<PAGE>
================================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

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

                                  FORM 10-Q


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

       For the quarterly period ended March 31, 2002

                                      OR

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

       For the transition period from ___________ to ___________


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


                                   333-36804
                             Commission file number


                           MADISON RIVER CAPITAL, LLC
            (Exact Name of Registrant as Specified in Its Charter)


           Delaware                                      56-2156823
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
 Incorporation or Organization)


                            103 South Fifth Street
                         Mebane, North Carolina 27302
         (Address of Principal Executive Offices, Including Zip Code)

                                (919) 563-1500
             (Registrant's Telephone Number, Including Area Code)



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

================================================================================

<PAGE>

                          MADISON RIVER CAPITAL, LLC

                              Index to Form 10-Q


Part I - Financial Information                                        Page
                                                                      ----
Item  1.  Financial Statements
          Condensed Consolidated Balance Sheets - March 31, 2002
          (Unaudited) and December 31, 2001                             1
          Condensed Consolidated Statements of Operations and
          Comprehensive Loss (Unaudited) - Three Months Ended March
          31, 2002 and 2001                                             2
          Condensed Consolidated Statements of Cash Flows
          (Unaudited) - Three Months Ended March 31, 2002 and 2001      3
          Notes to Condensed Consolidated Financial Statements
          (Unaudited)                                                   4
Item  2.  Management's Discussion and Analysis of Financial
          Condition and Results of Operations                           10
Item  3.  Quantitative and Qualitative Disclosures of Market Risks      19


Part II - Other Information
Item  6.  Exhibits and Reports on Form 8-K                              20
Signature                                                               20


























                                      i

<PAGE>

                          MADISON RIVER CAPITAL, LLC
                     Condensed Consolidated Balance Sheets
                            (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                  March 31, 2002     December 31, 2001
                                                                  --------------     -----------------
Assets                                                              (Unaudited)
<S>                                                                 <C>                 <C>
Current assets:
  Cash and cash equivalents                                          $   14,548           $   21,606
  Accounts receivable, less allowance for uncollectible accounts
    of $2,367 and $1,815 in 2002 and 2001, respectively                  12,834               14,305
  Receivables, primarily from interexchange carriers, less
    allowance for uncollectible accounts of $144 and $111
    in 2002 and 2001, respectively                                        9,874                8,826
  Other current assets                                                    4,468                6,461
                                                                       --------             --------
    Total current assets                                                 41,724               51,198
                                                                       --------             --------

Telephone plant and equipment                                           471,065              468,950
Less accumulated depreciation and amortization                          (82,853)             (72,156)
                                                                       --------             --------
  Telephone plant and equipment, net                                    388,212              396,794
                                                                       --------             --------

Other assets:
  Rural Telephone Finance Cooperative stock, at cost                     45,274               46,798
  Goodwill, net of accumulated amortization of $41,318
    in 2002 and 2001, respectively                                      367,929              367,929
  Other assets                                                           33,705               33,859
                                                                       --------             --------
    Total other assets                                                  446,908              448,586
                                                                       --------             --------

    Total assets                                                     $  876,844           $  896,578
                                                                       ========             ========

Liabilities and member's capital
Current liabilities:
  Accounts payable and accrued expenses                              $   29,871           $   40,500
  Other current liabilities                                               9,006                6,873
  Current portion of long-term debt                                      22,167               20,408
                                                                       --------             --------
    Total current liabilities                                            61,044               67,781
                                                                       --------             --------

Noncurrent liabilities:
  Long-term debt                                                        656,925              659,610
  Other liabilities                                                      63,466               62,969
                                                                       --------             --------
    Total noncurrent liabilities                                        720,391              722,579
                                                                       --------             --------

    Total liabilities                                                   781,435              790,360

Redeemable minority interest                                             47,100               46,825

Member's capital:
  Member's interest                                                     211,584              213,584
  Accumulated deficit                                                  (162,611)            (154,221)
  Accumulated other comprehensive (loss) income                            (664)                  30
                                                                       --------             --------
    Total member's capital                                               48,309               59,393
                                                                       --------             --------

    Total liabilities and member's capital                           $  876,844           $  896,578
                                                                       ========             ========
</TABLE>


           See Notes to Condensed Consolidated Financial Statements.



                                      1

<PAGE>

                          MADISON RIVER CAPITAL, LLC
     Condensed Consolidated Statements of Operations and Comprehensive Loss
                            (Dollars in thousands)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                        Three Months Ended March 31,
                                                                        ----------------------------
                                                                           2002              2001
                                                                        ----------        ----------
<S>                                                                     <C>               <C>
Operating revenues:
  Local service                                                          $  34,646         $  34,391
  Long distance service                                                      3,803             4,076
  Internet and enhanced data service                                         3,407             2,291
  Transport service                                                            836               338
  Miscellaneous telecommunications service and equipment                     3,233             4,111
                                                                           -------           -------
    Total operating revenues                                                45,925            45,207
                                                                           -------           -------

Operating expenses:
  Cost of services                                                          14,415            15,854
  Depreciation and amortization                                             12,309            14,066
  Selling, general and administrative expenses                              10,327            15,910
                                                                           -------           -------
    Total operating expenses                                                37,051            45,830
                                                                           -------           -------

Net operating income (loss)                                                  8,874              (623)

Interest expense                                                           (16,076)          (16,228)
Other income (expense), net                                                    557            (7,438)
                                                                           -------           -------

Loss before income tax expense and minority interest expense                (6,645)          (24,289)

Income tax expense                                                          (1,470)           (4,607)
                                                                           -------           -------

Loss before minority interest expense                                       (8,115)          (28,896)

Minority interest expense                                                     (275)             (250)
                                                                           -------           -------

Net loss                                                                    (8,390)          (29,146)

Other comprehensive (loss) income:
  Unrealized losses on marketable equity securities in quarter                (694)             (403)
  Reclassification adjustment for losses included in net loss                  -               4,442
                                                                           -------           -------
    Other comprehensive (loss) income                                         (694)            4,039
                                                                           -------           -------

Comprehensive loss                                                       $  (9,084)        $ (25,107)
                                                                           =======           =======
</TABLE>

           See Notes to Condensed Consolidated Financial Statements.


                                      2

<PAGE>


                          MADISON RIVER CAPITAL, LLC
                Condensed Consolidated Statements of Cash Flows
                            (Dollars in thousands)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                        Three Months Ended March 31,
                                                                        ----------------------------
                                                                           2002              2001
                                                                        ----------        ----------
<S>                                                                     <C>               <C>
Operating activities
Net cash used for operating activities                                  $  (1,343)        $ (29,600)
                                                                          -------           -------
Investing activities
Purchases of telephone plant and equipment                                 (3,283)          (12,073)
Redemption of Rural Telephone Finance Cooperative stock, net                1,524               148
Change in other assets                                                       (983)           11,278
                                                                          -------           -------
Net cash used for investing activities                                     (2,742)             (647)
                                                                          -------           -------

Financing activities
Capital contributions from member                                             -                 329
Redemption of member's interest                                            (2,000)              -
Proceeds from long-term debt                                                4,000               -
Payments on long-term debt                                                 (4,970)           (1,932)
Change in other long-term liabilities                                          (3)             (162)
                                                                          -------           -------
Net cash used for financing activities                                     (2,973)           (1,765)
                                                                          -------           -------

Net decrease in cash and cash equivalents                                  (7,058)          (32,012)

Cash and cash equivalents at beginning of year                             21,606            63,410
                                                                          -------           -------

Cash and cash equivalents at end of first quarter                       $  14,548         $  31,398
                                                                          =======           =======
</TABLE>



           See Notes to Condensed Consolidated Financial Statements.



                                      3

<PAGE>

                          MADISON RIVER CAPITAL, LLC
             Notes To Condensed Consolidated Financial Statements
                                 (Unaudited)


1.  GENERAL

Madison River Capital, LLC (the "Company"), a wholly-owned subsidiary of
Madison River Telephone Company LLC ("MRTC"), was organized on August 26,
1999 as a limited liability company under the provisions of the Delaware
Limited Liability Company Act. Under the provisions of this Act, the member's
liability is limited to the Company's assets provided that the member returns
to the Company any distributions received. The Company offers integrated
telecommunications services to business and residential customers in the Gulf
Coast, Mid-Atlantic and Midwest regions of the United States which include
local and long distance voice, high speed data, internet access and fiber
transport.  These consolidated financial statements include the financial
position and results of operations of the following subsidiaries of the
Company: Madison River Holdings Corp. ("MRH"), Madison River LTD Funding
Corp. ("MRLTDF"), Mebtel, Inc., Gallatin River Holdings, LLC and its
subsidiary, Gulf Coast Services, Inc. and its subsidiaries, Coastal
Communications, Inc. ("CCI") and its subsidiaries, Madison River Management
Company, Mebtel Long Distance Solutions, Inc., Madison River Long Distance
Solutions, Inc., Madison River Communications, LLC ("MRC") and Gulf
Communications, LLC.

Prior to the formation of the Company in 1999, all operations were
consolidated at the parent level.  Concurrent with the formation of the
Company, all operations are consolidated at the Company level.  The primary
purpose for which the Company and its predecessor were organized was the
acquisition, integration and operation of rural local exchange telephone
companies.  Since January 1998, the Company has acquired four rural incumbent
local exchange carriers ("ILECs") located in North Carolina, Illinois,
Alabama and Georgia.  These rural ILEC operations, which comprise the Local
Telecommunications Division (the "LTD"), served approximately 209,170 voice
access and digital subscriber line ("DSL") connections as of March 31, 2002.
The operations of the ILECs are subject to varying degrees of federal, state
and local regulation.

The Company also operates as a competitive local exchange carrier ("CLEC") in
markets in North Carolina, Illinois and Louisiana, as well as providing fiber
transport services to large businesses and other carriers, primarily in the
southeastern United States.  The CLEC and fiber transport operations form the
Integrated Communications Division (the "ICD") and that division served
approximately 17,080 voice access and DSL connections at March 31, 2002.

2.  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have
been prepared by the Company in accordance with generally accepted accounting
principles for interim financial information and are in the form prescribed
by the Securities and Exchange Commission in instructions to Form 10-Q and
Article 10 of Regulation S-X.  Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.  The interim unaudited
financial statements should be read in conjunction with the audited financial
statements of the Company as of and for the year ended December 31, 2001.
Such financial statements are included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2001 filed with the Securities
and Exchange Commission on April 1, 2002.  In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating results for
the three-month period ended March 31, 2002 are not necessarily indicative of
the results that may be expected for the year ending December 31, 2002.

Certain amounts in the March 31, 2001 condensed consolidated financial
statements have been reclassified to conform to the March 31, 2002
presentation.  These reclassifications had no effect on net loss or member's
capital as previously reported.


                                      4

<PAGE>

                          MADISON RIVER CAPITAL, LLC
        Notes To Condensed Consolidated Financial Statements, Continued
                                  (Unaudited)


3.  TELEPHONE PLANT AND EQUIPMENT

Telephone plant and equipment at March 31, 2002 and December 31, 2001
consisted of the following:
<TABLE>
<CAPTION>
                                           March 31,       December 31,
                                             2002              2001
                                           ---------       ------------
                                                (in thousands)
<S>                                        <C>             <C>
Land, buildings and general equipment      $  64,388        $  63,978
Central office equipment                     140,224          130,098
Poles, wires, cables and conduit             230,491          224,577
Leasehold improvements                         2,568            2,484
Software                                      17,603           17,308
Construction-in-process                       15,791           30,505
                                             -------          -------
Total telephone plant and equipment        $ 471,065        $ 468,950
                                             =======          =======
</TABLE>

4.  GOODWILL

In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning
after December 15, 2001.  Under the new rules, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized after December
31, 2001, but will be subject to annual impairment tests in accordance with
the statements.  Other intangible assets will continue to be amortized over
their useful lives.  The Company adopted the new rules on accounting for
goodwill and other intangible assets beginning in the first quarter of 2002.
The Company expects that application of the nonamortization provisions of the
statements will result in a decrease in net loss of approximately $16.5
million per year.

The Company determined that the goodwill related to its acquisitions, net of
accumulated amortization, was not impaired as of January 1, 2002.  During
2002, the Company will perform the required impairment tests in accordance
with the statements.  The Company does not believe that the results of these
tests will have a material impact on its financial position, net loss or cash
flows.

In previous years, goodwill resulting from the excess of the purchase price
of the Company's acquisitions in excess of the fair value of the net assets
acquired was amortized using the straight-line method over 25 years. For the
quarter ended March 31, 2001, had the Company been subject to the provisions
of the statements, net loss would have been as follows:

                               For the quarter ended March 31, 2001
                             ---------------------------------------
                                            Amortization
                             As reported      expense      Pro forma
                             -----------    ------------   ---------
                                           (in thousands)

        Net loss             $ (29,146)        $ 4,191     $ (24,955)
                              ========          ======      ========


                                      5

<PAGE>

                          MADISON RIVER CAPITAL, LLC
        Notes To Condensed Consolidated Financial Statements, Continued
                                  (Unaudited)



5.  EQUITY METHOD INVESTMENT

On March 15, 2002, Georgia PCS Management, L.L.C., a limited liability
company in which the Company owned approximately 15% of the outstanding
member interests and accounted for as an equity method investment, was
acquired by US Unwired Inc, a publicly traded Sprint PCS affiliate.  In
exchange for its ownership interest in Georgia PCS, the Company received
approximately 800,000 shares of US Unwired Class A common stock.  The shares
are subject to certain restrictions that limit the ability of the Company to
dispose of its shares for a specified period of time and will be accounted for
as an available for sale marketable equity security.

6.  RECENT ACCOUNTING PRONOUNCEMENT

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144").  SFAS 144 supersedes SFAS 121
and establishes a single accounting model for long-lived assets to be
disposed of by sale as well as resolves certain implementation issues related
to SFAS 121.  The Company adopted SFAS 144 as of January 1, 2002.  Adoption
of SFAS 144 did not have a material impact on the financial position, net
loss or cash flows of the Company.


7.  RESTRUCTURING CHARGE

In the fourth quarter of 2001, a subsidiary of the Company, MRC, recorded a $2.8
million restructuring charge associated with the subsidiary's decision to
reduce its sales and marketing efforts and eliminate redundant support
services.  The charge was recognized in accordance with EITF 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring)."  The
amounts recorded consist primarily of the costs associated with future
obligations on non-cancelable leases for closed sales offices, redundant
network operations centers and future switching facilities, net of any
estimated sublease income, losses from the abandonment of fixed assets and
leasehold improvements associated with those leased facilities and legal
related expenses.

As of March 31, 2002, the following amounts were recorded:

<TABLE>
<CAPTION>
                                                        2002
                                 Balance at         first quarter        Balance at
                              December 31, 2001       payments         March 31, 2002
                              -----------------     -------------      --------------
                                                    (in thousands)
    <S>                           <C>                 <C>                 <C>
    Future lease obligations      $  1,918            $    442            $  1,476
    Legal related expenses             200                  -                  200
                                    ------              ------              ------
                                  $  2,118            $    442            $  1,676
                                    ======              ======              ======
</TABLE>

The remaining liability as of March 31, 2002 is recorded as $724,000 in accrued
expenses and $952,000 in other long-term liabilities.


                                      6

<PAGE>

                          MADISON RIVER CAPITAL, LLC
        Notes To Condensed Consolidated Financial Statements, Continued
                                  (Unaudited)

8.  LONG-TERM DEBT AND LINES OF CREDIT

Long-term debt and lines of credit outstanding consist of the following at:
<TABLE>
<CAPTION>
                                                                        March 31,        December 31,
                                                                           2002              2001
                                                                        ----------       ------------
                                                                               (in thousands)
<S>                                                                     <C>               <C>
First mortgage notes collateralized by substantially all LTD assets:
  RTFC note payable in escalating quarterly principal installments
    through November 2012, interest payments due quarterly at a
    fixed rate of 6.5% (rate expires September 2003).                    $  12,711         $  12,906
  RTFC note payable in escalating quarterly principal installments
    through November 2012, interest payments due quarterly at a
    fixed rate of 8.15% (rate expires April 2003).                           6,446             6,545
  RTFC note payable in escalating quarterly principal installments
    through November 2012, interest payments due quarterly at the
    RTFC's base rate plus 0.5% (5.7% at March 31, 2002).                     1,029             1,043
  RTFC note payable in escalating quarterly principal installments
    through August 2013, interest payments due quarterly at a
    fixed rate of 6.7% (rate expires November 2004).                       110,498           112,014
  RTFC note payable in escalating quarterly principal installments
    through August 2013, interest payments due quarterly at the
    RTFC's base rate plus 0.75% (5.95% at March 31, 2002).                   5,956             6,031
  RTFC note payable in escalating quarterly principal installments
    through August 2013, interest payments due quarterly at a
    fixed rate of 8.4% (rate expires April 2003).                           71,434            71,684
  RTFC note payable in escalating quarterly principal installments
    through August 2013, interest payments due quarterly at the
    RTFC's base rate plus 0.75% (5.95% at March 31, 2002).                   3,798             3,846
  RTFC note payable in escalating quarterly principal installments
    through August 2014, interest payments due quarterly at a
    fixed rate of 8.4% (rate expires October 2004).                        130,588           132,207
  RTFC note payable in escalating quarterly principal installments
    through February 2015, interest payments due quarterly at a
    fixed rate of 8.5% (rate expires April 2005).                          105,315           106,462
  RTFC secured line of credit loan, maturing March 2005 with
    interest payments due quarterly at the RTFC's line
    of credit base rate plus 0.5% (6.7% at March 31, 2002).                 21,000            17,000
RTFC unsecured line of credit loan, maturing March 2005 with interest
  payments due quarterly at the RTFC's line of credit base
  rate plus 1.0% (7.2% at March 31, 2002).                                  10,000            10,000
Mortgage note payable in monthly installments of $18 with a
  balloon payment of $2,238 in April 2006, interest at a
  fixed rate of 8%, secured by land and building.                            2,344             2,349
Unsecured 131/4% senior notes payable, due March 1, 2010, with
  interest payable semiannually on March 1 and September 1, net of
  debt discount of $2,420 and $2,462, respectively.                        197,580           197,538
Other                                                                          393               393
                                                                           -------           -------
                                                                           679,092           680,018
Less current portion                                                        22,167            20,408
                                                                           -------           -------
                                                                         $ 656,925         $ 659,610
                                                                           =======           =======
</TABLE>

                                      7

<PAGE>

                          MADISON RIVER CAPITAL, LLC
        Notes To Condensed Consolidated Financial Statements, Continued
                                  (Unaudited)

8.  LONG-TERM DEBT AND LINES OF CREDIT, Continued

The loan facilities provided by the Rural Telephone Finance Cooperative (the
"RTFC") are with MRLTDF, a subsidiary of the Company.  The facilites are
secured by a first mortgage lien on substantially all of the property, assets
and revenue of the LTD.  In addition, substantially all of the outstanding
equity interests of the subsidiaries that comprise the LTD are pledged in
support of the facilities.

The terms of the RTFC loan agreement require MRLTDF to meet and adhere to
various financial and administrative covenants.  In addition, MRLTDF is
restricted from declaring or paying dividends to MRH, its parent, under
specified circumstances, is limited in its ability to make intercompany loans
or enter into other affiliated transactions, and is restricted from incurring
additional indebtedness above certain amounts without the consent of the
RTFC.  MRLTDF is required to test its compliance with certain financial
ratios on an annual basis.  At December 31, 2001, MRLTDF was in compliance
with its financial ratios.  At March 31, 2002, MRLTDF remained in compliance
with its other financial and administrative covenants.

The $31.0 million secured revolving line of credit expires in March 2005.
Interest is payable quarterly at the RTFC's line of credit base rate plus
0.5% per annum. At March 31, 2002, MRLTDF had drawn down $21.0 million under
this line of credit with the remaining $10.0 million fully available to
MRLTDF.  In addition, Coastal Utilities, Inc. has a fully-drawn $10.0 million
unsecured revolving line of credit from the RTFC that also expires in March
2005.  Interest is payable quarterly at the RTFC's line of credit base rate
plus 1.0% per annum.

MRLTDF also has available a $7.8 million term loan facility with the RTFC.
In accordance with the terms of the loan facility, MRLTDF will purchase
subordinated capital certificates equivalent to 10% of the amount advanced
under this term loan and may use proceeds from the facility to finance the
purchase.  Interest on this facility is payable at the lender's base rate
plus .35% per annum. MRLTDF had no borrowings under this facility at March
31, 2002.

Under the terms of the indenture that governs the senior notes, the Company
must comply with certain financial and administrative covenants. In addition,
the Company is restricted in its ability to incur additional indebtedness, to
pay dividends, to redeem or repurchase equity interests, to make various
investments or other restricted payments, to create certain liens or use
assets as security in other transactions, to sell certain assets or utilize
certain asset sale proceeds, to merge or consolidate with or into other
companies or to enter into transactions with affiliates.  At March 31, 2002,
the Company was in compliance with the terms of the senior notes indenture.

9.  SEGMENT INFORMATION

The Company is a provider of integrated communications services and
solutions.  The Company's operations are classified into two reportable
business segments, the LTD and the ICD.  Although both segments provide
telecommunication services, the segments are managed by separate management
teams and their financial and operating results are evaluated separately by
the chief operating decision maker.  The reporting segments follow the same
accounting principles and policies used for the Company's consolidated
financial statements.  The following tables summarize the revenues and net
operating income (loss) for each segment for the three months ended March 31,
2002 and 2001:

<TABLE>
<CAPTION>
                                           Quarterly period ended
                                         --------------------------
                                         March 31,        March 31,
                                           2002             2001
                                         ---------        ---------
                                               (in thousands)
        <S>                              <C>              <C>
        Total revenues:
            LTD                          $ 42,802         $ 43,704
            ICD                             3,963            1,948
                                          -------          -------
                                           46,765           45,652
        Less intersegment revenues           (840)            (445)
                                          -------          -------
            Total reported revenues      $ 45,925         $ 45,207
                                          =======          =======
</TABLE>
                                      8

<PAGE>

                          MADISON RIVER CAPITAL, LLC
        Notes To Condensed Consolidated Financial Statements, Continued
                                  (Unaudited)


9.  SEGMENT INFORMATION, Continued

<TABLE>
<CAPTION>
                                           Quarterly period ended
                                         --------------------------
                                         March 31,        March 31,
                                           2002             2001
                                         ---------        ---------
                                               (in thousands)
        <S>                              <C>              <C>
        Net operating income (loss):
            LTD                          $  13,043        $   9,042
            ICD                             (4,169)          (9,665)
                                           -------          -------
            Total reported net operating
              income (loss)              $   8,874        $    (623)
                                           =======          =======
</TABLE>

At March 31, 2002 and December 31, 2001, total assets by segment, net of
intersegment investments and other intersegment balances, were as follows:

<TABLE>
<CAPTION>
                                         March 31,        December 31,
                                           2002               2001
                                         ---------        ------------
                                               (in thousands)
        <S>                              <C>              <C>
        Total assets:
            LTD                          $  899,283        $  895,912
            ICD                             504,070           506,239
                                          ---------         ---------
                                          1,403,353         1,402,151
            Less intersegment assets       (526,509)         (505,573)
                                          ---------         ---------
            Total reported assets        $  876,844        $  896,578
                                          =========         =========
</TABLE>

10.  SUBSEQUENT EVENT

As part of the consideration paid in the acquisition of Coastal Utilities,
Inc., the Company issued to the former shareholders of Coastal Utilities 300
shares of Series A non-voting common stock and 300 shares of Series B non-
voting common stock of CCI in the face amount of $10.0 million and $5.0
million, respectively. The Series A and Series B stock had put and call
features defined pursuant to the terms of a shareholders agreement and
exercisable by the holders and CCI.  In February 2001, the holders of the
Series B stock notified the Company of their exercise of the put option.

On April 10, 2002, Madison River Telephone Company completed an agreement
with the former shareholders of Coastal Utilities that, among other things,
modified certain provisions of the CCI shareholders agreement.  Under the
terms of the new agreement, the former shareholders exchanged all of their
Series B stock and 40% of their Series A stock in CCI for 18.0 million Class
A member units in MRTC valued at $1 per unit and three term notes issued by
MRTC, in the aggregate principal amount of $20.0 million, payable over eight
years and bearing interest at approximately 8.4%.  In addition, CCI redeemed
30 shares of Series A stock retained by the former shareholders for
$33,333.33 per share, or approximately $1.0 million, at the closing of the
transaction.  Under the terms of CCI's amended shareholders agreement, the
former shareholders have the right, beginning May 31, 2003 and ending
September 30, 2007, to require CCI to redeem their remaining 150 shares of
Series A stock in increments not to exceed 30 shares at $33,333.33 per share,
or an aggregate value of $1.0 million, in any thirteen-month period.


                                      9

<PAGE>

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

Certain statements in this Form 10-Q constitute "forward-looking statements"
that involve risks and uncertainties. Forward-looking statements generally
can be identified by the use of forward-looking words such as "may," "will,"
"expect," "intend," "estimate," "anticipate," "plan," "seek" or "believe," or
by discussion of strategy that involves risks and uncertainties.  We believe
that the expectations reflected in such forward-looking statements are
accurate.  However, we cannot assure you that such expectations will occur.
Our actual results may differ materially from those anticipated in these
forward-looking statements as a result of various factors, including, but not
limited to:

  *  competition in the telecommunications industry;
  *  the passage of legislation, court decisions or regulatory changes
     adversely affecting the telecommunications industry;
  *  our ability to repay our outstanding indebtedness;
  *  our ability to raise additional capital on acceptable terms and on a
     timely basis; and
  *  the advent of new technology.

For more information, see the "Risk Factors" section beginning on page 14 of
our Annual Report on Form 10-K for the fiscal year ended December 31, 2001
(File No. 333-36804) filed with the Securities and Exchange Commission.

Except as required by law, we are not obligated to publicly release any
revisions to these forward-looking statements to reflect events or
circumstances occurring after the filing of this Form 10-Q or to reflect the
occurrence of unanticipated events.

Included in our discussion and analysis of our operating results are
comparisons of EBITDA.  EBITDA consists of operating income (loss) before
depreciation and amortization and is presented because we believe it is
frequently used by investors and other interested parties in the evaluation
of a company's ability to meet its future debt service, capital expenditure
and working capital requirements.  However, other companies in our industry
may present EBITDA differently than we do.  EBITDA is not a measurement of
financial performance under generally accepted accounting principles and
should not be considered as an alternative to cash flows from operating
activities as a measure of liquidity or as an alternative to net earnings as
an indicator of our operating performance or any other measures of
performance derived in accordance with generally accepted accounting
principles.

References in this Form 10-Q to "we," "us" and "our" mean Madison River
Capital, LLC and its subsidiaries.


Overview

We are an established rural local exchange company providing communications
services and solutions to business and residential customers in the Gulf
Coast, Mid-Atlantic and Midwest regions of the United States. Our integrated
service offerings include local and long distance voice, high-speed data,
Internet access and fiber transport.  At March 31, 2002, we had approximately
226,250 voice and DSL connections in service.

We are organized into two operating divisions, the LTD and the ICD.  The LTD
is responsible for the integration, operation and development of our
established markets that consist of four ILECs acquired since January 1998.
The ILECs are located in North Carolina, Illinois, Alabama and Georgia.  The
ICD is responsible for developing and managing our target markets as a CLEC.
In addition, the ICD is building a transport business focusing on providing
transport and IP transit services to other carriers and large businesses.
The ICD is building its base of customers around the LTD's currently
established operations and along its approximately 2,300 route miles of fiber
optic network.  We are currently certified in ten states as a CLEC (North
Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana,
Texas, Tennessee and Illinois) and in 11 states as a long distance provider
(North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi,
Louisiana, Texas, Tennessee, Kentucky and Illinois).



                                      10

<PAGE>

The majority of our fiber optic network comprises a long-haul network in the
southeast United States that connects Atlanta, Georgia and Dallas, Texas, two
of the four Tier I Network Access Points. Further, the route connects other
metropolitan areas such as Mobile and Montgomery, Alabama; Biloxi,
Mississippi; New Orleans, Louisiana; and Houston, Texas.  We have peering
agreements in both Atlanta and Dallas that allow us to pass the Internet
traffic we carry on our network to the Internet backbone providers.

Our current business plan is focused on improving cash flows for the
enterprise.  Since our inception, our principal activities have been the
acquisition, integration, operation and improvement of ILECs in rural
markets. In acquiring our four ILECs , we purchased businesses with positive
cash flow, government and regulatory authorizations and certifications,
operating support systems, management and key personnel and facilities.  The
LTD is continuing the development of these established markets with
successful marketing of vertical services and DSL products and is controlling
expenses through the use of business process management tools.  The LTD has
been successful in increasing its EBITDA for the quarter ended March 31, 2002
compared to the same quarter in the prior year.  For the first quarter of
2002, the LTD's EBITDA was $21.9 million compared to $21.1 million for the
first quarter of the prior year.  In the ICD, our strategy has shifted from
growth to a business model focused on getting the ICD's operations to
positive cash flow quicker than possible with an aggressive growth model.  In
order to achieve positive cash flow in the ICD, we intentionally slowed the
rate of growth in this division to allow us to capitalize on the revenues
generated by currently installed lines while simultaneously reducing our
expenses and capital expenditures.  Once the ICD begins to generate
sustainable positive cash flow, the ICD will then target a rate of growth
that can be funded from its own operations without additional investment. The
ICD is providing services to medium and large customers in three edge-out
markets: the Triangle (Raleigh, Durham and Chapel Hill) and the Triad
(Greensboro and Winston-Salem) in North Carolina; Peoria and Bloomington in
Illinois; and the New Orleans, Louisiana region.  However, the ICD is no
longer continuing to prospect and sell services to new customers in its
Illinois markets.  The ICD's transport business is focused on developing its
product lines in Atlanta, Georgia; New Orleans, Louisiana; and Houston and
Dallas, Texas.

Factors Affecting Future Operations

The following is a discussion of the primary factors that we believe will
affect our operations over the next few years.

Revenues

To date, our revenues have been derived principally from the sale of local
and long distance communications services to customers in our established
markets. For the quarter ended March 31, 2002, approximately 91% of our
operating revenues came from the LTD.  Our business plan is to generate
increasing revenues in our LTD and ICD operations from voice services (local
and long distance), Internet access and enhanced data and other services.
Our transport business will focus on growing revenues by providing services
to other carriers and major accounts such as intercity transport, including
both high capacity and optical wavelength transport, metro access services
and Internet egress services at a DS-3 level and above.

The sale of communications services to customers in our ILEC markets will
continue to provide the predominant share of our revenues for the foreseeable
future while we slow the rate of growth in our ICD operations.  We expect
that if we achieve sustainable positive cash flow in our ICD operations that
will allow the ICD to fund its own growth and we are successful in developing
and marketing our fiber transport and Internet egress products, then the
ICD's revenues may grow at a faster pace than the LTD's revenues.  This will
result in a growing percentage of our revenues coming from sales of
communications services to medium and large businesses and other carriers in
our edge-out markets.  In the near term, we anticipate that any increase in
revenues from the ICD will grow sequentially at a much slower pace than we
have experienced in the past several quarters due to our focus on achieving
positive cash flow for that division.

We will continue to offer bundled services and to competitively price our
services in each of our markets. In addition, we intend to continue to offer
combined service discounts designed to give customers incentives to buy
bundled services pursuant to long-term contracts. The fiber transport
business appears increasingly to be price driven, and, as a result, we may
competitively price these services to gain market share.
                                      11

<PAGE>

Expenses

Our ILECs, the foundation of our business, have historically reported
fairly consistent operating expenses from period to period.  However, in recent
quarters, as we continued to integrate our ILEC acquisitions and implement
business process management tools to control expenses, we have seen our
operating expenses in our ILEC operations decrease.  We seek to maintain the
expense reductions that we have achieved in our existing operations and, with
additional efforts, gain some further cost savings in the LTD though at a far
slower sequential rate than we have recently seen.

During the past two years, we made a significant investment in the ICD with
the buildout of our fiber network and asynchronous transfer mode, or ATM, and
time division modulation, or TDM, switching platforms and establishment of an
efficient marketing, sales and provisioning infrastructure.  This resulted in
significant increases in operating expenses in the ICD.  During much of 2001,
we worked on resizing the ICD organization to better align it with our market
opportunities and lower the pace of growth in operating expenses accordingly.
In the fourth quarter of 2001, our business plan for the ICD shifted from
aggressively growing the number of access lines in service to focusing on
business processes that will allow the division to move more quickly towards
generating positive cash flows.  As the basis for this strategy, we have
intentionally slowed the rate at which we are adding new access lines in the
ICD.  Accordingly, we have significantly reduced our cash utilization for
this division.  With slower planned growth, fewer sales personnel are needed,
and, as a result, fewer provisioners, sales engineers, customer care and
other support personnel are required.  In addition, our capital spending for
the ICD has decreased significantly. Once the ICD begins generating cash from
its operations, we intend to reinvest the cash in the division to fund its
future growth.  We have also addressed the organization of our transport
business to better align it with our cash flow positive strategy.  Therefore,
we expect that our operating expenses in the ICD will decrease moderately in
the near term as the impact of these changes are reflected in our operating
results.

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

Cost of services

Our cost of services includes:

  *  plant specific costs and expenses, such as network and general support
     expense, central office switching and transmission expense, information
     origination/termination expense and cable and wire facilities expense;
  *  plant nonspecific costs, such as testing, provisioning, network,
     administrative, power and engineering;
  *  the cost of leasing unbundled copper loop lines and high capacity
     digital lines from the ILECs to connect our customers and other
     carriers' networks to our network;
  *  the cost of leasing transport from ILECs or other providers where our
     fiber transport capacity is not available;
  *  the cost of collocating in ILEC central offices; and
  *  the cost of purchasing and installing electronics on our fiber network.

We have already entered into interconnection agreements with Bell South,
Verizon, Ameritech, Sprint and SBC. Other interconnection agreements may be
required, and certifications by state regulators would be required in states
where we are not certified as a competitive provider.

We have a resale agreement with Global Crossing to provide long distance
transmission services. This agreement contains minimum volume commitments.
Although we believe that we will meet these commitments and expect to
experience lower cost per minute usage rates as volume increases, we may not
be successful in generating adequate long distance business to absorb our
minimum volume commitment and will be required to pay for long distance
transmission services that we are not using.


                                      12

<PAGE>

Selling, general and administrative expenses

Selling, general and administrative expenses include:

  *  selling and marketing expenses;
  *  expenses associated with customer care;
  *  billing and other operating support systems; and
  *  corporate expenses.

We employ a professional sales team in the markets we serve.  We offer a
competitive compensation package based on minimum quota sales and incentives
for long-term contracts and bundled services.

We have operating support and other back office systems that we use to enter,
schedule, provision and track customer orders, test services and interface
with trouble management, inventory, billing, collection and customer care
service systems for the access lines in our operations. We may review and
consider the benefits offered by the latest generation of systems, and, if we
implement new systems, we expect that our operations support systems and
customer care expenses may increase.

As a result of our limited operating history as a consolidated company and
the number and timing of our acquisitions, there is limited operating and
financial data about us upon which to base an evaluation of our performance.
Although we expect to maintain positive EBITDA as an enterprise as we expand
from our established markets, operating losses in our edge-out markets in
which the ICD operates have materially decreased our EBITDA in recent
quarters and we expect may continue to lower our EBITDA over the near-term as
we work to make the ICD EBITDA positive. Further, our business plan requires
additional capital expenditures necessary to deliver high quality integrated
communications services and solutions. We anticipate that most of our capital
expenditures will be directed at maintaining our existing networks and for
success-based ATM equipment purchases in the ICD and will decrease moderately
from recent levels.  Although we are currently projecting an increase in
revenues, our revenues may not increase or even continue at their current
levels, and we may not achieve or maintain our target levels for expenses or
profitability.  We may not be able to generate cash from operations in future
periods at the levels we currently project or at all. Our actual future
operating results may differ from our current projections, and those
differences may be material.

Critical Accounting Policies

Revenue Recognition

Revenues are recognized when the corresponding services are provided
regardless of the period in which they are billed.  Recurring local service
revenues are billed one month in advance, and recognition is deferred until
the service has been provided.  Nonrecurring revenues, such as long distance
toll charges and other usage based billings, are billed in arrears and are
recognized when earned.

Network access service revenues are based on universal service funding and
charges to interexchange carriers for switched and special access services
and are recognized in the period when earned.  Our rural ILEC subsidiaries
participate in revenue sharing arrangements, sometimes referred to as pools,
with other telephone companies for interstate revenues and for certain
intrastate revenues.  Such sharing arrangements are funded by national
universal service funding, toll revenue and/or access charges in the
interstate market.  Revenues earned through the sharing arrangements are
initially recorded based on our estimates.  These estimates are then subject
to adjustment in future accounting periods as refined operating results
become available.  Traffic sensitive and special access revenues for
interstate services are billed under tariffs approved by the appropriate
regulatory authority and retained by us.

Revenues from billing and collection services provided to interexchange
carriers, advertising sold in telephone directories and the sale and
maintenance of customer premise equipment are recorded as miscellaneous
revenues.  These revenues are recognized when the service has been provided
or over the life of the contract, as appropriate.


                                      13

<PAGE>

Goodwill

Goodwill represents the excess of the purchase price of our acquisitions over
the fair value of the net assets acquired and has an indefinite life.  The
carrying value of goodwill is reviewed on an annual basis or if facts and
circumstances suggest impairment. If our review indicates that an impairment
of goodwill exists, as determined based on a comparison of the implied fair
value of goodwill to its carrying value, we would reduce the carrying value
by the difference.

Allowance for Uncollectible Accounts

We evaluate the collectibility of our accounts receivable based on a
combination of factors. In circumstances where we are aware of a specific
customer's inability to meet its financial obligations to us, such as a
bankruptcy filing or substantial down-grading of credit scores, we record a
specific allowance against amounts due to reduce the net recognized
receivable to the amount we reasonably believe will be collected. For all
other customers, we reserve a percentage of the remaining outstanding
accounts receivable balance as a general allowance based on a review of
specific customer balances, our trends and experience with prior receivables,
the current economic environment and the length of time the receivables are
past due. If circumstances change, we will review the adequacy of the
allowance, and our estimates of the recoverability of amounts due us could be
reduced by a material amount.


Results of Operations

Quarter Ended March 31, 2002 compared to Quarter Ended March 31, 2001

Total revenues for the quarter ended March 31, 2002 were $45.9 million, an
increase of $0.7 million, or 1.6%, from total revenues of $45.2 million for
the quarter ended March 31, 2001.  The increase is attributable to an
increase in revenues in the ICD.  For the first quarter of 2002, the ICD's
revenues were $4.0 million, an increase of $2.1 million from revenues of $1.9
million in the first quarter of 2001.  The ICD's growth came from an increase
in voice access lines in service.  The ICD finished the first quarter of 2002
with approximately 4,650, or 40%, more voice access lines in service than it
had at the end of the first quarter of 2001.  The LTD's revenues in the first
quarter of 2002 decreased approximately $1.4 million from the same quarter in
2001.  Approximately $0.7 million of the decrease is attributable to the
disposal of approximately 4,280 voice access lines in the Staunton and
Livingston exchanges in Illinois in May 2001.  The remaining decrease is
attributable to anticipated lower network access revenues at Gulf Coast
Services in the first quarter of 2002 when compared to the first quarter of
2001.

Revenues from voice services, which are comprised of local, network access
and long distance service, as a percentage of total revenues, were
approximately 83.7% and 85.1% for the quarters ended March 31, 2002 and 2001,
respectively.  The LTD and the ICD provided approximately 91.4% and 8.6% of
total revenues, respectively.

Total operating expenses decreased $8.8 million from $45.8 million, or 101.4%
of total revenues in the first quarter of 2001, to $37.0 million, or 80.7% of
total revenues in the first quarter of 2002. The decrease is primarily
attributable to expense reductions in both the LTD and the ICD and our
adoption of a new accounting standard in the first quarter of 2002.  In the
ICD, operating expenses in the first quarter of 2002 were approximately $3.5
million lower than the first quarter of 2001.  This decrease is a result of
the ICD's expense reductions implemented as part of its strategy to achieve
positive cash flow as quickly as possible.  The LTD's cost of services and
selling, general and administrative expenses in the first quarter of 2002
were approximately $2.1 million lower than the first quarter of 2001 as a
result of benefits gained from business process management enhancements and
tighter controls on operating expenses.  In addition, the LTD's depreciation
and amortization expenses declined significantly in the first quarter of 2002
from the first quarter of 2001 as a result of our adoption of the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
141, Business Combinations (FAS 141) in the first quarter of 2002.  Under the
guidelines of FAS 141, companies are no longer required to amortize the
goodwill carried on their balance sheets.  Through December 31, 2001, we
amortized our goodwill, which is the amount by which the purchase price we
paid for our acquisitions exceeded the fair value of the net assets we
acquired, on a straight-line basis over 25 years.  In the first quarter of
2001, this method of accounting for goodwill resulted in approximately $4.2
million in amortization expense. Beginning January 1, 2002, we no longer
amortized our goodwill but will perform required impairment tests of the
carrying value of our goodwill as provided for in the new accounting
standards.  We do not believe that the results of these impairment tests will
have a material impact on our financial position, net loss or cash flows.

                                      14

<PAGE>

Cost of services, as a percentage of total revenues, decreased from 35.1% in
the first quarter of 2001 to 31.4% in the first quarter of 2002, and selling,
general and administrative expenses, as a percentage of total revenues,
decreased from 35.2% in the first quarter of 2001 to 22.5% in the first
quarter of 2002. Depreciation and amortization expense, as a percentage of
total revenues, decreased from 31.1% in the first quarter of 2001 to 26.8% in
the first quarter of 2002.

Net operating income (loss) improved $9.5 million from a $0.6 million net
operating loss, or 1.4% of total revenues, in the first quarter of 2001, to
net operating income of $8.9 million, or 19.3% of total revenues, in the
first quarter of 2002.  The ICD's net operating loss decreased $5.5 million,
from a net operating loss of $9.7 million in the first quarter of 2001 to a
net operating loss of $4.2 million in the first quarter of 2002.  A
combination of increased revenues and reduced expenses accounted for the
improvement.  The LTD's net operating income in the first quarter of 2002 was
$13.0 million compared to $9.0 million in the first quarter of 2001, an
increase of $4.0 million.  The increase is primarily attributable to the
adoption of FAS 141 and elimination of the amortization of goodwill.

Interest expense decreased $0.1 million from $16.2 million, or 35.9% of total
revenues in the first quarter of 2001, to $16.1 million, or 35.0% of total
revenues in the first quarter of 2002. A slight increase in the weighted
average balance of long-term debt outstanding was offset by lower interest
rates on the variable portion of long-term debt and resulted in the minimal
decrease.

Other income (expense), net increased $8.0 million from net other expenses of
$7.5 million in the first quarter of 2001 to net other income of $0.5 million in
the first quarter of 2002.  The improvement is primarily attributable to an $8.7
million realized loss recorded in the first quarter of 2001 from the sale of
marketable equity securities.  There were no comparable losses in the first
quarter of 2002.

Net loss decreased $20.7 million from $29.1 million, or 64.5% of total
revenues, in the first quarter of 2001, to $8.4 million, or 18.3% of total
revenues, in the first quarter of 2002, as a result of the factors discussed
above. EBITDA increased $7.8 million from $13.4 million, or 29.7% of total
revenues, in the first quarter of 2001, to $21.2 million, or 46.1% of total
revenues, in the first quarter of 2002.  Improvements in the financial
operating results of the ICD was the primary reason for the increase in
EBITDA.


Liquidity and Capital Resources

We are a holding company with no business operations of our own. Our only
significant assets are the capital stock/member interests of our
subsidiaries. Accordingly, our only sources of cash to pay our obligations
are cash on hand and distributions from our subsidiaries from their net
earnings and cash flow. Even if our subsidiaries determine to pay a dividend
on, or make a distribution in respect of, their capital stock/member
interests, we cannot assure you that our subsidiaries will generate
sufficient cash flow to pay such a dividend or distribute such funds or that
they will be permitted to pay such dividend or distribution under the terms
of their credit facilities.

Operating Activities. For the quarters ended March 31, 2002 and 2001, we used
cash in operating activities of $1.3 million and $29.6 million, respectively.
The decrease in cash used for operating activities for the first quarter of
2002 when compared to the first quarter of 2001 is attributable primarily to
a lower net loss and a lower amount of cash used to pay accounts payable and
accrued expenses.  In the first quarter of 2002, cash used for accounts
payable and accrued expenses was approximately $9.9 million compared to $21.0
million for the same period of 2001.

Investing Activities. For the quarter ended March 31, 2002, net cash used for
investing activities was $2.7 million and was used primarily for the purchase
of telephone plant and equipment in the amount of $3.3 million.  For the
quarter ended March 31, 2001, we used cash for investing activities in the
amount of $0.6 million. Cash used in investing activities in the first
quarter of 2001 was primarily for the purchase of telephone plant and
equipment in the amount of $12.1 million and was offset by the change in
other assets, primarily from the cash proceeds related to the sale of our
investment in available-for-sale marketable equity securities.


                                      15

<PAGE>

Financing Activities. For the quarter ended March 31, 2002, net cash used in
financing activities was $3.0 million and consisted primarily of payments on
long-term debt of $5.0 million and redemption of our equity interests from
our parent, Madison River Telephone Company, of $2.0 million.  This was
offset by the proceeds from long-term debt of $4.0 million.  For the quarter
ended March 31, 2001, net cash used in financing activities was $1.8 million
and consisted primarily of payments on long-term debt of $1.9 million.

Long-Term Debt and Revolving Credit Facilities

We or our subsidiaries have outstanding term and revolving credit facilities
with the RTFC, which were entered into in connection with the acquisitions of
Mebcom, Gallatin River, Gulf Coast Services and Coastal Communications.  In
addition, we have $200.0 million in 131/4% senior notes outstanding that are
due in March 2010, a mortgage note payable on property acquired in the
Coastal Communications acquisition and a miscellaneous note payable.

RTFC Long-Term Debt
-------------------
As of March 31, 2002, we had approximately $447.8 million in term loans
outstanding with the RTFC.  Of this amount, $437.0 has fixed interest rates
that range between 6.5% and 8.5%, with a weighted average rate approximating
7.94%.  The fixed interest rates expire at various times, beginning April
2003 through April 2005, depending on the terms of the note, at which time
they will convert to a variable rate.  We have the ability to fix these
interest rates after the date of expiration at the RTFC's then-prevailing
interest rate for long-tem debt with similar maturities.  The remaining $10.8
million in term loans have variable interest rates that range from 5.7% to
5.95%.

At March 31, 2002, we also had a $7.8 million term loan fully available to
be drawn with the RTFC.  The $7.8 million term facility is available to fund
working capital and capital expenditures; however, as of December 29, 2003,
the RTFC may, in its sole discretion, stop advancing funds under this
facility.

As a condition of obtaining long-term financing from the RTFC, we purchased
subordinated capital certificates ("SCCs") that represent ownership interests
in the RTFC.  Depending on the loan agreement, we purchased SCCs equivalent
to either 5% or 10% of the amount borrowed.  The RTFC financed the purchase
of the SCCs by increasing the balance advanced for a loan by an amount equal
to the SCCs purchased.  In December 2000, we refinanced our outstanding loan
agreements with the RTFC and, at that time, agreed to increase the level of
SCCs we owned to a balance equivalent to a ratio of 10% of the outstanding
balance remaining on all of the term loans.

At March 31, 2002, we owned $45.3 million in SCCs.  The SCCs are redeemed
annually, at par, in an amount equivalent to 10% of the term loan principal
that was repaid in the prior year.

We also receive a share of the RTFC's net margins in the form of patronage
capital refunds. Patronage capital is allocated based on the percentage that
our interest payments contribute to the RTFC's gross margins. Currently, 70%
of the RTFC's patronage capital allocation is retired with cash after the end
of the year, and 30% is received in the form of patronage capital
certificates. The patronage capital certificates will be retired with cash in
accordance with the RTFC's board-approved rotation cycle.

In addition to the term loans, we also have a secured line of credit and an
unsecured line of credit with the RTFC.  The secured line of credit is a
$31.0 million facility that has no annual paydown provisions.  The secured
line of credit expires in March 2005 and bears interest at the RTFC base rate
for a standard line of credit plus 50 basis points, or 6.7% at March 31,
2002.  We had advanced $21.0 million against this line of credit at March 31,
2002, and the remaining $10.0 million is fully available to be drawn.  The
unsecured line of credit is a $10.0 million facility that is available for
general corporate purposes and expires in March 2005. In addition, under the
terms of the unsecured revolving line of credit agreement, we must repay all
amounts advanced under the facility within 360 days of the first advance and
bring the outstanding amount to zero for a period of five consecutive days in
each 360-day period.  The unsecured line of credit was fully advanced at
March 31, 2002 and bears interest at the RTFC base rate for a standard line
of credit plus 100 basis points, or 7.2% at March 31, 2002.

The borrower for our loan and revolving line of credit agreements with the
RTFC is our subsidiary, Madison River LTD Funding Corp..  The loan facilities
are secured by a first mortgage lien on substantially all of the property,
assets and revenue of the LTD.  In addition, substantially all of the
outstanding equity interests of the subsidiaries that comprise the LTD are
pledged in support of the facilities.

                                      16

<PAGE>

The terms of the RTFC loan agreement require MRLTDF to meet and adhere to
various financial and administrative covenants.  MRLTDF is also restricted
from declaring or paying dividends to its parent, Madison River Holdings, is
limited in its ability to make intercompany loans or enter into other
affiliated transactions, and is restricted from incurring additional
indebtedness above certain amounts without the consent of the RTFC.  As a
result of these provisions of the loan agreement, any amounts available under
the various credit facilities discussed above may only be available to MRLTDF
and its subsidiaries and not to the Company or its other subsidiaries to fund
their obligations.

MRLTDF is required to test its compliance with certain financial ratios on an
annual basis.  At December 31, 2001, MRLTDF was in compliance with its
financial ratios.  At March 31, 2002, MRLTDF remained in compliance with its
other financial and administrative covenants.

Senior Notes
------------
We currently have $200.0 million in publicly traded 131/4% senior notes
outstanding that are due in March 2010.  Interest is payable semiannually on
March 1 and September 1 of each year.  The senior notes are registered with
the Securities and Exchange Commission and are subject to the terms and
conditions of an indenture.  At March 31, 2002, the senior notes had a
carrying value of $197.6 million, which is net of a $2.4 million unamortized
discount.

Under the terms of the indenture, we must comply with certain financial and
administrative covenants. In addition, we are restricted in our ability to
incur additional indebtedness, to pay dividends, to redeem or repurchase
equity interests, to make various investments or other restricted payments,
to create certain liens or use assets as security in other transactions, to
sell certain assets or utilize certain asset sale proceeds, to merge or
consolidate with or into other companies or to enter into transactions with
affiliates.  At March 31, 2002, the Company was in compliance with the terms
of the senior notes indenture.

Other Long-Term Debt
--------------------
Our other indebtedness includes a $2.3 million note payable to the former
shareholders of Coastal Utilities, Inc. for the purchase of a building used
in our operations.  The note, which is secured by the building and bears
interest at 8.0%, is being repaid in monthly installments of $17,500 with a
balloon payment of approximately $2.2 million due in April 2006.  In
addition, we also have a miscellaneous note payable of $0.4 million that
bears interest at 8.0% and is due on demand.

Capital Requirements

Our business will require significant capital to fund working capital needs,
debt service requirements, capital expenditures and cash flow deficits.  In
the near term, we expect that our primary uses of cash will include:

  *  the maintenance of our current network infrastructure;
  *  the development and integration of operations support systems and other
     automated back office systems;
  *  scheduled principal and interest payments on our long-term debt;
  *  real estate expenses in connection with our network facilities and
     operations;
  *  sales and marketing expenses;
  *  corporate overhead; and
  *  personnel development.

We currently estimate that cash required to fund capital expenditures in 2002
will be less than $20.0 million. For the quarter ended March 31, 2002, our
capital expenditures were approximately $3.3 million.  Our anticipated use of
cash for capital expenditures in 2002 is significantly less than what we have
incurred in prior years.  This is a result of several factors.  First, we
have invested a significant amount in capital expenditures during the last
two years to build-out and enhance our network facilities in our markets.
Absent major changes in the technology that we employ, we believe that we
have very robust facilities in place capable of providing a high level of
service to our customers without significant alterations or enhancements.  We
anticipate that a large portion of our capital expenditures in 2002 will be
directed toward maintaining our existing facilities.  Second, we anticipate
slower growth in 2002 for the LTD than experienced in previous quarters.  In
addition, our new business plan for the ICD will significantly reduce its
rate of growth.  Therefore, there will be less demand to expand our network
facilities than we have seen in the past.  After 2002, we expect to see
stronger growth in our business, and, accordingly, we anticipate the level of
capital expenditures to accelerate in those years.

                                      17

<PAGE>

As part of the consideration paid in the Coastal Communications acquisition,
we issued to the former shareholders of Coastal Utilities 300 shares of
Series A non-voting common stock and 300 shares of Series B non-voting common
stock of Coastal Communications in the face amount of $10.0 million and $5.0
million, respectively. The Series A and Series B stock had put and call
features that were defined pursuant to the terms of a shareholders agreement
and were exercisable by the holders and CCI.

On April 10, 2002, Madison River Telephone Company announced the completion
of an agreement with the former shareholders which, among other things,
modified certain provisions of the shareholders agreement.  Under the terms
of the agreement, the former shareholders exchanged all of their Series B
stock and 40% of their Series A stock in CCI for 18.0 million Class A member
units in MRTC valued at $1 per unit and three term notes issued by MRTC, in
the aggregate principal amount of $20.0 million, payable over eight years and
bearing interest at approximately 8.4%.  In addition, CCI redeemed 30 shares
of Series A stock retained by the former shareholders for $33,333.33 per
share, or approximately $1.0 million, at the closing of the transaction.
Under the terms of CCI's amended shareholders agreement, the former
shareholders have the right, beginning May 31, 2003 and ending September 30,
2007, to require CCI to redeem their remaining 150 shares of Series A stock
in increments not to exceed 30 shares at $33,333.33 per share, or an
aggregate value of $1.0 million, in any thirteen-month period.

Under the terms of Madison River Telephone Company's Operating Agreement, at
any time on or after January 2, 2006, certain members may require MRTC to
purchase all of their member units at an amount equal to the fair market
value of the units. We may be required to fund this obligation of our parent
company.

Based on our business plan, we currently project that available borrowings
under our credit facilities, cash and investments on hand and our cash flow
from operations will be adequate to meet our foreseeable operational
liquidity needs for the next 12 months. However, our actual cash needs may
differ from our estimates, and those differences could be material. Our
future capital requirements will depend on many factors, including, among
others:

  *  the extent to which we consummate any significant additional
     acquisitions;
  *  our success in achieving net positive cash flow in our CLEC operations
     and transport business;
  *  the demand for our services in our existing markets;
  *  our ability to acquire, develop and integrate the necessary OSS and
     other back office systems; and
  *  regulatory, technological and competitive developments.

We may be unable to access the cash flow of our subsidiaries since certain of
our subsidiaries are parties to credit or other borrowing agreements that
restrict the payment of dividends, and those subsidiaries are likely to
continue to be subject to such restrictions and prohibitions for the
foreseeable future. In addition, future agreements governing the terms of our
subsidiaries' indebtedness may restrict our subsidiaries' ability to pay
dividends to us.

To the extent that our business plans or projections change or prove to be
inaccurate, we may require additional financing or require financing sooner
than we currently anticipate. Sources of additional financing may include
commercial bank borrowings, other strategic debt financing, sales of non-
strategic assets, vendor financing or the private or public sales of equity
and debt securities. We cannot assure you that we will generate sufficient
cash flow from operations in the future, that anticipated revenue growth will
be realized or that future borrowings or equity contributions will be
available in amounts sufficient to service our indebtedness, fund the payment
of any put options when due and make anticipated capital expenditures.
Failure to obtain necessary financing could require us to significantly
reduce our planned capital expenditures and scale back our expansion plans,
either of which could have a material adverse effect on our projected
financial condition and results of operations.


                                      18

<PAGE>

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards No. 141, "Business
Combinations", and No. 142, "Goodwill and Other Intangible Assets", effective
for fiscal years beginning after December 15, 2001.  Under the new rules,
goodwill and intangible assets deemed to have indefinite lives will no longer
be amortized but will be subject to annual impairment tests in accordance
with the statements.  Other intangible assets will continue to be amortized
over their estimated useful lives.  We adopted the new rules on accounting
for goodwill and other intangible assets as of January 1, 2002.  We expect
that application of the nonamortization provisions of the statements will
result in a decrease in net loss of approximately $16.5 million per year.  We
determined that the goodwill related to our acquisitions, net of accumulated
amortization, was not impaired as of January 1, 2002.  During 2002, we will
perform the required impairment tests in accordance with the statements.  We
do not believe that the results of these tests will have a material impact on
our financial position, net loss or cash flows.

In August 2001, FASB issued Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS
144).  SFAS 144 supersedes SFAS 121 and establishes a single accounting model
for long-lived assets to be disposed of by sale as well as resolves certain
implementation issues related to SFAS 121.  We adopted SFAS 144 as of January
1, 2002.  Adoption of SFAS 144 did not have a material impact on our
financial position, net loss or cash flows.


ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Although we invest our short-term excess cash balances, the nature and
quality of these investments are restricted under our internal investment
policies. These investments are limited primarily to U.S. Treasury agency
securities, certain time deposits and high quality repurchase agreements and
commercial paper. We do not invest in any derivative or commodity type
instruments. Accordingly, we are subject to minimal market risk on our
investments.

Our long term secured debt facilities with the RTFC amortize over a 15-year
period. As of March 31, 2002, we had fixed rate secured debt with the RTFC of
$437.0 million at a blended rate of 7.94%. The fixed rates on the notes
expire from 2003 to 2005 at which time they will be adjusted. We have $10.8
million in term notes and $31.0 million under lines of credit with the RTFC
that bear variable interest approximating a blended average rate of 6.6%. A
one percent change in the underlying interest rates for the variable rate
debt would have an immaterial impact of less than $420,000 per annum on
interest expense. The senior notes have a stated fixed rate of 13.25%.
Accordingly, we are subject to only minimal interest rate risk on our long-
term debt while our fixed rates are in place.



                                      19

<PAGE>

                                    Part II


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     Exhibit
     Number                     Description
     -------     -----------------------------------------------------------
       3.1       Certificate of Formation of the Registrant (incorporated by
                 reference to Exhibit 3.1 to the Registrant's Registration
                 Statement on Form S-4 (File No. 333-36804) filed with the
                 Securities and Exchange Commission on May 11, 2000 (the
                 "May Form S-4"))

       3.2       Limited Liability Company Agreement of the Registrant
                 (incorporated by reference to Exhibit 3.2 to the May Form
                 S-4)


(b)  Reports on Form 8-K

On March 20, 2002, we filed a Current Report on Form 8-K dated March
8, 2002 announcing our fourth quarter and year-end operating and
financial results for the year ended December 31, 2001.



                                   SIGNATURE

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.


                                         MADISON RIVER CAPITAL, LLC

Date:  May 15, 2002                      /s/  PAUL H. SUNU
                                         --------------------------------------
                                         Name:  Paul H. Sunu
                                         Title: Managing Director, Chief
                                                Financial Officer and Secretary


                                      20

<PAGE>

                                 EXHIBIT INDEX

     Exhibit
     Number                     Description
     -------     -----------------------------------------------------------
       3.1       Certificate of Formation of the Registrant (incorporated by
                 reference to Exhibit 3.1 to the Registrant's Registration
                 Statement on Form S-4 (File No. 333-36804) filed with the
                 Securities and Exchange Commission on May 11, 2000 (the "May
                 Form S-4"))

       3.2       Limited Liability Company Agreement of the Registrant
                 (incorporated by reference to Exhibit 3.2 to the May Form S-4)