<PAGE>   1



                                   FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


            [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934.


                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000


                                       OR


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


         FOR THE TRANSITION PERIOD FROM ____________ TO ______________


                         COMMISSION FILE NUMBER 0-24773


                             PINNACLE HOLDINGS INC.


     INCORPORATED IN DELAWARE I.R.S. EMPLOYER IDENTIFICATION NO. 65-0652634

             301 NORTH CATTLEMEN ROAD, SARASOTA, FLORIDA 34232-6427

                           TELEPHONE: (941) 364-8886




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










At August 11, 2000, Registrant had outstanding 48,417,793 shares of $.001 par
value Common Stock.



<PAGE>   2

PART I.  FINANCIAL INFORMATION

<TABLE>
<CAPTION>

                                                                                                              PAGE
                                                                                                              ----
<S>      <C>                                                                                                  <C>

Item 1.  Financial Statements
         Unaudited Condensed Consolidated Balance Sheets as of December 31, 1999 and June 30, 2000              1
         Unaudited Condensed Consolidated Statements of Operations for the six months ended
           June 30, 1999 and 2000                                                                               2
         Unaudited Condensed Consolidated Statements of Operations for the three months ended
           June 30, 1999 and 2000                                                                               3
         Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity for the
          six months ended June 30, 2000                                                                        4
         Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended
           June 30, 1999 and 2000                                                                               5
         Notes to Unaudited Condensed Consolidated Financial Statements                                       6-9

Item 2.  Management's Discussion and Analysis of Financial Condition and
           Results of Operations                                                                            10-17

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                                                     18

Item 2   Not Applicable

Item 3   Not Applicable

Item 4   Submission of Matters to a Vote of Security Holders                                                   18

Item 5   Other Information                                                                                  18-20

Item 6.  Exhibits and Reports on Form 8-K                                                                      20


SIGNATURES                                                                                                     21

EXHIBIT INDEX                                                                                                  22

</TABLE>



<PAGE>   3

PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements:

                             PINNACLE HOLDINGS INC.
                UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                             December 31,            June 30,
                                                                 1999                  2000
                                                           ---------------       ---------------
                                                                                    (Unaudited)
<S>                                                        <C>                   <C>

                        Assets
Current assets:
Cash and cash equivalents                                  $    94,862,918       $   156,081,479
Accounts receivable, net                                        12,076,689            17,427,337
Prepaid expenses and other current assets                        5,235,972            12,407,798
                                                           ---------------       ---------------
    Total current assets                                       112,175,579           185,916,614
Fixed assets, net                                              955,689,136         1,223,865,176
Leasehold interests, net                                        74,037,558            64,184,887
Deferred debt issue costs, net                                  14,299,519            19,304,210
Other assets                                                     3,232,248             5,855,038
                                                           ---------------       ---------------
                                                           $ 1,159,434,040       $ 1,499,125,925
                                                           ===============       ===============
           Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                                           $     7,297,498       $     7,245,863
Accrued expenses                                                53,853,059            42,944,489
Deferred revenue                                                 3,910,551             8,690,576
Current portion of long-term debt                                6,705,578             4,761,283
                                                           ---------------       ---------------
    Total current liabilities                                   71,766,686            63,642,211
Long-term debt                                                 712,659,042           819,308,375
Other liabilities                                                  510,090               678,356
                                                           ---------------       ---------------
                                                               784,935,818           883,628,942
Stockholders' equity:
  Common Stock , $.001 par value, 150,000,000 shares
  authorized; 41,094,471 and 48,349,465 shares issued
  and outstanding at December 31, 1999 and
  June 30, 2000, respectively                                       41,094                48,349
Additional paid-in capital                                     489,090,451           771,956,777
Foreign currency translation                                      (418,488)              100,379
Accumulated deficit                                           (114,214,835)         (156,608,522)
                                                           ---------------       ---------------
                                                               374,498,222           615,496,983
                                                           ---------------       ---------------
                                                           $ 1,159,434,040       $ 1,499,125,925
                                                           ===============       ===============

</TABLE>



The accompanying Notes to Unaudited Condensed Consolidated Financial Statements
         are an integral part of these condensed financial statements.




                                       1
<PAGE>   4

                             PINNACLE HOLDINGS INC.
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                          Six  Months  Ended June 30,
                                                                        -------------------------------
                                                                            1999               2000
                                                                        ------------       ------------
                                                                        (Unaudited)         (Unaudited)
<S>                                                                      <C>               <C>

Revenues                                                                $ 25,756,967       $ 84,282,587
Direct operating expenses, excluding depreciation and amortization         4,827,407         29,297,670
                                                                        ------------       ------------
   Gross margin, excluding depreciation and amortization                  20,929,560         54,984,917
                                                                        ------------       ------------
Other expenses:
  General and administrative                                               1,612,255          4,013,127
  Corporate development                                                    3,271,064          8,147,864
  State franchise, excise and minimum taxes                                  404,334            742,354
  Depreciation and amortization                                           19,648,671         54,915,030
                                                                        ------------       ------------
                                                                          24,936,324         67,818,375
                                                                        ------------       ------------
Loss from operations                                                      (4,006,764)       (12,833,458)
Interest expense                                                           8,240,059         16,310,677
Amortization of original issue discount and debt issuance costs           11,227,693         13,249,552
                                                                        ------------       ------------
Net loss                                                                ($23,474,516)      ($42,393,687)
                                                                        ============       ============
Payable-in-kind preferred dividends and accretion                          2,930,339                 --
                                                                        ------------       ------------
Net loss attributable to common shareholders                            ($26,404,855)      ($42,393,687)
                                                                        ============       ============
Basic and diluted loss per common share                                 $      (1.05)      $      (0.89)
                                                                        ============       ============
Weighted average number of common shares outstanding                      25,085,277         47,411,489
                                                                        ============       ============

</TABLE>



The accompanying Notes to Unaudited Condensed Consolidated Financial Statements
         are an integral part of these condensed financial statements.





                                       2
<PAGE>   5

                             PINNACLE HOLDINGS INC.
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>

                                                                          Three  Months Ended June 30,
                                                                        -------------------------------
                                                                            1999              2000
                                                                        ------------       ------------
                                                                        (Unaudited)         (Unaudited)
<S>                                                                     <C>                <C>

Revenues                                                                $ 13,748,759       $ 44,359,176
Direct operating expenses, excluding depreciation and amortization         2,594,756         14,957,003
                                                                        ------------       ------------
   Gross margin, excluding depreciation and amortization                  11,154,003         29,402,173
                                                                        ------------       ------------
Other expenses:
  General and administrative                                                 768,791          2,106,522
  Corporate development                                                    1,559,781          4,276,878
  State franchise, excise and minimum taxes                                  203,359            376,114
  Depreciation and amortization                                           10,654,460         28,519,433
                                                                        ------------       ------------
                                                                          13,186,391         35,278,947
                                                                        ------------       ------------
Loss from operations                                                      (2,032,388)        (5,876,774)
Interest expense                                                           4,339,867          7,534,684
Amortization of original issue discount and debt issuance costs            5,799,189          6,823,822
                                                                        ------------       ------------
Net loss                                                                ($12,171,444)      ($20,235,280)
                                                                        ============       ============
Basic and diluted loss per common share                                 $      (0.38)      $      (0.42)
                                                                        ============       ============
Weighted average number of common shares outstanding                      32,025,951         48,344,951
                                                                        ============       ============

</TABLE>



The accompanying Notes to Unaudited Condensed Consolidated Financial Statements
         are an integral part of these condensed financial statements.




                                       3
<PAGE>   6



                             PINNACLE HOLDINGS INC.

 UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>

                                             COMPREHENSIVE         COMMON STOCK        ADDITIONAL
                                                INCOME       ---------------------      PAID-IN      ACCUMULATED
                                                (LOSS)         SHARES      AMOUNT       CAPITAL        DEFICIT          EQUITY
                                             ------------    ----------   --------   ------------   -------------    -------------
<S>                                          <C>             <C>          <C>        <C>            <C>              <C>
Balance at December 31, 1999                                 41,094,471   $ 41,094   $489,090,451   ($114,633,323)   $ 374,498,222

Unaudited:

Issuance of common stock,
   net of issuance costs                                      7,254,994      7,255    282,866,326                      282,873,581
Foreign currency translation gain (loss)     $    518,867                                                 518,867          518,867

Net loss                                      (42,393,687)                                            (42,393,687)     (42,393,687)
                                             ------------    ----------   --------   ------------   -------------    -------------

Balance at June 30, 2000                     ($41,874,820)   48,349,465   $ 48,349   $771,956,777   ($156,508,143)   $ 615,496,983
                                             ============    ==========   ========   ============   =============    =============

</TABLE>



The accompanying Notes to Unaudited Condensed Consolidated Financial Statements
         are an integral part of these condensed financial statements.




                                       4
<PAGE>   7

                             PINNACLE HOLDINGS INC.
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                      SIX MONTHS ENDED
                                                                                          JUNE 30,
                                                                             ---------------------------------
                                                                                  1999               2000
                                                                             -------------       -------------
                                                                              (UNAUDITED)         (UNAUDITED)
<S>                                                                          <C>                 <C>

Cash flows from operating activities:
 Net loss                                                                    ($ 23,474,516)      ($ 42,393,687)
                                                                             -------------       -------------
    Adjustments to reconcile net loss to net cash provided
      by operating activities:
        Depreciation and amortization                                           19,648,671          54,915,030
        Amortization of original issue discount and debt issuance costs         11,227,693          13,249,552
        Provision for doubtful accounts                                                 --             373,091
        (Increase) decrease in:
          Accounts receivable, gross                                            (1,744,104)         (5,223,406)
          Prepaid expenses and other current assets                                  8,146          (7,171,826)
          Other assets                                                             228,208          (2,622,790)
        Increase (decrease) in:
          Accounts payable                                                       3,462,843             (51,635)
          Accrued expenses                                                       8,155,161         (10,908,561)
          Deferred revenue                                                       1,594,592           4,780,025
          Other liabilities                                                        142,846             168,266
                                                                             -------------       -------------
              Total adjustments                                                 42,724,056          47,507,746
                                                                             -------------       -------------
Net cash provided by operating activities                                       19,249,540           5,114,059
                                                                             -------------       -------------
Cash flows from investing activities:
        Payments made in connection with acquisitions:
           Fixed assets                                                       (140,382,672)       (277,848,111)
           Leasehold interests                                                          --          (4,184,483)
           Net current liabilities acquired                                             --             176,573
         Capital expenditures:
           Fixed assets                                                        (24,054,145)        (22,351,092)
                                                                             -------------       -------------
Net cash used in investing activities                                         (164,436,817)       (304,207,113)
                                                                             -------------       -------------
Cash flows from financing activities:
         Borrowings under long-term debt, net                                  304,850,661         277,567,298
         Repayment of long-term debt                                          (317,696,803)       (200,180,987)
         Proceeds from issuance of common stock, net                           286,786,317         282,873,581
         Liquidation of PIK preferred stock and warrants                       (93,741,617)                 --
         Distribution of contributed capital and payment of
          accretion on various classes of common stock                         (43,747,734)                 --
                                                                             -------------       -------------
Net cash provided by financing activities                                      136,450,824         360,259,892
                                                                             -------------       -------------
Effect of exchange rate changes on cash                                                 --              51,723
                                                                             -------------       -------------
Net increase (decrease) in cash and cash equivalents                            (8,736,453)         61,218,561
Cash and cash equivalents, beginning of period                                  13,801,190          94,862,918
                                                                             -------------       -------------
Cash and cash equivalents, end of period                                     $   5,064,737       $ 156,081,479
                                                                             =============       =============
Supplemental disclosure of cash flows:
        Cash paid for interest                                               $   9,540,955       $  17,656,818
                                                                             =============       =============
Non-Cash Transactions:
        Seller debt issued in connection with acquisitions                   $   4,890,250       $   8,989,000
        Payable-in-kind preferred dividends and accretion                    $   2,930,338       $          --

</TABLE>


The accompanying notes to Unaudited Condensed Consolidated Financial Statements
         are an integral part of these condensed financial statements.




                                       5
<PAGE>   8

                             PINNACLE HOLDINGS INC.
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1.       FINANCIAL STATEMENTS

         The accompanying consolidated financial statements reflect the
financial position and results of operations and cash flows of Pinnacle
Holdings Inc. and its wholly owned subsidiaries: Pinnacle Towers Inc., Pinnacle
Towers Canada Inc., Coverage Plus Antenna Systems, Inc. and Tower Systems, Inc.
In addition, beginning in 1999 Pinnacle Holdings Inc. contributed capital to PT
III ("PT III") to establish a preferred stock interest. Pinnacle Towers Inc.
and certain members of management of Pinnacle Holdings Inc. own the common
stock of PT III. PT III utilized the capital contributed to purchase certain
communications site assets and the stock of a corporation that owns and manages
communications sites. As a result of Pinnacle Holdings Inc.'s ability to direct
the policies and management that guide the ongoing activities of PT III, the
financial position and results of operations and cash flows of PT III are
consolidated in the financial statements of Pinnacle. Unless otherwise noted,
"we," "us," "our," or "Pinnacle" refers to Pinnacle Holdings Inc. and its
consolidated subsidiaries, including PT III. All significant intercompany
balances and transactions have been eliminated.

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and use
assumptions that affect the reported amounts of assets and liabilities and the
disclosure for contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results may vary from estimates used.

         Results of operations for any interim period are not necessarily
indicative of results of any other periods or for the year. The consolidated
statements as of June 30, 2000 and for the six month and three month periods
ended June 30, 2000 and 1999 are unaudited, but in the opinion of management
include all adjustments (consisting of normal recurring adjustments) necessary
for a fair presentation of results for such periods. These consolidated
financial statements should be read in conjunction with Pinnacle's financial
statements and notes thereto for the year ended December 31, 1999.

2.       ACQUISITIONS

         We actively acquire communications sites and related real estate
assets.

         On August 31, 1999, we acquired 1,858 communications sites and related
assets from Motorola, Inc. ("Motorola") for $254 million, comprised of $245
million in cash and $9 million of our common stock, plus fees and expenses of
approximately $17 million (the "Motorola Antenna Site Acquisition"). The
purchase price allocations related to this transaction are preliminary.
However, we do not expect that the final allocation of the purchase price will
be materially different from its preliminary allocation. This acquisition
results in Pinnacle having sites in all 50 states and nine Canadian Provinces.
We transferred certain of the rooftop communication sites we acquired from
Motorola to PT III.

         Included in the total purchase price recorded on a preliminary basis
for the Motorola acquisition were accrued costs related to completion of the
transaction of approximately $31.5 million. These accrued deal costs were
comprised primarily of employee severance and relocation costs ($1.7 million),
contract and title work related to communications sites, due diligence and
closing costs ($29.8 million). As of June 30, 2000, approximately $22.2 million
of these accrued costs had been paid by us.

         There is a working capital true up component of the Motorola
acquisition, the deadline for settlement on which has been mutually extended by
Motorola and Pinnacle. In addition, Motorola performed certain services on our
behalf under a Transition Services Agreement (receipt of cash payments from
tenants for a one month period and payment of vendor invoices for a two month
period subsequent to the closing) and, accordingly, there is an amount of cash
settlement to be finalized relative to this activity




                                       6
<PAGE>   9
as well. We intend to complete both settlements by the one year anniversary of
the acquisition and both settlements are expected to result in payments by
Motorola to us.

         In addition to the Motorola Antenna Site Acquisition, during the year
ended December 31, 1999 we completed 129 acquisitions of 442 communications
sites and related assets, each of which was individually insignificant to
Pinnacle, from various sellers for an aggregate purchase price of $238 million
consisting of $228 million in cash and $10 million of notes payable to the
former communications site owners.

         During the six months ended June 30, 2000, we completed 122
acquisitions of 1,084 communications sites and related assets, each of which
was individually insignificant to Pinnacle, from various sellers for an
aggregate purchase price of $291 million consisting of $282 million in cash and
$9 million of notes payable to the former communications site owners.

         We account for our acquisitions using the purchase method of
accounting. The results of operations of the acquired assets are included with
those of Pinnacle from the dates of the respective acquisitions. The pro forma
results of operations listed below reflect purchase accounting and pro forma
adjustments as if the transactions occurred as of January 1, 1999. The
unaudited pro forma consolidated financial statements are not necessarily
indicative of the results that would have occurred if the assumed transactions
had occurred on the dates indicated and are not necessarily indicative of the
expected financial position or results of operations in the future.

                                                                 Pro Forma
                                                       ------------------------
                                                             (in thousands)
                                                         June 30,     June 30,
                                                           1999        2000
                                                       -----------  -----------
                                                       (unaudited)  (unaudited)


Revenues                                                $ 84,082     $ 89,205
Gross margin, excluding depreciation and amortization     54,006       59,006
Net loss                                                 (67,468)     (49,756)
Net loss attributable to common stockholders             (70,398)     (49 756)
Basic and diluted loss per common share                    (2.81)       (1.05)


3.       LONG-TERM DEBT

         As of June 25, 1999, we amended our Senior Credit Facility to provide
$520 million of financing, of which $470 million was committed. Advances under
the Senior Credit Facility accrue interest at our option of either LIBOR plus a
margin of up to 3.00%, as defined in the related agreement, or at the greater
of the Federal Funds Effective Rate plus 0.50% or the prime rate, plus a margin
of up to 1.75%. Additionally, certain financial covenants were modified.

         As of September 17, 1999, we again amended our Senior Credit Facility
to provide $670 million of financing, of which $520 million was committed and
$377 million was utilized at June 30, 2000.

         The Senior Credit Facility is secured by a lien on substantially all
of our assets and a pledge of substantially all of the capital stock of our
subsidiaries. The Senior Credit Facility contains customary covenants such as
limitations on our ability to incur indebtedness, to incur liens or
encumbrances on assets, to make certain investments, to make distributions to
stockholders, or prepay subordinated debt. Under the Senior Credit Facility, we
may not permit the ratio of senior debt to annualized EBITDA as defined in the
agreement to exceed certain amounts.

         On March 22, 2000, we completed a private placement of $200 million of
5.5% Convertible Subordinated Notes Due 2007 (the "Convertible Notes") to
certain institutional purchasers pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act. We repaid outstanding revolving
debt under our Senior Credit Facility with the net proceeds of $193.5 million
from this private placement. We will pay interest on the Convertible Notes on
March 15 and September 15 of each year,




                                       7
<PAGE>   10

with the first interest payment to be made September 15, 2000. The Convertible
Notes will mature on September 15, 2007 unless previously redeemed or
repurchased. The Convertible Notes are convertible into Pinnacle's common stock
at the option of the Convertible Note holders at an initial price of $78.375
per share, which conversion price is subject to adjustment under the terms of
the Convertible Notes. We may redeem the Convertible Notes on or after March
21, 2003. Pursuant to a Registration Rights Agreement dated March 22, 2000, we
filed a registration statement on May 23, 2000, to cover resales of the
Convertible Notes and the shares of Common Stock issuable upon conversion of
the Convertible Notes.

4.       PUBLIC OFFERINGS AND STOCKHOLDERS' EQUITY

         Initial Public Offering
         -----------------------

         On February 19, 1999, we completed our initial public offering of our
common stock ("the Offering") whereby we sold 20,000,000 shares of a new class
of common stock (the "Common Stock"). In addition, on March 19, 1999, the
Underwriters over-allotment options were exercised to the extent that an
additional 2,026,000 shares were sold. The initial price per share was $14,
resulting in net proceeds from the Offering of approximately $288 million.

         In connection with the Offering, pursuant to a recapitalization
agreement between Pinnacle, our largest stockholder, ABRY Broadcast Partners
II, L.P. ("ABRY II"), and certain members of our management that are
stockholders of Pinnacle, we converted all outstanding shares of each class of
Pinnacle's five classes of common stock into shares of the Common Stock sold in
the Offering and paid to the holders of certain of such classes of common stock
preferential amounts and yields. Pinnacle's certificate of incorporation was
amended immediately prior to the consummation of the Offering to eliminate the
multiple classes of Pinnacle's common stock and create the now single class of
Common Stock, and all of the outstanding shares of all the classes of common
stock of Pinnacle other than Class D Common stock were converted into
approximately 8,571,309 shares of Common Stock and all shares of Class D common
stock were converted into approximately 1,428,691 shares of Common Stock. All
unvested shares of Class D Common stock held by employees at the date of the
Offering become vested shares.

         The holders of Pinnacle's outstanding (prior to the above described
conversion) shares of Class A Common stock, Class B Common stock and Class E
Common stock were collectively paid approximately $38.9 million by Pinnacle
from proceeds of the Offering, which amount equaled the amount of preferences
such shares were entitled to over the other classes of Pinnacle's common stock
pursuant to our certificate of incorporation before giving effect to the
amendment relative to the conversion of those shares as described above. In
addition, the holders of Pinnacle's outstanding (prior to the above described
conversion) shares of Class A Common stock were collectively paid approximately
$4.8 million by Pinnacle from proceeds of the Offering, which amount equaled
the amount of yield such shares had accrued from the date of their issuances
through June 30, 1997 pursuant to Pinnacle's certificate of incorporation
before giving effect to the amendment relative to the conversion of those
shares as described above.

         Other uses of proceeds from the Offering were: (1) approximately $32.0
redeemed the outstanding shares of Pinnacle's Series A Senior Preferred Stock
(the "Senior Preferred Stock"); (2) approximately $61.7 million redeemed the
outstanding shares of Pinnacle's Series B Junior Preferred Stock (the "Junior
Preferred Stock"); (3) approximately $15.7 million repaid in full and retired
loan from ABRY II; (4) approximately $123.8 million repaid outstanding
borrowings under Pinnacle's Senior Credit Facility; and, (5) $11.4 was used to
fund the closing of pending acquisitions proximate to the date the funds were
available from the Offering.

         Secondary Offerings
         -------------------

         On July 27, 1999, we completed a secondary offering of common stock
(the "July Offering") whereby we sold 8,650,000 shares of our common stock. The
price per share was $25, resulting in net proceeds from the July Offering of
approximately $206 million. Certain stockholders of Pinnacle also sold
2,350,000 shares of common stock, the net proceeds of which are not available
to us. The proceeds from the July Offering were invested initially in
short-term liquid securities and were used in conjunction with Pinnacle's



                                       8
<PAGE>   11

availability of senior debt under our amended Senior Credit Facility to fund
acquisitions, the construction of new communications sites and improvements to
existing communications sites.

         On January 24, 2000, we completed another secondary offering of common
stock (the "January Offering") whereby we sold 7,200,000 shares of our common
stock. The price per share was $41, resulting in net proceeds from the January
Offering of approximately $283 million. Certain stockholders of Pinnacle also
sold 3,150,000 shares of common stock, the net proceeds of which are not
available to us. The proceeds from the January Offering were invested initially
in short-term liquid securities and will be used to reduce our debt or be used
with borrowings made under the Senior Credit Facility to fund acquisitions, the
construction of new communications sites and improvements to existing
communications sites (approximately $178 million used through June 30, 2000).
The total shares sold included a concurrent exercise of the underwriters'
over-allotment option whereby 1,350,000 shares were sold (including 450,000
shares sold by certain of our stockholders).

         Other Issuances of Stock
         ------------------------

         In conjunction with the Motorola Antenna Site Acquisition, we issued
418,520 shares of common stock to Motorola as part of the consideration given
for the acquisition. These shares were recorded at the fair value of the
securities when the terms of the acquisition were agreed to and announced.

         During the six months ended June 30, 2000, we issued 54,994 shares of
our common stock upon exercise of various stock options granted to our
employees.

5.       COMMITMENTS

      Since June 30, 2000, we have completed 16 acquisitions with 17
communications sites for an aggregate purchase price of $62.4 million, including
2 carrier neutral colocation facility located in St. Louis for $56.9 million. In
addition, as of and subsequent to June 30, 2000, we entered into several
agreements or letters of intent with various third parties to purchase 852
communications sites, reflecting an aggregate commitment to pay approximately
$260.1 million including 1 carrier neutral colocation facility located in Dallas
for $152.5 million plus the capital expenditure required to construct the
planned facility of approximately $30 million, all of which are subject to
conditions of a closing and consummation of a transaction pending completion of
due diligence efforts and any further negotiation which may result therefrom.

6.       SUBSEQUENT EVENTS

         On July 18, 2000, the Internal Revenue Service issued a private letter
ruling to PT III confirming that the ownership of, and receipt of income from,
its rooftop sites and related equipment will be considered qualifying assets
and income for REIT purposes. However, PT III will not elect to be taxed as a
REIT for the short period year of 1999. PT III does anticipate making a REIT
election for the 2000 calendar year, but there can be no assurance that PT III
will satisfy all of the requirements for qualification as a REIT beyond those
which were addressed by the private letter ruling. In this regard, shortly
before receiving the private letter ruling, PT III discovered that it had been
recognizing non-REIT qualifying income at an annualized rate which, if allowed
to continue, would result in PT III failing one of the REIT income tests for
2000. PT III is studying steps that it may be able to take for the remainder of
the 2000 calendar year in order to satisfy that income test for the 2000
calendar year, which may include the transfer of certain assets to a
non-controlled subsidiary of PT III in which PT III will own notes and
preferred and common stock constituting a substantial portion of the overall
investment therein, but in which certain executive officers of PT III will own
in excess of 90% of the voting stock.




                                       9
<PAGE>   12

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS:

         The following discussion of the consolidated financial condition and
results of operations of Pinnacle should be read in conjunction with the
consolidated financial statements and related notes thereto. This discussion
contains forward-looking statements within the meaning of the federal securities
laws. The words "believe," "estimate," "expect," "intend," "anticipate," "plan,"
and similar expressions and variations of such expressions identify certain of
such forward-looking statements that speak only as of the dates on which they
were made. Prospective investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties. Actual events or results may differ materially from those
discussed in the forward-looking statements as a result of various factors,
including, without limitation, the forward-looking statements and associated
considerations set forth in Pinnacle's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999 and the risk factors section of our Amendment No. 1
to Registration Statement on Form S-3 filed with the SEC on August 7th, 2000.

OVERVIEW

         We acquire communications sites and construct rental towers and lease
space on these communications sites to a broad base of wireless communications
providers, operators of private networks, government agencies and other
customers. Our objective is to acquire or construct clusters of rental
communications sites in areas where there is significant existing and expected
continued growth in the demand for rental communications sites by wireless
communications providers. We seek to obtain a significant ownership position of
communications site assets in our targeted markets in order to offer "one-stop
shopping" to wireless communications providers who are deploying or expanding
wireless communications networks.

         Since our formation in May 1995, we have focused on creating a
portfolio of wireless communications site clusters in high growth markets such
as Atlanta, Birmingham, Boston, Chicago, Dallas, Houston, Los Angeles, New
Orleans, New York, Orlando and Tampa. We acquired two Carrier Hotels in Texas
during the second quarter for a total purchase price of $2.9 million.

      As of June 30, 2000, we had acquired 2 carrier neutral colocation
facilities located in Texas for an aggregate purchase price of $2.9 million.
Colocation facilities are buildings that provide telecommunications service
providers, such as incumbent local exchange carriers ("ILECs"), competitive
local exchange carriers ("CLECs"), fiber optic network carriers, Internet
backbone providers, application service providers ("ASPs"), and Internet data
centers ("IDCs"), square footage space to house their equipment (i.e. switches,
servers, routers) and access to an interexchange carrier (typically known as
long distance carriers). Independently owned carrier neutral colocation
facilities provide interconnectivity to multiple communications carriers versus
carrier-owned facilities that offer interconnectivity to just their own network.

      Generally, the building owner is required to maintain the physical
building and each tenant is required to maintain its own equipment. The
buildings include climate control, electrical power, access risers and
sufficient reinforcement to support the weight of tenants' equipment, and are
generally located adjacent to wireline or wireless communications networks.

      We believe carrier neutral colocation facilities are characterized by:

      -     high growth driven by continuing demand for voice, data and Internet
            services:

      -     stable and recurring cash flow from a diversified customer base;

      -     substantial barriers to entry for individual facilities which
            already house important anchor tenants; and,

      -     potential for improved margins as tenants are added to facilities
            without a proportional increase in operating expense.

      Subsequent to June 30, 2000, we acquired 2 more carrier neutral colocation
facilities in St. Louis for an aggregate purchase price of $56.9 million. We
also announced our intent, subject to various conditions to a closing, to
acquire 1 carrier neutral colocation facility and 1 planned carrier neutral
colocation facility in Dallas for an aggregate purchase price of $152.5 million,
plus the capital expenditure required to construct the planned facility of
approximately $30 million. Among the factors affecting the degree and pace of
our efforts in the carrier neutral colocation facilities business are the
availability of financing from our lenders and other sources of public or
private debt and equity. We continue to evaluate our plans relative to this type
of operating asset.



                                      10
<PAGE>   13
         The table below outlines the number of acquisitions we have completed
and the corresponding wireless communication sites and carrier neutral
colocation facilities as of June 30, 2000:

<TABLE>
<CAPTION>

                                                                                  PERIOD ENDING:
                                                        ----------------------------------------------------------------
                                                                      DECEMBER 31,                         JUNE 30,
                                                        -----------------------------------------      ----------------
                                                        1995     1996     1997     1998     1999       2000       Total
                                                        ----     ----     ----     ----     ----       ----       -----
<S>                                                     <C>      <C>      <C>      <C>      <C>        <C>        <C>

Number of wireless owned sites acquired                  29      119      134      517        858        688      2,345
Number of wireless managed sites acquired                 *        *        *        *        584        396        980
Number of wireless leased sites acquired                  *        *        *        *        858         --        858
Number of towers built                                    4        4       22       47         23          5        105
                                                         --      ---      ---      ---      -----      -----      -----
Number of sites acquired or built during the period      33      123      156      564      2,323      1,089      4,288

Number of carrier neutral colocation facilities
  acquired                                                                                                 2          2

Number of acquisition transactions completed             13       49       72       82        130        122        468

</TABLE>

*  Does not include 34 communications sites currently managed or leased that
   were acquired between 1995 and 1998.

         Since June 30, 2000, we have closed 16 acquisitions with 17 additional
communications sites for $62.4 million, including 2 carrier neutral colocation
facilities located in St. Louis for $56.9 million, and as of August 2, 2000,
have agreements or letters of intent to acquire 852 additional communications
sites for $260.1 million, including 1 carrier neutral colocation facility and 1
planned carrier neutral colocation facility in Dallas for $152.5 million, plus
the capital expenditure required to construct the planned facility of
approximately $30 million. In addition, we have identified numerous additional
acquisition candidates. We expect that internal growth related to completed
acquisitions and the business potential of pending acquisitions will have a
material impact on our future revenues and EBITDA.

         We believe that significant opportunities for growth exist by
maximizing the use of our existing and future communications sites. Because the
costs of operating a communications site are primarily fixed on owned sites,
increasing tower utilization significantly improves tower level operating
margins on these sites. We believe that "same site" organic revenue growth on
owned communications sites is a meaningful indicator of the quality of these
sites and our ability to generate incremental revenue on such sites. It is
measured by comparing the run rate revenue of our owned communications sites at
the end of a period to the run rate revenue for the same owned communications
sites at the end of the prior period. Same-site organic growth is a result of
expanded marketing efforts to increase the number of customers per site,
renegotiating leases that are subject to renewal, and, contractual price
escalations for existing customers. Taking into consideration new leases written
as of December 31, 1999, we experienced "same site" revenue growth of
approximately 19.0% for the year ended December 31, 1999 on the base of
communications sites we owned as of December 31, 1998.

         Nextel recently received a ruling from the Federal Communications
Commission ("FCC") allowing Nextel to accelerate the deconstruction of its
analog network. This resulted in more churn from their planned deconstruction
occurring during our second quarter 2000 than was originally anticipated. This
excess churn will have a continuing impact on our expected results until such
time as the churn was originally anticipated to occur. We are currently
negotiating with Nextel to limit our loss of revenue on any further
deconstruction of their analog network. In addition, Nextel has indicated to us
that they have completed their major push to deconstruct analog sites more
rapidly than was originally contemplated, and that the deconstruction of
further analog sites now will be undertaken by them at a much slower rate than
was originally contemplated.

         We have generated net losses since inception and at June 30, 2000, had
an accumulated deficit totaling approximately $156.6 million. Due to our plans
to continue to grow the business predominantly through acquisitions, it is
expected that charges relating to depreciation of existing and future assets
and interest expense associated with related debt balances will be substantial.
Accordingly, we expect to continue to generate losses for the foreseeable
future.

         Our annualized run rate revenue is calculated as of a given date by
annualizing the monthly rental rates then in effect for customer lease
contracts as of such date. We believe that growth in our annualized run rate
revenue is a meaningful indicator of our performance. As of June 30, 2000, our
annualized run rate revenue was approximately $166 million.

         On August 31, 1999, we completed the Motorola Antenna Site
Acquisition. In connection with that transaction, we acquired approximately
1,858 communications sites, consisting of approximately 499 owned sites, 526
managed sites and 833 leased sites, for $254 million in cash and stock, plus
fees and expenses. For the year ended December 31, 1999 on a pro forma basis,
the Motorola sites generated $55.7 million in revenue, $25.6 million in tower
level cash flow and $17.7 million in EBITDA for the eight months ended prior to
closing on August 30, 1999. Previously, we have not had a significant number of
managed or leased




                                      11
<PAGE>   14

sites in our portfolio. Generally, managed and leased sites have higher
operating costs than owned towers, primarily as a result of higher rental costs
related to revenue sharing with site owners. In addition, on leased sites, we
generally have a right to lease only a limited portion of a site, which limits
total revenue potential. Higher relative operating costs and limited revenue
growth results in substantially lower tower cash flow and EBITDA margin
performance on managed and leased sites. Accordingly, the acquisition of
managed and leased sites in the Motorola Antenna Site Acquisition or any
potential future acquisitions will substantially decrease our site level
operating margins.

         Following the closing of the Motorola Antenna Site Acquisition we
transferred a portion of the rooftop communication sites we acquired from
Motorola to PT III, a corporation in which we own substantially all of the
equity interests, in exchange for $9.8 million of convertible preferred stock
and a $39.2 million Convertible Promissory note, in order to minimize the risk
that the ownership of or income from such assets might negatively affect our
qualification as a REIT. We also agreed to make our personnel, facilities and
general and administrative overhead available to PT III, the cost thereof to be
reimbursed to us by PT III. During the quarterly period ended March 31, 2000,
we purchased approximately $2.4 million of additional convertible preferred
stock of PT III and approximately $9.5 of additional convertible promissory
notes. PT III used such funds to acquire all of the stock of a corporation that
owns and manages communications sites, and to acquire certain assets used in
communications site management and related activities. See Item 5, Other
Information.


RESULTS OF OPERATIONS

         The following table sets forth, for the six month periods indicated,
each statement of operations item as a percentage of revenue. The results of
operations are not necessarily indicative of results for any future period. The
following data should be read in conjunction with our consolidated financial
statements and notes thereto included elsewhere herein.

<TABLE>
<CAPTION>

                                                    FOR THE SIX MONTHS ENDED   FOR THE THREE MONTHS ENDED
                                                    ------------------------   --------------------------
                                                     JUNE 30,     JUNE 30,       JUNE 30,     JUNE 30,
                                                       1999         2000           1999         2000
                                                      -----        -----          -----        -----
<S>                                                  <C>           <C>            <C>          <C>
Statement of Operations Data:

     Revenue                                          100.0%       100.0%         100.0%       100.0%
     Direct operating expenses, excluding
        depreciation and amortization                  18.7         34.8           18.9         33.7
                                                      -----        -----          -----        -----
     Gross margin, excluding
        depreciation and amortization                  81.3         65.2           81.1         66.3
Other expenses:
     General and administrative                         6.3          4.8            5.6          4.7
     Corporate development                             12.7          9.7           11.3          9.6
     State franchise, excise and minimum taxes          1.6          0.9            1.5          0.8
     Depreciation and amortization                     76.3         65.2           77.5         64.3
                                                      -----        -----          -----        -----
Loss from operations                                  (15.6)       (15.2)         (14.8)       (13.2)
Interest expense                                       32.0         19.4           31.6         17.0
Amortization of original issue discount and            43.6         15.7           42.2         15.4
debt issuance costs                                   -----        -----          -----        -----
Net loss                                              (91.1)       (50.3)         (88.5)       (45.6)
                                                      =====        =====          =====        =====

</TABLE>

SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999

         Revenues increased by $58.5 million, or 227.2%, to $84.3 million for
the six-month period ended June 30, 2000 from $25.8 million for the six-month
period ended June 30, 1999. This additional revenue is mainly attributable to
the acquisition and construction of 3,205 wireless communication sites since
June 30, 1999 - 2,116 sites during the second half of 1999, which included
1,858 sites from the Motorola Antenna Site Acquisition, and 1,089 sites during
the first half of 2000. A portion of the revenue increase is related to
same-site organic growth.

         Direct operating expenses, excluding depreciation and amortization,
increased by $24.5 million or 506.9% to $29.3 million for the six-month period
ended June 30, 2000 from $4.8 million for the six-month period ended June 30,
1999. This increase is consistent with the acquisition and construction of the
3,205



                                      12
<PAGE>   15

sites discussed above. Direct operating expenses as a percentage of revenue
increased to 34.8% for the six-month period ended June 30, 2000 from 18.7% for
the six-month period ended June 30, 1999. The percentage increase is primarily
a result of the change in mix of sites. Both managed and leased sites produce
lower margins than owned sites because of their variable rent expense.
Notwithstanding, these sites are financially and strategically consistent with
our objective of providing wireless service providers a large selection of
antenna site locations.

         General and administrative expenses increased 148.9% for the six-month
period ended June 30, 2000 to $4.0 million from $1.6 million for the six month
period ended June 30, 1999. The increases in expenses are from additional
staffing required for the increased work volume, increased levels of advertising
and marketing expenditures, and other related costs associated with our growth.
However, as a percentage of revenue, it decreased to 4.8% of revenue for the six
month period ended June 30, 2000 from 6.3% for the six month period ended June
30, 1999 reflecting the disproportionately higher growth in revenues relative to
expenses. The decrease in percentage is from economies of scale realized from
increases in revenues as a result of our acquisitions and construction of
communications sites.

         Corporate development expenses increased by $4.9 million or 149.1% to
$8.1 million for the six month period ended June 30, 2000 from $3.3 million for
the six month period ended June 30, 1999. Corporate development expenses
decreased as a percentage of revenue to 9.7% for the six month period ended June
30, 2000 compared to 12.7% for the six month period ended June 30, 1999. The
increase in expense is related to the overall growth in the business and related
activity during this same period. The decrease in percentage is from economies
of scale realized from increases in tower revenues relative to corporate
development expenses as a result of Pinnacle's acquisitions and construction of
communications sites.

         State franchise, excise and minimum taxes, which represent taxes
assessed in connection with our operations in various state jurisdictions,
increased to $0.7 million for the six month period ended June 30, 2000 from
$0.4 for the six month period ended June 30, 1999. Such taxes are calculated
using various methods such as a portion of our property within a given state,
our capital structure or based upon a minimum tax in lieu of income taxes. The
increase in expense is related to the overall growth in the business and
related activity during this same period.

         Interest expense, net of amortization of original issue discount,
increased $8.1 million, or 97.9%, to $16.3 million for the six month period
ended June 30, 2000 from $8.2 million for the six month period ended June 30,
1999. The increase in interest expense was attributable to increased senior
borrowings outstanding associated with our acquisitions activity, partially
offset by some favorable interest rate protection agreements affecting the six
months ended June 30, 2000, plus the interest on our 5.5% Convertible
Subordinated Notes Due 2007 issued March 14, 2000. The weighted average balance
of senior debt outstanding increased by $223 million to $374 million for the six
months ended June 30, 2000 from $151 million for the six months ended June 30,
1999.

         Amortization of original issue discount and debt issuance cost
increased 2.0 million, or 18%, to $13.2 million for the six month period ended
June 30, 2000 from $11.2 million for the six month period ended June 30, 1999.
The increase resulted from increased amortization of original issue discount of
$1.2 million because of the semi-annual compounding of the amortization under
the indenture agreement, and increased amortization of debt issuance costs of
$0.8 million, $0.6 million attributable to the issuance costs for the September
17, 1999 amendment to our senior credit facility and $0.2 million attributable
to the issuance costs for our 5.5% Convertible Subordinated Notes Due 2007
issued March 14, 2000.

THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999

         Revenues increased by $30.6 million, or 222.6%, to $44.4 million for
the three-month period ended June 30, 2000 from $13.7 million for the
three-month period ended June 30, 1999. This additional revenue is mainly
attributable to the acquisition and construction of 3,205 wireless
communication sites since June 30, 1999 - 2,116 sites during the second half of
1999, which included 1,858 sites from the Motorola Antenna Site Acquisition, and
1,089 sites during the first half of 2000. A portion of the revenue increase is
related to same-site organic growth.

         Direct operating expenses, excluding depreciation and amortization,
increased by $12.4 million or 476.4% to $15.0 million for the three-month
period ended June 30, 2000 from $2.6 million for the three-month period ended
June 30, 1999. This increase is consistent with the acquisition and
construction of the 3,205 sites discussed above. Direct operating expenses as a
percentage of revenue increased to 33.7% for




                                      13
<PAGE>   16

the three-month period ended June 30, 2000 from 18.9% for the three-month
period ended June 30, 1999. The percentage increase is primarily a result of
the change in mix of sites. Both managed and leased sites produce lower margins
than owned sites because of their variable rent expense. Notwithstanding, these
sites are financially and strategically consistent with our objective of
providing wireless service providers a large selection of antenna site
locations.

         General and administrative expenses increased 174% for the three-month
period ended June 30, 2000 to $2.1 million from $0.8 million for the three
month period ended June 30, 1999. The increases in expenses are from additional
staffing required for the increased work volume, increased levels of
advertising and marketing expenditures, and other related costs associated with
our growth. However, as a percentage of revenue, it decreased to 4.7% of
revenue for the three month period ended June 30, 2000 from 5.6% for the three
month period ended June 30, 1999 reflecting the disproportionately higher
growth in revenues relative to expenses. The decrease in percentage is from
economies of scale realized from increases in revenues as a result of our
acquisitions and construction of communications sites.

         Corporate development expenses increased by $2.7 million or 174.2% to
$4.3 million for the three month period ended June 30, 2000 from $1.6 million
for the three month period ended June 30, 1999. Corporate development expenses
decreased as a percentage of revenue to 9.6% for the three month period ended
June 30, 2000 compared to 11.3% for the three month period ended June 30, 1999.
The increase in expense is related to the overall growth in the business and
related activity during this same period. The decrease in percentage is from
economies of scale realized from increases in tower revenues relative to
corporate development expenses as a result of Pinnacle's acquisitions and
construction of communications sites.

         State franchise, excise and minimum taxes, which represent taxes
assessed in connection with our operations in various state jurisdictions,
increased to $0.4 million for the three month period ended June 30, 2000 from
$0.2 for the three month period ended June 30, 1999. Such taxes are calculated
using various methods such as a portion of our property within a given state,
our capital structure or based upon a minimum tax in lieu of income taxes. The
increase in expense is related to the overall growth in the business and
related activity during this same period.

         Interest expense, net of amortization of original issue discount,
increased $3.2 million, or 73.6%, to $7.5 million for the three month period
ended June 30, 2000 from $4.3 million for the three month period ended June 30,
1999. The increase in interest expense was attributable to the increase in
senior borrowings outstanding under our senior credit facility associated with
our acquisitions activity, partially offset by some favorable interest rate
protection agreements affecting the three months ended June 30, 2000, plus the
interest on our 5.5% Convertible Subordinated Notes Due 2007 issued March 14,
2000. The weighted average balance of senior debt outstanding increased by $146
million to $310 million for the three months ended June 30, 2000 from $164
million for the three months ended June 30, 1999.

         Amortization of original issue discount and debt issuance cost
increased $1.0 million, or 17.6%, to $6.8 million for the three month period
ended June 30, 2000 from $5.8 million for the three month period ended June 30,
1999. The increase resulted from increased amortization of original issue
discount of $0.5 million because of the semi-annual compounding of the
amortization under the indenture agreement, and increased amortization of debt
issuance costs of $0.5 million, $0.3 million attributable to the issuance costs
for the September 17, 1999 amendment to our senior credit facility and $0.2
million attributable to the issuance costs for our 5.5% Convertible Subordinated
Notes Due 2007 issued March 14, 2000.


LIQUIDITY AND CAPITAL RESOURCES

         Our liquidity needs arise from our acquisition-related activities,
debt service obligations, working capital needs and capital expenditures. We
have historically funded our liquidity needs with proceeds from equity
contributions, public equity offerings, bank borrowings, debt offerings, and
cash flow from operations. We had net working capital of $122.3 million and
$40.4 million as of June 30, 2000 and December 31, 1999, respectively. Our
ratio of total debt to stockholders' equity was 1.3 to 1.0 at June 30, 2000 and
1.9 to 1.0 at December 31, 1999.

         Our Senior Credit Facility provides us with a $235 million revolving
line of credit, with an uncommitted increase option which could increase the
revolving line of credit to $435 million, a $125 million term loan and a $110
million term loan, for a total availability of up to $670 million, of which
$520 million (including letters of credit) is currently committed. Under our
revolving line of credit, we may make borrowings and repayments until June 30,
2006. Under one term loan, advances must be repaid in full by June 30, 2006.
Under the other term loan, advances must be repaid in full by June 30, 2007.
Once repaid,




                                      14
<PAGE>   17

amounts under the term loans may not be reborrowed. Advances under the term
loans may be used for refinancing certain existing indebtedness, acquisitions,
working capital, and other general corporate purposes. Advances under our
revolving line of credit are limited to acquisitions. Advances under our Senior
Credit Facility have been used primarily to fund acquisitions, construction of
new communications sites and improvements to existing communications sites.

         Beginning September 30, 2001, the availability under our revolving
line of credit and one term loan starts reducing by specified amounts on a
quarterly basis until June 30, 2006, when the availability under such credits
will be reduced to zero. Beginning June 30, 2001, the availability under the
other term loan starts reducing by specified amounts on a quarterly basis until
June 30, 2007, when the term loan must be repaid in full. As of June 30, 2000
we had $142.9 million available under our Senior Credit Facility, after giving
effect to approximately $35.7 million of outstanding letters of credit, which
reduced availability under our Senior Credit Facility.

         We also use seller financing to fund certain of our communications
site acquisitions. As of June 30, 2000, we had outstanding, in the aggregate
amount, $32.2 million of seller notes bearing interest at rates ranging from
8.5% to 13.0% per annum.

         On February 19, 1999, we completed the Offering where we sold
20,000,000 shares of our common stock and on March 19, 1999, the over-allotment
options were exercised and an additional 2,026,000 shares were sold. The
initial price per share was $14, resulting in net proceeds of approximately
$290 million before deducting the costs of the Offering. The proceeds were used
to acquire communications sites.

         On July 27, 1999, we completed a secondary offering of common stock
(the "July Offering") whereby we sold 8,650,000 shares of our common stock. The
price per share was $25, resulting in net proceeds from the July Offering of
approximately $206 million. Certain stockholders of Pinnacle also sold
2,350,000 shares of common stock, the net proceeds of which are not available
to us. The proceeds from the July Offering were invested initially in
short-term liquid securities and were used in conjunction with Pinnacle's
availability of senior debt under our amended Senior Credit Facility to fund
acquisitions, the construction of new communications sites and improvements to
existing communications sites.

         On January 24, 2000, we completed another secondary offering of common
stock (the "January Offering") whereby we sold 7,200,000 shares of our common
stock. The price per share was $41, resulting in net proceeds from the January
Offering of approximately $283 million. Certain stockholders of Pinnacle also
sold 3,150,000 shares of common stock, the net proceeds of which are not
available to us. The proceeds from the January Offering were invested initially
in short-term liquid securities and will be used to reduce our debt or be used
with borrowings made under the Senior Credit Facility to fund acquisitions, the
construction of new communications sites and improvements to existing
communications sites (approximately $178 million used through June 30, 2000).
The total shares sold included a concurrent exercise of the underwriters'
over-allotment option whereby 1,350,000 shares were sold (including 450,000
shares sold by certain of our stockholders).

         On March 22, 2000 we completed a private placement of $200 million of
5.5% Convertible Subordinated Notes Due 2007 (the "Convertible Notes") to
certain institutional purchasers pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act. We repaid outstanding revolving
debt under our Senior Credit Facility with the net proceeds of $193.5 million
from this private placement. We will pay interest on the Convertible Notes on
March 15 and September 15 of each year, with the first interest payment to be
made September 15, 2000. The Convertible Notes will mature on September 15,
2007 unless previously redeemed or repurchased. The Convertible Notes are
convertible into Pinnacle's common stock at the option of the Convertible Note
holders at an initial price of $78.375 per share, which conversion price is
subject to adjustment under the terms of the Convertible Notes. We may redeem
the Convertible Notes on or after March 21, 2003. Pursuant to a Registration
Rights Agreement dated March 22, 2000, we filed a registration statement on May
23, 2000, to cover resales of the Convertible Notes and the shares of Common
Stock issuable upon conversion of the Convertible Notes.




                                      15
<PAGE>   18

         Capital investments, including acquisitions, for the six month period
ended June 30, 2000 were $304.2 million, compared to $164.4 million in the
comparable 1999 period. Depending on availability of additional capital, we
expect that we may make substantial additional capital investments for
acquisitions, construction and upgrading of additional towers in 2000. We
currently estimate that we will make additional capital investments in 2000 of
at least $235 million. To the extent we commit to complete additional
significant acquisitions beyond those we have identified and currently believe
are probable that we will complete, that amount may increase materially.

      We believe that the availability under our Senior Credit Facility, cash
flow from operations and existing cash balances will be sufficient to meet
working capital requirements for existing properties. Among the factors
affecting our ability to complete all probable acquisitions are the availability
of financing from our lenders and other sources of public or private debt and
equity. To the extent that we pursue additional acquisitions, construction
activity and other capital expenditures requiring funding in excess of that then
available under our Senior Credit Facility, we will be required to obtain
additional financing. There can be no assurance that such financing will be
commercially available or be permitted by the terms of Pinnacle's existing
indebtedness. To the extent that we are unable to finance future capital
expenditures, we may not be able to achieve our current business strategy.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We are exposed to certain market risks inherent in our financial
instruments. These instruments arise from transactions entered into in the
normal course of business and, in some cases, relate to our acquisitions of
related businesses. We are subject to interest rate risk on our Senior Credit
Facility and any future financing requirements. Our fixed rate debt consists
primarily of outstanding balances on the Notes, the Convertible Notes, and
notes payable to former tower owners and our variable rate debt relates to
borrowings under our Senior Credit Facility. See "--Liquidity and Capital
Resources."

         The following table presents the future principal payment obligations
and weighted-average interest rates associated with our existing long-term debt
instruments assuming our actual level of long-term indebtedness of $325,000,000
under the Notes, $200,000,000 under the Convertible Notes, and $341,365,370
under our Senior Credit Facility as of June 30, 2000:

<TABLE>
<CAPTION>

                                                                         EXPECTED MATURITY DATE
                                                                         ----------------------
                                             2000      2001           2002           2003           2004         THEREAFTER
                                             ----   -----------    -----------    -----------    -----------    ------------
<S>                                          <C>    <C>            <C>            <C>            <C>            <C>

Liabilities
Long-term Debt
  Fixed Rate (7.97%)                          --             --             --             --             --    $525,000,000
  Variable Rate (Weighted Average Interest    --    $24,236,537    $35,804,806    $42,745,767    $52,000,381    $186,577,879
    Rate of 9.53%)

</TABLE>

         Our primary market risk exposure relates to the following:

         o   the interest rate risk on long-term and short-term borrowings;

         o   our ability to refinance the Notes and the Convertible Notes at
             maturity at market rates;

         o   the impact of interest rate movements on our ability to meet
             interest expense requirements and exceed financial covenants; and

         o   the impact of interest rate movements on our ability to obtain
             adequate financing to fund future acquisitions.

         We manage interest rate risk on our outstanding long-term and
short-term debt through our use of fixed and variable rate debt. While we
cannot predict or manage our ability to refinance existing debt or the impact
interest rate movements will have on our existing debt, we continue to evaluate
our financial position on an ongoing basis.

INFLATION

         Because of the relatively low levels of inflation experienced in 1999
and 2000, inflation did not have a significant effect on our results in such
years.




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<PAGE>   19

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         Pinnacle is from time to time involved in ordinary litigation
incidental to the conduct of its business. Pinnacle believes that none of its
pending litigation will have a material adverse effect on Pinnacle's business,
financial condition or results of operations.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

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

         At our Annual Meeting of Stockholders, held on May 2, 2000, the
following proposals were voted upon by the stockholders as indicated below:

1.       To elect the board of directors.

                                                   Number of Shares
                                                  For           Withheld
                                              ----------        -------

         Robert Wolsey                        42,628,201        769,047
         Steven Day                           42,628,201        769,047
         Andrew Banks                         42,628,201        769,047
         G. Peter O'Brien                     42,628,201        769,047
         J. Clare Smith                       42,628,201        769,047
         Royce Yudkoff                        42,628,201        769,047

2.       To approve an amendment to Pinnacle's Certificate of Incorporation
to increase the number of authorized shares of Common Stock from 100,000,000
shares to 150,000,000 shares.

                 For                 Against             Abstain
                 ---                 -------             -------

              41,137,253            1,239,654           1,020,341

3.       To approve an amendment to the Pinnacle Holdings Inc. Stock Incentive
Plan to increase the shares reserved for issuance under the plan from 3,000,000
shares to 5,000,000 shares.

                 For                 Against             Abstain
                 ---                 -------             -------

              28,466,923            13,885,295          1,045,030


ITEM 5.  OTHER INFORMATION.

         Informal Inquiry by the Securities Exchange Commission
         ------------------------------------------------------

         As previously disclosed by Pinnacle in a prospectus filed with the
Securities and Exchange Commission on August 7, 2000 and a press release of the
same date, the Staff of the Securities and Exchange Commission recently



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<PAGE>   20
requested information from Pinnacle and its independent accountants as part of
a nonpublic informal inquiry. Pinnacle is fully cooperating (and intends to
continue to cooperate) with the Staff.

         Through communications with the Staff, Pinnacle believes the inquiry
has come to primarily focus on the independence of its independent accountants
in light of the scope of non-audit services provided by them to Pinnacle.
However, as the Staff initially focused its inquiry on certain accounting issues
associated with Pinnacle's acquisition of Motorola, Inc.'s North American
antenna site business, Pinnacle cannot be certain that the Staff's focus will
remain on the independence of its independent accountants and not later refocus
on accounting treatment issues.

         Pinnacle's independent accountants have given their consent to
Pinnacle's use of Pinnacle's financial statements the independent accountants
have audited in connection with the aforementioned prospectus filed with the SEC
on August 7, 2000. In addition, another accounting firm that audited certain
historical financial statements of the North American Antenna Site Business of
Motorola, Inc. that Pinnacle acquired as a part of the Motorola transaction has
given its consent to their use in connection with such prospectus. Pinnacle's
independent accountants have also represented to Pinnacle in connection with
such prospectus that they are in fact independent and that they conducted their
audit consistent with their professional obligations. The Staff, however, might
not concur with that view. If the Commission determines that Pinnacle's
independent accountants were not independent, Pinnacle might be required to
engage a different independent accountant prospectively, and it might be
required to seek a re-audit of its previous years' financial statements.
Pinnacle cannot predict the outcome of the Staff's inquiry and what effect, if
any, it might have on it.

         Pinnacle Towers III Inc.
         ------------------------

         We are taxed as a Real Estate Investment Trust ("REIT") for federal
income tax purposes. The federal tax laws and regulations relating to REITs
limit our ability to own and derive income from certain types of assets. In
order to minimize the risk that our ownership of or income from certain assets
might negatively affect our qualification as a REIT, we previously transferred
certain potentially non-REIT qualifying assets to PT III, a corporation in
which Pinnacle owns substantially all of the equity interests in the form of
nonvoting, convertible preferred stock, as well as approximately 9% of the
voting common stock. Certain officers of Pinnacle own the remaining outstanding
shares of voting common stock of PT III. During the first quarter ended March
31, 2000, Pinnacle purchased approximately $2.4 million of additional
convertible preferred stock of PT III and approximately $9.5 million of
additional convertible promissory notes. PT III used such funds to acquire all
of the stock of a corporation that owns and manages communications sites,
certain of which may not be REIT qualifying assets or generate income from
assets that are non-REIT qualifying, and to acquire certain assets used in
communication tower consulting and management activities, which assets and the
income generated thereby may not be REIT qualifying.

         PT III has guaranteed the Senior Credit Facility and has pledged all
of its assets to secure such guarantee. The Board of Directors of Pinnacle,
excluding the officers of Pinnacle owning PT III common stock, who abstained,
approved the transactions with PT III and determined that such transactions
were on terms no less favorable to Pinnacle than those that would be obtained
in comparable arms-length transactions with parties that were not affiliated
with Pinnacle, and that such transactions were in the best interests of
Pinnacle.

         As a result of the acts referenced in the preceding paragraph and
prior transactions between PT III and a subsidiary of Pinnacle, a subsidiary of
Pinnacle currently owns $ 48.7 of convertible promissory notes issued by PT III
that accrues interest at the rate of 13%, with interest payable quarterly and
all principal and accrued interest due and payable within 30 days upon demand,
and $12.2 million of PT III convertible preferred stock that accrues dividends
at 18% per annum, payable quarterly. The terms of PT III's certificate of
incorporation limit PT III's ability to borrow money, pledge its assets, issue
additional securities, make distributions to its stockholders, purchase and
sell assets, enter into transactions with affiliates and take certain actions
without seeking approval from its common stockholders, and its ability to issue
or redeem certain securities, make certain distributions, enter into certain
transactions with its




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<PAGE>   21

affiliates or to sell, lease or dispose of a majority of its assets without the
approval of the holders of the convertible preferred stock is also limited by
such certificate of incorporation. Should all of the PT III convertible
preferred stock and the convertible promissory notes be fully converted to
common stock of PT III, a subsidiary of Pinnacle would own in excess of 99.9%
of the outstanding common stock of PT III. We currently anticipate that the
officers of Pinnacle who own PT III common stock will derive only such benefits
as are consistent with, and not greater than, the very small interest in the
overall equity of Pinnacle represented by their common stock and as such that
such officers will not receive significant benefits from such stock ownership.
PT III may issue limited amounts of nonvoting common stock in the future in
order for it to independently qualify as a REIT.

         The foregoing is merely a summary description of PT III and the
transactions between it and Pinnacle. The description does not purport to be a
complete description of such matters and is subject to the provisions of, and
is qualified in its entirety be reference to, the material agreements relating
to those matters, copies of which are filed as exhibits to this Quarterly
Report on Form 10-Q.

         We continue to assess the risk to our status as a REIT that might
result from us reacquiring the assets transferred to PT III. Depending upon the
conclusions reached from such assessment, we may seek to reacquire such assets
by purchase, merger or other means. It is possible that we may enter into
additional transactions with PT III or other similar entities in certain
circumstances to minimize the risk that we may no longer qualifying as a REIT.
In addition, as additional acquisition opportunities become available to us in
our existing line of business or in complimentary non-real estate based
communication site or services activities, we may determine that it is in our
best interests to acquire, operate or derive income from assets, businesses or
entities that would cause us to no longer qualify as a REIT.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)      The Exhibits listed in the "Exhibit Index" are filed as part of this
         report.

(b)      Reports on Form 8-K. Pinnacle filed no reports on form 8-K during
         the three month period ended June 30, 2000.




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<PAGE>   22

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                              Pinnacle Holdings Inc.

Date:  August 14, 2000                        By: /s/ Jeffrey J. Card
                                                 -----------------------------
                                                      Jeffrey J. Card
                                                      Chief Financial Officer
                                                      Vice President

                                              Duly Authorized Officer and
                                              Principal Financial Officer.




                                      20
<PAGE>   23

                                 EXHIBIT INDEX



Designation          Description
-----------          -----------

   27.1         Financial Data Schedule






                                      21