         Beckley, WV                                       2nd                 20                169,500
         Danville, VA                                      2nd                 10                168,600
         Williamsport, PA                                  3rd                 30                161,200
         Benton Harbor, MI                               Bright                10                160,100
         Lynchburg, VA                                     2nd                 10                160,100
         Cumberland, MD                                    2nd                 10                159,000
         Findlay, OH                                     Bright                30                152,900
         Pottsville, PA                                    3rd                 30                151,000
         State College, PA                                 3rd                 30                134,900
         Athens, OH                                        1st                 20                132,100
         Stroudsburg, PA                                   3rd                 30                128,100
         DuBois, PA                                        3rd                 30                127,900
         Cincinnati, OH (Partial)(3)                       2nd                 10                127,400
         Sharon, PA                                        3rd                 10                122,300
         Michigan City, IN (Partial)(3)                  Bright                10                109,900
         Marion, IN                                      Bright                30                108,600
         Morgantown, WV                                    2nd                 30                107,800
         Staunton, VA                                      2nd                 10                107,600
         Chillicothe, OH (4)                               1st                 35                104,700
         Oil City, PA                                      3rd                 30                104,500
         Ashtabula, OH                                     3rd                 10                103,500
         Portsmouth, OH                                    1st                 20                 93,800
         Martinsville, VA                                  2nd                 10                 90,400
         Meadville, PA                                     3rd                 10                 90,000


                                       8
<PAGE>
                                                       Sprint PCS            MHz of            Estimated
         Market                                         Grant(1)            Spectrum      Total Population(2)
         ------                                         --------            --------      -------------------
         Allentown, PA (Partial)(3)                        3rd                 30                 59,094
         Fairmont, WV                                      2nd                 30                 56,800
         Knoxville, TN (Partial)(3)                        3rd                 10                 54,201
         Dayton, OH (Partial)(3)                         Bright                10                 41,065
         Logan, WV                                         2nd                 10                 40,900
         Canton, OH (Partial)(3)                           2nd                 10                 36,215
         Toledo, OH (Partial)(3)                         Bright                30                 30,066
         Kalamazoo, MI (Partial)(3)                      Bright                30                 20,009
         Battle Creek, MI (Partial)(3)                   Bright                30                  8,980
                                                                                             -----------
           Estimated total population                                                         10,225,303

</TABLE>

     ----------


(1)  Indicates  the grant from  Sprint PCS in which we received  our  respective
     markets.  "Bright" indicates markets granted to Bright PCS in October 1999.
     The following summarizes our other grants:
                  1st:     June 1998
                  2nd:     August 1999
                  3rd:     May 2000
(2)  Estimated total population is based on January 1, 1999,  estimates compiled
     by Rand McNally  Commercial Atlas & Marketing Guide, 2000 Edition.
(3)  The estimated total  population in these markets  represents the population
     of  the  counties  within  the  market  granted  to us in  the  Sprint  PCS
     agreements, not the total population of that market.
(4)  Includes 15 MHz of spectrum owned directly by us.

Network Build-Out Plan

     Our  network  build-out  strategy  is to  provide  service  to the  largest
communities in our markets and to cover interstates and primary roads connecting
these  communities  to each other,  and to the adjacent  major markets owned and
operated  by Sprint  PCS.  We  believe  that our  schedule  for  completing  the
build-out is achievable based on our prior experience in network build-out,  the
digital PCS technology we will use to build our PCS network and the  established
standards  of  Sprint  PCS.  We  have  designed  our  build-out  to  exceed  the
requirements of the Sprint PCS agreements.

     Our markets have a total population of  approximately  10.2 million people.
As  of  December  31,  2001,  we  had  launched   service  in  markets  covering
approximately  6.9  million  residents,  or 68% of the total  population  in our
territory and had  approximately  194,100  customers.  According to our original
business  plan,  our  network,  when  completed,  would have covered 6.9 million
residents.  We have  decided  to expand the  coverage  in our  markets  from 6.9
million to 7.9 million  residents,  increasing our planned  coverage from 68% to
77% of the total  population  of our  territory.  We believe  that our  expanded
network will be substantially complete by December 31, 2002.

Network Build-Out Elements

     As part of our network  build-out  strategy,  we entered  into  outsourcing
relationships  with the third parties  described  below to assist us in building
out our network.  We believe that these  relationships  result in a more timely,
efficient and cost effective build-out process.

     Radio frequency  design.  We have engaged an outside design firm to provide
radio frequency design,  engineering and optimization  services for our markets.
This firm assists us in determining the required number of cell sites to operate
the network and  identifies  the general  geographic  areas in which each of the
required cell sites will be located.

     Site acquisition, project management and construction. We use a combination
of build-to-suit and co-location opportunities in the design and construction of
our network. We consider these arrangements to be preferable to building our own
towers.

     Build-to-suit  arrangements are contractual  relationships  whereby a tower
company  constructs  and owns a cell  tower at a location  that we  approve  and
leases  the  cell  tower  to us  for  use  in  our  network.  Co-location  is an


                                       9
<PAGE>

arrangement  whereby a  wireless  service  provider,  like us, is allowed to use
another  party's  cell  tower  as  part  of its  network.  Generally  we  prefer
build-to-suit  opportunities  because  of the  favorable  development  fees  and
leasing terms associated with our arrangement with SBA. Under our  build-to-suit
agreement, SBA acquires the site, builds the tower and leases it to us.

     In situations where we determine that build-to-suit is not appropriate,  we
use a co-location  strategy.  For sites where  co-location  leases are utilized,
zoning,  permitting  and  surveying  approvals  and  licenses  have already been
secured,  which  minimizes  our  start-up  costs and  accelerates  access to the
markets.

     We expect  that  approximately  1,380 sites will be required to achieve our
planned  expanded  coverage of the residents in our territory,  including  those
provided to us through our network services agreement.

     Microwave  relocation.  At the time of the FCC's  auction of PCS  licenses,
other third parties were using portions of the same frequency bandwidths for the
operation of microwave  facilities.  The FCC has established  procedures for PCS
licensees  to relocate  these  existing  microwave  paths,  generally at the PCS
licensee's   expense.   Sprint  PCS  relocates  the  microwave  paths  that  use
frequencies  owned by Sprint  PCS,  and is  analyzing  these  relocations  as we
continue the  build-out of our network.  Sprint PCS is also paying for a portion
of the relocation costs.  Sprint PCS has  substantially  completed the necessary
relocation for the microwave paths in our markets.

     Switching. We currently use two switching centers in Chillicothe, Ohio, and
Fort Wayne,  Indiana,  to provide  services to our network.  We also utilize the
Alliance's  two switching  centers  under our network  services  agreement  (see
"Alliances  Network  Services  Agreement"  below) and use  Sprint PCS  switching
centers  on an  interim  basis to more  rapidly  launch  our  markets in western
Pennsylvania  and northern  Ohio. A switching  center serves  several  purposes,
including  routing calls,  managing call handoff,  managing access to the public
telephone  network and providing  access to voice mail. As of December 31, 2001,
we are constructing two additional  switching  centers which we plan to complete
in 2002: one in Johnson City, Tennessee, and one in Erie, Pennsylvania.  The new
Nortel  switch  in  Johnson  City will  replace  the  older  Motorola  switch in
Chillicothe.  We believe the  capacity of our  switching  centers is adequate to
accommodate our planned growth.

     Interconnection.  Our  network  connects  to the public  telephone  network
through local exchange carriers.  Through our Sprint PCS agreements,  we benefit
from  Sprint  PCS-negotiated  interconnection  agreements  with  local  exchange
carriers,  which govern the terms of the relationship  between telephone service
carriers which interconnect in order to provide service between networks.

     Long distance and back haul. We use Sprint and other third-party  providers
for long distance  services and for back haul  services.  Back haul services are
the  telecommunications  services that other carriers provide to carry our voice
traffic from our cell towers to our switching facilities. When we use Sprint, we
receive the same preferred rates made available to Sprint PCS.

     Network monitoring. We use Sprint PCS' Network Operations Control Center to
monitor  continuously our owned and operated  network.  The Alliances  operate a
comparable network operations control center that provides network monitoring in
our resale markets.

SBA Agreement

     Prior to August 1999,  Horizon Telcom owned the cell site towers we used in
our network.  In August 1999,  Horizon  Telcom sold to SBA the towers we used in
our network;  we subsequently  entered into lease  arrangements with SBA. We now
pay a fixed amount per month,  per cell site,  to SBA for the right to use their
towers in our  markets.  This  fixed  fee is  subject  to an  annual  percentage
increase for each site  beginning on the third  anniversary of the date we began
using the site.  We believe the rates we pay under this  agreement are generally
more favorable than average co-location rates available in our markets.

     In August 1999, we also entered into a  build-to-suit  agreement  with SBA.
Under this  agreement,  SBA  acquires  and  develops  the sites and installs the
towers at locations we approve.  We receive a site  development fee from SBA for
tower sites which SBA constructs on our behalf. We have agreed to lease space on
a number of existing SBA towers for which we pay a fixed  amount per month,  per


                                       10
<PAGE>

cell site. For some of the leases, we receive a one year rent abatement on these
sites. Rent expense for the leases which include abatement will be recognized on
a straight-line basis over the life of the lease.

Motorola Product Supply Agreement

     In December 1999, we entered into a product supply  agreement with Motorola
for  the  purchase  of the  telecommunications  products  and  services  for our
network. Motorola also provides installation services for our network equipment.
We intend to use  Motorola  equipment  for the  build-out  of our new markets in
Pennsylvania,  New York,  Ohio and New Jersey and the Bright PCS markets.  Since
entering into the Sprint PCS  agreements in June 1998,  we have  benefited  from
Sprint PCS' volume pricing arrangements with Motorola on our equipment purchases
and expect to continue to benefit going forward.

Alliances Network Services Agreement

     The Alliances are two related,  independent PCS providers  offering service
under the NTELOS brand name. In August 1999, we entered into a network  services
agreement  with  the  Alliances  for 13 of our  markets  in  Virginia  and  West
Virginia.  Under this agreement,  we are entitled to use the Alliances' wireless
network and equipment to provide services to our customers in these markets. The
Alliances  are  required  to  maintain  their  network to Sprint  PCS  technical
standards.  We pay the Alliances a minimum  monthly charge for a fixed number of
minutes and a per minute of use charge for minutes in excess of the fixed number
of minutes.

     We believe this arrangement  eliminates or defers capital costs and reduces
network  expenses while permitting a faster launch of service and preserving our
capital  for  other  uses.  In  addition,  this  arrangement  gives us access to
additional  spectrum  in markets  where  Sprint PCS has  limited  bandwidth  and
reduces our risk of technological  obsolescence in these markets. We are subject
to the risk  that the  Alliances  will not  satisfactorily  build-out,  operate,
maintain  or  upgrade  their   network.   See  "Risk  Factors"  under  "ITEM  7.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operation" included herein.

     As of December 31, 2001,  the  Alliances had deployed 481 cell sites within
our  markets  in  West  Virginia  and  Virginia  and  had  complied  with  their
contractual build-out  requirements to date. At December 31, 2001, the Alliances
provided  coverage to  approximately  62% of the total population of 2.9 million
residents in the markets covered by our network services agreement.

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

Products and Services

     Our products and  services  mirror the service  offerings of Sprint PCS and
are designed to integrate  seamlessly  with the Sprint PCS  nationwide  network.
Sprint PCS  Wireless  Services  currently  serve the  majority  of the  nation's
metropolitan areas, including more than 4,000 cities and communities,  providing
customers with affordable,  reliable 100% digital, 100% PCS services. The Sprint
PCS service package we offer includes the following:

     100% digital wireless mobility and nationwide service.  Our primary service
is wireless  mobility  coverage.  Our PCS  network is part of the  largest  100%
digital, 100% PCS network in the nation and our customers are able to use Sprint
PCS services in our markets and seamlessly throughout the Sprint PCS network. We
offer customers in our territory  enhanced voice clarity,  advanced features and
simple,  affordable  Sprint PCS pricing  plans.  These plans  include  free long
distance and wireless  airtime minutes for use throughout the Sprint PCS network
at no additional  charge. Our basic wireless service includes voice mail, caller
ID,  enhanced call waiting,  three-way  calling,  call  forwarding,  distinctive
ringing and call blocking.

                                       11
<PAGE>

    Nationwide service. Dual-band/dual-mode handsets allow roaming on wireless
networks where Sprint PCS is not available and with which Sprint PCS has roaming
agreements. These handsets are designed to operate on analog and digital
cellular networks, as well as on Sprint PCS' digital PCS networks.

     Advanced handsets.  CDMA handsets offer significantly extended battery life
relative to earlier technologies,  providing up to five days of standby time and
approximately  two to four hours of talk time.  Handsets  operating on a digital
system  are  capable  of saving  battery  life  while  turned on but not in use,
improving   efficiency   and  extending   the  handset's   use.  We  also  offer
dual-band/dual-mode  handsets that allow  customers to make and receive calls on
both PCS and cellular  frequency  bands and both  digital or analog  technology.
These  handsets  allow  roaming on cellular  networks  where  Sprint PCS digital
service is not  available  through  carriers  with which  Sprint PCS has roaming
agreements.  All handsets are equipped with preprogrammed features such as speed
dial and last number redial,  and are sold under the Sprint and Sprint PCS brand
names.

     Improved voice quality.  We believe the Sprint PCS CDMA  technology  offers
significantly  improved  voice  quality  compared  to  existing  analog and TDMA
networks and more powerful error correction,  less susceptibility to call fading
and enhanced interference rejection; all of which result in fewer dropped calls.
See "CDMA  Technology"  below for a discussion  of the reasons  CDMA  technology
offers improved voice quality.

     Privacy  and  security.  Sprint PCS  provides  secure  voice  transmissions
encoded into a digital format to prevent  eavesdropping and unauthorized cloning
of subscriber identification numbers.

    Easy activation. Customers can purchase a Sprint PCS handset off the shelf
at a retail location and activate their service by calling customer service or
by visiting Sprint PCS' website. Either option allows the customer to activate
the handset over the air. We believe over-the-air activation will reduce the
training requirements for salespersons at the retail locations.

     Customer care. By using Sprint PCS'  established  back office services such
as customer care and billing  services,  we believe our operating  costs will be
reduced. By using Sprint PCS' services, we also expect to more rapidly implement
new products and services offered by Sprint PCS. Sprint PCS offers customer care
24 hours a day,  seven days a week.  Customers can call the Sprint PCS toll-free
customer  care number from  anywhere on the  national  Sprint PCS  network.  All
Sprint PCS phones  are  preprogrammed  with a speed  dial  feature  that  allows
customers to easily reach customer care at any time.

     Access to the Sprint PCS Wireless Web. We support and market the Sprint PCS
Wireless  Web  throughout  our  network.  The  Sprint  PCS  Wireless  Web allows
subscribers with  data-capable  handsets to connect their portable  computers or
personal  digital  assistants  to the  Internet.  Sprint  PCS  subscribers  with
data-capable  handsets  also have the  ability to receive  periodic  information
updates  such as stock  prices,  airline  schedules,  sports  scores and weather
reports   directly  on  their  handsets.   Sprint  PCS   subscribers   with  web
browser-enabled  handsets  have the  ability to connect to and browse  specially
designed  text-based  Internet  sites on an  interactive  basis.  Sprint PCS has
agreements with numerous  Internet  providers to provide services for the Sprint
PCS  Wireless  Web.  Sprint PCS offers  Sprint PCS  Wireless Web as an add-on to
existing Sprint PCS' Free and Clear pricing plans.

     Clear Pay pricing  plan.  We offer  Sprint PCS' "Clear Pay" pricing plan in
our markets. The "Clear Pay" plan is a credit policy which is designed to enable
potential  subscribers  who may not have a credit  history  that  qualifies  for
standard Sprint PCS post-pay pricing plans to become subscribers  without having
to pay high  rates  customarily  associated  with  pre-paid  plans or  having to
provide a large  deposit.  We believe the "Clear Pay"  pricing plan allows us to
obtain  subscribers  which we would not be able to  otherwise  obtain if we used
standard post-pay credit policies.

     Other  services.  We believe new features and services will be developed on
the Sprint PCS  nationwide  network to take advantage of CDMA  technology.  As a
leading wireless provider,  Sprint PCS conducts ongoing research and development
to produce innovative services that give Sprint PCS a competitive advantage.  We
intend to offer a portfolio of products and services  developed by Sprint PCS to
accommodate  the  growth in, and the  unique  requirements  of,  high speed data
traffic and demand for video services.  We plan to provide,  when  available,  a
number of applications for wireless data services including facsimile,  Internet
access, wireless local area networks and point-of-sale terminal connections.

                                       12
<PAGE>

Marketing Strategy

     Our marketing and sales strategy uses Sprint PCS'  strategies and developed
national  distribution  channels  that have  helped  Sprint PCS  generate  rapid
customer  growth.  We augment Sprint PCS'  strategies  with  marketing  programs
tailored to our specific territory.

     Use of Sprint PCS' brand equity and marketing.  We feature  exclusively and
prominently the nationally  recognized  Sprint and Sprint PCS brand names in our
marketing  effort.  From the  customers'  point of view,  they  will use our PCS
network and the Sprint PCS national  network  seamlessly  as a unified  national
network.  We are  building on Sprint PCS'  national  distribution  channels  and
advertising programs.

     Pricing.  We  believe  our use of the Sprint PCS  pricing  strategy  offers
customers in our territory simple, easy-to-understand service plans. Sprint PCS'
consumer  pricing  plans  are  typically  structured  with  competitive  monthly
recurring  charges and large  local  calling  areas,  service  features  such as
voicemail,  enhanced  caller ID, call waiting and three-way  calling and what we
believe to be competitive  per-minute rates.  Lower per-minute rates relative to
analog cellular providers are possible in part because the CDMA system that both
we and Sprint PCS employ has  greater  capacity  than  current  analog  cellular
systems,  which we believe  enables us to market  high usage  customer  plans at
lower prices. All of Sprint PCS' current national plans:

     o    include minutes in any Sprint PCS market with no roaming charges;

     o    offer a wide  selection of phones to meet the needs of  consumers  and
          businesses; and

     o    provide a limited-time money-back guarantee on Sprint PCS handsets.

     In addition,  Sprint PCS' national  Free and Clear plans,  which we believe
offer simple, affordable plans for every consumer and business customer, include
the option to choose free long  distance  calling  from  anywhere on Sprint PCS'
nationwide  network,  a package of off-peak  minutes or the Sprint PCS  Wireless
Web.

     Local focus. Our local focus enables us to supplement Sprint PCS' marketing
strategies  with our own  strategies  tailored to each of our specific  markets.
These include attracting local businesses to diversify our distribution channels
and using  local  radio  and  newspaper  advertising  to sell our  products  and
services in each of our  launched  markets.  We have  established  a local sales
force to execute our marketing strategy through  company-owned Sprint PCS stores
and also employ a direct sales force  targeted to business  sales.  In addition,
Sprint PCS' existing  agreements with national  retailers provide us with access
to over 455 retail  locations in our territory.  The former owners of Bright PCS
also offer Sprint PCS products in their local telephone  offices in northwestern
Ohio.  Sprint-owned  local exchange  carriers provide local telephone service to
approximately  20% of the total  population in our territory,  which provides us
with an  additional  distribution  channel  through  which we can  market  to an
established base of Sprint customers.  Some of the Sprint local exchange markets
have a store  for  Sprint  customers  to pay their  bills,  which we use to sell
Sprint PCS products and services.

     Advertising  and   promotions.   Sprint  PCS  uses  national  and  regional
television, radio, print, outdoor and other advertising campaigns to promote its
products.  We benefit  from this  national  advertising  in our  territory at no
additional cost to us.

     Sponsorships.  Sprint PCS is a sponsor of  numerous  selected,  broad-based
national and regional events.  These sponsorships  provide Sprint PCS with brand
name and product  recognition in high profile events,  provide a forum for sales
and promotional events and enhance our promotional efforts in our territory.

     Bundling of services.  We intend to take advantage of the complete array of
communications  services  offered by  bundling  Sprint PCS  services  with other
Sprint products, such as long distance and Internet access.

Sales and Distribution

     Our sales and distribution  plan mirrors Sprint PCS' multiple channel sales
and distribution  plan. Key elements of our sales and distribution  plan consist
of the following:

                                       13
<PAGE>

     Sprint store  within a RadioShack  store.  Sprint has an  arrangement  with
RadioShack  to  install  a "store  within a store"  for the sale of  Sprint  PCS
service. RadioShack has approximately 178 stores in our territory.

     Other national and regional third party retail stores. We also benefit from
the  distribution  agreements  established by Sprint PCS with other national and
regional retailers which currently include Best Buy, Circuit City, Office Depot,
OfficeMax,  Ritz Camera,  Staples, Cord Camera, The Wiz, Wal-Mart and h.h. gregg
department stores. At present,  these retailers operate approximately 277 retail
stores in our territory.  We also believe that we benefit from stores located in
major Sprint PCS markets near our markets because residents of our territory who
buy PCS handsets at those stores become our subscribers.

     Sprint PCS stores.  At December 31, 2001, we operated 38 Sprint PCS stores.
We plan to have up to 50 Sprint PCS stores in our  territory by the end of 2002.
These stores will be located in larger markets  within our  territory,  which we
believe  will  provide  us with  strong  local  presence  and a high  degree  of
visibility.  Following  the Sprint PCS model,  these  stores will be designed to
facilitate retail sales, bill payment and customer service.

     Local  telephone  stores.  We also offer  Sprint PCS  products and services
through the Sprint Local  Telephone  Division retail centers in our service area
and through local  telephone  service centers of former owners of Bright PCS and
their affiliates located in our markets.

     National  accounts  and  direct  selling.  We  participate  in Sprint  PCS'
national accounts program. Sprint PCS has a national accounts team which focuses
on the corporate  headquarters of Fortune 500 companies.  Once a  representative
reaches an agreement with the corporate headquarters,  we service the offices of
that  corporation  located in our territory.  Our direct sales force will target
the employees of these  corporations  in our territory and cultivate other local
business clients.

     Inbound telemarketing. Sprint PCS provides inbound telemarketing sales when
customers  call from our  territory.  As the  exclusive  provider  of Sprint PCS
products and services in our market,  we use the national Sprint  1-800-480-4PCS
number  campaigns that generate  call-in leads.  These leads are then handled by
Sprint PCS' inbound telemarketing group.

     Electronic  commerce.  A visitor to Sprint PCS' Internet site can order and
pay for a handset and select a service  plan.  Customers  visiting  the site can
review the status of their account,  including the number of minutes used in the
current  billing  cycle.  We manage  customers  in our  territory  who  purchase
products and services over the Sprint PCS Internet site.

CDMA (Code Division Multiple Access) Technology

     Sprint PCS' nationwide network and its affiliates' networks all use digital
CDMA technology.  CDMA technology is fundamental to  accomplishing  our business
objective  of  providing  high-volume,  high-quality  airtime at a low cost.  We
believe CDMA provides important system performance benefits.

     Voice  quality.  We believe  CDMA  systems  offer less  interference,  more
powerful error correction and less susceptibility to fading than analog systems.
Using enhanced voice-coding techniques,  CDMA systems achieve voice quality that
is comparable to that of the typical wireline telephone.  This CDMA voice-coding
technology also filters annoying background noise more effectively than existing
wireline, analog cellular or other digital PCS phones.

     Capacity.  CDMA  technology  allows a greater  number of calls  within  one
specific  frequency and reuses the entire frequency  spectrum in each cell. CDMA
systems provide  capacity gains of up to seven times over current analog systems
and up to three  times  greater  than TDMA and GSM  systems  used by some of our
competitors.  Additional  voice  capacity  improvements  are  expected  for CDMA
networks  over  the  next  two  years  as  new 3G  standards  are  approved  and
implemented.  Additionally,  3G will allow higher data transmission  speeds than
are currently available.

                                       14
<PAGE>

     CDMA  technology  is designed to provide  flexible or "soft"  capacity that
permits networks like ours to temporarily increase the number of telephone calls
that can be handled within a cell. When capacity limitations in analog, TDMA and
GSM systems are reached, additional callers in a given cell must be given a busy
signal. Using CDMA technology, networks like ours can allow a small reduction in
voice quality to provide temporary  increases in capacity.  This reduces blocked
calls and increases the probability of a successful cell-to-cell hand-off.

     Soft hand-off.  As a subscriber  travels from one cell site to another cell
site,  the call must be  "handed-off"  to the next site.  CDMA systems  transfer
calls  throughout the network using a technique  referred to as a soft hand-off,
which connects a mobile customer's call with a new cell site while maintaining a
connection  with the cell site  currently  in use.  CDMA  networks  monitor  the
quality of the transmission received by both cell sites simultaneously to select
a better  transmission  path and to ensure that the network does not  disconnect
the call in one cell until it is clearly  established in a new one. As a result,
fewer calls are dropped  compared to analog,  TDMA and GSM networks  which use a
"hard  hand-off"  and  disconnect  the call  from the  current  cell  site as it
connects with a new one.

     Integrated  services.  CDMA systems permit us to offer  advanced  features,
including voice mail, caller ID, enhanced call waiting,  three-way calling, call
forwarding, Internet access, paging and text-messaging.  These advanced features
may also be offered by companies utilizing competing technologies.

     Privacy  and  security.  Another  benefit  of  CDMA  technology  is that it
combines a constantly  changing coding scheme with a low-power signal to enhance
security and privacy.  Vendors are currently  developing  additional  encryption
capabilities which we believe will further enhance overall network security.

     Frequency  planning.  Frequency planning is the process used to analyze and
test alternative patterns of frequency use within a wireless network to minimize
interference  between  one  call and  another  call  and to  maximize  capacity.
Currently,  cellular  service  providers  spend  considerable  money and time on
frequency planning.  Since TDMA and GSM systems have frequency reuse constraints
similar to present  analog  systems,  frequency  reuse planning for TDMA and GSM
based systems is expected to be  comparable  to planning for the current  analog
systems.  With CDMA  technology,  however,  the same group of frequencies can be
reused in every cell, substantially reducing the need for costly frequency reuse
patterning and constant frequency plan management.

     Battery life. Due to their greater  efficiency in power  consumption,  CDMA
handsets provide up to five days of standby time and  approximately  two to four
hours of talk time  availability.  We believe this generally exceeds the battery
life of handsets using alternative digital or analog technologies.

     Third generation technology.  In addition,  wireless carriers are beginning
to  implement  a new "third  generation,"  or "3G,"  technology  throughout  the
industry. The 3G technology is intended to increase networks' capacity for voice
calls and enable better transmission of high-speed data. Sprint PCS has selected
a version of 3G  technology,  1XRTT,  for its own networks  which requires us to
upgrade our network to provide it. We currently  estimate  this network  upgrade
will cost  approximately  $35  million,  but  actual  costs  could  exceed  this
estimate.  To date, this technology has not been deployed on a commercial  basis
by Sprint PCS. It is our belief that CDMA  technology is more efficient than GSM
or TDMA. As a result, we believe that,  unlike our GSM and TDMA competitors,  we
will  not  require  additional  spectrum  in order to  operate  our 3G  network.
Additionally,  we believe our early nationwide  deployment of 3G technology will
provide  us  with a  competitive  advantage  in the  market  for  wireless  data
services.

     Benefits  of other  technologies.  While  CDMA has the  benefits  discussed
above,  TDMA networks are generally  less  expensive  when  overlaying  existing
analog systems. In addition, the GSM technology standard,  unlike CDMA, supports
a more  robust  interoperability  standard  which more  easily  allows a network
operator to use equipment  from several  different  vendors in the same network.
This,  along with the fact that the GSM  technology  is  currently  more  widely
deployed throughout the world than CDMA, provides economies of scale for handset
and equipment  purchases.  A standards process is also underway which will allow
wireless handsets to support analog, TDMA and GSM technologies in a single unit.
Currently, there are no plans to have CDMA handsets that support either the TDMA
or GSM technologies.



                                       15
<PAGE>

Competition

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

     Our largest single competitor is Verizon Wireless,  which offers service in
the  majority of our markets.  We also face  significant  competition  from AT&T
Wireless, which operates in conjunction with its affiliates in almost all of our
markets. After Verizon and AT&T Wireless, our strongest competitors are regional
wireless providers, ALLTEL, Centennial and NTELOS.

     The following table lists the material operational  competitors known to us
within our various geographic areas:

                                        Primary Operating              Type of
Geographic Area                            Competitors                 Service
---------------                         -----------------             ---------
Ohio markets                                 ALLTEL                   Cellular
                                          AT&T Wireless               Cellular
                                        Verizon Wireless              Cellular
                                             Nextel                     ESMR
Indiana markets                            Centennial                 Cellular
                                           CenturyTel                 Cellular
                                        Verizon Wireless              Cellular
                                           VoiceStream                   PCS
                                             Nextel                     ESMR
Pennsylvania and New York markets         AT&T Wireless               Cellular
                                        Verizon Wireless              Cellular
                                           VoiceStream                   PCS
                                             Nextel                     ESMR
Virginia and West Virginia markets           ALLTEL                   Cellular
                                          AT&T Wireless               Cellular
                                         Triton PCS (1)                  PCS
                                        Verizon Wireless              Cellular
                                             NTELOS                      PCS
Tennessee markets                            ALLTEL                   Cellular
                                        Verizon Wireless              Cellular
                                            Cingular                     PCS
                                         Triton PCS (1)                  PCS
                                             Nextel                     ESMR
----------
(1)  Triton PCS in an AT&T Wireless  affiliate offering AT&T Wireless and SunCom
     co-branded service.

     Our  primary  competitors  offer  a  wireless  service  that  is  generally
comparable to our PCS service. However, as a Sprint PCS affiliate, we believe we
are positioned to successfully  compete with all of these wireless providers due
to the strength of the Sprint PCS brand name,  distribution  channels and Sprint
PCS' nationwide  CDMA-only  network.  Verizon Wireless,  in particular,  lacks a
single  technology  throughout  all of its  markets.  We also  believe  that our
primary competitors do not offer 100% digital technology.

     Nextel  Communications,  together with its affiliate Nextel  Partners,  has
licenses to offer  service in the vast  majority  of our  markets and  currently
offers service to less than half of our planned  covered  residents.  We believe
Nextel's  coverage  in many of these  markets  is focused  primarily  on highway
coverage as opposed to community coverage.

     Our ability to compete  effectively  with these other providers will depend
on a number of factors,  including the continued  success of CDMA  technology in
providing  better  call  clarity  and  quality as  compared  to analog  cellular


                                       16
<PAGE>

systems, Sprint PCS' competitive pricing with various options suiting individual
customer's calling needs, the continued  expansion and improvement of the Sprint
PCS nationwide  network,  our extensive direct and indirect sales channels,  our
centralized  Sprint PCS  customer  care  systems  and our  selection  of handset
options.

    Many of our competitors have access to more licensed spectrum than the 10MHz
or 20MHz licensed to Sprint PCS in some of our markets and also have established
infrastructures, marketing programs and brand names. Many of our competitors may
be able to offer coverage in areas not served by our network, or, because of
their calling volumes or their affiliations with, or ownership of, other
wireless providers, may be able to offer roaming rates that are lower than those
offered by Sprint PCS. PCS operators compete with us in providing some or all of
the services available through the Sprint PCS network and may provide services
that we do not. Additionally, we expect existing cellular providers will
continue to upgrade their systems to provide digital wireless communication
services competitive with Sprint PCS.

     We also face limited  competition from  "resellers"  which provide wireless
service to customers  but do not hold FCC licenses or own  facilities.  Instead,
the  reseller  buys blocks of wireless  telephone  numbers and  capacity  from a
licensed carrier and resells service through its own distribution network to the
public.  Thus, a reseller is both a customer of a wireless  licensee's  services
and a competitor of that and other licensees.  The FCC requires all cellular and
PCS licensees to permit resale of carrier service to resellers.  Although Sprint
PCS is required to resell PCS in our markets,  currently  there are no resellers
of Sprint PCS in our markets. Any reseller of Sprint PCS in our markets would be
required to pay us for the use of our  capacity  and their use of the Sprint PCS
service marks in our markets would be restricted to describing their handsets as
operational on the Sprint PCS network.

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

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

     Over the past several  years the FCC has  auctioned,  and will  continue to
auction,  large amounts of wireless  spectrum that could be used to compete with
Sprint PCS service. Based upon increased competition,  we anticipate that market
prices for two-way wireless  services  generally will decline in the future.  We
will compete to attract and retain customers principally on the basis of:

     o    the  strength of the Sprint and Sprint PCS brand  names,  services and
          features;

     o    the location of our markets;

     o    the size of our territory;

     o    national network coverage and reliability;

     o    customer care; and

     o    pricing.

Intellectual Property

     "Sprint," the Sprint  diamond design logo,  "Sprint PCS," "Sprint  Personal
Communications  Services,"  "The Clear  Alternative to Cellular" and "Experience
the Clear  Alternative to Cellular Today" are service marks  registered with the
United  States  Patent and  Trademark  Office.  These service marks are owned by
Sprint.  Pursuant to the trademark and service mark license agreements,  we have
the right to use,  royalty-free,  the Sprint and Sprint PCS brand  names and the


                                       17
<PAGE>

Sprint diamond design logo and other service marks of Sprint in connection  with
marketing,  offering and providing licensed services to end-users and resellers,
solely within our territory.

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

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

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

Employees

     As of December 31, 2001, we employed 531 full-time employees, including 356
in sales  and  marketing,  142  technicians  and 33 in  executive,  finance  and
administration.  None of our  employees  are  represented  by a labor union.  We
believe we have good relations with our employees.

                            THE SPRINT PCS AGREEMENTS

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

Overview of Sprint PCS Relationship and Agreements

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

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

     o    the management agreement;

     o    the services agreement;

     o    the trademark and service mark license agreement with Sprint; and

     o    the trademark and service mark license agreement with Sprint PCS.



                                       18
<PAGE>


The Management Agreement

     Under our Sprint PCS agreements, we have agreed to:

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

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

     o    conduct advertising and promotion activities in our territory; and

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

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

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

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

     Under our original Sprint PCS agreements,  we were required to complete the
build-out in several of our markets in Pennsylvania and New York by December 31,
2000.  We and Sprint PCS agreed to an amendment of our  build-out  requirements,
which extended the date by which we were to launch coverage in several markets.

     Under the amended Sprint PCS agreement,  portions of the New York, Sunbury,
Williamsport,  Oil City, Dubois,  Erie,  Meadville,  Sharon,  Olean,  Jamestown,
Scranton,  State College,  Stroudsburg,  Allentown and  Pottsville  markets were
required to be  completed  and  launched by October 31,  2001.  Although we have
launched service in portions of each of these markets, we have not completed all
of the build-out  requirements.  We notified Sprint PCS in November 2001 that it
is our  position  that the  reasons  for the delay  constitute  events of "force
majeure" as described in the Sprint PCS  agreements and that,  consequently,  no
monetary penalties or other remedies would be applicable to missing the original
launch date. The delay has been primarily  caused due to delays in obtaining the
required  backhaul  services from local  exchange  carriers and zoning and other
approvals  from  governmental  authorities.  On  January  30,  2002,  Sprint PCS
notified  us  that,  as a result  of these  force  majeure  events,  it does not
consider our buildout delay to be a breach of the Sprint PCS agreement.  We have
agreed to  continue to use  commercially  reasonable  efforts to reach  buildout
completion  by either June 30, 2002 (for most of the affected  markets) or April
30,  2002  (for a few of these  markets).  If we fail to launch a market by more
than 90 days after the  extended  deadlines  and if our  failure  is  ultimately
determined to be for non-force majeure reasons,  Sprint PCS would have the right
to  terminate  our  Sprint PCS  agreements  or enforce  monetary  penalties.

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


                                       19
<PAGE>

distributor  or  Sprint  PCS  approves  the  terms and  conditions.  Subject  to
agreements existing before we became a Sprint PCS affiliate,  we are required to
use Sprint's long distance service which we can buy at wholesale rates.

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

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

     o    outbound non-Sprint PCS roaming revenue;

     o    inbound and outbound Sprint PCS roaming fees;

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

     o    proceeds from sales not in the ordinary course of business; and

     o    amounts collected with respect to taxes.

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

     Advertising  and  promotions.  Sprint PCS is  responsible  for all national
advertising  and  promotion  of the Sprint PCS  products  and  services.  We are
responsible for  advertising  and promotion in our territory,  including the pro
rata cost of any promotion or advertising  done by any third-party  retailers in
our territory  pursuant to a national  cooperative  advertising  agreement  with
Sprint.  Sprint  PCS'  service  area  includes  the  urban  markets  around  our
territory.  Sprint  PCS will pay for  advertising  in these  markets.  Given the
proximity  of these  markets to ours,  we expect  considerable  spill-over  from
Sprint PCS' advertising in surrounding urban markets.

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

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

                                       20
<PAGE>

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

     o    termination of Sprint PCS' PCS licenses;

     o    an uncured breach under the management agreement;

     o    bankruptcy of a party to the management agreement;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     o    if Sprint PCS is the licensee for 20MHz or more of the spectrum on the
          date the management agreement was executed, require Sprint PCS to sell
          to us,  subject  to  governmental  approval,  up to 10MHz of  licensed


                                       21
<PAGE>

          spectrum for an amount  equal to the greater of (1) the original  cost
          to Sprint PCS of the license plus any microwave  relocation costs paid
          by Sprint PCS or (2) 10% of our Entire Business Value.

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

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

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

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

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

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

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

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

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

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

     Sprint PCS  warrants.  In  connection  with  Sprint PCS' grant to us of our
markets in  Pennsylvania,  New York, Ohio and New Jersey,  we agreed to grant to
Sprint PCS warrants to acquire shares of the Company's class A common stock (See
"Recent Sales of Unregistered Securities" under "ITEM 5. Market for Registrant's
Common Equity and Related Stockholder Matters" included herein).

The Services Agreements

     The services agreements outline back office services provided by Sprint PCS
and available to us at  established  rates.  Sprint PCS can change any or all of
the service  rates one time in each twelve month  period.  Some of the available
services include:  billing,  customer care,  activation,  credit checks, handset
logistics,  home  locator  record,  voice  mail,  prepaid  services,   directory
assistance,   operator  services,  roaming  fees,  roaming  clearinghouse  fees,
interconnect fees and inter-service  area fees. Sprint PCS offers three packages


                                       22
<PAGE>

of available services.  Each package identifies which services must be purchased
from Sprint PCS and which may be purchased  from a vendor or provided  in-house.
Essentially,  services such as billing, activation and customer care must either
all be purchased  from Sprint PCS or we may provide  those  services  ourselves.
When we signed  our  original  Sprint  PCS  agreements,  we  elected  to provide
billing,  activation  and customer care services on our own. In connection  with
the May 2000  grant by  Sprint  PCS of  additional  markets  to us, we agreed to
change our  arrangement  under the  services  agreement  so that Sprint PCS will
provide  activation,  billing and customer care.  Accordingly,  in June 2001, we
discontinued  the  use  of  our  own  activation,  billing,  and  customer  care
capabilities. We now purchase those services from Sprint PCS. For our Bright PCS
markets  and our new  markets  in  Pennsylvania,  New  York and New  Jersey,  we
launched  these  markets  using Sprint PCS billing and customer  care  services.
Sprint PCS may contract  with third  parties to provide  expertise  and services
identical  or similar to those to be made  available  or provided to us. We have
agreed  not to use  the  services  received  under  the  services  agreement  in
connection with any other business or outside our territory.  We may discontinue
use of any service  upon three  months'  prior  written  notice.  Sprint PCS may
discontinue  a service  provided  that Sprint PCS  provides us with nine months'
prior notice.

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

The Trademark and Service Mark License Agreements

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

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

Consent  and  Agreement  for the  Benefit of the  Holders of the Senior  Secured
Credit Facility

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

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


                                       23
<PAGE>

secured  credit  facility  and any  refinancing  of the  senior  secured  credit
facility,  which was a condition to the funding of any amounts  under our senior
secured credit facility.

     The senior secured consent principally provides for the following:

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

     o    Sprint  PCS'  consent  to the pledge of all our  equity  interests  in
          Horizon  Personal  Communications,  Inc.  and the  pledge  by  Horizon
          Personal  Communications,  Inc. of all of its equity interests in each
          of its subsidiaries;

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

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

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

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

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

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

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

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

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

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

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

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

                                       24
<PAGE>

             REGULATION OF THE WIRELESS TELECOMMUNICATIONS INDUSTRY

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

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

     o    grant or deny licenses for PCS frequencies;

     o    grant or deny PCS license renewals;

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

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

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

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

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

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

     o    regulate the technical standards of PCS networks.

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

Transfers and Assignments of PCS Licenses

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

Conditions of PCS Licenses

     All PCS  licenses are granted for ten-year  terms  conditioned  upon timely
compliance  with  the  FCC's  build-out  requirements.  Pursuant  to  the  FCC's
build-out  requirements,  all 30 MHz  broadband  PCS  licensees  must  construct
facilities that offer coverage to one-third of the population  within five years
and to two-thirds of the population  within ten years,  and all 10MHz and 15 MHz
broadband PCS licensees  must  construct  facilities  that offer  coverage to at
least  one-quarter  of the  population  within  five  years or make a showing of
"substantial  service"  within  that  five-year  period.  Failure  to meet these
build-out  requirements  can result in license  cancellation  without a hearing.
Other rule violations could result in license revocations and/or monetary fines.
The FCC also  requires  licensees  to maintain a certain  degree of control over
their  licenses.  The Sprint PCS  agreements  reflect  an  arrangement  that the
parties  believe  meets the FCC  requirements  for licensee  control of licensed
spectrum.  However,  the FCC  decides  whether a  licensee  has  maintained  the


                                       25
<PAGE>

requisite degree of control on a case-by-case  basis, upon  consideration of the
"totality of  circumstances."  It is  therefore  difficult to predict in advance
with absolute  certainty whether a particular  arrangement will pass FCC muster.
If the FCC were to  determine  that our  agreements  with  Sprint PCS need to be
modified to increase the level of licensee  control,  the Sprint PCS  agreements
may be modified to cure any purported  deficiency  regarding licensee control of
the licensed spectrum.  However the business arrangement between the parties may
have to be restructured.

PCS License Renewal

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

Interconnection

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

Allocation of Additional PCS and Other Wireless Licenses

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

Other FCC Requirements

     In June 1996,  the FCC adopted rules that prohibit  broadband PCS providers
from  unreasonably  restricting  or  disallowing  resale  of their  services  or
unreasonably   discriminating   against   resellers.   Resale  obligations  will
automatically  expire on November 24, 2002. The FCC recently  decided that these
prohibitions  apply to services and not to equipment  such as handsets,  whether
alone or in bundled packages.

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

     The FCC has adopted rules  permitting  broadband  PCS and other  commercial
mobile radio  providers to provide  wireless local loop and other fixed services
that would  directly  compete  with the  wireline  services  of local  telephone
companies. In June 1996, the FCC adopted rules requiring broadband PCS and other


                                       26
<PAGE>

commercial  mobile radio  providers to implement  enhanced  emergency 911 (E911)
automatic location  identification (ALI) capabilities within 18 months after the
effective  date of the FCC's rules.  Sprint PCS' initial  compliance  with these
rules occurred on or before October 1, 2001.

     Additional  compliance  deadlines  include:  (1)  ensuring  that 25% of new
mobile phones  activated after December 31, 2001, are ALI capable;  (2) ensuring
that 50% of new mobile phones  activated  after June 30, 2002,  are ALI capable;
and (3)  ensuring  that 95% of all  customer  mobile  phones are ALI  capable by
December 31, 2005. On October 12, 2001,  the FCC granted Sprint PCS an extension
of the December 31, 2001,  deadline,  valid until July 31, 2002.  Sprint PCS was
also given more time in which to upgrade its E911 system software. The Company's
Chillicothe  PCS system,  the licenses to which the Company  owns,  is currently
exempt from E911 ALI requirements.

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

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

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

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

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

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

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

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

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

Communications Assistance for Law Enforcement Act

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

                                       27
<PAGE>

Other Federal Regulations

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

     In general,  carriers are required to clear any tower or antenna  structure
proposals with the FAA if the structure  will be 200 feet or more in height,  or
will be within 20,000 feet of an airport. Carriers must also ensure that antenna
structures  will  comply with  NEPA-related  regulations  protecting  wilderness
areas, wildlife preserves,  endangered species habitats, Indian religious sites,
flood  plains,  wetlands and historic  places.  In protecting  historic  places,
carriers must comply with the requirements of the National Historic Preservation
Act and the  regulations  of the  National  Council  for  Historic  Preservation
(NCHP).  This  generally  requires  consultation  with  the  appropriate  "State
Historic Preservation Officer" (SHPO) prior to each site construction.  However,
in March 2001,  the FCC issued a  programmatic  agreement  approved by the NCHP,
which allows carriers to avoid SHPO approval and other  time-consuming  historic
preservation  measures,  if the carrier  proposes to use an existing tower,  and
satisfies certain other conditions.

     Carriers must comply with certain other FCC requirements:

     o    payment of annual regulatory user fees;

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

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

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

     o    submission of an annual Form 395 employment report;

     o    periodic filing of Form 602 ownership report; and

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

Review of Universal Service Requirements

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

Wireless Facilities Siting

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


                                       28
<PAGE>

placement,  construction  or  operation  of  wireless  facilities.  The  FCC  is
considering numerous requests for preemption of local actions affecting wireless
facilities  siting.  The Federal courts have been  inconsistent in deciding such
disputes.

State Regulation of Wireless Service

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

ITEM 2. Properties

     Our  principal  executive  offices are leased from a subsidiary  of Horizon
Telcom and are located at 68 E. Main Street, Chillicothe, Ohio 45601-0480, which
is also the location of our first retail store. We lease an additional 37 retail
stores throughout our territory.  We own two switching facilities in Fort Wayne,
Indiana,  and  Chillicothe,  Ohio,  and are in the process of  constructing  two
additional  switching  centers in  Tennessee  and  Pennsylvania.  One of the new
centers will replace the switching facility in Chillicothe, Ohio. As of December
31, 2001, we leased 604 on-air towers;  we co-locate with other wireless service
providers on  approximately  72% of them. We believe our facilities are adequate
for our current operations and are in good condition and additional leased space
can be obtained if needed on commercially reasonable terms.

ITEM 3. Legal Proceedings

     We are not  aware  of any  pending  legal  proceedings  against  us  which,
individually or in the aggregate, if adversely determined, would have a material
adverse effect on our financial condition or results of operations.

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

     No  matters  were  submitted  to a vote of  shareholders  during the fourth
quarter of 2001.

                                     PART II

ITEM 5.  Market for Registrant's Common Equity and Related Stockholder Matters


     There is no  established  public  trading  market for the Company's  common
stock nor for the Company's  convertible  preferred  stock.  The following table
summarizes the Company's capital stock as of December 31, 2001:

                                                      Number of Shares
Capital Stock                                    Authorized       Outstanding
-------------                                 ---------------  --------------
Convertible preferred stock...............        175,000,000       28,272,170
Preferred stock...........................         10,000,000               --
Class A common stock......................        300,000,000           26,646
Class B common stock......................         75,000,000       58,445,288
                                              ---------------  ---------------
  Total...................................        560,000,000       86,744,104
                                              ===============  ===============

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

     We intend to retain our future  earnings,  if any, to fund the  development
and  growth of our  business  and,  therefore,  do not  anticipate  paying  cash
dividends in the foreseeable future. Our future decisions concerning the payment
of  dividends  on the common  stock will depend upon our results of  operations,
financial  condition and capital expenditure plans, as well as any other factors


                                       29
<PAGE>

that the board of directors,  in its sole discretion,  may consider relevant. In
addition,  provisions of the senior  secured  credit  agreement  and  indentures
governing  the senior  discount  notes and the  senior  notes  restrict,  and we
anticipate our future  indebtedness may restrict,  our ability to pay dividends.
In September  2000, we paid a dividend  consisting of  substantially  all of the
shares of our parent, Horizon Telcom, owned by us, to our stockholders.

Recent Sales of Unregistered Securities:

     During the last three years,  the Company has sold or issued the  following
unregistered securities:

     (1)  On  April  25,  2000,  in  connection  with the  incorporation  of the
          Company,  the Company  issued one share of its class B common stock to
          Horizon Telcom,  Inc.  ("Horizon Telcom") in return for the payment of
          $100.

     (2)  On June 27, 2000, in connection with the initial capitalization of the
          Company,  the Company issued  53,806,200  shares of its class B common
          stock to Horizon Telcom in return for Horizon Telcom's contribution to
          the Company of all the issued and outstanding capital stock of Horizon
          Personal Communications, Inc.

     (3)  On June 27, 2000, in connection with the initial capitalization of the
          Company,  the Company  issued an aggregate of 4,678,800  shares of its
          class B common  stock to the  former  non-Horizon  members  of  Bright
          Personal Communication Services, LLC ("Bright PCS"), in return for the
          contribution  by the  former  members  of  approximately  70% of their
          ownership interest in Bright PCS.

     (4)  On June 27,  2000,  the Company  granted  incentive  stock  options to
          purchase  3,874,047 shares of the Company's class B common stock at an
          exercise  price of $0.1209  per  share,  and  nonqualified  options to
          purchase  322,837  shares of its class B common stock,  at an exercise
          price of $0.1209 per share.  These options were granted in replacement
          of  stock  options   which  had  been  granted  by  Horizon   Personal
          Communications,  Inc. on November 16, 1999, prior to the incorporation
          of  the   Company  as  a  holding   company   for   Horizon   Personal
          Communications, Inc. and Bright PCS.

     (5)  In  connection  with Sprint PCS' grant of the Company's new markets on
          May 19, 2000,  the Company  agreed to grant  warrants to Sprint PCS to
          acquire  2,510,460  shares of the Company's class A common stock at an
          exercise price equal to the initial  public  offering price per share.
          The warrants will expire on the 3rd  anniversary  of the completion of
          the initial public offering.

     (6)  On February 15, 2000, Horizon Personal  Communications,  Inc. borrowed
          $13  million  from First Union  Investors,  Inc.  in  connection  with
          Horizon  Personal  Communication,  Inc.'s  purchase  of  shares of the
          outstanding  common stock of Horizon  Telcom.  In connection  with the
          loan transaction,  the Company and First Union Investors, Inc., agreed
          that,  upon  the  completion  of  certain  types  of  offerings,   the
          outstanding principal amount, and accrued interest thereon,  under the
          note to First Union Investors,  Inc. would be converted into shares of
          the same class of the  Company's  capital  stock as that issued in the
          offering.  In September  2000, the First Union note was converted into
          convertible  preferred stock as part of the  transaction  described in
          item (8) below.

     (7)  On  September  8,  2000,  the  Company  effected  a 1.1697 for 1 stock
          dividend of its issued and  outstanding  class B common stock and made
          corresponding adjustments to the outstanding options and warrants.

     (8)  On September 26, 2000,  the Company  issued  26,087,237  shares of its
          convertible  preferred stock at a weighted  average  purchase price of
          $5.39 per share (consisting of 10,252,239 shares of Series A Preferred
          Stock at $5.88 per share and 15,834,998 shares of Series A-1 Preferred
          Stock at $5.07 per share).  The purchasers of the preferred  stock and
          the amount purchased are listed in the table below.

                                       30
<PAGE>

                                                         Number of Shares
     Name of Purchaser                                 Series A      Series A-1
     -----------------                              -------------  ------------
     Apollo Investment Fund IV, L.P..............       7,854,719     12,132,161
     Apollo Overseas Partners IV, L.P............         436,097        673,582
     Ares Leveraged Investment Fund, L.P.........         467,687        722,375
     Ares Leveraged Investment Fund II, L.P......         467,687        722,375
     First Union Capital Partners, L.P...........       1,026,049      1,584,505

     First Union received its convertible preferred stock upon conversion of the
     note described in item (6) above.

     (9)  On September 26, 2000,  the Company  issued  295,000  units  ("Units")
          consisting  of $295 million  principal  amount of 14% Senior  Discount
          Notes due October 1, 2010, and warrants to purchase  3,805,500  shares
          of class A common stock at an exercise  price of $5.88 per share.  The
          initial purchasers of the Units and the amount purchased are listed in
          the table below.

<TABLE>
<CAPTION>
<S>                                                                                   <C>
          Initial Purchasers                                                          Number of Units
          ------------------                                                          ---------------
          Credit Suisse First Boston Corporation  (formerly Donaldson,  Lufkin
              & Jenrette Securities Corporation)..............................                206,500
          First Union Securities, Inc.........................................                 88,500
                                                                                              -------
                Total.........................................................                295,000
                                                                                              =======
</TABLE>

          The initial  purchasers  subsequently  resold the Units to the warrant
          holders  listed at "Warrant  Holders" in the  prospectus,  in reliance
          upon Rule 144A of the Securities Act.

     (10) In May 2001 and  November  2001,  the  Company  issued  an  additional
          1,163,051 and 1,021,882 shares, respectively, of convertible preferred
          stock  as  a  dividend-in-kind  to  the  holders  of  the  outstanding
          convertible preferred stock.

     (11) In September 2001, a previous owner of Bright PCS gifted 26,646 shares
          of the Company's class B common stock.  This  transaction  resulted in
          the  conversion  of the  class B  shares  into  26,646  shares  of the
          Company's class A common stock.

     (12) On December  7, 2001,  the Company  issued $175  million in  principal
          amount  of  13.75%  Senior  Notes  due  June  15,  2011.  The  initial
          purchasers of these notes are listed in the table below.

          Initial Purchasers                                   Amount Purchased
          ------------------                                 -------------------
          Credit Suisse First Boston Corporation.............  $    87,500,000
          First Union Securities, Inc........................       52,500,000
          Bear, Stearns & Co. Inc............................       17,500,000
          Lehman Brothers Inc................................       17,500,000
                                                                    ----------
                Total........................................  $   175,000,000
                                                                   ===========

     Exemption  from the  registration  provisions of the Securities Act for the
transactions described in paragraphs (7), (10) and (11) above was claimed on the
basis that such  transaction  did not  constitute  an "offer,"  "offer to sell,"
"sale," or "offer to buy" under Section 5 of the Securities Act.  Exemption from
the  registration  provisions of the Securities  Act for the other  transactions
described  above was claimed  under Section 4(2) of the  Securities  Act and the
rules and regulations promulgated thereunder on the basis that such transactions
did not involve any public  offering,  the purchasers  were  sophisticated  with
access  to the kind of  information  registration  would  provide  and that such
purchasers acquired such securities without a view towards distribution thereof.
In addition,  exemption from the  registration  provisions of the Securities Act
for the transactions  described in paragraph 4 was claimed under Section 3(b) of
the  Securities  Act on the basis that such  securities  were sold pursuant to a
written  compensatory benefit plan or pursuant to a written contract relating to
compensation  and  not  for  capital  raising  purposes  under  Rule  701 of the
Securities Act, and exemption from the registration provisions of the Securities
Act for the  transactions  described in paragraphs (8), (9), (10) and (12) above
was claimed under Rule 144A of the Securities Act.

                                       31
<PAGE>

ITEM 6. Selected Financial Data

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

     The following tables present  selected  consolidated  historical  financial
data for Horizon PCS, as of and for the five years ended  December 31, 2001.  We
derived the balance sheet and  statements  of operations  data as of and for the
five  years  ended   December  31,  2001,  for  Horizon  PCS  from  the  audited
consolidated  financial  statements  of Horizon PCS. The  following  information
should be read together with "ITEM 7.  Management's  Discussion  and Analysis of
Financial Condition and Results of Operation," and "ITEM 8. Financial Statements
and Supplementary Data":

<TABLE>
<CAPTION>
<S>                                   <C>      <C>        <C>        <C>        <C>
                                                     Year Ended December 31,
                                             --------------------------------------
                                       1997       1998       1999       2000       2001
                                          (Dollars in thousands, except per share and
                                                          other data)
Statements of Operations Data:
Operating revenues:
  Subscriber revenues............     $    26  $     456  $   3,665  $  17,725  $  77,658
  Roaming revenues...............          --         18        642      8,408     38,540
  Equipment revenues.............         138        309        600      3,061      7,106
                                      -------  ---------  ---------  ---------  ---------
    Total revenues...............         164        783      4,907     29,194    123,304
Operating expenses:
  Cost of service (exclusive of
    items shown below)...........         683      4,404      8,204     27,452    100,516
  Cost of equipment..............         422        994      2,444      9,775     14,872
  Selling and marketing..........         992      1,440      3,475     18,026     48,993
  General and administrative
    (exclusive of items shown
    below).......................       1,344      1,852      3,944     12,477     28,384
  Non-cash compensation expense..          --         --        291        490      1,434
  Depreciation and amortization..         419      1,748      2,685      6,135     18,519
                                      -------  ---------  ---------  ---------  ---------
    Total operating expenses.....       3,860     10,438     21,043     74,355    212,718
                                      -------  ---------  ---------  ---------  ---------
      Operating loss.............      (3,696)    (9,655)   (16,136)   (45,161)   (89,414)
Gain (Loss) on exchange of stock.          --         --         --     11,551       (400)
Gain (Loss) on sale of PCS assets          --         --      1,388         --     (1,297)
Interest income and other, net...         100     (1,690)        52      4,804      5,063
Interest expense, net............        (264)      (838)    (1,529)   (10,318)   (27,434)
                                     --------- ---------  ---------  ---------  ---------
      Loss from continuing
        operations before income
        taxes....................      (3,860)   (12,183)   (16,225)   (39,124)  (113,482)
Income tax benefit (expense).....       1,308      4,145      5,275     (1,075)        --
                                      -------  ---------  ---------  ---------  ---------
      Loss from continuing
        operations...............      (2,552)    (8,038)   (10,950)   (40,199)  (113,482)
Preferred stock dividend.........          --         --         --     (2,782)   (10,930)
      Loss from continuing
        operations available
        to common stockholders...     $(2,552) $  (8,038) $ (10,950) $ (42,981) $(124,412)
                                      =======  =========  =========  =========  =========

 Basic and diluted loss per share
  from continuing operations         $  (0.05) $   (0.15) $   (0.20) $   (0.76) $   (2.13)
 Basic and diluted loss per share
  available to common
  stockholders                       $  (0.06) $   (0.15) $   (0.20) $   (0.77) $   (2.13)
</TABLE>



                                       32
<PAGE>
<TABLE>
<CAPTION>
<S>                                   <C>      <C>        <C>        <C>        <C>
                                                     Year Ended December 31,
                                             --------------------------------------
                                       1997       1998       1999       2000       2001
                                          (Dollars in thousands, except per share and
                                                          other data)
Balance Sheet Data:
Cash and cash equivalents........    $    200  $      27   $    147  $ 191,417  $ 123,776
Total property and equipment, net      14,996     17,880     22,894    109,702    214,868
Total assets.....................      33,328     26,862     32,879    385,295    481,338
Long-term debt...................      16,611     21,180     24,590    185,283    384,056
Total liabilities................      29,094     24,919     35,042    238,300    447,957
Convertible preferred stock......          --         --         --    134,422    145,349
Total stockholders' equity
  (deficit)......................       4,234      1,943     (2,163)    12,573   (111,967)

Other Data:
Number of PCS subscribers(1).....         300      2,100     13,700     66,400    194,100
Total population in our markets
  (millions).....................         0.1        1.6        4.9       10.2       10.2
ARPU (including roaming)(2)......          NM  $      46  $      64  $      75  $      83
ARPU (excluding roaming)(2)......          NM         44         55         51         56
</TABLE>

----------
(1)  Represents  the  approximate  number of PCS  subscribers at the end of each
     period.
(2)  Represents average monthly revenue per unit  (subscriber).  For more detail
     on how ARPU is computed, see "ITEM 7. Management's  Discussion and Analysis
     of Financial Condition and Results of Operation."

ITEM 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operation

Results of Operation

     Service revenues consist primarily of PCS subscriber  revenues,  Sprint PCS
roaming revenues and non-Sprint PCS roaming  revenues.  PCS subscriber  revenues
consist  primarily  of  monthly  service  fees and other  charges  billed to our
customers  for Sprint PCS  service in our  territory  under a variety of service
plans.  We receive Sprint PCS roaming  revenues at a per minute rate from Sprint
PCS or another Sprint PCS affiliate when Sprint PCS subscribers based outside of
our territory use our portion of the Sprint PCS network.  Non-Sprint PCS roaming
revenues  include payments from wireless  service  providers,  other than Sprint
PCS, when those providers' subscribers roam on our network.

     We record 100% of PCS subscriber  revenues from our  customers,  Sprint PCS
roaming  revenues  from  Sprint PCS  subscribers  based  outside our markets and
non-Sprint PCS roaming revenues.  Sprint PCS retains 8% of all collected service
revenues.  Collected  service  revenues  include  PCS  subscriber  revenues  and
non-Sprint PCS roaming  revenues,  but exclude  Sprint PCS roaming  revenues and
revenues from sales of equipment.  We report the amounts  retained by Sprint PCS
as general and administrative expenses.

     Equipment  revenues  consist of digital  handsets and  accessories  sold to
customers in our territory through our directly owned channels.

     The following table sets forth a breakdown of our revenues by type.
<TABLE>
<CAPTION>
<S>                                      <C>         <C>         <C>         <C>         <C>        <C>

                                                            For the Years Ended December 31,
(Dollars in thousands, except ARPU)               2001                   2000                   1999
                                         ----------------------- ---------------------- ---------------------
                                           Amount          %        Amount         %       Amount       %
                                         ----------  ----------- ----------- ---------- ----------  ---------
Subscriber revenues......................$   77,658       63%    $  17,725          61% $    3,665        75%
Roaming revenues.........................    38,540       31%        8,408          29%        642        13%
Equipment revenues.......................     7,106        6%        3,061          10%        600        12%
                                         ----------  ----------- ----------- ---------- ----------  ---------
  Total revenues.........................$  123,304      100%    $  29,194         100% $    4,907       100%
                                         ==========  =========== =========== ========== ==========  =========
ARPU including roaming (1)...............$       83              $      75              $       64
ARPU excluding roaming (1)...............        56                     51                      55
</TABLE>
-----------
(1)  ARPU, average revenue per unit, is an industry term that measures total PCS
     service  revenues  per month from our  subscribers  divided by the  average
     number of digital  subscribers for that month. ARPU (including  roaming) is
     ARPU with Sprint PCS roaming and  non-Sprint PCS roaming.  ARPU  (excluding
     roaming) excludes Sprint PCS roaming and non-Sprint PCS roaming.

                                       33
<PAGE>

Year Ended December 31, 2001, Compared to Year Ended December 31, 2000

     Subscriber  revenues.  Subscriber  revenues for the year ended December 31,
2001, were $77.7 million,  compared to $17.7 million for the year ended December
31, 2000, an increase of $60.0  million.  The growth in  subscriber  revenues is
primarily   the  result  of  the  growth  in  our  customer   base.  We  managed
approximately  194,100 customers at December 31, 2001, compared to approximately
66,400 at  December  31,  2000.  Our  customer  base has grown  because  we have
launched  additional  markets and  increased  our sales  force.  ARPU  excluding
roaming  increased  in 2001 to $56 from $51 in 2000,  primarily  as a result  of
increased  minutes  of use by our  customers.  As  our  customers  exceed  their
allotted plan minutes, they incur additional charges for their usage.

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

     On April 27, 2001, Sprint PCS and its affiliates  announced an agreement on
a new Sprint PCS roaming rate; the receivable and payable roaming rate decreased
from $0.20 per minute to $0.15 per minute  effective June 1, 2001, and decreased
further to $0.12 per minute  effective  October 1, 2001.  The Sprint PCS roaming
rate will be changed to  approximately  $0.10 in 2002. After 2002, the rate will
be changed to "a fair and reasonable return," which has not yet been determined.
This decrease in the rate will reduce our revenue and expense per minute, but we
anticipate  this rate  reduction  will be offset  by volume  increases  from the
continued  build-out of our network and subscriber growth,  resulting in greater
overall roaming revenue and expense in the future.

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

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

     Also  included  in cost of service  are costs  incurred  under our  network
services agreement with the Alliances. In the third quarter of 2001, Horizon PCS
negotiated  an  amendment  to its  agreement  with the  Alliances  and a related
amendment to its Sprint PCS agreements.  Under the Alliances amendment,  Horizon
PCS is  obligated  to pay a minimum  monthly  fee for a stated  minimum  period.
Horizon PCS expects to incur lower  overall fees under this new  arrangement  at
expected usage levels as compared to the previous  agreement that was based on a
per minute fee. The  Alliances are also  obligated to upgrade their  networks to
provide 3G technology.  In connection  with this  amendment,  the Alliances have
agreed with  Sprint PCS to modify  their  networks to cause  Sprint PCS to be in
compliance with the FCC's  construction  requirements for PCS networks.  Horizon
PCS would be  responsible  for  completion of the network  modifications  if the
Alliances fail to comply.

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

                                       34
<PAGE>

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

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

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

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

     Non-cash  compensation  expense.  For the year ended  December 31, 2001 and
2000, we recorded stock-based compensation expense of approximately $1.4 million
and $490,000,  respectively.  The $1.4 million includes  approximately  $725,000
related to the distribution of 7,249 shares of Horizon Telcom stock to employees
of Horizon PCS and  approximately  $709,000 for certain stock options granted in
November 1999.  Stock-based  compensation expense will continue to be recognized
through the  conclusion  of the vesting  period for these  options in 2005.  The
annual non-cash  compensation  expense expected to be recognized for these stock
options is approximately  $681,000 in 2002,  $622,000 in 2003, $193,000 in 2004,
and $71,000 in 2005.

     Depreciation  and  amortization  expense.   Depreciation  and  amortization
expenses  increased by $12.4  million to a total of $18.5  million in 2001.  The
increase  reflects  the  continuing  construction  of our  network  as we funded
approximately  $116.6 million of capital  expenditures during 2001. In addition,
because  our  acquisition  of  Bright  PCS  was  accounted  for  as  a  purchase
transaction,  amortization  has increased as a result of amortizing  the related
goodwill and intangible assets. Amortization expense of the intangible asset was
$1.7 million and $868,000 during 2001 and 2000,  respectively.  Related goodwill
amortization was $389,000 and $198,000 in 2001 and 2000, respectively.  Goodwill
amortization  will cease as of December 31, 2001,  with the adoption of SFAS No.
142. See "Recent Accounting Pronouncements" below.

                                       35
<PAGE>

     Amortization  expense also includes  amortization  of an  intangible  asset
recorded in September  2000  related to the new markets  granted to us by Sprint
PCS in September 2000. We agreed to grant warrants to Sprint PCS in exchange for
the right to provide service in additional markets.  The warrants will be issued
to Sprint PCS at the  earlier of an initial  public  offering  of the  Company's
common stock or July 31, 2003. The intangible  asset is being amortized over the
remaining term of the Sprint PCS management agreement,  resulting in $752,000 of
amortization  expense per year.  Amortization expense related to this intangible
asset was  approximately  $752,000 and $188,000 for the years ended December 31,
2001 and 2000, respectively.

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

     Gain (Loss) on disposal of PCS assets.  During 2001,  we incurred a loss of
approximately  $1.3  million  related to the upgrade of network  equipment to 3G
technology.  The loss  represents the net book value of the assets  disposed of,
less proceeds received for the equipment. We expect to incur additional expenses
in 2002 as we continue to upgrade our network.

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

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

     We are required,  and we expect,  to borrow an additional $105.0 million by
March 26, 2002,  under the terms of the secured  credit  facility.  The interest
rate on the tranche that must be drawn by March 26, 2002, will be LIBOR plus 375
basis points (5.66% at December 31, 2001).

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

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

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

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


                                       36
<PAGE>

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

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

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

     Loss on continuing  operations.  Our loss on continuing  operations for the
year ended December 31, 2001,  was $113.5 million  compared to $40.2 million for
the year  ended  December  31,  2000.  The  increase  in our loss  reflects  the
continued  expenses  related to launching  our markets and building our customer
base.  We  expect  to  incur  significant   operating  losses  and  to  generate
significant  negative cash flow from operating  activities  while we continue to
construct our network and increase our customer base.

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

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

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

     Other comprehensive income (loss). In the first quarter of 2001, we entered
into a two-year interest rate swap, effectively fixing $25.0 million of our term
loan borrowed under the secured credit  facility at a rate of 9.4%. In the third
quarter  of  2001,  we  entered  into  another  two-year   interest  rate  swap,
effectively  fixing the remaining  $25.0 million of our term loan borrowed under
the secured credit facility at 7.65%. Other  comprehensive  income may fluctuate
based on changes in the fair value of the swap instrument.  Other  comprehensive
loss of approximately  $838,000 and an other expense of  approximately  $176,000
were recorded for the year ended  December 31, 2001. We do not expect the effect
of these swaps to have a material  impact to interest  expense for the remainder
of their lives.

Year Ended December 31, 2000, Compared to Year Ended December 31, 1999

     Subscriber  revenues.  Subscriber  revenues for the year ended December 31,
2000,  were $17.7 million,  compared to $3.7 million for the year ended December
31, 1999, an increase of $14.0  million.  The growth in  subscriber  revenues is
primarily   the  result  of  the  growth  in  our  customer   base.  We  managed
approximately  66,400 customers at December 31, 2000,  compared to approximately
13,700 at December 31, 1999.  We believe our customer  base has grown because we
have  launched  additional  markets,  increased  our  sales  force  and  are now
marketing under the Sprint PCS brand rather than our own.

                                       37
<PAGE>

     Roaming  revenues.  Roaming  revenues  increased from $642,000 for the year
ended  December 31, 1999, to $8.4 million for the year ended  December 31, 2000,
an increase of $7.8 million. This increase primarily resulted from the launch of
portions of our network  covering two heavily  traveled  interstate  highways in
western  Virginia  in the fourth  quarter of 1999,  as well as our launch of our
northwest Ohio and northern Indiana markets in the fourth quarter of 2000.

     ARPU  excluding  roaming and travel  decreased from the year ended December
31, 1999,  to the year ended  December  31,  2000,  primarily as a result of the
change in the mix of the packages our subscribers have selected. Our subscribers
have selected  packages with lower monthly  recurring  charges made available to
our subscribers as a result of our seasonal  promotions.  The decrease caused by
the change in the mix of packages  was  partially  offset by the increase in the
charges to our  subscribers  for  minute  sensitive  usage  (long  distance  and
overage)  and the growth in our  Sprint PCS  roaming  revenues.  ARPU  including
roaming and travel increased in the year ended December 31, 1999, as compared to
the same  period in 2000,  as a result of the  increase in travel  revenue  from
customers other than our own on our network.

     Equipment revenues.  Equipment revenues consist of handsets and accessories
sold to customers. Equipment revenues for the year ended December 31, 2000, were
$3.1  million,  compared to $600,000 for the year ended  December  31, 1999,  an
increase of $2.5  million.  The increase in equipment  revenues is the result of
our increase in customers.

     Cost of service.  Cost of service for the year ended December 31, 2000, was
$27.5 million, compared to $8.2 million for the year ended December 31, 1999, an
increase of $19.3 million.  This increase  reflects the increase in roaming fees
of $5.8  million,  the  increase in costs  incurred  under our network  services
agreement with the Alliances of $6.7 million,  $1.5 million of additional  costs
for rent expense for the  additional  towers  leased,  additional  customer care
support of $2.7  million  and $2.6  million of network  operational  and payroll
expenses.

     Cost of equipment.  Cost of equipment for the year ended December 31, 2000,
was $9.8 million, compared to $2.4 million for the year ended December 31, 1999,
an increase of $7.4 million. The increase in the cost of equipment is the result
of the growth in our wireless customers, partially offset by the decreasing unit
cost of the  handsets.  For  competitive  and  marketing  reasons,  we have sold
handsets to our customers below our cost and expect to continue to sell handsets
at a price below our cost for the foreseeable future.

     Selling and marketing  expenses.  Selling and marketing expenses consist of
costs  associated  with  operating our 16 retail  stores,  including  marketing,
advertising,  payroll, and sales commissions. Selling and marketing expense also
includes  commissions  paid to  national  and  local  third  party  distribution
channels  and  subsidies on handsets  sold by third  parties for which we do not
record  revenue.  Selling and  marketing  expenses rose to $18.0 million for the
year ended  December 31,  2000,  compared to $3.5 million for the same period in
1999, an increase of $14.5 million.  This increase  reflects the increase in the
costs of  operating  our 16  retail  stores of $7.7  million,  the  increase  in
subsidies on handsets sold by third parties of $4.0 million, and the increase in
commissions paid to third parties of $2.8 million.

     General and administrative  expenses.  General and administrative  expenses
rose to $12.5  million for the year ended  December 31,  2000,  compared to $3.9
million for the same period in 1999, an increase of $8.6 million.  This increase
reflects  the 8% fee  paid to  Sprint  PCS on our  increased  collected  service
revenues of $1.2  million,  increased  headcount  and  professional  services at
Horizon  Services  needed  to  support  our  growth of $3.6  million,  increased
building and maintenance  expenses of $1.4 million,  consulting,  legal and bank
fees of $900,000,  an increase in the  provision  for doubtful  accounts of $1.0
million, and increased other general expenses of $500,000.

     Non-cash  compensation  expense.  For the years ended December 31, 2000 and
1999,  we recorded  stock-based  compensation  expense of $490,000 and $291,000,
respectively,  for certain stock options  granted in November 1999.  Stock-based
compensation  expense will continue to be recognized  through the  conclusion of
the vesting period for these options in 2005. The annual  non-cash  compensation
expense expected to be recognized is approximately $709,000 in 2001, $681,000 in
2002, $622,000 in 2003, $193,000 in 2004, and $71,000 in 2005.

                                       38
<PAGE>

     Depreciation  and  amortization  expenses.  Depreciation  and  amortization
expenses  increased  by $3.4  million to a total of $6.1  million  in 2000.  The
increase  reflects  the  continuing  construction  of our  network.  Because our
acquisition  of  Bright  PCS  was  accounted  for  as  a  purchase  transaction,
amortization  will increase as a result of amortizing  the related  goodwill and
intangible  assets.  Amortization  expense of the intangible  asset was $868,000
during 2000.  Related goodwill  amortization was $198,000 during 2000.  Goodwill
amortization  will cease as of December 31, 2001,  with the adoption of SFAS No.
142. The Company has not  determined  the financial  impact the adoption of SFAS
No. 142 will have on its financial position or results of operations.

     At September 30, 2000, we recorded an intangible asset of $13.4 million for
the value of warrants we agreed to grant to Sprint in exchange  for the right to
provide service in additional  markets.  This intangible asset will be amortized
over the remaining  term of the Sprint PCS  management  agreement,  resulting in
$752,000 of amortization  expense per year.  Amortization expense related to the
intangible  asset was  approximately  $188,000  for the year ended  December 31,
2000.

     Gain on exchange of stock.  We transferred  40% of our Horizon Telcom stock
to the  former  members  of  Bright  PCS as  part of the  consideration  for the
acquisition of Bright PCS. This transaction resulted in a gain of $10.5 million.
In addition,  in September  2000,  10% of the 12% of the stock of Horizon Telcom
was  distributed to the  shareholders  in the form of a dividend.  To the extent
that the dividend was paid to shareholders other than Horizon Telcom, a non-cash
gain of $1.0 million was recognized.

     Interest  income and other,  net.  Other income  (expense) in 2000 was $4.8
million and consisted primarily of interest income of approximately $4.2 million
and dividend  income of  approximately  $600,000.  Interest income was generated
from cash proceeds  from our private  equity sales,  senior  discount  notes and
drawings under the senior secured  credit  facility,  all completed on September
26,  2000.  The  proceeds  were  invested in short term  accounts  waiting to be
deployed.  As capital  expenditures  are made to complete  the  build-out of our
network,  decreasing  cash balances may result in lower daily interest income in
the future.

     Interest  expense,  net.  Interest  expense for the year ended December 31,
2000,  was $10.3  million,  compared to $1.5  million in 1999.  The  increase in
interest  expense is the result of our additional  debt  outstanding  during the
year ended  December 31, 2000,  compared to the same period in 1999. We incurred
approximately  $2.0 million from the senior secured credit facility entered into
in September, 2000. Interest on our senior credit facility accrues at LIBOR plus
our  specified  margin  (approximately  10.6% at December 31,  2000).  We accrue
interest at a rate of 14% per annum on our senior discount notes through October
1,  2005  and will  pay  interest  semi-annually  in cash  thereafter.  Non-cash
interest expense also included the amortized  amount of deferred  financing fees
related to our senior secured credit  facility,  our senior discount notes,  and
the  accretion  of our  warrants  related to the senior  discount  notes.  Total
non-cash interest expense for the year ended December 31, 2000, was $6.5 million
compared to $4,700 for the same period in 1999.  In addition,  the $13.0 million
short-term convertible note issued to obtain funds used to purchase common stock
of Horizon Telcom  resulted in an increase in interest  expense of $1.1 million.
We expect our interest  expense to increase in the future as we borrow under our
senior  secured  credit  facility to fund our network  build-out  and  operating
losses.

     Income tax (expense) benefit. Until September 26, 2000, we were included in
the  consolidated  Federal income tax return of Horizon Telcom.  We provided for
Federal  income  taxes  on a pro  rata  basis,  consistent  with a  consolidated
tax-sharing  agreement.  As a result  of the sale of the  convertible  preferred
stock  on  September  26,  2000,  we  will  not be able  to  participate  in the
tax-sharing  agreement nor will we be able to recognize  any net operating  loss
benefits until we generate  taxable  income.  Thus, we filed a separate  Federal
income tax return for the short period after  deconsolidation  through  December
31, 2000, and will file a separate return for all subsequent periods.

     We  recorded  an income tax  expense  from  continuing  operations  of $1.1
million for the year.  This expense was primarily a result of the recognition of
an excess loss account on the deconsolidation from the Horizon Telcom affiliated
group,  reduced by the  benefit of the  carryback  net  operating  losses and an
increase in the valuation allowance.

     We  generated a tax of $4.3  million on a stock  dividend of 10% of Horizon
Telcom  stock held by us to Horizon  Telcom.  The tax on the stock  dividend was
charged directly to equity and not recorded as an income tax expense.

                                       39
<PAGE>

     Loss from continuing  operations.  Our loss from continuing  operations for
the year ended  December 31, 2000,  was $40.2 million  compared to $11.0 million
for the year ended  December  31, 1999.  The  increase in our loss  reflects the
continued  expenses  related to launching  our markets and building our customer
base partially offset by the $11.6 million gain on exchange of stock.

     Discontinued  operations.  In April 2000, we transferred our Internet, long
distance and other  businesses  unrelated to PCS wireless  operations to Horizon
Technology  (formerly United  Communications),  a separate subsidiary of Horizon
Telcom,  at net book value.  Accordingly,  the results of  operations  for these
business units have been reported as discontinued  operations in the current and
prior periods.  Income from  discontinued  operations,  net of tax expense,  was
$141,000 for the year ended  December 31, 2000,  and $282,000 for the year ended
December 31, 1999.

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

     Preferred  stock  dividend.  Our  convertible  preferred stock pays a stock
dividend at the rate of 7.5% per annum, payable  semi-annually  commencing April
30. For the year ended  December  31,  2000,  we recorded the accrual of a stock
dividend payable in additional stock of $2.8 million.

Liquidity and Capital Resources

     Before  September  26, 2000,  we financed  our  operations  through  equity
contributions  from Horizon  Telcom and through debt  financing  provided by the
Rural Telephone Finance  Cooperative (RTFC). To that date, we had received $21.2
million of equity  contributions from Horizon Telcom consisting of $18.7 million
in cash  contributions  and $2.5  million  in  property  contributions.  Horizon
Telcom's equity contribution during 1999 consisted of a contribution of property
of $2.5 million and $3.7  million in cash  contributions.  Of this amount,  $2.0
million  was  funded by  Horizon  Telcom's  sale of towers  to SBA.  The  equity
contributions for the year ended December 31, 2000, consisted of $1.4 million in
cash contributions.  There were no equity  contributions from Horizon Telcom for
the year ended December 31, 2001.

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

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

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

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

                                       40
<PAGE>

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

     The $50.0  million  tranche was drawn on  September  26,  2000,  and had an
interest rate of 6.16% at December 31, 2001. We are required,  and we expect, to
draw the remaining  $105.0 million  tranche by March 26, 2002. The interest rate
on the $105.0 million tranche, which had not been drawn as of December 31, 2001,
was 5.66% at December 31, 2001.

     On June 29,  2001,  and December 7, 2001,  the Company  amended its secured
credit facility with the bank group.  These  modifications  amended and restated
certain financial covenants,  including EBITDA (earnings before interest, taxes,
depreciation and amortization),  revenue  thresholds and imposed  limitations on
capital  expenditures.  The June 2001 amendment also increased the base interest
rate by 25 basis points to LIBOR plus 375 to 425 basis points.

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

     During the year ended  December 31, 2000, we borrowed  $13.0 million in the
form of a  short-term  convertible  note to purchase  19.78% of the  outstanding
capital  stock of Horizon  Telcom.  The $14.1  million  total of  principal  and
accrued  interest  on this  note  was  converted  into  2.6  million  shares  of
convertible  preferred  stock on September  26, 2000.  In May 2000, we exchanged
31,912  shares of Horizon  Telcom  common  stock,  which we acquired in February
2000,  along with 4.7 million  newly issued  shares of our class B common stock,
for the  remaining  74%  ownership  interest  in  Bright  PCS  which  we did not
previously own.

     The  following  table  summarizes   contractual   principal  maturities  of
long-term debt outstanding (which is recorded net of unaccreted  interest on the
balance sheet) and minimum  payments  required under operating  leases and other
long-term commitments as of December 31, 2001:
<TABLE>
<CAPTION>
<S>                              <C>              <C>             <C>              <C>
                                                                      Alliances
                                     Long-Term       Operating         Network
Year                                   Debt           Leases          Agreement         Total
----                             ---------------  --------------- ---------------  ---------------
2002........................     $            --  $   12,551,000  $    27,400,000  $    39,951,000
2003........................                  --      12,614,000       38,600,000       51,214,000
2004........................             375,000      11,974,000               --       12,349,000
2005........................             500,000       9,351,000               --        9,851,000
2006........................             500,000       4,873,000               --        5,373,000
Thereafter..................         518,625,000       9,102,000               --      527,727,000
                                 ---------------  --------------- ---------------  ---------------
   Total....................     $   520,000,000  $   60,465,000  $    66,000,000  $   646,465,000
                                 ===============  ==============  ===============  ===============
</TABLE>

     At December 31, 2001, we had cash and cash  equivalents  of $123.8  million
and working  capital of $117.0  million.  At December 31, 2000,  we had cash and
cash  equivalents of $191.4 million and working capital of $162.4  million.  The
decrease in cash and cash equivalents of $67.6 million is primarily attributable
to funding our loss from  continuing  operations  of $113.5  million  (this loss
includes  certain  non-cash  charges)  and funding our capital  expenditures  of
$116.6 million during 2001.

     Net cash used in operating activities for the year ended December 31, 2001,
was $72.9  million.  This reflects the continuing use of cash for our operations
to build our customer  base,  including but not limited to providing  service in
our  markets  and the costs of  acquiring  new  customers.  For the years  ended
December  31,  2001 and  2000,  our  cost  per  gross  additional  customer  was
approximately  $339 and $373,  respectively.  The net loss of $113.5 million was
partially offset by increases to depreciation and other non-cash charges.

     Net cash used in investing activities for the year ended December 31, 2001,
was $162.3  million.  Our  capital  expenditures  for that  period  were  $116.6
million,  reflecting  the continuing  build-out of our network.  At December 31,
2001, we operated  approximately 604 cell sites in our network.  This represents
an addition of approximately 301 sites during 2001. In addition to the sites, we
have  increased  the number of  switching  stations  in our  territory  and have


                                       41
<PAGE>

increased  our  number  of  retail  stores  from  16 at the end of 2000 to 38 at
December 31, 2001. We will incur additional capital  expenditures as we complete
the build-out of our network,  including the launch of additional retail stores,
completing  additional  cell sites and  expanding  capacity  at our  switches as
needed. The investment of restricted cash of $48.7 million relates to the escrow
funds required by the terms of the senior notes discussed above.

     Net cash provided by financing  activities  for the year ended December 31,
2001, was $167.6 million consisting  primarily of the December 2001 senior notes
offering ($175.0 million).  We paid approximately $7.4 million of financing fees
related to both the  senior  notes  offering  and the  amendments  to the senior
secured credit facility on June 29, 2001, and December 7, 2001.

     At December 31, 2001, we had $200.0 million  available to be borrowed under
our senior secured  credit  facility.  We anticipate  that our existing cash and
available  borrowings under our secured credit facility will be adequate to fund
our  network  build-out,   anticipated  operating  losses  and  working  capital
requirements  until  we  achieve  positive  earnings  before  interest,   taxes,
depreciation and  amortization,  which we expect to achieve in the third quarter
of 2003. We expect that our future  funding  needs,  including  our  anticipated
funding needs over the next 12 months, will be satisfied by our existing working
capital and borrowings  under our senior secured  credit  facility.  These funds
will be used for capital  expenditures and to fund working capital and operating
losses.

     From January 1, 2002, to December 31, 2002, we anticipate  that our funding
needs requirements will be approximately  $140.0 million, of which approximately
$60 million to $70 million will be used for capital expenditures;  the remainder
will be utilized  primarily to fund working  capital and operating  losses.  The
actual funds  required to build-out  our network and to fund  operating  losses,
working  capital needs and other capital  needs may vary  materially  from these
estimates and  additional  funds may be required  because of unforeseen  delays,
cost overruns,  unanticipated expenses,  regulatory changes,  engineering design
changes and required technological upgrades and other technological risks

     Other  future  cash  expenditures  that may require  additional  borrowings
include:

     o    expanding  the  coverage  within  our  existing  operating  markets or
          improving call quality with fill-in coverage;

     o    opening  additional  retail  stores,  beyond  our  current  plan of 50
          stores;

     o    mergers  or  acquisitions  of other  Sprint  PCS  affiliates  or other
          compatible PCS carriers

     o    the grant to us by Sprint PCS of  additional  markets under our Sprint
          PCS agreements; and/or

     o    expanding our network, if economically justifiable,  by exercising our
          right to build our own network in our markets which are covered by our
          network services  agreement with the Alliances under the terms of that
          amended agreement.

     If we are  unable to obtain any  necessary  additional  funding  and we are
unable to complete our network  build-out,  this may result in a termination  of
our Sprint PCS agreement; we will no longer be able to offer Sprint PCS products
and services.  In this event,  Sprint PCS may purchase our  operating  assets or
capital  stock for 72% of the entire  business  value.  Also,  any delays in our
build-out may result in penalties under our Sprint PCS agreement, as amended.

     The Company has significant  related party  transactions that are described
under "ITEM 13. Certain Relationships and Related Transactions."

Regulatory Developments

     See "Regulation of the Wireless Telecommunications Industry" under "ITEM 1.
Business" for a discussion of regulatory  developments  that could have a future
impact on the Company.

                                       42
<PAGE>

Seasonality

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

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

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

     o    competitive pricing pressures; and

     o    aggressive marketing and promotions.

Inflation

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

Recent Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No.  141,  "Business  Combinations"  and  SFAS  No.  142,  "Goodwill  and  Other
Intangible Assets".  SFAS No. 141 addresses  financial  accounting and reporting
for all  business  combinations  and  requires  that all  business  combinations
entered into subsequent to June 2001 be recorded under the purchase method. This
statement  also  addresses  financial  accounting and reporting for goodwill and
other intangible assets acquired in a business combination at acquisition.  SFAS
No. 142 addresses  financial  accounting  and reporting  for  intangible  assets
acquired  individually  or with a group of other  assets  at  acquisition.  This
statement  also  addresses  financial  accounting and reporting for goodwill and
other intangible assets subsequent to their acquisition.

     These  statements  will be  adopted  by the  Company  on  January  1, 2002.
Goodwill  amortization  will cease as of December 31, 2001, and the Company will
be required to complete an  impairment  test of the remaining  goodwill  balance
annually (or more frequently if impairment  indicators  arise).  The Company has
not yet  determined  the financial  impact the adoption of these  pronouncements
will have on its financial position or results of operations. As of December 31,
2001, the Company has goodwill of approximately  $7,191,000,  net of accumulated
amortization,   related  to  the   acquisition  of  Bright  PCS  and  recognized
approximately  $389,000 of  amortization  expense  during 2001. The valuation of
this goodwill will be subject to an impairment test at the date of adoption. The
Company  will  complete the first step of the  impairment  test by June 30, 2002
and, if necessary, will complete the second step by December 31, 2002.

    In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations". This statement addresses financial accounting and reporting for
obligations associated with the retirements of tangible long-lived assets and
the associated asset retirement costs. It applies to legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development and (or) the normal operation of a
long-lived asset. The Company will adopt this statement effective January 1,
2003. The adoption is not expected to have a material effect on the Company's
financial position, results of operations or cash flows.

     In  August  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived  Assets".  SFAS No. 144 addresses financial
accounting and reporting for the impairment of long-lived  assets. The statement
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for  Long-Lived  Assets to Be Disposed  Of", and the  accounting  and  reporting
provisions of APB Opinion No. 30. SFAS No. 144 removes  goodwill from its scope,
as goodwill is addressed in the impairment  test described  above under SFAS No.
142. The Company will adopt SFAS No. 144 on January 1, 2002. The adoption is not
expected to have a material effect on the Company's financial position,  results
of operations or cash flows.

                                       43
<PAGE>

                                  RISK FACTORS

We have not had any  profitable  years in the past  five  years,  and we may not
achieve or sustain operating  profitability or positive cash flow from operating
activities.

     We expect to incur significant operating losses and to generate significant
negative  cash flow from  operating  activities  until 2003 while we continue to
construct  our network and grow our customer  base.  We have already  incurred a
total of  approximately  $201.3 million in losses through December 31, 2001. Our
operating profitability will depend upon many factors,  including our ability to
market  our  services,  achieve  our  projected  market  penetration  and manage
customer   turnover  rates.  If  we  do  not  achieve  and  maintain   operating
profitability  and  positive  cash flow from  operating  activities  on a timely
basis, we may not be able to meet our debt service requirements.

If we fail to complete the  build-out of our network,  Sprint PCS may  terminate
the Sprint PCS  agreements,  and we would no longer be able to offer  Sprint PCS
products and services from which we generate substantially all our revenues.

     Our long-term affiliation  agreements with Sprint PCS, which we refer to as
the Sprint PCS  agreements,  require us to build and  operate the portion of the
Sprint PCS  network  located in our  territory  in  accordance  with Sprint PCS'
technical specifications and coverage requirements.  The agreements also require
us to provide  minimum  network  coverage to the  population  within each of the
markets which make up our territory by specified  dates.  Under the terms of our
Sprint PCS  agreements,  we are  required  to  provide  additional  coverage  in
specified markets by April 28, 2002.

     We did not launch  all of our  Bright PCS  markets by the date set forth in
the Sprint PCS agreements.  We were unable to obtain the required  backhaul from
local  exchange  carriers by that date,  despite using  commercially  reasonable
efforts.  We have  subsequently  obtained  the  required  backhaul  services and
launched  these  markets  and  Sprint  PCS  agreed  in  writing  that  we are in
compliance with the build-out requirements in these markets.

     Under our original Sprint PCS agreements,  we were required to complete the
build-out in several of our markets in Pennsylvania and New York by December 31,
2000.  Sprint PCS and HPC agreed to an amendment of the build-out  requirements,
which extended the dates by which we were to launch coverage in several markets.
The amended Sprint PCS agreement  provides for monetary  penalties to be paid by
us if coverage is not launched by these specified contract dates. The amounts of
the penalties range from $16,500 to $602,000 for each shortfall depending on the
market  and  length  of delay  (up to 180 days) in  launch,  and in some  cases,
whether the shortfall  relates to an initial  launch in the market or completion
of the  remaining  build-out.  The  penalties  must be paid in cash,  or if both
Horizon PCS and Sprint PCS agree, in shares of Horizon PCS capital stock.

     Under the amended Sprint PCS agreement,  portions of the New York, Sunbury,
Williamsport,  Oil City, Dubois,  Erie,  Meadville,  Sharon,  Olean,  Jamestown,
Scranton,  State College,  Stroudsburg,  Allentown and  Pottsville  markets were
required to be  completed  and  launched by October 31,  2001.  Although we have
launched service in portions of each of these markets, we have not completed all
of the build-out  requirements.  We notified Sprint PCS in November 2001 that it
is our  position  that the  reasons  for the delay  constitute  events of "force
majeure" as described in the Sprint PCS  agreements and that,  consequently,  no
monetary  penalties or other remedies  would be  applicable.  The delay has been
primarily caused due to delays in obtaining the required  backhaul services from
local  exchange  carriers  and  zoning  and other  approvals  from  governmental
authorities.  On January 30, 2002,  Sprint PCS notified us that,  as a result of
these force  majeure  events,  it does not consider  our buildout  delay to be a
breach  of  the  Sprint  PCS  agreement.  We  have  agreed  to  continue  to use
commercially  reasonable efforts to reach buildout completion by either June 30,
2002 (for most of the  affected  markets)  or April 30, 2002 (for a few of these
markets).

     We will  require  additional  expenditures  of  significant  funds  for the
continued development,  construction,  testing,  deployment and operation of our
network.  These  activities  are  expected to place  significant  demands on our
managerial, operational and financial resources. A failure to meet our build-out
requirements  for  any  of  our  markets,  or  to  meet  Sprint  PCS'  technical
requirements,  would constitute a breach of the Sprint PCS agreements that could


                                       44
<PAGE>

lead to their  termination  if not cured within the applicable  cure period.  If
Sprint  PCS  terminates  these  agreements,  we will no  longer be able to offer
Sprint PCS products and services. See "The Sprint PCS Agreements" under "ITEM 1.
Business" included herein.

Our substantial  indebtedness  could adversely  affect our financial  health and
prevent us from fulfilling our long-term debt obligations.

     As of December 31, 2001,  our total debt  outstanding  was $520.0  million,
comprised of $50.0 million  borrowed under our secured credit  facility,  $175.0
million due under our senior  notes issued in December  2001 and $295.0  million
represented  by our discount  notes (which are reported on our balance  sheet at
December  31,  2001,  net of a discount of  approximately  $135.9  million).  In
addition,  we are required  and intend to borrow an  additional  $105.0  million
under our senior secured credit facility by March 26, 2002.

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

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

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

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

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

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

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

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

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

To service our indebtedness,  we will require a significant  amount of cash. Our
ability to generate cash depends on many factors beyond our control.

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

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

If we fail to pay our debt,  our lenders may sell our loans to Sprint PCS giving
Sprint PCS the rights of a creditor to foreclose on our assets.

     If the lenders  accelerate  the amounts due under our senior secured credit
facility,  Sprint  PCS has the right to  purchase  our  obligations  under  that
facility and become a senior  lender.  To the extent Sprint PCS purchases  these
obligations,  Sprint PCS'  interests  as a creditor  could  conflict  with ours.


                                       45
<PAGE>

Sprint PCS' rights as a senior  lender would  enable it to exercise  rights with
respect to our assets and Sprint PCS'  continuing  relationship  in a manner not
otherwise permitted under the Sprint PCS agreements.

If Sprint PCS terminates the Sprint PCS  agreements,  the buy-out  provisions of
those agreements may diminish the valuation of our company.

     Provisions  of the Sprint PCS  agreements  could affect our  valuation  and
decrease our ability to raise additional capital. If Sprint PCS terminates these
agreements,  Sprint PCS may purchase our  operating  assets or capital stock for
80% of the Entire Business Value. If the termination is due to our breach of the
Sprint PCS  agreements,  the percent is reduced to 72% instead of 80%. Under our
Sprint PCS  agreements,  the Entire  Business Value is generally the fair market
value of our wireless  business valued on a going concern basis as determined by
an  independent  appraiser  and  assumes  that we own the  FCC  licenses  in our
territory.  In  addition,  Sprint PCS must  approve any change of control of our
ownership and consent to any assignment of the Sprint PCS agreements. Sprint PCS
also has a right of first refusal if we decide to sell our  operating  assets in
our Bright PCS markets.  We are also subject to a number of  restrictions on the
transfer of our business  including a prohibition  on selling our company or our
operating assets to a number of identified and yet to be identified  competitors
of Sprint  PCS or  Sprint.  These  and  other  restrictions  in the  Sprint  PCS
agreements  may limit the  marketability  of and reduce the price a buyer may be
willing to pay for the  Company  and may  operate to reduce the Entire  Business
Value of the Company.

The  termination  of our  strategic  affiliation  with Sprint PCS or Sprint PCS'
failure to  perform  its  obligations  under the  Sprint  PCS  agreements  would
severely restrict our ability to conduct our business.

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

If Sprint PCS does not complete the  construction of its nationwide PCS network,
we may not be able to attract and retain customers, which would adversely affect
our revenues.

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

We are  dependent  upon  Sprint PCS' back office  services  and its  third-party
vendors' back office systems, and problems with these systems, or termination of
these arrangements, could disrupt our business and possibly increase our costs.

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

                                       46
<PAGE>

We depend on other  telecommunications  companies  for some services  which,  if
delayed,  could  delay our  planned  network  build-out  and delay our  expected
increases in customers and revenues.

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

If we do  not  meet  all of the  conditions  under  our  senior  secured  credit
facility,  we may not be able to draw down all of the funds  under the  facility
and, as a result,  we may not be able to complete the  build-out of our network,
which may result in the termination of the Sprint PCS agreements.

     Our senior secured  credit  facility  provides for aggregate  borrowings of
$250.0  million of which $50.0  million was  borrowed as of December  31,  2001.
Availability of future borrowings will be subject to customary credit conditions
at each funding date, including the following:

     o    the absence of any default or event of default;

     o    the continuing accuracy of all representations and warranties; and

     o    no material adverse change.

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

Material  restrictions  in our debt  instruments may make it difficult to obtain
additional  financing or take other necessary actions to react to changes in our
business.

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

     o    designated types of mergers or consolidations;

     o    paying dividends or other distributions to our stockholders;

     o    making investments;

     o    selling assets;

     o    repurchasing our common stock;

     o    changing lines of business;

     o    borrowing additional money; and

     o    transactions with affiliates.

                                       47
<PAGE>

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

     o    leverage ratios;

     o    an interest coverage ratio; and

     o    a fixed charges ratio,

and to satisfy certain tests, including tests relating to:

     o    minimum covered population;

     o    minimum number of PCS subscribers in our territory; and

     o    minimum total revenues.

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

     An event of default under the senior secured  credit  facility may prohibit
us and the  guarantors  of the notes from paying the notes or the  guarantees of
the notes.

The terms of the convertible preferred stock may affect our financial results.

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

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

     o    to  approve  or   disapprove   fundamental   corporate   actions   and
          transactions;

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

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

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

If we  breach  our  agreement  with  SBA  Communications  Corp.  ("SBA"),  or it
otherwise  terminates  its  agreement  with us,  our right to  provide  wireless
service from most of our cell sites will be lost.

     We lease cell sites from SBA. We rely on our  contract  with SBA to provide
us with  access to most of our cell  sites and to the  towers  located  on these
sites. If SBA were to lose its underlying  rights to these sites, our ability to
provide  wireless  service  from these sites would end,  subject to our right to
cure defaults by SBA. If SBA terminates our agreement as a result of our breach,
we will lose our right to provide wireless services from most of our cell sites.

                                       48
<PAGE>

We may have difficulty in obtaining infrastructure equipment and handsets, which
could result in delays in our network  build-out,  disruption of service or loss
of customers.

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

If the West  Virginia PCS  Alliance  and  Virginia PCS Alliance  fail to provide
their network to us in their markets,  or if our network services agreement with
the  Alliances  is  otherwise  terminated,  we will lose the  ability to use the
Alliances' networks.

     West Virginia PCS Alliance and Virginia PCS Alliance,  which we refer to as
the  Alliances,  are two related,  independent  PCS  providers  whose network is
managed by NTELOS.  Under our network services agreement,  the Alliances provide
us with the use of and access to key  components of their network in most of our
markets in Virginia and West Virginia. We directly compete with the Alliances in
the markets where we use their  network.  If the Alliances  fail to maintain the
standards for their network as set forth in our network services  agreement with
them or  otherwise  fail to provide  their  network for our use,  our ability to
provide wireless services in these markets may be adversely affected, and we may
not be able to provide  seamless  service  for our  customers.  If we breach our
obligations  to the  Alliances,  or if the  Alliances  otherwise  terminate  the
network services agreement, we will lose our right to use the Alliances' network
to provide service in these markets. In that event, it is likely that we will be
required  to build our own network in those  markets  and incur the  substantial
costs associated with doing so.

Sprint PCS' vendor  discounts  may be  discontinued,  which could  increase  our
equipment  costs and require more capital than we had projected to build-out our
network.

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

Conflicts with Sprint PCS may not be resolved in our favor, which could restrict
our ability to manage our business and provide Sprint PCS products and services,
adversely affecting our relationships with our customers,  increase our expenses
or decrease our revenues.

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

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

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

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



                                       49
<PAGE>

We may not be able to compete with larger,  more established  wireless providers
who have resources to  competitively  price their  products and services,  which
could impair our ability to attract and retain customers.

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

     We will  also  compete  with  several  PCS  providers  and  other  existing
communications  companies in our markets and expect to compete with new entrants
as the FCC licenses additional  spectrum to mobile services providers.  A number
of our cellular, PCS and other wireless competitors have access to more licensed
spectrum  than the amount  licensed to Sprint PCS in most of our  territory  and
therefore will be able to provide  greater network call volume capacity than our
network to the extent that network  usage begins to reach or exceed the capacity
of our licensed spectrum.  Our inability to accommodate increases in call volume
could result in more dropped or disconnected calls. In addition, any competitive
difficulties  that  Sprint PCS may  experience  could also harm our  competitive
position and success.

We may not be able to offer competitive roaming  capability,  which could impair
our ability to attract and retain customers.

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

There is no uniform signal transmission technology and if we decide to use other
technologies  in the future,  this  decision  could  substantially  increase our
equipment expenditures to replace the technology used on our network.

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

We may not receive as much Sprint PCS roaming  revenue as we anticipate  and our
non-Sprint PCS roaming revenue is likely to be low.

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

                                       50
<PAGE>

If Sprint PCS customers are not able to roam instantaneously or efficiently onto
other wireless networks, we may suffer a reduction in our revenues and number of
customers.

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

Parts of our territories  have limited  licensed  spectrum,  which may adversely
affect the quality of our service.

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

Non-renewal  or  revocation  by  the  FCC  of  the  Sprint  PCS  licenses  would
significantly  harm our  business  because we would no longer  have the right to
offer wireless service through our network.

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

If the Sprint PCS agreements do not comply with FCC requirements, Sprint PCS may
terminate  the Sprint PCS  agreements,  which could  result in our  inability to
provide service.

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



                                       51
<PAGE>

We may need more capital than we currently  anticipate to complete the build-out
of our  network,  and a delay or  failure  to obtain  additional  capital  could
decrease our revenues.

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

     o    significant departures from our current business plan;

     o    unforeseen delays, cost overruns, unanticipated expenses; or

     o    regulatory, engineering design and other technological changes.

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

Because  Sprint PCS has  recently  required us to upgrade our network to provide
"third generation" technology, we will face additional capital expenses.

     The wireless  industry is seeking to implement new "third  generation,"  or
"3G,"  technology.  Sprint PCS has recently  selected a version of 3G technology
for its own  networks  and  required us to upgrade our network to provide  those
services.   We  currently   estimate   that  this  network   upgrade  will  cost
approximately  $35 million,  but actual costs could  exceed this  estimate.  The
current deadline for completion of our 3G upgrade generally is June 30, 2002. If
we fail to meet the  upgrade  deadline,  we will be in breach of our  Sprint PCS
agreements.  If other wireless  carriers  implement  their 3G upgrades on a more
rapid  timetable,  or on a more  cost  efficient  basis,  or on a more  advanced
technology  basis,  we  will  likely  suffer  competitive  disadvantages  in our
markets.  While  there are  potential  advantages  with 3G  technology,  such as
increased  network  capacity  and  additional  capabilities  for  wireless  data
applications,  the technology has not been proven in the marketplace and has the
risks inherent in other technological innovations.

Unauthorized  use of our  network  and other  types of fraud  could  disrupt our
business and increase our costs.

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

Expanding our territory may have a material adverse effect on our business.

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

     o    difficulty assimilating acquired operations and personnel;

     o    diversion of management attention;

     o    disruption of ongoing business;

     o    inability to retain key personnel;

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

                                       52
<PAGE>

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

     o    impairment of relationships with employees, customers or vendors.

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

The Sprint PCS agreements and our restated certificate of incorporation  include
provisions  that may  discourage,  delay or restrict  any sale of our  operating
assets or common stock to the possible detriment of our noteholders.

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

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

     o    the issuance of preferred stock without stockholder approval; and

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

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

We will not be able to receive the tax benefit of future  losses  until we begin
to generate taxable income.

     From  our  inception   until  September  2000,  we  were  included  in  the
consolidated  Federal  income tax return of Horizon  Telcom,  Inc.  which owns a
majority of our outstanding common stock.  Under the tax-sharing  agreement with
Horizon  Telcom,  Horizon Telcom filed a consolidated  tax return and paid us an
amount  equal to the tax savings  realized by Horizon  Telcom as a result of our
taxable operating losses being used to offset consolidated  taxable income. As a
result of the sale of convertible  preferred  stock in September 2000, we are no
longer included in Horizon  Telcom's  consolidated  tax return and, as a result,
will no longer be able to recognize any tax benefits  from our operating  losses
until we generate taxable income.

Horizon  Telcom  will be able to  control  the  outcome of  significant  matters
presented to  stockholders  as a result of its ownership  position,  which could
potentially impair our attractiveness as a takeover target.

     Horizon Telcom  beneficially  owns  approximately  58.1% of our outstanding
common stock on fully diluted  basis as of December 31, 2001.  In addition,  the
shares  held by  Horizon  Telcom  are class B shares,  which  have ten votes per
share.  The class A shares  have only one vote per share.  As a result,  Horizon
Telcom holds  approximately  84.5% of the voting power, on a fully diluted basis
at December 31, 2001.  Horizon  Telcom will have the voting power to control the
election of our board of directors  and it will be able to cause  amendments  to
our restated certificate of incorporation or our restated bylaws. Horizon Telcom
also may be able to cause changes in our business  without  seeking the approval
of any other party.  These changes may not be to the advantage of our company or
in the best interest of our other  stockholders or the holders of our notes. For
example,  Horizon Telcom will have the power to prevent, delay or cause a change
in control of our company and could take other  actions  that might be favorable
to Horizon Telcom, but not necessarily to other stockholders.  This may have the
effect of  delaying or  preventing  a change in control.  In  addition,  Horizon
Telcom is  controlled  by members of the McKell  family,  who  collectively  own
approximately  60.6% of the voting interests of Horizon Telcom.  Therefore,  the
McKell family,  acting as a group, may be able to exercise indirect control over
us.


                                       53
<PAGE>

We may face  conflicts  of  interest  with  Horizon  Telcom  which  may harm our
business.

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

     o    corporate opportunities;

     o    tax and intellectual property matters;

     o    potential acquisitions;

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

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

     Horizon  Telcom  controls  approximately  84.5% of the voting  power of our
shares on a fully diluted basis. Horizon Telcom is engaged in a diverse range of
telecommunications-related  businesses,  such as a local telephone  services and
Internet  services,  and these  businesses  may have  interests that conflict or
compete in some manner with our business.  Horizon Telcom is under no obligation
to share any  future  business  opportunities  available  to it with us,  unless
Delaware law requires it to do so. Any  conflicts  that may arise between us and
Horizon Telcom or any of its affiliates or any loss of corporate  opportunity to
Horizon  Telcom that may  otherwise be available to us may impact our  financial
condition or results of operations because these conflicts of interest or losses
of corporate  opportunities  could result in a loss of customers and, therefore,
business.  Because  Horizon  Telcom  will be able to control the outcome of most
conflicts upon which stockholders could vote and because it will have the voting
power to control our board of  directors,  conflicts  may not be resolved in our
favor.

Present and future  transactions  with Horizon  Telcom may be on terms which are
not as favorable as could be obtained from third parties.

     In the  past,  we  have  entered  into  transactions  with  Horizon  Telcom
including  the leasing of towers by Horizon  Telcom to us and the  advancing  of
cash  to  us to  finance  our  operations.  In  addition,  Horizon  Services,  a
subsidiary of Horizon Telcom  provides  administrative  services to us including
finance and accounting services,  computer access and human resources.  Although
these  transactions  were on terms that we  believe  are fair,  because  Horizon
Telcom  currently owns 58.1% of our outstanding  common stock on a fully diluted
basis,  third-parties  with  which  we  wish to  enter  into  agreements  or the
marketplace in general may not perceive these  transactions  with Horizon Telcom
to be fair.  In addition,  because  Horizon  Telcom has the power to control our
board  of  directors,  we may not be able to  renew  these  agreements  on terms
favorable to us.

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

     Our strategy to minimize  customer  turnover,  commonly known as churn, may
not be  successful.  As a result  of  customer  turnover,  we lose  the  revenue
attributable  to these  customers  and  increase the costs of  establishing  and
growing our customer  base.  The PCS industry has  experienced  a higher rate of
customer  turnover  as  compared  to  cellular  industry  averages.  The rate of
customer turnover is affected by the following factors, several of which are not
within our ability to address:

     o    extent of network coverage;

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

     o    non-use of phones;

     o    change of employment;

                                       54
<PAGE>

     o    the decision not to require our  customers to sign  contracts,  unlike
          most cellular providers that do require contracts;

     o    a lack of affordability;

     o    price competition;

     o    Sprint PCS' customer credit policies;

     o    customer care concerns; and

     o    other competitive factors.

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

Because the wireless  industry has  experienced  higher  customer  additions and
handset  sales in the fourth  calendar  quarter as  compared  to the other three
calendar  quarters,  a failure by us to acquire  significantly more customers in
the fourth quarter could have a disproportionate  negative effect on our results
of operations.

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

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

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

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

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

     o    a generally poor holiday shopping season.

Regulation by government agencies may increase our costs of providing service or
require us to change our services, which could impair our financial performance.

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

Use of hand-held  phones may pose health risks,  real or perceived,  which could
result in the  reduced use of our  services or  liability  for  personal  injury
claims.

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

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

     We do not engage in commodity  futures trading  activities and do not enter
into  derivative  financial  instruments  for trading  purposes.  We also do not
engage in transactions in foreign  currencies that would expose us to additional
market risk.

                                       55
<PAGE>

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

     We manage the interest rate risk on our outstanding  long-term debt through
the use of fixed and  variable-rate  debt and interest rate swaps.  In the first
quarter of 2001,  we entered  into a two-year  interest  rate swap,  effectively
fixing $25.0 million of the term loan borrowed under the secured credit facility
at a rate of 9.4%.  In the  third  quarter  of 2001,  we  entered  into  another
two-year interest rate swap,  effectively  fixing the remaining $25.0 million of
the term loan  borrowed  under the secured  credit  facility at 7.65%.  While we
cannot  predict our ability to refinance  existing  debt or the impact  interest
rate  movements  will have on our  existing  debt,  we continue to evaluate  our
interest  rate risk on an ongoing  basis.  We are  exposed to market risk on our
long-term debt related to the current market value of interest rates compared to
our fixed and  variable-rate  (100% hedged) debt. While a 100-basis point change
in interest rates would not affect our current earnings, it would have an impact
on the market value of our debt.

     As of December 31, 2001, 100% of our variable-rate  long-term debt has been
swapped for fixed-rate  debt,  thus reducing our exposure to interest rate risk.
Therefore,  an increase in the base lending rate would have an immaterial effect
on our annual earnings.  However,  our swap interest rates are currently greater
than the market  interest rates on our underlying  debt.  Thus, our results from
operations  currently  reflect a higher interest  expense than had we not hedged
our position.  If we do not renew our swaps, or, if we do not hedge  incremental
borrowings  under our senior  secured credit  facility,  of which we have $200.0
million  available at December 31, 2001, we will increase our interest rate risk
which could have a material impact on our future earnings.

ITEM 8. Financial Statements and Supplementary Data

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

ITEM  9.  Changes  in and  Disagreements  With  Accountants  on  Accounting  and
Financial Disclosure

     None.

                                    PART III

ITEM 10. Directors and Executive Officers of the Registrant

     The following are our directors and executive officers:
<TABLE>
<CAPTION>
<S>                                                 <C>     <C>
       Name                                         Age     Position
       ----                                         ---     --------
       William A. McKell.......................     41      Chairman of the Board, President and
                                                              Chief Executive Officer
       Peter M. Holland........................     36      Director, Chief Financial Officer
       Alan G. Morse...........................     43      Chief Operating Officer
       Joseph E. Corbin........................     46      Vice President, Engineering and Operations
       Joseph J. Watson........................     36      Vice President, Sales and Marketing
       Monesa S. Skocik........................     40      Vice President, External Affairs
       Robert A. Katz..........................     33      Director
       Thomas McKell...........................     66      Director
       Phoebe H. McKell........................     55      Director
       Lonnie D. Pedersen......................     44      Director
       Eric L. Zinterhofer.....................     30      Director
</TABLE>

     William A. McKell has served as Chairman of the Board,  President and Chief
Executive  Officer  of  Horizon  PCS since its  inception  in April 2000 and has
served as  President,  Chief  Executive  Officer  and  Chairman  of the Board of


                                       56
<PAGE>

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

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

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

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

     Joseph J. Watson has served as Vice President,  Sales and Marketing,  since
August 2000. He served as Vice President of Business  Development of Horizon PCS
since its inception in April 2000 and of Horizon Personal  Communications  since
August  1999.  Mr.  Watson is  responsible  for all of our  sales and  marketing
efforts and  regulatory  matters.  From May 1996 to August 1999, Mr. Watson held
various  senior  management  positions  with  Horizon  Personal  Communications,
including the positions of Vice President of Administration, Director of Finance
and  General  Manager  --  Horizon  Long  Distance.  Mr.  Watson has been in the
telecommunications   industry  for  eight  years  including  various  management
positions at The Chillicothe Telephone Company and sales positions at Cincinnati
Bell Long  Distance.  Mr.  Watson is a graduate of Ohio  University's  School of
Telecommunications.

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

     Robert A. Katz was  appointed a director of Horizon PCS in September  2000.
Mr.  Katz is a senior  principal  of  Apollo  Advisors,  with  which he has been
associated since 1990, and which,  together with affiliated investment managers,
manages the Apollo investment  funds,  including Apollo Investment Fund IV, L.P.
Mr. Katz is also a director of Aris Industries,  Inc., Clark Retail Group, Inc.,


                                       57
<PAGE>

Quality Distribution,  Inc., Vail Resorts, Inc. and Vinciv Corporation. Mr. Katz
was  appointed to the board  pursuant to the terms of the  Investors  Rights and
Voting  Agreement  entered  into in  connection  with  the  sale of  convertible
preferred  stock in September  2000.  See "ITEM 13.  Certain  Relationships  and
Related Transactions." Mr. Katz received a Bachelor of Science in Economics from
the University of Pennsylvania.

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

     Phoebe H. McKell has served as the President of Horizon  Services since its
inception in 1996.  Ms.  McKell has 23 years of  telecommunications  experience.
From  1989 to 1996,  she was  Director  of  Administration  for The  Chillicothe
Telephone Company. Ms. McKell is the niece of Thomas McKell.

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

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

Board of Directors

     There are presently  seven  members of the board of directors.  Pursuant to
Horizon PCS'  Certificate  of  Incorporation,  the board of directors is divided
into three  classes of directors  -- Class I, Class II and Class III.  Phoebe H.
McKell and Eric Zinterhofer serve as Class I. Peter M. Holland and Thomas McKell
serve as Class II  directors.  Robert A.  Katz,  William  A.  McKell  and Lonnie
Pedersen serve as Class III directors.  Directors in each class will serve for a
term of three years, or until their  successors have been elected and qualified.
Directors  may be  compensated  at the  discretion  of the  board of  directors.
Executive  officers are ordinarily  elected annually and serve at the discretion
of the board of directors.

Board Committees

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


                                       58
<PAGE>

Limitation on Liability and Indemnification

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

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

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

ITEM 11. Executive Compensation

     The  following  table  presents  summary  information  with  respect to the
compensation paid to our Chief Executive Officer and each of our other executive
officers whose salary and bonus exceeded $100,000 during the year ended December
31, 2001.

<TABLE>
<CAPTION>
<S>                             <C>          <C>         <C>                    <C>           <C>
                                                                              Long-Term
                                                                             Compensation
    Name and Principal                         Annual Compensation     Securities Underlying        All Other
        Position                    Year       Salary($)   Bonus($)           Options(#)          Compensation($)
----------------------------    -----------  ----------------------- ------------------------- ------------------
William A. McKell...........        2001     $  195,833  $  65,935                     --          $   116,885 (1)
  Chairman of the Board,            2000        154,167     21,458                     --               12,497 (2)
    President and Chief             1999        107,125      9,641              1,614,186                8,934 (3)
    Executive Officer

Peter M. Holland............        2001     $  170,833  $  57,479                     --          $   129,032 (5)
  Chief Financial Officer(4)        2000        150,000     20,625                     --               11,971 (6)
                                    1999             --         --              1,614,186                   --

Joseph E. Corbin............        2001     $  121,667  $  44,428                     --          $   126,797 (7)
  Vice President,                   2000        105,000     14,438                     --               20,254 (8)
    Engineering/Operations          1999         85,200      9,200                188,322               13,528 (9)

Joseph J. Watson............        2001     $  121,667  $  40,733                     --          $   123,884 (10)
  Vice President,                   2000        105,000     14,438                     --               14,862 (11)
    Sales and Marketing             1999         76,240      7,668                188,322               12,825 (12)

Monesa S. Skocik............        2001     $  121,667  $  40,733                     --          $   126,501 (13)
  Vice President,                   2000        105,000     14,438                     --               12,692 (14)
    External Affairs                1999         65,750      6,850                188,322                3,024 (15)
</TABLE>

----------
(1)  Includes an award of Horizon  Telcom  shares valued at $100,900 at the date
     of the award,  a yearly car allowance of $10,985 and a 401(k)  contribution
     of $5,000.
(2)  Includes a yearly car  allowance  of $7,784  and a 401(k)  contribution  of
     $4,713.
(3)  Includes a yearly car  allowance  of $7,428  and a 401(k)  contribution  of
     $1,506.
(4)  Mr.  Holland became Chief  Financial  Officer on November 17, 1999, but did
     not receive any  compensation in 1999. See "ITEM 13. Certain  Relationships
     and Related  Transactions"  for a discussion of consulting fees received by
     the Pinnacle Group, a company that was 50% owned by Mr.  Holland.  Pinnacle
     received consulting fees of $267,000 in 1999, $204,000 in 1998 and $419,000
     in 1997.
(5)  Includes an award of Horizon  Telcom  shares valued at $116,000 at the date
     of the award, a yearly car allowance of $7,892 and a 401(k) contribution of
     $5,140.


                                       59
<PAGE>

(6)  Includes  yearly  car  allowance  of $7,578  and a 401(k)  contribution  of
     $4,393.
(7)  Includes an award of Horizon  Telcom  shares valued at $116,000 at the date
     of the award, a yearly car allowance of $7,839 and a 401(k) contribution of
     $2,958.
(8)  Includes  yearly  car  allowance  of $9,981  and a 401(k)  contribution  of
     $10,273.
(9)  Includes  yearly  car  allowance  of $4,328  and a 401(k)  contribution  of
     $9,200.
(10) Includes an award of Horizon  Telcom  shares valued at $116,000 at the date
     of the award, a yearly car allowance of $7,619 and a 401(k) contribution of
     $265.
(11) Includes  yearly  car  allowance  of $8,435  and a 401(k)  contribution  of
     $6,427.
(12) Includes  yearly  car  allowance  of $7,851  and a 401(k)  contribution  of
     $4,974.
(13) Includes an award of Horizon  Telcom  shares valued at $116,000 at the date
     of the award, a yearly car allowance of $6,807 and a 401(k) contribution of
     $3,694.
(14) Includes  yearly  car  allowance  of $6,330  and a 401(k)  contribution  of
     $6,362.
(15) Includes a 401(k) contribution of $3,024.

2000 Stock Option Plan

     The 2000 Stock Option Plan has been  adopted by our board of directors  and
stockholders.  The option plan  permits the  granting  of both  incentive  stock
options and  nonqualified  stock options to employees.  The aggregate  number of
shares of common stock that may be issued  pursuant to options granted under the
option plan is 7,500,000  shares of class A common stock and 4,196,884 shares of
class B common stock,  subject to adjustments in the event of certain changes in
the  outstanding  shares of common stock.  On December 1, 1999, our  subsidiary,
Horizon Personal Communications, granted options to purchase 3,588,000 shares of
its class B common  stock  with an  exercise  price of  $0.1414  per share to 13
individuals  under its 1999 Stock Option Plan.  After we were  incorporated,  we
issued  options to replace those  initial  options,  on the same economic  terms
adjusted for the fact that Horizon Personal  Communications  was our subsidiary.
After  taking  into  account the  adjustment,  we issued  4,196,884  substituted
options on class B common  stock at an exercise  price of  $0.1209.  In November
2000, we granted  options to purchase  116,971 shares of class A common stock at
an exercise price of $5.88 per share.

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

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

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

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

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

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

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

     The plan contains  provisions that give the  compensation  committee or our
board of directors or the acquiring  entity's  board of directors  discretion to
take specified actions if Horizon PCS is acquired,  unless the individual option
grants  provide  otherwise.  Those  actions  can include  the  authorization  to


                                       60
<PAGE>

purchase  option  grants  from  plan   participants,   or  make  adjustments  or
modifications to outstanding  options granted to protect and maintain the rights
and interests of the plan  participants or accelerate the vesting of outstanding
options.  To date, all  individual  option grants have provided that the options
will accelerate and become fully exercisable upon an acquisition of Horizon PCS.

     Our board of  directors  has  adopted a policy to the effect  that,  for at
least one year from March 27,  2001,  3,000,000 of the shares  authorized  to be
issued  under the plan are  subject to the  condition  that they must  either be
issued to  non-promoter  employees (as defined in the North American  Securities
Administration  Association's statement of policy on options and warrants) or at
an exercise  price no less than $5.88 per share.  The board also has  undertaken
not to grant  options  (other than under the 2000 Stock Option Plan) with a term
of longer  than 5 years  until the class A common  stock is listed on either the
New York Stock  Exchange,  the American Stock  Exchange,  or the NASDAQ National
Market.

     None of our named  executive  officers were granted  stock  options  during
fiscal year 2001.  Additionally,  none of our named executive officers exercised
stock options in the fiscal year ended  December 31, 2001.  The following  table
sets forth  information  concerning the number and value of unexercised  options
held by each of our named executive  officers on December 31, 2001. There was no
public  market for our common stock as of December 31,  2001.  Accordingly,  the
fair market value on December 31, 2001, is based on an average  assumed value of
$5.39 per share.  This  valuation at December 31, 2001,  does not  represent the
actual value of our stock at December 31, 2001.

<TABLE>
<CAPTION>
                 Aggregated Option Exercises In Fiscal Year 2001
                     And 2001 Fiscal Year-End Option Values
<S>                                      <C>                <C>                 <C>            <C>
                                                Number of Securities                 Value of Unexercised
                                               Underlying Unexercised                    In-The-Money
                                               Options At Year End (#)              Options At Year End ($)
  Name                                       Exercisable      Unexercisable      Exercisable      Unexercisable
  ----                                    ---------------   -------------------- ------------   ---------------
  William A. McKell.....................          706,206           907,980      $ 3,721,708     $   4,785,053
  Peter M. Holland......................          706,206           907,980        3,721,708         4,785,053
  Joseph E. Corbin......................          117,701            70,621          620,285           372,171
  Joseph J. Watson......................          117,701            70,621          620,285           372,171
  Monesa S. Skocik......................          117,701            70,621          620,285           372,171
</TABLE>

Compensation of Directors

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

Employment Agreements

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

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



                                       61
<PAGE>

Compensation Committee Interlocks and Insider Participation

     For the year ended  December  31,  2001,  the entire  board of directors of
Horizon Personal Communications, Inc. determined executive compensation. None of
our  executive  officers  served as a  director  or  member of the  compensation
committee or other board committee  performing  equivalent  functions of another
corporation.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management

     The  following  table  sets  forth  information  regarding  the  beneficial
ownership of our voting securities, as of December 31, 2001, by:

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

     o    each of our directors;

     o    each of the executive officers; and

     o    all executive officers and directors as a group.

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

<TABLE>
<CAPTION>
<S>                                <C>           <C>          <C>           <C>           <C>
                                             class A                    class B
                                          Common Stock               Common Stock         Percentage of Total Voting
Name and Address                      Number        Percent      Number        Percent     Power (All Classes)(2)
----------------                   ------------  ------------ ------------  ------------  ---------------------------
Horizon Telcom (1)................          --         --      53,806,200       92.0%             87.8%
Apollo Management VI, L.P. (3)....  22,863,502       80.8%             --         --               3.7%
Ares Management II L.P. (4).......   2,604,468        9.2%             --         --                 *
First Union (5)...................   2,838,230       10.0%             --         --                 *
William A. McKell (6).............          --         --         706,206        1.2%              1.1%
Peter M. Holland (6)..............          --         --         706,206        1.2%              1.1%
Joseph E. Corbin (6)..............          --         --         117,701          *                 *
Joseph J. Watson (6)..............          --         --         117,701          *                 *
Monesa S. Skocik (6)..............          --         --         117,701          *                 *
Thomas McKell (7).................          --         --      53,806,200       92.0%             87.8%
Phoebe H. McKell (6)..............          --         --          33,629          *                 *
Lonnie D. Pedersen (8)............          --         --       1,519,907        2.6%              2.5%
Robert A. Katz (9)................          --         --              --         --                --
Eric L. Zinterhofer (9)...........          --         --              --         --                --
All Executive Officers and
  Directors as a Group (10
  persons)(9)(10).................          --         --      57,125,251       94.8%             90.5%
</TABLE>

----------
* Less than one percent.

(1)  The address for Horizon Telcom and each  executive  officer and director is
     68 E. Main Street, Chillicothe, Ohio, 45601-0480.
(2)  Holders  of class A common  stock  are  entitled  to one vote per share and
     holders  of class B common  stock are  entitled  to ten  votes  per  share.
     Holders of both  classes of common  stock  will vote  together  as a single
     class on all matters presented for a vote, except as otherwise  required by
     law.  Each share of class B common stock is  convertible  into one share of
     class A common stock.
(3)  Represents  22,863,502  shares of common stock issuable upon the conversion
     of  the  convertible  preferred  stock.  Assuming  conversion  of  all  the
     convertible preferred stock held by the Apollo stockholders,  the shares of
     common  stock  would   consist  of   21,660,884   shares  of  common  stock
     beneficially owned by Apollo Investment Fund IV, L.P., and 1,202,618 shares
     of common stock  beneficially  owned by Apollo  Overseas  Partners IV, L.P.
     Apollo  Management IV, L.P.  manages these two Apollo funds. The holders of
     the  convertible  preferred  stock  are  entitled  to one vote per share of
     convertible  preferred stock.  Messrs.  Katz and Zinterhofer,  directors of
     Horizon  PCS  and  associated  with  Apollo  Advisers  IV,  L.P.,  disclaim
     beneficial  ownership  of the shares held by the Apollo  stockholders.  The
     managing general partner of the Apollo funds is Apollo Advisors, a Delaware
     limited  partnership,  the  general  partner  of  which is  Apollo  Capital
     Management,  Inc.,  a  Delaware  corporation.  The  address  for the Apollo
     stockholders  is 1301 Avenue of the  Americas,  38th Floor,  New York,  New
     York, 10019.


                                       62
<PAGE>

(4)  Includes  2,579,468  shares of common stock issuable upon the conversion of
     the convertible preferred stock. Assuming conversion of all the convertible
     preferred stock held by the Ares  stockholders,  the shares of common stock
     would  consist of 1,289,734  shares of common stock  beneficially  owned by
     Ares Leveraged  Investment Fund, L.P., and 1,289,734 shares of common stock
     beneficially  owned by Ares Leveraged  Investment Fund II, L.P. The holders
     of the  convertible  preferred  stock are entitled to one vote per share of
     convertible preferred stock. The managing general partner of the Ares funds
     is Ares  Management II, L.P., a Delaware  corporation,  which together with
     its affiliate investment manager,  serves as investment manager of the Ares
     funds.  Also  includes  warrants to purchase  12,500 shares held by each of
     these two funds  which  are not  exercisable  within 60 days of the date of
     this Annual Report on Form 10-K. The address for the Ares  stockholders  is
     1999 Avenue of the Stars, Suite 1900, Los Angeles, California, 90067.
(5)  Includes  2,829,200  shares  issuable  upon the assumed  conversion  of the
     convertible  preferred  stock and 9,030  shares  issuable  upon the assumed
     exercise of warrants  issued with the September 2000 discount  notes.  Each
     share of convertible preferred stock is convertible into one share of class
     A common  stock and each  warrant  may be  exercised  at $5.88 per share of
     class A  common  stock.  Each  holder  of  convertible  preferred  stock is
     entitled  to one vote per share.  The  address for First Union is 301 South
     College Street, Charlotte, North Carolina, 28288.
(6)  Reflects  shares of class B common stock  issuable  upon  exercise of stock
     options that are presently exercisable or exercisable within 60 days of the
     date of this Annual Report on Form 10-K.
(7)  Includes  53,806,200  shares held by Horizon  Telcom.  Thomas McKell is the
     President of Horizon  Telcom,  and shares voting and investment  power with
     regard to these shares. Mr. McKell disclaims  beneficial ownership of these
     shares.
(8)  Includes 1,455,678 shares of class B common stock held by Telephone Service
     Company.  Mr.  Pedersen is the President of Telephone  Service  Company and
     shares  voting  and  investment  power  with  regard to these  shares.  Mr.
     Pedersen disclaims beneficial ownership of these shares.
(9)  Does  not  include  shares  held  by  Apollo.  Each  of  Messrs.  Katz  and
     Zinterhofer,  directors of Horizon PCS and  principals of Apollo  Advisors,
     L.P., disclaims beneficial ownership of the securities held by Apollo.
(10) Includes 1,799,145 shares of class B common stock issuable upon exercise of
     stock options that are presently  exercisable or exercisable within 60 days
     of the date of this Annual Report on Form 10-K.

ITEM 13. Certain Relationships and Related Transactions

Service Agreements With Horizon Telcom Subsidiaries

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

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

     o    direct labor charges at cost; and

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

     The agreement  provides that Horizon  Services'  obligations do not relieve
Horizon Personal  Communications of any of their rights and obligations to their
customers  and  to  regulatory   authorities  having   jurisdiction  over  them.
Additionally,  Horizon  Services,  upon request,  is required to provide Horizon
Personal Communications with access to Horizon Services' records with respect to
the  provision of  services,  and Horizon  Services is also  required to provide
regular reports to Horizon Personal  Communications,  as it may request. Horizon
Services  received   compensation   from  Horizon  Personal   Communications  of
approximately  $6.2  million,  $4.4  million and  $815,000  in the years  ending
December 31, 2001, 2000 and 1999, respectively. As of December 31, 2001, Horizon


                                       63
<PAGE>

Personal  Communications,  Inc.  had  a  receivable  from  Horizon  Services  of
approximately   $101,000.   As  of   December   31,   2001,   Horizon   Personal
Communications,  Inc. had a  receivable  from  Horizon  Telcom of  approximately
$484,000.

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

Sale of Assets to Affiliate

     On April 1, 2000, we  transferred  the assets and  contractual  rights that
made up our Internet,  long distance and other  businesses  unrelated to our PCS
wireless operations to Horizon Technology, a subsidiary of Horizon Telcom, for a
purchase price of approximately  $708,000.  Horizon Technology paid the purchase
price by  delivering  a  promissory  note  with an  interest  rate  equal to the
applicable Federal rate, which was 6.0%. The note was repaid in 2001.

Office Lease

     Horizon PCS leases its  principal  office  space,  the space for one of our
retail  locations  and the  space for  certain  equipment  from The  Chillicothe
Telephone Company, a wholly-owned subsidiary of Horizon Telcom. Under the lease,
Horizon PCS paid The Chillicothe Telephone Company $120,000, $97,500 and $22,300
in 2001, 2000 and 1999, respectively.  We believe the lease was made on terms no
less   favorable  to  Horizon  PCS  than  would  have  been   obtained   from  a
non-affiliated  third party. The lease term expires in May 2005. Horizon PCS has
the option to renew the lease for an  additional  two year  period.  The Company
expects that the lease will be renewed.

Stock Dividend

     Prior to September  2000, we owned 46,988 shares of common stock of Horizon
Telcom,  representing  approximately 12% of the total outstanding Horizon Telcom
stock. In September  2000, we distributed  39,890 of these shares to the Horizon
PCS  stockholders  as a  dividend,  retaining  approximately  2%  of  the  total
outstanding Horizon Telcom stock. We made this distribution so that our existing
stockholders could receive the full value of the distributed shares prior to the
issuance of the convertible  preferred stock. This distribution  resulted in the
recognition  of a gain of $1.0  million.  In  April  2001,  we  distributed  the
remaining  2% of the Horizon  Telcom  stock that we owned to a group of officers
and key employees in the form of a bonus. The officer group will include each of
the named executive officers. See "ITEM 11. Executive Compensation."



                                       64
<PAGE>

Tax-Sharing Agreement

     In 1997, HPC entered into a tax-sharing agreement with Horizon Telcom. This
agreement  provides  that  Horizon  Telcom  and  its  subsidiaries  will  file a
consolidated tax return as long as they are eligible to do so, and that HPC will
be paid for the  amount of its  taxable  net  operating  losses  used by Horizon
Telcom to offset  taxable  income.  During 1999,  HPC had taxable net  operating
losses of $16.5 million.  For 2000, HPC had taxable net income of $18.6 million.
For the years ended December 31, 2000 and 1999, Horizon Telcom paid an aggregate
of $4.5 million and $5.2 million,  respectively, to HPC under the agreement. Due
to the sale of the  convertible  preferred  stock in September 2000, the Company
will no longer be included  in the  consolidated  tax return of Horizon  Telcom.
This  change in our tax  status is  referred  to as a tax  deconsolidation.  The
tax-sharing agreement provides that Horizon Telcom will indemnify Horizon PCS to
the extent of any aggregate tax liability in excess of $11.5 million  related to
the tax  deconsolidation  and the dividend of the Horizon Telcom stock.  For the
year ended  December  31, 2001 and 2000,  the  Company  paid  $338,000  and $5.2
million,  respectively, to Horizon Telcom for taxes. As of December 31, 2001 and
2000,  we had a  receivable  and a payable  to Horizon  Telcom of  approximately
$484,000 and  $338,000,  respectively,  for Federal  income  taxes  attributable
primarily to the tax liability for the tax  deconsolidation  and the dividend of
the Horizon Telcom stock offset by the utilization of net operating losses.

Policy Regarding Related Party Transactions

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

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

Issuance of Convertible Preferred Stock

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

     Assuming full conversion of the convertible  preferred stock outstanding at
December 31, 2001, the investor group or its successors  will  beneficially  own
approximately  29.3% of our  outstanding  class A and class B common  stock on a
combined  basis,  based  on the  number  of  class A and  class B  common  stock
outstanding at December 31, 2001. This percentage represents  approximately 4.2%
of the  combined  voting  power of our class A and class B common  stock.  These
percentages  do not give effect to the  warrants to be issued to Sprint PCS, the
warrants issued as part of the discount note offering and the options which have
been granted under the 2000 stock option plan.

                                       65
<PAGE>

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

     o    the declaration or payment of dividends or distributions;

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

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

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

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

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

     o    adopting a new employee option or incentive plan;

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

     o    increasing the size of our board of directors;

     o    incurring any indebtedness for borrowed money;

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

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

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

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

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

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

                                       66
<PAGE>

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

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

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

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

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

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

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

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

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

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

Other Fees Paid To Stockholders

     An affiliate of  Donaldson,  Lufkin & Jenrette,  now known as Credit Suisse
First Boston, entered into an engagement letter with us in late July 2000 to act
as placement  agent for the placement of private equity.  The commitment  letter
provided  that the  affiliate of Credit  Suisse First Boston would be paid a fee
upon the closing of our private  equity  offering.  We paid the placement fee of
$3.6 million on September  26, 2000.  Credit Suisse First Boston and First Union
Securities were also initial  purchasers under our sale of units of warrants and
senior discount notes in September  2000, for which they received  approximately
$5.2 million for performing  these services.  In September 2000, an affiliate of
First Union Securities acted as sole lead arranger for our senior secured credit
facility and received fees totaling $7.0 million for these services.  Donaldson,
Lufkin & Jenrette Securities  Corporation,  a predecessor of Credit Suisse First
Boston,  and First  Union  Securities  also  acted as the lead  managers  of our
proposed  initial public offering.  In 2000, we entered into engagement  letters
with  Credit  Suisse  First  Boston  and First  Union  Securities  to act as our
co-advisors  in  possible  strategic  transactions,  for which they  expected to
receive fees customarily charged by investment bankers of international standing
in similar  transactions.  We have paid a total of  $450,000  in fees under this
arrangement.  Credit Suisse First Boston,  First Union  Securities and two other
firms  acted as initial  purchasers  under our sale of senior  notes in December
2001, for which they received  approximately  $5.3 million for performing  these
services.


                                       67
<PAGE>

                                     PART IV

ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

     (a) The following documents are filed as part of this annual report on Form
10-K:

     1. Financial Statements

     Report of Independent Public Accountants, Consolidated Balance Sheets as of
     December 31, 2001 and 2000,  Consolidated  Statements of Operations for the
     Years Ended December 31, 2001,  2000 and 1999,  Consolidated  Statements of
     Comprehensive Income (Loss) for the Years Ended December 31, 2001, 2000 and
     1999,  Consolidated  Statements  of the  Changes  in  Stockholders'  Equity
     (Deficit)  for  the  Years  Ended   December  31,  2001,   2000  and  1999,
     Consolidated  Statements  of Cash Flows for the Years  Ended  December  31,
     2001, 2000 and 1999, and Notes to Consolidated Financial Statements.

     2. Financial Statement Schedules

     Schedule II - Valuation and Qualifying Accounts

     3. Exhibits

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

     (b) Reports on Form 8-K

     On  December  10,  2001,  we filed a  Current  Report  on Form 8-K with the
Securities  and  Exchange  Commission  that  provided  information  under  "Item
5--Other Events"  disclosing we issued a press release announcing the completion
of our private offering of notes.

     On  November  28,  2001,  we filed a  Current  Report  on Form 8-K with the
Securities  and  Exchange  Commission  that  provided  information  under  "Item
5--Other  Events"  disclosing  we  entered  into a  Third  Amendment  to  Credit
Agreement and Waiver  attached  hereto as Exhibit 10.40.  The amendment  revises
several  definitions  and financial  covenants under the facility to provide for
the Registrant's new Senior Notes.

     On  November  27,  2001,  we filed a  Current  Report  on Form 8-K with the
Securities  and  Exchange  Commission  that  provided  information  under  "Item
9--Regulation  FD  Disclosure"  disclosing we amended our senior  secured credit
facility,  attached  hereto as Exhibit  10.17,  in  connection  with our private
placement  of  notes.  Pursuant  to  the  amendment,   the  Company's  operating
subsidiaries  will be  permitted  to make  distributions  to the Company to make
regularly  scheduled  payments  of  interest  on the  notes.  In  addition,  the
restrictions on our ability to incur  additional  indebtedness  were modified to
permit the issuance of the notes.  The Company also  amended  certain  financial
covenants under the senior secured credit facility.

     On  November  27,  2001,  we filed a  Current  Report  on Form 8-K with the
Securities  and  Exchange  Commission  that  provided  information  under  "Item
5--Other  Events"  disclosing we issued a press release  announcing our proposed
private offering of $175 million of 13-3/4% senior notes due 2011.

     On  November  14,  2001,  we filed a  Current  Report  on Form 8-K with the
Securities  and  Exchange  Commission  that  provided  information  under  "Item
9--Regulation FD Disclosure" disclosing we made a presentation at the UBS Global
Telecom Conference.

     On  November  12,  2001,  we filed a  Current  Report  on Form 8-K with the
Securities  and  Exchange  Commission  that  provided  information  under  "Item
5--Other Events"  disclosing we issued a press release  announcing our financial
results for the third quarter of fiscal year 2001.


                                       68
<PAGE>

                                   SIGNATURES

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

         HORIZON PCS, INC.

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


Date:    March 3, 2002


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S>                                 <C>                                    <C>
              NAME                             TITLE                              DATE

/s/ WILLIAM A. MCKELL               Chairman of the Board,                 February 28, 2002
-------------------------------     President, Chief Executive Officer
William A. McKell
(Principal Executive Officer)

/s/ PETER M. HOLLAND                Chief Financial Officer,               February 28, 2002
-------------------------------     Director
Peter M. Holland
(Principal Financial and
Accounting Officer)


/s/ THOMAS MCKELL                   Director                               February 28, 2002
-------------------------------
Thomas McKell


/s/ PHOEBE H. MCKELL                Director                               February 28, 2002
-------------------------------
Phoebe H. McKell


/s/ LONNIE D. PEDERSEN              Director                               February 28, 2002
-------------------------------
Lonnie D. Pedersen


/s/ ROBERT A. KATZ                  Director                               February 28, 2002
-------------------------------
Robert A. Katz


/s/ ERIC L. ZINTERHOFER             Director                               February 28, 2002
-------------------------------
Eric L. Zinterhofer

</TABLE>




                                       69
<PAGE>

                                INDEX TO EXHIBITS

Exhibit
Number    Description
-------   -----------
1.1*      Purchase  Agreement dated September 18, 2000 between Horizon PCS, Inc.
          and  Donaldson,  Lufkin & Jenrette  Securities  Corporation  and First
          Union Securities, Inc.
2.1**(1)  Asset  Purchase  Agreement,  dated May 19, 2000, by and between Sprint
          PCS, Inc. and Horizon Personal Communications, Inc.
2.2**(1)  Contribution and Exchange Agreement, as amended, dated May 4, 2000, by
          and among Horizon Personal Communications, Inc., Horizon Telcom, Inc.,
          the  Registrant  and those  persons  listed on the  attachment  to the
          Contribution and Exchange Agreement.
3.1**     Amended and Restated of Certificate of Incorporation of Horizon PCS.
3.2**     Bylaws of Horizon PCS.
4.1**     Specimen Common Stock Certificate.
4.2*      Indenture  dated as of September 26, 2000 between  Horizon PCS, Inc. ,
          Horizon Personal Communications, Inc., Bright Personal Communications,
          Inc. and Wells Fargo Bank Minnesota, National Association.
4.3*      A/B Exchange  Registration  Rights  Agreement made as of September 26,
          2000 by and among Horizon PCS, Inc. and  Donaldson,  Lufkin & Jenrette
          Securities Corporation and First Union Securities, Inc.
4.4*      Form of Registered Note (included in Exhibit 4.2).
4.5*      Note Guarantee of Horizon Personal Communications, Inc.
4.6*      Note Guarantee of Bright Personal Communications Services, LLC
10.1*     Form of Employment Agreement, dated September 26, 2000, by and between
          Registrant and William A. McKell.
10.2*     Form of Employment Agreement, dated September 26, 2000, by and between
          Registrant and Peter M. Holland.
10.3**+   Sprint  PCS  Management  Agreement  between  Sprint  Spectrum,   L.P.,
          SprintCom, Inc. and Horizon Personal Communications,  Inc., dated June
          8, 1998.
10.3.1**  Letter Agreement,  dated July 3, 2000, between Sprint Spectrum,  L.P.,
          SprintCom, Inc. and Horizon Personal Communications, Inc.
10.3.2    Addendum VI to Sprint PCS Management  Agreement between the Registrant
          and  Sprint  PCS,  Inc.  (incorporated  herein  by  reference  to  the
          Registrant's Current Report on Form 8-K filed on August 24, 2001).
10.3.3+   Addendum V to Sprint PCS Management  Agreement  between the Registrant
          and Sprint PCS,  Inc.  (incorporated  herein by  reference  to Exhibit
          10.3.1 to the  Registration  Statement on Form 10/A of Horizon Telcom,
          Inc. (File No. 000-32617)).
10.4**+   Sprint PCS Services Agreement between Sprint Spectrum L.P. and Horizon
          Personal Communications, Inc., dated June 8, 1998.
10.5**    Sprint  Trademark and Service Mark License  Agreement  between  Sprint
          Communications  Company,  L.P.  and Horizon  Personal  Communications,
          Inc., dated June 8, 1998.
10.6**    Sprint Spectrum  Trademark and Service Mark License  Agreement between
          Sprint Spectrum L.P. and Horizon Personal Communications,  Inc., dated
          June 8, 1998.
10.7**+   Sprint PCS Management Agreement between Wirelessco,  L.P.,  SprintCom,
          Inc.,  Sprint  Spectrum,   L.P.  and  Bright  Personal  Communications
          Services, LLC, dated October 13, 1999.
10.8**+   Sprint PCS Services Agreement between Sprint Spectrum, L.P. and Bright
          Personal Communications Services, LLC, dated October 13, 1999.
10.9**    Sprint  Trademark and Service Mark License  Agreement  between  Sprint
          Communications   Company,  L.P.  and  Bright  Personal  Communications
          Services, LLC, dated October 13, 1999.
10.10**   Sprint Spectrum  Trademark and Service Mark License  Agreement between
          Sprint  Spectrum,  L.P. and Bright Personal  Communications  Services,
          LLC, dated October 13, 1999.


                                       70
<PAGE>

10.18**   Registration  Rights Agreement,  dated June 27, 2000, by and among the
          Registrant   and  those  persons  listed  on  the  attachment  to  the
          Contribution and Exchange Agreement.
10.19**+  Network Services  Agreement by and between West Virginia PCS Alliance,
          L.C., Virginia PCS Alliance, L.C. and Horizon Personal Communications,
          Inc., dated August 12, 1999.
10.19.1+  Amendment to Network  Services  Agreement by and among the Registrant,
          West  Virginia PCS  Alliance,  L.C. and  Virginia PCS  Alliance,  L.C.
          (incorporated  herein by reference to the Registrant's  Current Report
          on Form 8-K filed on August 24, 2001).
10.21+    PCS CDMA Product  Supply  Contract by and between  Motorola,  Inc. and
          Horizon Personal Communications, Inc.
10.23**   13%  Senior   Subordinated   Promissory  Note  from  Horizon  Personal
          Communications,  Inc. to First Union  Investors,  Inc., dated February
          15, 2000.
10.24**   Conversion Agreement,  by and between Horizon Personal  Communications
          and First Union Investors, Inc., dated February 15, 2000.
10.25**   Form of Horizon PCS, Inc. 2000 Stock Option Plan.
10.26**+  Site   Development   Agreement   by  and  between   Horizon   Personal
          Communications, Inc. and SBA Towers, Inc., dated August 17, 1999.
10.27**+  Master Site  Agreement  by and between  SBA Towers,  Inc.  and Horizon
          Personal Communications, Inc., dated July 1999.
10.28**+  Master  Design  Build  Agreement  by  and  between  Horizon   Personal
          Communications, Inc. and SBA Towers, Inc., dated August 17, 1999.
10.29**+  Master Site  Agreement  by and between  SBA  Towers,  Inc.  and Bright
          Personal Communications Services, LLC, dated October 1, 1999.
10.30**+  Master  Design  Build   Agreement  by  and  between  Bright   Personal
          Communications  Services,  LLC and SBA Towers,  Inc., dated October 1,
          1999.
10.31**   Services  Agreement,  dated  May 1,  2000,  between  Horizon  Personal
          Communication, Inc. and Horizon Services, Inc.
10.32**   Lease  Agreement,  dated May 1,  2000  between  Chillicothe  Telephone
          Company and Horizon Personal Communications, Inc.
10.33**   Services  Agreement,  dated  May  1,  2000  between  Horizon  Personal
          Communications, Inc. and United Communications, Inc.
10.34**   Form of Indemnification Agreement.
10.35**   Amended and Restated Tax Allocation Agreement dated May 1, 2000 by and
          among Horizon Telcom,  Inc.,  Chillicothe  Telephone Company,  Horizon
          Personal  Communications,  Inc., United Communications,  Inc., Horizon
          Services, Inc., and Horizon PCS, Inc.
10.35.1*  First  Amendment to the Amended and Restated Tax Allocation  Agreement
          dated as of  September  26, 2000 by and among  Horizon  Telcom,  Inc.,
          Chillicothe Telephone Company, Horizon Personal Communications,  Inc.,
          United Communications,  Inc., Horizon Services, Inc., and Horizon PCS,
          Inc.
10.37*    Securities  Purchase  Agreement  dated September 26, 2000 by and among
          Horizon PCS, Inc.  Apollo  Investment  Fund IV, L.P.,  Apollo Overseas
          Partners  IV,  L.P.,  Ares  Leveraged   Investment  Fund,  L.P.,  Ares
          Leveraged  Investment Fund II, L.P. and First Union Capital  Partners,
          LLC.
10.38*    Investors  Rights and Voting Agreement dated September 26, 2000 by and
          among  Horizon PCS,  Inc.  Apollo  Investment  Fund IV,  L.P.,  Apollo
          Overseas Partners IV, L.P., Ares Leveraged Investment Fund, L.P., Ares
          Leveraged  Investment Fund II, L.P. and First Union Capital  Partners,
          LLC.
10.39*    Registration  Rights  Agreement  dated September 26, 2000 by and among
          Horizon PCS, Inc.  Apollo  Investment  Fund IV, L.P.,  Apollo Overseas
          Partners  IV,  L.P.,  Ares  Leveraged   Investment  Fund,  L.P.,  Ares
          Leveraged  Investment Fund II, L.P. and First Union Capital  Partners,
          LLC.


                                       71
<PAGE>

10.40*    Credit Agreement, dated as of September 26, 2000, by and among Horizon
          Personal  Communications,  Inc.,  and Bright  Personal  Communications
          Services,   LLC,   Horizon  PCS,  Inc.  (the   "Parent")  and  certain
          Subsidiaries  of the  Parent,  the several  banks and other  financial
          institutions  as  may  from  time  to  time  become  parties  to  this
          Agreement,   First  Union  National  Bank,  as  Administrative  Agent,
          Westdeutsche  Landesbank   Girozentrale,   as  Syndication  Agent  and
          Arranger and Fortis Capital Corp., as Documentation Agent.
10.40.1** First Amendment to Credit  Agreement and Assignment dated November 20,
          2000, by and among Horizon  Personal  Communications,  Inc. and Bright
          Personal   Communications   Services,  LLC,  Horizon  PCS,  Inc.  (the
          "Parent") and certain  subsidiaries of the Parent,  Existing  Lenders,
          New Lenders,  First Union  National  Bank,  as  Administrative  agent,
          Westdeutsche  Landesbank   Girozentrale,   as  Syndication  Agent  and
          Arranger and Fortis Capital Corp., as Documentation Agent.
10.40.2   Second  Amendment to Credit  Agreement and Assignment,  dated June 29,
          2001, by and among Horizon  Personal  Communications,  Inc. and Bright
          Personal   Communications   Services,  LLC,  Horizon  PCS,  Inc.  (the
          "Parent") and certain  Subsidiaries of the Parent,  Existing  Lenders,
          New Lenders,  First Union  National  Bank,  as  Administrative  Agent,
          Westdeutsche  Landesbank   Girozentrale,   as  Syndication  Agent  and
          Arranger,   and  Fortis  Capital   Corp.,   as   Documentation   Agent
          (incorporated  herein by reference to the Registrant's  Current Report
          on Form 8-K filed on July 3, 2001).
10.40.3   Third  Amendment to Credit  Agreement  and Waiver dated as of November
          26,  2001 by and among  Horizon  Personal  Communications,  Inc.,  and
          Bright Personal  Communications  Services, LLC, Horizon PCS, Inc. (the
          "Parent") and certain  Subsidiaries  of the Parent,  the several banks
          and  other  financial  institutions  as may from  time to time  become
          parties to the Agreement, First Union National Bank, as Administrative
          Agent, Westdeutsche Landesbank Girozentrale,  as Syndication Agent and
          Arranger   and  Fortis   Capital   Corp.,   as   Documentation   Agent
          (incorporated   by  reference  to  Exhibit   10.40.3  filed  with  the
          Registrant's Current Report on Form 8-K filed on November 28, 2001).
10.41*    Warrant  Agreement dated as of September 26, 2000 between Horizon PCS,
          Inc. and Wells Fargo Bank Minnesota, National Association.
10.42*    Warrant Registration Rights Agreement made as of September 26, 2000 by
          and  among  Horizon  PCS,  Inc.  and  Donaldson,   Lufkin  &  Jenrette
          Securities Corporation and First Union Securities, Inc.
10.43*    Pledge  and  Escrow  Agreement  dated  December  7,  2001 by and among
          Horizon PCS, Inc., Bright Personal Communications Services, LLC, Wells
          Fargo and Minnesota, National Association, as Escrow Agent.
10.44*    Registration  Rights  Agreement  dated  December  7, 2001 by and among
          Horizon PCS,  Inc.,  Horizon  Personal  Communications,  Inc.,  Bright
          Personal Communications  Services, LLC, and Credit Suisse First Boston
          Corporation,  First Union Securities,  Inc., Bear, Stearns & Co., Inc.
          and Lehman Brothers, Inc.
10.45*    Indenture  dated  December 7, 2001 by and among Horizon PCS,  Inc., as
          Issuer,  Horizon  Personal  Communications,  Inc., and Bright Personal
          Communications  Services,  LLC,  as  Guarantors,  and Wells Fargo Bank
          Minnesota, National Association, as Trustee.
10.46*    Purchase  Agreement  dated December 4, 2001 between Horizon PCS, Inc.,
          Horizon Personal Communications,  Inc., Bright Personal Communications
          Services, LLC, and Credit Suisse First Boston Corporation, First Union
          Securities, Inc., Bear, Stearns & Co., Inc., Lehman Brothers, Inc.
21.1**    Subsidiaries of Horizon.



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


                                       72
<PAGE>

                                HORIZON PCS, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S>                                                                                      <C>
                                                                                          Page

Report of Independent Public Accountants............................................       F-2

Consolidated Balance Sheets as of December 31, 2001 and 2000........................       F-3

Consolidated Statements of Operations for the Years Ended
  December 31, 2001, 2000 and 1999..................................................       F-5

Consolidated Statements of Comprehensive Income (Loss)
  for the Years Ended December 31, 2001, 2000 and 1999..............................       F-6

Consolidated Statements of Changes in Stockholders' Equity (Deficit)
  for the Years Ended December 31, 2001, 2000 and 1999..............................       F-7

Consolidated Statements of Cash Flows for the Years Ended
  December 31, 2001, 2000 and 1999..................................................       F-8

Notes to Consolidated Financial Statements, as of December 31, 2001 and 2000,
  and for the Years Ended December 31, 2001, 2000 and 1999..........................      F-10

Financial Statement Schedule - Valuation and Qualifying Accounts....................      F-31

</TABLE>



                                       F-1
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Shareholders of Horizon PCS, Inc.:

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

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

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

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




                                           ARTHUR ANDERSEN LLP

Columbus, Ohio
February 12, 2002



                                       F-2
<PAGE>

HORIZON PCS, INC.

Consolidated Balance Sheets
As of December 31, 2001 and 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                                                            <C>               <C>
                                                                                 December 31,      December 31,
                                                                                     2001              2000
                                                                               ----------------  ----------------
ASSETS
------
CURRENT ASSETS:
  Cash and cash equivalents................................................... $   123,775,562   $   191,417,394
  Restricted cash.............................................................      24,597,222                --
  Accounts receivable-- subscriber, less allowance for
    doubtful accounts of approximately $1,804,000 and $901,000 at
    December 31, 2001 and 2000, respectively..................................      14,293,771         3,259,634
  Receivable from affiliate...................................................         100,437           741,453
  Receivable from Parent......................................................         483,785                --
  Equipment inventory.........................................................       3,845,433         3,850,335
  Investments.................................................................              --         2,895,646
  Interest receivable and other current assets................................         840,970         4,573,042
                                                                               ----------------  ----------------
        Total current assets..................................................     167,937,180       206,737,504
                                                                               ----------------  ----------------

OTHER ASSETS:
  Restricted cash.............................................................      24,062,500                --
  Investment in Parent........................................................              --         1,120,262
  Intangible asset-- Sprint PCS licenses, net of amortization.................      42,840,534        45,299,867
  Goodwill, net of amortization...............................................       7,191,180         7,580,067
  Unamortized debt issuance costs and other assets............................      24,438,992        14,855,469
                                                                               ----------------  ----------------
        Total other assets....................................................      98,533,206        68,855,665
                                                                               ----------------  ----------------

PROPERTY AND EQUIPMENT, NET                                                        214,867,858       109,701,845
                                                                               ----------------  ----------------

            Total assets...................................................... $   481,338,244   $   385,295,014
                                                                               ================  ================
</TABLE>


(Continued on next page)



                                       F-3
<PAGE>

HORIZON PCS, INC.

Consolidated Balance Sheets (Continued)
As of December 31, 2001 and 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                                                                            <C>               <C>
                                                                                 December 31,      December 31,
                                                                                     2001              2000
                                                                               ----------------  ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES:
  Accounts payable............................................................ $     9,500,931   $    12,065,021
  Accrued liabilities.........................................................      27,527,462        24,722,200
  Payable to Sprint PCS.......................................................      10,244,529         4,959,128
  Deferred service revenue....................................................       3,712,734         1,015,701
  Payable to Parent...........................................................              --           427,747
  Payable to affiliate........................................................              --         1,114,727
                                                                               ----------------  ----------------
        Total current liabilities.............................................      50,985,656        44,304,524
                                                                               ----------------  ----------------

OTHER LONG-TERM LIABILITIES:
  Long-term debt..............................................................     384,055,643       185,283,104
  Payable to affiliates.......................................................              --           192,334
  Other long-term liabilities.................................................       2,195,355         1,015,802
  Deferred income.............................................................      10,719,888         7,504,268
                                                                               ----------------  ----------------
        Total other long-term liabilities.....................................     396,970,886       193,995,508
                                                                               ----------------  ----------------
          Total liabilities...................................................     447,956,542       238,300,032
                                                                               ----------------  ----------------

COMMITMENTS AND CONTINGENCIES (Note 12)

CONVERTIBLE PREFERRED STOCK...................................................     145,349,043       134,421,881

STOCKHOLDERS' EQUITY (DEFICIT):
  Preferred stock, 10,000,000 shares authorized, none issued
    or outstanding, at $0.0001 par value......................................              --                --
  Common stock-- class A, 300,000,000 shares authorized,
    26,646 issued and outstanding in 2001, at $0.0001 par value...............               3                --
  Common stock-- class B, 75,000,000 shares authorized,
    58,458,354 issued and 58,445,288 outstanding in 2001; 58,485,000
    issued and 58,471,934 outstanding in 2000, at $0.0001 par value...........           5,846             5,849
  Treasury stock-- class B, 13,066 shares, at $8.50 per share.................        (111,061)         (111,061)
  Accumulated other comprehensive income (loss)...............................        (837,851)               --
  Additional paid-in capital..................................................      91,852,117        91,852,117
  Deferred stock option compensation..........................................      (1,566,496)       (2,275,444)
  Retained deficit............................................................    (201,309,899)      (76,898,360)
                                                                               ----------------  ----------------
          Total stockholders' equity (deficit)................................    (111,967,341)       12,573,101
                                                                               ----------------  ----------------
            Total liabilities and stockholders' equity (deficit).............. $   481,338,244   $   385,295,014
                                                                               ================  ================
</TABLE>


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



                                       F-4
<PAGE>

HORIZON PCS, INC.

Consolidated Statements of Operations
For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

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

                                                                  2001               2000               1999
                                                            ----------------   ----------------   ----------------
OPERATING REVENUES:
  Subscriber revenues...................................    $     77,657,971   $     17,724,816   $      3,664,530
  Roaming revenues......................................          38,540,276          8,408,102            641,962
  Equipment revenues....................................           7,105,457          3,061,021            600,451
                                                            ----------------   ----------------   ----------------
         Total operating revenues.......................         123,303,704         29,193,939          4,906,943

OPERATING EXPENSES:
  Cost of service (exclusive of items shown below)......         100,515,780         27,452,382          8,203,598
  Cost of equipment.....................................          14,871,647          9,774,881          2,444,322
  Selling and marketing.................................          48,992,817         18,025,868          3,475,212
  General and administrative (exclusive of items shown
    below)..............................................          28,384,548         12,477,034          3,943,931
  Non-cash compensation.................................           1,433,848            490,202            291,345
  Depreciation and amortization.........................          18,518,948          6,134,458          2,684,644
                                                            ----------------   ----------------   ----------------
         Total operating expenses.......................         212,717,588         74,354,825         21,043,052
                                                            ----------------   ----------------   ----------------

OPERATING LOSS..........................................         (89,413,884)       (45,160,886)       (16,136,109)

Gain (Loss) on exchange of stock........................            (399,673)        11,550,866                 --
Gain (Loss) on disposal of PCS assets...................          (1,296,834)                --          1,387,718
Interest income and other, net..........................           5,062,780          4,803,820             52,421
Interest expense, net of capitalized interest...........         (27,434,076)       (10,317,473)        (1,529,157)
                                                            ----------------   ----------------   ----------------

LOSS ON CONTINUING OPERATIONS BEFORE INCOME TAX (EXPENSE)
  BENEFIT...............................................        (113,481,687)       (39,123,673)       (16,225,127)

INCOME TAX (EXPENSE) BENEFIT............................                  --         (1,075,711)         5,275,125
                                                            ----------------   -----------------  ----------------

LOSS ON CONTINUING OPERATIONS...........................        (113,481,687)       (40,199,384)       (10,950,002)

DISCONTINUED OPERATIONS:
  Income from discontinued operations, net of tax
    expense of $73,000 and $145,000 for the years
    ended December 31, 2000 and 1999, respectively......                  --            141,245            282,331
                                                            ----------------   ----------------   ----------------

LOSS BEFORE EXTRAORDINARY ITEM..........................        (113,481,687)       (40,058,139)       (10,667,671)

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

NET LOSS................................................        (113,481,687)       (40,544,462)       (10,667,671)

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

NET LOSS AVAILABLE TO COMMON STOCKHOLDERS...............    $   (124,411,539)  $    (43,326,510)  $    (10,667,671)
                                                            ================   ================   ================

Basic and diluted loss per share on continuing operations
  available to common stockholders......................    $          (2.13)  $          (0.76)  $          (0.20)
Basic and diluted income per share from discontinued
  operations............................................                  --                 --                 --
Basic and diluted loss per share from extraordinary item                  --              (0.01)                --
                                                            ----------------   ----------------   ----------------
Basic and diluted net loss per share available to common
  stockholders..........................................    $          (2.13)  $          (0.77)  $          (0.20)
                                                            =================  ================   ================
Weighted-average common shares outstanding..............          58,471,934         56,177,948         53,806,200
                                                            ================   ================   ================
</TABLE>

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



                                       F-5
<PAGE>


HORIZON PCS, INC.

Consolidated Statements of Comprehensive Income (Loss)
For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
<S>                                                         <C>                <C>                <C>
                                                                   2001              2000                1999
                                                            ----------------   ----------------   ----------------

NET LOSS................................................    $   (113,481,687)  $    (40,544,462)  $    (10,667,671)

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

COMPREHENSIVE INCOME (LOSS).............................    $   (114,319,538)  $    (40,544,462)  $    (10,667,671)
                                                            ================   ================   ================

</TABLE>

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



                                       F-6
<PAGE>

HORIZON PCS, INC.

Consolidated Statements of Changes in Stockholders' Equity (Deficit)
For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                      <C>       <C>      <C>     <C>        <C>          <C>          <C>           <C>          <C>
                                                               Accumulated
                                   class A  class B                Other     Additional    Deferred                     Total
                         Preferred Common   Common   Treasury  Comprehensive   Paid-in   Stock Option     Retained   Stockholders'
                           Stock    Stock    Stock     Stock   Income (Loss)   Capital   Compensation     Deficit   Equity (Deficit)
                         --------- -------- -------- --------- ------------- ----------  ------------  ------------ -------------
Balance, December 31,
  1998..................   $ --     $ --    $5,381  $      --  $       --   $13,550,822   $       --  $(11,613,588) $  1,942,615
  Equity contribution...     --       --        --         --          --     6,270,422           --            --     6,270,422
  Deferred stock option
   compensation.........     --       --        --         --          --     2,095,068   (2,095,068)           --            --
  Stock option compen-
   sation expense.......     --       --        --         --          --            --      291,345            --       291,345
  Net loss..............     --       --        --         --          --            --           --   (10,667,671)  (10,667,671)
                         --------- -------- -------- --------- ------------- ----------  ------------  ------------ -------------
Balance, December 31,
  1999..................     --       --     5,381         --          --    21,916,312   (1,803,723)  (22,281,259)   (2,163,289)
                         --------- -------- -------- --------- ------------- ----------  ------------  ------------ -------------
  Equity contribution...     --       --        --         --          --     1,373,703           --            --     1,373,703
  Acquisition of Bright
   PCS..................     --       --       468         --          --    33,999,532           --            --    34,000,000
  Issuance of warrants..     --       --        --         --          --    33,600,647           --            --    33,600,647
  Acquisition of trea-
   sury stock...........     --       --        --   (111,061)         --            --           --            --      (111,061)
  Deferred stock option
    compensation........     --       --        --         --          --       961,923     (961,923)           --            --
  Stock option compen-
   sation expense.......     --       --        --         --          --            --      490,202            --       490,202
  Dividends.............     --       --        --         --          --            --           --    (7,033,773)   (7,033,773)
  Tax on dividend.......     --       --        --         --          --            --           --    (4,256,818)   (4,256,818)
  Net loss..............     --       --        --         --          --            --           --   (40,544,462)  (40,544,462)
  Preferred Dividend....     --       --        --         --          --            --           --    (2,782,048)   (2,782,048)
                         --------- -------- -------- --------- ------------- ----------  ------------  ------------ -------------
Balance, December 31,
  2000..................     --       --     5,849   (111,061)         --    91,852,117   (2,275,444)  (76,898,360)   12,573,101
                         --------- -------- -------- --------- ------------- ----------  ------------  ------------ -------------
  Stock option compen-
   sation expense.......     --       --        --         --          --            --      708,948            --       708,948
  Net loss..............     --       --        --         --          --            --           --  (113,481,687) (113,481,687)
  Other comprehensive
   income (loss)........     --       --        --         --    (837,851)           --           --            --      (837,851)
  Conversion of class B
   common stock.........     --        3        (3)        --          --            --           --            --            --
  Preferred dividend....     --       --        --         --          --            --           --   (10,929,852)  (10,929,852)
                         --------- -------- -------- --------- ------------- ----------  ------------  ------------ -------------
Balance, December 31,
  2001..................   $ --     $  3    $5,846  $(111,061)$  (837,851)  $91,852,117  $(1,566,496)$(201,309,899)$(111,967,341)
                         ========= ======== ======== ========= ============= ==========  ============  ============ =============
</TABLE>
                   The accompanying notes are an integral part
                   of these consolidated financial statements.



                                      F-7

<PAGE>

HORIZON PCS, INC.

Consolidated Statements of Cash Flows
For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                                                <C>                <C>              <C>
                                                                         2001               2000             1999
                                                                   ----------------   ---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss................................................         $  (113,481,687)   $   (40,544,462) $   (10,667,671)
                                                                   ----------------   ---------------- ----------------
Adjustments to reconcile net loss to net cash used in
  operating activities, net of effect of acquisition:
  Depreciation and amortization...........................              18,518,948          6,189,073        2,911,258
  Extraordinary loss......................................                      --            486,323               --
  Deferred Federal income taxes...........................                      --                 --         (739,016)
  Non-cash compensation expense...........................               1,433,848            490,202          291,345
  Non-cash interest expense...............................              19,344,515          5,635,498               --
  Non-cash loss (gain) on exchange of stock...............                 399,673        (11,550,866)              --
  Allowance for doubtful accounts.........................               6,409,561          1,407,028          487,595
  Loss on hedging activities..............................                 176,322                 --               --
  Loss (Gain) on disposal of PCS assets and property and
   equipment..............................................               1,296,834                 --       (1,387,718)
  Change in:
    Accounts receivable...................................             (17,443,698)        (6,075,589)        (701,923)
    Equipment inventory...................................                   4,902         (1,712,998)      (1,253,208)
    Interest receivable and other.........................               3,732,072         (2,316,514)         (39,416)
    Deferred income.......................................               3,215,620          7,293,281               --
    Accounts payable......................................              (2,564,090)         8,916,376        1,707,749
    Accrued liabilities and deferred service revenue......              10,787,696         23,523,951          164,264
  Change in receivable/payable from affiliates and Parent.              (1,577,577)         2,837,997        4,857,543
  Change in other assets and liabilities, net.............              (3,118,592)          (167,593)         181,812
                                                                   ----------------   ---------------- ----------------
     Total adjustments....................................              40,616,034         34,956,169        6,480,285
                                                                   ----------------   ---------------- ----------------
         Net cash used in operating activities............             (72,865,653)        (5,588,293)      (4,187,386)
                                                                   ----------------   ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures, net...............................            (116,574,323)       (83,629,782)      (6,253,133)
  Increase in restricted cash.............................             (48,659,722)                --               --
  Proceeds from redemption of RTFC capital certificates...               2,895,646                 --               --
  Investment in Parent....................................                      --        (11,835,000)              --
  Investment in joint venture.............................                      --         (1,032,000)      (2,068,000)
  Proceeds from the sale of property and equipment........                      --            734,000        4,800,000
  Dividends received......................................                  (4,311)          (160,923)              --
  Cash acquired in acquisition of Bright PCS..............                      --          4,926,803               --
  Equity loss in investments, net.........................                      --             28,555               --
                                                                   ----------------   ---------------- ----------------
         Net cash used in investing activities............            (162,342,710)       (90,968,347)      (3,521,133)
                                                                   ----------------   ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Convertible preferred stock.............................                      --        126,500,000               --
  Cash dividends paid.....................................                      --            (18,309)              --
  Capital contributions...................................                      --          1,373,703        3,742,647
  Stock issuance costs....................................                      --         (9,161,242)              --
  Deferred financing fees.................................              (7,433,469)       (15,410,327)              --
  Intercompany advances (repayments) to Parent............                      --         (3,927,545)       1,827,517
  Notes payable - borrowings, net of repayments...........             175,000,000        188,470,948        2,258,646
                                                                   ----------------   ---------------- ----------------
         Net cash provided by financing activities........             167,566,531        287,827,228        7,828,810
                                                                   ----------------   ---------------- ----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS......             (67,641,832)       191,270,588          120,291
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR..............             191,417,394            146,806           26,515
                                                                   ----------------   ---------------- ----------------
CASH AND CASH EQUIVALENTS, END OF YEAR....................         $   123,775,562    $   191,417,394  $       146,806
                                                                   ----------------   ---------------- ----------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest, net of amounts capitalized....................         $     6,571,184    $     2,579,986  $     1,529,631
  Income taxes............................................                 338,141          5,174,949               --

</TABLE>


(Continued on next page)


                                      F-8
<PAGE>

HORIZON PCS, INC.

Consolidated Statements of Cash Flows (Continued)
For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

     During 2001,  the Company  paid  $11,775,917  of  dividends on  convertible
preferred  stock.  The dividends  were paid in additional  shares of convertible
preferred  stock.  During 2001 and 2000,  the  Company  accrued  $1,935,983  and
$2,782,048, respectively, to be paid in 2002 and 2001, respectively.

     The purchase of Horizon  Telcom,  Inc. (the "Parent")  common stock in 2000
(Note 5) was financed  through a  $13,000,000,  one year,  unsecured  13% senior
subordinated  promissory note to a third party lender. The lender converted 100%
of the outstanding  principal and unpaid interest into the Company's convertible
preferred stock valued at $14,066,611 (Note 13).

     The  proceeds  from the  issuance of the  discount  notes in 2000 have been
allocated to long-term debt and the value of the warrants  ($20,245,000 or $5.32
per share) has been allocated to additional paid-in capital (Note 9).

     During 2000,  the Company agreed to grant to Sprint PCS warrants to acquire
2,510,460 shares of class A common stock,  valued at approximately  $13,356,000,
in  exchange  for the right to service  PCS  markets in  additional  areas.  The
warrants will be issued to Sprint at the earlier of an initial  public  offering
of the Company's common stock or July 31, 2003 (Note 15).

     During 1999, the Company received approximately  $2,528,000 of net property
from Horizon Telcom, Inc., which was recorded as a capital contribution.

     During 1999, the Company had outstanding notes payable totaling  $1,032,000
related to the investment in joint venture.



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

                                      F-9
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 1 - Organization

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

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

NOTE 2 - Business Operations

     The Company primarily  provides wireless personal  communications  services
("PCS") as an  affiliate  of Sprint  PCS. At December  31,  2001,  approximately
194,100 Sprint PCS subscribers were in the Company's territory.

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

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

     During 1998,  the Company  elected to return all of the spectrum  from four
licenses and half of the spectrum from the fifth license. In connection with the
return of the spectrum,  the Company  entered into  management  agreements  with
Sprint PCS, the PCS group of Sprint  Corporation,  during 1998. These agreements
provide the Company with the exclusive right to build, own and manage a wireless
voice and data  services  network  in  certain  markets  located  in Ohio,  West
Virginia, Kentucky, Virginia, Tennessee and Maryland under the Sprint PCS brand.
HPCS is required to  build-out  the  wireless  network  according  to Sprint PCS
specifications.  The term of the  agreements  is 20 years with three  successive
10-year  renewal  periods  unless  terminated  by either party under  provisions
outlined in the management  agreements.  The management  agreements commenced in
June 1998,  but payments of the  management  fee (Note 3) did not commence until
HPCS  converted to a fully branded  Sprint PCS  affiliate in October  1999.  The
management agreements included  indemnification  clauses between the Company and
Sprint PCS to indemnify  each party against  claims  arising from  violations of
laws  or the  management  agreements,  other  than  liabilities  resulting  from
negligence or willful misconduct of the party seeking to be indemnified.


                                      F-10
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 2 - Business Operations (Continued)

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

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

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

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

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

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

     The management agreement specifies the terms of the Sprint PCS affiliation,
including the required network build-out plan. The Company has agreed to operate
its  network  to  provide  for a seamless  handoff  of a call  initiated  in its
territory  to a  neighboring  Sprint PCS  network.  The  Sprint  PCS  management
agreements  require the Company to complete specified portions of its markets by
specified dates.

     The Company must comply with Sprint PCS' program requirements for technical
standards,  customer service standards,  national and regional  distribution and
national   accounts   programs  to  the  extent  that  Sprint  PCS  meets  these
requirements.

     A failure  to meet the  build-out  requirements  for any of HPCS' or Bright
PCS' markets, or to meet Sprint PCS' technical requirements,  would constitute a
breach of the Sprint PCS agreements that could lead to their  termination if not
cured  within a cure  period of 30 to 180 days,  depending  on the nature of the
breach. If Sprint PCS terminates these agreements, the Company will no longer be
able to offer  Sprint PCS products and  services.  Additionally,  Sprint PCS may
purchase the Company's  operating assets or capital stock for 72% of the "Entire
Business  Value",  as defined in the  management  agreements.  The Company is in
compliance  with these  agreements,  or has  obtained  appropriate  waivers from
Sprint PCS as of December 31, 2001.

NOTE 3 - Summary of Significant Accounting Policies

Estimates

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

Cash and Cash Equivalents

     Cash and cash  equivalents  include cash on hand,  demand  deposits,  money
market accounts and investments in commercial paper with original  maturities of
three months or less.


                                       F-11
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 3 - Summary of Significant Accounting Policies (Continued)

Restricted Cash

     In connection with the Company's  December 2001 offering of $175,000,000 of
senior notes due in 2011 (Note 9),  approximately  $48,660,000 of the offering's
proceeds  was  placed in an escrow  account  to be used  toward  the first  four
semi-annual  interest  payments due under the terms of the notes.  The first two
interest payments have been classified as short-term.  The funds are invested in
a government security money market account.  Interest earned on the escrow funds
totaled $69,000 in 2001.

Equipment Inventory

     Equipment   inventory   consists  of  handsets  and  related   accessories.
Inventories are carried at the lower of cost (determined by the weighted average
method) or market (replacement cost).

Property and Equipment

     Property and equipment,  including  improvements  that extend useful lives,
are stated at original cost (Note 6), while  maintenance and repairs are charged
to operations as incurred.  Construction work in progress includes  expenditures
for the  purchase of capital  equipment,  construction  and items such as direct
payroll-related  benefits  and interest  capitalized  during  construction.  The
Company  capitalizes  interest  pursuant to Statement  of  Financial  Accounting
Standards  ("SFAS")  No. 34,  "Capitalization  of  Interest  Cost." The  Company
capitalized interest of approximately $6,579,000, $1,476,000 and $21,000 for the
years ended December 31, 2001, 2000 and 1999, respectively.

     The  Company  accounts  for  long-lived   assets  in  accordance  with  the
provisions of SFAS No. 121,  "Accounting for the Impairment of Long-Lived Assets
and Long-Lived  Assets to be Disposed Of." SFAS No. 121 requires that long-lived
assets and certain identifiable  intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying  amount of an asset to future  undiscounted  net
cash flows expected to be generated by the asset.  If such assets are considered
to be impaired,  the  impairment  to be  recognized is measured by the amount by
which the  carrying  amount of the assets  exceeds the fair value of the assets.
Assets to be disposed of are  reported  at the lower of the  carrying  amount or
fair value,  less costs to sell. At December 31, 2001 and 2000,  the Company had
no impaired assets.

Depreciation and Amortization of Property and Equipment

     The Company  provides for  depreciation  and  amortization  of property and
equipment under the straight-line  method,  based on the estimated service lives
of the various classes of property. Estimated useful lives are as follows:

                                                        Years
                                                        -----
      Network Assets................................    5-15
      Switching Equipment............................    5-8
      Furniture, vehicles and office equipment.......    3-5

Debt Issuance Costs

     In connection with the issuance of long-term debt (Note 9), the Company has
incurred approximately  $21,761,000 in deferred financing costs through December
31, 2001,  including  approximately  $7,433,000 during 2001. These debt issuance
costs are  amortized  using the effective  interest  method over the term of the
underlying  obligation,  ranging  from eight to ten years.  For the years  ended
December 31, 2001, 2000 and 1999, approximately $1,120,000,  $690,000 and $5,000
of  amortization  of  debt  issuance  costs,   including   subsequently  retired
financings, was included in interest expense.


                                       F-12
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 3 - Summary of Significant Accounting Policies (Continued)

Derivative Financial Instruments

     The  Company's  policies  do not  permit  the use of  derivative  financial
instruments  for speculative  purposes.  The Company uses interest rate swaps to
manage  interest  rate risk.  The net amount paid or  received on interest  rate
swaps is recognized as an adjustment to interest expense (Note 19).

     The  Company  has  adopted  SFAS  No.  133,   "Accounting   for  Derivative
Instruments and Hedging Activities", as amended by SFAS No. 138, "Accounting for
Derivative  Instruments  and  Certain  Hedging  Activities".   These  statements
established  accounting and reporting  standards for derivative  instruments and
hedging  activities  that require an entity to recognize all  derivatives  as an
asset or liability measured at fair value.  Depending on the intended use of the
derivative,  changes in its fair value will be  reported in the period of change
as either a component of earnings or a component of other comprehensive  income.
Pursuant to the  derivative  criteria  established by SFAS No. 133, an item with
exposure to variability in expected  future cash flows that is attributable to a
particular risk is considered a cash flow hedge.  The exposure may be associated
with an existing  recognized asset or liability such as future interest payments
on variable-rate debt.

Revenue Recognition

     The Company sells handsets and  accessories  which are recorded at the time
of the sale as  equipment  revenue.  After the handset has been  purchased,  the
subscriber purchases a service package which is recognized monthly as service is
provided  and is included as  subscriber  revenue.  The Company  defers  monthly
service  revenue billed in advance.  Roaming revenue is recorded when Sprint PCS
subscribers,   other  Sprint  PCS  affiliate   subscribers  and  non-Sprint  PCS
subscribers roam onto the Company's network.

     The Company's  accounting  policy for the  recognition  of  activation  fee
revenue is to record the  revenue  over the  periods  such  revenue is earned in
accordance with the current  interpretations  of SEC Staff  Accounting  Bulletin
("SAB") No. 101,  "Revenue  Recognition in Financial  Statements."  Accordingly,
activation fee revenue and direct  customer  activation  expense is deferred and
will be recorded over the average life for those  customers (36 months) that are
assessed an activation fee. The Company  recognized  approximately  $695,000 and
$47,000 of both  activation fee revenue and customer  activation  expense during
2001 and 2000,  respectively,  and had  deferred  approximately  $3,809,000  and
$393,000 of activation  fee revenue and direct  customer  activation  expense at
December  31,  2001 and 2000,  respectively,  which is shown as a  component  of
deferred income on the consolidated balance sheets.

     A  management  fee  of  8%  of  collected  PCS  revenues  from  Sprint  PCS
subscribers  based in the  Company's  territory,  is  accrued  as  services  are
provided and  remitted to Sprint PCS and  recorded as cost of service.  Revenues
generated from the sale of handsets and accessories, inbound and outbound Sprint
PCS roaming fees, and roaming services  provided to Sprint PCS customers who are
not based in the Company's  territory are not subject to the 8% affiliation fee.
Expense  related  to  the  management  fees  charged  under  the  agreement  was
approximately  $5,923,000,  $1,302,000 and $130,000 for the years ended December
31, 2001, 2000 and 1999 respectively.

Advertising Costs

     Costs  related  to  advertising  and  other  promotional  expenditures  are
expensed as incurred.  Advertising and promotional  costs totaled  approximately
$10,345,000,  $4,506,000  and  $1,165,000 for the years ended December 31, 2001,
2000 and 1999, respectively.



                                       F-13
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 3 - Summary of Significant Accounting Policies (Continued)

Stock-Based Compensation

     The  Company  accounts  for  compensation  cost  associated  with its stock
compensation plans for employees in accordance with Accounting  Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees".  The Company
applies  SFAS No. 123  "Accounting  for Stock  Based  Compensation"  and related
interpretations, for options granted to non-employees.

Deferred Income

     During  2001 and  2000,  the  Company  received  $740,000  and  $7,220,000,
respectively,  of site bonuses from SBA, which  constructs  towers leased by the
Company.  The Company  defers and  amortizes the site bonus over the life of the
respective  lease.  During  2001 and 2000,  the Company  recorded  approximately
$916,000  and  $320,000,   respectively,   as  a  reduction  to  lease  expense.
Additionally,  the Company has approximately $3,809,000 and $393,000 of deferred
activation fee revenue at December 31, 2001 and 2000, respectively.

Federal Income Taxes

     The Company  accounts for income taxes pursuant to the requirements of SFAS
No. 109,  "Accounting for Income Taxes". Under SFAS No. 109, deferred tax assets
and liabilities are determined based on differences  between financial reporting
and tax basis of assets and  liabilities  and are measured using the enacted tax
rates and laws  that will be in effect  when the  differences  are  expected  to
reverse.  Deferred tax assets and liabilities are adjusted for future changes in
tax rates.

Concentration of Credit Risk

     The  Company  maintains  cash and cash  equivalents  in an  account  with a
financial  institution  in excess of the amount  insured by the Federal  Deposit
Insurance Corporation.  The financial institution is one of the largest banks in
the United States and management  does not believe there is  significant  credit
risk associated with deposits in excess of Federally insured amounts.

     Restricted  cash is invested in short-term  government  money market funds.
The Company does not believe there is significant  credit risk  associated  with
the  funds  as  the  underlying  securities  are  issued  by the  U.S.  Treasury
Department.

     The  Company  maintains  accounts  with  nationally  recognized  investment
managers.  Such  deposits  are not  insured  by the  Federal  Deposit  Insurance
Corporation.  Management  does not  believe  there is  significant  credit  risk
associated with these uninsured deposits.

     Other  financial  instruments  that  potentially  subject  the  Company  to
concentrations  of credit risk  consist  primarily of accounts  receivable  from
subscribers.  Management  believes  the risk is  limited  due to the  number  of
customers comprising the Company's customer base and its geographic diversity.


                                       F-14
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 3 - Summary of Significant Accounting Policies (Continued)

Net Loss per Share

     The Company  computes net loss per common share in accordance with SFAS No.
128,  "Earnings per Share" and SAB No. 98. Basic and diluted loss per share from
continuing  operations is computed by dividing  loss on  continuing  operations,
less  preferred  stock  dividends,  for  each  period  by  the  weighted-average
outstanding  common  shares.  Basic and diluted net loss per share  available to
common  stockholders  is  computed  by  dividing  net loss  available  to common
stockholders for each period by the weighted-average  outstanding common shares.
No  conversion of common stock  equivalents  (options,  warrants or  convertible
securities)  has been  assumed in the  calculations  since the  effect  would be
antidilutive.  As a result,  the number of  weighted-average  outstanding common
shares  as well as the  amount  of net loss per  share is the same for basic and
diluted net loss per share  calculations  for all periods  presented.  There are
three  items that  could  potentially  dilute  basic  earnings  per share in the
future.  These  items  include the common  stock  options  (Note 16),  the stock
purchase  warrants  (Notes 9 and 15) and the  convertible  preferred stock (Note
13). These items will be included in the diluted earnings per share  calculation
when dilutive.

Recent Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No.  141,  "Business  Combinations"  and  SFAS  No.  142,  "Goodwill  and  Other
Intangible Assets".  SFAS No. 141 addresses  financial  accounting and reporting
for all  business  combinations  and  requires  that all  business  combinations
entered into subsequent to June 2001 be recorded under the purchase method. This
statement  also  addresses  financial  accounting and reporting for goodwill and
other intangible assets acquired in a business combination at acquisition.  SFAS
No. 142 addresses  financial  accounting  and reporting  for  intangible  assets
acquired  individually  or with a group of other  assets  at  acquisition.  This
statement  also  addresses  financial  accounting and reporting for goodwill and
other intangible assets subsequent to their acquisition.

     These  statements  will be  adopted  by the  Company  on  January  1, 2002.
Goodwill  amortization  will cease as of December 31, 2001, and the Company will
be required to complete an  impairment  test of the remaining  goodwill  balance
annually (or more frequently if impairment  indicators  arise).  The Company has
not yet  determined  the financial  impact the adoption of these  pronouncements
will have on its financial position or results of operations. As of December 31,
2001, the Company has goodwill of approximately  $7,191,000,  net of accumulated
amortization,   related  to  the   acquisition  of  Bright  PCS  and  recognized
approximately  $389,000  of  amortization  expense  during  2001  (Note 4).  The
valuation of this goodwill will be subject to an impairment  test at the date of
adoption.  The Company will  complete the first step of the  impairment  test by
June 30, 2002 and, if  necessary,  will complete the second step by December 31,
2002.

     In June  2001,  the  FASB  issued  SFAS  No.  143,  "Accounting  for  Asset
Retirement  Obligations".  This  statement  addresses  financial  accounting and
reporting for obligations associated with the retirements of tangible long-lived
assets  and  the  associated  asset  retirement   costs.  It  applies  to  legal
obligations associated with the retirement of long-lived assets that result from
the  acquisition,  construction,  development and (or) the normal operation of a
long-lived  asset.  The Company will adopt this statement  effective  January 1,
2003.  The adoption is not expected to have a material  effect on the  Company's
financial position, results of operations or cash flows.

     In  August  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived  Assets".  SFAS No. 144 addresses financial
accounting and reporting for the impairment of long-lived  assets. The statement
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for  Long-Lived  Assets to Be Disposed  Of", and the  accounting  and  reporting
provisions of APB Opinion No. 30. SFAS No. 144 removes  goodwill from its scope,
as goodwill is addressed in the impairment  test described  above under SFAS No.
142. The Company will adopt SFAS No. 144 on January 1, 2002. The adoption is not
expected to have a material effect on the Company's financial position,  results
of operations or cash flows.


                                       F-15
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 3 - Summary of Significant Accounting Policies (Continued)

Reclassifications

     Certain prior year amounts have been  reclassified to conform with the 2001
presentation.

NOTE 4 - Acquisitions

     During 1999 the Company entered into a joint venture  agreement through the
purchase  of 25.6% of Bright  Personal  Communications  Services,  LLC  ("Bright
PCS").  The  investment  was  accounted for under the equity  method.  The joint
venture  was  established  in October  1999 to provide  personal  communications
services in Ohio, Indiana and Michigan.

     On June 27, 2000, the Company acquired the remaining 74.4% of Bright PCS in
exchange for  approximately  8% of the Company's class B common stock (4,678,800
shares valued at approximately $34,000,000) and approximately 40% of the Horizon
Telcom,  Inc.  common stock owned by HPC (31,912 shares valued at  approximately
$15,300,000) (Note 5). This acquisition was treated as a purchase for accounting
purposes.  The  consolidated  statements  of  operations  include the results of
Bright PCS from June 28, 2000.

     In conjunction with this transaction,  the Company also acquired the Bright
PCS  management  agreement  with  Sprint PCS and,  with it, the right to operate
using Sprint PCS licenses in Bright PCS' markets.  The Company has recognized an
intangible asset totaling  approximately  $33,000,000  related to this licensing
agreement  which  will be  amortized  over 20  years,  the  initial  term of the
underlying   management   agreement.   Amortization   commenced  in  June  2000.
Amortization  expense  for the years  ended  December  31,  2001 and  2000,  was
$1,707,000  and  $868,000,   respectively.   Accumulated   amortization  on  the
intangible  asset was  approximately  $2,575,000 and $868,000 as of December 31,
2001 and 2000, respectively.

     The  purchase  price  exceeded  the fair  market  value  of the net  assets
acquired by approximately $7,778,000.  The resulting goodwill is being amortized
on a  straight-line  basis over 20 years.  Amortization  commenced in June 2000.
Amortization  expense  for the years  ended  December  31,  2001 and  2000,  was
$389,000 and $198,000,  respectively.  Accumulated  amortization of goodwill was
approximately $587,000 and $198,000 at December 31, 2001 and 2000, respectively.
The  Company  will adopt  SFAS No.  142 on  January 1, 2002.  As a result of the
adoption,  goodwill  amortization  will cease as of December 31,  2001,  and the
Company  will be  required  to  complete  an  impairment  test of the  remaining
goodwill balance annually (or more frequently if impairment indicators arise).

     The  purchase  price  allocation  of the fair value of assets  acquired and
liabilities assumed is summarized below:

                                                     Fair Value at
                                                     June 27, 2000
                                                     -------------
             Working capital........................  $  2,072,000
             Property and equipment.................     6,328,000
             Sprint PCS licenses....................    33,000,000
             Goodwill...............................     7,778,000
             Other assets...........................       122,000


                                       F-16
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 4 - Acquisitions (Continued)

     The following  unaudited pro forma summary  presents the net revenues,  net
loss and loss per share from the  combination  of the Company and Bright PCS, as
if the acquisition had occurred on January 1, 1999. The pro forma information is
provided for  information  purposes only. It is based on historical  information
and does not necessarily reflect the actual results that would have occurred nor
is it necessarily indicative of the future results of operations of the combined
enterprise:
<TABLE>
<CAPTION>
<S>                                                        <C>               <C>
                                                                 Year Ended December 31,
                                                                 2000              1999
                                                           ----------------  ---------------
       Net revenue......................................   $    27,278,629   $     4,428,240
       Net loss..........................................      (43,769,291)      (10,790,021)
       Basic and diluted net loss per share..............            (0.78)            (0.20)
</TABLE>

     Prior  to  acquisition,  Bright  PCS had not  commenced  revenue-generating
operations and was paying a management fee to its investor, HPCS. The management
fee recognized by HPCS in the periods prior to the acquisition  date is included
in net revenue  during 2000 and 1999. In the pro forma  disclosure  above,  this
management fee revenue is fully eliminated.

NOTE 5 - Investments

     In February  2000, the Company  purchased  78,900 shares of common stock of
its  parent,  Horizon  Telcom,  Inc.  from  the  Parent's  largest  unaffiliated
shareholder for approximately $11,835,000. This represented a 19.78% interest in
Horizon  Telcom,  Inc. The Company  exchanged  40% of the shares  owned  (31,912
shares) to the former members as consideration for the acquisition of Bright PCS
(Note 4). This transaction  resulted in a gain of approximately  $10,513,000 and
reduced the ownership in Horizon Telcom, Inc. to 11.78%.

     On September 26, 2000, the Company  distributed 10% of its 11.78% ownership
of Horizon  Telcom,  Inc.  in the form of a  dividend,  payable  pro rata to the
shareholders  of record on September 26, 2000.  This  transaction  resulted in a
gain of approximately $1,038,000, as part of the stock was distributed to owners
other than the Parent.

     During 2001, the Company  distributed its remaining 7,249 shares of Horizon
Telcom,  Inc. to employees of HPC as an award. As a result, the Company recorded
non-cash compensation expense of approximately $725,000 and a non-operating loss
of  approximately  $400,000  representing  the reduced  fair market value of the
stock at the time of the transaction  compared to the original  holding value of
the investment.

     As part of the term loan  facility  for the  construction  of the  personal
communications  network  (Note 9), the  Company was  required to purchase  Rural
Telephone  Finance   Cooperative's   (RTFC,  the  lender)  subordinated  capital
certificates  with each draw on the loan. The balance of these  certificates  at
December 31, 2000, was approximately $2,896,000.  The certificates were redeemed
in March 2001 for  approximately  $2,896,000  with no recognized gain or loss on
the redemption.


                                       F-17
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 6 - Property and Equipment

    Property and equipment consists of the following at December 31:
<TABLE>
<CAPTION>
<S>                                                                      <C>              <C>
                                                                               2001             2000
                                                                         ---------------  ---------------
     Network assets...................................................   $   134,257,789  $    52,242,148
     Switching equipment..............................................        35,253,986       14,053,810
     Furniture, vehicles and office equipment.........................        10,137,175        5,721,617
     Land.............................................................           966,689               --
                                                                         ---------------  ---------------
         Property and equipment in service, cost......................       180,615,639       72,017,575
     Accumulated depreciation.........................................       (22,478,698)      (9,259,862)
                                                                         ---------------  ---------------
             Property and equipment in service, net...................       158,136,941       62,757,713
     Construction work in progress....................................        56,730,917       46,944,132
                                                                         ---------------  ---------------
                 Total property and equipment, net....................   $   214,867,858  $   109,701,845
                                                                         ===============  ===============
</TABLE>

     During 2001, the Company  retired  certain network assets and replaced them
with  equipment  required  to  upgrade  the  network.   As  a  result  of  these
retirements,   the  Company   recorded  a  loss  on  disposal  of  approximately
$1,297,000.

     During 1999,  the Company sold certain PCS equipment,  including  ancillary
equipment and base stations, to an unrelated third party. The sale resulted in a
gain  of   approximately   $1,388,000,   which  is  included  in  the  Company's
consolidated  statements  of  operations,  and  represents  the  excess  of cash
proceeds over the historical net book value of the assets sold.

NOTE 7 - Lines of Credit

     On September  26, 2000,  the Company  entered  into a  $95,000,000  line of
credit that expires on September 30, 2008, as part of its senior  secured credit
facility  agreement  (Note 9). As of  December  31,  2001,  the  Company had not
borrowed on this line of credit.  The Company pays an annual  commitment  fee of
1.375% of the  unused  line at the end of each  quarter.  The  Company  incurred
approximately  $1,324,000 and $306,000 for the line of credit commitment fee for
the years ended December 31, 2001 and 2000, respectively.

     In May 2000, the Company entered into a $5,000,000  general  corporate line
of  credit  with a bank,  the  proceeds  of which  were  used for  financing  of
construction  expenditures.  Interest was at the bank's  standard line of credit
rate plus 100 basis  points and was  payable  quarterly  beginning  in the first
quarter after the initial  advance.  In September  2000, this line of credit was
fully repaid and  terminated  with the proceeds from the financing  described in
Note 9 below.

     In March 2000, the Company entered into a $5,000,000 interim revolving line
of credit  with a bank,  the  proceeds  of which were used for  general  working
capital  purposes.  Interest  was at the bank's  prevailing  prime rate plus 150
basis points and was payable quarterly, beginning in the first quarter after the
initial  advance.  In September  2000,  this line of credit was fully repaid and
terminated with the proceeds from the financing described in Note 9 below.

NOTE 8 - Short-Term Note Payable

     The Company's  purchase of Horizon  Telcom,  Inc. common stock (Note 5) was
financed  through a  $13,000,000,  one year,  unsecured 13% senior  subordinated
promissory  note to a third  party  lender.  The  lender  converted  100% of the
outstanding  principal  and  unpaid  interest  into  the  Company's  convertible
preferred  stock on  September  26,  2000,  as part of the  Company's  financing
activities  (Note 9). The value converted into  convertible  preferred stock was
$14,066,611 (Note 13).



                                       F-18
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 9 - Long-Term Debt

     On December 7, 2001, the Company received $175,000,000 from the issuance of
unsecured  senior notes (the "senior  notes") due on June 15, 2011.  Interest is
paid semi-annually on June 15 and December 15 at an annual rate of 13.75%,  with
interest  payments  commencing June 15, 2002.  Approximately  $48,660,000 of the
offering's  proceeds  was  placed in an escrow  account  to fund the first  four
semi-annual interest payments. The senior notes may be redeemed at the Company's
election on or after  December 15, 2006,  at  redemption  prices  defined in the
senior note agreement. Additionally, on or before December 15, 2004, the Company
may  redeem up to 35% of the  aggregate  principal  amount of the  senior  notes
originally  issued at a  redemption  price of 113.75%,  plus  accrued and unpaid
interest  to the  date of  redemption,  with  the  proceeds  of  certain  equity
offerings as long as 65% of the aggregate  principal  amount  originally  issued
remains outstanding after that redemption.

     On September 26, 2000, the Company received  $149,680,050 from the issuance
of $295,000,000  of unsecured  senior discount notes due on October 1, 2010 (the
"discount notes"). The discount notes accrete in value until October 1, 2005, at
a rate of 14% compounded  semi-annually.  Cash interest on the notes will become
payable on April 1 and October 1 of each year,  beginning on April 1, 2006.  The
discount notes may be redeemed at the Company's  election on or after October 1,
2005, at redemption prices defined in the discount note agreement. Additionally,
on or before  October 1, 2003, the Company may redeem up to 35% of the aggregate
principal amount of the discount notes  originally  issued at a redemption price
of 114%,  plus accrued and unpaid  interest to the date of redemption,  with the
proceeds of certain equity  offerings as long as 65% of the aggregate  principal
amount originally issued remains outstanding after that redemption. The discount
notes include  warrants to purchase  3,805,500  shares of the Company's  class A
common stock at $5.88 per share. The warrants represent the right to purchase an
aggregate of  approximately  4.0% of the issued and outstanding  common stock of
the Company on a fully diluted basis,  assuming the exercise of all  outstanding
options  and  warrants  to  purchase  common  stock  and the  conversion  of the
convertible  preferred stock (Note 13) into shares of class A common stock.  The
proceeds  from the  issuance of the discount  notes were  allocated to long-term
debt  and the  value  of the  warrants  ($20,245,000  or $5.32  per  share)  was
allocated  to  additional  paid-in  capital.  The fair value of the warrants was
estimated on the date of the grant using the Black-Scholes  option-pricing model
with the following  weighted  average  assumptions:  expected  dividend yield of
0.0%, a risk-free interest rate of 6.5%, expected life of 10 years (equal to the
term of the warrants) and a volatility of 95%.

     On September  26, 2000,  and  concurrent  with the sale of the  convertible
preferred  stock (Note 13) and the discount notes described  above,  the Company
entered into a senior secured credit  facility (the "secured  credit  facility")
with a financial  institution  to provide an  aggregate  commitment,  subject to
certain  conditions,  of up to  $250,000,000  (including a  $95,000,000  line of
credit  described in Note 7, a  $50,000,000  term note and a  $105,000,000  term
note) expiring on September 30, 2008. The secured credit facility bears interest
at various floating rates,  which  approximate one to six month LIBOR rates plus
375 to 425 basis  points  (5.66% to 6.16% at  December  31,  2001).  The secured
credit  facility  is  collateralized   by  a  perfected   security  interest  in
substantially  all of the Company's  tangible and intangible  current and future
assets,  including an assignment of the Company's  affiliation  agreements  with
Sprint  PCS and a pledge  of all of the  capital  stock of the  Company  and its
subsidiaries.  At December  31,  2001,  the  outstanding  balance on the secured
credit facility was $50,000,000.  The Company pays a commitment fee of 1.375% on
the unused portion of the  $250,000,000  note.  The Company  incurred a total of
approximately  $2,788,000  and $680,000 of commitment  fee expense for the years
ended  December 31, 2001 and 2000,  respectively.  Additionally,  the Company is
required, and expects, to draw on the $105,000,000 term note by March 26, 2002.

     In connection  with the  acquisition  of Bright PCS, the Company  assumed a
ten-year secured term loan totaling $35,400,000.  The note was collateralized by
the  equipment  acquired.  In  September  2000,  this note was fully  repaid and
terminated with the proceeds from the financing described above.


                                       F-19
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 9 - Long-Term Debt (Continued)

     In May 2000, the Company entered into a $40,500,000 term loan facility with
a financial  institution  to purchase  certain PCS  equipment to  construct  the
Company's personal communications network.  Maximum advances on the note totaled
$38,475,000.  This loan was secured by equipment,  collateral assignments of the
Company's tower lease (Note 12) and pledges of HPC stock and ownership interests
in Bright PCS. In September 2000, this note was fully repaid and terminated with
the proceeds from the financing described above.

     In August  1997,  the  Company  entered  into a term loan  facility  with a
financial  institution to purchase certain  equipment to construct the Company's
personal  communications  network.  The  note  was  collateralized  by the  same
equipment. The Parent had unconditionally  guaranteed the debt and had pledged a
security interest in all of the outstanding shares of the Company.  In addition,
certain obligations under this loan had been guaranteed by a third party vendor.
In September  2000,  this note was fully repaid and terminated with the proceeds
from the financings described above.

     The components of long-term debt outstanding at December 31, 2001 and 2000,
are as follows:
<TABLE>
<CAPTION>
<S>                                                  <C>                   <C>              <C>
                                                      Interest Rate at
                                                     December 31, 2001           2001             2000
                                                     -----------------     ---------------  ---------------
          Senior notes.............................        13.75%          $   175,000,000  $            --
          Discount notes...........................        14.00%              159,055,643      135,283,104
          Secured credit facility..................        6.16%                50,000,000       50,000,000
                                                                           ---------------  ---------------
              Total long-term debt.................                        $   384,055,643  $   185,283,104
                                                                           ===============  ===============
</TABLE>

     Scheduled  maturities of long-term  debt  outstanding at December 31, 2001,
are as follows:

                             Year                          Amount
                             ----                     ---------------
          2002..................................      $            --
          2003..................................                   --
          2004..................................              375,000
          2005..................................              500,000
          2006..................................              500,000
          Thereafter............................          518,625,000
                                                          -----------
            Total maturities of long-term debt..          520,000,000
          Less: Unaccreted interest portion of
            long-term debt......................         (135,944,357)
                                                         ------------
              Total long-term debt..............      $   384,055,643
                                                          ===========

     The senior  notes,  discount  notes and  secured  credit  facility  contain
various  financial  covenants.  Among other  restrictions,  the most restrictive
covenants  relate to maximum  capital  expenditures,  minimum EBITDA  ("earnings
before interest,  taxes, depreciation and amortization")  requirements,  maximum
financial  leverage ratios and minimum  revenues.  There are also limitations on
restricted  payments,   asset  sales,  additional  debt  incurrence  and  equity
issuance. In June 2001 and December 2001, the Company amended its secured credit
facility with the bank group. These  modifications  amended and restated certain
financial  covenants.  The June 2001  amendment also increased the base interest
rate by 25 basis  points to LIBOR plus 375 to 425 basis  points.  As of December
31, 2001, the Company was in compliance  with the amended  covenants  under each
agreement.


                                       F-20
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 10 - Federal Income Taxes

     The Company's Federal income tax expense (benefit) consists of:
<TABLE>
<CAPTION>
<S>                                                <C>              <C>              <C>
                                                               Year Ended December 31,
                                                        2001             2000             1999
                                                   -------------    --------------   -------------
       Continuing Operations:
         Current..............................     $            --  $    1,075,711   $  (4,536,109)
         Deferred.............................                  --              --        (739,016)
                                                   ---------------  --------------   -------------
                                                                --       1,075,711      (5,275,125)
       Discontinued Operations:
         Current..............................                  --          72,762         145,444
         Deferred.............................                  --              --              --
                                                   ---------------  --------------   -------------
                                                                            72,762         145,444
       Extraordinary Loss:
         Current..............................                  --        (261,863)             --
         Deferred.............................                  --              --              --
                                                   ---------------  --------------   -------------
                                                                --        (261,863)             --
                                                   ---------------  --------------   -------------
       Tax expense (benefit)..................     $            --  $      886,610   $  (5,129,681)
                                                   ===============  ==============   =============
</TABLE>

     The  effective  income tax expense  (benefit)  from  continuing  operations
varies from the statutory rate as follows:
<TABLE>
<CAPTION>
<S>                                                     <C>               <C>             <C>
                                                                      Year Ended December 31,
                                                              2001             2000            1999
                                                        ----------------  --------------  -------------
    Tax at statutory rate applied to pretax book
      loss from continuing operations...............    $   (38,583,774)  $  (13,693,286) $  (5,516,543)
    Increase (decrease) in tax from:
      Non-deductible goodwill amortization..........            444,227          302,968             --
      Tax on interest on warrants...................            695,627          177,210             --
      Non-deductible stock option compensation......            241,044          171,571             --
      Tax on excess loss account....................                 --       11,463,395             --
      Change in valuation allowance.................         37,163,536        2,484,155        237,519
      Tax on rate difference........................                 --          116,296             --
      Other, net....................................             39,340           53,402          3,899
                                                        ---------------   --------------  -------------
              Total tax expense (benefit) from
                continuing operations...............    $            --   $    1,075,711  $  (5,275,125)
                                                        ===============   ==============  =============
</TABLE>



                                       F-21
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 10 - Federal Income Taxes (Continued)

     Deferred  income  taxes  result  from  temporary  differences  between  the
financial   reporting  and  the  tax  basis  amounts  of  existing   assets  and
liabilities.  The  source  of these  differences  and tax  effect of each are as
follows, as of December 31:
<TABLE>
<CAPTION>
<S>                                                        <C>              <C>             <C>
                                                                2001             2000            1999
                                                           --------------   --------------  -------------
    Deferred income tax assets:
      Deferred income-- site bonuses.....................  $   2,285,961    $   2,345,943   $          --
      Unrealized loss on hedging activity................        284,869               --              --
      Allowance for doubtful accounts....................        662,084           30,296         125,982
      Vacation...........................................        142,427          107,090          39,471
      Net operating loss carryforward....................     36,089,387               --         903,292
      Interest expense on high yield notes...............      9,523,013        1,880,148              --
      Personal Communication Services Licenses and
         start-up........................................             --          654,293         381,276
      Other..............................................        965,141          599,936         251,139
                                                           -------------    -------------   -------------
              Total deferred income tax assets...........  $  49,952,882    $   5,617,706   $   1,701,160
                                                           =============    =============   =============

    Deferred income tax liabilities:
      Property differences...............................  $  (7,469,716)   $  (2,413,137)  $  (1,211,132)
      Capitalized interest...............................     (2,723,264)        (581,953)             --
      Other..............................................       (172,667)              --        (252,509)
                                                           --------------   -------------   -------------
              Total deferred income tax liabilities......  $ (10,365,647)   $  (2,995,090)  $  (1,463,641)
                                                           =============    =============   =============
    Deferred income taxes, net...........................  $  39,587,235    $   2,622,616   $     237,519
    Less: valuation allowance............................    (39,587,235)      (2,622,616)       (237,519)
                                                           -------------    -------------   -------------
              Total deferred income taxes, net...........  $          --    $          --   $          --
                                                           =============    =============   =============
</TABLE>

     Until  September 26, 2000,  HPCS was included in the  consolidated  Federal
income tax return of the Horizon  Telcom  affiliated  group.  HPCS  provided for
Federal  income  taxes  on a  pro-rata  basis,  consistent  with a  consolidated
tax-sharing  agreement.  As a result  of the sale of the  convertible  preferred
stock, HPCS will not be able to participate in the tax-sharing agreement nor the
filing of a  consolidated  Federal  income tax return  with the  Horizon  Telcom
affiliated group.  Thus, HPCS filed a separate Federal income tax return for the
period after deconsolidation through December 31, 2000, and will file a separate
return for all  subsequent  periods.  Additionally,  the Company  would not have
recorded  a tax  benefit  of  $5,129,681  in 1999  had it not been  eligible  to
participate in the consolidated Federal income tax return of the Parent.

     HPCS  recorded  income tax expense of $886,610 for the year ended  December
31, 2000.  This expense was primarily a result of the  recognition by HPCS of an
excess loss account on the  deconsolidation  from the Horizon Telcom  affiliated
group,  reduced by the benefit of net operating losses,  and the increase in the
valuation reserve.

     HPCS  generated a tax of $4,256,818 on the stock dividend of 10% of Horizon
Telcom stock held by HPCS to Horizon  Telcom.  The tax on the stock dividend was
charged directly to equity and not recorded as income tax expense during 2000.

     The Company has generated net operating  losses ("NOL") that may be used to
offset future taxable income. Each year's NOL has a maximum  carryforward period
of twenty years. The Company's ability to use its NOL carryforwards is dependent
on the future taxable  income of the Company.  At December 31, 2001, the Company
has NOL  carryforwards  of  approximately  $106,145,256,  expiring in 2021.  The
future tax benefit of these NOL  carryforwards  of $36,089,387 has been recorded
as a deferred tax asset. As a result of the Company's  operating  losses and its
deconsolidation  from the Horizon Telcom affiliated group for tax purposes,  the
Company does not expect to record future tax benefits of operating  losses until
such time its operations  become profitable and,  accordingly,  has recognized a
full valuation allowance.


                                       F-22
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 11 - Other Postretirement Benefits

     Certain employees of the Company participate in the Parent's postretirement
plan.  The plan is  maintained by the Parent and the Company is charged based on
its employee  participation  in the plan. The Company applies the accounting and
measurement  practices  prescribed by SFAS No. 106,  "Employers'  Accounting for
Postretirement  Benefits Other Than Pensions" and the disclosure requirements of
SFAS No. 132,  "Employers'  Disclosures about Pensions and Other  Postretirement
Benefits,"  which  superceded  the disclosure  requirements  of SFAS No. 106. As
permitted by SFAS No. 106,  the Company has elected to amortize the  accumulated
postretirement  benefit  obligation  existing  at  the  date  of  adoption  (the
transition  obligation) over a twenty-year  period.  The accrued benefit cost is
included in other long-term liabilities in the accompanying consolidated balance
sheets.

     The plan provides coverage of postretirement  medical,  prescription  drug,
telephone service and life insurance benefits to eligible retirees whose status,
at retirement from active  employment,  qualifies for  postretirement  benefits.
Coverage of postretirement  benefits is also provided to totally and permanently
disabled  active   employees  whose  status,   at  disablement,   qualified  for
postretirement  benefits as a retiree from active employment (retired disabled).
Certain eligible retirees are required to contribute toward the cost of coverage
under the  postretirement  health care and telephone  service benefits plans. No
contribution  is required for coverage under the  postretirement  life insurance
benefits plan. Unrecognized prior service cost is being amortized over 20 years.

     The funding  status of the Company's  participation  in the  postretirement
benefit plan as of December 31, 2001 and 2000, is as follows:

<TABLE>
<CAPTION>
<S>                                                                     <C>           <C>
                                                                           2001          2000
                                                                        ----------    ----------
                                                                             (in thousands)
                 Change in benefit obligation
                 Benefit obligation, beginning of year..............    $       90    $      207
                   Service cost.....................................           183            15
                    Interest cost...................................            17             5
                   Actuarial (gain) or loss.........................           167          (137)
                                                                        ----------    ----------
                 Benefit obligation, end of year....................    $      457    $       90
                                                                        ----------    ----------
                 Change in plan assets
                 Fair value of plan assets, beginning of
                   year.............................................            --            --
                   Employer contributions...........................            --            --
                   Benefits paid....................................            --            --
                                                                        ----------    ----------
                 Fair value of plan assets, end of year.............            --            --
                                                                        ----------    ----------
                 Funded status......................................          (457)          (90)
                 Unrecognized transition obligation.................            71            76
                 Unrecognized prior service cost....................            75            --
                 Unrecognized actuarial (gain) or loss..............            42          (127)
                                                                        ----------    -----------
                 Accrued benefit cost...............................    $     (269)   $     (141)
                                                                        ===========   ==========

                 Weighted-average assumptions at December 31:
                 Discount rate......................................         6.50%         7.75%

</TABLE>


                                       F-23
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 11 - Other Postretirement Benefits (Continued)

     The  assumed  medical  benefit  cost  trend  rate  used  in  measuring  the
accumulated  postretirement benefit obligation for the under age 65 retirees and
their spouses was 8.0% in 2001 and 7.0% in 2000 and 1999, declining gradually to
5% for all periods  presented.  For the over 65 retirees and their spouses,  the
assumed  medical  benefit  cost trend rate was 7.0% in 2001 and 6.5% in 2000 and
1999,  declining  gradually to 5% for all periods presented.  The assumed dental
and  vision  benefit  cost  trend  rates  used  in  measuring  the   accumulated
postretirement  benefit  obligation in 2001, 2000 and 1999,  were 6%,  declining
gradually to 5%, for retirees and their spouses.  The telephone  service benefit
cost trend rate for  retirees  and their  spouses  in 2001,  2000 and 1999,  was
estimated at 5% for all future years.

     The following  summarizes the  components of net periodic  benefit costs of
the Company's  participation  in the  postretirement  benefit plan for the years
ended December 31:

<TABLE>
<CAPTION>
<S>                                                                   <C>        <C>        <C>
                                                                         2001       2000       1999
                                                                      ---------  ---------  --------
                      Components of net periodic benefit cost                 (in thousands)

               Service cost.......................................    $    104   $     15   $     25
               Interest cost......................................          17          5         12
               Amortization of transition obligation..............           5          5          5
               Amortization of prior service cost.................           4         --         --
               Recognized net actuarial gain (loss)...............          (2)        (8)        --
                                                                      ---------  ---------   -------
               Net periodic benefit cost..........................    $    128   $     17   $     42
                                                                      ========   ========   ========
</TABLE>

     Assumed  health  care cost  trend  rates have a  significant  effect on the
amounts  reported for the health care plans.  A  one-percentage-point  change in
assumed health care cost trend rates would have the following effects:
<TABLE>
<CAPTION>
<S>                                                                       <C>              <C>
                                                                          1-Percentage-     1-Percentage-
                                                                          Point Increase   Point Decrease
                                                                          ---------------  --------------
                                                                                  (in thousands)
    Effect on total of service and interest cost components.............     $   41            $  (31)
    Effect on postretirement benefit obligation.........................     $  153            $ (116)
</TABLE>

     The  Parent  also  has two  defined  contribution  plans  covering  certain
eligible  salaried  and  hourly  employees.  HPCS  employees  were  eligible  to
participate in the Parent's plans in 1999. These plans provided for participants
to defer up to 19% of their annual  compensation as  contributions to the plans.
The  Parent  matched  a  participant's   contributions  equal  to  25%  of  each
participant's  salary  deferral  up  to a  maximum  of  1%  of  a  participant's
compensation.  The  Parent's  contributions  to these plans that  benefited  the
Company were $3,282 for 1999 and are included in expense of the Company.

     In May 1999,  the  Company  adopted a defined  contribution  plan  covering
certain  eligible  employees.  The plan provides for participants to defer up to
15% of the annual  compensation,  as defined under the plan, as contributions to
the  plan.  The  Company  has the  option,  at the  direction  of the  Board  of
Directors,  to  make a  matching  contribution  to the  plan  of up to 50% of an
employee's  contribution  to  the  plan,  limited  to a  maximum  of 3%  of  the
employee's salary. A matching contribution of approximately  $309,000,  $115,000
and $61,000 was recognized during 2001, 2000 and 1999, respectively.


                                       F-24
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 12 - Commitments and Contingencies

Operating Leases

     The  Company  leases  office  space and  various  equipment  under  several
operating leases. In addition, the Company leased certain PCS equipment from the
Parent.  This lease was  terminated  during 1999. In October  1999,  the Company
signed a tower lease agreement with a third party whereby the Company will lease
the towers for  substantially  all of the Company's cell sites. The tower leases
are  operating  leases  with a term of five to ten years with three  consecutive
five-year  renewal  option  periods.  In addition,  the Company  receives a site
development  fee from the tower lessor for certain  tower sites which the lessor
constructs on behalf of the Company.

     The Company also leases space for its retail stores.  At December 31, 2001,
the Company leased 38 stores operating throughout its territories.

     Future minimum operating lease payments are as follows:

           Year                                              Amount
           ----                                          --------------
           2002..................................        $   12,551,000
           2003..................................            12,614,000
           2004..................................            11,974,000
           2005..................................             9,351,000
           2006..................................             4,873,000
           Thereafter............................             9,102,000
                                                              ---------
           Future operating lease obligation.....        $   60,465,000
                                                             ==========

     Rental  expense  for all  operating  leases was  approximately  $8,461,000,
$3,056,000  and  $2,693,000  for years ended  December 31, 2001,  2000 and 1999,
respectively. Rental expense included above relating to the PCS equipment leased
from the Parent totaled approximately $1,975,000 during 1999.

Construction Expenditures

     Construction expenditures in 2002 are estimated to be between approximately
$60,000,000 and $70,000,000.  The majority of the estimated expenditures are for
the build-out of the Company's PCS network.

Legal Matters

     The  Company  is party to legal  claims  arising  in the  normal  course of
business.  Although the ultimate  outcome of the claims cannot be ascertained at
this time,  it is the opinion of  management  that none of these  matters,  when
resolved,  will have a  material  adverse  impact on the  Company's  results  of
operations, cash flows or financial condition.

Guarantees

     The  discount  notes  (Note 9) are  guaranteed  by the  Company's  existing
subsidiaries,  Horizon  Personal  Communications,   Inc.,  and  Bright  Personal
Communications  Services,  LLC, and will be guaranteed  by the Company's  future
domestic  restricted  subsidiaries.  The  Company has no  independent  assets or
operations  apart from its  subsidiaries.  The guarantees are general  unsecured
obligations.  Each guarantor unconditionally guarantees,  jointly and severally,
on a senior  subordinated  basis,  the full and  punctual  payment of  principal
premium and liquidated  damages, if any, and interest on the discount notes when
due. If the Company creates or acquires  unrestricted  subsidiaries  and foreign
restricted subsidiaries, these subsidiaries need not be guarantors.



                                       F-25
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 12 - Commitments and Contingencies (Continued)

NTELOS Network Agreement

     In August  1999,  the Company  entered  into a wholesale  network  services
agreement with the West Virginia PCS Alliance and the Virginia PCS Alliance (the
"Alliances"), two related, independent PCS providers whose network is managed by
NTELOS. Under the network services agreement,  the Alliances provide the Company
with the use of and access to key  components  of their network in most of HPCS'
markets in Virginia  and West  Virginia.  The initial  term was through  June 8,
2008, with four automatic ten-year renewals.

     This  agreement  was amended in the third  quarter of 2001 to provide for a
minimum  monthly fee to be paid by the Company  through  December 31, 2003.  The
minimum  monthly  fee  includes  a fixed  number  of  minutes  to be used by the
Company's  subscribers.  The Company  incurs  additional  per minute charges for
minutes used in excess of the fixed number of minutes  allotted each month.  The
aggregate amount of future minimum payments is as follows:

           2002..............................        $   27,400,000
           2003..............................            38,600,000
                                                         ----------
             Total...........................        $   66,000,000
                                                         ==========

NOTE 13 - Convertible Preferred Stock

     The Company has  authorized  175,000,000  shares of  convertible  preferred
stock at $0.0001 par value.  On  September  26, 2000,  an investor  group led by
Apollo Management purchased 23,476,683 shares of convertible preferred stock for
approximately $126,500,000 in a private placement offering.  Concurrent with the
closing,  holders of the $14,100,000  short-term  convertible note converted the
principal and unpaid  interest  into  2,610,554  shares of the same  convertible
preferred  stock  purchased by the investor  group.  Holders of the  convertible
preferred  stock have the option to convert  their  shares (on a share for share
basis)  into class A common  stock at any time.  In  addition,  the  convertible
preferred stock converts  automatically upon the completion of a public offering
of class A common stock  meeting  specified  criteria or upon the  occurrence of
certain business combination transactions.  The convertible preferred stock pays
a 7.5% stock dividend  semi-annually,  commencing  April 30, 2001. The dividends
are payable in  additional  preferred  stock.  During  2001,  the  Company  paid
$11,775,917 of dividends in additional shares of convertible preferred stock. At
December 31, 2001, there were 28,272,170  shares of convertible  preferred stock
outstanding.

     If the Company has not completed  either (i) a public offering of its class
A common  stock in which the  Company  receives at least  $50,000,000  or (ii) a
merger  or  consolidation  with a  publicly-listed  company  that  has a  market
capitalization of at least $100,000,000 by the fifth anniversary of the date the
Company issued the convertible  preferred  stock, the investor group may request
that the Company  repurchase all of their shares of convertible  preferred stock
at fair market value, as determined by three investment banking institutions. If
the investor group requests the Company  repurchase their convertible  preferred
stock and the Company declines,  the Company will be required to auction Horizon
PCS. If no bona fide offer is received upon an auction,  the repurchase right of
the investor group expires.  If, however, a bona fide offer is received upon the
auction,  the  Company  must  sell  Horizon  PCS or  the  dividend  rate  on the
convertible  preferred  stock will  increase  from 7.5% to 18.0% and the Company
will be  required  to  re-auction  Horizon PCS  annually  until the  convertible
preferred  stock is repurchased.  The Company's  secured credit facility and the
discount notes, both described in Note 9, prohibit the Company from repurchasing
any convertible  preferred stock.  Due to a mandatory  redemption  clause,  this
stock  is  considered  a  mezzanine   financing  and  is  recorded   outside  of
stockholders' equity (deficit).

     Holders of the Company's  convertible  preferred stock are entitled to vote
on all matters on an  as-converted  basis.  In addition,  the vote of at least a
majority of the outstanding shares of convertible  preferred stock,  voting as a
single  class,  shall be  necessary  for  effecting  or  validating  significant
corporate actions specified in the certificate of incorporation.


                                       F-26
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 13 - Convertible Preferred Stock (Continued)

     The Company has agreed that until the  conversion of the  preferred  stock,
the  Company  will  adhere  to  certain  restrictive   covenants.   Among  other
restrictions,  the most significant  covenants  relate to capital  expenditures,
asset  sales,  restricted  payments,   additional  debt  incurrence  and  equity
issuance.  As of December  31,  2001,  the Company  was in  compliance  with the
covenants under the agreement.

NOTE 14 - Common Stock

     Due to the  reorganization  discussed in Note 1, the Company has authorized
300,000,000  shares of class A common stock at $0.0001 par value.  Additionally,
the Company has authorized  75,000,000 shares of class B common stock at $0.0001
par value. Each holder of class A common stock is entitled to one vote per share
and each holder of class B common stock is entitled to ten votes per share. Both
classes of common stock have equal dividend rights. As of December 31, 2001, the
Company had issued  26,646 and  58,458,354  shares of class A and class B stock,
respectively,  and had granted  warrants to acquire  6,315,960 shares of class A
common stock (Notes 9 and 15).

     In June 2000,  in  conjunction  with the Bright PCS purchase  (Note 4), the
Company  received  a  distribution  of its own stock  from a former  Bright  PCS
shareholder,  valued at  $111,061.  The  13,066  shares of class B common  stock
distributed by the former Bright PCS  shareholder are held in treasury stock. At
December 31, 2001, 58,445,288 shares of class B common stock remain outstanding.

     In September  2001, a previous  owner of Bright PCS gifted 26,646 shares of
the Company's class B common stock. This transaction  resulted in the conversion
of the class B shares into 26,646 shares of the Company's class A common stock.

NOTE 15 - Sprint PCS Warrants

     The Company  agreed to grant to Sprint PCS  warrants  to acquire  2,510,460
shares of class A common  stock in exchange for the right to service PCS markets
in  additional  areas.  By  September  30,  2000,  Sprint PCS had  substantially
completed its  obligations  under the  agreement  and the Company  completed the
required purchase of certain Sprint PCS assets.  The Company valued the warrants
and recorded an intangible asset of approximately  $13,356,000 (based on a share
price of $5.88 per share, valued using the Black-Scholes  pricing model using an
expected  dividend  yield of 0.0%, a risk-free  interest rate of 6.5%,  expected
life of 10  years  and a  volatility  of  95%).  The  intangible  asset is being
amortized  over  the  remaining  term of the  Sprint  PCS  management  agreement
resulting  in   approximately   $752,000  of  amortization   expense  per  year.
Amortization  expense  for the years  ended  December  31,  2001 and  2000,  was
approximately  $752,000 and $188,000 respectively.  Accumulated  amortization on
the intangible  asset was  approximately  $940,000 and $188,000 and December 31,
2001 and 2000,  respectively.  The warrants  will be issued to Sprint PCS at the
earlier of an initial public offering of the Company's  common stock or July 31,
2003.

NOTE 16 - Stock Option Plans

     In November 1999, the Company adopted the 1999 Stock Option Plan, which was
amended in June 2000 and renamed the 2000 Stock  Option Plan (the  "Plan").  The
Plan is intended to provide  directors,  officers  and other  employees  of, and
service  providers  to, the  Company and any of its  related  corporations  with
opportunities   to  purchase  stock  pursuant  to  the  grant  of  incentive  or
nonqualified  options.  The Company may grant options for up to 7,500,000 shares
of class A common  stock  and  4,196,884  shares  of class B common  stock.  The
maximum  term of the  options is ten years.  Options  vest based on the terms of
each individual agreement over four to six years from the date of the grant.


                                       F-27
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 16 - Stock Option Plans (Continued)

     On November 17, 1999,  the Company  granted  4,196,884  options  related to
class B common stock at an exercise  price of $0.12 per share.  During 2000, the
Company  granted  116,971 options related to class A common stock at an exercise
price of $5.88 per share.  No options  were  granted  during 2001 and no options
were  exercised  or  forfeited  during the three years ended  December 31, 2001.
There were  2,017,733 and 1,166,249 and 500,398  exercisable  options on class B
common  stock at December  31,  2001,  2000 and 1999,  respectively.  There were
29,243 exercisable options on class A common stock at December 31, 2001.

     The Company  applies APB  Opinion  No. 25 and  related  interpretations  in
accounting for the Plan with respect to employees.  The Company applies SFAS No.
123 and related  interpretations  in  accounting  for stock  options  granted to
non-employees.  Pursuant  to this,  the  Company  will  recognize  approximately
$3,057,000  in  compensation  expense  over the  exercise  period of the options
(through 2005). The accompanying  consolidated  financial  statements  reflect a
non-cash  compensation  charge relating to the Plan of  approximately  $709,000,
$490,000  and $291,000  for the years ended  December  31, 2001,  2000 and 1999,
respectively.

     For the  purpose  of the SFAS No.  123  disclosure,  the fair value of each
option grant is estimated  on the date of grant using the  Black-Scholes  option
pricing model with an  assumption of a risk-free  interest rate of 5.5% for 2000
options and 6.5% for 1999  options,  an  expected  life equal to the term of the
options and a volatility of 95%. The  weighted-average  fair value of options on
class B and class A common stock was $0.60 and $4.75, respectively,  on the date
of the grants.

     Had compensation cost for the Company's Plan with respect to employees been
determined  based on the fair value at the grant dates for awards under the Plan
consistent with the method of SFAS No. 123, the Company's net loss available for
common shareholders and losses per common share would have been increased to the
pro forma amounts indicated below for the years ended December 31:
<TABLE>
<CAPTION>
<S>                                                    <C>                 <C>               <C>
                                                             2001                2000              1999
                                                       ----------------    ----------------  ----------------
      Net Loss
        As reported..............................      $   (124,411,539)  $  (43,326,510)    $   (10,667,671)
        Pro Forma................................          (124,775,559)     (44,020,378)        (10,749,411)
      Basic and diluted loss per share
        As reported..............................      $          (2.13)  $        (0.77)    $         (0.20)
        Pro Forma................................                 (2.13)           (0.78)              (0.20)
</TABLE>

NOTE 17 - Discontinued Operations

     Effective  April 1,  2000,  the  Company  transferred  its  Internet,  long
distance and other  businesses  unrelated to its wireless  operations to Horizon
Technology (formerly United Communications,  Inc.), a wholly-owned subsidiary of
the Parent. Accordingly, the results of operations for these business units have
been reported as  discontinued  operations in the current and prior periods.  At
December  31,  2000,  the Company had an interest  bearing  note  receivable  of
approximately $700,000 from Horizon Technology which was repaid during 2001.

     Operating  results for the years ended December 31, 2000 and 1999 for these
businesses are as follows:

<TABLE>
<CAPTION>
<S>                                                                  <C>             <C>
                                                                        Year Ended December 31,
                                                                          2000            1999
                                                                     -------------   -------------
       Total revenue..........................................       $   1,046,313   $   3,463,566
       Operating income before income taxes...................             214,008         427,775

       Earnings before income taxes...........................             214,008         427,775
       Income tax expense.....................................             (72,763)       (145,444)
                                                                     -------------   -------------
       Net income from discontinued operations................       $     141,245   $     282,331
                                                                     =============   =============
</TABLE>



                                       F-28
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 18 - Extraordinary Loss

     As a result of the September 26, 2000,  financings described in Note 9, the
Company retired long-term debt payable to financial institutions. As a result of
these early debt  extinguishments,  the Company expensed the unamortized portion
of the  related  financing  costs  as well  as fees  associated  with  the  debt
extinguishments.  These fees and  expenses  amounted to  approximately  $748,000
during 2000 and are shown on the consolidated  statements of operations net of a
tax benefit of approximately $262,000.

NOTE 19 - Disclosures About Fair Value of Financial Instruments

     SFAS  No.  107  requires  disclosure  of the fair  value  of all  financial
instruments.  For  purposes  of this  disclosure,  the fair value of a financial
instrument is the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale.
Fair  value  may be based  on  quoted  market  prices  for the  same or  similar
financial  instruments or on valuation  techniques  such as the present value of
estimated  future cash flows using a discount rate  commensurate  with the risks
involved.

     The  estimates  of fair  value  required  under SFAS No.  107  require  the
application of broad assumptions and estimates. Accordingly, any actual exchange
of such financial instruments could occur at values significantly different from
the  amounts  disclosed.  As cash and  cash  equivalents,  current  receivables,
current  payables and certain other  short-term  financial  instruments  are all
short term in  nature,  their  carrying  amounts  approximate  fair  value.  The
carrying  values of restricted  cash  approximate  fair value as the  investment
funds  are  short-term.  The  Company's  secured  credit  facility  is  based on
market-driven rates and, therefore,  its carrying value approximates fair value.
The senior notes were issued in December 2001 and  approximate  fair value as of
December  31,  2001.  The fair value of the  discount  notes was based on market
rates for the Company's notes. As of December 31, 2001, the estimated fair value
of the discount notes was $141,600,000 and the carrying value was  approximately
$159,056,000.

     In the first quarter of 2001, the Company entered into a two-year  interest
rate swap,  effectively  fixing  $25,000,000  of a term loan  under the  secured
credit  facility  (Note 9) at a rate of 9.4%. In the third quarter of 2001,  the
Company  entered  into a two-year  interest  rate swap,  effectively  fixing the
remaining  $25,000,000  borrowed under the secured credit facility at 7.65%. The
swaps  have been  designated  as a hedge of a  portion  of the  future  variable
interest  cash flows  expected  to be paid  under the  secured  credit  facility
borrowings. A loss of approximately $838,000 was recorded in other comprehensive
income during the year ended  December 31, 2001.  The Company also  recognized a
loss of  approximately  $176,000  in the  statement  of  operations  during 2001
related to the  ineffectiveness  of the hedge.  Other  comprehensive  income may
fluctuate based on changes in the fair value of the swap instrument. The Company
has  recorded a liability in other  long-term  liabilities  in the  accompanying
consolidated  balance  sheet of  approximately  $1,014,000 at December 31, 2001,
related to the swap.

NOTE 20 - Related Parties

     The Company has non-interest bearing receivables from and payables to other
subsidiaries  of the Parent related to advances made to and received from or for
services  received from those affiliated  companies.  As a result of the sale of
convertible preferred stock (Note 13), the Company is not able to participate in
the  tax-sharing  agreement  discussed  in Note 10. At December  31,  2001,  the
Company  had a net  receivable  from the Parent for  Federal  income  taxes.  At
December  31, 2000,  the Company had a payable to the Parent  related to Federal
income taxes and cash  advances  received  from the Parent's  line of credit and
associated  interest.  All payables to the Parent were repaid  during 2001.  The
balances due to and due from  related  parties as of December 31, 2001 and 2000,
are as follows:

<TABLE>
<CAPTION>
<S>                                                                <C>                <C>
                                                                     December 31,       December 31,
                                                                         2001               2000
                                                                   -----------------  ----------------
      Receivable from affiliates............................       $        100,437   $       741,453
      Receivable from Parent................................                483,785                --
      Payable to affiliates.................................                     --         1,307,061
      Payable to Parent.....................................                     --           427,747
</TABLE>


                                       F-29
<PAGE>

HORIZON PCS, INC.

Notes to Consolidated Financial Statements
As of December 31, 2001 and 2000,
And for the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 20 - Related Parties (Continued)

     During  2001,  2000 and 1999,  affiliated  companies  provided  the Company
management,   supervision  and  administrative   services  including  financial,
regulatory,  human resource and other administrative and support services. These
agreements have a term of three years, with the right to renew the agreement for
additional  one-year  terms  each year  thereafter.  The cost of the  management
services,  excluding amounts allocated to discontinued operations, for the years
ended  December  31,  2001,  2000,  and  1999  was   approximately   $6,217,000,
$4,444,000, and $815,000, respectively.

NOTE 21 - Supplementary Financial Information (Unaudited)

     The quarterly  results of operations for the years ended December,  31 2001
and 2000:
<TABLE>
<CAPTION>
<S>                                                <C>             <C>            <C>             <C>
                                                                     For the three months ended
                                                   ------------------------------------------------------------
                                                     March 31         June 30       September 30  December 31
                                                   -------------   ------------   --------------  -------------
                                                            (Dollars in thousands, except per share data)
Fiscal Year 2001:
----------------
  Total revenues                                     $    18,522    $    24,771     $    35,204     $    44,807
  Operating loss                                         (16,194)       (21,739)        (23,271)        (28,210)
  Net loss available to common shareholders              (22,094)       (30,004)        (31,503)        (40,811)
  Basic and diluted net loss per share available
    to common shareholders                           $     (0.38)   $     (0.51)    $     (0.54)    $     (0.70)

Fiscal Year 2000:
----------------
  Total revenues                                     $     3,503    $     5,327     $     7,442     $    12,922
  Operating loss                                          (5,787)        (7,508)        (12,158)        (19,708)
  Gain (Loss) on exchange of stock                            --         10,513           1,038              --
  Income from discontinued operations                        141             --              --              --
  Income (Loss) before extraordinary item                 (5,365)         3,547         (17,376)        (20,864)
  Extraordinary loss, net of taxes                            --             --            (486)             --
  Net income (loss) available to common
    shareholders                                          (5,365)         3,547         (17,862)        (23,647)
  Diluted income (loss) per share before
    extraordinary item                               $     (0.10)   $      0.06     $     (0.30)    $     (0.40)
  Diluted loss per share on extraordinary item                --             --           (0.01)             --
  Diluted net income (loss) per share available
    to common shareholders                           $     (0.10)   $      0.06     $     (0.31)    $     (0.40)

</TABLE>



                                       F-30
<PAGE>

HORIZON PCS, INC.

Financial Statement Schedule
Valuation and Qualifying Accounts
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                                  <C>            <C>             <C>            <C>
                                                       Balance at                                    Balance at
                                                        Beginning     Charged to    Deductions         End of
Description                                             of Period       Expense           (1)          Period
-----------                                          -------------  -------------   -------------  -------------
                                                                           (In thousands)
Allowance for Doubtful Accounts Receivable:
Year Ended December 31, 1999                           $     33       $    488      $     (150)        $    371
                                                       ========       ========      ===========        ========

Year Ended December 31, 2000                           $    371       $  1,382      $     (852)        $    901
                                                       ========       ========      ===========        ========

Year Ended December 31, 2001                           $    901       $  6,410      $   (5,507)        $  1,804
                                                       ========       ========      ===========        ========
</TABLE>

---------
(1)  Represent  amounts written off during the period less recoveries of amounts
     previously written off.


                                       F-31



1449831