SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A
                                 AMENDMENT NO.2
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                      For the Year Ended December 31, 1998

                           Commission File No. 0-26728

                                  TALK.COM INC.
                          FORMERLY, TEL-SAVE.COM, INC.
             (Exact name of registrant as specified in its charter)

                  DELAWARE                                    23-2827736
      (State or other jurisdiction of                      (I.R.S. Employer
       incorporation or organization)                   Identification Number)

                      12020 SUNRISE VALLEY DRIVE, SUITE 100
                             RESTON, VIRGINIA 22091
                                 (703) 391-7500
                   (Address, including zip code, and telephone
                  number, including area code, of registrant's
                          principal executive offices)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

       Title of each class:           Name of each exchange on which registered:
              None                                   Not applicable

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                     COMMON STOCK, PAR VALUE $.01 PER SHARE

Indicate by check mark whether the  Registrant  (1) has filed all  documents and
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 by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of the

<PAGE>



Registrant's   knowledge,   in  definitive   proxy  or  information   statements
incorporated by reference in Part III of this Form 10-K or any amendment of this
Form 10-K. [X]

The  aggregate  market  value of  voting  stock  held by  non-affiliates  of the
registrant  as of April 26,  1999 was  approximately  $741,591,301  based on the
average  of the high and low  prices of the  Common  Stock on April 26,  1999 of
$13.56 per share as reported on the Nasdaq National Market.

As of April 26,  1999,  the  Registrant  had issued and  outstanding  60,141,892
shares of its Common Stock, par value $.01 per share.



                                       2
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

         The following  sets forth  certain  biographical  information,  present
occupation  and  business  experience  for the past  five  years for each of the
directors of the Company.

CLASS I:  TERMS TO EXPIRE IN 2001

        GABRIEL  BATTISTA,  AGE 54.  Mr.  Battista  became  a  director  and the
Chairman of the Board,  Chief Executive  Officer and President of the Company on
January 5, 1999.  Prior to joining the  Company,  Mr.  Battista  served as Chief
Executive   Officer  of  Network   Solutions   Inc.,  an  Internet  domain  name
registration  company.  Prior to joining Network Solutions,  Mr. Battista served
from 1995 to 1996 as CEO and from 1991 to 1995 as President and Chief  Operating
Officer of Cable &  Wireless,  Inc.,  the  nation's  largest  telecommunications
provider  exclusively  serving  businesses.  His career also includes management
positions at US Sprint, GTE Telenet and General Electric  Information  Services.
Mr.  Battista  also serves as a director of Axent  Technologies,  Inc.,  Capitol
College, Systems & Computer Technology Corporation (SCT) and Online Technologies
Group, Inc. (OTG).

         RONALD R. THOMA,  AGE 61. Mr. Thoma currently  serves as Executive Vice
President of Crown Cork and Seal Company,  Inc. where he has been employed since
1955. Mr. Thoma has served as a director of the Company since 1995.

CLASS II:  TERMS TO EXPIRE IN 2000

        GEORGE P. FARLEY,  AGE 60. Mr. Farley became Chief Financial Officer and
Treasurer  of the Company  effective  October 29, 1997.  Mr.  Farley is formerly
Group Vice President of Finance/Chief  Financial  Officer of Twin County, a food
distribution company. Twin County filed a petition under Federal bankruptcy laws
in December 1998. Prior to joining Twin County in September 1995, Mr. Farley was
a partner of BDO Seidman,  LLP, where he had served as a partner since 1974. Mr.
Farley has served as a director of the Company since late 1996.

        GARY W. MCCULLA,  AGE 39. Mr.  McCulla  joined the Company in March 1994
and  previously  served as President  and Director of Sales and Marketing of the
Company until his retirement  from those offices on January 5, 1999. Mr. McCulla
has served as a director of the Company since 1995.

CLASS III: TERMS TO EXPIRE IN 1999

        EMANUEL J.  DEMAIO,  AGE 40. Mr.  DeMaio  joined the Company in February
1992 and  currently  serves as Chief  Operations  Officer.  Prior to joining the
Company,  from  1981  through  1992,  Mr.  DeMaio  held  various  technical  and
managerial  positions  with AT&T.  Mr.  DeMaio  has served as a director  of the
Company since 1995.


                                       3
<PAGE>

         HAROLD FIRST,  AGE 61. Mr. First is a certified  public  accountant and
currently is a financial consultant. Mr. First served as Chief Financial Officer
of Icahn  Holdings  Company and related  entities  from  December  1990  through
December 1992. Mr. First serves as a director of Cadus  Pharmaceutical  Company,
Panaco,  Inc. and Phillips  Service Corp.  Mr. First has served as a director of
the Company since 1995.

         Under Mr. Battista's  employment agreement with the Company, he has the
right to  nominate a majority  of the Board of  Directors  of the Company at the
next annual meeting of  shareholders. 


EXECUTIVE OFFICERS

         The  executive  officers  of the  Company as of April 28,  1999 were as
follows:

<TABLE>
<CAPTION>


NAME                                  AGE      POSITION
----                                  ---      --------
<S>                                   <C>
Gabriel Battista                      54       Chairman of the Board, Chief Executive Officer, President and Director
Emanuel J. DeMaio                     40       Chief Operations Officer and Director
George P. Farley                      60       Chief Financial Officer, Treasurer and Director
Michael Ferzacca                      41       Executive Vice President, Sales
Norris M. Hall, III                   38       Senior Vice President, Network Management
Edward B. Meyercord, III              33       Executive Vice President, Marketing and Corporate Development
George Vinall                         43       Executive Vice President, Business Development
Aloysius T. Lawn, IV                  40       General Counsel and Secretary
Kevin R. Kelly                        34       Controller

</TABLE>


GABRIEL BATTISTA.  Mr. Battista became a director and the Chairman of the Board,
Chief Executive  Officer and President of the Company on January 5, 1999.  Prior
to joining  the  Company,  Mr.  Battista  served as Chief  Executive  Officer of
Network Solutions Inc. Prior to joining Network  Solutions,  Mr. Battista served
as CEO, from 1995 to 1996, and as President and Chief  Operating  Officer,  from
1991 to 1995, of Cable & Wireless, Inc., the nation's largest telecommunications
provider  exclusively  serving  businesses.  His career also includes management
positions at US Sprint, GTE Telenet and General Electric  Information  Services.
Mr.  Battista  also serves as a director of Axent  Technologies,  Inc.,  Capitol
College, Systems & Computer Technology Corporation (SCT) and Online Technologies
Group, Inc. (OTG).

EMANUEL J. DEMAIO.  Mr. DeMaio joined the Company in February 1992 and currently
serves as a Director  and as Chief  Operations  Officer.  Prior to  joining  the
Company,  from  1981  through  1992,  Mr.  DeMaio  held  various  technical  and
managerial  positions with AT&T. As of May 14, 1999, Mr. DeMaio's  employment at
the Company


                                       4
<PAGE>




will  terminate,  pursuant to the Letter  Agreement  between Mr.  DeMaio and the
Company dated April 6, 1999.

GEORGE P. FARLEY. Mr. Farley became Chief Financial Officer and Treasurer of the
Company  effective October 29, 1997. Mr. Farley is formerly Group Vice President
of Finance/Chief Financial Officer of Twin County Grocers, Inc. ("Twin County"),
a food distribution company. Prior to joining Twin County in September 1995, Mr.
Farley was a partner of BDO Seidman, LLP, where he had served as a partner since
1974.

MICHAEL  FERZACCA.  Mr. Ferzacca became  Executive Vice President,  Sales of the
Company in January  1999.  Prior to joining  the  Company,  he served in various
roles at Cable & Wireless USA, a telecommunications  provider, including manager
of the Alternate Channels Division and Co-Chief Operating Officer.

NORRIS M. HALL, III. Mr. Hall became Senior Vice President,  Network Management,
of the  Company in January  1999.  Prior to joining  the  Company,  he served as
Senior  Vice  President,   Network  Operations  of  Premiere   Technologies,   a
telecommunications service provider, from August 1998 to December 1998. Prior to
joining Premiere Technologies he served as Vice President, Network Operations of
Cable and Wireless, an international common carrier.

EDWARD B. MEYERCORD, III. Mr. Meyercord joined the Company in September 1996 and
currently   serves  as  Executive  Vice   President,   Marketing  and  Corporate
Development.  From 1993 until joining the Company,  Mr.  Meyercord worked in the
corporate  finance  department  of  Salomon  Brothers,  where  he  held  various
positions, the most recent of which was Vice President. Prior to joining Salomon
Brothers,  Mr.  Meyercord  worked in the corporate  finance  department at Paine
Webber Incorporated.

GEORGE VINALL. Mr. Vinall became Executive Vice President,  Business Development
of the  Company  in January  1999.  Prior to  joining  the  Company he served as
President  of  International   Protocol  LLC,  a  telecommunication   consulting
business,  as  General  Manager  of  Cable  &  Wireless  Internet  Exchange,  an
international  internet service  provider,  and as Vice President,  Regulatory &
Government Affairs of Cable and Wireless North America, an international  common
carrier.

ALOYSIUS T. LAWN,  IV. Mr. Lawn joined the Company in January 1996 and currently
serves as General  Counsel and  Secretary of the  Company.  Prior to joining the
Company, from 1985 through 1995, Mr. Lawn was an attorney in private practice.

KEVIN R. KELLY.  Mr. Kelly joined the Company in April 1994 and currently serves
as Controller.  From 1987 to 1994, Mr. Kelly held various  managerial  positions
with a major public accounting firm. Mr. Kelly is a certified public accountant.

COMPENSATION OF DIRECTORS

         The Company currently pays non-employee directors an annual retainer of
$10,000.  In October,  1998, the Company's employee directors approved the grant
to each of the two


                                       5
<PAGE>



non-employee directors of an option to purchase 30,000 shares of Common Stock at
the  then-current  market  value under the 1998  Long-Term  Incentive  Plan.  In
December 1998, the employee  directors  approved an additional  grant to each of
the two non-employee  directors of an option to purchase 30,000 shares of Common
Stock at the then-current market value.

          The Company's employee directors may, from time to time in the future,
grant  options  to  non-employee  directors.  Non-employee  directors  also  are
reimbursed for reasonable  expenses  incurred in connection  with  attendance at
Board meetings or meetings of committees thereof.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

         The following  table sets forth  information for the fiscal years ended
December 31, 1998, 1997 and 1996 as to the  compensation  paid by the Company to
the Chief Executive Officer for services rendered and the four other most highly
compensated  executive  officers of the Company  whose  annual  salary and bonus
exceeded $100,000 (the "Named Executives").

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

Name and Principal Position                                              Annual Compensation            Long Term
                                                                                                      Compensation
-----------------------------------------------------                ----------------------------    ----------------
                                                                                                       Securities
                                                                                                       Underlying
                                                                                                      Options/SARs
                                                                                                           (#)(3)
                                                                                                           ------
                                                          Year         Salary(2)     Bonus(2)
                                                          ----         ---------     --------
<S>                                                       <C>          <C>          <C>                  <C> 
DANIEL BORISLOW, Chairman and Chief Executive Officer(1)  1998         $325,000     $400,000(6)          750,000
                                                          1997         $325,000     $500,000                --
                                                          1996         $325,000     $500,000                --

GARY W. MCCULLA, President and Director of Sales          1998         $300,000     $446,955(4)          350,000
and Marketing(5)
                                                          1997         $300,000     $500,000(6)             --
                                                          1996         $300,000     $350,000             900,000

EMMANUEL J. DEMAIO, Chief Operations Officer(7)           1998         $185,000     $345,382(4)          350,000

                                                          1997         $175,000     $225,000(6)             --
                                                          1996         $165,000     $150,000             270,000

EDWARD B. MEYERCORD, III, Executive Vice President        1998         $200,000     $128,338(4)             --
- Marketing and Corporate Development
                                                          1997         $210,000     $150,000                --
                                                          1996(8)      $52,000      $400,000             800,000


GEORGE P. FARLEY, Chief Financial Officer and Treasurer   1998         $200,000     $100,000(6)          250,000
                                                          1997(9)      $28,462      $5,000(6)            200,000(9)

</TABLE>
-----------------------------------
(1)      Effective  January 5, 1999, Mr. Borislow resigned from all offices with
         the Company and its subsidiaries.


                                       6
<PAGE>


(2)      The costs of certain  benefits  are not  included  because they did not
         exceed,  in the case of each Named Executive,  the lesser of $50,000 or
         10% of the total annual salary and bonus reported in the above table.

(3)      As  adjusted  to reflect a  three-for-two  stock split in the form of a
         stock dividend  effective as of March 15, 1996 and a two-for-one  stock
         split in the form of a stock dividend effective as of January 31, 1997.

(4)      Bonus paid in shares of Common  Stock and  in-kind  property  valued in
         each case at the current market value at the date of grant.

(5)      Effective  January 5, 1999, Mr. McCulla  resigned from all offices with
         the Company and its subsidiaries.

(6)      Bonus paid in shares of Common Stock valued at the current market value
         at the date of grant.

(7)      Effective  May 14, 1999,  Mr.  DeMaio will resign from all offices with
         the Company and its subsidiaries.

(8)      Mr.  Meyercord  was hired by the Company  effective  as of September 5,
         1996. In connection therewith,  Mr. Meyercord was paid $400,000 and was
         granted an option to purchase  800,000  shares of the Company`s  Common
         Stock.

(9)      Mr. Farley became an employee and Chief Financial Officer and Treasurer
         of the Company on October 29, 1997. In connection  with his employment,
         he purchased 200,000 shares of the Company's Common Stock at a price of
         $4.25 per share from a former executive officer of the Company.

STOCK OPTION GRANTS

      The following  table sets forth further  information  regarding  grants of
options to  purchase  Common  Stock made by the  Company  during the fiscal year
ended December 31, 1998 to the Named Executives.


<TABLE>
                                                          OPTION/SAR GRANTS IN LAST FISCAL YEAR

<CAPTION>
                                                                                                              Potential Realizable
                                                          Percent of                                            Value at Assumed
                                          Number of         Total                                            Annual Rates of Stock
                                         Securities      Options/SARs        Exercise                        Price Appreciation for
                                         Underlying       Granted to         Price per                            Option Term(1)
                                         Options/SARs      Employees           Share       Expiration      -----------------------
                Name                       Granted          in 1998         ($ share)        Date           5%($)           10%($)
                ----                       -------          -------         ---------        -----         ------           ------
<S>                                        <C>               <C>             <C>         <C>              <C>           <C>
Daniel Borislow                            750,000           13.6            5.75        Oct. 12, 2009    $3,063,338     $7,991,566
Gary W. McCulla                            350,000           6.3             5.75         Jan. 5, 2001    $206,281         $422,625
Emanuel J. DeMaio                          350,000           6.3             5.75         Jan. 5, 2001    $206,281         $422,625
Edward B. Meyercord, III                     --               --              --               --               --               --
George P. Farley                           250,000           4.5             5.75         Jan. 5, 2001    $147,344         $301,875

</TABLE>

----------------
(1)  Disclosures  of the 5% and 10%  assumed  annual  compound  rates  of  stock
     appreciation  are mandated by the rules of the SEC and do not represent the
     Company's  estimate or projection of future common stock prices. The actual
     value realized may be greater or less than the potential  realizable  value
     set forth in the table.


                                       7
<PAGE>


      The following  table sets forth  information  concerning the 1998 year-end
value of unexercised in-the-money options held by each of the Named Executives.

<TABLE>
                                     AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUES


<CAPTION>
                                                                                 Number of Securities
                                                                            Underlying Unexercised        Value of Unexercised
                                  Shares                                         Options/SARs         In-the-Money Options/SARs at
                                 Acquired                   Value            at Fiscal Year-End(#)        Fiscal Year-End($)(1)
                                On Exercise               Realized           ---------------------        ---------------------
                                -----------               --------         -------------------------
                                                                           Exercisable/Unexercisable   Exercisable/ Unexercisable
    Name
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                          <C>                          <C>     <C>                 <C>        <C>
Daniel Borislow                300,000                      $1,460,250                   750,000/0                   $8,250,000/0
Gary W. McCulla                673,900                      $1,263,610                   0/800,000                    0/$9,326,500
Emanuel J. DeMaio              213,978                        $446,438             199,200/485,000          $2,424,264/$5,492,950
Edward B. Meyercord, III            --                              --                   800,000/0                   $6,200,000/0
George P. Farley                    --                              --                   0/250,000                   0/$2,750,000

</TABLE>
--------------------------------------------------------------------------------
(1)      Calculated as the  difference  between the  exercise/base-price  of the
         options/SARs  and a  year-end  fair  market  value  of  the  underlying
         securities equal to $16.75.


EMPLOYMENT CONTRACTS

          Gabriel Battista is party to an employment  agreement with the Company
that  expires  on  December  31,  2001.  Under the terms of the  agreement,  Mr.
Battista  received a signing  bonus of  $3,000,000  and is entitled to an annual
salary of $500,000, payable in advance, plus a discretionary bonus. Mr. Battista
is also entitled to other benefits and  perquisites.  In addition,  Mr. Battista
was granted options that vest over three years to purchase  1,000,000  shares of
the  Company's  Common  Stock at an exercise  price of $10.4375  per share,  and
options that vested  immediately  upon execution of the agreement to purchase an
additional  650,000 shares at an exercise price of $7.00 per share. In the event
of certain  transactions  (including an acquisition of the Company's  assets,  a
merger into another entity or a transaction that results in the Company's Common
Stock no longer being required to be registered  under the  Securities  Exchange
Act of 1934), Mr. Battista will receive an additional bonus of $1,000,000 if the
price per share for the Company's Common Stock in such transaction was less than
or equal to $20.00 per share, or $3,000,000 if the consideration is greater than
$20.00 per share. In addition,  upon a change in control of the Company,  all of
Mr. Battista's options immediately vest.

         Edward B. Meyercord,  III entered into a five-year employment agreement
with the Company  effective  as of September 5, 1996.  Under the  contract,  Mr.
Meyercord is entitled to a minimum annual base salary of $210,000 for each year.
In the event of a "change in control" as defined in Mr.  Meyercord's  agreement,
he will be entitled to receive an amount  equal to the positive  difference,  if
any,  between  $2,000,000 and an amount equal to the product of (a) 800,000 (the
number of options held by Mr.  Meyercord)  and (b) the positive 


                                       8
<PAGE>



difference,  if any, between the market price of the Common Stock on the date of
the change in control and the exercise  price of Mr.  Meyercord's  stock options
($9.00).

        During 1998, George Farley was party to an employment agreement with the
Company,  which provides for a base annual salary of $200,000 and annual bonuses
determined by the Board.  The resignation of Mr. Borislow as the Chief Executive
Officer of the Company  permitted Mr. Farley,  under the terms of the agreement,
to terminate his agreement and continue  receiving payments through the original
term of the  agreement  ending in  October  2000.  In lieu of  exercising  these
rights, Mr. Farley and the Company modified his employment  agreement to provide
for, among other things (i) a continuation  of his employment  until October 31,
1999,  (ii) a base annual  salary of  $240,000,  commencing  January 1, 1999 and
(iii) the  continuation  of his  compensation  payments  under the agreement for
twenty-two consecutive months following the termination of his employment.
 
        Mr.  Borislow's  employment  agreement  with the Company  terminated  on
January 5, 1999. Under the terms of the agreement,  Mr. Borislow was entitled to
an annual  base  salary of  $325,000,  customary  benefits  and a cost of living
adjustment based upon the Consumer Price Index as published by the Department of
Labor.  Mr.  McCulla's and Mr.  DeMaio's  employment  agreements have or will be
terminated in  connection  with their  separation  from the Company as executive
officers. See "Certain Relationships and Related Party Transactions."

          The  above-described  agreements  require  each of the  executives  to
maintain the confidentiality of Company information and assign inventions to the
Company.  In  addition,  each of such  executive  officers  has agreed that such
person  will not compete  with the  Company by  engaging in any  capacity in any
business that is competitive with the business of the Company during the term of
his respective agreement and thereafter for specified periods.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

        Mr. Daniel Borislow, the Chief Executive Officer of the Company in 1998,
served  on the  Compensation  Committee  until  March 3,  1998,  the date of his
resignation  from  the  Committee.  Until  the  termination  of  his  employment
agreement on January 5, 1999, Mr. Borislow's  compensation was determined by the
non-employee director members of the Compensation Committee.

CERTAIN TRANSACTIONS

         See "Certain Relationships and Related Party Transactions."


                                       9
<PAGE>


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information known to the Company
with respect to beneficial  ownership of the Company's  Common Stock as of April
28, 1999 (except as otherwise noted) by (i) each stockholder who is known by the
Company to own  beneficially  more than five percent of the  outstanding  Common
Stock,  (ii)  each of the  Company's  directors,  (iii)  each  of the  executive
officers  named below and (iv) all current  directors and executive  officers of
the  Company  as a group.  Except as  otherwise  indicated  below,  the  Company
believes that the  beneficial  owners of the Common Stock listed below have sole
investment and voting power with respect to such shares.

<TABLE>
<CAPTION>
                                                                NUMBER OF
                                                                 SHARES                
                                                               BENEFICIALLY            PERCENT OF SHARES
NAME OF BENEFICIAL OWNER OR IDENTITY OF GROUP                    OWNED(1)              BENEFICIALLY OWNED
-------------------------------------------------              ------------           -------------------
<S>                                                              <C>                     <C>
Massachusetts Financial Services Company                         7,848,200 (2)              13.0%
         500 Boylston Street
         Boston, Massachusetts  02116
America Online, Inc.                                             6,843,356 (3)              11.4%
         22000 AOL Way
         Dulles, Virginia 20166
FMR Corp.                                                        6,613,200 (4)              11.0%
         82 Devonshire Street
         Boston, Massachusetts  02109
Paul Rosenberg                                                   5,759,985 (5)               9.6%
         600 North 4th Street
         Philadelphia, PA 19123
Daniel Borislow                                                  1,956,109                   3.2%
Seth Tobias                                                      4,637,491 (6)               7.7%
George P. Farley                                                 1,579,249 (7)               2.6%
Gary W. McCulla                                                  1,174,719                   1.9%
Edward B. Meyercord, III                                           806,131                   1.3%
Emanuel J. DeMaio                                                  663,178                   1.1%
Gabriel Battista                                                   670,000 (8)               1.1%
Harold First                                                        84,004                      *
Ronald R. Thoma                                                     97,934                      *
All current directors and executive officers as                  4,387,689 (9)               7.3%
a group           (12 persons)

</TABLE>


* Less than 1%

(1)      The  securities  "beneficially  owned" by a person  are  determined  in
         accordance  with the definition of "beneficial  ownership" set forth in
         the  regulations  of  the  Commission  and,  accordingly,  may  include
         securities  owned by or for,  among  others,  the  spouse,  children or
         certain  other  relatives  of  such  person.  The  same  shares  may be
         beneficially owned by more than one person. Beneficial ownership may be
         disclaimed  as  to  certain  of  the   securities.   Furthermore,   the
         information  as to numbers and  percentages  of shares owned  generally
         does not


                                       10
<PAGE>


         reflect,  and has not been  adjusted for, any shares that may be issued
         upon exercise of the  non-transferable  share purchase rights that were
         distributed  to holders of shares,  options  and  warrants of record on
         December   31,  1998.   Such  holders  of  record   received  one  such
         non-transferable  right for every 20  shares  of Common  Stock  held or
         underlying options or warrants on the record date.

(2)      Massachusetts   Financial  Services  Company  ("MFS"),   an  investment
         adviser,  filed an amendment to a Schedule 13G with the  Commission  on
         February  11,  1999 (the "MFS 13G"),  in which it  reported  beneficial
         ownership of 7,848,200 shares, 6,471,100 of which are also beneficially
         owned by MFS Series Trust II-MFS  Emerging  Growth Fund,  an investment
         company, and 1,377,100 of which are also owned by certain non-reporting
         entities as well as MFS. The foregoing  information is derived from the
         MFS 13G.

(3)      The  foregoing  information  is derived  from the Schedule 13G filed by
         America Online, Inc. on January 15, 1999.

(4)      The  foregoing  information  is derived from  the Schedule 13G filed by
         FMR Corp. on March 10, 1999.

(5)      The   foregoing  information  is derived from the Schedule 13D filed by
         Paul  Rosenberg,  the Rosenberg Family Limited  Partnership,  PBR, Inc.
         and the  New Millennium  Charitable Foundation  on January 12, 1999. 

(6)      The  foregoing  information  is derived  from the Schedule 13G filed by
         Seth Tobias on February 16, 1999.

(7)      Includes  1,200,000  shares held by the D&K Charitable  Foundation,  of
         which Mr. Farley serves as a director.

(8)      Does not  include  1,000,000  shares  of  Common  Stock  that  could be
         acquired upon exercise of options granted to Mr. Battista that have not
         yet vested.

(9)      Does not include an  aggregate  of 830,000  shares of Common Stock that
         could be  acquired  upon  exercise  of  options  by  certain  executive
         officers that have not yet vested.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Under Section 16(a) of the Securities  Exchange Act of 1934, as amended
(the "Exchange Act"),  the Company's  directors and certain officers and persons
who are the  beneficial  owners of more than 10 percent of the Common  Stock are
required to report  their  ownership  of the Common  Stock,  options and certain
related  securities and any changes in that  ownership to the SEC.  Specific due
dates for these  reports have been  established,  and the Company is required to
report in this proxy  statement  any failure to file by such dates in 1998.  The
Company  believes  that all of the  required  filings have been made in a timely
manner.  In making  this  statement,  the  Company  has  relied on copies of the
reporting forms received by it.

ITEM 13. CERTAIN RELATIONSHIPS AND 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 and its subsidiaries.  As outlined below, the Company
entered into various  agreements  and engaged in various  transactions  with Mr.
Borislow and certain entities in which he or his family has 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


                                       11
<PAGE>

insurance.  The  Company  also  agreed  that,  so  long  as  Mr.  Borislow  owns
beneficially  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 proceeds from any public or
private sale of debt securities,  excluding borrowings from a commercial bank or
other financial institution, by the Company 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 rights to repurchase Common Stock owned by Mr. Borislow or the trusts
for the benefit of his  children.  The Company also agreed that,  so long as Mr.
Borislow had such beneficial ownership, 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 Common  Stock  unless and until Mr.  Borislow  and the trusts
have sold or otherwise disposed of all of the shares of Common Stock held by him
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  Investment  Agreement with AOL described in
Item 7 of this report.

        Effective  December  31, 1998,  the Company,  in exchange for a total of
783,706 shares of Common Stock,  (i) sold to Jimlew Capital,  L.L.C.,  a company
owned by Mr. Borislow, (a) all of the capital stock of Emergency  Transportation
Corporation  (a wholly owned  subsidiary  of the Company,  the primary  asset of
which is an interest in a jet airplane),  valued at approximately  $8.7 million,
and (b) all of the real property constituting the Company's  headquarters in New
Hope, Pennsylvania,  valued at approximately $2.0 million, and (ii) released Mr.
Borislow  from  an  obligation  to  the  Company  for  borrowings   representing
approximately  $4.7 million  principal amount and interest at the rate of 6% per
annum. Mr. Borislow agreed to lease to the Company a portion of the headquarters
property at a base monthly rent of $12,500.  The  subsidiary  stock and the real
property  were  valued  based on the  book  value of  these  assets,  which  the
management of the Company  believes  approximated the fair market value of these
assets on the date of exchange.  The Common Stock  exchanged  for the assets was
valued  at its  market  value  on the date of the  exchanges.  The  Company  had
previously  determined that it would be desirable to dispose of these assets and
accordingly believed that the ownership of these assets was not required for the
continued operation of the Company's business.

        During  1998,  the  following  additional  officers  and  directors  had
outstanding   non-interest-bearing   loans  from  the  Company  in  the  amounts
indicated: Gary W. McCulla, $3,541,382;  George P. Farley, $1,554,532;  Aloysius
T. Lawn, IV, $1,293,506;  Emanuel J. DeMaio,  $821,906;  Harold First, $236,800;
and Ronald Thoma,  $236,800.  These loans were  incurred in connection  with the
exercise of stock options   or the holding of shares of Common Stock.  The loans
have since been repaid through delivery


                                       12
<PAGE>

by the  borrower  to the  Company of shares of Common  Stock with a fair  market
value on date of payment equal to the outstanding amount of such loans.

         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,  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.

          In the first quarter of 1999, the Company  purchased from Mr. Borislow
amd from two  trusts  for the  benefit of Mr.  Borislow's  children  $76,557,000
aggregate  principal  amount of the Company's  2002  Convertible  Notes and 2004
Convertible Notes for $65.4 million in cash.

          On January 5, 1999,  Gary W. McCulla  entered into a letter  agreement
with the  Company  in  connection  with his  separation  from the  Company as an
officer.  Pursuant  to  this  agreement,  he is  entitled  to  receive  payments
aggregating  $750,000  per year  through  January 5, 2001,  and is  eligible  to
receive certain health,  medical  and other benefits.

        On April 6, 1999, Emanuel J. DeMaio entered into a letter agreement with
the Company  providing for the termination of his employment with the Company as
of May 14,  1999.  Under this  agreement,  he is  entitled  to receive  payments
aggregating  $400,000 per year for two years, and is eligible to receive certain
health,  medical and other benefits. The agreement also provides that Mr. DeMaio
shall provide consulting  services to the Company for a period of 18 months at a
rate of two hundred dollars ($200) per hour.


                                       13
<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

3.  EXHIBITS:

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

2.1              Plan of  Reorganization  between and among  Tel-Save  Holdings,
                 Inc., a Delaware  corporation,  Tel-Save,  Inc., a Pennsylvania
                 corporation,  Daniel Borislow and Paul Rosenberg,  and Exhibits
                 Thereto  (incorporated  by  reference  to  Exhibit  2.1  to the
                 Company's   registration   statement  on  Form  S-1  (File  No.
                 33-94940)).

3.1              Amended  and  Restated  Certificate  of  Incorporation  of  the
                 Company,  as amended  (incorporated by reference to Exhibit 4.1
                 to the Company's registration statement on Form S-4 (File No.
                 333-38943)).

3.2              Bylaws of the Company (incorporated by reference to Exhibit 3.2
                 to the Company's  registration  statement on Form S-1 (File No.
                 33-94940)).

3.3              Certificate of Ownership and Merger Merging Tel-Save.com,  Inc.
                 into  Tel-Save  Holdings,   Inc.  (Changing  the  name  of  the
                 Registrant)  (incorporated  by reference to Exhibit 3(i) to the
                 Company's Current Report on Form 8-K dated January 20, 1999).

10.1             Employment  Agreement between the Company and Emanuel J. DeMaio
                 (incorporated  by reference  to Exhibit  10.2 to the  Company's
                 registration statement on Form S-1 (File No. 33-94940)).*

10.2             Employment  Agreement  between the Company and George P. Farley
                 (incorporated  by  reference  to  Exhibit  10 to the  Company's
                 report on Form 10-Q for the quarter ended September 30, 1997).*

10.3             Employment  Agreement between the Company and Aloysius T. Lawn,
                 IV dated October 13, 1998.*

10.4             Employment   Agreement   between  the  Company  and  Edward  B.
                 Meyercord,  III  (incorporated  by reference to Exhibit 10.6 to
                 the  Company's  Annual  Report on Form 10-K for the year  ended
                 December 31, 1996).*

10.5             Indemnification   Agreement  between  the  Company  and  Daniel
                 Borislow  (incorporated  by  reference  to Exhibit  10.4 to the
                 Company's registration statement on Form S-1 (File No.
                 33-94940)).

10.6             Indemnification  Agreement  between  the Company and Emanuel J.
                 DeMaio  (incorporated  by  reference  to  Exhibit  10.5  to the
                 Company's registration statement on Form S-1 (File No.
                 33-94940)).


                                       14
<PAGE>


10.7             Indemnification  Agreement  between  the  Company  and  Gary W.
                 McCulla  (incorporated  by  reference  to  Exhibit  10.6 to the
                 Company's   registration   statement  on  Form  S-1  (File  No.
                 33-94940)).

10.9             Indemnification  Agreement  between  the  Company  and Peter K.
                 Morrison  (incorporated  by  reference  to Exhibit  10.8 to the
                 Company's   registration   statement  on  Form  S-1  (File  No.
                 33-94940)).

10.10            Indemnification  Agreement  between  the  Company  and Kevin R.
                 Kelly  (incorporated  by  reference  to  Exhibit  10.9  to  the
                 Company's   registration   statement  on  Form  S-1  (File  No.
                 33-94940)).

10.11            Indemnification  Agreement  between the Company and Aloysius T.
                 Lawn,  IV  (incorporated  by reference to Exhibit  10.12 to the
                 Company's  Annual Report on Form 10-K for the fiscal year ended
                 December 31, 1995).

10.12            Indemnification  Agreement  between  the  Company and Edward B.
                 Meyercord,  III  (incorporated by reference to Exhibit 10.14 to
                 the  Company's  Annual  Report on Form 10-K for the fiscal year
                 ended December 31, 1996).

10.14            Tel-Save  Holdings,   Inc.  1995  Employee  Stock  Option  Plan
                 (incorporated  by reference to Exhibit  10.15 to the  Company's
                 registration statement on Form S-1 (File No. 33-94940)).*

10.15            Tel-Save  Holdings,  Inc. Employee Bonus Plan  (incorporated by
                 reference to page 13 of the Company's  Proxy  Statement for the
                 Company's  1996 Annual Meeting of  Stockholders  dated April 3,
                 1996).*

10.19            Telecommunications   Marketing   Agreement  by  and  among  the
                 Company,   Tel-Save,  Inc.  and  America  Online,  Inc.,  dated
                 February 22, 1997  (incorporated  by reference to Exhibit 10.32
                 to the  Company's  Form 10-K for the year  ended  December  31,
                 1996).+

10.20            Amendment  No.  1,  dated  as  of  January  25,  1998,  to  the
                 Telecommunications Marketing Agreement dated as of February 22,
                 1997 by and among  the  Company,  Tel-Save,  Inc.  and  America
                 Online, Inc. (incorporated by reference to Exhibit 10.31 to the
                 Company's Form 10-K for the year ended December 31, 1997). +

10.21            Amendment  No.  2,  dated  May 14,  1998,  among  the  Company,
                 Tel-Save,  Inc.  and America  Online,  Inc.,  which amends that
                 certain  Telecommunications  Marketing  Agreement,  dated as of
                 February 22, 1997,  as corrected  and amended by letter,  dated
                 April 23,  1997,  and  amended  by an  Amendment  No. 1,  dated
                 January 25, 1998  (incorporated by reference to Exhibit 10.1 to
                 the Company's  quarterly  report on Form 10-Q, dated August 14,
                 1998).+

10.22            Amendment  No. 3,  effective  as of October 1, 1998,  among the
                 Company,  Tel-Save, Inc. and America Online, Inc., which amends
                 that certain  Telecommunications  Marketing Agreement, dated as
                 of February 22, 1997, as corrected and amended by letter, dated
                 April 23,  1997,  and  amended  by an  Amendment  No. 1,  dated
                 January 25, 1998, and an Amendment No. 2, dated May 14, 1998.++

10.23            Indenture dated as of September 9, 1997 between the Company and
                 First Trust of 


                                       15
<PAGE>

                 New York, N.A. (incorporated by reference to Exhibit 4.3 to the
                 Company's   registration   statement  on  Form  S-3  (File  No.
                 333-39787)).

10.24            Registration  Agreement  dated as of  September 3, 1997 between
                 the Company and Salomon Brothers Inc,  Deutsche Morgan Grenfell
                 Inc., Bear,  Stearns & Co. Inc.,  Smith Barney Inc.,  Robertson
                 Stephens  &  Company  LLC  (incorporated  by  reference  to the
                 Company's   registration   statement  on  Form  S-3  (File  No.
                 333-39787)).

10.25            Indenture dated as of December 10, 1997 between the Company and
                 First Trust of New York,  N.A.  (incorporated  by  reference to
                 Exhibit 10.34 to the  Company's  Annual Report on Form 10-K for
                 the year ended December 31, 1997).

10.26            Registration  Agreement  dated as of December  10, 1997 between
                 the Company and Smith Barney Inc. (incorporated by reference to
                 Exhibit 10.35 to the  Company's  Annual Report on Form 10-K for
                 the year ended December 31, 1997).

10.27            Employment  Agreement,  dated as of November 13, 1998,  between
                 the Company and Gabriel Battista  (incorporated by reference to
                 Exhibit 10.1 to the Company's  Current Report on Form 8-K dated
                 January 20, 1999).*

10.28            Indemnification  Agreement,  dated  as of  December  28,  1998,
                 between  the  Company and  Gabriel  Battista  (incorporated  by
                 reference to Exhibit 10.2 to the  Company's  Current  Report on
                 Form 8-K dated January 20, 1999).

10.29            Stock Option Agreement,  dated as of November 13, 1998, between
                 the Company and Gabriel Battista  (incorporated by reference to
                 Exhibit 10.3 to the Company's  Current Report on Form 8-K dated
                 January 20, 1999).*

10.30            Stock Option Agreement,  dated as of November 13,  1998,between
                 the Company and Gabriel Battista  (incorporated by reference to
                 Exhibit 10.4 to the Company's  Current Report on Form 8-K dated
                 January 20, 1999).*

10.31            Severance Agreement, dated as of December 31, 1998, between the
                 Company  and Daniel  Borislow  (incorporated  by  reference  to
                 Exhibit 10.5 to the Company's  Current Report on Form 8-K dated
                 January 20, 1999).*

10.32            Purchase   Agreement   regarding   the   stock   of   Emergency
                 Transportation  Corporation,  dated  as  of  January  5,  1999,
                 between the Company and Jimlew Capital, L.L.C. (incorporated by
                 reference to Exhibit 10.6 to the  Company's  Current  Report on
                 Form 8-K dated January 20, 1999).

10.33            Exchange  Agreement,  dated as of December 31, 1998,  among the
                 Company,  Tel-Save,Inc.  and Mark  Pavol,  as  Trustee  of that
                 certain D&K Grantor  Retained Annuity Trust dated June 15, 1998
                 (incorporated  by reference  To Exhibit  10.7 to the  Company's
                 Current Report on Form 8-K dated January 20, 1999).

10.34            Modification  of the  Exchange  Agreement,  dated  ___________,
                 1999, by and among the Company, Tel-Save, Inc. and Mark Pavol.

10.35            Registration  Rights Agreement,  dated as of December 31, 1998,
                 among the Company,  Daniel Borislow,  Mark Pavol, as Trustee of
                 that certain D&K Grantor


                                       16
<PAGE>

                 Retained Annuity Trust,  dated June 15, 1998 and the Trustee of
                 that   certain   D&K   Grantor   Retained   Annuity   Trust  II
                 (incorporated  by reference  to Exhibit  10.8 to the  Company's
                 Current Report on Form 8-K dated January 20, 1999).

10.36            Amendment of  Registration  Rights  Agreement dated as of March
                 18, 1999, by and among the Company, Daniel M Borislow, and Seth
                 Tobias.

10.37            Amendment of  Registration  Rights  Agreement dated as of March
                 18, 1999, by and among the Company and Mark Pavol.

10.38            Agreement  of Purchase and Sale of Real  Property,  dated as of
                 January 5, 1999,  between  Tel-Save,  Inc. and Jimlew  Capital,
                 L.L.C.  (incorporated  by  reference  to  Exhibit  10.9  to the
                 Company's Current Report on Form 8-K dated January 20, 1999).

10.39            Lease, dated as of January 5, 1999, between Tel-Save,  Inc. and
                 Jimlew Capital,  L.L.C.  (incorporated  by reference to Exhibit
                 10.10 to the Company's Current Report on Form 8-K dated January
                 20, 1999).

10.40            1998 Long-Term  Incentive Plan of the Company  (incorporated by
                 reference to Exhibit 10.14 to the Company's  Current  Report on
                 Form 8-K dated January 20, 1999).*

10.41            Investment Agreement, dated as of December 31, 1998, as amended
                 on February __, 1999, among the Company,  America Online, Inc.,
                 and,  solely  for  purposes  of  Sections  4.5,  4.6 and 7.3(g)
                 thereof,  Daniel  Borislow,  and solely for purposes of Section
                 4.12 thereof, Tel-Save, Inc. and the D&K Retained Annuity Trust
                 dated June 15, 1998 by Mark Pavol, Trustee .

10.42            Registration  Rights  Agreement,  dated as of  January 5, 1999,
                 between the Company and America Online, Inc.

10.43            Sublease  Agreement,  dated January ____,  1997, by and between
                 Gemini Air Cargo, LLC and RMS International, Inc.

10.44            Sublease  Agreement,  dated  as of  January  20,  1999,  by and
                 between RMS International and Tel-Save, Inc.

10.45            Lease by and between Aetna Life  Insurance  Company and Potomac
                 Financial Group, L.L.C .

10.46            Agreement,  effective as of February 28, 1999, by and among the
                 Company,   Communication  Telesystems   International,   d.b.a.
                 WorldxChange Communications,  Tel-Save, Inc., Mark Pavol, Roger
                 B. Abbott and Rosalind Abbott, and Edward Soren.

10.48            Letter  Agreement   between  the  Company  and  Emanuel  DeMaio
                 regarding Employment Agreement dated October 13, 1998.

10.49            Letter  Agreement,  dated as of January 5,  1999,  between  the
                 Company and Gary R. McCulla amending Employment  Agreement with
                 Mr. McCulla. (1) *


                                       17
<PAGE>


10.50            Form of Indemnification Agreement, dated as of January 5, 1999,
                 for each of George Vinall, Michael Ferzacca and Norris M. Hall,
                 III. (1)

10.51            Form of  Non-Qualified  Stock  Option  Agreement,  dated  as of
                 December 16, 1998, for each of George Vinall,  Michael Ferzacca
                 and Norris M. Hall, III. (1) *


10.60            Employment  Agreement,  dated as of December 16, 1998,  between
                 the Company and Michael Ferzacca. (1) *

10.61            Employment  Agreement,  dated as of December 16, 1998,  between
                 the Company and Norris M. Hall, III. (1) *

10.62            Employment  Agreement,  dated as of December 16, 1998,  between
                 the Company and George Vinall. (1) *

10.63            Letter  Agreement,  dated as of December 30, 1998,  between the
                 Company and George Farley regarding  Employment Agreement dated
                 July 3, 1997. (1) *

21.1             Subsidiaries of the Company.

23.1             Consent of BDO Seidman, LLP.

27               Financial Data Schedule.

*                Management contract or compensatory plan or arrangement.

+                Confidential  treatment  previously  has  been  granted  for  a
                 portion of this exhibit.

++               Confidential  treatment has been requested for portions of this
                 exhibit.

(1)              Filed with this Amendment No. 2 on Form 10-K/A.





(b)              Reports on Form 8-K.

The following  Current  Reports on Form 8-K were filed by the Company during the
three months ended December 31, 1999:

1. Current Report on Form 8-K dated October 29, 1998.


                                       18
<PAGE>


                                   SIGNATURES

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

Date:    April 30, 1999                      TALK.COM  INC.

                                             By: /s/ Gabriel Battista
                                             ------------------------
                                             Gabriel Battista
                                             Chairman of the Board of Directors,
                                             Chief Executive Officer, President
                                             and Director

                                       19