~~Use~~UNITED ~~these links to rapidly review the document INDEX~~ STATES

~~UNITED STATES~~ SECURITIES AND EXCHANGE COMMISSION ~~Washington, D. C. 20549~~

~~FORM~~Washington, ~~10-Q~~ D.C. 20549

ý	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended September 30 2002.
o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from to .

Form 10-Q

Commission file number 0-27683

(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended March 31, 2003

Or

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

		For the transition period from to

~~AMERIVISION~~Commission file ~~COMMUNICATIONS, INC~~no. ~~(Exact name of registrant as specified in its charter)~~ 0-27683

Oklahoma (State or other jurisdiction of incorporation or organization)		73-1378798 (I.R.S. Employer Identification No.)
5900 Mosteller Drive, Suite 1600 Oklahoma City, Oklahoma (Address of principal executive offices)		73112 (Zip Code)
(405) 600-3500 (Registrant's telephone number, including area code)
Not applicable (Former name, former address and former fiscal year, if changed since last report)

Amerivision Communications, Inc.

(Exact name of registrant as specified in its charter)

Oklahoma		73-1378798
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

5900 Mosteller Drive, Suite 1800 Oklahoma City, Oklahoma		73112
(Address of principal executive offices)		(Zip Code)

(405) 600-3500
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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 ý No o

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

~~Outstanding shares~~At ofMarch 31, ~~the registrant's common stock~~2003, ~~par~~there ~~value~~were ~~$0.10 per share~~848,906 shares atof ~~October 31,~~our ~~2002:~~common ~~847,975.~~stock outstanding.

AMERIVISION COMMUNICATIONS, INC. INDEX

			Page No.
Part I.	Financial Information
Part I.		Financial Information	1
Item 1.	Financial Statements
Item 1.		Financial Statements	1
	Condensed Consolidated Balance Sheets—December 31, 2002 and March 31, 2003 (unaudited)
		Condensed Consolidated Balance Sheets—December 31, 2001 and September 30, 2002 (unaudited)	1
	Condensed Consolidated Statements of Operations (unaudited)— Three months ended March 31, 2002 and 2003
		Condensed Consolidated Statements of Operations (unaudited)—Three months and nine months ended September 30, 2001 and 2002	2
	Condensed Consolidated Statements of Stockholders’ Deficiency for the year ended December 31, 2002 and three months ended March 31, 2003 (unaudited)
		Condensed Consolidated Statements of Stockholders' Deficiency for the year ended December 31, 2001 and nine months ended September 30, 2002 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows (unaudited)—Three months ended March 31, 2002 and 2003
		Condensed Consolidated Statements of Cash Flows (unaudited)—Nine months ended September 30, 2001 and 2002	4
	Notes to Condensed Consolidated Financial Statements (unaudited)
		Notes to Condensed Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	8
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	13
Item 4.	Controls and Procedures
Item 4.		Controls and Procedures	13
Part II.	Other Information
Part II.		Other Information	14
Item 1.	Legal Proceedings
Item 1.		Legal Proceedings	14
Item 2.	Changes in Securities and Use of Proceeds
Item 2.		Changes in Securities and Use of Proceeds	14
Item 3.	Default Upon Senior Securities
Item 3.		Default Upon Senior Securities	14
Item 4.	Submission of Matters to a Vote of Security Holders
Item 4.		Submission of Matters to a Vote of Security Holders	14
Item 5.	Other Information
Item 5.		Other Information	14
Item 6.	Exhibits and reports on Form 8-K
Item 6.		Exhibits and reports on Form 8-K	15
Signatures
Signatures			16

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AMERIVISION COMMUNICATIONS, INC. ~~CONDENSED~~ CONDENSED CONSOLIDATED BALANCE SHEETS ~~(In thousands, except per share data) (Information at September 30, 2002 is unaudited)~~

			December 31, 2001			September 30, 2002
ASSETS
Current Assets:
	Cash		$	1,743		$	1,126
	Accounts receivable, net of allowance for uncollectible accounts of $900 and $1,946 at December 31, 2001 and September 30, 2002, respectively			10,944			11,850
	Prepaid expenses and other current assets			530			851
		Total current assets		13,217			13,827
Property and equipment, net				2,939			2,836
Net deferred income tax benefits				2,310			1,293
Covenants not to compete, net				1,030			2,558
Other assets				639			623
		Total assets	$	20,135		$	21,137
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
	Revolving line of credit		$	18,573		$	15,872
	Accounts payable and accrued expenses			8,921			10,157
	Current portion of other notes payable and capital lease obligations			2,297			969
	Loans and notes payable to related parties, current portion			2,737			5,339
	Short-term notes payable to individuals			324			279
		Total current liabilities		32,852			32,616
Long-term debt to related parties, net of current portion				1,172			494
Long-term debt, net of current portion				190			452
Redeemable common stock, carried at redemption value				1,597			1,200
Common stock subject to rescission				1,304			—
Commitments and Contingencies
Stockholders' deficiency:
	Common stock, $0.10 par value, 1,000,000 shares authorized; shares issued and outstanding at December 31, 2001and September 30, 2002 of 824,515 and 832,438, respectively, net of 15,537 redeemable shares			82			82
	Additional paid-in capital			9,275			11,000
	Unearned compensation			(14	)		—
	Retained earnings (accumulated deficit)			(26,323	)		(24,707	)
		Total stockholders' deficiency		(16,980	)		(13,625	)
		Total liabilities and stockholders' deficiency	$	20,135		$	21,137

(In thousands)

(Information at March 31, 2003 is unaudited)

	December 31, 2002			March 31, 2003

ASSETS
Current Assets:
Cash	$	799		$	1,595
Accounts receivable, net of allowance for uncollectible accounts of $1,542 and $936 at December 31, 2002 and March 31, 2003, respectively	8,538			6,984
Prepaid expenses and other current assets	1,047			1,068
Total current assets	10,384			9,647
Property and equipment, net	2,400			1,964
Net deferred income tax benefits	1,465			1,412
Covenants not to compete, net	2,319			2,081
Other assets	623			623
Total assets	$	17,191		$	15,727

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current Liabilities:
Revolving line of credit	$	13,719		$	13,165
Accounts payable and accrued expenses	8,802			7,990
Current portion of other notes payable and capital lease obligations	1,140			1,262
Loans and notes payable to related parties, current portion	4,829			4,742
Short-term notes payable to individuals	279			279
Total current liabilities	28,769			27,438
Long-term debt to related parties, net of current portion	859			787
Long-term debt, net of current portion	259			115
Redeemable common stock, carried at redemption value	1,200			1,200

Commitments and Contingencies
Stockholders’ deficiency:
Common stock, $0.10 par value, 1,000,000 shares authorized; shares issued and outstanding at December 31, 2002 and March 31, 2003 of 832,869 and 833,369 respectively, net of 15,537 redeemable shares	82			82
Additional paid-in capital	11,000			11,000
Retained earnings (accumulated deficit)	(24,978		)	(24,895		)
Total stockholders’ deficiency	(13,896		)	(13,813		)
Total liabilities and stockholders’ deficiency	$	17,191		$	15,727

The accompanying notes are an integral part of these financial statements.

AMERIVISION COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)

		Three months ended September 30,						Nine months ended September 30,
		2001			2002			2001			2002
Revenues:
	Net sales	$	19,973		$	16,538		$	62,015		$	50,384
Operating expenses:
	Cost of telecommunication services		8,434			7,143			27,450			22,126
	Selling, general and administrative expenses		9,349			7,446			28,916			21,987
	Depreciation and amortization		725			608			2,153			1,684
Total operating expenses			18,508			15,197			58,519			45,797
Income from operations			1,465			1,341			3,496			4,587
Other income (expense):
	Interest expense		(740	)		(488	)		(2,571	)		(1,580	)
	Interest expense to related parties		(220	)		(180	)		(536	)		(425	)
	Other income		18			9			54			50
Total other income (expense)			(942	)		(659	)		(3,053	)		(1,955	)
Income before income tax expense			523			682			443			2,632
Income tax expense			215			265			185			1,016
Net income		$	308		$	417		$	258		$	1,616
Earnings per share:
	Basic earnings per share	$	.37		$	.50		$	.31		$	1.95
	Diluted earnings per share	$	.32		$	.44		$	.26		$	1.69
Weighted average common shares outstanding:
Basic			827,190			831,866			826,346			830,307
Diluted			975,771			954,618			975,771			954,393

The accompanying notes are an integral part of these financial statements.

AMERIVISION COMMUNICATIONS, INC. COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (In thousands)

		Stockholders' deficiency
		Common Stock		Additional Paid-in Capital			Unearned Compensation			Retained Earning (Deficit)			Total
Balance at December 31, 2000 (restated)			82		9,207			(125	)		(32,902	)		(23,738	)
	Expiration of potential rescission claims on nonredeemable common stock		—		129			—			—			129
	Vesting of restricted stock awards and stock options		—		8			42			—			50
	Forfeiture of stock awards		—		(69	)		69			—			—
	Cancellation of distribution payable to related party		—		—			—			3,201			3,201
	Net income		—		—			—			3,378			3,378
Balance at December 31, 2001			82		9,275			(14	)		(26,323	)		(16,980	)
	Issuance of common stock (unaudited)		—		105			—			—			105
	Vesting of restricted stock awards and stock options (unaudited)		—		—			14			—			14
	Expiration of potential rescission claims on nonredeemable common stock (unaudited)		—		1,223			—			—			1,223
	Decrease in redemption value of redeemable common stock (unaudited)		—		397			—			—			397
	Net income (unaudited)		—		—			—			1,616			1,616
Balance at September 30, 2002 (unaudited)		$	82	$	11,000		$	—		$	(24,707	)	$	(13,625	)

The accompanying notes are an integral part of these financial statements.

AMERIVISION COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS (In thousands) (Unaudited)~~ OPERATIONS

						Nine months ended September 30,
						2001			2002
Cash flows from operating activities:
	Net income					$	258		$	1,616
	Adjustments to reconcile net income to net cash provided by (used in) operating activities:
		Depreciation of property and equipment					1,441			1,306
		Amortization of covenants not to compete					712			378
		Gain on sale of long-lived assets					45			—
		Amortization of unearned compensation related to stock option and awards					75			123
		Deferred income tax benefit					185			1,017
		Change in assets and liabilities:
			Decrease (increase) in operating assets:
				Accounts receivable			2,031			(906	)
				Prepaid expenses and other assets			183			(305	)
			Increase (decrease) in operating liabilities:
				Accounts payable and accrued expenses			(1,058	)		1,203
				Interest payable			4			33
					Net cash provided by operating activities		3,876			4,465
Cash flows from investing activities, purchase of property and equipment							(269	)		(1,203	)
Cash flows from financing activities:
	Repayments of loans and other obligations to related parties						(732	)		(462	)
	Net decrease in borrowings under line of credit arrangements						(1,020	)		(2,701	)
	Proceeds from notes payable						50			—
	Repayment of notes payable and capital lease obligations						(1,536	)		(691	)
	Repayment of short-term notes payable to individuals						(63	)		(25	)
					Net cash (used in) financing activities		(3,301	)		(3,879	)
Net change in cash and cash equivalents							306			(617	)
Cash and cash equivalents at beginning of period							1,104			1,743
Cash and cash equivalents at end of period						$	1,410		$	1,126
Cash paid during the period for interest						$	2,955		$	1,972
Cash paid during the period for income taxes						$	—		$	—
Supplemental non-cash activity:
		Cancellation of distribution payable				$	3,201		$	—
		Recognition of non compete and related note payable				$	—		$	2,011
		Transfer of notes payable to loans to related parties				$	—		$	375

(In thousands, except per share amounts)

(Unaudited)

	Three months ended March 31,
	2002			2003

Revenues:
Net sales	$	16,375		$	12,340
Operating expenses:
Cost of telecommunication services	6,541			4,643
Selling, general and administrative expenses	7,334			6,238
Depreciation and amortization	536			681
Total operating expenses	14,411			11,562
Income from operations	1,964			778
Other income (expense):
Interest expense	(576		)	(471		)
Interest expense to related parties	(126		)	(181		)
Other income	8			10
Total other income (expense)	(694		)	(642		)
Income before income tax expense	1,270			136
Income tax expense	484			53
Net income	$	786		$	83

Earnings per share:
Basic earnings per share	$	.95		$	.10
Diluted earnings per share	$	.82		$	.09
Weighted average common shares outstanding:
Basic	824,815			832,688

Diluted	950,317			955,440

The accompanying notes are an integral part of these financial statements.

AMERIVISION COMMUNICATIONS, INC. ~~AMERIVISION~~ COMMUNICATIONS, INC. ~~NOTES~~ TO CONDENSED CONSOLIDATED ~~FINANCIAL~~ STATEMENTS ~~(Unaudited)~~ OF STOCKHOLDERS’ DEFICIENCY

~~NOTE~~(In ~~A—BASIS OF PRESENTATION~~ thousands)

The accompanying unaudited consolidated condensed financial statements for AmeriVision Communications, Inc. (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. In the opinion of the Company's management, the condensed consolidated financial statements reflect all adjustments, of a normal and recurring nature, that are necessary to present fairly the Company's financial position as of September 30, 2002, and the results of its operations and cash flows for the nine months ended September 30, 2001 and 2002.

	Stockholders’ deficiency
	Common Stock			Additional Paid-in Capital			Unearned Compensation			Retained Earning (Deficit)			Total

Balance at December 31, 2001	$	82		$	9,275		$	(14	)	$	(26,323	)	$	(16,980	)
Expiration of potential rescission claims on nonredeemable common stock	-0		-	1,222			-0		-	-0		-	1,222
Stock issued to board of directors for services	-0		-	84			-0		-	-0		-	84
Vesting of restricted stock awards and stock options	-0		-	2			14			-0		-	16
Reduction of redemption value of redeemable common stock	-0		-	397			-0		-	-0		-	397
Issuance of common stock for payment of note payable	-0		-	20			-0		-	-0		-	20
Net income	-0		-	-0		-	-0		-	1,345			1,345
Balance at December 31, 2002	$	82		$	11,000		$	-0	-	$	(24,978	)	$	(13,896	)
Net income (unaudited)	-0		-	-0		-	-0		-	83			83
Balance at March 31, 2003 (unaudited)	$	82		$	11,000		$	-0	-	$	(24,895	)	$	(13,813	)

The ~~balance~~accompanying ~~sheet~~notes atare ~~December 31,~~an ~~2001~~integral ~~has~~part ~~been derived from the audited financial statements at that date but does not include all~~ of ~~the information and footnotes required by generally accepted accounting principles for complete financial statements. It is recommended that~~ these ~~consolidated condensed~~ financial statements ~~be read in conjunction with the consolidated financial statements and notes as of and for the year ended December 31, 2001~~. ~~The interim results are not necessarily indicative of the results for a full year.~~

Certain amounts in the condensed balance sheets as of September 30, 2002, have been reclassified to conform with the classifications used as of December 31, 2001.

NOTE B—EARNINGS PER SHARE (dollars in thousands, share and per share amounts not in thousands)

The computation of basic and diluted earnings per share for the three and nine months ended September 30, 2001 and 2002, is as follows:

		Three months ended				Nine months ended
		September 30,
		2001		2002		2001		2002
Basic Earnings (Loss) Per Share
Net income available to nonredeemable common stockholders		$	308	$	417	$	258	$	1,616
Average shares of nonredeemable common stock outstanding			827		832		827		830
	Basic earnings (loss) per share	$	.37	$	.50	$	.31	$	1.95
Diluted Earnings (Loss) Per Share
Net income available to nonredeemable common stockholders and assumed conversions		$	308	$	417	$	258	$	1,616
Average shares of nonredeemable common stock outstanding			827		832		827		830
Stock options and awards			133		107		133		109
Conversion of redeemable common stock			16		16		16		16
Average shares of common stock outstanding and assumed conversions			976		955		976		955
	Diluted earnings (loss) per share	$	.32	$	.44	$	.26	$	1.69

The conversion of convertible notes was not assumed in the computation of diluted earnings per share for the nine months ended September 30, 2001 and 2002, because to do so would have been antidilutive for the periods.

~~NOTE~~AMERIVISION COMMUNICATIONS, INC. ~~C—PRIOR~~CONDENSED ~~PERIOD~~CONSOLIDATED STATEMENTS ~~ADJUSTMENT~~ OF CASH FLOWS

Subsequent to December 31, 2001, the Company determined that it had incorrectly computed the amount of common stock subject to rescission by stockholders at December 31, 2000 and prior periods. Specifically, the Company did not apply correct state statutes when it previously reported the amount of common stock subject to rescission. The effects of this error were to increase the stockholders' deficiency (inIn thousands) (1) from ($27,644) to ($28,427) at January 1, 1999, (2) from ($23,758) to ($24,785) at December 31, 1999, and (3) from ($22,636) to ($23,738) at December 31, 2000. The restatement did not have any affect on the previously reported results of operations or cash flows for the years ended December 31, 1999 and 2000.

~~NOTE D—RELATED PARTY INFORMATION~~ (Unaudited)

As of May 26, 2000 (the "Commencement Date"), the Company entered into an amended and restated employment agreement with Stephen Halliday, then the Company's president and chief executive officer and a member of its board of directors (the "CEO Agreement"). That agreement carried an effective initial term of five years, measured from October 1998, and was subject to automatic one year extensions unless either party notified the other of an intention to terminate at the end of the then existing term. Under its principal provision Mr. Halliday was to receive an annual salary of $450,000 which was increased to $600,000 on October 1, 1999, as well as rights to receive and options to acquire shares of the Company's common stock. Pursuant thereto, as of July 1, 2000, the Company issued Mr. Halliday 4,549 shares of common stock of which 50% were then deemed to be vested and an additional 25% were to be vested on each of the two succeeding anniversary dates of the issuance. Further, Mr. Halliday was entitled to receive a cash bonus equal to whatever additional income tax resulted from the vesting of such shares and the payment of such bonus, as well as two separate options to acquire (a) 27,296 shares of common stock at an exercise price of $28.86/share, and (b) 2% of the common stock deemed outstanding, on a fully diluted basis, as of May 26, 2003, at an exercise price of $36.075. As a direct consequence of the shareholder action taken in July 2001, Mr. Halliday's status with the Company was modified and he chose to effect a good reason termination of the CEO Agreement.

	Three months ended March 31,
	2002			2003

Cash flows from operating activities:
Net income	$	786		$	83
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment	410			441
Amortization of covenants not to compete	126			238
Amortization of unearned compensation related to stock option and awards	25			-0		-
Deferred income tax benefit	484			53
Change in assets and liabilities:
Decrease (increase) in operating assets:
Accounts receivable	1,095			1,554
Prepaid expenses and other assets	(275		)	(21		)
Increase (decrease) in operating liabilities, accounts payable and accrued expenses	173			(812		)
Net cash provided by operating activities	2,824			1,536
Cash flows from investing activities:
Purchase of property and equipment	(200		)	(5		)
Cash flows from financing activities:
Repayments of loans and other obligations to related parties	(58		)	(159		)
Net decrease in borrowings under line of credit arrangements	(2,230		)	(554		)
Repayment of notes payable and capital lease obligations	(189		)	(22		)
Net cash used in financing activities	(2,479		)	(735		)
Net change in cash and cash equivalents	147			796
Cash and cash equivalents at beginning of period	1,743			799
Cash and cash equivalents at end of period	$	1,890		$	1,595

Cash paid during the period for interest	$	716		$	466

Cash paid during the period for income taxes	$	-0	-	$	-0	-

The ~~Company~~accompanying ~~and~~notes ~~Mr. Halliday~~are ~~have entered into a settlement agreement under terms that have resulted in a cancellation of the CEO Agreement,~~ an ~~acknowledgment~~integral bypart ~~the Company that it will pay Mr. Halliday monthly payments~~ of $37,500, extending through December 2006, and the execution of an independent contractor agreement under which Mr. Halliday will provide the Company with a variety of substantive consulting services and will have certain of his expenses incurred, directly or indirectly, in the performance of such activities reimbursed by the Company. The agreement also contains a non-competition and non-solicitation provision. The Company has recorded the present value of these payments as a long-term asset, and is amortizing the asset over the contractual period of the agreement. As a result of the shareholders June 2002 election of a new board or directors, however, a "change in control", as determined in the agreement has occurred, and Mr. Halliday has the right to demand full payment of the note's principal balance. Mr. Halliday has informed the Company that he has no current intentions of exercising his demand rights, but has not expressly and irrevocably waived has rights to demand payment. Accordingly, the liability is classified as a current obligation in the Company's financial statements.

NOTE E—MAJOR CUSTOMER AND SUPPLIER

During the nine months ended September 30, 2002, the Company recorded long distance telecommunications service revenue from a single customer constituting approximately 10% of its total

~~revenues~~AMERIVISION ~~for the period. In September 2002~~COMMUNICATIONS, it was mutually agreed to have the customer redirect its telecommunications service needs to other carriers. The customer has disputed certain charges from the Company and therefore has not paid an amount of approximately $2.2 ~~million owed to the Company~~INC. ~~The~~NOTES ~~Company~~TO ~~believes~~CONDENSED ~~it has adequate documentation of all charges and will~~CONSOLIDATED ~~prevail~~FINANCIAL ~~in the dispute. However, the Company believes it has provided for adequate reserves for the amount recorded in accounts receivable in the case of an unsuccessful outcome.~~ STATEMENTS

~~The Company~~(In is aware of the negative financial condition of certain major telecommunication companies. The Company does not have any long-term contracts with these companies. The Company is implementing a plan to diversify its risk by utilizing several different carriers to protect the service level to its customers. The Company anticipates that its customers will not have any significant disruptions of service due to the negative financial condition of these major companies. thousands)

~~NOTE E—LEGAL MATTERS~~ (Unaudited)

~~In February 2001, the State of Florida assessed the Company for underpayment of various Florida taxes, including gross receipts taxes and sales and use~~NOTE ~~taxes,~~A—BASIS ~~covering~~OF the periods from September 1993 through August 1998, to the extent of approximately $1.7 million, including penalties and interest of approximately $847,000. The Company agreed with $14,000 of the assessment and subsequently paid that amount. The Company disagrees with the remaining assessment of approximately $1.7 million, and has asserted that satisfaction of any underpaid taxes was the responsibility of the Company's third-party billing and collection companies. The State of Florida has requested an extension to December 31, 2003 to complete its audit. The Company believes that it will ultimately prevail in its protest of the assessment, and has not recorded a liability as of December 31, 2001 or September 30, 2002. PRESENTATION

~~NOTE~~The ~~F—SUBSEQUENT~~accompanying ~~EVENT~~ unaudited consolidated condensed financial statements for AmeriVision Communications, Inc. have been prepared in accordance with generally accepted accounting principles for interim financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. In the opinion of our management, the condensed consolidated financial statements reflect all adjustments, of a normal and recurring nature, that are necessary to present fairly our financial position as of March 31, 2003 and the results of our operations and cash flows for the three months ended March 31, 2002 and 2003.

OnThe ~~August~~balance sheet at December 631, 2002, ~~the~~has ~~Company~~been ~~was~~derived ~~notified~~from bythe audited ~~Coast~~financial ~~Business~~statements ~~Credit,~~at athat ~~Division~~date ofbut ~~Southern~~does ~~Pacific~~not ~~Bank~~include ~~("Coast"),~~all ~~the Company's primary lender,~~ of ~~its~~the ~~intention~~information ~~not~~and tofootnotes ~~renew~~required ~~its~~by ~~Credit~~generally ~~Facility~~accepted ~~following~~accounting ~~the~~principles for ~~occurrence~~complete offinancial ~~its~~statements. ~~current~~It ~~maturity~~is ~~date,~~recommended ~~January 30,~~that ~~2003.~~these ~~During~~condensed consolidated ~~September~~financial ~~the~~statements ~~Company~~be ~~was~~read ~~also~~in ~~notified~~conjunction ofwith anthe ~~event of default under~~consolidated ~~the~~financial ~~current~~statements ~~Credit~~and ~~Facility.~~notes ~~This~~as ~~event~~ of ~~default~~and ~~resulted~~for ~~from a decrease in~~ the ~~appraised~~year ~~value~~ended ofDecember 31, 2002. ~~the~~The ~~Company's~~interim ~~subscriber~~results ~~base,~~are ~~which~~not ~~was~~necessarily ~~larger~~indicative ~~than~~of ~~allowed~~the byresults ~~the~~for ~~loan~~a full ~~agreement~~year.

~~The~~NOTE ~~Company~~B—EARNINGS ~~anticipates~~PER ~~signing~~SHARE an(share ~~amendment~~and todollars ~~the~~in ~~existing loan agreement with Coast~~thousands, ~~which~~per ~~will~~share ~~provide~~amounts for a forebearance from taking any further actions against the Company through the maturity date. In consideration for the amendment, the Company will be required to reduce the loan to determined levels, pay certain fees, not ~~make any payments to subordinate note holders, and~~in follow a determined plan for expenditures, among others. Following amendment, the Company expects maximum borrowing under the Credit Facility to be $15.75 million at November 20, 2002 reducing to $14.5 million at January 30, 2003. thousands)

The ~~Company~~ iscomputation ~~currently considering available financing options, including an extension~~ of ~~the~~basic ~~Coast~~and ~~relationship~~diluted ~~upon~~earnings ~~alternative~~per ~~terms.~~share Iffor the ~~Company~~three months isended ~~not~~March 31, ~~successful~~2002 inand ~~obtaining alternative financing~~2003, ~~there~~is ~~could be a material adverse effect on the Company's ability to continue operations at its current levels or to meet its obligations~~ as ~~they come due.~~ follows:

	Three months ended March 31,
	2002		2003

Basic Earnings Per Share
Net income available to nonredeemable common stockholders	$	786	$	83

Average shares of nonredeemable common stock outstanding	825		832

Basic earnings per share	$	.95	$	.10

Diluted Earnings Per Share
Net income available to nonredeemable common stockholders and assumed conversions	$	786	$	83

Average shares of nonredeemable common stock outstanding	825		832
Stock options and awards	109		107
Conversion of redeemable common stock	16		16

Average shares of common stock outstanding and assumed conversions	950		955

Diluted earnings per share	$	.82	$	.09

NOTE C ~~Item~~— 2.LEGAL ~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~ MATTERS

In February 2001, the State of Florida made an assessment totaling approximately $1,728 which includes penalties and interest of approximately $847 for underpayment of various Florida taxes, including gross receipts taxes and sales and use taxes, covering the periods from September 1993 through August 1998. The Company agreed with $14 of the assessment and subsequently paid that amount. The Company disagrees with the remaining assessment of $1,714 asserting that the payment of taxes that were allegedly underpaid was the responsibility of its third-party billing and collection companies. On April 28, 2003 the Company received a Notice of Decision, however, the Company believes that it will ultimately prevail in its protest of the assessment, and have not recorded a liability as of March 31, 2003.

NOTE D — LINE OF CREDIT ARRANGEMENTS

The Company has a line of credit facility (the “Credit Facility”) with a financial institution. Borrowing availability is based upon collections multiples and earnings ratios, subject to the maximum line of credit. The maximum amount of the Credit Facility is $15,000. The outstanding balance at December 31, 2002 and March 31, 2003 was $13,719 and $13,165, respectively.

The Credit Facility matured on January 30, 2003, and carries an interest rate of prime plus 3.5%, with a contractual floor of 9.0%. The stated interest rate at March 31, 2003 was 9.0%. The Credit Facility is secured by substantially all of the Company’s assets, including accounts receivable and the Company’s customer base.

In connection with closing the Credit Facility, several of the Company’s creditors agreed to subordinate the Company’s obligations to them in favor of the financial institution. Repayment of these obligations is limited as specified in the loan and security agreement. The total outstanding debt owed to subordinated creditors as of March 31, 2003, was approximately $4,700.

The Credit Facility contains various financial and other covenants with which the Company must comply, including a minimum net worth requirement, restrictions on asset acquisitions, restrictions on the payment of dividends, and restrictions on principal and interest payments to subordinated creditors.

On August 6, 2002, the Company was notified by its financial institution of its intention not to renew its Credit Facility following the occurrence of its maturity date, January 30, 2003. During September 2002, the Company was also notified of an event of default under the Credit Facility. The event of default resulted from a decrease in the appraised value of the Company’s subscriber base larger than allowed by the Credit Facility. As of December 31, 2002, the Company was in violation of its debt service coverage ratio. Subsequent to year-end, the Company did receive a waiver of this violation with its financial institution. The Company executed two amendments to the existing Credit Facility, whereby the financial institution would agree to forbear from taking any further actions against the Company through May 2003. Pursuant to the amendments, the Company was required to reduce the maximum borrowing under the Credit Facility to $14,100 at May 2003, pay certain fees, not make any payments to subordinated note holders, and follow a determined plan for expenditures, among other requirements.

On February 7, 2003, the California Division of Financial Institutions closed Southern Pacific Bank, the parent company of the financial institution, and the Federal Deposit Insurance Corporation was named receiver. The credit facility was subsequently sold to LINC Credit L.L.C. on May 14, 2003. The Company entered into a forbearance agreement with LINC Credit effective July 14, 2003. Among other things, and subject to earlier termination of the forbearance agreement for certain breaches of the agreement, the forbearance agreement provides for the credit facility to remain in place until September 30, 2003 at which time it may be renewed for two further months under certain conditions. Upon termination of the forbearance agreement, LINC Credit will have the right, but not the obligation, to accelerate the repayment of the entire amount outstanding under the credit facility.

The Company is currently considering available financing options. As discussed further in Note E to the financial statements, if the Company is not successful in obtaining alternative financing, there could be a material adverse effect on the Company’s ability to continue as a going concern and to meet its obligations as they come due.

NOTE E — FINANCIAL CONDITION AND RESULTS OF OPERATIONS

At March 31, 2003, the Company had an accumulated stockholders’ deficiency of $13,813, and negative working capital of $17,791. Declining billable minutes, lower rates, and elimination of certain other fees, have reduced the Company’s net sales from $16,375 for the period ended March 31, 2002, to $12,340 for the same period in 2003. In addition, as discussed in Note D, the Company has been notified by its primary lender of its intent to not renew the Credit Facility. As discussed below, the Company is searching but has yet to replace its Credit Facility. In addition, the Company is in default to certain subordinated and non-subordinated debt holders with an outstanding balance of approximately $5,600. These debt holders have the right to demand payment of the outstanding balances, plus penalties and accrued interest, subject to the terms of their agreements. Despite the fact that the Company has realized net income in each of the last three years and the three month period ended March 31, 2003, the fact that the Company’s line of credit is not being renewed, the default of the subordinated and non-subordinated notes payable, as well as the declining customer base and total revenues, raise substantial doubts about the Company’s ability to continue in existence as a going concern.

Management plans to maintain the cost-cutting measures enacted in previous years and continue to search for new ways to continue to control expenses, including negotiations of new carrier contracts and improved collection procedures. The Company has also implemented or is implementing a series of initiatives and programs designed to help increase the customer base and as a result, total revenues. The Company has begun a new agent program, known as the Lifeline Giving Network. The Company is finalizing agreements for new services such as local service through a bundled package.

The Company believes that the combination of continued cost-cutting measures, revenue enhancement programs, and successful negotiation of a new credit facility must occur to enable the Company to continue in existence as a going concern for a reasonable period of time. Should the Board of Directors and management’s plans be unsuccessful, however, the Company may be unable to meet its obligations as they come due or continue in existence as a going concern. The financial statements do not contain any adjustments that might be necessary should the Company be unable to continue in existence as a going concern.

NOTE F — STOCK BASED COMPENSATION

At March 31, 2003, the Company has several stock-based compensation plans. The Company accounts for those plans under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees”, and its various interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to or greater than the market value of the underlying common stock on the date of the grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, “Accounting for Stock-Based Compensation”, to stock-based employee compensation.

	Three Months Ended March 31,
	2002		2003

Net income
As reported	$	786	$	83
Pro Forma	776		73
Basic earnings per share
As reported	$	.95	$	.10
Pro forma	.92		.09
Diluted earnings per share
As reported	$	.82	$	.09
Pro forma	.81		.08

Through June 30, 2000, the Company accounted for stock options granted to its non-employee directors in accordance with SFAS No. 123. Effective July 1, 2000, the Company adopted the provisions of FASB Interpretation No. 44, which permits companies to apply the provisions of APB No. 25 to its non-employee directors. The Company has reported the cumulative effects of this change in accounting principle in its statement of operations for the year ended December 31, 2000.

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

FINANCIAL CONDITION

The ~~historical financial~~ data presented inbelow ~~the~~should ~~following~~be ~~table~~read ~~for~~in ~~and~~conjunction atwith ~~the end of the nine-month periods ended September 30, 2001 and 2002~~our ~~are~~condensed ~~derived from the unaudited~~ consolidated financial statements ofand the ~~Company.~~notes Inthereto ~~the opinion of management of the Company, such unaudited consolidated condensed financial statements include all~~included ~~adjustments~~elsewhere ~~(consisting of normal recurring adjustments) necessary for a fair presentation of the financial data for such periods~~herein. ~~The results for the nine months ended September 30, 2002 are not necessarily indicative of the results to be achieved for the full year.~~

The data presented below should be read in conjunction with the Company's condensed consolidated financial statements and the notes thereto included elsewhere herein.

	December 31, 2002			March 31, 2003

BALANCE SHEET DATA:
Working capital (deficit)	$	(18,385	)	$	(17,791	)
Total long-term debt	$	2,318		$	2,102
Total stockholder’s deficit	$	(13,896	)	$	(13,813	)

		Nine Months Ended September 30,
		2001			2002
BALANCE SHEET DATA:
	Working capital (deficit)	$	(22,317	)	$	(18,789	)
	Total long-term debt	$	5,558		$	2,146
	Total stockholder's deficit	$	(19,031	)	$	(13,635	)
OTHER FINANCIAL DATA:
	EBITDA (1)	$	5,649		$	6,271

GENERAL

~~The~~Since ~~Company provides domestic long distance and other telecommunications services~~1998, ~~primarily~~we tohave ~~residential~~experienced ~~users.~~a ~~Since~~decline ~~its formation~~ in ~~1991, the Company's~~ annual ~~long~~net ~~distance~~sales ~~telephone volume has grown~~ from ~~approximately~~ $1124.02 million in ~~net~~1998 ~~sales in 1991~~ to ~~approximately~~ $8064.81 million in ~~net sales in 2001~~2002. ~~Substantially~~From ~~all of this growth~~March 2002 ~~is attributable~~ to ~~the~~March 2003, ~~increase~~subscribers inwith ~~the~~traffic ~~Company's~~have ~~subscriber~~decreased ~~base~~by approximately 23%. ~~The~~We ~~Company's~~have ~~subscriber~~also ~~base~~had ~~has~~several ~~increased~~changes ~~from~~in ~~approximately~~management ~~30,000~~in ~~subscribers~~recent atyears. To counteract the ~~beginning~~decline ofin ~~1994~~revenue toand ~~approximately 400,000~~ subscribers atwe ~~December 31,~~have ~~2001.~~implemented ~~The~~several significant ~~Company~~cost ~~does~~cutting ~~not~~strategies, ~~however,~~as ~~expect~~well ~~its~~as ~~revenues~~strategies orto increase our subscriber base toand ~~continue~~net torevenues. ~~grow~~However, atwith ~~this~~continual ~~rate~~declines in ~~the future. The~~ net sales ~~for the nine months ended~~ ~~September 30,~~we ~~2002~~may ~~totaled~~not ~~$50.4 million~~be ~~compared~~able to ~~$62.0 million~~meet ~~for~~our ~~the~~cash ~~nine~~requirements ~~months~~in ~~ended~~the ~~September 30,~~near ~~2001~~future.

~~From~~We are in default of our credit facility and our subordinated and ~~its~~certain ~~inception~~non-subordinated ~~through~~notes. ~~December~~We entered into a forbearance agreement with our lender effective July 3114, ~~1998~~2003. Among other things, and subject to earlier termination of the ~~Company~~forbearance ~~had~~agreement ~~incurred~~for ~~cumulative~~certain ~~net~~breaches ~~operating~~of ~~losses~~the agreement, ~~totaling~~the ~~approximately~~forbearance ~~$12.1 million.~~agreement ~~During~~provides for the ~~years~~credit ~~ended~~facility to remain ~~December~~in place until September 3130, ~~1999~~2003 at which time it may be renewed for two further months under certain conditions. Upon termination of the forbearance agreement, ~~2000~~LINC ~~and~~Credit ~~2001~~will have the right, but not the ~~Company~~obligation, ~~generated~~to accelerate ~~net~~the ~~income~~repayment of ~~$2.2 million,~~the $0entire amount outstanding under the credit facility.~~8 million,~~ We continue to hold discussions with our lenders concerning refinancing the debts and ~~$3.4 million,~~to ~~respectively~~explore other alternatives for financing our operations. ~~The~~To ~~improvements~~that ofend, ~~net~~we ~~income~~hired ~~from operating~~a ~~activities~~Finance ~~were~~and ~~primarily~~Restructuring ~~achieved~~expert ~~from~~in ~~reductions~~July to assist us in ~~operating~~this ~~expenses~~process. We ~~The~~can provide ~~Company~~no ~~reduced~~assurance ~~its~~that ~~accumulated~~we ~~stockholders'~~will ~~deficiency~~be ~~from~~successful ~~approximately~~in ~~$25.8 million~~refinancing atour debt, ~~December 31~~consummating a reorganization, ~~1997~~or otherwise becoming able to ~~approximately~~meet ~~$16~~our obligations as they become due or under accelerated repayment terms.~~9 million~~ Therefore, at ~~December~~March 31, ~~2001.~~2003, ~~The~~substantially ~~net~~all ~~income~~of ~~generated~~our ~~during~~long-term ~~the~~debt ~~nine~~is ~~months~~classified as ~~ended~~current. ~~September 30~~Unless these matters can be resolved, ~~2002~~there ~~also~~exists ~~contributed~~substantial doubt about our ability to ~~the decrease~~continue as a going concern, as expressed in ~~accumulated~~our independent ~~stockholders'~~auditors’ ~~deficiency~~report toincluded ~~approximately~~in ~~$15.2 million~~our at2002 ~~September 30,~~Annual Report on Form 10-K.

From our inception through December 31, 2002 we have incurred cumulative net operating losses totaling approximately $12.1 million. During the years ended December 31, 2001 and 2002, we generated net income of $3.4 million, and $1.3 million. The improvements of net income from operating activities were primarily achieved as a result of reductions in operating expenses. However, for the three month period ended March 31, 2003 our net income was $83,000 compared to $786,000 for the same period in 2002. We reduced our accumulated stockholders’ deficiency from approximately $25.8 million at December 31, 1997 to approximately $13.8 million at March 31, 2003. In addition to the net operating losses, the accumulated deficit was partially due to our declaration and payment of quarterly capital distributions to our stockholders during the period between 1994 and 1997, totaling approximately $16.0 million, and our redemptions of common stock totaling approximately $4.7 million. Our current liabilities exceeded our current assets by approximately $18.4 million at December 31, 2002 and $17.8 million at March 31, 2003.

We bill our customers under several different methods. Some customers ~~2002~~receive their long distance bills directly from us. InWe ~~addition~~also tohave billing and collection agreements with several of the ~~net~~regional bell operating ~~losses~~companies, ~~the~~or RBOCs. ~~accumulated~~Customers ~~deficit~~who ~~has~~are ~~been~~billed ~~attributed~~through to the ~~Company's~~RBOCs ~~declaration~~receive oftheir ~~quarterly~~long ~~distributions~~distance phone tobill ~~its~~with ~~stockholders~~their ~~during~~local ~~1994~~phone ~~through~~bill ~~1997 totaling~~from ~~approximately~~the ~~$16~~RBOC.~~0 million~~ ~~and~~We byhave ~~redemptions~~also ~~totaling~~used ~~approximately~~a ~~$4.7 million.~~third party ~~The~~billing ~~Company's~~and ~~current~~collection ~~liabilities~~service ~~exceeded~~for ~~its~~customer ~~current~~billings ~~assets~~through byother ~~approximately~~local ~~$22.7 million~~exchange carriers, ~~$19.6 million~~or LECs, or RBOCs with whom we did not have a separate billing and ~~$18~~collection agreement.~~8 million~~ ~~at December 31~~However, ~~2000,~~we ~~December 31,~~have ~~2001~~found this arrangement to be non-cost effective and athave ~~September 30,~~ceased ~~2002,~~that ~~respectively.~~arrangement effective November 2002.

The Company bills its customers under several different methods. Some customers receive their long distance bills directly from the Company. The Company also has billing and collection agreements with several of the Registered Bell Operating Companies, or RBOCs. Customers who are billed through the RBOCs receive their long distance phone bill with their local phone bill from the RBOC. The Company also utilizes one third party billing and collection service for customer billings through other Local Exchange Carriers, or LECs or RBOCs with whom the Company does not have a separate billing and collection agreement. 10

The Company makes payments of approximately 10.0% of certain of the customer's collected revenues to a non-profit organization selected by the customer.

Selling, general and administrative expenses include billing fees charged by LECs and other third party billing and collection companies, bad debts, commissions to salespersons, advertising and telemarketing expenses, customer service and support, and other general overhead expenses.

Interest expense includes the cost of financing ~~the~~our ~~Company's~~ accounts receivable and asset purchases, including loans from ~~its~~our primary financial institution under aour ~~line of~~ credit ~~facility,~~ ~~or LOC~~facility.

~~The Company~~We ~~has~~have recognized a net deferred tax ~~assets~~asset, primarily due to net operating loss carryforwards. and allowance for doubtful accounts.

In 1996, the FCC adopted regulations implementing the Telecommunications Act of 1996. To support universal service, carriers are required to contribute certain percentages of their annual gross receipts to fund the High Cost Fund, the Schools and Libraries Fund, and the Low Income Fund, collectively known as the Universal Service Fund, or USF. The FCC has allowed carriers to offset these charges by passing them through to their customers at a percentage rate greater than what is charged to the carrier. Effective April 2003, the FCC has passed additional legislation that will no longer allow for additional mark up to the customers in regards to that pass through liability. As a result, we will reduce our USF charges according to the quarterly rates set by the FCC. This change is expected to impact annual net sales and income from operations in 2003. In 2002, our net sales generated by the USF fee were $4.0 million and the amount included in cost of telecommunication services was $2.2 million. For the three month period ended March 31, 2003, our net sales generated by the USF fee were $819,000 and the amount included in cost of telecommunication services was $379,000.

RESULTS OF OPERATIONS

THREE ~~AND~~ ~~NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2001~~2002 COMPARED TO THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30~~MARCH 31, ~~2002~~ 2003

The following table sets forth for the three-month ~~and nine-month~~ periods indicated the percentage of net sales represented by certain items in ~~the~~our ~~Company's~~ statements of operations:

				Three Months Ended June 30,				Nine Months Ended June 30,
		Three Months Ended March 31,
				2001		2002		2001		2002
		2002		2003
Net sales		100.0	%	100.0	%	~~100.0~~	%	~~100.0~~	%	~~100.0~~	%
Operating expenses:
	Cost of telecommunication service			42.2	%	43.2	%	44.3	%	43.9	%
Cost of telecommunications service		39.9	%	37.6	%
Selling, general & administrative expense	~~Selling, general & administrative expense~~	44.8	%	4651.85	%	~~45.0~~	%	~~46.6~~	%	~~43.6~~	%
Depreciation and amortization expense	~~Depreciation and amortization expense~~	3.3	%	34.6	%	~~3.7~~	%	~~3.5~~	%	~~3.4~~	%
Total operating expenses		~~Total operating expenses~~88.0	%	9293.67	%	~~91.9~~	%	~~94.4~~	%	~~90.9~~	%
Income from operations		12.0	%	76.43	%	~~8.1~~	%	~~5.6~~	%	~~9.1~~	%
Interest expense and other		(4.2	)%	(45.82	)%	~~(4.0~~	)%	~~(4.9~~	)%	~~(3.9~~	)%
Income before income tax		7.8	%	(21.61	)%	~~4.1~~	%	~~0.7~~	%	~~5.2~~	%
Income tax expense		3.0	%	10.14	%	~~1.6~~	%	~~0.3~~	%	~~2.0~~	%
Net income		4.8	%	10.57	%	~~2.5~~	%	~~0.4~~	%	~~3.2~~	%

9Net Sales: Net sales decreased 25% to $12.3 million for the current quarter from $16.4 million for the same quarter the year earlier. This decrease was the result of fewer billable minutes being used by a smaller customer base. Total billable minutes decreased approximately 30% for the current quarter compared to the same quarter last year.

NET SALES: Net sales decreased 17.2% to $16.5 million for the current quarter from $20.0 million for the year earlier quarter. Net sales decreased 18.8% to $50.4 million for the nine months ended September 30, 2002 from $62.0 million for the nine months ended September 30, 2001. This decrease was the result of a decrease in total minutes of traffic and a reduction in minutes under certain rate plans, which are billed at a higher per minute rate. Total billable minutes were approximately 98 million minutes for the current quarter compared to 131 million minutes for the year earlier quarter, a decrease of 27.1%, and approximately 300 million minutes for the nine months ended September 30, 2002 compared to 398 million minutes for the same period in 2001, a decrease of 24.6%.

COST OF TELECOMMUNICATION SERVICES: The Company's cost of sales are variable costs based on amounts paid by the Company to its providers for its customers' long distance usage, as well as the amounts paid to providers for customer service and support. The total cost of telecommunication services for the three months and nine months ended September 30, 2002, were $7.1 million and $22.1 million compared to $8.4 million and $27.5 million for the same periods in 2001. For the three and nine months ended September 30, 2002, the Company's overall cost per minute decreased as compared to the three and nine months ended September 30, 2001. This decrease resulted from rate reductions received by the Company from its switchless carrier.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: The significant components of selling, general and administrative expenses include the following:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2001				2002				2001				2002
		Amount (000's)		% of Net Sales		Amount (000's)		% of Net Sales		Amount (000's)		% of Net Sales		Amount (000's)		% of Net Sales
Billing fees and charges		$	2,559	12.8	%	$	2,182	13.2	%	$	7,326	11.8	%	$	5,667	11.2	%
Advertising and marketing expense			652	3.3	%		414	2.5	%		2,184	3.5	%		1,220	2.4	%
Payments to non-profit organizations			1,286	6.4	%		1,165	7.0	%		4,160	6.7	%		3,510	7.0	%
Payroll expense			2,893	14.5	%		1,923	11.6	%		8,838	14.3	%		5,734	11.4	%
Other			1,959	9.8	%		1,762	10.7	%		6,408	10.3	%		5,856	11.6	%
	Total	$	9,490	46.8	%	$	7,446	45.0	%	$	28,916	46.6	%	$	21,987	43.6	%

Billing Fees and Charges: Billing fees and charges include the contractual billing fees and bad debts charged by LECs and other third party billing companies. It also includes bad debt charge-offs from the Company's direct bill customers. The efforts to collect the direct bill customer accounts are completed by internal personnel. The reduction in the overall billing fees and charges from 2001 to 2002 is due primarily to improvements in the Company's internal collection process.

Advertising and Marketing Expense: Advertising expense decreased for the nine months ended September 30, 2002 to approximately $1.2 million, compared to approximately $2.2 million in the same period in 2001. Similarly, advertising expense decreased for the three months ended September 30, 2002 to approximately $414,000 compared to approximately $652,000 for the same period in 2001. The decreases were primarily due to more focused efforts on specific advertising.

Payments to Non-Profit Organizations: Payments to non-profit organizations for the three months ended September 30, 2002 and 2001 were $1.2 million and $1.3 million, respectively, and for the nine months ended September 30, 2002 and 2001 were $3.5 million and $4.2 million, respectively. During each period, the Company made Partner Sharing payments to approximately 35,000 non-profit organizations, of which approximately 40.0% were paid to ten organizations.

Payroll Expenses: Payroll expenses decreased by approximately $3.1 million from the nine months ended September 30, 2001 to 2002, and approximately $1.0 million from the three months ended September 30, 2002 to 2001, due primarily to reorganization efforts and elimination of duplicated expenses.

Other General and Administrative Expense: Other general and administrative expenses decreased by approximately 8.6% during the nine months ended September 30, 2002 compared to the same

period in 2001 and approximately 10.1% during the three months ended September 30, 2002 compared to the same period in 2001. These decreases were due to increased controls on expenses.

DEPRECIATION AND AMORTIZATION: Depreciation and amortization expense totaled approximately $1.7 million for the nine months ended September 30, 2002 compared to approximately $2.2 million in same period in 2001 and approximately $.6 million for the three months ended September 30, 2002 compared to approximately $.7 million in the same period in 2001. These decreases were primarily attributable to significant assets acquired in prior years becoming fully depreciated.

INTEREST EXPENSE AND OTHER FINANCE CHARGES: Interest expense and other finance charges decreased to approximately $2.0 million for the nine months ended September 30, 2002 compared to $3.1 million in the same period in 2001 and decreased to $.7 million for the three months ended September 30, 2002 compared to $ million in the same period in 2001. This decrease is attributable to a reduction in the Company's LOC balance due to repayments from operating cash flow.

INCOME TAX EXPENSE: During the nine months ended September 30, 2002 and 2001 the Company recorded deferred income tax expense of approximately $1.0 million and $185,000, respectively, and approximately $.3 million and $.2 million for the three months ended September 30, 2002 and 2001, respectively. The income tax expense recognized in the financial statements consists primarily of the deferred tax effects of the temporary differences between the financial and tax basis of assets and liabilities, and net operating loss carryforwards. The Company believes that it will realize the tax benefits of net operating loss carryforwards within the period allowed under Federal tax laws (15 years).

NET INCOME: During the nine months ended September 30, 2002 and 2001 the Company reported net income of $1.6 million and $258,000, respectively, and $417,000 and $221,000 for the three months ended September 30, 2002 and 2001, respectively.

FINANCIAL CONDITION AND LIQUIDITY

Overall the Company's financial condition and liquidity continued to improve during the nine months ended September 30, 2002. The major factor underlying this improvement was the reduction in its negative working capital position by approximately $846,000 over the first nine months of 2002. Specifically, in the first nine months of 2002 the Company reduced its credit facility by over $2.7 million.

Net cash provided by operations for the nine months ended September 30, 2002 and 2001 was $4.5 million and $3.9 million, respectively. The variations in cash flow from operations are primarily attributable to net income for the period, the timing of collections on accounts receivable, and the timing of payments of accounts payable.

In 2001, the Company and its lender modified the LOC to provide availability of $28.5 million. Current availability is limited to approximately $16.0 million and reducing to $14.5 million according to an agreed upon reduction schedule. The Credit Facility is secured by a blanket lien on all of the Company's assets, including accounts receivable and the Company's customer base. The terms of the LOC are for three years from initial funding, with an interest rate of prime plus 3.5% (with a floor of 9%). Although the Credit Facility has a three-year term, it is classified as a current liability in the Company's financial statements because the agreement contains certain subjective acceleration clauses and requires that all cash receipts be deposited to a lockbox, the proceeds of which are used daily to repay the debt. The Credit Facility matures on January 31, 2003. On August 6, 2002, the Company received a letter from the lender providing notice of the lenders intent not to renew the Credit Facility on the maturity date. See Item 5. Other Information for further discussion.

The Company is currently in default of approximately $5 million of loans and notes payable to related parties. The default rates on these obligations range from 14% to 18%. The Company is

Our new rate plans are geared towards direct bill as we continue to ~~accruing~~build ~~all~~our ~~interest~~customer onretention ~~these~~and ~~obligations~~brand ~~but~~awareness. isApproximately ~~only~~57.0% ~~paying~~of our customers received a bill directly from us in the ~~interest~~three onmonth ~~obligations~~period ~~that~~ended March ~~are~~31, ~~not~~2003 ~~subordinated~~compared to ~~Coast~~the ~~Business Credit~~46.0% ~~See~~for ~~Item 5.~~the ~~Other~~same ~~Information~~quarter the year earlier. We have also implemented additional procedures to increase the percentage of direct billed customers.

~~The Company~~Cost isof ~~currently~~Telecommunication ~~considering~~Services: ~~available~~Our ~~financing~~cost ~~options,~~of ~~including~~sales anare ~~extension~~variable costs ofbased ~~the~~on ~~the~~amounts ~~Coast~~paid ~~relationship~~to ~~upon~~our ~~alternative~~providers ~~terms.~~for Ifour ~~the~~customers’ ~~Company~~long isdistance usage, ~~not~~as ~~successful~~well ~~in obtaining~~as ~~alternative~~the ~~financing,~~amounts ~~there~~paid ~~could~~to beproviders afor ~~material~~customer ~~adverse~~service ~~effect~~and support. onFor the ~~Company's~~three ~~ability~~months toended ~~continue~~March ~~operations~~31, at2003, ~~its~~the ~~current~~overall ~~levels~~cost orof telecommunication service was 37.6% compared to ~~meet~~39.9% ~~its~~of ~~obligations~~net assales ~~they~~for ~~come~~the ~~due.~~same period in 2002.

~~Subject to~~During the ~~resolution~~years ofended ~~the~~December 31, ~~Company's~~2002 ~~financing~~and ~~needs~~2001, the ~~Company~~cost ~~expects~~of sales toand ~~incur~~relative ~~future~~percentage ~~capital expenditures~~ of ~~approximately~~costs ~~$100,000 related~~ to ~~upgrades~~net tosales ~~the~~was ~~Company's management~~as ~~information systems and various aspects of reorganization.~~ follows:

OPERATING ACTIVITIES

	Three Months Ended March 31,
	2002				2003
	Amount (000’s)		Percentage of Net Sales		Amount (000’s)		Percentage of Net Sales

Switchless and switched operation costs	$	5,428	33.1	%	$	3,876	31.4	%
PICC/USF fees	825		5.0	%	439		3.6	%
Other related costs	288		1.8	%	328		2.6	%
Totals	$	6,541	39.9	%	$	4,643	37.6	%

~~Significant sources~~Overall ofswitchless ~~cash~~and inswitched ~~operating~~operation ~~activities~~costs ~~for~~decreased ~~the nine months ended September 30, 2002 includes an increase in accounts payable of approximately~~ $1.2 6 million. ~~This is primarily due to the increase~~ in the ~~payable~~three tomonth ~~carriers.~~period ~~The~~ended ~~Company~~March ~~also~~31, ~~generated~~2003 ~~cash~~compared ~~from~~to ~~operations~~the bysame ~~recording~~period ~~net income of approximately $1.6 million~~in 2002, ~~approximately $1.0 million~~due ~~from~~to ~~recording~~reduced acarrier ~~deferred~~costs ~~income~~per ~~tax~~minute ~~expense,~~ and ~~approximately~~a ~~$1.8 million~~reduction in ~~certain~~total ~~non-cash expenses, principally depreciation and amortization~~minutes.

~~Significant~~Selling, General and Administrative Expenses: Selling, general and ~~sources~~administrative ofexpenses ~~cash~~decreased inby ~~operating~~approximately ~~activities~~$1.1 ~~for~~million from the ~~nine~~ three months ended ~~September 30~~March 31, ~~2001~~2002 ~~includes~~to athe ~~decrease~~same period in ~~accounts~~2003, ~~receivable~~while ofthe ~~approximately~~percent ~~$2.0 million.~~of ~~The~~net ~~Company~~sales ~~also~~increased ~~generated~~by ~~cash~~approximately ~~from~~6.7%. This ~~operations~~was byprimarily ~~recording~~due ~~certain~~to ~~non-cash~~the ~~expenses,~~fixed ~~principally~~costs ~~depreciation~~being ~~and~~divided ~~amortization,~~over ~~totaling~~a ~~approximately $2.2 million. Significant~~reduced ~~uses~~net ofsales ~~cash~~amount. inThe ~~operating~~significant ~~activities~~components ~~includes~~of aselling, ~~reduction~~general inand ~~accounts~~administrative expenses ~~payable~~include ofthe ~~approximately $1.1 million.~~ following:

INVESTING ACTIVITIES

	Three Months Ended March 31,
	2002				2003
	Amount (000’s)		% of Net Sales		Amount (000’s)		% of Net Sales

Billing and collection expenses	$	1,867	11.4	%	$	1,866	15.1	%
Advertising and marketing expense	424		2.6	%	131		1.1	%
Payments to non-profit organizations	1,212		7.4	%	853		6.9	%
Payroll expense	1,981		12.1	%	1,735		14.1	%
Other	1,850		11.3	%	1,767		14.3	%
Total	$	7,334	44.8	%	$	6,352	51.5	%

~~The Company's~~Billing ~~investing~~and ~~activities~~Collection ~~for~~Expenses: ~~the~~Billing ~~nine~~and ~~months~~collection ~~ended~~expenses include ~~September 30,~~the ~~2002~~contractual billing fees and ~~2001~~bad ~~consisted~~debts ~~primarily~~charged ofby ~~property~~LECs and ~~equipment~~other third ~~purchases~~party ofbilling ~~approximately $1~~companies.~~2 million~~ ~~and~~It ~~$269,000,~~also ~~respectively~~includes bad debt charge-offs from our direct bill customers. The efforts to collect the direct bill customer accounts are completed by internal personnel.

~~FINANCING~~Advertising and Marketing Expense: Advertising expense decreased for ~~ACTIVITIES~~the three months ended March 31, 2003 to

During the nine months ended September 30, 2002 and 2001, financing activities used approximately $3.9 million and $3.3 million, respectively, in cash. The most significant use of cash in 2002 was the repayments of notes and leases payable, including the Company's LOC. The repayment of loans to related parties totaled approximately $456,000 and $732,000, respectively, for the nine months ended September 30, 2002 and 2001.

Inflation and Changing Prices

Telecommunications revenues do not necessarily track the changes in general inflation, as they tend to respond to the level of activity on the part of the telecommunications industry in combination with the number of competing companies. Capital and operating costs are influenced to a larger extent by specific price changes in the telecommunications industry and to a lesser extent by changes in general inflation.

Forward Looking Information

This Report contains forward-looking statements and information that are based on the beliefs of the Company's management as well as assumptions made by and information currently available to management. All statements other than statements of historical fact included in this Report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements identified by the words "anticipate," "believe," "intend," "estimate" and "expect" and similar expressions. Such statements reflect the Company's current views

~~with~~approximately ~~respect to future events~~$131, ~~based on what it believes are reasonable assumptions; however~~000, ~~such~~compared ~~statements are subject~~ to ~~certain~~approximately ~~risks~~$424,000 ~~uncertainties and assumptions, including but not limited to the risk factors set forth~~ in the ~~Company's Statements on FORM 10-K, copies of which may be obtained from the Securities and Exchange Commission or from the Internet site maintained by the~~same ~~Commission~~period ~~at http://www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those~~ in ~~the forward-looking statements~~2002. The ~~Company~~decrease ~~disclaims~~was ~~any~~primarily ~~intention~~due ~~or obligation~~ to ~~update~~more orfocused ~~review~~efforts ~~any forward-looking statements or information, whether as a result of new information, future events~~on orspecific ~~otherwise~~marketing.

Payments to Non-Profit Organizations: Payments to non-profit organizations decreased by approximately $360,000 from the three months ended ~~Item~~March 31, 2002 to 2003, due primarily to an overall decrease in net sales. During the three months ended March 31, 2003, we made approximately 3,500 partner sharing distributions to affinity partners on a monthly basis. Supporters ~~Quantitative~~of ten of these affinity partners accounted for approximately 40.0% of our gross revenue during the period. The termination of our relationship with any of these ten affinity partners may have a material adverse effect on our financial condition and ~~Qualitative~~results ~~Disclosure~~of ~~about~~operations. ~~Market~~In ~~Risk~~ the second quarter of 2003, our management agreed to terms and signed an agreement with a significant new Affinity Partner.

~~The~~Payroll ~~Company's~~Expenses: ~~primary~~Payroll ~~market~~expenses ~~risk~~decreased ~~relates~~by toapproximately ~~changes in interest rates. Market risk is the potential loss arising from adverse changes in market prices and rates~~$246,000 ~~including interest rates. The Company does not enter into derivatives or other financial instruments~~ for ~~trading or speculative purposes. The objective of~~ the ~~Company's~~three ~~financial~~months ~~risk~~ended ~~management~~March 31, is2003 compared to ~~minimize~~ the ~~negative~~same ~~impact~~period ofin 2002, ~~interest~~due ~~rate~~primarily ~~fluctuations~~to onreorganization ~~its~~efforts ~~earnings~~ and ~~equity.~~elimination ~~The~~of ~~Company currently is not involved with any derivatives or other financial instruments~~certain expenses.

~~At September~~Other ~~30,~~General ~~2002,~~and ~~the~~Administrative ~~Company~~Expense: ~~had~~Other ~~$15.9 million~~general ofand administrative ~~outstanding~~expenses ~~debt~~decreased ~~bearing~~by ~~interest~~approximately at$83,000 ~~floating~~during ~~rates.~~the ~~One~~three months ~~percentage~~ended ~~point~~March 31, of2003 ~~interest~~compared ~~rate~~to ~~adjustment~~the ~~would~~same ~~change~~period ~~the~~in 2002. The ~~Company's~~primary ~~interest~~reason ~~expense~~for onthese andecreases ~~annual~~was ~~basis~~due byto ~~approximately~~increased ~~$160,000.~~controls on expenses.

Depreciation and Amortization: Depreciation and amortization expense totaled approximately $567,000 for the three months ended March 31, 2003 ~~Item~~compared 4.to ~~Controls~~approximately ~~and~~$536,000 ~~Procedures~~ in the same period in 2002.

~~During~~Interest ~~2002,~~Expense ~~the Company began updating~~ and ~~enhancing~~Other ~~its~~Finance ~~existing~~Charges: ~~internal~~Interest ~~controls~~expense and ~~disclosure policies and procedures. The Company is still evaluating these~~other ~~controls,~~finance ~~policies~~charges ~~and~~decreased ~~procedures, and, if deemed beneficial, will make appropriate changes~~ to ~~ensure~~approximately ~~that information required to be disclosed in its periodic SEC filings is timely recorded~~$652, ~~processed,~~000 ~~summarized~~for ~~and reported. Within~~ the ~~90 days~~three ~~prior~~months ~~to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's~~ended ~~management~~March 31, ~~including~~2003 ~~the~~compared ~~Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant~~ to ~~Exchange Act Rule 13a-14. Based upon that evaluation~~$702,000 ~~the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are reasonably effective~~ in ~~timely alerting them to material information relating to~~ the ~~Company~~same ~~required~~period ~~to be included~~ in ~~the Company's periodic SEC filings~~2002. ~~There~~This decrease ~~were~~is noattributable ~~significant~~to ~~changes~~a inreduction ~~the Company's internal controls or~~ in ~~other~~our ~~factors~~credit ~~that~~facility ~~could~~balance ~~significantly~~due ~~affect these controls, and no corrective actions with regard~~ to repayments ~~significant~~from ~~deficiencies~~operating ~~and~~cash ~~material weaknesses subsequent to the date of their evaluation~~flow.

Income Tax Expense: During the three months ended March 31, 2003 and 2002 we recorded deferred income tax expense of approximately $53,000 and $484,000. The income tax benefits recognized in the financial statements consists primarily of the deferred tax effects of the temporary differences between the financial and tax basis of assets and liabilities, and net operating loss carryforwards.

Net Income: During the three months ended March 31, 2003 and 2002 we reported net income of $83,000 and $786,000.

FINANCIAL CONDITION AND LIQUIDITY

Our working capital has improved by $594,000 from December 31, 2002 to March 31, 2003 while our cash increased by $796,000. During the same period, we reduced our credit facility by $554,000.

We have a credit facility with the borrowing availability based upon collections multiples and earnings ratios, subject to the maximum line of credit. The maximum amount of the credit facility is $15.0 million. The outstanding balance at December 31, 2002 was $13.7 million and at March 31, 2003 was $13.2 million.

Credit Facility and Loans: The credit facility matured on January 30, 2003, and carried an interest rate of prime plus 3.5%, with a contractual floor of 9.0%. The stated interest rate at December 31, 2002 and March 31, 2003 was 9.0%.

In connection with closing the credit facility, several of our creditors agreed to subordinate our obligations to them in favor of the financial institution. Repayment of these obligations is limited as specified in the loan and security agreement. The total outstanding debt owed to subordinated creditors as of March 31, 2003 was approximately $4.7 million.

The credit facility contains various financial and other covenants with which we must comply, including a minimum net worth requirement, restrictions on asset acquisitions, restrictions on the payment of dividends, and restrictions on principal and interest payments to subordinated creditors.

On August 6, 2002, our lender notified us that it would not renew our $28.5 million credit facility following its

maturity on January 30, 2003. Since September 2002, we have been in default under our credit facility. We have executed two amendments to ~~PART~~our IIcredit facility, pursuant to which our lender has agreed to forbear from taking any action against us until the earlier of another event of default or May 30, 2003. ~~OTHER~~Pursuant ~~INFORMATION~~ to the amendments, we are required to reduce the maximum borrowing under the credit facility to $14.1 million at May 30, 2003, as well as pay certain fees, not make any payments to subordinated note holders, and follow a determined plan for expenditures, among other requirements. Under the amendments, at December 31, 2002, we were in violation of our debt service coverage ratio. We received a waiver of this violation from our lender. Our lender has a first secured interest in substantially all of our assets. On February 7, 2003, the California Division of Financial Institutions closed Southern Pacific Bank, the parent company of our lender, and the Federal Deposit Insurance Corporation, or FDIC, was appointed as receiver of our lender. The FDIC sold our loan to LINC Credit, L.L.C. on May 14, 2003. We subsequently entered into a forbearance agreement with LINC Credit effective July 14, 2003. Among other things, and subject to earlier termination of the forbearance agreement for certain breaches of the agreement, the forbearance agreement provides for the credit facility to remain in place until September 30, 2003 at which time it may be renewed for two further months under certain conditions. Upon termination of the forbearance agreement, LINC Credit will have the right, but not the obligation, to accelerate the repayment of the entire amount outstanding under the credit facility. We can give no assurance that we will successfully renegotiate the credit facility or that the credit facility will be amended to include terms favorable to us or that LINC Credit will continue to forebear from taking action against us.

Similarly, we are in default under $5.6 million principal amount ~~Item~~of our subordinated and non-subordinated notes. The non-subordinated lender presently has the right, but not the obligation, to accelerate the repayment of the entire $1.7 million ~~Legal~~principal ~~Proceedings~~balance and related penalties and interest outstanding under this notes. The subordinated lenders also have the right to demand repayment of the entire $3.9 million principal balance and related penalties and interest outstanding under these notes, subject to notification to and prior rights of the secured creditor. Certain of our subordinated note holders have expressed a desire to demand and accelerate the repayment of their notes.

InCASH February 2001, the State of Florida made an assessment totaling approximately $1.7 million, which includes penalties and interest of approximately $847,000 for underpayment of various Florida taxes, including gross receipts taxes and sales and use taxes, covering the periods from September 1993 through August 1998. The Company agreed with $14,000 of the assessment and subsequently paid that amount. The Company disagrees with the remaining assessment of $1.7 million, asserting that the payment of taxes that were allegedly underpaid was the responsibility of the Company's third-party billing and collection companies. The State of Florida has requested an extension to December 31, 2002 to complete the audit. The Company believes that it will ultimately prevail in its protest of the assessment, and has not recorded a liability as of December 31, 2001. FLOWS

Operating ~~Item 2. Changes in Securities and Use of Proceeds~~ Activities

~~Not~~Significant ~~applicable~~uses of cash in operating activities during the three months ended March 31, 2003 include a decrease in accounts payable and accrued expenses of $813,000 and an increase of prepaid expenses and other assets of $21,000. Significant sources of cash in operating activities for 2003 were a decrease in accounts receivable of $1.6 million. We also generated cash from operations by recording net income of $83,000, deferred income tax expense of $53,000, and certain non-cash expenses, principally depreciation and amortization, of $681,000.

Significant uses of cash in operating activities during the three months ended March 31, 2002 included an increase in prepaid expenses and other ~~Item~~assets 3of $275,000. ~~Default~~A ~~upon~~significant ~~Senior~~source ~~Securities~~ of cash in operating activities during the three months ended March 31, 2002 includes a decrease in accounts receivable of $1.1 million. We also generated cash from operations by recording net income of $786,000, deferred income tax expense of $484,000, and certain non-cash expenses, principally depreciation and amortization of $561,000.

NotInvesting applicable. Activities

Our investing activities during the three months ended March 31, 2003 ~~Item~~and 4.2002 ~~Submission~~consisted of ~~Matters~~property toand aequipment ~~Vote~~purchases of ~~Security~~$5,000 ~~Holders~~ and $200,000.

~~Not~~Financing ~~applicable.~~ Activities

During the three months ended March 31, 2003 and 2002, financing ~~Item~~activities used $736,000 and $2.5 million in cash. ~~Other~~The ~~Information~~most significant use of cash was the repayments of notes and leases payable, including our credit facility. The repayment of loans to related parties totaled approximately $159,000 and $58,000 for the three months ended March 31, 2003 and 2002.

~~SUBSEQUENT EVENT~~ 14

~~On August 6,~~OTHER 2002, the Company was notified by Coast Business Credit, a Division of Southern Pacific Bank ("Coast"), the Company's primary lender, of its intention not to renew its Credit Facility following the occurrence of its current maturity date, January 30, 2003. During September the Company was also notified of an event of default under the current Credit Facility. This event of default resulted from a decrease in the appraised value of the Company's subscriber base, which was larger than allowed by the loan agreement. MATTERS

~~The Company~~Intangible anticipates signing an amendment to the existing loan agreement with Coast, which will provide for a forebearance from taking any further actions against the Company through the maturity date. In consideration for the amendment the Company will be required to reduce the loan to determined levels, pay certain fees, not make any payments to subordinated note holders, and follow a determined plan for expenditures, among others. Following amendment, the Company expects maximum borrowing under the Credit Facility to be $15.75 million at November 20, 2002 reducing to $14.5 million at January 30, 2003. Assets

~~The~~We amortize intangible assets representing covenants not to compete on ~~Company~~a isstraight-line ~~currently~~basis ~~considering~~over ~~available~~their ~~financing~~contractual ~~options~~periods ranging up to five years. At each balance sheet date, ~~including~~we anassess ~~extension~~whether ofthere has been any permanent impairment in the ~~Coast~~value ~~relationship~~of ~~upon~~these ~~alternative~~intangible ~~terms~~assets. IfThe factors considered by us include if any breach in the ~~Company~~agreements has occurred. The measurement of possible impairment is ~~not~~based ~~successful~~on the ability to recover the balance of intangibles from expected future operating cash flows on an undiscounted basis. We believe there has been no impairment in ~~obtaining~~the carrying value of intangible ~~alternative~~assets ~~financing~~at March 31, ~~there~~2003. ~~could~~However, bethe contractual period of a ~~material~~covenant not ~~adverse~~to ~~effect~~compete onwith a former CEO can be accelerated upon termination of the consulting ~~Company's~~agreement ~~ability~~with tothe ~~continue~~former ~~operations~~CEO. atIf ~~its~~the ~~current~~consulting ~~levels~~agreement is terminated by the former CEO or toby ~~meet~~us, ~~its~~it ~~obligations~~would ascause ~~they~~the ~~come~~remaining ~~due~~book value of the non competition agreement, approximately $1.7 million, to be amortized as an expense over the succeeding six months.

During November 2002,Inflation theand BoardChanging of Directors agreed to hire a new CEO of the Company, Robert Cook. The Board of Directors is now in process of finalizing a contract with Mr. Cook. The contract will require the Company to pay the new CEO an annual base salary of approximately $180,000 plus incentives if certain goals are obtained. The Board anticipates having this contract finalized before November 30, 2002. Prices

~~RELATED~~Telecommunications revenues do not necessarily track the changes in ~~PARTY~~general ~~INFORMATION~~inflation, as they tend to respond to the level of activity on the part of the telecommunications industry in combination with the number of competing companies. Capital and operating costs are influenced to a larger extent by specific price changes in the telecommunications industry and to a lesser extent by changes in general inflation.

14Forward-Looking Information

AsThis ofreport ~~May 26,~~contains ~~2000~~forward-looking ~~(the~~statements ~~"Commencement~~and ~~Date"),~~information ~~the~~that are ~~Company~~based ~~entered~~on ~~into~~the anbeliefs ~~amended~~of ~~and~~our ~~restated~~management ~~employment~~as ~~agreement~~well ~~with~~as ~~Stephen~~assumptions ~~Halliday,~~made ~~then~~by ~~the Company's president~~ and ~~chief executive~~ ~~officer~~information ~~and~~currently aavailable ~~member~~to ~~of its board of directors (the "CEO Agreement")~~management. ~~That~~All ~~agreement~~statements ~~carried~~other anthan statements ~~effective initial term~~ of ~~five~~historical ~~years,~~fact ~~measured~~included ~~from~~in ~~October 1998,~~this ~~and~~Report ~~was~~constitute ~~subject to automatic~~forward-looking ~~one~~statements ~~year extensions~~within ~~unless either party notified~~ the ~~other~~meaning of ~~an intention to terminate at~~ the ~~end~~Private ofSecurities ~~the~~Litigation ~~then~~Reform ~~existing term. Under its principal provision Mr. Halliday was to receive an annual salary~~Act of ~~$450~~1995,~~000~~ ~~which~~including ~~was~~but ~~increased~~not tolimited ~~$600,000 on October 1, 1999, as well as rights~~ to ~~receive~~statements ~~and~~identified ~~options~~by ~~to acquire shares of~~ the ~~Company's common stock. Pursuant thereto~~words “anticipate,” ~~as of July 1~~“believe, ~~2000,~~” ~~the Company issued Mr. Halliday 4~~“intend,~~549~~” ~~shares~~“estimate” ofand ~~common~~“expect” ~~stock of which 50% were then deemed to be vested~~ and ~~an additional 25% were to be vested on each of the two succeeding anniversary~~similar ~~dates of the issuance~~expressions. ~~Further,~~Such ~~Mr. Halliday~~statements ~~was~~reflect ~~entitled~~our tocurrent ~~receive~~views awith ~~cash~~respect ~~bonus equal~~ to ~~whatever~~future events, ~~additional~~based ~~income~~on ~~tax~~what ~~resulted~~we ~~from~~believe ~~the~~are ~~vesting~~reasonable ofassumptions; ~~such~~however, ~~shares and the payment of~~ such ~~bonus,~~ asstatements ~~well~~are assubject ~~two separate options~~ to ~~acquire~~certain ~~(a) 27~~risks,~~296~~ ~~shares~~uncertainties ofand ~~common~~assumptions. ~~stock~~Should one ator anmore ~~exercise price~~ of ~~$28.86/share,~~these ~~and~~risks ~~(b) 2%~~or ofuncertainties ~~the common stock deemed outstanding~~materialize, onor ashould ~~fully diluted~~underlying ~~basis,~~assumptions asprove ~~of May 26~~incorrect, ~~2003,~~actual atresults anmay ~~exercise~~vary ~~price~~materially offrom ~~$36.075.~~those Asin the aforward-looking ~~direct~~statements. ~~consequence~~We ofdisclaim ~~the~~any ~~shareholder~~intention ~~action~~or ~~taken~~obligation into update ~~July 2001,~~or ~~Mr. Halliday's~~review ~~status~~any ~~with~~forward-looking ~~the~~statements ~~Company~~or ~~was modified~~information, ~~and~~whether heas ~~chose to effect~~ a result ~~good~~of ~~reason~~new ~~termination~~information, offuture ~~the~~events ~~CEO~~or ~~Agreement~~otherwise.

~~The Company~~Item ~~and Mr~~3. ~~Halliday~~ ~~have entered into a settlement agreement under terms that have resulted in a cancellation of the CEO Agreement, an acknowledgment by the Company that~~Quantitative ~~it will pay Mr. Halliday monthly payments of $37,500, extending through December 2006,~~ and ~~the~~Qualitative ~~execution~~Disclosure ofabout anMarket independent contractor agreement under which Mr. Halliday will provide the Company with a variety of substantive consulting services and will have certain of his expenses incurred, directly or indirectly, in the performance of such activities reimbursed by the Company. The agreement also contains a non-competition and non-solicitation provision. The Company has recorded the present value of these payments as a long-term asset and a current liability. Risk

~~MAJOR~~We are not exposed to market risk from the changes in marketable ~~CUSTOMER~~securities, ~~AND~~as ~~SUPPLIERS~~we have no such instruments.

~~During the~~Inflation ~~nine~~generally ~~months~~affects ~~ended~~us ~~September 30,~~by ~~2002,~~increasing ~~the~~our ~~Company~~cost ~~recorded long distance telecommunications service revenue from a single customer constituting approximately 10%~~ of ~~its total~~labor, ~~revenues~~equipment ~~for~~and ~~the~~new ~~period~~materials. InWe ~~September 2002,~~do itnot ~~was~~believe ~~mutually~~that ~~agreed~~inflation ~~to have the customer redirect its telecommunications service needs to other carriers. The customer~~ has ~~disputed~~had ~~certain~~any ~~charges~~material ~~from~~effect ~~the~~on ~~Company~~our ~~and~~results ~~therefore has not paid an amount~~ of ~~approximately~~operations ~~$2.2 million~~during ~~owed to~~ the ~~Company.~~three ~~The~~month ~~Company believes it has adequate documentation of all charges and will~~periods ~~prevail~~ending ~~in the dispute. However~~March 31, ~~the~~2002 ~~Company~~and ~~has provided for adequate reserves for the amount recorded in accounts receivable in the case of an unsuccessful outcome~~2003.

~~The Company~~We isare ~~aware~~exposed ofto ~~the~~future ~~negative~~earnings ~~financial~~or ~~condition~~cash offlow ~~certain~~fluctuations ~~major~~from changes ~~telecommunication~~in ~~companies.~~interest ~~The~~rates ~~Company~~on ~~does~~borrowings ~~not~~under ~~have~~our ~~any~~credit ~~long-term~~facility ~~contracts~~since ~~with~~amounts borrowed ~~these~~under ~~companies. The~~the ~~Company~~credit isfacility ~~implementing~~accrue interest at a ~~plan~~fluctuating rate equal to ~~diversify~~the ~~its~~prime ~~risk~~lending byrate, ~~utilizing~~or ~~several~~prime, ~~different~~plus ~~carriers~~3.5%. toOur ~~protect~~stated interest rate at March 31, 2000 was 9.0%, which represents the ~~service~~floor ~~level~~rate toof ~~its~~our ~~customers~~credit facility. ~~The~~At ~~Company~~March 31, ~~anticipates~~2003 ~~that~~we ~~its~~had ~~customers~~$13.2 million ~~will~~of ~~not~~outstanding ~~have~~debt ~~any~~bearing ~~significant~~interest ~~disruptions~~at offloating ~~service~~rates. ~~due~~Market torisk is estimated as the ~~negative~~potential increase ~~financial~~in ~~condition~~interest ofrate ~~these~~for ~~major~~borrowing ~~companies~~under our credit facility resulting from an increase in prime. Based on borrowings under our credit facility at March 31, 2003, a hypothetical increase of one percentage point in prime would increase our interest expense on an annual basis by approximately $132,000.

Our operations ~~Item~~are 6.all ~~Exhibits~~originated within the United States and ~~reports~~we therefore onconduct ~~Form 8-K~~ all business transactions in U.S. dollars.

~~None.~~ 15

~~(b) Reports~~Item on4. ~~Form 8-K~~ Controls and Procedures

~~On August~~Within 1the 90-day period prior to the filing of this report, ~~2002~~an evaluation was performed under the supervision and with the participation of our management, including the ~~Company~~Chief ~~filed~~Executive aOfficer ~~Form 8-K~~(CEO) ~~reporting~~and anthe ~~Item 1~~Chief Financial Officer (aCFO), ~~change~~of the effectiveness of ~~control~~the design and operation of our disclosure controls and procedures (as defined in Rule 13a-14(c) under the ~~Company's~~Securities ~~board~~and Exchange Act of ~~directors~~1934). Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective.

15Except for the resignation of the our Chief Financial Officer in April 2003, there have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

~~SIGNATURES~~ 16

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

	AMERIVISION COMMUNICATIONS, INC.
DATE: November 19, 2002	By:	/s/ JOHN TELLING John Telling, President and Chief Executive Officer
	By:	/s/ LONI WOODLEY Loni Woodley, Treasurer and Chief Financial Officer (Principal Financial Officer)

Item 1. Legal Proceedings

16In February 2001, the State of Florida made an assessment totaling approximately $1.7 million, which includes penalties and interest of approximately $847,000 for underpayment of various Florida taxes, including gross receipts taxes and sales and use taxes, covering the periods from September 1993 through August 1998. We agreed with $14,000 of the assessment and subsequently paid that amount. We disagree with the remaining assessment of $1.7 million asserting that the payment of taxes that were allegedly underpaid was the responsibility of our third-party billing and collection companies. On April 28, 2003, we received a Notice of Decision, however, we believe that we will ultimately prevail in our protest of the assessment, and have not recorded a liability as of March 31, 2003.

Item 2. Changes in ~~CERTIFICATIONS~~ Securities and Use of Proceeds

IIn February 2003, we issued 500 shares to an executive search firm in ~~John~~exchange ~~Telling~~for approximately $20,000 ~~certify~~of ~~that:~~services. The issuance was exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) thereunder.

1Item 3. I have reviewedDefault thisupon quarterlySenior report on Form 10-Q of Amerivision Communications, Inc.; Securities

~~2. Based on~~We myare ~~knowledge,~~in ~~this~~default ~~quarterly report does not contain any untrue statement~~ of aour ~~material~~credit ~~fact~~facility, oras ~~omit~~more tofully ~~state~~described ain "Management's ~~material~~Discussion ~~fact~~and ~~necessary~~Analysis toof ~~make~~Financial ~~the~~Conditions ~~statements~~and ~~made, in light~~Results of ~~the~~Operations". Our ~~circumstances~~existing default ~~under~~in ~~which~~our ~~such~~credit ~~statements~~facility ~~were~~has ~~made,~~been ~~not~~temporily ~~misleading~~waived ~~with~~pursuant ~~respect~~ to the forbearance ~~period~~agreement ~~covered~~with byour ~~this~~primary ~~quarterly report;~~ lenders.

3Item 4. ~~Based on~~ mySubmission ~~knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition,~~of ~~results~~Matters ofto ~~operations~~a ~~and~~Vote ~~cash flows~~ of ~~the~~Security ~~registrant as of, and for, the periods presented in this quarterly report;~~ Holders

~~4. The registrant's~~Not other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: applicable.

Item 5. ~~The registrant's~~ ~~other~~Other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): Information

6. The registrant'sMerger otherwith certifyingPowerNet officersGlobal andCommunications, IInc., have indicated in this quarterly report whether or notPNG. thereOur werepreviously significantannounced changesmerger innegotiations internalwith controlsPowerNet orGlobal inCommunications, otherInc. factorswere that couldterminated significantlyFriday, affectApril internal controls subsequent to the date of our most recent evaluation25, including any corrective actions with regard to significant deficiencies and material weaknesses2003.

~~Date:~~Agreements with ~~November~~Carriers. 19 In 2003, ~~2002~~we lowered our transmission service costs and resolved certain billing disputes and claims between our vendors and us. We are continuing negotiations with existing and prospective carriers that would further reduce our cost of telecommunications service for 2003.

~~/s/ John Telling John Telling President and Chief Executive Officer~~ 17

17Item 6. Exhibits and reports on Form 8-K

~~CERTIFICATIONS~~ (a) Exhibits

I, Loni Woodley, certify that:

Exhibit Number		Description

3.1		Certificate of Incorporation of the Registrant (which is incorporated herein by reference to Exhibit 3.1 to Registrant’s Form 10 registration statement, filed October15, 1999)
3.2		Amended and Restated Bylaws of the Registrant (which is incorporated herein by reference to Exhibit 3.2(ii) to Registrant’s Second Quarter Form 10-Q, filed August 19, 2002)
4.1		Form of certificate representing shares of the Registrant’s common stock (which is incorporated herein by reference to Exhibit 4.1 to Registrant’s Form 10 registration statement, filed October 15, 1999)
4.2		Form of Type C Redemption Agreement (which is incorporated herein by reference to Exhibit 4.4 to Registrant’s Form 10 registration statement, filed October 15, 1999)
4.3		Form of Type D Redemption Agreement (which is incorporated herein by reference to Exhibit 4.5 to Registrant’s Form 10 registration statement, filed October 15, 1999)
4.4		Form of Convertible Note (which is incorporated herein by reference to Exhibit 4.6 to Registrant’s Form 10 registration statement, filed October 15, 1999)
4.5		Promissory Note dated April 20, 1999, payable by the Registrant to John Damoose (which is incorporated herein by reference to Exhibit 4.8 to Registrant’s Form 10 registration statement, filed October 15, 1999)
4.7		Promissory Note dated April 20, 1999, payable by the Registrant to C.A.S.E. (which is incorporated herein by reference to Exhibit 4. to Registrant’s Form 10 registration statement, filed October 15, 1999)
4.8		Form of Subordinated Note dated February 1, 2001. (which is incorporated herein by reference to Exhibit 4.8 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
4.8.1		List of Subordinated Notes dated February 1, 2001. (which is incorporated herein by reference to Exhibit 4.8.1 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
4.9		Promissory Note dated November 15, 2001, payable by the Registrant to Larry J. Geringer(which is incorporated herein by reference to Exhibit 4.9 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
4.10		Promissory Note dated November 15, 2001, payable by the Registrant to Tineke C. Geringer. (which is incorporated herein by reference to Exhibit 4.10 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
4.11		Form of Subordinated Tranche ‘B’ and ‘C’ Note Payable dated February 15, 2000. (which is incorporated herein by reference to Exhibit 4.11 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
4.11.1		List of Subordinated Tranche ‘B’ and ‘C’ Note Payables dated February 15, 2000. (which is incorporated herein by reference to Exhibit 4.11.1 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
9.1		Freeny Voting Trust Agreement, dated September 1, 2001, by and among the Registrant, Tracy C. Freeny and Sharon Freeny, as beneficiaries, and David Clark, Russell Beaty, and David Thompson, as trustees (which is incorporated herein by reference to Exhibit 10.30 to Registrant’s 2001 Third Quarter Form 10-Q, filed December 28, 2001)
10.1		Loan and Security Agreement dated as of February 4, 1999 between the Registrant and Coast Business Credit (which is incorporated herein by reference to Exhibit 10.18 to Registrant’s Form 10 registration statement, filed October 15, 1999)
10.1.1		Amendment Number One to Loan and Security Agreement dated as of October 12, 1999 between the Registrant and Coast Business Credit (which is incorporated herein by reference to Exhibit 10.18.1 to Registrant’s Form 10 registration statement, filed October 15, 1999)
10.1.2		Amendment Number Two to Loan and Security Agreement dated as of May 10, 2000 between the Registrant and Coast Business Credit (which is incorporated herein by reference to Exhibit 10.18.2 to Registrant’s Form 10 registration statement, filed July 10, 2000)

~~1. I have reviewed this quarterly report on Form 10-Q of Amerivision Communications Inc.;~~ 18

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

Exhibit Number		Description

10.1.3		Amendment Number Three to Loan and Security Agreement dated as of December 19, 2001 between the Registrant and Coast Business Credit (which is incorporated herein by reference to Exhibit 10.1.3 to Registrant’s 2001 Form 10-K, filed, April 16, 2002)
10.1.4		Amendment Number Four to Loan and Security Agreement dated as of March 22, 2002 between the Registrant and Coast Business Credit. (which is incorporated herein by reference to Exhibit 10.1.4 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
10.1.5		Amendment Number Five to Loan and Security Agreement dated as of November 26, 2002 between the Registrant and Coast Business Credit. (which is incorporated herein by reference to Exhibit 10.1.5 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
10.1.6		Amendment Number Six to Loan and Security Agreement dated as of January 31, 2003 between the Registrant and Coast Business Credit. (which is incorporated herein by reference to Exhibit 10.1.6 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
10.1.7		Waiver of Event of Default on Loan and Security Agreement dated as of February 27, 2003 between the Registrant and Coast Business Credit. (which is incorporated herein by reference to Exhibit 10.1.7 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
10.2		Settlement Agreement, dated as of August 31, 2001, by and between the Registrant and Tracy C. Freeny (which is incorporated herein by reference to Exhibit 10.28 to Registrant’s 2001 Third Quarter Form 10-Q, filed December 28, 2001)
10.3**		Consulting Agreement, dated as of September 1, 2001, by and between the Registrant and Tracy C. Freeny (which is incorporated herein by reference to Exhibit 10.29 to Registrant’s 2001 Third Quarter Form 10-Q, filed December 28, 2001)
10.4		Confidentiality Agreement, effective as of August 31, 2001, by and between the Registrant and Tracy C. Freeny (which is incorporated herein by reference to Exhibit 10.31 to Registrant’s 2001 Third Quarter Form 10-Q, filed December 28, 2001)
10.5		Promissory Note dated September 1, 2001, payable by the Registrant to Tracy C. Freeny (which is incorporated herein by reference to Exhibit 10.32 to Registrant’s 2001 Third Quarter Form 10-Q, filed December 28, 2001)
10.6**		Amended and Restated Employment Agreement, dated as of May 24, 2000 between the Registrant and Stephen D. Halliday (which is incorporated herein by reference to Exhibit 10.3 to Registrant’s Form 10 registration statement, filed July 10, 2000)
10.8		Asset Purchase Agreement, dated as of April 30, 1999, among Hebron, AmeriVision, Tracy Freeny, Carl Thompson and S. T. Patrick (which is incorporated herein by reference to Exhibit 10.13 to Registrant’s Form 10 registration statement, filed October 15, 1999)
10.9		Lease/License Agreement, dated as of April 30, 1999 between Hebron and AmeriVision (which is incorporated herein by reference to Exhibit 10.14 to Registrant’s Form 10 registration statement, filed October 15, 1999)
10.10		Form of Promissory Note payable by AmeriVision to Hebron (form to be used with respect to Switch Note and Internet Note) (which is incorporated herein by reference to Exhibit 10.15 to Registrant’s Form 10 registration statement filed October 15 1999)
10.11		Promissory Note dated February 1, 1999, in the original principal amount of $2,274,416 payable by AmeriVision to Hebron (which is incorporated herein by reference to Exhibit 10.16 to Registrant’s Form 10 registration statement, filed October 15, 1999)
10.12		Capital Stock Escrow and Disposition Agreement dated April 30, 1999 among Tracy C. Freeny, Hebron and Bush Ross Gardner Warren & Rudy, P.A. (which is incorporated herein by reference to Exhibit 10.17 to Registrant’s Form 10 registration statement, filed October 15, 1999)
10.13**		Letter Agreement dated as of December 31, 1999 between the Company and John Telling (which is incorporated herein by reference to Exhibit 10.24 to Registrant’s Form 10 registration statement, filed July 10, 2000)

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 19

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

Exhibit Number		Description

10.14**		Stock Incentive Plan (which is incorporated herein by reference to Exhibit 10.27 to Registrant’s Form 10 registration statement, filed July 10, 2000)
10.15		Acknowledgement and Agreement, dated as January 1, 2002 between the Registrant and Stephen D. Halliday (which is incorporated herein by reference to Exhibit 10.1 to Registrant’s 2002 Form 10-Q, filed August 19, 2002)
10.16		Consulting and Settlement Agreement, dated as January 1, 2002 between the Registrant and Stephen D. Halliday (which is incorporated herein by reference to Exhibit 10.1 to Registrant’s 2002 Form 10-Q, filed August 19, 2002)
10.17		Promissory Note, dated as July 10, 2002 between the Registrant and Stephen D. Halliday (which is incorporated herein by reference to Exhibit 10.1 to Registrant’s 2002 Form 10-Q, filed August 19, 2002)
10.18		Confidentiality and Non-Competition Agreement, dated as June 26, 2002 between the Registrant and Stephen D. Halliday (which is incorporated herein by reference to Exhibit 10.1 to Registrant’s 2002 Form 10-Q, filed August 19, 2002)
10.21**		Consulting Agreement dated October 1, 2002 between the Registrant and Task Force 3, LLC (which is incorporated herein by reference to Exhibit 10.21 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
10.22**		Employment Agreement dated January 31, 2002 between the Registrant and Al Jones (which is incorporated herein by reference to Exhibit 10.22 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
10.23**		Employment Agreement dated November 11, 2002 between the Registrant and Robert Cook (which is incorporated herein by reference to Exhibit 10.23 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
10.24		Telecommunications Services Agreement dated April 20, 1999 by and between the Registrant and WorldCom Network Services, Inc. (which is incorporated herein by reference to Exhibit 10.19 to Registrant’s Form 10 registration statement, filed October 15, 1999)
*10.24.1(+)		Telecommunications Services Agreement Amendment 14 dated January 16, 2003 by and between the Registrant and WorldCom Network Services, Inc.
*10.24.2(+)		Telecommunications Services Agreement Amendment 15 dated November 26, 2002 by and between the Registrant and WorldCom Network Services, Inc.
*10.24.3(+)		Telecommunications Services Agreement Amendment 16 dated January17, 2003 by and between the Registrant and WorldCom Network Services, Inc.
10.25		Program Enrollment Terms dated April 20, 1999 by and between the Registrant and WorldCom Network Services, Inc. (which is incorporated herein by reference to Exhibit 10.20 to Registrant’s Form 10 registration statement, filed October 15, 1999)
10.25.1(+)		Amended and Restated Program Enrollment Terms dated November 11, 2001 by and between the Registrant and WorldCom Network Services, Inc. (which is incorporated herein by reference to Exhibit 10.25.1 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
10.26		Security Agreement dated April 20,1999 by and between the Registrant and WorldCom Network Services, Inc. (which is incorporated herein by reference to Exhibit 10.20 to Registrant’s Form 10 registration statement, filed October 15, 1999)
10.27(+)		Master Service Agreement dated October 18, 2002 by and between the Registrant and Broadwing Communications Services, Inc. (which is incorporated herein by reference to Exhibit 10.27 to Registrant’s 2002 Form 10-K, filed April 15, 2003)
*10.28		Lease agreement dated January 1, 2000, by and between the Registrant and Hebron Communications Corporation.
*10.29		Lease agreement dated November 18, 2002, by and between the Registrant and Hebron Communications Corporation.

~~5. The~~* Filed registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): herewith

~~6. The~~** Compensatory registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. contract

~~Date:~~(+) Confidential ~~November 19,~~treatment ~~2002~~ requested

~~/s/ Loni Woodley Loni Woodley Treasurer and Chief Financial Officer (Principal Financial Officer)~~20

18(b) Reports on Form 8-K

On March 11, 2003, we filed an 8-K announcing the FDIC being appointed receiver of our lender and our negotiations of a merger with PowerNet Global Communications, Inc.

SIGNATURES

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

	AMERIVISION COMMUNICATIONS, INC.





		/s/ Robert D. Cook
DATE: July 30, 2003	By:	Robert D. Cook, President and Chief Executive Officer

		/s/ Randall W. Muth
	By:	Randall W. Muth, Chief Financial Officer

CERTIFICATIONS

I, Robert Cook, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Amerivision Communications, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c)	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: July 30, 2003

/s/ Robert D. Cook
Robert D. Cook
President, Chief Executive Officer

CERTIFICATIONS

I, Randall W. Muth, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Amerivision Communications, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c)	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: July 30, 2003

/s/ Randall W. Muth
Randall W. Muth
Chief Financial Officer

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Amerivision Communications, Inc. on Form 10-Q for the period ending March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert Cook, President and Chief Executive Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Robert D. Cook
President, Chief Executive Officer
July 30, 2003

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Amerivision Communications, Inc. on Form 10-Q for the period ending March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Randall W. Muth, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Randall W. Muth
Chief Financial Officer
July 30, 2003

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

NotInvesting applicable. Activities

14Forward-Looking Information

1Item 3. I have reviewedDefault thisupon quarterlySenior report on Form 10-Q of Amerivision Communications, Inc.; Securities

Filing Compare · AMERIVISION COMMUNICATIONS INC