UNITED STATES


                       SECURITIES AND EXCHANGE COMMISSION


                             WASHINGTON, D.C. 20549


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


                                    FORM 10-Q

         (Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 For the quarterly period ended June 30, 2002

                                       or

[ ]  TRANSACTION  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934 For the transition period from   to


                        Commission File Number 000-27095
                                  -------------

                           AVERY COMMUNICATIONS, INC.


             (Exact name of registrant as specified in its charter)

          DELAWARE                                            22-2227079
(State or other jurisdiction of                         (IRS Employer ID No.)
 incorporation or organization)

 190 SOUTH LASALLE STREET, SUITE 1710                          60603
          CHICAGO, ILLINOIS
(Address and principal executive offices)                    (Zip code)

                                 (312) 419-0077
              (Registrant's telephone number, including area code)


Check  whether the Issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  Exchange Act 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 .

The  number of shares  outstanding  of each of the  issuer's  classes  of common
equity, as of June 30, 2002:


           TITLE OF CLASS                          NUMBER OF SHARES OUTSTANDING

     Common Stock, $.01 par value                            1,042,728


<PAGE>

                   AVERY COMMUNICATIONS, INC. AND SUBSIDIARIES


                                      INDEX





PART I   FINANCIAL INFORMATION                                              PAGE

Item 1.  Consolidated Financial Statements

         Consolidated Balance Sheets - June 30, 2002
         (unaudited) and December 31, 2001                                    1

         Consolidated Statements of Operations - For the Three
         and Six Months Ended June 30, 2002 and 2001  (unaudited)             3


         Consolidated Statements of Cash Flows - For the Six
         Months Ended June 30, 2002 and 2001 (unaudited)                      4


         Notes to Consolidated Financial Statements                           5

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

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

         Signatures                                                           18

<PAGE>

<TABLE>
<CAPTION>
                                   ITEM 1. AVERY COMMUNICATIONS, INC. AND SUBSIDIARIES
                                               CONSOLIDATED BALANCE SHEETS


                                                          ASSETS
                                                                                                  06/30/02      12/31/01
                                                                                                -------------  ------------
                                                                                                 (Unaudited)
<S>                                                                                          <C>              <C>
Current assets:
   Cash and cash equivalents                                                                 $     1,227,375  $  5,422,202
                                                                                                -------------  ------------
   Accounts receivable:
      Trade accounts and notes receivable, net of allowance for doubtful accounts of $242,901      2,374,317     3,231,166
      Advance payment receivables                                                                  2,432,013     1,794,352
      LEC billing and collection fees receivable                                                   3,908,732     4,948,502
      Receivable from OAN                                                                          2,178,571     2,113,056
      Other receivables                                                                              200,000        94,376
                                                                                                -------------  ------------
         Total accounts receivable                                                                11,093,633    12,181,452
                                                                                                -------------  ------------

   Deferred tax asset                                                                              1,641,517     1,090,690
   Deposits with LECs                                                                                657,031       933,618
   Other current assets                                                                              366,412        53,354
                                                                                                -------------  ------------
         Total current assets                                                                     14,985,968    19,681,316
                                                                                                -------------  ------------

Property and equipment:
   Computer equipment and software                                                                 5,832,963     5,718,172
   Furniture and fixtures                                                                            491,415       500,003
   Accumulated depreciation and amortization                                                      (1,905,565)   (1,379,877)
                                                                                                -------------  ------------

Property and equipment, net                                                                        4,418,813     4,838,298
                                                                                                -------------  ------------

Other assets:
   Goodwill, net                                                                                   5,576,050     5,577,735
   Investments                                                                                             -        30,100
   Deposits with LECs                                                                              2,236,983     2,236,983
   Purchased contracts, net of accumulated amortization of $345,213 and $339,996 at
      June 30, 2002 and December 31, 2001                                                              9,050        14,267
   Notes receivable due from related parties, net of allowance of $1,210,800                         352,700       752,700
   Capitalized financing fees                                                                        684,073       718,299
   Other assets                                                                                      198,685        43,036
                                                                                                -------------  ------------
         Total other assets                                                                        9,057,541     9,373,120
                                                                                                -------------  ------------

         Total assets                                                                        $    28,462,322  $ 33,892,734
                                                                                                =============  ============
</TABLE>


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

                                     - 1 -
<PAGE>
<TABLE>
<CAPTION>
                              ITEM 1. AVERY COMMUNICATIONS, INC. AND SUBSIDIARIES
                                    CONSOLIDATED BALANCE SHEETS-(Continued)
                                     Liabilities and Stockholders' Deficit
                                                                                         -----------  -----------
                                                                                          06/30/02     12/31/01
                                                                                         -----------  -----------
                                                                                         (Unaudited)
<S>                                                                                    <C>          <C>
Current liabilities:
   Line of credit                                                                      $  5,511,245 $  2,607,705
   Trade accounts payable                                                                   859,854    1,084,575
   Payable to OAN                                                                         1,115,679    1,755,464
   Accrued liabilities                                                                    1,898,754    2,425,938
   Current portion of customer cure liability                                               317,701      317,701
   Income taxes payable                                                                           -      163,994
   Deposits and other payables related to customers                                      19,963,652   24,456,346
                                                                                         -----------  -----------
          Total current liabilities                                                      29,666,885   32,811,723
                                                                                         -----------  -----------

Non-current liabilities:
   Long-term notes payable to related parties                                               680,681      680,681
   Customer cure liability                                                                1,398,697    1,576,021
                                                                                         -----------  -----------
          Total non-current liabilities                                                   2,079,378    2,256,702
                                                                                         -----------  -----------
Redeemable preferred stock:
   Series A; $0.01 par value, 391,667 shares authorized, issued and
      outstanding (liquidation preference of $391,667)                                      391,667      391,667
   Series B; $0.01 par value, 390,000 shares authorized, issued and
     outstanding (liquidation preference of $390,000)                                       390,000      390,000
   Series C; $0.01 par value, 40,000 shares authorized,  issued and
     outstanding (liquidation preference of $40,000)                                         40,000       40,000
   Series D; $0.01 par value, 1,500,000 shares authorized, issued and
     and outstanding (liquidation preference of $1,500,000)                               1,500,000    1,500,000
                                                                                         -----------  -----------
          Total redeemable preferred stock                                                2,321,667    2,321,667
                                                                                         -----------  -----------

Commitments and contingencies

Stockholders' deficit:
   Preferred stock:
       Series G; $0.01 par value, 2,150,493 shares authorized, issued and
        outstanding (liquidation preference of $21,505)                                      21,505       21,505
       Series H; $0.01 par value, 1,600,000 shares authorized, issued and
        outstanding (liquidation preference of $1,600,000)                                   16,000       16,000
       Series I; $0.01 par value, 500,000 shares authorized, issued and
        outstanding (liquidation preference of $500,000)                                      5,000        5,000
   Common stock: $0.01 par value, 20,000,000 shares authorized, 1,267,955 issued             12,680       12,680
   Additional paid-in capital                                                             6,390,841    6,639,337
   Accumulated deficit                                                                  (11,652,657)  (9,055,012)
   Treasury stock, 225,227 and 101,396 shares at June 30, 2002 and December 31, 2001,
     respectively, at cost                                                                 (222,986)     (58,440)
   Subscription notes receivable                                                           (175,991)  (1,078,428)
                                                                                         -----------  -----------
          Total stockholders' deficit                                                    (5,605,608)  (3,497,358)
                                                                                         -----------  -----------

          Total liabilities and stockholders' deficit                                  $ 28,462,322  $33,892,734
                                                                                         ===========  ===========
</TABLE>


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

                                     - 2 -
<PAGE>

<TABLE>
<CAPTION>
                   AVERY COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                   (UNAUDITED)

                                                                    Three Months Ended           Six Months Ended
                                                                        June 30,                      June 30,
                                                              ----------------------------- ------------------------------
                                                                  2002            2001          2002            2001
                                                              -------------  -------------- -------------- ---------------

<S>                                                           <C>            <C>            <C>            <C>
Revenues                                                      $ 10,335,759   $    8,135,849 $  21,515,420  $   16,600,460

Cost of revenues                                                (7,100,289)      (5,830,411)  (15,128,014)    (11,666,801)
                                                               ------------    -------------  ------------   -------------

     Gross profit                                                3,235,470        2,305,438     6,387,406       4,933,659

Operating expenses                                              (4,410,581)      (1,405,807)   (8,235,379)     (3,126,996)
                                                               ------------    -------------  ------------   -------------

     Operating income (loss)                                    (1,175,111)         899,631    (1,847,973)      1,806,663
                                                               ------------    -------------  ------------   -------------

Other income (expense):
   Interest expense                                                (42,882)         (99,702)      (82,893)       (114,447)
   Option buyback costs                                                  -                -             -         (88,378)
   Write-off of receivables from related parties                (1,200,000)                    (1,200,000)              -
   Other, net                                                       (6,229)          76,727      (130,100)        182,472
                                                               ------------    -------------  ------------   -------------

     Total other income (expense), net                          (1,249,111)         (22,975)   (1,412,993)        (20,353)
                                                               ------------    -------------  ------------   -------------
Income (loss) from continuing  operations before
    provision for income taxes and discontinued operations      (2,424,222)         876,656    (3,260,966)      1,786,310

Income tax benefit (expense)                                       378,828         (302,865)      663,321        (733,732)

                                                               ------------    -------------  ------------   -------------
Income (loss) from continuing operations                        (2,045,394)         573,791    (2,597,645)      1,052,578
Loss from discontinued operations (less applicable income
   tax benefit of $311,799 for the six months ended June 30, 2001)       -                -             -        (605,259)
                                                               ------------    -------------  ------------   -------------

     Net income (loss)                                        $ (2,045,394)  $      573,791 $  (2,597,645) $      447,319
                                                               ============    =============  ============   =============
     Net income (loss) attributable to common shareholders    $ (2,168,586)  $      505,763 $  (2,844,029) $      217,545
                                                               ============    =============  ============   =============
Per share data:
Basic net income (loss) per share:
Continuing operations income (loss)                           $      (1.94)  $         0.40 $       (2.50) $         0.64
Discontinued operations                                                  -                -             -           (0.47)
                                                               ------------    -------------  ------------   -------------
Net income (loss)                                             $      (1.94)  $         0.40 $       (2.50) $         0.17
                                                               ============    =============  ============   =============
Diluted net income (loss) per share:
Continuing operations income (loss)                           $      (1.94)  $         0.23 $       (2.50) $         0.39
Discontinued operations                                                  -                -             -           (0.29)
                                                               ------------    -------------  ------------   -------------
Net income (loss)                                             $      (1.94)  $         0.23 $       (2.50) $         0.10
                                                               ============    =============  ============   =============
Weighted average number of common shares outstanding:
   Basic common shares                                           1,116,850        1,264,408     1,137,316       1,285,632
                                                               ============    =============  ============   =============
   Diluted common shares                                         1,116,850        2,154,589     1,137,316       2,123,276
                                                               ============    =============  ============   =============
</TABLE>

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


                                     - 3 -
<PAGE>

<TABLE>
<CAPTION>
                   AVERY COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                   (UNAUDITED)
                                                                                                      Six Months Ended
                                                                                                          June 30,
                                                                                              ---------------------------------
                                                                                                   2002              2001
                                                                                              ----------------  ---------------
<S>                                                                                           <C>               <C>
Cash flows from operating activities:
   Net income (loss)                                                                          $    (2,597,645)  $      447,319
   Loss from discontinued operations                                                                        -          605,259
     Amortization of loan discounts                                                                         -            4,140
     Deferred income taxes                                                                           (550,827)          18,351
     Depreciation and amortization                                                                    530,905          280,533
     Provision for uncollectible related party notes receivable                                     1,200,000                -
     Option buyback costs                                                                                   -           88,378
     Investment asset surrendered in exchange for royalty obligation                                   30,100                -
     Change in  operating assets and liabilities:
       Trade accounts receivable                                                                      856,849          708,839
       Advance payment receivables                                                                   (637,661)        (442,733)
       Other current assets                                                                          (313,058)        (306,490)
       Deposits                                                                                       276,587         (116,563)
       Other receivables                                                                              868,631                -
       Trade accounts payable and accrued liabilities                                              (1,400,504)      (1,256,772)
       Income taxes payable                                                                          (163,994)         269,582
       Deposits and other payables related to customers                                            (4,670,018)      (2,551,769)
       Other assets                                                                                  (119,738)            (386)
                                                                                               ---------------   --------------

          Net cash used in continuing operations                                                   (6,690,373)      (2,252,312)
          Net cash provided by discontinued operations                                                      -          275,271
                                                                                               ---------------   --------------
          Net cash used in operations                                                              (6,690,373)      (1,977,041)
                                                                                               ---------------   --------------

Cash flows from investing activities:
   Purchase of property and equipment                                                                (106,203)         (21,134)
   Payment received on notes receivable                                                                     -           13,308
   Amounts loaned for notes receivable                                                                      -       (1,262,000)
   Purchase of investments                                                                                  -         (585,485)
                                                                                               ---------------   --------------

          Net cash used in investing activities                                                      (106,203)      (1,855,311)
                                                                                               ---------------   --------------

Cash flows from financing activities:
   Redemption of preferred shares                                                                           -         (350,000)
   Proceeds from line of credit                                                                     2,903,540                -
   Purchase of options for cash                                                                             -         (215,000)
   Acquisition costs                                                                                        -         (290,622)
   Purchase of treasury stock                                                                         (53,295)      (1,207,617)
   Payment of preferred stock dividends                                                              (248,496)        (154,884)
   Issuance of shares of common and preferred stock for cash                                                -        2,151,307
                                                                                               ---------------   --------------

          Net cash provided by (used in) financing activities                                       2,601,749          (66,816)
                                                                                               ---------------   --------------

Increase/(decrease)  in cash                                                                       (4,194,827)      (3,899,168)

Cash at beginning of period                                                                         5,422,202        6,719,888
                                                                                               ---------------   --------------

Cash at end of period                                                                         $     1,227,375   $    2,820,720
                                                                                               ===============   ==============
Supplemental disclosures:
   Interest paid                                                                              $       163,442   $      114,045
                                                                                               ===============   ==============

   Income taxes paid                                                                          $             -   $      134,000
                                                                                               ===============   ==============

Schedule of non-cash financing activities:
   Receipt of treasury stock in exchange for notes receivable                                 $       102,437   $            -
                                                                                               ===============   ==============
</TABLE>


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

                                     - 4 -
<PAGE>
                   AVERY COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


         NOTE 1. BASIS OF PRESENTATION

         The   accompanying    unaudited    financial    statements   of   Avery
Communications,  Inc. ("Avery") and subsidiaries  (collectively,  the "Company")
have been prepared in accordance with generally accepted  accounting  principles
for interim financial information.  Accordingly,  they do not include all of the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements.

         Management  uses  estimates  and  assumptions  in  preparing  financial
statements in accordance with generally accepted  accounting  principles.  Those
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities, and the reported amounts of
revenues and expenses.  Actual  results could vary from the estimates  that were
used.

         Certain prior period amounts have been  reclassified  to conform to the
2002 presentation.

         In the opinion of  management,  all  adjustments  (consisting of normal
recurring  adjustments)  considered  necessary for a fair presentation have been
included. Operating results for the three-month and six-month periods ended June
30, 2002 are not necessarily  indicative of the results that may be expected for
the year ending December 31, 2002.


         NOTE 2.  LIQUIDITY

         Avery has  incurred  a net loss of $2.6  million  during the six months
ended June 30, 2002, which includes a $1.2 million write off of notes receivable
from  related  parties.  The Company also used $6.7 million of cash in operating
activities over the same period.  The Company  anticipates  that it will achieve
profitability by the fourth quarter of 2002, based upon cost reductions achieved
through consolidation of operations.  The Company expects that the consolidation
of operations will be completed in the third quarter of 2002.

         Additionally,  Avery's working capital  position at June 30, 2002 was a
negative  $14.7  million,  compared to a negative  $13.1 million at December 31,
2001.  The  Company  can  operate  with  negative  working  capital,  because  a
significant  portion of its  current  liabilities  do not need to be paid in the
near  future.  For  example,  current  liabilities  at  June  30,  2002  include
approximately  $7 million of deposits  from  customers  which are not  typically
refunded in the ordinary  course of business.  The  customer  deposits  would be
refundable  over time only if the  customer  were to  significantly  reduce  the
volume of business  done with the Company or terminate its  relationship.  Avery
has not historically experienced any material loss of customers in its business.

                                     - 5 -
<PAGE>

         NOTE 3.  NET INCOME (LOSS) PER COMMON SHARE

         Basic and diluted net income  (loss) per share are computed by dividing
the net income (loss),  less preferred  stock  dividends  earned of $123,192 and
$68,028 for the three month  periods and $246,384 and $229,774 for the six month
periods  ended June 30, 2002 and 2001,  respectively,  by the  weighted  average
number of shares of common stock outstanding during the respective periods.  The
effect of the  preferred  stock  dividend on the basic income  (loss) per common
share was $0.11 and $0.05 per weighted average common share  outstanding for the
three month periods and $0.22 and $0.18 for the six month periods ended June 30,
2002 and 2001, respectively.

         Diluted  net  income  per share  includes  the  effect of all  dilutive
options,  warrants and instruments  convertible  into common stock.  Diluted net
loss per share equals basic loss per share because of the  anti-dilutive  effect
of outstanding options, warrants and instruments convertible into common stock.


         NOTE 4. DISCONTINUED OPERATIONS

         On August  1,  2000,  the  Board of  Directors  of Avery  approved  the
spin-off of Primal Solutions, Inc. ("PSI").


         On February 12, 2001, Avery distributed 100% of the outstanding capital
stock of PSI to its security holders. Accordingly, as of such date, Avery had no
further  ownership  interest  in  Primal  or its  subsidiary,  Wireless  Billing
Systems.


         As part of the formal  distribution,  the seven PSI stockholders at the
time of the  Company's  acquisition  of PSI  redeemed  4,976,401  shares  of the
Company's  Series G voting  preferred stock in exchange for 32% of PSI's capital
stock.  Also,  the  exercise  prices  of  Avery's  outstanding  options  and the
conversion prices of Avery's convertible securities were adjusted to reflect the
distribution.  After the transaction was completed, Avery's outstanding Series G
preferred stock was reduced to 2,150,493 shares.


         The financial  information contained in this document presents PSI as a
discontinued  operation  due to the  spin-off.  Accordingly,  the amounts in the
statements of operations through the provision for income taxes exclude expenses
relating to PSI.


          The  operating  results  of PSI  for the  period  January  1,  2001 to
February 12, 2001 were as follows:

                                     - 6 -
<PAGE>

                                                             Period January 1,
                                                             2001 to February
                                                                 12, 2001
                                                            ------------------
 Operating revenues                                                $  825,417
 Cost of revenues                                                    (598,792)
                                                            ------------------
    Gross profit                                                      226,625
 Selling, general and administrative expenses                      (1,127,751)
                                                            ------------------
    Loss from operations                                             (901,126)
 Other Expense                                                        (15,932)
                                                            ------------------
    Loss before income tax benefit                                   (917,058)
    Income tax benefit                                                311,799
                                                            ------------------
    Net loss                                                       $ (605,259)
                                                            ==================


         NOTE 5. CERTAIN TRANSACTIONS

         On March 9, 2001, HBS' largest customer, which accounted for 57% of its
call  records  processed in 2000 and 55% of all call  records  processed  during
2001,  filed a voluntary  petition for protection  under Chapter 11 of the U. S.
Bankruptcy Code in connection with the reorganization of its parent company. The
customer's  volume of call records  processed has declined  since the bankruptcy
filing,  but the  decline in volume is believed  to be  attributable  to general
industry  trends.  For the first six months of 2002, the customer  accounted for
62% of all call  records  processed,  compared  to 65% during the same period of
2001. As of July 31, 2002, the filing has had no material adverse effect on HBS'
business relationship with this customer,  and, based upon conversations between
the managements of the two companies,  the Company does not presently anticipate
that the filing will  materially  adversely  affect the  relationship  with this
company in the immediate future.

         In  connection  with  our  purchase  of  assets  from  Qorus.com,  Inc.
("Qorus") in November  2001,  the Company agreed to pay Qorus an amount equal to
five percent (5%) of the net after-tax income, if any, generated by the acquired
intelligent message  communications  service business for a period of five years
following the closing date.  Pursuant to an agreement  among the parties entered
into in March  2002,  Qorus  agreed to  eliminate  this  royalty  obligation  in
exchange for the  Company's  (i) cash  payment in the amount of  $100,000,  (ii)
return of all 3,010,000  common  shares of Qorus held by the Company;  and (iii)
agreement to cancel all unexercised  options to purchase 1,066,500 common shares
of Qorus at a price of $0.01 per share.  At December 31, 2001, the investment in
Qorus was recorded in the Company's financial statements at $30,100.  During the
first quarter of 2002, the Company recorded an expense of $130,100 in connection
with this transaction.

         On  January  3, 2002,  the  Company  advanced  the sum of  $200,000  to
Norlenton  Investments,  a  shareholder  of  the  Company,  in  exchange  for  a
promissory  note.  The note bears  interest at 6% and calls for the repayment of
all principal and interest on January 3, 2003.  The advance is secured by 38,881
shares of common stock in the Company.

         In October 2000, in order to permit its employees to participate in the
PSI spin-off,  the Board of Directors of the Company  authorized  the Company to
accelerate all its outstanding  options and to loan its employees,  on a secured
but non-recourse  basis,  the amount required to exercise such options,  plus an
additional  amount to offset the tax consequences of such exercises.  The loans,
which were  classified as stock  subscriptions  receivable,  were secured by the
stock acquired by the employees upon exercise of their options.  At December 31,
2001, the

                                      - 7 -
<PAGE>

aggregate of subscription  notes  receivable was  $1,078,428.  During the second
quarter of 2002,  the  Company  established  an  $800,000  reserve  against  the
subscription  notes receivable,  based on the excess of the amount owed over the
fair market value of the underlying stock.

          Effective March 20, 2002,  pursuant to a unanimous  written consent of
the  Company's  Directors,   the  Company  formally  acknowledged  that  certain
promissory notes aggregating  $685,118  received from executive  officers and/or
directors in October  2000, in  connection  with the exercise of stock  options,
were  intended  by the  Company  and the  various  borrowers  at the time of the
transaction to be non-recourse loans secured solely with the common stock issued
pursuant to the stock option  exercise.  The originally  issued notes,  however,
were issued without the intended non-recourse  language. In July 2002, new notes
which  clarified the notes as secured and  non-recourse  were  exchanged for the
previously issued notes.

         In connection  with the spin-off of PSI, the Company  advanced  certain
former PSI  stockholders  $1,563,500 on July 31, 2000 in exchange for promissory
notes.  The notes are  non-recourse,  bear  interest  at 6.6% per annum and were
originally  due on July 31, 2002.  Pursuant to the terms of an  assignment  of a
portion of the notes in January  2002,  the  maturity  date on  $963,810 of such
notes was  extended to July 31,  2006.  The loans are  secured by the  Company's
2,150,493  shares of  non-dividend  bearing  Series G preferred  stock (which is
convertible into 300,048 shares of the Company's common stock). During the third
quarter of 2001,  the Company  established  a reserve of $810,000  against those
notes  receivable,  due to the excess of the  amount  due over the stock  value.
During the second  quarter of 2002,  the Company  added  $400,000 to the reserve
based upon a further decline in the stock value.

         During the first six months of 2002,  the Company has purchased a total
of 32,000 shares of the Company's common stock in open market transactions at an
average purchase price of $1.67 per share.


         NOTE 6.  COMMITMENTS AND CONTINGENCIES

         The Company is involved in various claims, legal actions and regulatory
proceedings arising in the ordinary course of business.  The Company believes it
is unlikely that the final outcome of any of the claims or  proceedings to which
the  Company  is a party will have a material  adverse  effect on the  Company's
financial  position  or  results of  operations;  however,  due to the  inherent
uncertainty of litigation,  there can be no assurance that the resolution of any
particular  claim or proceeding  would not have a material adverse effect on the
Company's  results of operations for the fiscal period in which such  resolution
occurred.


         NOTE 7.  OAN and AELIX TRANSACTIONS

         The Company, through its wholly owned subsidiary, ACI Billing Services,
Inc. ("ACI"), completed the acquisition of certain assets from OAN Service, Inc.
("OAN") in August 2001. The Company  completed its acquisition of  substantially
all of the assets of Aelix, Inc. ("Aelix") in November 2001. Unaudited pro forma
financial  information  for the six months ended June 30, 2001 as though the OAN
and Aelix acquisitions had occurred on January 1, 2001 is as follows:

                                     - 8 -
<PAGE>


                                                                 Six months
                                                                    ended
                                                               June 30, 2001
                                                               --------------

Revenue                                                         $ 32,059,904

Net loss from continuing operations                               (6,787,049)

Net loss from continuing operations:
     Basic                                                           $ (5.28)
     Diluted                                                         $ (5.28)


         NOTE 8 - SEGMENT INFORMATION


         The local exchange  carrier billing segment  represents the third party
billing  clearinghouses for the telecommunications  industry.  These third party
clearinghouses  process these telephone call records and other  transactions and
submit them to local telephone companies for inclusion in their monthly bills to
end-users. The intelligent message communication services segment represents the
intelligent  message  communications  services  to  enterprises,  notably in the
travel, hospitality and transportation sectors.


         A summary of the segments'  operating  income for the six-month  period
ended June 30,  2002 and  certain  balance  sheet data as of June 30, 2002 is as
follows:

<TABLE>
<CAPTION>
                                            Local Exchange Intelligent Message    Corporate
                                           Carrier Billing   Communications    Administration      Consolidated

<S>                                           <C>                <C>              <C>              <C>
Revenue                                       $ 21,203,254       $  312,166       $         -      $ 21,515,420

Depreciation and Amortization                      468,439           61,800               666           530,905

Segment profit (loss)                              301,423         (686,702)       (2,212,366)       (2,597,645)

Segment assets                                  18,853,472        4,641,783         4,967,067        28,462,322

Capital expenditures by                            106,203                -                 -           106,203
segment
</TABLE>

         The intelligent message  communication service business was acquired in
November 2001. Accordingly, there was only one continuing segment during the six
months ended June 30,  2001.  Approximately  $1.2  million of Avery's  corporate
office  expenses  have been  allocated  to the local  exchange  carrier  billing
segment based on services provided to that segment.



         NOTE 9. REVERSE STOCK SPLIT


         The stockholders of the Company approved a 1-for-8 reverse split of the
Company's  common  stock,  which was  effective  on December  12,  2001.  Shares
outstanding and earnings per share during periods before the reverse stock split
have been restated to reflect the split.





         NOTE 10. GOODWILL


         Financial  Accounting  Standard No. 142 "Goodwill and Other  Intangible
Assets" requires that goodwill recorded on acquisitions  completed prior to July
1, 2001 be  amortized  through  December 31,  2001.  Effective  January 1, 2002,
goodwill is no longer to be amortized in periodic equal pre-determined  charges,
but will instead be tested for  impairment  as set forth in the  statement.  The
Company  adopted this  statement  effective  January 1, 2002.  The effect of not
recording any  amortization of goodwill  reduced the net loss by $60,000 for the
three  months ended June 30, 2002 and $121,000 for the six months ended June 30,
2002.

                                     - 9 -
<PAGE>


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

ITEM 2.


General


         Avery is a telecommunications  service company which operates two lines
of business.  Through its HBS and ACI  subsidiaries,  Avery provides billing and
collection  services for  inter-exchange  carriers and long-distance  resellers.
Through its Aelix subsidiary,  Avery provides intelligent message  communication
services to the travel, hospitality and transportation sectors.


         The   Company's   billing  and   collection   service   operates  as  a
clearinghouse.  Customers,  principally long distance service resellers,  submit
their  billing  records  to us.  We  aggregate  those  records  from  all of our
customers  and present them to local  exchange  carriers,  such as regional Bell
operating  companies.  The local exchange carriers include the submitted charges
on monthly phone bills sent to end-users.  The local  exchange  companies  remit
collected  funds to us,  generally 45 to 60 days after we submit our  customers'
billing  records  to them.  We then remit  such  funds to our  customers,  after
withholding our fees and other expenses.


         Our intelligent message  communication  service allows us to accept and
deliver  messages,  via voice,  e-mail or fax,  between  our  customers  and any
individual  or group of people  (customers,  suppliers,  employees,  etc.) on an
expedited basis. Examples of the types of services we offer are the following:

   o     Confirm ticket reservations
   o     Confirm hotel reservations
   o     Solicit bids for transportation services

Generally,  we charge a per-message fee to our intelligent message communication
service customers.




Forward Looking Statements


         This Quarterly Report on Form 10-Q contains  certain  "forward-looking"
statements as such term is defined in the Private  Securities  Litigation Reform
Act of 1995 and  information  relating  to the  Company  that  are  based on the
beliefs  of  the  Company's  management  as  well  as  assumptions  made  by and
information currently available to the Company's  management.  When used in this
report, the words "anticipate," "believe," "estimate," "expect" and "intend" and
words or  phrases  of  similar  import,  as they  relate to the  Company  or its
subsidiaries  or Company  management,  are intended to identify  forward-looking
statements.  Such  statements  reflect  the  current  risks,  uncertainties  and
assumptions   related  to  certain  factors   including,   without   limitation,
competitive   factors,   general  economic   conditions,   customer   relations,
relationships  with  vendors,   the  interest  rate  environment,   governmental
regulation  and  supervision,   seasonality,   distribution  networks,   product
introductions  and  acceptance,   technological  change,   changes  in  industry
practices,  onetime  events  and other  factors

                                     - 10 -
<PAGE>

described  herein and in other  filings made by the Company with the  Securities
and Exchange Commission. Based upon changing conditions,  should any one or more
of  these  risks  or  uncertainties   materialize,   or  should  any  underlying
assumptions  prove  incorrect,  actual  results may vary  materially  from those
described herein as anticipated,  believed, estimated, expected or intended. The
Company does not intend to update these forward-looking statements.




         GENERAL


         The following is a discussion of the consolidated  financial  condition
and results of  operations  of the Company for the three and  six-month  periods
ended  June  30,  2002 and  2001.  It  should  be read in  conjunction  with the
Consolidated  Financial  Statements of the Company,  the notes thereto and other
financial  information  included  elsewhere  in this report,  and the  Company's
Annual Report on Form 10-KSB for the year ended  December 31, 2001. For purposes
of the following  discussion,  references to year periods refer to the Company's
fiscal year ended December 31 and  references to quarterly  periods refer to the
Company's fiscal three month periods ended June 30, 2002 and 2001.

         The results of operations in 2002 include the  activities of ACI, which
purchased the assets of OAN in August 2001, and the  activities of Aelix,  which
was purchased in November 2001.

         The results on the "Discontinued operations" lines during the first six
months of 2001 relate to PSI, a wholly  owned  subsidiary  that was  spun-off in
February  2001.  All  discussions  relating  to revenue,  cost of  revenues  and
operating  expenses  pertain only to  continuing  operations,  which  consist of
Avery, HBS, ACI and Aelix.


         RESULTS OF OPERATIONS


         The   following   table   presents   certain  items  in  the  Company's
Consolidated  Statements of  Operations  for the three and six months ended June
30, 2002 and 2001:


<TABLE>
<CAPTION>
                                                              ------------------------------  ------------------------------
                                                                    Three Months Ended              Six Months Ended
                                                                         June 30,                       June 30,
                                                              ------------------------------  ------------------------------
                                                                  2002            2001            2002            2001
                                                              -------------  ---------------  -------------  ---------------
                                                                     (In Thousands)                  (In Thousands)
                                                                       (Unaudited)                     (Unaudited)

<S>                                                           <C>            <C>              <C>            <C>
Revenues                                                      $     10,335   $        8,136   $     21,515   $       16,600

Cost of revenues                                                    (7,100)          (5,830)       (15,128)         (11,667)
                                                               ------------    -------------   ------------    -------------

     Gross profit                                                    3,235            2,306          6,387            4,933

Operating expenses                                                  (4,108)          (1,265)        (7,709)          (2,846)
Depreciation and amortization                                          302              141            526              281
                                                               ------------    -------------   ------------    -------------
     Operating income (loss)                                        (1,175)             900         (1,848)           1,806
Other income (expense), net                                         (1,249)             (23)        (1,413)             (20)
Income tax benefit (expense)                                           379             (303)           663             (734)
Discontinued operations loss                                             -                -              -             (605)
                                                               ------------    -------------   ------------    -------------
     Net income (loss)                                        $     (2,045)  $          574   $     (2,598)  $          447
                                                               ============    =============   ============    =============
</TABLE>

         THREE  MONTHS  ENDED JUNE 30, 2002  COMPARED TO THREE MONTHS ENDED JUNE
30, 2001


         Operating Revenues

         The  Company's  revenues are derived  primarily  from the  provision of
billing  clearinghouse and information  management  services to direct dial long
distance  carriers and operator  services  providers  ("Local  Exchange  Carrier
billing" or "LEC billing").  To a lesser extent,  revenues are also derived from
enhanced  billing services  provided to companies that

                                     - 11 -
<PAGE>

offer  voice  mail,  paging  and  Internet   services  or  other   non-regulated
telecommunications   equipment  and  services,  and  from  electronic  messaging
services  provided by Aelix.  LEC billing  fees  charged by the Company  include
processing and customer  service  inquiry fees.  Processing fees are assessed to
customers  either  as a fee  charged  for each  telephone  call  record or other
transaction  processed  or as a  percentage  of the  customer's  revenue that is
submitted  by  the  Company  to  local  telephone   companies  for  billing  and
collection.  Processing fees also include any charges assessed to the Company by
local  telephone  companies for billing and collection  services that are passed
through to the  customer.  Customer  service  inquiry fees are assessed as a fee
charged for each billing inquiry made by end users.


         Total  revenue  for the  three  months  ended  June 30,  2002 was $10.3
million,  up $2.2 million or 27.0% from the comparable  quarter in 2001. Revenue
included in this period for the acquired ACI and Aelix  business units were $4.5
million and $0.2 million,  respectively.  Excluding revenue generated by ACI and
Aelix,  the Company's  revenue would have declined by 30.6%,  reflecting a 26.4%
decrease  in records  processed  and  competitive  pricing.  The decline in call
records processed  reflects  increased consumer usage of cell phones and prepaid
phone cards to make long  distance  calls.  Call records for neither cell phones
nor prepaid phone cards are typically processed through a billing clearinghouse.
Additionally,  some of the local  exchange  companies  have  begun to offer long
distance  service,  which reduces the market share of the network  resellers who
typically use clearinghouse services.


         The Company is pursuing additional sources of revenue to supplement its
LEC  billing  business.  The  additional  sources  of  revenue  can  arise  from
acquisitions  or  internal  growth.  In  general,  the  Company  intends to make
acquisitions  or expand into markets which will leverage the Company's  existing
infrastructure.




         Cost of Revenues

         Cost of revenues  includes  billing and collection  fees charged to the
Company by local telephone companies and related  transmission costs, as well as
all costs associated with the customer service organization,  including staffing
expenses and costs  associated  with  telecommunications  services.  Billing and
collection fees charged by the local telephone  companies  include fees that are
assessed for each record  submitted  and for each bill  rendered to its end-user
customers.  The Company achieves  discounted billing costs due to its aggregated
volumes and can pass these discounts on to its customers.  Cost of revenues also
includes $0.1 million of costs relating to the Aelix business unit.

         The  Company's  gross profit  margin in the second  quarter of 2002 was
31.3%,  compared to 28.3% in the second  quarter of 2001.  The increase in gross
margin  principally  reflects the inclusion of ACI in the 2002 financial results
and reduction in costs  attributable  to a  consolidation  of operations  into a
single location during the second quarter of 2002. ACI has historically achieved
a higher gross margin level than HBS.

                                     - 12 -
<PAGE>

         Operating Expenses

         Operating  expenses  are  comprised  of  all  selling,   marketing  and
administrative  costs incurred in direct  support of the business  operations of
the  Company.  Operating  expenses  for the  second  quarter  of 2002  were $4.4
million, compared to $1.4 million in the second quarter of 2001. The increase in
operating  expenses was attributable to the inclusion,  in the second quarter of
2002, of operating expenses of ACI totaling $2.1 million and Aelix totaling $0.6
million. Excluding the effect of the acquired businesses,  operating expenses in
2002  would  have  been  $1.7  million,   reflecting  one-time  termination  and
redundancy  costs  associated  with  the  consolidation  of our two LEC  billing
business units.

         Depreciation and Amortization

         Depreciation and  amortization  expense for the three months ended June
30, 2002 and 2001 was $307,236 and $140,717  respectively.  The increase was due
to depreciation  and amortization  expenses  associated with fixed assets of ACI
and Aelix, offset by the absence of amortization expense for goodwill during the
second  quarter of 2002,  pursuant to the  provisions  of Statement of Financial
Accounting  Standards No. 142,  "Goodwill and Other Intangible Assets" (see Note
10 to Consolidated Financial Statements).



         Other Income (Expense), Net


         Other  income  (expense),  net,  in the  second  quarter of 2002 was an
expense of $1.2  million  compared  to an  expense of $22,975  during the second
quarter  of 2001.  Other  expense  in the  second  quarter  of 2002  principally
consisted  of $1.2  million of charges  relating to  increases  in reserves  for
non-recourse  notes  receivable and stock  subscription  notes  receivable.  The
increase  in the  reserve  was deemed  appropriate  in light of a decline in the
value  of the  underlying  stock  for  the  non-recourse  notes  (see  Note 5 to
Consolidated Financial Statements).


         Income Taxes


         An income tax benefit of $378,828 was  recorded for the second  quarter
of 2002  compared to an expense of $302,865 in the second  quarter of 2001.  The
income tax benefit in the second  quarter of 2002  differs  materially  from the
expected income benefit  primarily  because of items  permanently not deductible
for income tax reporting purposes.


         SIX MONTHS  ENDED JUNE 30, 2002  COMPARED TO SIX MONTHS  ENDED JUNE 30,
2001


         Total revenue for the six months ended June 30, 2002 was $21.5 million,
up $4.9 million or 29.6% from the comparable  period in 2001.  Revenues included
in the first six months of 2002 for the  acquired ACI and Aelix  business  units
were $9.6 million.  Excluding  revenue generated by ACI and Aelix, the Company's
revenue  would have  declined by 28.0%,  reflecting a 23.7%  decrease in records
processed  and  competitive  pricing.  The  decline  in call  records  processed
reflects increased consumer usage of cell phones and prepaid phone cards to make
long  distance  calls.  Call records for neither  cell phones nor prepaid  phone
cards are typically

                                     - 13 -
<PAGE>

processed  through  a  billing  clearinghouse.  Additionally,  some of the local
exchange companies have begun to offer long distance service,  which reduces the
market share of the network resellers who typically use clearinghouse services.


         The Company is pursuing additional sources of revenue to supplement its
LEC  billing  business.  The  additional  sources  of  revenue  can  arise  from
acquisitions  or  internal  growth.  In  general,  the  Company  intends to make
acquisitions  or expand into markets which will leverage the Company's  existing
infrastructure.


         Cost of Revenues

         Cost of revenues  includes  billing and collection  fees charged to the
Company by local telephone companies and related  transmission costs, as well as
all costs associated with the customer service organization,  including staffing
expenses and costs  associated  with  telecommunications  services.  Billing and
collection fees charged by the local telephone  companies  include fees that are
assessed for each record  submitted  and for each bill  rendered to its end-user
customers.  The Company achieves  discounted billing costs due to its aggregated
volumes and can pass these  discounts to its  customers.  Cost of revenues  also
includes $0.2 million of costs relating to the Aelix business unit.



         The  Company's  gross profit margin in the first six months of 2002 was
29.7%,  which was equal to the gross  margin  earned  during the same  period in
2001.  The stable gross profit margin  reflects the inclusion of ACI in the 2002
financial results,  offset by a competitive pricing environment in 2002. ACI has
historically achieved a higher gross margin level than HBS.



         Operating Expenses

         Operating  expenses  are  comprised  of  all  selling,   marketing  and
administrative  costs incurred in direct  support of the business  operations of
the  Company.  Operating  expenses  for the first  six  months of 2002 were $8.2
million,  compared to $3.1 million in the first quarter of 2001. The $5.1million
increase in operating  expenses is attributable  to the inclusion,  in the first
six  months of 2002,  of  operating  expenses  for ACI and Aelix  totaling  $4.9
million. Excluding the effect of the acquired businesses,  operating expenses in
2002 would have been $3.3  million,  which would have been $0.2  million  higher
than operating  expenses in the first six months of 2002.  Operating expenses in
2002 were adversely  affected by staffing  redundancies,  travel,  severance and
other  costs  associated  with the  consolidation  of  operations  into a single
facility.

         Depreciation and Amortization

         Depreciation and amortization expense for the six months ended June 30,
2002 and 2001 was $530,905 and $280,533,  respectively.  The increase was due to
depreciation and amortization  expenses  associated with fixed assets of ACI and
Aelix,  offset by the absence of  amortization  expense for goodwill  during the
first six months of 2002,  pursuant to the  provisions of Statement of Financial
Accounting  Standards No. 142,  "Goodwill and Other Intangible Assets" (see Note
10 to Consolidated Financial Statements).

                                     - 14 -
<PAGE>

         Other Income (Expense), Net

         Other  income  (expense),  net,  in the first six months of 2002 was an
expense of $1.4 million,  compared to an expense of $20,353 during the first six
months of 2001. The increase in expense during 2002 is largely  attributable  to
$1.2 million of charges relating to increases in reserves for non-recourse notes
receivable and stock subscription notes receivable.  The increase in the reserve
was deemed  appropriate  in light of a decline  in the value of the stock  which
serves as  collateral  for the  non-recourse  notes (see Note 5 to  Consolidated
Financial  Statements).  Additionally,  the Company recorded $130,100 of expense
during the first six months of 2002 in connection  with the Company's  agreement
with Qorus to relieve the Company of any future  royalty  obligation to Qorus in
exchange for the Company's cash payment of $100,000,  the Company's surrender of
3,010,000  common  shares  of Qorus  and the  Company's  waiver  of its right to
purchase up to 1,066,500 shares of Qorus common stock for $0.01 per share.


         Income Taxes


         An income tax benefit of $663,321 was recorded for the first six months
of 2002 compared to an expense of $733,732 (from  continuing  operations) in the
first six months of 2001. The income tax benefit in 2002 differs materially from
the  expected  income  benefit   primarily  because  of  items  permanently  not
deductible for income tax reporting purposes.


         Loss from Discontinued Operations


         The Company's loss from discontinued  operations,  net of tax benefits,
was $605,259  for the six months  ended June 30, 2001.  The loss relates to PSI,
which was  spun-off on February 12, 2001 (see Note 4 to  Consolidated  Financial
Statements).



         LIQUIDITY AND CAPITAL RESOURCES


         Avery's  cash  balance at June 30, 2002 was $1.2  million,  compared to
$5.4  million at December  31,  2001.  Fluctuations  in daily cash  balances are
normal due to the large  amount of  customer  receivables  that we  collect  and
process on behalf of our  customers.  We receive money daily from local exchange
carriers,  but we ordinarily disburse such collected funds to our customers once
each week on Fridays.  Accordingly, our cash balance is generally at its highest
level on Thursdays and its lowest level on Fridays. The cash balance at June 30,
2002  reflected the Company's  cash position at the close of business on Friday,
June 28, 2002.

         Avery has  incurred  a net loss of $2.6  million  during the six months
ended June 30, 2002, which includes a $1.2 million write off of notes receivable
from  related  parties.  The Company also used $6.7 million of cash in operating
activities over the same period.  The Company  anticipates  that it will achieve
profitability by the fourth quarter of 2002, based upon cost reductions achieved
through consolidation of operations.  The Company expects that the consolidation
of operations will be completed in the third quarter of 2002.

                                     - 15 -
<PAGE>

         Additionally,  Avery's working capital  position at June 30, 2002 was a
negative  $14.7  million,  compared to a negative  $13.1 million at December 31,
2001.  The  Company  can  operate  with  negative  working  capital,  because  a
significant  portion of its  current  liabilities  do not need to be paid in the
near  future.  For  example,  current  liabilities  at  June  30,  2002  include
approximately  $7 million of deposits  from  customers  which are not  typically
refunded in the ordinary  course of business.  The  customer  deposits  would be
refundable  over time only if the  customer  were to  significantly  reduce  the
volume of business  done with the Company or terminate its  relationship.  Avery
has not historically experienced any material loss of customers in its business.
The Company also maintains a $6 million  working  capital line of credit to meet
peak cash  demands.  At June 30, 2002,  the Company had $0.5  million  available
under this credit line.


         Cash  flow  from  operating  activities.  Net  cash  used in  operating
activities  was $6.7  million  during the first half of 2002,  compared  to $2.3
million used during the first half of 2001 (excluding discontinued  operations).
The  $6.7  million  of  cash  used  in  operating  activities  during  2002  was
principally  attributable  to a $4.7  million  reduction  in deposits  and other
payables related to customers, a $2.6 million net loss, a $1.4 million reduction
in trade accounts payable and accrued  liabilities,  and a $0.6 million increase
in advance funding  receivables,  offset by a $1.7 million decrease in trade and
other  accounts  receivable  and a  non-cash  provision  for  $1.2  million  for
uncollectible  related  party  receivables.  During the first half of 2001,  the
Company's net use of $2.3 million cash from  continuing  operations  principally
reflected a $2.6 million  reduction in customer deposits and payables and a $1.3
million  reduction  in trade  payables  and  accruals,  offset by a $0.7 million
reduction  in trade  accounts  receivable,  $0.4  million of net income and $0.3
million of non-cash depreciation and amortization expense.


         Cash flow from investing activities.  Cash used in investing activities
was $0.1 million during the first six months of 2002 compared to $1.9 million in
the  comparable  period  of 2001.  During  the  first  half of 2002 the  Company
purchased  property and equipment  costing $0.1  million.  In the same period in
2001,  the Company used cash  through its  extension of $1.3 million of loans to
other entities and the purchase of $0.6 million in investments in affiliates.


         Cash  flow  from  financing  activities.  Cash  provided  by  financing
activities  was $2.6 million  during the first six months of 2002  compared to a
net use of $0.1  million  during the first six months of 2001.  During the first
half of 2002,  the Company  borrowed $2.9 million under its line of credit,  and
used cash to pay $0.2  million of  dividends  to  preferred  stock  holders  and
purchase $0.1 million of treasury  stock. In the  corresponding  period in 2001,
the Company raised $2.2 million from the issuance of common and preferred stock,
and used cash to (i) redeem $0.4 million of preferred stock,  (ii) purchase $0.2
million of  outstanding  stock  options,  (iii)  purchase  common stock for $1.2
million, (iv) pay $0.3 million in costs associated with potential  acquisitions,
and (v) pay $0.2 million for preferred stock dividends.


         Avery's  operating  cash  requirements  consist  principally of working
capital  requirements,  scheduled  debt  service  obligations,  and  payments of
preferred  dividends and capital  expenditures.  The Company believes cash flows
generated from  operations,  together with  borrowings  and/or proceeds from the
sale of equity securities will be sufficient to fund working capital needs, debt
and dividend payment  obligations and capital  expenditure  requirements for the
next twelve months.

                                     - 16 -
<PAGE>


Item 3     Quantitative and Qualitative Disclosures About Market Risk


         Avery is exposed to market risk from changes in  marketable  securities
(which  consist of  certificates  of deposit).  At June 30, 2002, our marketable
securities  were  recorded at a fair value of  approximately  $202,000,  with an
overall  weighted  average return of  approximately  2% and an overall  weighted
average  life of less  than one  year.  The  marketable  securities  held by the
Company have exposure to price risk, which is estimated as the potential loss in
fair value due to a  hypothetical  change of 20 basis points (10% of our overall
average rate of return) in quoted market prices.  This hypothetical change would
have an immaterial effect on the recorded value of the marketable securities.


         Avery  is  not  exposed  to  material  future  earnings  or  cash  flow
fluctuations  from changes in interest rates on long-term debt since 100% of our
long-term  debt is at a fixed  rate as of June 30,  2002.  The fair value of our
long-term  debt at June 30, 2002 is estimated to be $0.7 million based on the 8%
rate of the  long-term  debt and its maturity of 4.5 years,  which is consistent
with  rates  currently  available  for loans of  comparable  terms in  long-term
financing markets.


         To  date,   Avery  has  not  entered  into  any  derivative   financial
instruments  to manage  interest rate risk and currently are not  evaluating the
future use of any such financial instruments.


         Avery does not have any exposure to foreign currency  transaction gains
or losses. All other of the Company's business transactions are in U.S. Dollars.



PART II OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits




                  10.49    Form of  Non-Recourse  Promissory  Note,  dated as of
                           March 20, 2002, payable to Avery Communications, Inc.
                           which  is  a  restatement   and   replacement   of  a
                           promissory   note  dated   October  19,  2000  in  an
                           equivalent amount (filed herewith)

                  21.1     Subsidiaries of Registrant (filed herewith)

                  99.1     Certificate of the Chief  Executive  Officer dated as
                           of August 14, 2002 pursuant to the Sarbanes-Oxley Act
                           of 2002 (filed herewith)

                  99.2     Certificate of the Chief  Financial  Officer dated as
                           of August 14, 2002 pursuant to the Sarbanes-Oxley Act
                           of 2002 (filed herewith)



(b)      Reports on Form 8-K


                  None

                                     - 17 -
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                                   SIGNATURES


         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf, thereunto duly authorized.


                                              Avery Communications, Inc.

                                                    (Registrant)

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

Date     August 14,2002                       /s/Patrick J. Haynes III
    ----------------------------
                                      ------------------------------------------
                                                 Patrick J. Haynes III
                                                 Chairman of the Board


Date      August 14, 2002                      /s/ Thomas C. Ratchford
    -----------------------------
                                      ------------------------------------------
                                                  Thomas C. Ratchford
                                                 Chief Financial Officer



                                     - 18 -
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