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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-K

[_]      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                                       or

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

         For the transition period from January 1, 2001 to September 30, 2001

                  Commission File Numbers: 333-47682, 333-47688

                                   iPCS, INC.
             (Exact name of registrant as specified in its charter)

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<S>                                                                              <C>
                             Delaware                                                         36-4350876
  (State or other jurisdiction of incorporation or organization)                 (I.R.S. Employer Identification No.)
</TABLE>

    Harris Tower, 233 Peachtree Street NE, Suite 1700, Atlanta, Georgia 30303
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (404) 525-7272

           Securities registered pursuant to Section 12(b) of the Act:
                                      None
                                      ----
                                (Title of Class)

           Securities registered pursuant to Section 12(g) of the Act:
                                      None
                                      ----
                                (Title of Class)

     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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     All outstanding shares of the registrant's common stock are owned by
AirGate PCS, Inc.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

     The registrant meets the conditions set forth in General Instruction
(I)(1)(a) and (b) of Form 10-K and is therefore filing this form with the
reduced disclosure format permitted thereby.

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                                   iPCS, INC.

                        2001 FORM 10-K TRANSITION REPORT

                                TABLE OF CONTENTS
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                                                                                                                    Page No.
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                                                           PART I
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Item 1          Business..........................................................................................         1
Item 2          Properties........................................................................................         9
Item 3          Legal Proceedings ................................................................................         9

                                                           PART II

Item 5          Market for Registrant's Common Equity and Related Stockholder Matters ............................         9
Item 6          Selected Financial Data ..........................................................................        10
Item 7          Management's Discussion and Analysis of Financial Condition and Results of Operations ............        11
Item 7A         Quantitative and Qualitative Disclosures About Market Risk .......................................        23
Item 8          Financial Statements and Supplementary Data ......................................................        24
Item 9          Changes In and Disagreements With Accountants on Accounting and Financial Disclosure .............        24

                                                           PART IV

Item 14         Exhibits, Financial Statement Schedules, and Reports on Form 8-K .................................        26
                Signatures .......................................................................................        31
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                                     PART I

ITEM 1       Business

         We are a Sprint PCS network partner with the exclusive right to market
and provide digital wireless personal communications services, or PCS, to a
service territory of approximately 7.4 million residents with network coverage
of approximately 5.1 million residents as of November 30, 2001. We are a wholly
owned subsidiary of AirGate PCS, Inc., which acquired us on November 30, 2001.
As required by the terms of our and AirGate's outstanding indebtedness, we
conduct our business as a separate entity from AirGate. Through our management
agreement with Sprint, we have the exclusive right to provide Sprint PCS
products and services under the Sprint and Sprint PCS brand names in our
territory. Sprint PCS, directly and indirectly through network partners such as
us, operates the largest all-digital, all-PCS nationwide wireless network in the
United States based on covered population, covering nearly 244 million residents
in more than 4,000 cities and communities across the United States, Puerto Rico
and the U.S. Virgin Islands.

         Our Sprint PCS territory covers 37 basic trading areas, referred to as
markets, containing a total population of approximately 7.4 million residents in
portions of:

         .        Illinois, including Peoria, Springfield, Champaign-Urbana,
                  Decatur-Effingham, Bloomington and the Quad Cities (Rock
                  Island and Moline, Illinois; and Davenport and Bettendorf,
                  Iowa);

         .        Michigan, including Grand Rapids, Saginaw-Bay City, Muskegon
                  and Traverse City;

         .        Iowa, including Cedar Rapids, Iowa City, Waterloo-Cedar Falls
                  and Dubuque; and

         .        eastern Nebraska.

         As of September 30, 2001, we had 134,927 subscribers and total network
coverage of approximately 5.1 million residents, representing approximately 68%
of the resident population in our markets. For the nine months ended September
30, 2001, we generated revenue of approximately $77.5 million.

Investment Considerations

Risks Related to Our Business, Strategy and Operations

  We have a limited operating history and we may not achieve or sustain
operating profitability or positive cash flows

    We have a limited operating history. Our ability to achieve and sustain
operating profitability will depend upon many factors, including our ability to
market Sprint PCS services and manage customer turnover rates. In addition, a
key factor in our operational performance depends upon our ability to manage our
growth through the completion of our network build-out and through implementing
the best practices of AirGate and iPCS to increase market penetration in our
current and future markets. We will require additional expenditures for the
continued development, construction, testing, deployment and operation of our
network. These activities are expected to place demands on our managerial,
operational and financial resources. If we do not achieve and maintain positive
cash flows from operations when projected, our results of operations may be
adversely affected.

   The integration of AirGate and iPCS following the merger will present
significant challenges that could adversely affect our results of operations

    AirGate acquired us with the expectation that it would result in expanding
AirGate's existing network and customer base and leveraging the best operating
practices of both organizations. Achieving the benefits of the merger with
AirGate will depend in part on integrating the operations of the two businesses
in an efficient and timely manner. We cannot assure you that this will occur. To
realize the anticipated benefits of this combination, our management team must
develop strategies and implement a business plan that will successfully:

    .   manage our networks and markets;

    .   maintain adequate focus on existing business and operations while
        working to integrate the two companies;

    .   combine two companies with limited operating histories;

    .   manage our company's cash and available credit lines for use in
        financing future growth and working capital needs of our company;

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    .   manage our marketing and sales;

    .   manage the transition of iPCS' senior management expertise to the
        combined company; and

    .   retain and attract key employees of the combined company during a period
        of transition.

    We cannot assure you that combining the businesses of AirGate and iPCS, even
if achieved in an efficient, effective and timely manner, will result in
combined results of operations and financial conditions superior to those that
we could have achieved independently. The diversion of management's attention
from ongoing operations and any difficulties encountered in the transition and
integration process could have a material adverse effect on our financial
condition and results of operations.

  Parts of our territory have limited amounts of licensed spectrum, which may
adversely affect the quality of our service and our results of operations

    Sprint has licenses covering 30 MHz of spectrum throughout most of our
territory, but it has licenses covering only 10 MHz or 20 MHz in parts of
Illinois. As the number of customers in our territory increases, this limited
amount of licensed spectrum may not be able to accommodate increases in call
volume, may lead to increased dropped calls and may limit our ability to offer
enhanced services, all of which could result in increased customer turnover and
adversely affect our results of operations.

   If we lose the right to install our equipment on certain wireless towers or
are unable to renew expiring leases or locate new sites for wireless towers on
favorable terms, our business and results of operations could be adversely
impacted.

     Many of our cell sites are co-located on leased tower facilities shared
with one or more wireless providers. In addition, a large portion of these
leased tower sites are owned by a few tower companies. If a master co-location
agreement with one of these tower companies were to terminate, or if one of
these tower companies were unable to support our use of its tower sites, we
would have to find new sites or we may be required to rebuild that portion of
our network. In addition, the concentration of our cell sites with a few tower
companies could adversely affect our results of operations if we are unable to
renew expiring leases with such tower companies on favorable terms.

   The loss of the officers and skilled employees who we depend upon to operate
our business could adversely affect our results of operations

     Our business is managed by a small number of executive officers. We believe
that our future success depends in part on our continued ability to attract and
retain highly qualified technical and management personnel. We may not be
successful in retaining our key personnel or in attracting and retaining other
highly qualified technical and management personnel. We currently have "key man"
life insurance for our President. We do not have long-term employment or change
of control agreements with any of our executive officers.

   Expanding our territory includes numerous risks and our failure to overcome
these risks and any other problems encountered may have a material adverse
effect on our business and reduce the market value of our securities

   As part of our continuing operating strategy, we may expand our territory
through the grant of additional markets from Sprint or through acquisitions of
other Sprint network partners. These transactions may require the approval of
Sprint and commonly involve a number of risks, including the:

    .   difficulty of assimilating 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, customers or vendors.

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     Failure to overcome these risks or any other problems encountered in these
transactions could have a material adverse effect on our business. In connection
with these transactions, we also may incur additional debt or incur significant
amortization expenses related to intangible assets.

  Because our former stockholders did not provide any indemnification following
the merger, we will be responsible for any of our undisclosed prior liabilities

     We made certain representations and warranties to AirGate in the merger
agreement concerning our business and operations. The merger agreement did not
provide AirGate with any contractual indemnification from our former
stockholders for any breaches of our representations and warranties or any
failure to comply with our obligations under the merger agreement. As a result,
we will be responsible for any of our undisclosed prior liabilities. Such
liabilities could materially impact our future consolidated results of
operations.

  We may experience a higher rate of customer turnover in the future compared to
historical rates which would adversely affect our financial performance

     The wireless personal communications services industry in general and
Sprint in particular have experienced a higher rate of customer turnover,
commonly known as churn, as compared to cellular industry averages. This churn
rate has been driven higher in recent months due to the introduction of NDASL
and Clear Pay programs. In addition, due to significant competition in our
industry and general economic conditions, among other things, our future rate of
customer turnover may be higher than our historical rate. Factors which may
contribute to higher churn include:

    .   our handset return policy that allows customers to return used handsets
        within 14 days of purchase and receive a full refund;

    .   the attractiveness of our competitors' products and services;

    .   network performance;

    .   customer service;

    .   increased prices;

    .   any future changes by us in the products and services we offer,
        especially to the Clear Pay program; and

    .   customer mix and credit class, including those related to the NDASL
        program and Clear Pay program.

     A high rate of customer turnover could adversely affect our competitive
position, liquidity, results of operations and our costs of, or losses incurred
in obtaining new subscribers, especially because we subsidize some of the costs
of initial purchases of handsets by customers.

  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 collect to reflect the expected loss on such accounts in the current
period. However, 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' 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.


                                       3

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Risks Particular to Our Indebtedness

  We have substantial debt that we may not be able to service; a failure to
service such debt may result in the lenders under such debt controlling our
assets

    Our substantial debt has a number of important consequences for our
operations and our investors, including the following:

    .   we have to dedicate a substantial portion of any cash flow from our
        operations to the payment of interest on, and principal of, our debt,
        which will reduce funds available for other purposes;

    .   we anticipate that we have sufficient resources to finance our currently
        projected business plan, but we may not be able to obtain additional
        financing if the assumptions underlying the business plan are not
        correct for unanticipated capital requirements, capital expenditures,
        working capital requirements and other corporate purposes;

    .   some of our debt, including financing under our 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; and

    .   due to the liens on substantially all of our assets and the pledges of
        stock of our existing and future subsidiaries that secure our senior
        debt and senior discount notes, lenders or holders of such senior
        discount notes may control our assets or the assets of our subsidiaries
        in the event of a default.

    Our ability to make payments on our debt will depend upon our future
operating performance which is subject to general economic and competitive
conditions and to financial, business and other factors, many of which we cannot
control. If the cash flow from our operating activities is insufficient, we may
take actions, such as delaying or reducing capital expenditures, attempting to
restructure or refinance our debt, selling assets or operations or seeking
additional equity capital. Any or all of these actions may not be sufficient to
allow us to service our debt obligations. Further, we may be unable to take any
of these actions on satisfactory terms, in a timely manner or at all. The credit
facility and indenture governing our debt will limit our ability to take
several of these actions. Our failure to generate sufficient funds to pay our
debts or to successfully undertake any of these actions could, among other
things, materially, adversely affect our results of operations.

If we do not meet all of the conditions required under our senior secured credit
facility, we may not be able to draw down all of the funds we anticipate
receiving from our senior lenders and we may not be able to fund operating
losses and working capital needs

    As of November 30, 2001, we had borrowed $50.0 million under our senior
secured credit facility. The remaining $90.0 million available under our senior
secured credit facility, a portion of which we expect to borrow in the future,
is subject to us meeting all of the conditions specified in our financing
documents. We recently completed an amendment to our senior secured credit
facility, primarily to provide additional relief under the minimum EBITDA
covenant, which we anticipated not meeting in future quarters. In addition,
additional borrowings are subject to specific conditions on each funding date,
including the following:

    .   that the representations and warranties in our loan documents are true
        and correct;

    .   that certain of our financial covenant tests are satisfied, including
        leverage and operating performance covenants and loss covenants relating
        to earnings before interest, taxes, depreciation and amortization; and

    .   the absence of a default under our loan documents.

    If we do not meet these conditions at each funding date, our senior lenders
may not lend some or all of the remaining amounts under our senior secured
credit facility. If other sources of funds are not available, we may not be in a
position to meet our operating cash needs.

  The ability of AirGate and iPCS to operate as a combined company is limited by
the separate public debt indentures and senior secured credit facilities of
AirGate and iPCS

    In order to assure continued compliance with the indenture governing
AirGate's senior subordinated discount notes, AirGate has designated us as an
"unrestricted subsidiary." As a result, for purposes of their respective public
debt indentures, AirGate and we will operate as separate business entities. Due
to restrictions in AirGate's indenture, AirGate will be unable to provide direct
or indirect credit support to us and will be significantly limited in its
ability to maintain or preserve our financial condition or cause us to achieve a
specified level of operating results. Likewise, we will be restricted under our
debt instruments from paying dividends or freely transferring money to AirGate.
These restrictions may hinder the combined company's ability to achieve the
anticipated benefits of the merger, react to developments in either company's
business or take advantage of business opportunities.

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  If we fail to pay the debt under our senior secured credit facility, Sprint
has the option of purchasing our loans, giving Sprint certain rights of a
creditor to foreclose on our assets

    Sprint has contractual rights, triggered by an acceleration of the maturity
of the debt under our senior secured credit facility, pursuant to which Sprint
may purchase our obligations to our senior lenders and obtain the rights of a
senior lender. To the extent Sprint purchases these obligations, Sprint's
interests as a creditor could conflict with our interests. Sprint's rights as a
senior lender would enable it to exercise rights with respect to our assets and
continuing relationship with Sprint in a manner not otherwise permitted under
our Sprint agreements.

 Risks Particular to Our Relationship with Sprint

  The termination of our affiliation with Sprint or Sprint's failure to perform
its obligations under the Sprint agreements would severely restrict our ability
to conduct our business

   We do not own the licenses to operate our wireless network. Our ability to
offer Sprint PCS products and operate a PCS network is dependent on our Sprint
agreements remaining in effect and not being terminated. The management
agreement between Sprint and us is not perpetual. Sprint can choose not to renew
our management agreement at the expiration of the 20-year initial term or any
ten-year renewal term. In any event, our management agreement terminates in 50
years. In addition, the management agreement can be terminated for breach of any
material term, including, among others, build-out and network operational
requirements. We have constructed and are currently in the testing phase for
four sites located in a portion of a market in Nebraska. Due to issues beyond
our control, these sites are not yet operational. We have received two
extensions of our December 1, 2001 build out requirements to February 28, 2002
from Sprint. We believe these sites will be operational by this date. We also
are dependent on Sprint's ability to perform its obligations under the Sprint
agreements. The non-renewal or termination of any of the Sprint agreements or
the failure of Sprint to perform its obligations under the Sprint agreements
would severely restrict our ability to conduct business.

   Sprint may make business decisions that are not in our best interests, which
may adversely affect our relationships with customers in our territory, increase
our expenses and/or decrease our revenues

    Sprint, under the Sprint agreements, has a substantial amount of control
over the conduct of our business. Accordingly, Sprint may make decisions that
adversely affect our business, such as the following:

    .   Sprint 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 our business;

    .   Sprint could develop products and services or establish credit policies,
        such as NDASL, which could adversely affect our results of operations;

    .   Sprint could raise the costs for Sprint to perform back office services
        or reduce levels of services;

    .   Sprint could prohibit us from selling non-Sprint approved equipment;

    .   Sprint could, subject to limitations under our Sprint agreements, alter
        its network and technical requirements or request that we build out
        additional areas within our territories, which could result in increased
        equipment and build-out costs;

    .   Sprint could make decisions which could adversely affect the Sprint and
        Sprint PCS brand names, products or services; and

    .   Sprint could decide not to renew the Sprint agreements or to no longer
        perform its obligations, which would severely restrict our ability to
        conduct business.

     The occurrence of any of the foregoing could adversely affect our
relationship with customers in our territory, increase our expenses and/or
decrease our revenues.

   Change in Sprint PCS products and services may reduce customer additions

    The competitiveness of Sprint PCS products and services is a key factor in
our ability to attract and retain customers. Under the Sprint PCS service plans,
customers 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
customers were required to make a deposit ranging from $125 to $200 that could
be credited against future billings. In May 2001, the deposit requirement was
eliminated on certain, but not all, credit classes ("NDASL"). As a result, a
significant amount of our new customer additions have been under the NDASL
program (32% of our customer base at September 30, 2001). Sprint has replaced
the NDASL program with the "Clear Pay" program without reinstating the deposit
requirement. Sprint PCS has the right to end or materially change the terms of
the Clear Pay program. If Sprint chooses to eliminate the Clear Pay program or
alter its features, the growth rate we

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expect to achieve may decrease. We have requested reinstatement of the deposit
for sub-prime customers in our territory, which could reduce the number of
potential customer.

  The inability of Sprint to maintain high quality back office services, or our
inability to use Sprint's back office services and third party vendors' back
office systems, could lead to customer dissatisfaction, increased churn or
otherwise increase our costs

    We rely on Sprint's support systems, including customer care, billing and
back office support. Our operations could be disrupted if Sprint 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.
The rapid expansion of Sprint's PCS business is expected to continue to pose a
significant challenge to its internal support systems. Additionally, Sprint 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. We will depend on Sprint's willingness to continue to
offer these services and to provide these services effectively and at
competitive costs. Our Sprint agreements provide that, upon nine months' prior
written notice, Sprint may elect to terminate any of these services. The
inability of Sprint to maintain high quality back office services, or our
inability to use Sprint's back office services and third party vendors' back
office systems, could lead to customer dissatisfaction, increase churn or
otherwise increase our costs.

  If Sprint does not complete the construction of its nationwide PCS network, we
may not be able to attract and retain customers

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

  Certain provisions of the Sprint agreements may diminish the value of our
company and restrict the sale of our business

    Under limited circumstances and without further stockholder approval, Sprint
may purchase the operating assets of our company at a discount. In addition,
Sprint must approve any change of control of our ownership and must consent to
any assignment of our Sprint agreements. Sprint also has a right of first
refusal if we decide to sell our operating assets to a third party. We are also
subject to a number of restrictions on the transfer of our business, including a
prohibition on the sale of us or our operating assets to competitors of Sprint
or Sprint PCS. These restrictions and other restrictions contained in the Sprint
agreements may limit our ability to sell our business, may reduce the value a
buyer would be willing to pay for our business and may reduce the "entire
business value," as described in our Sprint agreements.

  We may have difficulty in obtaining an adequate supply of certain handsets
from Sprint, which could adversely affect our results of operations

    We depend on our relationship with Sprint to obtain handsets. Sprint orders
handsets from various manufacturers. We could have difficulty obtaining specific
types of handsets in a timely manner if:

    .   Sprint does not adequately project the need for handsets for itself, its
        Sprint PCS network partners and its other third party distribution
        channels, particularly in a transition to new technologies, such as "one
        times radio transmission technology," or "1XRTT";

    .   we do not adequately project our need for handsets;

    .   Sprint modifies its handset logistics and delivery plan in a manner that
        restricts or delays our access to handsets; or

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

    The occurrence of any of the foregoing could disrupt our customer service
and/or result in a decrease in our subscribers, which could adversely affect our
results of operations.

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  Non-renewal or revocation by the Federal Communications Commission of the
Sprint PCS licenses would significantly harm our business

    PCS licenses are subject to renewal and revocation by the Federal
Communications Commissions, referred to as the FCC. Sprint PCS licenses in our
territories will begin to expire in 2007 but may be renewed for additional
ten-year terms. There may be opposition to renewal of Sprint's PCS licenses upon
their expiration, and the Sprint PCS licenses may not be renewed. The FCC has
adopted specific standards to apply to PCS license renewals. Any failure by
Sprint or us to comply with these standards could cause revocation or forfeiture
of the Sprint PCS licenses for our territories. If Sprint loses any of its
licenses in our territories, we would be severely restricted in our ability to
conduct business.

  If Sprint does not maintain control over its licensed spectrum, the Sprint
agreements may be terminated, which would result in our inability to provide
service

    The FCC requires that licensees like Sprint maintain control of their
licensed spectrum and not delegate control to third-party operators or managers.
Although the Sprint agreements with us 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 agreements need to be modified to increase the level of licensee control,
we have agreed with Sprint to use our best efforts to modify the Sprint
agreements to comply with applicable law. If we cannot agree with Sprint to
modify the Sprint agreements, they may be terminated. If the Sprint agreements
are terminated, we would no longer be a part of the Sprint PCS network and would
be severely restricted in our ability to conduct business.

Risks Particular to Our Industry

  Significant competition in the wireless communications services industry may
result in our competitors offering new or better products and services or lower
prices, which could prevent us from operating profitably

    Competition in the wireless communications industry is intense. We
anticipate that competition will cause the market prices for two-way wireless
products and services to decline in the future. Our ability to compete will
depend, in part, on our ability to anticipate and respond to various competitive
factors affecting the telecommunications industry.

    Our dependence on Sprint to develop competitive products and services and
the requirement that we obtain Sprint's consent to sell non-Sprint approved PCS
equipment may limit our ability to keep pace with competitors on the
introduction of new products, services and equipment. Some of our competitors
are larger than us, possess greater resources and more extensive coverage areas,
and may market other services, such as landline telephone service, cable
television and Internet access, with their wireless communications services.
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 we do. In addition, we may be at a competitive disadvantage since
we may be more highly leveraged than some of our competitors.

  Increased penetration rates could limit or decrease our rate of net additions

    Intense competition in the wireless communications industry could cause
prices for wireless products and services to decline. If prices drop, then our
rate of net customer additions will take on greater significance in improving
our financial condition and results of operations. However, as our markets
become more saturated with our and our competitor's customers, our rate in
adding net customers could decrease. If this decrease were to happen, our
business and financial results could be materially adversely affected.

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

    The wireless communications industry is experiencing significant
technological change, as evidenced by the increasing pace of digital upgrades in
existing analog wireless systems, 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 network to become obsolete. Sprint may not be
able to respond to such changes and implement new technology on a timely basis,
or at an acceptable cost.

    If Sprint 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 network or our business strategy may
become obsolete. In addition, wireless carriers are seeking to implement an
upgrade to "one times radio transmission technology", or "1XRTT", as well as
"third generation," or "3G," technology throughout the industry. The 3G
technology promises high-speed, always-on Internet connectivity and high-quality

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video and audio. We cannot assure you that we or Sprint PCS can implement
"1XRTT" or "3G" technology successfully or on a cost-effective basis.

  We are a consumer business and a recession in the United States involving
significantly lowered spending could negatively affect our results of operations

    Our primary customer base is individual consumers and our accounts
receivable represent unsecured credit. In the event that the economic downturn
that the United States and our territory have recently experienced becomes more
pronounced or lasts longer than currently expected and spending by individual
consumers drops significantly, our business may be negatively affected.

  Regulation by government and taxing agencies may increase our costs of
providing service or require us to change our services, either of which could
impair our financial performance

    Our operations and those of Sprint may be 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 regulation of these regulatory bodies could
negatively impact our operations and our 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 us to alter the structure of our current relationship
with Sprint.

  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

    Media reports 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 us to potential litigation. Any resulting
decrease in demand for wireless services, or costs of litigation and damage
awards, could impair our ability to achieve and sustain profitability.

  Regulation by government or potential litigation relating to the use of
wireless phones while driving could adversely affect our results of operations

    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 could also have material adverse
effects on our results of operations.

Risks Relating to our Senior Discount Notes

   Senior discount notes may not have an active market and the price may be
volatile, so our noteholders may be unable to sell their notes at the price they
desire or at all.

   We cannot ensure that a liquid market will develop for our senior discount
notes or that our noteholders will be able to sell any of their notes at a
particular time, if at all, or that the price that they receive when they sell
will be favorable. Future trading prices of the notes will depend on many
factors, including our operating performance and financial condition, prevailing
interest rates and the market for similar securities.

   We are a holding company and because the guarantees of our senior discount
notes are unsecured and subordinated to debt that encumbers our guarantor
subsidiaries' assets, the notes may not be fully repaid if we or our guarantor
subsidiaries become insolvent.

   The notes are unsecured obligations of ours. On November 30, 2001, we were
acquired by AirGate through the merger of a wholly owned subsidiary of AirGate
with us. As a result, we are now a wholly owned subsidiary of AirGate. The
assets of AirGate, however, are not available to meet our obligations with
respect to the notes. In addition, we are a holding company for operating
subsidiaries and derive all our operating income from our subsidiaries. We are
dependent on the earnings and cash flow of our subsidiaries to meet our
obligations with respect to the notes. If we or our guarantor subsidiaries
become insolvent, we or our guarantor subsidiaries may not have sufficient
assets to make payments on amounts due on any or all of the notes or the
subsidiary guarantees. In addition, the right to payment on the guarantees will
be subordinated to all of our guarantor subsidiaries' existing and future senior
debt. The senior secured credit facility is secured by liens on substantially
all of the assets of our guarantor subsidiaries. If our guarantor subsidiaries
were to default on the senior secured credit facility, such lenders could
foreclose on the collateral regardless of any default with respect to the notes.
These assets would first be used to repay in full all amounts outstanding under
the senior secured credit facility. If our guarantor subsidiaries become
bankrupt, liquidate, dissolve, reorganize or undergo a similar proceeding, such
guarantor subsidiaries' assets will be available to pay obligations on the notes
or the applicable guarantee only after all outstanding senior debt of such party
has been paid in full. In addition, an event of default under the senior secured
credit facility may prohibit us and the guarantors of the notes from paying the
notes or the guarantees of the notes.

   Our agreements with Sprint and the infrastructure equipment used in our
network create the value of our assets. These assets are highly specialized
and, taken individually, have limited marketability, particularly as a result
of some of the provisions in the Sprint agreements. Therefore, in a
foreclosure sale, these assets are likely to be sold as an entirety, and the
lender may not realize enough money to satisfy all senior debt.

  Because federal and state statutes may allow courts to void the guarantees of
the notes, our noteholders may not have the right to receive any money pursuant
to the guarantees.

   Although the guarantees of the notes provide our noteholders with a direct
claim against the assets of the applicable guarantor, they are subordinate to
claims under our senior secured credit facility secured by a first priority
security interest in substantially all of our assets. In addition, creditors of
a bankrupt guarantor may challenge the guarantee. If a challenge to a guarantee
were upheld, then the applicable guarantee would be invalid and unenforceable,
junior to all creditors, including trade creditors, of that guarantor.

   The creditors of a bankrupt guarantor could challenge a guarantee on the
grounds that the guarantee constituted a fraudulent conveyance under bankruptcy
law. If a court were to rule that the guarantee did constitute a fraudulent
conveyance, then the court could void the obligations under the guarantee or
further subordinate the guarantee to other debt of the guarantor or take other
action detrimental to holders of the notes. In addition, any of the guarantees
could be subject to the claim that, since the guarantee was incurred for our
benefit, and only indirectly for the benefit of our subsidiary that provided
the guarantee, the obligations of the applicable guarantor were incurred for
less than fair consideration.

  The indenture and the senior secured credit facility contain provisions and
requirements that could limit our ability to pursue borrowing opportunities.

   The restrictions contained in the indenture governing our senior discount
notes, and the restrictions contained in our senior secured credit facility, may
limit our ability to implement our business plan, finance future operations,
respond to changing business and economic conditions, secure additional
financing, if needed, and engage in opportunistic transactions. The senior
secured credit facility also restricts our ability and the ability of our
subsidiaries and our future subsidiaries to do the following:

   . create liens;

   . make certain payments, including payments of dividends and distributions
     in respect of capital stock;

   . consolidate, merge and sell assets;

   . engage in certain transactions with affiliates; and

   . fundamentally change our business.

In addition, our senior secured credit facility requires us to maintain certain
ratios, including:

   . leverage ratios;

   . an interest coverage ratio; and

   . a fixed charges ratio;

and to satisfy certain tests, including tests relating to:

   . minimum number of subscribers to our services; and

   . minimum revenues.

   We may not satisfy the financial ratios and tests under the senior secured
credit facility due to events that are beyond our control. If we fail to
satisfy any of the financial ratios and tests, we could be in a default under
the senior secured credit facility or may be limited in our ability to access
additional funds under our senior secured credit facility which could result in
our being unable to make payments on the notes.

  Because the notes were issued with original issue discount, our noteholders
will have to include interest in their taxable income before they receive cash.

   The notes were issued at a substantial discount from their principal amount
at maturity. Consequently, although cash interest on the notes generally is not
payable prior to January 15, 2006, original issue discount will be includible
in the gross income of holders of notes for U.S. federal income tax purposes in
advance of the receipt of such cash payments on the notes. The amount of
original issue discount will be greater than the difference between the stated
principal amount at maturity of the notes and the issue price of the notes.

  We will not be able to deduct a portion of our borrowing expense for federal
income tax purposes because the original issue discount on the notes exceeds
certain limitations.

  The notes are classified as "applicable high yield discount obligations" for
United States federal income tax purposes. We will not be entitled to deduct
original issue discount accruing on the notes until such amounts are actually
paid. In addition, because the yield to maturity of the notes is in excess of
the sum of the applicable federal rate plus six percentage points, we are
permanently precluded from deducting the original issue discount equal to such
excess.

  The bankruptcy laws may reduce our noteholders claim in the event of our
insolvency.

   If a bankruptcy case were commenced by or against us under the United States
Bankruptcy Code, a claim with respect to the principal amount of the notes may
be limited to an amount equal to the sum of the initial offering price and that
portion of the original issue discount that is not deemed to constitute
unmatured interest for purposes of the United States Bankruptcy Code. Any
original issue discount that had not amortized as of the date of the bankruptcy
filing could constitute unmatured interest for purposes of the United States
Bankruptcy Code. To the extent that the United States Bankruptcy Code differs
from the Internal Revenue Code of 1986, as amended, in determining the method of
amortization of original issue discount, our noteholders may recognize taxable
gain or loss upon payment of their claim in bankruptcy.

  If an event constituting a change in control of us occurs, we may be unable
to fulfill our obligation to purchase the notes.

   Our senior secured credit facility restricts distributions to us from our
subsidiaries and we may not have other sources of funds to purchase any of the
notes before their stated maturity. In addition, the senior secured credit
facility prohibits us from prepaying debt, including the notes. Under the
indenture, upon a change in control we will be required to make an offer to
repurchase all of the notes. Our merger with AirGate did not constitute a
change of control under the indenture. In the event we become subject to a
change in control at a time when we do not have funds to purchase the notes or
when any such prepayment would otherwise not be permitted, we may seek consent
under the senior secured credit facility to have our subsidiary make a
distribution to us so that we would have sufficient funds to purchase the notes
and consent to make the prepayment or attempt to refinance the senior secured
credit facility that contains the prohibition. Moreover, a change of control
under the indenture governing the notes constitutes an event of default under
the senior secured credit facility. If we do not obtain a consent, a waiver or
repay the senior secured credit facility, our failure to purchase the tendered
notes would constitute an event of default under the indenture, which would in
turn result in a default under the senior secured credit facility. Even if we
obtain the consent, we cannot be assured that we will have sufficient resources
to repurchase the notes following the change in control.


                                        8

<PAGE>

ITEM 2       Properties

         Corporate offices. Our principal executive office consists of a 19,000
square foot leased office space located in Atlanta, Georgia. We also lease a
6,200 square foot office space located in Schaumburg, Illinois.

         Sprint PCS stores. We lease space for 17 Sprint PCS retail stores in
our territory.

         Switching Centers.  We have three leased switching centers in various
locations in our territory.

         Cell Sites  We lease space on approximately 380 operational cell site
towers and own approximately 70 operational tower sites. We co-locate on
approximately 85% of our cell sites in our markets. We believe that our
facilities are in good operating condition and are currently suitable and
adequate for our business operations.

ITEM 3       Legal Proceedings

         We are not aware of any pending legal proceedings against us which,
individually or in the aggregate, if adversely determined, would have a material
adverse effect on our financial condition or results of operations.

                                     PART II

ITEM 5       Market for Registrant's Common Equity and Related Stockholder
             Matters

         AirGate owns all of the outstanding shares of our common stock. There
is no established public trading market for our common stock.

         Payment of cash dividends is restricted under the instruments governing
our indebtedness. We have not paid cash dividends and do not anticipate paying
any cash dividends in the foreseeable future.

                                        9

<PAGE>

ITEM 6          Selected Financial Data

                             SELECTED FINANCIAL DATA

         The statement of operations and balance sheet data presented below are
derived from our audited consolidated financial statements as of and for the
period from January 22, 1999 (date of inception) through December 31, 1999, as
of and for the year ended December 31, 2000, and as of and for the nine months
ended September 30, 2000 and for the nine months ended and September 30, 2001.

         The data set forth below should be read in conjunction with our
consolidated financial statements and accompanying notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Form 10-K.

<TABLE>
<CAPTION>
                                                                         For the
                                                                       Period from
                                                                     January 22, 1999                        For the Nine
                                                                         (date of        For the Year        Months Ended
                                                                        inception)           Ended           September 30,
                                                                         through         December 31,    ---------------------
                                                                     December 31, 1999       2000           2000        2001
                                                                    -------------------  --------------  ---------    --------
                                                                       (In thousands, except per share and subscriber data)
<S>                                                                 <C>                  <C>             <C>          <C>
Statement of Operations Data:
Revenues
    Service revenue .............................................       $      71         $   18,534     $   9,914    $  71,834
    Equipment and other revenue .................................             144              2,695         1,700        5,678
                                                                        ---------         ----------     ---------    ---------

        Total revenues                                                        215             21,229        11,614       77,512
Operating expenses:
    Cost of service and roaming .................................          (1,695)           (16,786)       (9,812)     (60,496)
    Cost of equipment ...........................................            (484)           (10,053)       (4,977)     (18,292)
    Selling and marketing .......................................            (778)           (10,783)       (4,960)     (20,845)
    General and administrative ..................................          (1,520)            (9,319)       (4,694)      (8,635)
    Taxes on non-cash compensation ..............................              --             (1,567)       (1,567)          --
    Non-cash stock option compensation ..........................              --            (11,212)      (10,686)      (1,530)
    Depreciation and amortization ...............................            (381)            (8,609)       (5,549)     (15,385)
                                                                        ---------         ----------     ---------    ---------

        Total operating expenses ................................          (4,858)           (68,329)      (42,245)    (125,183)
                                                                        ---------         ----------     ---------    ---------

        Operating loss ..........................................          (4,643)           (47,100)      (30,631)     (47,671)
Interest income (expense), net ..................................              89             (8,298)       (4,310)     (13,458)
Other income ....................................................             174                726           424          470
                                                                        ---------         ----------     ---------    ---------
Loss before extraordinary item ..................................          (4,380)           (54,672)      (34,517)     (60,659)
Extraordinary item--loss on early extinguishment of debt ........              --             (1,485)       (1,485)          --
                                                                        ---------         ----------     ---------    ---------
        Net loss ................................................       $  (4,380)        $  (56,157)    $ (36,002)   $ (60,659)
                                                                        =========         ==========     =========    =========

Loss before extraordinary item ..................................       $  (4,380)        $  (54,672)      (34,517)   $ (60,659)
Beneficial conversion feature related to redeemable
   preferred stock ..............................................              --            (46,387)      (46,387)          --
Dividends and accretion on redeemable preferred stock ...........              --             (1,963)         (881)      (7,468)
                                                                        ---------         ----------     ---------    ---------

        Loss available to common stockholders ...................          (4,380)          (103,022)      (81,785)     (68,127)
Extraordinary Item ..............................................              --             (1,485)       (1,485)          --
                                                                        ---------         ----------     ---------    ---------

        Net loss available to common stockholders ...............       $  (4,380)        $ (104,507)    $ (83,270)   $ (68,127)
                                                                        ---------         ----------     ---------    ---------

Basic and diluted net loss per share of common stock ............       $   (0.10)        $    (2.33)    $   (1.86)   $   (1.52)
                                                                        ---------         ----------     ---------    ---------

Other Data:
Number of subscribers at end of period ..........................           1,981             46,773        25,150      134,927
</TABLE>

<TABLE>
<CAPTION>
                                                                                                 As of                As of
                                                                                              December 31,          September 30,
                                                                                          ---------------------
                                                                                            1999        2000           2001
                                                                                          --------   ----------   --------------
                                                                                                     (In thousands)
<S>                                                                                     <C>          <C>         <C>
Balance Sheet Data:
Cash and cash equivalents .......................................                         $   2,733   $165,958      $   54,579
Property and equipment, net .....................................                            39,106    129,087         198,161
Total assets ....................................................                            44,843    328,575         328,756
Long-term debt and accrued interest .............................                            27,571    163,800         208,336
Redeemable preferred stock ......................................                                --    114,080         121,548
Total stockholders' equity (deficit) ............................                             9,120     12,718         (53,879)
</TABLE>

                                       10

<PAGE>

ITEM 7          Management's Discussion and Analysis of Financial Condition and
                Results of Operations

Forward-Looking Statements

     Statements contained herein regarding expected financial results and other
planned events, including but not limited to, anticipated liquidity, churn
rates, ARPU (as defined below), decreases in roaming rates, EBITDA (as defined
below), capital expenditures and other statements that include words such as
"anticipate," "believe," "estimate," "expect," "intend," "plan," "seek," and
similar expressions are forward-looking statements that involve risk and
uncertainties. Actual future events or results may differ materially from these
statements. Readers are referred to the documents filed by us with the
Securities and Exchange Commission, specifically the most recent filings which
identify important risk factors that could cause actual results to differ from
those contained in the forward-looking statements, including:

         . the ability to successfully integrate the businesses of AirGate and
           iPCS;
         . the competitiveness and impact of Sprint PCS' pricing plans,
           products and services;
         . customer quality;
         . the ability of Sprint to provide back office, customer care and
           other services;
         . customer purchasing patterns;
         . potential fluctuations in quarterly results;
         . an adequate supply of infrastructure and subscriber equipment;
         . risks related to future growth and expansion;
         . rates of penetration in the wireless industry;
         . the potential need for additional sources of liquidity;
         . anticipated future losses;
         . our significant level of indebtedness;
         . adequacy of bad debt and other reserves; and
         . the potential to experience a high rate of customer turnover.

     These and other applicable risks are summarized under the captions
"Factors That May Affect Operating Results and Liquidity" included in this
Item 7 - Management's Discussion and Analysis of Financial Condition and Result
of Operations" of this Form 10-K and "Investment Considerations" included under
Item 1 - Business of this Form 10-K and elsewhere in this report.

Overview

     On January 22, 1999, we entered into a management agreement with Sprint
whereby we became the Sprint PCS network partner with the right to provide 100%
digital, 100% PCS products and services under the Sprint and Sprint PCS brand
names in fifteen markets in Illinois and Iowa. The Sprint agreements were
amended in March 2000 to add twenty additional markets and on February 28, 2001,
to add the Iowa City and Cedar Rapids, Iowa markets to our territory. With these
two amendments, the size of our territory was increased from a total population
of 2.8 million residents to a total population of 7.4 million residents.

     We are a wholly owned subsidiary of AirGate PCS, Inc., which acquired us on
November 30, 2001. As required by the terms of our and AirGate's outstanding
indebtedness, we conduct our business as a separate entity from AirGate.

     Under the Sprint agreements, we manage our network utilizing Sprint PCS'
licensed spectrum as well as using the Sprint and Sprint PCS brand names during
our PCS affiliation with Sprint. We benefit from Sprint's volume pricing
discounts for our purchases of network equipment, handsets and accessories.
These discounts reduce the overall capital required to build our network and
significantly reduce our costs of handsets and accessories. Additionally, we
have access to Sprint PCS' national marketing support and distribution programs.
Sprint collects all revenues from our customers and remits the net amount to us.
An affiliation fee of 8% of collected service revenues from Sprint PCS customers
based in our territory, excluding outbound roaming, and from non-Sprint PCS
customers who roam onto our network, is retained by Sprint PCS and recorded as a
cost of service. Revenues generated from the sale of handsets and accessories,
inbound and outbound Sprint PCS roaming fees, and from roaming services provided
to Sprint PCS customers who are not based in our territory are not subject to
the 8% affiliation fee.

     Under the Sprint agreements, we contract with Sprint to provide back office
services such as customer activation, billing, collections and customer care. We
currently purchase these services from Sprint to take advantage of Sprint's
economies of scale, to accelerate our build-out and market launches and to lower
our initial capital requirements. The cost for these services is primarily
calculated on a per customer and per transaction basis and is recorded as an
operating expense.

     Since the date of inception, we have incurred substantial costs to
negotiate the Sprint agreements and our debt and equity financing, to design,
engineer and build-out our network in our initial territory and to open our
retail stores. We launched service in our first two markets in December 1999,
and in 2000 we launched service in sixteen additional markets. In the nine
months ended September 30, 2001, we launched service in eleven markets,
including two markets previously launched by Sprint. By February 28, 2002, we
anticipate launching our remaining eight markets in Nebraska and Iowa, at which
time we will provide service in each of our markets.

                                       11

<PAGE>

     The following table sets forth the location, megahertz of spectrum,
estimated population, and date of actual or expected launch of commercial Sprint
PCS service in each of the markets that comprise our territory.

     The number of our customers in each of our launched markets varies based
upon the total population of the market, how long the markets have been
launched, and the extent and success of our marketing efforts to date in such
markets. Our Sprint agreements require us to cover a minimum percentage of
the resident population in our territory within specified time periods. Our
expected commercial launch of network coverage is scheduled to occur prior to
launch dates required by our Sprint agreements.

<TABLE>
<CAPTION>
           iPCS Basic                  MHz      Population (1)       Market Launch
         Trading Areas                                                  Date (2)
<S>                                  <C>       <C>                  <C>
Grand Rapids, MI                       30             1,060,600         November 2000
Saginaw-Bay City, MI                   30               634,100         November 2000
Peoria, IL                             10               464,600            March 2000
Davenport, IA and Moline, IL           30               430,500         December 1999
Cedar Rapids, IA (3)                   30               285,700            March 2001
Springfield, IL                        10               267,200         February 2000
Waterloo-Cedar Falls, IA               30               259,600            March 2001
Omaha (Partial), NE (4)                30               248,800         February 2002
Decatur-Effingham, IL                  10               247,600             June 2000
Traverse City, MI                      30               241,000              May 2001
Bloomington, IL                        10               234,100         December 1999
Muskegon, MI                           30               223,100         November 2000
Champaign-Urbana, IL                   10               221,100             June 2000
Dubuque, IA                            30               177,800            March 2001
Des Moines, IA (Partial) (4)           30               170,900         December 2001
LaSalle-Peru-Ottawa-Streator, IL       20               152,300             June 2000
Grand Island-Kearney, NE               30               147,100         February 2002
Clinton, IA and Sterling, IL           30               146,600        September 2000
Burlington, IA                         30               136,400             June 2001
Kankakee, IL                           20               135,600             June 2000
Mount Pleasant, MI                     30               130,700             June 2001
Fort Dodge, IA                         30               126,400         December 2001
Iowa City, IA (3)                      30               125,400            March 2001
Ottumwa, IA                            30               123,400             June 2001
Mount Vernon-Centralia, IL             30               121,900        September 2000
Mason City, IA                         30               115,500         December 2001
Danville, IL                           20               110,700        September 2000
Norfolk, NE                            30               110,600         February 2002
Lincoln, NE (Partial) (4)              30                98,300         February 2002
Galesburg, IL                          10                73,500             June 2000
Hastings, NE                           30                71,700         February 2002
Jacksonville, IL                       10                70,500        September 2000
Mattoon, IL                            10                62,600        September 2000
Lansing, MI (Partial) (4)              30                61,900            March 2001
Marshalltown, IA                       30                56,600        September 2001
Battle Creek, MI (Partial) (4)         30                54,600            March 2001
St. Louis, MO (Partial) (4)            30                46,700         February 2000
                                                      ---------
Total                                                 7,445,700
                                                      =========
</TABLE>

----------------------------
(1) Based on 2000 estimates compiled by Kagan's Wireless Telecom Atlas &
Databook, 2001 Edition, as reported per individual basic trading area.

(2) Expected commercial launch dates for these markets may change based on a
number of factors, including shifts in populations, target markets or network
focus, changes or advances in technology, acquisition of other markets and
delays in network build-out.

(3) These markets represent the Iowa option territory acquired by us on February
28, 2001, which markets were previously launched by Sprint PCS in February 1997.

(4) Territory covered by our Sprint PCS management agreements do not comprise a
complete basic trading area.

                                       12

<PAGE>

     On August 28, 2001, we signed an agreement and plan of merger with AirGate,
a Sprint PCS network partner, pursuant to which we combined in a tax-free stock
for stock transaction on November 30, 2001. In connection with the merger
AirGate issued approximately 12.4 million shares of AirGate common stock and
assumed options and warrants to purchase approximately 1.1 million shares of
AirGate common stock. At the effective time of the merger, each issued and
outstanding share of our common stock was converted into the right to receive
approximately 0.1594 of a share of AirGate common stock, referred to as the
exchange ratio. All shares of our preferred stock were converted into our common
stock immediately prior to the effective time of the merger. At the effective
time of the merger, AirGate assumed each unexpired and unexercised option and
warrant to purchase shares of our common stock and converted it into an option
or warrant to purchase AirGate common stock based on one share of our common
stock equal to the exchange ratio of AirGate's common stock. In addition, the
exercise price per share of AirGate common stock issuable under each converted
option or converted warrant is equal to the per share exercise price of our
option or warrant divided by the exchange ratio. The options became fully vested
at the time of the merger and the warrants will remain subject to the terms and
conditions set forth in the applicable warrant agreement. The costs that we
expect to incur in connection with our merger with AirGate are estimated to be
approximately $18.0 million, of which approximately $16.7 million were accrued
and expensed prior to the closing of the merger on November 30, 2001.

Significant Accounting Policies

     We rely on the use of estimates and make assumptions that impact our
financial condition and results. These estimates and assumptions are based on
historical results and trends as well as our forecasts as to how these might
change in the future. Some of the most critical accounting policies that might
materially impact our results include:

         Valuation of Accounts Receivable and Inventories:

     Reserve for Doubtful Accounts - Estimates are used in determining our
allowance for bad debts and are based on our historical collection experience,
current trends, credit policy and a percentage of our accounts receivable by
aging category. In determining these percentages, we look at historical
write-offs of our receivables and our history is limited. We also look at
current trends in the credit quality of our customer base as well as changes in
the credit policies. Under Sprint PCS service plans, customers 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 customers were required to make a
deposit ranging from $125 to $200 that could be credited against future
billings. In May 2001, the deposit requirement was eliminated on certain, but
not all, credit classes ("NDASL"). As a result, a significant amount of our new
customer additions have been under the NDASL program. The NDASL program has been
replaced by the "Clear Pay" program which reinstated the deposit requirement for
the lowest credit class and features increased back office controls with respect
to collection efforts. We anticipate the implementation of the deposit for all
new sub-prime customers on the Clear Pay program by the end of February and we
believe that this policy will reduce our future bad debt exposure. If the
deposit is not reimplemented or these estimates are insufficient for any reason,
our operating income, EBITDA and available cash would be reduced.

     Reserve for Obsolete/Excess Inventory - We currently record a reserve for
obsolete or excess handset inventory for models that are no longer manufactured.
With the migration to a 1XRTT network, we will need to continue to monitor the
depletion of our current inventory levels. If we do not deplete the inventory
that is not capable of providing 1XRTT services prior to our complete rollout of
1XRTT, we may have to record a reserve for any remaining obsolete or excess
inventory due to lower realizable retail prices on those handsets. If the
estimate for obsolete or excess inventory is understated, operating income, and
EBITDA would be reduced.

Revenue Recognition

     We record equipment revenue for the sale of handsets and accessories to
customers in our retail stores and to local resellers in our territories. We do
not record equipment revenue on handsets and accessories purchased by our
customers from national resellers or directly from Sprint. Our customers pay an
activation fee when they initiate service. We defer this activation fee and
record activation fee revenue over the average life of our customers which we
estimate to be 30 months. We recognize revenue from our customers as they use
the service. Additionally, we provide a reduction of recorded revenue for
billing adjustments and billing corrections.

Goodwill and Intangibles

     Purchase accounting requires extensive use of accounting estimates and
judgments to allocate the purchase price to the fair market value of the assets
and liabilities purchased. In our recording of the purchase of additional
markets from Sprint, values were assigned to an intangible asset for the right
to be the exclusive provider of Sprint PCS services in the additional twenty-two
markets in Michigan, Iowa, and Nebraska. Finite useful lives were assigned to
these intangibles and they will be

                                       13

<PAGE>

amortized over their remaining life. As with any intangible assets, future write
downs may be required if the value of these assets becomes impaired.

Results of Operations

For the nine months ended September 30, 2001 compared to the twelve months ended
December 31, 2000:

      Terms such as customer additions, average revenue per user, churn and cost
per gross addition are metrics used in the wireless telecommunications industry.
None of these terms are measures of financial performance under generally
accepted accounting principles in the United States.

     Customer Additions

         As of September 30, 2001, we provided personal communication services
to 134,927 customers compared to 46,773 customers as of December 31, 2000, an
increase of 88,154 customers. The increased net customers acquired during the
nine months ended September 30, 2001 are attributable to having more of our
markets launched during that period, new customers attracted from other wireless
carriers and increased demand for wireless services in the United States.

     Average Revenues Per User

         An important operating metric in the wireless industry is average
revenue per user (ARPU). ARPU summarizes the average monthly service revenue per
customer. ARPU is computed by dividing service revenue by the average customer
base for the period (computed based upon monthly customer counts). For the nine
months ended September 30, 2001, ARPU was $56. For the twelve months ended
December 31, 2000, ARPU was $55.

     Churn

         Churn is the monthly rate of customer turnover expressed as a
percentage of the average customer base. Churn is computed by dividing the
number of customers, net of thirty-day returns, that both voluntarily and
involuntarily discontinued service during the month, by the average customer
base. Churn for the nine months ended September 30, 2001 was 2.3% compared to
2.1% for the year ended December 31, 2000. The increase in churn is the result
of an increase in the number of sub-prime credit quality customers the company
added whose service was involuntarily discontinued during the period.

     Cost Per Gross Addition

         Cost per gross addition (CPGA) is the average cost to acquire new
customers during the period. CPGA is computed by adding the income statement
components of selling and marketing, cost of equipment and activation costs
(which are included as a component of cost of service) and reducing that amount
by equipment revenue. This total is divided by the total new customers acquired
during the period. CPGA was $328 for the nine months ended September 30, 2001
compared to $360 for the twelve months ended December 31, 2000. The increase in
total new customers added in the nine months ended September 30, 2001 compared
to the twelve months ended December 31, 2000 spread the fixed costs of selling
including store costs and advertising, over a greater number of customers.

     Revenues

         For the nine months ended September 30, 2001, service revenue and
equipment revenue were $71.8 million and $5.7 million, respectively, compared to
$18.5 million and $2.7 million, respectively, for the year ended December 31,
2000, an increase of $53.3 million and $3.0 million, respectively. The increase
is attributable primarily to the launch of additional markets and a larger
customer base. Service revenue consists of monthly recurring access and feature
charges and monthly non-recurring charges for local, long distance and roaming
airtime usage in excess of the pre-subscribed usage plan. Equipment revenue is
derived from the sale of handsets and accessories from our Sprint PCS stores,
net of sales incentives, rebates and an allowance for returns. Our handset
return policy allows customers to return their handsets for a full refund within
14 days of purchase. When handsets are returned to us, we may be able to reissue
the handsets to customers at little additional cost to us. However, when
handsets are returned to Sprint PCS for refurbishing, we receive a credit from
Sprint PCS, which is less than the amount we originally paid for the handset.

         Included in service revenue was roaming revenue of $25.3 million for
the nine months ended September 30, 2001, compared to $7.5 million for the year
ended December 31, 2000, an increase of $17.8 million. The increase is
attributable to greater network build-out in our territory and a larger customer
base for Sprint and its other network partners. We receive

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Sprint PCS roaming revenue at a per-minute rate from Sprint or another Sprint
PCS network partner when Sprint PCS customers outside of our territory use our
network. We have an agreement with Sprint PCS that fixed this per minute
reciprocal rate at $0.20 through December 31, 2001. On April 27, 2001, we and
Sprint announced that we had reached an agreement in principle to reduce the
reciprocal roaming rate exchanged between Sprint and us for customers who roam
into the other party's, or another network partner's, territory. This agreement
did not impact us prior to January 1, 2002. Under the agreement in principle,
the roaming rate with respect to calendar year 2002 will not be less than $0.10
per minute. For calendar year 2003 and beyond, the details of the agreement in
principle have not yet been finalized. Depending on the details of the final
agreement, the reciprocal roaming rate may be significantly less than the rate
charged in 2002. The reduction in revenues from any rate decrease will be
partially offset by a lower cost of roaming expense.

     Cost of Service and Roaming

         The cost of service and roaming was $60.5 million for the nine months
ended September 30, 2001, compared to $16.8 million for the year ended December
31, 2000, an increase of $43.7 million. Cost of service and roaming includes all
customer support costs, such as roaming expense when customers from our
territory place calls on Sprint PCS' network or other wireless networks, network
operating costs (including salaries, cell site lease payments, fees related to
the connection of our switches to the cell sites that they support,
inter-connect fees and other expenses related to network operations), back
office services provided by Sprint such as customer care, billing and
activation, the 8% of collected service revenue representing the Sprint
affiliation fee, the provision for doubtful accounts and long distance expense
relating to inbound roaming revenue and the long distance cost of customers in
our territory. The increase in cost of service is due to an increased customer
base and a larger in-service network.

         Roaming expense included in the cost of service and roaming was $19.7
million during the nine month period ended September 30, 2001, compared to $3.7
million for the year ended December 31, 2000, an increase of $16.0 million
resulting from the substantial increase in our customer base. The Sprint
affiliation fee for the nine months ended September 30, 2001 totaled $3.8
million, compared to $0.9 million for the year ended December 31, 2000, a $2.9
million increase related to the growth in service revenues.

         At September 30, 2001, our network consisted of 451 active cell sites
and two active switches compared to 238 active cell sites and one switch at
December 31, 2000. There were approximately 55 employees performing network
operations functions at September 30, 2001, compared to 30 employees at December
31, 2000.

     Cost of Equipment

         Cost of equipment was $18.3 million for the nine months ended September
30, 2001, and $10.1 million for the year ended December 31, 2000, an increase of
$8.2 million. The increase in cost of equipment, which includes the cost of
handsets, accessories and handset subsidies, was due substantially to the
increase in new customer additions from our launched markets. Because we
subsidize the price of handsets for competitive reasons, we expect and have
budgeted for the cost of handsets to continue to exceed the retail sales price
for the foreseeable future.

     Selling

         We incurred selling expenses of $20.8 million during the nine months
ended September 30, 2001, compared to $10.8 million for the year ended December
31, 2000, an increase of $10.0 million. These amounts included advertising and
promotional costs, salaries and sales commissions and expenses related to our
distribution channels. The increase in costs as compared to the year ended
December 31, 2000 is due substantially to the launching of nine markets and to
the addition to our territory of two markets previously launched by Sprint.
At September 30, 2001, there were approximately 172 employees performing sales
and marketing functions, compared to 105 employees at December 31, 2000. A net
88,154 customers were added in the nine months ended September 30, 2001,
compared to 44,792 net customers added in the year ended December 31, 2000.

     General and Administrative

         For the nine months ended September 30, 2001, we incurred general and
administrative expenses of $10.2 million, compared to $22.1 million for the year
ended December 31, 2000, a decrease of $11.9 million. Included in general and
administrative costs are administrative salaries and bonuses, employee benefit
costs, legal fees, insurance expense and other professional service fees. Also
included for the nine months ended September 30, 2001 are $2.4 million of merger
related expenses and non-cash compensation expense of approximately $1.5 million
related to the amortization of the deferred compensation expense associated with
the stock options granted in July 2000. During the year ended December 31, 2000,
we recorded a one-time charge of approximately $10.1 million for the issuance of
a 1.5% ownership interest to our then President and Chief Executive Officer
based on an expected initial public offering price. Included in this charge was
approximately $8.5 million of non-cash compensation expense and approximately
$1.6 million of payroll taxes paid in connection with the issuance of this 1.5%
ownership interest. In addition, we recorded $2.7 million of non-cash
compensation related to the amortization of deferred

                                       15

<PAGE>

compensation expense associated with the stock options granted in July 2000. In
addition, we recorded approximately $1.3 million of expenses related to a
planned initial public offering of stock that did not occur in 2000. The
remaining fluctuation in general and administrative expenses from the first nine
months of 2001 compared to the year ended December 31, 2000 is due to an
increase in personnel and other corporate infrastructure associated with our
growth.

     Depreciation and Amortization

         For the nine months ended September 30, 2001, depreciation and
amortization expense increased to $15.4 million, compared to approximately $8.6
million for the year ended December 31, 2000, an increase of $6.8 million. The
increase in depreciation and amortization expense is due to assets placed in
service for eleven additional markets since December 31, 2000. We incurred
capital expenditures of $98.4 million in the nine months ended September 30,
2001, compared to capital expenditures of $91.0 million for the year ended
December 31, 2000.

     Interest Income

         For the nine months ended September 30, 2001, interest income was $3.5
million compared to $3.4 million for the year ended December 31, 2000, an
increase of $0.1 million. Interest income increased due to the investment of the
proceeds from the senior discount notes received in July 2000, the proceeds from
the sale of Series A-1 and Series A-2 convertible preferred stock in July and
December 2000, respectively, and the proceeds from our borrowing under the
senior secured credit facility in December 2000 and June 2001.

     Interest Expense

         For the nine months ended September 30, 2001, interest expense was
$17.0 million, net of capitalized interest of approximately $6.6 million,
compared to interest expense of approximately $11.7 million, net of capitalized
interest of approximately $3.0 million, for the year ended December 31, 2000.
The increase in interest expense in the nine months ended September 30, 2001 is
the result of higher outstanding debt compared to December 31, 2000. For the
nine months ended September 30, 2001, interest expense related to interest
accrued on the senior discount notes, the amortization of the discount and
warrants issued in connection with the issuance of the senior discount notes,
and interest expense on our borrowings under the senior secured credit facility.
For 2000, interest expense related to the Nortel financing, which was in place
prior to our current senior secured credit facility, and interest expense on the
current credit facility as well as the senior discount notes.

     Other Income (Expense), Net

         Other income is principally comprised of gain on tower sales. For the
nine months ended September 30, 2001, we sold twelve towers to American Tower
for $3.4 million, resulting in a gain of approximately $1.6 million, of which
approximately $0.5 million was recognized at the time of the sale and the
remainder was deferred and is being amortized as a reduction in rental expense
over the initial lease term of ten years for the related towers. In addition, we
sold sixteen towers to Trinity Wireless for $4.8 million, resulting in a gain of
approximately $2.1 million, of which approximately $1.0 million was recognized
at the time of the sale and remainder was deferred and is being amortized as a
reduction in rental expense over the initial lease term of five years for the
related towers. Offsetting these gains was a loss of approximately $1.0 million
for site acquisition costs for sites that were either not feasible or not
necessary for our network build-out. For the year ended December 31, 2000, we
sold fifty-five towers to American Tower for $14.0 million, resulting in a total
gain of approximately $5.4 million, of which approximately $0.8 million was
recognized and the remainder is being amortized over the initial lease term of
ten years.

     Extraordinary Item

         In connection with the refinancing of the Nortel credit facility with
the Toronto Dominion and GE Capital Corporation credit facility, in the twelve
months ended December 31, 2000, we recorded an extraordinary loss on the early
extinguishment of debt of approximately $1.5 million related to the write-off of
the unamortized deferred financing costs of the Nortel credit facility.

     Net Loss

         For the nine months ended September 30, 2001, our net loss was
approximately $60.7 million, an increase of $4.5 million over a net loss of
$56.2 million for the year ended December 31, 2000. The increase in net loss was
the result of increased operating expenses associated with maintaining a larger
customer base and a larger network along with significantly higher customer
additions. Additionally, higher depreciation expense for a larger in-service
network coupled with increased interest expense related to our debt was recorded
during the first nine months of this year than in the prior year. The increase
in operating expenses was partially offset with increased service, equipment and
other revenues. For the year ended December 31, 2000, our net loss was caused
primarily by cost of services exceeding service revenues and costs associated
with handset


                                       16

<PAGE>

subsidies, selling, general and administrative expense, depreciation and
amortization associated with the markets launched in 1999 and 2000. Also in
2000, we recorded the following:

         .    an extraordinary loss of approximately $1.5 million on the early
              extinguishment of debt related to the write-off of the unamortized
              deferred financing costs of the Nortel credit facility,

         .    non-cash compensation expense of approximately $8.5 million and
              related taxes of approximately $1.6 million associated with the
              issuance of a 1.5% ownership interest in our predecessor, Illinois
              PCS, LLC, to our then President and Chief Executive Officer,

         .    non-cash compensation expense of approximately $2.7 million, which
              is related to the amortization of the deferred compensation
              expense associated with the stock options granted in July 2000,
              and

         .    expenses of approximately $1.3 million related to a planned
              initial public offering of stock that did not occur in 2000.

For the year ended December 31, 2000 compared to the period January 22, 1999
(date of inception) through December 31, 1999:

     Customer Additions

         For the year ended December 31, 2000, we added a net 44,792 customers,
compared to 1,981 net customers added in the period from start-up to December
31, 1999.

     Average Revenue Per User (ARPU)

         ARPU was $55 for the year ended December 31, 2000. Because we launched
our first markets in December 1999, ARPU for 1999 is not meaningful.

     Churn

         For the year ended December 31, 2000, churn was 2.1%. Churn for 1999 is
not meaningful.

     Cost Per Gross Addition (CPGA)

         CPGA was $360 for the twelve months ended December 31, 2000. CPGA for
1999 is not meaningful.

     Revenues

         Service revenue and equipment revenue were $18.5 million and $2.7
million, respectively, for the year ended December 31, 2000, compared to $71,000
and $144,000, respectively, for the period ended December 31, 1999.

         Included in service revenues was roaming revenue of $7.5 million
recorded during the year ended December 31, 2000, compared to $43,000 for the
period ended December 31, 1999.

         Lower revenues in 1999 were attributable to the fact that we did not
launch service until December 1999.

     Cost of Service and Roaming and Cost of Equipment

         The cost of service and roaming and the cost of equipment was $16.8
million and $10.1 million, respectively, for the year ended December 31, 2000,
compared to $1.7 million and $0.5 million, respectively, for the period ended
December 31, 1999, an increase of $15.1 million and $9.6 million, respectively.
The Sprint PCS affiliation fee totaled $0.9 million in the year ended December
31, 2000. There were approximately 30 employees performing network operations
functions at December 31, 2000, compared to 11 employees at December 31, 1999.

         Cost of equipment includes the costs of handsets, accessories, and
equipment subsidies. The cost of handsets generally exceeds the amount received
from customers because we subsidize the price of handsets to remain competitive
in the marketplace. The increase in costs is substantially due to the increase
in new customers associated with the launching of sixteen new markets during
2000.

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     Selling and Marketing

         We incurred expenses of $10.8 million during the year ended December
31, 2000 for selling and marketing costs, compared with $0.8 million for the
period ended December 31, 1999. Selling expenses include advertising and
promotional costs, salaries, sales commissions, and expenses related to our
distribution channels. The increase in costs is substantially due to the
launching of sixteen new markets during 2000. At December 31, 2000, there were
approximately 105 employees performing sales and marketing functions compared to
28 at December 31, 1999.

     General and Administrative

         For the year ended December 31, 2000, we incurred general and
administrative expenses of $22.1 million, compared to $1.5 million for the
period ended December 31, 1999, an increase of $20.6 million. Included in
general and administrative costs are administrative salaries and bonuses,
employee benefit costs, legal fees, insurance expense and other professional
service fees. Also included in the year ended December 31, 2000 is non-cash
compensation expense and taxes on non-cash compensation expense totaling
approximately $12.8 million. Of this amount, approximately $8.5 million was the
non-cash compensation expense which related to a one-time charge for the
issuance of a 1.5% ownership interest to our then President and Chief Executive
Officer based on an expected initial public offering price and approximately
$1.6 million of withholding taxes we have paid in connection with the issuance
of this 1.5% ownership interest. The other $2.7 million of non-cash compensation
expense is related to the amortization of the deferred compensation expense
associated with the stock options granted in July 2000. We did not grant any
options during 1999. In addition, we recorded approximately $1.3 million of
expenses related to a planned initial public offering of stock that did not
occur in 2000. The remaining increase in general and administrative expenses is
due to the launching of sixteen new markets during 2000.

     Depreciation and Amortization

         For the year ended December 31, 2000, depreciation and amortization
expense increased $8.2 million to $8.6 million compared to $0.4 million for the
period ended December 31, 1999. The increase in depreciation and amortization
expense relates to assets placed in service for the sixteen markets launched
during 2000.

     Interest Income

         For the year ended December 31, 2000, interest income was $3.4 million,
compared to $0.1 million for the period ended December 31, 1999. Interest income
increased due to the investment of the proceeds from the senior discount notes
and the sale of the Series A-1 convertible preferred stock in July 2000.

     Interest Expense

         For the year ended December 31, 2000, interest expense was $11.7
million, net of capitalized interest of approximately $3.0 million. In 1999,
total interest expense of approximately $0.5 million, which related to our
Nortel credit facility, was capitalized. The increase in interest expense in
2000, which related both to the Nortel financing and the senior discount notes,
was the result of the higher borrowings.

     Other Income (Expense), Net

         Other income is principally comprised of gain on tower sales. For the
year ended December 31, 2000, we sold 55 towers to American Tower for
approximately $14.0 million resulting in a gain of approximately $5.4 million,
of which approximately $0.8 million was recognized at the time of the sales and
the remainder was deferred and is being amortized as a reduction in rental
expense over the initial lease term of ten years for the related towers. For the
period ended December 31, 1999, we sold 18 towers for $4.5 million resulting in
a gain of approximately $1.9 million, of which approximately $0.2 million was
recognized and the remainder was deferred.

     Extraordinary Item

         In connection with the refinancing of the Nortel credit facility with
the Toronto Dominion and GE Capital Corporation credit facility, we recorded an
extraordinary loss on the early extinguishment of debt of approximately $1.5
million in the year ended December 31, 2000 related to the write-off of the
unamortized deferred financing costs of the Nortel credit facility.

                                       18

<PAGE>

     Net Loss

         For the year ended December 31, 2000, the net loss was $56.2 million,
compared with $4.4 million for the period ended December 31, 1999. The loss in
2000 was caused primarily by cost of services exceeding service revenues and
costs associated with handset subsidies, selling, general and administrative
expenses, depreciation and amortization associated with the markets launched in
1999 and 2000. Also in 2000 we recorded the following:

         .    an extraordinary loss of approximately $1.5 million on the early
              extinguishment of debt related to the write-off of the unamortized
              deferred financing costs of the Nortel credit facility;

         .    non-cash compensation expense of approximately $8.5 million and
              related taxes of approximately $1.6 million associated with the
              issuance of a 1.5% ownership interest in our predecessor, Illinois
              PCS, LLC, to our then President and Chief Executive Officer;

         .    non-cash compensation expense of approximately $2.7 million, which
              is related to the amortization of the deferred compensation
              expense associated with the stock options granted in July 2000;
              and

         .    expenses of approximately $1.3 million related to a planned
              initial public offering of stock that did not occur in 2000.

         Our net loss for the period ended December 31, 1999 was comprised
primarily of network build-out, selling, and general and administrative expenses
associated with the preparation of the launch of our initial markets.

Income Taxes

     Prior to July 12, 2000, our predecessor operated as a limited liability
company and, as a result, our losses were included in the income tax returns of
our members. Subsequent to July 12, 2000, the date of reorganization as
discussed in the notes to our financial statements, we became a C Corporation
and began accounting for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." No benefit for federal income taxes has been
recorded for the periods ended September 30, 2001 and December 31, 2000 as the
net deferred tax asset generated, primarily from temporary differences related
to the net operating loss carry forwards, would have been offset by a full
valuation allowance because it is not considered more likely than not that these
benefits will be realized due to our losses since inception.

Liquidity and Capital Resources

         As of September 30, 2001, we had $54.6 million in cash and cash
equivalents, compared to $166.0 million in cash and cash equivalents at December
31, 2000. Out net working capital was $38.6 million at September 30, 2001,
compared to working capital of $141.3 million at December 31, 2000.

      Net Cash Used in Operating Activities

         Net cash used in operating activities was approximately $16.7 million
for the nine months ended September 30, 2001 and was approximately $22.0 million
for the year ended December 31, 2000. Cash used in operating activities was
primarily attributable to operating losses offset by depreciation and
amortization expense, non-cash interest, non-cash compensation expense and
working capital needs.

     Net Cash Used In Investing Activities

         Net cash used in investing activities was approximately $119.3 million
for the nine months ended September 30, 2001 and approximately $82.5 million for
the year ended December 31, 2000. The expenditures related primarily to the
purchase of our network infrastructure equipment and the acquisition of the
markets in Iowa from Sprint PCS in February 2001, offset partially with the
proceeds from tower sales and our build-to-suit agreement.

     Net Cash Provided By Financing Activities

         Net cash provided by financing activities was approximately $24.7
million for the nine months ended September 30, 2001 and consisted primarily of
proceeds of $25.0 million drawn on our senior secured credit facility offset
somewhat by debt issuance and interest rate protection costs. Net cash provided
by financing activities during the year ended December 31, 2000 was
approximately $267.7 million and consisted primarily of equity contributions and
debt borrowings, and also cash provided by

                                       19

<PAGE>

the proceeds from the sale of redeemable convertible preferred stock and the
issuance of our senior discount notes offset by the repayment in full of the
Nortel debt of approximately $40.3 million.

     Liquidity

         At September 30, 2001, we had $54.6 million of cash and cash
equivalents and total availability under our senior secured credit facility of
$90.0 million. By September 2003, we expect that our customer base will have
increased to a size sufficient for us to generate net free cash flow (EBITDA
plus non-cash stock option expense minus capital expenditures, cash interest
payments and required payments of principal under the senior credit facility).
We expect our free cash flow after September 2003 will be sufficient to meet the
cash requirements of the business including; capital expenditures, cash
interest, required payments of principal under the senior credit facility and
working capital needs. Our projections contain significant assumptions including
projections for gross new customer additions, ARPU, churn, bad debt expense and
roaming revenue.

Factors That May Affect Operating Results and Liquidity

         In addition to the Investment Considerations found under Item 1 of this
report, the following risk factors could materially and adversely affect our
future operating results and could cause actual events to differ materially from
those predicted in forward-looking statements related to our business.

         We may not be able to sustain our growth or obtain sufficient revenue
to achieve and sustain profitability. We incurred EBITDA (Earnings before
interest, taxes, depreciation and amortization) losses of $32.3 million in the
nine months ended September 30, 2001. Our business projections reflect
continuing growth in our customer base and a reduction and eventual elimination
of EBITDA losses as the cash flow generated by the growing customer base exceeds
costs incurred to acquire new customers. If we acquire more customers than we
project, the upfront costs to acquire those customers (including the handset
subsidy, commissions and promotional expenses) may result in greater EBITDA
losses in the near term but higher cash flows in later periods. Conversely, if
there is a slowdown in new subscriber growth in the wireless industry, we may
acquire fewer new customers, which would result in lower EBITDA losses in the
near term but lower cash flows in later periods.

         We may experience a higher churn rate than our historical churn rate.
Our average customer monthly churn (net of 30 day returns) for the nine months
ended September 30, 2001 was 2.3%. This rate of churn was higher than our
historical average and is expected to increase slightly into 2002 before
declining in the second half of calendar 2002. If the rate of churn was not to
decline as expected or was to increase materially above its current levels and
remain there, we would lose the cash flow attributable to these customers and
have greater EBITDA losses.

         We may not be able to reinstate the deposit requirement for new
sub-prime credit customers. We have requested that Sprint reinstate a customer
deposit for all sub-prime customers added after February 24, 2002. Sprint has
indicated its

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<PAGE>

willingness to make the required program changes to effect the deposit
requirement for sub-prime customers (which was present in all of our
distribution channels until May 2001, when Sprint introduced No Deposit Account
Spending Limits (NDASL)). As of September 30, 2001, approximately 32% of our
134,927 customers had a credit rating placing them in the sub-prime category. In
addition, because Sprint does not plan to reinstate a deposit in its markets, we
may experience difficulty in implementing a deposit requirement in national
third party retailers in our territory. Our inability to collect deposits from
sub-prime customers may result in a higher rate of customer churn and additional
bad debt expense than our business plan projects.

         We may receive a significantly lower roaming rate in 2003 and
thereafter. We are paid a fee from Sprint for every minute that a Sprint PCS
subscriber based outside of our territory uses our network; we refer to such
fees as roaming revenue. Similarly, we pay a fee to Sprint PCS for every minute
that our customers use the Sprint PCS network outside of our markets; we refer
to such fees as roaming expense. Under our agreements with Sprint, Sprint had
the right to change the reciprocal roaming rate exchanged for customers who roam
into the other party's or another network partner's network. On April 27, 2001
we announced an agreement in principle with Sprint to set the roaming rate
for periods beyond 2001. We have an agreement with Sprint that fixed this
per minute reciprocal rate at $0.20 through December 31, 2001. Under the
agreement in principle, the roaming rate for calendar year 2002 will not be less
than $0.10 per minute. For calendar year 2003 and beyond, the details of the
agreement in principle have not yet been finalized. Depending on the details of
the agreement, the reciprocal roaming rate may be significantly less than the
rate charged in 2002. While a much lower roaming rate would significantly
reduce the roaming revenue we receive, it would also significantly reduce the
roaming expense we pay to Sprint PCS. The ratio of roaming revenue to roaming
expense for the nine months ended September 30, 2001 was 1.4 to 1.0. We project
that by 2003, the growth in our customer base will result in a ratio of revenue
to expense approaching 1.0 to 1.0, minimizing the net earnings and EBITDA impact
of any substantial reduction in the roaming rate. If the ratio of roaming
revenue to roaming expense was not to decline, a reduction in the reciprocal
roaming rate could have an adverse affect on our cash cushion.

         Our ability to borrow funds under our senior secured credit facility
may be restricted due to our failure to maintain or comply with the restrictive
financial and operating covenants contained in the agreements governing the
senior secured credit facility. Our senior secured credit facility contains
covenants specifying the maintenance of certain financial ratios, reaching
defined subscriber growth and network covered population goals, minimum
quarterly service revenues, minimum EBITDA losses and limiting capital
expenditures. We believe that we are currently in compliance with all financial
and operational covenants relating to our senior secured credit facility. We
have recently completed an amendment to our senior secured credit facility,
primarily to provide additional relief under the maximum EBITDA losses covenant,
which we anticipated not meeting in future quarters. If we are unable to operate
our business within the covenants specified in the senior secured credit
facility, as amended, our ability to obtain future amendments to the covenants
is not guaranteed and our ability to make borrowings required to operate our
business could be restricted or terminated. Such a restriction or termination
would have a material adverse affect on our liquidity.

         We may not be able to sell enough towers at an adequate price to
generate proceeds projected in our business plan. Upon completion of our initial
network build-out at March 31, 2002, we expect to own approximately 90 towers.
We do not consider towers a strategic asset and plan on selling some or all of
these assets as market terms and conditions permit. There are several companies
that have traditionally been purchasers of towers in the wireless industry.
However, the financial condition of these tower companies and their willingness
and ability to purchase towers we own is not certain.

         Variable interest rates may increase substantially. At September 30,
2001, we had $50.0 million borrowed under our senior secured credit facility.
The rate of interest on the facility is based on a margin above either the
alternate bank rate (the prime lending rate in the United States) or the London
Interbank Offer Rate (LIBOR). Our weighted average borrowing rate on variable
rate borrowings at September 30, 2001 was 6.84%. While our business plan uses a
7.0% base borrowing rate, increases in a market interest rate substantially
above our estimates may result in unanticipated cash interest costs.

         We operate with negative working capital because of amounts owed to
Sprint. Each month we pay Sprint amounts relating to: (i) roaming expense, (ii)
the 8% affiliation fee, (iii) costs for customer support and billing, (iv)
handsets purchased from Sprint, (v) reimbursements for commissions paid to
national third party distributors such as Radio Shack, Best Buy and Circuit
City, (vi) reimbursement for subsidies related to handsets sold by national
third party retailers, and (vii) wholesale long distance expense that our
customers use and that Sprint PCS customers incur related to roaming revenue. A
reduction in the amounts we owe Sprint may result in a greater use of cash for
working capital purposes than our business plan currently projects.

         We may not be able to access the credit markets for additional capital
if the liquidity discussed above is insufficient for the cash needs of our
business. We frequently evaluate options for additional financings to supplement
our liquidity position and maintain maximum financial flexibility. However, if
the assumptions used in our projections are incorrect, we may be unable to raise
additional capital.

                                       21

<PAGE>

         Capital Resources

         Our senior secured discount notes due 2010 will require cash payments
of interest beginning on January 15, 2006.

         Our $140.0 million senior secured credit facility provides for a $90.0
million senior secured term loan which matures on December 31, 2008, which is
the first installment of the loan, or tranche A. The second installment, or
tranche B, under the senior credit agreement is for a $50.0 million senior
secured term loan, which matures on December 31, 2008. The senior credit
agreement requires us to make quarterly payments of principal beginning March
31, 2004 for tranche A and tranche B, initially in the amount of 2.5% of the
loan balance then outstanding and increasing thereafter. The commitment fee on
unused borrowings ranges from 1.0 to 1.5%, payable quarterly. As of September
30, 2001, $90.0 million remained available for borrowing. Our obligations under
the senior credit agreement are secured by all of our assets. As discussed
above, we expect that cash and cash equivalents together with future advances
under our credit facility will fund capital expenditures, operating losses and
working capital requirements through the end of fiscal 2002, at which time we
expect to generate positive earnings before interest, taxes, depreciation and
amortization (EBITDA). Our senior secured credit facility is subject to certain
restrictive covenants including maintaining certain financial ratios, reaching
defined subscriber growth and network covered population goals, minimum
quarterly service revenues, minimum EBITDA amounts and limiting annual capital
expenditures.

         As of September 30, 2001, we believe that we are in compliance with all
financial and operational covenants associated with our senior secured credit
facility, senior subordinated discount notes, and Sprint Agreements.

         Contractual Obligations

         We are obligated to make future payments under various contracts we
have entered into, including amounts pursuant to our senior secured credit
facility, senior discount notes, capital leases for office equipment and cell
sites and non-cancelable operating lease agreements for office space, cell
sites, and vehicles. Future minimum contractual obligations for the next five
years and in the aggregate at September 30, 2001, are as follows (dollars in
thousands):

<TABLE>
<CAPTION>
                                                     Payments Due by Period
                           --------------------------------------------------------------------------------
                                                    Years Ended September 30,
                                                --------------------------------
 Contractual Obligation       Total       2002       2003       2004       2005       2006     Thereafter
-------------------------  ------------ ---------- ---------- ---------- ---------- ---------- ------------
<S>                        <C>          <C>        <C>        <C>        <C>        <C>        <C>
Senior Secured Credit
Facility (1)                $  50,000   $      -    $      -   $  3,750   $  6,875   $ 11,250    $ 28,125

Operating Leases (2)           69,031     10,785      10,619     10,149      9,305      6,626      21,547

Capital Leases                    802         47          43         45         47         49         571

Senior Discount Notes         300,000          -           -          -          -          -     300,000

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

Total                       $ 419,833     10,832      10,662     13,944     16,227     17,925     350,243
                           ============ ========== ========== ========== ========== ========== ============
</TABLE>

   (1)    Total repayments are based on borrowings outstanding as of
          September 30, 2001.

   (2)    Does not include payments due under renewals to the original lease
          term.

         There are provisions in each of the agreements governing the senior
secured credit facility and the senior discount notes resulting in an
acceleration of repayment upon an event of default, as defined in the respective
agreements.

Seasonality

           Our business is subject to seasonality because the wireless industry
is heavily dependent on fourth calendar quarter results. Among other things, the
industry relies on significantly higher customer additions and handset sales in
the fourth calendar quarter as compared to the other three calendar quarters. A
number of factors contribute to this trend, including: the increasing use of
retail distribution, which is heavily dependent upon the year-end holiday
shopping season; the timing of new product and service announcements and
introductions; competitive pricing pressures; and aggressive marketing and
promotions. The increased level of activity requires a greater use of our
available financial resources during this period.

                                       22

<PAGE>

Inflation

         Our management believes that inflation has not had, and will not have,
a material adverse effect on our results of operations.

Effect of Recently Issued Accounting Pronouncements

         In August 2001, the Financial Accounting Standards Board ("FASB")
issued Statement of Accounting Standards ("SFAS") No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets ("SFAS No. 144")", which addresses
financial accounting and reporting for the impairment of long-lived assets and
for long-lived assets to be disposed of. The provisions of the Statement are
effective for financial statements issued for fiscal years beginning after
December 31, 2001. The adoption is not expected to have a material effect on our
consolidated results of operations, financial position or cash flows.

         In June 2001, the FASB issued SFAS No. 141, "Business Combinations
("SFAS No. 141")", which is effective for all business combinations initiated
after June 30, 2001. SFAS 141 requires companies to account for all business
combinations using the purchase method of accounting, recognizes intangible
assets if certain criteria are met, as well as provide additional disclosures
regarding business combinations and allocation of purchase price. We have
adopted SFAS No. 141 effective July 1, 2001, and the impact of such adoption did
not have a material impact on our financial statements.

         In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets ("SFAS No. 142"), which eliminates amortization of goodwill
and intangible assets that have indefinite useful lives and requires annual
tests of impairments of those assets. SFAS No. 142 also provides specific
guidance about how to determine and measure goodwill and intangible asset
impairments, and requires additional disclosures of information about goodwill
and other intangible assets. The provisions of SFAS No. 142 are required to be
applied starting with fiscal years beginning after December 15, 2001 and applied
to all goodwill and other intangible assets recognized in its financial
statements at that date. Goodwill and intangible assets acquired after June 30,
2001 will be subject to the amortization provisions of the statement. In
connection with the merger with AirGate and our change in fiscal year end to
September 30, we adopted SFAS No. 142 effective October 1, 2001. The adoption is
not expected to have a material effect on our consolidated results of
operations, financial position, or cash flows.

         In November 2000, the Emerging Issues Task Force ("EITF") reached a
consensus in EITF 00-14, "Accounting for Certain Sales Incentives" that when
recognized, the reduction in or refund of the selling price of a product or
service resulting from any cash incentive should be classified as a reduction in
revenue and not as an operating expense. We adopted the provisions of EITF 00-14
in the first quarter of 2001. See the notes to our financial statements for
further information related to EITF 00-14.

         In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities," an amendment to SFAS No.
133 "Accounting for Derivative Instruments and Hedging Activities," which is
effective for all fiscal years beginning after June 15, 2000. Our adoption of
SFAS No. 138 on January 1, 2001 did not have a material effect on our results of
operation, financial position, or cash flows.

         In March 2000, the FASB issued Interpretation No.44 ("FIN 44"),
"Accounting for Certain Transaction Involving Stock Compensation-an
Interpretation of Accounting Principles Board Opinion 25" ("Opinion 25"). FIN 44
clarifies (a) the definition of employee for purposes of applying Opinion 25,
(b) the criteria for determining whether a plan qualifies as a non-compensatory
plan, (c) the accounting consequences of various modifications to the terms of a
previously fixed stock option or award, and (d) the accounting for an exchange
of stock compensation awards in a business combination. FIN 44 is effective July
1, 2000; however, certain conclusions in this Interpretation cover specific
events that occur after either December 15, 1998, or January 12, 2000. The
adoption of FIN 44 did not have an effect on our results of operations,
financial position or cash flows.

         On December 3, 1999, the Securities and Exchange Commission ("SEC")
released Staff Accounting Bulletin 101, "Revenue Recognition in Financial
Statements" ("SAB 101"). This bulletin specifically addresses revenue
recognition requirements for nonrefundable fees, such as activation fees,
collected by a company upon entering into an arrangement with a customer, such
as an arrangement to provide telecommunications services. On June 26, 2000, the
SEC released SAB 101B, which delayed the required implementation of SAB 101
until no later than the fourth quarter of fiscal years ending on or after
December 31, 2000. We adopted SAB 101 in the fourth quarter of 2000. See the
notes to our financial statements for further information related to SAB 101.

ITEM 7A.        Quantitative and Qualitative Disclosures About Market Risk

         We do not engage in commodity futures trading activities and do not
enter into derivative financial instrument transactions for trading or other
speculative purposes. We also do not engage in transactions in foreign
currencies that could expose us to market risk.

                                       23

<PAGE>

         We are subject to interest rate risk on our senior secured credit
facility and any future financing requirements. Our variable rate debt consists
of borrowings made under our senior secured credit facility of which we had
borrowed $50.0 million at September 30, 2001. As required under the senior
secured credit facility, on January 12, 2001, we entered into a three-year
interest rate protection agreement with a counter party for a notional amount of
$12.5 million that caps the three-month floating LIBOR interest rate at 7.25%.

         The following table presents the estimated future outstanding long-term
debt at the end of each year and future required annual principal payments for
each year then ended associated with our senior secured credit facility based on
our projected level of long-term indebtedness:

<TABLE>
<CAPTION>
                                                Years Ending September 30,
                                                -----------------------------------------------------------------------------------

                                                2002          2003         2004          2005          2006          Thereafter
                                                -----------   ----------   -----------   -----------   -----------   --------------

                                                (In thousands)
<S>                                             <C>           <C>          <C>           <C>           <C>           <C>
      Senior Discount Notes(1):                 $154,027      $167,790     $182,784      $199,117      $216,910        $     --

      Fixed interest rate                          14.00%        14.00%       14.00%        14.00%        14.00%          14.00%

      Principal payments                        $     --      $     --     $     --      $     --      $     --        $300,000


      Senior Secured Credit Facility(2):        $105,500      $125,000     $115,625      $ 98,436      $ 70,309        $     --

      Variable interest rate(3)                     5.75%         5.75%        5.75%         5.75%         5.75%           5.75%

      Principal payments                        $     --      $     --     $  9,375      $ 17,189      $ 28,127        $ 70,309
</TABLE>

(1)      The amounts presented represent estimated year-end debt balances under
         our senior discount notes based on amortizing the discount utilizing
         the effective interest method over the term of the senior discount
         notes

(2)      The amounts presented represent estimated year-end debt balances under
         our $140.0 million senior secured financing based upon a projection of
         the funds borrowed under that facility pursuant to our current network
         build-out plan.

(3)      Interest rate on our senior secured financing equals the lesser of
         either:

         .        a base rate loan with an interest rate equal to 2.75% plus the
                  higher of:

                  .    the prime rate of the Toronto-Dominion Bank, New York
                       Branch or;

                  .    the federal fund effective rate plus 0.5%; or

         .        a Eurodollar loan with an interest rate equal to the London
                  interbank offered rate plus 3.75%. The London interbank
                  offered rate is assumed to equal 2.00% for all periods
                  presented, which is the current LIBOR rate.

         Our primary market risk exposure relates to:

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

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

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

ITEM 8       Financial Statements and Supplementary Data.

         Our financial statements are listed under Item 14 (a) of this annual
report and are filed as part of this report on the pages indicated.

ITEM 9       Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

         During the period covered by this report, we had no changes in our
disagreements with our accountants on accounting and financial disclosure.
However, on November 30, 2001, we were acquired by AirGate through the merger of
a wholly owned

                                       24

<PAGE>

subsidiary of AirGate with and into us. At the effective time of the merger,
AirGate, as our parent, replaced our independent accountant, Deloitte and
Touche LLP, with KPMG, LLP. We have previously reported this change in
accountants in a Current Report on Form 8-K filed on November 30, 2001, as
amended on Form 8-K/A on December 5, 2001.

                                       25

<PAGE>

                                     PART IV

ITEM 14.  Financial Statement Schedules, Reports On Form 8-K And Exhibits.

(a)   Financial Statements

1.   The following financial statements are filed with this report on the pages
indicated:

<TABLE>
                                                                                                                             Page
<S>                                                                                                                          <C>

           Independent Auditors' Report                                                                                       F-1

           Consolidated Balance Sheets as of September 30, 2001 and December 31, 2000 and 1999                                F-2

           Consolidated Statements of Operations for the nine months ended                                                    F-3
               September 30, 2001 and 2000, for the year ended December 31,
               2000 and for the period from January 22, 1999 (date of inception)
               to December 31, 1999

           Consolidated Statements of Redeemable Preferred Stock and Equity                                                   F-4
               (Deficiency) for the nine months ended September 30, 2001,
               for the year ended December 31, 2000 and for the period from
               January 22, 1999 (date of inception) to December 31, 1999

           Consolidated Statements of Cash Flows for the nine months ended                                                    F-5
               September 30, 2001 and 2000, for the year ended December 31,
               2000 and for the period from January 22, 1999 (date of inception)
               to December 31,1999

           Notes to Consolidated Financial Statements                                                                         F-6
</TABLE>

2.    Exhibits

               See Item 14(c) below

(b)   Reports on Form 8-K

         On August 31, 2001, we filed a Current Report on Form 8-K reporting
"Other Events" pursuant to Item 5 reporting that on August 28, 2001, we entered
into an Agreement and Plan of Merger with AirGate under which we would combine
with AirGate in a tax-free stock for stock transaction.

         On November 30, 2001, we filed a Current Report on Form 8-K reporting
"Changes in Control of Registrant" pursuant to Item 1 reporting that on November
30, 2001, we were acquired by AirGate through the merger of a wholly owned
subsidiary of AirGate with and into us. The Current Report also reported
"Changes in Registrant's Certifying Accountant" pursuant to Item 4 reporting
that at the effective time of the merger, AirGate, as our parent, replaced our
independent accountant, Deloitte & Touche LLP, with KPMG, LLP. Among other
things, the Current Report further stated that during the fiscal years ending
December 31, 1999 and 2000 and the period ending September 30, 2001, there were
no disagreements between us and Deloitte & Touche LLP on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure.

         On December 5, 2001, we filed an Amended Current Report on Form 8-K/A
amending the Current Report on Form 8-K filed on November 30, 2001. The sole
purpose of such amendment was to extend the time period during which we stated
that we had no disagreements with Deloitte & Touche LLP to include the
subsequent interim period ending November 30, 2001.

         On December 20, 2001, we filed a Current Report on Form 8-K reporting a
"Change in Fiscal Year" pursuant to Item 8 changing our fiscal year end from a
calendar year ending December 31 to a fiscal year ending September 30.

                                       26

<PAGE>

(c)   Exhibits

2.1         Asset Purchase Agreement, dated as of January 10, 2001, by and among
            Sprint Spectrum L.P. and its subsidiaries Sprint Spectrum Equipment
            Company, L.P. and Sprint Spectrum Realty Company, L.P., and iPCS
            Wireless, Inc. (Incorporated by reference to Exhibit 2.1 to the
            current report on Form 8-K filed by the company with the Commission
            on March 15, 2001).

3.1         Restated Certificate of Incorporation of iPCS, Inc. (Incorporated by
            reference to Exhibit 3.1 to the Post-Effective Amendment No. 1 on
            Form S-1 to the registration statement on Form S-4 filed by the
            company with the Commission on December 20, 2001 (SEC File No.
            333-47688)).

3.2         Bylaws of iPCS, Inc. (Incorporated by reference to Exhibit 3.2 to
            the Post-Effective Amendment No. 1 on Form S-1 to the registration
            statement on Form S-4 filed by the company with the Commission on
            December 20, 2001 (SEC File No. 333-47688)).

3.3         Certificate of Incorporation of iPCS Wireless, Inc. (Incorporated by
            reference to Exhibit 3.4 to the registration statement on Form S-4
            filed by the company with the Commission on January 8, 2001 (SEC
            File No. 333-47688)).

3.4         Bylaws of iPCS Wireless, Inc. (Incorporated by reference to Exhibit
            3.5 to the registration statement on Form S-4 filed by the company
            with the Commission on January 8, 2001 (SEC File No. 333-47688)).

3.5         Certificate of Incorporation of iPCS Equipment, Inc. (Incorporated
            by reference to Exhibit 3.6 to the registration statement on Form
            S-4 filed by the company with the Commission on January 8, 2001 (SEC
            File No. 333-47688)).

3.6         Bylaws of iPCS Equipment, Inc. (Incorporated by reference to Exhibit
            3.7 to the registration statement on Form S-4 filed by the company
            with the Commission on January 8, 2001 (SEC File No. 333-47688)).

4.1         Specimen Common Stock Certificate. (Incorporated by reference to
            Exhibit 4.1 to the registration statement on Form S-4 filed by the
            company with the Commission on January 8, 2001 (SEC File No.
            333-47688)).

4.2         14% Senior Discount Notes due 2010 Indenture dated as of July 14,
            2000 by and among iPCS, Inc., as issuer, iPCS Equipment, Inc. and
            iPCS Wireless, Inc., as guarantors, and CTC Illinois Trust Company,
            as trustee. (Incorporated by reference to Exhibit 4.2 to the
            registration statement on Form S-4 filed by the company with the
            Commission on January 8, 2001 (SEC File No. 333-47688)).

10.1*       Sprint PCS Management Agreement, as amended, dated as of January
            22, 1999 by and among Sprint Spectrum, LP, SprintCom, Inc.,
            Wireless Co. LP and Illinois PCS, LLC, as amended by Addendum I,
            Addendum II, Amended and Restated Addendum III, Addendum IV,
            Addendum V and Addendum VI thereto. (Incorporated by reference to
            exhibits to the registration statement on Form S-4 filed by the
            company with the Commission (SEC File No. 333-47688)).

10.2*       Sprint PCS Services Agreement dated as of January 22, 1999 by and
            between Sprint Spectrum, LP and Illinois PCS, LLC. (Incorporated by
            reference to Exhibit 10.2 to the registration statement on Form S-4
            filed by the company with the Commission on January 8, 2001 (SEC
            File No. 333-47688)).

10.3*       Sprint Trademark and Service Mark License Agreement dated as of
            January 22, 1999 by and between Sprint Communications Company, LP
            and Illinois PCS, LLP. (Incorporated by reference to Exhibit 10.3 to
            the registration statement on Form S-4 filed by the company with the
            Commission on January 8, 2001 (SEC File No. 333-47688)).

10.4        Sprint Spectrum Trademark and Service Mark License Agreement dated
            as of January 22, 1999 by and between Sprint Spectrum LP and
            Illinois PCS, LLC. (Incorporated by reference to Exhibit 10.4 to the
            registration statement on Form S-4 filed by the company with the
            Commission on January 8, 2001 (SEC File No. 333-47688)).

10.5        Amended and Restated Consent and Agreement dated as of July 12, 2000
            by and between Sprint Spectrum, LP, SprintCom, Inc., Sprint
            Communications Company, LP, WirelessCo, LP, and Toronto Dominion
            (Texas), Inc. and the lenders party thereto. (Incorporated by
            reference to Exhibit 10.5 to the registration statement on Form S-4
            filed by the company with the Commission on January 8, 2001 (SEC
            File No. 333-47688)).

10.6        Amended and Restated Credit Agreement dated as of July 12, 2000 by
            and among iPCS Wireless, Inc., as


                                       27

<PAGE>

            borrower, iPCS, Inc. and iPCS Equipment, Inc. as guarantors, the
            lenders named therein, Toronto Dominion (Texas), Inc., as
            administrative agent, and GE Capital Corporation, as syndication
            agent, for a $140.0 million credit facility. (Incorporated by
            reference to Exhibit 10.6 to the registration statement on Form
            S-4 filed by the company with the Commission on January 8, 2001
            (SEC File No. 333-47688)).

10.7        Amended and Restated Employment Agreement effective as of January 1,
            2001 by and between iPCS Wireless, Inc., Timothy M. Yager and iPCS,
            Inc. (Incorporated by reference to Exhibit 10.8 to the quarterly
            report on Form 10-Q filed by the company with the Commission on May
            15, 2001).

10.8        Amended and Restated Employment Agreement effective as of July 1,
            2000 by and between Illinois PCS, LLC, William W. King, Jr. and
            iPCS, Inc. (Incorporated by reference to Exhibit 10.9 to the
            registration statement on Form S-4 filed by the company with the
            Commission on January 8, 2001 (SEC File No. 333-47688)).

10.9        Agreement Regarding Construction, Sale and Leaseback of Towers dated
            as of May 28, 1999 by and between American Tower Corporation and
            Illinois PCS, LLC. (Incorporated by reference to Exhibit 10.11 to
            the registration statement on Form S-4 filed by the company with the
            Commission on January 8, 2001 (SEC File No. 333-47688)).

10.10       Lease dated as of June 1, 1999 by and between Gridley Enterprises,
            Inc. and Illinois PCS, LLC. (Incorporated by reference to Exhibit
            10.12 to the registration statement on Form S-1 filed by the company
            with the Commission on July 19, 2000 (SEC File No. 333-32064)).

10.11       Amended and Restated Employment Agreement effective as of July 1,
            2000 by and between Illinois PCS, LLC, Leroy R. Horsman and iPCS,
            Inc. (Incorporated by reference to Exhibit 10.13 to the registration
            statement on Form S-4 filed by the company with the Commission on
            January 8, 2001 (SEC File No. 333-47688)).

10.12       Amended and Restated Employment Agreement, effective as of July 1,
            2000 by and between Illinois PCS, LLC, Jeffrey Pinegar and iPCS,
            Inc. (Incorporated by reference to Exhibit 10.14 to the registration
            statement on Form S-4 filed by the company with the Commission on
            January 8, 2001 (SEC File No. 333-47688)).

10.13       Amended and Restated Employment Agreement effective as of January 1,
            2001 by and between iPCS Wireless, Inc., Linda K. Wokoun and iPCS,
            Inc. (Incorporated by reference to Exhibit 10.15 to the quarterly
            report on Form 10-Q filed by the company with the Commission on May
            15, 2001).

10.14       Amended and Restated Employment Agreement effective as of January 1,
            2001 by and between iPCS Wireless, Inc., Stebbins B. Chandor, Jr.
            and iPCS, Inc. (Incorporated by reference to Exhibit 10.16 to the
            quarterly report on Form 10-Q filed by the company with the
            Commission on May 15, 2001).

10.15       Amended and Restated Employment Agreement effective as of January 1,
            2001 by and between iPCS Wireless, Inc., Anthony R. Muscato and
            iPCS, Inc. (Incorporated by reference to Exhibit 10.17 to the
            quarterly report on Form 10-Q filed by the company with the
            Commission on May 15, 2001).

10.16       Amended and Restated Employment Agreement effective as of July 1,
            2000 by and between Illinois PCS LLC, Patricia M. Greteman and iPCS,
            Inc. (Incorporated by reference to Exhibit 10.19 to the registration
            statement on Form S-4 filed by the company with the Commission on
            January 8, 2001 (SEC File No. 333-47688)).

10.17       Purchase Agreement dated as of July 12, 2000 for $300,000,000 of
            300,000 units consisting of 14% Senior Discount Notes Due 2010 and
            warrants to purchase 2,982,699 shares of Common Stock. (Incorporated
            by reference to Exhibit 10.18 to the registration statement on Form
            S-4 filed by the company with the Commission on January 8, 2001 (SEC
            File No. 333-47688)).

10.18*      CDMA 1900 SprintCom Additional Affiliate Supply Agreement dated as
            of May 24, 1999 between Illinois PCS, LLC and Nortel Networks, Inc.
            (Incorporated by reference to Exhibit 10.20 to the registration
            statement on Form S-4 filed by the company with the Commission on
            January 8, 2001 (SEC File No. 333-47688)).

10.19*      Amendment No. 1 to 1900 CDMA Additional Affiliate Supply Agreement
            dated as of July 11, 2000 between Illinois PCS, LLC and Nortel
            Networks, Inc. (Incorporated by reference to Exhibit 10.21 to the
            registration statement on Form S-4 filed by the company with the
            Commission on January 8, 2001 (SEC File No. 333-47688)).

10.20       Asset Purchase Agreement dated as of July 12, 2000 by and among
            Sprint Spectrum LP, Sprint Spectrum



                                       28

<PAGE>

            Equipment Company, LP, Sprint Spectrum Realty Company, LP and iPCS
            Wireless, Inc. (Incorporated by reference to Exhibit 10.30 to the
            registration statement on Form S-4 filed by the company with the
            Commission on January 8, 2001 (SEC File No. 333-47688)).

10.21       Design, Development, Engineering Construction and Oversight Services
            Agreement, dated as of February 1999, by and between Illinois iPCS,
            LLC and Communication Management Specialists. (Incorporated by
            reference to Exhibit 10.31 to the registration statement on Form S-4
            filed by the company with the Commission on January 8, 2001 (SEC
            File No. 333-47688)).

10.22       Interim Network Operating Agreement dated as of July 12, 2000 by and
            between Sprint Spectrum LP and iPCS Wireless, Inc. (Incorporated by
            reference to Exhibit 10.32 to the registration statement on Form S-4
            filed by the company with the Commission on January 8, 2001 (SEC
            File No. 333-47688)).

10.23       A/B Exchange Registration Rights Agreement dated as of July 12, 2000
            by and among iPCS Equipment, Inc., iPCS Wireless, Inc. and Donaldson
            Lufkin & Jenrette Securities Corporation and TD Securities (USA)
            Inc. (Incorporated by reference to Exhibit 10.24 to the registration
            statement on Form S-4 filed by the company with the Commission on
            January 8, 2001 (SEC File No. 333-47688)).

10.24       Consulting Agreement dated as of April 20, 1999 by and between
            WaveLink Engineering and Illinois PCS, LLC. (Incorporated by
            reference to Exhibit 10.33 to the registration statement on Form S-4
            filed by the company with the Commission on January 8, 2001 (SEC
            File No. 333-47688)).

10.25       Form of Global Notes. (Incorporated by reference to Exhibit 10.25 to
            the registration statement on Form S-4 filed by the company with the
            Commission on January 8, 2001 (SEC File No. 333-47688)).

10.26*      Construction and Oversight Services Agreement dated as of September
            1, 2000 by and between iPCS Wireless, Inc. and SDS Wireless, Inc.
            (Incorporated by reference to Exhibit 10.34 to the registration
            statement on Form S-4 filed by the company with the Commission on
            January 8, 2001 (SEC File No. 333-47688)).

10.27*      Build to Suit Agreement dated as of September 1, 2000 by and between
            iPCS Wireless, Inc. and Trinity Wireless Towers, Inc. (Incorporated
            by reference to Exhibit 10.35 to the registration statement on Form
            S-4 filed by the company with the Commission on January 8, 2001 (SEC
            File No. 333-47688)).

10.28       Additional Affiliate Agreement dated as of July 12, 2000 by and
            between iPCS Wireless, Inc. and Lucent Technologies Inc.
            (Incorporated by reference to Exhibit 10.36 to the registration
            statement on Form S-4 filed by the company with the Commission on
            January 8, 2001 (SEC File No. 333-47688)).

10.29       First Amendment to Amended and Restated Credit Agreement and Consent
            dated as of February 23, 2001, by and among iPCS Wireless, Inc., as
            borrower, iPCS, Inc. and iPCS Equipment, Inc. as guarantors, and
            lenders named therein and Toronto Dominion (Texas), Inc., as
            administrative agent. (Incorporated by reference to Exhibit 10.37 to
            the annual report on Form 10-K405 filed by the company with the
            Commission on March 29, 2001).

10.30       Amendment No.2 to 1900 CDMA Additional Affiliate Supply Agreement by
            and among iPCS Wireless, Inc. and iPCS Equipment, Inc. and Nortel
            Networks Inc. (Incorporated by reference to Exhibit 10.38 to the
            annual report on Form 10-K405 filed by the company with the
            Commission on March 29, 2001).

10.31       Amended and Restated Interim Network Operating Agreement, dated as
            of March 1, 2001 by and between Sprint Spectrum LP and iPCS
            Wireless, Inc. (Incorporated by reference to Exhibit 10.39 to the
            annual report on Form 10-K405 filed by the company with the
            Commission on March 29, 2001).

10.32*      Build to Suit Agreement, dated as of December 29, 2000, by and
            between Trinity Wireless Towers, Inc., Trinity Wireless Services,
            Inc., SDS Wireless, Inc. and iPCS Wireless, Inc. (Incorporated by
            reference to Exhibit 10.41 to the annual report on Form 10-K405
            filed by the company with the Commission on March 29, 2001).

10.33*      Construction and Oversight Services Agreement, dated as of December
            29, 2000, by and between iPCS Wireless, Inc. and SDS Wireless, Inc.
            (Incorporated by reference to Exhibit 10.42 to the annual report on
            Form 10-K405 filed by the company with the Commission on March 29,
            2001).


                                       29

<PAGE>

10.34       Master Lease Agreement, dated as of August 31, 2000, by and between
            iPCS Wireless, Inc. and Trinity Wireless Towers, Inc. (Incorporated
            by reference to Exhibit 10.43 to the annual report on Form 10-K405
            filed by the company with the Commission on March 29, 2001).

10.35       First Amendment to Agreement Regarding Construction, Sale and
            Leaseback of Towers dated as of November 2000 by and between America
            Tower Corporation and iPCS Wireless, Inc. (Incorporated by reference
            to Exhibit 10.44 to the annual report on Form 10-K405 filed by the
            company with the Commission on March 29, 2001).

10.36       Agreement and Plan of Merger, dated as of August 28, 2001, by and
            between AirGate PCS, Inc. and iPCS, Inc. (Incorporated by reference
            to Exhibit 10.1 to the current report on Form 8-K filed by the
            company with the Commission on August 31, 2001).

10.37       Second Amendment to Amended and Restated Credit Agreement and
            Consent dated as of September 28, 2001, by and among iPCS Wireless,
            Inc., as borrower, iPCS, Inc. and iPCS Equipment, Inc. as
            guarantors, and lenders named therein and Toronto Dominion (Texas),
            Inc., as administrative agent. (Incorporated by reference to Exhibit
            10.40 to the quarterly report on Form 10-Q filed by the company with
            the Commission on November 14, 2001).

10.38       First Amendment of Amended and Restated Employment Agreement
            effective as of August 28, 2001 by and between iPCS Wireless, Inc.,
            Linda K. Wokoun and iPCS, Inc. (Incorporated by reference to Exhibit
            10.43 to the quarterly report on Form 10-Q filed by the company with
            the Commission on November 14, 2001).

10.39       First Amendment of Amended and Restated Employment Agreement
            effective as of August 28, 2001 by and between iPCS Wireless, Inc.,
            Stebbins B. Chandor, Jr. and iPCS, Inc. (Incorporated by reference
            to Exhibit 10.44 to the quarterly report on Form 10-Q filed by the
            company with the Commission on November 14, 2001).

10.40       First Amendment of Amended and Restated Employment Agreement
            effective as of August 28, 2001 by and between iPCS Wireless, Inc.,
            Anthony R. Muscato and iPCS, Inc. (Incorporated by reference to
            Exhibit 10.45 to the quarterly report on Form 10-Q filed by the
            company with the Commission on November 14, 2001).

----------
   * Confidential treatment has been requested on portions of these documents








                                       30

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on
February 14, 2002.

                           iPCS, INC.

                           By: /s/ Alan B. Catherall
                              --------------------------------------------------
                                   Alan B. Catherall
                                   Chief Financial Officer
                                   (Principal Financial and Accounting Officer)

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

<TABLE>

Signature                                     Title                                              Date
---------                                     -----                                              ----

<S>                                           <C>                                                <C>
     /s/ Thomas M. Dougherty                  President and Director (Principal Executive        February 14, 2002
-----------------------------------------     Officer)
         Thomas M. Dougherty


     /s/ Alan B. Catherall
-----------------------------------------     Vice President, Chief Financial Officer and        February 14, 2002
         Alan B. Catherall                    Director (Principal Financial and Accounting
                                              Officer)


    /s/ Barbara L. Blackford                  Director                                           February 14, 2002
-----------------------------------------
        Barbara L. Blackford


       /s/ Eric F. Ensor                      Director                                           February 14, 2002
-----------------------------------------
           Eric F. Ensor
</TABLE>



                                       31

<PAGE>

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR--CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S>                                                                                                  <C>
Independent Auditors' Report........................................................................ F-2
Consolidated Balance Sheets as of September 30, 2001, December 31, 2000 and 1999.................... F-3
Consolidated Statements of Operations for the Nine Months Ended September 30, 2001 and 2000, for the
  Year Ended December 31, 2000 and for the Period from January 22, 1999 (date of inception) through
  December 31, 1999................................................................................. F-4
Consolidated Statements of Redeemable Preferred Stock and Equity (Deficiency) for the Nine Months
  Ended September 30, 2001, for the Year Ended December 31, 2000 and for the Period from January 22,
  1999 (date of inception) through December 31, 1999................................................ F-5
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2001 and 2000, for the
  Year Ended December 31, 2000 and for the Period from January 22, 1999 (date of inception) through
  December 31, 1999................................................................................. F-6
Notes to Consolidated Financial Statements.......................................................... F-7
</TABLE>

                                      F-1

<PAGE>

                         INDEPENDENT AUDITORS' REPORT

iPCS, Inc.
Schaumburg, Illinois

   We have audited the accompanying consolidated balance sheets of iPCS, Inc.
and Subsidiaries and Predecessor (the "Company") as of September 30, 2001 and
December 31, 2000 and 1999, the consolidated statements of operations and of
cash flows for the nine months ended September 30, 2001 and 2000, for the year
ended December 31, 2000 and for the period from January 22, 1999 (date of
inception) through December 31, 1999, and the consolidated statements of
redeemable preferred stock and equity (deficiency) for the nine months ended
September 30, 2001, for the year ended December 31, 2000 and for the period
from January 22, 1999 (date of inception) through December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

   In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of September
30, 2001 and December 31, 2000 and 1999, and the results of its operations and
its cash flows for the nine months ended September 30, 2001 and 2000, for the
year ended December 31, 2000 and for the period from January 22, 1999 (date of
inception) through December 31, 1999 in conformity with accounting principles
generally accepted in the United States of America.

/s/  Deloitte & Touche LLP

Davenport, Iowa
November 5, 2001

                                      F-2

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

                          CONSOLIDATED BALANCE SHEETS
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                      December 31,
                                                                     September 30, -----------------
                                                                         2001        2000     1999
                                                                     ------------- --------  -------
                              Assets
                              ------
<S>                                                                  <C>           <C>       <C>
Current Assets:
   Cash and cash equivalents........................................   $  54,579   $165,958  $ 2,733
   Accounts receivable, less allowance: 2001--$2,713; 2000--$328;
     1999--$1.......................................................      14,964      5,350       92
   Other receivables................................................       1,604        231       39
   Inventories......................................................       3,379      3,314      927
   Prepaid expenses and other assets................................       4,799      1,839      432
                                                                       ---------   --------  -------
       Total current assets.........................................      79,325    176,692    4,223
Property and equipment including construction in progress, net......     198,161    129,087   39,106
Financing costs, less accumulated amortization: 2001--$1,173; 2000--
  $445; 1999--$66...................................................       9,558     10,045    1,514
Intangible assets, net..............................................      39,934     12,359       --
Other assets........................................................       1,778        392       --
                                                                       ---------   --------  -------
       Total assets.................................................   $ 328,756   $328,575  $44,843
                                                                       =========   ========  =======
  Liabilities, Redeemable Preferred Stock and Equity (Deficiency)
  ---------------------------------------------------------------
Current Liabilities:
   Accounts payable.................................................   $  31,410   $ 27,294  $ 3,839
   Accrued expenses.................................................       4,446      2,686      393
   Accrued interest.................................................          79         22      265
   Deferred revenue.................................................       4,742      1,346       --
   Capital lease obligations--current portion.......................           7         12       --
   Advance on tower sales...........................................          --         --    2,000
                                                                       ---------   --------  -------
       Total current liabilities....................................      40,684     31,360    6,497
Deferred gain on tower sales........................................       7,667      6,000    1,655
Deferred rent.......................................................       2,264         --       --
Deferred revenue....................................................       1,763        392       --
Capital lease obligations--long-term portion........................         373        225       --
Accrued interest....................................................      16,944      6,219       --
Long-term debt......................................................     191,392    157,581   27,571
                                                                       ---------   --------  -------
       Total liabilities............................................     261,087    201,777   35,723
                                                                       ---------   --------  -------
Redeemable preferred stock $0.01 par value; 75,000,000 shares
  authorized; 23,090,909 shares issued and outstanding..............     121,548    114,080       --
                                                                       ---------   --------  -------
Commitments and contingencies
Equity (Deficiency):
Common stock, $0.01 par value; 300,000,000 shares authorized;
  44,869,643 shares issued and outstanding..........................         449        449       --
Additional paid in capital..........................................      70,853     78,321       --
Contributed capital--Predecessor Company............................          --         --   13,500
Unearned compensation...............................................      (3,985)    (5,515)      --
Accumulated deficit.................................................    (121,196)   (60,537)  (4,380)
                                                                       ---------   --------  -------
       Total equity (deficiency)....................................     (53,879)    12,718    9,120
                                                                       ---------   --------  -------
       Total liabilities, redeemable preferred stock and equity
         (deficiency)...............................................   $ 328,756   $328,575  $44,843
                                                                       =========   ========  =======
</TABLE>
                See notes to consolidated financial statements.

                                      F-3

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                     For the Period from
                                              For the Nine Months Ended For the Year  January 22, 1999
                                                    September 30,          Ended     (date of inception)
                                              ------------------------  December 31,       through
                                                 2001         2000          2000      December 31, 1999
                                              -----------  -----------  ------------ -------------------
<S>                                           <C>          <C>          <C>          <C>
Revenues:
   Service................................... $    71,834  $     9,914  $    18,534      $        71
   Equipment and other.......................       5,678        1,700        2,695              144
                                              -----------  -----------  -----------      -----------
          Total revenues.....................      77,512       11,614       21,229              215
                                              -----------  -----------  -----------      -----------
Operating Expenses:
   Cost of service...........................      60,496        9,812       16,786            1,695
   Cost of equipment.........................      18,292        4,977       10,053              484
   Selling...................................      20,845        4,960       10,783              778
   General and administrative:
       Non-cash compensation.................       1,530       10,686       11,212               --
       Taxes on non-cash compensation........          --        1,567        1,567               --
       Other general and administrative......       8,635        4,694        9,319            1,520
       Depreciation and amortization.........      15,385        5,549        8,609              381
                                              -----------  -----------  -----------      -----------
          Total operating expenses...........     125,183       42,245       68,329            4,858
                                              -----------  -----------  -----------      -----------
Loss from operations                              (47,671)     (30,631)     (47,100)          (4,643)
Other Income (Expense):
   Interest income...........................       3,537        1,949        3,443               89
   Interest expense..........................     (16,995)      (6,259)     (11,741)              --
   Other income..............................         470          424          726              174
                                              -----------  -----------  -----------      -----------
Loss Before Extraordinary Item...............     (60,659)     (34,517)     (54,672)          (4,380)
Extraordinary item--loss on early
  extinguishment of debt.....................          --       (1,485)      (1,485)              --
                                              -----------  -----------  -----------      -----------
Net Loss..................................... $   (60,659) $   (36,002) $   (56,157)     $    (4,380)
                                              ===========  ===========  ===========      ===========
Loss before extraordinary item............... $   (60,659) $   (34,517) $   (54,672)     $    (4,380)
Beneficial conversion feature related to
  redeemable preferred stock.................          --      (46,387)     (46,387)              --
Dividends and accretion on redeemable
  preferred stock............................      (7,468)        (881)      (1,963)              --
                                              -----------  -----------  -----------      -----------
Loss available to common stockholders........     (68,127)     (81,785)    (103,022)          (4,380)
Extraordinary item...........................          --       (1,485)      (1,485)              --
                                              -----------  -----------  -----------      -----------
Net loss available to common stockholders.... $   (68,127) $   (83,270) $  (104,507)     $    (4,380)
                                              ===========  ===========  ===========      ===========
Pro forma basic and diluted loss per share of
  common stock (unaudited):
   Loss available to common stockholders
     before extraordinary item............... $     (1.52) $     (1.83) $     (2.30)     $     (0.10)
   Extraordinary item........................ $        --  $     (0.03) $     (0.03)     $        --
   Net loss available to common stockholders. $     (1.52) $     (1.86) $     (2.33)     $     (0.10)
Pro forma weighted average common shares
  outstanding (unaudited)....................  44,869,643   44,869,643   44,869,643       44,869,643
                                              ===========  ===========  ===========      ===========
</TABLE>

                See notes to consolidated financial statements.

                                      F-4

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

             CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK
                            AND EQUITY (DEFICIENCY)
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                   Redeemable     |                              Contributed
                                 Preferred Stock  |   Common Stock    Additional  Capital-
                               -------------------| -----------------  Paid in   Predecessor   Unearned   Accumulated
                                 Shares    Amount |   Shares   Amount  Capital     Company   Compensation   Deficit
                               ---------- --------| ---------- ------ ---------- ----------- ------------ -----------
<S>                            <C>        <C>      <C>        <C>    <C>        <C>         <C>          <C>
BALANCE AT JANUARY 22,                            |
 1999 (DATE OF                                    |
 INCEPTION)                                       |
Members' contributions........                    |                              $ 13,500
Net loss......................                    |                                                       $  (4,380)
                                                  |                              --------                 ---------
BALANCE AT DECEMBER                               |
 31, 1999                                         |                                13,500                    (4,380)
Members' contributions from                       |
 January 1, 2000 to July 11,                      |
 2000.........................                    |                                16,500
Issuance of 1.5% interest in                      |
 Predecessor Company to                           |
 Mr. Yager....................                    |                                 8,480
Reorganization of Predecessor                     |
 Company to C Corporation.....                    |44,869,643  $449   $ 38,031    (38,480)
Sale of Series A-1 redeemable                     |
 preferred stock..............  9,090,909 $ 46,387|
Beneficial conversion feature                     |
 related to Series A-1                            |
 redeemable preferred stock...                    |                     46,387
Accretion of Series A-1                           |
 redeemable preferred                             |
 stock beneficial conversion                      |
 feature......................                    |                    (46,387)
Grant of stock options........                    |                      8,247                $(8,247)
Amortization of unearned                          |
 compensation.................                    |                                             2,732
Issuance of warrants in                           |
 connection with the senior                       |
 discount notes...............                    |                     24,859
Issuance of warrants to Sprint                    |
 PCS..........................                    |                      9,147
Sale of Series A-2 redeemable                     |
 preferred stock.............. 14,000,000   65,730|
Accrued dividends on                              |
 redeemable preferred stock...               1,808|                     (1,808)
Accretion to redemption amount                    |
 of redeemable preferred stock                 155|                       (155)
Net loss......................                    |                                                         (56,157)
                               ---------- --------|----------  ----   --------   --------     -------     ---------
BALANCE AT DECEMBER                               |
 31, 2000                      23,090,909  114,080|44,869,643   449     78,321                 (5,515)      (60,537)
Accrued dividends on                              |
 redeemable preferred stock...               6,937|                     (6,937)
Accretion to redemption amount                    |
 of redeemable preferred stock                 531|                       (531)
Amortization of unearned                          |
 compensation.................                    |                                             1,530
Net loss......................                    |                                                         (60,659)
                               ---------- --------|----------  ----   --------   --------     -------     ---------
BALANCE AT SEPTEMBER 30, 2001. 23,090,909 $121,548|44,869,643  $449   $ 70,853   $     --     $(3,985)    $(121,196)
                               ========== ========|==========  ====   ========   ========     =======     =========
</TABLE>

                See notes to consolidated financial statements.

                                      F-5

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)

<TABLE>
<CAPTION>
                                                               For the Nine Months                   For the Period from
                                                                      Ended               For the     January 22, 1999
                                                                  September 30,          Year Ended  (date of inception)
                                                               -------------------      December 31,       through
                                                                 2001         2000          2000      December 31, 1999
                                                               ---------    --------    ------------ -------------------
<S>                                                            <C>          <C>         <C>          <C>
Cash Flows from Operating Activities:
  Net loss.................................................... $ (60,659)   $(36,002)     $(56,157)       $ (4,380)
  Adjustments to reconcile net loss to net cash
   flows from operating activities:
   Depreciation and amortization..............................    15,385       5,549         8,609             381
   Loss on disposal of property and equipment.................     1,042          56            56              --
   Gain on tower sales........................................    (1,509)       (479)         (778)           (174)
   Amortization of deferred gain on tower sales...............      (543)       (180)         (298)            (22)
   Amortization of deferred rent..............................      (135)         --            --              --
   Amortization of financing costs............................       729         234           604              --
   Non-cash interest..........................................     8,842       2,322         5,109              --
   Extraordinary loss on early extinguishment of debt.........        --       1,485         1,485              --
   Non-cash compensation......................................     1,530      10,686        11,212              --
   Changes in assets and liabilities:
    Accounts receivable.......................................    (8,657)     (3,313)       (5,258)            (92)
    Other receivables.........................................      (650)       (141)         (192)            (39)
    Inventories...............................................       (66)        222        (2,387)           (927)
    Prepaid expenses and other assets.........................    (4,333)     (2,259)       (1,799)           (432)
    Accounts payable, accrued expenses and accrued interest...    27,509       9,395        16,020           1,758
    Deferred revenue..........................................     4,768         521         1,738              --
                                                               ---------    --------      --------        --------
      Net cash flows from operating activities................   (16,747)    (11,904)      (22,036)         (3,927)
                                                               ---------    --------      --------        --------
Cash Flows from Investing Activities:
  Capital expenditures........................................   (98,394)    (65,194)      (90,993)        (39,331)
  Intangible acquired in purchase of network assets...........        --      (3,526)       (3,526)             --
  Acquisition of the Iowa City/Cedar Rapids, Iowa markets.....   (31,678)         --            --              --
  Proceeds from disposition of fixed assets...................        42          --            --              --
  Proceeds from build to suit agreement.......................     2,496          --            --              --
  Proceeds from tower sales...................................     8,204       8,500        12,036           4,500
  Advance on tower sales......................................        --          --            --           2,000
                                                               ---------    --------      --------        --------
      Net cash flows from investing activities................  (119,330)    (60,220)      (82,483)        (32,831)
                                                               ---------    --------      --------        --------
Cash Flows from Financing Activities:
  Proceeds from long-term debt................................    25,000     165,106       190,106          27,571
  Repayment of Nortel debt....................................        --     (40,346)      (40,346)             --
  Payments on capital lease obligations.......................       (13)         --           (13)             --
  Debt financing costs........................................      (243)    (10,023)      (10,620)         (1,580)
  Interest rate protection costs..............................       (46)         --            --              --
  Proceeds from sale of Series A-1 redeemable preferred
   stock, net of offering costs of $3,613.....................        --      46,387        46,387              --
  Proceeds from sale of Series A-2 redeemable preferred
   stock, net of offering costs of $4,270.....................        --          --        65,730              --
  Members' contributions......................................        --      16,500        16,500          13,500
                                                               ---------    --------      --------        --------
      Net cash flows from financing activities................    24,698     177,624       267,744          39,491
                                                               ---------    --------      --------        --------
Increase (decrease) in cash and cash equivalents..............  (111,379)    105,500       163,225           2,733
Cash and cash equivalents at beginning of period..............   165,958       2,733         2,733              --
                                                               ---------    --------      --------        --------
Cash and cash equivalents at end of period.................... $  54,579    $108,233      $165,958        $  2,733
                                                               =========    ========      ========        ========
</TABLE>

                See notes to consolidated financial statements.

                                      F-6

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. ORGANIZATION AND BUSINESS OPERATIONS

   Illinois PCS, LLC was formed in January 1999 as an Illinois limited
liability company for the purpose of becoming a provider of wireless personal
communication services ("PCS"). On July 12, 2000, Illinois PCS, LLC (the
"Predecessor Company") reorganized its business into a C Corporation in which
members of the Predecessor Company received 44,869,643 shares of common stock
of iPCS, Inc. in exchange for their ownership interests in the Predecessor
Company. The ownership percentages among the members following the
reorganization remained consistent with the ownership percentages at December
31, 1999 as adjusted for the effects of the agreement described in Note 15. As
of July 12, 2000, the Predecessor Company merged with and into iPCS Wireless,
Inc., a wholly owned subsidiary of iPCS, Inc. iPCS Equipment, Inc. was also
formed and is a wholly owned subsidiary of iPCS Wireless, Inc. iPCS Wireless,
Inc. has continued the activities of the Predecessor Company and, for
accounting purposes, this transaction was accounted for as a reorganization of
the Predecessor Company into a C Corporation. iPCS, Inc. and its subsidiaries,
including the Predecessor Company, are collectively referred to as the
"Company."

   In January 1999, the Company entered into affiliation agreements (the
"Sprint PCS Agreements") with Sprint Communications Company, L.P. ("Sprint")
and Sprint Spectrum L.P. and SprintCom, Inc., entities controlled by the PCS
Group of Sprint ("Sprint PCS"). The Sprint PCS Agreements, as amended, provide
the Company with the exclusive right to build, own and manage a wireless voice
and data services network in 37 basic trading areas ("BTAs") located in
Illinois, Iowa, Michigan and Nebraska under the Sprint PCS brand.

   The PCS market is characterized by significant risks as a result of rapid
changes in technology, increasing competition and the cost associated with the
build-out of a PCS network. The Company's continuing operations are dependent
upon Sprint PCS' ability to perform its obligations under the Sprint PCS
Agreements and the ability of the Company to raise sufficient capital to fund
operating losses, to meet debt service requirements, and to complete the
build-out of its PCS network. Additionally, the Company's ability to attract
and maintain a sufficient customer base is critical to achieving breakeven
operating cash flow. Changes in technology, increased competition, or the
inability to obtain required financing or achieve breakeven operating cash
flow, among other factors, could have an adverse effect on the Company's
financial position and results of operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation:

   The consolidated financial statements of the Company include its
subsidiaries, iPCS Wireless, Inc. and iPCS Equipment, Inc., and the Predecessor
Company. All significant intercompany accounts or balances have been eliminated
in consolidation.

Use of Estimates:

   The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Concentration of Risk:

   The Company's operations as currently conducted rely heavily on critical
functions performed by Sprint PCS. The termination of the Company's strategic
relationship with Sprint PCS or Sprint PCS' failure to perform its obligations
under the Sprint PCS Agreements (see Note 3) would severely restrict the
Company's ability to conduct its business.

                                      F-7

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The Company maintains cash and cash equivalents in accounts with a financial
institution in excess of the amount insured by the Federal Deposit Insurance
Corporation. The Company monitors the financial stability of this institution
regularly and management does not believe there is significant credit risk
associated with deposits in excess of federally insured amounts.

Cash and Cash Equivalents:

   For purposes of reporting cash flows, the Company considers all highly
liquid investments, with an original maturity of three months or less at the
time of purchase, to be a cash equivalent.

Inventories:

   Inventories consist of handsets and related accessories. Inventories
purchased for resale will be carried at the lower of cost, determined using
weighted average cost, or market, determined using replacement cost.

Property, Equipment and Construction in Progress:

   Property and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation is provided using the straight-line method over the
estimated useful lives of the assets. Asset lives used by the Company are as
follows:

<TABLE>
<CAPTION>
                                                                 Useful life:
                                                                 -------------
<S>                                                              <C>
Network assets.................................................. 3 to 15 years
Computer equipment.............................................. 3 to 5 years
Furniture, fixtures, office equipment and leasehold improvements 5 to 21 years
</TABLE>

   Construction in progress includes expenditures for the purchase of capital
equipment, design services, and construction services of the Company's network.
The Company capitalizes interest on its construction in progress activities.
Interest capitalized for the nine months ended September 30, 2001 and 2000, for
the year ended December 31, 2000 and for the period ended December 31, 1999
totaled approximately $6.6 million, $1.5 million, $3.0 million, and $0.5
million, respectively. When the network assets are placed in service, the
Company transfers the assets from construction in progress to network assets
and depreciates those assets over their estimated useful life.

Financing Costs:

   Deferred financing costs are amortized as interest expense over the term of
the respective financing using the effective interest method.

Income Taxes:

   Prior to July 12, 2000, the Predecessor Company operated as a limited
liability company ("LLC") and, as a result, its losses were included in the
income tax returns of its members. Therefore, the accompanying consolidated
financial statements do not include any income tax amounts prior to July 12,
2000. Subsequent to July 12, 2000, the date of reorganization as discussed in
Note 1, the Company became a C Corporation and began accounting for income
taxes in accordance with Statement on Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes." Deferred income taxes are provided for
the tax consequences in future years of temporary differences between the tax
basis of assets and liabilities and their financial reporting amounts, based on
enacted tax laws and the tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax

                                      F-8

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

assets to the amounts expected to be realized. Income tax expense is the tax
payable for the year and the change during the period in deferred tax assets
and liabilities. The Company has not provided any pro forma income tax
information because any net deferred tax asset would have been offset by a full
valuation allowance due to the Company's losses since inception.

Revenue Recognition:

   The Company began offering service to customers in December 1999.

   The Company recognizes revenue as services are performed. Sprint PCS
collects all revenues from the Company's customers and remits the net amount to
the Company. An affiliation fee of 8% of collected service revenues from Sprint
PCS subscribers based in the Company's territory, excluding outbound roaming,
and from non-Sprint PCS subscribers who roam onto the Company's network is
retained by Sprint PCS and recorded as a cost of service. Revenues generated
from the sale of handsets and accessories, inbound Sprint PCS roaming fees, and
from roaming services provided to Sprint PCS customers who are not based in the
Company's territory are not subject to the 8% affiliation fee.

   Sprint PCS pays the Company a Sprint PCS roaming fee for each minute that a
Sprint PCS subscriber based outside of the Company's territory roams onto the
Company's network. Revenues from these services are recognized as the services
are performed. Similarly, the Company pays roaming fees to Sprint PCS when a
Sprint PCS subscriber based in the Company's territory roams on the Sprint PCS
network outside of the Company's territory. These costs are included as cost of
services when incurred.

   Equipment revenues consisting of proceeds from sales of handsets and
accessories are recorded net of an allowance for sales returns. The allowance
is estimated based on Sprint PCS' handset return policy, which allowed
customers to return handsets for a full refund within 14 days of purchase at
September 30, 2001 and December 31, 2000 and within 30 days of purchase at
December 31, 1999. When handsets are returned to the Company, the Company may
be able to reissue the handsets in the future to other customers at little
additional cost. However, when handsets are returned to Sprint PCS for
refurbishing, the Company receives a credit from Sprint PCS, which is less than
the amount the Company originally paid for the handset.

   Prior to January 1, 2001, the Company recorded promotional cash credits and
rebates granted to customers as expenses. Effective January 1, 2001, the
Company adopted the Emerging Issues Task Force ("EITF") 00-14, "Accounting for
Certain Sales Incentives." The EITF requires that, when recognized, the
reduction in or refund of the selling price of the product or service resulting
from any cash incentive should be classified as a reduction in revenue and not
as an operating expense. The Company adopted EITF 00-14 in the first quarter of
2001. For the nine months ended September 30, 2001, a reduction in revenue of
approximately $10.4 million, and an offsetting reduction in operating expenses,
was recorded. In accordance with the provisions of EITF 00-14, approximately
$1.0 million and $2.7 million of operating expenses for the nine months ended
September 30, 2000 and for the year ended December 31, 2000, respectively, have
been reclassified as a reduction in revenue.

   The Company recognizes activation fee revenue over the periods such revenue
is earned in accordance with SEC Staff Accounting Bulletin No. 101 ("SAB 101"),
"Revenue Recognition in Financial Statements." SAB 101 was adopted by the
Company in the fourth quarter of 2000. Accordingly, activation fee revenue and
direct customer activation expense have been deferred and are being recognized
over the average life for customers assessed an activation fee (30 months). For
the nine months ended September 30, 2001, the Company recognized approximately
$0.8 million of activation fee revenue and direct customer activation fee
expense and has deferred approximately $2.8 million of activation fee revenue
and direct customer activation expense to future periods. During the year ended
December 31, 2000, the Company recognized approximately $42,000 of activation
fee

                                      F-9

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


revenue and direct customer activation expense and deferred approximately $0.7
million of activation fee revenue and direct customer activation expense to
future periods.

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of:

   The Company accounts for long-lived assets in accordance with the provisions
of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed Of." SFAS No. 121 requires that long-lived
assets and certain identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. If such events or changes in circumstances occur,
the Company will recognize an impairment loss if the undiscounted future cash
flows expected to be generated by the asset (or acquired business) are less
than the carrying value of the related asset. The impairment loss would adjust
the asset to its fair value. The Company has identified no such impairment
losses.

Advertising Costs:

   The Company expenses advertising costs when the advertisement occurs. Total
advertising expense was approximately $6.1 million, $1.9 million, $4.0 million
and $0.2 million for the nine months ended September 30, 2001 and 2000, for the
year ended December 31, 2000 and for the period ended December 31, 1999,
respectively.

Stock Compensation:

   As allowed by SFAS No. 123, "Accounting for Stock Based Compensation" ("SFAS
No. 123"), the Company has chosen to account for compensation expense
associated with its stock option plan in accordance with Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees" and
related interpretations. The Company will disclose pro forma net loss as if
compensation expense had been determined consistent with SFAS No. 123.

Comprehensive Income:

   A statement of comprehensive income has not been included in the
accompanying consolidated financial statements since the Company does not have
any "Other Comprehensive Income" to report.

Accretion on Redeemable Preferred Stock:

   Up to the date of redemption, the Company accretes the carrying value of the
redeemable preferred stock to the redemption amount using the effective
interest method.

Cumulative Dividends on Redeemable Preferred Stock:

   Cumulative dividends on the redeemable preferred stock are recorded as a
charge to additional paid-in-capital and an increase to the carrying value of
the redeemable preferred stock as the dividends are earned by the holders.

Pro Forma Loss Per Share (Unaudited):

   Pro forma basic and diluted loss per share are calculated by dividing the
net loss available to common stockholders by the pro forma weighted average
number of shares of common stock of iPCS, Inc. as if the shares of common stock
of iPCS, Inc. into which the Predecessor Company's members' interests were
converted had

                                     F-10

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

been outstanding for all of the periods presented. The calculation was made in
accordance with SFAS No. 128, "Earnings Per Share." The pro forma basic and
diluted loss per share are the same because the inclusion of the incremental
potential common shares from any assumed conversion of redeemable preferred
stock or exercise of options and warrants is antidilutive.

   Potential common shares excluded from the pro forma loss per share
computations because they were antidilutive are as follows:

<TABLE>
<CAPTION>
                                  For the Nine Months Ended            For the
                            -------------------------------------    Year Ended
                            September 30, 2001 September 30, 2000 December 31, 2000
                            ------------------ ------------------ -----------------
<S>                         <C>                <C>                <C>
Convertible preferred stock     23,090,909          9,090,909        23,090,909
Options....................      3,005,251          1,556,000         1,590,000
Warrants...................      4,134,637          4,134,637         4,134,637
                                ----------         ----------        ----------
       Total...............     30,230,797         14,781,546        28,815,546
                                ==========         ==========        ==========
</TABLE>

Recently Issued Accounting Pronouncements:

   In August 2001, the Financial Accounting Standards Board, ("FASB") issued
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets."
SFAS No. 144 provides new guidance on the recognition of impairment losses on
long-lived assets to be held and used or to be disposed of and also broadens
the definition of what constitutes a discontinued operation and how the results
of a discontinued operation are to be measured and presented. SFAS No. 144 is
effective for the Company's fiscal year beginning in 2002 and is not expected
to materially change the methods used by the Company to measure impairment
losses on long-lived assets.

   In July 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting, and broadens the criteria for recording
intangible assets separate from goodwill. Recorded goodwill and intangibles
will be evaluated against this new criteria and may result in certain
intangibles being subsumed into goodwill, or alternatively, amounts initially
recorded as goodwill may be separately identified and recognized apart from
goodwill. SFAS No. 142 requires the use of a non-amortization approach to
account for purchased goodwill and certain intangibles. Under a
non-amortization approach, goodwill and certain intangibles will not be
amortized into results of operations, but instead will be reviewed for
impairment and written down and charged to results of operations only in the
periods in which the recorded value of goodwill and certain intangibles is more
than its fair value. The provisions of each statement which apply to goodwill
and intangible assets acquired prior to June 30, 2001 will be adopted by the
Company on January 1, 2002. The Company is currently assessing but has not yet
determined the impact of these pronouncements on its financial position and
results of operations.

   In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities," an amendment of SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," which
is effective for all fiscal years beginning after June 15, 2000. The adoption
by the Company on January 1, 2001 did not have an effect on the Company's
results of operations, financial position, or cash flows. However, as discussed
in Note 10, the Company did enter into an interest rate cap agreement on
January 12, 2001.

   In March 2000, the FASB issued Interpretation No. 44, ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation--an
Interpretation of Accounting Principles Board Opinion 25" ("Opinion 25"). FIN
44 clarifies (a) the definition of employee for purposes of applying Opinion
25, (b) the criteria for

                                     F-11

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

determining whether a plan qualifies as a noncompensatory plan, (c) the
accounting consequences of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. FIN 44 was effective July 1,
2000; however, certain conclusions in FIN 44 cover specific events that occur
after either December 15, 1998 or January 12, 2000. The adoption of FIN 44 did
not have an effect on the Company's results of operations, financial position,
or cash flows.

Reclassifications:

   Certain amounts in prior periods' financial statements have been
reclassified to conform to the current year's presentation.

3. SPRINT PCS AGREEMENTS

   In January 1999, the Company signed the following four agreements with
Sprint and Sprint PCS: management agreement, services agreement, trademark and
service license agreement with Sprint PCS, and the trademark and service
license agreement with Sprint. These agreements allow the Company to
exclusively offer Sprint PCS services in the Company's territory.

   The management agreement has an initial term of 20 years with three 10-year
automatic renewals. The management agreement can be terminated as a result of a
number of events including an uncured breach of the management agreement or
bankruptcy of either party to the agreement. In the event that the management
agreement is terminated or not renewed, certain formulas apply to the valuation
and disposition of the Company's assets. The key clauses of the management
agreement are summarized as follows:

      (a) Exclusivity: The Company is designated as the only person or entity
   that can manage or operate a PCS network for Sprint PCS in the Company's
   territory. Sprint PCS is prohibited from owning, operating, building or
   managing another wireless mobility communications network in the Company's
   territory while the management agreement is in place.

      (b) Network build-out: The Company has agreed to build out the service
   area network in accordance with build-out plans developed jointly by Sprint
   PCS and the Company. Sprint PCS and the Company intend to expand network
   coverage to cover population areas of at least ten thousand residents and
   all interstate and major highways.

      (c) Products and services offered for sale: The management agreement
   identifies the products and services that can be offered for sale in the
   Company's territory. The Company cannot offer wireless local loop services
   specifically designed for the competitive local market in areas where Sprint
   owns the local exchange carrier unless the Sprint-owned local exchange
   carrier is named as the exclusive distributor or Sprint PCS approves the
   terms and conditions.

      (d) Service pricing: The Company must offer Sprint PCS subscriber pricing
   plans designated for regional or national offerings. With prior approval
   from Sprint PCS, the Company is permitted to establish local price plans for
   Sprint PCS products and services offered only in the Company's territory.
   Sprint PCS will pay to the Company 92% of the Company's collected service
   revenues and of its roaming revenues from non-Sprint PCS subscribers but
   will remit 100% of revenues derived from roaming of other Sprint PCS
   customers and sales of handsets and accessories and proceeds from sales not
   in the ordinary course of business.

      (e) Roaming: When a Sprint PCS customer from outside of the Company's
   territory roams onto the Company's network, the Company will earn roaming
   revenues based on established rates. Similarly, the

                                     F-12

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

   Company will pay Sprint PCS when the Company's own subscribers use the
   Sprint PCS nationwide network outside the Company's territory.

      (f) Advertising and promotion: Sprint PCS is responsible for all national
   advertising and promotion of Sprint PCS products and services. The Company
   is responsible for advertising and promotion in the Company's territory.

      (g) Program requirements including technical and customer care standards:
   The Company will comply with Sprint PCS' program requirements for technical
   standards, customer service standards, national and regional distribution
   and national accounts programs.

      (h) Non-competition: The Company may not offer Sprint PCS products and
   services outside the Company's territory.

      (i) Inability to use non-Sprint PCS brands: The Company may not market,
   promote, advertise, distribute, lease or sell any of the Sprint PCS products
   on a non-branded, "private label" basis or under any brand, trademark or
   trade name other than the Sprint PCS brand, except for sales to resellers.

      (j) Rights of first refusal: Sprint PCS has certain rights of first
   refusal to buy the Company's assets upon a proposed sale.

   The services agreement outlines various support services such as activation,
billing, collections and customer care that will be provided to the Company by
Sprint PCS. These services are available to the Company at established rates.
Sprint PCS can change any or all of the service rates one time in each twelve
month period. The Company may discontinue the use of any service upon three
months written notice. Sprint PCS may discontinue a service provided that
Sprint PCS provides the Company with nine months prior written notice. The
services agreement automatically terminates upon termination of the management
agreement.

   The trademark and service mark license agreements with Sprint and Sprint PCS
provide the Company with non-transferable, royalty free licenses to use the
Sprint and Sprint PCS brand names, the "diamond" symbol and several other
trademarks and service marks. The Company's use of the licensed marks is
subject to adherence to quality standards determined by Sprint and Sprint PCS.
Sprint and Sprint PCS can terminate the trademark and service mark license
agreements if the Company files for bankruptcy, materially breaches the
agreement or if the management agreement is terminated.

   Amounts related to the Sprint PCS Agreements are as follows (in thousands):

<TABLE>
<CAPTION>
                                                 Nine Months Ended       Year        Period
                                                   September 30,        Ended        Ended
                                                -------------------- December 31, December 31,
                                                    2001       2000      2000         1999
                                                ------------- ------ ------------ ------------
<S>                                             <C>           <C>    <C>          <C>
Amounts included in the Consolidated Statements
  of Operations:
   Cost of service.............................    $38,140    $4,492   $ 8,570        $115
   Cost of equipment...........................     18,290     5,023    10,255         222
   Selling expense.............................      2,600       695     1,184          81
   General and administrative expense..........         39        22        36           7
                                                                 December 31,
                                                September 30, ---------------
                                                    2001       2000      1999
                                                ------------- ------ ------------
Amount included in the Consolidated Balance
  Sheets:
   Inventory...................................    $ 3,379    $3,236   $   918
   Accounts receivable due from Sprint PCS,
     net.......................................     15,105     5,499        92
   Accounts payable due to Sprint PCS..........     10,306     6,610       663
</TABLE>

                                     F-13

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. PROPERTY AND EQUIPMENT INCLUDING CONSTRUCTION IN PROGRESS

   Property and equipment including construction in progress consists of the
following (in thousands):

<TABLE>
<CAPTION>
                                                                     December 31,
                                                    September 30, -----------------
                                                        2001        2000     1999
                                                    ------------- --------  -------
<S>                                                 <C>           <C>       <C>
Network assets.....................................   $148,351    $ 82,094  $22,737
Computer equipment.................................      3,153       1,816      675
Furniture, fixtures, office equipment and leasehold
  improvements.....................................      4,170       2,698      626
                                                      --------    --------  -------
Total property and equipment.......................    155,674      86,608   24,038
Less accumulated depreciation and amortization.....    (22,067)     (8,338)    (315)
                                                      --------    --------  -------
Property and equipment, net........................    133,607      78,270   23,723
Construction in progress (network build-out).......     64,554      50,817   15,383
                                                      --------    --------  -------
Property and equipment including construction in
  progress, net....................................   $198,161    $129,087  $39,106
                                                      ========    ========  =======
</TABLE>

   The Company has reclassified the December 31, 2000 microwave relocation
costs totaling $2.3 million from intangible assets to property and equipment to
be consistent with industry practice.

5. INTANGIBLE ASSETS

   Intangible assets consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                           September 30, December 31,
                                                               2001          2000
                                                           ------------- ------------
<S>                                                        <C>           <C>
Exclusive provider rights which arose with the issuance of
  warrants to Sprint PCS (see Note 6).....................    $ 9,147      $ 9,147
Exclusive provider rights which arose with the purchase of
  assets in Michigan from Sprint PCS (see Note 6).........      3,526        3,526
Exclusive provider rights which arose with the acquisition
  of the Iowa markets from Sprint PCS (see Note 6)........     29,039           --
                                                              -------      -------
Total intangible assets...................................     41,712       12,673
Less accumulated amortization.............................     (1,778)        (314)
                                                              -------      -------
Intangible assets, net....................................    $39,934      $12,359
                                                              =======      =======
</TABLE>

6. AMENDMENTS TO SPRINT PCS AGREEMENT

   On March 8, 2000, the Company entered into an amendment to the Sprint PCS
agreements to expand its service area to include 20 BTAs located in Michigan,
Iowa and Nebraska (the "Expansion"). In connection with the Expansion, the
Company agreed to purchase certain network assets under construction in four
BTAs in Michigan, for a purchase price to be determined on the closing date
based upon the assets to be purchased and the stage of completion of those
assets as of the closing date. In addition, in connection with the Expansion,
the Company was granted an option, exercisable by the Company at any time prior
to January 31, 2001, to add the Iowa City and Cedar Rapids, Iowa BTAs to its
service area. As consideration to be the exclusive provider of Sprint PCS
services in the Expansion territory, the Company committed to grant to Sprint
PCS a warrant to acquire 2% of the equity of the Company at the earliest of
July 15, 2000, the closing of an initial public offering, or the consummation
of a private placement of equity in an amount equal to at least $70.0 million.
In connection

                                     F-14

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

with the closing of the sale of the convertible preferred stock discussed in
Note 14, the Company issued Sprint PCS a warrant to acquire 1,151,938 shares of
common stock of the Company on July 12, 2000 at an exercise price of $4.95 per
share. The warrants are exercisable by Sprint PCS beginning on or after July
15, 2001 and expiring on July 15, 2007. The fair value of the warrants, as
determined using the Black-Scholes model, was approximately $9.1 million and
was recorded as an increase to paid in capital with a corresponding amount
recorded as an intangible asset representing the right to be the exclusive
provider of Sprint PCS services in the Expansion territory. Such intangible
asset is being amortized over a life of 18.5 years, which is the remaining term
of the Sprint PCS agreement at the date the warrants were issued. The fair
value of the warrants was calculated using the following assumptions:

      (1) risk free interest rate of 6.35%;

      (2) stock price based on a planned initial public offering;

      (3) dividend yield of 0%;

      (4) life of 7 years; and

      (5) volatility of 40%.

   Also, on July 12, 2000 the Company purchased the assets under construction
in Michigan from Sprint PCS for approximately $12.7 million. The Company
allocated approximately $9.2 million of the purchase price to property based on
the fair value of the assets acquired, with the excess amount of $3.5 million
allocated to the intangible asset representing the right to be the exclusive
provider of Sprint PCS services in Michigan. The intangible asset is being
amortized over a life of 18.5 years, which is the remaining term of the Sprint
PCS agreement at the date the assets were acquired.

   On January 10, 2001 the Company exercised its option to purchase from Sprint
PCS certain telecommunications equipment and retail store assets and inventory
located in the Iowa City and Cedar Rapids, Iowa markets. Concurrently with the
closing, the Sprint PCS Management Agreement which sets forth the terms of the
Company's long-term affiliation with Sprint PCS was amended to reflect the
expansion of the Company's territory to include these two additional Iowa
markets which included approximately 14,000 customers. The Company closed on
this transaction on February 28, 2001 and paid approximately $31.7 million for
these two markets. The Company has accounted for this business combination
using the purchase method. The Company made a preliminary allocation of the
purchase price based on the fair values of the tangible assets and liabilities
acquired and allocated any excess amount over fair value to the intangible
asset representing the right to be the exclusive provider of Sprint PCS
services in the Iowa City and Cedar Rapids, Iowa markets.

7. DEFERRED GAIN ON TOWER SALES

   On May 28, 1999 the Company signed a tower sale and leaseback agreement with
American Tower Corporation ("American Tower"). Under the agreement, the Company
was to locate sites for, develop and construct between sixty and eighty
wireless communication towers and then sell the towers to American Tower. The
term of this agreement was to expire at the earlier of the final tower sale or
December 31, 2000. In November 2000, the agreement was amended to extend the
expiration date to February 28, 2001 for the sale of the first eighty towers
and to increase the sales price from $250,000 to $272,000 for any tower with an
extendable height of 249 feet.

   In 1999, American Tower advanced $2.0 million to the Company for the
purchases of the fifty-third through sixtieth towers. If the Company did not
construct and sell the required number of towers to American Tower by December
31, 2000, the Company was required to repay the advance plus accrued interest
at 5%. The advance on

                                     F-15

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

tower sales of $2.0 million at December 31, 1999 was reduced to zero because
the fifty-third through sixtieth towers were sold by November 21, 2000.

   For the period ended December 31, 1999, eighteen towers were sold to
American Tower for $4.5 million in cash, resulting in a gain of $1.9 million,
of which approximately $0.2 million was recognized at the time of the sale and
the remainder was deferred and is being amortized as a reduction to rental
expense over the initial lease term of ten years.

   During the year ended December 31, 2000, fifty-five towers were sold to
American Tower for approximately $14.0 million, of which approximately $12.0
million was received in cash and $2.0 million represented a reduction in the
advance on tower sales. These tower sales resulted in a gain of approximately
$5.4 million, of which approximately $0.8 million was recognized at the time of
the sale and the remainder was deferred and is being amortized as a reduction
to rental expense over the initial lease term of ten years.

   On January 2, 2001, twelve towers were sold to American Tower for
approximately $3.4 million, resulting in a gain of approximately $1.6 million
of which approximately $0.5 million was recognized at the time of the sale and
the remainder was deferred and is being amortized as a reduction to rental
expense over the initial lease term of ten years. The sale of the first seven
towers in this transaction satisfied the terms of the agreement signed in 1999.
The remaining five towers were sold as individual tower sales to American Tower.

   On June 29, 2001, the Company signed a tower sale and leaseback agreement
with Trinity Towers Wireless, Inc. ("Trinity"). The Company has constructed
wireless communication towers, which it agreed to sell and lease back a portion
of these towers from Trinity. The agreement expires on December 31, 2001.

   On June 29, 2001, the Company sold sixteen towers to Trinity for
approximately $4.8 million, resulting in a gain of approximately $2.1 million
of which approximately $1.0 million was recognized at the time of the sale and
the remainder was deferred and is being amortized as a reduction to rental
expense over the initial lease term of five years.

   Upon the sale of a tower, the Company leases a portion, generally one-third,
of the tower to collocate antennas and other network communication equipment.
The leases are operating leases with initial terms between five and ten years.

8. DEFERRED RENT

   On December 29, 2000, the Company signed a build-to-suit agreement with
Trinity whereby the Company agreed to locate and obtain ground leases for tower
sites and deliver assignments of these leases to Trinity for at least
seventy-five towers located in Iowa and Nebraska. Trinity agreed to reimburse
the Company for site acquisition and development costs, build a tower at these
sites, and purchase the site at the time of the commencement of the tower lease
with Trinity.

   During the nine months ended September 30, 2001, the Company entered into
tower leases for forty-six sites under this agreement. The Company received
approximately $2.4 million from Trinity and recorded this amount as deferred
tower rent which will be amortized as a reduction to rental expense over the
life of the initial tower lease term of five years.

                                     F-16

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


9. INCOME TAXES

   Because the Predecessor Company was a nontaxable entity, the results
presented below relate solely to the periods subsequent to July 12, 2000.

   The income tax expense (benefit) for the period differed from the amounts
computed by applying the statutory U.S. Federal income tax rate of 35% as set
forth below:

<TABLE>
<CAPTION>
                                                 Nine Months Ended
                                                   September 30,    Year Ended
                                                 ----------------  December 31,
                                                  2001      2000       2000
                                                 ------    ------  ------------
  <S>                                            <C>       <C>     <C>
  U.S. Federal statutory rate...................  35.00%    35.00%     35.00%
  State income taxes, net of federal tax benefit   5.00      5.00       5.00
  Non-deductible interest associated with senior
    discount notes..............................  (2.98)    (3.80)     (2.90)
  Non-deductible fees associated with merger....  (1.15)       --         --
  Other permanent non-deductible items..........  (0.19)       --         --
  Change in valuation allowance for deferred tax
    assets...................................... (35.68)   (36.20)    (37.10)
                                                 ------    ------     ------
  Effective tax rate............................   0.00%     0.00%      0.00%

                                                 ======    ======     ======
</TABLE>

   The tax effects of significant temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax liabilities
are as follows (in thousands):

<TABLE>
<CAPTION>
                                              September 30, December 31,
                                                  2001          2000
                                              ------------- ------------
<S>                                           <C>           <C>
Deferred tax assets:
   Accrued liabilities.......................   $    164      $     72
   Deferred transaction costs................        558         1,068
   Compensation expense......................      1,705         1,093
   Interest expense..........................      5,566         2,720
   Deferred gain on tower sales..............      3,973         2,400
   Net operating loss carryforwards..........     29,529         9,299
   Allowance for bad debts...................      1,085           134
                                                --------      --------
Total gross deferred tax assets..............     42,580        16,786
Less valuation allowance.....................    (33,438)      (12,647)
                                                --------      --------
Net deferred tax assets......................      9,142         4,139
                                                --------      --------
Deferred tax liabilities:
   Capitalized interest......................       (529)         (649)
   Property, equipment and intangible assets.     (8,384)       (3,278)
   Other.....................................       (229)         (212)
                                                --------      --------
Total gross deferred tax liabilities.........     (9,142)       (4,139)
                                                --------      --------
Net deferred tax liabilities.................   $     --      $     --
                                                ========      ========
</TABLE>

   In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. No benefit for federal
income taxes has been recorded for the periods ended September 30, 2001 and
2000, and December 31, 2000 as the net deferred tax asset generated, primarily
from

                                     F-17

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

temporary differences related to the net operating loss, was offset by a full
valuation allowance because it is not considered more likely than not that
these benefits will be realized due to the Company's losses since inception. At
September 30, 2001, the Company has net operating loss carryforwards for
federal income tax purposes of approximately $73.8 million which are available
to offset future taxable income through 2021.

10. DEBT

Senior Discount Notes and Warrants

   On July 12, 2000, the Company issued 300,000 units consisting of $300.0
million 14% senior discount notes due July 15, 2010 (the "Notes") and warrants
to purchase 2,982,699 shares of common stock at an exercise price of $5.50 per
share. The warrants become exercisable at any time after July 15, 2001 for a
period of ten years from the date of issuance. The Notes were issued at a
substantial discount such that the Company received gross proceeds from the
issuance of the units of approximately $152.3 million. On July 15, 2005 the
Company will begin incurring cash interest on the principal amount of the Notes
at the rate of 14% per annum, compounded semi-annually, payable beginning
January 15, 2006, and on each January 15 and July 15 thereafter. The Company is
amortizing the discount on the Notes as interest expense over the period from
date of issuance to the maturity date utilizing the effective interest method.
For the nine months ended September 30, 2001 and 2000, and the year ended
December 31, 2000, the Company recorded approximately $7.5 million, $1.8
million and $4.4 million, respectively, as interest expense related to the
amortization of the discount. In addition, the Company has recorded accrued
interest of approximately $10.7 million and $6.2 million at September 30, 2001
and December 31, 2000, respectively, utilizing the effective interest method.

   The Notes are a general unsecured obligation, subordinated in right of
payment to all senior debt, including all obligations under the credit
facility. The Notes contain covenants which restrict the Company's ability to
incur additional indebtedness, pay dividends, merge, dispose of its assets, and
certain other matters as defined in the Indenture. During the first 36 months,
the Company may redeem up to 35% of the Accreted Value of Notes (as defined in
the Notes agreement) at a redemption price of 114% with the net cash proceeds
of one or more equity offerings excluding the first $70.0 million of equity
offerings. After July 15, 2005, the Notes may be redeemed at a price of 107%
beginning in 2005, 105% beginning in 2006, 102% beginning in 2007 and 100%
thereafter. Upon a change in control as defined in the Notes agreement, the
Company will be required to make an offer to purchase the Notes at a price
equal to 101% of the Accreted Value of Notes (as defined in the Notes
agreement) on any purchase date prior to July 15, 2005 or 101% of the aggregate
principal amount therefor, plus accrued and unpaid interest and Liquidated
Damages (as defined in the Notes agreement), if any, to the date of purchase if
on or after July 15, 2005.

   The Company allocated approximately $24.9 million to the fair value of the
warrants, as determined by using the Black-Scholes model, and recorded a
discount on the Notes, which is being recognized as interest expense over the
period from date of issuance to the maturity date. For the nine months ended
September 30, 2001 and 2000, and the year ended December 31, 2000, the Company
recorded approximately $1.3 million, $0.3 million and $0.7 million,
respectively, as interest expense related to the amortization of the value of
the warrants.

   The fair value of the warrants was calculated using the following
assumptions:

      (1) risk free interest rate of 6.35%;

      (2) stock price based on a planned initial public offering;

      (3) dividend yield of 0%;

      (4) life of 10 years; and

      (5) volatility of 40%.

                                     F-18

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The Company incurred approximately $6.3 million of costs associated with the
issuance of the Notes. Those costs consisted of investment banker fees, legal
fees and other issuance costs that have been capitalized and are being
amortized to interest expense using the effective interest method over the term
of the Notes.

Nortel Credit Facility

   Effective May 14, 1999, the Company entered into a credit facility agreement
(the "Nortel Credit Facility") with Nortel Networks Inc. ("Nortel"). The
proceeds were used to purchase equipment and to fund the construction of the
Company's portion of the Sprint PCS network. The financing terms permitted the
Company to borrow $48.0 million through three commitment tranches (Tranche
A--$32.0 million, Tranche B--$11.0 million and Tranche C--$5.0 million) through
May 14, 2002, and required minimum equipment purchases of $32.0 million (see
Note 12).

   The Company could borrow money at the lesser of either: (1) a base rate loan
with an interest rate equal to 3 percent plus the higher of (A) the prime rate
of Citibank, N.A. (New York) or (B) the federal fund effective rate plus one
half of a percent; or (2) a London interbank offered rate (Libor), as adjusted
for reserve requirements, plus 4 percent. All borrowings were based on the
Libor rate plus 4 percent (10% at December 31, 1999). Accrued interest was
generally payable quarterly. Interest incurred and capitalized for the period
ended December 31, 1999 totaled $471,000. The Company had outstanding
borrowings under the Nortel Credit Facility of approximately $27.6 million at
December 31, 1999.

   On July 12, 2000, the Nortel Credit Facility was repaid in full with the
proceeds from the issuance of the Notes. In connection with the early
extinguishment of the Nortel Credit Facility, the Company recorded an
extraordinary loss of approximately $1.5 million related to the write-off of
the unamortized deferred financing costs at July 12, 2000.

   An unused facility commitment fee ranging from 0.75% to 1.5% on the daily
average unused portion of the Nortel Credit Facility was due on a quarterly
basis. The commitment fee expense for each of the nine months ended September
30, 2000, the year ended December 31, 2000 and the period ended December 31,
1999 was approximately $81,000.

Senior Secured Credit Facility

   On July 12, 2000, the Company entered into an amended and restated credit
facility with Toronto Dominion (Texas), Inc. and GE Capital Corporation for a
$140.0 million senior secured credit facility ("credit facility") to replace
the Nortel Credit Facility. The credit facility permits the Company to borrow
up to $140.0 million through two tranches (Tranche A--$90.0 million and Tranche
B--$50.0 million) subject to a borrowing base limitation which is an amount
equal to 100% of the gross book value of all the property and equipment owned
by the Company. The credit facility contains certain financial ratios and other
financial conditions similar to the Nortel Credit Facility and is
collateralized by all of the Company's assets and assignment of the Sprint PCS
Agreements.

   As of September 30, 2001, the Company's borrowings under this credit
facility totaled $50.0 million and represents the entire Tranche B commitment.
The weighted average interest rate on these borrowings was 6.84%. The Company
had borrowed $25.0 million under this credit facility as of December 31, 2000
and such borrowings bore interest at 10.44% as of December 31, 2000.

                                     F-19

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Commencing March 31, 2004, and on the last day of each calendar quarter
ending during the periods set forth below, the Tranche A commitment as of March
30, 2004 shall be automatically and permanently reduced by the percentage
amount set forth below for the quarters indicated:

   .   for the four quarters commencing with the fiscal quarter ending March
       31, 2004, 2.50% per quarter;

   .   for quarters five through eight, 3.75% per quarter;

   .   for quarters nine through sixteen, 6.25% per quarter; and

   .   for the last two quarters, 12.50% per quarter.

   Commencing March 31, 2004, the Company must begin to repay, in quarterly
installments, the principal on all borrowings outstanding as of March 30, 2004
made under the Tranche B commitment. A fixed percentage on all Tranche B
borrowings will be due each quarter as follows:

   .   for the first four quarters commencing with the fiscal quarter ending
       March 31, 2004, 2.50% of the principal balance of the loan is due per
       quarter;

   .   for quarters five through eight, 3.75% per quarter;

   .   for quarters nine through sixteen, 6.25% per quarter; and

   .   for the last two quarters, 12.50% per quarter.

   The aggregate amount required to be repaid under Tranche B for each of the
four periods above will be $5.0 million, $7.5 million, $25.0 million, and $12.5
million, respectively.

   Any principal that has not been paid by the maturity date, June 30, 2008, is
due at that time.

   The Company may voluntarily prepay any of the loans at any time. Tranche A
permits reborrowings on a revolving basis but amounts repaid under Tranche B
may not be reborrowed.

   The Company will have to make mandatory prepayments under certain
circumstances, including among others:

   .   50% of the Company's excess annual cash flow as computed under the
       senior secured credit agreement, commencing April 30, 2004 with respect
       to the fiscal year ending December 31, 2003;

   .   Any amount in excess of $1.0 million per calendar year received as net
       proceeds of asset sales outside the ordinary course of business or
       insurance proceeds subject to certain exceptions, to the extent not
       reinvested in property or assets within a stated period of time;

   .   50% of the net proceeds of any equity issuance excluding the committed
       issuance of the convertible preferred stock, an initial public offering
       and any offering to a borrower or guarantor party to the senior secured
       financing; and

   .   100% of the net proceeds of a debt issuance excluding permitted
       indebtedness.

   All prepayments described above are applied to the outstanding loan balances
pro rata between Tranche A and Tranche B and pro rata across the maturities.

                                     F-20

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   From the date of the senior secured credit agreement through and including
the date on which earnings before interest, taxes and depreciation and
amortization ("EBITDA") is greater than zero for two consecutive fiscal
quarters, the Company may borrow money at the lesser of either:

   .   A base rate loan with an interest rate equal to 2.75% plus the higher of:

      .   The prime rate of the Toronto-Dominion Bank, New York Branch or

      .   The federal funds effective rate plus 0.5%; or

   .   A Eurodollar loan with an interest rate equal to the London interbank
       offered rate ("LIBOR"), plus 3.75%.

   After the date of which EBITDA is greater than zero for two consecutive
fiscal quarters, the base rate margin will range from 2.75% to 2.25% and the
Eurodollar loan margin will range from 3.75% to 3.25%, depending upon the
leverage ratio as of the most recently ended fiscal quarter.

   The Company was required to maintain in full force and effect through the
maturity date one or more interest rate protection agreements (i.e. swap, cap,
collar or similar agreement) for a period of three years or the date ending on
the earlier to occur of the maturity date or the date upon which all of the
loans have been paid in full or have terminated or expired, to fix or place a
limit upon a rate of interest with respect to not less than an aggregate
notional amount equal to fifty percent of the aggregate principal amount of
credit facility debt that does not have a fixed interest rate until the credit
facility was amended on February 23, 2001. The amended credit facility expanded
the requirement of the Company to fix or place a limit upon a rate of interest
with respect to not less than fifty percent of the Company's total outstanding
debt.

   On January 12, 2001, the Company entered into an interest rate cap agreement
with a counter party for a notional amount of $12.5 million to manage the
interest rate risk on the Company's variable rate debt. The agreement expires
in three years and caps the three-month LIBOR interest rate at 7.25%. For the
nine months ended September 30, 2001, the Company recorded a loss of
approximately $31,000 for this derivative.

   The Company incurred approximately $4.1 million of costs associated with
obtaining the credit facility. Those costs consisted of loan origination fees,
legal fees and other debt issuance costs that have been capitalized and are
being amortized to interest expense using the effective interest method over
the term of the credit facility.

   An unused facility commitment fee ranging from 1.0% to 1.5% on the daily
average unused portion of the credit facility is due on a quarterly basis. The
commitment fee expense for the nine months ended September 30, 2001 and 2000
and the year ended December 31, 2000 was approximately $1.1 million, $0.5
million and $1.0 million, respectively.

   As a condition of the credit facility, Sprint PCS has entered into a consent
and agreement with the lenders that modifies Sprint PCS' rights and remedies
under its management agreement with the Company. Among other things, Sprint PCS
consented to the pledge of substantially all of the Company's assets, including
the management agreement, to the lenders. In addition, Sprint PCS may not
terminate the management agreement with the Company and must maintain 10 MHz of
PCS spectrum in the Company's markets until the credit facility is satisfied or
the Company's assets are sold pursuant to the terms of the consent and
assignment with the lenders.

   The Company is required to maintain certain financial ratios and other
financial conditions including debt coverage ratios, minimum levels of revenue
and wireless subscribers, and limitations on capital expenditures.
Additionally, the Company has agreed not to merge, dispose of its assets, make
restricted payments, including

                                     F-21

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

dividends, and certain other matters as defined in the credit facility. On
February 23, 2001, the Company entered into an amendment to the credit facility
which included a consent to the purchase from Sprint PCS of the Iowa City and
Cedar Rapids, Iowa BTAs discussed in Note 6 and which amended certain covenant
definitions and requirements. On September 28, 2001, the Company entered into
an amendment which included a consent to the merger with AirGate PCS, Inc. as
discussed in Note 19 and which amended certain covenant definitions and
requirements.

   At September 30, 2001, the Company was in compliance with these covenants in
accordance with the amended credit facility.

   Annual maturities of the long-term debt are as follows as of September 30,
2001 (in thousands):

<TABLE>
<CAPTION>
                   <S>                            <C>
                   September 30,.................
                      2002....................... $      --
                      2003.......................        --
                      2004.......................     3,750
                      2005.......................     6,875
                      2006.......................    11,250
                      Thereafter.................   328,125
                                                  ---------
                      Total......................   350,000
                      Less: Unamortized discount.  (158,608)
                                                  ---------
                      Total long-term debt....... $ 191,392
                                                  =========
</TABLE>

11. LEASE COMMITMENTS

   The Company is obligated under non-cancelable operating lease agreements for
offices, stores, network equipment space and cell sites. At September 30, 2001,
the future minimum annual lease payments under these non-cancelable operating
lease agreements are as follows (in thousands):

<TABLE>
<CAPTION>
                             <S>            <C>
                             September 30,.
                                2002....... $10,785
                                2003.......  10,619
                                2004.......  10,149
                                2005.......   9,305
                                2006.......   6,626
                                Thereafter.  21,547
                                            -------
                                Total...... $69,031
                                            =======
</TABLE>

   Rent expense was approximately $6.5 million, $1.7 million, $3.0 million and
$0.4 million for the nine months ended September 30, 2001 and 2000, for the
year ended December 31, 2000 and for the period ended December 31, 1999,
respectively, of which approximately $40,000, $40,000, $53,000 and $31,000,
respectively, was paid to one of the Company's stockholders/members. Included
in minimum lease commitments is approximately $0.4 million and $0.5 million,
respectively, for the nine months ended September 30, 2001 and 2000, and
approximately $0.5 million each for the year ended December 31, 2000 and the
period ended December 31, 1999, payable to one of the Company's
stockholders/members.

                                     F-22

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The Company leases two tower sites and several phone systems under capital
leases. At September 30, 2001, the future payments under the capital lease
obligations, less imputed interest, are as follows (in thousands):

<TABLE>
<CAPTION>
           <S>                                                <C>
           September 30,.....................................
              2002........................................... $  47
              2003...........................................    43
              2004...........................................    45
              2005...........................................    47
              2006...........................................    49
              Thereafter.....................................   571
                                                              -----
              Total minimum lease payments...................   802
              Less amount representing interest..............  (422)
                                                              -----
              Present value of net minimum lease payments....   380
              Less current obligations under a capital lease.    (7)
                                                              -----
              Long-term obligations under a capital lease.... $ 373
                                                              =====
</TABLE>

   The following is a summary of property and equipment under capital leases
included in the accompanying consolidated balance sheets as follows (in
thousands):

<TABLE>
<CAPTION>
                                               September 30, December 31,
                                                   2001          2000
                                               ------------- ------------
       <S>                                     <C>           <C>
       Network assets.........................     $380          $224
       Office equipment.......................       26            26
                                                   ----          ----
                                                    406           250
       Less accumulated depreciation..........      (19)           (5)
                                                   ----          ----
                                                   $387          $245
                                                   ====          ====
</TABLE>

12. PURCHASE COMMITMENTS

   On May 24, 1999 the Company entered into a three-year $32.0 million
agreement with Nortel for the purchase of network equipment and infrastructure,
including switches and base station controllers. On July 11, 2000 the amount
was increased from $32.0 million to $60.0 million. Nortel provided financing to
the Company until July 12, 2000 for these purchases pursuant to the Nortel
Credit Facility discussed in Note 10. iPCS has also committed to purchase
required equipment from Nortel related to certain expansion markets if they are
granted them by Sprint PCS. Under the agreement, the Company receives a
discount on the network equipment and services because of the Sprint PCS
affiliation, but pays a slight premium to the discounted price on any equipment
and services financed by Nortel. If the Company's affiliation with Sprint PCS
ends, Nortel has the right to either terminate the agreement or, with the
Company's consent, modify the agreement to establish new prices, terms and
conditions. As of September 30, 2001, the Company has met the requirements of
the agreement.

   In July 2000 the Company entered into an equipment purchase agreement with
Lucent Technologies Inc. ("Lucent") for the purchase of network equipment and
infrastructure which includes one switch and 100 base station controllers for
the Michigan markets within the first year of the agreement and an additional
32 base station controllers within two years after the execution of the
agreement. As of September 30, 2001, the Company has satisfied these purchase
terms. In addition, the Company has agreed to use Lucent's equipment
exclusively in the construction of the Company's network located within the
state of Michigan. The Company has entered into this agreement with Lucent as
an additional affiliate of Sprint PCS and is subject to the terms

                                     F-23

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

and conditions of a procurement and services contract between Lucent and an
affiliate of Sprint PCS that will expire on January 31, 2006.

13. EMPLOYEE BENEFITS

   The Company has established a 401(k) plan (the "Plan") in which
substantially all employees may participate. The Plan allows eligible employees
to contribute up to 15% of their compensation and provides that the Company
will make matching contributions of 50% up to the first eight percent of an
employee's contribution. In addition, the Company may make discretionary
contributions to the Plan. Company contributions to the Plan were approximately
$72,000, $28,000, $38,000 and $14,000 for the nine months ended September 30,
2001 and 2000, for the year ended December 31, 2000 and for the period ended
December 31, 1999, respectively.

14. REDEEMABLE PREFERRED STOCK

   Contemporaneously with the issuance of the 300,000 units discussed in Note
10, the Company issued to an investor group 9,090,909 shares of Series A-1
convertible participating preferred stock ("Series A-1 preferred stock") at a
purchase price of $5.50 per share, yielding gross proceeds of $50.0 million;
net proceeds were approximately $46.4 million. On December 28, 2000, the
Company issued to the same investor group 14,000,000 shares of Series A-2
convertible participating preferred stock ("Series A-2 preferred stock") at a
purchase price of $5.00 per share, yielding gross proceeds of $70.0 million;
net proceeds were approximately $65.8 million.

   The holders of Series A-1 preferred stock and Series A-2 preferred stock
may, at their option, convert all or any such shares into shares of common
stock. Each share of Series A-1 preferred stock and Series A-2 preferred stock
shall automatically convert into common stock under certain conditions
including a public offering of securities with gross proceeds of $50 million or
a change of control. The holders of Series A-1 preferred stock and Series A-2
preferred stock have the same voting rights as common stockholders. The Series
A-1 preferred stock ranks senior to common stock and on parity with the Series
A-2 preferred stock. In the event that the Company has not completed an initial
public offering of common stock or consummated a business transaction meeting
certain criteria by the fifth anniversary of the investment, the investor group
has the right to request the Company to repurchase the Series A-1 preferred
stock and Series A-2 preferred stock at fair market value, unless the Company's
Board of Directors determines, in its sole discretion, that it is not in the
Company's best interests to do so, whereupon the investor group would have the
right to force a sale of the Company subject to the rights of Sprint and Sprint
PCS under the Sprint PCS Agreements. The Series A-1 preferred stock and Series
A-2 preferred stock have a mandatory redemption for cash at an amount equal to
the stated value plus accrued dividends on July 12, 2011. The Company accretes
the carrying value of the Series A-1 preferred stock and Series A-2 preferred
stock (net of offering costs incurred) to the redemption amount by the
effective interest method. During the nine months ended September 30, 2001 and
the year ended December 31, 2000, the Company recorded approximately $0.2
million and $0.2 million, respectively, of accretion on the Series A-1
preferred stock and approximately $0.3 million and approximately $4,000,
respectively, of accretion on the Series A-2 preferred stock.

   The Company allocated the entire net proceeds received from the issuance of
Series A-1 preferred stock of approximately $46.4 million to the beneficial
conversion feature on the issuance of Series A-1 preferred stock in accordance
with EITF Issue No. 98-5, "Accounting for Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable Conversion Ratios to
Certain Convertible Instruments." The beneficial conversion feature was
calculated at the issuance date of the Series A-1 preferred stock based on the
difference

                                     F-24

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

between the conversion price of $5.50 per share and estimated fair value of the
common stock at that date. This amount, however, was limited to the proceeds
received from issuing the beneficial convertible security. As the Series A-1
preferred stock was immediately convertible, the Company also recorded
accretion of approximately $46.4 million to additional paid-in capital.

   The Company allocated the entire net proceeds received from the issuance of
the Series A-2 preferred stock of approximately $65.8 million to the Series A-2
preferred stock in accordance with EITF Issue No. 00-27, "Application of EITF
Issue No. 98-5, "Accounting for Convertible Securities with Beneficial
Conversion, Features or Contingently Adjustable Conversion Ratios to Certain
Convertible Instruments." No beneficial conversion feature was considered to
exist due to the conversion price of the Series A-2 preferred stock at time of
issuance exceeding the estimated fair value of the common stock at that date.

   The Series A-1 preferred stock and Series A-2 preferred stock bear
cumulative dividends, whether or not declared, at the rate of 7.5% of the
preferred liquidation preference per year and, when paid, shall be paid only in
additional shares of preferred stock. Dividends shall accumulate and compound
semi-annually. The preferred liquidation preference is equal to $5.50 (Series
A-1) and $5.00 (Series A-2) per share plus any accrued but unpaid dividends on
such share of preferred stock. Dividends on each share shall accrue on a daily
basis and be cumulative from the date of original issue. During the nine months
ended September 30, 2001 and the year ended December 31, 2000, the Company
recorded approximately $2.9 million and $1.8 million, respectively, of accrued
dividends on the Series A-1 preferred stock and approximately $4.0 million and
approximately $0.1 million, respectively, of accrued dividends on the Series
A-2 preferred stock, as a charge to additional paid in capital.

   In addition to the 7.5% dividend, when and if the Board of Directors
declares a dividend payable with respect to the then outstanding shares of
common stock, the holders of the Series A-1 preferred stock and Series A-2
preferred stock shall be entitled to the amount of dividends per share as would
be payable on the number of shares of common stock into which such shares of
Series A-1 preferred stock and Series A-2 preferred stock could then be
converted. Upon the occurrence of a change of control prior to July 12, 2005,
the Company will be obligated to pay a special dividend to each holder of
Series A-1 preferred stock and Series A-2 preferred stock (except as to any
changes of control in connection with a business combination with a private
company as to which the investor group waives its right to receive such
dividend) in an amount equal to the amount of all unpaid dividends that would
have been payable through July 12, 2005.

15. EQUITY

   The Predecessor Company was organized as a LLC and, as such, had no
outstanding stock. Owners (members) actually held a membership interest in the
LLC. As a result, the investment of those members in the Predecessor Company is
reflected as Members contributions in the accompanying Consolidated Statements
of Redeemable Preferred Stock and Equity (Deficiency).

   On March 12, 1999, the Company entered into a management agreement (the
"Management Agreement") with Mr. Yager to act as the Manager of the Predecessor
Company. The Management Agreement entitled Mr. Yager to a cash bonus equal to
2.5% of the fair market value of the Company in the event of a Transfer (as
defined in the Management Agreement) of all or substantially all of the assets
of the Company, or 2.5% of the fair market value of any transferred interests
in the Company, in excess of the applicable member's cumulative contributions.
Effective as of February 29, 2000, Mr. Yager and the Company agreed to
terminate the Management Agreement, and in exchange therefor Mr. Yager received
a 1.5% ownership interest in the Predecessor Company. In addition, the Company
paid the withholding tax obligation arising by reason of the issuance of the
1.5% ownership interest to Mr. Yager, and the federal and state taxes on the
issuance of the ownership interest and payment of the withholding tax
obligation. Based upon the expected offering price of the

                                     F-25

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

initial public offering as determined on April 24, 2000, the Company recorded
non-cash compensation expense of approximately $8.5 million related to the
ownership interest granted and recorded general and administrative expense of
approximately $1.6 million related to taxes paid by the Company on behalf of
Mr. Yager for both the nine months ended September 30, 2000 and the year ended
December 31, 2000.

   On July 11, 2000, the Board of Directors approved the amended and restated
2000 Long Term Incentive Stock Plan. Under the plan, the Company may grant
stock options, stock appreciation rights, shares of common stock and
performance units to employees, consultants and directors. The total number of
shares of common stock that can be awarded under the plan is 6,500,000 shares,
which will be increased on December 31 of each year beginning on December 31,
2000 by a number of shares equal to 1% of the number of shares then
outstanding, up to maximum of 8,000,000. On July 12, 2000, the Board of
Directors granted options to members of management, employees and directors to
acquire 1,558,750 shares of common stock with an exercise price of $5.50 per
share.

   On February 28, 2001, the Board of Directors approved options for members of
management, employees and directors, with a grant date of January 1, 2001. The
vesting period for these employee stock options begins on the later of the
employee's hire date or January 1, 2001, and extends for four years. For
directors, the vesting period begins on January 1, 2001, and extends for four
years. During the nine months ended September 30, 2001, 1,427,750 options were
granted at an exercise price of $4.65.

   At September 30, 2001 and December 31, 2000, the following is a summary of
options outstanding and exercisable:

<TABLE>
<CAPTION>
                                                               Weighted
                                                               Average
                                                               Exercise
                                                     Shares     Price
                                                    ---------  --------
        <S>                                         <C>        <C>
        Outstanding at beginning of period
           Granted................................. 1,592,750   $5.52
           Exercised...............................        --      --
           Forfeited...............................    (2,750)   5.50
                                                    ---------   -----
        Outstanding at December 31, 2000........... 1,590,000    5.52
           Granted................................. 1,427,750    4.65
           Exercised...............................        --      --
           Forfeited...............................   (12,499)   5.30
                                                    ---------   -----
        Outstanding at September 30, 2001.......... 3,005,251   $5.11
                                                    =========   =====
        Options exercisable........................ 1,045,472
        Weighted-average remaining contractual life 9.0 years
</TABLE>

   The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations to account for its employee and
director stock options. Compensation expense is determined as the excess of the
fair value of the Company's common stock at date of grant over the exercise
price. Based upon the then expected offering price of a planned initial public
offering, the Company recognized total unearned compensation expense of
approximately $8.3 million related to the grants made in July 2000. This amount
is being amortized as compensation expense over the vesting period of the
options; such vesting period begins on the employee's date of hire and extends
for four years. For directors and all future grants to employees, the vesting
period begins on the date of grant and extends for four years. Total non-cash
compensation expense related to such options was approximately $1.5 million,
$2.2 million and $2.7 million, respectively, for the nine months ended
September 30, 2001 and 2000, and the year ended December 31, 2000. There was no

                                     F-26

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

compensation expense recorded for the grants made to employees and directors
during the nine months ended September 30, 2001 since the exercise price was
equal to the estimated fair value of the Company's common stock.

   If compensation expense for the stock option grants had been determined
based on fair value at the grant date consistent with the requirements of SFAS
No. 123, "Accounting for Stock Based Compensation," the Company's net loss
applicable to common stockholders and net loss per share would have been the
pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                            Nine Months Ended
                                              September 30,     Year Ended
                                           ------------------  December 31,
                                             2001      2000        2000
                                           --------  --------  ------------
<S>                                        <C>       <C>       <C>
Net loss applicable to common stockholders
  (in thousands):
   As reported............................ $(68,127) $(83,270)  $(104,507)
   Pro forma..............................  (69,678)  (83,902)   (105,290)
Basic and diluted loss per common share:
   As reported............................ $  (1.52) $  (1.86)  $   (2.33)
   Pro forma..............................    (1.55)    (1.87)      (2.35)
</TABLE>

   The Company's calculation of fair value of the options was made using the
Black-Scholes model with the following assumptions:

<TABLE>
<CAPTION>
                                                Nine Months
                                                   Ended
                                               September 30,  Year Ended
                                               ------------- December 31,
                                                2001   2000      2000
                                               -----  -----  ------------
       <S>                                     <C>    <C>    <C>
       Risk free interest rate................ 5.17%  6.35%     6.35%
       Dividend yield.........................    0%     0%        0%
       Expected life in years.................     4      4         4
       Volatility.............................  100%    40%       40%
</TABLE>

16. FAIR VALUE OF FINANCIAL INSTRUMENTS

   The following disclosure of the estimated fair value of financial
instruments is made pursuant to SFAS No. 107, "Disclosures About Fair Value of
Financial Instruments." Fair value estimates are subject to inherent
limitations. Estimates of fair value are made at a specific point in time,
based on relevant market information and information about the financial
instrument. The estimated fair values of financial instruments are not
necessarily indicative of amounts the Company might realize in actual market
transactions. Estimates of fair value are subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot be
determined with precision. Changes in assumptions could significantly affect
the estimates. The carrying amounts at September 30, 2001, December 31, 2000
and 1999 for cash and cash equivalents, accounts receivable, other receivables,
accounts payable, accrued liabilities, and variable rate long-term debt are
reasonable estimates of their fair values. The fair value of our senior secured
notes based on closing market prices at September 30, 2001 and December 31,
2000 was approximately $150.0 million and $123.0 million, respectively.

                                     F-27

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


17. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (in thousands)

<TABLE>
<CAPTION>
                                                                Nine Months Ended
                                                                  September 30,    Year Ended  Period Ended
                                                                ----------------- December 31, December 31,
                                                                  2001     2000       2000         1999
                                                                 ------  -------  ------------ ------------
<S>                                                             <C>      <C>      <C>          <C>
Supplemental disclosure of cash flow information--cash paid
  for interest................................................. $2,090   $ 1,971    $ 1,971       $  206
Supplemental schedule of noncash investing and financial
  activities:
   Accounts payable incurred for the acquisition of property,
     equipment and construction in progress....................  7,592    10,223     16,610        2,739
   Capital lease obligations incurred for the acquisition of
     property and equipment....................................    156        --        250           --
   Accrued dividends on redeemable preferred stock.............  6,937       812      1,808           --
   Accretion to the redemption amount of redeemable
     preferred stock...........................................    531        69        155           --
   Grant of stock options......................................     --     8,247      8,247           --
   Issuance of warrants in connection with the senior discount
     notes.....................................................     --    24,859     24,859           --
   Issuance of warrants to Sprint PCS..........................     --     9,147      9,147           --
</TABLE>

18. VALUATION AND QUALIFYING ACCOUNTS (in thousands)

<TABLE>
<CAPTION>
                                                                     Balance
                                     Beginning Costs and            at End of
                                     of Period Expenses  Write-Offs  Period
                                     --------- --------- ---------- ---------
<S>                                  <C>       <C>       <C>        <C>
Period ended December 31, 1999
  allowance for doubtful accounts...   $ --     $    1    $    --    $    1
                                       ====     ======    =======    ======
Nine months ended September 30, 2000
  allowance for doubtful accounts...   $  1     $  305    $  (137)   $  169
                                       ====     ======    =======    ======
Year ended December 31, 2000
  allowance for doubtful accounts...   $  1     $  614    $  (287)   $  328
                                       ====     ======    =======    ======
Nine months ended September 30, 2001
  allowance for doubtful accounts...   $328     $5,042    $(2,657)   $2,713
                                       ====     ======    =======    ======
</TABLE>

                                     F-28

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


19. MERGER

   On August 28, 2001, the Company signed an agreement and plan of merger with
AirGate PCS, Inc. ("AirGate"), a Sprint PCS affiliate, under which AirGate and
the Company will combine in a tax-free stock for stock transaction. AirGate
will issue approximately 13.5 million shares of AirGate common stock, including
1.1 million shares reserved for issuance upon the exercise of the Company's
outstanding options and warrants. At the effective time of the merger, each
issued and outstanding share of the Company's common stock will be converted
into the right to receive approximately 0.1594 of a share of AirGate common
stock, referred to as the exchange ratio. All shares of the Company's preferred
stock will be converted into the Company's common stock immediately prior to
the effective time of the merger. At the effective time of the merger, AirGate
will assume each unexpired and unexercised option and warrant to purchase
shares of the Company's common stock and convert it into an option or warrant
to purchase AirGate common stock based on one share of the Company's common
stock equal to the exchange ratio of AirGate's common stock. In addition, the
exercise price per share of AirGate common stock issuable under each converted
option or converted warrant will be equal to the per share exercise price of
the Company option or warrant divided by the exchange ratio. The options will
be fully vested at the time of the merger and the warrants will remain subject
to the terms and conditions set forth in the applicable warrant agreement. The
total number of shares of AirGate common stock to be issued by AirGate in
connection with the merger will not exceed 13,500,000. The completion of the
merger is subject to approval by the stockholders of the Company and AirGate.
The special meetings of the AirGate stockholders and iPCS stockholders have
each been set for November 27, 2001. A majority of the stockholders of iPCS
have agreed to vote their shares in favor of the merger. The closing of the
merger is also subject to other customary conditions, including regulatory
approval under the Hart-Scott-Rodino Act and the consent or approval of Sprint
PCS and the lenders under the AirGate and iPCS credit facilities, all of which
have been obtained. The merger agreement will terminate if the merger is not
consummated on or before March 1, 2002. It is anticipated that the merger will
close around the end of November 2001.

                                     F-29

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

20. CONSOLIDATING FINANCIAL INFORMATION

   The Notes are fully, unconditionally, and joint and severally guaranteed by
iPCS Wireless, Inc. and iPCS Equipment, Inc., which are wholly-owned
subsidiaries of iPCS, Inc. The consolidating financial information for 1999 has
not been provided since iPCS, Inc. and its two wholly-owned subsidiaries did
not acquire the business of the Predecessor Company until July 12, 2000 as
discussed in Note 1 and only the Predecessor Company had activities in 1999.
Therefore, the 1999 consolidating financial information is identical to the
Consolidated Financial Statements. The following consolidating financial
information as of September 30, 2001 and December 31, 2000 and for the nine
months ended September 30, 2001 and for the year ended December 31, 2000 is
presented for iPCS, Inc., iPCS Wireless, Inc. and iPCS Equipment, Inc. (in
thousands):

                          Consolidating Balance Sheet
                           as of September 30, 2001

<TABLE>
<CAPTION>
                                                                         iPCS
                                                                    Wireless, Inc.
                                                                         and          iPCS
                                                            iPCS,    Predecessor   Equipment,
                          Assets                            Inc.       Company        Inc.    Eliminations Consolidated
                          ------                           -------- -------------- ---------- ------------ ------------
<S>                                                        <C>      <C>            <C>        <C>          <C>
Current Assets:
   Cash and cash equivalents.............................. $    306    $ 53,890     $   383    $      --     $ 54,579
   Accounts receivable, less allowance....................       --      14,964          --           --       14,964
   Other receivables......................................       --       1,604          --           --        1,604
   Intercompany receivables...............................  102,050          --           4     (102,054)          --
   Inventories............................................       --       3,379          --           --        3,379
   Prepaid expenses and other assets......................      235       4,564          --           --        4,799
                                                           --------    --------     -------    ---------     --------
      Total current assets................................  102,591      78,401         387     (102,054)      79,325
Property and equipment including construction in progress,
 net......................................................       --     160,546      37,651          (36)     198,161
Financing costs, less accumulated amortization............    6,059       3,499          --           --        9,558
Intangible assets, net....................................    8,549      31,385          --           --       39,934
Intercompany receivables--long term.......................  232,276      45,241       7,688     (285,205)          --
Other assets..............................................       --       1,778          --           --        1,778
                                                           --------    --------     -------    ---------     --------
      Total assets........................................ $349,475    $320,850     $45,726    $(387,295)    $328,756
                                                           ========    ========     =======    =========     ========
</TABLE>

                                     F-30

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
                                            Consolidating Balance Sheet
                                        as of September 30, 2001 (continued)

                                                                       iPCSWireless,
                                                                         Inc. and       iPCS
           Liabilities, Redeemable Preferred                  iPCS,     Predecessor  Equipment,
             Stock and Equity (Deficiency)                    Inc.        Company       Inc.    Eliminations Consolidated
             -----------------------------                   --------  ------------- ---------- ------------ ------------
<S>                                                          <C>       <C>           <C>        <C>          <C>
Current Liabilities:........................................
   Accounts payable......................................... $    721    $  26,862    $ 3,827    $      --    $  31,410
   Accrued expenses.........................................       18        4,419          9           --        4,446
   Accrued interest.........................................       --           79         --           --           79
   Intercompany payables....................................       --      102,054         --     (102,054)          --
   Deferred revenue.........................................       --        4,742         --           --        4,742
   Capital lease obligations--current portion...............       --            7         --           --            7
                                                             --------    ---------    -------    ---------    ---------
      Total current liabilities.............................      739      138,163      3,836     (102,054)      40,684
Deferred gain on tower sales................................       --        7,667         --           --        7,667
Deferred rent...............................................       --        2,264         --           --        2,264
Deferred revenue............................................       --        1,763         --           --        1,763
Capital lease obligations--long term........................       --          373         --           --          373
Intercompany payables--long term............................       --      239,964     45,241     (285,205)          --
Accrued interest............................................   16,944           --         --           --       16,944
Long-term debt..............................................  141,392       50,000         --           --      191,392
                                                             --------    ---------    -------    ---------    ---------
      Total liabilities.....................................  159,075      440,194     49,077     (387,259)     261,087
                                                             --------    ---------    -------    ---------    ---------
Redeemable preferred stock..................................  121,548           --         --           --      121,548
                                                             --------    ---------    -------    ---------    ---------
Equity (Deficiency):
   Common stock.............................................      449           --         --           --          449
   Additional paid in capital...............................   70,853           --         --           --       70,853
   Unearned compensation....................................   (3,985)          --         --           --       (3,985)
   Accumulated deficit......................................    1,535     (119,344)    (3,351)         (36)    (121,196)
                                                             --------    ---------    -------    ---------    ---------
      Total equity (deficiency).............................   68,852     (119,344)    (3,351)         (36)     (53,879)
                                                             --------    ---------    -------    ---------    ---------
      Total liabilities, redeemable preferred stock and
       equity (deficiency).................................. $349,475    $ 320,850    $45,726    $(387,295)   $ 328,756
                                                             ========    =========    =======    =========    =========
</TABLE>

                                     F-31

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

 Consolidating Statement of Operations for the Nine Months Ended September 30,
                                     2001

<TABLE>
<CAPTION>
                                                 iPCS
                                            Wireless, Inc.
                                                 and
                                   iPCS,     Predecessor        iPCS
                                   Inc.        Company     Equipment, Inc. Eliminations Consolidated
                                  --------  -------------- --------------- ------------ ------------
<S>                               <C>       <C>            <C>             <C>          <C>
Revenues:
   Service....................... $     --     $ 71,834        $    --       $     --     $ 71,834
   Equipment and other...........       --        5,678          8,273         (8,273)       5,678
                                  --------     --------        -------       --------     --------
          Total revenues.........       --       77,512          8,273         (8,273)      77,512
                                  --------     --------        -------       --------     --------
Operating Expenses:
   Cost of service...............       --       61,042             --           (546)      60,496
   Cost of equipment.............       --       18,292          7,691         (7,691)      18,292
   Selling.......................       --       20,845             --             --       20,845
   General and administrative:
       Non-cash compensation.....       --        1,530             --             --        1,530
       Other general and
         administrative..........    1,895        6,739              1             --        8,635
   Depreciation and amortization.      371       14,391            623             --       15,385
                                  --------     --------        -------       --------     --------
          Total operating
            expenses.............    2,266      122,839          8,315         (8,237)     125,183
                                  --------     --------        -------       --------     --------
Loss from operations.............   (2,266)     (45,327)           (42)           (36)     (47,671)
Other Income (Expense):
   Interest Income...............   21,347        6,689            487        (24,986)       3,537
   Interest expense..............  (13,249)     (25,569)        (3,163)        24,986      (16,995)
   Other income..................       --          470             --             --          470
                                  --------     --------        -------       --------     --------
Net Income (Loss)................ $  5,832     $(63,737)       $(2,718)      $    (36)    $(60,659)
                                  ========     ========        =======       ========     ========
</TABLE>

                                     F-32

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

 Consolidating Statement of Cash Flows for the Nine Months Ended September 30,
                                     2001

<TABLE>
<CAPTION>
                                                                          iPCS
                                                                     Wireless, Inc.
                                                                          and
                                                            iPCS,     Predecessor        iPCS
                                                            Inc.        Company     Equipment, Inc. Eliminations Consolidated
                                                           --------  -------------- --------------- ------------ ------------
<S>                                                        <C>       <C>            <C>             <C>          <C>
Cash Flows from Operating Activities:
  Net loss................................................ $  5,832    $ (63,737)      $ (2,718)        $(36)     $ (60,659)
  Adjustment to reconcile net loss to net cash flows from
   operating activities:
   Depreciation and amortization..........................      370       14,392            623           --         15,385
   Loss on disposal of property and equipment.............       --        1,042             --           --          1,042
   Gain on tower sales....................................       --       (1,509)            --           --         (1,509)
   Amortization of deferred gain on tower sales...........       --         (543)            --           --           (543)
   Amortization of deferred rent..........................       --         (135)            --           --           (135)
   Amortization of financing costs........................      340          389             --           --            729
   Non-cash interest......................................    8,811           31             --           --          8,842
   Non-cash compensation..................................       --        1,530             --           --          1,530
   Changes in assets and liabilities:
    Accounts receivable...................................       --       (8,657)            --           --         (8,657)
    Other receivables.....................................       --         (650)            --           --           (650)
    Inventories...........................................       --          (66)            --           --            (66)
    Prepaid expenses and other assets.....................      (85)      (4,248)            --           --         (4,333)
    Accounts payable, accrued expenses and accrued
     interest.............................................   10,664       16,864            (19)          --         27,509
    Deferred revenue......................................       --        4,768             --           --          4,768
                                                           --------    ---------       --------         ----      ---------
      Net cash flows from operating activities............   25,932      (40,529)        (2,114)         (36)       (16,747)
                                                           --------    ---------       --------         ----      ---------
Cash Flows from Investing Activities:
  Capital expenditures....................................       --      (78,940)       (19,490)          36        (98,394)
  Acquisition of the Iowa City, Cedar Rapids, Iowa
   markets................................................       --      (31,678)            --           --        (31,678)
  Proceeds from disposition of fixed assets...............       --           42             --           --             42
  Proceed from build-to-suit agreement....................       --        2,496             --           --          2,496
  Proceeds from tower sales...............................       --        8,204             --           --          8,204
                                                           --------    ---------       --------         ----      ---------
      Net cash flows from investing activities............       --      (99,876)       (19,490)          36       (119,330)
                                                           --------    ---------       --------         ----      ---------
Cash Flows from Financing Activities:
  Proceeds from long-term debt............................       --       25,000             --           --         25,000
  Payments on capital lease obligations...................       --          (13)            --           --            (13)
  Debt financing costs....................................     (243)          --             --           --           (243)
  Interest rate protection costs..........................       --          (46)            --           --            (46)
  Intercompany receivables/payables.......................  (25,685)       4,067         21,618           --             --
                                                           --------    ---------       --------         ----      ---------
      Net cash flows from financing activities............  (25,928)      29,008         21,618           --         24,698
                                                           --------    ---------       --------         ----      ---------
Increase (decrease) in cash and cash equivalents..........        4     (111,397)            14           --       (111,379)
Cash and cash equivalents at beginning of period..........      302      165,287            369           --        165,958
                                                           --------    ---------       --------         ----      ---------
Cash and cash equivalents at end of period................ $    306    $  53,890       $    383         $ --      $  54,579
                                                           ========    =========       ========         ====      =========
</TABLE>

                                     F-33

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              Consolidating Balance Sheet as of December 31, 2000

<TABLE>
<CAPTION>
                                                                  iPCS
                                                             Wireless, Inc.
                                                                  and
                                                    iPCS,     Predecessor        iPCS
                   Assets                           Inc.        Company     Equipment, Inc. Eliminations Consolidated
                   ------                          --------  -------------- --------------- ------------ ------------
<S>                                                <C>       <C>            <C>             <C>          <C>
Current Assets:
   Cash and cash equivalents...................... $    302     $165,287        $   369      $      --     $165,958
   Accounts receivable, less allowance............       --        5,350             --             --        5,350
   Other receivables..............................       --          231             --             --          231
   Intercompany receivables.......................  307,110       15,930             --       (323,040)          --
   Inventories....................................       --        3,314             --             --        3,314
   Prepaid expenses and other assets..............      150        1,689             --             --        1,839
                                                   --------     --------        -------      ---------     --------
      Total current assets........................  307,562      191,801            369       (323,040)     176,692
Property and equipment including construction
 in progress, net.................................       --      109,379         19,708             --      129,087
Financing costs, less accumulated amortization....    6,156        3,889             --             --       10,045
Intangible assets, net............................    8,921        3,438             --             --       12,359
Other assets......................................       --          392             --             --          392
                                                   --------     --------        -------      ---------     --------
      Total assets................................ $322,639     $308,899        $20,077      $(323,040)    $328,575
                                                   ========     ========        =======      =========     ========

           Liabilities, Redeemable
             Preferred Stock and
             Equity (Deficiency)
           -----------------------
Current Liabilities:
   Accounts payable............................... $    729     $ 21,785        $ 4,780      $      --     $ 27,294
   Accrued expenses...............................       72        2,614             --             --        2,686
   Accrued interest...............................       --           22             --             --           22
   Intercompany payables..........................       --      307,110         15,930       (323,040)          --
   Deferred revenue...............................       --        1,346             --             --        1,346
   Capital lease obligations--current portion.....       --           12             --             --           12
                                                   --------     --------        -------      ---------     --------
      Total current liabilities...................      801      332,889         20,710       (323,040)      31,360
Deferred gain on tower sales......................       --        6,000             --             --        6,000
Deferred revenue..................................       --          392             --             --          392
Capital lease obligations--long-term..............       --          225             --             --          225
Accrued interest..................................    6,219           --             --             --        6,219
Long-term debt....................................  132,581       25,000             --             --      157,581
                                                   --------     --------        -------      ---------     --------
      Total liabilities...........................  139,601      364,506         20,710       (323,040)     201,777
                                                   --------     --------        -------      ---------     --------
Redeemable preferred stock........................  114,080           --             --             --      114,080
                                                   --------     --------        -------      ---------     --------
Equity (Deficiency):
   Common stock...................................      449           --             --             --          449
   Additional paid in capital.....................   78,321           --             --             --       78,321
   Unearned compensation..........................   (5,515)          --             --             --       (5,515)
   Accumulated deficit............................   (4,297)     (55,607)          (633)            --      (60,537)
                                                   --------     --------        -------      ---------     --------
      Total equity (deficiency)...................   68,958      (55,607)          (633)            --       12,718
                                                   --------     --------        -------      ---------     --------
      Total liabilities, redeemable preferred
       stock and equity (deficiency).............. $322,639     $308,899        $20,077      $(323,040)    $328,575
                                                   ========     ========        =======      =========     ========
</TABLE>

                                     F-34

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                     Consolidating Statement of Operations
                 for the Nine Months Ended September 30, 2000

<TABLE>
<CAPTION>
                                                           iPCS
                                                      Wireless, Inc.
                                                           and
                                              iPCS,    Predecessor        iPCS
                                              Inc.       Company     Equipment, Inc. Eliminations Consolidated
                                             -------  -------------- --------------- ------------ ------------
<S>                                          <C>      <C>            <C>             <C>          <C>
Revenues:
   Service.................................. $    --     $  9,914        $   --         $   --      $  9,914
   Equipment and other......................      --        1,700            --             --         1,700
                                             -------     --------        ------         ------      --------
          Total revenues....................      --       11,614            --             --        11,614
                                             -------     --------        ------         ------      --------
Operating Expenses:
   Cost of service..........................      --        9,812            --             --         9,812
   Cost of equipment........................      --        4,977            --             --         4,977
   Selling..................................      --        4,960            --             --         4,960
   General and administrative:
       Non-cash compensation................      --       10,686            --             --        10,686
       Taxes on non-cash compensation.......      --        1,567            --             --         1,567
       Other general and administrative.....     898        3,708            88             --         4,694
   Depreciation and amortization............     103        5,446            --             --         5,549
                                             -------     --------        ------         ------      --------
          Total operating expenses..........   1,001       41,156            88             --        42,245
                                             -------     --------        ------         ------      --------
Loss from operations........................  (1,001)     (29,542)          (88)            --       (30,631)
Other Income (Expense):
   Interest income..........................     174        1,775            --             --         1,949
   Interest expense.........................  (4,760)      (1,499)           --             --        (6,259)
   Other income.............................      --          424            --             --           424
                                             -------     --------        ------         ------      --------
Loss Before Extraordinary Item..............  (5,587)     (28,842)          (88)            --       (34,517)
Extraordinary item--loss on early
  extinguishment of debt....................      --       (1,485)           --             --        (1,485)
                                             -------     --------        ------         ------      --------
Net Loss.................................... $(5,587)    $(30,327)       $  (88)        $   --      $(36,002)
                                             =======     ========        ======         ======      ========
</TABLE>

                                     F-35

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


                     Consolidating Statement of Operations
                     for the Year Ended December 31, 2000

<TABLE>
<CAPTION>
                                                             iPCS
                                                           Wireless,
                                                           Inc. and      iPCS
                                                  iPCS,   Predecessor Equipment,
                                                  Inc.      Company      Inc.    Eliminations Consolidated
                                                 -------  ----------- ---------- ------------ ------------
<S>                                              <C>      <C>         <C>        <C>          <C>
Revenues:
   Service...................................... $    --   $ 18,534     $  --      $    --      $ 18,534
   Equipment and other..........................      --      2,695        --           --         2,695
                                                 -------   --------     -----      -------      --------
          Total revenues........................      --     21,229        --           --        21,229
                                                 -------   --------     -----      -------      --------
Operating Expenses:
   Cost of service..............................      --     16,786        --           --        16,786
   Cost of equipment............................      --     10,053        --           --        10,053
   Selling......................................      --     10,783        --           --        10,783
   General and administrative:
       Non-cash compensation....................      --     11,212        --           --        11,212
       Taxes on non-cash compensation...........      --      1,567        --           --         1,567
       Other general and administrative.........   3,925      5,278       116           --         9,319
   Depreciation and amortization................     227      8,382        --           --         8,609
                                                 -------   --------     -----      -------      --------
          Total operating expenses..............   4,152     64,061       116           --        68,329
                                                 -------   --------     -----      -------      --------
Loss from operations............................  (4,152)   (42,832)     (116)          --       (47,100)
Other Income (Expense):
   Interest income..............................   9,403      3,780        --       (9,740)        3,443
   Interest expense.............................  (9,548)   (11,416)     (517)       9,740       (11,741)
   Other income.................................      --        726        --           --           726
                                                 -------   --------     -----      -------      --------
Loss Before Extraordinary Item..................  (4,297)   (49,742)     (633)          --       (54,672)
Extraordinary item--loss on early extinguishment
  of debt.......................................      --     (1,485)       --           --        (1,485)
                                                 -------   --------     -----      -------      --------
Net Loss........................................ $(4,297)  $(51,227)    $(633)     $    --      $(56,157)
                                                 =======   ========     =====      =======      ========
</TABLE>

                                     F-36

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


                     Consolidating Statement of Cash Flows
                 for the Nine Months Ended September 30, 2000

<TABLE>
<CAPTION>
                                                                         iPCS
                                                                       Wireless,
                                                                       Inc. and      iPCS
                                                             iPCS,    Predecessor Equipment,
                                                             Inc.       Company      Inc.    Eliminations Consolidated
                                                           ---------  ----------- ---------- ------------ ------------
<S>                                                        <C>        <C>         <C>        <C>          <C>
Cash Flows from Operating Activities:
  Net loss................................................ $  (5,587)  $(30,327)   $    (88)     $--        $(36,002)
  Adjustment to reconcile net loss to net cash flows from
   operating activities:
   Depreciation and amortization..........................       103      5,446          --       --           5,549
   Loss on disposal of property and equipment.............        --         56          --       --              56
   Gain on tower sales....................................        --       (479)         --       --            (479)
   Amortization of deferred gain on tower sales...........        --       (180)         --       --            (180)
   Amortization of financing costs........................        69        165          --       --             234
   Non-cash interest......................................     2,322         --          --       --           2,322
   Extraordinary loss on early extinguishment of debt.....        --      1,485          --       --           1,485
   Non-cash compensation..................................        --     10,686          --       --          10,686
   Changes in assets and liabilities:
    Accounts receivable...................................        --     (3,313)         --       --          (3,313)
    Other receivables.....................................        --       (141)         --       --            (141)
    Inventories...........................................        --        222          --       --             222
    Prepaid expenses and other assets.....................    (1,318)      (941)         --       --          (2,259)
    Accounts payable, accrued expenses and accrued
     interest.............................................     3,167      4,853       1,375       --           9,395
    Deferred revenue......................................        --        521          --       --             521
                                                           ---------   --------    --------      ---        --------
      Net cash flows from operating activities............    (1,244)   (11,947)      1,287       --         (11,904)
                                                           ---------   --------    --------      ---        --------
Cash Flows from Investing Activities:
  Capital expenditures....................................        --    (53,260)    (11,934)      --         (65,194)
  Intangible acquired in purchase of network assets.......        --     (3,526)         --       --          (3,526)
  Proceeds from tower sales...............................        --      8,500          --       --           8,500
                                                           ---------   --------    --------      ---        --------
      Net cash flows from investing activities............        --    (48,286)    (11,934)      --         (60,220)
                                                           ---------   --------    --------      ---        --------
Cash Flows from Financing Activities:
  Proceeds from long-term debt............................   152,331     12,775          --       --         165,106
  Repayment of Nortel debt................................        --    (40,346)         --       --         (40,346)
  Debt financing costs....................................    (5,978)    (4,045)         --       --         (10,023)
  Proceeds from sale of Series A-1 redeemable preferred
   stock, net of offering costs of $3,613.................    46,387         --          --       --          46,387
  Members' contributions..................................               16,500          --       --          16,500
  Intercompany receivables/payables.......................  (191,117)   179,030      12,087       --              --
                                                           ---------   --------    --------      ---        --------
      Net cash flows from financing activities............     1,623    163,914      12,087       --         177,624
                                                           ---------   --------    --------      ---        --------
Increase in cash and cash equivalents.....................       379    103,681       1,440       --         105,500
Cash and cash equivalents at beginning of period..........        --      2,733          --       --           2,733
                                                           ---------   --------    --------      ---        --------
Cash and cash equivalents at end of period................ $     379   $106,414    $  1,440      $--        $108,233
                                                           =========   ========    ========      ===        ========
</TABLE>

                                     F-37

<PAGE>

                  iPCS, INC. AND SUBSIDIARIES AND PREDECESSOR

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Concluded)

                     Consolidating Statement of Cash Flows
                     for the Year Ended December 31, 2000

<TABLE>
<CAPTION>
                                                                      iPCS
                                                                 Wireless, Inc.
                                                                      and
                                                        iPCS,     Predecessor        iPCS
                                                        Inc.        Company     Equipment, Inc. Eliminations Consolidated
                                                      ---------  -------------- --------------- ------------ ------------
<S>                                                   <C>        <C>            <C>             <C>          <C>
Cash Flows from Operating Activities:
  Net loss........................................... $  (4,297)    $(51,227)      $   (633)        $ --       $(56,157)
  Adjustment to reconcile net loss to net cash flows
   from operating activities:
   Depreciation and amortization.....................       227        8,382             --           --          8,609
   Loss on disposal of property and equipment........        --           56             --           --             56
   Gain on tower sales...............................        --         (778)            --           --           (778)
   Amortization of deferred gain on tower sales......        --         (298)            --           --           (298)
   Amortization of financing costs...................       185          419             --           --            604
   Non-cash interest.................................     5,109           --             --           --          5,109
   Extraordinary loss on early
    extinguishment of debt...........................        --        1,485             --           --          1,485
   Non-cash compensation.............................        --       11,212             --           --         11,212
   Changes in assets and liabilities:
    Accounts receivable..............................        --       (5,258)            --           --         (5,258)
    Other receivables................................        --         (192)            --           --           (192)
    Inventories......................................        --       (2,387)            --           --         (2,387)
    Prepaid expenses and other assets................      (150)      (1,649)            --           --         (1,799)
    Accounts payable, accrued expenses and accrued
     interest........................................     7,020        8,972             28           --         16,020
    Deferred revenue.................................        --        1,738             --           --          1,738
                                                      ---------     --------       --------         ----       --------
      Net cash flows from operating activities.......     8,094      (29,525)          (605)          --        (22,036)
                                                      ---------     --------       --------         ----       --------
Cash Flows from Investing Activities:
  Capital expenditures...............................        --      (76,037)       (14,956)          --        (90,993)
  Intangible acquired in purchase of network assets..        --       (3,526)            --           --         (3,526)
  Proceeds from tower sales..........................        --       12,036             --           --         12,036
                                                      ---------     --------       --------         ----       --------
      Net cash flows from investing activities.......        --      (67,527)       (14,956)          --        (82,483)
                                                      ---------     --------       --------         ----       --------
Cash Flows from Financing Activities:
  Proceeds from long-term debt.......................   152,331       37,775             --           --        190,106
  Repayment of Nortel debt...........................        --      (40,346)            --           --        (40,346)
  Payments on capital lease obligations..............        --          (13)            --           --            (13)
  Debt issuance costs................................    (6,341)      (4,279)            --           --        (10,620)
  Proceeds from sale of Series A-1 redeemable
    preferred stock, net of offering costs...........    46,387           --             --           --         46,387
  Proceeds from sale of Series A-2 redeemable
    preferred stock, net of offering costs...........    65,730           --             --           --         65,730
  Members' contributions.............................        --       16,500             --           --         16,500
  Intercompany receivables/payables..................  (265,899)     249,969         15,930           --             --
                                                      ---------     --------       --------         ----       --------
      Net cash flows from financing activities.......    (7,792)     259,606         15,930           --        267,744
                                                      ---------     --------       --------         ----       --------
Increase in cash and cash equivalents................       302      162,554            369           --        163,225
Cash and cash equivalents at beginning of period.....        --        2,733             --           --          2,733
                                                      ---------     --------       --------         ----       --------
Cash and cash equivalents at end of period........... $     302     $165,287       $    369         $ --       $165,958
                                                      =========     ========       ========         ====       ========
</TABLE>

                                     F-38