-------------------------------------------------------------------------------
                       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 0 - 26728

                           TALK AMERICA HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)

       DELAWARE                                         23-2827736
(State of incorporation)                    (I.R.S. Employer Identification No.)

12020  SUNRISE  VALLEY  DRIVE,  SUITE  250,  RESTON,  VIRGINIA          20191
(Address of principal executive offices)                              (Zip Code)

                                 (703) 391-7500
              (Registrant's telephone number, including area code)

     Indicate  by  check  mark  whether the registrant (1) has filed all reports
required  to  be  filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or  for  such shorter period that the
registrant  was required to file such reports), and (2) has been subject to such
filing  requirements  for  the  past  90  days.

                                 Yes  X  No
                                     ---    ---

     Indicate  the  number of shares outstanding of each of the issuer's classes
of  common  stock,  as  of  the  latest  practicable  date.

     81,690,766  shares  of  Common  Stock,  par  value of $0.01 per share, were
issued  and  outstanding  as  of  August  6,  2002.

<PAGE>

                  TALK AMERICA HOLDINGS, INC. AND SUBSIDIARIES


                                      INDEX

                                                                           PAGE
                                                                           ----

PART  I  -  FINANCIAL  INFORMATION:

Item  1.  Consolidated  Financial  Statements:

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

     Consolidated  Balance  Sheets  -  June  30,  2002  (unaudited)
     and  December  31,  2001. . . . . . . . . . . . . . . . . . . . . . . . .4

     Consolidated Statements of Cash Flows - Six Months Ended
     June 30, 2002 and 2001 (unaudited). . . . . . . . . . . . . . . . . . . .5

     Notes  to  Consolidated  Financial  Statements  (unaudited). . . . . . . 6

Item  2.  Management's  Discussion  and  Analysis  of
     Financial  Condition and  Results  of  Operations. . . . . . . . . . .  14

Item  3.  Quantitative and Qualitative Disclosure About Market Risk. . . . . 26


PART  II  -  OTHER  INFORMATION:

Item  2.  Changes  in  Securities. . . . . . . . . . . . . . . . . . . . . . 26

Item  6.  Exhibits  and  Reports  on  Form  8-K

     (a)  Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26

     (b)  Reports  on  Form  8-K. . . . . . . . . . . . . . . . . . . . . .  27

                                        2
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM  1.    CONSOLIDATED  FINANCIAL  STATEMENTS

<TABLE>
<CAPTION>

                                 TALK AMERICA HOLDINGS, INC. AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
                                                  (UNAUDITED)

                                                       FOR THE THREE MONTHS          FOR THE SIX MONTHS
                                                          ENDED JUNE 30,                 ENDED JUNE 30,
                                                     -----------------------      ------------------------
                                                        2002        2001             2002         2001
                                                     ----------  -----------      ----------   -----------
<S>                                                   <C>               <C>               <C>        <C>
Sales                                                 $77,673      $132,445        $157,120      $264,225

Costs and expenses:
   Network and line costs                              37,652        63,513          77,871       128,218
   General and administrative expenses                 13,647        23,266          28,208        43,711
   Provision for doubtful accounts                      2,801        35,852           6,808        50,549
   Sales and marketing expenses                         6,913        25,004          12,808        56,458
   Depreciation and amortization                        4,429         9,698           8,872        18,912
                                                     ----------  -----------      ----------   -----------
      Total costs and expenses                         65,442       157,333         134,567       297,848
                                                     ----------  -----------      ----------   -----------

Operating income (loss)                                12,231      (24,888)          22,553       (33,623)
Other Income (expense):
   Interest income                                         94           308             183           831
   Interest expense                                    (2,899)       (1,542)         (4,373)       (3,126)
   Other, net                                              (9)          272            (816)          (80)
                                                     ----------  -----------      ----------   -----------
Income (loss) before provision for income taxes         9,417       (25,850)         17,547       (35,998)
Provision for income taxes                                 --            --              --            --
                                                     ----------  -----------      ----------   -----------
Income (loss) before cumulative effect of an
   accounting change                                    9,417       (25,850)         17,547       (35,998)
Cumulative effect of an accounting change                  --       (36,837)             --       (36,837)
                                                     ----------  -----------      ----------   -----------
Net income (loss)                                      $9,417      $(62,687)        $17,547      $(72,835)
                                                     ==========  ===========      ==========   ===========

Income (loss) per share - Basic:
   Income (loss) before cumulative effect of an
      accounting change per share                       $0.12        $(0.33)          $0.22        $(0.46)
   Cumulative effect of an accounting change
      per share                                            --         (0.47)             --         (0.47)
                                                     ----------  -----------      ----------   -----------
   Net income (loss) per share                          $0.12        $(0.80)          $0.22        $(0.93)
                                                     ==========  ===========      ==========   ===========

Weighted average common shares outstanding             81,667        78,374          81,611        78,373
                                                     ==========  ===========      ==========   ===========

Income (loss) per share - Diluted:
   Income (loss) before cumulative effect of an
      accounting change per share                       $0.11        $(0.33)          $0.21        $(0.46)
   Cumulative effect of an accounting change
      per share                                            --         (0.47)             --         (0.47)
                                                     ----------  -----------      ----------   -----------
   Net income (loss) per share                          $0.11        $(0.80)          $0.21        $(0.93)
                                                     ==========  ===========      ==========   ===========

   Weighted average common and common equivalent
      shares outstanding                               86,817        78,374          83,860        78,373
                                                     ==========  ===========      ==========   ===========

                     See  accompanying  notes  to  consolidated  financial  statements.

</TABLE>
                                        3
<PAGE>

<TABLE>
<CAPTION>
                      TALK  AMERICA  HOLDINGS,  INC.  AND  SUBSIDIARIES
                                CONSOLIDATED  BALANCE  SHEETS
                 (IN  THOUSANDS,  EXCEPT  FOR  SHARE  AND  PER  SHARE  DATA)

                                                                            JUNE 30,    DECEMBER 31,
                                                                              2002          2001
                                                                         -------------  -------------
                                                                          (UNAUDITED)
<S>                                                                          <C>         <C>
ASSETS
Current assets:
   Cash and cash equivalents                                               $ 30,702        $ 22,100
   Accounts receivable, trade (net of allowance for uncollectible
     accounts of $17,053 and $46,404 at June 30, 2002 and
     December 31, 2001, respectively)                                        22,980          26,647
   Prepaid expenses and other current assets                                  2,142           1,951
                                                                         -------------  -------------
       Total current assets                                                  55,824          50,698

Property and equipment, net                                                  70,789          75,879
Goodwill                                                                     19,503          19,503
Intangibles, net                                                              8,800          10,169
Other assets                                                                  8,976           8,972
                                                                         -------------  -------------
                                                                          $ 163,892       $ 165,221
                                                                         =============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
   Accounts payable                                                        $ 30,886        $ 43,098
   Sales, use and excise taxes                                                9,043           8,339
   Deferred revenue                                                           7,735          10,193
   Current portion of long-term debt                                          8,954          10,544
   4.5% Convertible subordinated notes due 2002                               3,910           3,910
   Other current liabilities                                                 11,377          11,189
                                                                         -------------  -------------
      Total current liabilities                                              71,905          87,273
                                                                         -------------  -------------

Long-term debt:
   Senior credit facility                                                    10,000          12,500
   8% Convertible notes due 2011 (includes future accrued interest of
      $29,496 and $30,982 at June 30, 2002 and December 31, 2001,
      respectively)                                                          63,102          63,755
   12% Senior subordinated notes due 2007                                    70,653              --
   8% Convertible senior subordinated notes due 2007 (includes future
     accrued interest of $1,346 at June 30, 2002)                             4,168              --
   4.5% Convertible subordinated notes due 2002                                  --          57,934
   5% Convertible subordinated notes due 2004                                   670          18,093
   Other long-term debt                                                          58              88
                                                                         -------------  -------------
       Total long-term debt                                                 148,651         152,370
                                                                         -------------  -------------

Commitments and contingencies

Stockholders' equity (deficit):
   Preferred stock - $.01 par value, 5,000,000 shares authorized;
     no shares outstanding                                                       --              --
   Common stock - $.01 par value, 300,000,000 shares authorized;
     81,688,489 and 81,452,721 shares issued and outstanding at
     June 30, 2002 and December 31, 2001, respectively                          817             815
   Additional paid-in capital                                               350,835         350,626
   Accumulated deficit                                                     (408,316)       (425,863)
                                                                         -------------  -------------
       Total stockholders' equity (deficit)                                 (56,664)        (74,422)
                                                                         -------------  -------------
                                                                          $ 163,892       $ 165,221
                                                                         =============  =============

                   See accompanying notes to consolidated financial statements.
</TABLE>
                                        4
<PAGE>
<TABLE>
<CAPTION>
                         TALK AMERICA HOLDINGS, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                       (IN THOUSANDS)
                                         (UNAUDITED)

                                                                         SIX MONTHS ENDED
                                                                              JUNE 30,
                                                                      -----------------------
                                                                         2002       2001
                                                                     ----------  -----------
<S>                                                                      <C>         <C>
Cash flows from operating activities:
   Net income (loss)                                                  $ 17,547    $(72,835)
   Reconciliation of net income (loss) to net cash provided
     by (used in) operating activities:
     Provision for doubtful accounts                                     6,808      50,549
     Depreciation and amortization                                       8,872      18,912
     Cumulative effect of an accounting change for contingent
       redemptions                                                          --      36,837
     Loss on sale and retirement of assets                                 205         116
     Other non-cash charges                                                128          --
     Changes in assets and liabilities:
        Accounts receivable, trade                                      (3,141)    (47,063)
        Prepaid expenses and other current assets                          (58)       (119)
        Other assets                                                       518         643
        Accounts payable                                               (12,212)     (1,066)
        Deferred revenue                                                (2,458)     (2,274)
        Sales, use and excise taxes                                        704         376
        Other liabilities                                                  188       2,467
                                                                     ----------  -----------
           Net cash provided by (used in) operating activities          17,101     (13,457)
                                                                     ----------  -----------

Cash flows from investing activities:
   Capital expenditures                                                 (2,103)     (2,246)
   Capitalized software development costs                               (1,120)         --
   Acquisition of intangibles                                              (50)       (154)
                                                                     ----------  -----------
          Net cash used in investing activities                         (3,273)     (2,400)
                                                                     ----------  -----------

Cash flows from financing activities:
   Payments of borrowings                                               (2,685)        (84)
   Acquisition of convertible debt                                      (1,697)         --
   Payments of capital lease obligations                                  (861)         --
   Exercise of stock options                                                17          --
                                                                     ----------  -----------
          Net cash used in financing activities                         (5,226)        (84)
                                                                     ----------  -----------

Net increase (decrease) in cash and cash equivalents                     8,602     (15,941)
Cash and cash equivalents, beginning of period                          22,100      40,604
                                                                     ----------  -----------
Cash and cash equivalents, end of period                              $ 30,702    $ 24,663
                                                                     ==========  ===========

               See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>
                                        5
<PAGE>
                  TALK AMERICA HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

NOTE  1.  ACCOUNTING  POLICIES

(A)  BASIC  PRESENTATION

     The  consolidated financial statements include the accounts of Talk America
Holdings,  Inc.  and  its wholly owned subsidiaries, primarily Talk America Inc.
(collectively,  the  "Company"),  and  have been prepared as if the entities had
operated  as  a  single  consolidated  group  since  their  respective  dates of
incorporation.  All intercompany balances and transactions have been eliminated.

     The  consolidated financial statements and related notes thereto as of June
30,  2002 and for the three and six months ended June 30, 2002 and June 30, 2001
are  presented  as  unaudited  but  in  the  opinion  of  management include all
adjustments  necessary  to present fairly the information set forth therein. The
consolidated  balance  sheet  information for December 31, 2001 was derived from
the audited financial statements included in the Company's Form 10-K, as amended
by  its  Form  10-K/A  filed  April 12, 2002. These interim financial statements
should  be read in conjunction with the Company's Annual Report on Form 10-K for
the  year ended December 31, 2001, as amended by its Form 10-K/A filed April 12,
2002.  The interim results are not necessarily indicative of the results for any
future  periods. Certain prior year amounts have been reclassified to conform to
the  current  year's  presentation.

(B)  RISKS  AND  UNCERTAINTIES

     Future  results  of operations involve a number of risks and uncertainties.
Factors  that  could  affect  future  operating results and cash flows and cause
actual  results  to vary materially from historical results include, but are not
limited  to:

     -    The Company's business strategy with respect to bundled local and long
          distance  services  may  not  succeed
     -    Failure  to  manage, or difficulties in managing, the Company's growth
          and  operations including attracting and retaining qualified personnel
          and  opening  up new territories for its services with favorable gross
          margins
     -    Dependence  on  the  availability and functionality of incumbent local
          telephone companies' networks, as they relate to the unbundled network
          element  platform  or  the  resale  of  such  services
     -    Increased  price  competition  in  local  and  long  distance services
     -    Failure  or  interruption  in  the  Company's  network and information
          systems
     -    Changes  in  government  policy,  regulation  and  enforcement
     -    Failure of the marketing of the bundle of the Company's local and long
          distance  services  under  its direct marketing channels and under its
          agreements  with  its  various  marketing  partners  and  failure  to
          successfully  add  new  marketing  partners
     -    Failure  of  the  Company's  collection  management  system and credit
          control  efforts  for  customers
     -    Inability  to  adapt  to  technological  change
     -    Competition  in  the  telecommunications  industry
     -    Inability  to  manage  customer  attrition  or  turnover  and bad debt
          expense  and  lower  customer  acquisition  costs
     -    Adverse change in the Company's relationship with third party carriers
     -    Failure  or  bankruptcy of other telecommunications companies whom the
          Company  relies  upon  for  services  and  revenues
     -    Ability to realize the benefit of any net operating loss carryforwards
          on  future  taxable  income  generated  by  the  Company

     Negative  developments  in  these areas could have a material effect on the
Company's  business,  financial  condition  and  results  of  operations.

(C)  NEW  ACCOUNTING  PRONOUNCEMENTS

     Effective  January  1,  2002,  the  Company  adopted Statement of Financial
Accounting  Standards  No.  142,  "Goodwill  and Other Intangible Assets," which
establishes  the  impairment  approach  rather  than  amortization for goodwill.

                                        6
<PAGE>

Effective  January  1,  2002,  the  Company  was  no  longer  required to record
amortization  expense  on  goodwill,  but  instead is required to evaluate these
assets  for  potential impairment at least annually and will test for impairment
between  annual  tests  if  an  event  occurs or circumstances change that would
indicate the carrying amount may be impaired. An impairment loss would generally
be  recognized  when  the  carrying  amount  of  the reporting units' net assets
exceeds  the  estimated  fair  value  of  the  reporting  unit.

     In order to complete the transitional assessment of goodwill as required by
SFAS  No.  142, the Company was required to determine by June 30, 2002, the fair
value  of  the reporting unit associated with the goodwill and compare it to the
reporting  unit's carrying amount, including goodwill. To the extent a reporting
unit's carrying amount exceeded its fair value, an indication would have existed
that  the  reporting unit's goodwill assets may be impaired and the Company must
perform the second step of the transitional impairment test. In the second step,
the  Company  must  compare  the  implied  fair  value  of  the reporting unit's
goodwill, determined by allocating the reporting unit's fair value to all of its
assets  and  liabilities  in  a manner similar to a purchase price allocation in
accordance  with SFAS  No. 141, "Business Combinations," to its carrying amount,
both  of which would be measured as of the date of adoption. This second step is
required to be completed as soon as possible, but no later than the end of 2002.
Any  transitional  impairment charge will be recognized as the cumulative effect
of  a  change in accounting principle in the Company's consolidated statement of
operations.  The  Company  completed the transitional assessment of goodwill and
determined  that  the  fair  value  of  the  reporting unit exceeds its carrying
amount,  thus  goodwill is not considered impaired.  Since the fair value of the
reporting  unit  exceeded the carrying amount under the transitional assessment,
the  Company  does  not  need  to  perform  the  second step of the transitional
impairment test. The Company determined that it has one reporting unit under the
guidance  of  SFAS  No.  142.  The  fair  value was determined primarily using a
discounted  cash  flow  approach and quoted market price of the Company's stock.
The  amount  of  goodwill reflected in the balance sheet as of June 30, 2002 was
$19.5  million.  The  required impairment tests of goodwill may result in future
period  write-downs.

     The following unaudited pro forma summary presents the adoption of SFAS No.
142  as  of the beginning of the periods presented to eliminate the amortization
expense  recognized  in  those  periods  related  to goodwill that are no longer
required  to  be  amortized.  The pro forma amounts for the three and six months
ended  June 30, 2001 do not include any write downs of goodwill which could have
resulted had the Company adopted SFAS No. 142 as of the beginning of the periods
presented  and  performed  the  required  impairment  test  under this standard.

<TABLE>
<CAPTION>

                                         FOR THE THREE MONTHS        FOR THE SIX MONTHS
                                            ENDED JUNE 30,             ENDED JUNE 30,
                                         --------------------        ------------------
                                           2002        2001           2002      2001
                                         --------    --------        -------   --------
<S>                                         <C>        <C>             <C>        <C>
Net income (loss) as reported             $9,417     $(62,687)       $17,547   $(72,835)
Goodwill amortization                         --        5,047             --     10,453
                                         --------    --------        -------   --------
Adjusted net income (loss)                $9,417     $(57,640)       $17,547   $(62,382)
                                         ========    ========        =======   ========

Basic income (loss) per share:
   Net income (loss) as reported
     per share                             $0.12       $(0.80)         $0.22     $(0.93)
   Goodwill amortization per share            --         0.06             --       0.13
                                         --------    --------        -------   --------
   Adjusted net income (loss) per share    $0.12       $(0.74)         $0.22     $(0.80)
                                         ========    ========        =======   ========

Diluted income (loss) per share:
   Net income (loss) as reported per
     share                                 $0.11       $(0.80)         $0.21     $(0.93)
   Goodwill amortization per share            --         0.06             --       0.13
                                         --------    --------        -------   --------
   Adjusted net income (loss) per share    $0.11       $(0.74)         $0.21     $(0.80)
                                         ========    ========        =======   ========
</TABLE>

      Intangible  assets consisted primarily of purchased customer accounts with
a  definite  life and are being amortized on a straight-line basis over 5 years.
The  Company  incurred amortization expense on intangible assets with a definite
life  of  $0.7  million and $1.4 million for the three and six months ended June
30,  2002, and  $1.5 million and $2.2 million for the three and six months ended
June  30, 2001.  The Company's balance of intangible assets with a definite life
was  $8.8  million  at  June  30,  2002, net of accumulated amortization of $4.8
million.  Amortization expense on intangible assets with a definite life for the

                                        7
<PAGE>

next  5  years  as  of  June 30, is as follows: 2003 - $2.8 million, 2004 - $2.8
million,  2005  -  $2.8  million,  2006  - $0.3 million and 2007 - $0.1 million.

     In  August  2001, the Financial Accounting Standards Board issued Statement
of  Financial  Accounting  Standards  No.  143,  "Accounting  for  Obligations
Associated  with  the  Retirement  of  Long-Lived  Assets." SFAS 143 establishes
accounting  standards for the recognition and measurement of an asset retirement
obligation and its associated asset retirement cost. It also provides accounting
guidance  for  legal  obligations  associated  with  the  retirement of tangible
long-lived  assets.  SFAS  143 is effective in fiscal years beginning after June
15, 2002, with early adoption permitted. The Company expects that the provisions
of  SFAS  143  will  not  have  a material effect on its consolidated results of
operations  or  financial  position  upon  adoption.

     Effective  January  1,  2002,  the  Company  adopted Statement of Financial
Accounting  Standards  No.  144,  "Accounting  for the Impairment or Disposal of
Long-Lived  Assets."  SFAS  144  establishes  a  single accounting model for the
impairment  or disposal of long-lived assets, including discontinued operations.
SFAS  144  superseded  Statement  of  Financial  Accounting  Standards  No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be  Disposed Of," and APB Opinion No. 30, "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual  and  Infrequently  Occurring Events and Transactions." Adoption of SFAS
144  has  had  no  impact on the Company's consolidated results of operations or
financial  position.

     Effective  January  1,  2002, the Company also adopted Emerging Issues Task
Force  (EITF)  01-09,  "Accounting  for  Consideration  Given  by  a Vendor to a
Customer  or  a  Reseller  of  the  Vendor's Products." This issue presumes that
consideration  from  a vendor to a customer or reseller of the vendor's products
is  a  reduction  of the selling prices of the vendor's products and, therefore,
should  be  characterized  as  a  reduction  of  revenue  when recognized in the
vendor's  statement  of  operations  and  could  lead  to negative revenue under
certain  circumstances.  Revenue  reduction is required unless the consideration
relates  to a separate, identifiable benefit and the benefit's fair value can be
established.  The  adoption  of  this  issue  resulted  in a reclassification of
approximately $1.3 million and $7.3 million from sales and marketing expenses to
a  reduction  of  net  sales  for  the  three and six months ended June 30, 2001
attributed  to  direct marketing promotion check campaigns. The adoption of EITF
01-09  did  not  have  a material effect on the Company's consolidated financial
statements  for the three and six months ended June 30, 2002, as the Company did
not  have  any  direct marketing promotion check campaigns during these periods.

     In  July 2002, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards No. 146,  "Accounting for Costs Associated with
Exit  or  Disposal  Activities."  SFAS  146 requires that a liability for a cost
that  is  associated  with  an  exit or disposal activity be recognized when the
liability  is  incurred.  SFAS  146  also  establishes  that  fair  value is the
objective  for  the  initial measurement of the liability. SFAS 146 is effective
for exit or disposal activities that are initiated after December 31, 2002.  The
Company  expects that the provisions of SFAS 146 will not have a material effect
on  its  consolidated results of operations or financial position upon adoption.

NOTE  2.  CONVERTIBLE  SUBORDINATED  NOTES  AND  EXCHANGE  OFFERS

     Effective  April  4,  2002,  the  Company  completed  the exchange of $57.9
million  of  the  $61.8  million  outstanding  principal  balance  of its 4 1/2%
Convertible  Subordinated  Notes  ("4  1/2% Notes") that mature on September 15,
2002 into $53.2 million of new 12% Senior Subordinated PIK Notes due August 2007
("12%  Notes")  and $2.8 million of new 8% Convertible Senior Subordinated Notes
due  August  2007  ("8%  Notes") and cash paid of $0.5 million. In addition, the
Company  exchanged  $17.4  million  of  the  $18.1 million outstanding principal
balance  of  its  5%  Convertible Subordinated Notes ("5% Notes") that mature on
December  15,  2004  into  $17.4  million  of  the  new  12%  Notes.

     The  new  12%  Notes  accrue  interest  at  a  rate  of 12% per year on the
principal  amount,  payable  two times a year on each February 15 and August 15,
beginning  on  August  15,  2002.  Interest  is payable in cash, except that the
Company  may,  at  its  option,  pay  up to one-third of the interest due on any
interest payment date through and including the August 15, 2004 interest payment
date in additional 12% Notes (see Note 5 regarding the Company's agreement under
its  Credit  Facility  Agreement  to  pay interest in kind to the maximum extent
possible).  The  new  8%  Notes  accrue interest at a rate of 8% per year on the
principal  amount,  payable  two times a year on each February 15 and August 15,

                                        8
<PAGE>

beginning  on  August 15, 2002 and are convertible, at the option of the holder,
into common stock at $5.00 per share. The 12% and 8% Notes are redeemable at any
time  at  the  option  of  the Company at par value plus accrued interest to the
redemption  date,  although  the  Company's  Credit  Facility  Agreement and AOL
Restructuring  Agreement restrict the Company's ability to redeem the 12% and 8%
Notes  (see  Notes  3  and  5). In addition, the Company is not required to make
mandatory  redemption  payments  to  repurchase  the  new notes in the case of a
change  of  control  of  the  Company.

     As  part of the restructuring, the Company amended the indentures governing
the  4  1/2%  and  5%  Notes  that  were  not  exchanged to remove the Company's
obligation  to  repurchase  the  notes  on  the  termination  of  trading of the
Company's  common  stock  on  a  national  securities  exchange  or  established
automated  over-the-counter  trading  market  and  to  remove  the obligation to
repurchase  the  notes on the occurrence of certain designated events, such as a
change  of  control  of  the  Company.

     In  accordance  with  SFAS No. 15, "Accounting by Debtors and Creditors for
Troubled  Debt  Restructurings,"  the  exchange  of  the 4 1/2% Notes into $53.2
million  of the 12% Notes and $2.8 million of the 8% Notes is accounted for as a
troubled  debt  restructuring. Since the total liability of $57.4 million ($57.9
million  of  principal  as  of  the  exchange  date,  less cash payments of $0.5
million) is less than the future cash flows to holders of 8% Notes and 12% Notes
of  $91.5 million (representing the $56.0 million of principal and $35.5 million
of  future  interest  expense),  the  liability remained on the balance sheet at
$57.4  million  as  long-term  debt.  The  difference  of  $1.4  million between
principal  and the carrying amount will be recognized as a reduction of interest
expense  over  the  life  of  the  new  notes.

NOTE  3.  AOL  AGREEMENTS

     On  September  19, 2001, the Company restructured its financial obligations
with  America  Online,  Inc.  ("AOL")  that arose under the Investment Agreement
entered  into  on January 5, 1999 and also ended its marketing relationship with
AOL  effective  September  30,  2001  (collectively the "AOL Restructuring"). In
connection  with  the  AOL  Restructuring,  the  Company  and AOL entered into a
Restructuring  and  Note Agreement ("Restructuring Agreement") pursuant to which
the  Company  issued  to  AOL  $54.0  million principal amount of its 8% secured
convertible  notes  due  September 2011 ("2011 Convertible Notes") and 3,078,628
additional  shares  of  the  Company's  common  stock.

     Pursuant  to  the  Restructuring  Agreement,  in  exchange  for  and  in
cancellation  of  the  Company's  warrants  to  purchase 2,721,984 shares of the
common  stock  and  the  Company's  related  obligations  under  the  Investment
Agreement to repurchase such warrants from AOL, the Company issued the 3,078,628
additional  shares  of its common stock to AOL, after which AOL holds a total of
7,200,000  shares  of  common  stock.  The  Company  agreed  to  provide certain
registration  rights to AOL in connection with the shares of common stock issued
to  it  by  the  Company.

     The  Restructuring  Agreement  provided  that the Investment Agreement, the
Security  Agreement  securing  the  Company's  obligations  under the Investment
Agreement  and  the  existing  Registration  Rights  Agreement  with  AOL  were
terminated  in  their  entirety  and  the parties were released from any further
obligation  under  these agreements. In addition, AOL, as the holder of the 2011
Convertible  Note, entered into an intercreditor agreement with the lender under
the  Company's  existing  secured  credit  facility (see Note 5).

     The  2011  Convertible  Notes  were issued in exchange for a release of the
Company's reimbursement obligations under the Investment Agreement. AOL, in lieu
of any other payment for the early discontinuance of the marketing relationship,
paid  the  Company  $20.0 million by surrender and cancellation of $20.0 million
principal  amount  of  the  2011  Convertible  Notes  delivered  to AOL, thereby
reducing the outstanding principal amount of the 2011 Convertible Notes to $34.0
million. The 2011 Convertible Notes are convertible into shares of the Company's
common  stock  at the rate of $5.00 per share, may be redeemed by the Company at
any  time  without premium and are subject to mandatory redemption at the option
of the holder on September 15, 2006 and September 15, 2008. The 2011 Convertible
Notes  accrue  interest  at  the  rate  of  8% per year on the principal amount,
payable  two  times a year on January 1 and July 1; interest is payable in cash,
except  that  the  Company  may  elect to pay up to 50% (100% in the case of the
first  interest  payment) of the interest due on any payment date in kind rather

                                        9
<PAGE>

than  in  cash  (see  Note  5 regarding the Company's agreement under its Credit
Facility  Agreement to pay interest in kind to the maximum extent possible). The
2011  Convertible  Notes  are  guaranteed  by  the Company's principal operating
subsidiaries  and are secured by a pledge of the Company's and the subsidiaries'
assets.

     In  addition  to  the  restructuring of the financial obligations discussed
above,  the  Company  and  AOL agreed, in a further amendment to their marketing
agreement,  dated  as  of  September  19,  2001, to discontinue, effective as of
September  30, 2001, their marketing relationship under the marketing agreement.
In  connection with this discontinuance, the Company paid AOL $6.0 million under
the marketing agreement, payable in two installments - $2.5 million on September
20,  2001 and the remaining $3.5 million on October 4, 2001. AOL, in lieu of any
other  payment  for the early discontinuance of the marketing relationship, paid
the  Company  $20 million by surrender and cancellation of $20 million principal
amount  of  the  2011  Convertible  Notes  delivered  to AOL as discussed above,
thereby  reducing the outstanding principal amount of the 2011 Convertible Notes
to  $34  million.  The amendment also provided for the payment by the Company of
certain  expenses related to marketing services until the discontinuance and for
the  continued  servicing  and  transition  of  telecommunications  customer
relationships  after  the  discontinuance  of  marketing.

     In  accordance  with  SFAS No. 15, "Accounting by Debtors and Creditors for
Troubled  Debt  Restructurings," the AOL Restructuring transaction was accounted
for  as  a troubled debt restructuring. The Company combined all liabilities due
AOL  at  the  time  of  the  Restructuring  Agreement,  including the contingent
redemption  feature  of  the  warrants  with  a  value  of $34.2 million and the
contingent redemption feature of the common stock with a value of $54.0 million.
The  total  liability  of  $88.2  million  was  reduced by the fair value of the
3,078,628  incremental  shares  provided to AOL of $1.4 million and cash paid in
connection with the AOL Restructuring of $3.5 million. Since the remaining value
of  $83.3 million was greater than the future cash flows to AOL of $66.4 million
(representing  the $34.0 million of convertible debt and $32.4 million of future
interest  expense),  the  liability  was written down to the value of the future
cash flows due to AOL and an extraordinary gain of $16.9 million was recorded in
the third quarter of 2001. As a result of this accounting treatment, the Company
will  record  no  interest  expense  associated  with these convertible notes in
future  periods  in  the  Company's  statement  of  operations.

     On  February  21,  2002,  by  letter agreement, AOL agreed to waive certain
rights  that  it  had  under  the  Restructuring  Agreement  with respect to the
Company's  restructuring  of  its existing 4 1/2% and 5% Notes. As conditions to
the waiver of such rights with respect to the restructuring of its 4 1/2% and 5%
Notes,  the Company agreed to (i) provide that the new notes to be exchanged for
the  existing  4 1/2% and 5% Notes have a maturity date after September 19, 2006
and, if convertible, have a conversion price of not less than $5.00, (ii) make a
prepayment on the 2011 Convertible Notes equal to forty percent of the amount of
cash  (excluding  accrued  interest  paid on existing notes which are exchanged)
that  the  Company  pays  to  the  holders of the existing notes in the exchange
offers, and (iii) limit the aggregate amount of cash that the Company pays under
the  exchange  offers  and  to  AOL under the letter agreement to $10.0 million.
Under the letter agreement, the Company also paid AOL approximately $1.2 million
as  a  prepayment  on  the  2011 Convertible Note, approximately $0.7 million of
which  was  credited  against  amounts  the  Company  owed  AOL under the letter
agreement  for  cash payments in the exchange offers. After giving effect to the
prepayment,  and taking into account the interest that had been paid on the 2011
Convertible  Notes in additional principal amount of the 2011 Convertible Notes,
there  was  outstanding  as  of  June  30,  2002,  an aggregate of $33.6 million
principal  amount  of the 2011 Convertible Notes and the Company did not owe AOL
any  additional  payments related to the exchange offers. In addition, by letter
agreement  dated  April 22, 2002, AOL agreed to waive certain rights that it had
under the Restructuring Agreement with respect to the purchase prior to maturity
of  the  balance  of  the  $3.9  million  of  the  outstanding  4  1/2%  Notes.

     On  January  5,  1999,  the  Company  and  AOL  entered  into an Investment
Agreement.  Under  the  terms of the Investment Agreement, the Company agreed to
reimburse  AOL  for  losses  AOL  may incur on the sale of certain shares of the
Company's  common  stock.  In  addition,  AOL  also had the right to require the
Company  to  repurchase  warrants  held  by  AOL. Upon the occurrence of certain
events,  including material defaults by the Company under its AOL agreements and
a  "change  of  control" of the Company, the Company could have been required to
repurchase  for  cash  all  of the shares held by AOL for $78.3 million ($19 per
share),  and  the  warrants  for  $36.3  million.

                                       10
<PAGE>

     The  Company had originally recorded the contingent redemption value of the
common  stock  and  warrants  at  $78.3  and $36.3 million, respectively, with a
corresponding  reduction  in  additional paid-in capital. In connection with the
implementation  of  EITF  00-19, the contingent redemption feature of the common
stock  and  warrants  were recorded as a liability at their fair values of $53.5
and  $32.3  million, respectively, as of June 30, 2001. The increase in the fair
value  of  these  contingent  redemption instruments from issuance on January 5,
1999  to  June  30,  2001 was $36.8 million, which was presented as a cumulative
effect  of  a change in accounting principle in the statement of operations. For
the quarter ended September 30, 2001, the Company recorded an unrealized loss of
$2.4  million  on  the  increase  in the fair value of the contingent redemption
instruments, which has been reflected in other (income) expense on the statement
of  operations. As discussed above, these contingent redemption instruments were
satisfied through the Restructuring Agreement entered into with AOL on September
19,  2001.

NOTE  4.  LEGAL  PROCEEDINGS:

     On November 12, 2001, the Company received an award of arbitrators awarding
Traffix,  Inc.  approximately  $6.2  million  in  an  arbitration concerning the
termination  of a marketing agreement between the Company and Traffix, which the
parties agreed would be paid in two installments - $3.7 million paid in November
2001  and  the  remaining  $2.5  million  paid  on April 1, 2002.  The Company's
obligations  to  Traffix  have  been  satisfied.

     The  Company  also  is a party to a number of legal actions and proceedings
arising  from  the  Company's  provision  and  marketing  of  telecommunications
services,  as  well  as  certain legal actions and regulatory investigations and
enforcement  proceedings arising in the ordinary course of business. The Company
believes  that  the ultimate outcome of the foregoing actions will not result in
liability  that  would have a material adverse effect on the Company's financial
condition  or  results  of  operations. However, it is possible that, because of
fluctuations  in  the  Company's  cash position, the timing of developments with
respect  to  such  matters that require cash payments by the Company, while such
payments  are  not expected to be material to the Company's financial condition,
could  impair  the  Company's  ability  in  future  interim or annual periods to
continue  to  implement  its  business  plan,  which could affect its results of
operations  in  future  interim  or  annual  periods.

NOTE  5.  SENIOR  CREDIT  FACILITY

     The  Company's  principal  operating  subsidiaries  have  a Credit Facility
Agreement  with MCG Finance Corporation ("MCG"), providing for a term loan of up
to  $20.0  million  maturing  on  June  30,  2005  and a line of credit facility
permitting  such  subsidiaries  to  borrow  up  to  an  additional $30.0 million
available through June 30, 2003. The availability of the line of credit facility
is  subject, among other things, to the successful syndication of that facility.
The  Company  does  not  anticipate  having  any availability under this line of
credit  facility.  Loans  under the Credit Facility Agreement bear interest at a
rate  equal  to either (a) the Prime Rate, or (b) LIBOR, plus, in each case, the
applicable  margin.  The  applicable  margin  is  7.0%  for  borrowings accruing
interest  at  LIBOR and 6.0% for borrowings accruing interest at the Prime Rate.

     The  Credit Facility Agreement subjects the Company and its subsidiaries to
certain  restrictions  and  covenants related to, among other things, liquidity,
per-subscriber-type  revenue, subscriber acquisition costs and interest coverage
ratio  requirements.  The  principal  of  the  term  loan  is  paid in quarterly
installments  of  $1.25  million on the last calendar day of each fiscal quarter
commencing  on  September  30,  2001,  and is fully repaid by June 30, 2005. The
loans  under the Credit Facility Agreement are secured by a pledge of all of the

                                       11
<PAGE>

assets of the subsidiaries of the Company that are parties to that agreement. In
addition, the Company has guaranteed the obligations of those subsidiaries under
the  Credit  Facility  Agreement  and related documents. The Company's guarantee
subjects  the  Company  to  certain  restrictions  and  covenants,  including  a
prohibition  against the payment of dividends in respect of the Company's equity
securities,  except  under certain limited circumstances. In connection with the
AOL  Restructuring,  MCG  entered  into an Intercreditor Agreement with AOL (see
Note  3). At June 30, 2002, $15.0 million principal balance remained outstanding
under  the term loan facility and no amounts were outstanding or available under
the  line  of  credit  facility.

     The  Credit  Facility Agreement contains mandatory prepayment provisions if
the  Company  uses  a  total  of  $10.0 million or more of cash to repurchase or
otherwise  prepay its other debt obligations, including the 4 1/2% and 5% Notes,
the  2011  Convertible  Notes  and  the  new  8%  and 12% Notes, and effectively
requires  the Company to elect to pay in kind, rather than cash, interest on its
2011  Convertible  Notes  and  its  new  12%  Notes  to the fullest extent it is
permitted to do so under such notes. In connection with amendments to the Credit
Facility Agreement in February 2002, the Company issued 200,000 shares of common
stock  to  MCG with a value of $84,000 upon issuance and agreed to register such
shares  in  the  future.

NOTE  6.  IMPAIRMENT  AND  RESTRUCTURING  CHARGES

     In  the third quarter of 2001, the Company recorded an impairment charge of
$168.7  million  primarily related to the write-down of goodwill associated with
the  acquisition  of Access One Communications Corp., ("Access One"), a private,
local  telecommunications  service  provider  to nine states in the southeastern
United  States. The goodwill was created by purchase accounting treatment of the
Access  One  merger transaction that closed in August 2000. SFAS 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of," required the evaluation of impairment of long-lived assets and identifiable
intangibles  whenever  events  or  changes  in  circumstances  indicate that the
carrying  amount  of an asset may not be recoverable. Management determined that
goodwill should be evaluated for impairment in accordance with the provisions of
SFAS  121 due to the increased bad debt rate and increased customer turnover, as
well  as  the AOL Restructuring that occurred in the quarter ended September 30,
2001. The Company addressed these operational issues by improving credit quality
through  credit  scoring  the  existing  and  future customer base, slowing down
growth  of  new  expected  customers  through  decreased marketing, and lowering
product  pricing. These and other actions taken by the Company resulted in lower
current  and  future  projected  growth  of bundled revenues and cash flows than
those  originally projected at the time of the Access One merger. The write-down
of  goodwill was based on an analysis of projected discounted cash flows using a
discount  rate  of  18%,  which  results  determined  that the fair value of the
goodwill  was  substantially  less  than  the  carrying  value.

     In  September  2001,  the  Company approved a plan to close its call center
operation  in Sunrise, Florida. The Company recorded a charge of $2.5 million in
the quarter ended September 30, 2001 to reflect the elimination of approximately
225  positions  amounting to $1.0 million and lease exit costs amounting to $1.5
million  in connection with the call center closure. The employees identified in
the  plan were notified in September 2001 and terminated in October 2001. Actual
restructuring  costs  were  $1.9  million, comprised of $1.2 million of employee
severance  costs  and  $0.7  million  of lease termination and other call center
closure costs.  Accordingly, a $0.6 million credit was recorded in the statement
of  operations  for  the  fourth  quarter of 2001 for the difference between the
original  restructuring  charge of $2.5 million and the actual costs incurred of
$1.9  million.

                                       12
<PAGE>

NOTE  7.  PER  SHARE  DATA:

     Basic earnings per common share is calculated by dividing net income by the
average  number  of  common shares outstanding during the year. Diluted earnings
per  common  share  is  calculated  by  adjusting  outstanding  shares, assuming
conversion  of  all potentially dilutive stock options, warrants and convertible
bonds.  Earnings  per  share  are  computed  as  follows  (in  thousands):

<TABLE>
<CAPTION>

                                                 FOR THE THREE MONTHS        FOR THE SIX MONTHS
                                                    ENDED JUNE 30,             ENDED JUNE 30,
                                                 --------------------        ------------------
                                                   2002        2001           2002      2001
                                                 --------    --------      --------   ---------
<S>                                                  <C>        <C>           <C>         <C>
Income (loss) before cumulative effect
   of an accounting change                        $9,417    $(25,850)       $17,547   $(35,998)
Cumulative effect of an accounting change             --     (36,837)            --    (36,837)
                                                 --------    --------      --------   ---------
Net income (loss)                                 $9,417    $(62,687)       $17,547   $(72,835)
                                                 ========    ========      ========   =========

Average shares of common stock outstanding
  used to compute basic earnings per share        81,667      78,374         81,611     78,373
Additional common shares to be issued assuming
   exercise of stock options and warrants,
   net of shares assumed reacquired and
   conversion of convertible bonds *               5,150          --          2,249         --
                                                 --------    --------      --------   ---------
Average shares of common and common
   equivalent stock outstanding used to
   compute diluted earnings per share             86,817       78,374        83,860     78,373
                                                 ========    ========      ========   =========

Income (loss) per share - Basic:
   Income (loss) before cumulative effect
      of an accounting change per share            $0.12       $(0.33)        $0.22     $(0.46)
   Cumulative effect of an accounting
      change per share                                --        (0.47)           --      (0.47)
                                                 --------    --------      --------   ---------
   Net income (loss) per share                     $0.12       $(0.80)        $0.22     $(0.93)
                                                 ========    ========      ========   =========

   Weighted average common shares outstanding     81,667       78,374        81,611     78,373
                                                 ========    ========      ========   =========

Income (loss) per share - Diluted:
   Income (loss) before cumulative effect
       of an accounting change per share           $0.11       $(0.33)        $0.21     $(0.46)
   Cumulative effect of an accounting change
       per share                                      --        (0.47)           --      (0.47)
                                                 --------    --------      --------   ---------
   Net income (loss) per share                     $0.11       $(0.80)        $0.21     $(0.93)
                                                 ========    ========      ========   =========

   Weighted average common and common
      equivalent shares outstanding               86,817       78,374        83,860     78,373
                                                 ========    ========      ========   =========
</TABLE>

*  The  diluted  share  basis  for  the three and six months ended June 30, 2001
excludes  convertible  notes,  options  and  warrants  due to their antidilutive
effect  as  a  result  of the Company's net loss from continuing operations. The
diluted  share  basis  for the three and six months ended June 30, 2002 excludes
convertible  notes  that are convertible into 7.5 million shares of common stock
due  to  their  antidilutive  effect.

                                       13
<PAGE>

ITEM  2.    MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS:

SAFE  HARBOR  FOR  FORWARD-LOOKING  STATEMENTS

     The  following  discussion  should  be  read  in  conjunction  with  the
Consolidated  Financial  Statements  included elsewhere in this Form 10-Q and in
the  Company's  Annual  Report on Form 10-K, as amended by its Form 10-K/A filed
April  12,  2002 and any subsequent filings. Certain of the statements contained
herein  may  be  considered  forward-looking  statements.  Such  statements  are
identified  by  the  use of forward-looking words or phrases, including, but not
limited  to,  "estimates,"  "expects,"  "expected,"  "anticipates,"  and
"anticipated."  These  forward-looking  statements  are  based  on the Company's
current  expectations.  Although  the  Company  believes  that  the expectations
reflected  in  such  forward-looking  statements are reasonable, there can be no
assurance  that  such  expectations  will  prove  to  have  been  correct.

     Forward-looking  statements  involve  risks  and  uncertainties  and  the
Company's  actual  results  could  differ  materially  from  the  Company's
expectations. In addition to those factors discussed elsewhere in this Form 10-Q
(see  particularly  Note  1(b) of the Consolidated Financial Statements) and the
Company's  other  filings with the Securities and Exchange Commission, important
factors that could cause such actual results to differ materially include, among
others,  increased  price  competition  for  long  distance  and local services,
failure  of  the marketing of the bundle of local and long distance services and
long  distance  services under its agreements with its direct marketing channels
and  its various marketing partners, failure to manage the nonpayment of amounts
due  the  Company  from  its  customers from bundled and long distance services,
attrition  in  the  number of end-users, failure or difficulties in managing the
Company's  operations,  including  attracting and retaining qualified personnel,
failure of the Company to be able to expand its active offering of local bundled
services  in  a greater number of states, failure to provide timely and accurate
billing  information  to  customers,  failure  of  the  Company  to  manage  its
collection management systems and credit controls for customers, interruption in
the Company's network and information systems, failure of the Company to provide
adequate  customer  service,  and  changes  in government policy, regulation and
enforcement and/or adverse judicial interpretations and rulings relating to such
regulations  and  enforcement.  Except as otherwise required by law, the Company
undertakes  no  obligation  to  update  its  forward-looking  statements.

OVERVIEW

     Talk  America  Holdings,  Inc.,  through  its subsidiaries (the "Company"),
provides  local  and long distance telecommunication services to residential and
small business customers throughout the United States. The Company has developed
integrated  order  processing,  provisioning,  billing,  payment,  collection,
customer  service  and  information systems that enable the Company to offer and
deliver  high-quality,  competitively  priced  telecommunication  services  to
customers.

     The  Company's  telecommunication  services offerings primarily include the
bundled  service  offering  of local and long distance voice services, which are
billed  to customers in one combined invoice. Local phone services include local
dial  tone  and  local  calling  with  a  variety  of  features  such  as caller
identification, call waiting and three-way calling. Long distance phone services
include  traditional  1+  long  distance,  international  and calling cards. The
Company  uses  the unbundled network element platform ("UNE-P") of the incumbent
local  exchange  carriers  ("ILECs")  network  to provide local services and the
Company's  nationwide network and third party international switching to provide
long  distance  services.  The  Company  attracts  new  customers through direct
marketing  channels,  advertising,  agent  and  referral  programs and marketing
arrangements  with  business  partners.

                                       14
<PAGE>

RESULTS  OF  OPERATIONS

     The  following table sets forth for the periods indicated certain financial
data  of  the  Company  as  a  percentage  of  sales:

<TABLE>
<CAPTION>

                                         FOR THE THREE MONTHS          FOR THE SIX MONTHS
                                            ENDED JUNE 30,               ENDED JUNE 30,
                                         --------------------         -------------------
                                           2002       2001              2002       2001
                                         --------   --------          --------   --------
<S>                                      <C>              <C>              <C>     <C>
Sales                                     100.0%     100.0%            100.0%     100.0%
Costs and expenses:
   Network and line costs                  48.5       48.0              49.6       48.5
   General and administrative expenses     17.6       17.5              17.9       16.5
   Provision for doubtful accounts          3.6       27.1               4.3       19.1
   Sales and marketing expenses             8.9       18.9               8.2       21.4
   Depreciation and amortization            5.7        7.3               5.6        7.2
                                         --------   --------          --------   --------
      Total costs and expenses             84.3      118.8              85.6      112.7
                                         --------   --------          --------   --------
Operating income (loss)                    15.7      (18.8)             14.4      (12.7)
Other income (expense):
   Interest income                          0.1        0.2               0.1        0.3
   Interest expense                        (3.7)      (1.1)             (2.8)      (1.2)
   Other, net                                --        0.2              (0.5)        --
                                         --------   --------          --------   --------
Income (loss) before income taxes          12.1      (19.5)             11.2      (13.6)
Provision for income taxes                   --         --                --         --
                                         --------   --------          --------   --------
Income (loss) before cumulative effect
   of an accounting change                 12.1      (19.5)             11.2      (13.6)
Cumulative effect of an accounting
   change                                    --      (27.8)               --      (14.0)
                                         --------   --------          --------   --------
Net income (loss)                          12.1%     (47.3)%            11.2%     (27.6)%
                                         ========   ========          ========   ========
</TABLE>

QUARTER  ENDED  JUNE  30,  2002  COMPARED  TO  QUARTER  ENDED  JUNE  30,  2001

     Sales. Sales decreased by 41.4% to $77.7 million for the quarter ended June
30,  2002  from  $132.4  million  for  the  quarter  ended  June  30,  2001.

     The  Company's  long  distance  sales  decreased  to  $38.3 million for the
quarter  ended  June  30, 2002 from $80.4 million for the quarter ended June 30,
2001  and  have  decreased 12.8% sequentially from $43.9 million for the quarter
ended  March  31, 2002.  A significant percentage of the Company's revenues were
derived  from long distance telecommunication services provided to customers who
were obtained under the AOL marketing agreement. The Company's decision to focus
on the bundled product and the discontinuation of the AOL marketing relationship
effective  September  30,  2001, together with customer turnover, contributed to
the  decline  in  long  distance  customers  and  revenues. This decline in long
distance  customers  and revenues is expected to continue so long as the Company
continues  to  focus its marketing efforts on the bundled product. Long distance
revenues for the quarter ended June 30, 2002 and June 30, 2001 included non-cash
amortization of deferred revenue of $1.9 million related to a telecommunications
service  agreement with Shared Technologies Fairchild Inc. entered into in 1997.
Deferred  revenue relating to this agreement has been amortized over a five-year
period.  The  agreement and related amortization will terminate in October 2002.
Long distance revenues are expected to decline to between $31 and $33 million in
the  third quarter of 2002 and for the full year 2002 are expected to be between
$135  and  $145  million.

     The  Company's bundled sales for the quarter ended June 30, 2002 were $39.4
million  compared  with  $52.1  million for the quarter ended June 30, 2001, but
have  increased  10.9%  sequentially from $35.5 million for the first quarter of
2002.  The  Company has approximately 244,000 bundled lines as of June 30, 2002,
of  which  approximately  100,000  of  the  lines  are  Michigan customers.  The
decrease  in  bundled  sales  in  the  second  quarter  of 2002 compared to 2001
reflects  the  Company's  decision  to  slow  growth  in bundled sales while the
Company  pursued  its plans to improve the efficiencies of the Company's bundled
business  model  and  improve  customer  collections. In addition, a significant
portion  of the bundled sales for the quarter ended June 30, 2001 were generated

                                       15
<PAGE>

from bundled service customers acquired through marketing programs that had been
discontinued  in  2001. The increase in bundled revenues sequentially from first
quarter  of  2002 to the second quarter of 2002 is attributed to increased sales
and  marketing expenditures, as well as reductions in customer turnover.  In the
second  quarter  of  2002,  agent  sales  slowed  due  to  implementation issues
associated  with  the  Company's  new  product  offerings.  Bundled revenues are
expected  to  increase  to  between  $42 and $44 million in the third quarter of
2002.  Bundled  revenues  for the full year 2002 are expected to be between $165
and  $175  million.  Longer-term  growth  in  revenues  will depend on continued
operating  efficiencies,  lower  customer  turnover and the Company's ability to
develop  and  scale  various  marketing  programs.

     Network  and Line Costs. Network and line costs decreased by 40.7% to $37.7
million  for  the quarter ended June 30, 2002 from $63.5 million for the quarter
ended June 30, 2001. The decrease in network and line costs was primarily due to
a  lower  number of local and long distance customers, a reduction in access and
usage  charges and a reduction in primary interexchange carrier charges. Network
and  line  costs  for the second quarter of 2002 benefited from a credit of $0.8
million  that  the  New York Public Service Commission mandated that Verizon New
York  provide the Company in connection with a refund of certain UNE-P switching
costs  totaling  an  aggregate  $1.6  million.  The  balance  of  the credit, an
additional  $0.8  million,  will  be provided to the Company in the form of bill
credits  from Verizon over the six-month period ended December 31, 2002. Network
and  line  costs  also  benefited  from  favorable  resolution  of disputes with
vendors.  The Company's policy is not to record credits from such disputes until
received.  As  a  percentage of sales, network and line costs increased to 48.5%
for  the  quarter ended June 30, 2002, as compared to 48.0% for the same quarter
last  year.

     Gross  profit,  defined  as sales less network and line costs, decreased by
41.9%  for  the  quarter ended June 30, 2002 to $40.0 million from $68.9 million
for  the same quarter last year, and, gross margin, defined as gross profit as a
percentage  of  sales,  decreased  to 51.5% as compared to 52.0% for the quarter
ended  June  30,  2001. Gross margin for the long distance product was 56.6% for
the  second  quarter of 2002 as compared to 54.5% for the same quarter last year
and  gross  margin  for  the bundled product was 46.6% for the second quarter of
2002  as compared to 48.3% for the same quarter last year. The decrease in gross
margin was due to the Company's decision to lower its pricing for both local and
long  distance service, to become more competitive with the ILECs and to provide
greater value to its customers. In addition, the growth of local bundled service
as  a  percentage  of  total revenue and product mix has also contributed to the
decrease  in  gross margin. Excluding the benefit of the Verizon New York credit
and  other  dispute  resolutions, the gross margin for the bundled product would
have  been  in  the  low  40% range. Upon termination of the Shared Technologies
Fairchild  Inc.  agreement  in  October 2002, gross margin for the long distance
product  will  decrease  approximately  2%.  The  FCC  is  currently considering
modifications  to  the  Universal  Service Fund ("USF") program that may go into
effect  as  early as the end of 2002. Any changes to the methodology used in the
calculation  of  the  collection  and payment of USF charges may have an adverse
impact  on the Company's gross margin. The increase in the long distance product
gross  margin was  primarily attributable  to a reduction in access charges. The
Company  does  not anticipate a material change in access charges in the future.

     General  and  Administrative  Expenses. General and administrative expenses
decreased  by  41.3%  to  $13.6 million for the quarter ended June 30, 2002 from
$23.3  million  for  the  quarter  ended  June 30, 2001. The overall decrease in
general  and  administrative expenses was due primarily to significant workforce
reductions  and  other  cost  cutting  efforts  by  the  Company  as  it pursued
improvements  in operating efficiencies of the Company's bundled business model.
The  Company  had  increased  personnel  costs  associated  with  supporting the
Company's  bundled  services offerings, including customer service, provisioning
and  collections  personnel  during  the  quarter ended June 30, 2001. While the
Company  expects  to  realize  further  general  and  administrative  expense
efficiencies  as  the customer base grows, realization of such efficiencies will
be  dependant  on  the ability of management to control personnel costs in areas
such  as  collections  and  customer  service.

     Provision  for Doubtful Accounts. Provision for doubtful accounts decreased
by  92.2% to $2.8 million for the quarter ended June 30, 2002 from $35.9 million
for the same quarter last year, and, as a percentage of sales, decreased to 3.6%
as  compared to 27.1% for the quarter ended June 30, 2001. The Company had taken
several  steps  during  the third and fourth quarters of 2001 to reduce bad debt
expense, improve the overall credit quality of its customer base and improve its
collections of past due amounts. The benefits of the Company's actions to reduce
bad debt expense and improve the overall credit quality of its customer base are
reflected  in  the  lower  bad debt expense for the quarter ended June 30, 2002.
Further,  the  provision  for  doubtful  accounts for the second quarter of 2002
reflects  a benefit from a reversal of the reserve for doubtful accounts of $0.5

                                       16
<PAGE>

million.  In  general,  the  Company  believes  that  the  bad debt expense as a
percentage  of sales of the Company's long distance customers is lower than that
of  its  bundled customers because of the relative maturity of the long distance
customer  base.


     Sales  and  Marketing Expenses. During the quarter ended June 30, 2002, the
Company  incurred  $6.9  million  of sales and marketing expenses as compared to
$25.0  million  for  the  same  quarter  last  year, a 72.4% decrease, and, as a
percentage  of  sales,  a  decrease to 8.9% as compared to 18.9% for the quarter
ended  June  30, 2001.  The decrease from the second quarter of 2002 compared to
2001  is  primarily  attributable to the reduction in marketing fees paid to AOL
due  to  the  termination  of  the  marketing  relationship  with  AOL effective
September 30, 2001. Sales and marketing expenses declined further as the Company
slowed  growth  as  it pursued its plan to improve efficiencies of the Company's
bundled  business  model.    Currently,  substantially  all  of  the  sales  and
marketing  expense is in connection with the growth of the bundled product.  The
Company increased sales and marketing spending from the first quarter of 2002 of
$5.9  million  to  the  second quarter of 2002 by 17.3% in order to increase the
number  of  new bundled customers.  Sales and marketing expenses are expected to
increase  in  the  third and fourth quarters of 2002 as the Company continues to
target  growth  in  the  bundled  product  and  invest in the development of its
marketing  programs.

     Depreciation  and  Amortization.  Depreciation  and  amortization  for  the
quarter  ended  June  30,  2002  was  $4.4  million,  a decrease of $5.3 million
compared  to  $9.7  million  for  the  quarter  ended  June  30, 2001, and, as a
percentage of sales, decreased to 5.7% as compared to 7.3% for the quarter ended
June  30,  2001.  The Company's amortization expense decreased significantly for
the quarter ended June 30, 2002 due to the write-off of goodwill associated with
the  acquisition  of  Access One in the third quarter of 2001. Additionally, the
Company  implemented  Statement  of  Financial  Accounting  Standards  No.  142,
"Goodwill  and  Other  Intangible  Assets,"  which  established  the  impairment
approach  rather  than  amortization  for  goodwill,  resulting  in  reduced
amortization  in  2002  (See  Note  1  of  the  Notes  to Consolidated Financial
Statements).  Amortization  expense  will  increase in the future as the Company
completes  capitalized  software  development  projects.

     Interest Income. Interest income was $94,000 for the quarter ended June 30,
2002  versus  $308,000  for the quarter ended June 30, 2001. Interest income for
the  quarter  ended  June  30, 2002 was lower due to the Company's lower average
cash balances and a decrease in interest rates during the second quarter of 2002
as  compared  to  the  second  quarter  of  2001.

     Interest  Expense.  Interest expense was $2.9 million for the quarter ended
June  30,  2002 as compared to $1.5 million for the quarter ended June 30, 2001.
The  increase  in  interest  expense  is  attributed  to  higher  yielding  debt
instruments  associated  with  the exchange of the Company's 4 1/2% and 5% Notes
for 8% and 12% Notes and the restructuring of the MCG credit facility (see Notes
2,  3 and 5 of the Notes to Consolidated Financial Statements and "Liquidity and
Capital  Resources").  In  addition, interest expense for the quarter ended June
30,  2002  includes  the  write-off  of  deferred financing costs of $364,000 in
connection  with the bond restructuring.  As described in Note 2 of the Notes to
Consolidated  Financial  Statements,  the  8%  convertible  notes  due 2011 were
accounted  for  as  a troubled debt restructuring and, as such, interest expense
related  to  the  notes is excluded from net income.  For the quarter ended June
30,  2002,  $672,000  of interest expense related to the notes was excluded from
net  income.

     Provision  for  Income  Taxes.  At June 30, 2002 and 2001, a full valuation
allowance  has  been  provided  against  the  Company's  net  operating  losses
carryforwards and other deferred tax assets. Since the amounts and extent of the
Company's  future  earnings  are  not  determinable  with a sufficient degree of
probability  to  recognize  the  deferred  tax  assets  in  accordance  with the
requirements of Statement of Financial Accounting Standards No. 109, "Accounting
for  Income  Taxes,"  the Company has recorded a full valuation allowance on the
net  deferred  tax  assets.  For  the  quarter ended June 30, 2002, although the
Company  has net income, no provision for income taxes has been reflected on the
statement of operations due to the full valuation allowance. The Company has not
recorded  any  income tax expense or benefit for the quarter ended June 30, 2001
because  the  Company incurred losses during this period as well as maintained a
full  valuation  allowance at June 30, 2001. There can be no assurances that the
Company  will  realize  the  benefit  of any net operating loss carryforwards on
future  taxable income generated by the Company due to the "change of ownership"
provisions  of the Internal Revenue Code Section 382 (see "Liquidity and Capital
Resources,  Other  Matters").

     Cumulative  Effect  of  an  Accounting Change. The Company adopted Emerging
Issues  Task  Force  Abstract  No.  00-19,  "Accounting for Derivative Financial
Instruments  Indexed  to, and Potentially Settled in, a Company's Own Stock," in

                                       17
<PAGE>

the  quarter  ended June 30, 2001. The cumulative effect of the adoption of this
change  in  accounting  principle resulted in a non-cash charge to operations of
$36.8  million  in  the  quarter ended June 30, 2001, representing the change in
fair  value  of contingent redemption features of warrants and common stock held
by  AOL  from  issuance  on  January  5,  1999  through  June  30,  2001.

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

     Sales.  Sales decreased by 40.5% to $157.1 million for the six months ended
June  30,  2002  from  $264.2  million  for  the six months ended June 30, 2001.

     The  Company's  long  distance sales decreased to $82.3 million for the six
months ended June 30, 2002 from $166.9 million for the six months ended June 30,
2001.  A significant percentage of the Company's revenues were derived from long
distance  telecommunication  services  provided  to  customers who were obtained
under  the  AOL  marketing  agreement.  The  Company's  decision to focus on the
bundled  product  and  the  discontinuation  of  the  AOL marketing relationship
effective  September  30,  2001, together with customer turnover, contributed to
the  decline  in  long  distance  customers  and  revenues. This decline in long
distance  customers  and revenues is expected to continue so long as the Company
continues  to  focus its marketing efforts on the bundled product. Long distance
revenues  for  the  six  months  ended  June 30, 2002 and June 30, 2001 included
non-cash  amortization  of  deferred  revenue  of  $3.7  million  related  to  a
telecommunications  service  agreement  with Shared Technologies Fairchild, Inc.
entered  into  in  1997.  Deferred  revenue  relating to this agreement has been
amortized  over a five-year period.  The agreement and related amortization will
terminate  in  October  2002.

     The  Company's  bundled  sales  for the six months ended June 30, 2002 were
$74.8  million  compared  with  $97.3  million for the six months ended June 30,
2001.  The  decrease  in  bundled  sales  for the six months ended June 30, 2002
compared to 2001 reflects the Company's decision to slow growth in bundled sales
while the Company pursued its plans to improve the efficiencies of the Company's
bundled  business  model  and  improve  customer  collections.  In  addition,  a
significant  portion of the bundled sales for the six months ended June 30, 2001
were  generated  from  bundled  service  customers  acquired  through  marketing
programs  that  had  been  discontinued  in  2001.

     Network  and Line Costs. Network and line costs decreased by 39.3% to $77.9
million  for  the six months ended June 30, 2002 from $128.2 million for the six
months  ended  June 30, 2001. The decrease in costs was primarily due to a lower
number  of  local  and  long distance customers, a reduction in access and usage
charges  and  a  reduction in primary interexchange carrier charges. Network and
line costs for the six months ended June 30, 2002 benefited from the Verizon New
York  credit  of  $0.8  million.  Network  and  line  costs  also benefited from
favorable  resolution  of disputes with vendors.  The Company's policy is not to
record  credits  from  such  disputes until received.  As a percentage of sales,
network  and  line  costs  increased  to 49.6% for the six months ended June 30,
2002,  as  compared  to  48.5%  for  the  same  period  last  year.

     Gross  profit,  defined  as sales less network and line costs, decreased by
41.7%  for  the  six  months  ended  June  30, 2002 to $79.2 million from $136.0
million  for  the  same  period  last  year, and, gross margin, defined as gross
profit as a percentage of sales, decreased to 50.4% as compared to 51.5% for the
six  months  ended June 30, 2001. Gross margin for the long distance product was
58.4% for the six months ended June 30, 2002 as compared with 54.5% for the same
period  last year and gross margin for the bundled product was 41.7% for the six
months  ended  June 30, 2002 as compared to 46.3% for the same period last year.
The  decrease  in  gross  margin  is  due to the Company's decision to lower its
pricing  for  both  local  and long distance service, to become more competitive
with  the  ILECs and to provide greater value to its customers. In addition, the
growth of local bundled service as a percentage of total revenue and product mix
has  also  contributed to the decrease in gross margin. The increase in the long
distance  product  gross  margin  was  primarily  attributable to a reduction in
access  charges.  The  Company  does  not anticipate a material change in access
charges  in  the  future.



     General  and  Administrative  Expenses. General and administrative expenses
decreased  by 35.5% to $28.2 million for the six months ended June 30, 2002 from
$43.7  million  for  the six months ended June 30, 2001. The overall decrease in
general  and  administrative expenses was due primarily to significant workforce
reductions  and  other  cost  cutting  efforts  by  the  Company  as  it pursued
improvements  in operating efficiencies of the Company's bundled business model.
The  Company  had  increased  personnel  costs  associated  with  supporting the

                                       18
<PAGE>

Company's  bundled  services offerings, including customer service, provisioning
and  collections  personnel  during  the  six  months  ended  June  30,  2001.

     Provision  for Doubtful Accounts. Provision for doubtful accounts decreased
by  86.5%  to  $6.8  million  for  the six months ended June 30, 2002 from $50.5
million  for the same period last year, and, as a percentage of sales, decreased
to 4.3% as compared to 19.1% for the six months ended June 30, 2001. The Company
had  taken  several steps during the third and fourth quarters of 2001 to reduce
bad  debt  expense,  improve the overall credit quality of its customer base and
improve  its  collections  of  past  due  amounts. The benefits of the Company's
actions to reduce bad debt expense and improve the overall credit quality of its
customer  base  are  reflected  in the lower bad debt expense for the six months
ended  June  30,  2002. Further, the provision for doubtful accounts for the six
months ended June 30, 2002 reflects a benefit from a reversal of the reserve for
doubtful accounts of $1.5 million. In general, the Company believes that the bad
debt  expense  as a percentage of sales of the Company's long distance customers
is  lower than that of its bundled customers because of the relative maturity of
the  long  distance  customer  base.

     Sales  and  Marketing  Expenses. During the six months ended June 30, 2002,
the  Company  incurred $12.8 million of sales and marketing expenses as compared
to  $56.5  million  for  the  same period last year, a 77.3% decrease, and, as a
percentage  of sales, a decrease to 8.2% as compared to 21.4% for the six months
ended  June  30,  2001.  The  decrease  in 2002 is primarily attributable to the
reduction  in marketing fees paid to AOL due to the termination of the marketing
relationship  with  AOL  effective  September  30,  2001.  The  decline  is also
attributable  to  decreased  direct promotional and advertising campaigns. Sales
and  marketing  expenses  declined  further  as  the Company slowed growth as it
pursued  its  plan  to  improve  efficiencies  of the Company's bundled business
model.  Currently,  substantially  all  of the sales and marketing expense is in
connection  with  growth  of  the  bundled  product.

     Depreciation  and  Amortization.  Depreciation and amortization for the six
months  ended  June  30,  2002  was  $8.9  million,  a decrease of $10.0 million
compared  to  $18.9  million  for  the six months ended June 30, 2001, and, as a
percentage  of  sales,  decreased to 5.6% as compared to 7.2% for the six months
ended  June 30, 2001. The Company's amortization expense decreased significantly
for  the  six  months  ended  June  30,  2002  due  to the write-off of goodwill
associated  with  the  acquisition  of  Access One in the third quarter of 2001.
Additionally,  the  Company  implemented  Statement  of  Financial  Accounting
Standards No. 142, "Goodwill and Other Intangible Assets," which established the
impairment  approach rather than amortization for goodwill, resulting in reduced
amortization  for the six months ended June 30, 2002 (see Note 1 of the Notes to
the  Consolidated  Financial  Statements).

     Interest Income. Interest income was $183,000 for the six months ended June
30, 2002 versus $831,000 for the six months ended June 30, 2001. Interest income
for  the  six  months  ended  June 30, 2002 was lower due to the Company's lower
average  cash  balances  and  a decrease in interest rates during the six months
ended  June  30,  2002  as  compared  to  2001.

     Interest  Expense.  Interest  expense  was  $4.4 million for the six months
ended  June  30,  2002 as compared to $3.1 million for the six months ended June
30, 2001. The increase in interest expense is attributed to higher yielding debt
instruments  associated  with  the exchange of the Company's 4 1/2% and 5% Notes
for  8%  and 12% Notes and the MCG credit facility restructuring (see Notes 2, 3
and  5  of  the  Notes  to  Consolidated Financial Statements and "Liquidity and
Capital Resources"). In addition, interest expense for the six months ended June
30,  2002  includes  the  write-off  of  deferred financing costs of $364,000 in
connection  with the bond restructuring.  As described in Note 2 of the Notes to
Consolidated  Financial  Statements,  the  8%  convertible  notes  due 2011 were
accounted  for  as  a troubled debt restructuring and, as such, interest expense
related to the notes is excluded from net income.  For the six months ended June
30,  2002,  $1.3  million  of interest expense related to the notes was excluded
from  net  income.

     Other, Net.  Net other expenses were $816,000 for the six months ended June
30,  2002 compared to $80,000 for the six months ended June 30, 2001. The amount
for the six months ended June 30, 2002 primarily consists of costs in connection
with the Company's restructuring of its convertible subordinated notes (see Note
2  of  the  Notes  to  Consolidated  Financial  Statements).

     Provision  for  Income  Taxes.  At June 30, 2002 and 2001, a full valuation
allowance  has  been  provided  against  the  Company's  net  operating  losses
carryforwards and other deferred tax assets. Since the amounts and extent of the

                                       19
<PAGE>

Company's  future  earnings  are  not  determinable  with a sufficient degree of
probability  to  recognize  the  deferred  tax  assets  in  accordance  with the
requirements of Statement of Financial Accounting Standards No. 109, "Accounting
for  Income  Taxes,"  the Company has recorded a full valuation allowance on the
net  deferred  tax  assets. For the six months ended June 30, 2002, although the
Company  has net income, no provision for income taxes has been reflected on the
statement of operations due to the full valuation allowance. The Company has not
recorded  any  income  tax  expense or benefit for the six months ended June 30,
2001  because  the  Company  incurred  losses  during  this  period  as  well as
maintained  a  full  valuation  allowance  at  June  30,  2001.  There can be no
assurances  that  the Company will realize the benefit of any net operating loss
carryforwards  on  future  taxable  income  generated  by the Company due to the
"change  of  ownership" provisions of the Internal Revenue Code Section 382 (see
Liquidity  and  Capital  Resources,  Other  Matters).

     Cumulative  Effect  of  an  Accounting Change. The Company adopted Emerging
Issues  Task  Force  Abstract  No.  00-19,  "Accounting for Derivative Financial
Instruments  Indexed  to, and Potentially Settled in, a Company's Own Stock," in
the  six  months  ended  June 30, 2001. The cumulative effect of the adoption of
this  change in accounting principle resulted in a non-cash charge to operations
of  $36.8 million in the six months ended June 30, 2001, representing the change
in  fair  value  of  contingent redemption features of warrants and common stock
held  by  AOL  from  issuance  on  January  5,  1999  through  June  30,  2001.

                                       20
<PAGE>

LIQUIDITY  AND  CAPITAL  RESOURCES

     The  Company's  cash  requirements  arise  primarily from the subsidiaries'
operational  needs, the subsidiaries' capital expenditures, and the debt service
obligations  of  the  subsidiaries and of Talk America Holdings, Inc. Since Talk
America  Holdings,  Inc. conducts all of it operations through its subsidiaries,
primarily  Talk  America  Inc.,  it relies on dividends, distributions and other
payments  from its subsidiaries to fund its obligations. The MCG Credit Facility
Agreement  and related agreements contain certain covenants, including covenants
that  may  restrict  such payments by the subsidiaries to Talk America Holdings,
Inc.  (see  Note  5  of  the  Notes  to  Consolidated  Financial  Statements).

     Contractual  obligations  of the Company as of June 30, 2002 are summarized
as  follows  (in  thousands):

<TABLE>
<CAPTION>

                                                     1 year or    2 - 3     4 - 5
Contractual Obligations (3)                 Total       less      Years     Years     Thereafter
-------------------------------------     ---------   --------   -------   -------    ----------
<S>                                         <C>         <C>        <C>      <C>        <C>
Talk America Holdings, Inc.:
----------------------------
   8% Convertible notes due 2011(1)        $65,159     $2,057     $2,940    $3,182      $56,980
   12% Senior subordinated notes
      due 2007                              70,653         --         --        --       70,653
   8% Convertible senior subordinated
      notes due 2007 (2)                     4,168         --         --        --        4,168
   4.5% Convertible subordinated notes
      due 2002                               3,910      3,910         --        --           --
   5% Convertible subordinated notes
      due 2004                                 670         --        670        --           --

Talk America Inc. and other subsidiaries:
-----------------------------------------
   Senior Credit Facility                   15,000      5,000     10,000        --           --
   Capital Lease Obligations                   262        204         58        --           --
   Other Long-Term Obligations               1,693      1,693         --        --           --
                                          ---------   --------   -------   -------    ----------
Total Contractual Obligations             $161,515    $12,864    $13,668    $3,182     $131,801
                                          =========   ========   =======   =======    ==========

</TABLE>
---------------------

(1)  The  2011  Convertible  Notes  include $33.6 million of principal and $31.5
million  of  future  accrued  interest  (see Note 3 of the Notes to Consolidated
Financial  Statements).  The  2011  Convertible  Notes  are subject to mandatory
redemption, at the option of the holder, in September 2006 and September 2008 at
par  plus  accrued  interest.

(2)  The  8%  Notes include $2.8 million of principal and $1.3 million of future
accrued interest (see Note 2 of the Notes to Consolidated Financial Statements).

(3)  Excluded from these contractual obligations are operating lease obligations
and  network service obligations.  The Company leases office space and equipment
under  operating  lease  agreements.  Certain leases contain renewal options and
purchase  options,  and  generally  provide  that  the  Company  shall  pay  for
insurance,  taxes  and  maintenance.  As  of  December 31, 2001, the Company had
future  minimum  annual  lease obligations under noncancellable operating leases
with  terms  in  excess of one year as follows: 2002 - $1.8 million, 2003 - $1.7
million,  2004 - $1.4 million, 2005 - $0.9 million, 2006 - $0.4 million and 2007
and  thereafter  -  $0.3  million.  The Company is also party to various network
service agreements, which contain certain minimum usage commitments. The largest
contract  establishes  pricing  and provides for annual minimum payments for the
years  ended December 31, as follows: 2002 - $22.2 million, 2003 - $22.8 million
and  2004  -  $27.9  million.  A  separate  contract  with  a  different  vendor
establishes pricing and provides for annual minimum payments for the years ended
December  31,  as  follows:  2002 - $3.0 million, 2003 - $6.0 million and 2004 -
$3.0  million.  As  a  consequence of these minimum network service obligations,
there  can  be  no  assurances that the Company will be able to realize the most
effective  network  cost.

     The  Company  relies  on  internally  generated  funds  and  cash  and cash
equivalents  on hand to fund its capital and financing requirements. The Company

                                       21
<PAGE>

had  $30.7  million  of cash and cash equivalents as of June 30, 2002, and $22.1
million  as  of  December  31,  2001.

     Net  cash  provided  by  operating activities was $17.1 million for the six
months  ended June 30, 2002 compared to net cash used in operating activities of
$13.5  million for six months ended June 30, 2001. For the six months ended June
30,  2002,  the  major  contributors  to  the  net  cash  provided  by operating
activities  were  the  net income of $17.5 million and non-cash charges of $16.0
million  primarily consisting of provision for doubtful accounts of $6.8 million
and  depreciation and amortization of $8.9 million. These amounts were offset by
an  increase  in  accounts receivable of $3.1 million and a decrease in accounts
payable  of  $12.2 million. For the six months ended June 30, 2001, the net cash
used  in  operating  activities  was  mainly  generated by the net loss of $72.8
million,  an increase in accounts receivable of $47.1 million offset by non-cash
items  of $106.4 million primarily consisting of provision for doubtful accounts
of  $50.5  million,  depreciation  and  amortization  of  $18.9  million and the
cumulative  effect  of  an accounting change for contingent redemptions of $36.8
million.

     Net  cash  used  in  investing  activities  was $3.3 million during the six
months  ended June 30, 2002, which consisted of capitalized software development
costs  of $1.1 million and capital expenditures for the purchase of equipment of
$2.1  million. Net cash used in investing activities was $2.4 million during the
six  months  ended  June  30,  2001,  which primarily related to the purchase of
equipment  and  intangibles.

     Net  cash  used  in  investing activities was $2.5 million during the three
months  ended June 30, 2002, which consisted of capitalized software development
costs  of $0.6 million and capital expenditures for the purchase of equipment of
$1.9  million.  The  Company  anticipates  incurring  for  the full year of 2002
capital  expenditures  of  between  $4  and  $5 million and capitalized software
development  costs  of  between  $2  and  $3  million.

     Net  cash  used  in  financing activities for the six months ended June 30,
2002  was  $5.2  million  compared  to $84,000 for the six months ended June 30,
2001.  The  net  cash used in financing activities for the six months ended June
30, 2002 was primarily attributable to payment of borrowings under the Company's
credit  facility of $2.5 million, payments under 8% Convertible notes due 2011of
$1.2  million,  payments in connection with exchange of the Company's 4.5% Notes
for  8%  Notes  of  $470,000  and  payments  under  capital  lease  obligations.

     The  Company  generally does not have a significant concentration of credit
risk  with  respect to net trade accounts receivable, due to the large number of
end-users  comprising  the  Company's  customer  base.

CONVERTIBLE  SUBORDINATED  NOTES AND EXCHANGE OFFERS (see Note 2 of the Notes to
Consolidated  Financial  Statements)

     Effective  April  4,  2002,  the  Company  completed  the exchange of $57.9
million  of  the  $61.8  million  outstanding  principal  balance  of its 4 1/2%
Convertible  Subordinated  Notes  ("4  1/2% Notes") that mature on September 15,
2002 into $53.2 million of new 12% Senior Subordinated PIK Notes due August 2007
("12%  Notes")  and $2.8 million of new 8% Convertible Senior Subordinated Notes
due  August  2007  ("8%  Notes") and cash paid of $0.5 million. In addition, the
Company  exchanged  $17.4  million  of  the  $18.1 million outstanding principal
balance  of  its  5%  Convertible Subordinated Notes ("5% Notes") that mature on
December  15,  2004  into  $17.4  million  of  the  new  12%  Notes.

AOL  AGREEMENTS  (see  Note 3 of the Notes to Consolidated Financial Statements)

     On  September  19, 2001, the Company restructured its financial obligations
with  AOL  that  arose  under  the  1999 Investment Agreement and also ended its
marketing  relationship  with AOL effective September 30, 2001 (collectively the
"AOL  Restructuring"). In connection with the AOL Restructuring, the Company and
AOL  entered into a Restructuring and Note Agreement ("Restructuring Agreement")
pursuant  to which the Company has outstanding $33.6 million principal amount of
its  8%  secured convertible notes due September 2011, as of June 30, 2002. With
the  issuance  of  additional shares under the Restructuring Agreement, AOL held
7,200,000  shares  of  Company  common  stock.


SENIOR  CREDIT  FACILITY  (see  Note  5  of the Notes to Consolidated Financial
Statements)

     The  Company's  principal  operating  subsidiaries  have  a Credit Facility
Agreement  with MCG Finance Corporation ("MCG"), providing for a term loan of up
to  $20.0  million  maturing  on  June  30,  2005  and a line of credit facility

                                       22
<PAGE>

permitting  such  subsidiaries  to  borrow  up  to  an  additional $30.0 million
available through June 30, 2003. The availability of the line of credit facility
is  subject, among other things, to the successful syndication of that facility.
The  Company  does  not  anticipate  having  any availability under this line of
credit  facility.  Loans  under the Credit Facility Agreement bear interest at a
rate  equal  to either (a) the Prime Rate, or (b) LIBOR, plus, in each case, the
applicable  margin.  The  applicable  margin  is  7.0%  for  borrowings accruing
interest  at  LIBOR and 6.0% for borrowings accruing interest at the Prime Rate.

     The  Credit Facility Agreement subjects the Company and its subsidiaries to
certain  restrictions  and  covenants related to, among other things, liquidity,
per-subscriber-type  revenue, subscriber acquisition costs and interest coverage
ratio  requirements.  The  principal  of  the  term  loan  is  paid in quarterly
installments  of  $1.25  million on the last calendar day of each fiscal quarter
commencing  on  September  30,  2001,  and is fully repaid by June 30, 2005. The
loans  under the Credit Facility Agreement are secured by a pledge of all of the
assets of the subsidiaries of the Company that are parties to that agreement. In
addition, the Company has guaranteed the obligations of those subsidiaries under
the  Credit  Facility  Agreement  and related documents; the Company's guarantee
subjects  the  Company  to  certain  restrictions  and  covenants,  including  a
prohibition  against the payment of dividends in respect of the Company's equity
securities,  except  under certain limited circumstances. In connection with the
AOL Restructuring, MCG entered into an Intercreditor Agreement with AOL. At June
30,  2002,  $15.0  million principal balance remained outstanding under the term
loan  facility  and  no  amounts were outstanding or available under the line of
credit  facility.

OTHER  MATTERS

     The  Company's  provision  of  telecommunication  services  is  subject  to
government  regulation.  Changes  in  existing regulations could have a material
adverse  effect  on  the Company. The Company's local telecommunication services
are  provided  almost  exclusively  through  the  use  of ILEC Unbundled Network
Elements  ("UNE"), and it is primarily the availability of costs-based UNE rates
that  enables  the  Company  to  price  its  local  telecommunications  services
competitively.  On  May  13,  2002,  the United Stated Supreme Court released an
opinion  in  Verizon  Communications  et al v. Federal Communications Commission
upholding  the  FCC's  decision to adopt the "total element long-run incremental
cost"  ("TELRIC")  methodology  for  pricing UNEs. On December 12, 2001, the FCC
initiated  its  so-called UNE Triennial Review rulemaking in which it intends to
review  all  UNEs  and determine whether ILECs should continue to be required to
provide  them  to competitors. Among other things, the FCC has indicated that it
will consider whether ILECs should continue to be required to provide the "local
switching" UNE, an essential component of the UNE-P combination. Any curtailment
by  the  FCC  in  the  availability  of the local switching UNE would materially
impair  the  Company's ability to provide local telecommunications services, and
could  eliminate  the  Company's  capability to provide local telecommunications
services  entirely.  On May 24, 2002, the United States Court of Appeals for the
D.C. Circuit released an opinion in United States Telecom Association v. Federal
Communications  Commission  remanding  to  the FCC for further consideration the
Unbundled  Network  Element  Remand  Order,  which  may  provide  the  FCC  with
justification for significantly reducing the unbundling obligations of the ILECs
as  part  of the UNE Triennial Review. A petition for rehearing en banc has been
filed  by  the FCC with the United States Court of Appeals for the D.C. Circuit.

     The  FCC  requires  the  Company  and  other providers of telecommunication
services  to  contribute  to  the USF, which helps to subsidize the provision of
local  telecommunication  services  and  other services to low-income consumers,
schools,  libraries, health care providers, and rural and insular areas that are
costly  to  serve.  The  FCC  is  currently considering modifications to the USF
program  that may go into effect as early as the end of 2002. Any changes to the
methodology used in the calculation of the collection and payment of USF charges
may  have  an  adverse  impact  on  the  Company's  gross  margin.

     At  December  31,  2001,  the  Company  had  net  operating  loss  (NOL)
carryforwards  for  federal  income  tax  purposes of $262.8 million. Due to the
"change  of  ownership" provisions of the Internal Revenue Code Section 382, the
availability of the Company's net operating loss and credit carryforwards may be
subject  to  an  annual limitation against taxable income in future periods if a
change  of ownership of more than 50% of the value of the Company's stock should
occur  within a three-year testing period. Many of the changes that affect these
percentage  change  determinations,  such  as  changes  in  the  Company's stock
ownership,  are outside the Company's control. A more-than-50% cumulative change
in  ownership  for purposes of the Section 382 limitation occurred on August 31,
1998 and October 26, 1999. As a result of such changes, certain of the Company's

                                       23
<PAGE>

carryforwards  are limited. As of December 31, 2001, approximately $64.0 million
of  NOL  carryforwards  are  not available to offset future income. In addition,
based  on  information  currently available to the Company, the Company believes
that the change of ownership percentage was approximately 45% for the applicable
three-year testing period. If, during the current three-year testing period, the
Company  experiences  an additional more-than-50% ownership change under Section
382,  the  amount  of  the  NOL  carryforward available to offset future taxable
income  may  be  further  and substantially reduced. To the extent the Company's
ability  to use these net operating loss carryforwards against any future income
is  limited,  its  cash  flow available for operations and debt service would be
reduced.  There can be no assurance that the Company will realize the benefit of
any  carryforwards.

     The Company is a party to a number of legal actions and proceedings arising
from  the  Company's  provision and marketing of telecommunications services, as
well  as  certain  legal  actions  and regulatory investigations and enforcement
proceedings  arising  in  the  ordinary course of business. The Company believes
that  the ultimate outcome of the foregoing actions will not result in liability
that  would  have a material adverse effect on the Company's financial condition
or  results of operations. However, it is possible that, because of fluctuations
in  the Company's cash position, the timing of developments with respect to such
matters  that  require cash payments by the Company, while such payments are not
expected  to  be material to the Company's financial condition, could impair the
Company's  ability  in future interim or annual periods to continue to implement
its  business  plan,  which  could  affect  its  results of operations in future
interim  or  annual  periods.

     While  the  Company  believes  that  it  has access, albeit limited, to new
capital  in the public or private markets to fund its ongoing cash requirements,
there  can be no assurance as to the timing, amounts, terms or conditions of any
such  new  capital  or  whether  it could be obtained on terms acceptable to the
Company.  Accordingly,  the  Company  anticipates  that  its  cash  requirements
generally  must  be  met from the Company's cash-on-hand and from cash generated
from  operations.  Based  on  its  current projections for operations and having
restructured  the  MCG  facility  and  most of its outstanding convertible notes
indebtedness  through  the  exchange  offers,  the  Company  believes  that  its
cash-on-hand  and  its  cash flow from operations will be sufficient to fund its
capital  expenditures,  its  debt  service  obligations, including the increased
interest expense of its outstanding indebtedness, and the expenses of conducting
its  operations  for  at  least the next twelve months. However, there can be no
assurance that the Company will be able to realize its projected cash flows from
operations,  which  is  subject  to the risks and uncertainties discussed above.

CRITICAL  ACCOUNTING  POLICIES

     The  Company's  discussion  and  analysis  of  its  financial condition and
results  of  operations  are  based  upon  the  Company's consolidated financial
statements,  which  have  been prepared in accordance with accounting principles
generally  accepted  in  the  United  States. The preparation of these financial
statements  requires the Company to make estimates and judgments that affect the
reported  amounts  of  assets,  liabilities,  revenues and expenses, and related
disclosure  of  contingent  assets  and  liabilities.  On an on-going basis, the
Company  evaluates  its estimates, including those related to bad debt, goodwill
and  intangible  assets, income taxes, contingencies and litigation. The Company
bases  its estimates and judgments on historical experience and on various other
assumptions  that  are  believed  to  be reasonable under the circumstances, the
results  of  which form the basis for making judgments about the carrying values
of  assets  and  liabilities  that  are not readily apparent from other sources.
Actual  results  may  differ  from  these  estimates.

     Recognition  of  Revenue.  The  Company derives its revenues from local and
long  distance  phone  services,  primarily  local  services  bundled  with long
distance  services,  long  distance  services,  inbound  toll-free  service  and
dedicated  private  line  services for data transmission. The Company recognizes
revenue  from  voice,  data and other telecommunications related services in the
period  in  which  subscribers uses the related service. Allowances for doubtful
accounts  are  maintained for estimated losses resulting from the failure of its
customers  to  make  required  payments  and  for  uncollectible  usage.

     Deferred revenue represents the unearned portion of local telecommunication
services  and  features  that  are  billed one month in advance. In addition, it
includes  the  amortization  of  a non-refundable prepayment received in 1997 in
connection  with  an  amended  telecommunications services agreement with Shared
Technologies Fairchild, Inc. The payment is amortized over the five-year term of
the  agreement,  which  expires October 2002. The amount included in revenue was

                                       24
<PAGE>

$1.9 million in each of the quarters ended June 30, 2002 and 2001. The remaining
amount of $2.5 million will be included in revenue during the remainder of 2002.
This  agreement is terminable by either party on thirty days notice. Termination
by  either  party  would  accelerate  recognition  of  the  deferred  revenue.

     Allowance  for  Doubtful Accounts. The Company reviews accounts receivable,
historical  bad  debt,  and  customer  credit-worthiness through customer credit
scores,  current  economic  trends,  changes  in  customer  payment  history and
acceptance  of the Company's calling plans and fees when evaluating the adequacy
of  the  allowance  for  doubtful  accounts.  If  the financial condition of the
Company's  customers  were  to  deteriorate, resulting in an impairment of their
ability  to  make payments, additional allowances may be required. The Company's
accounts  receivable  balance  was  $23.0 million, net of allowance for doubtful
accounts  of  $17.1  million,  as  of  June  30,  2002.

     Valuation  of Long-Lived Assets and Intangible Assets with a Definite Life.
The  Company  continually  reviews  the  recoverability of the carrying value of
long-lived  assets,  including  intangibles  with a definite life for impairment
whenever events or changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. When such events occur, the Company compares
the  carrying  amount  of  the  assets  to the undiscounted expected future cash
flows.  Factors the Company considers important that could trigger an impairment
review  include  the  following:

     -    Significant  underperformance  relative  to  expected  historical  or
          projected  future  operating  results
     -    Significant changes in the manner of the Company's use of the acquired
          assets  or  the  strategy  for  the  Company's  overall  business
     -    Significant  negative  industry  or  economic  trends
     -    Significant  decline  in  the  Company's  stock  price for a sustained
          period  and  market  capitalization  relative  to  net  book  value

     If  this  comparison  indicates  there  is  impairment,  the  amount of the
impairment  loss  to  be recorded is calculated by the excess of the net assets'
carrying  value over its fair value and is typically calculated using discounted
expected  future  cash  flows.

     Goodwill.  Goodwill represents the cost in excess of net assets of acquired
companies.  Effective  January  1,  2002,  with  the  adoption  of SFAS No. 142,
goodwill  (comprised  of  goodwill  acquired  in  the Access One  acquisition in
August  2000)  will  not  be amortized, but rather will be tested for impairment
annually,  and  will  be  tested for impairment between annual tests if an event
occurs  or  circumstances  change that would indicate the carrying amount may be
impaired.  Prior to January 1, 2002 goodwill and intangibles were amortized on a
straight-line  basis  over  periods ranging from 5 years to 15 years. Impairment
testing  for goodwill is performed at a reporting unit level. An impairment loss
would  generally  be recognized when the carrying amount of the reporting units'
net  assets  exceeds  the  estimated  fair value of the reporting unit. Prior to
January  1, 2002, goodwill was tested for impairment in a manner consistent with
long-lived  assets  and  intangible  assets  with  a definite life.  The Company
completed the transitional assessment of goodwill under the requirements of SFAS
142  and  determined  that  the  fair  value  of  the reporting unit exceeds the
carrying  amount,  thus  the  goodwill  is  not  considered  impaired.

     Software  Development  Costs.  Direct  development  costs  associated  with
internal-use  computer  software  are  accounted for under Statement of Position
98-1,  "Accounting  for the Costs of Computer Software Developed or Obtained for
Internal  Use"  and  are capitalized including external direct costs of material
and  services  and  payroll  costs  for  employees devoting time to the software
projects.  Costs  incurred  during the preliminary project stage, as well as for
maintenance  and training, are expensed as incurred. Amortization is provided on
a  straight-line  basis over the shorter of 3 years or the estimated useful life
of  the  software.

     Income  Taxes. Income taxes are accounted for under the asset and liability
method.  Deferred  tax  assets  and liabilities are recognized for the estimated
future  tax  consequences  attributable to the differences between the financial
statement  carrying  amounts  of  existing  assets  and  liabilities  and  their
respective  tax  bases and operating loss and tax credit carryforwards. Deferred
tax  assets  and  liabilities are measured using enacted tax rates in effect for
the  year  in  which those temporary differences are expected to be recovered or
settled.

     The Company records a valuation allowance to reduce its deferred tax assets
in  an  amount  that  is  more  likely  than not to be realized. The Company has
provided  a  full  valuation  allowance  for the net deferred tax assets for the

                                       25
<PAGE>

estimated  future  tax effects attributable to temporary differences between the
basis  of  assets and liabilities for financial and tax reporting purposes as of
June  30,  2002. If the Company continues to be profitable in future quarters at
levels  which  cause management to conclude that it is more likely than not that
the  Company  will realize all or a portion of the NOL carryforward, the Company
would  record  the  estimated  net realizable value of the deferred tax asset at
that  time  and  would  then  provide  for  income  taxes at a rate equal to the
Company's  combined  federal  and  state  effective  rates.

     Legal  Proceedings. The Company is a party to a number of legal actions and
proceedings  arising  from  the  Company's  provision  and  marketing  of
telecommunications  services,  as  well  as certain legal actions and regulatory
investigations  and  enforcement  proceedings  arising in the ordinary course of
business.  Management's  current estimated range of liability related to some of
the  pending litigation is based on claims for which management can estimate the
amount  and  range of loss. The Company recorded the minimum estimated liability
related  to  those  claims,  where  there  is  a  range  of loss. Because of the
uncertainties  related  to  both  the  amount and range of loss on the remaining
pending  litigation,  management  is unable to make a reasonable estimate of the
liability  that  could  result  from  an  unfavorable  outcome.  As  additional
information  becomes  available, the Company will assess the potential liability
related  to  the  Company's  pending  litigation  and revise its estimates. Such
revisions in the Company's estimates of the potential liability could materially
affect  its  results  of  operations  and  financial  position.

ITEM  3.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURE  ABOUT  MARKET  RISK:

     In  the normal course of business, the financial position of the Company is
subject  to  a  variety  of  risks,  such  as the collectibility of its accounts
receivable and the receivability of the carrying values of its long-term assets.
The  Company's  long-term  obligations  consist  primarily  of its own notes and
credit  facility.  The  Company  does  not presently enter into any transactions
involving derivative financial instruments for risk management or other purposes
due  to  the  stability in interest rates in recent times and because management
does  not  consider  the  potential  impact  of  changes in interest rates to be
material.

     The  Company's  available  cash balances are invested on a short-term basis
(generally  overnight)  and,  accordingly,  are not subject to significant risks
associated  with  changes  in interest rates. Substantially all of the Company's
cash  flows  are  derived  from  its operations within the United States and the
Company  is  not  subject  to  market  risk  associated  with changes in foreign
exchange  rates.


                           PART II - OTHER INFORMATION

ITEM  2.  CHANGES  IN  SECURITIES.

     In connection with the completion of the exchange offers for its 4 1/2% and
5%  Notes  on  April 4, 2002 (as further described in Note 2 of the Consolidated
Financial  Statements),  the  Company  issued a total of $70.7 million principal
amount  of  its  new  12%  Notes and $2.8 million principal amount of its new 8%
Notes. The issuance of such securities were made in reliance on Section 3(a) (9)
of  the  Securities  Act  of  1933.

ITEM  6.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)     Exhibits

10.1     Amendment  to  Employment  Agreement,  dated June 17, 2002, between the
Company  and  Kevin  Griffo  (filed  herewith).  *

10.2     Interconnection  Agreement  between BellSouth Telecommunications, Inc.,
The  Other Phone Company, Inc. d/b/a Access  One Communications, The Other Phone
Company,  Inc.  d/b/a  Talk America Inc., (NOT in Florida) and Talk America Inc.
dated  May  13,  2002  (filed  herewith).

                                       26
<PAGE>

99.1     Certification  of  Gabriel Battista Pursuant to 18 U.S.C. Section 1350,
as  Adopted  Pursuant  to  Section  906  of  the  Sarbanes-Oxley  Act  of  2002.

99.2     Certification  of David G. Zahka Pursuant to 18 U.S.C. Section 1350, as
Adopted  Pursuant  to  Section  906  of  the  Sarbanes-Oxley  Act  of  2002.

(b)     Reports  on  Form  8-K

     During  the  quarter  ended  June  30,  2002,  the Company filed no Current
Reports  on  Form  8-K.

*  Management  contract  or  compensatory  plan  or  arrangement.

                                       27
<PAGE>

                                   SIGNATURES

Pursuant  to  the  requirements  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.


                           TALK AMERICA HOLDINGS, INC.

Date:  August  13,  2002                By: /s/  Gabriel  Battista
                                           ------------------------
                                           Gabriel  Battista
                                           Chairman of the Board of Directors,
                                           Chief Executive Officer and Director


Date:  August  13,  2002                By: /s/  David  G.  Zahka
                                           ------------------------
                                           David  G.  Zahka
                                           Chief  Financial  Officer
                                          (Principal  Financial  Officer)


Date:  August  13,  2002                By: /s/  Thomas  M.  Walsh
                                           ------------------------
                                           Thomas  M.  Walsh
                                           Senior Vice President - Finance
                                          (Principal Accounting Officer)

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