<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)

[x]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the fiscal year ended
         December 31, 1998.

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 [NO FEE REQUIRED]

         For the transition period from __________ to

Commission file number 1-13002

                           PAGING PARTNERS CORPORATION
           (Name of small business issuer as specified in its charter)

         Delaware                                   22-3281446
(State of other jurisdiction of                   (I.R.S. Employer
incorporation or organization)                   Identification No.)

        Freehold Office Plaza
4249 Route 9 North, Building 2
        Freehold, New Jersey                            07728
(Address of principal executive offices)             (Zip Code)

       Registrant's telephone number, including area code: (732) 409-7088

Securities registered under Section 12(b) of the Securities Exchange Act of
1934:

                                                    Name of each exchange
    Title of Each Class                             on which registered

Common Stock, $0.01 par value                       Boston Stock Exchange

Securities registered under Section 12(g) of the Securities Exchange Act of
1934:

                               Title of Each Class

                                      None

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the securities Exchange Act of 1934 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.   X Yes      No

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained herein, and no disclosure will be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.       Yes     X No

         The revenues of registrant for the fiscal year ended December 31, 1998
were $9,902,000.

         The aggregate market value of the voting stock held by non-affiliates
of the registrant, as of February 18, 1999, was approximately $5,000,000 based
upon a last sales price of $1.31.

         As of February 18, 1999, there were 6,327,000 shares of the
registrant's Common Stock outstanding.

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                                     PART I

ITEM 1. BUSINESS

MERGER

         On November 6, 1998, Paging Partners Corporation (the "Company" or
"Paging Partners") entered into a Merger Agreement with Aquis Communications,
Inc., ("Aquis") whereby Aquis will merge (the "merger") with a wholly owned
subsidiary of the Company. Upon consummation of the merger the current
shareholders of Aquis will own approximately 58.5% of the outstanding shares of
the Company's common stock.

         Consummation of the merger is subject to several conditions, including,
approval by the shareholders of the Company, finalization of all financing
commitments and the approval of the Federal Communications Commission to the
transfer of control of the Company. Management believes that the merger will be
completed within approximately 90 days.

         On December 31, 1998, Aquis acquired licenses and other assets relating
to the paging business of the Bell Atlantic Corporation (the "Paging Business")
subject to certain liabilities relating to the Paging Business. The purchase
price for the Paging Business was approximately $28,000,000 which was financed
by a blend of senior debt, seller financing and equity. As of December 31, 1998,
the Paging Business served approximately 250,000 users.

         Upon consummation of the merger, the ongoing entity will provide local
paging service on six frequencies over a combined service area covering most of
the densely populated portions of the Northeast and Mid-Atlantic regions of the
United States. Under the terms of a reseller agreement, Cellco Partnership, a
partnership doing business as Bell Atlantic Mobile ("BAM") acts as a
non-exclusive reseller for Aquis. Aquis also acts as a reseller, offering
nationwide and regional paging services through its relationships with other
paging carriers.

         The following description of the Company's business is based on its
operation during 1998 through the date of this report and on plans conceived by
the current management team. After the consummation of the above merger, the
Company's current business will be overseen by Aquis executives. While the
Company's management is not aware of any significant changes planned by Aquis,
management can give no assurance that such changes will not, in fact, occur.

GENERAL

         Paging Partners operates technologically advanced paging systems which
provide one-way wireless messaging services. The Company's Metro system, which
broadcasts on 931.7875 MHz (The "Metro System"), initially focused on the New
York Metropolitan area and currently provides service over portions of seven
states (New York, New Jersey, Connecticut, Pennsylvania, Maryland, Virginia and
Delaware) and Washington, D.C.

         During 1994 the Company obtained licenses from the Federal
Communications Commission ("FCC") to construct a paging system (its "Corridor
System") operating on a single frequency (929.6375 MHz) in the territory
extending along Interstate I-95 from Baltimore/Washington to Boston (the
"Northeast Corridor"). The Company has completed sufficient construction of the
Corridor system to ensure exclusive operation on the 929.6375 MHz frequency
throughout the Corridor, including the metropolitan areas of
Baltimore/Washington, D.C., Philadelphia, New York, and Boston and now provides
continuous service from Boston to Washington, D.C. Through a reciprocal
arrangement with another carrier, the Company will also offer coverage in the
Southeastern United States. Because the Corridor System is independent of the
company's Metro System, the Company continues to operate both Systems, and has
the flexibility to provide Resellers customized access to service on either
System.

         The Company also obtained licenses from the FCC for a third 900 MHz
frequency covering most of the I-95 Northeast Corridor. The Company entered into
a sharing agreement with another carrier which was granted licenses for the
frequency covering substantially the same territory. Pursuant to this sharing
agreement, the Company may use up to 50 percent of the available air-time.



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         From inception, the Company's principal operating strategy has been to
act as a wholesaler and market access to its paging systems exclusively to
paging service companies, retailers, and other third parties which, in turn,
directly solicit and service subscribers. The Company also solicits private
network operators, radio common carriers and other service providers
(collectively, with the paging service companies, retailers and other parties
described in the preceding sentence, "Resellers"), which have a need for access
to transmission facilities in the territories served by the Company's Systems.
This strategy permits the Company to operate with less personnel than vertically
integrated paging companies. In addition, this strategy removes the threat of
competition between the Company and substantially all of its Resellers which,
management believes, makes Resellers more likely to sell the Company's services
than those of vertically integrated paging companies, though there can be no
assurance that this, in fact, is the case.

          Another key strategy of the Company has been to concentrate on
providing high quality data and information transmission services targeted
toward "higher end" pagers which receive alphanumeric messages (i.e., messages
consisting of both numbers and letters). One aspect of this strategy has been
the Company's focus on developing technologically advanced systems designed for
alphanumeric paging services. Another has been the Company's efforts to supply
its Resellers with multiple "information streams" to be marketed to subscribers.
Successful marketing of alphanumeric services requires the ability to deliver a
signal which will not be corrupted and the development of a system and software
which can format and transmit large quantities of information received from
multiple sources. The Company's Metro and Corridor systems were designed and
constructed to address the needs of alphanumeric subscribers. The success of the
Company's efforts to stress its alphanumeric capabilities is evidenced by the
fact that the proportion of alphanumeric pagers which it services exceeds the
proportion of alphanumeric pagers in service throughout the industry.

         The Company's emphasis on alphanumeric services is highlighted by its
AlphaPlus(R) software and services, and its agreement with Motorola whereby the
Company broadcasts over its systems branded information services made available
to it by Motorola. AlphaPlus allows subscribers to select from information
services provided by the Company (such as customized message dispatch, traffic,
sports, weather, financial updates, and news headlines), the content to be
received by their pagers.

         Another element of the Company's strategy is its willingness to adapt
its transmission facilities for applications demanded by the marketplace.
Because the Company acts as a wholesaler, it does not dictate the services
offered subscribers or the uses made of its Systems by parties with a need for
bulk paging. By maintaining flexible, technologically advanced Systems, the
Company hopes to be able to satisfy the evolving needs of the wireless
marketplace.

         In the immediate future, the Company intends to continue to expand by
adding Resellers and hence new subscribers to its Metro and Corridor Systems. As
part of its strategy to increase the penetration of its Systems the Company will
continue to seek to increase and customize the information services available to
subscribers.

         In addition to providing paging services in the Northeast Corridor, the
Company, from time to time, may consider entering new geographical markets. Such
expansion could occur through the acquisition of new licenses in auctions
conducted by the FCC or the acquisition of existing paging systems, including
licenses, from current license holders.

PAGING OPERATIONS

         Subscriber Services

         The pagers currently used by subscribers to the Company's Systems
provide two basic types of service, digital display and alphanumeric display -
each of which can be combined with a variety of enhancements to increase a
pager's utility. A digital display pager permits a caller, utilizing a touch
tone telephone, to transmit to the subscriber a numeric message consisting of a
series of numbers, such as a telephone number, an account number or coded
information. Digital display pagers have the capacity to store several numeric
messages that can be recalled on demand. An alphanumeric display pager allows
subscribers to receive and store messages consisting of both numbers and
letters. Alphanumeric pagers common in the industry today have sufficient memory
to store thousands of characters.



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         Digital display paging service represents a majority of the pagers in
service today. Alphanumeric display service constitutes a relatively small
portion of the pagers in use, primarily due to the difficulty of accurately
inputting the message to be delivered and in ensuring accurate receipt of the
message by the subscriber's pager. The success of the Company's focus on
alphanumeric services is evidenced by the fact that of the pagers served by the
Company, 20% are alphanumeric as compared to an industry average of
approximately 15%.

         Traditionally, the message to be delivered to an alphanumeric pager was
transcribed by an operator of the paging company during a telephone conversation
with the party desiring to send the message. Today, a properly equipped
facility, such as the Company's, permits callers to input messages directly into
the transmission system either by using a personal computer equipped with a
modem or a dedicated input device such as an AlphaMate(TM) manufactured by
Motorola. For parties lacking such equipment, the Company links its subscribers
to a dispatch center selected by the subscriber which will input a message into
the Company's systems when a party calls the subscriber's pager telephone number
seeking to send an alphanumeric message. To ensure that data transmitted is
received accurately by the subscriber's pager, the Company designs and operates
its system so that its transmitters send out a synchronized radio signal. This
reduces interference and increases the probability that the message will be
received accurately.

         During 1998, the Company introduced a new message delivery mechanism -
AlphaPlus(R) E-mail. A subscriber selecting this service has the ability to
receive his E-mail on his pager while it is simultaneously being forwarded to
his usual E-mail address.

         Message Mail is an enhancement that allows a Reseller to add a custom
greeting to a pager and which gives the subscriber the ability to retrieve the
last ten numeric messages that were sent to the pager. In addition, the Company
provides a feature that enables a caller to leave a voice (voice mail) message
for a subscriber which the subscriber can retrieve by calling his voice mail box
at the Company's facility. A subscriber's pager displays a numeric code alerting
the subscriber whenever a voice mail message is left.

         The Company's programming software allows the subscriber (through its
Reseller) to select any of the enhancements offered by the Company at the
initial programming of a pager or at any time that the pager is in service. In
addition, because the Company has incorporated Motorola's FLEX(TM) OTA (over the
air) technology into its systems, a subscriber need not bring his pager to the
Reseller for adjustments when he decides to add on new enhancements. The Company
constantly monitors the paging market to determine what new enhancements it
might successfully sell to Resellers.

         As part of its AlphaPlus(R) service, the Company transmits a variety of
information services which Resellers can sell to their subscribers. This service
allows subscribers to receive information on their alphanumeric pagers which
they can review at their convenience. Currently, the information provided by the
Company includes headline news stories, hourly financial updates, sports scores
and a variety of other "infotainment" items purchased by the Company from
various third party information providers. The Company provides additional
premium information services, including more detailed sports, weather,
financial, traffic and emergency information, which Resellers can sell to
individual subscribers. The Company has entered into an arrangement with
Motorola's InfoPower Division whereby the Company makes available branded
information services developed by Motorola through its alliance with leading
information service providers. The Company intends to transmit additional
information services as they are made available by Motorola, as well as services
supplied by other providers, including SportsBox and ScoreQuest. ScoreQuest's
offerings include MVP, FastTrax and Daily Racing Form(R) information services.

         Network Services

         In addition to marketing its paging Systems and related services to
Resellers, the Company also markets these Systems to private network operators,
radio common carriers ("RCC") and service providers which have a need for bulk
paging or data transmission services in the territories serviced by the
Company's transmission facilities. The Company has entered into arrangements
with other RCCs and private network customers, permitting such parties to
"network" their systems with the Company's and expand the coverage offered to
their end users. More recently, the Company has allowed Resellers to directly
connect their switches into the Company's terminal, permitting Resellers to
service their subscribers through the Company's Systems. The Company charges for
such access on either a fixed fee or per-usage basis.

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         The Company has also entered into arrangements with specialized
information providers (for example, sports scores/lines, stock quotes, emergency
information) which have a "niche" subscriber base but which do not have their
own transmission facilities, whereby the Company transmits data selected by the
information provider for receipt by that provider's customers. Each of these
arrangements differs depending upon the amount of data to be transmitted and
time of transmission. By maintaining technologically sophisticated flexible
transmission systems, the Company hopes to profit from new applications of
wireless information services as they are developed.

         Resellers which rely upon the Company exclusively for transmission
services are typically given direct electronic access to the Company's
facilities. In addition, these Resellers typically operate their own switching
equipment and procure their own telephone numbers. Day-to-day servicing of these
accounts requires minimal intervention by the Company's personnel. Consequently,
by marketing to these Resellers, the Company increases its revenue with little
incremental costs.

MARKETING

         Rather than solicit and service individual subscribers directly, the
Company recruits Resellers which, in effect, act as the Company's salesforce.
The Resellers purchase from the Company, on a wholesale basis, access to its
transmission system which, in the case of paging service providers and
retailers, they provide to individual members of the general public. The Company
recruits Resellers through industry contacts, its seminar program, and a small
sales force.

         Management believes that Resellers are attracted to the Company because
of the quality of coverage provided by its paging systems, the computerized
nature of the Company's operations, which allows the Reseller 24-hour access to
its accounts, and the responsiveness of the Company to each of its Resellers. As
part of its marketing efforts, the Company conducts seminars for Resellers,
potential Resellers and other interested members of the paging industry. These
programs give the Company an opportunity to maintain contact with its Resellers.
Further, they afford the Company the opportunity to update Resellers on service
enhancements available. The Company provides technical, marketing, sales and
operations support to its Resellers and will participate with Resellers in their
efforts to solicit large volume subscribers. The Company employs sales
representatives to directly solicit Resellers in their respective territories.

         The Company's current Resellers are from both within and without the
communications industry. The Resellers include specialty and mass market
retailers, answering services, two-way radio companies and other participants in
the communications industry seeking to expand the services offered to their
customers; nationwide paging companies which rely upon the Company to service
their customers in territories serviced by the Company's Systems; private
network operators and other radio common carriers which supplement their
transmission facilities by networking into the Company's facilities; retailers,
electronics distributors and other specialty retail outlets seeking to
supplement their product lines and information providers which rely on the
Company to transmit information to their subscribers. The Company has
constructed both of its paging Systems as a series of interconnected modules,
which allows the Company to give Resellers the ability to offer services to
subscribers in only those portions of the service area which the subscriber
designates. The Company makes such subregional services available at rates below
those for service throughout the Company's service area.

         When a Reseller decides to market the Company's services, it is
provided with on-line access to the Company's computer terminal and can directly
activate, deactivate or modify the services provided to a subscriber's pager.
Because the Reseller, through its computer terminal, interacts directly with the
Company's computers, there is no incremental cost to the Company. Further,
because the Company's computers are active 24 hours a day, Resellers can service
accounts at their convenience.

         As a convenience to its Resellers, the Company maintains an inventory
of pagers and Resellers can either purchase pagers from industry suppliers or
purchase pagers from the Company. Each Reseller maintains its own sales,
marketing and accounting staff and directly services, bills and collects
payments from its subscribers. The Company derives the majority of its revenue
from a per-unit monthly fee, not dependent on usage, charged to Resellers for
each active pager. This fee, along with any other amounts due for incremental
services provided to a subscriber, must be paid by the Reseller regardless of
whether the subscriber pays the Reseller. Because each Reseller has direct
access to the Company's computers, billing disputes between the Company and its
Resellers, common throughout the industry, are virtually eliminated.



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         The Company is not dependent on any single Reseller. No single Reseller
accounts for more than 5% of the Company's gross revenues.

SOURCES OF EQUIPMENT

         The Company does not manufacture any of the equipment used in its
operations, all of which is available from a variety of sources. Due to the high
degree of compatibility among different models of transmitters, computers and
other paging and voice mail equipment, the Company has been able to design its
paging networks so as not to be dependent upon any single source for such
equipment. The Company periodically evaluates its purchasing arrangements for
pagers to be sure that the equipment it is offering to its Resellers is current
and is available at appropriate prices.

         The Company currently purchases its transmitters and paging network
equipment from Motorola. The Company's terminal equipment has a modular design,
which will allow significant future expansion by adding or replacing modules
rather than replacing the entire system. The Company believes that its
investment in technologically advanced transmission equipment reduces its cost
of maintenance and system expansion over the long term. The Company believes
that its paging system equipment is among the most technologically sophisticated
in the paging industry.

DATA RECEIPT AND TRANSMISSION

         A key strategy of the Company has been to emphasize the utility of
pagers and devices equipped with paging receivers to receive large volumes of
data on a timely and economical basis. In furtherance of this strategy, the
Company transmits a variety of information streams, including headline news
stories, hourly financial updates, sports scores, traffic, weather and an
assortment of what is referred to as "infotainment," for receipt by its
subscribers. Additional categories of information are added periodically in
response to market demand.

         As part of its emphasis on data transmission, the Company continues to
seek to develop software capable of receiving large volumes of information,
analyzing the information to determine what is relevant to a particular
subscriber and then reformatting the information for transmission over the
Company's systems for receipt by subscribers. Fully developed, such software
would allow a paging receiver to function as a personal information device
receiving an individualized data stream selected by the subscriber and broadcast
over the Company's systems.

         To increase the visibility of its AlphaPlus(R) services, the Company
entered into an agreement with Motorola whereby the Company will make available
to subscribers branded information services through its alliances with leading
service providers. During 1998, the Company introduced Alpha Plus(R) E-Mail. A
subscriber selecting this service has the ability to receive his E-mail on his
pager while it is simultaneously being forwarded to his usual E-mail address.

         The Company's Systems currently allow a Reseller to select the
enhancements offered by the Company at the initial programming of a pager or at
any time thereafter.

         In addition to attracting subscribers to the Company's Systems,
management believes that the software developed in connection with the Company's
AlphaPlus(R) services may be of interest to other radio paging system operators.
Consequently, the Company will seek to profit from the information market by
distributing to other system operators preprocessed information for transmission
to their subscribers or processing software developed by the Company.

         In addition to information services broadcast by the Company, the
Company's systems have been designed to allow subscribers to send information
for receipt on their pagers. Developments in software and information processing
equipment, such as the Motorola AlphaMate(TM), allow subscribers to a properly
equipped facility, such as the Company's, to receive messages sent by an
appropriate device directly to the operator's facility for transmission to the
subscriber. Such a facility allows a subscriber to receive messages directly
from his office without the possibility of transcription errors. In addition,
existing technology permits information broadcast over a paging system to be
received on a computer equipped with a paging modem. Management anticipates that
as paging systems evolve they will be capable of transmitting virtually all
electronic data currently transmitted over traditional telephone lines.




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COMPETITION

         The Company faces intense competition from operators of other wireless
transmission systems in its efforts to recruit Resellers. Such competition is
based upon price, as well as on the quality and variety of services offered, and
the geographic area covered. The Company's Resellers in turn face intense
competition from operators of other wireless message transmission systems as
well as the Resellers representing such systems. Many of the competitors of the
Company and its Resellers, which include local, regional and national paging
companies, possess greater financial, technical and other resources than the
Company. Certain competitors offer wider coverage than does the Company and
certain competitors follow a low-price discounting strategy to expand market
share.

         Management believes that the quality of the service the Company
provides, as well as the variety of enhancements offered, appeal to Resellers.
To date, the Company has focused its efforts on providing higher end
alphanumeric and data transmission services. The merits of this strategy are
attested to by the fact that the proportion of the pagers served by the Company
which are alphanumeric exceeds the proportion of pagers throughout the industry
which are alphanumeric. Moreover, management believes that because the Company
concentrates on Resellers and does not maintain a competitive sales force,
Resellers are more likely to rely upon the Company than on its competitors,
although there can be no assurance this, in fact, is the case.

         The Company's Metro System competes with at least ten other paging
system operators in the New York metropolitan area and others throughout its
coverage area. These include systems operated by Paging Network, Inc., Page
Mart, MetroCall, and SkyTel, as well as systems operated by privately owned
companies. The Company's Corridor System competes with several or more
competitors in all regions of the Northeast Corridor. Some of these competitors
are small, privately owned companies serving only one market area, while others
are larger companies, including those mentioned above, that provide service in
more than one market and, in some cases, continuous coverage throughout the
Northeast Corridor or the entire United States.

         A number of technologies, including cellular telephone service,
personal communications service ("PCS"), enhanced specialized mobile radio,
low-speed data networks and mobile satellite services are competitive forms of
technology used in, or projected to be used for, wireless one-and two-way
communications. Management believes that paging will remain one of the
lowest-cost forms of wireless messaging due to the low-cost infrastructure
associated with paging systems, as well as advances in technology that will
provide for reduced paging costs.

         Future technological developments in the wireless communications
industry and the enhancement of current technologies will likely create new
products and services competitive with the paging services currently offered by
the Company. There can be no assurance that the Company will not be adversely
affected by such technological changes.

REGULATION

         The Company's paging operations are subject to regulation by the
Federal Communications Commission ("FCC") under the Communications Act of 1934,
as amended ("the Communications Act") and the Telecommunications Act of 1996
("1996 Act"). The Company is required to obtain licenses from the FCC to use the
radio frequencies necessary for its paging operations. These authorizations
specify the particular locations and frequencies authorized for use by the
Company and set forth technical parameters such as power, tower height and
antenna specifications under which the Company is permitted to use its
frequencies.

         The Company's current frequencies are in the 929-931 MHz band and its
operations are governed under the Commission's Rules covering commercial mobile
radio services ("CMRS"). CMRS licensees must provide interconnection upon
reasonable request, must not engage in any unreasonably discriminatory practices
and are subject to complaints regarding any unlawful practices. The Company is
also subject to provisions that authorize the FCC to provide remedial relief to
an aggrieved party upon finding of a violation of the Communications Act and
related customer protection provisions.



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         The Company's FCC licenses are issued for ten years. At the end of the
ten year term, the Company must file applications for renewal of its
authorizations. The Company can expect renewal if it has met minimum service
requirements. While there can be no assurance that any future renewal
applications filed by the Company will be approved, based upon its experience to
date, the Company knows of no reason to believe that such renewal applications
would not be routinely approved.

         The Communications Act requires prior FCC approval for the transfer of
control of a Company that holds FCC radio licenses as well as prior consent to
the assignment of such licenses to another entity. Although there can be no
assurances that any such future applications filed by the Company will be
approved or acted upon in a timely manner by the FCC, the Company, based on its
past experience, knows of no reason to believe that any future transfer or
assignment applications would not be ultimately approved.

         The Omnibus Budget Reconciliation Act of 1993 (the "Budget Act")
imposed a structure of regulatory fees which the Company is required to pay with
respect to its licenses. These fees are revised on an annual basis. The Company
believes that these regulatory fees will not have a material adverse effect on
the Company's business.

         The Communications Act also limits foreign ownership in FCC licensed
CMRS entities to no more than twenty percent (20%) direct ownership and, without
Commission consent, no more than twenty-five (25%) indirect ownership. However,
as the result of the World Trade Organization ("WTO") Agreement on Basic
Telecommunications Service entered into February 15, 1997 and effective February
5, 1998, the Commission liberalized foreign participation in the U.S.
telecommunications market by action taken November 25, 1997. This action allows
for an expedited process of approving indirect ownership over the 25% level for
WTO signatories.

         The FCC, under the Communications Act, has authority to revoke or
modify licenses issued by it. Any such revocation can only occur after notice
and opportunity for hearing based upon egregious misconduct by the licensee. No
license of the Company has ever been revoked or modified involuntarily.

         Paging authorizations, such as those held by the Company, have
traditionally been issued on a site-specific basis. However, the FCC, on
February 19, 1997, adopted an Order looking to fundamental changes in its
regulation of the paging industry. Specifically, the FCC will, in the future,
issue most paging licenses on a geographic basis. The FCC has defined these as
Economic Areas ("EAs"). The future licensees will be given operating authority
on particular frequencies within these geographic areas, subject only to
protection of incumbent operators from interference. The FCC proposes to award
these future paging licenses by competitive bidding (auctions). The Company, as
an incumbent licensee, will be entitled to interference protection from such
auction winners for its existing operations. However, the Company's ability to
expand its service territories will be affected by these new policies.

         Because the auctions are new to paging, the Company cannot predict
their impact on its business. Initially, auctions or competitive bidding may
increase the Company's cost of obtaining authorizations from the FCC. The FCC's
new wide-area licensing and auction Rules may also serve as a barrier to new
participants to the paging industry. On the other hand, the more flexible
licensing scheme should save on application costs associated with making changes
to facilities within the wide area should the Company be successful and bid for
wide areas or within its incumbent geographic areas. On the other hand, if the
Company is not a winner in the auctions for broad geographic areas, its ability
to expand its service territories will be affected by these new policies.

         In the future, the Congress may modify or amend the Communications Act
and the FCC may modify its Rules or Policies in ways that could have a material
adverse effect on the Company's business. Such actions may effect the scope and
manner of the Company's operations and delivery of its service. As a result of
the enactment of the 1996 Act, the Company has incurred additional financial
obligations. In November 1996, in response to a directive in the 1996 Act, the
FCC adopted new rules that govern compensation to be paid to pay phone
providers. After these rules were vacated by the U.S. Court of Appeals for the
D.C. Circuit, the FCC released an order mandating that long distance carriers
compensate pay phone providers 28.4 cents for each 800 Number call during a
two-year interim period. The long distance carriers have either passed this cost
through to the paging companies that provide toll-free service to their
subscribers or have blocked payphone calls to toll-free Numbers. This has
increased the cost of providing certain toll-free messaging services and limited
the utility of toll-free Number service. Petitions for review and stay of this
order have been filed with a federal appellate court. Also, in response to
changes made by the 1996 Act, the FCC has adopted new rules regarding payments
by

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telecommunications firms into a revamped fund that will provide for the
widespread availability of telecommunications services, including to low-income
consumers ("Universal Service"). Prior to the implementation of the 1996 Act,
Universal Service obligations largely were met by local telephone companies.
Under the new rules, all telecommunications carriers, including paging
companies, are required to contribute to the Universal Service Fund. Payments
into the fund have increased the cost of doing business and could make the
Company's service less competitive with the other services. For example, under
the 1996 Act, local exchange carriers are prohibited from charging paging
carriers for the "transport and termination" of local exchange carrier
originated traffic. This has already led to substantial savings for the Company.
In addition, paging carriers may be entitled to compensation from other
telecommunications carriers that terminate a call on a paging network. This
could lead to additional revenue for the Company. Of course, the Company cannot
predict the final outcome of any FCC proceedings, any court challenges to any
FCC Rules or Policies or predict what Congress may, in the future, propose in
the way of changes to the telecommunications laws.

         In connection with state regulations, under the amendments to the
Communications Act included in the Budget Act, the Congress preempted state and
local rate and entry regulation of all CMRS providers. Entry regulation
typically refers to the process whereby an entity's right to provide service in
a particular market is subject to the prior approval by a regulatory body such
as the state public service commission. Rate regulation traditionally concerns
the amount, terms and conditions that an operator may charge for its services.
These items were usually included in tariffs subject to approval by the state
regulatory body. While state and local regulatory bodies have been preempted
from rate and entry regulation, they may still regulate other aspects of the
Company's service offerings. This apparently has not created any burdensome
state or local regulation since the enactment of the 1993 Budget Act. However,
there can be no assurances that state and local governments will not attempt in
the future to expand their regulatory scope.

             The Company is subject to the state and local laws applicable to
any business enterprise. The 1996 Amendments to the Communications Act, however,
have limited the application of state and local zoning regulations requiring
that they not be unreasonably discriminatory among providers of functionally
equivalent wireless services and shall not have the effect of prohibiting the
provision of wireless services.

         The foregoing description of certain regulatory considerations does not
purport to be a complete summary of all present federal and state regulatory
requirements nor of all proposed legislation and regulations pertaining to the
Company's present operations.

EMPLOYEES

         As of February 18, 1999, the Company had 20 full-time and three
part-time employees. The Company believes that its relationships with its
employees are generally good.

ITEM 2.  PROPERTY

         The Company's principal office is located in approximately 4,300 square
feet of leased space at Freehold Office Plaza, 4249 Route 9 North, Building 2,
Freehold, New Jersey. The fixed rent on the lease, which expires August 31,
1999, is currently approximately $80,000 per year. In addition to fixed rent,
the lease requires the Company to pay its proportionate share of certain
maintenance expenses and any increase in real estate taxes and insurance costs.
The Company leases approximately 230 locations for its transmitters on
commercial broadcast towers, buildings and other fixed structures. In addition,
the Company leases space in New York, Pennsylvania, Maryland, and Massachusetts,
primarily to house equipment related to its paging systems. The rental payable
for such leases, together with those for the Company's transmitter locations,
aggregated approximately $145,000 per month, as of February 18, 1999.

ITEM 3.  LEGAL PROCEEDINGS

         There are no material pending legal proceedings to which the Company is
a party or to which any of its property is subject.

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

         Not Applicable.




                                       9
<PAGE>   10
                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company's Common Stock is traded over the counter on the NASDAQ
SmallCap Market under the Symbol PPAR. In April 1997, the Company's Warrants
were delisted from NASDAQ due to an absence of market makers for this security.
Over the counter market quotations reflect inter-dealer prices without mark-up,
mark-down or commissions, and may not represent actual transactions. The
quarterly high and low bid prices for the Company's Common Stock for the past
two years as reported by the National Association of Securities Dealers, Inc.,
are as follows:


<TABLE>
<CAPTION>
                               1997                                                       1998
                           COMMON STOCK                                               COMMON STOCK

       QUARTER          HIGH                LOW          QUARTER                   HIGH                 LOW
<S>                     <C>                  <C>         <C>                       <C>                  <C> 
First Quarter           2.06                 0.75        First Quarter             1.81                 0.69
Second Quarter          1.68                 0.69        Second Quarter            1.75                 1.00
Third Quarter           1.69                 1.00        Third Quarter             1.50                 0.88
Fourth Quarter          1.50                 1.00        Fourth Quarter            3.19                 0.69
</TABLE>

         On February 18, 1999, the closing price of the Company's Common Stock
was $1.31. As of this date, there were approximately 100 record holders of the
Company's Common Stock. The number of record holders does not reflect the number
of beneficial owners of the Company's Common Stock for whom shares are held by
banks, brokerage firms and others. Based on information requests received from
representatives of such beneficial owners, management believes that there are at
least 1,000 beneficial holders of the Company's Common Stock.

DIVIDENDS

         The payment of dividends is contingent upon the Company's revenues and
earnings, if any, capital requirements and general financial condition. The
payment of dividends is currently prohibited by the Company's Credit Agreement
with Motorola. It is the present intention of the Company's Board of Directors
to retain its earnings, if any, for use in the Company's business.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

SELECTED FINANCIAL DATA

         The following table sets forth-summary historical financial information
and operating data for each of the five fiscal years ended December 31, 1998.
The financial information and operating data were derived from, and should be
read in conjunction with, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
of the Company and the notes thereto included elsewhere in this Report.





                                       10
<PAGE>   11
<TABLE>
<CAPTION>
                                                                      Year Ending December 31,
                                                1998            1997            1996           1995            1994
                                                ----            ----            ----           ----            ----
                                                              (In thousands, except per share numbers )

STATEMENT OF OPERATIONS DATA:
<S>                                           <C>             <C>             <C>             <C>             <C>     
Total revenues ........................       $  9,902        $  9,069        $  6,910        $  5,474        $  3,951
Operating expenses ....................         10,596          10,286           9,466           7,819           4,418
                                              --------        --------        --------        --------        --------

Operating loss ........................           (694)         (1,217)         (2,556)         (2,345)           (467)
Other expense (income) ................            453             200             160              (7)            188
                                              --------        --------        --------        --------        --------

Net loss ..............................         (1,147)         (1,417)         (2,716)         (2,338)           (655)
                                              --------        --------        --------        --------        --------

Net loss per common share .............       $  (0.18)       $  (0.23)       $  (0.50)       $  (0.49)       $  (0.16)
                                              --------        --------        --------        --------        --------

BALANCE SHEET DATA (at year end):
Total assets ..........................       $  5,318        $  6,723        $  6,691        $  7,746        $ 11,178
Long-term debt, less current maturities       $  1,146        $  1,590        $  1,335        $    930        $  1,800

OTHER DATA (at year end) (unaudited)
EBITDA (1) ............................       $    578        $    (47)       $ (1,500)       $ (1,555)       $   (107)
Equivalent units in service (2) .......            181             151              83              59              37
</TABLE>


(1) EBITDA represents earnings (excluding interest and non-operating items)
before taxes, depreciation and amortization EBITDA is a financial measure
commonly used in the paging industry EBITDA is not derived pursuant to generally
accepted accounting principles ("GAAP") and therefore should not be construed as
an alternative to operating income, as an alternative to cash flows from
operating activities (as determined in accordance with GAAP) or as a measure of
liquidity The calculation of EBITDA does not include the commitments of the
Company for capital expenditures and payment of debt and should not be deemed to
represent funds available to the Company See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" for a discussion of
the financial operations and liquidity of the Company as determined in
accordance with GAAP

(2) The Company reports its units in service on the basis of "(equivalent) units
in service" Certain of the Company's customers are serviced and billed on a
measurement basis other than one which relates to the number of units in service
In such case the number of units reported is based upon the monthly revenue
received converted into units at the lowest unit pricing given to any of the
Company's customers for equivalent service The number of units in service
excludes subscribers receiving AlphaPlus data services but not subscribing to
basic paging services.




                                       11
<PAGE>   12
RESULTS OF OPERATIONS - 1998 TO 1997

         The Table below presents certain items in the Company's statements of
operations in dollars and as percentages of total revenues and changes therein
for the years ended December 31, 1998 and 1997. The table also presents certain
key operating statistics (unaudited) for the same periods.

<TABLE>
<CAPTION>
                                                   1998                      1997                        CHANGE
                                             $             %           $              %              $             %
Revenues:
<S>                                    <C>              <C>       <C>              <C>           <C>            <C>
   Service                               7,542,000        76.2      7,012,000        77.3          530,000        7.6
  Equipment Sales                        2,360,000        23.8      2,057,000        22.7          303,000       14.7
                                         ---------        ----      ---------        ----          -------
  Total Revenue                          9,902,000       100.0      9,069,000       100.0          833,000        9.2
                                         ---------       -----      ---------       -----          -------
Operating Expenses:
  Service                                1,875,000        18.9      1,635,000        18.0          240,000       14.7
  Technical                              2,575,000        26.0      2,500,000        27.6           75,000        3.0
  Cost of Equipment Sold                 2,422,000        24.4      2,270,000        25.0          152,000        6.7
  Selling                                  511,000         5.2        783,000         8.6        (272,000)     (34.7)
  General and Administrative             1,941,000        19.6      1,928,000        21.3           13,000        0.7
  Depreciation and
     Amortization                        1,272,000        12.9      1,170,000        12.9          102,000        8.7
                                         ---------        ----      ---------        ----          -------
                                        10,596,000       107.0     10,286,000       113.4          310,000        3.0
                                        ----------       -----     ----------       -----          -------

Loss from operations                     (694,000)       (7.0)    (1,217,000)      (13.4)          523,000       43.0

Merger Costs                               151,000         1.5              0         0.0          151,000     ------
Emergency Satellite
   Transfer Costs                          100,000         1.0              0         0.0          100,000     ------
Interest  expense                          202,000         2.0        200,000         2.2            2,000        1.0
                                           -------         ---        -------         ---            -----

Net loss                               (1,147,000)      (11.5)    (1,417,000)      (15.6)          270,000       19.1
                                       -----------      ------    -----------      ------          -------

OTHER DATA

EBITDA*                                   $578,000         5.9      $(47,000)       (0.5)         $625,000     1329.8

Equivalent Units
   Reseller                                116,000                    111,000                        5,000        4.5
   Transmission Only                        65,000                     40,000                       25,000       62.5

Average Monthly per Unit Revenue**
   Reseller                                  $4.85                      $5.71                        $ .86     (15.1)
   Transmission Only                         $0.95                      $1.16                        $ .21     (18.1)
</TABLE>


*    Profit (loss) from operations before depreciation and amortization.
**  Average (monthly) service revenue per unit.


                                       12
<PAGE>   13
         The increase in the Company's service revenues reflects increases in
the number of (equivalent) units in service offset in part by reduced service
revenue per unit. Service revenue per unit on reseller units has declined due in
part to continued competitive pricing in the industry. Additionally, the portion
of the Company's revenues generated by transmission-only services has increased.
The Company charges a lower unit price to customers for transmission-only
services as the customers operate their own switching terminal equipment and
procure their own telephone numbers from local exchange carriers and are only
using the Company's radio transmission network. In turn, the Company incurs
virtually no incremental telecommunications, selling, customer service, or
capital costs from servicing these units. Service revenue per unit for
transmission-only units has declined because early customers were alphanumeric
information providers who were charged a fixed monthly fee for use of the
Company's systems. Since the Company began active marketing of transmission-only
capability in early 1997, new customers have mostly added numeric paging units
with lower revenue per unit.

         The Company reports its units in service on the basis of "(equivalent)
units in service". Certain of the Company's customers are serviced and billed on
a measurement basis other than one which relates to the number of units in
service. In such case the number of units reported is based upon the monthly
revenue received converted into units at the lowest unit pricing given to any of
the Company's customers for equivalent service. The number of units in service
excludes subscribers receiving AlphaPlus (R) data services but not subscribing
to basic paging services.

         Service cost represents outlays to third party providers of
alphanumeric message dispatch service. These costs increased in 1998 as compared
to 1997 due to a greater number of alphanumeric units in service.

         Technical expenses include transmission site rentals, telephone
interconnect services, and the costs (mostly personnel-related) of the Company's
engineering function. The increases in technical costs in 1998 as compared to
1997 are attributable to increased telephone interconnect costs and increased
transmission site rental prices as well as an increase in the number of
transmission sites.

         Equipment sales increased during 1998 as compared to 1997 due to new
product introductions by the Company's primary supplier (Motorola) as well as
price increases and decreased availability from certain competitors. The Company
continues to sell pagers as an accommodation to Resellers and not as a source of
profit. However, lessened competition has permitted narrower loss margins on
pager sales during 1998 than in previous years.

         Selling expenses decreased in 1998 as compared to 1997. This reflects
lower promotional expenditures, lower sales commissions due to lower
intra-quarter sales growth, and lower salary expense due to a sales department
reorganization more fully described in the Current Trends section below.

         EBITDA reflects the Company's earnings (excluding interest and
non-operating items) before taxes, depreciation and amortization and measures
the Company's operating cash flows, which the Company considers to be a
significant measure of performance. EBITDA is commonly used in the paging
industry and by financial analysts and others who follow the industry to measure
operating performance, but should not be considered in isolation or as an
alternative to measures of operating performance or cash flows pursuant to
generally accepted accounting principles. EBITDA improved significantly during
1998 as compared to 1997 reflecting the fact that the increase in service
revenue exceeded the resulting increase in cost of service while other operating
costs declined. Now that the Company's paging systems are built-out, increases
in service revenues should not result in proportional increases in operating
expenses.

         Interest expense primarily reflects the Company's equipment financing
with Motorola.

         Depreciation increased as the Company put into service equipment
purchased in 1997 for the Metro System upgrade.

         Net loss decreased due to the improvement in EBITDA noted above, offset
in part by increased depreciation and the emergency satellite transfer and
merger costs described below.



                                       13
<PAGE>   14
    EMERGENCY SATELLITE TRANSFER COSTS

         The Company relies on a satellite for dissemination of its paging
signal from its paging hub in Freehold, New Jersey to its network of over 240
radio transmitters in the Eastern United States. On the evening of May 19, 1998,
the unprecedented sudden failure of the Galaxy IV satellite used by the Company
(as well as most other large paging carriers) caused the suspension of paging
service. Within 24 hours, the Company made a successful transition to an
alternate satellite (SBS-6) on which it had previously reserved backup time.
However, the Company had to engage subcontractors to reorient the satellite
receiver on each transmission tower to receive radio signals from the new
satellite. The Company incurred approximately $100,000 of such expenses during
1998 to cover the costs of these realignments.

    CURRENT TRENDS

         Although higher than 1997, on a "run-rate" basis service revenue did
not grow during 1998, due primarily to a reduction in alphanumeric and message
dispatch units and revenue. Management believes that a significant factor in
such reduction was a new per-call charge instituted in October 1997 under the
Telecommunications Act of 1996 for calls to toll-free numbers made from pay
phones. This charge has disrupted the cost structures of the Company's message
dispatch providers which either have had to absorb the cost (approximately $.30
per call) or pass it on to the Company which would likely, in turn, seek to pass
it on to the Company's resellers (and ultimately to end users). Rather than
elect to absorb the new cost without knowing whether it could successfully be
recovered from end-users, the Company, with its major dispatch providers, has
determined to block calls originating from pay phones to the toll free numbers
maintained by the dispatch providers to receive messages for end users. The
inability to receive messages from callers using pay phones may have caused some
end-users to stop obtaining message dispatch (and possibly numeric and
alphanumeric) service from the Company's resellers.

         Additionally, in an effort to reduce the impact of the new per call
charge, certain of the Company's dispatchers switched long distance carriers or
made programming changes to their internal switches. In some cases this may have
interfered with the quality of service provided to the Company's end-users,
which may have caused them to seek an alternative service provider. Management
also believes that decreasing wireless phone charges may also account for some
portion of the alphanumeric unit decreases. Consistent with an industry-wide
trend, revenue growth from numeric display paging slowed during 1998.

         The paging industry experienced substantial consolidation during 1997
as well as announcements of additional transactions during 1998. There have also
been significant management changes at many of the larger companies in the
industry. In response to investor dissatisfaction, management at several major
paging companies announced their intention to shift from a price competitive
strategy intended to increase subscriber base, towards a strategy intended to
increase operating margins.

         In an effort to capitalize on any opportunity that may result from its
competitors' strategy shifts and offset the impact of the negative trends
discussed above, the Company has made several changes in how it markets its
services and supports its resellers and, in turn, end-users. The Company has
restructured its salaried sales force emphasizing less costly internal support
personnel servicing existing resellers and soliciting increased business from
smaller accounts. The Company has also recently introduced several attractively
priced service bundles and annual paging packages and now offers E-mail based
messaging on alphanumeric (text) pagers.

         Senior management continues to solicit large, established resellers and
carriers for transmission-only service. Although the Company's per unit revenues
for such service are lower, the Company incurs no incremental costs and the
Company is partnered with organizations having the financial and management
strength to purchase and maintain their own paging terminals.

Year 2000

         Much of the Company's operating software was designed specifically for
use by the Company. As the services provided by the Company change, certain
underlying programs are updated. The Company's MIS personnel have informed the
Board of Directors that the code for all such updates is written to be "Year
2000 compliant". MIS personnel have further informed the Board that during 1998,
they investigated the balance of the underlying programs and revised remaining
programs requiring revision to become "Year 2000 compliant."

                                       14
<PAGE>   15
1997 TO 1996 RESULTS OF OPERATIONS

          The Table below presents certain items in the Company's statements of
operations in dollars and as percentages of total revenues and changes therein
for the years ended December 31, 1997 and 1996. The table also presents certain
key operating statistics (unaudited) for the same periods.

<TABLE>
<CAPTION>
                                                 1997                       1996                         CHANGE
                                            $              %           $              %              $             %
Revenues:  
<S>                                   <C>              <C>       <C>   <C>        <C>         <C>             <C> 
   Service                               7,012,000        77.3      4,950 000        71.7        2,062,000       41.7
  Equipment Sales                        2,057,000        22.7      1,960,000        28.3           97,000        4.9
                                         ---------        ----      ---------        ----           ------
  Total Revenue                          9,069,000       100.0      6,910,000       100.0        2,159,000       31.2
                                         ---------       -----      ---------       -----        ---------

Operating Expenses:
  Service                                1,635,000        18.0        868,000        12.6          767,000       88.4
  Technical                              2,500,000        27.6      2,548,000        36.8         (48,000)        1.9
  Cost of Equipment Sold                 2,270,000        25.0      2,136,000        30.9          134,000        6.3
  Selling                                  783,000         8.6        927,000        13.5        (144,000)     (15.5)
  General and Administrative             1,928,000        21.3      1,931,000        27.9          (3,000)      (0.2)
  Depreciation and
     Amortization                        1,170,000        12.9      1,056,000        15.3          114,000       10.8
                                         ---------        ----      ---------        ----          -------

                                        10,286,000       113.4      9,466,000       137.0          820,000        8.7
                                        ----------       -----      ---------       -----          -------

Loss from operations                   (1,217,000)      (13.4)    (2,556,000)      (37.0)        1,339,000     (52.4)
Interest  expense                          200,000         2.2        160,000         2.3           40,000       25.0
                                           -------         ---  --    -------         ---           ------

Net loss                               (1,417,000)      (15.6)    (2,716,000)      (39.3)        1,299,000       47.8
                                       -----------      ------    -----------      ------        ---------

OTHER DATA:
EBITDA*                                  $(47,000)       (0.5)   $(1,500,000)      (21.7)       $1,453,000       96.9

Equivalent Units (end of year)             151,000                     83,000                       68,000       81.9
ARPU**                                       $4.99                      $5.73                       $(.74)     (12.9)
</TABLE>

     *    Loss from operations before depreciation and amortization.
     ** Average (monthly) service revenue per unit.

         The increase in the Company's service revenues reflects a substantial
increase in the number of (equivalent) units in service offset in part by
reduced service revenue per unit. Service revenue per unit has declined due in
part to continued competitive pricing in the industry, offset in part by
increased market penetration by the Company of higher (per unit) revenue
alphanumeric messaging. Additionally, the portion of the Company's revenues
generated by transmission-only services has increased. The Company generally
charges a lower unit price to customers for transmission-only services as the
customers operate their own switching terminal equipment and procure their own
telephone numbers from local exchange carriers and are only using the Company's
radio transmission network. In turn, the Company incurs virtually no incremental
telecommunications, selling, customer service, or capital costs from servicing
these units.

         Recent unit growth has resulted from factors which include:

         -        Increased penetration of transmission-only services (see
                  below)

         -        Overall wireless messaging industry growth, particularly in
                  the Company's target market sector--alphanumeric (as opposed 
                  to numeric) messaging.


                                       15
<PAGE>   16
         -        Increased penetration of add-on services to alphanumeric
                  messaging (message dispatch, sports, business and news
                  offerings)

         -        Improved responsiveness to industry price competition in a
                  selective manner through price simplification and discounting
                  incremental units in service.

         -        Upgraded sales force.

             The Company reports its units in service on the basis of
"(equivalent) units in service". Certain of the Company's customers are serviced
and billed on a measurement basis other than one which relates to the number of
units in service. In such case the number of units reported is based upon the
monthly revenue received converted into units at the lowest unit pricing given
to any of PPC's customers for equivalent service. The number of units in service
excludes subscribers receiving AlphaPlus (R) data services but not subscribing
to basic paging services.

         Service cost represents outlays to third-party providers of
alphanumeric dispatch service. These costs increased in 1997 as compared to 1996
based on continued market penetration of alphanumeric paging.

         Technical expenses include transmission site rentals, telephone
interconnect services, and the costs (mostly personnel-related) of the Company's
engineering function. The decrease in technical costs during 1997 are
attributable to a decrease in telephone interconnect service costs resulting
from the Telecommunications Act of 1996. However, other provisions of the
Telecommunications Act, when they become effective, could partially or fully
offset such decreases. The telecommunications cost decreases were offset in part
by increased site rental prices and personnel costs.

         Equipment sales increased during 1997 as compared to 1996 due to new
product introductions by the Company's supplier (Motorola) as well as price
increases by certain competitors. These changes occurred during the second half
of 1997. The Company continues to sell pagers as an accommodation to Resellers
and not as a source of profit.

         Selling expenses decreased in 1997 as compared to 1996 as a result of
the elimination of the position of Vice President Sales and Marketing during
1996 and due to one-time promotional expenses incurred in the second quarter of
1996 which were not repeated in 1997.

         EBITDA reflects the Company's earnings (excluding interest and
non-operating items) before taxes, depreciation and amortization and measures
the Company's operating cash flows, which the Company considers to be a
significant measure of performance. EBITDA is commonly used in the paging
industry and by financial analysts and others who follow the industry to measure
operating performance, but should not be considered in isolation or as an
alternative to measures of operating performance or cash flows pursuant to
generally accepted accounting principles. EBITDA improved significantly during
1997 reflecting the fact that the increase in service revenue exceeded the
resulting increase in cost of service. Now that the Company's paging systems are
built-out, increases in service revenues should not result in proportional
increases in operating expenses.

         Interest expense primarily reflects the Company's equipment financing
with Motorola and has increased as a result of 1996 and 1997 capital
expenditures.

         Depreciation increased as the Company put into service equipment
purchased for the final portion of the Corridor System as well as the Metro
System upgrade described below.

         Net loss decreased consistent with the improvement in EBITDA noted
above, partially offset by increased depreciation and interest expense.




                                       16
<PAGE>   17
LIQUIDITY AND CAPITAL RESOURCES

         By relying primarily upon resellers to build its subscriber base, the
Company has been able to avoid many of the expenses associated with the
solicitation and servicing of subscribers. Nevertheless, the construction and
initial operation and marketing of a paging system requires substantial
expenditures which can only be recouped, if at all, from the subsequent
operation of the system. At this point, the Company anticipates that it will
from time to time make substantial capital expenditures to upgrade its Systems
to assure that they remain technologically current, but the level of such
expenditures should be less than those associated with the initial construction
of its Systems. During 1997, the Company incurred approximately $750,000 of net
capital expenditures, primarily for technological upgrades of the Metro System,
substantially all of which was financed by Motorola. During 1998, the Company
incurred $258,000 of capital expenditures and expects spending to remain at a
comparable level in 1999. However, capital needs could change as a result of the
planned merger described below.

         On November 6, 1998, the Company agreed to merge with BAP Acquisition
Corporation ("BAP"), later renamed Aquis Communications, Inc. ("Aquis").
Effective December 31, 1998, Aquis purchased substantially all the paging assets
of Bell Atlantic. After the merger is complete, the current shareholders of
Aquis would own approximately 58.5% of the Company's common stock. The merger is
subject to the approval of the Company's shareholders as well as FCC approval of
the transfer of the Company's radio (paging) licenses.

         The Aquis asset purchase from Bell Atlantic was financed by a blend of
senior debt, seller financing, and equity. Based on the individual performances
of the Bell Atlantic paging business and the Paging Partners business,
management believes that the combined entity should generate sufficient
operating cash flow to finance its combined debt service and capital
expenditures with funds left over for acquisitions or early debt retirement.
Through December 31, 1998 the Company incurred $151,000 of professional and
related costs arising directly from the merger.

         The Company's only long-term debt is a note to Motorola with a balance
of $1,590,000 as of December 31, 1998. Although the Company has been repaying
the note in accordance with its terms, 1998 revenues did not grow sufficiently
to enable the Company to meet certain covenants in its Loan Agreement with
Motorola, as amended. To facilitate the merger described above, Motorola has
agreed to waive any past or future covenant violations occurring prior to
merger. However, if the merger is not consummated, it is possible that the
Company would again be out of compliance with the loan covenants.

Forward-Looking Statements

         The foregoing discussion of the Company's Financial Condition and
Results of Operations, and other portions of this Report contain forward-looking
statements including, but not limited to, statements regarding the Company's
future financial condition, results of operations, growth strategies, product
development and revenues. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
various factors, including the competitive conditions in the markets for the
Company's services, the further development of products, such as wireless
telephones, PCS and other products which are competitive with the Company's
services and the willingness of the providers of such services to engage in
aggressive pricing strategies designed to expand markets, the Company's ability
to complete the anticipated merger with Aquis, the Company's ability to
consolidate its operations with those of Aquis and the continued market
penetration of the Company's products and services.

ITEM 7.       FINANCIAL STATEMENTS - See Index to Financial Statements, Page 18.

ITEM 8.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
              FINANCIAL DISCLOSURE - Not Applicable.





                                       17
<PAGE>   18
                           PAGING PARTNERS CORPORATION
                                      INDEX


Report of Independent Certified Public Accountants       19

Balance Sheets ...................................       20

Statements of Operations .........................       21

Statements of Changes in Stockholders' Equity ....       22

Statements of Cash Flows .........................       23

Notes to Financial Statements ....................       24







                                       18
<PAGE>   19
                          INDEPENDENT AUDITORS' REPORT


Board of Directors
Paging Partners Corporation
Freehold, NJ


We have audited the accompanying balance sheets of Paging Partners Corporation
as of December 31, 1998 and 1997, and the related statements of operations,
changes in stockholders' equity, and cash flows for the years ended December 31,
1998, 1997, and 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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 financial statements referred to above present fairly, in
all material respects, the financial position of Paging Partners Corporation as
of December 31, 1998 and 1997 and the results of its operations and its cash
flows for the years ended December 31, 1998, 1997, and 1996 in conformity with
generally accepted accounting principles.



/s/Berenson & Company LLP

New York, NY
January 22, 1999





                                       19
<PAGE>   20
                           PAGING PARTNERS CORPORATION

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                    December 31,
                                                                                           --------------------------------
                                                                                              1998                1997
                                                                                           ------------        ------------
ASSETS

        Current assets:

<S>                                                                                        <C>                 <C>         
              Cash and cash equivalents ............................................       $    558,000        $    752,000
              Accounts receivable (net of allowances of $47,000 and $61,000) .......            397,000             522,000
              Inventory ............................................................            120,000             106,000
              Other current assets .................................................            108,000             194,000
                                                                                           ------------        ------------
                    Total current assets ...........................................          1,183,000           1,574,000

        Property and equipment .....................................................          3,693,000           4,608,000
        Licenses (less accumulated amortization of $906,000 and $775,000) ..........            442,000             541,000
                                                                                           ------------        ------------
                                                                                           $  5,318,000        $  6,723,000
                                                                                           ============        ============

LIABILITIES

        Current liabilities:

              Current maturities of notes payable ..................................       $    444,000        $    384,000
              Accounts payable .....................................................            506,000             582,000
              Accrued expenses .....................................................            422,000             381,000
              Deferred revenue .....................................................            162,000              26,000
                                                                                           ------------        ------------
                    Total current liabilities ......................................          1,534,000           1,373,000

        Notes payable (less current maturities) ....................................          1,146,000           1,590,000
                                                                                           ------------        ------------
                                                                                              2,680,000           2,963,000
                                                                                           ------------        ------------
        Commitments

STOCKHOLDERS' EQUITY

        Common stock, $0.01 par value, 20,000,000 shares authorized ................             63,000              63,000
        Preferred stock, $0.01 par value, 1,000,000 shares authorized (none issued) 
        Additional paid-in capital .................................................         12,668,000          12,643,000
        Accumulated deficit ........................................................        (10,093,000)         (8,946,000)
                                                                                           ------------        ------------
                                                                                              2,638,000           3,760,000
                                                                                           ------------        ------------
                                                                                           $  5,318,000        $  6,723,000
                                                                                           ============        ============
</TABLE>

THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART HEREOF.


                                       20
<PAGE>   21
                           PAGING PARTNERS CORPORATION

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                               Years ended December 31,
                                                  ----------------------------------------------------
                                                      1998                1997                1996
                                                  ------------        ------------        ------------

 Revenues:
<S>                                               <C>                 <C>                 <C>         
       Service ............................       $  7,542,000        $  7,012,000        $  4,950,000
       Equipment sales ....................          2,360,000           2,057,000           1,960,000
                                                  ------------        ------------        ------------
                                                     9,902,000           9,069,000           6,910,000
                                                  ------------        ------------        ------------

 Expenses:
       Service ............................          1,875,000           1,635,000             868,000
       Technical ..........................          2,575,000           2,500,000           2,548,000
       Cost of equipment sold .............          2,422,000           2,270,000           2,136,000
       Selling ............................            511,000             783,000             927,000
       Administrative .....................          1,941,000           1,928,000           1,931,000
       Depreciation and amortization ......          1,272,000           1,170,000           1,056,000
                                                  ------------        ------------        ------------
                                                    10,596,000          10,286,000           9,466,000
                                                  ------------        ------------        ------------

Loss from operations ......................           (694,000)         (1,217,000)         (2,556,000)

Merger costs ..............................            151,000                 -0-                 -0-
Emergency satellite transfer costs ........            100,000                 -0-                 -0-
Interest expense ..........................            202,000             200,000             160,000
                                                  ------------        ------------        ------------

NET LOSS ..................................       $ (1,147,000)       $ (1,417,000)       $ (2,716,000)
                                                  ============        ============        ============

NET LOSS PER COMMON SHARE .................       $      (0.18)       $      (0.23)       $      (0.50)
                                                  ============        ============        ============

 Weighted average common shares outstanding          6,305,000           6,180,000           5,371,000
                                                  ============        ============        ============
</TABLE>

 THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART HEREOF.




                                       21
<PAGE>   22
                           PAGING PARTNERS CORPORATION

                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                 ADDITIONAL
                                                 COMMON STOCK                     PAID-IN          ACCUMULATED
                                            SHARES            AMOUNT              CAPITAL            DEFICIT

<S>                                      <C>              <C>                <C>                <C>          
BALANCE - JANUARY 1, 1996 .......          4,800,000        $     48,000       $ 10,663,000       $ (4,813,000)

Net proceeds of private placement            857,000               9,000          1,291,000
Net loss ........................                                                                   (2,716,000)
Other ...........................             16,000                   0             90,000

                                        ------------        ------------       ------------       ------------
BALANCE - DECEMBER 31, 1996 .....          5,673,000              57,000         12,044,000         (7,529,000)

Net proceeds of private placement            541,000               5,000            495,000
Net loss ........................                                                                   (1,417,000)
Other ...........................             87,000               1,000            104,000

                                        ------------        ------------       ------------       ------------
BALANCE - DECEMBER 31, 1997 .....          6,301,000              63,000         12,643,000         (8,946,000)

Net loss ........................                                                                   (1,147,000)
Other ...........................             26,000                   0             25,000

                                        ------------        ------------       ------------       ------------
BALANCE DECEMBER 31, 1998 .......          6,327,000        $     63,000       $ 12,668,000       $(10,093,000)
                                        ============        ============       ============       ============
</TABLE>

 THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART HEREOF.



                                       22
<PAGE>   23
                              PAGING PARTNERS CORPORATION

                                STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                               Years ended December 31,
                                                                   -------------------------------------------------
                                                                      1998               1997               1996
                                                                   -----------        -----------        -----------

Cash flows from operating activities:
<S>                                                                <C>                <C>                <C>         
      Net loss .............................................       $(1,147,000)       $(1,417,000)       $(2,716,000)
      Adjustments to reconcile net loss to net
           cash provided (used) by operating activities:
          Depreciation .....................................         1,140,000          1,038,000            928,000
          Amortization .....................................           132,000            132,000            128,000
          Merger costs .....................................           151,000                -0-                -0-
          Non-cash compensation ............................               -0-                -0-             34,000
      Changes in operating assets and liabilities:
           Decrease in accounts receivable net
                of allowances and deferred revenue .........           125,000             33,000             41,000
           (Increase) decrease in other current assets .....            86,000           (125,000)           (12,000)
           (Increase) decrease in inventory ................           (14,000)           (13,000)           289,000
           Increase in accounts payable and accrued expenses           101,000            471,000            269,000
                                                                   -----------        -----------        -----------

          Net cash provided (used) by operating activities .           574,000            119,000         (1,039,000)
                                                                   -----------        -----------        -----------

Cash flows from investing activities:
      Acquisition of property, equipment and licenses ......          (258,000)          (213,000)          (292,000)
                                                                   -----------        -----------        -----------

          Net cash used by investing activities ............          (258,000)          (213,000)          (292,000)
                                                                   -----------        -----------        -----------

Cash flows from financing activities:
      Net proceeds from private equity placement ...........               -0-            500,000          1,300,000
      Merger costs .........................................          (151,000)               -0-                -0-
      Proceeds from stock option exercise ..................            25,000              9,000             46,000
      Repayment of notes payable ...........................          (384,000)          (170,000)           (61,000)
                                                                   -----------        -----------        -----------

          Net cash provided (used) by financing activities .          (510,000)           339,000          1,285,000
                                                                   -----------        -----------        -----------

      Net increase (decrease) in cash and cash equivalents .          (194,000)           245,000            (46,000)
      Cash and cash equivalents - beginning of year ........           752,000            507,000            553,000
                                                                   -----------        -----------        -----------
      Cash and cash equivalents - end of year ..............       $   558,000        $   752,000        $   507,000
                                                                   ===========        ===========        ===========

      Supplemental disclosures of cash flow information:
          Cash paid for interest ...........................       $   202,000        $   200,000        $   150,000
          Debt incurred for the purchase of equipment ......               -0-            741,000            540,000
          Common stock issued in exchange for services .....               -0-             96,000                -0-
          Other ............................................               -0-                -0-             10,000
</TABLE>

 THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART HEREOF.



                                       23
<PAGE>   24
                           PAGING PARTNERS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


1.  THE COMPANY:

    Paging Partners Corporation ("The Company") operates two paging systems
    providing one-way wireless messaging services in portions of ten states from
    New Hampshire to Virginia.

2.  MERGER:

    On November 6, 1998, the Company entered into a merger agreement with BAP
    Acquisition Corporation ("BAP"), which subsequently changed its name to
    Aquis Communications, Inc. ("Aquis"). Aquis has conducted no operations to
    date, but purchased substantially all of the assets of the Paging Division
    of Bell Atlantic on December 31, 1998. After the merger is complete, the
    current shareholders of Aquis would own a majority of the Company's stock.
    The merger is subject to the approval of the Company's shareholders and the
    FCC (regarding transfer of the Company's radio paging licenses).

    For accounting purposes, the Company plans to account for the merger as if
    Aquis is the acquiror (a reverse acquisition) of the Company using the
    purchase method of accounting. Under the purchase method of accounting, the
    purchase price is allocated to the assets and liabilities acquired based
    upon the estimated fair values of such assets and liabilities on the date of
    acquisition. Any excess of the fair market value of the consideration given
    over the fair market value of the identifiable net assets acquired is
    reported as goodwill. The 1998 statement of operations includes costs
    incurred that are directly related to the merger.

3.  CAPITALIZATION:

    a.  Initial Public Offering:

    In May 1994, the Company completed an initial public offering of 1,800,000
    units at $6.00 per unit. Each unit consists of one share of common stock and
    one redeemable common stock purchase warrant. The Company issued the units
    to the underwriter for a total of $10,800,000. Net proceeds to the Company
    after underwriting costs was $8,942,000.

    In connection with the initial public offering, the Company sold to the
    representative of the underwriters, for an aggregate of $100, the right to
    purchase up to an aggregate of 170,000 units. The units are identical to
    those described herein except that the warrants are not redeemable and have
    an exercise price equal to 122% of the exercise price of the warrants
    described below.

    Each warrant entitles the holder to purchase one share of common stock of
    the Company for $6.60, subject to adjustment in certain circumstances, at
    any time during the period commencing May 19, 1995 and ending on May 19,
    1999. The Company may call the warrants for redemption, in whole or in part,
    at a price of $.01 per warrant at any time after they become exercisable
    upon 30 days' notice if the last sale price of the common stock has been at
    least 175% of the then exercise price of the warrants for the 20 consecutive
    trading days ending on the third day prior to the date on which the notice
    of redemption is given.

    b.  Private Equity Placements

    In May 1996 the Company completed a private placement of 857,000 shares of
    its Common Stock for gross proceeds of $1.5 million yielding net proceeds of
    $1,300,000 after deduction of placement agent and professional fees,
    including $130,000 of placement agent fees paid to affiliates of one of the
    Company's directors.


                                       24
<PAGE>   25
                           PAGING PARTNERS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

     In March 1997, the Company completed a private placement of 515,000 shares
     of its Common Stock for gross proceeds of $532,000, yielding estimated net
     proceeds of $500,000 after deduction of professional fees and other
     expenses. 115,000 of the shares were purchased by members of the Company's
     Board of Directors. 26,000 additional shares of stock were issued in
     payment of professional fees in connection with this transaction.

    c.  Options:

    The Company has a stock option plan (the "Plan"), pursuant to which options
    to purchase shares of the Company's common stock, intended to qualify as
    "incentive stock options", may be granted to employees and directors of the
    Company and independent contractors providing services to the Company. A
    total of 450,000 shares of common stock have been reserved for issuance
    under the Plan. Options are exercisable for terms of six months to ten years
    from the date granted. Details are as follows:

                             NUMBER             OPTION
                             OF SHARES          PRICE RANGE
1996

Outstanding, January 1          210,500        $2.75 - 6.25
Granted                         176,700        $1.38 - 4.38
Exercised                       (16,000)       $       2.88
Cancelled                      (110,600)       $2.75 - 6.00
                           ------------
Outstanding, December 31        260,600        $1.38 - 6.25
                           ------------

Exercisable, December 31        129,350        $2.75 - 6.25
                           ------------

1997

Outstanding, January 1          260,600        $1.38 - 6.25
Granted                         128,500        $0.88 - 1.38
Exercised                       (10,000)       $       0.88
Cancelled                       (37,150)       $1.38 - 6.25
                           ------------
Outstanding, December 31        341,950        $0.88 - 6.25
                           ------------

Exercisable, December 31        254,050        $0.88 - 6.25
                           ------------

1998

Outstanding, January 1          341,950        $0.88 - 6.25
Granted                         216,100        $1.38 - 4.38
Exercised                        25,750        $0.88 - 1.00
Cancelled                       180,150        $0.88 - 6.25
                           ------------
Outstanding, December 31        352,150        $0.88 - 4.19
                           ------------

Exercisable, December 31        342,150        $0.88 - 4.19
                           ------------

In consideration of the pending merger (Note 2), exercisable options as of
December 31, 1998 include options that actually become exercisable on February
13, 1999 and options that become exercisable upon a change in control.




                                       25
<PAGE>   26
                           PAGING PARTNERS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

The Company continues to measure compensation cost pursuant to APB No. 25, as
permitted by the Financial Accounting Standards Board (FASB) Statement No. 123.
Had compensation cost been determined on the basis of FASB Statement No. 123,
net income and earnings per share would have been reduced as follows:

<TABLE>
<CAPTION>
                                   1998                       1997                      1996
                                   ----                       ----                      ----

Net Loss:
<S>                                <C>                        <C>                       <C>         
  As reported                      $(1,147,000)               $(1,417,000)              $(2,716,000)
  Pro forma                        $(1,160,000)               $(1,445,000)              $(2,733,000)

Net Loss per Common Share:
  As reported                      $(0.18)                    $(0.23)                   $(0.50)
  Pro forma                        $(0.18)                    $(0.23)                   $(0.51)
</TABLE>


    The fair value of compensation was computed using an option-pricing model
which took into account the following factor as of the grant date:

-        the exercise price and expected life of the option

-        the current price of the stock and its expected volatility

-        expected dividends, if any, on the stock

-        the risk-free interest rate for the expected term of the option using
         the Treasury Note rate with a remaining term equal to the expected life
         of the options.

4.  SIGNIFICANT ACCOUNTING POLICIES:

    a.  Cash and Cash Equivalents:

    Investments in liquid, marketable securities with original maturities of
    less than three months are considered to be cash equivalents and are carried
    at amortized cost.

    b.  Inventory:

    Inventory is stated at the lower of cost (first-in, first-out basis) or
    market, and consists of pagers for resale.

    c.  Property and Equipment:

    Property and equipment are recorded at cost. The Company provides for
    depreciation using the straight-line method over the estimated useful lives
    ranging from 5 to 10 years.

    d.  Licenses:

    Licenses are amortized using the straight-line method over their terms (10
    years).

    e.  Revenue Recognition:

    Deferred revenue represents advance billings for services not yet performed.
    Such revenue is recognized in the month in which the service is provided.




                                       26
<PAGE>   27
                           PAGING PARTNERS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS



    f.  Income Taxes:

    Income taxes for the Company have been provided for the tax effects of
    transactions reported in the financial statements and will consist of taxes
    currently due plus deferred taxes related primarily to differences between
    the basis of assets for financial and income tax reporting.

    g.  Concentration of Risk:

    The Company maintains its cash and cash equivalents in one commercial bank
    and one money market fund which invests solely in securities issued by the
    US government. The Company's accounts receivable are due from resellers
    located in the Northeast and Mid-Atlantic regions of the United States and
    the ability to collect is based upon economic conditions in the area. The
    Company purchases substantially all of its paging system equipment and
    pagers for resale from Motorola. However, such items are also available from
    Motorola's competitors.

    h. Estimates

    The preparation of financial statements in conformity with generally
    accepted accounting principles 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 from those estimates.

    i.  Fair Value of Financial Instruments

    The carrying amounts of financial instruments including cash and cash
    equivalents, accounts receivable and accounts payable approximate fair value
    because of the short maturity of these instruments. The carrying amounts of
    notes payable approximate fair value because of similar current rates at
    which the Company could borrow funds with consistent remaining maturities.

    j.  Reclassification of Certain Expenses

    Certain operating expense components for 1996 and 1997 have been
    reclassified to conform to current year classifications.

5.       PROPERTY AND EQUIPMENT:
<TABLE>
<CAPTION>
                                                       December 31,
                                                  1998             1997
                                                  ----             ----
<S>                                            <C>              <C>       
Transmission and  other paging equipment       $6,680,000       $6,570,000
Telephone and computer equipment                  685,000          590,000
Other                                             154,000          134,000
                                               ----------       ----------
                                                7,519,000        7,294,000
     Less accumulated depreciation              3,826,000        2,686,000
                                               ----------       ----------
                                               $3,693,000       $4,608,000
                                               ==========       ==========
</TABLE>





                                       27
<PAGE>   28
                           PAGING PARTNERS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

6.  NOTES PAYABLE

    Since June 1995, Motorola has agreed to provide financing for equipment to
    complete the build-out of the Company's Corridor paging system and the
    upgrade of its Metro paging system. $1,590,000 remains due to Motorola under
    this arrangement as of December 31, 1998, bearing interest at the 90-day
    commercial paper rate +6%. Borrowings are collateralized by all of the
    Company's assets. This arrangement has been subject to certain covenants
    measured by the Company's financial condition and performance. These
    covenants have been suspended until March 31, 1999 pending the anticipated
    completion of the merger with Aquis (see Note 2 above). However, if the
    Company's planned merger is terminated, the Company will be in violation of
    some of these covenants.

    Principal maturities of notes payable are as follows:

    1999 ..................  444,000
    2000 ..................  504,000
    2001 ..................  504,000
    2002 ..................  138,000

7.  LEASES:

    The Company leases office space, satellite transmission services, and
    transmitter sites both on a month-to-month basis and under noncancelable
    operating leases which provide for increased rentals based upon increases in
    real estate taxes, operating costs or selected price indices. Minimum annual
    rentals under leases expiring at various times through January 2006 are as
    follows:

    1999  .....................    1,538,000
    2000  .....................    1,140,000
    2001  .....................      651,000
    2002  .....................      494,000
    2003  .....................      242,000
    Thereafter.................      214,000

    Rent expense was $1,749,000, $1,676,000, and $1,483,000  for 1998, 1997, and
    1996,  respectively.

8.  INCOME TAXES:

The Company is permitted to recognize currently the future benefit of its net
operating loss carryforwards and future tax deductions for expenses previously
recorded for financial reporting purposes. At December 31, 1998, the Company had
available net operating loss carryforwards of approximately $8,700,000 expiring
through 2013.

As of December 31, 1998, the recorded deferred tax asset, representing the
expected benefit from the future realization of the net operating losses, net of
the valuation allowance, was $-0-. The sources of the deferred tax asset and the
tax effect is as follows:

Net operating loss carry forward benefit                 $ 3,500,000
Valuation allowance                                       (3,500,000)
                                                         ------------

Deferred tax asset                                       $      - 0 -
                                                         ============





                                       28
<PAGE>   29

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

      Information with respect to Item 9 is set forth in the Company's Proxy
Statement for its 1999 Annual Meeting of Stockholders (the "1999 Proxy
Statement") and is incorporated herein by reference

ITEM 10. EXECUTIVE COMPENSATION

     Information with respect to Item 10 is set forth in the 1999 Proxy
Statement and is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Information with respect to Item 11 is set forth in the 1999 Proxy
Statement and is incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information with respect to Item 12 is set forth in the 1999 Proxy
Statement and is incorporated herein by reference.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

    The following documents are filed as part of this report:

    Exhibit No.                                 Description of Exhibit
    -----------                                 ----------------------

         2        Agreement and Plan of Merger with BAP Acquisition Corp., (now
                  Aquis Communications, Inc.) (1)

         3.1      Amended and Restated Certificate of Incorporation of the
                  Registrant (2)

         3.2      Revised By-Laws of the Registrant (2)

         4.1      Form of Common Stock Certificate (2)

         4.2      Form of Warrant Certificate (2)

         4.3      Form of Unit Purchase Option granted to GKN Securities Corp.
                  (2)

         4.4      Warrant Agreement between Continental Stock Transfer & Trust
                  Company and the Registrant (2)

         10.9     1994 Incentive Stock Option Plan (2)

         23       Consent of Independent Auditor (3)

         27       Financial Data Schedule (3)

(1) Incorporated by reference to the Company's Current Report on Form 8-K dated
    November 6, 1998. 

(2) Incorporated by reference to the Company's Registration Statement on Form
    SB-2 (Registration No. 33-76744). 

(3) Filed herewith.

Reports on Form 8-K

    On November 6, 1998 the Company filed a current report on Form 8-K to report
its Merger Agreement with BAP Acquisition Corporation (since renamed Aquis
Communications, Inc.).


                                       29
<PAGE>   30
                                   SIGNATURES


           Pursuant to the requirements of Section 13 and 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.

       Dated:  February 22, 1999

                                          PAGING PARTNERS CORPORATION
                                          (Registrant)



                                          By: /s/Richard J. Giacchi            
                                              --------------------------------
                                                 Richard J. Giacchi, President

           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>
        SIGNATURE                                      TITLE                                    DATE
        ---------                                      -----                                    ----
<S>                                <C>                                                 <C>
/s/Leonard D. Fink                 Chairman of the Board of Directors                    February 22, 1999
------------------
Leonard D. Fink

/s/Richard J. Giacchi              President, Director and Principal                     February 22, 1999
---------------------
Richard J. Giacchi                 Executive Officer

/s/Jeffrey M. Bachrach             Vice President, Treasurer, Secretary, and             February 22, 1999
----------------------
Jeffrey M. Bachrach                Principal Financial and Accounting Officer

/s/Robert Davidoff                 Director                                              February 22, 1999
------------------
Robert Davidoff

/s/Monte Engler                    Director                                              February 22, 1999
---------------
Monte Engler

/s/Rochelle B. King                Director                                              February 22, 1999
-------------------
Rochelle B. King
</TABLE>


                                       30