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

                                   FORM 10-QSB
(Mark one)
/X/      Quarterly  report  pursuant  to Section  13 or 15(d) of the  Securities
         Exchange Act of 1934

For the Quarterly Period Ended March 31, 1998

                                       OR

/ /      Transition  report  pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934

For the transition period from ________to________

Commission file number: 333-41007

                         EAST/WEST COMMUNICATIONS, INC.
             (Exact name of registrant as specified in its charter)

       DELAWARE                                        13-3964837
(State of incorporation)                 (I.R.S. Employer identification number)

                   350 STUYVESANT AVENUE, RYE, NEW YORK 10580
                    (Address of principal executive offices)

Registrant's telephone number, including area code:  (914) 921-6300


Check  whether  the  registrant  (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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

As of April 1, 1998  there were  1,772,198  shares of the  Registrant's  Class A
Common Stock outstanding and 1,779,301 shares of the Registrant's Class B Common
Stock outstanding.


<PAGE>
                                      INDEX

                         EAST/WEST COMMUNICATIONS, INC.


PART I      FINANCIAL INFORMATION

Item 1      Financial Statements

            Balance Sheet
            -           March 31, 1998
            -           December 31, 1997 (Audited)

            Statement of Operations
            -           Three months ending March 31, 1998 and 1997
            -           July 26, 1996 (Inception) to March 31, 1998

            Statements of Cash Flows
            -           Three months ending March 31, 1998 and 1997
            -           July 26, 1996 (Inception) to March 31, 1998

Item 2      Management  Discussion  and  Analysis  of  Financial  Condition  and
            Results of Operations


PART II     OTHER INFORMATION

Item 6      Exhibits and Reports on Form 8-K

            Exhibit 27


SIGNATURES

<PAGE>
                                     PART I

ITEM 1. FINANCIAL STATEMENTS

                         East/West Communications, Inc.

                   (A Development Stage Enterprise, formerly
                       Aer Force Communications B, L.P.)

                                 Balance Sheets
<TABLE>
<CAPTION>

                                                                        March 31,             December 31,
                                                                          1998                    1997
                                                                     -------------------------------------
                                                                      (Unaudited)                 (A)
ASSETS
Current assets
<S>                                                                  <C>                     <C>         
   Cash and cash equivalents                                         $    246,880            $    254,427
   Deposit with FCC                                                          --                      --
                                                                     ------------            ------------
Total current assets                                                      246,880                 254,427

PCS Licenses                                                           18,957,721              18,957,721
Capitalized costs                                                       1,447,443               1,240,434
                                                                     ============            ============
Total assets                                                         $ 20,652,044            $ 20,452,582
                                                                     ============            ============

Liabilities and shareholder's equity (deficit)
Current liabilities:
   Accrued liabilities                                               $    860,013            $    654,853

Long-term debt:
     Loan from FCC                                                     15,166,177              15,166,177
Deferred income taxes                                                     500,000                 500,000

Redeemable preferred stock, $1000 par value; 5% cumulative
   dividends, 15,000 shares authorized, 7,800 issued and
   outstanding  (liquidation  value  - $7,800,000)
                                                                        3,536,930               3,389,487

Shareholder's equity (deficit):
Common stock, Class A, $.0001 par value, 3,600,000 shares
  authorized,  1,772,198 shares issued and outstanding                        177                     177
Common stock, Class B, $.0001 par value, 16,000,000 shares
  authorized, 1,779,301 shares issued and outstanding                         178                     178
Additional paid-in capital                                              4,949,645               4,949,645
Shareholder's deficit accumulated during the development stage         (4,361,076)             (4,207,935)
                                                                      -----------            ------------

Total shareholder's equity (deficit) accumulated during the
  development stage                                                       588,924                 742,065
                                                                     ============            ============
Total liabilities and shareholder's equity (deficit)                 $ 20,652,044            $ 20,452,582
                                                                     ============            ============
</TABLE>

(A) The Balance  Sheet at December  31, 1997 has been  derived  from the Audited
Financial  Statements at that date, but does not include all of the  information
and footnotes required by generally accepted accounting  principles for complete
financial statements.


See accompanying notes.

                                       2
<PAGE>
                         East/West Communications, Inc.

                    (A Development Stage Enterprise, formerly
                       Aer Force Communications B, L.P.)

                            Statements of Operations

<TABLE>
<CAPTION>

                                                                                                      JULY 26, 1996
                                                                  THREE MONTHS ENDED                  (INCEPTION) TO
                                                                      MARCH 31.                          MARCH 31,
                                                              1998                   1997                  1998
                                                           --------------------------------------------------------

<S>                                                        <C>                   <C>                   <C>         
  Interest expense including commitment fees                      --             $  (743,054)          $(3,566,062)
  Deferred income tax expense                                     --                    --                (500,000)
  Other expenses                                              (8,464)                   --                 (96,815)
  Investment income                                            2,766                    --                   3,510
                                                           -----------           -----------           -----------
            Net loss                                          (5,698)               (743,054)           (4,159,367)

Dividend requirement on preferred stock                       (147,443)                 --                (201,709)
                                                           ===========           ===========           ===========
Loss applicable to common shares                           $  (153,141)          $  (743,054)          $ 4,361,076
                                                           ===========           ===========           ===========

Basic and diluted loss per share:
            Net loss                                       $      (.04)
                                                           ===========

Number of shares used in computation                         3,551,499
                                                           ===========

Net loss allocated to general partner (1%)                                       $    (7,431)
                                                                                 ===========

Net loss allocated to limited partner (99%)                                      $  (735,623)
                                                                                 ===========
</TABLE>


See accompanying notes.

                                       3
<PAGE>
                         East/West Communications, Inc.

                   (A Development Stage Enterprise, formerly
                       Aer Force Communications B, L.P.)

                            Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                                                                       JULY 26, 1996
                                                                                      THREE MONTHS ENDED              (INCEPTION) TO
                                                                                           MARCH 31,                    MARCH 31,
                                                                                   1998                1997               1998
                                                                               -----------------------------------------------------

OPERATING ACTIVITIES
<S>                                                                            <C>                 <C>                 <C>          
Net loss                                                                       $     (5,678)       $   (743,054)       $ (4,159,367)
Adjustments to reconcile net loss to net cash used
 in operating activities:
      Deferred income taxes                                                            --                  --               500,000
Changes in operating assets and liabilities:
      Accrued liabilities                                                            (1,849)               --                59,071
Interest accrued, including commitment fees                                            --               743,054           3,566,063
                                                                               ------------        ------------        ------------
Net cash used in operating activities                                                (7,457)               --               (34,233)

Investing activities
(Deposits with) refunds from the FCC                                                   --            10,104,228          (1,895,772)
Purchase of PCS licenses                                                               --                  --            (1,895,772)
Other                                                                                  --                  --               (11,617)
                                                                               ------------        ------------        ------------
Net cash (used in) provided by investing activities                                    --            10,104,228          (3,803,161)

Financing activities
Proceeds from the issuance of loans from the Limited Partner
                                                                                       --                  --            13,738,502
Repayment of loans from the Limited Partner                                            --           (10,104,228)        (10,104,228)
Capital contributions                                                                  --                  --               450,000
                                                                               ------------        ------------        ------------
Net cash provided by (used in) financing activities                                    --           (10,104,228)          4,084,274

Net change in cash and cash equivalents                                              (7,457)               --               246,880
Cash and cash equivalents at beginning of period                                    254,427                --                  --
                                                                               ============        ============        ============
Cash and cash equivalents at end of period                                     $    246,880        $       --          $    246,880
                                                                               ============        ============        ============
</TABLE>



See accompanying notes.

                                       4
<PAGE>
                         East/West Communications, Inc.

                   (A Development Stage Enterprise, formerly
                       Aer Force Communications B, L.P.)

                          Notes to Financial Statements

                                December 31, 1997

1. ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

East/West  Communications,  Inc. ("the Company") was  incorporated on August 13,
1997 to succeed to the rights and  obligations  of Aer Force  Communications  B,
L.P. ("the  Partnership").  The  Partnership  was formed in July 1996 to bid for
personal  communications services ("PCS") licenses in the Federal Communications
Commission's  ("FCC")  F-Block  auction.  PCS  is a  second  generation  digital
wireless  service  utilizing  voice,  video or data devices that allow people to
communicate at anytime and virtually  anywhere.  Over the past three years,  the
FCC auctioned off PCS licenses,  a total of 120 MHZ of spectrum,  falling within
six separate frequency blocks labeled A through F. Frequency blocks C and F were
designated by the FCC as  "entrepreneurial  blocks."  Certain  qualifying  small
businesses  including  the  Partnership  were  afforded  bidding  credits in the
auctions  as  well  as  government  financing  of  the  licenses  acquired.  The
Partnership  won  five  licenses  in 1997  to  provide  personal  communications
services  over 10Mhz of spectrum to a population  of  approximately  21 million,
including Los Angeles and Washington, D.C. Aer Force Communications Inc. was the
General  Partner of the  Partnership  with a 50.1%  equity  interest.  Lynch PCS
Corporation F ("Lynch PCS F"), a  wholly-owned  subsidiary of Lynch  Corporation
("Lynch"),  a publicly held company,  was the Limited Partner of the Partnership
with a 49.9% equity interest.

On December 4, 1997, the Company  succeeded to the assets and liabilities of the
Partnership  under a plan where the General Partner received 50.1% of the Common
Stock of the Company (in the form of 100% of the Company's Class B Common Stock)
and Lynch PCS F received  49.9% of the Common  Stock of the Company (in the form
of 100% of the Company's  Class A Common Stock).  Just prior to the  succession,
the Partners made cash  contributions  totaling $250,000 (in proportion to their
respective  equity  interests)  to  the  Partnership  and  the  Limited  Partner
contributed $4.5 million of its outstanding loan to the Partnership's Capital.

Immediately thereafter,  Lynch PCS F dividended 39.9% of the Common Stock of the
Company to Lynch which, in turn,  dividended this interest to its  shareholders.
In addition,  Lynch PCS F  transferred  the remaining 10% of Common Stock of the
Company held by it to Gabelli Funds,  Inc., an affiliate of the Chairman and CEO
of Lynch,  in  satisfaction of a previously  incurred  obligation.  Also at that
time,  Lynch PCS F converted the remaining  principal  amount of its loan to the
Partnership of $3,335,221 (after the capital  contribution of $4,500,000) into a
redeemable  preferred stock of the Company (see Note 6). Under the terms of this
conversion the Limited  Partner's prior  obligation to make further loans to the
Partnership was terminated.

BASIS OF PRESENTATION

The financial  statements  are prepared in conformity  with  generally  accepted
accounting principles applicable to a development stage enterprise.


                                       5
<PAGE>
                         East/West Communications, Inc.

                   (A Development Stage Enterprise, formerly
                       Aer Force Communications B, L.P.)

                    Notes to Financial Statements (continued)



1. ACCOUNTING POLICIES (CONTINUED)

BASIS OF PRESENTATION (CONTINUED)

The Company's  financial  statements have been prepared on a going concern basis
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business and do not include any  adjustments  to reflect
the possible future effects on the  recoverability  and classification of assets
and the amount  and  classifications  of  liabilities  that may result  from the
possible inability of the Company to continue as a going concern.

The Company believes that its PCS licenses have substantial potential.  However,
the Company has not yet adopted a business plan or determined how to finance its
operations because of uncertainties relating to PCS. Therefore,  the Company has
not yet  determined  whether to develop  its PCS  licenses  on its own, to joint
venture  its  licenses  with  other  PCS  or  wireless  telephone  licensees  or
operators,  or to sell  some or all of its  licenses.  The  Company  expects  to
continually evaluate these factors and adopt a business plan once the financing,
regulatory and market aspects of PCS are less uncertain.

The Company has incurred  losses since inception and will need to obtain capital
in order to fund its interest  payment  obligations  and for working capital and
general corporate purposes. There can be no assurance that the Company can raise
sufficient  capital to fund its obligations and finance the  construction of its
networks.  Accordingly,  the lack of funding creates substantial doubt about the
Company's ability to continue as a going concern.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents for which the carrying amount  approximates fair value
include highly liquid investments with a maturity of three months or less at the
time of purchase.

ADMINISTRATIVE SERVICES

The Company and the Partnership  has never had any paid  employees.  Lynch PCS F
provided the  Partnership,  at its request,  with certain services in connection
with the Partnership's  bidding for PCS licenses in the FCC auction in late 1996
through  early 1997.  Aside from that  matter,  neither the General  Partner nor
Lynch PCS F provided the Partnership or the Company with a substantial amount of
services.  Neither  partner  charged  the  Partnership  or the  Company  for the
services provided, as such amounts are not significant.

USE OF ESTIMATES

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


                                       6
<PAGE>
                         East/West Communications, Inc.

                   (A Development Stage Enterprise, formerly
                       Aer Force Communications B, L.P.)

                    Notes to Financial Statements (continued)

1. ACCOUNTING POLICIES (CONTINUED)

CAPITALIZED COSTS

Interest charges including commitment fees incurred prior to the granting of the
licenses have been  expensed.  Subsequent to the license grant dates,  and until
operations  commence,  all interest  charges and commitment  fees on outstanding
loan  balances  will be  capitalized.  These  costs will be  amortized  over the
remaining life of the  respective  loan when the Company  commences  operations.
Capitalized  interest,  included in capitalized costs, amounted to $1,104,273 at
March 31,  1998.  Total  interest  charges  amounted to  $207,009,  $173,054 and
$2,024,287, respectively, for the three months ended March 31, 1998 and 1997 and
for the period from July 26, 1996 (inception) to March 31, 1998.

The FCC licenses will be amortized over a period,  consistent  with the industry
standard,  not to exceed 40 years,  which will begin when  operations  commence.
Pursuant to FCC regulations,  license holders are required to commence providing
service to  one-third of the  population  within the license area within 5 years
from the date of award and  two-thirds of the  population  within ten years from
the date of award.

LOSS PER SHARE

In 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings
per Share,"  which was  adopted by the Company in 1997 upon the  issuance of its
common  stock.  Basic loss per share is  calculated  by dividing net loss by the
weighted average number of Class A and Class B common shares  outstanding during
the period.  The basic and  diluted  loss per share for the year ended March 31,
1998 give effect to the  issuance  of the common  stock of the Company as if the
issuance occurred on January 1, 1998.

INCOME TAXES

Prior to  December  4,  1997,  no  provision  for  income  taxes was made in the
financial  statements as the partners  were required to report their  respective
share of  income  or loss on their  respective  income  tax  returns.  Beginning
December  4, 1997,  the  Company  accounts  for  income  taxes  pursuant  to the
provisions of SFAS No. 109,  "Accounting  for Income Taxes." Under SFAS No. 109,
deferred taxes result from temporary  differences in the recognition of revenues
and expenses for income tax and financial  reporting  purposes.  At December 31,
1997, and March 31, 1998,  deferred tax liabilities  represent the tax effect of
taxable temporary differences (pertaining to capitalized costs) which existed at
the date the Partnership converted into a C-Corporation.

2. RELATED PARTIES

Due to Limited Partner represents amounts due for interest, including commitment
fees, on the loan  outstanding  which was to be repaid according to the terms of
the loan (See Note 4).


                                       7
<PAGE>
                         East/West Communications, Inc.

                   (A Development Stage Enterprise, formerly
                       Aer Force Communications B, L.P.)

                    Notes to Financial Statements (continued)

3. PARTNERSHIP AGREEMENT

The Partnership was formed in July 1996 to bid for PCS licenses in the "F-Block"
auction. The General Partner originally  contributed $100,200 to the Partnership
for a 50.1% equity interest and the Limited Partner  contributed  $99,800 to the
Partnership for a 49.9% equity interest.

Under the terms of the  Partnership  Agreement  all  deductions  with respect to
interest  expense and commitment  fees were allocated 99% to the Limited Partner
and 1% to the General Partner. All profits of the Partnership were allocated 99%
to the Limited Partner and 1% to the General Partner until the aggregate  amount
of all profits  allocated to the Limited  Partner and General  Partner equal the
deductions with respect to interest expense and commitment  fees.  Subsequently,
all profits and losses were to be allocated  to the Limited  Partner and General
Partner  in  proportion  to  their  respective   interests,   49.9%  and  50.1%,
respectively.
On December 4, 1997, the Partnership was terminated.

4. LONG-TERM DEBT

Long-term debt at March 31, 1998 and December 31, 1997 consists of:

FCC financing of PCS licenses awarded in the
 following markets and maturing in 2007:
  Los Angeles, CA                                    $ 3,579,000
  Washington, D.C                                      7,068,000
  Sarasota, FL                                         1,322,400
  Reno, NV                                             1,429,800
  Santa Barbara, CA                                    1,766,977
                                                     -----------
                                                      15,166,177
                                                     -----------
                                                     $15,166,177
                                                     ===========

In connection with the PCS "F-Block"  auction,  $12.0 million was deposited with
the FCC of which  $11.8  million was  borrowed  from Lynch PCS F under a line of
credit  which  was due and  payable  in five  years.  The  interest  rate on the
outstanding  borrowings  under  the  line  was  fixed  at 15%;  additionally,  a
commitment  fee of 20% per annum was  charged on the total  line of  credit.  On
December 4, 1997,  the balance of such loan was  $7,835,221,  including  accrued
interest and commitment  fees. On such date, $4.5 million was contributed to the
equity of the Partnership and the remaining  balance of $3,335,221 was converted
into 7,800 shares of redeemable  preferred stock (see Note 6). At that time, the
line of credit was terminated.


                                       8
<PAGE>
                        East/West Communications, Inc.

                   (A Development Stage Enterprise, formerly
                       Aer Force Communications B, L.P.)

                    Notes to Financial Statements (continued)


4. LONG-TERM DEBT (CONTINUED)

All of the FCC financing bears interest at 6.25% per annum.  Quarterly  interest
payments of $236,972  were required for the first two years of the license (1997
and 1998) and  quarterly  payments of  principal  and  interest of $605,879  are
required  over the remaining  eight years of the license  term.  These loans are
secured by the licenses  granted.  In April 1997, the FCC suspended the interest
payments  on the debt  through  March  31,  1998.  On March  24,  1998,  the FCC
indicated  that such interest  payments will be resumed not earlier than 90 days
subsequent   to   publication   in  the  Federal   Register  of  its  "Order  on
Reconsideration  of the Second  Report and Order."  Such order was  published on
April 8, 1998,  requiring  the  suspended  payments  (aggregating  approximately
$801,000) to be made in eight quarterly  installments beginning in July 31, 1998
in addition to regular interest  payments.  Also on that date,  accrued interest
from March 31, 1998 to July 31, 1998 of $318,000 will be due.

There were no cash  payments for  interest for the periods  ended March 31, 1998
and 1997.


5. COMMON STOCK

The Company has two classes of Common Stock authorized: Class A Common Stock and
Class B Common Stock.  The authorized  capital stock of the Company  consists of
3,600,000 shares of Class A Common Stock and 16,000,000 shares of Class B Common
Stock.  The  holders  of Common  Stock are  entitled  to  receive  ratably  such
dividends,  if any,  as may be  declared  from  time to  time  by the  Board  of
Directors  out  of  funds  legally  available  therefor.  In  the  event  of the
liquidation,  dissolution  or winding up of the  Company,  the holders of Common
Stock are entitled to share  ratably in all assets  remaining  after  payment of
liabilities, if any, then outstanding.

Collectively,  the shares of Class A Common Stock  represent not more than 49.9%
of the Company's voting interest, with each share of Class A Common Stock issued
and outstanding  having one vote per share on all matters except the election of
directors  or as  otherwise  provided by law.  The holders of the Class A Common
Stock as a class will be entitled  to elect  members to the  Company's  Board of
Directors who collectively will represent two of the five votes of the Company's
Board of Directors.

Collectively, the shares of Class B Common Stock represent at least 50.1% of the
Company's  voting  interest,  with each share of Class B Common Stock issued and
outstanding  having 5 votes per share on all  matters  except  the  election  of
directors  or as  otherwise  provided by law.  With  respect to the  election of
directors, the Class B Common Stock, voting together as a class, may elect up to
three members of the Company's Board of Directors.


                                       9
<PAGE>
                        East/West Communications, Inc.

                   (A Development Stage Enterprise, formerly
                       Aer Force Communications B, L.P.)

                    Notes to Financial Statements (continued)


6. REDEEMABLE PREFERRED STOCK

The Company is  authorized  to issue  15,000  shares of  Preferred  Stock and at
December 31, 1997 has  outstanding  7,800 shares of Preferred  Stock,  par value
$1,000 per share. The Preferred Stock (i) is entitled to preferred  dividends at
an annual rate of 5 shares of  additional  Preferred  Stock for each one hundred
shares of  Preferred  Stock  outstanding,  (ii) has no voting  rights  except as
provided by law,  and (iii) is entitled to be redeemed at $1,000 per share (plus
accrued and unpaid dividends) on the earlier of (i) October 1, 2009, (ii) upon a
change of control of the Class A or Class B Common  Stock or (iii) upon the sale
of  one or  more  PCS  licenses  for  cash  or a  non-cash  sale  under  certain
circumstances.  The  difference  between  the book value of such  shares  (which
approximates  fair value) and the redemption  price is being amortized using the
effective  interest method to November 1, 2009.  Accrued dividends and accretion
on the  preferred  stock are  included in the  preferred  stock  accounts in the
balance sheet.

7. LEGAL MATTERS

The United  States  Department  of Justice has  initiated  an  investigation  to
determine  whether there has been bid rigging and market allocation for licenses
auctioned by the FCC for PCS. The Company,  together  with various other bidders
in  the  PCS  auctions,  has  received  a  civil  investigative  demand  ("CID")
requesting  documents and information  relating to bidding, and in May 1997, the
Company  complied with the CID. The Company is not aware of what further action,
if any,  the  Justice  Department  or the FCC may take and cannot  estimate  its
exposure, if any, at this time.

8. YEAR 2000 (UNAUDITED)

The Company  believes its  information  systems are in compliance with year 2000
information technology requirements.


                                       10
<PAGE>
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS

            The  Company is a  development  stage  company  with no  significant
results of  operations  to date.  The Company  holds five 10 megahertz  personal
communications  services ("PCS") licenses to serve a population of approximately
21 million,  including  two of the top ten markets,  Los Angeles and  Washington
D.C., plus Sarasota,  Florida, Reno, Nevada and Santa Barbara,  California.  The
total cost of these licenses was approximately $19 million,  after a 25% bidding
credit provided by the Federal  Communications  Commission  ("FCC").  80% of the
cost of the licenses (or $15.2  million) was financed over ten years by the U.S.
government (the "Government  Financing"),  with only payments of interest during
the first two years after award of the licenses.

            The  Company   believes  that  its  PCS  licenses  have  substantial
potential.  However,  the  Company  has  not  yet  adopted  a  business  plan or
determined how to finance its operations  because of  uncertainties  relating to
PCS, which makes evaluation difficult,  including without limitation the newness
of PCS, financing,  affiliation and technology issues and the financial problems
of certain C-Block licensees.  Therefore, Company has not yet determined whether
to develop its PCS licenses on its own,  joint  venture its licenses  with other
PCS or wireless  telephone licenses holders or operators or others, or sell some
or all of its  licenses.  The  Company  expects to  continually  evaluate  these
factors and to adopt a plan or plans once the  financing,  regulatory and market
aspects of PCS are less  uncertain.The  Company's  principal expense to date has
been interest (including commitment fees) plus minor administrative expenses.

            Unless the Company sells its PCS business or joint  ventures its PCS
licenses with an entity that has the capacity to provide  substantial funds, the
Company will need to raise substantial capital to fund its installment  payments
to the  U.S.  Government  and the  build  out of its  PCS  licenses.  Under  the
originally agreed to Government  Financing,  the Company has to make payments of
approximately  $948,000  in each of the  first  two  years  after  award  of the
licenses,  and  $2,424,000  in each of years three  through  ten.  The  interest
payments have been  suspended,  however,  until July 31, 1998, at which time the
Company will be required to make suspended  interest payments in eight quarterly
installments,  in addition to regular  interest  payments.  The Company does not
have a reliable  estimate  of the cost to build out its PCS  licenses  but it is
likely to be substantial.

            The  Company  will  have to  raise  funds  shortly  in order to make
interest  payments  on the  Government  Financing  and for  working  capital and
general corporate  purposes.  The report of the Company's  independent  auditors
with respect to the  financial  statements of the Company as of and for the year
ended December 31, 1997,  the period from July 26, 1996  (inception) to December
31,  1996 and the period  from July 26, 1996  (inception)  to December  31, 1997
contains a paragraph as to the Company's ability to continue as a going concern.
Among the factors cited by the auditors as raising  substantial  doubt as to the
Company's  ability to continue as a going  concern is that,  with respect to the
periods covered, the Company has incurred losses since inception and has not yet
adopted a business plan or  determined  how to finance its  operations  and will
need to obtain capital in order to fund its interest payment obligations and for
working capital and general corporate purposes.

LIQUIDITY AND CAPITAL RESOURCES

            The  principal  amount  of  debt  (excluding  accrued  interest)  on
December 31, 1997 was $15,166,177,  compared to shareholders equity of $588,924.
During the period from July 26, 1996


                                       11
<PAGE>

(inception) to March 31, 1998, the Company had no revenues or operating  profits
and cannot predict when it may have any revenues or operating profits.

            The debt of the Company to the Limited  Partner  (including  accrued
interest and commitment fees) was $7,835,221 at December 4, 1997. Of that amount
$4,500,000  was  contributed  as equity  to the  partnership  and the  remaining
$3,335,221  was  converted  into  7,800  shares of $1,000  par value  redeemable
preferred  stock of the  Registrant.  The  redeemable  preferred  stock  accrues
payment  in-kind  dividends at 5% per annum and is  redeemable at par value plus
including  accrued  dividends  on  November  1,  2009 or  earlier  upon  certain
circumstances.

            In April 1997, the FCC suspended interest payments on the government
financing through March 31, 1998. On March 24, 1998, the FCC indicated that such
interest will be resumed not earlier than 90 days  subsequent to the publication
in the Federal  Register of the Order on  Reconsideration.  Such publication was
made on April 8, 1998 requiring  cumulative  suspended  interest  payments to be
made in eight  quarterly  installments  of $100,000  each  beginning on July 31,
1998, also on that date, accrued interest from the date the interest  suspension
ended,  March 31,  1998,  until July 31,  1998 is due.  Accordingly,  during the
remainder of 1998, the Registrant  will be required to make regularly  scheduled
interest  payment of  approximately  $396,000,  suspended  interest  payments of
$220,000  and an accrued  interest  payment of  $320,000,  or total  payments of
$829,000.  Interest  payment for 1999 are projected to be $907,000.  The Company
will have to raise funds in order to make these cash commitments and others both
through the end of 1999 and beyond, and there is no assurance it will be able to
do so.

YEAR 2000 COMPLIANCE
The Company  believes its  information  systems are in compliance with year 2000
information technology requirements.

SEASONALITY
The Company  believes  that its  operations  are not  significantly  effected by
seasonality.

RISK FACTORS: FORWARD LOOKING STATEMENTS

            The management  discussion and analysis and the information provided
elsewhere in this Form 10-QSB contain forward looking  statements  regarding the
Company's future plans,  objectives and expected  performance.  Those statements
are based on  assumptions  that the Company  believes  are  reasonable,  but are
subject  to a wide  range of risks and  uncertainties,  and a number of  factors
could  cause the  Company's  actual  results  to differ  materially  from  those
expressed in the forward looking statements referred to above.

Government Regulation

            The   spectrum   licensing,   construction,   operation,   sale  and
interconnection  arrangements of wireless  communications networks are regulated
to varying degrees by state regulatory agencies,  the FCC, Congress,  the courts
and  other  governmental  bodies.  There can be no  assurance  that any of these
governmental  bodies  having  jurisdiction  over the  Company  will not adopt or
change  regulations  or take  other  actions  that  would  adversely  affect the
Company's business,  financial condition or results of operations.  Although the
FCC has issued rules  regarding the F-Block  Auction and numerous other matters,
not  all  of  them  have  been  subject  to  FCC  or  judicial   interpretation.
Accordingly,  for  certain  matters  (such  as the  structure  of its  Board  of
Directors and management), the Company is relying on public and private informal
interpretation  of the rules from


                                       12
<PAGE>
the staff of the FCC. The FCC is not bound by such  informal  interpretation  of
FCC staff and there can be no  assurance  that the FCC or the courts  will agree
with the  staff's  interpretation.  Many of these  rules  also  require  ongoing
compliance that the Company may not be able to satisfy despite diligent efforts.
A failure  to  comply  with FCC rules  could  subject  the  Company  to  serious
penalties  and have a  material  adverse  effect  upon the  Company's  business,
results of  operations  and  financial  condition.  In  addition,  although  the
Company's  PCS licenses are  renewable  after the  expiration  of their  10-year
terms, there can be no assurance that the Company's licenses will be renewed.

            The  Telecommunications  Act  of  1996  (the  "1996  Act")  mandates
significant  changes in existing regulation of the  telecommunications  industry
that are intended by Congress to promote competitive  development of new service
offerings,  to expand public availability of telecommunications  services and to
streamline   regulation  of  the  industry.   Included  in  these  mandates  are
requirements  that local  exchange  carriers  ("LECs")  must:  (i) permit  other
competitive carriers,  which may include PCS licensees, to interconnect to their
networks;  (ii) establish  reciprocal  compensation  agreements with competitive
carriers to terminate traffic on each other's networks and (iii) offer resale of
their telecommunications  services. In addition,  incumbent LECs are required to
offer  interconnection  and access to unbundled  network  elements at cost-based
rates (plus a reasonable profit),  as well as significant resale discounts.  The
implementation  of these mandates by the FCC and state  authorities  potentially
involves numerous changes in established rules and policies that could adversely
affect the Company's business, financial condition and results of operations.

            In March 1997, CAI Wireless Systems, Inc. (and certain subsidiaries)
("CAI") filed petitions to deny various D, E and F-Block PCS licenses, including
the  Company's  license  for  Washington,  D.C.,  because  it  feared  that  PCS
operations might cause  interference with petitioners'  wireless cable services.
In June 1997 the FCC  dismissed  all of those  petitions on the grounds that CAI
failed  to  establish  standing  because  it failed  to  allege  specific  facts
supported  by  affidavit   demonstrating   that   applicants   would  cause  CAI
interference  if their  applications  were granted.  It is possible that CAI, or
others similarly situated, might attempt to raise this issue at a later date.

            The FCC  has  proceedings  in  process  that  could  open  up  other
frequency bands for wireless telecommunications and PCS-like services. There can
be no assurance that these proceedings will not adversely affect the Company and
the Company's ability to offer a full range of PCS services.

Personal Communications Services ("PCS")

            Victoria G. Kane, a director of the Company and the sole shareholder
of the Class B Common Stock,  is the majority  stockholder of Fortunet  Wireless
Communications Corporation,  which is the General Partner and 50.1% equity owner
in Fortunet Communications, L.P. ("Fortunet"). Fortunet is the successor to five
partnerships that won 30 megahertz personal  communications services licenses in
the FCC's C-Block  auction  (restricted  to small  businesses  and certain other
qualifying  bidders),  which  concluded in 1996.  Fortunet won 31 licenses in 17
states covering a population of approximately 7 million people. The licenses had
an aggregate purchase price of $216 million after a 25% bidding credit.

F-BLOCK LICENSE REQUIREMENTS

            When the FCC  allocated  spectrum  to  public  auction  for PCS,  it
designated the F-Block as an  "Entrepreneurs'  Block." FCC rules require F-Block
applicants  and  licensees  (collectively,   "Entrepreneurs")  to  meet  various
qualifications.


                                       13
<PAGE>
            The FCC has  determined  that  Entrepreneurs  that qualify as a Very
Small Business and win PCS licenses are eligible to receive a loan from the U.S.
Government  for 80% of the dollar  amount of their  winning  bids in the F-Block
Auction (a "F-Block Loan"). The Government  Financing provided to the Company is
F-Block Loans. In order to ensure  continued  compliance with the FCC rules, the
FCC has  announced  its  intention to conduct  random  audits during the initial
10-year PCS  license  terms.  There can be no  assurance  that the Company  will
continue to satisfy any of the F-Block license requirements,  and the failure to
do so would have a material adverse effect on the Company.

            Entrepreneurs  Requirements.  In order to hold a F-Block license, an
entity  must  have:   (i)  less  than  $125  million  in  gross   revenues  (the
"Entrepreneurs Revenues Limit") for the two years preceding the auction and (ii)
less than $500 million in total assets (excluding the value of C-Block licenses)
(the "Entrepreneurs  Asset Limit" and, together with the Entrepreneurs  Revenues
Limit, the "Entrepreneurs Requirements"). To qualify for the F-Block Auction, an
entity  had to have met the  Entrepreneurs  Revenues  Limit  for each of the two
years  prior to the  auction  and the  Entrepreneurs  Asset Limit at the time it
filed its  application  to qualify for the F-Block  Auction on FCC Form 175 (the
"Short Form").  For at least five years after  obtaining an F-Block  license,  a
licensee  must  continue  to meet  the  Entrepreneurs  Requirements,  which  are
modified for such five-year  period to exclude  certain assets and revenues from
being  counted  toward  the  Entrepreneurs  Asset  Limit  and the  Entrepreneurs
Revenues Limit,  respectively.  Additional  amounts are excluded if the licensee
maintains  an   organizational   structure  that  satisfies  the  Control  Group
Requirements  described  below.  In calculating a licensee's  gross revenues for
purposes of the Entrepreneurs Requirements,  the FCC includes the gross revenues
of the licensee's  affiliates,  those persons or entities that hold interests in
the licensee, and the affiliates of such persons or entities.

            By claiming status as an Entrepreneur, the Company qualified for the
F-Block  Auction.  If the FCC were to determine that the Company did not satisfy
the  Entrepreneurs  Requirements  at the  time it  participated  in the  F-Block
Auction  or  that  the  Company   fails  to  meet  the   ongoing   Entrepreneurs
Requirements,  the FCC could revoke the Company's PCS licenses, fine the Company
or take other  enforcement  actions,  including  imposing the Unjust  Enrichment
Penalties  described  below.  Although  the  Company  believes  it has  met  the
Entrepreneurs  Requirements,  there can be no assurance that it will continue to
meet  such  requirements  or  that,  if  it  fails  to  continue  to  meet  such
requirements,  the FCC will not take  action  against the  Company,  which could
include revocation of its PCS licenses.

            Very  Small  Business   Requirements.   An  entity  that  meets  the
Entrepreneurs  Requirements  may also  apply  to  receive  certain  preferential
financing terms if it meets certain  requirements to qualify as a Small Business
or a Very Small  Business  (the  "Small  Business  Requirements"  or "Very Small
Business  Requirements").  The  preferential  financing  terms  for  Very  Small
Businesses,  include a 25% bidding credit (the "Bidding Credit") and the ability
to make quarterly  interest-only  payments on its F-Block Loan for the first two
years of the  license  term.  To meet the Very Small  Business  Requirements,  a
licensee  must  have had  annual  average  gross  revenues  of not more than $15
million for the three calendar years preceding the date it filed its Short Form.
In  calculating  a  licensee's  gross  revenues  for  purposes of the Very Small
Business  Requirements,  the FCC includes the gross  revenues of the  licensee's
affiliates,  those persons or entities that hold interests in the licensee,  and
the affiliates of such persons or entities.

            By claiming status as a Very Small Business,  the Company  qualified
for the 25% Bidding Credit and the most favorable  installment payment terms. If
the FCC were to  determine  that the  Company  does not  qualify as a Very Small
Business, the Company could, at a minimum, be forced to



                                       14
<PAGE>

give up any  benefits  for  which it was not  eligible.  Further,  the FCC could
revoke the Company's PCS  licenses,  fine the Company or take other  enforcement
actions,  including  imposing  the Unjust  Enrichment  Penalties.  Although  the
Company  has  structured  itself to meet the Very Small  Business  Requirements,
there  can be no  assurance  that  it  will  remain  in  compliance  with  these
requirements or that, if it fails to continue to meet such requirements, the FCC
will not take action against the Company,  which could include revocation of its
PCS licenses.

            Control  Group  Requirements.  If an F-Block  licensee  maintains an
organizational  structure  in which at least 25% of its total  equity on a fully
diluted  basis is held by a control  group  (the  "Control  Group")  that  meets
certain  requirements  (the  "Control  Group  Requirements"),  the FCC  excludes
certain  assets and revenues  from such  licensee's  total  revenues and assets,
thereby making it easier for the licensee to meet the Entrepreneurs Requirements
and the Very Small Business Requirements. The Control Group Requirements mandate
that the Control Group,  among other things,  have both actual and legal control
of the licensee. Further, the FCC permits licensees to qualify under the Control
Group Requirements pursuant to an alternative structural option (the "Qualifying
Investor  Option"),  in which:  (i) an  established  group of investors  meeting
certain financial  qualifications (the "Qualifying Investors") that own at least
15% of the  equity  interest  on a fully  diluted  basis and 50.1% of the voting
power in the F-Block licensee and (ii) additional members  ("Additional  Control
Group  Members") that hold at least 10%, on a fully diluted basis, of the equity
interest in the F-Block  licensee.  Additional  Control  Group  Members  must be
either:  (a) the same Qualifying  Investors of the Control Group, (b) members of
the  licensee's  management  or  (c)  non-controlling  institutional  investors,
including  venture  capital  firms.  To take  advantage of the FCC's  Qualifying
Investor Option, a F-Block licensee must have met the Qualifying Investor Option
requirements  at the time it filed its Short Form and must  continue to meet the
Qualifying  Investor Option  requirements  for three years following the License
Grant Date.  Commencing  the fourth year of the license term,  the FCC rules (i)
eliminate the requirement that the Additional Control Group Members meet certain
qualifications and (ii) allow the licensee to reduce the minimum required equity
interest held by the Control Group's Qualifying Investors from 15% to 10%.

            In order to meet  the  Control  Group  Requirements,  the  Company's
Certificate of  Incorporation  provides that the Company's Class B Common Stock,
as a class, must constitute 50.1% of the voting power of the Company.  There can
be no  assurance  that the Company  will remain in  compliance  with the Control
Group Requirements or, if it fails to continue to meet such  requirements,  that
the FCC will not take action against the Company, which could include revocation
of its PCS  licenses.  Although  the  Company has taken these and other steps to
meet the Control Group Requirements,  there can be no assurance that the Company
has or will continue to meet the Control Group Requirements,  and the failure to
meet such requirements would have a material adverse effect on the Company.

            Asset and  Revenue  Calculation.  In  determining  whether an entity
qualifies as an Entrepreneur and/or as a Very Small Business, the FCC counts the
gross  revenues and assets of the  entity's  "financial  affiliates"  toward the
entity's total gross revenues and total assets.  Financial affiliation can arise
from  common  investments,   familial  or  spousal  relationships,   contractual
relationships,  voting trusts, joint venture agreements,  stock ownership, stock
options,   convertible  debentures  and  agreements  to  merge.   Affiliates  of
noncontrolling  investors  with  ownership  interests  that  do not  exceed  the
applicable FCC nonattributable  investor ownership thresholds are not attributed
to  F-Block  licensees  for  purposes  of  determining  whether  such  licensees
financially  qualify  for  the  applicable  F-Block  Auction  preferences.   The
Entrepreneurs  Requirements  and the Very Small  Business  Requirements  provide
that, to qualify as a nonattributable  investor, an entity may not own more than
25% of the  Company's  total equity on a fully  diluted  basis.  There can be no


                                       15
<PAGE>

assurance  that the Company will not exceed  these  passive  investor  limits or
otherwise violate the Entrepreneur  Requirements  and/or the Very Small Business
Requirements.

            In  addition,  if an  entity  makes  bona  fide  loans to a  F-Block
licensee, the assets and revenues of the creditor would not be attributed to the
licensee  unless the creditor is otherwise  deemed an affiliate of the licensee,
or the loan (including the redeemable  Preferred Stock) is treated by the FCC as
an equity  investment and such treatment  would cause the  creditor/investor  to
exceed the applicable  ownership  interest  thresholds (for purposes of both the
financial  affiliation and foreign ownership rules).  Although the FCC permits a
creditor/investor  to use standard  terms to protect its  investment  in F-Block
licensees, such as covenants,  rights of first refusal and super-majority voting
rights on  specified  extraordinary  issues,  the FCC has stated that it will be
guided,  but not bound,  by criteria  used by the  Internal  Revenue  Service to
determine  whether a debt investment is bona fide debt. The FCC's application of
its  financial  affiliation  rules  is  largely  untested  and  there  can be no
assurance  that the FCC or the courts  will not treat  certain of the  company's
lenders or investors as financial affiliates of the Company.

            Transfer  Restrictions.  In  addition,  the  FCC  prohibits  F-Block
licensees  from  assigning  or  transferring  control  of any of  their  F-Block
licenses for a period of at least five years from the License  Grant Date to any
entity that fails to satisfy the Entrepreneurs  Requirements during such period.
After the fifth year, all transfers and assignments remain subject to the Unjust
Enrichment Penalties.  The effect of this prohibition will likely deter or delay
unsolicited changes in control of the Company.

            The Company (i) believes  that it has  structured  itself to satisfy
the Entrepreneurs  Requirements,  (ii) intends to diligently pursue and maintain
its  qualification as a Very Small Business and (iii) has structured the Class A
and Class B Common  Stock in a manner  intended  to ensure  compliance  with the
applicable FCC Rules. The Company has relied on representations of its investors
to  determine  its  compliance  with  the  FCC's  rules  applicable  to  F-Block
licensees.  There can be no assurance,  however, that the Company's investors or
the Company itself will continue to satisfy these  requirements  during the term
of any PCS license  granted to the  Company or that the Company  will be able to
successfully implement divestiture or other mechanisms included in the Company's
Certificate of  Incorporation  which are designed to ensure  compliance with FCC
rules.  Any  non-compliance  with FCC rules could subject the Company to serious
penalties, including revocation of its PCS licenses.

            FCC rules impose build-out  requirements  that require PCS licensees
to provide  adequate  service to at least  one-third  of the  population  in the
licensed area within five years from the date of grant and two-thirds within ten
years.  The Company has not begun any build out of its licenses.  There are also
substantial  restrictions  on the  transfer  of  control  of C and F  Block  PCS
licenses.

            There  are  many  risks  relating  to PCS  communications  including
without  limitation,  the high cost of PCS  licenses,  the fact that it involves
start-up  businesses,  raising  the  substantial  funds  required to pay for the
licenses and the buildout,  determining the best way to develop the licenses and
which  technology to utilize,  the small size and limited  resources the Company
compared  to other  potential  competitors,  existing  and  changing  regulatory
requirements,  additional auctions of wireless  telecommunications  spectrum and
actually  building  out and  operating  new  businesses  profitably  in a highly
competitive   environment  (including  already  established  cellular  telephone
operators  and five  new PCS  licensees).  There  can be no  assurance  that any
licenses  granted  to the  Company  can be  successfully  sold  or  financed  or
developed.


                                       16
<PAGE>
ITEM 6.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
             ON FORM 8-K


(A) DOCUMENTS FILED AS PART OF THIS REPORT

            (3) Exhibits
                        27     Financial  Data  Schedule,   which  is  submitted
                               electronically  to the  Securities  and  Exchange
                               Commission for information  purposes only and not
                               filed.



(B) REPORTS ON FORM 8-K

            None




                                       17
<PAGE>
SIGNATURES

            Pursuant  to  the  requirements  of  Section  13  or  15(d)  of  the
Securities  Exchange Act of 1934,  the  Registrant  has caused this report to be
signed this 20th day of May,  1998 on its behalf by the  undersigned,  thereunto
duly authorized.

                                           EAST/WEST COMMUNICATIONS, INC.



                                           By:/S/ VICTORIA KANE
                                              ----------------------------------
                                              Victoria Kane
                                              Chairman of the Board
                                              (Chief Executive Officer and Chief
                                              Financial Officer)