UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(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
		For the quarterly period ended June 30, 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

Commission file no. 0-27683

~~Amerivision~~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 Act) Yes o No ý

At ~~March 31~~June 30, 2003, there were ~~848~~860,906 shares of our common stock outstanding.

AMERIVISION COMMUNICATIONS, INC. INDEX

Part I.	Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets—December 31, 2002 and March 31, 2003 (unaudited)
	Condensed Consolidated Balance Sheets-December 31, 2002 and June 30, 2003 (unaudited)
	Condensed Consolidated Statements of Operations (unaudited)— Three months ended March 31, 2002 and 2003
	Condensed Consolidated Statements of Operations (unaudited)— Three and six months ended June 30, 2002 and 2003
	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, 2002 and six months ended June 30, 2003 (unaudited)
	Condensed Consolidated Statements of Cash Flows (unaudited)—Three months ended March 31, 2002 and 2003
	Condensed Consolidated Statements of Cash Flows (unaudited)—Three and six months ended June 30, 2002 and 2003
	Notes to Condensed Consolidated Financial Statements (unaudited)
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
Part II.	Other Information
Item 1.	Legal Proceedings
Item 2.	Changes in Securities and Use of Proceeds
Item 3.	Default Upon Senior Securities
Item 4.	Submission of Matters to a Vote of Security Holders
Item 5.	Other Information
Item 6.	Exhibits and reports on Form 8-K
Signatures

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AMERIVISION COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Information at ~~March~~June 3130, 2003 is unaudited)

	December 31, 2002			~~March~~June 3130, 2003
ASSETS
Current Assets:
Cash	$	799		$	1,~~595~~439
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
Accounts receivable, net of allowance for uncollectible accounts of $1,542 and $936 at December 31, 2002 and June 30, 2003, respectively	8,538			5,968
Prepaid expenses and other current assets	1,047			1,~~068~~046
Total current assets	10,384			98,~~647~~453
Property and equipment, net	2,400			1,~~964~~531
Net deferred income tax benefits	1,465			1,~~412~~529
Covenants not to compete, net	2,319			21,~~081~~842
Other assets	623			~~623~~572
Total assets	$	17,191		$	1513,~~727~~927
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current Liabilities:
Revolving line of credit	$	13,719		$	1312,~~165~~166
Accounts payable and accrued expenses	8,802			7,~~990~~464
Current portion of other notes payable and capital lease obligations	1,140			1,~~262~~299
Loans and notes payable to related parties, current portion	4,829			45,~~742~~060
Short-term notes payable to individuals	279			279
Total current liabilities	28,769			2726,~~438~~268
Long-term debt to related parties, net of current portion	859			~~787~~307
Long-term debt, net of current portion	259			~~115~~55
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
Common stock, $0.10 par value, 1,000,000 shares authorized; shares issued and outstanding at December 31, 2002 and June 30, 2003 of 832,869 and 845,369 respectively, net of 15,537 redeemable shares	82			84
Additional paid-in capital	11,000			11,~~000~~088
Retained earnings (accumulated deficit)	(24,978		)	(2425,~~895~~075		)
Total stockholders’ deficiency	(13,896		)	(13,~~813~~903		)
Total liabilities and stockholders’ deficiency	$	17,191		$	1513,~~727~~927

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 March 31,
	Three months ended June 30,						Six months ended June 30,
	2002			2003			2002			2003
Revenues:
Net sales	$	1617,~~375~~470		$	1210,~~340~~770		$	33,845		$	23,110
Operating expenses:
Cost of telecommunication services	68,~~541~~523			4,~~643~~330			15,063			8,982
Selling, general and administrative expenses	7,~~334~~125			65,~~238~~286			14,461			11,622
Depreciation and amortization	~~536~~538			~~681~~792			1,075			1,359
Total operating expenses	1416,~~411~~186			1110,~~562~~408			30,599			21,963
Income from operations	1,~~964~~284			~~778~~362			3,246			1,147
Other income (expense):
Interest expense	(~~576~~517		)	(~~471~~512		)	(1,093		)	(984		)
Interest expense to related parties	(~~126~~118		)	(181		)	(244		)	(361		)
Other income	833			1034			41			37
Total other income (expense)	(~~694~~602		)	(~~642~~659		)	(1,296		)	(1,308		)
Income before income tax expense	1,270			136
Income (loss) before income tax expense (benefit)	682			(297		)	1,950			(161		)
Income tax expense	484			53
Income tax expense (benefit)	267			(117		)	751			(64		)
Net income	$	786		$	83
Net income (loss)	$	415		$	(180	)	$	1,199		$	(97	)
Earnings per share:
Earnings (loss) per share:
Basic earnings per share	$	.95		$	.10
Basic earnings (loss) per share	$	.49		$	(.21	)	$	1.45		$	(.12	)
Diluted earnings per share	$	.82		$	.09
Diluted earnings (loss) per share	$	.43		$	(.21	)	$	1.26		$	(.12	)
Weighted average common shares outstanding:
Basic	~~824~~832,~~815~~438			~~832~~839,~~688~~369			829,627			836,286
Diluted	~~950~~955,~~317~~190			~~955~~839,~~440~~369			953,379			836,286

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~~Earnings Accumulated (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
Forfeiture of stock awards	-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
Issuance of common stock (unaudited)	2			88									90
Balance at March 31, 2003 (unaudited)	$	82		$	11,000		$	-0	-	$	(24,895	)	$	(13,813	)
Net income (loss) (unaudited)	-0		-	-0		-	-0		-	(97		)	(97		)
Balance at June 30, 2003 (unaudited)	$	84		$	11,088		$	-0	-	$	(25,075	)	$	(13,903	)

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

AMERIVISION COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three months ended March 31,
	Six months ended June 30,
	2002			2003
Cash flows from operating activities:
Net income	$	~~786~~1,199		$	83(97	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment	~~410~~822			~~441~~881
Amortization of covenants not to compete	~~126~~252			~~238~~477
Amortization of unearned compensation related to stock option and awards	25			-0		-
Amortization of unearned compensation related to stock option,awards and issuance of common stock	139			90
Deferred income tax benefit	~~484~~751			53(64		)
Change in assets and liabilities:
Decrease (increase) in operating assets:
Accounts receivable	~~1,095~~81			12,~~554~~570
Prepaid expenses and other assets	(~~275~~246		)	~~(21~~52		)
Increase (decrease) in operating liabilities, accounts payable and accrued expenses	~~173~~1,303			(~~812~~1,338		)
Net cash provided by operating activities	24,~~824~~301			12,~~536~~571
Cash flows from investing activities:
Purchase of property and equipment	(~~200~~914		)	(512		)
Cash flows from financing activities:
Repayments of loans and other obligations to related parties	(58238		)	(~~159~~320		)
Net decrease in borrowings under line of credit arrangements	(23,~~230~~408		)	(~~554~~1,553		)
Repayment of notes payable and capital lease obligations	(~~189~~595		)	(2246		)
Net cash used in financing activities	(24,~~479~~241		)	(~~735~~1,919		)
Net change in cash and cash equivalents	~~147~~(854		)	~~796~~640
Cash and cash equivalents at beginning of period	1,743			799
Cash and cash equivalents at end of period	$	~~1,890~~889		$	1,~~595~~439
Cash paid during the period for interest	$	~~716~~1,309		$	~~466~~973
Cash paid during the period for income taxes	$	-0	-	$	-0	-
Non cash transaction:
Recognition of non compete agreement and related notes payable	$	2,011		$	-0	-

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

AMERIVISION COMMUNICATIONS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands)

(Unaudited)

NOTE A—BASIS OF PRESENTATION

The accompanying 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~~June 3130, 2003 and the results of our operations for the three and six months ended, June 30, 2002 and 2003, and cash flows for the ~~three~~six months ended ~~March~~June 3130, 2002 and 2003.

The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. It is recommended that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes as of and for the year ended December 31, 2002 included in the Company's 2002 annual report 10K. The interim results are not necessarily indicative of the results for a full year.

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

The computation of basic and diluted earnings (loss) per share for the three and six months ended ~~March 31~~June 30, 2002 and 2003, is as follows:

	Three months ended March 31,
	Three months ended June 30,					Six months ended June 30,
	2002		2003			2002		2003
Basic Earnings Per Share
Basic Earnings (Loss) Per Share
Net income available to nonredeemable common stockholders	$	786	$	83
Net income (loss) available to nonredeemable common stockholders	$	415	$	(180	)	$	1,199	$	(97	)
Average shares of nonredeemable common stock outstanding	~~825~~823		~~832~~839			830		836
Basic earnings per share	$	.95	$	.10
Basic earnings (loss) per share	$	.49	$	(.21	)	$	1.45	$	(.12	)
Diluted Earnings Per Share
Diluted Earnings (Loss) Per Share
Net income available to nonredeemable common stockholders and assumed conversions	$	786	$	83
Net income (loss) available to nonredeemable common stockholders and assumed conversions	$	415	$	(180	)	$	1,199	$	(97	)
Average shares of nonredeemable common stock outstanding	~~825~~832		~~832~~839			830		836
Stock options and awards	~~109~~107		~~107~~-0		-	107		-0		-
Conversion of redeemable common stock	16		16-0		-	16		-0		-
Average shares of common stock outstanding and assumed conversions	~~950~~955		~~955~~839			953		836
Diluted earnings per share	$	.82	$	.09
Diluted earnings (loss) per share	$	.43	$	(.21	)	$	1.26	$	(.12	)

The conversion of redeemable common stock and the issuance of stock options were not assumed in the calculation of diluted earnings (loss) per share for the three and six months ended June 30, 2003 because to do so would be antidilutive for the periods.

NOTE C — LEGAL MATTERS

In August ~~February 2001~~2002, the ~~State~~Florida Department of ~~Florida~~Revenue ~~made~~issued anto ~~assessment~~AmeriVision Communications, Inc. proposed assessments totaling approximately $1~~,728~~.8 million, which includes penalties and interest of approximately $~~847~~1 ~~for~~million for underpayment of ~~various~~ Florida ~~taxes,~~sales ~~including~~and ~~gross~~use ~~receipts~~ taxes ~~and~~ ~~sales~~ and ~~use~~gross receipts taxes, ~~covering~~ during the ~~periods~~period ~~from~~ September 1993 through August 1998. The Company ~~agreed~~disagrees with ~~$14 of~~ the proposed ~~assessment~~assessments and ~~subsequently~~ ~~paid~~filed ~~that~~a ~~amount.~~protest ~~The~~with ~~Company~~the ~~disagrees~~Department. ~~with~~On ~~the~~April ~~remaining~~28, 2003 ~~assessment~~the Department issued a Notice of $1Decision,~~714~~ ~~asserting~~reducing ~~that~~portions of the ~~payment~~proposed assessments ofand ~~taxes~~sustaining ~~that~~the ~~were~~remainder. ~~allegedly underpaid~~The ~~was~~balance shown on the ~~responsibility~~Notice of Decision ~~its~~after ~~third-party~~application ~~billing~~of ~~and~~interest ~~collection companies.~~through On April 2814, 2003 ~~the~~is $1.7 million. The Company ~~received~~has filed a petition for reconsideration of the Notice of Decision, ~~however,~~and ~~the~~has ~~Company~~engaged ~~believes~~Florida ~~that~~counsel itto ~~will~~advise ~~ultimately~~and ~~prevail~~assist it in ~~its~~this ~~protest~~matter. The ofcompany believes, based upon prior ~~the~~experience, it is not liable for this assessment, and ~~have~~has not recorded ait as a liability as of ~~March 31~~June 30, 2003 in the financial statements.

NOTE D — LINE OF CREDIT ARRANGEMENTS

~~The~~On February 4, 1999, the Company ~~has~~obtained a line of credit ~~facility~~ (the “Credit Facility”) ~~with~~from Coast Business Credit (“Coast”), a ~~financial~~division ~~institution~~of Southern Pacific Bank, a California corporation. ~~Borrowing~~On ~~availability~~August is6, ~~based~~2002, ~~upon~~the ~~collections~~Company was notified by Coast of its intention ~~multiples~~not ~~and~~to ~~earnings~~renew ~~ratios~~the Credit Facility following the occurrence of its maturity date, January ~~subject~~30, to2003. During September 2002, the ~~maximum~~Company ~~line~~was also notified of ~~credit~~an event of default under the Credit Facility. The event of default resulted from ~~maximum~~a ~~amount~~greater decrease in the appraised value of the Company’s subscriber base than allowed by the Credit Facility. isAs ~~$15~~of December 31,~~000~~ 2002, the Company was also in default of its debt service coverage ratio. ~~The~~Subsequent ~~outstanding~~to ~~balance~~year atend, the ~~December~~Company did receive a waiver of this default from Coast. On February 317, 2003, ~~2002~~the California Division of Financial Institutions closed Southern Pacific Bank, the parent company of Coast, and ~~March~~the 31Federal Deposit Insurance Corporation (“FDIC”) was named receiver. The Company executed two amendments to the existing Credit Facility, whereby the FDIC as receiver of Coast agreed to forbear from taking any further actions against the Company through May 31, 2003. ~~was~~The terms of the amendments included requirements that the Company would: reduce the maximum borrowing under the Credit Facility to $1314.1 million by May 31,~~719~~ ~~and~~2003, ~~$13~~pay certain fees,~~165~~ not make any payments to subordinated note holders, ~~respectively~~and follow a determined plan for expenditures.

~~The~~On May 14, 2003, the Credit Facility ~~matured~~was onsold to ~~January 30,~~LINC ~~2003,~~Credit ~~and~~L.L.C. ~~carries~~(“LINC anCredit”) The Company entered into a forbearance ~~interest~~agreement ~~rate~~(“Forbearance ofAgreement”) ~~prime~~with ~~plus~~LINC ~~3.5%~~Credit effective July 14, 2003. The ~~with~~Forbearance aAgreement provides ~~contractual~~for ~~floor~~the ofCredit ~~9.0%.~~Facility ~~The~~to ~~stated~~remain in place and for LINC Credit to ~~interest~~forego ~~rate~~its atremedies ~~March~~under the Credit Facility until September 3130, 2003 ~~was~~at which 9time the Forbearance Agreement may be extended for two additional months under certain conditions.~~0%.~~ Upon ~~The~~termination ~~Credit~~of ~~Facility~~the isForbearance ~~secured~~Agreement, byLINC ~~substantially~~Credit ~~all~~will ofhave the ~~Company’s~~right, but ~~assets~~not the obligation, ~~including~~to ~~accounts~~accelerate ~~receivable~~the ~~and~~repayment of the ~~Company’s~~entire ~~customer~~amount outstanding ~~base~~under the Credit Facility.

InThe ~~connection~~Credit ~~with~~Facility ~~closing~~carries ~~the~~an ~~Credit~~interest ~~Facility~~rate of prime plus 3.5%, ~~several~~adjustable ofmonthly, ~~the Company’s~~with ~~creditors~~a ~~agreed~~contractual tofloor ~~subordinate~~of ~~the~~9.0%. ~~Company’s~~The stated ~~obligations~~interest torate ~~them~~at ~~in favor~~June of30, ~~the~~2003 ~~financial~~was ~~institution~~9.0%. The ~~Repayment~~Credit ofFacility ~~these~~is ~~obligations~~secured isby ~~limited as~~substantially ~~specified~~all inof the Company’s ~~loan~~assets, ~~and~~including ~~security~~accounts ~~agreement.~~receivable ~~The~~and ~~total~~the ~~outstanding~~Company’s ~~debt~~customer ~~owed~~base. toOutstanding ~~subordinated~~balances ~~creditors~~at ~~as of March~~December 31, ~~2003~~2002 and June 30, ~~was~~2003 ~~approximately~~were $~~4,700~~13.7 million and $12.1 million respectively.

~~The~~On July 7, 2003, the amount outstanding under the Credit Facility ~~contains~~was approximately ~~various~~$12.1 ~~financial~~million. ~~and~~Advances ~~other~~were ~~covenants~~made ~~with~~to the Company pursuant to the ~~which~~Forbearance Agreement equal to the net amount of funds collected by LINC Credit, primarily from the Company’s ~~must~~lockbox, ~~comply~~for the period June 19, ~~including~~2003 through aJuly ~~minimum~~14, ~~net~~2003, ~~worth~~less ~~requirement~~the sum of $300,000. Advances from cash collected by LINC Credit during the ~~restrictions~~forbearance onperiod ~~asset~~will ~~acquisitions~~be reduced by $35,000 ~~restrictions~~per onweek for the ~~payment~~period ofJuly ~~dividends~~15, ~~and~~2003 ~~restrictions~~through onAugust ~~principal~~29, 2003, and ~~interest~~by ~~payments~~$40,000 per week for the period September 1, 2003 to ~~subordinated~~September ~~creditors~~30, 2003. During the extension period the advances will be reduced by $40,000 per week through to October 31, 2003 and then by $45,000 per week until the termination of the Forbearance Agreement.

OnSeveral ~~August 6,~~of ~~2002,~~ the Company’s ~~was~~creditors ~~notified by its financial~~(the ~~institution~~“Subordinated ofCreditors”) ~~its~~have ~~intention~~agreed ~~not~~ to ~~renew~~accept ~~its~~a ~~Credit~~subordinated ~~Facility~~position ~~following the~~in ~~occurrence~~favor of ~~its maturity date, January 30, 2003. During September 2002,~~ the ~~Company~~issuer ~~was also notified~~ of ~~an event of default under~~ the Credit Facility. ~~The~~Repayment ~~event~~ of ~~default~~these ~~resulted~~obligations ~~from~~is limited aas ~~decrease~~specified in the ~~appraised~~ ~~value~~various ofsubordination ~~the~~agreements ~~Company’s~~executed ~~subscriber base larger than allowed~~ by the ~~Credit~~Subordinated ~~Facility~~Creditors. AsThe oftotal ~~December 31,~~outstanding ~~2002, the Company was in violation of its~~ debt ~~service~~owed ~~coverage ratio. Subsequent~~ to ~~year-end,~~ the ~~Company did~~Subordinated ~~receive~~Creditors aas ~~waiver~~ of ~~this~~June ~~violation with its financial institution. The Company executed two amendments to the existing Credit Facility~~30, ~~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~~ toapproximately ~~reduce the maximum borrowing under the Credit Facility to~~ $~~14,100 at~~4.7 ~~May 2003, pay certain fees, not make any payments to subordinated note holders, and follow a determined plan for expenditures, among other requirements~~million.

OnThe ~~February 7,~~Credit ~~2003,~~Facility ~~the~~contains ~~California Division of Financial~~various ~~Institutions closed Southern Pacific Bank, the parent company of the~~ financial ~~institution,~~ and ~~the~~other ~~Federal~~covenants ~~Deposit~~with ~~Insurance~~which ~~Corporation~~the ~~was~~Company ~~named~~must ~~receiver. The~~comply, ~~credit facility was subsequently sold to~~including ~~LINC~~restrictions ~~Credit L.L.C.~~ on ~~May 14,~~asset ~~2003. The Company entered into a forbearance agreement with LINC Credit effective July 14~~acquisitions, ~~2003. Among other~~restrictions ~~things,~~on ~~and subject to earlier termination of~~ the ~~forbearance~~payment ~~agreement for certain breaches~~ of ~~the agreement~~dividends, ~~the forbearance agreement provides for~~ ~~the~~and ~~credit~~restrictions ~~facility~~on toprincipal ~~remain~~and ininterest ~~place~~payments 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~~Subordinated ~~facility~~Creditors.

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.

The Company is actively pursuing other available financing options that may be available. 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~~June 30, 2003, the Company had an accumulated stockholders’ deficiency of $13~~,813,~~.9 million and negative working capital of $17~~,791~~.8 million. Declining billable minutes, lower rates, and elimination of certain other fees, have reduced the Company’s net sales from $~~16,375~~33.8 million for the period ended ~~March~~June 3130, 2002, to $~~12,340~~23.1 million for the same period in 2003. In addition, as discussed in Note D, the ~~Company~~Credit Facility has ~~been~~matured ~~notified~~and byis ~~its~~subject ~~primary lender of its intent~~ to ~~not renew~~ the ~~Credit~~terms ~~Facility.~~of ~~As discussed below,~~ the ~~Company~~Forbearance ~~is searching but has yet to replace its Credit Facility~~Agreement. The ~~In addition, the~~ Company is also in default to certain subordinated and non-subordinated debt holders with an ~~outstanding~~ aggregate outstanding balance of approximately $5~~,600~~.5 million, some of which may be subject to legal challenge. These debt holders ~~have~~may have the right to demand payment of the outstanding balances, plus penalties and ~~accrued~~ accrued interest, subject to the terms of their agreements. The ~~Despite the fact that the~~ Company has ~~realized~~retained ~~net~~a ~~income~~finance ~~in each of the last three years~~ and ~~the three~~ ~~month~~restructuring ~~period~~consultant ~~ended~~who ~~March 31, 2003, the fact that the Company’s line of credit~~ is ~~not~~actively ~~being~~pursuing ~~renewed,~~new ~~the~~financing ~~default~~alternatives ~~of the subordinated and non-subordinated~~to ~~notes~~replace ~~payable,~~both asits ~~well~~Credit asFacility ~~the declining customer base~~ and ~~total~~a ~~revenues,~~portion ~~raise substantial~~of ~~doubts~~its ~~about~~debt ~~the Company’s ability to continue in existence as a going concern~~holders.

Management plans to maintain the cost-cutting measures enacted in previous years and continue to search for new ways to ~~continue to control~~ 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~~ asresulting ain ~~result, total~~ increased revenues. The Company has begun a new agent program, known as the ~~Lifeline~~ “LifeLine Giving Network.” ~~The~~In ~~Company~~May is2003, ~~finalizing~~the Company finalized ~~agreements~~an ~~for~~agreement ~~new~~to ~~services~~resell ~~such~~a asbundled ~~local~~telephone ~~service~~package ~~through~~which aincludes ~~bundled~~local ~~package~~and long distance service.

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~~’ and management’s plans be unsuccessful, however, the Company may be unable to ~~meet~~ 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~~ necessary should the Company be unable to continue in existence as a going concern.

NOTE F — STOCK BASED COMPENSATION (share and dollars in thousands, per share amounts not in thousands)

At ~~March 31~~June 30, 2003, the Company ~~has~~had several stock-based compensation plans. The Company accounts for those plans under the ~~recognition~~ recognition and measurement provisions of Accounting Principles Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees”, and its ~~various~~ various interpretations. No stock-based employee compensation cost is reflected in the calculation of net income (loss), 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 loss and earnings loss 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,
	Three Months Ended June 30,					Six Months Ended June 30,
	2002		2003			2002		2003
Net income
Net income (loss)
As reported	$	~~786~~415	$	83(180	)	$	1,199	$	(97	)
Pro Forma	~~776~~404		73(190		)	1,188		(107		)
Basic earnings per share
Basic earnings (loss) per share
As reported	$	.9549	$	(.1021	)	$	1.45	$	(.12	)
Pro forma	.9248		(.0922		)	1.43		(.13		)
Diluted earnings per share
Diluted earnings (loss) per share
As reported	$	.8243	$	(.0921	)	$	1.26	$	(.12	)
Pro forma	.8142		(.0822		)	1.25		(.13		)

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

	December 31, 2002			March 31, 2003
	December 31,				June 30,
BALANCE SHEET DATA:
	2002			2003
Working capital (deficit)	$	(18,385	)	$	(17,791	)
	(000’s)			(000’s)
Total long-term debt	$	2,318		$	2,102
BALANCE SHEET DATA:
Total stockholder’s deficit	$	(13,896	)	$	(13,813	)
Working capital (deficit)	$	(18,385	)	$		(17,815	)
Total long-term debt	$	2,318		$		1,562
Total stockholders’ deficiency	$	(13,896	)	$		(13,903	)

GENERAL

Since 1998, we have experienced a decline in annual net sales from $124.2 million in 1998 to $64.1 million in 2002. The net sales for the six months ended June 30, 2002 and 2003, were $33.8 million ~~From~~and ~~March~~$23.1 million. From June 2002 to ~~March~~June 2003, subscribers with traffic have decreased by ~~approximately~~ 2311%. ~~We have also had several changes in management in recent years.~~ To counteract the decline in revenue and subscribers we have implemented ~~several~~ several significant cost cutting strategies, as well as strategies to increase ~~our~~ our subscriber base and net revenues. ~~However,~~The ~~with~~Company ~~continual~~has ~~declines~~finalized inagreements ~~net sales~~to weprovide ~~may~~local ~~not~~service bethrough ~~able~~a bundled package and continues to ~~meet~~explore opportunities ~~our~~for ~~cash~~additional ~~requirements~~services into ~~the~~be ~~near~~marketed ~~future~~to its client base.

WeCurrently, ~~are~~the inCompany ~~default~~has ~~of our credit facility and our subordinated and certain non-subordinated notes. We entered into~~ a ~~forbearance~~Credit ~~agreement with~~Facility ~~our~~with ~~lender~~LINC ~~effective July 14~~Credit, ~~2003. Among other things~~LLC, ~~and~~which is subject to ~~earlier~~ ~~termination~~a ofForbearance ~~the forbearance agreement for certain breaches of the agreement~~Agreement, ~~the~~dated ~~forbearance agreement provides for the credit facility to remain~~July ~~in place until September 30~~14, 2003 at(See, ~~which~~Note ~~time~~D itto ~~may~~Financial beStatements ~~renewed~~— ~~for~~Line ~~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~~Arrangements). We continue to hold discussions with our lenders concerning refinancing the debts and to explore other alternatives for financing our operations. To that end, we hired a Finance and Restructuring ~~expert~~consultant in July to assist us in this process. We can provide no assurance that we will be successful in refinancing our debt, ~~consummating~~ a consummating reorganization, or otherwise becoming able to meet our obligations as they become due ~~or under accelerated repayment terms~~. Therefore, at ~~March 31~~June 30, 2003, substantially all of our long-term debt is classified as current. Unless these matters can be resolved, there exists substantial doubt about our ability to continue as a going concern, as expressed in our independent auditors’ report included in our 2002 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 ~~for~~ the ~~three~~six month period ended June ~~March 31~~30, 2003 our net ~~income~~loss was $8397,000 compared to a net income of $~~786,000~~1.2 million for the same period in 2002. We have reduced our accumulated stockholders’ deficiency from ~~approximately~~ $25.8 million at December 31, 1997 to ~~approximately~~ $13.89 million at ~~March 31~~June 30, 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 redemption ~~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.~~

WeOur ~~bill~~current ~~our~~liabilities ~~customers~~exceeded ~~under~~our ~~several different methods. Some customers~~current ~~receive~~assets ~~their~~by ~~long distance bills directly from us~~$18.4 million Weat ~~also~~December 31, ~~have~~2002 ~~billing~~ and ~~collection~~ ~~agreements with several of the regional bell operating companies, or RBOCs~~$18.8 ~~Customers~~million ~~who are billed through the RBOCs receive their long distance~~at ~~phone~~June ~~bill with their local phone bill from the RBOC. We have also used a third party billing and collection service for customer billings through other local exchange carriers~~30, ~~or LECs~~2003, ormainly ~~RBOCs~~as ~~with whom we did not have~~ a ~~separate billing~~result ~~and~~of ~~collection~~the ~~agreement. However, we have found this arrangement to be non~~long-~~cost~~term ~~effective~~debt ~~and~~being ~~have~~classified ~~ceased that arrangement effective~~as ~~November 2002~~current.

10We bill our customers under several different methods. Some customers receive their long distance bills directly from us. We also have billing and collection agreements with several of the regional bell operating companies, or RBOCs. Customers who are billed through the RBOCs receive their long distance phone bills with their local phone bills from the RBOC.

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.10

~~Interest~~Selling, ~~expense~~general ~~includes~~and ~~the~~administrative ~~cost~~expenses include ofbilling ~~financing~~fees ~~our~~charged ~~accounts~~by ~~receivable~~Local Exchange Carriers (“LECs”) and other third party billing and ~~asset~~collection ~~purchases~~companies, ~~including~~bad ~~loans~~debts, ~~from~~commissions ~~our~~to salespersons, ~~primary~~advertising ~~financial~~and ~~institution~~telemarketing expenses, customer service and ~~under~~support, ~~our~~and ~~credit~~other ~~facility~~general overhead expenses.

WeInterest ~~have~~expense ~~recognized~~includes athe ~~net~~cost ~~deferred~~of financing ~~tax~~our accounts receivable and asset purchases, ~~primarily~~including ~~due~~loans tofrom ~~net~~our ~~operating~~primary ~~loss~~financial ~~carryforwards~~institution ~~and~~under ~~allowance~~our ~~for~~Credit ~~doubtful accounts~~Facility.

InWe ~~1996,~~have ~~the~~recognized 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~~net ~~rate~~deferred ~~greater~~tax ~~than what is charged to the carrier. Effective April 2003~~asset, ~~the FCC has passed additional legislation that will no longer~~ ~~allow~~primarily ~~for~~due ~~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~~operating ~~income~~loss ~~from~~carry-forwards ~~operations in 2003. In 2002, our net sales generated by the USF fee were $4.0 million~~ and ~~the~~allowance ~~amount~~for ~~included in cost of telecommunication~~doubtful ~~services was $2~~accounts.~~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~~In 1996, the FCC adopted regulations OFimplementing ~~OPERATIONS~~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 markup to customers of the pass through liability. As a result, we have reduced our USF charges according to the quarterly rates set by the FCC. For the three and six month period ended June 30, 2003, our net sales included USF fees of $593,000 and $1.4 million before taking into account the cost of such telecommunication service of $504,000 and $885,000.

~~THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THREE MONTHS ENDED MARCH~~RESULTS ~~31,~~OF ~~2003~~OPERATIONS

~~The~~THREE ~~following~~AND ~~table~~SIX ~~sets~~MONTHS ~~forth~~ENDED ~~for~~JUNE ~~the~~30, ~~three-month~~2002 ~~periods~~COMPARED ~~indicated the~~TO ~~percentage~~THREE ofAND ~~net~~SIX MONTHS ~~sales~~ENDED ~~represented~~JUNE by30, ~~certain items in our statements of operations:~~2003

	Three Months Ended March 31,
	2002		2003
Net sales	100.0	%	100.0	%
Operating expenses:
Cost of telecommunications service	39.9	%	37.6	%
Selling, general & administrative expense	44.8	%	51.5	%
Depreciation and amortization expense	3.3	%	4.6	%
Total operating expenses	88.0	%	93.7	%
Income from operations	12.0	%	6.3	%
Interest expense and other	(4.2	)%	(5.2	)%
Income before income tax	7.8	%	1.1	%
Income tax expense	3.0	%	0.4	%
Net income	4.8	%	0.7	%

The following table for the three and six month periods indicated the percentage of net sales represented by certain items in our statements of operations:

Net 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.

	Three Months Ended June 30				Six Months Ended June 30,
	2002		2003		2002		2003

Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Operating expenses:
Cost of telecommunications service	48.8	%	40.2	%	44.5	%	38.9	%
Selling, general & administrative expense	40.8	%	49.1	%	42.7	%	50.3	%
Depreciation and amortization expense	3.1	%	7.3	%	3.2	%	5.8	%
Total operating expenses	92.7	%	96.6	%	90.4	%	95.0	%
Income from operations	7.3	%	3.4	%	9.5	%	5.0	%
Interest expense and other	(3.0	)%	(4.7	)%	(3.2	)%	(4.3	)%
Income (loss) before income tax	3.9	%	(2.7	)%	5.7	%	(0.7	)%
Income tax expense (benefit)	1.5	%	(1.0	)%	2.2	%	(0.2	)%
Net income (loss)	2.4	%	(1.7	)%	3.5	%	(0.5	)%

Net Sales: Net sales decreased 38% to $10.8 million for the current quarter from $.5 million for the same quarter the year earlier. Net sales decreased 32% from $33.8 million for the six months ended June 30, 2002 compared to $23.1 million for the six months ended June 30, 2003. This decrease was the result of fewer billable minutes being used by a smaller customer base as well as a reduction in per minute charges to our customers and the termination of one wholesale customer that accounted for $2.4 million and $2.7million of net sales for the three and six months ended June 30, 2002 compared to $0 in the same periods in the current year. Total billable minutes, excluding wholesale minutes, decreased 23% for the current quarter and six months ended June 30, 2003 compared to the same periods last year. From June 2002 to June 2003, subscribers with traffic have decreased by 11%.

Our new rate plans are geared towards direct bill as we continue to build our customer retention and brand awareness. Approximately 57.0% of our customers received a bill directly from us in the three month period ended March 31, 2003 compared to the 46.0% for the same quarter the year earlier. We have also implemented additional procedures to increase the percentage of direct billed customers.11

~~Cost of Telecommunication Services:~~ Our ~~cost~~new ofrate plans ~~sales~~ are ~~variable costs~~geared ~~based~~towards ondirect ~~amounts~~bill ~~paid to our providers for our customers’ long distance usage,~~ as ~~well~~we ascontinue ~~the amounts paid~~ to ~~providers~~build ~~for~~our customer retention ~~service~~ and ~~support.~~ ~~For~~brand ~~the~~awareness. As ~~three~~of June ~~months ended March 31~~30, ~~2003~~2002, ~~the~~40% ~~overall~~of ~~cost~~our ~~of telecommunication~~customers ~~service~~received ~~was~~a ~~37.6%~~bill directly from us compared to ~~39.9~~55% as of ~~net~~June ~~sales for the same period in 2002~~2003.

~~During~~Cost of ~~the~~Telecommunication ~~years~~Services: ~~ended~~Our ~~December 31~~cost of sales are variable costs based on amounts paid to our providers for our customers’ long distance usage, ~~2002~~as well as the amounts paid to providers for customer service and ~~2001~~support. For the three and six months ended June 30, 2002, the overall cost of ~~sales~~ ~~and~~telecommunication ~~relative~~services ~~percentage~~were 48.8% and 44.5% of ~~costs~~net sales compared to 40.2% and 38.9% of net sales ~~was~~for the same period in 2003, a 17.6% and 12.6% decrease in these costs as ~~follows:~~a percentage of net sales.

	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	%

During the three and six month periods ended June 30, 2002 and June 30, 2003, the cost of sales and relative percentage of costs to net sales was as follows:

Overall switchless and switched operation costs decreased $1.6 million in the three month period ended March 31, 2003 compared to the same period in 2002, due to reduced carrier costs per minute and a reduction in total minutes.

	Three Months Ended June 30,								Six Months Ended June 30,
	2002				2003				2002				2003
	Amount		Percentage of Net Sales		Amount		Percentage of Net Sales		Amount		Percentage of Net Sales		Amount		Percentage of Net Sales
	(000’s)				(000’s)				(000’s)				(000’s)
Switchless and switched operation costs	$	7,268	41.6	%	$	3,505	32.5	%	$	12,660	37.4	%	$	7,397	32.0	%
PICC/USF fees	806		4.6	%	544		5.1	%	1,632		4.8	%	983		4.3	%
Other related costs	449		2.6	%	281		2.6	%	771		2.3	%	602		2.6	%
Totals	$	8,523	48.8	%	$	4,330	40.2	%	$	15,063	44.5	%	$	8,982	38.9	%

~~Selling,~~Overall ~~General~~switchless and ~~Administrative~~switched ~~Expenses: Selling, general and~~operation ~~administrative~~costs ~~expenses~~ decreased by$3.8 ~~approximately~~million and $15.13 million ~~from~~in the three and six month ~~months~~periods ended ~~March~~June 3130, ~~2002~~2003 compared to the same period in ~~2003~~2002, ~~while the percent of net sales increased by approximately 6.7%. This was primarily~~ due to ~~the~~reduced carrier ~~fixed~~ costs ~~being~~per ~~divided~~minute, ~~over~~ a ~~reduced net~~reduction ~~sales~~in ~~amount.~~total ~~The~~consumer ~~significant~~minutes ~~components~~and the termination of ~~selling,~~the ~~general~~wholesale ~~and~~customer ~~administrative expenses~~relationship ~~include~~described ~~the following:~~previously.

	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	%

Selling, General and Administrative Expenses: Selling, general and administrative expenses decreased by $1.8 million and $2.9 million from the three and six months ended June 30, 2002 to the same period in 2003, while the relative percent of net sales increased by 21% and 18%. This was primarily due to fixed costs and the cost of manpower being divided over a reduced net sales amount. The significant components of selling, general and administrative expenses include the following:

Billing and Collection Expenses: Billing and collection expenses 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 our direct bill customers. The efforts to collect the direct bill customer accounts are completed by internal personnel.

	Three Months Ended June 30,								Six Months Ended June 30,
	2002				2003				2002				2003
	Amount		Percentage of Net Sales		Amount		Percentage of Net Sales		Amount		Percentage of Net Sales		Amount		Percentage of Net Sales
	(000’s)				(000’s)				(000’s)				(000’s)
Billing and Collection Expenses	$	1,618	9.3	%	$	1,069	9.9	%	$	3,485	10.3	%	$	2,935	12.7	%
Advertising and Marketing Expense	204		1.1	%	80		0.7	%	418		1.2	%	211		0.9	%
Payments to non-profit Organizations	1,133		6.4	%	770		7.1	%	2,345		7.0	%	1,623		7.0	%
Salaries & Wages	1,818		10.4	%	1,735		16.2	%	3,799		11.2	%	3,470		15.0	%
Other	2,352		13.5	%	1,632		15.2	%	4,414		13.0	%	3,383		14.7	%
Total	$	7,125	40.7	%	$	5,286	49.1	%	$	14,461	42.7	%	$	11,622	50.3	%

~~Advertising~~ Billing and ~~Marketing~~Collection ~~Expense~~Expenses: ~~Advertising~~Billing ~~expense~~and ~~decreased for~~collection expenses include the ~~three~~contractual ~~months~~billing ~~ended~~fees ~~March~~and ~~31,~~bad ~~2003~~debts charged by LECs and other third party billing companies. It also includes bad debt charge-offs from our direct bill customers. The efforts to collect the direct bill customer accounts are completed by internal personnel.

~~approximately~~Advertising and ~~$131,000,~~Marketing ~~compared~~Expense: toAdvertising ~~approximately~~expense ~~$424,000~~decreased for in the ~~same period~~three inand ~~2002.~~six ~~The~~months ~~decrease~~ended ~~was~~June ~~primarily~~30, ~~due~~2003 to ~~more focused efforts on specific marketing.~~

~~Payments to Non-Profit Organizations: Payments to non-profit~~$80,000 ~~organizations~~and ~~decreased by approximately~~ $~~360~~211,000 ~~from the three months ended March 31~~, ~~2002~~compared to ~~2003~~$204,000 ~~due~~and ~~primarily~~$418,000 tofor anthe ~~overall~~same ~~decrease~~period in ~~net sales~~2002. ~~During~~The ~~the~~decrease ~~three~~was ~~months~~primarily ~~ended~~due ~~March 31, 2003, we made approximately 3,500 partner sharing distributions~~ to ~~affinity~~more ~~partners~~focused onefforts a monthly basis. Supporters 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~~specific ~~condition and results of operations~~marketing. ~~In the second quarter of 2003, our management agreed to terms and signed an agreement with a significant new Affinity Partner.~~

~~Payroll~~Affinity ~~Expenses~~Partner Relationships: ~~Payroll~~Sharing ~~expenses~~with Affinity Partners decreased by $356,000 ~~approximately~~and $~~246~~707,000 ~~for~~ from the three ~~months~~and six months ended ~~March 31~~June 30, ~~2003~~2002 compared to the same ~~period~~periods in ~~2002~~ 2003, due primarily to ~~reorganization~~an overall ~~efforts~~decrease ~~and~~in ~~elimination~~net sales. During the six months ended June 30, 2003, we made 3,500 monthly sharing distributions to Affinity Partners. During the six months ended June 30, 2003, two groups representing four Affinity Partners, which accounted for 18% of ~~certain~~our gross revenue for the period, notified us that ~~expenses~~they would no longer endorse our products or services. We expect that the loss of these endorsements will result in a loss of revenues from these organizations in the future. However, in the second quarter of 2003, we signed an agreement with a significant new Affinity Partner, and we are actively pursuing new relationships with other new partners.

~~Other General~~ Salaries and ~~Administrative Expense~~Wages: ~~Other~~Salaries ~~general~~ and ~~administrative~~ Wages expenses decreased by ~~approximately~~ $83,000 ~~during~~and $329,000 for the three and six months ended ~~March 31~~June 30, 2003 compared to the same period in 2002., ~~The primary reason for these decreases was~~ due primarily to ~~increased~~reorganization ~~controls on expenses~~efforts.

~~Depreciation~~Other General and ~~Amortization~~Administrative Expense: ~~Depreciation~~Other general and ~~amortization~~administrative ~~expense totaled~~expenses ~~approximately~~decreased by $~~567~~720,000 ~~for~~and ~~the~~$1 million during the three and six months ended ~~March 31~~June 30, 2003 compared to ~~approximately $536,000 in~~ the same period in 2002. The primary reason for these decreases was due to increased controls on expenses.

~~Interest Expense~~ Depreciation and ~~Other Finance Charges~~Amortization: ~~Interest~~Depreciation ~~expense~~ and ~~other~~amortization ~~finance~~expense ~~charges~~totaled ~~decreased to approximately~~ $~~652~~538,000 and $1.4 million for the three ~~months~~and ~~ended~~six months ~~March 31~~ended June 30, 2003 compared to $~~702~~538,000 and $1.1 million in the same period in 2002. ~~This decrease is attributable to a reduction in our credit facility balance due to repayments from operating cash flow.~~

~~Income~~Interest Expense ~~Tax~~and ~~Expense~~Other Finance Charges: ~~During~~Interest expense ~~the~~and ~~three~~other ~~months~~finance ~~ended~~charges ~~March~~increased ~~31,~~by ~~2003~~9% and 1% to $693,000 and $1.3 ~~2002~~million wefor ~~recorded~~the ~~deferred~~three ~~income~~and ~~tax~~six ~~expense~~months ofended ~~approximately~~June ~~$53~~30,~~000~~ ~~and~~ 2003 compared to $~~484~~635,000. and ~~The~~$1.3 ~~income~~million ~~tax~~in ~~benefits recognized~~the same periods in 2002. ~~the~~This ~~financial~~increase ~~statements~~is ~~consists~~attributable ~~primarily~~to ofan increase in the ~~deferred~~interest ~~tax effects~~rate ofon the revolving ~~temporary~~Credit ~~differences~~Facility ~~between~~as the ~~financial~~debt ~~and~~came ~~tax~~due ~~basis~~which ofwas offset in part by a ~~assets~~reduction ~~and~~in ~~liabilities,~~our ~~and~~Credit ~~net~~Facility ~~operating~~balance ~~loss~~due ~~carryforwards~~to repayments from operating cash flow.

~~Net~~ Income Tax Expense (Benefit): During the three and six months ended ~~March 31~~June 30, 2003 and 2002 we ~~reported~~recorded ~~net~~deferred income tax benefits of $117,000 and $8364,000 compared to deferred tax expense of $267,000 and $~~786~~751,000 for the same period in 2002. The income tax benefits recognized in the financial statements consist primarily of the deferred tax effects of the temporary differences between the financial and tax basis of assets and liabilities, and net operating loss carry-forwards.

~~FINANCIAL~~Net ~~CONDITION~~Income: ~~AND~~During ~~LIQUIDITY~~the three and six months ended June 30, 2003 we reported net losses of $180,000 and $97,000 compared to net income of $682,000 and $1.9 million for the three and six months ended June 30, 2002.

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

WeOur ~~have~~working acapital ~~credit~~has ~~facility~~improved ~~with~~by ~~the borrowing availability based upon~~$430,000 ~~collections~~from ~~multiples~~December ~~and earnings ratios~~31, ~~subject~~2002 to ~~the~~June ~~maximum~~30, ~~line~~2003 ~~of credit.~~while ~~The~~our ~~maximum~~cash ~~amount~~increased ofby ~~the credit facility is~~ $15640,000.~~0 million. The~~ ~~outstanding~~During ~~balance~~the atsame ~~December 31~~period, ~~2002~~we ~~was~~reduced ~~$13.7 million~~our ~~and~~Credit ~~at March 31,~~Facility ~~2003~~by ~~was~~ $131.2 6 million.

Credit Facility and Loans: ~~The~~On February 4, 1999, the Company obtained a line of credit ~~facility~~(the ~~matured~~“Credit Facility”) onfrom Coast Business Credit (“Coast”), a division of Southern Pacific Bank, a California corporation. On August 6, 2002, the Company was notified by Coast of its intention not to renew the Credit Facility following the occurrence of its maturity date, January 30, 2003. During September 2002, ~~and~~the Company ~~carried~~was also notified of an ~~interest~~event ~~rate~~of default under the Credit Facility. The event of ~~prime~~default ~~plus~~resulted 3from a greater decrease in the appraised value of the Company’s subscriber base than allowed by the Credit Facility.5% As of December 31, ~~with~~2002, the Company was also in default of its debt service coverage ratio. Subsequent to year end, the Company did receive a waiver of this default from ~~contractual~~Coast. ~~floor~~On February 7, 2003, the California Division of 9Financial Institutions closed Southern Pacific Bank, the parent company of Coast, and the Federal Deposit Insurance Corporation (“FDIC”) was named receiver.~~0%.~~ The ~~stated~~Company executed ~~interest~~two ~~rate~~amendments atto ~~December~~ the existing Credit Facility, whereby the FDIC as receiver of Coast agreed to forbear from taking any further actions against the Company through May 31, ~~2002~~2003. The terms of the amendments included requirements ~~and~~that ~~March~~the Company would: reduce the maximum borrowing under the Credit Facility to $14.1 million by May 31, 2003, ~~was~~pay 9certain fees, not make any payments to subordinated note holders, and follow a determined plan for expenditures.~~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.13

~~The~~On ~~credit~~May ~~facility~~14, ~~contains~~2003, ~~various~~the ~~financial~~Credit ~~and~~Facility ~~other~~was ~~covenants with~~sold ~~which~~to weLINC ~~must~~Credit ~~comply,~~L.L.C. ~~including~~(“LINC Credit”) The Company entered into a ~~minimum~~forbearance agreement ~~net~~(“Forbearance ~~worth~~Agreement”) ~~requirement~~with LINC Credit effective July 14, 2003. The ~~restrictions~~Forbearance Agreement onprovides ~~asset~~for ~~acquisitions~~the Credit Facility to remain in place and for LINC Credit to forego its remedies under the Credit Facility until September 30, ~~restrictions~~2003 onat which time the ~~payment~~Forbearance Agreement may be extended for two additional months under certain conditions. Upon termination of ~~dividends~~the Forbearance Agreement, ~~and restrictions~~LINC onCredit ~~principal~~will ~~and~~have ~~interest~~the ~~payments~~right, but not the obligation, to ~~subordinated~~accelerate ~~creditors~~the repayment of the entire amount outstanding under the Credit Facility.

OnThe ~~August 6~~Credit Facility carries an interest rate of prime plus 3.5%, ~~2002~~adjustable monthly, ~~our~~with ~~lender~~a ~~notified~~contractual usfloor ~~that~~of it9.0%. ~~would~~The stated ~~not~~interest ~~renew~~rate at June 30, 2003 was 9.0%. The Credit Facility is secured by substantially all of the ~~our~~Company’s ~~$28~~assets, including accounts receivable and the Company’s customer base.5 Outstanding balances at December 31, 2002 and June 30, 2003 were $13.7 million ~~credit~~and ~~facility~~$12.1 ~~following~~million ~~its~~respectively.

13On July 7, 2003, the amount outstanding under the Credit Facility was approximately $12.1 million. Advances were made to the Company pursuant to the Forbearance Agreement equal to the net amount of funds collected by LINC Credit, primarily from the Company’s lockbox, for the period June 19, 2003 through July 14, 2003, less the sum of $300,000. Advances from cash collected by LINC Credit during the forbearance period will be reduced by $35,000 per week for the period July 15, 2003 through August 29, 2003, and by $40,000 per week for the period September 1, 2003 to September 30, 2003. During the extension period the advances will be reduced by $40,000 per week through to October 31, 2003 and then by $45,000 per week until the termination of the Forbearance Agreement.

~~maturity~~Several on January 30, 2003. Since September 2002, we have been in default under our credit facility. We have executed two amendments to our credit 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. Pursuant to~~ the ~~amendments,~~Company’s wecreditors ~~are required to reduce~~ (the ~~maximum~~“Subordinated ~~borrowing~~Creditors”) ~~under~~have ~~the~~agreed ~~credit facility~~ to ~~$14.1 million~~accept ~~at May 30,~~a ~~2003, as well as pay certain fees, not make any payments to~~ subordinated ~~note~~position ~~holders, and follow a determined plan for expenditures, among other requirements. Under the amendments, at December 31, 2002, we were~~ in ~~violation~~favor of ~~our~~the ~~debt~~issuer ~~service coverage ratio. We received a waiver~~ of ~~this violation~~the ~~from~~Credit ~~our lender~~Facility. ~~Our~~Repayment ~~lender has a first secured interest in substantially all~~ of ~~our~~these ~~assets.~~obligations ~~On February 7, 2003, the California~~is ~~Division~~limited ofas ~~Financial~~specified ~~Institutions~~in ~~closed Southern Pacific Bank,~~ the ~~parent company~~various ofsubordination ~~our~~agreements ~~lender,~~executed ~~and~~by the ~~Federal Deposit Insurance Corporation, or FDIC,~~ ~~was~~Subordinated ~~appointed as receiver of our lender~~Creditors. The ~~FDIC~~total ~~sold~~outstanding ~~our~~debt ~~loan~~owed to ~~LINC~~the ~~Credit,~~Subordinated ~~L.L.C.~~Creditors onas ~~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~~June ~~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~~was ~~will~~approximately ~~have the right~~$4, ~~but not the obligation~~700, ~~to accelerate the repayment of the entire amount outstanding under the credit facility~~000. 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,~~The weCredit ~~are~~Facility incontains ~~default under $5.6 million principal amount~~various offinancial ~~our subordinated~~ and ~~non-subordinated~~other ~~notes.~~covenants ~~The~~with ~~non-subordinated~~which ~~lender presently~~the ~~has~~Company ~~the~~must ~~right~~comply, ~~but~~including restrictions ~~not~~on ~~the~~asset ~~obligation~~acquisitions, torestrictions ~~accelerate~~on the ~~repayment~~payment of ~~the~~ ~~entire $1.7 million principal balance~~ dividends, and ~~related~~restrictions ~~penalties~~on ~~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~~payments ~~under these notes, subject~~ to ~~notification~~ ~~to and prior rights of~~ the ~~secured creditor. Certain of our subordinated note holders~~Subordinated ~~have expressed a desire to demand and accelerate the repayment of their notes~~Creditors.

As a result of the Company’s default under the Credit Facility, Coast required the Company to stop payment to the Subordinated Creditors, and consequently the Company is in default of $5.5 million principal amount of our subordinated and certain non-subordinated notes, which may be subject to legal challenge. A non-subordinated lender presently may have the right, but not the obligation, to accelerate the repayment of the entire $1.6 million principal balance and related penalties and interest outstanding under these notes, which may be subject to legal challenge. The subordinated lenders also may 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 accelerate the repayment of their notes.

CASH FLOWS

Operating Activities

Significant uses of cash in operating activities during the ~~three~~ six months ended ~~March~~June 3130, 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~~1.3 million. Significant sources of cash in operating activities for 2003 were a decrease in accounts receivable of $12.6 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~~1.4 million.

Significant uses of cash infor operating activities during ~~the~~six ~~three~~ months ended ~~March~~June 3130, 2002 included an increase in prepaid expenses and other assets of $~~275~~246,000. A significant source of cash in for operating activities during the ~~three~~six months ended ~~March~~June 3130, 2002 includes aan increase ~~decrease~~ in accounts ~~receivable~~ payable and accrued expenses of $1.13 million. We also generated cash from operations by recording net income of $~~786,000,~~1.2 million, deferred income tax expense of $~~484~~751,000, and certain non-cash expenses, principally depreciation and amortization of $~~561,000~~1.1 million.

Investing Activities

Our investing activities during the ~~three~~ six months ended ~~March~~June 3130, ~~2003~~ 2002 and ~~2002~~2003 consisted of property and equipment purchases of $5914,000 and $~~200~~12,000.

Financing Activities

During the ~~three~~six months ended ~~March 31~~June 30, ~~2003~~2002 and ~~2002~~ 2003, financing activities used $~~736,000~~4.2 million and $21.5 9 million in cash. The most ~~significant~~ significant use of cash was the repayments of notes, ~~and~~ leases payable, ~~including~~and reduction of our ~~credit~~ ~~facility~~Credit Facility. The repayment of loans to related parties ~~totaled~~ ~~approximately~~totaled $~~159~~238,000 and $58320,000 for the ~~three~~six months ended ~~March 31~~June 30, ~~2003~~ 2002 and ~~2002~~2003.

1415

OTHER MATTERS

Intangible Assets

We amortize intangible assets representing covenants not to compete on a straight-line basis over their contractual periods ranging up to five years. At each balance sheet date, we assess whether there has been any permanent impairment in the value of these intangible assets such as an occurrence of the breach of the agreement. The factors considered by us include if any breach in the agreements has occurred. ~~The measurement of possible impairment is based 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 the carrying value of intangible assets at ~~March 31~~June 30, 2003. However, the contractual period of a covenant not to compete with a former CEO can be accelerated upon termination of the consulting agreement with the former CEO. If the consulting agreement is terminated by the former CEO or by us, it would cause the remaining book value of the non -competition agreement, ~~approximately~~ $1.76 million, to be amortized as an expense over the succeeding six months.

Inflation and Changing Prices

Telecommunications revenues do not necessarily track the changes in general inflation. Rather, 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 our 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 our current views with respect to future events, based on what we believe are reasonable assumptions; however, such statements are subject to certain risks, uncertainties and assumptions. 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. We disclaim any intention or obligation to update or review any forward-looking statements or information, whether as a result of new information, future events or otherwise.

Item 3. ~~Quantitative~~ Quantitative and Qualitative Disclosure about Market Risk

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

Inflation generally affects us by increasing our cost of labor, equipment and new materials. We do not believe that inflation has had any material effect on our results of operations during the three and six month periods ending ~~March 31~~June 30, 2002 and 2003.

We are exposed to future earnings or cash flow fluctuations from changes in interest rates on borrowings under our ~~credit~~Credit Facility ~~facility~~ since amounts borrowed under the ~~credit~~Credit ~~facility~~Facility accrue interest at a fluctuating rate equal to the prime lending rate, ~~or prime,~~ plus 3.5%. Our stated interest rate at ~~March~~ 31June 30, ~~2000~~2003 was 9.0%, which represents the floor rate of our ~~credit~~Credit ~~facility~~Facility. At ~~March 31~~June 30, 2003 we had $1312.2 million of outstanding debt bearing interest at floating rates. Market risk is estimated as the potential increase in interest rate for borrowing under our ~~credit~~Credit ~~facility~~Facility resulting from an increase in prime. Based on borrowings under our ~~credit~~Credit ~~facility~~Facility at ~~March 31~~June 30, 2003, a hypothetical increase of one percentage point in prime ~~would~~ would increase our interest expense on an annual basis by ~~approximately~~ $~~132~~122,000.

Our operations are all originated within the United States and we therefore conduct all business transactions in U.S. dollars.

1516

Item 4. Controls ~~and~~ and Procedures

Within the 90-day period prior to the filing of this report, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities and Exchange Act of 1934). Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective.

Except 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.

16Randall Muth joined the company in May of 2003 and was promoted to Chief Financial Officer in July 2003.

~~PART II. OTHER INFORMATION~~17

~~Item~~PART 1II. ~~Legal Proceedings~~OTHER INFORMATION

InItem ~~February 2001, the State of Florida made an assessment totaling approximately $~~1.~~7 million,~~ ~~which~~Legal 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.Proceedings

~~Item~~In August 22002, the Florida Department of Revenue issued to AmeriVision Communications, Inc. ~~Changes~~proposed assessments totaling approximately $1.8 million, which includes penalties and interest of approximately $1 million for underpayment of Florida sales and use taxes and gross receipts taxes, during the period September 1993 through August 1998. The Company disagrees with the proposed assessments and filed a protest with the Department. On April 28, 2003 the Department issued a Notice of Decision, reducing portions of the proposed assessments and sustaining the remainder. The balance shown on the Notice of Decision after application of interest through April 14, 2003 is $1.7 million. The Company has filed a petition for reconsideration of the Notice of Decision, and has engaged Florida counsel to advise and assist it in this matter. The company believes, based upon prior ~~Securities~~experience, it is not liable for this assessment and ~~Use~~has not recorded it as a liability as of ~~Proceeds~~June 30, 2003 in the financial statements.

InItem ~~February~~2. ~~2003,~~Changes ~~we issued 500 shares to an executive search firm~~ in ~~exchange~~ ~~for~~Securities ~~approximately~~and ~~$20,000~~Use of ~~services. The issuance was exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) thereunder.~~Proceeds

~~Item~~In 3.June ~~Default~~2003, ~~upon~~we ~~Senior~~issued ~~Securities~~12,000 shares of common stock to the Board of Directors for their service to the Company.

WeItem are in default of our credit facility, as more fully described in "Management's Discussion and Analysis of Financial Conditions and Results of Operations"3. Our existing defaultDefault inupon ourSenior credit facility has been temporily waived pursuant to the forbearance agreement with our primary lenders.Securities

~~Item~~We 4are currently in a “Permitted Event of Default” of our Credit Facility, as that term is defined in our Forbearance Agreement. Our ~~Submission~~existing “Permitted Event of Default” of ~~Matters~~our Credit Facility has been waived pursuant to athe ~~Vote~~terms of ~~Security~~the ~~Holders~~Forbearance Agreement with our primary lender.

NotItem applicable4. Submission of Matters to a Vote of Security Holders

~~Item~~On 5July 31, 2003, the company held its annual meeting of shareholders. At ~~Other~~that meeting, ~~Information~~nine directors were nominated as set forth in management’s proxy material, along with one nomination from the floor. Nine directors were elected by plurality vote. They were:

~~Merger~~Tom ~~with PowerNet Global Communications, Inc., or PNG. Our previously announced merger negotiations with PowerNet Global Communications, Inc. were terminated Friday, April 25, 2003.~~Choquette

~~Agreements~~David with Carriers. In 2003, 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. Clark

17Sharon Freeny

~~Item~~Wilbur ~~6. Exhibits and reports on Form 8-K~~Fullbright

~~(a) Exhibits~~Belarmino Gonzalez

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)

Kenneth Guthrie

18Curtis Nestegard

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)

Art Richardson

19Wallace Walcher

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.

Appointment of the independent auditors was ratified.

* FiledItem 5. Other ~~herewith~~Information

** CompensatoryAgreements with ~~contract~~Carriers. In 2003, 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 could further reduce our cost of telecommunications service for 2003.

~~(+) Confidential~~CFO. Randall Muth joined our management team in ~~treatment~~May ~~requested~~of 2003 and was promoted to Chief Financial Officer in July 2003. Mr. Muth has spent the last 18 years of his career in senior management positions in both finance and operations with public and private companies operating in the communications and telecommunications sectors. Prior to that, Mr. Muth spent a number of years in public practice with national public accounting firms, providing financial accounting and tax services to clients. Mr. Muth earned his Bachelor of Commerce degree from the University of Alberta.

2018

~~(b) Reports~~Item on6. Exhibits and 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.~~) Exhibits

SIGNATURES

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)

~~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.~~19

	AMERIVISION COMMUNICATIONS, INC.
Exhibit Number		Description
		/s/ Robert D. Cook
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)
DATE: July 30, 2003	By:	Robert D. Cook, President and Chief Executive Officer
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)
		/s/ Randall W. Muth
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)
	By:	Randall W. Muth, Chief Financial Officer
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), which may be subject to legal challenge.
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)

2120

CERTIFICATIONS

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), which may be subject to legal challenge.
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), which may be subject to legal challenge.
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), which may be subject to legal challenge.
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), which may be subject to legal challenge.
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 20, 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 20, 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 20, 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. (which is incorporated herein by reference to Exhibit 10.24.1 to Registrant’s 2003 Form 10Q, filed July 31, 2003.
10.24.2(+)		Telecommunications Services Agreement Amendment 15 dated November 26, 2002 by and between the Registrant and WorldCom Network Services, Inc. (which is incorporated herein by reference to Exhibit 10.24.2 to Registrant’s 2003 Form 10Q, filed July 31, 2003.
10.24.3(+)		Telecommunications Services Agreement Amendment 16 dated January17, 2003 by and between the Registrant and WorldCom Network Services, Inc. (which is incorporated herein by reference to Exhibit 10.24.3 to Registrant’s 2003 Form 10Q, filed July 31, 2003.
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 20, 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 20, 2003)
10.28		Lease agreement dated January 1, 2000, by and between the Registrant and Hebron Communications Corporation. (which is incorporated herein by reference to Exhibit 10.28 to Registrant’s 2003 Form 10Q, filed July 31, 2003.
10.29		Lease agreement dated November 18, 2002, by and between the Registrant and Hebron Communications Corporation. (which is incorporated herein by reference to Exhibit 10.29 to Registrant’s 2003 Form 10Q, filed July 31, 2003.
10.30*		Forbearance Agreement dated July 14, 2003, by and between the Registrant and Continental Business Credit, Textron Financial Corporation, Republic Financial Corporation, and LINC Credit, L.L.C. (which is incorporated herein by reference to Exhibit 10.30 to Registrant’s 2003 Form 10Q, filed August 14, 2003.
10.31(+)*		Special Rate Amendment No. 17 dated June 11, 2003 by and between the Registrant and MCI WorldCom Network. (which is incorporated herein by reference to Exhibit 10.31 to Registrant’s 2003 Form 10Q, filed August 14, 2003.
31.1*		Certification of President and Chief Executive Officer of Amerivision Communication, Inc.
31.2*		Certification of Vice President and Chief Financial Officer of Amerivision Communication, Inc.
32.1*		Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. § 1350
32.2*		Certification of the Vice President and Chief Financial Officer pursuant to 18 U.S.C. § 1350

~~I, Robert Cook, certify that:~~* Filed herewith

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.

** Compensatory contract

~~Date:~~(+) Confidential treatment ~~July 30, 2003~~requested

~~/s/ Robert D. Cook Robert D. Cook President, Chief Executive Officer~~21

22(b) Reports on Form 8-K

~~CERTIFICATIONS~~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.

~~I, Randall W. Muth, certify that:~~SIGNATURES

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.

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.

Date: July 30, 2003

	AMERIVISION COMMUNICATIONS, INC.


		/s/ Robert D. Cook
DATE: AUGUST 14, 2003	By:	Robert D. Cook, President and Chief Executive Officer

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

~~/s/ Randall W. Muth Randall W. Muth Chief Financial Officer~~22

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

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