<PAGE>   1

                                   FORM 10-Q/A
                       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 SEPTEMBER 30, 1999

                                       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 34236

                            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 November 12, 1999, Registrant had outstanding 41,094,520 shares of $.001 par
value Common Stock

<PAGE>   2

<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION                                                                                PAGE
                                                                                                          ----------
<S>                                                                                                         <C>

Item 1.  Financial Statements
         Condensed Consolidated Balance Sheets as of December 31, 1998 and September 30, 1999                   1
         Condensed Consolidated Statements of Operations for the nine months ended
           September 30, 1998 and 1999                                                                          2
         Condensed Consolidated Statements of Operations for the three months ended
           September 30, 1998 and 1999                                                                          3
         Condensed Consolidated Statements of Changes in Stockholders' Equity for the nine months
            ended September 30, 1999                                                                            4
         Condensed Consolidated Statements of Cash Flows for the nine months ended
           September 30, 1998 and 1999                                                                          5
         Notes to Condensed Consolidated Financial Statements                                                6-11

Item 2.  Management's Discussion and Analysis of Financial Condition and
           Results of Operations                                                                            11-18

Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                           18

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                                                     18

Item 2   Not Applicable                                                                                        19

Item 3   Not Applicable                                                                                        19

Item 4   Not Applicable                                                                                        19

Item 5   Other Information                                                                                  19-20

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


SIGNATURES                                                                                                     21

EXHIBIT INDEX                                                                                               22-23
</TABLE>

<PAGE>   3


PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements:

                             PINNACLE HOLDINGS INC.
                UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                         December 31,         September 30
                                                                                             1998                  1999
                                                                                       ---------------       ---------------
<S>                                                                                    <C>                   <C>
                                                                                                             Restated-Note 1
                                                                                                                (unaudited)
Assets
Current assets:
Cash and cash equivalents                                                              $    13,801,190       $   151,868,363
Accounts receivable, net                                                                     1,679,390             7,253,110
Prepaid expenses and other current assets                                                    1,432,428             6,192,589
                                                                                       ---------------       ---------------
   Total current assets                                                                     16,913,008           165,314,062
Tower assets, net                                                                          473,942,309           833,811,735
Leasehold interests, net                                                                            --            76,266,440
Fixed assets, net                                                                            2,476,666             3,606,803
Land                                                                                        14,613,365            31,234,982
Deferred debt issue costs, net                                                               6,686,683            14,026,548
Other assets                                                                                 1,516,070             2,612,601
                                                                                       ---------------       ---------------
                                                                                       $   516,148,101       $ 1,126,873,171
                                                                                       ===============       ===============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                                                                       $     3,280,809       $     4,903,801
Accrued expenses                                                                             5,761,016            15,425,188
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            31,339,681
Long-term debt                                                                             417,524,802           698,320,176
Other liabilities                                                                              125,152               359,145
                                                                                       ---------------       ---------------
                                                                                           443,833,123           730,019,002
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 redeemable, 14% dividend, $.001 par value, 100
  shares authorized; 60 and 0 shares issued and outstanding at December 31, 1998
  and September
  30, 1999, respectively                                                                    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)          (92,613,325)
                                                                                       ---------------       ---------------
                                                                                            39,671,640           396,854,169
                                                                                       ---------------       ---------------
                                                                                       $   516,148,101       $ 1,126,873,171
                                                                                       ===============       ===============
</TABLE>


  The accompanying Notes to 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>
                                                                                    NINE MONTHS ENDED
                                                                                       SEPTEMBER 30,
                                                                             -------------------------------
                                                                                 1998               1999
                                                                             ------------       ------------
<S>                                                                          <C>                <C>
                                                                              (UNAUDITED)      RESTATED-NOTE 1
                                                                                                 (UNAUDITED)

Revenues                                                                     $ 21,127,633       $ 48,514,143
Direct operating expenses, excluding depreciation and amortization              3,965,511         11,813,418
                                                                             ------------       ------------
         Gross margin, excluding depreciation and amortization                 17,162,122         36,700,725
Other expenses:
          General and administrative                                            2,720,097          2,855,760
          Corporate development                                                 4,955,121          6,191,851
          State franchise, excise and minimum taxes                               398,730            699,836
          Depreciation and amortization                                        13,357,626         34,398,375
                                                                             ------------       ------------
                                                                               21,431,574         44,145,822
                                                                             ------------       ------------
Loss from operations                                                           (4,269,452)        (7,445,097)
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)      ($39,219,305)
                                                                             ============       ============
Payable-in-kind preferred dividends and accretion                                 683,304          2,930,338
                                                                             ============       ============

Net loss attributable to common stockholders                                 ($23,864,640)      ($42,149,643)
                                                                             ============       ============
Basic and diluted loss attributable to common stockholders per share(a)      ($      2.46)      ($      1.42)
                                                                             ============       ============
Weighted average number of common shares outstanding                            9,708,457         29,721,466
                                                                             ============       ============
</TABLE>



(a)  Basic and diluted 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, separately presented.

      The accompanying Notes to 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
                                                                                 SEPTEMBER 30,
                                                                        -------------------------------
                                                                             1998              1999
                                                                        ------------       ------------
<S>                                                                     <C>                <C>
                                                                         (UNAUDITED)      RESTATED-NOTE 1
                                                                                            (UNAUDITED)

Revenue                                                                 $  8,583,537       $ 22,757,176
Direct operating expenses, excluding depreciation and amortization         1,908,426          6,986,011
                                                                        ------------       ------------
         Gross margin, excluding depreciation and amortization             6,675,111         15,771,165
Other expenses:
          General and administrative                                         852,967          1,243,505
          Corporate development                                            1,660,516          2,920,787
          State franchise, excise and minimum taxes                          116,083            295,502
          Depreciation and amortization                                    5,865,773         14,749,704
                                                                        ------------       ------------
                                                                           8,495,339         19,209,498
                                                                        ------------       ------------
Loss from operations                                                      (1,820,228)        (3,438,333)
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)      ($15,744,789)
                                                                        ============       ============
Payable-in-kind preferred dividends and accretion                            683,304                 --
                                                                        ============       ============
Net loss attributable to common shareholders                            ($10,725,479)      ($15,744,789)
                                                                        ============       ============
Basic and diluted loss per common share(a)                              ($      1.07)      ($      0.41)
                                                                        ============       ============
Weighted average number of common shares outstanding                      10,000,000         38,842,567
                                                                        ============       ============
</TABLE>


(a)  Basic and diluted 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 separately presented.

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


                                       3
<PAGE>   6

                             PINNACLE HOLDINGS INC.
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                    Series B
                                     junior                                Class A          Class E
                                preferred stock        Common stock      common stock     common stock     Additional
                              -------------------  ------------------  ---------------- -----------------    paid-in
                              Shares    Amount       Shares    Amount   Shares   Amount  Shares    Amount    capital
                              ------  -----------  ---------- -------  --------  ------ --------   ------  ------------
<S>                           <C>     <C>          <C>        <C>       <C>      <C>     <C>       <C>    <C>
Balance at December 31, 1998  60.40   $59,928,980      -          -     202,500  $ 203   174,766   $ 175  $ 33,136,302

UNAUDITED:
Dividends and accretion on
  Preferred Stock              1.27     1,767,106      -          -                                         (2,930,338)


Issuance of common stock,
 net of issuance costs,
 and conversion
 (Note 3)                                          41,094,520 $41,095  (202,500)  (203) (174,766)   (175)  502,968,169


Liquidation of Series B
 Junior Preferred Stock      (61.67)  (61,696,086)


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

Net loss attributable to
common stockholders
(Restated-Note 1)
                             ------   -----------  ---------- -------  --------  -----   -------  ------  ------------

Balance at
September 30, 1999
(Restated-Note 1)              -      $    -       41,094,520 $41,095      -     $  -       -     $  -    $489,426,399
                             ======   ===========  ========== =======  ========  =====   =======  ======  ============

<CAPTION>
                               Accumulated  Stockholders'
                                 deficit       equity
                              ------------  ------------
<S>                           <C>           <C>
Balance at December 31, 1998  ($53,394,020) $ 39,671,640

UNAUDITED:
Dividends and accretion on
  Preferred Stock                             (1,163,232)


Issuance of common stock,
 net of issuance costs,
 and conversion
 (Note 3)                                    503,008,886


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


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

Net loss attributable to
common stockholders
(Restated-Note 1)              (39,219,305)  (39,219,305)
                              ------------  ------------

Balance at
September 30, 1999
(Restated-Note 1)             ($92,613,325) $396,854,169
                              ============  ============
</TABLE>

      The accompanying Notes to 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>
                                                                                         NINE MONTHS ENDED
                                                                                           SEPTEMBER 30,
                                                                                -----------------------------------
                                                                                    1998                   1999
                                                                                -------------         -------------
<S>                                                                             <C>                     <C>
                                                                                                    (RESTATED-NOTE 1)
                                                                                 (UNAUDITED)           (UNAUDITED)
Cash flows from operating activities:
 Net loss                                                                       ($ 23,181,336)          (39,219,305)
    Adjustments to reconcile net loss to net cash provided
      by (used in) operating activities:
        Depreciation and amortization                                              13,357,626            34,398,375
        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)           (2,775,230)
          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             9,664,172
          Deferred revenue                                                            399,402               296,130
          Other liabilities                                                             7,077               233,993
                                                                                -------------         -------------
              Total adjustments                                                    29,153,212            57,434,356
                                                                                -------------         -------------
Net cash provided by (used in)operating activities                                  5,971,876            18,215,051
                                                                                -------------         -------------
Cash flows from investing activities:
         Payments made in connection with acquisitions:
          Tower assets                                                           (310,721,207)         (355,516,082)
          Leasehold interests                                                              --           (77,621,307)
          Land                                                                     (7,010,921)          (16,621,617)
          Net current liabilities acquired                                                 --            (2,714,622)
         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)         (482,013,795)
                                                                                -------------         -------------
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>   8

                             PINNACLE HOLDINGS INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


         As used in this Quarterly Report on Form 10-Q/A for the period ending
September 31, 1999, unless the context otherwise requires, "we," "us," "our,"
"Company" or "Pinnacle" refers to Pinnacle Holdings Inc. and its consolidated
subsidiaries, including Pinnacle Towers III Inc. ("PT III").

1.       RESTATEMENT

         We restated our audited financial statements for the year ended
December 31, 1999, and our unaudited financial statements for the quarters ended
September 30, 1999, March 31, 2000, June 30, 2000, and September 30, 2000, to
expense certain costs previously capitalized as direct costs of the acquisition
of the Motorola Antenna Site Acquisition ("Motorola Antenna Site Acquisition")
and to accrue direct costs of the acquisition only as the related services are
performed. Direct costs incurred in connection with a purchased business are
required to be capitalized and indirect costs are required to be expensed.
Determining under available accounting guidance which costs or portions thereof
are direct, as opposed to indirect, requires the exercise of a certain amount of
judgment. Upon completion of the Motorola Antenna Site Acquisition, we
determined to capitalize all pre- and post-closing costs directly related to the
acquisition. Following an inquiry by the Securities and Exchange Commission and,
after consulting with our new independent auditors, Ernst & Young LLP, we
reconsidered our previous accounting judgment and concluded it was appropriate
to capitalize all costs that relate directly to the acquisition except those
post-closing costs that are deemed to more than incidentally reduce our need to
incur ongoing business expenses necessary to integrate those assets into our
operations. Additionally, we had previously, at the date of the acquisition,
accrued estimated direct costs of acquisitions regardless of whether the costs
had been incurred as of that date. We have now concluded that such costs should
be accrued as the services are incurred.

         A detailed summary of the effects of the restatement is set forth in
Note 8.

2.       FINANCIAL STATEMENTS

         The accompanying unaudited 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 PT 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. 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 condensed
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 unaudited condensed consolidated financial statements should be read in
conjunction with the Company's restated consolidated 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,



                                       6
<PAGE>   9

"Reporting Comprehensive Income." Accordingly, no separate Consolidated
Statement of Comprehensive Income is presented as would otherwise be required.

3.       ACQUISITIONS

         We actively acquire 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 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, we consummated the Motorola Antenna Site
Acquisition pursuant to which we acquired approximately 1,858 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 $2.2 million. The purchase price
allocations related to this transaction are preliminary. This acquisition
resulted 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. See Part II, Item 5, Other Information.

         Included in the total purchase price recorded on the Motorola Antenna
Site Acquisition as of September 30, 1999 were incurred and accrued costs of
approximately $7.5 million. These incurred and accrued deal costs were comprised
primarily of employee severance and relocation costs ($0.5 million), contract
and title work related to telecommunications sites, due diligence and closing
costs ($7.0 million).

         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.


                                       7
<PAGE>   10

<TABLE>
<CAPTION>
                                                                                  Pro Forma Nine Months Ended
                                                                        ------------------------------------------------
                                                                           September 30,              September 30,
                                                                               1998                       1999
                                                                        --------------------      ----------------------
<S>                                                                        <C>                         <C>
                                                                            (unaudited)                (unaudited)
Revenue                                                                    $100,368,428                $109,939,230
Gross margin, excluding depreciation                                         57,896,990                  67,148,938
Net loss                                                                    (88,939,174)                (73,518,838)
Net loss attributable to common stockholders                                (89,622,478)                (76,449,176)
Basic and diluted loss attributable to common stockholders per share              (9.23)                      (2.57)
</TABLE>


4.       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 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 issuance 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 27, 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.



                                       8
<PAGE>   11

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.

5.       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.

         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.

6.       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.

7.       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.



                                       9
<PAGE>   12

8.       RESTATEMENT

         As described in Note 1, the unaudited quarterly financial information
for the nine months ended September 30, 1999 and for the three months ended
September 30, 1999 have been restated.

            Unaudited Condensed Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                      As Previously       As restated       As Previously       As restated
                                                         Reported                              Reported
                                                       Three Months      Three Months        Nine Months        Nine Months
                                                          Ended              Ended              Ended              Ended
                                                      September 30,      September 30,       September 30,      September 30,
                                                           1999              1999                1999              1999
                                                       (unaudited)        (unaudited)        (unaudited)        (unaudited)

<S>                                                    <C>                <C>                <C>                <C>
Revenues                                               $ 23,059,176       $ 22,757,176       $ 48,816,143       $ 48,514,143
Direct operating expenses, excluding
depreciation and amortization                             6,863,660          6,986,011         11,691,067         11,813,418
                                                       ---------------------------------------------------------------------
Gross margin, excluding depreciation and
amortization                                             16,195,516         15,771,165         37,125,076         36,700,725
                                                       ---------------------------------------------------------------------
Other expenses:
   General and administrative                             1,210,505          1,243,505          2,822,760          2,855,760
   Corporate development                                  2,459,995          2,920,787          5,731,059          6,191,851
   State franchise, excise and minimum taxes                295,502            295,502            699,836            699,836
   Depreciation and amortization                         15,469,742         14,749,704         35,118,413         34,398,375
                                                       ---------------------------------------------------------------------
                                                         19,435,744         19,209,498         44,372,068         44,145,822
                                                       ---------------------------------------------------------------------
Loss from operations                                     (3,240,228)        (3,438,333)        (7,246,992)        (7,445,097)
Interest expense                                          6,199,411          6,199,411         14,439,470         14,439,470
Amortization of original issue discount and debt
issuance costs                                            6,107,045          6,107,045         17,334,738         17,334,738
                                                       ---------------------------------------------------------------------
Net loss
                                                        (15,546,684)       (15,744,789)       (39,021,200)       (39,219,305)
Payable-in-kind preferred dividends and accretion                --                 --          2,930,338          2,930,338
Net loss attributable to common stockholders           $(15,546,684)      $(15,744,789)      $(41,951,538)      $(42,149,643)
                                                       =====================================================================

Basic and diluted loss attributable to common
stockholders per share                                 $      (0.40)      $      (0.41)      $      (1.41)      $      (1.42)
                                                       =====================================================================
Weighted average number of common shares
outstanding                                              38,842,567         38,842,567         29,721,466         29,721,466
                                                       =====================================================================
</TABLE>



                                       10
<PAGE>   13

                     UNAUDITED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                             As Previously      As Restated
                                                                                               Reported
                                                                                             September 30,    September 30,
                                                                                                   1999           1999
                                                                                               (unaudited)      (unaudited)
<S>                                                                                        <C>              <C>
Assets
Cash and cash equivalents                                                                    $ 151,868,363    $ 151,868,363
Accounts receivable, net                                                                         7,555,110        7,253,110
Prepaid expenses and other current assets                                                        6,192,589        6,192,589
                                                                                            --------------   --------------
   Total current assets                                                                        165,616,062      165,314,062
Tower assets, net                                                                              861,753,326      833,811,735
Leasehold interests, net                                                                        81,071,025       76,266,440
Fixed assets, net                                                                                3,606,803        3,606,803
Land                                                                                            31,611,851       31,234,982
Deferred debt issue costs, net                                                                  14,026,548       14,026,548
Other assets                                                                                     2,612,601        2,612,601
                                                                                            --------------   --------------
                                                                                            $1,160,298,216   $1,126,873,171
                                                                                            ==============   ==============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                                                                                $4,903,801       $4,903,801
Accrued expenses                                                                                48,652,128       15,425,188
Deferred revenue                                                                                 4,344,308        4,344,308
Current portion of long-term debt                                                                6,666,384        6,666,384
                                                                                            --------------   --------------
   Total current liabilities                                                                    64,566,621       31,339,681
Long-term debt                                                                                 698,320,176      698,320,176
Other liabilities                                                                                  359,145          359,145
                                                                                            --------------   --------------
                                                                                               763,245,942      730,019,002
Redeemable stock:
  Series A senior preferred stock, Class B common stock, and Class D common stock                       --               --
  Warrants                                                                                              --               --
                                                                                                        --               --
Stockholders' equity:
Common stock:
  Class A common stock, 0 shares issued and outstanding at September 30, 1999                           --               --
  Class E common stock, 0 shares issued and outstanding at September 30, 1999                           --               --
  Common Stock, $.001 par value, 100,000,000 shares authorized;  41,094,520 shares issued
   and outstanding at September 30, 1999                                                            41,095           41,095
Additional paid-in capital                                                                     489,426,399      489,426,399
Accumulated deficit                                                                            (92,415,220)     (92,613,325)
                                                                                            --------------   --------------
                                                                                               397,052,274      396,854,169
                                                                                            --------------   --------------
                                                                                            $1,160,298,216   $1,126,873,171
                                                                                            ==============   ==============
</TABLE>

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 forward-looking



                                       11
<PAGE>   14

statements and associated considerations set forth in Pinnacle's Annual Report
on Form 10-K/A for the fiscal year ended December 31, 1999.

         We restated our audited financial statements for the year ended
December 31, 1999, and our unaudited financial statements for the quarters ended
September 30, 1999, March 31, 2000, June 30, 2000, and September 30, 2000, to
expense certain costs previously capitalized as direct costs of the acquisition
of the Motorola Antenna Site Acquisition and to accrue direct costs of the
acquisition only as the related services are performed. Direct costs incurred in
connection with a purchased business are required to be capitalized and indirect
costs are required to be expensed. Determining under available accounting
guidance which costs or portions thereof are direct, as opposed to indirect,
requires the exercise of a certain amount of judgment. Upon completion of the
Motorola Antenna Site Acquisition, we determined to capitalize all pre- and
post-closing costs directly related to the acquisition. Following an inquiry by
the Securities and Exchange Commission and, after consulting with our new
independent auditors, Ernst & Young LLP, we reconsidered our previous accounting
judgment and concluded it was appropriate to capitalize all costs that relate
directly to the acquisition except those post-closing costs that are deemed to
more than incidentally reduce our need to incur ongoing business expenses
necessary to integrate those assets into our operations. Additionally, we had
previously, at the date of the acquisition, accrued estimated direct costs of
acquisitions regardless of whether the costs had been incurred as of that date.
We have now concluded that such costs should be accrued as the services are
incurred.

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.

         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. See Part II, Item 5, Other Information. 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 have never completed a transaction as large as the Motorola Antenna
Site Acquisition. Due to the magnitude, timing, logistical and other constraints
of the Motorola Acquisition, we were unable prior to closing the transaction to
access, analyze and verify all information needed to (1) ascertain the physical
inventory and condition of the assets acquired (including thorough engineering
surveys of the assets); (2) estimate the fair value of the assets acquired and
liabilities assumed for purposes of purchase price allocation in our financial
statements; (3) identify, evaluate and record the assets acquired and
liabilities assumed for purposes of determining the final purchase price; and
(4) properly evaluate all record title and mortgage documents for acquired real
estate assets.

         We estimate that the total of our Motorola Acquisition pre and
post-closing transaction related due diligence and related efforts will cost
approximately $19 million. To date, such efforts have cost us approximately $7.0
million. Such efforts have thus far not revealed any unanticipated information
regarding matters that would have a material adverse effect on our operations
and liquidity. However, we cannot assure you that our continued due diligence
efforts will not reveal unanticipated information that would have a material
adverse effect on our operations and liquidity.

         Motorola's representations and warranties in the definitive purchase
agreement between us and Motorola (the "Motorola Purchase Agreement") did not
survive the closing of the acquisition. Therefore, our ability to obtain
compensation from Motorola for defects in title, the need for third party
consents (and the need to make payments to obtain such consents) or other
site-related and other unanticipated issues is limited. We may be able to seek
redress under certain other provisions of the Motorola Purchase Agreement,
including through the purchase price adjustment based on changes in working
capital and the covenant requiring Motorola to provide further assurances as
needed to convey the acquired assets. The nature and magnitude of these issues
will not be fully determined until our post-closing investigation is
substantially completed, but the issues could have an impact on our operations
and liquidity, which impact could be significant.



                                       12
<PAGE>   15

         We currently have over 3,000 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 $27.4 million, or 130%, to $48.5 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 $7.8 million or 198% to $11.8 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 24.4% 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 owned sites because of relatively higher
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 nine-month period
ended September 30, 1999 from $2.7 million to $2.9 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 5.9% 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 $1.2 million, but decreased as
a percentage of revenue from 23.5% for the nine-month period ended September 30,
1998 compared to 12.8% 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



                                       13
<PAGE>   16

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 158%, or $21.0 million,
to $34.4 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.

         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, 1999 compared to three months ended September
30, 1998

         Site Revenues increased by $14.2 million, or 165%, to $22.8 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. 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 $5.1 million, or 266%, to $7.0 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 30.7% 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 5.5% 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



                                       14
<PAGE>   17

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 $1.3 million, from $1.7
million to $2.9 million, but decreased as a percentage of revenue from 19.3% for
the three-month period ended September 30, 1998 to 12.8% 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 153%, or $9.0 million
to $14.9 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.

         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.

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 $134.0 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 million 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.



                                       15
<PAGE>   18

         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.

         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



                                       16
<PAGE>   19

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 issuance 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 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 million
was used to fund the closing of pending acquisitions proximate to the date the
funds were available from the IPO.

         On July 27, 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.

         Capital expenditures, including acquisitions, for the nine months ended
September 30, 1999 were $482.0 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


                                       17
<PAGE>   20

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.

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:

Expected Maturity Date

<TABLE>
<CAPTION>
                          1999      2000       2001       2002        2003      Thereafter
<S>                     <C>        <C>     <C>         <C>         <C>         <C>
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.


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.



                                       18
<PAGE>   21

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 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 were filed as
exhibits to this Quarterly Report on Form 10-Q/A.

         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



                                       19
<PAGE>   22

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.


                                       20
<PAGE>   23


                                   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:  May 3, 2001     By:  /s/ Steven R. Day
                          -----------------------------------------------------
                          Steven R. Day,
                          Chief Operating Officer,
                          Chief Financial Officer,
                          Vice President and Secretary

                       Duly Authorized Officer and Principal Financial Officer.



                                       21
<PAGE>   24


                                  EXHIBIT INDEX

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

2.1      Agreement for Purchase and Sale of Assets between Pinnacle Towers Inc.
         and Motorola, Inc., dated June 25, 1999.(3)

2.2      Amendment to Agreement for Purchase and Sale of Assets dated as of
         August 31, 1999 between Pinnacle Towers Inc. and Motorola, Inc.(5)

3.1.1    Amended and Restated Certificate of Incorporation.(1)

3.1.2    Bylaws of the Company.(2)

4.1      Registration Rights Agreement dated as of August 31, 1999 between the
         Registrant and Motorola, Inc.(5)

10.1     Fourth Amended and Restated Credit Agreement, dated June 25, 1999.(4)

10.2     Fifth Amended and Restated Credit Agreement, dated September 17,
         1999.(6)

10.3     Subscription Agreement between Pinnacle Towers Inc. and Pinnacle Towers
         III, Inc., dated as of August 31, 1999.(6)

10.4     Amended and Restated Articles of Incorporation of Pinnacle Towers III,
         Inc., dated September 28, 1999.(6)

10.5     Agreement For Purchase and Sale of Assets by and between Pinnacle
         Towers Inc. and Pinnacle Towers III, Inc., dated as of August 31,
         1999.(6)

10.6     Services Agreement by and between Pinnacle Towers Inc. and Pinnacle
         Towers III, Inc., dated as of August 31, 1999.(6)

10.7     Agreement by and between Pinnacle Towers III, Inc. and Pinnacle Towers
         Inc., dated as of September 28, 1999.(6)

10.8     Amended and Restated Articles of Incorporation of Pinnacle Towers III,
         Inc., dated October 28, 1999.(6)

10.9     Convertible Promissory Note of Pinnacle Towers III, Inc.(6)

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.(6)

27.1     Financial Data Schedule(6)

27.2     Revised Financial Data Schedule

------------------

(1)      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).

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



                                       22
<PAGE>   25

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

(4)      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).

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

(6)      Previously filed on November 15, 1999 with the Company's Quarterly
         Report on Form 10-Q.