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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003 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 000-22003



US UNWIRED INC.

(Exact name of registrant as specified in its charter)



|Louisiana                                                      |  | 72-1457316                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|901 Lakeshore Drive Lake Charles, LA                           |  | 70601                               
|(Address of principal executive offices)                       |  | (Zip code)                          



(337) 436-9000

(Registrants telephone number, including area code)





---

(Former name, former address and former fiscal year, if changed since last report)



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 ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x      No ̈



There were 128,831,535 shares of common stock, $0.01 par value per share, outstanding at November 1, 2003.



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##### Table of Contents

|           |  |                                                                                       |  | Page
|---------- |  | ------------------------------------------------------------------------------------- |  | ----
|Part I    |  | Financial Information                                                                 |  |     
|           |  |                                                                                      
|Item 1.    |  | Financial Statements                                                                  |  |     
|           |  |                                                                                      
|           |  | Condensed Consolidated Balance Sheets                                                 |  | 3   
|           |  | Condensed Consolidated Statements of Operations                                       |  | 4   
|           |  | Condensed Consolidated Statements of Cash Flows                                       |  | 5   
|           |  | Notes to Condensed Consolidated Financial Statements                                  |  | 6   
|           |  |                                                                                      
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 20  
|           |  |                                                                                      
|Item 4.    |  | Controls and Procedures                                                               |  | 33  
|           |  |                                                                                      
|Part II   |  | OTHER INFORMATION                                                                     |  |     
|           |  |                                                                                      
|Item 1.    |  | Legal Proceedings                                                                     |  | 33  
|           |  |                                                                                      
|Item 3.    |  | Defaults in Senior Securities                                                         |  | 33  
|           |  |                                                                                      
|Item 5.    |  | Other Information                                                                     |  | 33  
|           |  |                                                                                      
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                      |  | 63  
|           | 
|Signatures |  | 64                                                                                   



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Part I Financial Information

Item 1. Financial Statements



US UNWIRED INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)



|                                                            |  | September 30,2003 |          |   | December 31,2002 |  
|----------------------------------------------------------- |  | ----------------- | -------- | - | ---------------- | -
|                                                            |  | (Unaudited)       |          |   | (Note 1)         |  
|Assets                                                      |  |                   |          |   |                  |  
|Current assets:                                             |  |                   |          |   |                  |  
|Cash and cash equivalents                                   |  | $                 | 89,937   |   |                  | $
|Restricted cash                                             |  |                   | 19,294   |   |                  |  
|Subscriber receivables, net                                 |  |                   | 35,955   |   |                  |  
|Other receivables                                           |  |                   | 3,054    |   |                  |  
|Inventory                                                   |  |                   | 4,864    |   |                  |  
|Prepaid expenses and other assets                           |  |                   | 19,350   |   |                  |  
|Receivables from related parties                            |  |                   | 645      |   |                  |  
|Receivables from officers                                   |  |                   | 85       |   |                  |  
|                                                            |  |                   |          |   |                  |  
|Total current assets                                        |  |                   | 173,184  |   |                  |  
|                                                            |  |                  
|Property and equipment, net                                 |  |                   | 433,213  |   |                  |  
|Restricted cash                                             |  |                   |         |   |                  |  
|Goodwill                                                    |  |                   | 46,705   |   |                  |  
|Intangibles, net                                            |  |                   | 50,004   |   |                  |  
|Notes receivable from unconsolidated affiliates             |  |                   | 1,868    |   |                  |  
|Other assets                                                |  |                   | 38,892   |   |                  |  
|                                                            |  |                   |          |   |                  |  
|Total assets                                                |  | $                 | 743,866  |   |                  | $
|                                                            |  |                   |          |   |                  |  
|Liabilities and stockholders deficit                       |  |                   |          |   |                  |  
|Current liabilities:                                        |  |                   |          |   |                  |  
|Accounts payable                                            |  | $                 | 23,235   |   |                  | $
|Accrued expenses                                            |  |                   | 85,934   |   |                  |  
|Current maturities of long term obligations                 |  |                   | 9,872    |   |                  |  
|Current maturities of long term obligations in default      |  |                   | 351,309  |   |                  |  
|                                                            |  |                   |          |   |                  |  
|Total current liabilities                                   |  |                   | 470,350  |   |                  |  
|                                                            |  |                  
|Long term obligations, net of current maturities            |  |                   | 435,945  |   |                  |  
|Long term obligations in default, net of current maturities |  |                   |         |   |                  |  
|Deferred gain                                               |  |                   | 30,538   |   |                  |  
|Investments in and advances to unconsolidated affiliates    |  |                   | 3,936    |   |                  |  
|                                                            |  |                  
|Stockholders deficit:                                      |  |                   |          |   |                  |  
|Common stock                                                |  |                   | 1,288    |   |                  |  
|Additional paid in capital                                  |  |                   | 654,606  |   |                  |  
|Retained deficit                                            |  |                   | (852,610 | ) |                  |  
|Promissory note                                             |  |                   | (177     | ) |                  |  
|Treasury stock                                              |  |                   | (10      | ) |                  |  
|                                                            |  |                   |          |   |                  |  
|Total stockholders deficit                                 |  |                   | (196,903 | ) |                  |  
|                                                            |  |                   |          |   |                  |  
|Total liabilities and stockholders deficit                 |  | $                 | 743,866  |   |                  | $
|                                                            |  |                   |          |   |                  |  



See accompanying notes
to condensed consolidated financial statements



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US UNWIRED INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

|                                                          |  | For the three monthsended September 30, |         |   | For the nine months ended September 30, |  
|--------------------------------------------------------- |  | --------------------------------------- | ------- | - | --------------------------------------- | -
|                                                          |  | 2003                                    |         |   | 2002                                    |  
|Revenue:                                                  |  |                                         |         |   |                                         |  
|Subscriber                                                |  | $                                       | 101,285 |   |                                         | $
|Roaming                                                   |  |                                         | 35,154  |   |                                         |  
|Merchandise sales                                         |  |                                         | 5,830   |   |                                         |  
|Other revenue                                             |  |                                         | 663     |   |                                         |  
|                                                          |  |                                         |         |   |                                         |  
|Total revenue                                             |  |                                         | 142,932 |   |                                         |  
|Expense:                                                  |  |                                         |         |   |                                         |  
|Cost of service                                           |  |                                         | 55,042  |   |                                         |  
|Merchandise cost of sales                                 |  |                                         | 12,003  |   |                                         |  
|General and administrative                                |  |                                         | 33,449  |   |                                         |  
|Sales and marketing                                       |  |                                         | 19,407  |   |                                         |  
|Non-cash stock compensation                               |  |                                         | 266     |   |                                         |  
|Depreciation and amortization                             |  |                                         | 30,396  |   |                                         |  
|IWO asset abandonment charge                              |  |                                         |        |   |                                         |  
|                                                          |  |                                         |         |   |                                         |  
|Total operating expense                                   |  |                                         | 150,563 |   |                                         |  
|                                                          |  |                                         |         |   |                                         |  
|Operating loss                                            |  |                                         | (7,631  | ) |                                         |  
|Other income (expense):                                   |  |                                         |         |   |                                         |  
|Interest expense                                          |  |                                         | (23,715 | ) |                                         |  
|Gain (loss) on sale of assets                             |  |                                         | (18     | ) |                                         |  
|                                                          |  |                                         |         |   |                                         |  
|Total other expense                                       |  |                                         | (23,733 | ) |                                         |  
|                                                          |  |                                         |         |  
|Loss before equity in income of unconsolidated affiliates |  |                                         | (31,364 | ) |                                         |  
|Equity in income of unconsolidated affiliates             |  |                                         | 57      |   |                                         |  
|                                                          |  |                                         |         |   |                                         |  
|Loss before income taxes                                  |  |                                         | (31,307 | ) |                                         |  
|Income tax benefit                                        |  |                                         |        |   |                                         |  
|                                                          |  |                                         |         |   |                                         |  
|Net loss                                                  |  | $                                       | (31,307 | ) |                                         | $
|                                                          |  |                                         |         |   |                                         |  
|Basic and diluted loss per share                          |  | $                                       | (0.25   | ) |                                         | $
|                                                          |  |                                         |         |   |                                         |  
|Weighted average outstanding common shares                |  |                                         | 128,832 |   |                                         |  
|                                                          |  |                                         |         |   |                                         |  



See accompanying notes
to condensed consolidated financial statements



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US UNWIRED INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

|                                                     |  | For the nine monthsended September 30, |        
|---------------------------------------------------- |  | -------------------------------------- | -------
|                                                     |  | 2003                                   |        
|Cash flows from operating activities                 |  |                                        |        
|Net cash provided by (used in) operating activities  |  | $                                      | 34,992 
|                                                     |  |                                       
|Cash flows from investing activities                 |  |                                        |        
|Proceeds from restricted cash                        |  |                                        | 21,924 
|Proceeds from sale of assets                         |  |                                        | 350    
|Distributions from unconsolidated affiliates         |  |                                        | 250    
|Payments for the purchase of equipment               |  |                                        | (26,361
|Acquisition of business, net of cash acquired        |  |                                        |       
|Proceeds from maturities of investments              |  |                                        |       
|Investments in unconsolidated affiliates             |  |                                        |       
|                                                     |  |                                        |        
|Net cash used in investing activities                |  |                                        | (3,837 
|                                                     |  |                                       
|Cash flows from financing activities                 |  |                                        |        
|Principal payments of long-term debt                 |  |                                        | (3,203 
|Proceeds from long-term debt                         |  |                                        |       
|Proceeds from stock options exercised                |  |                                        |       
|Proceeds from promissory notes                       |  |                                        |       
|Debt issuance costs                                  |  |                                        |       
|                                                     |  |                                        |        
|Net cash (used in) provided by financing activities  |  |                                        | (3,203 
|                                                     |  |                                        |        
|Net increase (decrease) in cash and cash equivalents |  |                                        | 27,952 
|Cash and cash equivalents at beginning of period     |  |                                        | 61,985 
|                                                     |  |                                        |        
|Cash and cash equivalents at end of period           |  | $                                      | 89,937 
|                                                     |  |                                        |        



See accompanying notes
to condensed consolidated financial statements



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US UNWIRED INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2003

(UNAUDITED)



|1. | Basis of Presentation
|-- | ---------------------



The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in
the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three and
nine-month periods ended September 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003.



The condensed consolidated balance sheet at December 31, 2002 has been derived from the audited financial statements at that date but does not include all
of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The condensed consolidated financial statements contained herein should be read in conjunction with the
financial statements and notes included in the Form 10-K for US Unwired Inc. for the year ended December 31, 2002, filed on March 31, 2003 with the Securities and Exchange Commission.



Recent Accounting Pronouncements



In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of Variable Interest EntitiesAn Interpretation of Accounting
Research Bulletin (ARB) No. 51 (FIN 46). This interpretation clarifies how to identify variable interest entities and how a company should assess its interests in a variable interest entity to decide whether to consolidate the
entity. FIN 46 applies to variable interest entities created after January 31, 2003, in which a company obtains an interest after that date. Also, FIN 46 applies in the first fiscal quarter or interim period beginning after December 15, 2003, to
variable interest entities in which a company holds a variable interest that it acquired before February 1, 2003. The Company is currently analyzing the impact this interpretation will have on its consolidated results of operations and its financial
position, with respect to entities acquired before February 1, 2003.



In November 2002, the FASB issued FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. This interpretation expands the
disclosures to be made by a guarantor about its obligations under certain guarantees and requires that, at the inception of a guarantee, a guarantor recognize a liability for the fair value of the obligation undertaken in issuing the guarantee. The
disclosure requirements are effective immediately. As disclosed in Note 5 to the Consolidated Financial Statements, Louisiana Unwired LLC and Unwired Telecom Corporation have fully and unconditionally guaranteed the Companys obligations under
the US Unwired 13 3/8% senior subordinated discount notes and Independent Wireless One Corporation has fully and unconditionally guaranteed the Companys obligations under the IWO 14% senior notes. The initial recognition and measurement
provisions of this interpretation are effective for guarantees issued or modified after December 31, 2002. The adoption of the initial recognition and measurement provisions of this interpretation did not have a material effect on the Companys
financial position, results of operations or cash flows.



In
May 2003, the Emerging Issues Task Force (EITF) modified its previous consensus to EITF 00-21 to clarify the scope of Issue 00-21 and its interaction with other authoritative literature. As permitted under the modified consensus, the
Company adopted this modified consensus effective July 1, 2003 for all revenue arrangements entered into subsequent to June 30, 2003. EITF 00-21 addresses the determination of whether an arrangement involving more than one deliverable contains more
than one unit of accounting and how the related revenues should be measured and allocated to the separate units of accounting. In applying this guidance, separate contracts with the same party, entered into at or near the same time, will be presumed
to be a package, and the consideration will be measured and



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allocated to the separate units based on their relative fair values. The Company has reviewed EITF 00-21
and determined that the sale of handsets and future service under contract should be accounted for as separate units under EITF 00-21. As a result, the total consideration under these arrangements, including any related activation fees, is allocated
between these separate units based on their relative fair values.



|2. | Description of the Organization
|-- | -------------------------------



US Unwired Inc. (the Company or US Unwired) is principally engaged in the ownership and operation of wireless communications
systems, consisting of personal communications systems (PCS), cellular and paging communication systems in the southern and northeastern regions of the United States.



US Unwired acquired IWO Holdings, Inc. (IWO) on April 1, 2002.



On September 15, 2003, the Company executed an agreement for the purchase and
sale of assets of its cellular operations and certain PCS licenses for approximately $30.0 million. The sale, which was approved by the holders of the US Unwired senior bank credit facility on October 30, 2003, is contingent upon FCC approval and
other conditions.



|3. | Liquidity and Capital Resources
|-- | -------------------------------



US Unwired has a senior bank credit facility and senior subordinated discount notes. IWO has a senior bank credit facility and senior notes. US Unwired
and IWO entered into these prior to the acquisition of IWO. Under the terms of these debt instruments, funds available under the US Unwired debt can only be used by US Unwired, and funds available under the IWO debt can only be used by IWO. US
Unwired is not obligated for the payment of IWOs debt, and IWO is not obligated for the payment of US Unwireds debt.



US Unwired Liquidity



As of September 30, 2003, US Unwired had $62.3 million in cash and cash equivalents; availability under the US Unwired senior bank credit facility of
$68.3 million; and indebtedness that consisted of $87.3 million related to the US Unwired senior bank credit facility, $347.7 million related to the US Unwired senior subordinated discount notes and $10.8 million in capital leases, promissory notes
and vendor financing for a total of $445.8 million. See Note 6 for commitments and contingencies that may affect US Unwireds liquidity. US Unwired must comply with certain financial covenants of the US Unwired senior bank credit facility and
the US Unwired senior subordinated discount notes, and as of September 30, 2003, was in compliance with these financial covenants.



On October 30, 2003, the Company and the holders of the US Unwired senior bank credit facility revised certain provisions of the US Unwired $170 million
senior bank credit facility through execution of the third amendment to the US Unwired senior bank credit facility. The Company and its senior lenders agreed to a revised set of financial covenants, a $40 million revolving credit facility that is
subject to certain borrowing conditions, an immediate $10.0 million partial repayment of the senior bank term loans and a 0.5% increase to the interest rate. The October 30, 2003 amendment requires the Company to remit approximately $8.0 million of
the planned net proceeds from the sale of its cellular operations and certain PCS licenses as discussed in Note 2 above and a portion of the net proceeds of any future asset disposals. The amendment also provides for additional restrictions on the
Companys ability to draw on the $40 million revolver that include certain financial requirements and only allow for additional draws if the Companys cash balance falls below $15.0 million prior to March 31, 2005 or $10.0 million on or
subsequent to March 31, 2005. Subject to these restrictions and after giving affect to the outstanding letters of credit as of September 30, 2003, US Unwired will have additional borrowing capacity under the amended US Unwired senior bank credit
facility of $38.3 million. The Company incurred approximately $2.6 million in banking and other professional fees related to this amendment that will be paid in the fourth quarter of 2003.



The Company has updated the US Unwired business model to include its
operating performance for the six months ended June 30, 2003 and the initiatives discussed below. Based upon existing



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assumptions in the business model, the Company believes that it will be able to comply with the financial
covenants of the amended US Unwired senior bank credit and have sufficient cash to fund its operations, debt service and capital requirements over the next twelve months.



The Companys funding status and ability to comply with these amended financial covenants is dependent upon a number of
factors influencing projections of earnings and operating cash flows. These factors include subscriber growth, average monthly revenue per user (ARPU), cash cost per user (CCPU), customer churn and cost per gross addition
(CPGA).



Should actual results differ from the
underlying business model assumptions, the Companys liquidity position and its ability to comply with the amended financial covenants could be adversely affected. The Company could be required to raise additional capital that may or may not be
available on terms acceptable to the Company, if at all. This could have a material adverse effect on the Companys ability to achieve its intended business objectives.



IWO Liquidity



The Company has been unable to develop a business plan for IWO that provides sufficient cash to fund operations, debt service and capital requirements in
2003. The Company is in discussions with the IWO banking group to arrive at an acceptable restructuring to preserve IWO liquidity but cannot state with certainty that an acceptable plan will be forthcoming. If an acceptable restructuring plan is not
agreed upon by Company and the IWO banking group, the Company will be forced to seek protection under bankruptcy for IWO.



As of September 30, 2003, IWO had $27.6 million in cash and cash equivalents and $19.3 million in restricted cash; and indebtedness that consisted of
$213.2 million related to the IWO senior bank credit facility and $138.1 million related to the IWO senior notes for a total of $351.3 million. A portion of the original proceeds of the IWO senior notes offering was set aside as restricted cash to
make the first six scheduled interest payments on the IWO senior notes through January 2004. Principal repayment of the IWO senior bank credit facility commences in March 2004.



Since March 2003, IWO has failed to make $7.5 million in interest payments on its $240 million senior bank credit facility
and was not in compliance with its restrictive covenants under the IWO senior bank credit facility at September 30, 2003. As a result of IWOs failure to make scheduled interest payments and the covenant violations, IWO was in default of its
senior bank credit facility at September 30, 2003 and the holders of the senior bank credit facility have denied IWO access to the remaining $25.2 million of availability. As a result, the Company has classified all outstanding indebtedness of both
the IWO senior bank credit facility and the IWO senior notes as a current liability.



As a result of liquidity challenges, IWO has made the decision to reduce capital expenditures for network expansion and abandon the construction of cell sites that do not provide a sufficient level of enhanced
coverage. IWO recorded an asset abandonment charge of $12.4 million during the nine-month period ended September 30, 2003 for the cell sites and the related property leases of these abandoned cell sites. Included in this asset abandonment charge are
cell sites that IWO is required to construct to meet the build out requirements under the IWO Sprint management agreement. Failure to complete the build out of the IWO service area will place IWO in violation of the IWO Sprint management agreement.
As a result, Sprint PCS could declare IWO in default and take action up to and including termination of the IWO Sprint management agreement. At September 30, 2003, IWOs construction in progress included $4.9 million primarily related to cell
sites that IWO plans to complete and management estimates that completion of these cell sites will require approximately $8.5 million in additional costs to complete construction and place these sites in operation. IWO anticipates that only a
portion of these sites will be completed in 2003.



Due to
restrictions in the US Unwired debt instruments, US Unwired cannot provide any capital or other financial support to IWO. Further, IWO creditors, IWO lenders and IWO note holders cannot place any liens or encumbrances on the assets of US Unwired.
Should the holders of the IWO senior bank credit facility place IWO in default, US Unwireds relationship with IWO may change and several alternatives exist ranging from working for the holders of the IWO senior bank credit facility



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and the holders of the IWO senior notes as a manager of the IWO territory, possibly subject to the
approval by Sprint PCS, to no involvement with IWO at all.



Considering IWOs default of the IWO loan agreements and its liquidity as discussed above, there is substantial doubt about IWOs ability to continue as a going concern.



The Companys Business Strategy



The Company is undertaking a number of key initiatives designed to enable US
Unwired to achieve the underlying assumptions of the US Unwired business model and preserve IWO liquidity. The Company has:



| |  | focused on attracting customers that are in good credit standing
| | - | ----------------------------------------------------------------



| |  | reinstated the deposit requirement for higher credit risk subscribers and will request not to participate in any Sprint PCS programs where the Companys analysis indicates
adversely impacted levels of customer turnover or unsatisfactory economic returns.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | restructured sales employees programs to pay higher commissions on subscribers with better credit ratings.
| | - | -----------------------------------------------------------------------------------------------------------



| |  | revised the local agent commission structure. The Company pays higher commissions for subscribers with good credit ratings. The Company has cancelled and continues to cancel
agreements with local agents that target higher credit risk subscribers or provide low economic value.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | reintroduced the pre-pay program, which requires advance payment for minutes of use. The Company believes that this program offers higher credit risk subscribers a less stressful
environment in which to subscribe to the Companys service by providing an opportunity to better manage their expenditures for the service provided and limits the Companys bad debt exposure.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | supplemented Sprint PCSs customer service function with certain members of its own staff who focus on subscriber retention.
| | - | ----------------------------------------------------------------------------------------------------------------------------



| |  | limited its capital expenditures to: (1) capacity and required technical upgrades of existing equipment, and (2) only adding additional cell site coverage in areas that the Company
expects will produce positive cash returns as a result of either new subscriber growth or decreases in subscriber turnover.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | continued to identify and will seek to divest of certain non-core assets.
| | - | -------------------------------------------------------------------------



| |  | undertaken a corporate wide evaluation of expenses. This includes the consolidation of functions, divesting of unused and under utilized facilities, renegotiation of vendor
contracts, extension of vendor payment terms and other cost cutting measures.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | evaluated and continues to evaluate its markets and reduce sales staffing levels and close retail outlets that do not meet its minimum internal rates of returns.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | continued to work with Sprint PCS to improve the detail, timeliness and accuracy of information processed by Sprint PCS on the Companys behalf.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------



As a result of these initiatives and operating results to date, the Company
believes that US Unwired will be able to comply with the US Unwired senior bank credit facility financial covenants and have sufficient cash to fund its operations, debt service and capital requirements over the next twelve months. However, as
discussed above, US Unwireds funding status and ability to comply with these amended financial covenants is dependent upon a number of factors influencing projections of earnings and operating cash flows. While the Company believes that these
initiatives have had and will continue to have a positive impact on operating results and support the ability of US Unwired to comply with its amended senior bank credit facility covenants and have sufficient cash to support the operations of US
Unwired over the next twelve months, the Company cannot state with certainty that these initiatives will result in its ability to sustain IWOs operations through the end of 2003.



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|4. | Details of Certain Balance Sheet Accounts
|-- | -----------------------------------------



Major categories of property and equipment consisted of the following:



|                                               |  | September 30,2003 |         | December 31,2002
|---------------------------------------------- |  | ----------------- | ------- | ----------------
|                                               |  | (In thousands)   
|Land                                           |  | $                 | 890     |                 
|Buildings and leasehold improvements           |  |                   | 22,355  |                 
|Facilities and equipment                       |  |                   | 611,599 |                 
|Furniture, fixtures and vehicles               |  |                   | 30,192  |                 
|Construction in progress                       |  |                   | 12,697  |                 
|                                               |  |                   |         |                 
|                                               |  |                   | 677,733 |                 
|Less accumulated depreciation and amortization |  |                   | 244,520 |                 
|                                               |  |                   |         |                 
|                                               |  | $                 | 433,213 |                 
|                                               |  |                   |         |                 



Intangible assets
consisted of the following:



|                              |  | September 30,2003 |         | December 31,2002
|----------------------------- |  | ----------------- | ------- | ----------------
|                              |  | (In thousands)   
|Sprint affiliation agreement  |  | $                 | 35,266  |                 
|Subscriber base               |  |                   | 81,824  |                 
|                              |  |                   |         |                 
|                              |  |                   | 117,090 |                 
|Less accumulated amortization |  |                   | 67,086  |                 
|                              |  |                   |         |                 
|Intangible assets, net        |  | $                 | 50,004  |                 
|                              |  |                   |         |                 



|5. | Long-Term Obligations
|-- | ---------------------



Long-term debt, including capital lease obligations, consisted of the following:



|                                                           |  | September 30,2003 |         | December 31,2002
|---------------------------------------------------------- |  | ----------------- | ------- | ----------------
|                                                           |  | (In thousands)   
|US Unwired Inc. senior subordinated discount notes         |  | $                 | 347,714 |                 
|US Unwired Inc. senior bank credit facility                |  |                   | 87,333  |                 
|Capital leases                                             |  |                   | 6,938   |                 
|Promissory note                                            |  |                   | 3,506   |                 
|Vendor financing                                           |  |                   | 326     |                 
|                                                           |  |                   |         |                 
|Total long-term obligations, US Unwired Inc.               |  |                   | 445,817 |                 
|                                                           |  |                  
|IWO Holdings, Inc. senior notes                            |  |                   | 138,125 |                 
|IWO Holdings, Inc. senior bank credit facility, in default |  |                   | 213,184 |                 
|                                                           |  |                   |         |                 
|Total long-term obligations, IWO Holdings, Inc.            |  |                   | 351,309 |                 
|                                                           |  |                  
|Less current maturities                                    |  |                   | 361,181 |                 
|                                                           |  |                   |         |                 
|Long-term obligations, excluding current maturities        |  | $                 | 435,945 |                 
|                                                           |  |                   |         |                 



As of September 30,
2003, US Unwired was in compliance with all financial covenants under the US Unwired senior bank credit facility and the US Unwired senior subordinated discount notes.



As discussed in Note 3 above, on October 30, 2003, the Company and the holders of the US Unwired senior bank credit facility
revised certain provisions of the US Unwired $170 million senior bank credit facility. The information presented below related to the US Unwired senior bank credit facility has been updated to reflect these revisions.



10



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##### Table of Contents

Since March 2003, IWO has failed to make $7.5 million in interest payments on the IWO $240 million senior
bank credit facility and was not in compliance with its restrictive covenants under its senior bank credit facility at September 30, 2003. As a result of the failure to make scheduled interest payments and the covenant violations, IWO was in default
of its senior bank credit facility at September 30, 2003 and the holders of the senior bank credit facility have denied the Company access to the remaining $25.2 million of availability. As a result of this and those issues as discussed in Note 3
above, the Company has classified all outstanding indebtedness of both the IWO senior bank credit facility and the IWO senior notes as a current liability.



US Unwired Senior Subordinated Discount Notes  133/8%



In
October 1999, US Unwired issued $400 million in aggregate principal amount of 133/8% Senior Subordinated
Discount Notes due November 1, 2009 (the US Unwired senior subordinated discount notes). The US Unwired senior subordinated discount notes were issued at a substantial discount such that the Company received gross proceeds of
approximately $209.2 million. The US Unwired senior subordinated discount notes increase in value daily, compounded twice per year, at the rate of 133/8% per year until November 1, 2004. On that date, the value of the US Unwired senior subordinated discount notes will be equal to the face amount of the US Unwired senior subordinated discount notes and
interest will begin to accrue at the rate of 133/8% per year. The Company will be required to pay the accrued
interest beginning May 1, 2005, and on each November 1 and May 1 thereafter. The US Unwired senior subordinated discount notes are a general unsecured obligation of the Company, except for the limited security provided by a pledge agreement by the
Companys wholly owned subsidiary, Louisiana Unwired LLC (LA Unwired). The US Unwired senior subordinated discount notes rank junior to all existing and future senior debt of the Company and equal in right of payment of any future
senior subordinated indebtedness of the Company.



The US Unwired senior subordinated discount notes are fully, unconditionally, and jointly and severally guaranteed by two of the Companys wholly owned subsidiaries: LA Unwired and Unwired Telecom Corp. (Unwired Telecom).
Each of the guarantees is a general unsecured obligation of the guarantor, except for a pledge by LA Unwired of its interest in Texas Unwired and any notes payable to it by Texas Unwired as security for the guarantee. Each of the guarantees ranks
equally in right of payment with the guarantors future senior subordinated indebtedness and is subordinated in right of payment to all existing and future senior debt of the guarantor. The US Unwired senior subordinated discount notes are not
guaranteed by IWO.



US Unwired Senior Bank Credit Facility
 $170 million



The $170 million US Unwired senior bank
credit facility consists of an $80 million reducing revolving credit facility and $90 million in term loans. Effective October 30, 2003, the Company and the holders of the US Unwired senior bank credit facility executed a Third Amendment to Credit
Agreement that agreed to a revised set of financial covenants, the retention of a $40 million revolving credit facility, an immediate $10.0 million partial repayment of the term loans and a 0.5% increase to the interest rate. The $40 million
reducing revolving credit facility will be permanently reduced by reductions of $4.0 million to $6.0 million per quarter beginning in September 2005. The US Unwired senior bank credit facility matures in 2008. The US Unwired senior bank credit
facility allows for up to $2.0 million in letters of credit and any letters of credit issued by the Company reduce the amount available under the reducing revolving credit facility. The term loans are being repaid in quarterly installments that
began in June 2003. All loans under the US Unwired senior bank credit facility bear interest at variable rates tied to the federal funds rate or LIBOR. The US Unwired senior bank credit facility is secured by all of the assets of the Company and its
subsidiaries (other than property owned by IWO). Such collateral also secures certain interest rate protection and other hedging agreements permitted by our credit agreement that may be entered into from time to time by the Company. Lucent
Technologies, Inc, is also a guarantor of a portion of our senior secured credit facility. The proceeds from the US Unwired senior bank credit facility are available for use only by US Unwired and its subsidiaries other than IWO.



11



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##### Table of Contents

IWO Senior Notes  14%



In February 2001, IWO issued 160,000 units, each consisting of $1,000 principal amount of 14% Senior Notes (the IWO
senior notes) due January 15, 2011 and one warrant to purchase 12.50025 shares of IWOs class C common stock at an exercise price of $7.00 per share. As a result of US Unwireds acquisition of IWO in April 2002, this warrant was
converted to a US Unwired warrant to purchase 12.96401 shares of US Unwireds common stock at $6.75 per share. Interest is payable semi-annually on January 15 and July 15 of each year. Independent Wireless One Corporation, a wholly owned
subsidiary of IWO, is the sole guarantor of the IWO senior notes. All of IWOs restricted subsidiaries formed or acquired after the issuance of the IWO senior notes that guarantee the IWO senior bank credit facility will also be required to
guarantee the IWO senior notes. The IWO senior notes are not guaranteed by Independent Wireless One Realty Corporation, a wholly owned subsidiary of IWO, or US Unwired and its subsidiaries.



A portion of the original proceeds of the IWO senior notes were used to
purchase a portfolio of U.S. government securities that will generate sufficient proceeds to make the first six scheduled interest payments on the IWO senior notes through January 2004. The account holding the investment securities and all of the
securities and other items contained in the account have been pledged to the trustee for the benefit of the holders of the IWO senior notes.



IWO Senior Bank Credit Facility  $240 million



Effective December 2000, Independent Wireless One Corporation, a wholly owned subsidiary of IWO, entered into an amended and restated secured credit
facility (the IWO senior bank credit facility) under which it may borrow up to $240 million in the aggregate consisting of up to $70 million in revolving loans and $170 million in term loans. The IWO senior bank credit facility matures
in 2008. The term loans are due to be repaid in quarterly installments beginning in March 2004 and the reducing revolver matures in March 2008. All loans under the senior bank credit facility, effective with the date of the default, bear interest at
a rate of 4.25-4.75 percent above the agent banks prime rate. The IWO senior bank credit facility is secured by all of the assets of IWO and its subsidiaries. As discussed above, the holders of the IWO senior bank credit facility have denied
IWO access to the remaining $25.2 million of availability as a result of IWOs failure to make scheduled interest payments and the covenant violations. The IWO credit facility is available for use only by IWO and its subsidiaries.



|6. | Commitments and Contingencies
|-- | -----------------------------



The Company uses Sprint PCS to process all post-pay PCS subscriber billings including monthly recurring charges, airtime and other charges such as
interconnect fees. The Company pays various fees to Sprint PCS for new subscribers as well as recurring monthly fees for services performed for existing customers including billing and management of customer accounts. Sprint PCSs billing for
these services is based upon an estimate of the actual costs incurred by Sprint PCS to provide such services. At the end of each calendar year, Sprint PCS compares its actual costs to provide such services to remittances by the Company for estimated
billings and either refunds overpayments or bills for costs in excess of the payments made. Based upon information as provided by Sprint PCS, the Company believes it has adequately provided for the above-mentioned costs in the accompanying
consolidated financial statements. Additionally, Sprint PCS has contracted with national retailers that sell handsets and service to new PCS subscribers in the Companys markets. Sprint PCS pays these national retailers a new subscriber
commission and provides handsets to such retailers below cost. Sprint PCS passes these costs of commissions and the handset subsidies to the Company.



The Company periodically reviews all charges from Sprint PCS and from time to time, the Company may dispute certain of these charges. As of September 30,
2003, the Company had disputed approximately $14.8 million of charges to US Unwired and $6.2 of charges to IWO. Based upon the information provided to the Company by Sprint PCS to date, the Company believes the accompanying condensed consolidated
balance sheet adequately reflects its obligation that may be due to Sprint PCS for these charges.



12



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##### Table of Contents

The Companys PCS licenses and the PCS licenses that the Company operates for Sprint PCS are subject
to a requirement that Sprint PCS construct network facilities that offer coverage to 25% of the population or have substantial service in each of its Basic Trading Areas (BTAs) within five years from the grant of the licenses. As of
September 30, 2003, management believes that Sprint PCS has met the requirements necessary for the licenses that the Company operates for Sprint PCS under the Sprint PCS affiliation agreements and that the Company has met the requirements necessary
for the licenses that it owns.



On July 11, 2003, the Company
and two of its subsidiaries, Louisiana Unwired, LLC and Texas Unwired (the Company), filed suit in the U.S. District Court for the Western District of Louisiana, against Sprint Corporation, Sprint Spectrum, L.P., Wireless, L.P. and
Sprintcom, Inc. (collectively, Sprint). The suit alleges violations of the Racketeer Influenced and Corrupt Organizations Act, breach of fiduciary duty and fraud arising out of Sprints conduct in its dealings with the plaintiff
companies. It seeks treble actual damages in unspecified amounts and appointment of a receiver over property and assets controlled by Sprint in Louisiana. On September 25, 2003, the Company filed an amended complaint to include contractual claims.
On October 20, 2003, Sprint submitted their Answer, Defenses, and Counterclaim of Defendants seeking dismissal of US Unwireds First Amended Complaint and filing a counter-claim for approximately $13.3 million related primarily to contractual
disputes as discussed above. On October 21, 2003, Sprint filed a Defendants Partial Motion for Judgment on the Proceedings seeking partial dismissal of claims filed in the First Amended Complaint. On October 21, 2003, Sprint filed
Defendants Motion to Strike Plaintiffs Jury Demand from the First Amended Complaint.



On October 10, 2003, Sprint PCS remitted to the Company a $3.0 million settlement primarily related to uncollected regulatory fees charged to subscribers.
The Company had previously recognized this amount as bad debt expense and will record a benefit in the fourth quarter of 2003.



|7. | Income Taxes
|-- | ------------



The Companys effective income tax rate for the interim periods presented is based on managements estimate of the Companys effective tax rate for the applicable year and differs from the federal
statutory income tax rate primarily due to nondeductible permanent differences, state income taxes and changes in the valuation allowance for deferred tax assets.



|8. | Stock Compensation
|-- | ------------------



The Company accounts for its stock compensation arrangements under the provision of APB 25, accounting for stock issued to employees.



Had compensation expense for the Companys stock option plan been
determined in accordance with SFAS No. 123, the Companys net loss and basic and diluted net loss per share of common stock for the three and nine-month periods ended September 30, 2003 and 2002 would have been:



|                                                        |  | Three months endedSeptember 30, |         |   | Nine months endedSeptember 30, |  
|------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | -
|                                                        |  | 2003                            |         |   | 2002                           |  
|Net loss:                                               |  |                                 |         |   |                                |  
|As reported                                             |  | $                               | (31,307 | ) |                                | $
|Add recorded non-cash stock compensation                |  |                                 | 266     |   |                                |  
|Less stock compensation in accordance with SFAS No. 123 |  |                                 | (728    | ) |                                |  
|                                                        |  |                                 |         |   |                                |  
|Pro forma net loss                                      |  | $                               | (31,769 | ) |                                | $
|                                                        |  |                                 |         |   |                                |  
|Basic and diluted loss per share:                       |  |                                 |         |   |                                |  
|As reported                                             |  | $                               | (0.25   | ) |                                | $
|                                                        |  |                                 |         |   |                                |  
|Pro forma net loss per share                            |  | $                               | (0.25   | ) |                                | $
|                                                        |  |                                 |         |   |                                |  



13



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##### Table of Contents

|9. | Condensed Consolidating Financial Information
|-- | ---------------------------------------------



As discussed in Note 5, the US Unwired Senior Subordinated Discount Notes are guaranteed by certain of the Companys subsidiaries. The following
information presents the condensed consolidating balance sheets as of September 30, 2003 and December 31, 2002 and the condensed consolidating statements of operations and cash flows for the three and nine-month periods ended September 30, 2003 and
September 30, 2002 of (a) the Parent Company, US Unwired Inc., (b) the Guarantors, Unwired Telecom Corporation and Louisiana Unwired, and (c) the Non-Guarantor, IWO, and includes eliminating entries and the
Company on a consolidated basis.



The separate consolidated
financial statements of IWO, including disclosure of condensed consolidating financial information for IWO, are included in IWOs separate Form 10-Q filing.



14



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##### Table of Contents

Condensed Consolidating Balance Sheet



|                                                                 |  | As of September 30, 2003 |         
|---------------------------------------------------------------- |  | ------------------------ | --------
|                                                                 |  | USUnwiredInc. (Parent)   |         
|                                                                 |  | (in thousands)           |         
|ASSETS:                                                          |  |                          |         
|Current Assets                                                   |  |                          |         
|Cash and cash equivalents                                        |  | $                        | 59,967  
|Restricted cash                                                  |  |                          |        
|Subscriber receivables, net                                      |  |                          |        
|Other receivables                                                |  |                          | 51      
|Inventory                                                        |  |                          |        
|Prepaid expenses and other assets                                |  |                          | 2,092   
|Receivables from (payables to) related parties                   |  |                          | (486    
|Receivables from officers                                        |  |                          | 85      
|                                                                 |  |                          |         
|Total current assets                                             |  |                          | 61,709  
|Property and equipment, net                                      |  |                          | 10,763  
|Goodwill and other intangible assets, net                        |  |                          |        
|Notes receivable from consolidated and unconsolidated affiliates |  |                          | 158,089 
|Other assets                                                     |  |                          | 10,365  
|                                                                 |  |                          |         
|Total assets                                                     |  | $                        | 240,926 
|                                                                 |  |                          |         
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                   |  |                          |         
|Current liabilities:                                             |  |                          |         
|Accounts payable                                                 |  | $                        | 570     
|Accrued expenses                                                 |  |                          | 8,665   
|Current maturities of long term debt                             |  |                          | 40,480  
|                                                                 |  |                          |         
|Total current liabilities                                        |  |                          | 49,715  
|Long term debt, net of current maturities                        |  |                          | 429,205 
|Deferred gain                                                    |  |                          |        
|Investments in and advances to unconsolidated affiliates         |  |                          | 7,884   
|                                                                 |  |                          |         
|Stockholders equity (deficit):                                  |  |                          |         
|Common stock                                                     |  |                          | 1,288   
|Treasury stock                                                   |  |                          | (10     
|Additional paid in capital                                       |  |                          | 655,727 
|Retained earnings (deficit)                                      |  |                          | (902,883
|Promissory note                                                  |  |                          |        
|                                                                 |  |                          |         
|Total stockholders equity (deficit)                             |  |                          | (245,878
|                                                                 |  |                          |         
|Total liabilities and stockholders equity (deficit)             |  | $                        | 240,926 
|                                                                 |  |                          |         



15



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##### Table of Contents

Condensed Consolidating Balance Sheet



|                                                                              |  | As of December 31, 2002 |         
|----------------------------------------------------------------------------- |  | ----------------------- | --------
|                                                                              |  | USUnwiredInc. (Parent)  |         
|                                                                              |  | (in thousands)          |         
|ASSETS:                                                                       |  |                         |         
|Current Assets                                                                |  |                         |         
|Cash and cash equivalents                                                     |  | $                       | 23,025  
|Restricted cash and US Treasury securities at amortized cost-held to maturity |  |                         |        
|Subscriber receivables, net                                                   |  |                         |        
|Other receivables                                                             |  |                         | 33      
|Inventory                                                                     |  |                         |        
|Prepaid expenses and other assets                                             |  |                         | 1,012   
|Receivables from (payables to) related parties                                |  |                         | (1,362  
|Receivables from officers                                                     |  |                         | 101     
|                                                                              |  |                         |         
|Total current assets                                                          |  |                         | 22,809  
|Property and equipment, net                                                   |  |                         | 11,844  
|Restricted cash                                                               |  |                         |        
|Goodwill and other intangible assets, net                                     |  |                         |        
|Notes receivable from consolidated and unconsolidated affiliates              |  |                         | 187,600 
|Other assets                                                                  |  |                         | 11,572  
|                                                                              |  |                         |         
|Total assets                                                                  |  | $                       | 233,825 
|                                                                              |  |                         |         
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                |  |                         |         
|Current liabilities:                                                          |  |                         |         
|Accounts payable                                                              |  | $                       | 1,164   
|Accrued expenses                                                              |  |                         | 3,803   
|Current maturities of long term debt                                          |  |                         | 28,313  
|                                                                              |  |                         |         
|Total current liabilities                                                     |  |                         | 33,280  
|Long term debt, net of current maturities                                     |  |                         | 404,860 
|Deferred gain                                                                 |  |                         |        
|Investments in and advance to unconsolidated affiliates                       |  |                         | (88,013 
|Stockholders equity (deficit):                                               |  |                         |         
|Common stock                                                                  |  |                         | 1,288   
|Additional paid in capital                                                    |  |                         | 659,180 
|Retained earnings (deficit)                                                   |  |                         | (776,770
|Promissory note                                                               |  |                         |        
|                                                                              |  |                         |         
|Total stockholders equity (deficit)                                          |  |                         | (116,302
|                                                                              |  |                         |         
|Total liabilities and stockholders equity (deficit)                          |  | $                       | 233,825 
|                                                                              |  |                         |         



16



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##### Table of Contents

Condensed Consolidating Statement of Operations



|                                                         |  | Three-month period ended September 30, 2003 |        
|-------------------------------------------------------- |  | ------------------------------------------- | -------
|                                                         |  | USUnwiredInc. (Parent)                      |        
|                                                         |  | (in thousands)                              |        
|Revenues:                                                |  |                                             |        
|Subscriber                                               |  | $                                           |       
|Roaming                                                  |  |                                             |       
|Merchandise sales                                        |  |                                             |       
|Other revenue                                            |  |                                             | 7,117  
|                                                         |  |                                             |        
|Total revenues                                           |  |                                             | 7,117  
|Expenses:                                                |  |                                             |        
|Cost of service                                          |  |                                             |       
|Merchandise cost of goods sold                           |  |                                             |       
|General and administrative                               |  |                                             | 7,117  
|Sales and marketing                                      |  |                                             |       
|Non-cash stock compensation                              |  |                                             | 218    
|Depreciation and amortization                            |  |                                             | 698    
|IWO asset abandonment charge                             |  |                                             |       
|                                                         |  |                                             |        
|Total operating expense                                  |  |                                             | 8,033  
|                                                         |  |                                             |        
|Operating income (loss)                                  |  |                                             | (916   
|Other income (expense)                                   |  |                                             |        
|Interest income (expense), net                           |  |                                             | (11,301
|Gain on sale of assets                                   |  |                                             |       
|                                                         |  |                                             |        
|Total other income (expense)                             |  |                                             | (11,301
|Equity in income (losses) of unconsolidated subsidiaries |  |                                             | (19,628
|                                                         |  |                                             |        
|Net income (loss)                                        |  | $                                           | (31,845
|                                                         |  |                                             |        



Condensed
Consolidating Statement of Operations



|                                                         |  | Three-month period ended September 30, 2002 |        
|-------------------------------------------------------- |  | ------------------------------------------- | -------
|                                                         |  | USUnwiredInc. (Parent)                      |        
|                                                         |  | (in thousands)                              |        
|Revenues:                                                |  |                                             |        
|Subscriber                                               |  | $                                           |       
|Roaming                                                  |  |                                             |       
|Merchandise sales                                        |  |                                             |       
|Other revenue                                            |  |                                             | 8,556  
|                                                         |  |                                             |        
|Total revenues                                           |  |                                             | 8,556  
|Expenses:                                                |  |                                             |        
|Cost of service                                          |  |                                             |       
|Merchandise cost sales                                   |  |                                             |       
|General and administrative                               |  |                                             | 8,556  
|Sales and marketing                                      |  |                                             |       
|Non-cash stock compensation                              |  |                                             | 1,268  
|Depreciation and amortization                            |  |                                             | 801    
|                                                         |  |                                             |        
|Total operating expense                                  |  |                                             | 10,625 
|                                                         |  |                                             |        
|Operating income (loss)                                  |  |                                             | (2,069 
|Other income (expense)                                   |  |                                             |        
|Interest income (expense), net                           |  |                                             | (9,615 
|Gain on sale of assets                                   |  |                                             | 8      
|                                                         |  |                                             |        
|Total other income (expense)                             |  |                                             | (9,607 
|Equity in income (losses) of unconsolidated subsidiaries |  |                                             | (42,764
|                                                         |  |                                             |        
|Income (loss) before income tax benefit                  |  |                                             | (54,440
|Income tax benefit                                       |  |                                             | (781   
|                                                         |  |                                             |        
|Net income (loss)                                        |  | $                                           | (53,659
|                                                         |  |                                             |        



17



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##### Table of Contents

Condensed Consolidating Statement of Operations



|                                                         |  | Nine-month period ended September 30, 2003 |         
|-------------------------------------------------------- |  | ------------------------------------------ | --------
|                                                         |  | USUnwiredInc. (Parent)                     |         
|                                                         |  | (in thousands)                             |         
|Revenues:                                                |  |                                            |         
|Subscriber                                               |  | $                                          |        
|Roaming                                                  |  |                                            |        
|Merchandise sales                                        |  |                                            |        
|Other revenue                                            |  |                                            | 25,154  
|                                                         |  |                                            |         
|Total revenues                                           |  |                                            | 25,154  
|Expenses:                                                |  |                                            |         
|Cost of service                                          |  |                                            |        
|Merchandise cost of goods sold                           |  |                                            |        
|General and administrative                               |  |                                            | 25,154  
|Sales and marketing                                      |  |                                            |        
|Non-cash stock compensation                              |  |                                            | 2,088   
|Depreciation and amortization                            |  |                                            | 2,011   
|IWO asset abandonment charge                             |  |                                            |        
|                                                         |  |                                            |         
|Total operating expense                                  |  |                                            | 29,253  
|                                                         |  |                                            |         
|Operating income (loss)                                  |  |                                            | (4,099  
|Other income (expense)                                   |  |                                            |         
|Interest income (expense), net                           |  |                                            | (31,978 
|Gain on sale of assets                                   |  |                                            |        
|                                                         |  |                                            |         
|Total other income (expense)                             |  |                                            | (31,978 
|Equity in income (losses) of unconsolidated subsidiaries |  |                                            | (90,037 
|                                                         |  |                                            |         
|Net income (loss)                                        |  | $                                          | (126,114
|                                                         |  |                                            |         



Condensed Consolidating Statement of
Operations



|                                                         |  | Nine-month period ended September 30, 2002 |         
|-------------------------------------------------------- |  | ------------------------------------------ | --------
|                                                         |  | USUnwiredInc. (Parent)                     |         
|                                                         |  | (in thousands)                             |         
|Revenues:                                                |  |                                            |         
|Subscriber                                               |  | $                                          |        
|Roaming                                                  |  |                                            |        
|Merchandise sales                                        |  |                                            |        
|Other revenue                                            |  |                                            | 22,208  
|                                                         |  |                                            |         
|Total revenues                                           |  |                                            | 22,208  
|Expenses:                                                |  |                                            |         
|Cost of service                                          |  |                                            |        
|Merchandise cost of sales                                |  |                                            |        
|General and administrative                               |  |                                            | 22,208  
|Sales and marketing                                      |  |                                            |        
|Non-cash stock compensation                              |  |                                            | 3,405   
|Depreciation and amortization                            |  |                                            | 3,933   
|                                                         |  |                                            |         
|Total operating expense                                  |  |                                            | 29,546  
|                                                         |  |                                            |         
|Operating loss                                           |  |                                            | (7,338  
|Other income (expense)                                   |  |                                            |         
|Interest income (expense), net                           |  |                                            | (27,383 
|Gain on sale of assets                                   |  |                                            | 8       
|                                                         |  |                                            |         
|Total other (income) expense                             |  |                                            | (27,375 
|Equity in income (losses) of unconsolidated subsidiaries |  |                                            | (101,363
|                                                         |  |                                            |         
|Income (loss) before income tax benefit                  |  |                                            | (136,076
|Income tax benefit                                       |  |                                            | (781    
|                                                         |  |                                            |         
|Net income (loss)                                        |  | $                                          | (135,295
|                                                         |  |                                            |         



18



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##### Table of Contents

Condensed Consolidating Statement of Cash Flows



|                                                     |  | Nine-month period ended September 30, 2003 |       
|---------------------------------------------------- |  | ------------------------------------------ | ------
|                                                     |  | USUnwiredInc.(Parent)                      |       
|                                                     |  | (in thousands)                             |       
|Cash flows from operating activities:                |  |                                            |       
|Net cash provided by (used in) operating activities  |  | $                                          | 3,162 
|                                                     |  |                                            |       
|Cash flows from investing activities:                |  |                                            |       
|Proceeds from restricted cash                        |  |                                            |      
|Proceeds from the sale of assets                     |  |                                            |      
|Investments in unconsolidated affiliates             |  |                                            |      
|Payments for the purchase of equipment               |  |                                            | (236  
|Disbursement of intercompany note                    |  |                                            | 29,511
|                                                     |  |                                            |       
|Net cash provided by (used in) investing activities  |  |                                            | 29,275
|                                                     |  |                                            |       
|Cash flows from financing activities:                |  |                                            |       
|Principal payments of long-term debt                 |  |                                            | (3,607
|Proceeds from long-term debt                         |  |                                            | 8,112 
|                                                     |  |                                            |       
|Net cash provided by (used in) financing activities  |  |                                            | 4,505 
|                                                     |  |                                            |       
|Net increase (decrease) in cash and cash equivalents |  |                                            | 36,942
|Cash and cash equivalents at beginning of period     |  |                                            | 23,025
|                                                     |  |                                            |       
|Cash and cash equivalents at end of period           |  | $                                          | 59,967
|                                                     |  |                                            |       



Condensed Consolidating Statement of
Cash Flows



|                                                     |  | Nine-month period ended September 30, 2002 |         
|---------------------------------------------------- |  | ------------------------------------------ | --------
|                                                     |  | USUnwiredInc.(Parent)                      |         
|                                                     |  | (in thousands)                             |         
|Cash flows from operating activities:                |  |                                            |         
|Net cash provided by (used in) operating activities  |  | $                                          | 6,954   
|                                                     |  |                                            |         
|Cash flows from investing activities:                |  |                                            |         
|Payments for the purchase of equipment               |  |                                            | (1,853  
|Acquisition of business, net of cash acquired        |  |                                            | (61,990 
|Proceeds from maturities of investments              |  |                                            |        
|Proceeds from the sale of assets                     |  |                                            | 303     
|Proceeds from restricted cash                        |  |                                            |        
|Investments in unconsolidated affiliates             |  |                                            |        
|Disbursement of intercompany note                    |  |                                            | (50,935 
|                                                     |  |                                            |         
|Net cash provided by (used in) investing activities  |  |                                            | (114,475
|                                                     |  |                                            |         
|Cash flows from financing activities:                |  |                                            |         
|Proceeds from long-term debt                         |  |                                            | 58,368  
|Proceeds from stock options exercised                |  |                                            | 212     
|Proceeds from promissory notes                       |  |                                            |        
|Principal payments of long-term debt                 |  |                                            | (161    
|Debt issuance costs                                  |  |                                            | (762    
|                                                     |  |                                            |         
|Net cash provided by (used in) financing activities  |  |                                            | 57,657  
|                                                     |  |                                            |         
|Net increase (decrease) in cash and cash equivalents |  |                                            | (49,864 
|Cash and cash equivalents at beginning of period     |  |                                            | 79,184  
|                                                     |  |                                            |         
|Cash and cash equivalents at end of period           |  | $                                          | 29,320  
|                                                     |  |                                            |         



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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations



Cautionary Note Regarding Forward-Looking Statements



This report contains forward-looking statements, which are statements about future business strategy, operations and capabilities, construction plans, construction
schedules, financial projections, plans and objectives of management, expected actions of third parties and other matters. Forward-looking statements often include words like believes, belief, expects, plans, anticipates, intends, projects,
estimates, may, might, would or similar words. Forward-looking statements speak only as of the date of this report. They involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different. In
addition to the risk factors described elsewhere, specific factors that might cause such a difference include, but are not limited to (i) our ability to integrate operations and finance future growth opportunities; (ii) our dependence on Sprint PCS;
(iii) our ability to expand our Sprint PCS network or to upgrade the Sprint PCS network to accommodate new technologies; (iv) limited operating history in the PCS market and anticipation of future losses; (v) potential fluctuations in operating
results; (vi) changes or advances in technology; (vii) changes in law or government regulation; (viii) competition in the industry and markets in which we operate; (ix) future acquisitions; (x) our ability to attract and retain skilled personnel;
(xi) our dependence on contractor and consultant services, network implementation and information technology support; (xii) our potential inability to expand the services and related products we provide in the event of substantial increases in
demand in excess of supply for network and handset equipment and related services and products; (xiii) the availability at acceptable terms of sufficient funds to pay for our business plans; (xiv) changes in labor, equipment and capital costs; (xv)
any inability to comply with the indentures that govern our senior notes or credit agreements; (xvi) changes in management; and (xvii) general economic and business conditions.



You should not rely too heavily on any forward-looking statement. We cannot assure you that our forward-looking statements will prove to be
correct. We have no obligation to update or revise publicly any forward-looking statement based on new information, future events or otherwise. This discussion should be read in conjunction with our financial statements included in this report and
with the Risk Factors included in this report under Item 5 Other Information, and with the financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations that are included in the Form 10-K for US
Unwired Inc. for the year ended December 31, 2002, filed on March 31, 2003 with the Securities and Exchange Commission (SEC) and with the financial statements and Managements Discussion and Analysis of Financial Condition and
Results of Operations in the Form 10-K for IWO Holdings, Inc. for the year ended December 31, 2002, filed on March 31, 2003 with the SEC.



Critical Accounting Policies and Estimates



Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses,
and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to bad debts, activation fee revenues and related expense, determination of fair value of separate units for the
application of EITF 00-21, revenue recognition of contract cancellation and late fees, inventory reserves, intangible assets and contingencies. We base our estimates on our historical experience, the historical experience of Sprint PCS and the
historical experience of other Sprint PCS affiliates and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may vary from these estimates under different assumptions or conditions.



We believe the following critical accounting policies affect our significant judgments and estimates used in the preparation of our consolidated financial statements.



Reliance on Sprint PCS Processing



We rely on Sprint PCS for much of our financial reporting information including: revenues;
commissions paid to national retailers; fees paid for customer care and billing; roaming revenue and roaming expense on



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the Sprint PCS and Sprint PCS affiliate network; and, the maintenance of accounts receivable, including cash collections
and the write off of customer balances that are not collectible and the accuracy of our accounts receivable balance. Where uncertainty exists regarding revenues, we do not record these revenues until substantive information has been provided to
ensure that such revenues have been earned. Based upon the timing of the information received from Sprint PCS, we make certain assumptions that the information is accurate and that it is consistent with historical trends. We also rely upon the
evaluation of internal controls as performed by Sprint PCSs external auditors that were performed in accordance with AICPA Statement on Auditing Standards (SAS) No. 70.



Bad Debt Expense



We maintain allowances for doubtful accounts for estimated losses resulting from the inability of subscribers to make payments. If the financial conditions of our
subscribers deteriorate, resulting in the subscribers inability to make payments, additional allowances will be required.



We estimate our allowance by examining the components of our revenue. We establish a general reserve of all accounts receivable that are estimated to be uncollectible. In
addition, we do not recognize 100% of our late fees or cancellation fees as revenue because of high uncertainty of the collectibility of these amounts. Reserves for these amounts are recorded to our allowance for doubtful accounts. Our evaluation of
the adequacy of these amounts includes our own historical experience and discussions with Sprint PCS and other Sprint PCS affiliates.



Revenue Recognition



We recognize only a portion of contract cancellation fees billed to subscribers that disconnect service prior to fulfilling the contractual length of service, as there is significant uncertainty that all contract
cancellation fees that are billed will be collected. We have very limited information at a detail level sufficient to perform our own evaluation and rely on Sprint PCS historical trending to make our estimates. If the collections on contract
cancellation fees are less than that recognized, additional allowances may be required.



We recognize only a portion of late fees billed to subscribers that fail to pay their bills within the required payment period, as there is no assurance that all late fees that are billed will be collected. We have very limited information
at a detail level sufficient to perform our own evaluation and rely on Sprint PCS historical trending to make our estimates. If the collections on late fees are less than that recognized, additional allowances may be required.



For sales channels other than our retail outlets, we defer revenues collected for activation
fees over the estimated life of the subscriber relationship, which we believe to be 15-24 months, based upon our historical trends of average customer lives and discussions with Sprint PCS. For these same sales channels, we also defer an activation
expense in an amount equal to the activation fee revenue and amortize this expense in an amount equal to the activation fee revenue over the life of the subscriber relationship. If the estimated life of the subscriber relationship increases or
decreases, the amounts of deferred revenue and deferred expense will be adjusted over the revised estimated life of the subscriber relationship. For our retail sales channels, the sale of handsets and future service under contract are accounted for
as separate units under EITF 00-21. As a result, the total consideration under these arrangements, including any related activation fees, is allocated between these separate units based upon their relative fair values. The determination of fair
values for these separate units can vary depending upon market conditions.



Inventory Reserves



We review our inventory semi-annually and
write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market
conditions are less favorable than those projected by management, additional inventory write-downs may be necessary.



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Accrued Commissions



We accrue commissions and other costs related to national retailers based upon their sales to new subscribers. The national retailers receive both a commission and,
because the handset is typically sold below cost, a reimbursement for the difference between the sales price and the cost. We base our accruals on information provided by Sprint PCS on subscriber additions and recognize that there are typically
timing differences between the point of subscriber activation and the time that we are invoiced for commissions by Sprint PCS. We periodically and annually evaluate the adequacy of our accruals through analysis of historical information and
discussions with Sprint PCS. Depending on the level of sales and other factors, our estimates of the amounts accrued for commissions and other costs owed to such retailers may require modification of our previous estimates.



Goodwill and Intangible Assets Impairment Analysis



We perform impairment tests of goodwill and indefinite lived assets as required by Statements
of Financial Accounting Standards No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets. The impairment analysis requires numerous subjective assumptions and estimates to determine fair value of the
respective reporting units as required by FAS No. 142. Depending on level of sales, our liquidity and other factors, we may be required to recognize impairment charges in the future.



Overview



Through our subsidiaries, Louisiana Unwired LLC (LA Unwired) and IWO Holdings, Inc. (IWO), we provide wireless personal communication services, commonly
referred to as PCS in all or some portion of Louisiana, Texas, Florida, Arkansas, Mississippi, Georgia, Alabama, New York, New Hampshire, Vermont and portions of Massachusetts and Pennsylvania. We are a network partner of Sprint PCS, the personal
communications services group of Sprint Corporation. Sprint PCS, directly and through affiliates like us, provides wireless services in more than 4,000 cities and communities across the country. We have the exclusive right to provide digital PCS
services under the Sprint® and Sprint PCS® brand names in our service area which is among the
largest in population and subscribers of all of the Sprint PCS network partners and is contiguous with Sprint PCSs launched markets.



Liquidity and Capital Resources



US Unwired has a senior bank credit facility and senior subordinated discount notes. IWO has a senior bank credit facility and senior notes. US Unwired and IWO entered into these prior to the acquisition of IWO. Under
the terms of these debt instruments, funds available under the US Unwired debt can only be used by US Unwired, and funds available under the IWO debt can only be used by IWO. US Unwired is not obligated for the payment of IWOs debt, and IWO is
not obligated for the payment of US Unwireds debt.



US Unwired
Liquidity



As of September 30, 2003, US Unwired had $62.3 million in cash
and cash equivalents; availability under the US Unwired senior bank credit facility of $68.3 million; and indebtedness that consisted of $87.3 million related to the US Unwired senior bank credit facility, $347.7 million related to the US Unwired
senior subordinated discount notes and $10.8 million in capital leases, promissory notes and vendor financing for a total of $445.8 million. See Note 6 for commitments and contingencies that may affect US Unwireds liquidity. US Unwired must
comply with certain financial covenants of the US Unwired senior bank credit facility and the US Unwired senior subordinated discount notes, and as of September 30, 2003, was in compliance with these financial covenants.



On September 15, 2003, we executed an agreement for the purchase and sale of assets of US
Unwireds cellular operations and certain PCS licenses for approximately $30.0 million. The sale, which was approved by the holders of the US Unwired senior bank credit facility on October 30, 2003, is contingent upon FCC approval and other
conditions.



On October 30, 2003, we and the holders of the US Unwired senior
bank credit facility revised certain provisions of the US Unwired $170 million senior bank credit facility through execution of the third amendment to the US Unwired senior bank credit facility. We and our senior lenders agreed to a revised set of
financial covenants, a $40 million revolving credit facility that is subject to certain borrowing conditions, an immediate $10.0 million partial repayment of the senior bank term loans and a 0.5% increase



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to the interest rate. The October 30, 2003 amendment requires us to remit approximately $8.0 million of the planned net
proceeds from the sale of our cellular operations and certain PCS licenses as discussed above and a portion of the net proceeds of any future asset disposals. The amendment also provides for additional restrictions on our ability to draw on the
$40.0 million revolver that includes certain financial requirements and only allow for additional draws if our cash balance falls below $15.0 million prior to March 31, 2005 or $10.0 million on or subsequent to March 31, 2005. Subject to these
restrictions and after giving affect to the outstanding letters of credit as of September 30, 2003, we will have additional borrowing capacity under the US Unwired senior bank credit facility of $38.3 million. We incurred approximately $2.6 million
in banking and other professional fees related to this amendment that will be paid in the fourth quarter of 2003.



We have updated the US Unwired business model to include our operating performance for the six months ended June 30, 2003 and the initiatives discussed below. Based upon
existing assumptions in the business model, we believe that we will be able to comply with the financial covenants of the amended US Unwired senior bank credit facility and have sufficient cash to fund its operations, debt service and capital
requirements over the next twelve months.



Our funding status and ability to
comply with these amended financial covenants is dependent upon a number of factors influencing projections of earnings and operating cash flows. These factors include subscriber growth, average monthly revenue per user (ARPU), cash cost
per user (CCPU), customer churn and cost per gross addition (CPGA).



Should actual results differ from the underlying business model assumptions, our liquidity position and ability to comply with the amended financial covenants could be adversely affected. We could be required to raise
additional capital that may or may not be available on terms acceptable us, if at all. This could have a material adverse effect on our ability to achieve our intended business objectives.



IWO Liquidity



We have been unable to develop a business plan for IWO that provides sufficient cash to fund operations, debt service and capital
requirements in 2003. We are in discussions with the IWO banking group to arrive at an acceptable restructuring to preserve IWO liquidity but cannot state with certainty that an acceptable plan will be forthcoming. If an acceptable restructuring
plan is not agreed upon by us and the IWO banking group, we will be forced to seek protection under bankruptcy for IWO.



As of September 30, 2003, IWO had $27.6 million in cash and cash equivalents and $19.3 million in restricted cash; and indebtedness that consisted of $213.2 million
related to the IWO senior bank credit facility and $138.1 million related to the IWO senior notes for a total of $351.3 million. A portion of the original proceeds of the IWO senior notes offering was set aside as restricted cash to make the first
six scheduled interest payments on the IWO senior notes through January 2004. Principal repayment of the IWO senior bank credit facility commences in March 2004.



Since March 2003, IWO has failed to make $7.5 million in interest payments on the IWO $240 million senior bank credit facility and was not
in compliance with its restrictive covenants under the IWO senior bank credit facility at September 30, 2003. As a result of IWOs failure to make scheduled interest payments and the covenant violations, IWO was in default of the IWO senior
bank credit facility at September 30, 2003 and the holders of the senior bank credit facility have denied IWO access to the remaining $25.2 million of availability. As a result, we have classified all outstanding indebtedness of both the IWO senior
bank credit facility and the IWO senior notes as a current liability.



As a
result of liquidity challenges, IWO has made the decision to reduce capital expenditures for network expansion and abandon the construction of cell sites that do not provide a sufficient level of enhanced coverage. IWO recorded an asset abandonment
charge of $12.4 million during the nine-month period ended September 30, 2003 for the cell sites and the related property leases of these abandoned cell sites. Included in this asset abandonment charge are cell sites that IWO is required to
construct to meet the build out requirements under the IWO Sprint management agreement. Failure to complete the build out of the IWO service area will place IWO in violation of the IWO Sprint management agreement. As a result, Sprint PCS could
declare IWO in default and take action up to and including termination of the IWO Sprint management agreement. At September 30, 2003, IWOs construction in progress included $4.9 million



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primarily related to cell sites that IWO plans to complete, and we estimate that completion of these cell sites will
require approximately $8.5 million in additional costs to complete construction and place these sites in operation. We anticipate that only a portion of these sites will be completed in 2003.



Due to restrictions in the US Unwired debt instruments, US Unwired cannot provide any capital
or other financial support to IWO. Further, IWO creditors, IWO lenders and IWO note holders cannot place any liens or encumbrances on the assets of US Unwired. Should the holders of the IWO senior bank credit facility place IWO in default, US
Unwireds relationship with IWO may change and several alternatives exist ranging from working for the holders of the IWO senior bank credit facility and the holders of the IWO senior notes as a manager of the IWO territory, possibly subject to
the approval by Sprint PCS, to no involvement with IWO at all.



Considering
IWOs default of the IWO loan agreements and its liquidity as discussed above, there is substantial doubt about IWOs ability to continue as a going concern.



Our Business Strategy



We are undertaking a number of key initiatives designed to enable US Unwired to achieve the underlying assumptions of the US Unwired business model and preserve IWO
liquidity. We have:



| | focused on attracting customers that are in good credit standing
|- | ----------------------------------------------------------------



| | reinstated the deposit requirement for higher credit risk subscribers and will request not to participate in any Sprint PCS programs where our analysis indicates adversely impacted
levels of customer turnover or unsatisfactory economic returns.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | restructured sales employees programs to pay higher commissions on subscribers with better credit ratings.
|- | -----------------------------------------------------------------------------------------------------------



| | revised the local agent commission structure. We pay higher commissions for subscribers with good credit ratings. We have cancelled and continue to cancel agreements with local
agents that target higher credit risk subscribers or provide low economic value.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | reintroduced the pre-pay program, which requires advance payment for minutes of use. We believe that this program offers higher credit risk subscribers a less stressful environment
in which to subscribe to our service by providing an opportunity to better manage their expenditures for the service provided and limits our bad debt exposure
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | supplemented Sprint PCSs customer service function with certain members of our own staff who focus on subscriber retention.
|- | ----------------------------------------------------------------------------------------------------------------------------



| | limited our capital expenditures to: (1) capacity and required technical upgrades of existing equipment, and (2) only adding additional cell site coverage in areas that we expect
will produce positive cash returns as a result of either new subscriber growth or decreases in subscriber turnover.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | continued to identify and will seek to divest of certain non-core assets.
|- | -------------------------------------------------------------------------



| | undertaken a corporate wide evaluation of expenses. This includes the consolidation of functions, divesting of unused and under utilized facilities, renegotiation of vendor
contracts, extension of vendor payment terms and other cost cutting measures.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | evaluated and continue to evaluate our markets and reduce sales staffing levels and close retail outlets that do not meet its minimum internal rates of returns.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | continued to work with Sprint PCS to improve the detail, timeliness and accuracy of information processed by Sprint PCS on our behalf.
|- | --------------------------------------------------------------------------------------------------------------------------------------



As a result of these initiatives and operating results to date, we believe that US Unwired
will be able to comply with the US Unwired senior bank credit facility financial covenants and have sufficient cash to fund its operations, debt service and capital requirements over the next twelve months. However, as discussed above, US
Unwireds funding status and ability to comply with these amended financial covenants is dependent upon a number of factors influencing projections of earnings and operating cash flows. While we believe that these initiatives have had and will
continue to have a positive impact on operating results and support the ability of US Unwired to comply with its amended senior bank credit facility covenants and have sufficient cash to support the operations of US Unwired over the next twelve
months, we cannot state with certainty that these initiatives will result in our ability to sustain IWO operations through the end of 2003.



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Cash Flows



Net cash provided by operating activities during the nine-month period ended September 30, 2003 was $35.0 million. Net cash used in investing activities during the
nine-month period ended September 30, 2003 was $3.8 million and included $21.9 million in proceeds of restricted cash, $350,000 in proceeds from the sale of assets and $250,000 in distributions from unconsolidated affiliates offset by $26.4 million
for capital expenditures. Cash used in financing activities during the nine-month period ended September 30, 2003 was $3.2 million and represented principal repayment of long-term debt.



Results of Operations



PCS Performance Measurements and Metrics (Non-GAAP Terms)



The wireless telecommunications industry uses terms such as subscriber additions, average revenue per user, churn and cost per gross addition as performance measurements
or metrics. None of these terms are measures of financial performance under accounting principles generally accepted in the United States (GAAP). When we use these terms, they may not be comparable to similar terms used by other wireless
telecommunications companies.



|                                    |  | Three month periodended September 30, |         |   | Nine month periodended September 30, |  
|----------------------------------- |  | ------------------------------------- | ------- | - | ------------------------------------ | -
|                                    |  | 2003                                  |         |   | 2002                                 |  
|Subscribers                         |  |                                       |         |   |                                      |  
|                                    |  |                                       |         |  
|Gross Additions                     |  |                                       | 68,635  |   |                                      |  
|                                    |  |                                       |         |  
|Net Additions                       |  |                                       | 2,656   |   |                                      |  
|                                    |  |                                       |         |  
|Total Customers                     |  |                                       | 595,724 |   |                                      |  
|                                    |  |                                       |         |  
|Churn                               |  |                                       | 3.5     | % |                                      |  
|                                    |  |                                       |         |  
|Average Revenue Per User, Monthly   |  |                                       |         |   |                                      |  
|                                    |  |                                       |         |  
|Including Roaming                   |  | $                                     | 74.54   |   |                                      | $
|                                    |  |                                       |         |  
|Without Roaming                     |  | $                                     | 55.22   |   |                                      | $
|                                    |  |                                       |         |  
|Cash Cost Per User, Monthly         |  |                                       |         |   |                                      |  
|                                    |  |                                       |         |  
|Including Roaming                   |  | $                                     | 48.52   |   |                                      | $
|                                    |  |                                       |         |  
|Without Roaming                     |  | $                                     | 35.37   |   |                                      | $
|                                    |  |                                       |         |  
|Cost Per Gross Addition             |  | $                                     | 360     |   |                                      | $
|                                    |  |                                       |         |  
|Average Monthly MOUs Per Subscriber |  |                                       |         |   |                                      |  
|                                    |  |                                       |         |  
|Home                                |  |                                       | 580     |   |                                      |  
|                                    |  |                                       |         |  
|Roaming Off Our Network             |  |                                       | 188     |   |                                      |  
|                                    |  |                                       |         |  
|System MOUs (Millions)              |  |                                       |         |   |                                      |  
|                                    |  |                                       |         |  
|Subscriber                          |  |                                       | 1,035   |   |                                      |  
|                                    |  |                                       |         |  
|Roaming                             |  |                                       | 481     |   |                                      |  
|                                    |  |                                       |         |  
|Licensed POPs (Millions)            |  |                                       | 17.6    |   |                                      |  
|                                    |  |                                       |         |  
|Covered POPs (Millions)             |  |                                       | 12.8    |   |                                      |  
|                                    |  |                                       |         |  
|Towers (Owned and Leased)           |  |                                       | 1,864   |   |                                      |  
|                                    |  |                                       |         |  
|Cum. CapEx Per Covered POP          |  | $                                     | 49.88   |   |                                      | $



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Subscribers



We refer to our customers as subscribers. Gross additions refer to the total number of new subscribers added during the period. Net subscribers refer to the
total number of new subscriber additions during the period reduced by any subscribers that have cancelled or terminated their service with us during this same period.



The number of gross additions decreased for the three and nine-month periods ended September 30, 2003 as compared to the three and
nine-month periods ended September 30, 2002 primarily as a result of our marketing efforts to target customers of good credit quality and the re-institution and increase of deposits for credit challenged subscribers.



The number of net additions was comparable for the three-month periods ended September 30,
2003 and September 30, 2002. The number of net additions decreased for the nine-month period ended September 30, 2003 as compared to the nine-month period ended September 30, 2002 primarily as a result of a reduction in gross additions that was
partially offset by an improvement in subscriber churn, as discussed below.



Churn



Churn is the monthly rate of customer turnover expressed as a
percentage of our overall average customers for the reporting period. Customer turnover includes both customers that elected voluntarily to not continue using our service and customers that were involuntarily terminated from using our service
because of non-payment. Churn is calculated by dividing the sum of (i) the number of customers that discontinue service; (ii) less those customers discontinuing their service within 30 days of their original activation date; (iii) adding back those
customers that reactivate their service, by our overall average customers for the reporting period; and, (iv) dividing by the number of months in the period. The decrease in churn for the three and nine-month periods ended September 30, 2003 as
compared to the three and nine-month periods ended September 30, 2002 was primarily as a result of a continuing improvement in the credit quality of our subscriber base.



Subscriber and Roaming Revenue



Subscriber revenue consists primarily of a basic service plan (where the customer purchases a pre-allotted number of minutes for voice and/or data transmission); airtime
(which consists of billings for minutes that either exceed or are not covered by the basic service plan); long distance; and charges associated with travel outside our service area.



Roaming revenue consists primarily of Sprint PCS travel revenue and foreign roaming revenue. Sprint PCS travel revenue is generated on a per
minute basis when a Sprint PCS subscriber outside of our markets uses our service when traveling through our markets. Sprint PCS travel expense is generated on a per minute basis when our subscribers travel outside our market area and use the Sprint
PCS network. Historically, our Sprint PCS travel revenue exceeds our Sprint PCS travel expense. Foreign roaming revenue is generated when a non-Sprint PCS customer uses our service when traveling through our markets.



Effective January 1, 2003, Sprint PCS reduced the reciprocal travel rate for Louisiana
Unwired from $0.20 per minute in 2002 to $0.058 per minute in 2003 and for Texas Unwired and Georgia PCS Management Inc. (Georgia PCS), both subsidiaries of LA Unwired, and IWO from $0.10 per minute in 2002 to $0.058 per minute in 2003.
For the three-month period ended September 30, 2003, the reduction in the travel rate has resulted in a $35.0 million decrease to our revenues, a $29.6 million decrease to our expenses and a reduction to our cash flow of $5.4 million. For the
nine-month period ended September 30, 2003 the reduction in the travel rate has resulted in a $95.5 million decrease to our revenues, a $77.1 million decrease to our expenses and a reduction to our cash flow of $18.4 million.



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Average Revenue per User



Average revenue per user (ARPU) is the average monthly service revenue per subscriber and is calculated by dividing total subscriber revenue for the period by
the average number of subscribers during the period. We present ARPU excluding and including roaming revenue. The increase in ARPU excluding roaming for the three-month period ended September 30, 2003 as compared to the three-month period ended
September 30, 2002 was primarily as a result of an E-911 reimbursement as discussed below in Subscriber Revenues that added $1.74. The decrease in ARPU excluding roaming for the nine-month period ended September 30, 2003 as compared to the
nine-month period ended September 30, 2002 was primarily as a result of the E-911 reimbursement offset by subscriber plans that offer more generous allotment of minutes. The decrease in ARPU including roaming for the three and nine-month periods
ended September 30, 2003 as compared to the three and nine-month periods ended September 30, 2002 was primarily as a result of the reduction in the reciprocal travel rate as discussed above.



Cash Cost per User



Cash cost per user (CCPU) is a measure of the average monthly operating costs to operate the business on a per user basis
consisting of subscriber support, network operations, service delivery, roaming expense, bad debt expense, wireless handset upgrade subsidies (but not commissions) and other general and administrative costs, divided by average subscribers for the
period. The decrease in CCPU for the three and nine-month periods ended September 30, 2003 as compared to the three and nine-month periods ended September 30, 2002 was primarily as a result of reductions in roaming expense and bad debt expense.



Cost per Gross Addition



Cost per gross addition (CPGA) summarizes the average cost to acquire new
customers during the reporting period. CPGA is computed by adding selling and marketing expenses and cost of equipment and reducing the amount by the revenue from handset and accessory sales. The net amount is divided by the number of total new
subscribers added for the period. The decrease in CPGA for the three and nine-month periods ended September 30, 2003 as compared to the three and nine-month periods ended September 30, 2002 was primarily as a result of an overall decrease in selling
and marketing expenses.



Average Monthly Minutes of Use per Subscriber



We calculate average monthly minutes of use (MOUs) per subscriber to
provide us with an indication of the effectiveness of our basic service plans. We calculate average monthly MOUs per subscriber by dividing total subscriber minutes with and without roaming by the average number of our subscribers. Our average
subscriber MOUs with and without roaming are increasing primarily as a result of more generous allotments of minutes in our basic service plans.



System Minutes of Use



System minutes of Use (MOUs) provide an indication of total network (system) usage. We track and evaluate system usage for our subscribers as well as other Sprint PCS, Sprint PCS affiliates and
non-Sprint PCS subscribers using our system in order to assess network capacity. Our overall system minutes are increasing primarily as a result of increases in subscribers and increases in minutes allotted to subscriber plans.



Resident Population/Service Area



Our service area comprises a population (Licensed POPs) of approximately 17.6
million residents. When we use the term Covered POPs, we refer to that portion of residents in our service area that have service available as a result of our network build out. The number of people in our service area does not represent
the number of Sprint PCS subscribers that we expect to have in our service area. The increase in Covered POPs is the result of additional cell site towers (towers) that either we have constructed and own or where we have leased space on
cell site towers owned by others.



Cumulative Capital Expenditures Per Covered
POP



Cumulative Capital Expenditures Per Covered POP (Cum CapEx Per
Covered POP) is calculated by dividing our capital expenditures since inception by our ending Covered POPs.



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Three-Month Period Ended September 30, 2003 Compared to the Three-Month Period Ended September 30, 2002



Revenues



|                    |  | Three-month periodended September 30,
|------------------- |  | -------------------------------------
|                    |  | 2003                                 
|                    |  | (In thousands)                       
|Subscriber revenues |  | $                                    
|Roaming revenues    |  |                                      
|Merchandise sales   |  |                                      
|Other revenues      |  |                                      
|                    |  |                                      
|Total revenues      |  | $                                    
|                    |  |                                      



Subscriber revenues



Total subscriber revenues were $101.3 million for the three-month period ended September 30,
2003 as compared to $90.8 million for the three-month period ended September 30, 2002, representing an increase of $10.5 million and was primarily as a result of an increase in subscribers as discussed in Subscriber Additions above and a one-time
$3.1 million revenue adjustment from Sprint PCS to recognize an E911 monthly surcharge that was applied to each of our subscribers invoices.



Roaming revenues



Roaming revenues were $35.2 million for the three-month period ended September 30, 2003 as compared to $53.0 million for the three-month period ended September 30, 2002, representing a decrease of $17.8 million and
was primarily as a result of an increase of $16.6 million related to a higher volume of PCS subscribers traveling though our service area and an increase of $1.8 million related to a higher volume of non-PCS subscribers traveling though our service
area offset by a decrease of $35.0 million related to our decrease in the reciprocal roaming rate as discussed in Subscriber and Roaming Revenue above and a $1.2 million decrease in cellular roaming. We provided service in 68 PCS markets at
September 30, 2003 and September 30, 2002. We continue to add cell sites in locations that we believe will enhance service and increase roaming revenue.



Merchandise sales



Merchandise sales were $5.8 million for the three-month period ended September 30, 2003 as compared to $4.4 million for the three-month period ended September 30, 2002, representing an increase of $1.4 million. The
increase is primarily as a result of no longer discounting handset sales to local agents and our July 1, 2003 adoption of EITF 00-21 as discussed in Note 1 above. The cost of handsets typically exceeds the amount received from our subscribers
because we subsidize the price of handsets to remain competitive in the marketplace.



Operating Expenses



|                            |  | Three-month periodended September 30,
|--------------------------- |  | -------------------------------------
|                            |  | 2003                                 
|                            |  | (In thousands)                       
|Cost of service             |  | $                                    
|Merchandise cost of sales   |  |                                      
|General & administrative    |  |                                      
|Sales & marketing           |  |                                      
|Non-cash stock compensation |  |                                      
|Depreciation & amortization |  |                                      
|                            |  |                                      
|Total operating expenses    |  | $                                    
|                            |  |                                      



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Cost of service



Cost of service was $55.0 million for the three-month period ended September 30, 2003 as compared to $67.6 million for the three-month period ended September 30, 2002,
representing a decrease of $12.6 million, that was primarily related to a $13.1 million decrease in roaming expense. The overall decrease in roaming expense was primarily as a result of an increase of $16.5 million related to a higher volume of our
subscribers traveling though other Sprint PCS offset by a decrease of $29.6 million related to our decrease in the roaming revenue rate as discussed in Subscriber and Roaming Revenue above and a decrease of $1.0 million related to our subscribers
using non-Sprint PCS service area and Sprint PCS affiliate service area partially offset by an increase of $1.0 million in repairs and maintenance.



Merchandise cost of sales



Merchandise cost of sales was $12.0 million for the three-month period ended September 30, 2003 as compared to $10.0 million for the three-month period ended September 30, 2002, representing an increase of $2.0
million that was primarily as a result of our adoption of EITF 00-21 as discussed in Note 1 above. We no longer defer a portion of our handset cost for handsets sold in our retail outlets. The cost of handsets typically exceeds the amount received
from our subscribers because we subsidize the price of handsets to remain competitive in the marketplace.



General and administrative expenses



General
and administrative expenses were $33.4 million for the three-month period ended September 30, 2003 as compared to $43.4 million for the three-month period ended September 30, 2002, representing a decrease of $10.0 million that was primarily as a
result of a $7.3 million decrease in bad debt expense and collection fees, a $1.3 million decrease in wages, taxes and benefits primarily due to efforts as discussed Liquidity above, a $1.0 million decrease in handset upgrades and a $.2 million
decrease in travel related expenses.



Sales and marketing expenses



Sales and marketing expenses were $19.4 million for the three-month period ended September
30, 2003 as compared to $28.0 million for the three-month period ended September 30, 2002, representing a decrease of $8.6 million that primarily as a result of a decrease in advertising of $3.2 million, a decrease in agent commissions and handset
subsidies of $3.8 million and a decrease in wages, taxes and benefits of $1.6 million.



Non-cash stock compensation



Non-cash compensation was $.3 million for
the three-month period ended September 30, 2003 as compared to $1.4 million for the three-month period ended September 30, 2002, representing a decrease of $1.1 million. The non-cash stock compensation consists of compensation expense related to the
granting of certain stock options for the Companys stock in July 1999 and January 2000 with exercise prices less than the market value of the Companys stock at the date of the grant and the impact of the stock options granted in
connection with the IWO acquisition. The non-cash stock compensation expense is generally being amortized over a four-year period representing the vesting periods of the options.



Depreciation and amortization expense



Depreciation and amortization expense was $30.4 million for the three-month period ended September 30, 2003 as compared to $32.7 million for the three-month period ended
September 30, 2002, representing a decrease of $2.3 million that was primarily as a result of a $1.8 million increase in depreciation expense offset by a reduction of $4.1 million in amortization expense. Property and equipment increased to $677.7
million at September 30, 2003 from $650.4 million at September 30, 2002, and intangible assets decreased to $117.1 million at September 30, 2003 from $312.3 million at September 30, 2002 primarily as a result of a $188.3 million impairment charge
recorded in the fourth quarter of 2002.



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Other Income/(Expense)



|                              |  | Three-month periodended September 30, |        
|----------------------------- |  | ------------------------------------- | -------
|                              |  | 2003                                  |        
|                              |  | ( In thousands)                       |        
|Interest expense              |  | $                                     | (24,030
|Interest income               |  |                                       | 315    
|Gain (loss) on sale of assets |  |                                       | (18    
|                              |  |                                       |        
|Total other expense           |  | $                                     | (23,733
|                              |  |                                       |        



Interest expense was $24.0 million for
the three-month period ended September 30, 2003 as compared to $21.3 million for the three-month period ended September 30, 2002, representing an increase of $2.7 million. The increase in interest expense was primarily as a result of our increase in
outstanding debt. Our outstanding debt, including current maturities, was $797.1 million at September 30, 2003 as compared to $743.7 million at September 30, 2002. All loans under the IWO senior bank credit facility, effective with the date of the
default as discussed in Note 5 above, bear interest at a rate of 4.25-4.75 percent above the agent banks prime rate.



Interest income was $.3 million for the three-month period ended September 30, 2003 as compared to $.8 million for the three-month period ended September 30, 2002,
representing a decrease of $.5 million. The decrease was primarily as a result of less cash and cash equivalents available for investment.



Nine-Month Period Ended September 30, 2003 Compared to the Nine-Month Period Ended September 30, 2002



Revenues



|                    |  | Nine-month period endedSeptember 30,
|------------------- |  | ------------------------------------
|                    |  | 2003                                
|                    |  | (In thousands)                      
|Subscriber revenues |  | $                                   
|Roaming revenues    |  |                                     
|Merchandise sales   |  |                                     
|Other revenues      |  |                                     
|                    |  |                                     
|Total revenues      |  | $                                   
|                    |  |                                     



Subscriber revenues



Total subscriber revenues were $294.8 million for the nine-month period ended September 30,
2003 as compared to $236.4 million for the nine-month period ended September 30, 2002, representing an increase of $58.4 million and was primarily as a result of an increase in subscribers as discussed above and our April 1, 2002 acquisition of IWO.



Roaming revenues



Roaming revenues were $95.1 million for the nine-month period ended September 30, 2003 as compared to $133.4 million for the nine-month
period ended September 30, 2002, representing a decrease of $38.3 million and was primarily as a result of our April 1, 2002 acquisition of IWO that added $7.1 million in roaming revenue, an increase of $47.1 million related to a higher volume of
PCS subscribers traveling though our service area and an increase of $8.5 million related to non-Sprint PCS subscribers traveling through our service area offset by a decrease of $95.5 million related to our decrease in the reciprocal roaming rate
as discussed in Subscriber and Roaming Revenue above and a $5.5 million decrease in cellular roaming. We provided service in 68 PCS markets at September 30, 2003 and September 30, 2002. We continue to add cell sites in locations that we believe will
enhance service and increase roaming revenue.



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##### Table of Contents

Merchandise sales



Merchandise sales were $17.3 million for the nine-month period ended September 30, 2003 as compared to $13.5 million for the nine-month period ended September 30, 2002,
representing an increase of $3.8 million that was primarily as a result of a $2.0 million increase related to our April 1, 2002 acquisition of IWO. The increase is also affected by no longer discounting handset sales to local agents and our July 1,
2003 adoption of EITF 00-21 as discussed in Note 1 above. The cost of handsets typically exceeds the amount received from our subscribers because we subsidize the price of handsets to remain competitive in the marketplace.



Other revenues



Other revenues were comparable at $2.0 million for the nine-month period ended September 30, 2003 and for the nine-month period ended
September 30, 2002.



Operating Expenses



|                             |  | Nine-month period endedSeptember 30,
|---------------------------- |  | ------------------------------------
|                             |  | 2003                                
|                             |  | (In thousands)                      
|Cost of service              |  | $                                   
|Merchandise cost of sales    |  |                                     
|General & administrative     |  |                                     
|Sales & marketing            |  |                                     
|Non-cash stock compensation  |  |                                     
|Depreciation & amortization  |  |                                     
|IWO asset abandonment charge |  |                                     
|                             |  |                                     
|Total operating expenses     |  | $                                   
|                             |  |                                     



Cost of service



Cost of service was $160.0 million for the nine-month period ended September 30, 2003 as
compared to $172.4 million for the nine-month period ended September 30, 2002, representing a decrease of $12.4 million, that was primarily related to a $32.5 million decrease in roaming expense and a $.8 million decrease in clearing house charges
offset by our April 1, 2002 acquisition of IWO that added $17.5 million in cost of service, a $2.0 million increase in new cell site lease expenses and escalators of existing leases and an increase of $1.6 million in repairs and maintenance. The
overall decrease in roaming expense consisted of an increase of $44.6 million related to a higher volume of our subscribers traveling though other Sprint PCS and Sprint PCS affiliate service areas offset by a decrease of $77.1 million related to our
decrease in the roaming revenue rate as discussed in Subscriber and Roaming Revenue above.



Merchandise cost of sales



Merchandise cost of
sales was $30.5 million for the nine-month period ended September 30, 2003 as compared to $28.3 million for the nine-month period ended September 30, 2002, representing an increase of $2.2 million and was primarily as a result of our April 1, 2002
acquisition of IWO that added $1.8 million of merchandise cost of sales and to the adoption of EITF 00-21 as discussed in Note 1 above. The cost of handsets typically exceeds the amount received from our subscribers because we subsidize the price of
handsets to remain competitive in the marketplace.



General and administrative
expenses



General and administrative expenses were $106.4 million for the
nine-month period ended September 30, 2003 as compared to $107.4 million for the nine-month period ended September 30, 2002, representing a decrease of $1.0 million that was primarily as a result of our April 1, 2002 acquisition of IWO that added
$13.0 million of general and administrative expense, a one-time charge of $3.9 million in professional fees related to an unsuccessful debt exchange offer and $2.1 million related to restructuring and legal expenses



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offset by a $15.2 million decrease in bad debt expense and collection fees and a $2.5 million decrease in wages, taxes
and benefits.



Sales and marketing expenses



Sales and marketing expenses were $65.4 million for the nine-month period ended September 30,
2003 as compared to $77.9 million for the nine-month period ended September 30, 2002, representing a decrease of $12.5 million that was primarily as a result of our April 1, 2002 acquisition of IWO that added $8.5 million of selling and marketing
expense in the nine-month period ended September 30, 2003 offset by decreases in advertising of $7.8 million, agent commissions and handset subsidies of $11.3 million, wages and benefits of $1.0 million and property taxes of $1.0 million.



Non-cash stock compensation



Non-cash compensation was $2.4 million for the nine-month period ended September 30, 2003 as
compared to $3.8 million for the nine-month period ended September 30, 2002, representing a decrease of $1.4 million. The non-cash stock compensation consists of compensation expense related to the granting of certain stock options for the
Companys stock in July 1999 and January 2000 with exercise prices less than the market value of the Companys stock at the date of the grant and the impact of the stock options granted in connection with the IWO acquisition. The non-cash
stock compensation expense is generally being amortized over a four-year period representing the vesting periods of the options.



Depreciation and amortization expense



Depreciation and amortization expense was $90.5 million for the nine-month period ended September 30, 2003 as compared to $78.6 million for the nine-month period ended
September 30, 2002, representing an increase of $11.9 million that was primarily as a result of our April 1, 2002 acquisition of IWO added $5.9 million of depreciation and $7.5 million of amortization expense related to the Sprint affiliation
agreement and subscriber base in the nine-month period ended September 30, 2003 and a $6.2 million increase in depreciation expense offset by a reduction of $7.7 million in amortization expense related to the IWO impairment. Property and equipment
increased to $677.7 million at September 30, 2003 from $650.4 million at September 30, 2002, and intangible assets decreased to $117.1 million at September 30, 2003 from $312.3 million at September 30, 2002 primarily as a result of a $188.3 million
impairment charge recorded in the fourth quarter of 2002.



IWO asset
abandonment charge



As discussed in Liquidity above, we recorded a $12.4
million write off of construction in progress and related lease expense due to abandoned cell site construction at IWO in the nine-month period ended September 30, 2003.



Other Income/(Expense)



|                       |  | Nine-month periodended September 30, |        
|---------------------- |  | ------------------------------------ | -------
|                       |  | 2003                                 |        
|                       |  | ( In thousands)                      |        
|Interest expense       |  | $                                    | (66,992
|Interest income        |  |                                      | 1,338  
|Gain on sale of assets |  |                                      | 58     
|                       |  |                                      |        
|Total other expense    |  | $                                    | (65,596
|                       |  |                                      |        



Interest expense was $67.0 million for
the nine-month period ended September 30, 2003 as compared to $52.7 million for the nine-month period ended September 30, 2002, representing an increase of $14.3 million. The increase in interest expense was primarily as a result of our increase in
outstanding debt. Our outstanding debt, including current maturities, was $797.1 million at September 30, 2003 as compared to $743.7 million at September 30, 2002. All loans under the IWO senior bank credit facility, effective with the date of the
default as discussed in Note 5 above, bear interest at a rate of 4.25-4.75 percent above the agent banks prime rate.



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Interest income was $1.3 million for the nine-month period ended September 30, 2003 as compared to $2.3 million for the
nine-month period ended September 30, 2002, representing a decrease of $1.0 million. The decrease was primarily as a result of less cash and cash equivalents available for investment.



Seasonality



Like the wireless communications industry in general, there is an increase in subscriber additions in the fourth quarter due to the holiday season. A greater number of
phones sold at holiday promotional prices causes our losses on merchandise sales to increase. Our sales and marketing expenses increase also with holiday promotional activities. We generally have the weakest demand for new wireless services during
the summer. We expect these trends to continue based on historical operating results.



Item 4. Controls and Procedures



As of September 30,
2003, an evaluation was performed under the supervision and with the participation of the Companys management, including the CEO and CFO, of the effectiveness of the design and operation of the Companys disclosure controls and
procedures. Based on that evaluation, the Companys management, including the CEO and CFO, concluded that the Companys disclosure controls and procedures were effective as of September 30, 2003. There have been no changes in the
Companys internal control over financial reporting during the fiscal quarter ended September 30, 2003 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



PART II



Item 1. Legal Proceedings



On July 11, 2003, the
Company and two of its subsidiaries, Louisiana Unwired, LLC and Texas Unwired (the Company), filed suit in the U.S. District Court for the Western District of Louisiana, against Sprint Corporation, Sprint Spectrum, L.P., Wireless, L.P.
and Sprintcom, Inc. (collectively, Sprint). The suit alleges violations of the Racketeer Influenced and Corrupt Organizations Act, breach of fiduciary duty and fraud arising out of Sprints conduct in its dealings with the plaintiff
companies. It seeks treble actual damages in unspecified amounts and appointment of a receiver over property and assets controlled by Sprint in Louisiana. On September 25, 2003, the Company filed an amended complaint to include contractual claims.
On October 20, 2003, Sprint submitted their Answer, Defenses, and Counterclaim of Defendants seeking dismissal of the Companys First Amended Complaint and filing a counter-claim for approximately $13.3 million related primarily to contractual
disputes as discussed above. On October 21, 2003, Sprint filed a Defendants Partial Motion for Judgment on the Proceedings seeking partial dismissal of claims filed in the First Amended Complaint. On October 21, 2003, Sprint filed
Defendants Motion to Strike Plaintiffs Jury Demand from the First Amended Complaint.



Item 3. Defaults Upon Senior Securities



Since March
2003, Independent Wireless One Corporation, a wholly owned subsidiary of IWO, has failed to make $7.5 million in interest payments on the IWO amended and restated $240 million senior bank credit facility and was not in compliance with its
restrictive covenants. As a result of the failure to make scheduled interest payments and the covenant violations, IWO was in default of the IWO senior bank credit facility at September 30, 2003.



Item 5. Other Information



OUR SECURITY HOLDERS AND
PERSONS WHO ARE CONSIDERING AN INVESTMENT IN OUR SECURITIES SHOULD CAREFULLY CONSIDER THESE RISK FACTORS, IN ADDITION TO THE FACTORS DESCRIBED ELSEWHERE.



The risk factors described below are qualified and supplemented in their entirety by the discussions in Note 3 to the condensed consolidated financial statements included
herein and in Item 2 (Managements Discussion and Analysis of Financial Condition and Results of Operations) under the captions Overview and Liquidity. These items contain important disclosures related to our and IWO
Holdings, Inc.s current



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liquidity, debt, relationship with Sprint PCS and constraints on our business in the current environment. An adequate
understanding of near term risks facing us requires consideration of the referenced discussions.



Introduction



In this section,
we and our and the noun combined company refer collectively to US Unwired and all of its subsidiaries. We use US Unwired to refer just to our parent company without reference to its subsidiaries.
LA Unwired refers collectively to our subsidiaries Louisiana Unwired, LLC, Texas Unwired general partnership, and Georgia PCS Management, L.L.C., unless the context of the reference indicates otherwise.



An extremely brief overview introduces each of the subsections below. We think the overview
captures the gist of the subsection, but it is not a substitute for reading the entire subsection.



Risks Related to Our Stock Price



Overview of this subsection:



Our stock price has not been
stable. Many additional shares have become freely tradeable in the public market. This may have caused our stock price to fluctuate greatly. Our common stock was delisted from the Nasdaq National Market effective May 8, 2003 and since then it has
been traded on the Nasdaq Over the Counter (OTC) Bulletin Board.



The stock price of US Unwired may continue to be volatile.



The
market price of our common stock could be subject to wide fluctuations in response to factors such as the following, some of which are beyond our control:



| |  | quarterly variations in our operating results;
| | - | ----------------------------------------------



| |  | operating results that vary from the expectations of securities analysts and investors;
| | - | ---------------------------------------------------------------------------------------



| |  | changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors;
| | - | -----------------------------------------------------------------------------------------------------------------------------------



| |  | changes in our liquidity that may impact our ability to meet the financial covenants of our senior bank credit facility and repay of our debts;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  | changes in our relationship with IWO that may include being forced to seek bankruptcy protection for IWO that may possibly include having no involvement with IWO at all;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | possible significant increases in subscriber turnover with the introduction of wireless portability that will affect a significant portion of our markets beginning in November 2003
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | changes in our relationship and that of other Sprint PCS affiliates with Sprint PCS;
| | - | ------------------------------------------------------------------------------------



| |  | announcements by Sprint PCS or Sprint PCS affiliates concerning developments or changes in its business, financial condition or results of operations, or in its expectations as to
future financial performance;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | actual or potential defaults in bank covenants by Sprint PCS or Sprint PCS affiliates, which may result in a perception that we are unable to comply with our bank covenants;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | announcements of technological innovations or new products and services by Sprint PCS or our competitors;
| | - | ---------------------------------------------------------------------------------------------------------



| |  | changes in results of operations, market valuations and investor perceptions of Sprint PCS, Sprint PCS affiliates or of other companies in the telecommunications industry in general
and the wireless industry in particular, including our competitors;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  | departures of key personnel;
| | - | ----------------------------



| |  | changes in laws and regulations;
| | - | --------------------------------



| |  | significant claims or lawsuits;
| | - | -------------------------------



| |  | the large number of US Unwired shares that can freely be sold in the public market, as described under the following italicized heading;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------



| |  | announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  | general economic and competitive conditions.
| | - | --------------------------------------------



The number of shares of our common stock that is freely tradeable in the public market increased substantially after November 22, 2002. Sales of unusually large
numbers of shares of our common stock in the public market, or the perception that such sales could occur, could further depress our stock price.



We issued approximately 44,400,000 additional shares of our common stock when we acquired Georgia PCS and IWO in March and April 2002 through two mergers, and we agreed
to issue about another 6,900,000 shares upon the exercise of warrants and options that we assumed from IWO. Before November 22, 2002, most of these shares were not freely tradeable in the public market because of the combined effect of restrictions
under federal securities laws and of agreements, called lock up agreements that we obtained from the holders not to sell shares before specified dates. The restrictions imposed by federal securities laws on sales of these shares terminated on
November 22, 2002, which was the effective date of the registration statement that we were required to file to register certain of those shares for resale. On March 28, 2003, all remaining shares that were then still subject to the lock up
agreements, equal to about 1,080,000, shares became freely tradeable.



The
market price of our common stock could be depressed if the holders of shares that have become freely tradeable sell them or if the market perceives that they intend to sell them. We cannot predict whether future sales of our common stock or the
availability of our common stock for sale will adversely affect the market price for our common stock.



We rely on Sprint PCS for a substantial amount of our financial information. If that information is not accurate, the investment community could lose confidence in us.



Under our agreements with Sprint PCS, it performs our billing, manages our accounts
receivable and provides a substantial amount of financial data about our accounts. We use that information to calculate our financial results and to prepare our financial statements. If we later find errors in that information, we may be required to
restate our financial statements. If that occurs with respect to us or any other Sprint PCS affiliate, investors and securities analysts may lose confidence in us. In fact, we and Sprint PCS have discovered billing and other errors or inaccuracies
that could be material to us. If we are required to make adjustments to our financial statements as a result of these inaccuracies that could negatively affect the investment communitys perception of us. For more information about these
inaccuracies, please see the section of these Risk Factors entitled Risks Particular to the Our Relationship with Sprint PCS.



Our common stock was delisted from the Nasdaq National Market effective May 8, 2003 and is now quoted on the Over the Counter (OTC) Bulletin Board.



Our common stock was delisted from the Nasdaq National Market effective
May 8, 2003 and is now quoted on the Nasdaq OTC Bulletin Board. The stock was delisted because we did not meet Nasdaqs requirements for continued listing related to our stock price and stockholders equity. Since then, it has become more
difficult to buy and sell our shares and securities analysts and news media have lost much of their interest in us. Additionally, we may become subject to SEC rules that affect penny stocks, which are stocks priced below $5.00 per share
that are not quoted on a Nasdaq market. These rules would make it more difficult for brokers to find buyers for our shares and could lower the net sales prices that our stockholders are able to obtain.



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If our common stock price remains low, we may not be willing or able to raise equity capital.



Our business is capital intensive, and we may contemplate raising equity capital in the
future. A low stock price may frustrate our doing so, for two reasons:



| |  | We may be unwilling to sell our shares at such prices.
| | - | ------------------------------------------------------



| |  | Investors may not be interested in a company whose shares are priced so low.
| | - | ----------------------------------------------------------------------------



Risks Related to the Our Business, Strategy and Operations



Overview of this subsection:



None of our PCS operating subsidiaries has ever operated profitably or achieved consistent positive cash flow. If that doesnt change, we will not have enough cash
to run our business, as more fully discussed in the Managements Discussion section of this report. Timely expansion or completion of the PCS networks of our operating subsidiaries is a key to our success, but we face numerous challenges in
doing that. Revenues we receive from travelers in our territories will likely not meet our expectations.



Our PCS operating subsidiaries have not yet operated their PCS businesses profitably or achieved consistent positive cash flow.



We expect to continue to incur significant operating losses and to continue to generate negative cash flow while we complete and/or expand
our PCS networks and build our customer base. Our ultimate profitability will depend upon many factors, including our ability to market our services successfully and operate our networks efficiently, in addition to numerous other factors that are
described in this Risk Factors section. If we fail to achieve at least positive cash flow within a reasonable period of time, we may not be able to service our debt and an investment in our securities may not have much value.



If our business strategies are not implemented or are unsuccessful, our business could
be adversely affected.



Our strategies seek to (1) limit capital
expenditures to required technical upgrades and only adding cell site coverage in areas that are expected to produce positive cash returns, (2) sell certain assets that are not part of our core PCS business, (3) reduce the number of our employees
and our corporate overhead, (4) evaluate, and in certain cases renegotiate, certain expenses, (5) reduce customer turnover or churn rate and improve customer credit quality, (6) improve US Unwireds relationship with Sprint PCS and (7) increase
our market share among higher credit quality customers. We may not be successful in implementing some or all of these strategies or may be harmed by their implementation. In particular:



| |  | Because technology in our business continually evolves, we may be required to spend significant amounts of money on capital expenditures or risk obsolescence.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We may lose customers if they are not satisfied with our coverage.
| | - | ------------------------------------------------------------------



| |  | Although we have divested our cellular business and certain PSC licenses (subject to FCC approval) and will continue to divest of certain non-core assets, the amounts realized will
not be significant to our overall cash flow requirements
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Our reduced workforce may not be sufficient and our service may suffer because of it.
| | - | -------------------------------------------------------------------------------------



| |  | We may not be able to improve our cost structure because we cannot control the outcome of negotiations with counter parties, including Sprint PCS.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Our relationship with Sprint PCS could deteriorate further as a result of the lawsuits we have filed against Sprint and that Sprint PCS and Sprint and Sprint PCS have filed against
us.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  | We may not be able to reduce customer churn, and the introduction of wireless number portability in a significant portion of our markets in November 2003 may cause it to increase.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We may not be able to improve customer quality without restricting overall subscriber growth.
| | - | ---------------------------------------------------------------------------------------------



Potential loss of management fees from IWO would result in material loss of revenue and income and have a material adverse effect on our
liquidity and financial condition.



US Unwired currently receives
management fees from IWO in an estimated amount of $10 million per year. There is a risk that this arrangement could be terminated due to the uncertainties surrounding IWO. This result could occur if IWO were to file for bankruptcy and elect to
terminate this arrangement. Moreover, IWOs lenders are entitled to designate a manager for the IWO business and may not choose us. If the management arrangement with IWO were terminated for any reason, we would lose an estimated $10 million of
revenue annually. In addition, we believe our equity position in IWO currently has negligible value.



We will not receive as much Sprint PCS net travel, or roaming, revenue as we anticipated.



We are paid a fee from Sprint PCS for every minute that a Sprint PCS subscriber based outside of our markets uses the Sprint PCS network in our markets. Similarly, we pay
a fee to Sprint PCS for every minute that a Sprint PCS subscriber based in our markets uses the Sprint PCS network outside our markets. Sprint PCS subscribers from our markets may spend more time in other Sprint PCS coverage areas than we anticipate
and Sprint PCS subscribers from outside our markets may spend less time in our markets or may use our services less than we anticipate. As a result, we may receive less Sprint PCS travel revenue than we anticipate or we may have to pay more Sprint
PCS travel fees than the travel revenue we collect.



Under our agreements with
Sprint PCS, we believe that Sprint PCS can change the fee, called a travel rate, within certain limitations, that we receive and pay for each Sprint PCS travel minute. Sprint PCS has changed the reciprocal travel rate for Louisiana Unwired from
$0.20 per minute in 2002 to $0.058 per minute in 2003 and for IWO, Georgia PCS and Texas Unwired from $0.10 per minute in 2002 to $0.058 per minute in 2003. While we believe this particular reduction is not in accordance with our agreements with
Sprint PCS, we are reviewing our options, but our recourse against Sprint PCS for this reduction may be limited. Currently the revenues we receive for subscribers of Sprint PCS and its other network partners using our networks exceed the expenses
that we pay for our subscribers using their networks. The change in the travel rate will materially decrease our revenues, expenses and our net travel position, which is the difference between travel revenue and travel expense, and will materially
decrease our cash flow from operations.



If we do not successfully manage
our operations and expected growth, our operating performance may be adversely impacted.



Our PCS operating subsidiaries have limited operating histories as Sprint PCS affiliates. Louisiana Unwired began operations as a Sprint PCS affiliate on June 8, 1998, IWO on January 5, 2000, Texas Unwired on January
7, 2000 and Georgia PCS on June 8, 1998. The combined companys ability to achieve and sustain operating profitability will depend upon many factors, including our PCS operating subsidiaries abilities to effectively market Sprint PCS
services and manage customer turnover rates in their respective markets. In addition, a key factor the combined companys operational performance will depend upon is our ability to manage growth of the combined company through the expansion or
completion of IWOs network build-out, which appears unlikely at present. To be successful, our PCS operating subsidiaries will require continued development, construction, testing, deployment and operation of their respective networks. These
activities are expected to place demands on our managerial, operational and financial resources.



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The failure of any of our PCS operating subsidiaries to timely expand or complete the build-out of its network, or to
obtain the equipment needed for completion on a timely basis, may result in a decrease in the number of expected new PCS subscribers and adversely affect its and the combined companys results of operations or, in the case of IWO, result in a
breach of its agreements with Sprint PCS or, in the case of LA Unwired, result in the loss of the FCC licenses that it owns.



LA Unwired has completed the network build-out that is required by its agreements with Sprint PCS. Nevertheless, we may decide from time to time to build out additional
portions of its markets to increase the population that is covered by its Sprint PCS service or we may acquire additional territory to be built out by acquiring additional markets from Sprint PCS or by acquiring other Sprint PCS network partners
that have not completed their build-out requirements. Due to liquidity issues as described in Note 3 above, IWO has not yet completed its required build-out and has determined to abandon the construction of cell sites that do not provide a
sufficient level of enhanced coverage. In the nine-month period ended September 30, 2003, IWO recorded an asset abandonment charge of $12.4 million for the cell sites and related property leases of these abandoned cell sites. Included in this asset
abandonment are cell sites that IWO is required to construct to meet the build out requirements under the IWO Sprint Management Agreement. Failure to complete the build-out of the IWO service area may place IWO in default of its Sprint PCS
Management Agreement, and Sprint PCS may take actions up to and including termination of the Management Agreement. In addition, IWO anticipates that only a portion of the sites it plans to complete will be finished in 2003.



In order to expand or complete network build-outs, our PCS operating subsidiaries must
successfully lease or otherwise retain rights to a sufficient number of radio communications and network control sites, complete the purchase and installation of equipment, build-out the physical infrastructure and test the network. The applicable
company must also meet all requirements of its agreements with Sprint PCS and all FCC requirements. One of these FCC requirements is that our networks not interfere with microwave radio systems. Compliance with that requirement could delay or impede
expansion or build-out of our networks. Regulatory changes, engineering design changes and required technological upgrades could affect the number and location of our PCS operating subsidiaries towers as well as their ability to obtain
sufficient rights to meet their network build-out expansion goals or requirements. Some of the radio communications and network control sites required for IWO to complete its required build-out are likely to require zoning variances or other local
governmental or third party approvals. The local governmental authorities in various locations in IWOs markets have, at times, placed moratoriums on the construction of additional cell sites. Any failure by IWO to complete its network
build-out on a timely basis may limit its network capacity and/or reduce the number of its expected new PCS subscribers, either of which could adversely affect our or IWOs results of operations and financial condition or result in IWOs
breach of its agreements with Sprint PCS. Any failure by LA Unwired to expand its network on a timely basis may limit its network capacity and/or reduce the number of its expected new PCS subscribers, either of which could adversely affect our
results of operations and financial condition or result in a loss of LA Unwireds licenses.



The foregoing expansion, as well as maintenance, capacity enhancements and coverage improvements, could require additional capital expenditures that we may not be able to fund. Additional funds could be required for a
variety of reasons, including unanticipated expenses or operating losses. We may face significant limitations on our ability to obtain additional funds. Even if those funds are available, we may not be able to obtain them on a timely basis, or on
terms acceptable to us or within limitations permitted by our debt agreements. Failure to obtain additional funds, should the need for them develop, would result in the delay or abandonment of our development and expansion plans.



Our liquidity situation has forced us to agree to sell assets in the near future without
any certainty of improvement in our long-term financial condition.



Because
our cash flow from operations may be insufficient to fund our capital requirements and our access to capital markets may be limited, we have elected to sell certain assets that we consider non-core to our business consisting of our cellular business
and certain non-essential PCS licenses. Although we have divested and will continue to divest of certain non-core assets, the amounts realized will not be significant to our overall cash flow requirements as the holders of our senior bank credit
facility require us to use a significant portion of the net proceeds from the non-core asset sales to repay existing bank debt.



Our ability to sell core assets is subject to several restrictions under the Sprint PCS agreement. Our operating PCS subsidiaries are subject to a prohibition on the sale
of certain of its assets to competitors of Sprint or Sprint PCS. Also, Sprint PCS has the right of first refusal on certain sales of our PCS operating subsidiaries operating assets to a third party, and under certain circumstances Sprint PCS
could purchase our PCS operating subsidiaries operating assets at a discount. See Risks Particular to the Combined



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Companys Relationship with Sprint PCS. These and other restrictions may limit our ability to sell core assets
and may also reduce the value a buyer would be willing to pay for such core assets. Also, we cannot assure you that our core assets will be sold quickly enough or for sufficient amounts to enable us to meet our obligations.



Sales of core assets may lead to loss of revenues generated by these core assets and/or an
increase in operating expenses and may materially reduce our capacity to generate cash flows. This, in turn, may adversely impact our ability to satisfy financial covenants and to service our outstanding obligations as they become due. If we fail to
satisfy our financial covenants under our senior secured credit facility, our lenders would be permitted to declare a default and accelerate payments due under the loan which would in turn give rise to an event of default under our senior notes.



We may not be able to obtain the communications equipment that we need to
expand our network.



From time to time, there is considerable demand for
the communications equipment that our PCS operating subsidiaries need to expand or complete their networks, and manufacturers of this equipment could have substantial backlogs of orders. Competitors who purchase large quantities of communications
equipment may receive priority in the delivery of this equipment. If our PCS operating subsidiaries cannot get this equipment, they may fail to expand or construct their networks timely.



We obtain most of our network equipment from two suppliers. This equipment is not interchangeable, and we would be materially adversely
affected if we could not obtain this network equipment timely or at all.



Our PCS networks are either Lucent networks, meaning that the network equipment is supplied by Lucent, or Nortel networks, meaning that the network equipment is supplied by Nortel. If additional equipment is needed for expansion or repair
of a network, it must come from Lucent, if the network is a Lucent network, or Nortel, if the network is a Nortel network, for compatibility with our existing network equipment. If either of these suppliers should cease or delay to supply its
equipment, we would be prevented or delayed in expanding or repairing the affected network or completing the IWO build-out.



Any inability to expand our networks, or to keep them repaired or to complete the IWO build-out, could have a material adverse effect on us.



Our territory has limited amounts of licensed spectrum, which may adversely affect the
quality of our service and our results of operations.



On September 15,
2003, LA Unwired entered into two agreements, subject to FCC approval, to divest eight non-core PCS licenses. LA Unwired still owns five PCS licenses for 10 MHz of spectrum. Sprint PCS has licenses for 10 to 30 MHz of spectrum in all of our
territories, which we have an agreement to use. In the future, as the number of subscribers in our territories increases, this limited amount of licensed spectrum may not be able to accommodate increases in call volume, may lead to increased dropped
or blocked calls and may limit our ability to offer enhanced services, all of which could result in increased customer turnover and adversely affect the combined companys results of operations and financial condition.



If any of our PCS operating subsidiaries loses the right to install its equipment on
wireless towers or is unable to renew expiring leases for wireless towers on favorable terms or at all, our business and results of operations could be adversely impacted and we may not comply with our agreements with Sprint PCS.



Substantially all of the cell sites of our PCS operating subsidiaries are installed on leased
tower facilities that are shared with one or more other wireless service providers. In addition, a large portion of these leased tower sites are owned by a few tower companies. If a master agreement with one of these tower companies were to
terminate, or if one of these tower companies were unable to support use of its tower sites by any of our PCS operating subsidiaries, the affected subsidiaries would have to find new sites or may be required to rebuild the affected portion of their
networks. In addition, the concentration of our PCS operating subsidiaries cell sites with a few tower companies could adversely affect our results of operations and financial condition if any of our PCS operating subsidiaries is unable to
renew its expiring leases with these tower companies on favorable terms or at all. If any of the tower leasing companies that we do business with should experience severe financial difficulties, or file for bankruptcy protection, our



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ability to use our towers could be adversely affected. That, in turn, would aversely affect our revenues and financial
condition if a material number of towers were involved and may result in non-compliance with our Sprint PCS management agreements.



The loss of the officers and skilled employees upon whom we depend to operate our business or the inability to attract additional personnel for the combined
companys growth could adversely affect the combined companys results of operations.



Our business is managed by a small number of executive officers. We believe that our future success will depend in part on our continued ability to retain these executive officers and to attract and retain highly
qualified technical and management personnel for the combined company. We may not be successful in retaining key personnel or in attracting and retaining other highly qualified technical and management personnel. We do not maintain policies of life
insurance on our key executives. In addition, we granted stock options as a method of attracting and retaining employees, to motivate performance and to align the interests of management with those of our stockholders. Due to the decline in the
trading price of our common stock, a substantial number of the stock options held by our employees have an exercise price that is higher than the current trading price of our common stock, and therefore these stock options may not be effective in
helping us to retain valuable employees.



Expanding LA Unwireds or
IWOs territory may have a material adverse effect on its business and reduce the market value of our securities.



As part of LA Unwireds and IWOs continuing operating strategy, it may expand its territory through the grant of additional markets from Sprint PCS or through
acquisitions of other Sprint PCS network partners. These transactions may require the approval of Sprint PCS and commonly involve a number of risks, including the:



| |  | difficulty of integrating acquired operations and personnel;
| | - | ------------------------------------------------------------



| |  | diversion of managements attention;
| | - | ------------------------------------



| |  | disruption of ongoing business;
| | - | -------------------------------



| |  | impact on our cash and available credit lines for use in financing future growth and working capital needs;
| | - | -----------------------------------------------------------------------------------------------------------



| |  | inability to retain key personnel;
| | - | ----------------------------------



| |  | inability to successfully incorporate acquired assets and rights into our service offerings;
| | - | --------------------------------------------------------------------------------------------



| |  | inability to maintain uniform standards, controls, procedures and policies; and
| | - | -------------------------------------------------------------------------------



| |  | impairment of relationships with employees, subscribers or vendors.
| | - | -------------------------------------------------------------------



Failure to overcome these risks or any other problems encountered in these transactions could have a material adverse effect on the combined companys business. In
connection with these transactions, we may issue additional equity securities, and we may, subject to any necessary approval of existing bank credit facility lenders, incur additional debt or incur significant amortization expenses related to
certain intangible assets connected with a newly acquired Sprint PCS management agreement or a newly acquired subscriber base.



Our service area will be threatened by bad weather, including hurricanes and severe winter weather, which could cause interruptions in service resulting in increased
expenses and reduced operating results.



Much of LA Unwireds service
area is on or near the Gulf of Mexico or the Atlantic Ocean and could be damaged by bad weather like hurricanes and excessive rain. In addition, the IWO service area could be adversely affected by severe winter storms. We may face service
interruptions for indefinite periods if a major hurricane or winter storm strikes one or more of our service areas, resulting in increased expenses and reduced operating results.



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Unauthorized use of our networks could disrupt our business.



We will likely incur costs associated with the unauthorized use of our networks, including
administrative and capital costs associated with detecting, monitoring and reducing the incidence of fraud. Fraud impacts interconnection costs, capacity costs, administrative costs, fraud prevention costs and payments to other carriers for
unbillable fraudulent roaming.



IWOs projected build-out plan and LA
Unwireds completed build-out do not cover all of their territories, which could make it difficult to maintain profitable customer bases.



As of September 30, 2003, LA Unwired covered approximately 71% of the resident population in its territory and IWO covered 75% of residents in its territory. IWOs
projected build-out plan, which has currently been suspended due to liquidity issues, and LA Unwireds build-out do not cover all their service areas. The coverage may not adequately serve the needs of the potential subscribers in the
respective territories or attract enough subscribers to operate our business successfully. To correct this potential problem, LA Unwired or IWO may have to cover a greater percentage of its territory than anticipated, which it may not have the
financial resources to complete or may be unable to do profitably.



Sprint
PCSs roaming arrangements may not be competitive with other wireless service providers, which may restrict our ability to attract and retain subscribers and create other risks for us.



We rely on Sprint PCSs roaming arrangements with other wireless service
providers for coverage in some areas where Sprint PCS service is not yet available. The risks related to these arrangements include:



| |  | the quality of the service provided by another provider during a roaming call may not approximate the quality of the service provided by the Sprint PCS network;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the price of a roaming call off our network may not be competitive with prices of other wireless companies for roaming calls;
| | - | -----------------------------------------------------------------------------------------------------------------------------



| |  | subscribers must end a call in progress and initiate a new call when leaving the Sprint PCS network and entering another wireless network;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sprint PCS subscribers may not be able to use Sprint PCSs advanced features, such as high speed Internet access and voicemail notification, while roaming; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sprint PCS or the carriers providing the service may not be able to provide us with accurate billing information on a timely basis.
| | - | -----------------------------------------------------------------------------------------------------------------------------------



If Sprint PCS subscribers are not able to roam instantaneously or efficiently onto other
wireless networks, we may lose current Sprint PCS subscribers and our Sprint PCS services will be less attractive to new subscribers.



Sales of Sprint PCS products and services in our territory by a reseller that is 50% owned by Sprint PCS could reduce our number of subscribers and our
margins.



We allow a company, called a reseller, to sell Sprint PCS
products and services in our territories. Our networks provide the Sprint PCS services that are sold by the reseller in our territories. We receive income from the reseller that we consider to be a fair return for this use of our networks, but our
margins are greater when we generate our own subscribers. The reseller is 50% owned by Sprint PCS.



Risks Particular to the Indebtedness of the Combined Company



Note: We have two separate debt structures. Each of US Unwired and IWO has issued senior notes under agreements called indentures, and each of them has senior credit facilities with banks. Because of restrictions in
the indentures governing the senior notes and the credit agreements governing the senior credit facilities, funds borrowed by US Unwired may not be used to finance IWO and IWOs subsidiaries



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but are available for all of US Unwireds other subsidiaries. Because of the same restrictions, funds borrowed by
IWO may be used only to finance IWO and IWOs subsidiaries.



Overview
of this subsection:



US Unwired and IWO have a substantial amount of debt.
They cannot borrow from their banks unless they meet the banks requirements for borrowing. The current economic downturn is making it more difficult to meet these requirements. If we fail to repay our debt on time, our lenders may foreclose on
our assets and, if that occurs, our stock will probably be worthless.



Both
US Unwired and IWO have substantial debt that neither of them may be able to service; a failure to service this debt may result in the lenders under this debt taking away assets of ours (other than IWOs) if US Unwired fails to service its
debt, or assets of IWO if IWO fails to service its debt.



The substantial
debt of US Unwired and IWO will have a number of important consequences for our operations and our investors, including the following:



| |  | each company will have to dedicate a substantial portion of any cash flow from its operations to the payment of interest on, and principal of, its debt, which will reduce funds
available for other purposes;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | neither company may be able to obtain additional financing for capital requirements, capital expenditures, working capital requirements and other corporate purposes;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | some of each companys debt, including financing under each companys senior credit facility, will be at variable rates of interest, which could result in higher interest
expense in the event of increases in market interest rates; Since March 2003, IWO has failed to make $7.5 million in interest payments on the IWO $240 million senior bank credit facility and, effective with the date of the default, all loans under
the senior bank credit facility bear interest 4.25-4.75 percent above the agent banks prime rate.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | due to the liens on substantially all of each companys assets and the pledges of stock of each companys existing and future subsidiaries as collateral for such
companys senior debt, lenders may control US Unwireds or IWOs assets or the assets of the subsidiaries of US Unwired or IWO in the event of a default.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



US Unwireds and IWOs ability to make payments on their respective debt will depend upon their future operating performance,
which is subject to general economic and competitive conditions and to financial, business and other factors, many of which neither of them can control. If the cash flow from either companys operating activities is insufficient, US Unwired or
IWO have taken or may take actions, such as delaying or reducing capital expenditures, attempting to restructure or refinance its debt, selling assets or operations or seeking additional equity capital. Any or all of these actions may not be
sufficient to allow US Unwired or IWO to service its debt obligations or may adversely affect its results of operations. Further, US Unwired or IWO may be unable to take any of these actions on satisfactory terms, in a timely manner or at all. The
credit facilities and indentures governing US Unwireds and IWOs respective debt limit their ability to take several of these actions, and limit their ability to borrow more money. Their failure to generate sufficient funds to pay their
debts or to successfully undertake any of these actions could, among other things, materially adversely affect the market value of US Unwired common stock or other securities or result in lenders controlling the assets of each of them and their
subsidiaries (other than unrestricted subsidiaries).



If US Unwired does not
meet all of the conditions required under its credit facilities, it may not be able to draw down all of the funds it anticipates receiving from the lenders and it may not be able to fund operating losses and working capital needs. IWO does not meet
the conditions required under its credit facility, and its lenders have refused to make further funds available to it. Without additional funds, IWO may not be able to fund operating losses and working capital needs.



As of October 30, 2003, US Unwired had approximately $77.3 million outstanding under its
senior credit facility and had approximately $213.2 million outstanding under its senior credit facility. As of October 30,



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2003, IWO had $19.3 million in unrestricted cash As of October 30, 2003, US Unwired had $38.3 million of availability
under its senior bank credit facility and IWO had no availability under its senior bank credit facility. As discussed in Note 3 above, on October 30, 2003, the Company and the holders of the US Unwired senior bank credit facility revised certain
provisions of the US Unwired $170 million senior bank credit facility through execution of the third amendment to the US Unwired senior bank credit facility. The Company and its senior lenders agreed to a revised set of financial covenants, a
$40 million revolving credit facility that is subject to certain borrowing conditions, an immediate $10.0 million partial repayment of the US Unwired senior bank term loans and a 0.5% increase to the interest rate. The US Unwired senior bank credit
facility allows for up to $2.0 million in letters of credit and any letters of credit issued by the Company reduce the amount available under the reducing revolving credit facility. The availability of the US Unwireds senior bank credit
facility is subject to the applicable company meeting all of the conditions specified by the respective financing documents and, in addition, is subject at each funding date to specific conditions, including the following:



| |  | that the representations and warranties in such companys loan documents are true, correct and complete in all material respects;
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| |  | that such companys financial and operating covenant tests are satisfied, including leverage and operating performance covenants and covenants relating to earnings and cash
flow;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | that we are solvent; and
| | - | ------------------------



| |  | the absence of a default under such companys loan documents, including its indenture.
| | - | --------------------------------------------------------------------------------------



US Unwired was in compliance with the restrictive covenants of its senior secured credit facility at September 30, 2003 and, as noted above,
recently amended its covenants to permit more flexibility in covenant compliance. However, due to the nature of the revised covenants, should actual results differ from the underlying business model assumptions, the Companys ability to comply
with the amended financial covenants could be adversely affected. The Company could be required to raise additional capital that may or may not be available on terms acceptable to the Company, if at all. This could have a material adverse effect on
the Companys ability to achieve its intended business objectives.



IWO
was not in compliance with its restrictive covenants of its senior bank credit facility at September 30, 2003 and since March 2003, IWO has failed to make $7.5 million in interest payments on its $240 million senior bank credit facility. The holders
of the IWO senior bank credit facility have denied IWO access to the remaining $25.2 million of availability as a result of covenant violations and the missed interest payments. The Company is in discussions with the IWO banking group to arrive at
an acceptable restructuring to preserve IWO liquidity but cannot state with certainty that an acceptable plan will be forthcoming. If an acceptable restructuring plan is not agreed upon by Company and the IWO banking group, IWO will be forced to
seek protection under bankruptcy for IWO.



Please see the discussion under
Risks Related to Factors Currently Affecting Our Business, below.



US Unwired may fail and IWO has failed to pass financial and business tests under its separate senior credit facilities.



US Unwireds and IWOs senior credit facilities require US Unwired and IWO to maintain specified financial ratios and to satisfy specified tests. Depending on
the Company, these tests include:



| |  | minimum covered population;
| | - | ---------------------------



| |  | minimum number of subscribers and/or average revenue per subscriber;
| | - | --------------------------------------------------------------------



| |  | minimum annualized revenues;
| | - | ----------------------------



| |  | maximum dollar amounts for capital expenditures;
| | - | ------------------------------------------------



| |  | various leverage tests;
| | - | -----------------------



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| |  | minimum last four quarters operating cash flow
| | - | ----------------------------------------------



| |  | minimum earnings before interest, taxes, depreciation and amortization, or EBITDA; and
| | - | --------------------------------------------------------------------------------------



| |  | maximum EBITDA loss.
| | - | --------------------



As a result of covenant violations, the holders of the IWO senior bank credit facility have denied IWO access to the remaining available funds. We believe that US Unwired is currently in compliance with all financial
and operating covenants relating its senior secured credit facility and, based upon existing assumptions in the business model, the Company believes that it will be able to comply with the financial covenants of the amended US Unwired senior bank
credit and have sufficient cash to fund its operations, debt service and capital requirements over the next twelve months. Should actual results differ from the underlying business model assumptions, our liquidity position and ability to comply with
the amended financial covenants could be adversely affected. Additionally, if our business does not generate the results required by the covenants in the senior secured credit facility, our ability to make borrowings under the revolving line of
credit required to operate our business would be restricted or terminated and the credit facility could be declared in default. Such a restriction, termination or declaration of default would have a material adverse affect on our liquidity. In
addition to making funds under the senior bank credit facility unavailable to US Unwired and, in the case of IWO where there is no availability under the senior bank credit facility, an event of default under its senior credit facilities would in
the case of US Unwired and does in the case of IWO prohibit it from paying its senior notes, which would cause a default under the affected companys indenture, or may result in the affected companys lenders controlling substantially all
of the affected companys assets or accelerating the maturity of the affected companys debt. Should this occur, the common stock and other securities of US Unwired may have little or no value.



Please see the discussion under Risks Related to Factors Currently Affecting Our
Business, below.



If US Unwired or IWO needs additional financing that
it cannot obtain, it may have to change its network construction plans and modify its business plans. If the affected company is US Unwired, the network construction plans of LA Unwired may also have to be changed.



US Unwired expects to make significant capital expenditures to expand the PCS networks of LA
Unwired. Actual expenditures may differ significantly from estimates. US Unwired would have to obtain, subject to the approval of its senior lenders, additional financing to fund LA Unwireds network expansion plans, and IWO would have to
obtain additional financing to fund its network construction or expansion plans, if:



| |  | existing sources of capital are unavailable or insufficient;
| | - | ------------------------------------------------------------



| |  | LA Unwired or IWO significantly departs from or changes its business plan;
| | - | --------------------------------------------------------------------------



| |  | LA Unwired or IWO experiences unexpected delays or cost overruns in the expansion or completion of its network, including changes to the schedule or scope of the network build-out
or expansion;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | changes in technology or governmental regulations create unanticipated costs; or
| | - | --------------------------------------------------------------------------------



| |  | LA Unwired or IWO acquires additional licenses or Sprint PCS grants any of them more service areas to build out and manage.
| | - | ---------------------------------------------------------------------------------------------------------------------------



IWO needs to make significant capital expenditures to complete or expand its PCS network and
has abandoned cell sites required to complete its build-out due to liquidity issues. IWO will be required to obtain additional financing to fund its network completion or expansion.



We cannot predict whether any additional financing will be available to US Unwired or IWO or on what terms such financing would be
available. If either US Unwired or IWO needs additional financing that it cannot obtain, the affected company will have to change its plans for the remainder of its network, which would adversely affect such companys expected future results of
operations.



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US Unwireds and IWOs indebtedness place restrictions on them which will limit their operating flexibility
and US Unwireds and IWOs ability to engage in some transactions.



The respective indentures governing US Unwireds and IWOs senior notes and their respective senior credit facilities impose material operating and financial restrictions on US Unwired and its subsidiaries (other than IWO), on the
one hand, and on IWO and its subsidiaries, on the other hand. These restrictions may limit their ability to engage in some transactions, including the following:



| |  | completing designated types of mergers or consolidations;
| | - | ---------------------------------------------------------



| |  | creating liens;
| | - | ---------------



| |  | paying dividends or other distributions to their stockholders;
| | - | --------------------------------------------------------------



| |  | making investments;
| | - | -------------------



| |  | selling assets;
| | - | ---------------



| |  | repurchasing their common stock or debt instruments like their senior notes;
| | - | ----------------------------------------------------------------------------



| |  | changing lines of business;
| | - | ---------------------------



| |  | borrowing additional money;
| | - | ---------------------------



| |  | entering into transactions with their affiliates; and
| | - | -----------------------------------------------------



| |  | issuing additional shares of common stock.
| | - | ------------------------------------------



These restrictions could also limit their ability to obtain financing by borrowing money or issuing common stock, refinance or pay principal or interest on US
Unwireds or IWOs outstanding debt, consummate acquisitions for cash or debt or react to changes in their operating environment. Moreover, these restrictions could cause the combined company to be at a competitive disadvantage to
competitors who do not have similar restrictions.



If a specified change in
control of US Unwired or IWO occurs, the affected company may not be able to buy back its senior notes as required by its indenture.



If US Unwired or IWO has a change in control as defined under its indenture, the applicable company will be required to offer to buy back all of its outstanding senior
notes. We cannot assure you that US Unwired or IWO will have sufficient funds at the time of a change in control to perform this obligation or that restrictions in its credit facilities would allow it to do so. US Unwireds or IWOs
requirement to buy back its notes upon a change in control could impair the value of US Unwired common stock and other securities or could cause a default under the affected companys indenture which, in turn, would cause a default under its
senior credit facility. In addition, a change in control as defined under US Unwireds or IWOs respective credit facilities would cause the affected company to default under its senior credit facility.



If US Unwired or IWO defaults under its senior credit facilities, the affected
companys lenders may declare its debt to be immediately due and payable and Sprint PCS may force the affected company to sell its assets to Sprint PCS without stockholder approval.



If US Unwired or IWO defaults under its senior credit facilities and the affected
companys lenders accelerate the maturity of the affected companys debt, Sprint PCS has the option to purchase the affected companys assets at a discount to market value and assume the affected companys obligations under its
senior credit facility without further approval of the stockholders of the affected company. If Sprint PCS does not exercise this option, the affected companys lenders may sell its assets to third parties without further approval of the
stockholders of the affected company.



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If either US Unwired or IWO fails to pay the debt under its credit facility, Sprint PCS has the option of purchasing
the affected companys loans, giving Sprint PCS certain rights of a creditor to foreclose on that companys assets.



Sprint PCS has contractual rights, triggered by an acceleration of the maturity of the debt under US Unwireds or IWOs respective senior credit facility,
pursuant to which Sprint PCS may purchase US Unwireds or IWOs obligations to its senior lenders and obtain the rights of a senior lender. To the extent Sprint PCS purchases these obligations, Sprint PCSs interests as a creditor
would likely conflict with our interests. Sprint PCSs rights as a senior lender would enable it to exercise rights with respect to the affected companys assets and its continuing relationship with Sprint PCS in a manner not otherwise
permitted under US Unwireds or IWOs Sprint PCS agreements.



Risks Particular to the Combined Companys Relationship with Sprint PCS



Overview of this subsection:



We depend
heavily on Sprint PCS. It performs our billing, designs and advertises the products and services we sell, and provides our customer service, in addition to a wide variety of other services, including network design, research and development. If
Sprint PCS does not succeed, it is highly unlikely that we will succeed. We have little influence with Sprint PCS under our agreements with it. We have recently sued and been countersued by Sprint.



The termination of LA Unwireds or IWOs affiliation with Sprint PCS or Sprint
PCSs failure to perform its obligations under the Sprint PCS agreements would severely restrict the affected companys ability to conduct its business.



LA Unwired owns few of the FCC licenses that we operate. IWO does not own any FCC licenses. Each of our PCS operating subsidiaries operates
under the FCC licenses of Sprint PCS and LA Unwired that are applicable to its territory. The ability of each of our PCS operating subsidiaries to offer Sprint PCS products and operate a PCS network is almost entirely dependent on its Sprint PCS
agreements remaining in effect and not being terminated. Other than performing its contractual obligations under the management agreement and other related agreements between us, Sprint PCS is not obligated to provide us with any support in
connection with our business or otherwise.



| |  | These agreements give it the right to use the Sprint® and Sprint PCS® brand names and logos and related rights. If it loses these rights, our operations will be impaired.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | These agreements impose strict requirements on the construction of each companys network. IWO has not yet completed construction of its network and has determined to abandon
the construction of certain cell sites that it is required to construct under its Sprint Agreement. If IWO does not meet its build-out requirements, these agreements may be terminated and IWO could lose the right to be the provider or sole provider
of Sprint PCS products and services in IWOs service area.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | These agreements require our PCS operating subsidiaries to meet strict technical requirements such as the percentage of time the network is operative, the percentage of dropped
calls, the ratio of blocked call attempts to total call attempts, the ratio of call origination to termination failures, and call transport requirements for links between cell sites, switches and outside telephone systems. If these and other
requirements are not met, Sprint PCS can terminate the affected agreements.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Sprint PCS agreements of any of our PCS operating subsidiaries may be terminated also if any of Sprint PCSs FCC licenses are lost or jeopardized, or if the subsidiary
becomes insolvent.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | These agreements give Sprint PCS a substantial amount of influence and control over the conduct of each companys business. Sprint PCS may make decisions that adversely affect
our PCS operating subsidiaries business, like introducing costly new products that fail in the marketplace or setting the prices for its national plans at levels that may not be economically sufficient for our PCS operating subsidiaries
business.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  | If any of our management agreements are terminated, we may be required to sell our PCS operating assets to Sprint PCS. This sale may take place for a price equal to 72% of our
entire business value, subject to the valuation criteria and procedures described under Certain of Our Agreements with Sprint PCS. The provisions of our management agreement that allow Sprint PCS to purchase our operating assets at a
discount may limit our ability to sell our business, reduce the value a buyer would be willing to pay for our business and limit our ability to obtain new investment or support from any source. If we were to file for bankruptcy, the management
agreement would provide Sprint PCS with various remedies, including purchase rights at a discount to market value, though we cannot predict if or to what extent such remedies would be enforceable. In addition, we may be very reluctant to reject the
management agreement under Section 365 of the federal Bankruptcy Code because our ability to conduct our business without it would be severely restricted. If Sprint PCS were to file for bankruptcy, Sprint PCS may be able to reject the management
agreement under Section 365 of the federal Bankruptcy Code. In addition, in the event of a Sprint PCS bankruptcy, the management agreement would provide us various remedies, including purchase and put rights, though we cannot predict if or to what
extent our remedies would be enforceable. In any event, a bankruptcy by Sprint PCS could severely restrict our ability to conduct our business for the reasons set forth above. For additional information concerning the remedies available under the
management agreement, see Certain of Our Agreements with Sprint PCS.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The management agreements are not perpetual. If Sprint PCS decides not to renew the management agreements at the expiration of the 20-year initial term or any 10-year renewal term,
the affected subsidiaries would no longer be a part of the Sprint PCS network. Moreover, each of these agreements can be terminated at any time for breach of any material term.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sprint PCS is permitted to terminate the management agreements for breach of any of the material terms of the agreements. These terms include operational and network requirements
that are extremely technical and detailed and apply to each retail store, cell site and switch site. Many of these operational and network requirements can be changed by Sprint PCS with little notice. As a result, our PCS operating subsidiaries may
not always be in compliance with all requirements of the Sprint PCS agreements. Sprint PCS conducts periodic audits of compliance with various aspects of its program guidelines and identifies issues it believes need to be addressed. There may be
substantial costs associated with remedying any non-compliance, and such costs may adversely affect our operating results and cash flow.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Sprint PCS may make business decisions that are not in the best interests of our PCS operating subsidiaries, which may adversely affect the relationships of our PCS
operating subsidiaries with subscribers in their territories, increase their expenses and/or decrease their revenues.



Sprint PCS, under the Sprint PCS agreements, has a substantial amount of influence and control over the conduct of the businesses of our PCS operating subsidiaries.
Conflicts between us and Sprint PCS may arise and, if Sprint PCS owes us no duties except as set forth in the agreements, those conflicts may not be resolved in our favor. Accordingly, Sprint PCS has made and may continue to make decisions that
adversely affect LA Unwireds or IWOs business, such as the following:



| |  | Sprint PCS could price its national plans based on its own objectives and could set price levels or other terms that may not be economically sufficient for LA Unwireds or
IWOs business;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sprint PCS could raise the costs it charges us to perform back office services for LA Unwired and IWO or otherwise seek to increase what we pay Sprint PCS, or it could reduce levels
of services it provides our PCS operating subsidiaries;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sprint PCS may elect, with little or no notification, to upgrade or convert its financial reporting, billing or inventory software or change third party service organizations that
can adversely affect
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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our ability to determine or report our operating results, adversely affect our ability to obtain handsets
or adversely affect our subscriber relationships.



| |  | Sprint PCS has sought to charge us more as a result of launching the new third generation, or 3G, technology called one times radio transmission technology,
or IXRTT;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sprint PCS prohibits LA Unwired or IWO from selling non-Sprint PCS approved equipment;
| | - | --------------------------------------------------------------------------------------



| |  | Sprint PCS could develop products and services, or establish credit policies such as the NDASL program that is described below, that adversely affect our business;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sprint PCS has made it very expensive for us to migrate in-house or to other vendors services that they currently perform;
| | - | --------------------------------------------------------------------------------------------------------------------------



| |  | Sprint PCS is negotiating its fee structure with other Sprint PCS affiliates and, if we do not agree to conform to this methodology, it may result in Sprint PCS increasing the fees
it charges to us. Further, Sprint PCS may refuse to negotiate with us due to our outstanding lawsuits.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sprint PCS introduced a payment method for subscribers to pay the cost of service with us. This payment method did not initially have adequate controls or limitations, and we have
discovered that some fraudulent payments were made to accounts using this payment method. The controls and limitations have now been strengthened. If the other types of fraud become widespread, it could have a material adverse impact on our results
of operations and financial condition;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sprint PCS could keep us from developing our own promotional plans that we may believe to be necessary to attract new subscribers or from selling equipment selected by us;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sprint PCS could, subject to limitations under LA Unwireds and IWOs Sprint PCS agreements, alter its network and technical requirements or request that LA Unwired or IWO
build out additional areas within LA Unwireds or IWOs territories, which could result in increased equipment and build-out costs;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sprint or Sprint PCS could make decisions which could adversely affect the Sprint® and Sprint PCS® brand names, products or services; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| |  | Sprint PCS could decide not to renew the Sprint PCS agreements or to no longer perform its obligations, which would severely restrict LA Unwireds and IWOs ability to
conduct business.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Decisions such as those referred to above
could adversely affect our PCS operating subsidiaries relationships with their subscribers by changing products, services and price plans to which those subscribers had become accustomed. Should Sprint PCS have a change of control, or should
management of Sprint PCS change, the pace at which decisions such as the foregoing occur could change, increasing the risk of disfavor from subscribers of our operating subsidiaries. In fact, Sprint has made changes to its senior management,
including replacing its chairman and chief executive officer and dismissing its president and chief operating officer.



We deal with Sprint PCS daily on a variety of issues. Sometimes we disagree with Sprint PCS or oppose what Sprint PCS would like us to do or require us to pay, and we
have numerous disputes with Sprint PCS that we have as yet been unable to resolve, many of which we have described elsewhere in the Risk Factors. This occurs particularly when Sprint PCS tells us we must adopt business methods or pricing plans that
we think will hurt our business. Our disputes with Sprint PCS, including our lawsuit against Sprint that is referred to in Note 6 to our condensed consolidated financial statements that are a part of this filing and is further described below, could
adversely affect our relationship with Sprint PCS. Because we rely so heavily on our relationship with Sprint PCS, any deterioration of that relationship or of Sprint PCSs desire to cooperate with LA Unwired or IWO could adversely affect the
combined companys business. In addition, Sprint PCSs level of control and influence over us would make it difficult for us to sell our business to anyone other than Sprint PCS.



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In the future, we may approach Sprint PCS and seek to modify our management agreements, the consent and agreement and our
other agreements with Sprint PCS and take other actions consistent with such objective, including formally bringing certain claims or proceedings under such arrangements that we believe we may have against Sprint PCS. We have not determined whether
we will approach Sprint PCS or bring such claims or proceedings or take such other actions. In the event we do, we can provide no assurance that any such modifications will be made or that, if any such claims are brought or other such actions taken,
they will be resolved in our favor.



Our dependence on Sprint PCS may
adversely affect our ability to predict our results of operations.



Our
dependence on Sprint PCS injects a great degree of uncertainty into our business and financial planning. Unanticipated expenses and reductions in revenue have had and, if they occur in the future, will have a negative impact on our liquidity and
make it more difficult to predict with reliability our future performance. Inaccuracies in data provided by Sprint PCS could understate our expenses or overstate our revenues, result in out-of-period adjustments or lead us to make bad business
decisions that may materially adversely affect our financial results. A significant portion of cost of service and roaming in our financial statements relates to charges from Sprint PCS. In addition, because Sprint PCS provides billing and
collection services for us, it collects cash from our subscribers on our behalf and remits that cash to us. As a result, we rely on Sprint PCS to provide accurate, timely and sufficient data and information to properly record our revenues, expenses
and accounts receivable that underlie a substantial portion of our periodic financial statements and other financial disclosures.



We and Sprint PCS have disputes concerning billing and other errors or inaccuracies. If we are required in the future to make additional adjustments or charges as a
result of errors or inaccuracies in data provided to us by Sprint PCS, such adjustments or charges may have a material adverse effect on our financial results in the period that the adjustments or charges are made, on our ability to satisfy
covenants contained in our credit facilities, and our ability to make fully informed business decisions.



The inability of Sprint PCS to maintain high quality back office services or our inability to use Sprint PCSs back office services and third party vendors back office systems could lead to customer
dissatisfaction, increase the loss of subscribers or otherwise increase our costs or adversely affect our businesses.



We rely on Sprint PCSs internal support systems, including customer care, billing and other back office support. Our operations could be disrupted if Sprint PCS is
unable to maintain and expand its internal support systems in a high quality manner, or to efficiently outsource those services and systems through third party vendors. We expect the rapid expansion of Sprint PCSs business and the
consolidation of back office services by Sprint PCS to continue to pose a significant challenge to its internal support systems. Additionally, Sprint PCS has relied on third party vendors for a significant number of important functions and
components of its internal support systems and may continue to rely on these vendors in the future. Our PCS operating subsidiaries depend on Sprint PCSs willingness to offer and provide back office services effectively and at competitive
costs. Our agreements with Sprint PCS provide that, upon nine months prior written notice, Sprint PCS may elect to terminate any of these services. The inability of Sprint PCS to maintain high quality back office services, or provide us with
adequate notification of our inability to continue to provide those services or our inability to use Sprint PCSs back office services and third party vendors back office systems could lead to customer dissatisfaction, increase the loss
of subscribers or otherwise disrupt our business and increase our costs. Additionally, we are dependent on Sprint PCS to assist us in transferring our back office services from Sprint PCS to a third party if we choose to do that, and any failure by
Sprint PCS to cooperate in this effort, such as by making a transfer cost prohibitive, could have a similar adverse effect on us.



We rely on Sprint PCS for providing timely and accurate information to allow us to meet our financial reporting obligations. If material internal control weaknesses exist
at Sprint PCS, we may not be able to provide timely and accurate information.



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Inaccuracies in data provided by Sprint PCS could understate our expenses or overstate our revenues, result in
out-of-period adjustments or lead us to make bad business decisions that may materially adversely affect our financial results.



A significant portion of Cost of Service expenses and Roaming revenues in our financial statements relates to charges from Sprint PCS. In
addition, because Sprint PCS provides billing and collection services for us, it collects cash from our subscribers on our behalf and remits that cash to us. As a result, we rely on Sprint PCS to provide accurate, timely and sufficient data and
information to properly record our revenues, expenses and accounts receivables that underlie a substantial portion of our periodic financial statements and other financial disclosures.



We and Sprint PCS have discovered billing and other errors or inaccuracies that could be material to us. We have disputed invoices that
Sprint PCS has sent us for US Unwired and for IWO. If we are required in the future to make additional adjustments or charges as a result of errors or inaccuracies in data provided to us by Sprint PCS, such adjustments or charges may have a material
adverse affect on our financial results in the period that the adjustments or charges are made, on our ability to satisfy covenants contained in our credit facility, and our ability to make fully informed business decisions.



Changes in Sprint PCS products and services may reduce customer additions and may be
otherwise economically adverse.



The competitiveness and effective
promotion of Sprint PCS products and services are key factors in our ability to attract and retain subscribers. For example, under the Sprint PCS service plans, subscribers who do not meet certain credit criteria can nevertheless select any plan
offered subject to an account-spending limit, referred to as ASL, to control credit exposure. Account spending limits range from $125 to $200 depending on the credit quality of the customer. Prior to May 2001, all of these subscribers were required
to make a deposit ranging from $125 to $250 that could be credited against future billings. In May 2001, a new Sprint PCS program, called NDASL for no deposit account spending limit, eliminated the deposit requirement on certain, but not all, credit
classes. A significant amount of our new customer additions occurred in 2002 under the NDASL program. Sprint PCS has replaced the NDASL program with the Clear Pay Program. The Clear Pay Program is substantially similar to the NDASL
program but with an increased emphasis on payment of outstanding amounts. Under the Clear Pay Program, subscribers who do not meet certain credit criteria can select any plan offered, subject to an account-spending limit.



The NDASL program had the effect of increasing churn and bad debt expense and, though better
than the NDASL program, the Clear Pay Program still caused an unacceptable rate of churn. Sprint PCS has the right to end or materially change the terms of the Clear Pay Program. If Sprint PCS chooses to eliminate the Clear Pay Program or alter its
features, the growth rate we expect to achieve may decrease. Our PCS operating subsidiaries requested and received, effective February 24, 2002, the ability to reinstate deposits in their territories for subscribers with poor or inadequate payment
histories. We believe that reinstatement of the deposit has reduced the number of potential new subscribers in these markets. While deposits for Clear Pay customers provide us with protection against bad debt expense for sub-prime customers, it has
and may continue to deter some people with sub-prime credit from becoming subscribers. As a result, our gross additions have declined and may continue to do so, which may further result in lower cash flows and impair our ability to service our debt.
As of September 30, 2003, approximately 32% of our subscribers had a credit rating placing them in the sub-prime category.



Sprint PCS may elect to offer additional programs that may attract high credit risk subscribers. Sprint PCS may not offer relief in any of such programs.



If Sprint PCS does not complete the construction of its nationwide PCS network, our PCS
operating subsidiaries may not be able to attract and retain subscribers.



Sprint PCS and its affiliates currently intend to cover a significant portion of the population of the United States, Puerto Rico and the U.S. Virgin Islands by creating a nationwide PCS network through Sprint PCSs own construction
efforts and those of its network partners like LA Unwired and IWO. Sprint PCS and its affiliates are still constructing the nationwide network and do not yet offer PCS services, either on Sprint PCSs own network or through its roaming
agreements, everywhere in the United States.



If one of LA Unwireds or
IWOs subscribers travels in an area where a Sprint PCS or compatible system is not yet operational, the customer would not be able to make a call on that areas system unless he or she has a telephone handset that can make calls on both
systems. Generally, these handsets are more costly. Moreover, the Sprint PCS network does not allow for calls to be transferred without interruption between



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the Sprint PCS network and another wireless network. This means that a customer must end a call in progress and initiate
a new call when entering an area not served by the Sprint PCS network. The quality of the service provided by another network may not be equal to that of the Sprint PCS network, and LA Unwireds or IWOs subscribers may not be able to use
some of the advanced features of its network. This could result in customer dissatisfaction and loss of subscribers.



Sprint PCS has entered into management agreements similar to LA Unwireds and IWOs with companies in other markets under its nationwide PCS build-out strategy.
LA Unwireds and IWOs results of operations are dependent on Sprint PCSs national network and, to a lesser extent, on the networks of Sprint PCSs other network partners. Sprint PCSs network may not provide nationwide
coverage to the same extent as its competitors, which could adversely affect LA Unwireds and IWOs ability to attract and retain subscribers.



If Sprint PCS does not succeed, or if LA Unwired or IWO does not maintain a good relationship with Sprint PCS, LA Unwireds or IWOs business may not
succeed.



If Sprint PCS has a significant disruption to its business plan
or network, fails to operate its business in an efficient manner, or suffers a weakening of its brand name, LA Unwireds and IWOs operations and profitability would likely be impaired. Sprint PCS currently intends to cover a significant
portion of the population of the United States, Puerto Rico and the U.S. Virgin Islands by creating a nationwide PCS network through its own construction efforts and those of its network partners. Sprint PCS is still constructing its nationwide
network and does not offer PCS services, either on its own network or through its roaming agreements, in every city in the United States. Sprint PCSs network may not provide nationwide coverage to the same extent as its competitors, which
would adversely affect our ability to attract and retain customers.



If Sprint
PCS should have significant financial problems, including bankruptcy, our PCS business would suffer material adverse consequences that could include termination or revision of our Sprint PCS agreements.



LA Unwired and IWO use their relationships with Sprint PCS to obtain, at favorable prices,
handsets and the equipment for the construction or expansion and operation of their networks. Any disruption in their relationships with Sprint PCS could make it much more difficult for them to obtain this equipment.



On July 11, 2003, we sued Sprint and Sprint PCS for violations of the Racketeer Influenced
and Corrupt Organizations Act, breach of fiduciary duty and fraud. On September 25, 2003, we filed an amended complaint to include contractual claims. On October 20, 2003, Sprint submitted their Answer, Defenses, and Counterclaim of Defendants
seeking dismissal of our First Amended Complaint and filing a counter-claim for approximately $13.3 million related primarily to contractual disputes. On October 21, 2003, Sprint filed a Defendants Partial Motion for Judgment on the
Proceedings seeking partial dismissal of claims filed in the First Amended Complaint. On October 21, 2003, Sprint filed Defendants Motion to Strike Plaintiffs Jury Demand from the First Amended Complaint. Our disputes with Sprint PCS,
such as our lawsuit against Sprint and Sprints lawsuit against us, could cause our relationship with Sprint PCS to further deteriorate, which could in turn adversely affect our business. In fact, since we filed the suit originally Sprint has
refused to meet with us to resolve contract disputes, which was the reason for our amended complaint.



If Sprint PCS or other Sprint PCS network partners have financial difficulties, the Sprint PCS network could be disrupted.



Sprint PCSs national network is a combination of networks. The large metropolitan areas are owned and operated by Sprint PCS, and the
areas in between them are owned and operated by Sprint PCS network partners, all of which are independent companies like we are. We believe that most, if not all, of these companies have incurred substantial debt to pay the large cost of building
out their networks. If any of these companies experience financial difficulties, the Sprint PCS network could be disrupted in that companys territory, which would adversely affect our ability to attract and retain customers.



If other network partners experience financial difficulties, the Sprint PCS network could be
disrupted in the territories of those partners. If the Sprint PCS agreements of those partners are like ours, Sprint PCS would



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have the right to step in and operate the affected territory. Of course this right could be delayed or hindered by legal
proceedings, including any bankruptcy proceeding relating to the affected network partner. Sprint PCS network partners, iPCS, Inc. and Horizon, recently filed bankruptcy and other network partners, including IWO, may follow The impact of these
developments on the Sprint PCS network, on our funding and our relationship with Sprint PCS, and on our travel revenue from subscribers roaming in iPCS markets may be materially adverse.



Material disruptions in the Sprint PCS network would have a material adverse effect on our ability to attract and retain subscribers.



Certain provisions of the Sprint PCS agreements may diminish the value of
US Unwired common stock and other securities and restrict the sale of our business.



Under some circumstances and without further stockholder approval, Sprint PCS may purchase LA Unwireds or IWOs operating assets at a discount. In addition, Sprint PCS must approve any change of control of the ownership of LA
Unwired or IWO and must consent to any assignment of LA Unwireds or IWOs Sprint PCS agreements.



Sprint PCS also has a right of first refusal if LA Unwired or IWO decides to sell its operating assets to a third party. LA Unwired and IWO also are subject to a number of restrictions on the transfer of their
businesses, including a prohibition on the sale of LA Unwired or IWO or their operating assets to competitors of Sprint or Sprint PCS. These restrictions and other restrictions contained in the Sprint PCS agreements could adversely affect the value
of US Unwired common stock and other securities, may limit our ability to sell LA Unwireds and IWOs business, may reduce the value a buyer would be willing to pay for LA Unwireds or IWOs business and may reduce LA
Unwireds or IWOs or the combined companys entire business value.



LA Unwired or IWO may have difficulty in obtaining an adequate supply of certain handsets from Sprint PCS, which could adversely affect LA Unwireds or IWOs results of operations.



LA Unwired and IWO depend on our and their relationships with Sprint PCS to obtain handsets
at a competitive cost. Sprint PCS orders handsets from various manufacturers. LA Unwired or IWO could have difficulty obtaining specific types of handsets at a competitive cost and in a timely manner if:



| |  | Sprint PCS does not adequately project the need for handsets for itself, its Sprint PCS network partners and its other third party distribution channels, particularly in transition
to new technologies such as 3G;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sprint PCS gives preference to other distribution channels;
| | - | -----------------------------------------------------------



| |  | LA Unwired or IWO does not adequately project our need for handsets;
| | - | --------------------------------------------------------------------



| |  | Sprint PCS modifies its handset logistics and delivery plan in a manner that restricts or delays LA Unwireds or IWOs access to handsets; or
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  | there is an adverse development in the relationship between Sprint PCS and its suppliers or vendors.
| | - | ----------------------------------------------------------------------------------------------------



The occurrence of any of the foregoing could disrupt LA Unwireds or IWOs customer service and/or result in a decrease in LA
Unwireds or IWOs subscribers, which could adversely affect its results of operations.



Non-renewal or revocation by the FCC of LA Unwireds licenses or the Sprint PCS licenses LA Unwired or IWO uses would significantly harm the affected companys business.



PCS licenses are subject to renewal and revocation by the FCC. LA Unwireds and Sprint
PCSs licenses in LA Unwireds and IWOs territories will begin to expire in 2005 but may be renewed for additional ten-year terms. There may be opposition to renewal of these licenses upon their expiration, and the licenses may not
be renewed. The FCC has adopted specific standards to apply to PCS license renewals. Any failure



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by Sprint PCS, LA Unwired or IWO to comply with these standards could cause revocation or forfeiture of the licenses for
its territories. If any of the licenses of Sprint PCS that our PCS operating subsidiaries are using should be lost, the affected subsidiary would be severely restricted in its ability to conduct its business. If we were to lose any of the licenses
we own, we could replace it with a Sprint PCS license in the affected territory, but at a greater cost to us than the use of our own license.



If Sprint PCS does not maintain control over its licensed spectrum, the Sprint PCS agreements may be terminated, which would result in LA Unwireds and IWOs
inability to provide PCS service.



The FCC requires that license holders
like Sprint PCS and LA Unwired maintain control of their licensed spectrum and not delegate control to third-party operators or managers. Although the Sprint PCS agreements with LA Unwired and IWO reflect an arrangement that the parties believe
meets the FCC requirements for licensee control of licensed spectrum, we cannot assure you that the FCC will agree. If the FCC were to determine that the Sprint PCS agreements need to be modified to increase the level of licensee control, LA Unwired
and IWO have agreed with Sprint PCS to use best efforts to modify the Sprint PCS agreements to comply with applicable law. If LA Unwired and IWO cannot agree with Sprint PCS to modify the Sprint PCS agreements, the agreements may be terminated. If
the Sprint PCS agreements are terminated, LA Unwired and IWO would no longer be a part of the Sprint PCS network and the combined company would be severely restricted in its ability to conduct business.



We have limited rights if Sprint PCS fails to perform its obligations to our PCS operating
subsidiaries under their agreements with Sprint PCS. Should that occur, the consequences to us would be severe.



If Sprint PCS fails to perform its obligations to our PCS operating subsidiaries, the consequences to us would be severe. Our PCS operating subsidiary could terminate its
Sprint PCS agreements, but in that case it may have to discontinue its PCS business or to conduct it on a reduced scale. It would not be permitted to offer Sprint PCS products and services. We would in these events suffer material adverse
consequences to our results of operations and financial condition. The only remedy of our PCS operating subsidiary would be to require Sprint PCS either to purchase its operating assets at a price that would be unfavorable to us, or to assign to our
PCS operating subsidiary limited amounts of Sprint PCSs licensed spectrum for a price equal to the greater of 10% of the business value of our PCS operating subsidiary or Sprint PCSs original cost for the spectrum plus any costs incurred
in relocating microwave radio systems.



Sprint PCS has notified us of
charges and fees that it intends to pass on to us. We did not anticipate these charges and fees when we formulated our business plan. We believe these charges and fees are material, and if Sprint PCS is entitled to collect them, they could
materially and adversely affect our results of operations and financial condition.



Sprint PCS has presented us with a number of charges and fees that we did not expect when we formulated our business plan, including:



| |  | New development costs and fees to upgrade Sprint PCSs systems to cover new third generation technology services, such as one times radio transmission technology or 1XRTT,
offered to our subscribers. In addition, Sprint PCS has begun billing us for back office services related to new technology that we believe are provided for under our existing billing arrangements.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Charges resulting from the objection by long distance carriers, including Sprint, to charges they paid to Sprint PCS for the termination of long distance calls in our
service territory. Sprint PCS has paid us what they estimated they would collect from those long distance carriers, but the long distance carriers are now contesting whether they were obligated to pay those charges. Sprint PCS has indicated that it
will seek to recover the charges it paid us that it cannot collect from the long distance carriers.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



If we disagree with Sprint PCS on the validity of these (or any other) charges or fees, we have the right to formally dispute the charges or fees. We are disputing the
charges for back office services related to new technologies. In addition, we are discussing with Sprint PCS whether there is a basis for the other charges and fees under our management agreements and service agreements with Sprint PCS. We believe
that these charges and fees are material, and if Sprint PCS is entitled to collect them, they could have a material adverse effect on our results of operations or financial condition or both.



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Sprint PCS has invoked certain dispute resolution provisions of our agreements with respect to several ongoing disputes
between our companies. The process requires senior management officials of each company to attempt to resolve the disputes, following which, as to any dispute not resolved through the dispute resolution process, the parties are free to proceed with
litigation or, in certain specified cases, to arbitration. We have also invoked certain dispute resolution provisions under the agreements. In addition, we have filed a lawsuit against Sprint and Sprint PCS related to other disputes between Sprint
and us that are not within the scope of this dispute resolution process, and Sprint and Sprint PCS have sued us for recovery of approximately $13 million dollars of fees and other charges that we have disputed.



We rely on the use of the Sprint PCS brand name and logo to market our services, and a
loss of use of this brand and logo or a decrease in the attractiveness of this brand and logo to potential customers would significantly impair our ability to market our products.



The Sprint PCS brand and logo is highly recognizable. If we lose our rights to use the Sprint PCS brand and logo under our trademark and
service mark license agreements, we would lose the advantages associated with marketing efforts conducted by Sprint PCS. If we lose the rights to use this brand and logo or the value of the brand and logo decreases, it is highly unlikely that
customers would recognize our brand and we would have to spend significantly more money on advertising to create brand recognition.



Our July 2003 lawsuit and our September amended complaint against Sprint and Sprint PCS may cause Sprint PCS to retaliate against LA Unwired, which is also a plaintiff
in the lawsuit, or IWO, which is not. The lawsuit and the counter suit filed by Sprint and Sprint PCS against us may also cause further deterioration in our relationship with Sprint and Sprint PCS.



Our lawsuit against Sprint and Sprint PCS alleges, among other things, that:



| |  | They have violated the Racketeer Influenced and Corrupt Organizations Act,
| | - | --------------------------------------------------------------------------



| |  | Their goal is to acquire us at a substantial discount by driving us to the brink of financial ruin,
| | - | ---------------------------------------------------------------------------------------------------



| |  | They have committed fraud and extortion against us,
| | - | ---------------------------------------------------



| |  | They have used certain of our assets without our consent and without properly compensating us, and
| | - | --------------------------------------------------------------------------------------------------



| |  | They have improperly charged fees to us and misappropriated revenues, discounts and rebates that belong to us.
| | - | --------------------------------------------------------------------------------------------------------------



| |  | They have violated certain provisions of our Sprint PCS management agreement.
| | - | -----------------------------------------------------------------------------



The Sprint and Sprint PCS counter suit against us alleges that we have refused to pay Sprint certain fees and charges we are obligated to pay under our agreements with
Sprint, currently amounting to over $13 million.



We had a tense relationship
with Sprint PCS before we and Sprint filed lawsuits. Our allegations may cause further deterioration in that relationship, with the adverse effects that are described above. Should Sprint and Sprint PCS prevail in its claims, our liquidity could be
further eroded.



If, despite our lawsuit, Sprint PCS succeeds in what we
believe to be its plan to acquire us at a substantial discount, our stockholders and creditors would be adversely affected.



Risks Particular to the Combined Companys Industry



Overview of this subsection:



We face significant competition in our service areas from a number of competitors. There are five other national operators that offer service in at least some portion of
our service areas in addition to a number of local and regional carriers. Approximately 94% of the population has three or more different operators



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offering mobile telephone service in the counties in which they live.The result is that prices of wireless
services have dramatically dropped. Providers are offering larger bundles of minutes at lower prices and this has resulted in a decrease in airtime revenue, which is the price a customer pays for using the service in excess of allotted minutes. In
addition, other factors affecting our industry are changing rapidly. If we cannot effectively meet the challenges of these conditions, we probably will not succeed. Activists are seeking new laws that would restrict use of telephones by drivers, our
placement of the towers that carry our transmissions and disposal of wireless phones. Such laws could adversely impact our business.



Our PCS operating subsidiaries business may suffer because subscribers frequently disconnect their service in the PCS industry. The rate at which these
disconnections occur, or churn, may be even higher in the future.



The PCS
industry in general and Sprint PCS in particular have experienced a high rate of subscribers who disconnect their service. This rate is referred to as churn. We have experienced even higher churn in 2002 due in large part, we believe, to the NDASL
program that Sprint PCS introduced in May 2001 and the Clear Pay program that replaced NDASL. These programs are described under Risks Particular to Our Relationship with Sprint PCS. Our future churn rate may be higher than our
historical rate due to intense competition and general economic conditions, among other factors. Factors that tend to contribute to higher churn include:



| |  | wireless portability, which allows subscribers to retain their PCS numbers while changing wireless carriers will be introduced in a significant portion of our markets in November
2003
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | inability of subscribers to pay, which caused a significant percentage of our churn in 2002. We believe that a large portion of this churn is attributable to the NDASL and Clear Pay
Program, which resulted in subscriber accounts with greater than normal credit risks.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | our generous handset return policy, which makes it easier to cancel an account.
| | - | -------------------------------------------------------------------------------



| |  | intense competition in our industry.
| | - | ------------------------------------



| |  | performance and coverage of our networks.
| | - | -----------------------------------------



| |  | ineffective customer service.
| | - | -----------------------------



| |  | increase in prices.
| | - | -------------------



| |  | performance and reliability of handsets.
| | - | ----------------------------------------



| |  | changes in our products and services.
| | - | -------------------------------------



A high rate of PCS subscriber churn could harm the competitive position of our PCS operating subsidiaries and their results of operations. We subsidize some of the costs
of handsets for our new subscribers, pay commissions for new accounts and incur expenses to advertise and maintain a distribution network. When we experience a high rate of churn, we may not receive sufficient revenue to offset these costs. Sprint
PCS may elect to offer additional programs that may attract high credit risk subscribers.



Sprint PCS and we face intense competition that may reduce its and our market share and harm its and our financial performance.



There is substantial competition in the telecommunications industry. According to information it has filed with the SEC, Sprint PCS believes
that the traditional dividing lines between long distance, local, wireless, and Internet services are increasingly becoming blurred. Through mergers and various service integration strategies, major providers, including Sprint PCS, are striving to
provide integrated solutions both within and across all geographical markets.



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Sprint PCS expects competition to intensify as a result of the entrance of new competitors and the rapid development of
new technologies, products, and services. Sprint PCS cannot predict which of many possible future technologies, products, or services will be important to maintain its competitive position or what expenditures will be required to develop and provide
these technologies, products or services. Sprint PCSs ability to compete successfully will depend on marketing and on its ability to anticipate and respond to various competitive factors affecting the industry, including new services that may
be introduced, changes in consumer preferences, demographic trends, economic conditions, and discount pricing strategies by competitors. To the extent Sprint PCS does not keep pace with technological advances or fails to respond timely to changes in
competitive factors in its industry, it could lose market share or experience a decline in revenue and net income.



Each of the markets in which Sprint PCS competes is served by other wireless service providers, including cellular, enhanced specialized mobile radio, called ESMR, and
PCS operators and resellers. A majority of markets have five or more commercial mobile radio services or CMRS providers. Each of the top 50 metropolitan markets has at least two other PCS competitors in addition to one ESMR competitor and two
cellular incumbents. Some of these competitors have been operating for a number of years and currently serve a substantial subscriber base. The FCC has decided to allow CMRS providers to own more spectrum, up to 55 MHz, in urban markets and to
eliminate its rule imposing spectrum limits. However, the FCC plans to continue to review proposed mergers and combinations involving spectrum after the spectrum limits are eliminated. Competition may continue to increase to the extent that licenses
are transferred from smaller stand-alone operators to larger, better capitalized, and more experienced wireless communications operators. These larger wireless communications operators may be able to offer subscribers network features not offered by
Sprint PCS. The actions of these larger wireless communications operators could negatively affect Sprint PCSs and our customer churn, ability to attract new subscribers, average revenue per user, cost to acquire subscribers, and operating
costs per customer.



Sprint PCS relies on agreements with competitors to
provide automatic roaming capability to Sprint PCS subscribers in many of the areas of the United States not covered by the Sprint PCS network, which primarily serves metropolitan areas. Certain competitors may be able to offer coverage in areas not
served by Sprint PCSs network or may be able to offer roaming rates that are lower than those offered by Sprint PCS. Certain of Sprint PCSs competitors are seeking to reduce access to their networks through actions pending with the FCC.
Moreover, the engineering standard, called AMPS, for the dominant air interface on which PCS subscribers roam is currently being considered for elimination by the FCC as part of a streamlining process. If the FCC eliminates this mandatory standard
and cellular operators cease to offer their AMPS networks for roaming, some Sprint PCS subscribers may have difficulty roaming in certain markets.



Some wireless providers, some of which have an infrastructure in place and have been operating for a number of years, have been upgrading their systems and provide
expanded and digital services to compete with Sprint PCSs services. Some of these wireless providers require their subscribers to enter into long-term contracts, which may make it more difficult for Sprint PCS to attract subscribers away from
these wireless providers.



Significant competition in the wireless
communications services industry may result in LA Unwireds or IWOs competitors offering new or better products and services or lower prices, which could prevent the affected company from operating profitably or reduce its profitability.



Competition in the wireless communications industry is intense. We
anticipate that competition will continue to cause the market prices for two-way wireless products and services to decline in the future. Providers are offering larger bundles of minutes at lower prices and this has resulted in a decrease in airtime
revenue, which is the price a customer pays for using the service in excess of allotted minutes. LA Unwireds and IWOs ability to compete will depend, in part, on their ability to anticipate and respond to various competitive factors
affecting the telecommunications industry. Our major competitors include such wireless companies as Verizon, T-Mobile, Cingular, AT&T Wireless, and Nextel.



Our PCS operating subsidiaries dependence on Sprint PCS to develop competitive products and services and the requirement that they obtain Sprint PCSs
consent to sell local pricing plans and equipment that Sprint PCS has not approved may limit their ability to keep pace with competitors on the introduction of new products, services and equipment. Many of these competitors are larger than our PCS
operating



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subsidiaries individually or combined, may have entered the wireless communications services market before our PCS
operating subsidiaries did, possess greater resources and more extensive coverage areas, may offer lower rates, and may market other services, such as landline telephone service, cable television and Internet access, with their wireless
communications services. In addition, we may be at a competitive disadvantage since we may have more debt than some of our competitors.



Furthermore, there has been a recent trend in the wireless communications industry towards consolidation of wireless service providers through joint ventures,
reorganizations and acquisitions. We expect this consolidation to lead to larger competitors over time. We may be unable to compete successfully with larger companies that have substantially greater resources or that offer more services than LA
Unwired and IWO do.



Alternative technologies and current uncertainties in
the wireless market may reduce demand for PCS.



PCS providers in the United
States use one of three technological standards. Even though the three standards share basic characteristics, they are not compatible or interchangeable with each other. Our PCS operating subsidiaries and Sprint PCS use the standard known as CDMA.
If another standard becomes preferred in the industry, our PCS operating subsidiaries may be at a competitive disadvantage. If Sprint PCS changes its standard, our PCS operating subsidiaries will need to change theirs as well, which will be costly
and time consuming. If our PCS operating subsidiaries cannot change the standard, they may not be able to compete with other systems.



The wireless communications industry is experiencing significant technological change, as evidenced by the increasing pace of digital upgrades in existing analog wireless
systems, satellite coverage, evolving industry standards, ongoing improvements in the capacity and quality of digital technology, shorter development cycles for new products and enhancements and changes in end-user requirements and preferences.
Technological advances and industry changes could cause the technology used on our PCS operating subsidiaries networks to become obsolete. Sprint PCS may not be able to respond to such changes and implement new technology on a timely basis, or
at an acceptable cost.



If Sprint PCS is unable to keep pace with these
technological changes or changes in the wireless communications market based on the effects of consolidation from the Telecommunications Act of 1996 or from the uncertainty of future government regulation, the technology used on our PCS operating
subsidiaries networks, or their business strategy, may become obsolete. In addition, wireless carriers have implemented an upgrade to one times radio transmission technology, or 1XRTT, which is also broadly known as third generation, or 3G,
technology throughout the industry. The 3G technology promises high-speed, always-on Internet connectivity and high-quality video and audio. We cannot assure you that our PCS operating subsidiaries or Sprint PCS can implement 1XRTT or 3G technology
successfully or on a cost-effective basis.



Regulation by government and
taxing agencies may increase our PCS operating subsidiaries costs of providing service or require them to change their services, either of which could impair the combined companys financial performance.



Our operations and the operations of Sprint PCS are subject to varying degrees of regulation
by the FCC, the Federal Trade Commission, the Federal Aviation Administration, the Environmental Protection Agency, the Occupational Safety and Health Administration and state and local regulatory agencies and legislative bodies. Adverse decisions
or regulations of these regulatory bodies could negatively impact operations and costs of doing business. For example, changes in tax laws or the interpretation of existing tax laws by state and local authorities could subject us to increased
income, sales, gross receipts or other tax costs or require LA Unwired or IWO to alter the structure of its current relationship with Sprint PCS. In addition:



| |  | The loss of any of LA Unwireds FCC licenses, or any of Sprint PCSs FCC licenses in LA Unwireds or IWOs service area, may impair the affected companys
business and operating results.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The FCC may revoke any of LA Unwireds or Sprint PCSs PCS licenses at any time for cause. Cause could be a failure to comply with terms of the licenses or applicable FCC
rules. We cannot
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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ensure that LA Unwireds and Sprint PCSs PCS licenses will not be revoked or will be renewed
when they expire.



| |  | The FCC regulates LA Unwireds and IWOs relationship with Sprint PCS under each companys Sprint PCS agreements.
| | - | -----------------------------------------------------------------------------------------------------------------



| |  | The combined company may need to acquire additional licenses, which may require approval of regulatory authorities. These regulatory authorities may not grant approval in a timely
manner, if at all.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | All PCS licenses, including LA Unwireds own licenses and Sprint PCSs licenses, are subject to the FCCs build-out regulations. These regulations require license
holders to offer specified levels of service to the population in their service areas within set time periods. Even though our PCS operating subsidiaries have developed a build-out plan that meets these requirements, they may be unable to meet their
build-out schedules. If LA Unwired or IWO or Sprint PCS does not meet these requirements, the FCC could take back the portions of the service area that are not being served, impose fines, or even revoke the related licenses.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The FCC may license additional spectrum for new carriers, which would increase the competition our PCS operating subsidiaries face.
| | - | -----------------------------------------------------------------------------------------------------------------------------------



| |  | The FCC imposes additional requirements on holders of PCS licenses reserved for small businesses. These licenses are called C-block and F-block licenses. LA Unwired holds F-block
licenses and must meet special requirements to hold them. If it does not meet these requirements, the FCC could fine it, revoke its licenses or require it to restructure its ownership.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The FCC has mandated that wireless carriers implement portability for wireless subscribers. This will permit users of wireless services the opportunity to retain the same phone
number as they change local wireless carriers. Prior to implementation, subscribers that changed carriers were also required to change phone numbers. We believe that this will make it easier for subscribers to switch wireless carriers resulting in
increased subscriber churn and increased cost associated with retaining our overall subscriber base. The manner in which wireline carriers implement this program may also adversely affect us. In preparation of wireless local number portability
BellSouth has implemented intralata dialing pattern changes for wireless providers who use reverse toll billing. This change will now require wireline carriers to dial 1+ to reach wireless customers that are not within the local calling area
regardless of their reverse toll billing status. We believe that this process will be very confusing to our subscribers and is likely result in a higher level of subscriber churn.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The introduction of wireless number portability is likely to lead to an increase in
subscriber churn.



The FCC has mandated that wireless carriers implement
portability for wireless subscribers that will affect a significant portion of our markets effective November 2003. This will permit users of wireless services the opportunity to retain the same phone number as they change local wireless carriers.
Prior to implementation, subscribers that changed carriers were also required to change phone numbers. We believe that this will make it easier for subscribers to switch wireless carriers, resulting in increased subscriber churn and increased costs
associated with retaining our overall subscriber base. The manner in which wireless carriers implement this program may also adversely affect us.



In preparation for wireless local number portability BellSouth has implemented dialing pattern changes for wireless providers who use reverse toll billing. This change
will now require wireline carriers to dial 1+ to reach wireless customers that are not within the local calling area regardless of their reverse toll billing status. We believe that this process is very confusing to our subscribers and is likely to
result in a higher level of subscriber churn.



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An increase in the amount of our foreign ownership could cause us to lose our FCC licenses or restructure our
ownership.



Ownership of US Unwired capital stock by non-U.S. citizens is
subject to limitations under the Communications Act of 1934 and FCC regulations. In the absence of FCC consent, not more than 25% of US Unwired capital stock may be owned or voted by non-U.S. citizens or their representatives, by a foreign
government or its representatives, or by a foreign corporation. We believe the level of foreign ownership in US Unwired common stock to be approximately 25%. Because US Unwired common stock is publicly traded, the level of foreign ownership may
fluctuate.



The FCC has granted us the authority to permit US Unwireds
foreign ownership to exceed 25%, subject to specific limitations. If US Unwired exceeds the permitted levels or does not comply with the applicable limitations, it may have to restructure its ownership to come within the permitted ownership limit or
else we may lose our FCC licenses. In that case, the articles of incorporation of US Unwired permit it to force foreign shareholders to sell their shares to US Unwired, whether they wish to do so or not, so as to reduce the foreign ownership of US
Unwired to slightly lower than permitted levels.



Our future prospects are
uncertain because the future prospects of the PCS industry are uncertain.



PCS systems have not operated in the United States for very long, and we cannot assure you that the operation of these systems in our markets will become profitable. In addition, we cannot estimate how much demand there will be for PCS in
our markets or how much competitive pricing pressure there will be. As a result, the future prospects of the PCS industry, including LA Unwireds and IWOs prospects, remain uncertain. The future demand for wireless communications services
in general is uncertain. We also cannot predict what new challenges we may face in this changing industry environment. If we cannot react promptly and effectively to these challenges, our business could be materially and adversely affected.



Use of hand-held phones may pose health risks, which could result in the
reduced use of wireless services or liability for personal injury claims.



Some media reports and some studies have suggested that certain radio frequency emissions from wireless handsets may be linked to various health problems, including cancer, and may interfere with various electronic medical devices,
including hearing aids and pacemakers. Concerns over radio frequency emissions may discourage use of wireless handsets or expose the combined company to potential litigation. Any resulting decrease in demand for wireless services, or costs of
litigation and damage awards, could impair the combined companys ability to achieve and sustain profitability.



Our PCS operating subsidiaries may be subject to potential litigation relating to the use of wireless phones while driving. In addition, several state and local
governments are considering, or have recently adopted, legislation that restricts the use of wireless handsets by drivers.



Some studies have indicated that some aspects of using wireless phones while driving may impair drivers attention in certain circumstances, making accidents more
likely. These concerns could lead to potential litigation relating to accidents, deaths or serious bodily injuries, or to new restrictions or regulations on wireless phone use, any of which also could have material adverse effects on our results of
operations.



A number of U.S. state and local governments are considering or
have recently enacted legislation that would restrict or prohibit the use of a wireless handset while driving a vehicle or, alternatively, require the use of a hands-free telephone. Legislation of this sort, if continued to be enacted, would require
wireless service providers to provide hands-free enhanced services such as voice activated dialing and hands-free speaker phones and headsets so that they can keep generating revenue from their subscribers, who make many of their calls while on the
road. If we are unable to provide hands-free services and products to our subscribers in a timely and adequate fashion, the volume of wireless phone usage would likely decrease, and our ability to generate revenues would suffer. Moreover, recent
studies have found that driver distraction due to cell phone use can occur regardless of whether hand-held or hands-free cell phones are used, and that cell phone conversations create much higher levels of driver distractions than listening to the
radio or driving under the influence of alcohol. If legislation is adopted in our service areas banning all cell phone use while driving, our revenues would be even more significantly impacted.



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Environmentalists have asked the FCC to halt the building of towers used for transmission of wireless signals.



Three environmental groups claim that towers used for transmission of
wireless signals kill migratory birds. They have petitioned the FCC to study how many birds die from flying into towers, and have asked the FCC to halt tower construction until the study is completed. In February 2003, environmental groups filed
suit against the FCC to force it to protect migratory birds from communication towers. On May 1, 2003, the FCC announced that it would launch a study of this issue but it has filed court papers opposing the lawsuit. If we cannot build new towers, we
may not be able to complete or expand our networks.



At least one
environmental group and one state believe that the disposal of wireless phones could pose a threat to public health. If new regulations governing wireless phone disposal are passed, or if our industry does not develop an efficient disposal or
recycling program, our operating costs could increase.



An environmental
research group has argued that the disposal of used wireless phones could pose a threat to public health because the phones contain small amounts of toxic chemicals that may leak into the soil and water supply when they are deposited in landfills.
At least one state has begun a study of the environmental effects of wireless phone disposal and has announced that it will issue appropriate regulations if the study concludes that those effects could be harmful. If new and burdensome regulations
governing the disposal of wireless phones are passed in the states covered by our network, or if the PCS industry cannot develop a cost-effective disposal or recycling program for wireless phones, our operating costs could increase.



General Risks Currently Affecting our Business



Overview of this subsection



Our business has recently been challenged by a number of adverse factors. IWO has violated
covenants of its senior bank credit facility and has failed to make required payments of interest amounting to approximately $7.5 million since March 2003. As a result, IWOs leaders have denied IWO access to remaining credit under this
facility. If our assumptions in the US Unwired business model are impacted by adverse factors as discussed in Note 3 above, it is likely that US Unwireds business will suffer to the point that US Unwired will not meet some of the amended
covenants in the US Unwired bank debt agreements. If that occurs and the US Unwired banks do not agree to again revise the US Unwired amended covenants, they would be able to declare a default under the US Unwired bank debt and to refuse to advance
funds to us.



Our business is being adversely affected by increased
competition, slower subscriber growth than we anticipated, uncertainties regarding churn due to the introduction of wireless number portability, general economic conditions and other factors. If these factors continue, it is likely that we will not
have enough cash to operate our business. IWO is already in default of its senior bank credit facility due to covenant violations and missed interest payments. The IWO bank lenders could demand payment of what we owe them, and they have already
denied IWO access to the remaining available funds under the facility. If payment were demanded, we would also be in default under the IWO senior notes and the related indenture. US Unwireds funding status and ability to comply with its
amended senior bank credit facility financial covenants is dependent upon a number of factors influencing projections of earnings and operating cash flows. These factors include subscriber growth, average monthly revenue per user (ARPU),
cash cost per user (CCPU), customer churn and cost per gross addition (CPGA). Should actual results differ from the underlying business model assumptions, the Companys liquidity position and it ability to comply with
the amended financial covenants could be adversely affected. The Company could be required to raise additional capital that may or may not be available on terms acceptable to the Company, if at all. This could have a material adverse effect on the
Companys ability to achieve its intended business objectives. If we were unable to comply with our amended covenants, the banks could place us in default and accelerate payment. If payment were demanded, we would also be in default under our
senior notes and the related indenture and it is likely that we will not have enough cash to operate.



Our business has been adversely affected by the following factors:



| |  | A highly competitive marketplace.
| | - | ---------------------------------



| |  | General economic conditions in our markets have not been good, further adversely affecting subscriber growth and churn.
| | - | -----------------------------------------------------------------------------------------------------------------------





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| |  | Initiatives by Sprint PCS including the introduction of NDASL, the charging of higher fees than we believe are contractually permitted, the forced migration to Sprint PCS back
office services, and other factors affecting our business relationship.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition, there are other factors that could contribute to a continuation of poor business conditions for us. These include:



| |  | Uncertainty whether our expected level of capital expenditures will be sufficient to support our networks.
| | - | ----------------------------------------------------------------------------------------------------------



| |  | Uncertainty about charges that Sprint PCS is seeking to impose on us, as described above.
| | - | -----------------------------------------------------------------------------------------



| |  | Uncertainly as to our future relationship with Sprint and Sprint PCS as a result of outstanding litigation.
| | - | -----------------------------------------------------------------------------------------------------------



As a result of our adverse business conditions, due to the above and other factors, IWO has
failed to meet some of the financial covenants with its banks and since March 2003, has failed to make $7.5 million in interest payments on the IWO $240 million senior bank credit facility. Loan covenants are promises that borrowers make either to
do or not to do specified things or not to allow specified things to happen. A failure to meet a loan covenant has three principal consequences. First, it permits the lender to refuse to advance additional borrowings. IWOs lenders have already
taken this action. IWO would not have sufficient cash to operate if it is unable to obtain the proceeds under its bank loan agreements or comparable amounts from alternative financing sources, and it is most unlikely that alternate financing will be
available. We believe that US Unwired would have sufficient cash to fund its operations, debt service and capital requirements in the next twelve months without additional borrowing, but, should the assumptions in its underlying business model be
incorrect, we may need additional borrowing to fund those needs in 2004. Second, failure to meet a loan covenant allows the lender to declare the loan to be in default and to insist on payment of all amounts due under the loan. US Unwired and IWO
would not have sufficient cash to repay these loans, and their failure to repay them, if repayment is demanded by the banks, would allow their note holders to declare a default under the indentures that govern the senior notes and to insist on
payment of all amounts due under the senior notes. If these things happen and we were unable to work out a debt restructuring with our banks and note holders on mutually acceptable terms, we likely would have no other alternative than to seek
protection under bankruptcy laws.



The Company has updated the US Unwired
business model to include its operating performance for the six months ended June 30, 2003 and the initiatives as discussed below. Based upon existing assumptions in the business model, the Company believes that, over the next twelve months, it will
be able to comply with the financial covenants of the amended US Unwired senior bank credit and have sufficient cash to fund its operations, debt service and capital requirements. US Unwireds funding status and ability to comply with these
amended financial covenants is dependent upon a number of factors influencing projections of earnings and operating cash flows. These factors include subscriber growth, average monthly revenue per user (ARPU), cash cost per user
(CCPU), customer churn and cost per gross addition (CPGA). Should actual results differ from the underlying business model assumptions, the Companys liquidity position and it ability to comply with the amended financial
covenants could be adversely affected. The Company could be required to raise additional capital that may or may not be available on terms acceptable to the Company, if at all. This could have a material adverse effect on the Companys ability
to achieve its intended business objectives.



The Company has been unable to
develop a business plan for IWO that provides sufficient cash to fund operations, debt service and capital requirements in 2003. The Company is in discussions with the IWO banking group to arrive at an acceptable restructuring to preserve IWO
liquidity but it is probable that no plan will be forthcoming, and the Company will soon be forced to seek protection under bankruptcy for IWO. Due to uncertainties, all of the IWO debt has been classified as a current obligation and our outside
auditors have rendered a going concern opinion on IWO.



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The economic downturn in the United States has caused a general weakening of our business. If our business in general,
and our sales and churn in particular, do not improve, we may not have the financial and operational performance that we were expecting.



In recent months, we have not achieved the number of new subscribers that we expected in our business plan. We attribute this to weak economic conditions, churn
associated with high credit risk subscribers and intense price competition. If the economic downturn continues, we may have an even lower number of new subscribers and may not be able to add subscribers on terms we expected. In addition, our primary
customer base is individual consumers. The weak economy may hurt the ability of our existing subscribers, who are primarily individual consumers, to pay us on time, which may force us to terminate their service. Furthermore, there is also
uncertainty as to the extent of customer demand as well as the extent to which airtime and monthly recurring charges may continue to decline. If all of the foregoing events occur, our financial and operational performance may suffer.



A recession in the United States involving significantly lowered spending could continue
to negatively affect our results of operations.



Our primary customer base
is individual consumers and our accounts receivable represent unsecured credit. If the economic downturn that the United States and our territories have recently experienced becomes more pronounced or lasts longer than currently expected and
spending by individual consumers drops significantly, our business would continue to be negatively affected. Moreover, the recent upturn in the national economy has not significantly resulted in improvements to our financial performance, and there
is no assurance that it will ultimately do so.



Our allowance for doubtful
accounts may not be sufficient to cover uncollectible accounts.



On an
ongoing basis, we estimate the amount of customer receivables that we will not be able to collect. This allows us to calculate the expected loss on our receivables for the period we are reporting. Our allowance for doubtful accounts may
underestimate actual unpaid receivables for various reasons, including:



| |  | adverse changes in our churn rate exceeding our estimates;
| | - | ----------------------------------------------------------



| |  | adverse changes in the economy generally exceeding our expectations; or
| | - | -----------------------------------------------------------------------



| |  | unanticipated changes in Sprint PCSs products and services.
| | - | ------------------------------------------------------------



If our allowance for doubtful accounts is insufficient to cover losses on our receivables, our business, financial position or results of operations could be materially
adversely affected.



Demand for some of Sprint PCSs communications
products and services has been adversely affected by a downturn in the United States economy as well as changes in the global economy.



Demand for some of Sprint PCSs communications products and services has been adversely affected by a downturn in the United States economy as well as changes in the
global economy. According to Sprint PCS, a number of its suppliers have recently experienced financial challenges. If these suppliers cannot meet their commitments, Sprint PCS states that it would have to use different vendors and this could result
in delays, interruptions, or additional expenses associated with the upgrade and expansion of Sprint PCSs networks and the offering of its products and services. If current general economic conditions continue or worsen, the revenues, cash
flow, and operating results of Sprint PCS could be adversely affected. Any of these developments could adversely affect our business, financial position or results of operations.



Risks Related to Anti-Takeover Provisions



Overview of this subsection:



Our anti-takeover provisions may permit our board of directors to turn down a proposal that our stockholders would like us to accept.



Anti-takeover provisions in US Unwireds charter and by-laws will make it difficult for
anyone to acquire US Unwired without approval of its board of directors (other than an acquisition of LA Unwired or IWO, or both, by Sprint PCS under the terms of our agreements with Sprint PCS that are described above).



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Prior to acquiring IWO, US Unwired had little concern about being acquired against the will of its board of directors
(other than an acquisition of LA Unwired or IWO, or both, by Sprint PCS under the terms of our agreements with Sprint PCS that are described above) because the voting power of its founding family and their related interests, even if not completely
united, could prevent such an acquisition of it. That voting power decreased to about 33% after the IWO acquisition as a result of that acquisition and the amendments to US Unwireds articles of incorporation that converted its class B common
stock, which had 10 votes per share, to class A common stock (later renamed common stock), which has one vote per share. Because of this, US Unwireds board of directors has implemented additional anti-takeover provisions. These
anti takeover provisions, and others, including a poison pill that our board of directors may adopt hereafter, may discourage offers to acquire us and may permit our board of directors to choose not to entertain offers to purchase us,
even offers that are at a substantial premium to the market price of our stock. Our stockholders may therefore be deprived of opportunities to profit from a sale of control.



Item 6. Exhibits and Reports on Form 8-K



a. Exhibits



(a) The following
exhibits are filed as part of this report:



|          | 
|--------- | 
|(3)(i)    | 
|          | 
|3(ii)     | 
|          | 
|(4)(i)(a) | 
|          | 
|(4)(i)(b) | 
|          | 
|(4)(i)(c) | 
|          | 
|(4)(i)(d) | 
|          | 
|(4)(i)(e) | 
|          | 
|(4)(i)(f) | 
|          | 
|(31.1)    | 
|          | 
|(31.2)    | 
|          | 
|(32.1)    | 
|          | 
|(32.2)    | 



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Registrant agrees to furnish to the Commission on request copies of any instrument defining the rights of holders of
long-term debt the total amount of which does not exceed 10% of the total consolidated assets of the registrant and which is otherwise not filed as an exhibit.



b. Reports on Form 8-K



On July 11, 2003, we filed a Current Report on Form 8-K containing a press release announcing that two of our subsidiaries, Louisiana Unwired LLC and
Texas Unwired, filed suit in the U.S.



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District Court for the Western District of Louisiana, against Sprint Corporation, Sprint Spectrum, L.P.,
Wireless, L.P. and Sprintcom, Inc. (collectively, Sprint). The suit alleges violations of the Racketeer Influenced and Corrupt Organizations Act, breach of fiduciary duty and fraud, arising out of Sprints conduct in its dealings
with the plaintiff companies.



On August 7, 2003, we filed a
Current Report on Form 8-K containing a press release announcing the Companys earnings for the fiscal quarter ended June 30, 2003.



On August 14, 2003, we filed a Current Report on Form 8-K containing a transcript of the conference call to discuss the Companys second quarter 2003
earnings.



On September 17, 2003, we filed a Current Report on
Form 8-K containing a press release announcing the sale of certain non-core assets.



On October 10, 2003, we filed a Current Report on Form 8-K to include a presentation that US Unwired Inc. management gave on September 24, 2003.



On October 31, 2003, we filed a Current Report on Form 8-K containing a press release announcing that the Company had
reached agreement with its senior credit lenders to modify certain provisions of the US Unwired $170 million senior bank credit facility.



SIGNATURES



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



|November 11, 2003 |  | US UNWIRED INC.
|----------------- |  | ---------------
|                  |  |                
|                  |  | By:            
|                  |  |                



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