<PAGE>

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

                                   FORM 10-KSB

[X] Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934 for the Fiscal Year Ended December 31, 2001.
0r
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
    Exchange Act of 1934 for the Transition Period
    From _____________to _____________

Commission File Number 000-29032
                       ---------

                      CHAMPION COMMUNICATION SERVICES, INC.

            DELAWARE                                   76-0448005
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
  incorporation or organization)

1610 WOODSTEAD COURT, SUITE 330
       THE WOODLANDS, TEXAS                               77380
 (Address of Principal Offices)                         (Zip Code)

                                 (281) 362-0144
                (Issuer's Telephone Number, including area code.)

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

     Title of Each Class                    Name of Exchange on which Registered
           NONE                                           NONE

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

         Title of Each Class                Name of Exchange on which Registered
COMMON STOCK, PAR VALUE $.01 PER SHARE                    NONE

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

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

State issuer's revenues for its most recent fiscal year.  $10,674,475

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and ask prices of such stock, as of a specified date within the past 60
days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.)

As of March 29, 2002, there were 4,311,025 shares of common stock, $0.01 par
value, of the registrant outstanding. The aggregate market value of the voting
stock held by non-affiliates of the registrant as of March 5, 2002 was
$1,332,757 based upon the average bid and ask price of the common stock on such
date of U.S. $0.60 per share. For purposes of this computation, all executive
officers, directors and 10% stockholders were deemed affiliates. Such a
determination should not be an admission that such executive officers, directors
or 10% stockholders are affiliates.


<PAGE>


             CHAMPION COMMUNICATION SERVICES, INC. AND SUBSIDIARIES

<Table>
<Caption>
                                                 INDEX                                                PAGE NUMBER
<S>                                                                                                   <C>

DOCUMENTS INCORPORATED BY REFERENCE ..................................................................      i

GLOSSARY OF TERMS ....................................................................................     ii

                                                PART I

ITEM 1.  DESCRIPTION OF BUSINESS .....................................................................      1

ITEM 2.  DESCRIPTION OF PROPERTY .....................................................................     14

ITEM 3.  LEGAL PROCEEDINGS ...........................................................................     14

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .........................................     14


                                                PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ....................................     15

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .......     16

ITEM 7.  FINANCIAL STATEMENTS ........................................................................     18

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE ........     19


                                               PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
         SECTION 16 (a) OF THE EXCHANGE ACT ..........................................................     20

ITEM 10. EXECUTIVE COMPENSATION ......................................................................     20

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ..............................     20

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ..............................................     20

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K ............................................................     21

SIGNATURES ...........................................................................................     25
</Table>


<PAGE>


                       DOCUMENTS INCORPORATED BY REFERENCE


         The information required by Part III of this Annual Report on Form
10-KSB is incorporated by reference from the Registrant's definitive proxy
statement for the Registrant's 2002 annual meeting of stockholders.


<Table>
<S>           <C>                         <C>
Item  9       Directors and Executive      Incorporated by reference from
              Officers of the Registrant   "Nominees for Election of Directors"
                                           of the Company's definitive proxy
                                           statement to be filed pursuant to
                                           Regulation 14A of the Securities
                                           Exchange Act of 1934, as amended
                                           (the "Exchange Act"), for the
                                           Company's 2002 annual meeting of
                                           stockholders. The incorporated
                                           portions consist of all of the
                                           disclosures that appear in that
                                           Proxy Statement under the headings
                                           "Nominees for Election as Directors"
                                           and "Executive Officers."

Item 10       Executive Compensation       Incorporated by reference from
                                           "Executive Compensation" of the
                                           Company's definitive proxy statement
                                           to be filed pursuant to Regulation
                                           14A of the Exchange Act for the
                                           Company's 2002 annual meeting of
                                           stockholders.

Item 11       Security Ownership of        Incorporated by reference from
              Certain Beneficial Owners    "Security Ownership of Certain
              and Management               Beneficial Owners and Management" of
                                           the Company's definitive proxy
                                           statement to be filed pursuant to
                                           Regulation 14A of the Exchange Act
                                           for the Company's 2002 annual
                                           meeting of stockholders.

Item 12       Certain Relationships and    Incorporated by reference from
              Related Transactions         "Certain Relationships and Related
                                           Transactions" of the Company's
                                           definitive proxy statement to be
                                           filed pursuant to Regulation 14A of
                                           the Exchange Act for the Company's
                                           2002 annual meeting of stockholders.
</Table>


Transitional Small Business Disclosure Format: Yes   ; No  X
                                                  ---     ---



                                        i
<PAGE>


                                GLOSSARY OF TERMS

<Table>
<S>                                     <C>
Airtime Charges                         Charges to users of wireless communications
                                        services based on the actual minutes of use.

Analog                                  A transmission method employing a
                                        continuous (rather than pulsed or
                                        digital) electrical signal that varies
                                        in amplitude or frequency in response to
                                        changes in sound or other input
                                        impressed on a transducer in the sending
                                        device. Current SMR technology primarily
                                        uses analog transmission.

Bandwidth                               The relative range of frequencies that
                                        can be passed through a transmission
                                        medium between two defined limits
                                        without distortion. The greater the
                                        bandwidth, the more information the
                                        medium can carry. Bandwidth is measured
                                        in Hertz.

Base Station                            A station located at a specified
                                        site authorized to communicate with
                                        mobile stations.

Cellular                                The wireless radio telephone service
                                        licensed by the FCC to provide services
                                        on a CMRS basis utilizing 50 MHz of
                                        spectrum in the 800 MHz band.

Channel                                 A pathway for the transmission of
                                        information between a sending point and
                                        a receiving point; also referred to as
                                        "frequency." In SMR, a channel refers to
                                        a set of paired send and receive
                                        frequencies. Thus, a five-channel 800
                                        MHz SMR actually has 10-25 kHz channels:
                                        five send channels and five receive
                                        channels.

Co-channel                              Relates to the authorization or
                                        operation of two transmitters on the
                                        same frequency, normally separated by
                                        some defined distance. Co-channel
                                        operators may not interfere with each
                                        other unless separated by sufficient
                                        distance or operated in a coordinated
                                        manner.

Commercial Mobile Radio Service         Mobile services that are provided for
("CMRS")                                profit, are interconnected to the PSN
                                        and are available to the general public
                                        on a non-discriminatory basis. These
                                        CMRS providers historically have been
                                        referred to as "common carriers."

Community Repeater ("CR")               Conventional two-way radio systems
                                        consisting of a control station, a
                                        repeater station and mobile and/or
                                        portable radios. The repeater is shared
                                        by otherwise unrelated users.

Conventional System                     A method of operation in which one or
                                        more radio frequency channels are assigned
                                        to mobile and base stations but are not
                                        employed as a trunked group.

Digital                                 A method of storing, processing and
                                        transmitting information through the use
                                        of distinct electronic or optical
                                        pulses. Digital transmission and
                                        switching technologies employ a sequence
                                        of discrete, distinct pulses to
                                        represent information, as opposed to the
                                        continuously variable analog signal.
</Table>


                                       ii
<PAGE>


<Table>
<S>                                     <C>
Dispatch                                A service provided to customers who want
                                        to transmit and receive short messages
                                        to and from a fleet of vehicles
                                        operating within range of the system's
                                        repeater.

Extended Area ("EA")                    A specialized block of SMR spectrum
                                        within one (1) of the 175 Extended Areas
                                        as defined by the U.S. Department of
                                        Commerce Bureau of Economic Analysis.

800 MHz (SMR)                           As a group, the 280 channels of trunked
                                        SMR frequencies in the 800 MHz band with
                                        25 kHz channel bandwidth. The cellular
                                        radio frequencies are also in the 800
                                        MHz band.

ESMR                                    Enhanced Specialized Mobile Radio. SMR
                                        multi-site digital networks, which are
                                        designed to provide integrated
                                        telecommunications services, including
                                        wireless, telephone, paging, data
                                        transmission and dispatch services. ESMR
                                        generally is used as a dispatch
                                        technology, although it also may be
                                        interconnected with the PSN to provide
                                        mobile telephone services. The Company
                                        does not provide ESMR services.

FCC                                     Federal Communications Commission.

450-512 MHz Band                        450-470 MHz - A group of frequencies
                                        operating with a narrow channel
                                        bandwidth, which is shared with an
                                        unlimited number of users (co-channel
                                        operation) utilizing an unlimited number
                                        of units. Thus, user exclusivity on a
                                        particular frequency during a call is
                                        currently not achievable in this band.

                                        470-512 MHz - A group of frequencies
                                        operating with a narrow channel
                                        bandwidth, an unlimited number of users,
                                        and a limited number of units. Thus,
                                        user exclusivity on a particular
                                        frequency during a call is currently
                                        achievable in this band.

Frequency Coordinator                   An entity or organization that has been
                                        certified by the FCC to recommend
                                        frequencies for use by PMRS and other
                                        wireless licensees.

Hertz                                   The unit for measuring the frequency
                                        with which an electromagnetic signal
                                        cycles through the zero-value state
                                        between lowest and highest state. One
                                        Hertz (abbreviated Hz) equals one cycle
                                        per second; kHz (kilohertz) stands for
                                        thousands of Hertz; MHz (megahertz)
                                        stands for millions of Hertz.

Loading                                 The capacity utilization of a land
                                        mobile communications system. The FCC
                                        requires licensees of PMRS systems to
                                        load a specified number of units per
                                        channel within a certain time frame or
                                        before certain actions can be taken. If
                                        a licensee does not meet this loading
                                        requirement, the FCC may take back a
                                        proportionate number of the licensee's
                                        unloaded channels.

Major Metropolitan Areas                Metropolitan areas (as defined by the
                                        U.S. Office of Management and Budget)
                                        with a population of 1,000,000 or more.
</Table>


                                      iii
<PAGE>


<Table>
<S>                                     <C>
Major Trading Areas ("MTAs")            Service areas based on the 47 areas
                                        contained in Rand McNally's 1992
                                        Commercial Atlas and Marketing Guide,
                                        123rd Edition, except that: (1) Alaska
                                        is separate from Seattle, (2) Guam and
                                        Northern Mariana Islands are licensed as
                                        a single area, (3) Puerto Rico and the
                                        United States Virgin Islands are
                                        licensed as a single area, and (4)
                                        American Samoa is licensed as a single
                                        MTA-like area. These modifications by
                                        the FCC resulted in a total of 51 MTAs.
                                        A MTA license authorizes a specific
                                        block of SMR Spectrum in one (1) of 51
                                        MTAs.

900 MHz SMR                             As a group, the 200 channels of trunked
                                        SMR frequencies in the 900 MHz band with
                                        12.5 kHz channel bandwidth. The FCC
                                        initially licensed these channels only
                                        in the top 50 markets. The FCC has
                                        auctioned all 900 MHz SMR channels for
                                        every MTA.

Paging                                  A one-way communications service from a
                                        base station to mobile or fixed
                                        receivers that provides signaling or
                                        information transfer by such means as
                                        tone, tone-voice, tactile or optical
                                        readout. Paging services are provided on
                                        several bands, including the 450-512 MHz
                                        and 900 MHz bands.

PCS                                     Personal Communications Services. The
                                        PCS is a wireless communication
                                        technology. It operates on the 900 MHz
                                        (narrowband) and on the 2 GHz
                                        (broadband) frequency bands. PCS is a
                                        radio communications service using
                                        mobile and ancillary fixed communication
                                        technologies to provide services for
                                        industry and business. This service can
                                        be integrated with a variety of
                                        competing networks. A broadband PCS,
                                        with a wider channel bandwidth, provides
                                        a greater variety of services than
                                        narrowband PCS (e.g., broadband can
                                        provide full voice and data
                                        transmission, but narrowband PCS
                                        generally is limited to one-way
                                        services).

Private Mobile Radio Service            Two-way radio operations offering
("PMRS")                                dispatch and other wireless
                                        communications services. These services
                                        generally cannot be interconnected to
                                        the PSN. An operator may provide such
                                        services on a discriminatory basis.
                                        Operators who provide dispatch services
                                        in the bands below 800 MHz are regulated
                                        as PMRS licensees. These PMRS licensees
                                        historically have been referred to as
                                        "private carriers."

PSN                                     Public Switched Network. Historically
                                        referred to as the "Public Switched
                                        Telephone Network" or "PSTN."

Repeater                                A device which automatically retransmits
                                        received signals on an outbound circuit,
                                        generally in an amplified form.

Roam(ing)                               A service offered by mobile
                                        communications providers which allows a
                                        subscriber to use a mobile phone while
                                        in the service area of another carrier.

Site                                    The location of a base station or
                                        repeater in a radio communications
                                        system.
</Table>


                                       iv
<PAGE>


<Table>
<S>                                     <C>
Specialized Mobile Radio ("SMR")        A radio system authorized by the FCC in
                                        which licensees provide mobile
                                        communications services (other than
                                        radio location services) in the 800 MHz
                                        and 900 MHz bands on a commercial basis
                                        to eligible entities, federal government
                                        entities and individuals. It is
                                        generally used as a dispatch technology.
                                        However, SMR may be interconnected with
                                        the PSN to provide telephone
                                        interconnect services.

Spectrum                                A term generally applied to the range of
                                        electromagnetic radio frequencies used
                                        in the transmission of sound, data, and
                                        television.

Switch                                  A device that opens or closes circuits
                                        or selects the paths or circuits to be
                                        used for transmission of information.
                                        Switching is the process of
                                        interconnecting circuits to form a
                                        transmission path between users.

T-Band                                  The group of channels operating at
                                        470-512 MHz previously assigned to the
                                        UHF band.

Telephone Interconnect                  Connection of a telecommunications device
                                        or service to the PSN. In SMR, Telephone
                                        Interconnect refers to the service provided
                                        to a customer which allows specified customer
                                        units to have the capability to connect
                                        directly to the PSN and thereby
                                        communicate with any other party that
                                        can be reached over the PSN.

Trunked System                          A system that combines multiple channels
                                        with unrestricted access in such a
                                        manner that user demands for channels
                                        are automatically "queued" and then
                                        allocated to the first available
                                        channel. Compared to a conventional
                                        system, this method allows for the use
                                        of frequencies by more users and
                                        provides faster access than a
                                        conventional system, thereby reducing
                                        the likelihood of network congestion.
                                        LTR for "logic trunked radios" is one
                                        technology commonly used in trunked
                                        Systems.

UHF                                     An ultra high frequency in the 450 - 512
                                        MHz bandwidth.

Unit                                    A base, mobile or hand held radio.

Universal Licensing Service             The FCC's electronic system for filing
("ULS")                                 PMRS and other wireless applications,
                                        coordination data, and other accessory
                                        information.

Wireless Local Loop                     A low-power radio system providing
                                        communication from subscriber to
                                        provider without wires. This technology
                                        is especially useful in sparsely
                                        populated areas and in areas with
                                        difficult terrain.
</Table>

                                      V



<PAGE>


                                     PART I


ITEM 1. DESCRIPTION OF BUSINESS

         This Annual Report on Form 10-KSB includes "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act") and Section 21E of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act."). All statements other than statements of
historical information provided herein are forward looking and may contain
information about financial results, economic conditions, trends and known
uncertainties. The Company cautions the reader that actual results could differ
materially from those expected by the Company, depending on the outcome of
certain factors, including those factors discussed in the Section of this Annual
Report on Form 10-KSB entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operation." Specifically, there can be no
assurance that the Company will be able to compete effectively, continue to sell
its licensed systems at a profit, increase its utilization on its T-Band
systems, retain its key personnel or take any or all of the other actions in
this Annual Report. Readers are cautioned not to place undue reliance on these
forward looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to release to investors the result of any revisions to
these forward looking statements which may be made to reflect events or
circumstances after the date herein, including, without limitation, changes in
the Company's business strategy or planned capital expenditures, or to reflect
the occurrence of unanticipated events.

                                   THE COMPANY

         The Company provides high-powered trunked radio dispatch services in
the United States. The Company currently serves approximately 799 trunked
dispatch customers in the Major Metropolitan Areas utilizing 13,257 subscriber
units (either radio or base stations) in 6 states. The Company's customers are
principally businesses and government agencies located in the targeted
metropolitan areas.

         Dispatch services are offered on the 450-512 MHz and 800 MHz bands.
Operators of these dispatch services are regulated as PMRS providers (i.e.,
private carriers) or as CMRS providers (i.e., common carriers). Under recent
rule changes, an operator, like the Company, provides service pursuant to a
frequency-specific, site-specific FCC license. Additionally, an operator, like
the Company, may provide service to an entity which, itself, is licensed to
operate on a specific frequency at a specific location within the same band. A
repeater that is operated as a PMRS is subject to more relaxed regulatory
requirements than a CMRS provider, such as cellular and certain SMR or ESMR
licensees. See "Current Business - Regulation."

         The Company offers its dispatch services primarily in the 470-512 MHz
band, or T-Band. It also operated conventional and trunked dispatch services in
the 800 MHz band until the end of 2001. During 2001, the Company closed, with
FCC consent, contracted sales of the majority of its 800 MHz services, and it
entered into a contract, conditioned upon obtaining requisite FCC consent, to
sell its remaining 800 MHz services, thereby concluding its current operations
in the 800 MHz band. The Company continues to concentrate on the 470-512 MHz
band because this coverage allows the Company to provide a more competitive
monthly service rate than other service providers. However, there can be no
assurance that this strategy will be effective. In the 470-512 MHz band, the
Company operates repeaters with its own FCC license. None of the Company's
repeaters are interconnected to the PSN. Thus the Company's private carrier
licenses all are in the PMRS category. As a PMRS licensee, the Company is
subject to less stringent regulatory requirements than CMRS licensees.

         The Company has determined that UHF trunking was its primary goal for
business operations in its targeted metropolitan areas. The Company believes
that achieving this goal has transformed its operations from a primarily
conventional CR business to a business providing trunked technology in selected
Major Metropolitan Areas. The Company has capitalized upon its ability to trunk
numerous


                                       1
<PAGE>


repeaters into consolidated systems with many channels offering wide geographic
coverage in five metropolitan markets. This approach has involved the Company's
ongoing conversion to T-Band systems by eliminating single site CRs and CRs
outside the Major Metropolitan Markets after having obtained any requisite FCC
approvals. The Company began the final phase to divest itself of CRs in the
450-470 MHz band in late 2001 in order to focus its resources on T-Band systems,
which the Company believes to be more profitable. The Company plans to have
completed the removal and sale of all CRs by the end of the first quarter 2002.

         Initially, the Company utilized independent dealers for sales and
service activities. This sales approach changed, as from late 1997 until the end
of 2001, the Company managed its assets and customers through Company-owned
sales and services in five operational regions. During the fourth quarter of
2001, the Company determined that it could access a larger potential customer
base by authorizing qualified independent dealers to represent operations in the
five served major regions. Thus, the direct sales and service operations in
these regions have been discontinued and inventory and service will be centrally
warehoused at the Company's corporate location in The Woodlands, Texas. The
Company will maintain regional representation to concentrate on the national
accounts that require "totally integrated communication systems."

         Management of the Company has observed that, over the last decade, most
spectrum has increased in value, precipitated by a fixed supply and increased
utilization. In the process of securing a limited number of licenses for its own
use, management of the Company discovered that it was successful at identifying
and acquiring exclusive licenses after obtaining requisite FCC consent. The
process is technical and lengthy. As a result of its successes, after obtaining
FCC consent, the Company has been able to sell several licensed systems in
excess of $15,856,000 since its inception. Some of these sales were operational
revenues and others were sales of communication equipment and other assets.
Based on this experience, management recognizes the value of spectrum and will
continue to maximize value for the Company through these efforts.

         The Company has identified that communication solution opportunities
exist in Vietnam and elsewhere in South and Southeast Asia. Preliminary studies
of these opportunities indicate that the Company might be afforded the
opportunity to install Wireless Local Loop products throughout Vietnam. A test
system was operational and given preliminary approval by the Vietnamese
government during 2001. If final testing and approval is achieved, the Company's
Wireless Local Loop product will be available to be utilized throughout Vietnam.
However, there are no assurances that there will be final approval or that the
sale of the Company's Wireless Local Loop product will be successful if it is
available.

         The Company has formed Champion Wireless International B.V. and
Champion Vietnam Wireless B.V., both Netherland companies, and Champion Wireless
Systems International N.V., a Netherland Antilles company, as wholly owned
subsidiaries to conduct the international operations. Authority for resident
offices was obtained in Vietnam during 2001 and Champion Vietnam Wireless B.V.
has established offices in both Hanoi and Ho Chi Minh City. There are currently
two employees in the Ho Chi Minh City office and one in the Hanoi office.

         The Company is a Delaware corporation. Its principal place of business
is 1610 Woodstead Court, Suite 330, The Woodlands, Texas 77380. The Company's
telephone number is (281) 362-0144.


                                     HISTORY

         The Company was incorporated under the laws of the State of Delaware on
September 29, 1994. In 1994, the Company acquired 1,501 CRs from Motorola
through several agreements. There were no FCC licenses assigned to the Company
as a part of this transaction.


                                       2
<PAGE>


         Since acquiring the CRs from Motorola, the Company evaluated its total
mix of dispatch services and identified markets in which it had sufficient
strength to build dispatch operations. The Company is gradually divesting itself
of various dispatch operations outside the markets identified for development,
after obtaining any necessary FCC consent. In particular, in an effort to
increase its subscriber capacity, overall network control and revenue potential,
consistent with FCC rules, the Company has converted its systems in targeted
markets to Trunked Systems. In both the 450-512 MHz band and the 800 MHz band,
the Company, after obtaining any necessary FCC consents, converted many of the
individual licenses held by its subscribers to consolidated licenses in its own
name. As of March 9, 2002, the Company: (i) operated 91 CRs and 272 trunked
repeaters in the 450-512 MHz band; (ii) held 280 exclusive licenses, of which
one (1) license is in the 800 MHz band and 279 licenses are in the 470-512 MHz
band; and (iii) held 184 co-channeled licenses, of which 2 licenses are in the
800 MHz band, 158 licenses are in the 470-512 MHz band, and 24 licenses are in
the 450-470 MHz band.


                              THE DISPATCH INDUSTRY

OVERVIEW

         Most businesses or service organizations with mobile work forces
require the ability to communicate with employees in order to conduct their
operations efficiently. They rely on radio communications as a tool to control
resources, personnel, materials and equipment in a cost-effective manner.
Dispatch services improve the efficiency and response time of such businesses
and organizations.

         The dispatch industry is a distinct segment of the wireless
communications industry, which also includes wireless telephone (cellular, PCS
and satellite), paging and data transmission services. Wireless telephone
services are designed for personal communications by providing two-way
communication among individuals. This segment of the industry refers to its
radios as "telephones" and is viewed as an extension of the traditional wireline
telephone network. Wireless telephones require a minimum seven digit dial-up
procedure and wireless telephone conversations typically average more than one
minute in duration. Paging services enable subscribers to contact an individual
or group of portable receivers which emit an audible, visual or tactile alert
and can sometimes record a numeric or alpha-numeric message. Paging systems
allow only the transmission of a limited amount of information and generally
only provide one-way communication. Data transmission services are, at present,
primarily offered on data-only (non-voice) packet switched networks. In
contrast, dispatch services provide for the immediate transmission of
information, whether voice messages or data, to groups of mobile or portable
radio users. Companies use dispatch services to communicate among others and to
provide task assignment and coordination. Dispatch services are designed to
provide bi-directional group communications and to allow the user to address
either entire groups, sub-groups or individuals with simple and rapid
push-to-talk call set-up procedures. Dispatch conversations are typically short
and allow for all participants to communicate with each other simultaneously.
Dispatch services are less expensive than other CMRS wireless communications
services, such as 800 MHz and 900 MHz SMR, cellular and PCS.

         Each segment of the wireless communications industry relies on a
different technology and serves distinct customer needs. The Company believes
that the various services address distinct markets and generally do not compete
effectively against each other. The Company believes the wireless communications
industry will continue to grow with the emergence of new technologies and
applications. There can be no assurance, however, that this growth will continue
or that the Company's targeted markets will flourish. A decrease in the growth
rate of the industry may have a material adverse effect on the Company's ability
to prosper.


                                       3
<PAGE>


HISTORY OF DISPATCH NETWORKS

         The dispatch industry is comprised of operator-licensed systems and
user-licensed systems. The Company currently provides both these dispatch
services, although it is exiting the end-user licensed dispatch market. See "The
Company." In the 800 MHz and 900 MHz bands, trunked dispatch systems are
referred to as SMRs or ESMRs. These systems are operated by licensees that
provide dispatch services to others for a monthly fee. In contrast, providers of
dispatch services, such as the Company, derive revenues from the sale, rental
and servicing of end-user equipment and from dispatch fees.

         The development of military wireless communications in the 1940s led to
the first dispatch systems for business and industrial use. Shared repeater
services, the predecessors to SMR systems, developed in the early 1970s as
available radio spectrum became increasingly scarce. By the mid-1980s, the
number of commercial users in major urban areas was surpassing the capacity of
shared repeater services, and trunked SMR systems were introduced to satisfy the
increasing demand for dispatch services.

         Implementation of emerging, spectrum-efficient digital switching and
transmission technologies is increasing dispatch system capacity even further.
These new technologies are currently being implemented on ESMR systems. However,
the Company has no current plans to operate ESMR systems.


DISPATCH FREQUENCIES

         Under international agreements, specific bands of frequencies may be
used for radio communications: low band (which includes low ("LF"), medium
("MF") and high ("HF") frequencies), Very High Frequency ("VHF"), Ultra High
Frequency ("UHF") and Super High Frequencies ("SHF").

         In the United States, the FCC has exclusive responsibility for
allocating radio frequencies assigned to non-government use. The FCC has
established rules governing the licensing of, and operations on, such
frequencies. The FCC grants licenses to use radio frequencies pursuant to formal
applications from prospective users or operators, consistent with its spectrum
allocation. The dispatch industry operates in various band segments, including
the 450-512 MHz and 800 MHz bands. Within each band, channels are created by the
allocation of specified bandwidths. See "Current Business - Regulation." The
wireless mobile communications industry operates primarily within the UHF
frequencies and can be categorized by operations in the following frequency
ranges:

         450-512 MHz. Dispatch communications services are provided in the
450-512 MHz band to vehicle-mounted and hand-held portable two-way radio units.
These services operate at a higher transmitter power level than other wireless
services, such as cellular and PCS, yielding a greater service area. This band,
which was developed in the 1950s, is populated by PMRS licensees, such as the
Company and its customers.

         Users of the 450-512 MHz band have begun to experience channel
congestion and spectrum crowding, especially in metropolitan areas. This
spectrum is frequently incapable of handling the demands placed upon it, and
users are often unable to find a clear channel. To remedy this situation,
beginning in 1997, the FCC has adopted rules, and has considered additional
rules, to promote more effective and efficient use of the bands below 512 MHz.
These actions, implemented as part of the FCC's ongoing "refarming proceeding,"
have increased and shall continue to increase the opportunities for the Company
to use higher capacity trunking technology in these bands. See "Current Business
- Regulation."

         800 MHz (SMR). Dispatch services are provided not only in the 450-512
MHz band, but also in the 800 MHz band. Due to technological developments and
regulatory changes, 800 MHz band operators may elect to convert their systems
from analog to digital. Conversion of systems to digital technology may make
this band more appropriate for services other than dispatch. See "Current
Business - Competition." The Company has successfully negotiated contracts to
sell (with FCC consent) substantially all its 800


                                       4
<PAGE>


MHz operations. Pursuing this strategy, however, does not prevent the Company
from being granted FCC licenses for the exclusive use of additional 800 MHz
channels and from obtaining FCC consent to operate trunked repeater 800 MHz band
systems in the future.

         900 MHz. The 900 MHz band (SMR) analog operating format is very much
like the 800 MHz band format. Initially, the FCC awarded 900 MHz band SMR
licenses in the top 50 markets in the United States by lottery. In 1996, the FCC
completed auctions for the remaining 900 MHz band SMR licenses to operate in 51
MTAs in the United States, Puerto Rico, United States Virgin Islands, Guam -
Northern Mariana Islands and American Samoa. Specifically, 1,020 licenses were
offered in these 51 MTAs, or 20 channels per MTA. The Company participated in
the 900 MHz auction, but was not granted licenses as a result of its
participation.


EMERGING TECHNOLOGIES

         The limited number of available frequencies, particularly in urban
areas, has generated ongoing introduction of new and advanced technologies and
applications that allow for better spectrum utilization. The first technology
developed for that purpose was "trunking," which was developed in the late 1970s
and which uses microprocessors to allow many users to share frequencies without
interfering with one another. In non-trunked conventional systems, the channels
assigned to each group of users are independent. If a channel is occupied by
another conversation, the user has to wait, even though another channel in the
system may be idle. The user may have to try several times before the channel is
free. In contrast, trunking allocates messages to various frequencies in the
most efficient way. In a "trunked" system, user calls are assigned to the first
available channel and a different channel may be assigned for each transmission
during the same conversation. The Trunked System therefore can handle more call
traffic with a given number of channels. In addition, the channel "switching" on
a Trunked System makes eavesdropping more difficult and therefore enhances the
privacy of conversations.

         Advances in digital technology are improving spectrum efficiency and
increasing loading capacity (the use of a channel by subscriber radios). Use of
digital rather than analog transmission expands channel capacity by a factor of
two, three or more times.

         The Company is currently using trunking technology to serve more
customers with either new or upgraded existing equipment. Depending upon cost
and competitive factors, the Company also might implement digital technology to
increase its customer base even further. However, the Company has no current
plans to convert to digital technology.


                                CURRENT BUSINESS

GENERAL

         The Company provides high-powered repeater dispatch services in Major
Metropolitan Areas in 6 states. The Company currently serves approximately 799
customers utilizing 13,257 two-way radio units in the trunked format. The
Company provides its customers, which are primarily business and governmental
agencies, with equipment, equipment rentals and dispatch services. Under
applicable FCC rules, the Company is not required to obtain FCC licenses for
those CR systems serving individually-licensed customers. However, the Company
is licensed by the FCC to operate its Trunked Systems serving customers which do
not have their own licenses.

         Pursuant to several contracts with Motorola executed in 1994 (the
"Motorola Agreements"), the Company acquired 1,501 CRs. There were no FCC
licenses assigned to the Company as part of this transaction. The Company
historically has operated CRs and trunked repeaters exclusively for dispatch
purposes. It is expanding the dispatch services provided to include data
transmission, which allows text


                                       5
<PAGE>


messaging and vehicle tracking by satellite. A largely expanded use of bandwidth
is tracking vehicle location through the Global Positioning Network. The data
transmissions require less bandwidth which increases the potential subscriber
usage of each channel. This format will increase the potential number of units
which may be loaded on each system.

         Equipment products for the 450-512 MHz band frequencies, where the
Company provides most of its services, and for the 800 MHz band, are available
from numerous manufacturers. Prices for this equipment range from $450 to $900
per unit, depending on the features offered and the warranty provided. The
Company's principal equipment suppliers are Motorola and Kenwood, and the
Company has entered into dealer agreements with both companies. Both dealer
agreements, however, may be terminated at any time by either party without cost.
Termination of either of these agreements could have a materially adverse effect
on the Company.

         The Company operates its dispatch repeaters primarily in the 450-512
MHz frequency band. The Company has also had limited operations in the 800 MHz
band. However, the Company is not active in the 220 MHz band, 900 MHz band,
cellular or PCS segments of the wireless communications industry and it
currently does not intend to become active in those segments.

         450-512 MHz REPEATER OPERATIONS. The Company conducts the majority of
its operations in the 450-512 MHz frequency band. The Company is actively
pursuing widespread utilization of trunking technology for its systems in this
band. A trunked 450-512 MHz band repeater is superior to a conventional repeater
in that Trunked Systems make more channels available to handle calls and thus
provide greater capacity than conventional systems. See "The Dispatch Industry -
Emerging Technologies." The trunked repeater format also provides the customer
with more calls and faster calls than a conventional system. See "The Dispatch
Industry - Emerging Technologies." These factors, in turn, allow a greater
number of users to make more calls than a conventional system, which should
generate additional revenues for the Company. The trunked 450-512 MHz band
repeaters function similarly to 800 MHz band trunked SMR systems. Although the
Company's systems are not interconnected to the PSN, if they were, they would be
comparable to cellular telephone technology.

         The Company has converted its original 450-512 MHz band focus to the
LTR trunking format in the 470-512 MHz band. Concurrently, the Company has sold
or removed the majority of its CRs in non-core rural areas. The planned
conversion to trunked operations has involved obtaining exclusive use of a
frequency by being assigned individual user licenses, claiming licenses for
unused channels, and receiving all necessary FCC approvals. There can be no
assurance that the Company will continue to be granted the FCC licenses for such
operations. Nevertheless, substantial conversion to trunked format operations in
the Major Metropolitan Areas has been achieved by the Company.

         The 470-512 MHz portion of the 450-512 MHz band is available in the top
13 U.S. major metropolitan areas and is known commonly as the T-Band. Operation
on the T-Band is particularly advantageous as it contains the only frequencies
in the 450-512 MHz band on which exclusive business radio service channels are
available. The Company operates approximately 272 T-Band repeaters in its
metropolitan areas. Exclusive channels are superior to co-channel operations
because an operator, such as the Company, has more available capacity and less
restrictions on service provision. As of March 9, 2002, the Company has been
granted FCC licenses to operate 437 T-Band channels in the Houston, Dallas/Ft.
Worth, San Francisco Bay, Washington/Baltimore and Chicago areas. Through these
efforts, the Company has gained exclusive control over channels in these areas
(with appropriate FCC approvals), and now operates trunked repeaters in Houston,
Dallas/Ft. Worth, Northern California, Washington/Baltimore and Chicago. As of
March 9, 2002, the Company holds 279 exclusive use FCC licenses and an
additional 158 non-exclusive FCC licenses in the T-Band. The Company's Spectrum
Division has dedicated considerable effort to removing dormant or otherwise
unnecessary co-channel licenses, generally through purchases or trades (with FCC
consent). There can be no assurance that the Company will be able to continue to
obtain exclusive control (with applicable FCC approval) over all or
substantially all of these channels.


                                       6
<PAGE>


         800 MHz REPEATER OPERATIONS. Under the Motorola Agreements, the Company
acquired 92 CRs in the 800 MHz band. As with the 450-512 MHz band CRs which were
acquired from Motorola, the 800 MHz band CR licenses were held by the users.
Through license filings and assignments, the Company was successful in obtaining
(with FCC consent) a number of licenses for its own benefit in this band. With
appropriate FCC consent, 20 of these licenses were cleared to an exclusive
status and the related systems were sold in 1997 for in excess of $3,500,000.
The Company, with FCC consent, sold and traded other systems and operated 37
repeaters in Northern California (of which 26 had been converted with FCC
approval to SMRs). Since inception, the Company has expanded its 800 MHz
operations in Northern California and during 2001 successfully closed contracts
to sell, with the appropriate FCC consents, substantially all these 800 MHz
operations. The Company may elect to obtain additional exclusive licenses in the
800 MHz bandwidth with the intention of operating and/or selling the systems.
There can be no assurance that the FCC will grant the Company exclusive licenses
or that FCC approval for all assignments and sales will be granted.


BUSINESS STRATEGY

         The Company's business strategy includes the following:

         EXPANSION OF HOLDINGS. The Company seeks to expand its spectrum and
infrastructure holdings within its selected metropolitan markets through the
FCC-approved acquisition of operating and start-up 450-512 MHz band trunked
dispatch systems. Simultaneously, the Company, with FCC approval, has undertaken
a program to dispose of CRs in non-core areas.

         DEVELOPMENT OF EXISTING INTRINSIC VALUE. The intrinsic value of the
Company today lies in the value of its spectrum as measured by recent sales
and/or the potential cash flow capacity.

         The initial business plan for the Company was to operate the 1,501 CRs
purchased from Motorola, Inc. in 1994. The Company recognized the opportunities
available to expand operations by converting to Trunked Systems, which expanded
the utilization of channels and allowed increased customer loading. This
strategy was focused in the Major Metropolitan Areas where licenses to operate
in the required spectrum could be granted by the FCC. As other technologies have
developed, the Company believes that new opportunities exist to expand the use
of the Company's spectrum by using bandwidth for data transmissions. Since data
transmissions require less bandwidth, the Company continues to pursue various
data uses of its spectrum, which will increase the number of subscriber units
that may be loaded on each channel. This format may triple the possible usage of
each system. The Company believes that the efforts to achieve these results will
span several years and there is no assurance that the Company will be successful
in these efforts. It is the intention of management to enhance the value of the
assets by continuing to expand the usage of its constructed infrastructure.

         Under the Motorola Agreements, the Company also purchased 92 unlicensed
800 MHz band CRs. At that time, the Company believed that, if it obtained FCC
consent to assignments of a sufficient number of 800 MHz band licenses, it could
obtain exclusivity over the related channels and could then enhance the value of
the assets. The Company achieved this objective by obtaining FCC consent to
convert 26 of these unlicensed CRs to four (4) 800 MHz Trunked Systems for which
it held the exclusive license. During 2001, the majority of these were sold
(with FCC consent) for in excess of $5,500,000 and the remaining are under
contract to be sold, with proper FCC consent, in 2002.

         SPECTRUM. Spectrum is critical in the communications business. Without
spectrum on which to operate, the best communications equipment is worthless.
The Company is spending considerable funds to acquire FCC-licensed stations to
provide dispatch services. The Company is being assigned these licenses, and the
corollary right to use the spectrum, through FCC approved purchases of existing
systems and through FCC grants of new licenses. The Company anticipates that
these efforts will be ongoing. There


                                       7
<PAGE>


can be no assurance that the Company will be successful in any or all of these
efforts to be granted the rights to use the spectrum.

         Specifically, the Company has been actively pursuing the grant of
additional licenses from the FCC to operate on the 470-512 MHz T-Band channels.
As the FCC grants these licenses, the Company intends to construct such T-Band
systems. The Company also participated in the filing of applications for FCC
grant of offset channel licenses (i.e., new narrowband channels located adjacent
to existing channels). As of March 9, 2002, the Company has been granted 6
licenses by the FCC for offset channels in the 470-512 MHz band.

         In 1997, as part of its "refarming" proceeding, the FCC adopted a
consolidation plan and related rules for the PMRS bands below 800 MHz. These
rules changed how the frequencies are assigned, established a method for PMRS
users to implement highly efficient Trunked Systems in the bands below 800 MHz,
and provided for operation of offset channels in the 450-470 MHz band. See
"Regulation."

         EQUIPMENT RENTAL. To augment its sales activities, the Company operates
a Rental Division. This division currently maintains an inventory of 700 units.
The Company provides equipment rental directly to customers, as well as through
approved dealers for short term usage.

         INTERNATIONAL. To enhance and grow the Company's value, a search for
business expansion produced the potential of previously untapped communication
opportunities in the international sector. South and Southeast Asia have been
identified as targets for the Company. The Company has formed three offshore
subsidiaries to conduct international operations, and during 2001 opened two
resident offices in Vietnam employing three people. However, to date, the
Company's international operations have not commenced sales.


COMPETITION

         The Company faces intense competition from the following types of
operations:

         OTHER 450-512 MHz BAND CR OPERATORS. The Company currently competes
with many other 450-512 MHz band CR operators. With FCC approval, the Company
has converted its Metropolitan Market Area 450-512 MHz band CRs from
user-licensed conventional operations to the trunked multi-channel format.
Although the Company believes that this conversion will help distinguish it from
the 450-512 MHz conventional CR operators, there can be no assurance that the
Company will continue to expand its conversion to the trunked multi-channel
format or that such conversion will indeed distinguish the Company from
conventional CR operators. In addition, a limited number of paging operations
are provided in the 450-512 MHz band, but the Company does not anticipate that
these services will compete with its repeater dispatch services in this band.

         UHF TRUNKING. Since the FCC permitted the trunking of the UHF channels
in 1996, considerable competition has evolved in the UHF trunking market.

         CELLULAR TELEPHONE SYSTEMS. The Company currently competes, and
believes that it will continue to compete, with cellular telephone systems to a
great extent. The Company charges a flat monthly rate for its services. By
contrast, cellular charges are primarily based on minutes of use. Additionally,
cellular service providers typically charge for a call whether the user placed
or received the call. Because many wireless calls are mobile-to-mobile, cellular
calls from one user to another result in two (2) airtime charges, one (1) charge
for the caller and one (1) charge for the receiver. Large fleet operators may
find cellular costs prohibitive, although extremely small fleets may be in a
position to justify the cost of cellular service. The Company believes that
cellular telephones are not an economical solution for medium to large dispatch
users, and that CRs offer a cost-effective alternative for high volume users of
cellular telephone services. Cellular is also limited to point- to- point
communication. Dispatch provides


                                       8
<PAGE>


communications capabilities to entire worker groups or individual worker groups,
and it also provides such capabilities on a one-to-one basis among members of a
user group. It is unlikely, however, that this price advantage will change
because the FCC no longer is considering imposing a "calling party pays"
requirement on cellular carriers.

         800 MHz BAND SMR OPERATORS. The FCC permits 800 MHz band SMR operators
to convert their systems from analog to digital. Nextel, the largest SMR
operator in the United States, is in the process of converting its analog
technology to digital, beginning with its major metropolitan area systems.
Conversion to the digital technology requires capital investment, and the
Company believes that companies that convert may be required to increase
customer rates to recoup their capital costs. These factors may price digital
800 MHz band operators out of the dispatch market and into the cellular
telephone market. For this reason, the Company believes 800 MHz band SMR digital
operators will not represent a significant competitive threat. However, there
can be no assurance that this will be the case.

         The 800 MHz band SMR operators that retain analog technology probably
will continue to concentrate on dispatch services and therefore will continue to
compete with the Company. The Company believes that eventually many of these 800
MHz band SMR analog providers may be acquired by large digital operators
interested in obtaining their rights to additional spectrum so that loading
capacity could be optimized. However, there can be no assurance that such
acquisitions will take place or that the 800 MHz band SMR operators will not
continue to generate significant competition for the Company.

         900 MHz BAND SMR OPERATORS. Operators of 900 MHz band SMR systems
currently provide the greatest dispatch service competition to the Company. Many
of these 900 MHz band system operators are using analog technology, thereby
minimizing capital costs so they can maintain rates at competitive levels. Rates
for these services could increase, however, because of higher capital costs for
auctioned systems and because of the costs of any conversion to digital
technology. However, there can be no assurance that these rates will increase or
that operation of 900 MHz band SMR systems will not continue to generate
significant competition for the Company.

         In addition to the existing 900 MHz band SMRs in the top 50 markets,
the FCC auctioned 900 MHz band systems in 51 MTAs during 1996. The Company
unsuccessfully participated in this auction. Per channel costs for the 900 MHz
band systems averaged in excess of $10,000 each in the auction. In contrast,
many systems that the Company operates in the 450-512 MHz band cost less than
$1,000 per channel. There can be no assurance, however, that the Company will be
able to continue obtaining licensed systems for this price.

         The Company believes that the auctioned 900 MHz band licensees will
operate using analog technology. In some cases, the auction price paid by the
900 MHz licensees per channel indicates that a higher rate may be charged to
each subscriber to produce a desired rate of return on the investment. The
Company believes that the comparative low cost of the Company's dispatch
services may result in lower, more competitive rates for its subscribers. In
addition, because of the high prices paid for spectrum in the 900 MHz band
auction, the Company believes it is unlikely that analog technology based
services, such as dispatch services, will be offered on the 900 MHz band on a
long-term basis. However, there can be no assurance that 900 MHz band services
will be more expensive than the Company's services or that dispatch will not
continue to be offered by 900 MHz band operators. Competition from 900 MHz band
operators could have a material adverse effect on the Company.

         220 MHz OPERATORS. The 220 MHz band has been available to potential
dispatch operators for several years. Although the Company is not aware of any
major equipment manufacturer that currently provides a full array of
communications equipment to operate at this frequency level, as spectrum
availability decreases, manufacturers will probably begin providing equipment
for the 220 MHz band. If this occurs, 220 MHz band operators could become
dispatch competitors to the Company.


                                       9
<PAGE>


         PCS OPERATORS. The Personal Communications Service was established by
the FCC in 1994, when it adopted Part 24 of its Rules. The FCC established two
classes of PCS, broadband and narrowband. It awarded several authorizations for
each such class in every Metropolitan Trading Area and Basic Trading Area.

         Broadband PCS offers a cellular phone-like service for a significantly
reduced price. Broadband PCS is broadly defined by the FCC as radio
communications encompassing mobile and ancillary fixed communication services
for individuals and businesses that can be integrated with a variety of
competing networks. The Broadband PCS authorizations awarded in the FCC's
auctions granted the use of different spectrum blocks, ranging from 10 MHz to 30
MHz in various specified service areas. An auction of these frequency blocks was
completed in 2001.

         Narrowband PCS is defined as a family of mobile or portable radio
services that may be used to provide wireless telephony, data transmission,
advanced paging and other services to individuals and businesses. Narrowband PCS
may be integrated with a variety of competing networks. Narrowband PCS uses less
than one voice grade channel. Narrowband PCS is being used to provide new
services, such as voice message paging, two-way acknowledgment paging and other
text-based services. Licenses were awarded on a nationwide regional MTA and ETA
basis. An auction for these frequencies was completed in 2001.

         A substantial number of the companies which were high-bidders at the
PCS auctions were existing communication service providers or joint ventures
involving existing communications service providers. The Company believes that
PCS will be interchangeable with existing cellular and paging services.

         At this time, the impact of PCS growth on the Company's business is
uncertain. Although some PCS providers have also gained a significant presence,
cellular service providers have suffered the impact of their presence most
significantly. It is unclear whether PCS providers will expand their service
offerings to include dispatch-like services. Given the high cost of entry, the
Company believes that any entry into the low-cost dispatch services will be
delayed pending saturation of the higher-priced cellular service market.

REGULATION

         The FCC regulates the construction, operation and acquisition of
wireless communications systems, such as those operated by the Company, under
the Communications Act of 1934, as amended (the "Communications Act"), and
pursuant to the FCC's rules and policies adopted thereunder. The FCC rules
governing wireless communications are highly technical and subject to change.
The Company believes it is in material compliance with FCC licensing, loading,
technical and operating requirements. The Company has not received any
notification of problems or material deficiencies from the FCC.

         Under the Communications Act, dispatch operators, such as the Company,
generally are regulated as PMRS providers (i.e., private carriers) rather than
as CMRS providers (i.e., common carriers). A PMRS provider is subject to less
stringent regulations, both by the FCC and individual states, than a CMRS
provider. In contrast, cellular telephone, most paging services and those SMR
operators providing PSN telephone interconnection capabilities are, or will be,
regulated as CMRS providers. Generally, CMRS providers must provide services
under the same terms and conditions to any subscriber requesting services. These
CMRS providers also may be required to file tariffs and their revenues from
services may be regulated. As PMRS providers, dispatch operators, such as the
Company, may decline service to certain subscribers and may negotiate different
prices with each customer for "like" services. Certain changes to the
Communications Act and to the related FCC rules and policies could result in
minimizing or eliminating this distinction between PMRS and CMRS providers.
These changes could have a material adverse effect on the Company. See
"Regulatory Developments."



                                       10
<PAGE>


         LICENSING. In order to provide dispatch services, the Company does not
need an FCC license if its customers are licensed by the FCC. Most licenses in
the 450-512 MHz, 800 MHz and 900 MHz bands were granted for 5-year or 10-year
terms. The FCC now grants all PMRS licenses for a 10-year term and all renewal
licenses to the same 10-year term. License renewals are generally pro forma,
absent material licensee misconduct or failure to meet applicable construction
and loading requirements. To the extent that the Company operates its own
systems in the 450-512 MHz or 800 MHz bands, it is subject to the same licensing
and related requirements as its customers. All licenses issued to the Company
upon inception and all licenses issued to third parties, whose systems the
Company manages in compliance with FCC requirements, began to expire after May
24, 1999. To date, all appropriate renewals for each such license have been
granted by the FCC. While the FCC generally grants renewal of PMRS licenses in
routine fashion, these licensees are not entitled to a renewal expectancy. There
can be no assurance that the FCC will continue its current renewal practices.

         Prior FCC approval is a prerequisite to any license assignment or to
the transfer of control over a licensee. In certain instances, the FCC
conditions the assignment of a license or transfer of control over a licensee
upon meeting certain loading requirements. For its licensed systems, the Company
believes that it is in compliance with all applicable FCC rules, including any
loading requirements.

         The ULS has been fully implemented. It has been and will continue to be
beneficial to the Company because FCC application processing will be expedited
and because companies will have more efficient access to industry data.

         SYSTEM CONSTRUCTION. Licensees in the 450-512 MHz, 800 MHz and 900 MHz
bands are subject to certain deadlines for completing construction and
commencing operation. If the licensee does not meet these deadlines and does not
obtain an extension from the FCC, the license is subject to cancellation or
modification. The FCC is currently auditing 450-512 MHz licensees by requesting
that they confirm, in writing, system construction in compliance with this
requirement. The Company continually monitors compliance with FCC construction
requirements. This ongoing review assists the Company in ensuring that it
completes construction within the FCC's deadlines. The Company has submitted a
timely report in response to the Commission's audit, confirming such compliance.

         CHANNEL LOADING REQUIREMENTS. Presently, the FCC does not require that
a 450-470 MHz band PMRS system operator load a system with a specified number of
radio units within a prescribed time frame. However, the 470-490 MHz T-Band is
subject to loading requirements. Loading requirements also apply to 800 MHz and
900 MHz band SMR licensees. If a licensee does not meet loading levels, the FCC
may take back channels or cancel the license. A licensee that loses channels
cannot reapply for any channels at that location for a specified period. As
discussed above under "System Construction," the Company continually monitors
its compliance with general FCC requirements, including loading requirements.

         SYSTEM OPERATION. Licensees in the 450-512 MHz, 800 MHz and 900 MHz
bands are subject to certain technical and other operating requirements. If a
licensee does not comply with these requirements, the FCC may impose a fine or,
if the violations are substantial, the FCC may revoke its license. In addition,
licensees in the 450-512 MHz band cannot allow their stations to discontinue
operation for a continuous 12-month period. If a station is inoperable for this
period, the FCC can cancel the license. As part of its audit referenced in
"Regulation - System Construction," the FCC also has required licensee
confirmation that its stations have been operating as required. For its licensed
systems, the Company continually monitors its operations and believes that it is
in material compliance with the FCC's requirements. The Company has submitted a
timely report in response to the Commission's audit, confirming such compliance.

         INTERCONNECTION WITH PUBLIC SWITCHED NETWORK. Under the Communications
Act, wireless communications operators can provide their customers with mobile
radio services interconnected to the PSN. Because these operators have access to
the local telephone carrier, subscribers communicate with


                                       11
<PAGE>


non-subscribers. If the operator provides such interconnection to the PSN on a
"for-profit" basis, the FCC likely will regulate the operator as a CMRS
provider. The Company does not offer interconnected service.

         REFARMING PROCEEDING. In its ongoing "refarming" proceeding, the FCC
periodically has adopted rules to relieve congestion in the land mobile bands
below 800 MHz. These rules have: (i) increased the number of channels available
on an exclusive basis by requiring conversion to narrowband technologies; (ii)
provided a phased-in 10-year transition for operators and manufacturers to
comply fully with the new requirements; (iii) permitted narrowband licensees to
aggregate channels so they can provide service on a wide area basis; (iv)
protected existing operators from harmful interference; (v) provided
coordinators greater flexibility in assigning frequencies; (vi) consolidated
operations in the bands below 800 MHz; (vii) implemented highly efficient
Trunked Systems; (viii) disposed of offset channels in the 450-470 MHz band; and
(ix) with respect to its licensing of 800 MHz SMR systems adopted more specific
service rules and clarified the rights and obligations for operation on the
lower 230 channels (including permitting EA licenses on the lower 80 SMR and
general category channels to switch between CMRS and PMRS services, provided
that channels designated exclusively for SMRs continue to be used for SMRs); and
established procedures for relocating incumbent SMR licensees to the lower
channels. See "Business Strategy - Spectrum."

         The FCC is also considering other issues that could benefit the
Company, such as imposing user fees, implementing further license auctions and
relaxing requirements for trunked service. Management believes that these new
proposed rules could make it easier for the Company to expand its footprint and
scope of operations but at greater expense. In particular, if the FCC holds
auctions in the 450-512 MHz band, the Company, as an established provider of
services in this band, may be able to secure exclusive license status in some of
its markets. However, there can be no assurance that the proposed rules would be
adopted, that the Company would be able to secure exclusive licenses if they
were made available, that the Company would be able to expand its footprint or
that the Company would be successful in any FCC auction. In addition, the
"refarming" proceeding has been controversial and could take several more years
to complete. Thus, the impact this proposal may have on the Company's operations
is uncertain.

         Furthermore, the FCC has adopted a notice of proposed rulemaking with
respect to possible re-alignment of the 800 MHz band. This proposal is based
upon plans submitted by Nextel and by the National Association of Manufacturers.
In addition, it is anticipated that a proposal submitted to the FCC in 2001 by
the Personal Communications Industry Association, Inc. ("PCIA") will be
presented to the public for comment. The PCIA proposes consolidating the 800 MHz
and 900 MHz band Industrial and Business Pool channels into a single pool. It is
uncertain at this time what impact, if any, those actions will have on the
Company.

         REGULATORY RECLASSIFICATION. Under the Omnibus Budget Reconciliation
Act of 1993, the Communications Act was amended to establish two (2) new
regulatory categories that involve certain Company businesses. Instead of
distinguishing between private carriers and common carriers, the FCC now must
distinguish between PMRS providers and CMRS providers. In general, CMRS
providers are subject to regulatory requirements comparable to the requirements
for common carriers and PMRS providers are subject to regulatory requirements
comparable to the requirements for private carriers. The FCC has classified all
private carrier licensees within the 450-512 MHz refarming bands, except
Business Radio Service licensees, as PMRS providers. One of the criteria for
determining if a carrier is subject to CMRS regulation, however, is if it
provides interconnection to the PSN. Since the Company does not offer such
interconnection, it is currently classified as a PMRS provider and is generally
free from the uniform rules applicable to CMRS providers. If the Company decided
to upgrade its services and provide interconnection to the PSN, it likely then
would be classified as a CMRS provider. The interconnection to PSN, if deemed
appropriate in the Company's business strategy, could provide another source of
revenue.

         SMR. The FCC has ruled that 800 MHz band SMR systems, to the extent
possible, should be licensed on a wide-area basis and should be subject to
auctions. Similar licensing requirements have been imposed upon 900 MHz band SMR
licensees. In addition, certain limits on aggregate spectrum held by


                                       12
<PAGE>


CMRS licensees, including SMR operators, have been imposed, but are scheduled to
sunset on January 1, 2003. As a result of these changes, the Company believes
that its licensed 800 MHz band systems may be attractive to prospective
purchasers. However, the Company cannot predict what impact, if any, it could
have on its business.

         NEW ALLOCATIONS. The FCC has proposals pending from time to time
seeking the allocation of additional spectrum for wireless communications
services. The Company cannot predict whether or when any such allocation might
be made or the extent to which any future allocation of additional spectrum
would affect the Company's existing operations or its opportunity to expand.

         STATE REGULATION. State and local governments may exercise their
traditional regulatory powers (e.g., health, safety, consumer protection and
zoning regulation) over wireless communications systems. The Communications Act,
however, specifically preempts state and local government regulation of CMRS and
PMRS provider rate offerings and market entry.

         REGULATION OF RADIO TOWERS. The FCC, the Federal Aviation
Administration and certain state and local government agencies regulate radio
towers with respect to geographic location, height, construction standards and
tower maintenance. Failure to maintain radio towers in compliance with
regulations can result in penalties to the tower owner or operator. Compliance
with lighting and painting requirements is particularly important. The Company
believes each tower it uses is in material compliance with applicable
regulations. The Company maintains liability insurance to protect it from third
party claims relating to non-compliance with tower regulations.

         REGULATORY DEVELOPMENTS. The FCC is considering regulatory changes that
may affect the Company's businesses. These changes involve PMRS licensing,
including ongoing implementation of the Telecommunications Act of 1996,
deployment of broadband wireless technology, implementation of "secondary
market" spectrum transaction mechanisms to optimize usage and deployment of new,
innovative technologies, and adoption of consumer obligations and public safety
requirements. However, it is uncertain at this time what impact, if any, these
changes could have on the Company's operations.


OPERATIONS

         The Company performs billing, maintenance of subscriber records, FCC
licensing activities and equipment leasing and distribution at its Woodlands,
Texas headquarters.

         The Company's operations are divided into five business regions as
follows: Houston, Dallas/Ft. Worth, Northern California, Chicago, and Washington
D.C./Baltimore. Each region is assigned a manager, whose responsibility is to
provide communication solutions to national accounts on the Company owned
infrastructure. The manager is also responsible for establishing and maintaining
relationships with independent dealers to load the Company's systems.

         Historically, the Vietnamese government has prohibited foreign
investment in the communications sector. The Company has identified that
communication solution opportunities exist in Vietnam and elsewhere in South and
Southeast Asia. Preliminary studies of these opportunities indicate that the
Company might be afforded the opportunity to install Wireless Local Loop
products throughout Vietnam. A test system was operational and given preliminary
approval by the Vietnamese government during 2001. If final testing and approval
is achieved, the Company's Wireless Local Loop product will be available to be
utilized throughout Vietnam. However, there are no assurances that there will be
final approval or that the sale of the Company's product will be successful if
it is available.

         The Company has formed Champion Wireless International B.V. and
Champion Vietnam Wireless B.V., both Netherland companies, and Champion Wireless
Systems International N.V., a Netherland Antilles company, as wholly owned
subsidiaries to conduct the international operations.


                                       13
<PAGE>


Authority for resident offices was obtained in Vietnam during 2001 and Champion
Vietnam Wireless B.V. has established offices in both Hanoi and Ho Chi Minh
City. There are currently two employees in the Ho Chi Minh City office and one
in the Hanoi office.


EMPLOYEES

         As of March 9, 2002, the Company employed 27 people on a full-time
basis. None of the Company's employees belong to a union.


ITEM 2. DESCRIPTION OF PROPERTY

         The Company leases 4,738 square feet of office space and 1,525 square
feet of warehouse space in The Woodlands, Texas, a suburb of Houston, Texas,
where its principal offices are located. In addition, regional satellite offices
are located in Dallas, Chicago and Virginia. The Company has also leases two
offices in Vietnam, one in Hanoi and another in Ho Chi Minh City.

         The Company leases antenna and repeater space on approximately 135
tower sites. Other than its leases on the Sears Tower in Chicago, Illinois, and
Allied Tower in Houston, Texas, no one lease is material to the business of the
Company. The leases are generally for terms of one year and month-to-month
thereafter except as follows:

<Table>
<Caption>
                    Location                  Lease Expiration
                    --------                  ----------------
<S>                                                 <C>

                    Missouri City, TX         March 2004
                    Splendora, TX             March 2004
                    Falls Church, VA          May 2004
                    Denton, TX                October 2005
                    Chicago, IL               December 2005
                    Willis, TX                July 2006
</Table>


ITEM 3. LEGAL PROCEEDINGS

         From time to time, the Company is involved in various legal proceedings
arising in the ordinary course of business. On November 13, 1998, the FCC's
Compliance and Information Bureau for the Chicago, Illinois region, issued a
Notice of Violation ("Notice") to the Company, alleging that the Company
operated the single-channel shared community repeater station WIM351 in
violation of the FCC's rules. On November 25, 1998, the Company defended the
allegations, and asserted that it operates in full compliance with the FCC's
rules and policies. The Company has substantial defenses to the Notice based
upon informal letters and other documents published by the FCC that appear to
permit the practice at issue. The Company at this time is unable to predict the
outcome and the FCC has not notified the Company of any pursuit of this matter.
Although the proceeding involves a single community repeater station, an adverse
decision in this proceeding could impact the Company's decentralized trunking
operation nationwide.


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

         Not Applicable.



                                       14
<PAGE>


                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company's Common Stock is currently traded on the Canadian Venture
Exchange and the U.S. OTC Bulletin Board. During the years ended December 31,
2000, and December 31, 2001, the high and low bid prices were as follows:

<Table>
<Caption>
                        U. S. OTC Bulletin Board     Canadian Dealing Network     Canadian Venture Exchange
                       (All amounts are in U.S. $)  (All amounts are in CDN $)   (All amounts are in CDN $)
                       --------------------------   --------------------------   --------------------------
          Date            High             Low         High             Low         High             Low
          ----         ----------      ----------   ----------      ----------   ----------      ----------
<S>                    <C>             <C>          <C>             <C>          <C>             <C>

March 31, 2000         $    1.000      $    0.500   $    1.250      $    0.550          N/A             N/A

June 30, 2000          $    0.938      $    0.531   $    1.000      $    0.750          N/A             N/A

September 30, 2000     $    0.875      $    0.625          N/A             N/A          N/A             N/A

December 31, 2000      $    1.000      $    0.625          N/A             N/A   $    0.800      $    0.800



March 31, 2001         $    0.840      $    0.840          N/A             N/A   $    0.800      $    0.800

June 30, 2001          $    0.550      $    0.530          N/A             N/A   $    0.800      $    0.800

September 30, 2001     $    0.550      $    0.520          N/A             N/A   $    1.100      $    1.050

December 31, 2001      $    0.640      $    0.550          N/A             N/A   $    0.710      $    0.410
</Table>

         The quotations reflect inter-dealer prices, without retail and mark-up,
markdown or commission and may not represent actual transactions.

         As of March 9, 2002, the Company's Common Stock was held by 115
stockholders of record.

         On February 6, 2002, the Board of Directors authorized the Company to
purchase up to 300,000 shares of its own common stock representing
approximately 5% of the issued and outstanding shares, plus additional shares
in privately negotiated transactions with shareholders in the United States.

         On March 27, 2002, the Board of Directors approved by Unanimous Written
Consent the redemption 1,859,200 shares owned by David A. Terman, a major
stockholder and former director and officer of the Company, and Highland
Wireless Services, L.L.C., which is an entity controlled by David A. Terman.
This transaction was completed on March 28, 2002.

         The Company has not declared or paid any dividends. The payment of
dividends in the future will depend on the Company's earnings, capital
requirements, operating and financial position and general business conditions.
The Company anticipates that earnings will be retained to finance future growth
and operations, including research and product development. As such, management
anticipates that no dividends will be paid on the Common Stock in the
foreseeable future.

         For information concerning recent sales of unregistered securities, see
Item 10, "Executive Compensation -- Outstanding Options." These transactions
were exempt from registration under the Securities Act pursuant to Section 4(2),
as not involving any public offering. At an appropriate time, the Company
expects to file a registration statement on Form S-8 to register the
transactions relating to the


                                       15
<PAGE>


grant and exercise of these options. The following options were granted as
additional compensation for employee and non-employee director services:

<Table>
<Caption>
                               No. of Options      Exercise
        Date of Grant              Granted           Price
        -------------          --------------      --------
<S>                            <C>                 <C>

        January 3, 2001             4,000           $0.5625

        December 31, 2001          55,000           $0.6400
</Table>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

         The following discussion should be read in conjunction with the
consolidated financial statements of the Company and the notes thereto included
elsewhere in this Report on Form 10-KSB. The discussion in this section of this
Report on Form 10-KSB contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in this section, those
discussed in "Risk Factors" and those discussed elsewhere in this Report on Form
10-KSB.


RESULTS OF OPERATIONS

         Total revenues for 2001 were $10,674,000, an increase of $3,403,000, or
47%, from 2000. Revenues increased significantly as a result of the successful
closing of several contracted license and communication equipment sales.
Dispatch revenues decreased 3% from $4,742,000 in 2000 to $4,587,000 in 2001.
This decrease reflects the reduction of revenues due to sales and removal of
non-strategic sites. Equipment and related sales decreased 30% from $1,079,000
in 2000 to $752,000 in 2001. This decrease is a result of the Company
redirecting its sales focus from the sale of all types of communications
equipment to equipment sales deployed only on the Company's infrastructure.
Radio rental revenues were down 35% from $280,000 for 2000 to $181,000 for 2001,
due to competition from other dealers. Spectrum sales and related revenues
increased from $1,170,000 in 2000 to $5,154,000 in 2001. This increase relates
to the FCC granting consent on system sales for various contracts during 2001.

         Costs of sales increased to $4,372,000 in 2001 from $3,215,000 in 2000.
Dispatch costs and expenses were $2,188,000 for 2000 as compared with $2,073,000
for 2001, a decrease of 5% or $115,000. The decrease in dispatch costs is due to
reduced tower rent and maintenance as a result of the sale and removal of
non-strategic community repeaters. The costs of equipment sales and service
decreased to $687,000 in 2001 from $772,000 in 2000 for a decrease of 11% due to
the decrease in related sales. The decrease in costs of equipment sales and
service corresponds to decreased gross sales, offset by inventory adjustments.
Rental expenses increased $9,000 from 2000 to 2001 due to freight and parts
expenses. Spectrum expenses were $1,600,000 in 2001 compared to $253,000 in 2000
corresponding to the increased sales.

         Depreciation and amortization increased to $1,057,000 in 2001 from
$928,000 in 2000. The increase of $129,000, or 14% from 2000 is attributed as
follows: amortization increased $36,000 to fully amortize customer lists as the
Company has ceased repair and maintenance service in Northern California;
expense increased $130,000 to accelerate amortization of offset channel license
fees which the Company believes unlikely to have future benefit; and
depreciation expense increased $43,000 to approximate depreciable life to actual
life. These adjustments were offset by a decrease in depreciation due to the



                                       16
<PAGE>


disposition of rural community repeaters as part of the continued migration to
the targeted metropolitan areas.

         General and administrative expenses decreased $187,000 to $3,594,000
for 2001 from $3,781,000 for 2000. The Company had significant savings in
personnel costs that were offset by legal expenses related to the exploration of
international business.

         The Company recognized a net gain on the sale of communication
equipment assets in 2001 of $2,580,000 as compared with a net gain of $521,000
in 2000. The increase in 2001 is attributed to closing substantially all of an
asset purchase agreement for the sale of selected communication assets. In
addition, the Company disposed of non-productive assets outside the targeted
metropolitan areas to implement its continuing overall business plan to migrate
from the rural community repeater areas to the metropolitan trunked repeaters.

         Interest income for 2001 was $71,000 as compared with $76,000 for 2000.
Interest expense for the year ended December 31, 2001 was $44,000, a decrease of
$32,000 from interest expense of $76,000 for 2000. This decrease in interest
expense is primarily due to reductions on the Company's line of credit and
equipment notes.

         The Company reported net income for 2001 of $3,011,000 as compared to a
net loss of $371,000 for 2000, and a basic and diluted net income per common
share for 2001 of $0.49 compared with basic and diluted net loss per common
share of $0.06 for 2000. Net income in 2001 is primarily due to closing
substantially all of an asset purchase agreement for the sale of selected
communication assets.

         The Company has entered into contracts for the sale of spectrum with
projected gross margins before income taxes to be in excess of $400,000, which,
assuming FCC approval, will be reflected in future quarters. These transactions
are pending the required FCC consents and subsequent issuance of the licenses in
the transferee's name. However, there can be no assurance that the FCC will
consent to the consummation of these similar transactions or that license
assignments will continue, and factors which could reduce the Company's ability
to generate revenue through such transactions include the Company's inability to
acquire licensed operations on favorable terms, demand for spectrum, regulatory
restraints, competition, and the Company's inability to negotiate sales on
favorable terms.


LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 2001, the Company had cash and cash equivalents of
approximately $4,584,000 as compared to $1,054,000 at December 31, 2000.

         The working capital of the Company was $4,097,000 at December 31, 2001
as compared with a negative $504,000 at December 31, 2000. The Company's
reduction of negative working capital in 2001 reflects the successful closing,
with FCC consent, of several contracted license and communication equipment
sales.

         Net cash provided by operating activities was $795,000 for 2001 as
compared with $580,000 for 2000. This increase was the result of margins earned
on license sales.

         Net cash provided by investing activities was $3,071,000 for 2001 as
compared with $561,000 for 2000 reflecting the sale of selected communication
assets resulting in a gain for the Company.

         Net cash used in financing activities was $337,000 in 2001 compared to
$464,000 in 2000. Less cash was used in financing activities in 2001 as the
Company has continued to reduce its outstanding debt. The Company will utilize
additional cash in 2002 in connection with the repurchase of 1,859,200 shares
owned by David A. Terman, a major stockholder and former director and officer,
and Highland


                                       17
<PAGE>


Wireless Services, L.L.C., an entity controlled by David A. Terman. The
repurchase of the shares held by Mr. Terman and Highland Wireless Services,
L.L.C. was approved by the Unanimous Written Consent of the Board of Directors
on March 27, 2002.  This transaction was completed on March 28, 2002.

         The Company closed on several sales of licensed systems in the 800 MHz
band during 2001 and 2000. The Company plans to continue to obtain licensed
systems for resale; however, there can be no assurance that these sales will
continue in this manner. Failure to do so could have a material adverse effect
on the Company's cash flows and available working capital.

         As of December 31, 2001, the Company's current liabilities included
$145,000 owed to three commercial lenders with varying repayment terms.


NEW ACCOUNTING PRONOUNCEMENTS

         In June 2001, the Financial Accounting Standards Board finalized FASB
Statement No. 141 "Business Combinations" (SFAS 141), and No. 142, "Goodwill and
Other Intangible Assets" (SFAS 142). SFAS 141 requires the use of the purchase
method of accounting and prohibits the use of the pooling-of-interests method of
accounting for business combinations initiated after June 30, 2001. SFAS 141
also requires that the Company recognize acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. SFAS 141
applies to all business combinations initiated after June 30, 2001 and for
purchase business combinations completed on or after July 1, 2001. It also
requires, upon adoption of SFAS 142, that the Company reclassify the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.

         SFAS 142 requires, among other things, that companies no longer
amortize goodwill, but instead test goodwill for impairment at least annually.
In addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142, which is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption, and to reassess
the useful lives of other intangible assets within the first interim quarter
after adoption of SFAS 142. Currently, the Company does not expect the adoption
of SFAS 141 and SFAS 142 to have a material impact on its financial position and
results of operations.

         In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143, which amends SFAS No. 19, "Financial
Accounting and Reporting by Oil and Gas Producing Companies," is applicable to
all companies. SFAS No. 143, which is effective for fiscal years beginning after
June 15, 2002, addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. It applies to legal obligations associated with the
retirement of long-lived assets that result from the acquisition, construction,
development and/or the normal operation of a long-lived asset, except for
certain obligations of lessees. As used in SFAS No. 143, a legal obligation is
an obligation that a party is required to settle as a result of an existing or
enacted law, statute, ordinance, or written or oral contract or by legal
construction of a contract under the doctrine of promissory estoppel. While the
Company is not yet required to adopt SFAS No. 143, it does not believe the
adoption will have a material effect on the financial condition or results of
operations of the Company.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-lived Assets." SFAS No. 144, which supersedes
SFAS No. 121, "Accounting for the


                                       18
<PAGE>


Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of,"
and amends ARB No. 51, "Consolidated Financial Statements," addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
SFAS No. 144 is effective for fiscal years beginning after December 15, 2001,
and interim financials within those fiscal years, with early adoption
encouraged. The provisions of SFAS No. 144 are generally to be applied
prospectively. As of the date of this filing, the Company is still assessing the
requirements of SFAS No. 144 and has not determined the impact the adoption will
have on the Company's financial condition or results of operations.


EFFECTS OF INFLATION

         The Company believes that the relatively moderate rate of inflation
over the past few years has not had a significant impact on the Company's
results of operations.


ITEM 7. FINANCIAL STATEMENTS

         (See Item 13).


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

         NONE






                                       19
<PAGE>


                                    PART III


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

         Information concerning Directors and Executive Officers of the Company
is incorporated in reference from the Company's definitive Proxy Statement and
related materials in connection with the annual meeting of stockholders to be
held on July 8, 2002. The incorporated portions consist of all of the
disclosures that appear in that Proxy Statement under the headings "Nominees for
Election as Directors" and "Executive Officers."


ITEM 10. EXECUTIVE COMPENSATION

         Information concerning Executive Compensation is incorporated by
reference from the Company's definitive Proxy Statement and related materials in
connection with the annual meeting of stockholders to be held on July 8, 2002.
The incorporated portions consist of all of the disclosures that appear in that
Proxy Statement under the heading "Executive Compensation."


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information concerning the Security Ownership of Certain Beneficial
Owners and Management is incorporated by reference from the Company's definitive
Proxy Statement and related materials in connection with the annual meeting of
stockholders to be held on July 8, 2002. The incorporated portions consist of
all of the disclosures that appear in that Proxy Statement under the heading
"Security Ownership of Certain Beneficial Owners and Management."


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information concerning Certain Relationships and Related Transactions
is incorporated by reference from the Company's definitive Proxy Statement and
related materials in connection with the annual meeting of stockholders to be
held on July 8, 2002. The incorporated portions consist of all of the
disclosures that appear in that Proxy Statement under the heading "Certain
Relationships and Related Transactions."







                                       20
<PAGE>


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Documents filed as part of this report.

<Table>
<Caption>
                                                                                        Page
<S>      <C>                                                                           <C>

1.       Consolidated Financial Statements:


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


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


              Consolidated Statements of Operations, Years Ended
                      December 31, 2001 and 2000 ....................................... F-4


              Consolidated Statements of Changes in Stockholders' Equity, Years Ended
                      December 31, 2001 and 2000........................................ F-5


              Consolidated Statements of Cash Flows, Years Ended
                      December 31, 2001 and 2000........................................ F-6


              Notes to Consolidated Financial Statements................................ F-7
</Table>





                                       21
<PAGE>


2.       Exhibits:

<Table>
<Caption>
                                                                       INCORPORATED BY
NUMBER                     DESCRIPTION                                   REFERENCE TO
------                     -----------                                 ---------------
<S>       <C>                                           <C>

3.1       Certificate of Incorporation filed            Exhibit 3.1 to the Registration Statement on
          September 29, 1994.                           Form 10-SB effective February 13, 1997
                                                        (File No. 0-29032)

3.2       Certificate of Amendment to Certificate of    Exhibit 3.2 to the Registration Statement on
          Incorporation filed January 26, 1996.         Form 10-SB effective February 13, 1997
                                                        (File No. 0-29032)

3.3       Certificate of Amendment to Certificate of    Exhibit 3.3 to the Registration Statement on
          Incorporation filed April 23, 1996.           Form 10-SB effective February 13, 1997
                                                        (File No. 0-29032)

3.4       By-laws dated September 29, 1994.             Exhibit 3.4 to the Registration Statement on
                                                        Form 10-SB effective February 13, 1997
                                                        (File No. 0-29032)

3.5       Amended and Restated By-laws, as adopted      Exhibit 99.2 of the Company's Current Report
          January 23, 2002.                             on Form 8-K filed February 6, 2002
                                                        (File No. 000-29032)

4.1       Specimen Common Stock share certificate.      Exhibit 4.1 to the Registration Statement on
                                                        Form 10-SB effective February 13, 1997
                                                        (File No. 0-29032)

4.2       Pages from Certificate of Incorporation and   Exhibit 4.2 to the Registration Statement on
          By-laws defining rights of stockholders -     Form 10-SB effective February 13, 1997
          included in Exhibits 3.1, 3.2, 3.3 and 3.4.   (File No. 0-29032)

10.1      [omitted]                                     [omitted]

10.2      [omitted]                                     [omitted]

10.3      [omitted]                                     [omitted]

10.4      [omitted]                                     [omitted]

10.5      [omitted]                                     [omitted]

10.6      [omitted]                                     [omitted]

10.7      [omitted]                                     [omitted]

10.8      [omitted]                                     [omitted]

10.9      [omitted]                                     [omitted]

10.10     [omitted]                                     [omitted]

10.11     [omitted]                                     [omitted]

10.12     [omitted]                                     [omitted]
</Table>



                                       22
<PAGE>


<Table>
<Caption>
                                                                       INCORPORATED BY
NUMBER                     DESCRIPTION                                   REFERENCE TO
------                     -----------                                 ---------------
<S>       <C>                                           <C>
10.13     Radius Communication Products Reseller        Exhibit 10.13 to the Registration Statement on
          Agreement dated September 22, 1994, between   Form 10-SB effective February 13, 1997
          Motorola, Inc. and the Company; Amendment     (File No. 0-29032)
          to Reseller Agreement dated September 22,
          1994; and Master Amendment No. 1 dated
          September 30, 1996.

10.14     Motorola Authorized Two-Way Radio Dealer      Exhibit 10.14 to the Registration Statement on
          Agreement dated September 22, 1994, between   Form 10-SB effective February 13, 1997
          Motorola, Inc. and the Company; Paging        (File No. 0-29032)
          Product Sales to the United States
          Government Amendment dated on or about
          January 10, 1996; Amendment dated on or
          about February 13, 1996; and Per Unit
          Administrative Processing Charge Amendment
          dated September 30, 1996.

10.15     Motorola Master Radio Service Software        Exhibit 10.15 to the Registration Statement on
          License Agreement dated November 8, 1994,     Form 10-SB effective February 13, 1997
          between Motorola, Inc. and the Company.       (File No. 0-29032)

10.16     Master Dealer Agreement Land Mobile Radio     Exhibit 10.16 to the Registration Statement on
          Products, undated, between Kenwood            Form 10-SB effective February 13, 1997
          Communications Corporation and the Company;   (File No. 0-29032)
          Product Addendum dated February 5, 1996;
          and Product Addendum, undated.

10.17     [omitted]                                     [omitted]

10.18     [omitted]                                     [omitted]

10.19     [omitted]                                     [omitted]

10.20     [omitted]                                     [omitted]

10.21     Antenna Site License commencing November 1,   Exhibit 10.21 to the Registration Statement on
          1995, for a term of 36 months, between        Form 10-SB effective February 13, 1997
          Motorola, Inc. and the Company.                (File No. 0-29032)
          (CONFIDENTIAL)

10.22     Antenna Site License commencing November 1,   Exhibit 10.22 to the Registration Statement on
          1995, for a term of 36 months, between        Form 10-SB effective February 13, 1997
          Motorola, Inc. and the Company.                (File No. 0-29032)
          (CONFIDENTIAL)

10.23     [omitted]                                     [omitted]
</Table>


                                       23
<PAGE>



<Table>
<Caption>
                                                                       INCORPORATED BY
NUMBER                     DESCRIPTION                                   REFERENCE TO
------                     -----------                                 ---------------
<S>       <C>                                           <C>
10.24     [omitted]                                     [omitted]

10.25     [omitted]                                     [omitted]

10.26     [omitted]                                     [omitted]

10.27     Form of Indemnification Agreement between     Exhibit 10.27 to the Registration Statement on
          officers and director of the Company and      Form 10-SB effective February 13, 1997
          the Company.                                   (File No. 0-29032)

10.28     Escrow Agreement dated July 29, 1996          Exhibit 10.28 to the Registration Statement on
          between Albert F. Richmond, David A.          Form 10-SB effective February 13, 1997
          Terman, Equity Transfer Services, Inc. and    (File No. 0-29032)
          the Company.

10.29     [omitted]                                     [omitted]

10.30     Lease Agreement dated January 1, 2000,        Exhibit 10.30 to the 10-KSB filed March 30,
          between Woodlands office Equities 95          2000 (File No. 001-12565)
          Limited and the Company.

24.1      Power of Attorney (included on signature
          page)
</Table>



(b)       Reports on Form 8-K.

           None filed during the last quarter of the period.



                                       24
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d), the Securities and
Exchange Act of 1934, the Registrant has duly caused this Form 10-KSB, Annual
Report, for the year ending December 31, 2001, to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of The Woodlands, and State
of Texas, on the 29th day of March, 2002.

CHAMPION COMMUNICATION SERVICES, INC.


By: /s/ Albert F. Richmond
    ------------------------------------------------------------
    Albert F. Richmond,
    Chairman of the Board, Chief Executive Officer and President


POWER OF ATTORNEY TO SIGN AMENDMENTS

         KNOW ALL BY THESE PRESENTS, that each person whose signature appears
below does hereby constitute and appoint Albert F. Richmond his true and lawful
attorney-in-fact and agent for him and in his name, place and stead, in any and
all capacities, to sign any or all amendments to the Champion Communication
Services, Inc. Form 10-KSB, Annual Report, for year ending December 31, 2001,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agents full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully, to all intents and purposes,
as they or he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, or any of them, may lawfully do or cause
to be done by virtue hereof. This Power of Attorney has been signed below by the
following persons in the capacities and on the dates indicated.

         Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant in the capacities and on the dates indicated.


<Table>
<Caption>
         Signature                                Title                             Date
         ---------                                -----                             ----
<S>                                 <C>                                       <C>

/s/ Albert F. Richmond              Chairman of the Board,                     March 29, 2002
----------------------------        Chief Executive Officer and President
Albert F. Richmond

/s/ Pamela R. Cooper                Chief Financial Officer, Treasurer,        March 29, 2002
----------------------------        and Controller
Pamela R. Cooper

/s/ Peter F. Dicks                  Director                                   March 29, 2002
----------------------------
Peter F. Dicks

/s/ Randel R. Young                 Director                                   March 29, 2002
----------------------------
Randel R. Young
</Table>





                                       25
<PAGE>



<Table>
<Caption>
                                                                                   Page
<S>                                                                               <C>
Consolidated Financial Statements:

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

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

  Consolidated Statements of Operations, Years Ended December 31, 2001 and 2000 ....F-4

  Consolidated Statements of Changes in Stockholders' Equity, Years Ended
           December 31, 2001 and 2000...............................................F-5

  Consolidated Statements of Cash Flows, Years Ended December 31, 2001 and 2000.....F-6

  Notes to Consolidated Financial Statements........................................F-7
</Table>




                                       F-1
<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



The Board of Directors
Champion Communication Services, Inc.

We have audited the accompanying consolidated balance sheets of Champion
Communication Services, Inc. and Subsidiaries (the "Company") as of December 31,
2001 and 2000, and the related consolidated statements of operations,
stockholders' equity and cash flows for the years then ended. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Champion
Communication Services, Inc. and Subsidiaries at December 31, 2001 and 2000, and
the results of their operations and their cash flows for the years then ended,
in conformity with accounting principles generally accepted in the United States
of America.

/s/ BDO SEIDMAN, LLP
Houston, Texas
March 8, 2002, except with
respect to Note (11) which
date is March 28, 2002





                                       F-2
<PAGE>


             CHAMPION COMMUNICATION SERVICES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2001 and 2000

<Table>
<Caption>
ASSETS                                                                    2001            2000
                                                                      ------------    ------------
<S>                                                                   <C>             <C>

Current Assets
      Cash and cash equivalents                                       $  4,583,549    $  1,053,651
      Accounts receivable, net of allowance for doubtful
          accounts of $87,189 and $27,424, respectively                    277,444         445,510
      Notes receivable                                                          --          29,208
      Inventories                                                          140,677         538,965
      Prepaid expenses and other                                           273,258         172,085
                                                                      ------------    ------------

         Total Current Assets                                            5,274,928       2,239,419
                                                                      ------------    ------------

Communications equipment and related assets, net                         1,396,190       2,267,043
Notes receivable, long-term, net                                                --         191,181
Deferred taxes                                                              86,000         215,000
Other assets, net of amortization of $981,707 and
   $766,734, respectively                                                  861,128       1,394,687
                                                                      ------------    ------------
                                                                      $  7,618,246    $  6,307,330
                                                                      ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
      Note payable to bank                                            $    100,000    $    278,000
      Accounts payable                                                     236,000         395,328
      Accrued expenses                                                     629,450         611,318
      License sales deposits                                                50,000       1,044,250
      Deferred revenue                                                       4,812         228,263
      Current maturities of notes payable                                  157,991         185,466
                                                                      ------------    ------------

         Total Current Liabilities                                       1,178,253       2,742,625
                                                                      ------------    ------------

Long-Term Liabilities
        Notes payable                                                       27,113         144,251
        Customer deposits                                                    8,936          13,991
                                                                      ------------    ------------

         Total Long-Term Liabilities                                        36,049         158,242
                                                                      ------------    ------------

Stockholders' Equity
        Common stock, $0.01 par value, 20,000,000 shares
          authorized, 6,201,690 shares issued and 6,170,225
          outstanding at December 31, 2001 and 6,201,690 shares
          issued and 6,195,418 outstanding at December 31, 2000             62,017          62,017
       Additional paid-in capital                                        5,226,234       5,226,234
       Treasury stock, 31,465 shares at December 31, 2001 and
          6,272 shares at December 31, 2000, at cost                       (18,611)         (4,704)
       Retained earnings (deficit)                                       1,134,304      (1,877,084)
                                                                      ------------    ------------

Total Stockholders' Equity                                               6,403,944       3,406,463
                                                                      ------------    ------------

                                                                      $  7,618,246    $  6,307,330
                                                                      ============    ============
</Table>



See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>


             CHAMPION COMMUNICATION SERVICES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     Years Ended December 31, 2001 and 2000

<Table>
<Caption>
                                                         2001            2000
                                                     ------------    ------------
<S>                                                  <C>             <C>

Revenues
    Dispatch communications                          $  4,587,163    $  4,742,343
    Equipment sales and service                           751,935       1,078,750
    Rental                                                181,472         279,923
    Spectrum sales and fees                             5,153,905       1,170,341
                                                     ------------    ------------

        Total Revenues                                 10,674,475       7,271,357
                                                     ------------    ------------

Operating expenses:
    Cost of sales:
      Dispatch communications                           2,072,801       2,188,486
      Equipment sales and service                         687,498         772,292
      Rental                                               11,301           1,736
      Spectrum sales and fees                           1,600,167         252,643
                                                     ------------    ------------

        Total Cost of Sales                             4,371,767       3,215,157

    Provision for doubtful accounts                       102,000         243,000

    Depreciation and amortization                       1,057,396         927,760

    General and administrative expenses                 3,594,231       3,781,026
                                                     ------------    ------------

      Total Operating Expenses                          9,125,394       8,166,943
                                                     ------------    ------------

      Operating Income (Loss)                           1,549,081        (895,586)
                                                     ------------    ------------

Other income (expenses):

    Net gain  on disposal/sale of fixed assets          2,580,155         521,090
    Interest income                                        70,637          76,081
    Interest expense                                      (44,485)        (75,780)
                                                     ------------    ------------

Income (loss) before income taxes                       4,155,388        (374,195)

Income tax expense (benefit)                            1,144,000          (3,067)
                                                     ------------    ------------

Net income (loss)                                    $  3,011,388    $   (371,128)
                                                     ============    ============

Weighted average common shares and common stock
    equivalents outstanding                             6,180,852       6,188,678
                                                     ============    ============

Basic net income (loss) per common share             $       0.49    $      (0.06)
                                                     ============    ============

Diluted net income (loss) per common share           $       0.49    $      (0.06)
                                                     ============    ============
</Table>


See accompanying notes to consolidated financial statements.



                                      F-4
<PAGE>
             CHAMPION COMMUNICATION SERVICES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     Years Ended December 31, 2001 and 2000


<Table>
<Caption>
                                         Common                      Additional      Retained                          Total
                                         stock          Common         paid-in       earnings        Treasury      stockholders'
                                         shares         stock          capital      (deficit)         stock           equity
                                      ------------   ------------   ------------   ------------    ------------    -------------
<S>                                      <C>         <C>            <C>            <C>             <C>             <C>

Balance at December 31, 1999             6,150,622   $     61,506   $  5,201,211   $ (1,505,956)   $         --    $  3,756,761

Contribution of common stock to
  Company 401(k) Plan                       51,068            511         25,023             --              --          25,534

Purchase of treasury stock                      --             --             --             --          (4,704)         (4,704)

Net loss for 2000                               --             --             --       (371,128)             --        (371,128)
                                      ------------   ------------   ------------   ------------    ------------    ------------

Balance at December 31, 2000             6,201,690         62,017      5,226,234     (1,877,084)         (4,704)      3,406,463

Purchase of treasury stock                      --             --             --             --         (13,907)        (13,907)

Net income for 2001                             --             --             --      3,011,388              --       3,011,388
                                      ------------   ------------   ------------   ------------    ------------    ------------

Balance at December 31, 2001             6,201,690   $     62,017   $  5,226,234   $  1,134,304    $    (18,611)   $  6,403,944
                                      ============   ============   ============   ============    ============    ============
</Table>

See accompanying notes to consolidated financial statements.



                                      F-5
<PAGE>
             CHAMPION COMMUNICATION SERVICES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Years Ended December 31, 2001 and 2000

<Table>
<Caption>
                                                                                           2001            2000
                                                                                       ------------    ------------
<S>                                                                                    <C>             <C>

Cash flows from operating activities:
    Net income (loss)                                                                  $  3,011,388    $   (371,128)
    Adjustments to reconcile net income (loss) to
      net cash provided by (used in) operating activities:
      Depreciation and amortization                                                       1,057,396         927,760
      Bad debt expense                                                                      102,000         243,000
      Common stock issued for services - 401(k) plan                                             --          25,534
      Gain on disposal/sale of fixed assets                                              (2,580,155)       (521,090)
      Change in assets and liabilities:
        Accounts receivable                                                                 137,169         283,622
        Inventory                                                                           403,617         (28,071)
        Prepaid expenses                                                                   (101,173)        (15,293)
        Deferred taxes                                                                      129,000         (19,000)
        Accounts payable                                                                   (159,328)       (145,206)
        Accrued expenses                                                                     18,132             523
        License sales and customer deposits                                                (999,305)        395,502
        Deferred revenue                                                                   (223,451)       (196,082)
                                                                                       ------------    ------------
          Net cash provided by (used in) operating activities                               795,290         580,071
                                                                                       ------------    ------------

Cash flows from investing activities:
    Issuance of notes receivable                                                                 --         (25,650)
    Collections of notes receivable                                                          22,325          77,906
    Additions to property and equipment, net                                                (85,071)       (129,270)
    Proceeds from sale of fixed assets                                                    3,304,054         884,546
    Additions to other assets, net                                                         (170,180)       (246,148)
                                                                                       ------------    ------------
          Net cash provided by investing activities                                       3,071,128         561,384
                                                                                       ------------    ------------

Cash flows from financing activities:
    Proceeds from issuance of notes payable                                                  62,970          53,841
    Repayment of notes payable                                                             (385,583)       (513,309)
    Purchase of treasury stock                                                              (13,907)         (4,704)
                                                                                       ------------    ------------
          Net cash used in financing activities                                            (336,520)       (464,172)
                                                                                       ------------    ------------

Net increase in cash and cash equivalents                                                 3,529,898         677,283

Cash and cash equivalents at beginning of period                                          1,053,651         376,368
                                                                                       ------------    ------------

Cash and cash equivalents at end of period                                             $  4,583,549    $  1,053,651
                                                                                       ============    ============

Supplemental disclosure of cash flow information:
    Cash paid during the period for:
    Taxes                                                                              $  1,009,073    $     25,000
                                                                                       ============    ============
    Interest                                                                           $     42,487    $     75,781
                                                                                       ============    ============

    Non-cash transactions:
    Transfer of property and equipment and intangible assets to/(from) inventory       $     (5,329)   $    130,388
                                                                                       ============    ============
    Equipment acquired from note receivable settlement                                 $    111,508    $         --
                                                                                       ============    ============
    Equipment sold in exchange for other assets                                        $     71,103    $         --
                                                                                       ============    ============
</Table>


See accompanying notes to consolidated financial statements.



                                      F-6
<PAGE>


             CHAMPION COMMUNICATION SERVICES, INC. and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2001 and 2000

(1)  Summary of Significant Accounting Policies

     (a)  Description of Business

               Champion Communication Services, Inc. (the Company) is a provider
          of high powered community repeater dispatch services operating within
          the 450 - 512 MHz and 800 MHz frequency band in the United States. The
          Company's customers consist primarily of business and government
          agencies located in both metropolitan and rural geographic regions.
          The Company provides customers with equipment sales and service, and
          radio rentals.

               To pursue international business opportunities, the Company
          formed Champion Wireless International B.V. and Champion Vietnam
          Wireless B.V., both Netherland companies, and Champion Wireless
          Systems International N.V., a Netherland Antilles company, as wholly
          owned subsidiaries. Authority for resident offices was obtained in
          Vietnam during 2001 and Champion Vietnam Wireless B.V. has established
          offices in both Hanoi and Ho Chi Minh City.

     (b)  Organization and Basis of Presentation

               The Company has raised equity capital through the issuance of
          common stock and warrants, which expired during 1998, to the public
          sector in the United States and Canada. Accordingly, its securities
          are registered with the Securities and Exchange Commission in the U.S.
          and listed on the Canadian Venture Exchange.

               The consolidated financial statements include the accounts of
          Champion Communication Services, Inc. and its wholly-owned
          subsidiaries, Champion Wireless International B.V., Champion Vietnam
          Wireless B.V. and Champion Wireless Systems International N.V. All
          significant intercompany transactions and balances have been
          eliminated in consolidation.

               The accompanying financial statements have been prepared in
          accordance with accounting principles generally accepted in the U.S.
          The differences between accounting principles generally accepted in
          the U.S. and Canada would not have a material impact on the
          accompanying financial statements.

     (c)  Cash and Cash Equivalents

               For purposes of the statements of cash flows, the Company
          considers all highly liquid financial instruments purchased with an
          original maturity of three months or less to be cash equivalents.

               The Company has $100,000 restricted as collateral for its direct
          deposit payroll. These funds are invested in a money market account.

     (d)  Inventory

               The Company's inventory consists primarily of two-way radios,
          parts and accessories. The Company uses the average cost method of
          accounting for inventory and is recorded at the lower of cost or
          market.

               An allowance for obsolete inventory has been established for
          inventory items identified as slow-moving. It is anticipated that
          these items will be sold during the first quarter 2002.

     (e)  Communications Equipment and Related Assets

               Communications equipment and related assets are recorded at cost.
          Depreciation is computed on a straight-line basis over the estimated
          useful lives of the assets ranging from two to five years for other
          fixed assets and five to ten years for base station and related
          equipment.



                                      F-7
<PAGE>


             CHAMPION COMMUNICATION SERVICES, INC. and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Summary of Significant Accounting Policies, (continued)


     (f)  Other Assets

               Fees associated with obtaining Federal Communication Commission
          licenses for 450-470 MHz, 470-512 MHz and 800 MHz are capitalized as
          part of the cost of the licenses. Upon disposition of the licenses,
          such costs are relieved based upon an average cost basis. Licenses
          that are used by the Company are capitalized and amortized under the
          straight-line method for five years. Amortization of fees paid for
          refarming and offset filings have been accelerated to be fully
          amortized by December 31, 2002.


     (g)  Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed
          Of

               Management reviews long-lived assets and intangible assets for
          impairment whenever events or changes in circumstances indicate that
          the carrying amount of an asset may not be recoverable. Recoverability
          of assets to be held and used is measured by a comparison of the
          carrying amount of an asset to future net cash flows expected to be
          generated by the asset. If such assets are considered to be impaired,
          the impairment to be recognized is measured by the amount by which the
          carrying amount of the assets exceeds the fair value of the assets
          which considers the discounted future net cash flows. Assets to be
          disposed of are reported at the lower of the carrying amount or the
          fair value less costs of disposal. This analysis of the long-lived
          assets as of December 31, 2001 and 2000 indicated there was no
          impairment to these assets' carrying values.

     (h)  Accrued Expenses

               Accrued expenses consist primarily of accrued tower rents
          totaling $235,000 and $325,000 at December 31, 2001 and 2000,
          respectively.

     (i)  Income Taxes

               In accordance with the liability method under accounting
          principles generally accepted in the United States of America,
          deferred tax assets and liabilities are recognized for the future tax
          consequences attributable to differences between the financial
          statement carrying amounts of existing assets and liabilities and
          their respective tax basis. Deferred tax assets and liabilities are
          measured using enacted tax rates expected to apply to taxable income
          in the years which those temporary differences are expected to be
          recovered or settled. The effect on deferred tax assets and
          liabilities of a change in tax rates is recognized in income in the
          period that includes the enactment date.

     (j)  Fair Value of Financial Instruments

               Fair value estimates are made at discrete points in time based on
          relevant market information. These estimates may be subjective in
          nature and involve uncertainties and matters of significant judgment
          and therefore cannot be determined with precision.

               The Company believes that the carrying amounts of its current
          assets and current liabilities approximate the fair value of such
          items due to their short-term nature. The carrying amount of long-term
          debt approximates its fair value because the interest rates
          approximate market and there has been no significant change in the
          credit risk of the Company.

     (k)  Stock Option Plan

               Statement of Financial Accounting Standards (SFAS) No. 123,
          "Accounting for Stock-Based Compensation," permits entities to
          recognize as expense over the vesting period the fair value of all
          stock-based awards on the date of grant. Alternatively, SFAS No. 123
          also allows entities to continue to apply the provisions of Accounting
          Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to
          Employees," and provide pro forma net income and pro forma earnings
          per share disclosures for employee



                                      F-8
<PAGE>


             CHAMPION COMMUNICATION SERVICES, INC. and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Summary of Significant Accounting Policies, (continued)

          stock option grants made in 1995 and future years as if the
          fair-value-based method defined in SFAS No. 123 had been applied. The
          Company has elected to continue to apply the provisions of APB Opinion
          No. 25, in which no compensation expense is recognized for employee
          stock option if there is no intrinsic value at the date of the grant,
          and to provide the pro forma disclosure provisions of SFAS No. 123.

     (l)  Treasury Stock

               The Company utilizes the cost method for accounting for its
          treasury stock acquisitions and dispositions.

     (m)  Revenue Recognition

               The billing cycle for radio dispatch service until the fourth
          quarter 2002 was for three, six and twelve month intervals. The
          Company deferred amounts billed in advance and recognized revenue as
          the related services were provided. In November 2001 the Company began
          billing all customers on a monthly basis and will no longer carry
          significant deferred revenue.

     (n)  Net Income (Loss) Per Common Share

               For the years ended December 31, 2001 and 2000, the weighted
          average number of common shares outstanding was 6,180,852 and
          6,188,678, respectively. In calculating diluted EPS for the year ended
          December 31, 2001, options to purchase 7,000, shares of common stock
          at exercise prices ranging from $0.50 to $0.5625 were included in the
          computation of diluted EPS. Options to purchase 296,000 shares at
          exercise prices ranging from $0.64 to $2.75 were not included in the
          December 31, 2001 calculation of diluted EPS because the Company's
          average stock price during 2001 was $0.62. In calculating EPS for the
          year ended December 31, 2000, options to purchase 277,000 shares of
          common stock at exercise prices ranging from $0.50 to $2.75 were not
          included because the potential shares were considered anti-dilutive
          due to the Company's reported loss.

     (o)  Use of Estimates

               Management of the Company has made a number of estimates and
          assumptions relating to the reporting of assets and liabilities and
          the disclosure of contingent assets and liabilities to prepare these
          financial statements in conformity with generally accepted accounting
          principles. Actual results could differ from those estimates.

     (p)  Differences Between Generally Accepted Accounting Principles in the
          United States and Canada

               The Company prepares its financial statements in accordance with
          generally accepted accounting principles (GAAP) in the United States.
          There are no significant differences between the United States and
          Canadian GAAP effecting the Company's financial statements.

     (q)  New Accounting Pronouncements

               In June 2001, the Financial Accounting Standards Board finalized
          FASB Statement No. 141 "Business Combinations" (SFAS 141), and No.
          142, "Goodwill and Other Intangible Assets" (SFAS 142). SFAS 141
          requires the use of the purchase method of accounting and prohibits
          the use of the pooling-of-interests method of accounting for business
          combinations initiated after June 30, 2001. SFAS 141 also requires
          that the Company recognize acquired intangible assets apart from
          goodwill if the acquired intangible assets meet certain criteria. SFAS
          141 applies to all business combinations initiated after June 30, 2001
          and for purchase business combinations completed on or after July 1,
          2001. It also requires, upon adoption of SFAS 142, that the Company
          reclassify the carrying amounts of intangible assets and goodwill
          based on the criteria in SFAS 141.


                                      F-9
<PAGE>


             CHAMPION COMMUNICATION SERVICES, INC. and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Summary of Significant Accounting Policies, (continued)

               SFAS 142 requires, among other things, that companies no longer
          amortize goodwill, but instead test goodwill for impairment at least
          annually. In addition, SFAS 142 requires that the Company identify
          reporting units for the purposes of assessing potential future
          impairments of goodwill, reassess the useful lives of other existing
          recognized intangible assets and cease amortization of intangible
          assets with an indefinite useful life. An intangible asset with an
          indefinite useful life should be tested for impairment in accordance
          with the guidance in SFAS 142, which is required to be applied in
          fiscal years beginning after December 15, 2001 to all goodwill and
          other intangible assets recognized at that date, regardless of when
          those assets were initially recognized. SFAS 142 requires the Company
          to complete a transitional goodwill impairment test six months from
          the date of adoption, and to reassess the useful lives of other
          intangible assets within the first interim quarter after adoption of
          SFAS 142. Currently, the Company does not expect the adoption of SFAS
          141 and SFAS 142 to have a material impact on its financial position
          and results of operations.

               In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
          Retirement Obligations." SFAS No. 143, which amends SFAS No. 19,
          "Financial Accounting and Reporting by Oil and Gas Producing
          Companies," is applicable to all companies. SFAS No. 143, which is
          effective for fiscal years beginning after June 15, 2002, addresses
          financial accounting and reporting for obligations associated with the
          retirement of tangible long-lived assets and the associated asset
          retirement costs. It applies to legal obligations associated with the
          retirement of long-lived assets that result from the acquisition,
          construction, development and/or the normal operation of a long-lived
          asset, except for certain obligations of lessees. As used in SFAS No.
          143, a legal obligation is an obligation that a party is required to
          settle as a result of an existing or enacted law, statute, ordinance,
          or written or oral contract or by legal construction of a contract
          under the doctrine of promissory estoppel. While the Company is not
          yet required to adopt SFAS No. 143, it does not believe the adoption
          will have a material effect on the financial condition of results of
          operations of the Company.

               In August 2001, the FASB issued SFAS No. 144, "Accounting for the
          Impairment or Disposal of Long-lived Assets." SFAS No. 144, which
          supersedes SFAS No. 121, "Accounting for the Impairment of Long-lived
          Assets and for Long-lived Assets to be Disposed Of," and amends ARB
          No. 51, "Consolidated Financial Statements," addresses financial
          accounting and reporting for the impairment or disposal of long-lived
          assets. SFAS No. 144 is effective for fiscal years beginning after
          December 15, 2001, and interim financials within those fiscal years,
          with early adoption encouraged. The provisions of SFAS No. 144 are
          generally to be applied prospectively. As of the date of this filing,
          the Company is still assessing the requirements of SFAS No. 144 and
          has not determined the impact the adoption will have on the Company's
          financial condition or results of operations.


(2)  Note Receivable

          The Company had a note receivable relating to the March 1999 sale of
     certain equipment totaling $400,000. There was no outstanding balance on
     this note as of December 31, 2001. The outstanding balance of this note as
     of December 31, 2000 was $355,389 and a reserve for bad debts of $135,000
     was recorded at December 31, 2000 after the note holder became delinquent
     on note payments.

          In 2001, the Company negotiated with the purchaser of the equipment to
     settle the related note receivable as a result of the purchaser's default
     on the note payments. The Company obtained a partial cash settlement of
     $22,325 from the purchaser and reclaimed the assets previously sold. The
     Company valued the recovered assets at $111,508 and recorded a loss on such
     previously sold assets of $86,556 for the year ended December 31, 2001.


(3)  Communication Equipment and Related Assets

          Communication equipment and related assets at December 31, 2001 and
     2000 are comprised of the following:



                                      F-10
<PAGE>
             CHAMPION COMMUNICATION SERVICES, INC. and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(3)  Communication Equipment and Related Assets, (continued)

<Table>
<Caption>
                                                                      December 31, 2001
                                                          ------------------------------------------
                                               Asset                     Accumulated         Net
                                               Life           Cost       Depreciation      Balance
                                          -------------   ------------   ------------   ------------
<S>                                       <C>             <C>            <C>            <C>

Base station and related equipment         5 - 10 years   $  2,383,172   $  1,133,815   $  1,249,357
Rental radio equipment                     2 - 5 years         619,269        538,720         80,549
Other furniture, data processing and
communications equipment                   2 - 5 years         694,228        627,944         66,284
                                                          ------------   ------------   ------------

                                                          $  3,696,669   $  2,300,479   $  1,396,190
                                                          ============   ============   ============
</Table>

<Table>
<Caption>
                                                                      December 31, 2000
                                                          ------------------------------------------
                                               Asset                     Accumulated         Net
                                               Life           Cost       Depreciation      Balance
                                          -------------   ------------   ------------   ------------
<S>                                       <C>             <C>            <C>            <C>

Base station and related equipment         5 - 10 years   $  3,154,444   $  1,184,860   $  1,969,584
Rental radio equipment                     2 - 5 years         628,106        488,774        139,332
Other furniture, data processing and
communications equipment                   2 - 5 years         683,921        525,794        158,127
                                                          ------------   ------------   ------------

                                                          $  4,466,471   $  2,199,428   $  2,267,043
                                                          ============   ============   ============
</Table>

          During the year ended December 31, 2001, communication equipment and
     other assets with a net book value of approximately $492,000 were sold
     resulting in a gain of approximately $2,849,000. In addition, the Company
     disposed of communication equipment and other assets with a net book value
     of approximately $269,000, reducing the total net gain to approximately
     $2,580,000 for the year ended December 31, 2001. During the year ended
     December 31, 2000, communication equipment and other assets with a net book
     value of approximately $356,000 were sold resulting in a gain of
     approximately $521,000.

(4)  Notes Payable

          At December 31, 2001 and 2000, notes payable consisted of the
     following:

<Table>
<Caption>
                                                                                  2001            2000
                                                                              ------------    ------------
<S>                                                                           <C>             <C>

Revolving note payable to a bank with a maximum credit line of
$100,000, bearing interest at the prime rate plus three-fourths of one
percent per annum (5.5% at December 31, 2001) and maturing December 31,
2002. The note had a maximum credit line of $500,000 at December 31,
2000. The note is secured by all accounts receivable, inventory and
other property as described in the security agreement. The Company is
required to maintain a tangible net worth and a positive cash flow which
the Company was in compliance at December 31, 2001 and 2000.                  $    100,000    $    278,000
                                                                              ============    ============

Installment notes payable due in monthly payments of $8,535, including
interest at rates ranging from 7.68% to 11.0%. These notes mature in
various years through 2003 and are collateralized
by communication equipment                                                    $     70,017    $    202,560

Note payable due in monthly payments of interest at 6%.  This
note matures May 2002 and is collateralized by office assets and
equipment purchased                                                                 75,000          75,000

Other                                                                               40,087          52,157
                                                                              ------------    ------------
Total notes payable                                                                185,104         329,717
Less current maturities                                                           (157,991)       (185,466)
                                                                              ------------    ------------
                                                                              $     27,113    $    144,251
                                                                              ============    ============
</Table>



                                      F-11
<PAGE>

             CHAMPION COMMUNICATION SERVICES, INC. and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(4)  Notes Payable, (continued)

          The combined aggregate maturities of the notes payable for each of the
     two years to maturity following December 31, 2001 are as follows:

<Table>
<Caption>
                  Years Ended                    Amount
                  -----------                  ---------
<S>                                         <C>
                      2002                     $ 257,991
                      2003                        27,113
                                               ---------
                                               $ 285,104
</Table>

(5)  Income Taxes

          The provision for income taxes (benefit) consisted of the following
     for the years ended December 31, 2001 and 2000:

<Table>
<Caption>
                                                              2001           2000
                                                         ------------   ------------
<S>                                                      <C>            <C>
     Current:
         Federal                                         $    851,000   $     13,433
         State                                                164,000          2,500
       Deferred                                               129,000        (19,000)
                                                         ------------   ------------

       Net Income Tax Expense (Benefit)                  $  1,144,000   $     (3,067)
                                                         ============   ============
</Table>

          For the years ended December 31, 2001 and 2000, the Company's
     effective income tax rate differed from the statutory tax rate as follows:

<Table>
<Caption>
                                                       2001         2000
                                                     --------     --------
<S>                                                  <C>         <C>

Federal statutory tax rate                                 34%         (34)%
State income tax rate                                       4           --
Non-deductible expenses                                     3            3
Change in valuation allowance                               5           30
Utilization of net operating losses and credits           (18)          --
                                                     --------     --------

Effective tax rate                                         28%          (1)%
                                                     ========     ========
</Table>

          As of December 31, 2001 and 2000, deferred tax assets and liabilities
     were as follows:

<Table>
<Caption>
                                              2001           2000
                                         ------------   ------------
<S>                                      <C>            <C>

Allowance for doubtful accounts          $     30,000   $         --
Communications equipment                           --        270,733
                                         ------------   ------------
    Total deferred tax liabilities       $     30,000   $    270,733
                                         ------------   ------------

Minimum tax credit carry forward         $         --   $     70,590
Net operating loss carry forward                   --        605,699
Allowance for doubtful accounts                    --         55,224
Communications equipment                      116,000             --
Inventory reserve                                  --         14,366
                                         ------------   ------------

    Total deferred tax assets            $    116,000   $    745,879
                                         ------------   ------------

Valuation allowance                                --       (260,146)
                                         ------------   ------------

Net deferred tax assets                  $     86,000   $    215,000
                                         ============   ============
</Table>



                                      F-12
<PAGE>

             CHAMPION COMMUNICATION SERVICES, INC. and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(5)  Income Taxes, (continued)

          In assessing the realizability of deferred tax assets, management
     considers whether it is more likely than not that some portion or all of
     the deferred tax assets will not be realized and a valuation allowance is
     recorded. The Company has recorded a valuation allowance as of December 31,
     2001 and 2000 of $0 and $260,146, respectfully.

          The Company had a net operating loss carryforward of approximately
     $1,781,000 as of December 31, 2000, which the Company applied to its
     taxable income for 2001. The Company had $70,590 in alternative minimum tax
     carryforwards as of December 31, 2000, which the Company also applied to
     its taxable income for 2001.


(6)  Stockholders' Equity

          Of the 6,170,225 outstanding shares of common stock at December 31,
     2001, 1,555,200 shares owned by the chief executive officer and president
     of the Company had been placed in escrow, in connection with the Company's
     initial public offering in Canada in 1996. Seventy percent of the
     securities were released from escrow during the period 1997 through 2000,
     and the remaining thirty percent were released on April 29, 2001.

          During the year ended December 31, 2000, the Company issued 51,068
     shares at $0.50 per share in connection with the Company contribution to
     match employee's participation in the Company's 401(K) plan. No shares were
     issued during the year ended December 31, 2001.

          During the year ended December 31, 2001 and 2000, the Company
     acquired, to be held in treasury stock, 25,193 and 6,272 shares of its
     common stock at prices averaging $0.55 per share and $0.72 per share,
     respectively.

(7)  Stock Options

          In 1996, the Company adopted the "1996 Incentive Plan" (the Plan) to
     provide incentive options, non-statutory options, restricted stock awards
     and stock appreciation rights to certain key employees, non-employee
     directors and other persons. The Plan authorizes grants of options to
     purchase up to 500,000 shares of common stock. Stock options are granted
     with an exercise price equal to the stock's fair market value at the date
     of grant. All stock options issued under the Plan have 10-year terms.
     Options granted to employees prior to August 1, 2000, vest and become fully
     exercisable after a range of two to six years from the date of grant. For
     options granted to employees after August 1, 2000, twenty-five percent
     (25%) vest and become exercisable immediately and twenty-five percent (25%)
     vest and become exercisable in each of the three following years. Options
     granted to non-employee directors vest and become exercisable immediately
     upon issuance. At December 31, 2001 and 2000, there were 197,000 and
     223,000 additional shares, respectively, available for grant under the
     Plan. No options were granted in the year 2000.

          During 2001, the Company granted options to purchase 59,000 shares of
     common stock to employees and directors of the Company. The per share
     weighted-average value of stock options granted during 2001 was $0.36, on
     the date of grant, using the Black Scholes option model with the following
     assumptions: weighted-average risk-free interest rate of 4.0%,
     weighted-average expected life of three years, weighted-average expected
     volatility of 85%, and no expected dividend yield.

          The Company applies APB Opinion No. 25 in accounting for its Plan and
     no compensation cost has been recognized for its stock options in the
     financial statements for the years ended December 31, 2001 and 2000. Had
     the Company determined compensation cost based on the fair value at the
     grant date for its stock options under SFAS No. 123, the Company's net
     income (loss) would have been reduced (increased) to the pro forma amounts
     indicated below:


                                      F-13
<PAGE>

             CHAMPION COMMUNICATION SERVICES, INC. and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(7)  Stock Options, (continued)

<Table>
<Caption>
                                      2001             2000
                                 --------------   --------------
<S>                              <C>              <C>
Net income (loss)
        As reported              $    3,011,388   $     (371,128)
        Pro forma                $    2,999,758   $     (371,128)
                                 ==============   ==============

Income (loss) per share
        As reported              $          .49   $         (.06)
        Pro forma                $          .49   $         (.06)
                                 --------------   --------------
</Table>

          The following table summarizes the information about the stock options
     as of December 31, 2001:

<Table>
<Caption>
                                                     Weighted
                                                     Average
                         Number       Weighted       Remaining       Number         Weighted
        Range of      Outstanding      Average      Contracted    Exercisable        Average
        Exercise          at          Exercise         Life            at           Exercise
         Price         12/31/01        Price         (Years)        12/31/01         Price
     -------------   ------------   ------------   ------------   ------------   ------------
<S>                    <C>            <C>            <C>            <C>            <C>

     $        0.50          3,000   $       0.50           8.00          3,000   $       0.50

              0.56          4,000           0.56           9.01          4,000           0.56

              0.64         55,000           0.64          10.00         28,750           0.64

              0.88        100,000           0.88           7.33         10,000           0.88

              1.00         36,000           1.00           6.86         26,250           1.00

              1.16         15,000           1.16           6.28          3,750           1.16

              1.25         13,000           1.25           6.41          5,500           1.25

              2.00         42,000           2.00           4.08         36,500           2.00

              2.22         32,000           2.22           5.10         16,000           2.22

              2.75          3,000           2.75           5.00          3,000           2.75
     -------------   ------------   ------------   ------------   ------------   ------------

     $0.50 - $2.75        303,000   $       1.19           6.99        136,750   $       1.35
     =============   ============   ============   ============   ============   ============
 </Table>


<Table>
<Caption>
                                                 Number of      Weighted-average
                                                  Options        exercise price
                                                -----------     ----------------
<S>                                             <C>             <C>

           Balance at December 1999                 388,000           $1.44
                   Granted                               --              --
                   Forfeited                       (111,000)          $1.75
                                                -----------

           Balance at December 2000                 277,000           $1.34
                   Granted                           59,000           $ .63
                   Forfeited                        (33,000)          $1.46
                                                -----------

           Balance at December 2001                 303,000           $1.19
                                                ===========
</Table>



                                      F-14
<PAGE>

             CHAMPION COMMUNICATION SERVICES, INC. and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(7)  Stock Options, (continued)

          At December 31, 2001 and 2000, the number of options exercisable under
     the Plan was 136,750 and 72,450, respectively, and the weighted-average
     exercise price of these options was $1.35 and $1.65, respectively.


(8)  401(k) Plan

          In January 1996, the Company adopted a 401(k) Plan (the "401(k) Plan")
     under which all employees of the Company who have completed three months of
     service are eligible to participate. Participants may elect to defer the
     receipt of up to 15% of their annual compensation (up to a maximum dollar
     amount established in accordance with Section 401(k) of the Internal
     Revenue Code) and have such deferred amounts contributed to the 401(k)
     Plan. The Company may, in its discretion, make matching contributions to
     the extent it deems appropriate. The Board of Directors elected to match
     the 2001 contributions by 100% and 2000 contributions by 50%.


(9)  Commitments and Contingencies

     Lease Commitments

          At December 31, 2001 the Company had commitments under non-cancelable
     operating lease agreements for the rental of office and tower space. Future
     minimum rental payments due under the leases are:

<Table>
<S>                              <C>
                      2002         $  446,245
                      2003            300,636
                      2004            204,915
                      2005            147,829
                      2006              4,728
                                   ----------

                                   $1,104,353
                                   ==========
</Table>

          During the year ended December 31, 2001 the Company incurred $219,082
     in office rental expense and $1,623,112 in tower rental expense. During the
     year ended December 31, 2000 the Company incurred $221,775 in office rental
     expense and $1,764,524 in tower rental expense.

     Legal Proceedings

          From time to time, the Company is involved in discussions relating to
     various claims arising in the ordinary course of business. Management has
     reviewed these claims with legal counsel and believes that these actions
     are without merit or that the ultimate liability, if any, resulting from
     them will not materially affect the Company's financial position.


(10) Major Suppliers

          The Company has entered into reseller agreements with two principal
     communication equipment suppliers. Both dealer agreements may be terminated
     at any time by the suppliers or the Company without cost. Termination of
     either of these agreements could have a materially adverse effect on the
     Company.

(11) Subsequent Events

          On February 6, 2002, the Board of Directors authorized the Company to
     purchase up to 300,000 shares of its own common stock representing
     approximately 5% of the issued and outstanding shares, plus additional
     shares in privately negotiated transactions with shareholders in the United
     States.

          On March 27, 2002, the Board of Directors approved by Unanimous
     Written Consent the redemption of 1,859,200 shares of stock held by David
     A. Terman, a major stockholder and former director and officer, and
     Highland Wireless Services, L.L.C., which is an entity controlled by David
     A. Terman. These shares were redeemed at $0.80 per share on March 28, 2002.



                                      F-15