<PAGE>

PART I. FINANCIAL INFORMATION
Item 1.  Financial Statements:
         --------------------
                             PINNACLE HOLDINGS INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>


                                                                                                 December 31,       September 30
                                                                                                     1998               1999
                                                                                               ----------------  ------------------
                                                                                                                    (unaudited)
<S>                                                                                            <C>               <C>
Assets
Current assets:
Cash and cash equivalents                                                                        $  13,801,190      $  151,868,363
Accounts receivable, net                                                                             1,679,390           7,555,110
Prepaid expenses and other current assets                                                            1,432,428           6,192,589
                                                                                                 -------------      --------------
 Total current assets                                                                               16,913,008         165,616,062
Tower assets, net                                                                                  473,942,309         861,753,326
Leasehold interests, net                                                                                    --          81,071,025
Fixed assets, net                                                                                    2,476,666           3,606,803
Land                                                                                                14,613,365          31,611,851
Deferred debt issue costs, net                                                                       6,686,683          14,026,548
Other assets                                                                                         1,516,070           2,612,601
                                                                                                 -------------      --------------
                                                                                                 $ 516,148,101      $1,160,298,216
                                                                                                 =============      ==============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                                                                                 $   3,280,809      $    4,903,801
Accrued expenses                                                                                     5,761,016          48,652,128
Deferred revenue                                                                                     1,448,432           4,344,308
Current portion of long-term debt                                                                   15,692,912           6,666,384
                                                                                                 -------------      --------------
 Total current liabilities                                                                          26,183,169          64,566,621

Long-term debt                                                                                     417,524,802         698,320,176
Other liabilities                                                                                      125,152             359,145
                                                                                                 -------------      --------------
                                                                                                   443,833,123         763,245,942
                                                                                                 -------------      --------------
Redeemable stock:
 Series A senior preferred stock, Class B common stock, and Class D common stock                    31,643,338                  --
 Warrants                                                                                            1,000,000                  --
                                                                                                 -------------      --------------
                                                                                                    32,643,338                  --
                                                                                                 -------------      --------------
Stockholders' equity:
Series B junior preferred stock                                                                     59,928,980                  --
Common stock:
Class A common stock, 202,500  and 0 shares issued and outstanding at December 31, 1998 and
 September 30, 1999, respectively                                                                          203                  --
Class E common stock, 174,766 and 0 shares issued and outstanding at December 31, 1998 and
 September 30, 1999, respectively                                                                          175                  --
Common Stock, $.001 par value, 100,000,000 shares authorized;  0 and 41,094,520 shares issued
 and outstanding at December 31, 1998 and September 30, 1999, respectively                                  --              41,095
Additional paid-in capital                                                                          33,136,302         489,426,399
Accumulated deficit                                                                                (53,394,020)        (92,415,220)
                                                                                                 -------------      --------------
                                                                                                    39,671,640         397,052,274
                                                                                                 -------------      --------------
                                                                                                 $ 516,148,101      $1,160,298,216
                                                                                                 =============      ==============

</TABLE>



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

                                       1
<PAGE>

                             PINNACLE HOLDINGS INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>


                                                                              Nine Months Ended
                                                                                September 30,
                                                                      ----------------------------------
                                                                            1998              1999
                                                                      ----------------  ----------------
                                                                        (unaudited)       (unaudited)
<S>                                                                   <C>               <C>

Revenues                                                               $   21,127,633    $   48,816,143
Direct operating expenses, excluding depreciation and amortization          3,965,511        11,691,067
                                                                       --------------    --------------
          Gross margin, excluding depreciation and amortization            17,162,122        37,125,076
Other expenses:
           General and administrative                                       2,720,097         2,822,760
           Corporate development                                            4,955,121         5,731,059
           State franchise, excise and minimum taxes                          398,730           699,836
           Depreciation and amortization                                   13,357,626        35,118,413
                                                                       --------------    --------------
                                                                           21,431,574        44,372,068
                                                                       --------------    --------------
Loss from operations                                                       (4,269,452)       (7,246,992)
Interest expense                                                            7,276,265        14,439,470
Amortization of original issue discount and debt issuance costs            11,635,619        17,334,738
                                                                       --------------    --------------
Net loss                                                               $  (23,181,336)   $  (39,021,200)
                                                                       ==============    ==============
Payable-in-kind preferred dividends and accretion                             683,304         2,930,338
                                                                       ==============    ==============
Net loss attributable to common shareholders                           $  (23,864,640)   $  (41,951,538)
Basic loss per common share(a)                                         $        (2.46)   $        (1.41)
                                                                       --------------    --------------
Weighted average number of common shares outstanding                        9,708,457        29,721,466
                                                                       ==============    ==============

</TABLE>

(a)  Basic loss per common share in 1999 and 1998 have been computed based on
     the weighted average number of common shares outstanding during the
     periods, after giving retroactive effect for the conversion of the
     Company's common stock outstanding prior to the Company's initial public
     offering in accordance with the recapitalization effected contemporaneously
     with the completion of the initial public offering (Note 3).  Diluted loss
     per common share would be anti-dilutive and therefore is not applicable.

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

                                       2
<PAGE>

                             PINNACLE HOLDINGS INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>


                                                                             Three Months Ended
                                                                                September 30,
                                                                      ---------------------------------
                                                                           1998              1999
                                                                      ---------------  ----------------
                                                                        (unaudited)      (unaudited)
<S>                                                                   <C>              <C>

Revenue                                                                $   8,583,537    $   23,059,176
Direct operating expenses, excluding depreciation and amortization         1,908,426         6,863,660
                                                                       -------------    --------------
          Gross margin, excluding depreciation and amortization            6,675,111        16,195,516
Other expenses:
           General and administrative                                        852,967         1,210,505
           Corporate development                                           1,660,506         2,459,995
           State franchise, excise and minimum taxes                         116,083           295,502
           Depreciation and amortization                                   5,865,773        15,469,742
                                                                       -------------    --------------
                                                                           8,495,339        19,435,744
                                                                       -------------    --------------
Loss from operations                                                      (1,820,228)       (3,240,228)
Interest expense                                                           2,725,923         6,199,411
Amortization of original issue discount and debt issuance costs            5,496,024         6,107,045
                                                                       -------------    --------------
Net loss                                                               $ (10,042,175)   $  (15,546,684)
                                                                       -------------    --------------
Payable-in-kind preferred dividends and accretion                            683,304                 -
                                                                       =============    ==============
Net loss attributable to common shareholders                           $ (10,725,479)   $  (15,546,684)
Basic loss per common share(a)                                         $       (1.07)   $        (0.40)
                                                                       -------------    --------------
Weighted average number of common shares outstanding                      10,000,000        38,842,567
                                                                       =============    ==============

</TABLE>

(a)  Basic loss per common share in 1999 and 1998 have been computed based on
     the weighted average number of common shares outstanding during the
     periods, after giving retroactive effect for the conversion of the
     Company's common stock outstanding prior to the Company's initial public
     offering in accordance with the recapitalization effected contemporaneously
     with the completion of the initial public offering (Note 3).  Diluted loss
     per common share would be anti-dilutive and therefore is not applicable.

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

                                       3
<PAGE>

                             PINNACLE HOLDINGS INC.
      CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>



                                      Series B
                                       Junior                                               Class A
                                   preferred Stock                 Common Stock           common stock
                             ---------------------------       -------------------     ---------------------
                               Shares         Amount            Shares     Amount       Shares       Amount
                             ----------  ----------------     ----------  ---------    --------    -----------
<S>                          <C>         <C>                  <C>         <C>         <C>         <C>

Balance at December 31,
 1998                            60.40     $  59,928,980            -            -       202,500         $  203

Unaudited:
Dividends and accretion on
  Preferred Stock                 1.27         1,767,106            -            -

Issuance of common stock,
 net of issuance costs, and
   conversion (Note 3)                                     41,094,520  $    41,095      (202,500)          (203)

Liquidation of Series B
 Junior Preferred Stock         (61.67)      (61,696,086)
Distribution of
 contributed capital
 and yield on various
  classes of common stock

Net Loss
                                ------      ------------   ----------  -----------      --------          ------
Balance at September 30,
 1999                                -      $          -   41,094,520  $    41,095             -          $    -
                                ======      ============   ==========  ===========      ========          ======

                                                      Class E
                                                    common stock      Additional
                                               ---------------------    paid-in     Accumulated   Stockholders'
                                                 Shares      Amount     capital       deficit         equity
                                               ---------   ---------- ------------  ------------   -------------
Balance at December 31, 1998                     174,766          175 $ 33,136,302  $(53,394,020)  $  39,671,640

Unaudited:
Dividends and accretion on
  Preferred Stock                                                       (2,930,338)                   (1,163,232)

Issuance of common stock,
 net of issuance costs, and
   conversion (Note 3)                          (174,766)        (175) 502,968,169                   503,008,886

Liquidation of Series B
 Junior Preferred                                                                                    (61,696,086)

Distribution of
 contributed capital
 and yield on various
  classes of common stock                                              (43,747,734)                  (43,747,734)

Net Loss                                                                             (39,021,200)    (39,021,200)
                                             -----------   ---------- ------------  ------------   -------------
Balance at September 30, 1999                          -   $        - $489,426,399  ($92,415,220)  $ 397,052,274
                                             ===========   ========== ============  ============   =============
</TABLE>

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

                                       4
<PAGE>

                            PINNACLE HOLDINGS INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                     Nine Months Ended
                                                                                       September  30,
                                                                             -------------------------------------
                                                                                   1998                1999
                                                                             -----------------  ------------------
                                                                                (unaudited)        (unaudited)
<S>                                                                          <C>                <C>
Cash flows from operating activities:
 Net loss                                                                      $  (23,181,336)     $  (39,021,200)
    Adjustments to reconcile net loss to net cash provided
      by operating activities:
         Depreciation                                                              13,357,626          35,118,413
         Amortization of original issue discount and debt issuance costs           11,635,619          17,334,738
         Provision for doubtful accounts                                              286,905             568,000
         (Increase) decrease in:
            Accounts receivable, gross                                               (855,026)         (3,077,230)
            Prepaid expenses and other current assets                                   4,828            (758,769)
            Other assets                                                             (609,486)         (1,096,531)
         Increase (decrease) in:
            Accounts payable                                                          647,258            (430,522)
            Accrued expenses                                                        4,279,009           4,041,112
            Deferred revenue                                                          399,402             296,130
            Other liabilities                                                           7,077             233,993
                                                                               --------------      --------------
               Total adjustments                                                   29,153,212          52,229,334
                                                                               --------------      --------------
Net cash provided by operating activities                                           5,971,876          13,208,134
                                                                               --------------      --------------
Cash flows from investing activities:
          Payments made in connection with acquisitions:
            Tower assets                                                         (310,721,207)       (383,216,262)
            Leasehold interests                                                             -         (83,387,340)
            Land                                                                   (7,010,921)        (16,998,487)
            Net current liabilities acquired                                                -          36,135,378
          Capital expenditures:
            Tower assets                                                          (31,312,021)        (27,706,463)
            Fixed assets                                                           (1,244,500)         (1,833,704)
                                                                               --------------      --------------
Net cash used in investing activities                                            (350,288,649)       (477,006,878)
                                                                               --------------      --------------
Cash flows from financing activities:
          Borrowings under long-term debt, net                                    474,736,382         556,080,721
          Repayment of long-term debt                                            (204,138,000)       (317,963,299)
          Proceeds from issuance of common stock, net                              10,767,709         501,237,846
          Proceeds from issuance of PIK preferred stock and warrants, net          61,669,647                   -
          Liquidation of PIK preferred stock and warrants                                   -         (93,741,617)
          Distribution of contributed capital and payment of
           accretion on various classes of common stock                              (412,888)        (43,747,734)
                                                                               --------------      --------------
Net cash provided by financing activities                                         342,622,850         601,865,917
                                                                                -------------      --------------
Net increase (decrease) in cash and cash equivalents                               (1,693,923)        138,067,173
Cash and cash equivalents, beginning of period                                      1,693,923          13,801,190
                                                                                -------------      --------------
Cash and cash equivalents, end of period                                        $          -       $  151,868,363
                                                                                =============      ==============
Supplemental disclosure of cash flows:
         Cash paid for interest                                                 $   7,840,878      $   16,498,833
                                                                                =============      ==============
Non-Cash Transactions:
         Seller debt issued in acquisitions                                     $   2,347,107      $    8,998,250
         Payable-in-kind preferred dividends and accretion                      $     683,304      $    2,930,338
         Stock issued for acquisitions                                          $         -        $    8,804,163
</TABLE>
  The accompanying notes to Condensed Consolidated Financial Statements are an
            integral part of these condensed financial statements.

                                       5
<PAGE>

                             Pinnacle Holdings Inc.
              Notes to Condensed Consolidated Financial Statements

1. Financial Statements

The accompanying condensed 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. At the
time of the August 31, 1999 Motorola site acquisition (as defined herein), the
Company invested $49 million in convertible preferred stock of PT III, a newly
formed entity, most of the common stock of which is owned by two members of
management of the Company. These proceeds were utilized by PT III to acquire the
ownership of certain rooftop communication site leases previously owned by
Motorola. The Company and Part III modified certain aspects of those
relationships subsequent to September 30, 1999. See Part II, Item 5, Other
Information. In addition, PT III entered into a service agreement with the
Company to manage these assets. As a result of these transactions and
significant operating relationships with PT III, the assets and liabilities of
PT III, together with the results of operations from the date of the Motorola
acquisition, have been included in the Company's consolidated financial
statements as of September 30, 1999. These entities are collectively referred to
as the "Company". See Part II, Item 5, Other Information. All significant
intercompany balances and transactions have been eliminated. Preparation of the
consolidated financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements. 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
September 30, 1999 and for the nine month and three month periods ended
September 30, 1999 and 1998 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 the Company's financial
statements and notes thereto for the year ended December  31, 1998.

The Company's Condensed Consolidated Statements of Operations for the nine month
and three month periods ended September 30, 1999, reflect all components of
Comprehensive Income as defined by SFAS No. 130, "Reporting Comprehensive
Income."  Accordingly, no separate Consolidated Statement of Comprehensive
Income is presented as would otherwise be required.

2. Acquisitions

The Company actively acquires communications sites and related real estate
assets.

On March 4, 1998, the Company completed the acquisition of 201 communications
sites from Southern Communications Services, Inc. ("Southern Communications"), a
subsidiary of Southern Company. The Company paid $83,500,000 for these
communications sites, located in Georgia, Alabama, Mississippi, and Florida.

On September 3, 1998, the Company acquired from MobileMedia Corporation
("MobileMedia") and several of its affiliates 166 communications sites for an
aggregate purchase price of approximately $170 million (the "MobileMedia
Acquisition").  MobileMedia assigned its existing tenant leases on the sites to
the Company.  The Company entered into a lease (the "Lease") with MobileMedia
Communications, Inc., an affiliate of MobileMedia, providing such affiliate of
MobileMedia the non-exclusive right to install a certain amount of its equipment
on the acquired communications sites for aggregate rent of $10.7 million per
year.  The Lease has an initial term of 15 years and one five-year renewal term
exercisable at the option of the lessee.  Prior to this acquisition, space on
the sites was primarily for the exclusive use of MobileMedia and its affiliates.
The Company has integrated these communications sites into its rental tower
business and is leasing space on these sites to other third party wireless

                                       6
<PAGE>

communications providers.  The communications sites are located in the
Southeastern United States, Southern California and New England.

In addition to the Southern Communications and MobileMedia transactions
described above, the Company completed 80 acquisitions of 526 communications
sites and related assets, all of which were individually insignificant to the
Company, from various sellers during the year ended December 31, 1998 for an
aggregate purchase price of $331,204,262, consisting of $328,789,297 in cash and
$2,414,965 of notes payable to the former tower owners.

On August 31, 1999, the Company acquired 1858 communications sites and related
assets from Motorola, Inc.  ("Motorola") for $254 million, comprised of $245
million in cash and $9 million in the Company's 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 the Company having sites in all fifty States and nine Canadian
Provinces.  The Company transferred certain of the rooftop communication sites
it acquired from Motorola to PT III. See Part II, Item 5, Other Information.

In addition to the Motorola Antenna Site Acquisition, during the nine months
ended September 30, 1999 the Company completed 108 acquisitions of 295
communications sites and related assets, all of which were individually
insignificant to the Company, from various sellers for an aggregate purchase
price of $211 million consisting of $202 million in cash and $9 million of notes
payable to the former tower owners.

The Company accounts for its acquisitions using the purchase method of
accounting. The results of operations of the acquired assets are included  with
those of the Company from the dates of the respective acquisitions. The pro
forma results of operations listed below reflect purchase accounting and pro
forma adjustments as if all of the transactions completed during 1998 and the
nine months ended September 30, 1999 occurred as of January 1, 1998.  The
unaudited pro forma condensed consolidated financial information 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 results of operations in the future.
<TABLE>
<CAPTION>

                                                                Pro Forma
                                                -----------------------------------------
                                                   September 30,        September 30,
                                                       1998                  1999
                                                -------------------  --------------------
                                                    (unaudited)          (unaudited)
<S>                                             <C>                  <C>
Revenue                                              $ 100,368,428         $ 110,241,230
Gross margin, excluding depreciation                    57,896,990            67,573,289
Net loss                                               (88,939,174)          (72,603,977)
Net loss attributable to common shareholders           (89,622,478)          (75,534,315)
Basic net loss per common share                              (9.23)                (2.54)

</TABLE>

3. Public Offerings and Stockholders' Equity

On February 19, 1999, the Company completed its initial public offering of
common stock ("the IPO") whereby the Company 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 option was 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 IPO of approximately $288 million.

In connection with the IPO, pursuant to a recapitalization agreement between the
Company, its largest stockholder, ABRY Broadcast Partners II, L.P. ("ABRY II"),
and certain members of the Company's

                                       7
<PAGE>

management that are stockholders of the Company, the Company converted all
outstanding shares of each class of the Company's five classes of common stock
into shares identical to the Common Stock sold in the IPO and paid to the
holders of certain of such classes of common stock preferential amounts and
yields. The certificate of incorporation of the Company was amended immediately
prior to the consummation of the IPO to eliminate the multiple classes of the
Company'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 the Company
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.

The holders of the Company'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 the Company
from proceeds of the IPO, which amount equaled the amount of preferences such
shares were entitled to over the other classes of the Company's common stock
pursuant to the Company's certificate of incorporation before giving effect to
the amendment relative to the conversion of those shares as described above.  In
addition, the holders of the Company's outstanding (prior to the above described
conversion) shares of Class A Common Stock were collectively paid approximately
$4.8 million by the Company from proceeds of the IPO, which amount equaled the
amount of yield such shares had accrued from the date of their issuances through
June 30, 1997 pursuant to the Company'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 IPO were:  (1) approximately $32.0 million
redeemed the outstanding shares of the Company's Series A Senior Preferred Stock
(the "Senior Preferred Stock");  (2) approximately $61.7 million redeemed the
outstanding shares of the Company's Series B Junior Preferred Stock (the "Junior
Preferred Stock");  (3) approximately $15.7 million repaid in full and retired a
loan from ABRY II;  (4) approximately $123.8 million repaid outstanding
borrowings under the Company's Senior Credit Facility (as defined herein); and,
(5) $11.4 million was used to fund the closing of pending acquisitions proximate
to the date the funds were available from the IPO.

On July 22, 1999, the Company completed a secondary offering of common stock
(the "Secondary Offering") whereby the Company sold 8,650,000 shares of its
Common Stock.  The price per share was $25, resulting in net proceeds from the
Secondary Offering of approximately $206 million.  Certain stockholders of the
Company also sold 2,350,000 shares of common stock, the net proceeds of which
are not available to the Company.  The proceeds from the Secondary Offering were
invested initially in short-term liquid securities and will be used in
conjunction with the Company's availability of senior debt under its amended
Senior Credit Facility to fund acquisitions and development of communications
sites.   Approximately $55 million of this cash had been used as of September
30, 1999, $20 million of which was used to consummate the Motorola Antenna Site
Acquisition.

Also in conjunction with the Motorola Antenna Site Acquisition the Company
issued 418,520 shares of its 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.

4. Long-term Debt

As of June 25, 1999, the Company amended its Senior Credit Facility to provide
$520 million of financing, of which $470 million was committed.  Advances under
the Senior Credit Facility accrue interest at the Company's 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, the Company again amended its Senior Credit Facility
to provide $670 million of financing, of which $470 million was committed and
utilized at September 30, 1999.

                                       8
<PAGE>

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

5. Commitments

As of and subsequent to September 30, 1999, the Company entered into several
letters of intent with various third parties to purchase 512 additional
communications sites and related assets, reflecting an aggregate commitment to
pay approximately $105 million, all of which are subject to consummation of
transactions pending completion of due diligence efforts and any further
negotiation that may result therefrom.

6. Subsequent Events

During October 1999, the Company increased the committed amount of its Senior
Credit Facility from $470 million to $520 million, $50 million of which remains
available for use in making acquisitions as of November 11, 1999.


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 the Company should be read in conjunction with the condensed
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 risk factors set forth in the Company's
Amendment No. 2 to Registration Statement on Form S-3 (No. 333-82273) filed on
July 21, 1999 (the "Registration Statement").

The Company

The Company acquires and constructs communications sites, including exclusive
management rights or leasehold interests and leases space on such sites to a
broad base of wireless communications providers, operators of private networks,
government agencies and other customers. The Company's objective is to own or
manage and operate 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. The Company seeks to
obtain a substantial number of communications sites in its targeted markets in
order to offer "one-stop shopping" to wireless communications providers who are
deploying or expanding wireless communications networks.

The Company's growth has come primarily from aggressively pursuing communication
site acquisitions in areas that complement the Company's existing base of rental
communications sites and the expansion into additional high growth wireless
communications markets. The Company also selectively constructs new
communications sites to further augment its communication site portfolio.
Additionally, the Company realizes organic revenue growth from new tenants,
escalations and repricing of existing tenant leases. The Company is the leading
provider of wireless communications rental tower space in the Southeastern
United States. With the closing of the Motorola Antenna Site Acquisition, the
Company's footprint has expanded to cover all fifty states and parts of Canada.

                                       9
<PAGE>

During the quarter, we achieved a 185% increase in our number of sites by
closing 1,987 sites - nearly tripling our site inventory. These new sites
included the purchase of all of Motorola's 1,858 North American antenna sites,
which accounted for 499 owned sites, 526 "managed" sites and 833 "leased" sites.
Managed sites are tower or rooftop communications sites owned by others where we
would have the exclusive right to market antenna space on these sites. Leased
sites are tower or rooftop communications sites owned by others that we would
have a non-exclusive right to market antenna space. We subsequently sold certain
rooftop sites to PT III. As of September 30, 1999, the Company has completed
over 320 acquisitions and upon completion of all pending acquisitions will own
or manage over 3,600 sites.

We currently have over 3000 customers renting space on one or more of our
communications sites. Our tenants consist of all forms of wireless
communications providers, operators of private wireless networks and government
agencies, including Southern Communications, Nextel, Sprint PCS, PageNet,
Motorola, BellSouth Mobility, MobileMedia Communications, Teletouch, Skytel,
Pagemart, Federal Bureau of Investigation and Bureau of Alcohol, Tobacco &
Firearms.  The Company's leases generally range in duration from three to five
years and many provide for scheduled minimum rent increases of the greater of a
specified percentage (which typically ranges from 3-5%) or the change for the
relevant period in the Consumer Price Index.  Additionally, our customers are
generally responsible for the installation of their own equipment and the
incremental utility costs associated with such equipment.  Hence, adding
customers on a communications site does not increase monitoring, maintenance or
utility costs. When new customers are added to a communications site, we are
able to increase revenue at low incremental cost, thereby increasing cash flow
margins.

The Company has designed and implemented a three-tiered growth strategy that
focuses on: (i) increasing revenue yield per tower through aggressive marketing
and development; (ii) continuing to acquire communications sites in key markets;
and (iii) selective new tower construction.  In order to effect its strategy,
the Company has created a highly focused, structured organization in which
significant resources are devoted to acquiring or constructing communications
sites on strategically located sites supported by customer demand.  In addition
to supporting the purchase decision regarding potential acquisitions, the
Company uses its proprietary information systems and other systems to rapidly
integrate new communications sites and initiate sales and marketing efforts
immediately following their acquisition or construction.


Results of Operations

Nine months ended September 30, 1999 compared to nine months ended September 30,
--------------------------------------------------------------------------------
1998
----

Site Revenues increased by $27.7 million, or 131%, to $48.8 million for the
nine-month period ended September 30, 1999 from $21.1 million for the nine-month
period ended September 30, 1998. This additional revenue is mainly attributable
to the acquisition and construction of 2,748 sites since January 1, 1998. They
are as follows: 1,987 sites during third quarter, 1999; 197 sites during first
two quarters of 1999; and 564 sites during 1998. A portion of the revenue
increase is related to same-sites organic growth. 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.

Direct operating expenses, excluding depreciation and amortization, increased by
$7.7 million or 195% to $11.7 for the nine-month period ended September 30, 1999
from $4.0 million for the nine-month period ended September 30, 1998. This
increase is consistent with the acquisition and construction of the 2,748 sites
discussed above.  Direct operating expenses as a percentage of revenue increased
to 23.9% for the nine-month period ended September 30, 1999 from 18.8% for the
nine-month period ended September 30, 1998.  The percentage increase is
primarily a result of the change in mix of sites.  Both managed and leased sites
produce lower margins than

                                       10

<PAGE>

owned sites because of their variable rent expense. Notwithstanding, these sites
are financially and strategically consistent with the Company's objective of
providing wireless service providers a large selection of antenna site
locations.

General and administrative expenses increased slightly for the nine-month period
ended September 30, 1999 from $2.7 million to $2.8 million for the nine-month
period ended September 30, 1998.  The increases in expenses are from additional
staffing required for the increased work volume, the Company becoming a public
registrant, increased levels of advertising and marketing expenditures, and
other related costs associated with the Company's growth.  However, as a
percentage of revenue, it decreased to 5.8% of revenue for the nine-month period
ended September 30, 1999 from 12.9% for the nine-month period ended September
30, 1998 reflecting the disproportionate higher growth in revenues relative to
expenses. The decrease in percentage is from economies of scale realized from
increases in tower revenues as a result of the Company's acquisitions and
construction of communications sites.

Corporate development expenses increased $776 thousand, but decreased as a
percentage of revenue from 23.5% for the nine-month period ended September 30,
1998 compared to 11.7% for the nine-month period ended September 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 direct operating
expenses as a result of the Company's acquisitions and construction of
communications sites.

State franchise, excise and minimum taxes, which represent taxes assessed in
connection with the Company's operations in various state jurisdictions
increased to $0.70 million for the nine-month period ended September 30, 1999
from $0.40 million for the nine-month period ended September 30, 1998.  Such
taxes are calculated using various methods such as a portion of the Company's
property within a given state, the Company's capital structure or based upon a
minimum tax in lieu of income taxes.  The increase in 1999 is primarily
attributable to the Company's significant growth in assets and capital, offset
slightly by benefits resulting from the ability to apportion such amounts to
certain newly entered states that have no such taxes or only minimum taxes, plus
taxes to be incurred related to operations located in Canada from the Motorola
Acquisition.

Depreciation and amortization expense increased 163%, or $21.8 million, to $35.1
million for the nine-month period ended September 30, 1999 from $13.4 million
for the nine-month period ended September 30, 1998 as a result of the increase
in tower assets through the acquisition activities of the Company as described
above.  Of the $21.8 million increase, $3.6 million was attributable to the
Motorola Acquisition.

Interest expense increased $7.2 million, or 98%, for the nine-month period ended
September 30, 1999 from $7.3 million for the nine-month period ended September
30, 1998. The increase in interest expenses was attributable to higher interest
rates and increased average borrowings associated with the Company's
acquisitions during the nine-month period ended September 30, 1999 as compared
to the nine-month period ended September 30, 1998.

Amortization of original issue discount and debt issuance cost increased $5.7
million to $17.3 million for the nine-month period ended September 30, 1999 from
$11.6 million for the nine-month period ended September 30, 1998.  The prior
year period included amortization of original issue discount for only six full
and one partial month, as the sale of the Company's 10% Senior Discount Notes
due March 15, 2008 ("Senior Discount Notes") was consummated on March 20, 1998,
compared to a full nine-months of amortization on the accreted balance for the
1999 period.


Three months ended September 30, 199 compared to three months ended September
-----------------------------------------------------------------------------
30, 1998
--------

Site Revenues increased by $14.5 million, or 169%, to $23.1 million for the
three-month period ended September 30, 1999 from $8.6 million for the three-
month period ended September 30, 1998.  The additional revenue is mainly
attributable to the acquisition and construction of 2,184 sites over the past
twelve months since September 30, 1998, of which 1,987 closed during the three
months ended September 30, 1999.

                                       11
<PAGE>

A portion of the revenue increase is related to same-sites sales growth.
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.

Direct operating expenses, excluding depreciation and amortization, increased by
$5.0 million, or 260%, to $6.9 million for the three-month period ended
September 30, 1999 from $1.9 million for the three-month period ended September
30, 1998. This increase is consistent with the acquisition and construction of
the 2,184 sites discussed above.  Direct operating expenses as a percentage of
revenue increased to 29.8% for the three-month period ended September 30, 1999
from 22.2% for the three-month period ended September 30, 1998.  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 the Company's objective of providing wireless service providers
a large selection of antenna site locations.

General and administrative expenses increased for the three-month period ended
September 30, 1999 from $0.9 million to $1.2 million for the three-month period
ended September 30, 1998.  However, as a percentage of revenue, it decreased to
5.2% of revenue for the three-month period ended September 30, 1999 from 9.9%
for the three-month period ended September 30, 1998 reflecting the
disproportionate higher growth in revenues relative to expenses. The decrease in
percentage is from economies of scale realized from increases in tower revenues
as a result of the Company's acquisitions and construction of communications
sites.  The increases in expenses are from additional staffing required for the
increased work volume, the Company becoming a public registrant, increased
levels of advertising and marketing expenditures, and other related costs
associated with the Company's growth.

Corporate development expenses increased $0.8 million, from $1.7 million to
$2.5 million, but decreased as a percentage of revenue from 19.3% for the
three-month period ended September 30, 1998 compared to 10.7% for the three-
month period ended September 30, 1999.  The increases are related to the overall
growth in the business and related activity during this same period. The
decrease in percentage is from economics of scale realized from increases in
tower revenues relative to direct operating expenses as a result of the
Company's acquisitions and construction of communications sites.

State franchise, excise and minimum taxes, which represent taxes assessed in
connection with the Company's operations in various state jurisdictions
increased to $0.3 million for the three-month period ended September 30, 1999
from $0.1 million for the three-month period ended September 30, 1998.  Such
taxes are calculated using various methods such as a portion of the Company's
property within a given state, the Company's capital structure or based upon a
minimum tax in lieu of income taxes.  The increase in 1999 is primarily
attributable to the Company's significant expansion of its geographic region,
primarily through acquisitions.

Depreciation and amortization expense increased 164%, or $9.6, million to $15.5
million for the three-month period ended September 30, 1999 from $5.9 million
for the three-month period ended September 30, 1998 as a result of the increase
in tower assets through the acquisition activities of the Company as described
above.  Of the $9.6 million increase, $3.6 million was attributable to the
Motorola Acquisition.

Interest expense increased $3.5 million, or 127%, for the three-month period
ended September 30, 1999 from $2.7 million for the three-month period ended
September 30, 1998. The increase in interest expenses was attributable to higher
interest rates and increased average borrowings associated with the Company's
acquisitions during the three-month period ended September 30, 1999 as compared
to the three-month period ended September 30, 1998.

Amortization of original issue discount and debt issuance cost increased $0.6
million to $6.1 million for the three-month period ended September 30, 1999 from
$5.5 million for the three-month period ended September 30, 1998. The increase
reflects the twelve months of compounding of the amortized original issue
discount of the zero-coupon Senior Discount Notes issued March 20, 1998 and due
March 15, 2003.

                                       12
<PAGE>

Liquidity and Capital Resources
-------------------------------

The Company's liquidity needs arise from its acquisition-related activities,
debt service, working capital and capital expenditures. The Company has
historically funded its liquidity needs with proceeds from equity contributions,
bank borrowings, cash flow from operations and the offering of its Senior
Discount Notes. The Company had working capital of $101.0 million and a working
capital deficit $9.3 million (inclusive of a $15.0 million bridge loan owed to
ABRY II repaid on February 24, 1999) as of September 30, 1999 and December 31,
1998, respectively. The Company's ratio of total debt to stockholders' equity
was 1.8 to 1.0 at September 30, 1999 and 10.9 to 1.0 at December 31, 1998.

The Senior Credit Facility with Bank of America, N.A. and certain other lenders
provides a combination of term loans and revolving lines of credit for
borrowings of up to $670 million, 520 of which is currently committed. The
Company may make borrowings and repayments until June 30, 2006. Beginning June
30, 2001, the availability under the term loans and revolving lines of credit
start reducing by specified amounts on a quarterly basis until June 30, 2007
when the availability will be reduced to zero. Loans under the Senior Credit
Facility bear interest at a rate per annum, at the borrower's request, equal to
the agent bank's prime rate plus a margin of up to 1.75% or the 90-day London
Interbank Offered Rate plus a margin of up to 3.00%. Outstanding borrowings
under the Senior Credit Facility have been used primarily to fund acquisitions
and construction of communications sites. As of September 30, 1999, there was
approximately $200 million available under the Senior Credit Facility (of the
additional $50 million of uncommitted amount that subsequently was committed and
the $150 million that remains uncommitted currently) after giving effect to
approximately $25.7 million of outstanding letters of credit, which reduce
availability under the Senior Credit Facility.

The Company also uses seller financing to fund certain of its tower
acquisitions. The Company had outstanding notes that it issued to sellers
bearing interest at rates ranging from 8.5% to 13.0% per annum in the aggregate
amount of $28.2 million at September 30, 1999.

In March 1998, the Company completed its offering of its Senior Discount Notes.
The Company received net proceeds of approximately $192.8 million from that
offering. The proceeds were used to repay outstanding borrowings under the
Senior Credit Facility, to repay in full and retire a $12.5 million bridge loan
from ABRY II and accrued interest thereon, to repay in full and retire a $20
million subordinated term loan and accrued interest thereon and to pay a
distribution preference to holders of Class B Common Stock. The Senior Discount
Notes were issued under an indenture dated as of March 20, 1998 and will mature
on March 15, 2008. Until March 15, 2003, the Company's interest expense on the
Senior Discount Notes will consist solely of the accretion of original issue
discount. Thereafter, the Senior Discount Notes will require semi-annual cash
interest payments of $16.25 million.

In September 1998, in order to finance the MobileMedia Acquisition, the Company
sold two newly issued series of Preferred Stock, the Senior Preferred Stock with
a liquidation preference of $30.0 million and the Junior Preferred Stock with a
liquidation preference of $32.5 million. Included in the sale of the Senior
Preferred Stock were warrants to purchase approximately .75% of the Company's
outstanding common stock.  The warrants were cancelled upon the redemption of
the Senior Preferred Stock. ABRY/Pinnacle, Inc., an affiliate of ABRY II,
purchased the Junior Preferred Stock. In addition to the proceeds from the above
sales, the MobileMedia Acquisition was funded with the ABRY Bridge Loan and
borrowings under the Senior Credit Facility. In December 1998, the Company
issued $26.2 million of additional Junior Preferred Stock to ABRY/Pinnacle, Inc.
The proceeds from the sale of the Junior Preferred Stock were used to fund tower
acquisitions and pay operating costs. The Senior Preferred Stock and the Junior
Preferred Stock were entitled to receive dividends, payable quarterly, at a
current rate of 14% per annum. The Senior Preferred Stock and the Junior
Preferred Stock were redeemable, at the option of the Company, in whole (but not
in part), at any time at a redemption price equal to the aggregate liquidation
preference thereof, plus all accumulated but unpaid dividends to the date of
redemption.

                                       13
<PAGE>

The principal stockholders of the Company (ABRY II, and Messrs. Wolsey, Dell'Apa
and Day) were parties to a Subscription and Stockholders Agreement, dated as of
May 16, 1996, as amended (the "Stockholders Agreement"). Pursuant to the
Stockholders Agreement, ABRY II agreed to make capital contributions to the
Company, up to an aggregate capital contribution of $50.0 million. As of
December 31, 1998, ABRY II had contributed $37.2 million and had guaranteed an
additional $3.9 million of other debt under the aggregate $50.0 million capital
contribution commitment. Such capital contribution commitment terminated upon
the closing of the IPO. Additionally, as of December 31, 1998, ABRY II or an
affiliate had contributed separately $73.7 million to the Company, including
$15.0 million outstanding under the ABRY Bridge Loan and $58.7 million of Junior
Preferred Stock.  The Stockholders Agreement was terminated upon completion of
the IPO.

On February 19, 1999, the Company completed the IPO whereby the Company sold
20,000,000 shares of Common Stock.  In addition, on March 19, 1999, the
Underwriters over-allotment option was 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 IPO of approximately $290 million before
deducting costs of the IPO.

In connection with the IPO, pursuant to a recapitalization agreement between the
Company, its largest stockholder, ABRY II, and certain members of the Company's
management that are stockholders of the Company, the Company converted all
outstanding shares of each class of  the Company's five classes of common stock
into shares of the Common Stock sold in the IPO and paid to the holders of
certain of such classes of common stock preferential amounts and yields.  The
certificate of incorporation of the Company was amended immediately prior to the
consummation of the IPO to eliminate the multiple classes of the Company'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 the Company 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.

The holders of the Company'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 the Company
from proceeds of the IPO, which amount equaled the amount of preferences such
shares were entitled to over the other classes of the Company's common stock
pursuant to the Company's certificate of incorporation before giving effect to
the amendment relative to the conversion of those shares as described above.  In
addition, the holders of the Company's outstanding (prior to the above described
conversion) shares of Class A Common Stock were collectively paid approximately
$4.8 million by the Company from proceeds of the IPO, which amount equaled the
amount of yield such shares had accrued from the date of their issuances through
June 30, 1997 pursuant to the Company'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 IPO were:  (1) approximately $32.0 redeemed the
outstanding shares of the Company's Senior Preferred Stock;  (2) approximately
$61.7 million redeemed the outstanding shares of the Company's Junior Preferred
Stock;  (3) approximately $15.7 million repaid in full and retired a loan from
ABRY II;  (4) approximately $123.8 million repaid outstanding borrowings under
the Company'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 IPO.

On July 22, 1999, the Company completed the Secondary Offering whereby the
Company sold 8,650,000 shares of common stock.  The price per share was $25,
resulting in net proceeds from the Secondary Offering of approximately $206
million.  Certain stockholders of the Company also sold 2,350,000 shares of
common stock, the net proceeds of which are not available to the Company.  The
proceeds from the Secondary Offering were invested initially in short-term
liquid securities and will be used in conjunction with the Company's
availability of senior debt under the Senior Credit Facility to fund the
expected consummation of the Motorola Antenna Site Acquisition and other
acquisitions and development of communications sites.

                                       14
<PAGE>

Capital expenditures, including acquisitions, for the nine months ended
September 30, 1999 were $477.0 million, compared to $350.3 million in the
comparable 1998 period. The Company anticipates that it will spend approximately
$98.7 million on capital expenditures during the period from October 1, 1999
through December 31, 1999, including the Motorola Antenna Site Acquisition,
various individually immaterial acquisitions in the Company's current targeted
acquisitions pipeline, construction and upgrading of communications sites.
Depending on availability of additional capital, the Company expects that it may
make substantial capital expenditures for acquisitions, construction and
upgrading of additional communications sites in 1999 and 2000.

The Company believes that cash flow from operations and existing cash balances
will be sufficient to meet working capital requirements for existing properties.
The Company currently anticipates that it will seek additional financing in
order to pursue additional acquisitions, construction activity and other capital
expenditures that will require funding in excess of available proceeds and funds
available under its Senior Credit Facility.  Such additional financing may be
obtained by the Company through public or private debt and equity offerings or
increasing availability under its Senior Credit Facility.  There can be no
assurance that such financing will be commercially available through an
increased commitment under the Senior Credit Facility or otherwise or be
permitted by the terms of the Company's existing indebtedness.   To the extent
that the Company is unable to finance future capital expenditures, it may not be
able to achieve its current acquisition strategy.

Inflation

Because of the relatively low levels of inflation experienced in 1998 and as of
September 30, 1999, inflation did not have a significant effect on the Company's
results in such years.

Year 2000

Many computer systems in use today were designed and developed using two digits,
rather than four, to specify years.  As a result, such systems will recognize
the year 2000 as "00" or 1900.  This could cause many computer applications to
fail completely or to create erroneous results unless corrective measures are
taken.

We utilize management information systems and software technology that may be
affected by Year 2000 issues throughout our businesses.  During 1996, we began
to implement plans to assess our systems to determine their ability to meet our
internal and external requirements.  During 1998, we completed our initial
comprehensive testing of and modifications to our information systems in
response to that testing.  We have developed questionnaires and contacted key
suppliers regarding their Year 2000 compliance to determine any impact on our
operations.  In general, our suppliers and customers appear to have developed or
are in the process of developing plans to address Year 2000 issues.  We will
continue to monitor and evaluate the progress of our suppliers and customers on
this matter.

Year 2000 issues are not expected to have a material impact on our current
information systems as a result of the steps already completed to try and make
our systems Year 2000 compliant.  Based on the nature of our business, we
anticipate that we are not likely to experience material business interruption
due to the impact of Year 2000 compliance on our customers and vendors, although
if our customers and vendors experience Year 2000 problems, our results of
operations could be materially adversely affected.  We estimate that we will
spend approximately $100,000 in 1999 to continue to monitor and test our systems
for Year 2000 compliance including our software applications that we
continuously develop and enhance.  As a result, we do not anticipate that
incremental expenditures to address Year 2000 compliance will be material to our
liquidity, financial position or results of operations prior to the Year 2000.

                                       15
<PAGE>

Item 3.   Quantitative and Qualitative Disclosures About Market Risk.
          ----------------------------------------------------------

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

The following table represents the future principal payment obligations and
weighted-average interest rates associated with the Company's existing long-term
debt instruments assuming the Company's actual level of long-term indebtedness
of $676.8 million under the Senior Discount Notes and the Senior Credit Facility
as of September 30, 1999:
<TABLE>
<CAPTION>

   Expected Maturity Date
<S>                        <C>         <C>          <C>          <C>          <C>          <C>

                             1999       2000           2001         2002         2003      Thereafter
Liabilities
Long-term Debt
Fixed Rate
(10.00%)                   $  --      $  --        $        --  $        --  $        --  $325,000,000
Variable Rate
(Weighted Average
Interest Rate of 8.32%)       --         --         34,530,000   51,245,000   61,274,000   297,251,000
</TABLE>

The Company's primary market risk exposure relates to (i) the interest rate risk
on long-term and short-term borrowings, (ii) its ability to refinance its Senior
Discount Notes at maturity at market rates, (iii) the impact of interest rate
movements on its ability to meet interest expense requirements and exceed
financial covenants and (iv) the impact of interest rate movements on the
Company's ability to obtain adequate financing to fund future acquisitions.  The
Company manages interest rate risk on its outstanding long-term and short-term
debt through its use of fixed and variable rate debt.  While the Company can not
predict or manage its ability to refinance existing debt or the impact interest
rate movements will have on its existing debt, management continues to evaluate
its financial position on an ongoing basis.

                                       16
<PAGE>

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.
         -----------------

The Company is from time to time involved in ordinary litigation incidental to
the conduct of its business. The Company believes that none of its pending
litigation will have a material adverse effect on the Company'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.
         ---------------------------------------------------

Not applicable.

Item 5.  Other Information.
         -----------------

The Company is taxed as a Real Estate Investment Trust ("REIT") for federal
income tax purposes. The federal tax laws and regulations relating to REITs
limit the Company's ability to own and derive income from certain types of
assets. In order to minimize the risk that the ownership of or income from
certain of the roof top communications sites acquired from Motorola (the
"Transferred Assets") might negatively affect the Company's qualification as a
REIT, effective September 29, 1999 the Transferred Assets were transferred to PT
III for $49,000,000. A subsidiary of the Company owns approximately 9% of PT
III's common stock. Certain officers of the Company own the remaining
outstanding common stock of PT III. In September 1999, a subsidiary of the
Company purchased $49,000,000 of convertible preferred stock issued by PT III.
PT III used the proceeds from the sale of such preferred stock to acquire the
Transferred Assets. In connection with such transfer, a subsidiary of the
Company and PT III entered into a services agreement whereby such subsidiary
agreed to service the assets of PT III and take certain related actions.
Subsequent to September 30, 1999, PT III exchanged a portion of the convertible
preferred stock it issued for a $39,200,000 convertible promissory note issued
by it to a subsidiary of the Company and amended certain terms of the remaining
convertible preferred stock. In addition, the aforementioned services agreement
was replaced with a cost and expense sharing and reimbursement agreement. PT III
has guaranteed the Senior Credit Facility and has pledged all of its assets to
secure such guarantee. The Board of Directors of the Company, excluding the
officers of the Company 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 the Company than those that would be obtained in comparable
arms-length transactions with parties that were not affiliated with the Company,
and that such transactions were in the best interests of the Company. The
Company currently does not anticipate that the officers of the Company who own
PT III common stock will significantly benefit from such stock ownership.

As a result of the acts referenced in the preceding paragraph, a subsidiary of
the Company currently owns a $39,200,000 convertible promissory note 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.  The $9,800,000 of outstanding PT III convertible preferred stock
accrues dividends at 18% per annum, payable quarterly.  The terms of PT III's
convertible promissory note, convertible preferred stock and certificate of
incorporation limit PT III's ability to borrow money, pledge its assets, issue
additional securities, make distributions to its shareholders, purchase and sell
assets, enter into transactions with affiliates and take certain actions without
seeking approval from either its common shareholders, the holders of the
convertible preferred

                                       17
<PAGE>

stock and/or the holders of the convertible note, depending on the action
seeking to be taken. Should all of the PT III convertible preferred stock and
the convertible promissory note be fully converted to common stock of PT III, a
subsidiary of the Company would own in excess of 99.9% of the outstanding
common stock of PT III. 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 the Company and its subsidiaries.  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.

The Company continues to assess the risk to its status as a REIT that might
result from it reacquiring the Transferred Assets.  Depending upon the
conclusions reached from such assessment, the Company may seek to reacquire the
Transferred Assets by purchase, merger or other means.  It is possible that the
Company may enter into additional transactions with PT III or other similar
entities in certain circumstances to minimize the risk of no longer qualifying
as a REIT.  In addition, as additional acquisition opportunities become
available to the Company in its existing line of business or in complimentary
non-real estate based communication services activities, the Company may
determine that it is in its best interests to acquire, operate or derive income
from assets, business or entities that would cause it 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. The Company filed a Form 8-K on September 14, 1999
     with respect to the acquisition of communication sites from Motorola, Inc.
     as discussed in footnote 2 to the Consolidated Financial Statements in Part
     I, Item 1 above.  The Company indicated in such Form 8-K that it intended
     to file the required financial statements and pro forma financial
     information as soon as practicable, but no later than 60 days from the date
     of that filing.  The Form 8-K/A was filed on November 15, 1999.

     No other reports on Form 8-K were filed during the nine month period ended
     September 30, 1999.

                                       18
<PAGE>

                                   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  November 15, 1999       By:  /s/ Steven R. Day
                                  -----------------------
                                  Steven R. Day
                                  Chief Financial Officer
                                  Vice President, and Secretary

                                  Duly Authorized Officer and Principal
                                    Financial Officer.

                                       19
<PAGE>

                                 EXHIBIT INDEX

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

2.1   Agreement for Purchase and Sale of Assets between Pinnacle Towers Inc. and
      Motorola, Inc., dated June 25, 1999.***

2.2   Amendment to Agreement for Purchase and Sale of Assets dated as of August
      31, 1999 between Pinnacle Towers Inc. and Motorola, Inc.+

3.1.1 Amended and Restated Certificate of Incorporation.*

3.1.2 Bylaws of the Company.**

4.1   Registration Rights Agreement dated as of August 31, 1999 between the
      Registrant and Motorola, Inc.+

10.1  Fourth Amended and Restated Credit Agreement, dated June 25, 1999.****

10.2  Fifth Amended and Restated Credit Agreement, dated September 17, 1999.

10.3  Subscription Agreement between Pinnacle Towers Inc. and Pinnacle Towers
      III, Inc., dated as of August 31, 1999.

10.4  Amended and Restated Articles of Incorporation of Pinnacle Towers III,
      Inc., dated September 28, 1999.

10.5  Agreement For Purchase and Sale Agreement of Assets by and between
      Pinnacle Towers Inc. and Pinnacle Towers III, Inc., dated as of August 31,
      1999.

10.6  Services Agreement by and between Pinnacle Towers Inc. and Pinnacle Towers
      III, Inc., dated as of August 31, 1999.

10.7  Agreement by and between Pinnacle Towers III, Inc. and Pinnacle Towers
      Inc., dated as of September 28, 1999.

10.8  Amended and Restated Articles of Incorporation of Pinnacle Towers III,
      Inc., dated October 28, 1999.

10.9  Convertible Promissory Note of Pinnacle Towers III, Inc.

10.10 Cost and Expense Sharing and Reimbursement Agreement by and between
      Pinnacle Towers Inc. and Pinnacle Towers III, Inc., effective as of
      August 31, 1999.

27.1  Financial Data Schedule

__________________

*    Previously filed on February 17, 1999 with Amendment No. 6 to the Company's
     Registration Statement on Form S-11 (S.E.C. File No. 333-59297).

**   Previously filed on April 1, 1998 with the Company's Registration Statement
     on Form S-4 (S.E.C. File No. 333-49147).

***  Previously filed on July 2, 1999 with the Company's Registration Statement
     on Form S-3 (S.E.C. File No. 333-82273).

**** Previously filed on July 21, 1999 with Amendment No. 2 to the Company's
     Registration Statement on Form S-3 (S.E.C. File No. 333-82273).

+    Previously filed on September 14, 1999 with the Company's Report on Form
     8-K (S.E.C. file No. 000-24773)

                                       20