<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              ---------------------

                                    FORM 10-Q

     [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2000

                                       OR

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

            For the transition period from             to
                                          -------------  -------------

                        Commission file number 333-64717

                               US XCHANGE, L.L.C.
             (Exact name of registrant as specified in its charter)


           MICHIGAN                                        38-3305418
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)

Incorporation or Organization)

20 MONROE AVENUE NW, SUITE 450, GRAND RAPIDS, MICHIGAN                     49503
   (Address of Principal Executive Offices)                           (Zip Code)

       Registrant's telephone number, including area code: (616) 988-7000

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     At May 15, 2000, all of the membership interests of the registrant were
held by one affiliate of the registrant.





<PAGE>   2

                               US XCHANGE, L.L.C.

                          QUARTERLY REPORT ON FORM 10-Q

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                              Page No.
<S>                                                                                                           <C>
PART I  FINANCIAL INFORMATION........................................................................................3

Item 1. Financial Statements.........................................................................................3

   Consolidated Balance Sheets.......................................................................................3
   Consolidated Statements Of Operations.............................................................................4
   Consolidated Statements Of Cash Flows.............................................................................5
   Notes To Consolidated Financial Statements........................................................................6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................10


Item 3.  Quantitative and Qualitative Disclosures About Market Risk.................................................17


PART II  OTHER INFORMATION..........................................................................................18


Item 3. Defaults Upon Senior Securities.............................................................................18


Item 6. Exhibits and Reports on Form 8-K............................................................................18


SIGNATURES..........................................................................................................19


INDEX TO EXHIBITS...................................................................................................20

</TABLE>


                                       2
<PAGE>   3
                                     PART I

                              FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS.
                               US XCHANGE, L.L.C.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                     MARCH 31,           DECEMBER 31,
                                                                                        2000                 1999
                                                                                        ----                 ----
                                                                                    (UNAUDITED)
<S>                                                                               <C>                    <C>
ASSETS
CURRENT ASSETS
   Cash and equivalents....................................................          $1,419,902              $189,304
   Restricted investments..................................................          28,550,368            28,795,226
   Accounts receivable, less allowance for doubtful accounts of
   $1,076,000 and $792,000.................................................           6,794,043             5,995,466
   Other current assets....................................................           1,112,598             1,003,960
                                                                                 -----------------------------------------
         TOTAL CURRENT ASSETS..............................................          37,876,911            35,983,956
                                                                                 -----------------------------------------
NETWORKS AND EQUIPMENT
   Networks and networks in process (cost to complete of $3,000,000)                129,592,135           125,797,486
   Furniture and equipment.................................................          20,574,240            19,423,809
   Leasehold improvements..................................................           7,740,850             7,451,545
                                                                                 -----------------------------------------
                                                                                    157,907,225           152,672,840
   Less accumulated depreciation and amortization..........................          20,936,107            16,566,408
                                                                                 -----------------------------------------
NET NETWORKS AND EQUIPMENT.................................................         136,971,118           136,106,432
                                                                                 -----------------------------------------
OTHER ASSETS
   Restricted investments..................................................          14,704,268            28,873,973
   Debt issuance costs, net................................................           6,817,800             7,029,423
   Miscellaneous...........................................................           2,322,354             2,106,239
                                                                                 -----------------------------------------
   TOTAL OTHER ASSETS......................................................          23,844,422            38,009,635
                                                                                 -----------------------------------------
   TOTAL ASSETS............................................................        $198,692,451          $210,100,023
                                                                                 =========================================
LIABILITIES AND MEMBER'S DEFICIT
CURRENT LIABILITIES
    Accounts payable.......................................................         $10,066,442            $9,286,552
    Accrued interest.......................................................           7,663,064            15,191,526
    Accrued other liabilities..............................................           2,603,126             2,105,387
    Current maturities of long-term debt...................................             800,000               800,000
    Senior Secured Facility................................................          50,000,000            50,000,000
                                                                                 -----------------------------------------
    TOTAL CURRENT LIABILITIES..............................................          71,132,632            77,383,465
UNEARNED REVENUE...........................................................           7,297,557             3,406,414
LONG-TERM DEBT, LESS CURRENT MATURITIES
   15% Senior Notes........................................................         200,000,000           200,000,000
   Notes payable...........................................................           1,600,000             1,800,000
   Member Subordinated Debt (including accrued interest)...................          27,666,962            14,746,750
                                                                                 -----------------------------------------
TOTAL LIABILITIES..........................................................         307,697,151           297,336,629
MEMBER'S DEFICIT
   Capital contributions...................................................          60,000,000            60,000,000
   Accumulated deficit.....................................................        (169,004,700)         (147,236,606)
                                                                                 -----------------------------------------
   TOTAL MEMBER'S DEFICIT..................................................        (109,004,700)          (87,236,606)
                                                                                 -----------------------------------------
   TOTAL LIABILITIES AND MEMBER'S DEFICIT                                          $198,692,451          $210,100,023
                                                                                 =========================================
</TABLE>
     See accompanying notes to unaudited consolidated financial statements.

                                       3
<PAGE>   4
                               US XCHANGE, L.L.C.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                                  THREE MONTHS ENDED
                                                                                                      MARCH 31,
                                                                                       -----------------------------------------
                                                                                               2000                 1999
                                                                                       -----------------------------------------
<S>                                                                                    <C>                   <C>
Revenues.................................................................                   $  9,720,601        $  4,339,437
Costs and Expenses
     Cost of communication services......................................                     10,971,909           8,207,998
     Selling, general and administrative.................................                      7,887,858          10,086,505
     Depreciation and amortization.......................................                      4,391,193           2,229,520
                                                                                       --------------------- -------------------
           Total costs and expenses......................................                     23,250,960          20,524,023
                                                                                       --------------------- -------------------
     Loss from operations................................................                    (13,530,359)        (16,184,586)
                                                                                       --------------------- -------------------
Interest Expense.........................................................                     (8,862,370)         (5,933,845)
                                                                                       --------------------- -------------------
Interest Income..........................................................                        624,635           1,310,186
                                                                                       --------------------- -------------------
Net Loss.................................................................                   $(21,768,094)       $(20,808,245)
                                                                                       ===================== ===================
</TABLE>



















     See accompanying notes to unaudited consolidated financial statements.



                                       4
<PAGE>   5
                               US XCHANGE, L.L.C.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                            THREE MONTHS ENDED
                                                                                                 MARCH 31,
                                                                                    -------------------------------------
                                                                                          2000                1999
                                                                                          ----                ----

<S>                                                                                 <C>                  <C>
OPERATING ACTIVITIES
Net loss....................................................................           $(21,768,094)       $(20,808,245)
Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization..........................................               4,602,817           2,229,520
     Provision for doubtful accounts........................................                 284,065              85,000
     Interest earned on restricted investments..............................               (585,437)           (957,295)

     Accrued interest on Member Subordinated Debt...........................                 393,587           -
     Increase in unearned revenue...........................................               3,891,143           -
     Changes in assets and liabilities:
         Accounts receivable................................................             (1,082,642)           (993,245)
         Other current assets...............................................               (108,638)           (243,971)
         Accounts payable...................................................                 779,890         (2,730,628)
         Accrued liabilities................................................             (7,030,723)         (6,390,363)
                                                                                     ---------------     ---------------
         NET CASH USED IN OPERATING ACTIVITIES..............................           $(20,624,032)        (29,809,227)
                                                                                     ---------------     ---------------
INVESTING ACTIVITIES
Decrease in restricted investments..........................................              15,000,000          15,500,000
Purchase of networks and equipment..........................................             (5,244,335)        (14,503,515)

Increase in other assets....................................................               (227,660)           (259,395)
                                                                                     ---------------     ---------------
         NET CASH USED IN INVESTING ACTIVITIES..............................               9,528,005             737,090
                                                                                     ---------------     ---------------
FINANCING ACTIVITIES
Proceeds from long-term debt................................................              12,526,625           -
Repayment of long-term debt.................................................               (200,000)           (133,333)
Direct costs of financing...................................................                --                 (349,825)
                                                                                     ---------------     ---------------
         NET CASH PROVIDED BY FINANCING ACTIVITIES..........................              12,326,625           (483,158)
                                                                                     ---------------     ---------------
         NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS....................               1,230,598        (29,555,295)
Cash and equivalents, beginning of period...................................                 189,304          40,018,552
                                                                                     ---------------     ---------------
Cash and equivalents, end of period.........................................              $1,419,902         $10,463,257
                                                                                     ===============     ===============
Supplemental Disclosure of Cash Flow Information
         Interest Paid (net of amounts capitalized).........................             $15,409,781         $15,558,846
                                                                                     ===============     ===============

</TABLE>



     See accompanying notes to unaudited consolidated financial statements.




                                       5
<PAGE>   6
                               US XCHANGE, L.L.C.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.   BASIS OF PRESENTATION

         The consolidated balance sheet of US Xchange, L.L.C. (the "Company") at
     December 31, 1999 was obtained from the Company's audited balance sheet as
     of that date. All other financial statements contained herein are unaudited
     and, in the opinion of management, contain all adjustments (consisting of
     normal recurring accruals) considered necessary for a fair presentation.
     Operating results for the three months ended March 31, 2000 are not
     necessarily indicative of the results that may be expected for the year
     ending December 31, 2000. The Company's accounting policies and certain
     other disclosures are set forth in the notes to the Company's audited
     consolidated financial statements as of and for the year ended December 31,
     1999.

2.   RESTRICTED INVESTMENTS

         Restricted investments consist of U.S. government securities and money
     market funds plus accrued interest thereon purchased in connection with the
     15% Senior Notes (see Note 4) to secure the first three years' (six
     semi-annual) interest payments on these notes, which payments the Company
     commenced on January 1, 1999. All these investments are classified as
     held-to-maturity securities. Such investments are stated at cost, which
     approximates fair value, and are reported in both current and long-term
     assets, based upon the maturity dates of the individual securities.

3.   UNEARNED REVENUES

         Sales of indefeasible rights to use fiber or capacity ("IRU") are
     recorded as unearned revenue at the earlier of the acceptance of the
     applicable portion of the network by the customer or the receipt of cash.
     The revenue is recognized over the life of the agreement as services are
     provided beginning on the date of customer acceptance. IRU revenues of
     $32,000 and $0 were earned during the three months ended March 31, 2000 and
     1999, respectively.

4.   LONG-TERM DEBT

         In August 1999, the Company entered into a Line of Credit Agreement
     with its sole member for up to $50 million in subordinated debt financing.
     Borrowings under this arrangement totaled $27.0 million at March 31, 2000.
     Under this subordinated line of credit, interest accrues on outstanding
     borrowings at a floating rate equal to prime rate less 1.25% (effectively
     7.75% at March 31, 2000), and borrowings are secured by all present and
     future assets of the Company and are subordinated to the indebtedness under
     the Company's current and any future secured credit facilities. Repayment
     of borrowings under this line of credit and all accrued interest will
     commence upon the repayment of all obligations under the Company's current
     and any future secured credit facilities.

         On April 30, 1999, the Company obtained a $50 million senior secured
     credit facility, pursuant to a Loan and Security Agreement among the
     Company's wholly-owned subsidiary, US Xchange Finance Company, L.L.C., as
     borrower, the Company and its operating subsidiaries, as guarantors, and
     General Electric Capital Corporation ("GE Capital"), as Administrative
     Agent and lender. As of March 31, 2000 the full $50 million was
     outstanding. Issuance costs approximating $1 million are being ratably
     amortized over the term of the facility. Loans under this facility bear
     interest at a floating rate equal to either a defined base rate plus 3.0%
     or at LIBOR plus 4.0%, at the borrower's option. The effective interest
     rate was 10.1% at March 31, 2000. Interest is payable at least on a
     quarterly basis. During 1999, unused portions of this facility subject to a

                                       6

<PAGE>   7
     commitment fee ranging between .75% and 1.25% of the unused amount. The
     aggregate outstanding principal is repayable in quarterly installments,
     commencing July 31, 2002 and continuing through April 30, 2007, based upon
     the following annual debt reduction formula: 10%, 15%, 20%, 25% and 30%.
     Borrowings are secured by all present and future real and personal
     property, assets and revenues of the borrower and its subsidiaries. The
     Company and the subsidiaries of the borrower have guaranteed the repayment
     of all indebtedness under this facility.

         The senior secured revolving credit facility contains financial
     performance covenants regarding minimum quarterly revenues, maximum
     quarterly EBITDA losses and maximum annual capital expenditures, with which
     the Company did not comply for the quarters ended December 31, 1999 and
     March 31, 2000 and for the year ended December 31, 1999. (EBITDA consists
     of earnings (loss) before net interest, income taxes, depreciation and
     amortization.) GE Capital has agreed to forbear from exercising any
     remedies against the Company as a result of the non-compliance with these
     covenants through the earlier of a Termination Event, as defined by GE
     Capital, or July 31, 2000 (the "forbearance period"). As a result, the
     Company has classified the GE Capital senior secured credit facility as a
     current liability since there is no assurance that GE Capital will not
     require repayment of this credit facility after the forbearance period
     expires. However, it is anticipated that this credit facility will be
     settled as a result of the impending merger of the Company's new parent
     (see Note 7).

         On June 25, 1998, the Company completed a sale of $200 million
     principal amount of 15% Senior Notes, due 2008 (the "15% Senior Notes"). Of
     the total net proceeds approximating $193.0 million, the Company placed
     approximately $82.5 million, representing funds, together with interest
     thereon, sufficient to pay the first six semi-annual interest payments on
     the 15% Senior Notes, into an escrow account for the benefit of the
     holders. Issuance costs approximating $7.0 million are being amortized
     ratably over the term of the debt. Interest on the 15% Senior Notes is
     payable semi-annually, on January 1 and July 1, commencing January 1, 1999.
     The Company made interest payments of $15 million, $15.5 million and $15.0
     million on January 1, 2000, July 1, 1999 and January 1, 1999, respectively,
     to the holders of the 15% Senior Notes. The 15% Senior Notes are
     non-callable and mature in full on July 1, 2008.

         The 15% Senior Notes are unsubordinated, unsecured senior indebtedness
     of the Company. The Company's subsidiaries have no obligation to pay
     amounts due on the 15% Senior Notes and do not guarantee the 15% Senior
     Notes. Therefore, the 15% Senior Notes are effectively subordinated to all
     existing and future liabilities (including trade payables) of the Company's
     subsidiaries.

         The 15% Senior Notes are subject to certain covenants that, among other
     things, restrict the ability of the Company and certain subsidiaries to
     incur additional indebtedness, pay dividends or make distributions or
     redemptions in respect of membership interests.

         On August 28, 1997, the Company entered into a credit facility
     agreement with a local bank that provided for borrowings of up to $4
     million for the acquisition of office furniture, equipment and computer
     software and for construction costs related to leasehold improvements of
     office and switch site locations. In March 1998, the credit facility was
     fully utilized and converted into a term note payable in 60 equal monthly
     installments commencing April 1998. Amounts borrowed bear interest at 1/2%
     under the bank's prime rate or 2% over the bank's cost of funds, at the
     Company's option. The effective rate was 8.50% at March 31, 2000. Specific
     assets and the guarantee of an affiliated company owned by the Company's
     majority member secure all borrowings. The credit facility also provides
     that the affiliated company maintains minimum debt to tangible net worth
     and current ratio levels. At March 31, 2000, the affiliated company was in
     compliance with the covenant requirements.




                                       7
<PAGE>   8
         The aggregate principal repayments of long-term debt over the next five
     years are as follows:

<TABLE>
<CAPTION>
                                YEAR ENDING DECEMBER 31,
              --------------------------------------------------------------------------------------------
<S>                                                                                          <C>
               2000 (9 months)                                                               600,000
               2001                                                                          800,000
               2002                                                                          800,000
               2003                                                                          200,000
</TABLE>


5. RELATED PARTY TRANSACTIONS

         Under an expense sharing agreement with an affiliated company, the
     Company incurred $19,414 and $82,153 relating to management and
     administrative services for the three months ended March 31, 2000 and 1999,
     respectively. In October 1999, the Company entered into a lease agreement
     with the affiliated company for certain office furniture in its corporate
     administrative offices. Total lease costs under this agreement for the
     three months ended March 31, 2000 was $48,750. The Company also leases its
     corporate administrative offices from two companies each of which is 50%
     controlled by the same affiliated company. Rents paid under these lease
     agreements were $394,207 and $134,757 for the three months ended March 31,
     2000 and 1999, respectively.

         The Company has a lease agreement with another affiliated company owned
     by the majority member for aircraft transportation services. Total costs
     incurred under this arrangement for the three months ended March 31, 2000
     and 1999 were $6,095 and $33,350, respectively.

         See also Note 4 regarding the Company's borrowings under the
     subordinated line of credit from the Company's sole member.

6. LEASES

         The Company leases administrative and sales office facilities,
     operating sites and certain equipment under noncancelable operating leases
     having initial or remaining terms of more than one year. Certain of the
     Company's facility leases include renewal options, and most leases include
     provisions for rent escalation to reflect increased operating costs and/or
     require the Company to pay certain maintenance and utility costs. Rental
     expense under these operating leases for the three months ended March 31,
     2000 and 1999 was $1,127,800 and $719,600 respectively.




                                       8
<PAGE>   9


         Future minimum lease payments under noncancelable operating leases at
     March 31, 2000 were as follows:
<TABLE>
<CAPTION>

            YEAR ENDING                                OPERATING SITE
           DECEMBER 31,         OFFICE FACILITIES        FACILITIES          EQUIPMENT             TOTAL
        --------------------------------------------------------------------------------------------------------
<S>                             <C>                    <C>                   <C>              <C>
        2000 (9 months)......        $  1,726,259          $  474,310        $  816,517       $  3,017,085
        2001.................           2,192,213             640,750           615,439          3,448,401
        2002.................           1,980,657             634,812           307,200          2,922,669
        2003.................           1,397,028             329,964             5,378          1,732,370
        2004.................             580,073             237,739         --                   817,812
        2005-2009............          --                     865,822         --                   865,822

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

7. SUBSEQUENT EVENT

         On May 14, 2000, the new parent of the Company, a corporation
         wholly-owned by the Company's sole member, entered into a definitive
         merger agreement with Choice One Communications, Inc. ("Choice One"), a
         publicly-held company. Under terms of the agreement, Choice One will
         exchange 7 million shares of its common stock and $311 million in net
         cash for all of the outstanding common stock of the Company's parent.
         Based on the price of Choice One's common stock as of the close of
         business on the day before the merger announcement, the merger is
         valued at approximately $518 million. In addition, as a condition of
         the merger, all of the holders of the 15% Senior Notes have agreed to a
         redemption price equal to 109% of their principal amount plus accrued
         interest, if any, to the closing date of the merger. The merger is
         subject to regulatory approvals and other customary conditions.






                                       9
<PAGE>   10
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

         Except for historical information, the discussion in this Item 2
contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those set forth in these
forward-looking statements as a result of a number of factors. These factors
include, but are not limited to, the risks we discuss below and under the
caption "Risk Factors" in Exhibit 99.1 to our Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, which is incorporated herein by reference.

OVERVIEW

         We have established local exchange telecommunications networks in
selected markets, primarily Tier III cities, in the northern portion of the
Midwestern United States and interconnected our local networks through our
long-haul fiber networks. Our customers are currently offered a bundled package
of local, long distance and other enhanced services. We operate 13
facilities-based local networks and provide switched local and long distance
services within the states of Wisconsin, Illinois, Indiana and Michigan. We also
made a strategic decision to build a high capacity long-haul fiber optic network
that was sufficient not only to meet our own long term capacity needs but also
would allow us to make any remaining excess capacity available to other
providers of telecommunications services.

         The construction, expansion and operating of our local and long haul
networks have required substantial expenditures, significant portions of which
have been incurred before the realization of revenues. These expenditures to
date have resulted in significant losses, negative cash flows and negative
EBITDA, which we believe will continue until an adequate customer base is
established. As our customer base grows, we expect that incremental revenues can
be generated with decreasing incremental operating expenses which may provide
positive contributions to cash flow.

FACTORS AFFECTING RESULTS OF OPERATIONS

REVENUES

         We direct our sales and marketing efforts primarily towards small to
medium-sized business customers, Internet service providers and governmental and
other institutional end users in selected underserved markets. In each of our
markets, we initially resold incumbent carrier services to establish a market
presence and enhance our market penetration efforts. As our network switching
systems have become commercially operational, we have begun to transition our
resale customers to our own switch-based networks. We compete primarily on the
basis of competitive pricing, superior service and products and innovative
service and product offerings. By using our own switched-based facilities, we
believe we will be able to achieve higher gross margins on our own
facilities-based services than we can achieve through reselling others'
services.

         We also generate revenues from the sale of our services to residential
customers. We believe that our bundled service offerings, high degree of front
office and back office automation and automated customer care, billing and
credit-checking systems and procedures enhance our ability to offer services to
residential customers in our markets. In addition, we believe we have
significant operating leverage and a relatively low marginal cost of providing
service to residential customers. We target creditworthy residential customers
who we believe are likely to have needs for multiple services. We market our
residential services through various affinity group and other cost-effective
marketing programs and service packages specifically designed to appeal to these
customers.

         To further leverage our fixed costs, we have identified selective
channels for the sale of our services on a wholesale basis. For example, we
offer our local and internet access services on a wholesale basis to internet
service providers in certain of our markets. We have established and expect to
establish additional strategic alliances with, and supply wholesale services to,
electric utility companies and other selected telecommunications providers for
resale to their own customers. We also expect to generate revenues from the sale
of dark fiber along


                                       10
<PAGE>   11
our long-haul routes and certain of our local network rings. Since 1999, we have
sold indefeasible rights to use our fiber to several other carriers and are
pursuing similar arrangements with certain other carriers as a source of
additional revenues. Beginning in the first quarter of 2000, we have earned
approximately $32,000 of revenues from IRUs, which revenues we will earn over
the life of the IRU as services are provided.

OPERATING EXPENSES

         Our primary operating expenses consist of the cost of communication
services, selling, general and administrative expenses and depreciation and
amortization charges.

         Cost of Communications Services. Cost of communication services
consists of the fixed costs of leased facilities, minutes-of-use charges for
origination and termination services and access line charges for local and long
distance services, including the costs to use incumbent local telephone company
unbundled network elements, costs for installation and initial service turn-up,
and costs of network personnel. We also incur rights-of-way costs and, in
certain markets, franchise fees and taxes paid to local governments based on
revenue. After we install our network infrastructure and activate our switching
systems, we can add customers and associated revenues with lower incremental
cost of communication services, so that such customers provide greater
contributions to our operating cash flows and EBITDA. With an expanding customer
base and the continued conversion of those customers to our own facilities-based
switches, we expect that cost of communications services will represent a
smaller percentage of revenues. While we primarily target businesses, internet
service providers, and governmental and other institutional customers, we
believe that, once a network is operational, the marginal cost of providing our
services to residential customers is low enough to allow us to economically
address these customers because they generally require less complex services
than other customers. Cost of communication services does not include
depreciation and amortization.

         Selling, General and Administrative. Our selling, general and
administrative expenses include sales and marketing costs, customer service and
technical support, billing and collection, and general management and overhead
expense. These costs grow significantly as we expand our operations, and
administrative overhead is a large portion of these expenses during the
deployment of our networks. However, as we expand our customer base, we expect
these expenses will represent a smaller percentage of our revenues.

         Depreciation and Amortization. We depreciate and amortize our property
and equipment using the straight-line method over the estimated useful life of
the assets, ranging from five to eight years for equipment, 20 years for fiber,
three to five years for third-party software costs and the lesser of 15 years or
the lease term for leasehold improvements.

INTEREST EXPENSE

         Prior to our issuance of the 15% Senior Notes in June 1998, we did not
incur material interest expense. Since then, however, we have incurred and
expect to continue to incur substantial interest expense relating to our 15%
Senior Notes, senior secured credit facility, subordinated line of credit and
bank credit facility. We amortize our debt issuance costs using the
straight-line method over the life of the related debt agreement.

RESULTS OF OPERATIONS

         Three Months Ended March 31, 2000 Compared to Three Months Ended March
31, 1999.

         Revenues for the first quarter of 2000 totaled $9.7 million, an
increase of 126% over the $4.3 million in the comparable period in 1999. The
increase is attributable to the continued growth in our customer base in all of
our markets and increased usage by our current customers. Revenues derived from
our facilities-based switched operations during the first quarter of 2000 were
$4.9 million, an increase of 656% over the comparable quarter of 1999 total of
$648,000. This increase was the result of continued growth in the number of
facility-based

                                       11
<PAGE>   12
customers as well as the continued conversion of resale customers to our own
switches in all of our facilities-based markets. At March 31, 2000, we had
approximately 60,100 installed local access lines in service, of which
approximately 66% were served by our own facilities.

         Cost of communication services increased to $11 million for the first
quarter of 2000, or 113% of revenues, from $8.2 million, or 189% of revenues,
for the comparable period in 1999. The increase relates primarily to the costs
of leased telecommunications facilities and services in connection with the
growth of our local and long distance services.

         Selling, general and administrative expenses were $7.9 million, or 81%
of revenues, for the first quarter of 2000, compared to $10.1 million, or 232%
of revenues, for the same period in 1999. The decrease was due primarily to
reduced personnel costs associated with improved processes and procedures.

         Depreciation and amortization expenses increased to $4.4 million for
the first quarter of 2000 from $2.2 million for the comparable period in 1999.
The increase primarily reflects the thirteen switches and networks that were
commercially operational during the first quarter of 2000 compared to eight
switches and networks in operation for the same quarter of 1999.

         Interest expense for the three months ended March 31, 2000 increased
$3.0 million to $8.9 million compared to $5.9 million during the same period in
1999. The increase relates primarily to the accrual of interest on the senior
secured credit facility and the subordinated secured line of credit from the
sole member. Interest costs of $559,000 and $1.6 million were capitalized during
the three months ended March 31, 2000 and 1999, respectively, as part of the
construction costs of our networks.

         Interest income of $625,000 for the first quarter of 2000 resulted
primarily from interest earnings on the short-term investment of the cash
proceeds from the issuance of the 15% Senior Notes.

         For the reasons stated above, our net loss increased to $21.8 million
for the first quarter of 2000, compared with $20.8 million for the comparable
period in 1999.

LIQUIDITY AND CAPITAL RESOURCES

         Our deficiency in net cash used in operations was $20.6 million for the
three months ended March 31, 2000, compared to $29.8 million for the comparable
period in 1999. Cash from operating activities in 2000 were used primarily to
fund our net loss of $21.8 million. The reduction in the deficiency of $8
million is primarily due to an increase in unearned revenues of $3.9 million
relating to sales of indefeasible rights to use our fiber optic networks,
additional depreciation and amortization expense of $2.4 million and an improved
working capital position of $2.1 million. For the same period in 1999, cash from
operating activities was used primarily to fund our net loss of $20.8 million
and a decrease in accounts payable and accrued liabilities of $9.1 million. We
expect that negative operating cash flows will continue as we expand our
operations and transition our customers from resale services to facilities-based
services.

         Our net cash from investing activities for the three months ended March
31, 2000 provided cash of $9.5 million primarily due to a $15 million decrease
in restricted investments for payment of interest on our 15% Senior Notes offset
by expenditures for our switching and long haul fiber optic networks of $5.2
million. Net cash from investing activities during the same period in 1999 was
$737,100 primarily due to a $15.5 million decrease in restricted investments for
payment of interest on our 15% Senior Notes offset by $14.5 million used to
acquire network related equipment, office equipment and information systems
software and to construct local and long haul fiber optic networks.

         Our financing activities provided net cash of $12.3 million during the
three months ended March 31, 2000. This relates primarily to $12.5 million of
proceeds received from borrowings under our subordinated debt

                                       12
<PAGE>   13
arrangement with our sole member, offset by a $200,000 repayment of principal on
our bank credit facility. For the comparable period in 1999 our financing
activities used cash of $483,200 for repayment of principal on our bank credit
facility and for payment of debt issuance costs incurred to obtain the senior
secured credit facility.

         At March 31, 2000, we had $2.4 million of outstanding indebtedness
under our bank credit facility. The borrowings bear interest at an annual rate
equal to (1) 1/2 % under the bank's prime lending rate or (2) 2% over the bank's
costs of funds, at our option. The effective annual interest rate of the bank
credit facility was 8.5% at March 31, 2000. The borrowings are repayable in
monthly installments of $66,667 through March 31, 2003 and are secured by
specific assets of US Xchange and one of our wholly owned subsidiaries and by
the guarantees of the same subsidiary and of RVP Development Corporation.

          Our bank credit facility contains certain affirmative and restrictive
covenants, including, but not limited to, limitations on our ability to

     -    enter into any merger or consolidation or sell, lease, transfer or
          dispose of all, substantially all or any material part of our assets,
          except in the ordinary course of business,
     -    guarantee, endorse or otherwise become secondarily liable for or upon
          the obligations of others, except by endorsement for deposit in the
          ordinary course of business or
     -    create, incur, assume or suffer to exist any mortgage, pledge,
          encumbrance, security interest, lien or charge of any kind upon any of
          our assets.

All financial covenants under the bank credit facility apply to RVP Development
Corporation and not to US Xchange. At March 31, 2000, RVP Development
Corporation was in compliance with all of its covenant requirements under the
bank credit facility. On June 25, 1998 we issued and sold $200 million aggregate
principal amount of our 15% Senior Notes due July 1, 2008. Of the $193.0 million
of net proceeds that we received for these Notes, we used approximately $82.5
million to purchase U.S. government securities, including accrued interest, to
secure and fund our first six scheduled semi-annually payments of interest on
these Notes. Interest on the 15% Senior Notes is payable semi-annually, on
January 1 and July 1. The Company made interest payments of $15 million, $15.5
million and $15.0 million on January 1, 2000, July 1, 1999 and January 1, 1999,
respectively, to the holders of the 15% Senior Notes.

    The indenture governing our 15% Senior Notes imposes certain financial and
operating restrictions on us and our restricted subsidiaries. These restrictions
limit, among other things, our ability to:

     -    incur additional indebtedness;

     -    create liens;

     -    engage in sale-leaseback transactions;

     -    sell assets;

     -    effect consolidations or mergers;

     -    make investments or certain other restricted payments;

     -    pay dividends or make distributions in respect of membership
          interests;

     -    redeem membership interests;

     -    issue or sell membership interests of our restricted subsidiaries; and

     -    enter into transactions with any of our members or affiliates.

While these limitations are subject to a number of important qualifications and
exceptions, if we were to fail to comply with these restrictions and, in some
cases, were to fail to cure our noncompliance, we would be in


                                       13
<PAGE>   14
default under the indenture. Under the indenture, we are also required to file
certain reports with the Securities and Exchange Commission and to deliver these
reports to the trustee and the holders of the 15% Senior Notes. We have not
timely delivered our Annual Report on Form 10-K for the year ended December 31,
1999 or our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000
and, accordingly, have failed to comply with our reporting obligations under the
indenture. However, in connection with the merger discussed below, all the
holders of the 15% Senior Notes have agreed that the 15% Senior Notes may be
redeemed on the merger closing date. If the merger were not to be completed, the
trustee or holders of 25% of the outstanding principal of the 15% Senior Notes
could declare the outstanding principal and accrued and unpaid interest to be
immediately due and payable. We cannot give any assurance that we would have
sufficient cash resources or be able to obtain any additional financing to meet
these payment obligations.

         On April 30, 1999, we obtained a $50.0 million senior secured revolving
credit facility, pursuant to a Loan and Security Agreement among our
wholly-owned subsidiary US Xchange Finance Company, L.L.C., as borrower, US
Xchange and our operating subsidiaries, as guarantors, and General Electric
Capital Corporation, as Administrative Agent and lender. As of March 31, 2000,
we had $50 million outstanding under this facility. All outstanding borrowings
bear interest at a floating rate equal to either a defined base rate plus 3.0%
or at LIBOR plus 4.0% at our option. The effective rate was 10.1% as of March
31, 2000. Interest is payable at least on a quarterly basis. During 1999, unused
portions of this facility were subject to a commitment fee ranging between .75%
and 1.25% of the unused amount. The aggregate outstanding principal is repayable
in quarterly installments, commencing July 31, 2002 and continuing through April
30, 2007 based upon the following annual debt reduction formula: 10%, 15%, 20%,
25% and 30%. Borrowings are secured by all present and future real and personal
property, assets and revenues of the borrower and its subsidiaries. US Xchange
and the subsidiaries of the borrower have guaranteed the repayment of all
indebtedness under this facility.

         The terms of our indebtedness impose certain financial and operating
restrictions on us and our restricted subsidiaries. These restrictions limit,
among other things, our ability to:

          -    incur additional indebtedness;
          -    create liens;
          -    engage in sale-leaseback transactions;
          -    sell assets;
          -    effect consolidations or mergers;
          -    make investments or certain other restricted payments
          -    pay dividends or make distributions in respect of membership
               interest;
          -    redeem membership interests;
          -    issue or sell membership interest of our restricted subsidiaries;
               and
          -    enter into transactions with any of our members or affiliates.



     These limitations are subject to a number of important qualifications and
exceptions. However, if we fail to comply with these restrictions or other
covenants under the facility and, in some cases, fail to cure our noncompliance,
GE Capital, as the administrative agent and sole lender under the facility,
could declare a default or a default could be deemed immediately to occur and GE
Capital would be entitled to make all borrowings immediately due and payable. As
of and for the quarter ended March 31, 2000, we were not in compliance with
certain financial performance covenants under the facility, and we do not expect
to be in compliance with these covenants for subsequent periods.



                                       14
<PAGE>   15
      However, on May 15, 2000, we announced that US Xchange, Inc., the newly
formed parent of US Xchange, L.L.C. and a corporation wholly owned by our sole
member, signed a definitive merger agreement with Choice One Communications,
Inc. ("Choice One"), a publicly held integrated communications provider that
offers local exchange and long distance telecommunications services, high-speed
data, Internet and DSL solutions, and web design and hosting primarily to small
and medium-sized businesses in second and third tier markets in the Northeast
United States. Under the terms of the agreement, Choice One will pay
approximately $311 million in net cash and issue approximately 7,000,000 shares
of its common stock to Mr. VanderPol, the sole stockholder of our parent. The
merger is subject to certain conditions, including Hart-Scott-Rodino clearance
and other regulatory approvals. In addition, all of the holders of our
outstanding 15% Senior Notes have executed and delivered to Choice One a letter
agreement pursuant to which they have agreed that the surviving corporation upon
completion of the merger may redeem the 15% Senior Notes on the merger closing
date at a redemption price equal to 109% of their principal amount plus accrued
interest, if any, to the closing date. The bond holders also have agreed to an
amendment to the Indenture, to take effect on the redemption date, providing for
the deletion of certain covenants and other provisions of the Indenture.

     In connection with the merger, GE Capital has agreed to forbear from
exercising its rights and remedies relating to our non-compliance with financial
performance covenants until the earlier of (i) July 31, 2000 or (ii) the
occurrence of any of the following events:

     -    the occurrence of an event of default, or the occurrence of an event
          or the happening of a condition which with the passing of time or the
          giving of notice or both would constitute an event of default, under
          the loan agreement, other than the events of default for the periods
          ending December 31, 1999 and March 31, 2000;

     -    certain events of bankruptcy;

     -    termination of the merger.

     We currently expect to complete this merger by July 31, 2000. Pursuant to
the merger agreement, we will receive sufficient cash consideration to pay the
obligations under the senior secured credit facility and the 15% Senior Notes in
full. However, we can give no assurance that none of the events listed above
will occur, that we will complete the merger by July 31, 2000 or that GE Capital
will again agree to forbear from exercising its rights under the loan agreement.
If GE Capital exercises its remedies under the loan agreement, we may be
required to repay all or any portion of the outstanding borrowings under the
facility. If this occurs prior to the completion of the merger and we cannot
otherwise satisfy our payment obligations under the senior secured credit
facility, our business would be materially adversely affected and we would also
be in default of the indenture governing the 15% Senior Notes.


         On August 26, 1999, the Company entered into a Line of Credit Agreement
with our Co-Chairman, Mr. VanderPol, for up to $50.0 million in subordinated
debt financing. Borrowings under this arrangement totaled $27.0 million at March
31, 2000. Interest accrues on outstanding borrowings at a floating rate equal to
prime rate less 1.25%. The effective rate was 7.75% at March 31, 2000. All
borrowings are secured by all present and future assets of the Company and are
subordinated to the indebtedness under the Company's current and future secured
credit facilities. Repayment of borrowed amounts and all accrued interest
thereon will commence upon the repayment of all obligations under our current
and any future secured credit facilities.

         Our operations have required a substantial capital investment for the
purchase of telecommunications equipment and the construction and development of
our networks. Since the beginning of fiscal 1997 and through March 31, 2000, we
have spent approximately $157.9 million on capital expenditures. We have funded
these

                                       15
<PAGE>   16
expenditures through our existing equity capital, the net proceeds from the sale
of our 15% Senior Notes and borrowings under our GE Capital senior secured
credit facility, our subordinated secured line of credit from Mr. VanderPol and
our bank credit facility.

         The costs associated with the initial installation and expansion of
each of our networks, including development, installation, certain
organizational costs and early operating expenses, and the construction of our
planned long haul routes interconnecting our commercial regions are significant.
We expect to experience negative cash flow for each market until we establish an
adequate customer base and revenue stream.

         We estimate that, as of March 31, 2000, our future capital requirements
(including requirements for capital expenditures, working capital, debt service
and operating losses) to fund the operating losses of our networks, the
expansion of certain of our local networks and the planned installation of
long-haul fiber interconnecting our networks will total approximately $69.8
million. Of this amount, approximately $5.0 million was committed for capital
expenditures required for the completion of our long-haul routes and the
expansion of certain of our local networks through the second quarter of 2000.
We plan to finance these capital requirements with the available borrowings
under our subordinated line of credit from our majority member (approximately
$23.0 million as of March 31, 2000), cash expected to be generated from future
revenues, and interim debt financing of up to $25 million provided by Choice One
under the merger agreement, and possibly through sales of dark fiber along our
local and long-haul networks. We currently have no commitments for additional
debt or equity financing, and we can give no assurance that additional debt or
equity financing will be available to us on terms we consider acceptable or at
all. If we are unable to complete the merger with Choice One, to secure
additional debt or equity financing or to sell any dark fiber on acceptable
terms, we may be required to modify or delay some of our planned capital
expenditures, which could have a material adverse effect on our business.

         The actual amount and timing of our capital requirements may vary
significantly from our estimates based upon a number of factors, including,
among other things:

         -    the timing and success of our current development plans;
         -    shortfalls in our revenue and cost projections;
         -    demand for our services;
         -    regulatory, technological and competitive developments;
         -    any decision to expand our operations into additional commercial
              regions or markets or within any of our current networks; and
         -    any acquisitions or joint ventures that we decide to undertake.

         Actual revenues and costs may vary materially from expected amounts,
and such variations will likely affect our future cash flow requirements.
Accordingly, we cannot assure you that our actual capital requirements will not
exceed our current estimates.



                                       16
<PAGE>   17
NEW ACCOUNTING STANDARDS

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." Among other
provisions, this standard requires that entities recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair value. Gains and losses resulting from changes in the fair values of
those derivatives would be accounted for depending on the use of the derivative
and whether it qualifies for hedge accounting. This standard, as amended by SFAS
137 issued in June 1999, is effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000, though earlier adoption is encouraged and
retroactive application is prohibited. Historically, we have not entered into,
and we currently have no plans to enter into, any derivative instruments.
Accordingly, we believe that this standard will not have a material impact on
our consolidated financial position, results of operations or cash flows.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         We are exposed to market risk related to changes in interest rates
because the interest rate on approximately $79.4 million of our debt is indexed
to floating interest rates. We monitor the risk associated with interest rates
on an ongoing basis, but we have not entered into any interest rate swaps or
other financial instruments to actively hedge the risk of changes in prevailing
interest rates.

         We have outstanding $200 million of 15% Senior Notes, which mature on
July 1, 2008 and pay interest semi-annually on January 1 and July 1 of each
year. The effective interest rate is 15.35%. As of March 31, 2000, the fair
market value of the 15% Senior Notes was approximately $153 million. As a result
of issuing fixed interest securities, we are less sensitive to market rate
fluctuations.



                                       17
<PAGE>   18
                                     PART II

                                OTHER INFORMATION

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         The Company's $50.0 million senior secured revolving credit facility
contains quarterly financial performance covenants regarding minimum revenues
and maximum EBITDA losses, which the Company did not satisfy for the quarter
ended March 31, 2000. General Electric Capital Corporation, as Administrative
Agent and sole lender under this facility, has agreed to forbear from declaring
a default of our obligations under the facility and from exercising its rights
and remedies relating to this non-compliance until July 31, 2000.


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits filed with (or incorporated by reference into) this
                  report

               2.1  Agreement and Plan of Merger by and among Choice One
                    Communications Inc., Barter Acquisition Corporation, US
                    Xchange, Inc. and the Stockholder of US Xchange, Inc. dated
                    as of May 14, 2000 (incorporated by reference to Exhibit
                    99.2 to the Current Report on Form 8-K/A of Choice One
                    Communications Inc. dated May 14, 2000 filed on May 16,
                    2000)
               3.1  Articles of Organization of US Xchange, L.L.C. (incorporated
                    by reference to Exhibit 3.1 to the registrant's registration
                    statement on Form S-4 (Commission File No. 333-64717) filed
                    September 30, 1998, the "Form S-4")
               3.2  Operating Agreement of US Xchange, L.L.C. dated as of August
                    1, 1996 (incorporated by reference to Exhibit 3.2 to the
                    Form S-4)
               4.1  Loan and Security Agreement dated as of April 29, 1999,
                    among US Xchange Finance Company, L.L.C., as Borrower, US
                    Xchange, L.L.C. and certain operating subsidiaries of US
                    Xchange, L.L.C., as Guarantors, and General Electric Capital
                    Corporation, as Administrative Agent and lender thereunder
                    (incorporated by reference to Exhibit 4.1 to the
                    registrant's Quarterly Report on Form 10-Q for the quarter
                    ended March 31, 1999, as amended)
               4.2  Schedules to Loan and Security Agreement (incorporated by
                    reference to Exhibit 4.2 to the registrant's Current Report
                    on Form 8-K dated August 23, 1999)
               27.1 Financial Data Schedule for Three Months Ended March 31,
                    2000
               99.1 Risk Factors, incorporated herein by reference to Exhibit
                    99.1 to the registrant's Annual Report on Form 10-K for the
                    fiscal year ended December 31, 1999





         (b)      Reports on Form 8-K:

         The Registrant filed no reports on Form 8-K during the quarter ended
March 31, 2000.






                                       18
<PAGE>   19
                                   SIGNATURES

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

                                US XCHANGE, L.L.C.


June 6, 2000                    By:  /s/ Richard Postma
                                     -------------------------------------------
                                     Richard Postma, Co-Chairman and Chief
                                     Executive Officer


June 6, 2000                    By:  /s/ Joseph J. Miglore
                                     -------------------------------------------
                                     Joseph J. Miglore, Executive Vice President
                                     and Chief Financial Officer (Principal
                                     Financial Officer and Principal Accounting
                                     Officer)









                                       19
<PAGE>   20
                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>

           EXHIBIT
           NUMBER                        DESCRIPTION
           ------    -----------------------------------------------------------

<S>                  <C>
            2.1      Agreement and Plan of Merger by and among Choice One
                     Communications Inc., Barter Acquisition Corporation,
                     US Xchange, Inc. and the Stockholder of US Xchange,
                     Inc. dated as of May 14, 2000(incorporated by
                     reference to Exhibit 99.2 to the Current Report on
                     Form 8-K/A of Choice One Communications Inc. dated
                     May 14, 2000 filed on May 16, 2000)

            3.1      Articles of Organization of US Xchange, L.L.C.
                     (incorporated by reference to Exhibit 3.1 to the
                     registrant's registration statement on Form S-4
                     (Commission File No. 333-64717) filed September 30,
                     1998, the "Form S-4")


            3.2      Operating Agreement of US Xchange, L.L.C. dated as of
                     August 1, 1996 (incorporated by reference to Exhibit
                     3.2 to the Form S-4)


            4.1      Loan and Security Agreement dated as of April 29,
                     1999, among US Xchange Finance Company, L.L.C., as
                     Borrower, US Xchange, L.L.C. and certain operating
                     subsidiaries of US Xchange, L.L.C., as Guarantors,
                     and General Electric Capital Corporation, as
                     Administrative Agent and lender thereunder
                     (incorporated by reference to Exhibit 4.1 to the
                     registrant's Quarterly Report on Form 10-Q for the
                     quarter ended March 31, 1999, as amended)

            4.2      Schedules to Loan and Security Agreement
                     (incorporated by reference to Exhibit 4.2 to the
                     registrant's Current Report on Form 8-K dated August
                     23, 1999)

            27.1     Financial Data Schedule for Three Months Ended March
                     31, 2000

            99.1     Risk Factors, incorporated herein by reference to
                     Exhibit 99.1 to the registrant's Annual Report on
                     Form 10-K for the fiscal year ended December 31, 1999

</TABLE>



                                       20