UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(MARK ONE)

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999.
                               ------------------

[ ]  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.COM INC.
         --------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                    DELAWARE
         --------------------------------------------------------------
         (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)

                                   23-2827736
         --------------------------------------------------------------
                      (I.R.S. EMPLOYER IDENTIFICATION NO.)

               12020 SUNRISE VALLEY DRIVE, RESTON, VIRGINIA 20190
         --------------------------------------------------------------
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES - ZIP CODE)

                                  703-391-7500
         --------------------------------------------------------------
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

         --------------------------------------------------------------
              (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
                         IF CHANGED SINCE LAST REPORT.)

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
                                       ---  ---

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

INDICATE  BY CHECK MARK  WHETHER  THE  REGISTRANT  HAS FILED ALL  DOCUMENTS  AND
REPORTS REQUIRED TO BE FILED BY SECTION 13, OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934 SUBSEQUENT TO THE  DISTRIBUTION OF SECURITIES UNDER A PLAN CONFIRMED
BY A COURT

                                   YES   NO
                                      ---  ---

APPLICABLE ONLY TO CORPORATE ISSUERS:  INDICATE THE NUMBER OF SHARES OUTSTANDING
OF EACH OF THE ISSUER'S  CLASSES OF COMMON STOCK,  AS OF THE LATEST  PRACTICABLE
DATE.

AS OF  NOVEMBER  5, 1999,  64,670,445  SHARES OF COMMON  STOCK  WERE  ISSUED AND
OUTSTANDING.


<PAGE>


                                  TALK.COM INC.
                                    FORM 10-Q
                               SEPTEMBER 30, 1999

                                TABLE OF CONTENTS

PART I   -  FINANCIAL INFORMATION

            Item 1. Financial Statements

                    Consolidated Balance Sheets as of September 30, 1999
                         and December 31, 1998

                    Consolidated Statements of Operations for the three and nine
                         months ended September 30, 1999 and 1998

                    Consolidated Statement of Stockholders' Equity (Deficit) for
                         the nine months ended September 30, 1999

                    Consolidated Statements of Cash Flows for the nine
                         months ended September 30, 1999 and 1998

                    Notes to Consolidated Financial Statements

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

PART II  -  OTHER INFORMATION

            Signatures


                                       2

<PAGE>


PART I - FINANCIAL INFORMATION
     ITEM 1. FINANCIAL STATEMENTS

                         TALK.COM INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT FOR SHARE DATA)

<TABLE>
<CAPTION>


                                                                                        SEPTEMBER 30, 1999
                                                                                            (UNAUDITED)       DECEMBER 31, 1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>                <C>
ASSETS
CURRENT:
   Cash and cash equivalents                                                                  $  43,552          $   3,063
   Marketable securities                                                                             --             89,649
   Accounts receivable, trade, net of allowance for uncollectible accounts
     of $3,729 and $1,669, respectively                                                          57,299             46,587
   Advances to partitions and notes receivable                                                    1,997              1,870
   Prepaid expenses and other current assets                                                     10,497              8,600
------------------------------------------------------------------------------------------------------------------------------------
       TOTAL CURRENT ASSETS                                                                     113,345            149,769
Property and equipment, net                                                                      56,987             56,703
Intangibles, net                                                                                  1,089              1,150
Other assets                                                                                      3,843             64,938
------------------------------------------------------------------------------------------------------------------------------------
       TOTAL ASSETS                                                                           $ 175,264          $ 272,560
====================================================================================================================================
LIABILITIES, CONTINGENCIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT:
   Margin account indebtedness                                                                $      --          $  49,621
   Accounts payable and accrued expenses:
      Trade and other                                                                            35,559             64,794
      Partitions                                                                                  5,475              4,380
      Other                                                                                      21,770             17,913
------------------------------------------------------------------------------------------------------------------------------------
       TOTAL CURRENT LIABILITIES                                                                 62,804            136,708
Convertible debt                                                                                 84,985            242,387
Deferred revenue                                                                                 22,850             28,400
Other liabilities                                                                                    --              1,850
------------------------------------------------------------------------------------------------------------------------------------
       TOTAL LIABILITIES                                                                        170,639            409,345
------------------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
Contingent redemption value of common stock                                                      25,115                 --
------------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY (DEFICIT):
   Preferred stock, $.01 par value, 5,000,000 shares authorized; no shares
     outstanding                                                                                     --                 --
   Common stock - $.01 par value, 100,000,000 shares authorized; 66,934,635
     issued                                                                                         669                669
   Additional paid-in capital                                                                   205,372            265,325
   Accumulated deficit                                                                         (155,981)          (218,229)
   Treasury stock, at cost                                                                      (70,550)          (184,550)
------------------------------------------------------------------------------------------------------------------------------------
       TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                                     (20,490)          (136,785)
------------------------------------------------------------------------------------------------------------------------------------
       TOTAL LIABILITIES, CONTINGENCIES AND STOCKHOLDERS' EQUITY (DEFICIT)                    $ 175,264          $ 272,560
====================================================================================================================================

</TABLE>


          See accompanying notes to consolidated financial statements.

                                       3

<PAGE>


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

<TABLE>
<CAPTION>

                                                                        FOR THE THREE MONTHS                FOR THE NINE MONTHS
                                                                         ENDED SEPTEMBER 30,                 ENDED SEPTEMBER 30,
                                                                  ---------------------------------    -----------------------------
                                                                         1999              1998             1999             1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>              <C>              <C>              <C>

SALES                                                                  $ 140,027        $ 122,525        $ 367,738        $ 324,769

COST OF SALES                                                             85,476           99,789          233,592          269,427
------------------------------------------------------------------------------------------------------------------------------------

GROSS PROFIT                                                              54,551           22,736          134,146           55,342

GENERAL AND ADMINISTRATIVE EXPENSES                                       11,274           10,822           30,461           30,645

PROMOTIONAL, MARKETING AND ADVERTISING
     EXPENSES                                                             27,698          107,653           63,490          192,592

SIGNIFICANT OTHER CHARGES (INCOME)                                            --              308           (2,718)          21,903
------------------------------------------------------------------------------------------------------------------------------------

OPERATING INCOME (LOSS)                                                   15,579          (96,047)          42,913         (189,798)

INVESTMENT AND OTHER INCOME (EXPENSE), NET                                  (933)           3,751           (1,895)             (59)
------------------------------------------------------------------------------------------------------------------------------------

INCOME (LOSS) BEFORE INCOME TAXES                                         14,646          (92,296)          41,018         (189,857)

PROVISION FOR INCOME TAXES                                                    --               --               --           40,388
------------------------------------------------------------------------------------------------------------------------------------

INCOME (LOSS) BEFORE EXTRAORDINARY GAIN                                   14,646          (92,296)          41,018         (230,245)

EXTRAORDINARY GAIN                                                         2,233           50,562           21,230           50,562
------------------------------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS)                                                      $  16,879        $ (41,734)       $  62,248        $(179,683)
====================================================================================================================================

BASIC EPS:

INCOME (LOSS) BEFORE EXTRAORDINARY GAIN                                $    0.24        $   (1.58)       $    0.68        $   (3.69)

EXTRAORDINARY GAIN                                                          0.04             0.87             0.35             0.81
------------------------------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS)                                                      $    0.28        $   (0.71)       $    1.03        $   (2.88)
====================================================================================================================================

WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING - BASIC                                                  61,343           58,376           60,233           62,317
====================================================================================================================================

DILUTED EPS:

INCOME (LOSS) BEFORE EXTRAORDINARY GAIN                                $    0.23        $   (1.58)       $    0.65        $   (3.69)

EXTRAORDINARY GAIN                                                          0.04             0.87             0.34             0.81
------------------------------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS)                                                      $    0.27        $   (0.71)       $    0.99        $   (2.88)
====================================================================================================================================

WEIGHTED AVERAGE COMMON AND COMMON  EQUIVALENT SHARES
     OUTSTANDING - DILUTED                                                63,480           58,376           63,093           62,317
====================================================================================================================================
</TABLE>
                    SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       4
<PAGE>


                         TALK.COM INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
                                   (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                     COMMON STOCK              ADDITIONAL                       TREASURY STOCK
                                 -----------------------        PAID-IN       ACCUMULATED   ------------------------
                                  SHARES         AMOUNT         CAPITAL         DEFICIT       SHARES         AMOUNT          TOTAL
                                 --------       --------       ----------     -----------   ---------      ---------         ------
<S>                              <C>              <C>           <C>            <C>           <C>           <C>             <C>

Balance, January 1, 1999          66,935          $669          $265,325       $(218,229)    (12,949)      $(184,550)     $(136,785)
  Net income                          --            --                --          62,248          --             --          62,248
  AOL investment                      --            --            (3,730)             --       4,121         58,730          55,000
  Exercise of common stock
     options                          --            --           (29,780)             --       3,863         54,770          24,990
  Acquisition of treasury
     stock                            --            --                --              --        (639)        (7,686)         (7,686)
  Issuance of common stock
     for convertible debt             --            --            (1,328)             --         575          8,186           6,858
  Contingent redemption value
     of common stock                  --            --           (25,115)             --          --             --         (25,115)
------------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 1999       66,935          $669          $205,372       $(155,981)     (5,029)      $(70,550)      $ (20,490)
====================================================================================================================================

</TABLE>

                    See accompanying notes to consolidated financial statements.

                                       5

<PAGE>


                         TALK.COM INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                          FOR THE NINE MONTHS
                                                                                          ENDED SEPTEMBER 30,
                                                                                    --------------------------------
                                                                                        1999              1998
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>              <C>
Cash flows from operating activities:
   Net income (loss)                                                                  $62,248          $(179,683)
   Adjustment to reconcile net income (loss) to net cash provided by (used in)
     operating activities:
   Provision for bad debts                                                              2,181              6,130
   Depreciation and amortization                                                        4,449              4,145
   Vested AOL warrants and amortization of prepaid AOL marketing costs                     --             71,665
   Purchased research and development                                                      --             21,034
   Deferred revenue                                                                    (5,550)            (5,550)
   Extraordinary gain                                                                 (21,230)           (50,562)
   Compensation charges                                                                    --              1,500
   Valuation allowance for deferred tax assets                                             --             40,388
   (Increase) decrease in:
     Accounts receivable, trade                                                       (12,772)           (14,207)
     Advances to partitions and notes receivable                                         (127)            20,794
     Prepaid expenses and other current assets                                         (1,896)            (4,741)
     Other assets                                                                       4,084            (67,578)
   Increase (decrease) in:
     Accounts and partition payables and accrued expenses                             (24,405)            35,485
     Other liabilities                                                                 (1,850)            (1,592)
--------------------------------------------------------------------------------------------------------------------
       Net cash provided by (used in) operating activities                              5,132           (122,772)
--------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
   Capital expenditures                                                                (4,671)            (8,369)
   Sale (purchase) of securities, net                                                  89,649             26,942
   Securities sold short                                                                   --            (21,087)
   Due from broker                                                                         --             21,087
   Acquisition of intangibles                                                              --               (285)
   Acquisition of ADS Holdings, Inc.                                                       --            (26,707)
--------------------------------------------------------------------------------------------------------------------
       Net cash provided by (used in) investing activities                             84,978             (8,419)
--------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
   Repayment of margin account indebtedness                                           (49,621)                --
   Proceeds from margin account indebtedness                                               --            107,323
   Acquisition of convertible debt                                                    (72,304)           (57,320)
   Proceeds from exercise of options and warrants                                      24,990             13,238
   AOL investment                                                                      55,000                 --
   Retirement of common stock                                                              --             (1,470)
   Acquisition of treasury stock                                                       (7,686)          (224,111)
--------------------------------------------------------------------------------------------------------------------
       Net cash used in financing activities                                          (49,621)          (162,340)
--------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                                   40,489           (293,531)
Cash and cash equivalents, at beginning of period                                       3,063            316,730
--------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, at end of period                                         $  43,552          $  23,199
--------------------------------------------------------------------------------------------------------------------

</TABLE>


                    See accompanying notes to consolidated financial statements.

                                       6

<PAGE>


                         TALK.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Basic Presentation

     The consolidated financial statements include the accounts of Talk.com Inc.
and its wholly-owned subsidiaries, 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
September  30, 1999 and for the three and nine months ended  September  30, 1999
and 1998 are presented as unaudited but in the opinion of management include all
adjustments necessary to present fairly the information set forth therein. These
adjustments  consist  solely  of normal  recurring  accruals.  The  consolidated
balance  sheet  information  for  December 31, 1998 was derived from the audited
financial  statements  included in the Company's  Form 10-K,  as amended.  These
interim  financial  statements should be read in conjunction with that Form 10-K
report.  The interim results are not  necessarily  indicative of the results for
any future periods.

2.   AOL Agreements

     The  Company  has  negotiated  a  number  of  amendments  to its  marketing
agreements  with America Online Inc.  ("AOL") based on the experience  gained by
the Company in the  marketing  and sale of telecom  services to AOL  subscribers
during 1998.  A  substantial  amendment to the AOL  agreement in January 1999 in
which the Company  agreed to fixed  quarterly  payments  ranging from $10 to $15
million  during  the  exclusivity  period  of the  agreement  resulted  in:  the
elimination  of the  Company's  obligation  to make  bounty  and  profit-sharing
payments to AOL;  alteration  of the terms of the online and  offline  marketing
arrangements between the Company and AOL; elimination of AOL's rights to receive
further  common  stock  warrants  based  upon  customers  gained  from  the  AOL
subscriber  base;  AOL's  contribution  of up to $4.0  million  per  quarter for
offline  marketing;  establishment  of the  framework  for the  Company to offer
additional  services and products to AOL subscribers;  and extension of the term
of the AOL agreement, including the long distance exclusivity period, until June
2003, although AOL can end the Company's long distance  exclusivity period on or
after June 30, 2000 by foregoing the fixed quarterly  payments  described above.
The fixed payments to AOL are being amortized  based on estimated  benefits from
the AOL subscriber base.

     On January 5, 1999, pursuant to an Investment Agreement between AOL and the
Company,  AOL  purchased  a total of  4,121,372  shares of  common  stock of the
Company  for $55.0  million  in cash and the  surrender  of  rights to  purchase
5,076,016  shares of common  stock of the Company  pursuant to various  warrants
held by AOL. AOL agreed to end further vesting under the outstanding performance
warrant and retained vested warrants exercisable for 2,721,984 shares of Company
common  stock.  See  Note  4(a)  for  a  discussion  of  certain   reimbursement
obligations of the Company in favor of AOL.

3.   Related Party Transactions

     On January 5, 1999, Mr. Daniel  Borislow,  a founder of the Company and its
Chairman of the Board and Chief  Executive  Officer,  resigned as a director and
officer of the Company.  The Company entered into various agreements and engaged
in various  transactions  with Mr. Borislow and certain  entities in which he or
his family had an interest.

     The Company paid $1.0 million to Mr. Borislow, assigned certain automobiles
to him, and  continued  certain of his health and medical  benefits and director
and officer  insurance.  The Company also agreed that,  as long as Mr.  Borislow
owned  beneficially  and of record at least two percent (2%) of the common stock
(on a fully  diluted  basis),  Mr.  Borislow  and trusts for the  benefit of his
children would be entitled to:  registration rights with respect to their shares
of common  stock;  the right to  require  the  Company  to use a portion  of the
proceeds  from any  public or private  sale of debt  securities  by the  Company
(excluding borrowings from commercial banks or other financial  institutions) to
repurchase  debt  securities of the Company owned by Mr.  Borislow or the trusts
for the benefit of his children; and the right to require the Company to use the
proceeds  from  the  exercise  of stock  options  or share  purchase  rights  to
repurchase  common stock owned by Mr.  Borislow or the trusts for the benefit of
his children  (see Note 4 (b)).  The Company  also agreed  that,  as long as Mr.
Borislow had such beneficial and record ownership,

                                       7

<PAGE>

                         TALK.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the Company  would not,  without the prior written  consent of Mr.  Borislow and
subject to certain  exceptions:  (a)  engage in  certain  significant  corporate
transactions,  including the sale or  encumbrance  of  substantially  all of its
assets,  mergers and consolidations and certain material  acquisitions,  or, (b)
for a period  of 18 months  from the  agreement  date,  offer or sell any of its
capital  stock  unless  and  until  Mr.  Borislow  and the  trusts  have sold or
otherwise  disposed  of all  the  shares  of  common  stock  held by them on the
agreement date. In turn, Mr. Borislow terminated his employment with the Company
and agreed not to compete with the Company for at least one year.  Mr.  Borislow
also agreed to guarantee up to $20.0  million of the  Company's  obligations  in
connection with the AOL investment discussed below.

     On January 5, 1999, the Company  assigned to a trust for the benefit of Mr.
Borislow's  children the Company's  interest in $53,700,000  principal amount of
subordinated notes of Communication TeleSystems International d/b/a WorldxChange
Communications,  which were  included in other assets at December  31, 1998,  in
exchange  for  $62,545,000  aggregate  principal  amount of the  Company's  2002
Convertible  Notes and 2004  Convertible  Notes owned by the trust. The exchange
rate was determined based on the Company's  assessment of the fair values of the
WorldxChange  Notes and of the  Company's  Convertible  Notes given in exchange,
which  assessment  was  supported  by the opinion of an  independent  investment
banking firm as to the fairness to the Company of the consideration received.

     On January 5, 1999,  the Company,  in open market  transactions,  purchased
from two trusts for the benefit of Mr. Borislow's children $65,080,000 aggregate
principal  amount of the Company's 2002  Convertible  Notes and 2004 Convertible
Notes owned by the trusts for $55.4 million in cash.

     On March 18, 1999,  the Company  purchased  from Mr.  Borislow  $11,477,000
aggregate  principal  amount of the Company's 2004  Convertible  Notes for $10.0
million in cash with proceeds from the exercise of stock options pursuant to the
agreements with Mr. Borislow as described  above.  During the three month period
ended June 30,  1999,  the Company  purchased  from Mr.  Borislow  approximately
639,000 shares of common stock for approximately $7.7 million with proceeds from
the exercise of stock options  pursuant to the agreements  with Mr.  Borislow as
described above. On September 30, 1999, the Company  purchased from Mr. Borislow
$9,300,000  aggregate  principal amount of the Company's 2004 Convertible  Notes
for $6.9  million in cash with the proceeds  from the exercise of stock  options
pursuant to agreements with Mr. Borislow.

4.   Stockholders' Equity

(a)  Contingent Redemption Value of Common Stock

     On January 5, 1999, pursuant to an Investment Agreement between AOL and the
Company, AOL acquired 4,121,372 shares of common stock for $55.0 million in cash
and the  surrender of rights to acquire up to  5,076,016  shares of common stock
pursuant  to various  warrants  held by AOL.  Under the terms of the  Investment
Agreement  with AOL, the Company has agreed to reimburse  AOL for losses AOL may
incur on the sale of any of the 4,121,372  shares during the period from June 1,
1999 through September 30, 2000. The Company has the first right to purchase any
of the 4,121,372  shares of common stock at the market value on the day that AOL
notifies the Company of its intent to sell any of the shares plus an amount,  if
any,  equal to the  Company's  reimbursement  obligation  described  below.  The
reimbursement amount would be determined by multiplying the number of shares, if
any, that AOL sells during the applicable  period by the difference  between the
purchase price per share paid by AOL, or $19 per share,  and the price per share
that AOL sells the shares  for,  if less than $19 per share.  The  reimbursement
amount may not exceed  $14 per share for  2,894,737  shares or $11 per share for
1,226,635   shares.   Accordingly,   the  maximum   amount  payable  to  AOL  as
reimbursement on the sale of AOL's shares would be  approximately  $54.0 million
plus AOL's reasonable expenses incurred in connection with the sale. The Company
has the option of issuing a  six-month  10% note  payable to AOL to satisfy  the
reimbursement  amount or other amounts  payable on exercise of its first refusal
rights.  Assuming  AOL were to sell all of its shares  subject to the  Company's
reimbursement  obligation at the closing price of the Company's  common stock as
of September 30, 1999, the  reimbursement  amount would be  approximately  $25.1
million.  At September  30, 1999,  the Company  recorded  $25.1  million for the
contingent redemption value of this common stock with a corresponding  reduction
in additional paid-in capital.  As previously  reported,  the Company received a
letter  from AOL,  dated  August 25,  1999,  stating  that AOL did not intend to
exercise its reimbursement rights under the Investment Agreement (to require the
Company to reimburse AOL shortfalls on sales of the Company common stock that it
acquired in January 1999) any earlier than  December 31, 1999.  AOL also has the
right on termination of long distance

                                       8
<PAGE>
                         TALK.COM INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

exclusivity  under the AOL  marketing  agreements  to  require  the  Company  to
repurchase  the  warrants to purchase  2,721,984  shares of common  stock of the
Company held by AOL for a minimum price of $36.3 million, which repurchase price
can be paid in Company common stock,  cash or a six-month  note. AOL can end the
Company's  long  distance  exclusivity  period  on or  after  June  30,  2000 by
foregoing certain fixed quarterly payments. The Company has pledged the stock of
its  subsidiaries  and has agreed to fund an escrow account of up to $35 million
from 50% of the proceeds of any debt financing, other than a bank, receivable or
other asset based  financing  of up to $50  million,  to secure its  obligations
under the Investment Agreement with AOL. AOL has agreed that it will subordinate
its security interests to permit the securitization of certain future financings
by the Company.  Mr.  Borislow has agreed to guarantee up to  $20,000,000 of the
Company's reimbursement obligations under the Investment Agreement with AOL.

(b)  Restriction on Future Sales of Common Stock

     As  previously  reported,  the Company was subject to certain  restrictions
under a registration  rights agreement between the Company and Mr. Borislow that
could have affected the  Company's  ability to raise capital and engage in other
types of financing transactions. Since Mr. Borislow currently holds less than 2%
of  the  Company's  outstanding  common  stock,  these  restrictions  have  been
suspended and no longer apply to the Company.  If at a later date Mr. Borislow's
beneficial and record ownership of common stock equals or exceeds 2% solely as a
result of Mr. Borislow receiving distributions of common stock from two existing
trusts organized for the benefit of his children,  then such restrictions  would
once  again  apply  to the  Company.  In all  events,  under  the  terms  of the
registration  rights agreement with Mr. Borislow,  these  restrictions,  even if
they should  become  applicable  again to the Company,  shall expire on June 30,
2000 and be of no further  force and effect,  regardless of the ownership by Mr.
Borislow of shares of common stock.

5.   Legal Proceedings

     On June 16,  1998,  a purported  shareholder  class action was filed in the
United States District Court for the Eastern  District of  Pennsylvania  against
the Company and certain of its officers  alleging  violation  of the  securities
laws in connection  with certain  disclosures  made by the Company in its public
filings and seeking unspecified damages. Thereafter,  additional lawsuits making
substantially  the same  allegations  were filed by other plaintiffs in the same
court. At this point,  no classes have been  certified.  A motion to dismiss was
granted as to certain  officers  of the  Company  and denied as to the  Company.
There are currently no officers of the Company who are parties to these actions.
The Company  believes the  allegations  in the  complaints are without merit and
intends to defend the  litigations  vigorously.  The Company  also is a party to
certain legal actions 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 of results of operations.

                                       9

<PAGE>


                         TALK.COM INC. AND SUBSIDIARIES

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



RESULTS OF OPERATIONS

         The  following  tables  set forth  for the  periods  indicated  certain
financial data as a percentage of sales:

<TABLE>
<CAPTION>


                                                           FOR THE THREE MONTHS ENDED
                                                                 SEPTEMBER 30,
                                                           --------------------------
                                                                1999        1998
                                                                ----        ----
<S>                                                             <C>         <C>

Sales                                                          100.0%      100.0%
Cost of sales                                                   61.0        81.4
                                                               -----       -----
Gross profit                                                    39.0        18.6
General and administrative expenses                              8.1         8.8
Promotional, marketing and advertising expenses                 19.8        87.9
Significant other charges                                         --         0.3
                                                               -----       -----
Operating income (loss)                                         11.1       (78.4)
Investment and other income (expense), net                      (0.6)        3.1
                                                               -----       -----
Income (loss) before income taxes                               10.5       (75.3)
Provision for income taxes                                        --          --
                                                               -----       -----
Income (loss) before extraordinary gain                         10.5       (75.3)
Extraordinary gain                                               1.6        41.2
                                                               -----       -----
Net income (loss)                                               12.1%      (34.1)%
                                                               =====       =====


                                                             FOR THE NINE MONTHS ENDED
                                                                   SEPTEMBER 30,
                                                             --------------------------
                                                                1999         1998
                                                                ----         ----
Sales                                                          100.0%      100.0%
Cost of sales                                                   63.5        83.0
                                                               -----       -----
Gross profit                                                    36.5        17.0
General and administrative expenses                              8.3         9.4
Promotional, marketing and advertising expenses                 17.3        59.3
Significant other charges (income)                              (0.8)        6.7
                                                               -----       -----
Operating income (loss)                                         11.7       (58.4)
Investment and other income (expense), net                      (0.5)         --
                                                               -----       -----
Income (loss) before income taxes                               11.2       (58.4)
Provision for income taxes                                        --        12.5
                                                               -----       -----
Income (loss) before extraordinary gain                         11.2       (70.9)
Extraordinary gain                                               5.7        15.6
                                                               -----       -----
Net income (loss)                                               16.9%      (55.3)%
                                                               =====       =====

</TABLE>


                                       10

<PAGE>

                         TALK.COM INC. AND SUBSIDIARIES

THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS
ENDED SEPTEMBER 30, 1998

         Sales.  Sales increased by 14.3% to $140.0 million in the third quarter
of 1999 from $122.5  million in the third quarter of 1998. The increase in sales
primarily reflected an increase in the number of online customers.  The increase
in online sales was partially offset by a decrease in the Company's other sales.

         Cost of Sales. Cost of sales decreased by 14.3% to $85.5 million in the
third  quarter of 1999 from $99.8  million  in the third  quarter of 1998.  This
decrease  was  primarily  due to lower  network  usage costs for services on the
Company's OBN network on a per minute basis and lower partition costs due to the
decrease in other sales, as noted above.

         Gross Margin.  Gross margin  increased to 39.0% in the third quarter of
1999 from 18.6% in the third  quarter of 1998.  The increase in gross margin was
primarily  due to lower  network  usage  costs for OBN  services on a per minute
basis and lower  partition  costs due to the decrease in other  sales,  as noted
above.  The Company  anticipates  continued gross margin  improvement;  however,
price  competition  continues to intensify for the  Company's  products and this
trend can be expected to continue to put downward pressure on gross margins.

         Other Operating Expenses. General and administrative expenses increased
by 4.2% to $11.3  million in the third quarter of 1999 from $10.8 million in the
third quarter of 1998. The increase in general and  administrative  expenses was
due primarily to increased costs associated with hiring additional  personnel to
support the Company's  continuing  growth,  offset by the elimination of general
and  administrative  expenses of TSFL  Holdings,  Inc. (as discussed  below) and
decreased fees for professional services.  During the third quarter of 1999, the
Company incurred $27.7 million of promotional, marketing and advertising expense
to expand its  online  customer  base.  During  the third  quarter of 1998,  the
Company  incurred  $107.7  million of  promotional,  marketing  and  advertising
expense,  including $16.3 million related to the AOL Agreement, $5.9 million for
the  performance  warrants issued to AOL on September 30, 1998 and $85.5 million
of promotional,  marketing and advertising expense to expand its online customer
base.

         Investment and Other Income (Expense), Net. Investment and other income
(expense),  net was $(0.9)  million in the third  quarter  of 1999  versus  $3.8
million  in the  third  quarter  of 1998.  During  the  third  quarter  of 1999,
investment and other income (expense), net consists primarily of interest income
offset by interest expense related to the Company's convertible debt.

         Extraordinary  gain.  During  the third  quarter of 1999,  the  Company
recorded an  extraordinary  gain of $2.2  million  from the  acquisition  of the
Company's convertible debt at a discount from its aggregate principal amount.



                                       11

<PAGE>


                         TALK.COM INC. AND SUBSIDIARIES

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 1998

         Sales.  Sales  increased  by 13.2% to $367.7  million in the first nine
months  of 1999  from  $324.8  million  in the first  nine  months of 1998.  The
increase  in sales  primarily  reflected  an  increase  in the  number of online
customers.  The increase in online sales was  partially  offset by a decrease in
the Company's other sales.

         Cost of Sales.  Cost of sales  decreased by 13.3% to $233.6  million in
the first nine  months of 1999 from  $269.4  million in the first nine months of
1998.  This decrease was primarily due to lower network usage costs for services
on the Company's OBN network on a per minute basis and lower partition costs due
to the decrease in other sales, as noted above.

         Gross Margin.  Gross margin increased to 36.5% in the first nine months
of 1999 from  17.0% in the first  nine  months of 1998.  The  increase  in gross
margin was  primarily due to lower network usage costs for OBN services on a per
minute basis and lower  partition  costs due to the decrease in other sales,  as
noted above.

         Other Operating Expenses. General and administrative expenses decreased
by 0.6% to $30.5  million in the first nine months of 1999 from $30.6 million in
the first  nine  months of 1998.  The  decrease  in general  and  administrative
expenses was due  primarily  to the  elimination  of general and  administrative
expenses of TSFL  Holdings,  Inc. (as discussed  below) and  decreased  fees for
professional  services,   offset  by  increased  costs  associated  with  hiring
additional  personnel to support the  Company's  continuing  growth.  During the
first nine months of 1999, the Company  incurred  $63.5 million of  promotional,
marketing and advertising expense to expand its online customer base. During the
first nine months of 1998, the Company  incurred  $192.6 million of promotional,
marketing and  advertising  expense,  including $49.7 million related to the AOL
Agreement,  $22.0 million for the performance  warrants issued to AOL during the
first nine  months of 1998 and  $120.9  million of  promotional,  marketing  and
advertising  expense to expand its online  customer base.  During the first nine
months  of 1999,  the  Company  sold TSFL  Holdings,  Inc.  (formerly  Symetrics
Industries,  Inc.),  resulting in a gain of $2.7  million  which was included in
significant  other charges  (income).  During the first nine months of 1998, the
Company  allocated $21.0 million of the acquisition cost of TSFL Holdings,  Inc.
to purchased research and development expense, which was included in significant
other charges (income).

         Investment and Other Income (Expense), Net. Investment and other income
(expense),  net was  $(1.9)  million  in the first  nine  months of 1999  versus
$(59,000)  in the first nine  months of 1998.  During  the first nine  months of
1999, investment and other income (expense),  net consists primarily of interest
income offset by interest expense related to the Company's convertible debt.

         Extraordinary  gain.  During the first nine months of 1999, the Company
recorded an  extraordinary  gain of $21.2  million from the  acquisition  of the
Company's convertible debt at a discount from its aggregate principal amount.


                                       12

<PAGE>


                         TALK.COM INC. AND SUBSIDIARIES


LIQUIDITY AND CAPITAL RESOURCES

         The  Company's  working  capital was $50.5 million and $13.1 million at
September 30, 1999 and December 31, 1998, respectively. This increase in working
capital is primarily a result of the cash generated during the first nine months
1999 from the Company's operations.

         The Company  expended an aggregate of $132.9  million of cash,  Company
common  stock  and  other  consideration  for  the  repurchase  of an  aggregate
principal  amount of $157.4 million of  Convertible  Notes during the first nine
months of 1999. The Company (a) purchased  from Mr.  Borislow and two trusts for
the benefit of Mr. Borislow's children $85,857,000 aggregate principal amount of
the Company's  Convertible  Notes for $72.3  million in cash;  (b) exchanged the
$53.7 million remaining on the WorldxChange  Notes to a trust for the benefit of
Mr.  Borislow's  children  for  $62,545,000  aggregate  principal  amount of the
Company's  Convertible Notes and (c) purchased  $9,000,000  aggregate  principal
amount of the  Company's  Convertible  Notes for $6.9 million in Company  common
stock.  As of September 30, 1999,  the Company had reduced the principal  amount
outstanding of its  Convertible  Notes to $85.0 million ($66.9 million of 4 1/2%
notes and $18.1  million of 5%  notes).  The  Company  also  purchased  from Mr.
Borislow  approximately  639,000 shares of common stock for  approximately  $7.7
million  during the first six months of 1999 with  proceeds from the exercise of
stock options pursuant to agreements with Mr. Borislow.

         On January 5, 1999, pursuant to an Investment Agreement between AOL and
the Company,  AOL acquired 4,121,372 shares of common stock for $55.0 million in
cash and the  surrender  of rights to acquire up to  5,076,016  shares of common
stock  pursuant  to  various  warrants  held  by AOL.  Under  the  terms  of the
Investment  Agreement  with AOL,  the  Company has agreed to  reimburse  AOL for
losses  AOL may  incur on the sale of any of the  4,121,372  shares  during  the
period from June 1, 1999 through  September 30, 2000.  The Company has the first
right to  purchase  any of the  4,121,372  shares of common  stock at the market
value on the day that AOL  notifies the Company of its intent to sell any of the
shares plus an amount, if any, equal to the Company's  reimbursement  obligation
described below. The reimbursement amount would be determined by multiplying the
number of shares,  if any,  that AOL sells during the  applicable  period by the
difference  between the purchase  price per share paid by AOL, or $19 per share,
and the price per share  that AOL  sells the  shares  for,  if less than $19 per
share.  The  reimbursement  amount may not  exceed  $14 per share for  2,894,737
shares or $11 per share for 1,226,635  shares.  Accordingly,  the maximum amount
payable  to  AOL  as  reimbursement  on  the  sale  of  AOL's  shares  would  be
approximately   $54.0  million  plus  AOL's  reasonable   expenses  incurred  in
connection  with the sale. The Company has the option of issuing a six-month 10%
note payable to AOL to satisfy the reimbursement amount or other amounts payable
on exercise of its first  refusal  rights.  Assuming AOL were to sell all of its
shares subject to the Company's reimbursement obligation at the closing price of
the Company's  common stock as of September 30, 1999, the  reimbursement  amount
would be  approximately  $25.1  million.  At  September  30,  1999,  the Company
recorded $25.1 million for the contingent  redemption value of this common stock
with a  corresponding  reduction in additional  paid-in  capital.  As previously
reported, the Company received a letter from AOL, dated August 25, 1999, stating
that  AOL  did not  intend  to  exercise  its  reimbursement  rights  under  the
Investment  Agreement  (to require the Company to reimburse  AOL  shortfalls  on
sales of the Company  common stock that it acquired in January 1999) any earlier
than December 31, 1999.  AOL also has the right on  termination of long distance
exclusivity  under the AOL  marketing  agreements  to  require  the  Company  to
repurchase  the  warrants to purchase  2,721,984  shares of common  stock of the
Company held by AOL for a minimum price of $36.3 million, which repurchase price
can be paid in Company common stock,  cash or a six-month  note. AOL can end the
Company's  long  distance  exclusivity  period  on or  after  June  30,  2000 by
foregoing certain fixed quarterly payments. The Company has pledged the stock of
its  subsidiaries  and has agreed to fund an escrow account of up to $35 million
from 50% of the proceeds of any debt financing, other than a bank, receivable or
other asset based  financing  of up to $50  million,  to secure its  obligations
under the Investment Agreement with AOL. AOL has agreed that it will subordinate
its security interests to permit the securitization of certain future financings
by the Company.  Mr.  Borislow has agreed to guarantee up to  $20,000,000 of the
Company's reimbursement obligations under the Investment Agreement with AOL.

         As previously reported, the Company was subject to certain restrictions
under a registration  rights agreement between the Company and Mr. Borislow that
could have affected the  Company's  ability to raise capital and engage in other
types of financing transactions. Since Mr. Borislow currently holds less than 2%
of  the


                                       13

<PAGE>
                         TALK.COM INC. AND SUBSIDIARIES

Company's  outstanding  common stock, these restrictions have been suspended and
no longer apply to the Company. If at a later date Mr. Borislow's beneficial and
record  ownership of common stock equals or exceeds 2% solely as a result of Mr.
Borislow  receiving  distributions  of common  stock  from two  existing  trusts
organized for the benefit of his  children,  then such  restrictions  would once
again apply to the Company.  In all events,  under the terms of the registration
rights  agreement with Mr.  Borislow,  these  restrictions,  even if they should
become applicable again to the Company,  shall expire on June 30, 2000 and be of
no further  force and effect,  regardless  of the  ownership by Mr.  Borislow of
shares of common stock.

         The Company  generally  does not have a  significant  concentration  of
credit risk with respect to accounts  receivable  due to the large number of end
users  comprising  the  Company's  customer  base and  their  dispersion  across
different  geographic  regions.  The Company  maintains  reserves for  potential
credit  losses  and,  to date,  such  losses  have  been  within  the  Company's
expectations.

         The Company does not, and has not  historically,  required  significant
amounts of working capital for its day-to-day  operations.  The Company believes
that its current cash position and the cash flow  expected to be generated  from
operations will be sufficient to fund its capital expenditures,  working capital
and other cash  requirements  for at least the next twelve  months.  The Company
also believes that,  assuming the current market price of its common stock,  its
cash flow from operations will be sufficient to fund any reimbursement amount in
the event that AOL elects to sell its shares of the Company's  common stock at a
price below $19 per share and that, alternatively,  it has the ability to obtain
the  necessary  financing  to fund  its  obligations  under  the AOL  Investment
Agreement.  Should the Company seek to raise additional capital, there can be no
assurance that,  given current market  conditions,  the Company would be able to
raise such additional capital on terms acceptable to the Company.

         YEAR 2000

         The "Year  2000  issue"  refers  to the  potential  harm from  computer
programs  that  identify  dates by the last two digits of the year  rather  than
using the full four digits. Such programs could fail due to misidentification of
dates  on or after  January  1,  2000.  If such a  failure  were to occur to the
Company's  internal  computer-based  systems  or to the  computer-based  systems
operated by third  parties that are critical to the  Company's  operations,  the
Company could be unable to continue to provide  telecommunications  services, to
sign up new customers or to bill existing customers for services. Such failures,
if  they  occurred,  would  have a  material  adverse  effect  on the  Company's
business, results of operations and financial condition. However, because of the
complexity of the issues,  the number of parties involved and the fact that many
of the issues are outside the Company's  control,  the Company cannot reasonably
predict with certainty the nature or likelihood of such effects.

         The Company,  using its internal staff, has conducted a review and test
of most of the internal  computer-based  systems.  Most of the Company's systems
are relatively  new. Much of the software used by the Company has been developed
internally  and  is  regularly   modified  and  updated  to  meet  the  changing
requirements  of its business.  The Company  expects that its critical  internal
systems  will be able to  process  relevant  date  information  in the future to
permit the  Company to  continue to provide  its  services  without  significant
interruption or material  adverse effect on its business,  results of operations
and financial  condition.  However,  there can be no assurances that the Company
will not experience  unanticipated  negative  consequences  caused by undetected
errors or defects in the technology used in its internal systems.

     Notwithstanding the Company's expectation that its own systems will be able
to  process  Year  2000  date  information,   the  Company's   business  depends
significantly  on  receiving   uninterrupted  services  by  other  parties.  The
principal   service   suppliers  to  the  Company  include  other   switch-based
long-distance  providers, the local exchange carriers throughout the country and
AOL.  Other parties whose ability to deal with Year 2000 issues could affect the
Company include the Company's partitions and the credit and debit card companies
through which most of the Company's online customers are billed. The Company has
made  inquiry of some of these  parties  regarding  their  respective  levels of
preparedness  for Year 2000 issues as they may affect the  Company.  The Company
will continue to make such inquiries and will monitor the public  disclosures of
such companies  regarding their Year 2000 status.  So far, the responses to such
inquiries have been generally  non-committal regarding levels of preparedness or
willingness  to provide  assurances  to the  Company.  In almost all cases,  the
Company is not in a position to require either  affirmative action or assurances
by these  parties  regarding  continued  provision of services in the Year 2000.
Accordingly,  while  the  Company  has not been  advised  by any of these  other
companies  on which it depends that they do not expect to be ready for Year 2000
issues,  the  Company  does not  believe  it is in a  position  to  project  the
likelihood of such parties' abilities to provide  uninterrupted  services to the
Company. The Company has considered 14
<PAGE>
                         TALK.COM INC. AND SUBSIDIARIES

possible  contingency  plans.  Although  the Company has entered  into  multiple
contracts with long-distance  service providers to support its OBN network,  the
failure of any of the significant  suppliers to provide uninterrupted service to
the  Company  would  likely  have a  material  adverse  effect on the  Company's
business and its results of operations and financial condition.

         The Company does not  separately  identify costs incurred in connection
with Year 2000 compliance  activities.  To date,  however,  the Company does not
believe such costs to be  significant  because they generally have been incurred
in the normal course of internally modifying and updating the Company's software
programs.  Future  expenditures  are not expected to be significant  and will be
funded out of operating cash flows.

                                    * * * * *

         Certain  of  the   statements   contained   herein  may  be  considered
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933  and  Section  21E of the  Securities  Exchange  Act of  1934.  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  herein,  important factors that
could cause such actual  results to differ  materially  include,  among  others,
adverse  developments in the Company's  relationship  with AOL,  increased price
competition  for  long  distance  services,  failure  of the  marketing  of long
distance  services under the AOL Agreement and its other  marketing  agreements,
attrition  in the  number  of end  users,  and  changes  in  government  policy,
regulation and enforcement.  The Company undertakes no obligations to update its
forward-looking statements.


                                       15

<PAGE>



PART II - OTHER INFORMATION

Item 4.    Submission of Matters to a Vote of Security Holders

           (a)   The  Company's  Annual  Meeting  of  Stockholders  was  held on
                 November 10, 1999 ("Annual Meeting").
           (b)   Not applicable.
           (c)   At  the  Annual  Meeting,   the  stockholders  of  the  Company
                 considered and approved the following proposals:
                 (i)  Election of Director. The following sets forth the nominee
                      who was  elected a director  of the  Company  for the term
                      expiring  in the year  indicated  as well as the number of
                      votes cast for, against or withheld.

<TABLE>
<CAPTION>

<S>                                 <C>                    <C>                      <C>                    <C>
                                                           VOTES
     TERM (YEAR EXPIRES)                NAME                    FOR                  AGAINST                WITHHELD
            2002                   Mark S. Fowler            45,389,023                  0                  6,032,671

</TABLE>


                 (ii) At  the  Annual  Meeting  the  stockholders  approved  the
                      appointment  of BDO Seidman LLP as  independent  certified
                      public   accountants  of  the  Company.   The  appointment
                      received   51,299,558  votes  in  favor,  75,265  votes in
                      opposition  and 46,871 votes abstained from such.

Item 6.    Exhibits and Reports on Form 8-K

           (a)   Exhibits

                 11     Computation of Net Income Per Share
                 27     Financial Data Schedule

           (b)   Reports on Form 8-K

                 Since June 30, 1999,  the  Company  filed  one  Current  Report
                 on Form 8-K,  which  related  to the  Company's  adoption  of a
                 shareholder  rights  plan and  disclosed  that the  Company had
                 received a letter from  America  Online,  Inc.  relating to its
                 intent with respect to the  Investment Agreement, as previously
                 described in this Report.


                                       16

<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.

Date:    November 12, 1999                      TALK.COM INC.
                                                --------------------------------
                                                        (Registrant)

                                           By:  /s/ Gabriel Battista
                                                --------------------------------
                                                Gabriel Battista
                                                Chief Executive Officer



                                           By:  /s/ Edward B. Meyercord, III
                                                --------------------------------
                                                Edward B. Meyercord, III
                                                Chief Financial Officer

                                           By:  /s/ Kevin R. Kelly
                                                --------------------------------
                                                Kevin R. Kelly
                                                Controller


                                       17