<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 JUNE 30, 2001

                                      OR

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


For the transition period from ___________________ to ____________________


                        COMMISSION FILE NUMBER: 0-27778


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


                                    GEORGIA
        (State or other jurisdiction of incorporation or organization)

                                  59-3074176
                     (I.R.S. Employer Identification No.)


                            3399 PEACHTREE ROAD NE
                         THE LENOX BUILDING, SUITE 600
                            ATLANTA, GEORGIA 30326
         (Address of principal executive offices, including zip code)

                                (404) 262-8400
              (Registrant's telephone number including area code)

                                      N/A
             (Former name, former address and former fiscal year,
                         if changed since last report)


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

              (1) Yes [X]  No [ ]            (2) Yes [X]  No [ ]

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

            Class                     Outstanding at August 8, 2001
            -----                     -----------------------------
Common Stock, $0.01 par value               49,874,378 Shares
<PAGE>

                     PTEK HOLDINGS, INC. AND SUBSIDIARIES

                              INDEX TO FORM 10-Q


                                                                            Page
                                                                            ----
PART I FINANCIAL INFORMATION

  Item 1  Financial Statements

          Consolidated Condensed Balance Sheets
          as of June 30, 2001 and December 31, 2000.........................   3

          Consolidated Condensed Statements of Operations
          for the Three and Six Months Ended June 30, 2001 and 2000.........   4

          Consolidated Condensed Statements of Cash Flows
          for the Six Months Ended June 30, 2001 and 2000...................   5

          Notes to Consolidated Condensed Financial Statements..............   6

  Item 2  Management's Discussion and Analysis of Financial Condition
          and Results of Operations.........................................  12

  Item 3  Quantitative and Qualitative Disclosures About Market Risk........  19

PART II OTHER INFORMATION

  Item 1  Legal Proceedings.................................................  20

  Item 2  Changes in Securities.............................................  22

  Item 3  Defaults Upon Senior Securities...................................  22

  Item 4  Submission of Matters to a Vote of Security Holders...............  22

  Item 5  Other Information.................................................  22

  Item 6  Exhibits and Reports on Form 8-K..................................  23

SIGNATURES..................................................................  24

EXHIBIT INDEX...............................................................  25

                                       2
<PAGE>

                         ITEM 1.  FINANCIAL STATEMENTS

                     PTEK HOLDINGS, INC. AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED BALANCE SHEETS AS OF
                      JUNE 30, 2001 AND DECEMBER 31, 2000
                       (IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
                                                                                      June 30,     December 31,
                                                                                        2001          2000
                                                                                     ---------     ------------
<S>                                                                                  <C>           <C>
                                                                                            (Unaudited)
                                           ASSETS
CURRENT ASSETS
     Cash and equivalents........................................................    $  31,942      $  22,991
     Marketable securities, available for sale...................................        2,047          6,725
     Accounts receivable, net....................................................       65,243         66,927
     Notes receivable - sale of revenue base.....................................        6,552          6,552
     Prepaid expenses and other..................................................       10,324          8,904
     Deferred income taxes, net..................................................       20,717         18,998
                                                                                     ---------     ----------
               Total current assets..............................................      136,825        131,097

PROPERTY AND EQUIPMENT, NET......................................................      112,216        117,106

OTHER ASSETS
     Investments.................................................................            -         27,066
     Intangibles, net............................................................      305,302        344,782
     Other assets................................................................       10,957         10,882
                                                                                     ---------     ----------
                                                                                     $ 565,300     $  630,933
                                                                                     =========     ==========
                           LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
     Accounts payable............................................................    $  41,887     $   32,057
     Deferred revenue............................................................        1,745            540
     Accrued taxes...............................................................        9,747         12,276
     Accrued liabilities.........................................................       57,481         60,966
     Deferred gain - sale of revenue base........................................        6,552          6,552
     Current maturities of long-term debt and capital lease obligations..........        3,102          1,676
     Accrued restructuring costs.................................................        5,161          1,081
                                                                                     ---------     ----------
               Total current liabilities.........................................      125,675        115,148
                                                                                     ---------     ----------

LONG-TERM LIABILITIES
     Convertible subordinated notes..............................................      172,500        172,500
     Long-term debt and capital lease obligations................................        6,090          4,586
     Other accrued liabilities...................................................          379          1,429
     Deferred income taxes, net..................................................       15,111         23,864
                                                                                     ---------     ----------
               Total long-term liabilities.......................................      194,080        202,379
                                                                                     ---------     ----------

COMMITMENTS AND CONTINGENCIES (Note 7)

SHAREHOLDERS' EQUITY
     Common stock, $0.01 par value; 150,000,000 shares authorized, 52,750,978 and
       51,316,880 shares issued in 2001 and 2000 and 49,827,353 and 49,870,978
       shares outstanding in 2001 and 2000, respectively.........................          528            513
     Unrealized gain on marketable securities, available for sale................          927          2,316
     Additional paid-in capital..................................................      584,429        581,474
     Treasury stock, at cost.....................................................      (14,147)       (12,398)
     Note receivable, shareholder................................................       (3,834)        (3,834)
     Cumulative translation adjustment...........................................       (7,573)        (6,363)
     Accumulated deficit.........................................................     (314,785)      (248,302)
                                                                                     ---------     ----------
               Total shareholders' equity........................................      245,545        313,406
                                                                                     ---------     ----------
                                                                                     $ 565,300     $  630,933
                                                                                     =========     ==========
</TABLE>


   Accompanying notes are integral to these consolidated condensed financial
                                  statements.

                                       3
<PAGE>

                      PTEK HOLDINGS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
               THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>


                                                                  Three Months Ended      Six Months Ended
                                                                 ---------------------  ---------------------
                                                                 June 30,     June 30,   June 30,    June 30,
                                                                  2001         2000       2001        2000
                                                                 --------     --------   --------    --------
                                                                     (Unaudited)             (Unaudited)
<S>                                                             <C>          <C>        <C>         <C>
Revenue.............................................            $109,268     $111,458   $217,645    $227,171
Telecommunications costs............................              26,626       28,276     54,051      59,739
                                                                --------     --------   --------    --------
GROSS PROFIT........................................              82,642       83,182    163,594     167,432
Direct operating costs..............................              18,132       17,242     35,662      34,212
                                                                --------     --------   --------    --------
CONTRIBUTION MARGIN.................................              64,510       65,940    127,932     133,220
                                                                --------     --------   --------    --------
OTHER OPERATING EXPENSES
     Selling and marketing..........................              22,769       24,702     45,960      48,345
     General and administrative.....................              20,083       19,296     40,610      41,053
     Research and development.......................               4,094        3,488      8,194       7,079
     Depreciation...................................               8,750       12,342     17,855      22,305
     Amortization...................................              24,845       25,674     48,938      51,434
     Restructuring costs............................               6,714            -      6,714           -
     Equity based compensation......................               2,217            -      2,217           -
     Gain on legal settlement.......................                   -       (3,730)         -      (3,730)
                                                                --------     --------   --------    --------
          Total other operating expenses............              89,472       81,772    170,488     166,486
                                                                --------     --------   --------    --------

OPERATING LOSS......................................             (24,962)     (15,832)   (42,556)    (33,266)
                                                                --------     --------   --------    --------

OTHER INCOME (EXPENSE)
     Interest, net..................................              (2,901)      (2,692)    (5,510)     (5,403)
     Gain on sale of marketable securities..........                 959        7,043      2,563      53,059
     Asset impairment - investments.................             (24,440)           -    (29,195)          -
     Amortization of goodwill - equity investments..                   -            -     (1,612)          -
     Other, net.....................................                (539)          97       (910)       (319)
                                                                --------     --------   --------    --------
          Total other income (expense)..............             (26,921)       4,448    (34,664)     47,337
                                                                --------     --------   --------    --------

INCOME/(LOSS) BEFORE INCOME TAXES...................             (51,883)     (11,384)   (77,220)     14,071
INCOME TAX EXPENSE/(BENEFIT)........................              (8,952)       1,548    (10,737)     18,708
                                                                --------     --------   --------    --------

NET LOSS............................................            $(42,931)    $(12,932)  $(66,483)   $ (4,637)
                                                                ========     ========   ========    ========

BASIC NET LOSS PER SHARE............................            $  (0.86)    $  (0.27)  $  (1.34)   $  (0.10)
                                                                ========     ========   ========    ========
DILUTED NET LOSS PER SHARE..........................            $  (0.86)    $  (0.27)  $  (1.34)   $  (0.10)
                                                                ========     ========   ========    ========

WEIGHTED AVERAGE SHARES OUTSTANDING
     BASIC..........................................              49,860       48,031     49,679      47,743
                                                                ========     ========   ========    ========
     DILUTED........................................              49,860       48,031     49,679      47,743
                                                                ========     ========   ========    ========

</TABLE>


   Accompanying notes are integral to these consolidated condensed financial
                                  statements.

                                       4
<PAGE>

                      PTEK HOLDINGS, INC. AND SUBSIDIARIES
             CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE
                    SIX MONTHS ENDED JUNE 30, 2001 AND 2000
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                          2001           2000
                                                                                        --------       --------
                                                                                               (Unaudited)
<S>                                                                                     <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss.....................................................................      $(66,483)       $ (4,637)
     Adjustments to reconcile net loss to cash flows from operating activities:
     Depreciation and amortization................................................        66,793          73,739
     Asset impairment - investments...............................................        29,195               -
     Amortization of goodwill - equity investments................................         1,612               -
     Equity based compensation....................................................         2,217               -
     Gain on sale of marketable securities........................................        (2,563)        (53,059)
     Gain on legal settlement.....................................................             -          (3,730)
     Deferred income taxes........................................................       (10,737)         17,163
     Restructuring costs..........................................................         6,714               -
     Payments for restructuring costs.............................................          (900)         (3,267)
     Proceeds/(payments) from legal settlement....................................          (863)         12,000
     Income taxes paid............................................................          (440)        (15,389)
     Changes in assets and liabilities:
          Accounts receivable, net................................................           405          (7,130)
          Prepaid expenses and other..............................................          (127)         (7,170)
          Accounts payable and accrued expenses...................................         5,390         (12,161)
                                                                                        --------        --------

     Total adjustments............................................................        96,696             996
                                                                                        --------        --------

     Net cash provided by (used in) operating activities..........................        30,213          (3,641)
                                                                                        --------        --------

CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures.........................................................       (13,103)        (14,631)
     Proceeds from disposal of property and equipment.............................             -           1,937
     Sale of marketable securities................................................         4,050          55,628
     Payments made for certain business assets....................................        (3,628)           (495)
     Investments..................................................................        (3,791)        (26,891)
     Other........................................................................        (1,010)           (781)
                                                                                        --------        --------

          Net cash (used in) provided by investing activities.....................       (17,482)         14,767
                                                                                        --------        --------

CASH FLOWS FROM FINANCING ACTIVITIES
     Payments under borrowing arrangements........................................        (1,087)         (4,605)
     Exercise of stock options....................................................            61           3,503
     Purchase of treasury stock, at cost..........................................        (1,749)           (197)
                                                                                        --------        --------

          Net cash used in financing activities...................................        (2,775)         (1,299)
                                                                                        --------        --------

EFFECT OF EXCHANGE RATE CHANGES ON CASH...........................................        (1,005)           (138)
                                                                                        --------        --------

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS...................................         8,951           9,689
CASH AND EQUIVALENTS, beginning of period.........................................        22,991          15,366
                                                                                        --------        --------
CASH AND EQUIVALENTS, end of period...............................................      $ 31,942        $ 25,055
                                                                                        ========        ========

Income taxes paid.................................................................      $    440        $ 15,389
                                                                                        ========        ========
Interest paid.....................................................................      $  5,259        $  5,340
                                                                                        ========        ========
</TABLE>


   Accompanying notes are integral to these consolidated condensed financial
                                  statements.

                                       5
<PAGE>

                      PTEK HOLDINGS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


1.  BASIS OF PRESENTATION

The accompanying unaudited interim consolidated condensed financial statements
have been prepared by management of PTEK Holdings, Inc. and its subsidiaries
(collectively, the "Company" or "PTEK") in accordance with rules and regulations
of the Securities and Exchange Commission ("SEC").  Accordingly, certain
information and footnote disclosures usually found in financial statements
prepared in accordance with accounting principles generally accepted in the
United States have been condensed or omitted. In the opinion of management of
the Company, all adjustments (consisting only of normal recurring adjustments,
except as disclosed herein) considered necessary for a fair presentation of the
condensed consolidated financial statements have been included.  Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Examples include provisions for bad debts, carrying values and useful lives
assigned to goodwill and other long-lived assets and accruals for restructuring
costs and employee benefits.  Actual results could differ from those estimates.
These interim consolidated condensed financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
December 31, 2000.


2.  NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 141, "Accounting for Business Combinations,"
on June 30, 2001.  It requires that all business combinations initiated after
June 30, 2001, be accounted for using the purchase method.

The FASB issued SFAS No. 142, "Accounting for Goodwill and Other Intangible
Assets," on June 30, 2001.  It requires that goodwill and certain intangible
assets will no longer be subject to amortization, but instead will be subject to
a periodic impairment assessment by applying a fair-value based test.  The
Company's required adoption date is January 1, 2002.  Adoption of SFAS No. 142
will have a material effect on the Company's results of operations due to the
cessation of goodwill amortization on January 1, 2002.  Goodwill amortization
for the three and six months ended June 30, 2001 was approximately $17.2 and
$34.4 million, respectively.

The FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," in June 1998, SFAS No. 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of the FASB Statement
No. 133," in June 1999 and SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities - an amendment of FASB Statement No.
133," in June 2000.  SFAS No. 133 establishes accounting and reporting standards
for derivatives and hedging.  It requires that all derivatives be recognized as
either assets or liabilities at fair value and establishes specific criteria for
the use of hedge accounting. SFAS No. 137 defers the effective date of SFAS No.
133 by one year to fiscal years beginning after June 15, 2000.  SFAS No. 138
amends the accounting and reporting standards of SFAS No. 133 for certain
derivative instruments and certain hedging activities. The Company's required
adoption date was January 1, 2001.  The Company adopted these three statements
with no material impact to its results of operations or financial position.


3.  NET INCOME (LOSS) PER SHARE

The Company follows SFAS No. 128, "Earnings per Share." That statement requires
the disclosure of basic earnings per share and diluted earnings per share.
Basic earnings per share is computed by dividing net income (loss) available to
common shareholders by the weighted-average number of common shares outstanding
during the period and does not include any other potentially dilutive
securities.  Diluted net income (loss) per share gives effect to all potentially
dilutive securities.  The Company's convertible subordinated notes and stock
options are potentially dilutive securities.  For the three and six months ended
June 30, 2001 and 2000, both potentially dilutive securities were antidilutive
and therefore are not included in diluted net loss per share.


4.  COMPREHENSIVE INCOME

Comprehensive income (loss) for the three and six months ended June 30, 2001 was
$(42.1) and $(66.5) million, respectively.  This comprised net income (loss) of
$(42.9) and $(66.5) million, changes in foreign currency translation of $(0.6)
and $(1.2) million, and changes in unrealized gains on marketable securities of
$1.3 and $1.2 million, respectively.  Comprehensive income (loss) for the three
and six months ended June 30, 2000 was $(24.8) and $5.0 million, respectively.
This comprised net income of

                                       6
<PAGE>

$(12.9) and $(4.6) million, changes in foreign currency translation of $(0.3)
and $(0.4) million, and changes in unrealized gains on marketable securities of
$(11.6) and $10.0 million.


5.  INVESTMENTS

The Company through its Ptek Ventures investment group has made investments in
various companies engaged in emerging technologies related to the Internet.
These investments are classified as either cost or equity investments in
accordance with APB Opinion No. 18, "The Equity Method of Accounting for
Investments in Common Stock."  The Company has continually evaluated the
carrying value of its ownership interests in non-public investments in the Ptek
Ventures portfolio for possible impairment that is "other than temporary" based
on achievement of business plan objectives and current market conditions.  The
business plan objectives the Company considers include, among others, those
related to financial performance such as achievement of planned financial
results, forecasted operating cash flows and completion of capital raising
activities, and those that are not primarily financial in nature such as the
development of technology or the hiring of key employees.  The Company has
previously taken impairment charges on certain of these investments when it has
determined that an "other than temporary" decline in the carrying value of the
investment has occurred.  Many Internet based businesses have experienced
difficulty in raising additional capital necessary to fund operating losses and
make continued investments that their management teams believe are necessary to
sustain operations.  Valuations of public companies operating in the Internet
sector declined significantly during 2000 and 2001. During the second quarter of
2001, market conditions worsened for the non-public companies in the Ptek
Ventures portfolio.  In the second quarter the financial performance and updated
financial forecasts for the near term of such portfolio along with the Company's
decision to exit the venture business led management to the conclusion that
there is an "other than temporary" decline in the carrying value of such
portfolio.  Accordingly, the Company has recorded an impairment charge of
approximately $24.4 million for the remaining carrying value of its non-public
portfolio.


6.   RESTRUCTURING COSTS

Realignment of Workforce and Facilities

During the second quarter of 2001, management committed to a plan to reduce
annual operating expenses by approximately $14.6 million through the elimination
of certain operating activities in its Voicecom, Xpedite and Corporate operating
segments, and the corresponding reductions in personnel costs relating to the
Company's operations, sales and administration.  The plan will eliminate through
involuntary separation approximately 190 employees or 8% of the workforce and
exit duplicative facilities in the Voicecom and Xpedite business segments.
Accordingly, the Company accrued restructuring costs of approximately $6.7
million associated with this plan commitment.  The Company expects to incur
approximately $5.0 million of cash payments related to severance, exit costs and
contractual obligations associated with the $6.7 million plan costs.
Approximately $4.0 million of the cash payments are expected to occur by
December 31, 2001 and are primarily related to severance and exit cost
activities. The remaining $1.0 million of cash payments are associated with
contractual obligations not expected to expire until December 31, 2003.  During
the second quarter of 2001, $0.5 million of cash payments were made as a result
of this plan.  Approximately $1.7 million of non-cash charges are related to
certain executive management severance costs from employee stock option
modifications.  The Company estimated the cost of these modifications using the
Black-Scholes option model.  Accordingly, this portion of the restructuring
costs was recorded as additional paid-in-capital.

Exit of the Asia Real-Time Fax and Telex Business

During the fourth quarter of 2000, the Company recorded a charge of $1.4 million
for costs associated with Xpedite's plan to exit its legacy real-time fax and
real-time telex business in Asia.  This service depended on significant price
disparities between regulated incumbent telecommunications carriers and
Xpedite's cost of delivery over its fixed-cost network.  With the deregulation
of most Asian telecommunications markets, Xpedite's cost advantage dissipated,
and the Company decided to exit this service and concentrate on higher value-
added services such as transactional messaging and messageREACH.  Payments made
for severance and exit costs represent the remaining severance obligations to 67
employees.  The Company does not expect any further severance payments under
this plan. Contractual and other obligations paid were the result of lease
commitments from facilities that were exited.  These commitments are expected to
expire in the first quarter of 2002.

Reorganization of Company into EES and CES Business Segments

The balance of severance and exit costs at December 31, 2000 and June 30, 2001
represents the remaining severance reserve for a former executive manager.  Cash
severance payments in 2001 were $0.2 million.  The Company expects to pay the
remaining severance reserve balance of $0.4 million over a ten month period
ending April 30, 2002.

                                       7
<PAGE>

Accrued restructuring costs at December 31, 2000 and June 30, 2001 are as
follows (in thousands):


<TABLE>
<CAPTION>
Reorganization of Company into         Accrued Costs at       Restructuring         Non Cash                      Accrued Costs at
 EES and CES Business Segments        December 31, 2000           Costs               Costs        Payments        June 30, 2001
------------------------------        -----------------       -------------         --------       --------       ----------------
<S>                                   <C>                     <C>                   <C>            <C>            <C>
Severance and exit costs                    $  639                 $    -             $    -          $208              $  431
                                            ------                 ------             ------          ----              ------
Accrued restructuring costs                 $  639                 $    -             $    -          $208              $  431
                                            ------                 ------             ------          ----              ------
</TABLE>

<TABLE>
<CAPTION>
Exit of the Asia Real-Time Fax and       Accrued Costs at       Restructuring         Non Cash                     Accrued Costs at
         Telex Business                 December 31, 2000          Costs                Costs        Payments        June 30, 2001
----------------------------------      -----------------       -------------         --------       --------       ----------------
<S>                                     <C>                     <C>                   <C>            <C>            <C>

Severance and exit costs                    $   59                 $    -             $    -          $ 59              $    -
Contractual obligations                        290                      -                  -            49                 241
Other                                           93                      -                  3            15                  75
                                            ------                 ------             ------          ----              ------
Accrued restructuring costs                 $  442                 $    -                  3          $123              $  316
                                            ------                 ------             ------          ----              ------
</TABLE>

<TABLE>
<CAPTION>

Realignment of Workforce and            Accrued Costs at        Restructuring         Non Cash                      Accrued Costs at
       Facilities                       December 31, 2000           Costs              Costs         Payments         June 30, 2001
----------------------------            -----------------       -------------         --------       --------       ----------------
<S>                                     <C>                     <C>                   <C>            <C>            <C>

Severance and exit costs                    $    -                 $4,977             $1,345          $533              $3,099
Contractual obligations                          -                  1,515                386                             1,129
Other                                            -                    222                  -            36                 186
                                            ------                 ------             ------          ----              ------
Accrued restructuring costs                 $    -                 $6,714             $1,731          $569              $4,414
                                            ------                 ------             ------          ----              ------

</TABLE>

<TABLE>
<CAPTION>
                                         Accrued Costs at       Restructuring         Non Cash                      Accrued Costs at
Consolidated                            December 31, 2000           Costs               Costs        Payments          June 30, 2001
----------------------------            -----------------       -------------         --------       --------       ----------------
<S>                                     <C>                     <C>                   <C>            <C>            <C>

Severance and exit costs                    $  698                 $4,977             $1,345          $800              $3,530
Contractual obligations                        290                  1,515                386            49               1,370
Other                                           93                    222                  3            51                 261
                                            ------                 ------             ------          ----              ------
Accrued restructuring costs                 $1,081                 $6,714             $1,734          $900              $5,161
                                            ------                 ------             ------          ----              ------
</TABLE>


7.  COMMITMENTS AND CONTINGENCIES

LITIGATION

The Company has several litigation matters pending, as described below, which it
is pursuing or defending vigorously.  Due to the inherent uncertainties of the
litigation process and the judicial system, the Company is unable to predict the
outcome of such litigation matters.  If the outcome of one or more of such
matters is adverse to the Company, it could have a material adverse effect on
the Company's business, financial condition and results of operations.

The Company and certain of its officers and directors have been named as
defendants in multiple shareholder class action lawsuits filed in the United
States District Court for the Northern District of Georgia.  Plaintiffs seek to
represent a class of individuals (including a subclass of former Voice-Tel
franchisees and a subclass of former Xpedite Systems, Inc. ("Xpedite")
shareholders) who purchased or otherwise acquired the Company's common stock
from as early as February 11, 1997 through June 10, 1998.  Plaintiffs allege the
Company admitted it had experienced difficulty in achieving its anticipated
revenue and earnings from voice messaging services due to difficulties in
consolidating and integrating its sales function.  Plaintiffs allege, among
other things, violation of Sections 10(b), 14(a) and 20(a) of the Securities
Exchange Act of 1934 and Sections 11, 12 and 15 of the Securities Act of 1933.
We filed a motion to dismiss this complaint on April 14, 1999.  On December 14,
1999, the court issued an order that dismissed the claims under Sections 10(b)
and 20 of the Exchange Act without prejudice, and dismissed the claims under
Section 12(a)(1) of the Securities Act with prejudice.  The effect of this order
was to dismiss from this lawsuit all open-market purchases by the plaintiffs.
The plaintiffs filed an amended complaint on February 29, 2000. The defendants
filed a motion to dismiss on April 14, 2000, which was granted in part and
denied in part on December 8, 2000.  The defendants filed an answer on January
8, 2001.

                                       8
<PAGE>

A lawsuit was filed on November 4, 1998 against the Company and certain of its
officers and directors in the Southern District of New York.  Plaintiffs are
shareholders of Xpedite who acquired common stock of the Company as a result of
the merger between the Company and Xpedite in February 1998.  Plaintiffs'
allegations are based on the representations and warranties made by the Company
in the prospectus and the registration statement related to the merger, the
merger agreement and other documents incorporated by reference, regarding the
Company's acquisitions of Voice-Tel and VoiceCom Systems, the Company's roll-out
of Orchestrate, the Company's relationship with customers Amway Corporation and
DigiTEC, 2000, and the Company's 800-based calling card service.  Plaintiffs
allege causes of action against the Company for breach of contract, against all
defendants for negligent misrepresentation, violations of Sections 11 and
12(a)(2) of the Securities Act of 1933 and against the individual defendants for
violation of Section 15 of the Securities Act.  Plaintiffs seek undisclosed
damages together with pre- and post-judgment interest, recission or recissory
damages as to violation of Section 12(a)(2) of the Securities Act, punitive
damages, costs and attorneys' fees.  The defendants' motion to transfer venue to
Georgia has been granted.  The defendants' motion to dismiss has been granted in
part and denied in part.  The defendants filed an answer on March 30, 2000.

On February 23, 1998, Rudolf R. Nobis and Constance Nobis filed a complaint in
the Superior Court of Union County, New Jersey against 15 named defendants
including Xpedite and certain of its alleged current and former officers,
directors, agents and representatives. The plaintiffs allege that the 15 named
defendants and certain unidentified "John Doe defendants" engaged in wrongful
activities in connection with the management of the plaintiffs' investments with
Equitable Life Assurance Society of the United States and/or Equico Securities,
Inc. (collectively "Equitable").  The complaint asserts wrongdoing in connection
with the plaintiffs' investment in securities of Xpedite and in unrelated
investments involving insurance-related products.  The defendants include
Equitable and certain of its current or former representatives.  The allegations
in the complaint against Xpedite are limited to plaintiffs' investment in
Xpedite.  The plaintiffs have alleged that two of the named defendants,
allegedly acting as officers, directors, agents or representatives of Xpedite,
induced the plaintiffs to make certain investments in Xpedite but that the
plaintiffs failed to receive the benefits that they were promised.  Plaintiffs
allege that Xpedite knew or should have known of alleged wrongdoing on the part
of other defendants.  Plaintiffs seek an accounting of the corporate stock in
Xpedite, compensatory damages of approximately $4.85 million, plus $200,000 in
"lost investments," interest and/or dividends that have accrued and have not
been paid, punitive damages in an unspecified amount, and for certain equitable
relief, including a request for Xpedite to issue 139,430 shares of common stock
in the plaintiffs' names, attorneys' fees and costs and such other and further
relief as the court deems just and equitable.  This case has been dismissed
without prejudice and compelled to NASD arbitration, which has commenced.  In
August 2000, the plaintiffs filed a statement of claim with the NASD against 12
named respondents, including Xpedite (the "Nobis Respondents").  The claimants
allege that the 12 named respondents engaged in wrongful activities in
connection with the management of the claimants' investments with Equitable.The
statement of claim asserts wrongdoing in connection with the claimants'
investment in securities of Xpedite and in unrelated investments involving
insurance-related products.  The allegations in the statement of claim against
Xpedite are limited to claimants' investment in Xpedite.  Claimants seek, among
other things, an accounting of the corporate stock in Xpedite, compensatory
damages of not less than $415,000, a fair conversion rate on stock options,
losses on the investments, plus interest and all dividends, attorneys' fees and
costs.  A hearing before the NASD panel is scheduled for September 12 - 14,
2001.

On September 3, 1999, Elizabeth Tendler filed a complaint in the Superior Court
of New Jersey Law Division, Union County, against 17 named defendants including
the company and Xpedite, and various alleged current and former officers,
directors, agents and representatives of Xpedite. Plaintiff alleges that the
defendants engaged in wrongful activities in connection with the management of
the plaintiff's investments, including investments in Xpedite.  The allegations
against Xpedite and the Company are limited to plaintiff's investment in
Xpedite. Plaintiff's claims against Xpedite and the Company include breach of
contract, breach of fiduciary duty, unjust enrichment, conversion, fraud,
interference with economic advantage, liability for ultra vires acts, violation
of the New Jersey Consumer Fraud Act and violation of New Jersey RICO.
Plaintiff seeks an accounting of the corporate stock of Xpedite, compensatory
damages of approximately $1.3 million, accrued interest and/or dividends, a
constructive trust on the proceeds of the sale of any Xpedite or PTEK stock,
shares of Xpedite and/or PTEK to satisfy defendants' obligations to plaintiff,
attorneys' fees and costs, punitive and exemplary damages in an unspecified
amount, and treble damages.  On February 25, 2000, Xpedite filed its answer, as
well as cross claims and third party claims.  This case has been dismissed
without prejudice and compelled to NASD arbitration, which has commenced.  In
August 2000, a statement of claim was also filed with the NASD against all but
one of the Nobis Respondents making virtually the same allegations on behalf of
claimant Elizabeth Tendler.  Claimant seeks an accounting of the corporate stock
in Xpedite, compensatory damages of not less than $265,000, a fair conversion
rate on stock options, losses on other investments, interest and/or unpaid
dividends, attorneys fees and costs.  A hearing before the NASD panel is
scheduled for September 12 - 14, 2001.

In 1999, we received separate letters from Ronald A. Katz Technology Licensing,
L.P. ("Katz") and Aerotel Limited/Aerotel USA, Inc., and in 2000 from Nortel
Networks, Inc., informing us of the existence of their respective patents or
patent portfolios and the potential applicability of those patents on our
products and services. We are currently considering each of these matters.
However, we currently lack sufficient information to assess the potential
outcomes of these matters.  Due to the inherent uncertainties of litigation,
however, we are unable to predict the outcome of any potential litigation, and
any adverse outcome could have a material effect on our business, financial
condition and results of operations.  Even if we were to prevail in this type

                                       9
<PAGE>

of challenge, our business could be adversely affected by the diversion of
management attention and litigation costs.

Certain of our customers have alleged that we are obligated to indemnify them
against patent infringement claims made by Katz against said customers.  We do
not believe that we have an obligation to indemnify such customers; however, due
to the inherent uncertainties of litigation, we are unable to predict the
outcome of any potential litigation, and any adverse outcome could have a
material effect on our business, financial condition and results of operations.
Even if we were to prevail in this type of challenge, our business could be
adversely affected by the diversion of management attention and litigation
costs.

On or about May 19, 2000, the Company was served with a Complaint filed by
Robert Cowan in the Circuit Court of Jackson County, Missouri, alleging claims
for breach of contract, fraudulent misrepresentation, negligent
misrepresentation, breach of duty of good faith and fair dealings, unjust
enrichment, and violation of Georgia and Missouri blue sky laws.  Plaintiff's
claims arise out of the Company's acquisition of American Teleconferencing
Services, Ltd. ("ATS") in April 1998.  Plaintiff was a shareholder of ATS who
received shares of PTEK stock in the transaction.  The Company removed the case
to the United States District Court for the Western District of Missouri, and
filed a Motion to Compel Arbitration, or Alternatively to Transfer Venue, or
Alternatively to Dismiss the Complaint.  Plaintiff has filed a Motion to Remand
the case back to state court.  By order dated March 28, 2001, the court granted
plaintiff's Motion to Remand and dismissed as moot the Company's Motion to
Compel Arbitration, or Alternatively to Transfer Venue, or Alternatively to
Dismiss the Compliant.  By Order dated July 5, 2001, the state court has denied
the Company's Motion to Compel Arbitration, or Alternatively to Transfer Venue,
or Alternatively to Dismiss the Compliant.

On November 3, 2000, a complaint was filed by BGL Development, Inc. d/b/a The
Bristol Group in the United States District Court for the Southern District of
New York.  Plaintiff alleges that it had a contract with Xpedite whereby Xpedite
would pay certain commissions for new customers that plaintiff brought Xpedite.
Plaintiff claims back commissions are due and that they have not been paid in
breach of the contract.  Plaintiff claims damages of not less than $185,000.  On
November 20, 2000, the Company filed its answer and affirmative defenses.

On May 14, 2001, Voice-Tel Enterprises, Inc. ("Voice-Tel") filed two complaints
against Quixtar, Inc. and Alticor, Inc., f/k/a Amway Corporation, and Amway
Corporation, in the State Court of Fulton County, Georgia, which were
subsequently removed to the U.S. District Court for the Northern District of
Georgia.  Voice-Tel alleged, among other things, fraud in the inducement of a
contract to market voice messaging services and sought a declaratory judgment
that contractual provisions which alleged trade secrets and restrictions on
competition were null and void.  In response to these lawsuits, Amway and
Quixtar asserted certain counterclaims for breach of contract and to enjoin
competitive behavior by PTEK and its affiliates.

The Company filed a complaint against Qwest Communications Corporation ("Qwest")
in the State Court of Fulton County, Georgia on June 1, 2001. The case was
subsequently removed to the U.S. District Court for the Northern District of
Georgia. This complaint alleges a breach of contract by Qwest to purchase voice
conferencing services. In response to PTEK's breach of contract claim, Qwest
asserted a counterclaim for alleged breach of a contract to purchase certain
software licenses.

The Company is also involved in various other legal proceedings which the
Company does not believe will have a material adverse effect upon the Company's
business, financial condition or results of operations, although no assurance
can be given as to the ultimate outcome of any such proceedings.


8.  SEGMENT REPORTING

The Company's reportable business segments are Xpedite, Voicecom, Premiere
Conferencing and Corporate. Xpedite offers a full range of value-added
multimedia messaging services through its worldwide proprietary dedicated IP
network for electronic information delivery.  Xpedite's customers are primarily
global Fortune 1000 companies.  Voicecom offers a suite of integrated
communications solutions including voice messaging, interactive voice response
("IVR") services and unified communications. Voicecom's initial customers came
from direct selling organizations, but Voicecom now targets key vertical markets
such as financial services, telecom providers, real estate and healthcare.
Premiere Conferencing offers a full range of enhanced, automated and Web
conferencing services for all forms of group communications activities,
primarily to Fortune 1000 customers. Corporate is a holding company with minimal
headcount leaving the day-to-day management of the businesses at the operating
business units.  In addition, the Company previously had one other reportable
business segment, Retail Calling Card Services, which the Company exited through
the sale of its revenue base effective August 1, 2000.  The business segment
consisted primarily of the Premiere Worldlink calling card product, which was
marketed primarily through direct response advertising and co-branding
relationships to individual retail users.  Adjusted EBITDA is management's
primary measure of segment profit and loss.  Adjusted EBITDA is defined by the
Company as operating income or loss before depreciation, amortization,
restructuring costs, equity based compensation and gain on legal settlement.  On
January 1, 2001, management responsibility for international conferencing and
voice messaging services was transferred from Xpedite to Premiere Conferencing
and Voicecom, respectively.  These international revenues were reported in the
Xpedite operating segment for fiscal year 2000 and in the Premiere

                                       10
<PAGE>

Conferencing and Voicecom operating segments beginning on January 1, 2001. In
order to report comparable operating segment financial results, revenue and
Adjusted EBITDA for the three and six month periods ended June 30, 2000, have
been reclassified to reflect the proforma effect of this management change.

Information concerning the operations in these reportable segments is as follows
(in millions):


<TABLE>
<CAPTION>
                                            Three Months   Three Months   Six Months   Six Months
                                                Ended          Ended         Ended       Ended
                                              June 30,       June 30,      June 30,     June 30,
                                                2001           2000          2001         2000
                                            ------------   ------------   ----------   ----------
<S>                                          <C>           <C>            <C>          <C>
Revenues
     Xpedite                                  $ 55.6         $ 58.2         $112.5       $119.7
     Voicecom                                   25.2           30.5           51.3         62.3
     Premiere Conferencing                      28.6           17.2           54.0         33.2
     Retail Calling Card Services                  -            5.6              -         12.0
     Eliminations                               (0.1)             -           (0.2)           -
                                              ------         ------         ------       ------
                                              $109.3         $111.5         $217.6       $227.2
                                              ======         ======         ======       ======


EBITDA
     Xpedite                                  $ 13.6         $ 13.7         $ 27.5       $ 31.6
     Voicecom                                    1.0            4.7            2.0          9.5
     Premiere Conferencing                       7.1            2.9           12.1          4.8
     Retail Calling Card Services                  -            0.6              -          1.2
     Corporate                                  (4.0)          (3.4)          (8.3)        (9.8)
     Eliminations                               (0.1)             -           (0.2)           -
                                              ------         ------         ------       ------
                                              $ 17.6         $ 18.5         $ 33.1       $ 37.3
                                              ======         ======         ======       ======

                                             June 30,     December 31,
                                               2001          2000
                                             --------     ------------
Identifiable assets
     Xpedite                                  $358.4         $391.6
     Voicecom                                   84.0           90.2
     Premiere Conferencing                      73.9           75.0
     Corporate                                  49.0           74.1
                                              ------         ------
                                              $565.3         $630.9
                                              ======         ======
</TABLE>


A reconciliation of Adjusted EBITDA to Operating loss and to Income (loss)
before income taxes is as follows (in millions):


<TABLE>
<CAPTION>
                                                        Three Months        Three Months         Six Months          Six Months
                                                           Ended               Ended                Ended               Ended
                                                       June 30, 2001        June 30, 2000        June 30, 2001       June 30, 2000
                                                       -------------        -------------        -------------       -------------
<S>                                                    <C>                  <C>                  <C>                 <C>
Adjusted EBITDA                                          $ 17.6                $ 18.5               $ 33.2              $ 36.7
Less depreciation                                          (8.8)                (12.3)               (17.9)              (22.3)
Less amortization                                         (24.8)                (25.7)               (48.9)              (51.4)
Less restructuring costs                                   (6.7)                    -                 (6.7)                  -
Less equity based compensation                             (2.2)                    -                 (2.2)                  -
Plus gain on legal settlement                                 -                   3.7                    -                 3.7
                                                         ------                ------               ------              ------
Operating loss                                            (25.0)                (15.8)               (42.6)              (33.3)
Less interest expense, net                                 (2.9)                 (2.7)                (5.5)               (5.4)
Plus gain on sale of marketable equity securities           1.0                   7.0                  2.6                53.1
Less asset impairment - investments                       (24.4)                    -                (29.2)                  -
Less amortization of goodwill - equity investments            -                     -                 (1.6)                  -
Plus other income (expense), net                           (0.5)                  0.1                 (0.9)               (0.3)
                                                         ------                ------               ------              ------
Income (loss) before income taxes                        $(51.9)               $(11.4)              $(77.2)             $ 14.1
                                                         ======                ======               ======              ======
</TABLE>

                                       11
<PAGE>

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


OVERVIEW

PTEK Holdings, Inc., a Georgia corporation, and its subsidiaries (collectively
the "Company" or "PTEK") is a global provider of communications and data
services, including conferencing (audio conference calling and Web-based
collaboration), multimedia messaging (high-volume fax, e-mail, wireless
messaging and voice message delivery), and unified communications (personal
communications management systems that handle voice mail, e-mail and personal
content from the Web or the telephone).  The Company's reportable segments align
the Company into areas of focus that are driven by product offering and
corporate services.  These segments are Xpedite, Voicecom, Premiere Conferencing
and Corporate.  Xpedite offers a full range of value-added multimedia messaging
services through its worldwide proprietary IP network for electronic information
delivery. Xpedite's customers are primarily global Fortune 1000 companies.
Voicecom offers a suite of integrated communications solutions including voice
messaging, interactive voice response ("IVR") services and unified
communications.  Voicecom's initial customers came from direct selling
organizations, but Voicecom now targets key vertical markets such as financial
services, telecom providers, real estate and healthcare.  Premiere Conferencing
offers a full range of enhanced, automated and Web conferencing services for all
forms of group communications activities, primarily to Fortune 1000 customers.
Corporate focuses on being a holding company with minimal headcount leaving the
day-to-day management of the businesses at the three operating business units.
In addition, Corporate includes PtekVentures, the Company's Internet investment
arm. Retail Calling Card Services is a business segment that the Company exited
through the sale of its revenue base effective August 1, 2000.  It primarily
consisted of the Premiere WorldLink calling card product, which was marketed
primarily through direct response advertising and co-branding relationships to
individual retail users.  Adjusted EBITDA is management's primary measure of
segment profit and loss.

The Company's revenues are based on usage in the Xpedite and Premiere
Conferencing business segments and a mix of both usage and monthly fixed fees in
the Voicecom business segment.

Telecommunications costs consist primarily of the cost of metered and fixed
telecommunications related costs incurred in providing the Company's services.

Direct operating costs consist primarily of salaries and wages, travel,
consulting fees and facility costs associated with maintaining and operating the
Company's various revenue generating platforms and telecommunications networks,
regulatory fees and non-telecommunications costs directly associated with
providing services.

Selling and marketing costs consist primarily of salaries and wages, travel and
entertainment, advertising, commissions and facility costs associated with the
functions of selling or marketing the Company's services.

General and administrative costs consist primarily of salaries and wages
associated with billing, customer service, order processing, executive
management and administrative functions that support the Company's operations.
Bad debt expense associated with customer accounts is also included in this
caption.

Research and development costs consist primarily of salaries and wages, travel,
consulting fees and facilities costs associated with developing product
enhancements and new product development.

Equity based compensation relates primarily to notes receivable from certain
executive officers of the Company for the taxes owed by such officers with
respect to certain restricted stock grants made by the Company in May 1999.
In addition, it includes the non-cash cost of Company stock warrants issued to
vendors for services rendered, as determined using the Black-Scholes option
model.

Depreciation and amortization includes depreciation of computer and
telecommunications equipment, furniture and fixtures, office equipment,
leasehold improvements and amortization of intangible assets.  The Company
provides for depreciation using the straight-line method of depreciation over
the estimated useful lives of property and equipment, generally two to five
years, with the exception of leasehold improvements that are depreciated on a
straight-line basis over the shorter of the term of the lease or the useful life
of the assets.  Intangible assets being amortized include goodwill, customer
lists, developed technology and assembled work force.  Intangible assets are
amortized over periods generally ranging from three to seven years.

"Adjusted EBITDA" is defined by the Company as operating income or loss before
depreciation, amortization, restructuring costs, equity based compensation and
gain on legal settlement.

Adjusted EBITDA is considered a key financial management performance indicator
because it excludes the effects of goodwill and intangible amortization
attributable to acquisitions primarily acquired using the Company's common
stock, the effects of prior years' cash investing and financing activities that
affect current period profitability and the effects of sales of marketable
securities, the write-down of investments, and special cash or non-cash charges
associated with acquisitions, equity based

                                       12
<PAGE>

compensation and internal exit activities. Adjusted EBITDA provides each
segment's management team with a consistent measurement tool for evaluating the
operating profit of the business before investing activities, taxes and special
charges. Adjusted EBITDA may not be comparable to similarly titled measures
presented by other companies and could be misleading unless all companies and
analysts calculate them in the same manner.

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States ("GAAP") requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting period.  Actual results could differ from these estimates.  The
following discussion and analysis provides information which management believes
is relevant to an assessment and understanding of the Company's consolidated
results of operations and financial condition.  This discussion should be read
in conjunction with the unaudited condensed consolidated financial statements
and notes thereto.


RESULTS OF OPERATIONS

The following table presents certain financial information about the Company's
operating segments for the periods presented (amounts in millions):

<TABLE>
<CAPTION>
                                            Three Months   Three Months   Six Months   Six Months
                                                Ended          Ended         Ended       Ended
                                               June 30,       June 30,      June 30,     June 30,
                                                 2001           2000          2001         2000
                                         --------------------------------------------------------
<S>                                 <C>           <C>            <C>          <C>
Revenues
     Xpedite                                  $ 55.6         $ 58.2         $112.5       $119.7
     Voicecom                                   25.2           30.5           51.3         62.3
     Premiere Conferencing                      28.6           17.2           54.0         33.2
     Retail Calling Card Services                  -            5.6              -         12.0
     Eliminations                               (0.1)             -           (0.2)           -
                                              ------         ------         ------       ------
                                              $109.3         $111.5         $217.6       $227.2
                                              ======         ======         ======       ======


EBITDA
     Xpedite                                  $ 13.6         $ 13.7         $ 27.5       $ 31.6
     Voicecom                                    1.0            4.7            2.0          9.5
     Premiere Conferencing                       7.1            2.9           12.1          4.8
     Retail Calling Card Services                  -            0.6              -          1.2
     Corporate                                  (4.0)          (3.4)          (8.3)        (9.8)
     Eliminations                               (0.1)             -           (0.2)           -
                                              ------         ------         ------       ------
                                              $ 17.6         $ 18.5         $ 33.1       $ 37.3
                                              ======         ======         ======       ======
</TABLE>


ANALYSIS

Consolidated revenues decreased 2.0% to $109.3 million in the three months ended
June 30, 2001, as compared with $111.5 million the same period in 2000 and
decreased 4.2% to $217.6 million in the six months ended June 30, 2001 as
compared with $227.2 million in the same period in 2000.  As discussed in
footnote 8, "Segment Reporting," the three and six months ended June 30, 2000
have been restated on a segment basis to reflect the movement of international
conferencing and voice messaging results of operations from Xpedite to Premiere
Conferencing and Voicecom, respectively, due to the change in management
responsibility on January 1, 2001.  On a segment basis these changes in revenue
were caused by the following:

 .  Xpedite experienced a 4.5% decrease to $55.6 million in the three months
   ended June 30, 2001 and a 6.0% decrease to $112.5 million in the six months
   ended June 30, 2001, compared with the same periods in 2000, respectively.
   The declines in both periods is primarily attributable to exit of the real
   time fax and telex business in Xpedite's Asia/Pacific regions and the
   strengthening of the U.S. dollar against foreign currencies in Europe and
   Asia/Pacific in the comparable periods. Real time fax and telex business
   revenues in Asia Pacific for the three and six months ended June 30, 2000
   were $5.7 and $11.9 million, respectively.

 .  Voicecom experienced a 17.4% decrease to $25.2 million in the three months
   ended June 30, 2001 and a 17.7% decrease to $51.3 million in the six months
   ended June 30, 2001, compared with the same periods in 2000, respectively.
   The decrease in

                                       13
<PAGE>

   revenue is primarily driven by declines in messaging revenue, offset in part
   by increases in Voicecom's IVR and platform services revenue. The
   decline in messaging revenue is principally due to weakness in direct selling
   organizations ("DSOs") and the exit of selling into the small office/home
   office sales channels. In particular, Voicecom has experienced continued
   attrition associated with its largest DSO marketing agent, Alticor Inc.,
   f/k/a Amway Corporation, and its affiliates (collectively "Amway"). Voicecom
   believes the attrition has resulted in large part from (i) Amway's refusal to
   honor the terms of its marketing agreement with Voicecom, and (ii) Voicecom's
   reluctance to selectively solicit or otherwise engage in promotional
   activities directly with Voicecom's customers, which are also Amway's
   independent business owners ("IBOs"), due to restrictive language in the
   current marketing agreements with Amway. Amway has indicated an intent to
   terminate the current marketing agreements. Voicecom has filed two lawsuits
   against Amway and an affiliated entity. See footnote 7, "Commitments and
   Contingencies." Voicecom is currently engaged in settlement discussions with
   Amway that would clarify Voicecom's right to deal directly with the IBOs;
   however, there can be no assurance that such a settlement will be reached or
   that the IBOs sill select Voicecom as their messaging provider. In addition,
   Voicecom's second largest DSO customer, Primerica, has given Voicecom notice
   that it is not going to renew its current agreement with Voicecom. Amway and
   Primerica represented approximately 22% and 6%, respectively, of Voicecom's
   revenue for the six months ended June 30, 2001. Increases in IVR and
   platform services revenue are due primarily to increased minutes of use
   with existing customers.

 .  Premiere Conferencing experienced a 66.3% increase to $28.6 million in the
   three months ended June 30, 2001 and a 62.7% increase to $54.0 million in the
   six months ended June 30, 2001, compared with the same periods in 2000,
   respectively. The overall growth in revenue at Premiere Conferencing resulted
   primarily from growth in its unattended/automated conferencing product
   offering.

 .  Retail Calling Card Services was an operating segment whose customer base was
   sold on August 1, 2000. The Company ceased recognizing revenue on this
   customer base subsequent to its sale. The Company provides administrative
   support services and sells on a wholesale basis its network management
   services to the acquirer. Accordingly, revenues from the network management
   services are recognized in the Voicecom operating segment.

Consolidated gross profit margins were 75.6% and 74.6% for the three months
ended June 30, 2001 and 2000, respectively, and 75.2% and 73.7% for the six
months ended June 30, 2001 and 2000, respectively. In general, the Company has
experienced favorable trends in per unit telecommunications costs in each of its
operating segments by aggressively negotiating lower telecommunications costs
with various providers. The Company also has experienced favorable
telecommunications costs by benefiting from the general industry trend of
decreased costs from increased capacity among the various long distance
carriers.

Consolidated direct costs of operations increased to 16.6% of revenues in the
three months ended June 30, 2001, as compared with 15.5% for the same period of
2000 and increased to 16.4% of revenues in the six months ended June 30, 2001,
as compared with 15.1% for the same period of 2000.  The increase for both
periods compared is primarily attributable to the growth in Premiere
Conferencing as a percentage of the overall Company revenue mix.  Premiere
Conferencing has inherently higher direct operating costs as a percentage of its
overall costs structure compared to the other two operating units due to the
live operator conferencing aspect of its business.

Consolidated selling and marketing costs decreased to 20.8% of revenues in the
three months ended June 30, 2001, from 22.2% of revenues in the same period in
2000 and decreased to 21.1% of revenues in the six months ended June 30, 2001,
from 21.3% of revenues in the same period in 2000.  This decline is attributable
to cost reductions in the direct sales force at the Voicecom operating segment
in the latter half of 2000, offset in part by increased international sales
force costs at Premiere Conferencing as part of an investment to foster future
growth in this segment's international business.

Research and development costs increased to 3.7% of revenues for the three
months ended June 30, 2001 compared with 3.1% of revenues for the same period in
2000, and increased to 3.8% of revenues in the six months ended June 30, 2001,
from 3.1% of revenues in the same period in 2000. The increase in these costs as
a percentage of revenue is primarily from increased product development in the
Premiere Conferencing operating segment.

General and administrative costs were 18.4% of revenues for the three months
ended June 30, 2001, compared with 17.3% of revenues for the same period in
2000, and were 18.7% of revenues for the six months ended June 30, 2001,
compared with 18.1% of revenues in the same period in 2000.  General and
administrative costs have increased for both comparable periods due to increased
provisions for doubtful accounts at Premiere Conferencing and various fixed
support costs at Voicecom against significant revenue declines in this segment.
As part of Premiere Conferencing's periodic assessment of its accounts
receivable aging, various increases in the overall age of its receivable
portfolio has warranted additional provisions for doubtful accounts.  The
Company has made significant progress in collecting its overall receivables
portfolio for the three months ended June 30, 2001 and continues to do so.  The
Company assigns overall reserve percentages to its various accounts receivable
aging categories. From this calculation the Company determines its requirement
for an allowance for doubtful accounts. This does not mean that the Company has
written off the receivable or ceased collection efforts.

Depreciation was 8.0% of revenues for the three months ended June 30, 2001,
compared with 11.1% of revenues for the same period in 2000, and was 8.2% of
revenues for the six months ended June 30, 2001, compared with 9.8% of revenues
for the same

                                      14
<PAGE>

period in 2000. The decline in depreciation as a percentage of revenue for both
comparable periods is due to the growth in Premiere Conferencing's revenue base
which has utilized more of the available capacity of its operating platform.
Also contributing to this decline was the shortening of the estimated useful
life of various legacy operating platforms in the Voicecom operating segment.
These lives were estimated not to extend beyond December 31, 2000.

Amortization was $24.8 million for the three months ended June 30, 2001,
compared with $25.7 million for the same period in 2000, and $48.9 million for
the six months ended June 30, 2001, compared with $51.4 million for the same
period in 2000.  The decline in both comparable periods is attributable to the
shortening of the useful lives of various intangibles tied to contractual
obligations in the Voicecom operating segment in 2000 and the expiration of the
useful life of the assembled workforce intangible related to the Xpedite
acquisition in 1998.  The lives of the Voicecom asset were estimated not to
extend beyond December 31, 2000.

Equity based compensation relates primarily to notes receivable from certain
executive officers of the Company for the taxes owed by such officers with
respect to certain restricted stock grants made by the Company in May 1999,
which notes total approximately $5.5 million.  One fourth of the principal
amount of these notes, plus accrued interest, will be cancelled on each January
1 of 2002 through 2005, provided such executive officers are employed by the
Company on January 1 of each of such years.  The Company will also make "tax
gross-up" payments to or on behalf of the executive officers in connection with
any taxes that may be due as a result of the cancellation of these notes.
Assuming these executives are employed by the Company on each anniversary date,
future equity based compensation related to these notes would be approximately
$2.1 million in the last six months of 2001, $3.0 million in 2002, $2.8 million
in 2003, and $2.6 million in 2004. In addition, equity based compensation
includes the non-cash cost of Company stock warrants issued to vendors for
services rendered, as determined using the Black-Scholes option model, in the
amount of approximately $112,000 for the three months ended June 30, 2001.

The gain on legal settlement of $3.7 million for the three months ended June 30,
2000 is attributable to the Company's favorable settlement of a contractual
dispute with WorldCom. As part of the settlement, the Company received $12
million in cash for terminating the strategic alliance contract with WorldCom.
Accordingly, the Company expensed the net book value of this contract of
approximately $7 million against the initial gain of $12 million during the
second quarter of 2000.  In addition, the Company expensed approximately $1.3
million in legal costs incurred during the second quarter of 2000 associated
with this settlement.

EBITDA was $17.6 million or 16.1% of revenues for the three months ended June
30, 2001, compared with $18.5 million or 16.6% of revenues for the same period
in 2000 and $33.2 million or 15.2% of revenues for the six months ended June 30,
2001, compared with $37.3 million or 16.4% of revenues for the same period in
2000. On a segment basis this change was caused by the following:

 .  Xpedite's EBITDA was $13.6 million or 24.5% of segment revenues for the three
   months ended June 30, 2001, compared with $13.7 million or 23.5% of segment
   revenues for the same period in 2000, and $27.5 million or 24.4% of segment
   revenues for the six months ended June 30, 2001, compared with $31.6 million
   or 26.4% of segment revenues for the same period in 2000. These decreases in
   EBITDA are primarily a result of increased pricing pressure in the market for
   certain of Xpedite's legacy fax services and increased sales and marketing
   costs associated with the launch of messageREACH/SM/. As a result of
   declining EBITDA yields in Asia/Pacific and Europe, the Company has approved
   a plan of headcount reductions. As part of the Company's $6.7 million
   restructuring reserve to rationalize its workforce and facilities in the
   second quarter of 2001, Xpedite has committed to a plan that reduces
   headcount by 75 employees. The expected before-tax annualized savings from
   this plan are $2.6 million. The primary area for costs savings will be the
   exit of its operations in Indonesia and the consolidation of operations in
   the Asia/Pacific region.

 .  Voicecom's EBITDA was $1.0 million or 4.0% of segment revenues for the three
   months ended June 30, 2001, compared with $4.7 million or 15.4% of segment
   revenues for the same period in 2000, and $2.0 million or 3.9% of segment
   revenues for the six months ended June 30, 2001, compared with $9.5 million
   or 15.3% of segment revenues for the same period in 2000. The significant
   decline in EBITDA is primarily related to the declines in revenue over a
   primarily fixed cost structure delivery network. In response to these
   significant declines in EBITDA, the Company has rationalized the workforce
   and facilities attributable to the Voicecom operating segment. As a result of
   this, the Company has approved a plan of headcount reductions and facility
   closures in response to the revenue declines. As part of the Company's $6.7
   million restructuring reserve in the second quarter of 2001, Voicecom has
   committed to a plan that reduces headcount by 111 employees, the exit of a
   research and development facility in Atlanta and a reduction in portions of
   its fixed cost delivery network. Expected before-tax annualized savings from
   this plan are $11.3 million.

 .  Premiere Conferencing's EBITDA was $7.1 million or 24.7% of segment revenues
   for the three months ended June 30, 2001, compared with $2.9 million or 16.9%
   of segment revenues for the same period in 2000, and $12.1 million or 22.5%
   of segment revenues for the six months ended June 30, 2001, compared with
   $4.8 million or 14.5% of segment revenues for the same period in 2000. This
   increase is primarily attributable to growth in unattended conferencing
   products and improved telecommunications costs.

                                       15
<PAGE>

 .  Retail Calling Card Services was an operating segment whose customer base was
   sold on August 1, 2000. The Company ceased recognizing revenue on this
   customer base subsequent to its sale. The Company provides administrative
   support services and sells on a wholesale basis its network management
   services to the acquirer. Accordingly, revenues from the network management
   services are recognized in the Voicecom operating segment.

 .  Corporate EBITDA was $(4.0) million for the three months ended June 30, 2001,
   compared to $(3.4) million for the same period in 2000, and $(8.3) million
   for the six months ended June 30, 2001, compared to $(9.8) million for the
   same period in 2000. The increase in negative EBITDA for the three month
   comparable period is attributable to increased professional and
   administrative fees associated with various internal projects with the
   potential for cost savings in the future. The decline in negative EBITDA for
   the six-month comparable period is related primarily to headcount reduction
   in the prior year. As part of the Company's rationalization of workforce and
   facilities in the second quarter of 2001, Corporate committed to a plan to
   reduce the headcount by 4 employees or 14% of its workforce. These reductions
   were related to the exit of the venture business and a reduction of finance
   and administration personnel within Corporate. Annualized before-tax savings
   are expected to be approximately $0.8 million.

Interest expense, net was $2.9 million for the three months ended June 30, 2001
compared with $2.7 million for the same period in 2000 and $5.5 million for the
six months ended June 30, 2001, compared with $5.4 million for the same period
in 2001.  The slight increase in interest expense, net is primarily attributable
to higher prior year's average cash and cash equivalent balances which earned
interest income.  The primary financing vehicle that generates interest expense
for the Company is the convertible subordinated notes of $172.5 million, which
bear interest at 5.75% and are due on July 1, 2004.


RESTRUCTURING COSTS

Realignment of Workforce and Facilities

During the second quarter of 2001, management committed to a plan to reduce
annual operating expenses by approximately $14.6 million through the elimination
of certain operating activities in its Voicecom, Xpedite and Corporate operating
segments, and the corresponding reductions in personnel costs relating to the
Company's operations, sales and administration.  The plan will eliminate through
involuntary separation approximately 190 employees or 8% of the workforce and
exit duplicative facilities in the Voicecom and Xpedite business segments.
Accordingly, the Company accrued restructuring costs of approximately $6.7
million associated with this plan commitment.  The Company expects to incur
approximately $5.0 million of cash payments related to severance, exit costs and
contractual obligations associated with the $6.7 million plan costs.
Approximately $4.0 million of the cash payments are expected to occur by
December 31, 2001 and are primarily related to severance and exit cost
activities.  The remaining $1.0 million of cash payments are associated with
contractual obligations not expected to expire until December 31, 2003.
Approximately $1.7 million of non-cash charges are related to certain executive
management severance costs from employee stock option modifications.  The
Company estimated the cost of these modifications using the Black-Scholes option
model.  Accordingly, this portion of the restructuring costs were recorded as
additional paid-in-capital.

Exit of the Asia Real-Time Fax and Telex Business

During the fourth quarter of 2000, the Company recorded a charge of $1.4 million
for costs associated with Xpedite's plan to exit its legacy real-time fax and
real-time telex business in Asia.  This service depended on significant price
disparities between regulated incumbent telecommunications carriers and
Xpedite's cost of delivery over its fixed-cost network.  With the deregulation
of most Asian telecommunications markets, Xpedite's cost advantage dissipated,
and the Company decided to exit this service and concentrate on higher value-
added services such as transactional messaging and messageREACH.  Payments made
for severance and exit costs represent the remaining severance obligations to 67
employees.  The Company does not expect any further severance payments under
this plan. Contractual and other obligations paid were the result of lease
commitments from facilities that were exited.  These commitments are expected to
expire in the first quarter of 2002.

Reorganization of Company into EES and CES Business Segments

The balance of severance and exit costs at December 31, 2000 and June 30, 2001
represents the remaining severance reserve for a former executive manager.  Cash
severance payments in 2001 were $0.2 million.  The Company expects to pay the
remaining severance reserve balance of $0.4 over a ten month period ending April
30, 2000.


INVESTMENTS

The Company through its Ptek Ventures investment group has made investments in
various companies engaged in emerging technologies related to the Internet.
These investments are classified as either cost or equity investments in
accordance with APB

                                       16
<PAGE>

Opinion No. 18, "The Equity Method of Accounting for Investments in Common
Stock." The Company has continually evaluated the carrying value of its
ownership interests in non-public investments in the Ptek Ventures portfolio for
possible impairment that is "other than temporary" based on achievement of
business plan objectives and current market conditions. The business plan
objectives the Company considers include, among others, those related to
financial performance such as achievement of planned financial results,
forecasted operating cash flows and completion of capital raising activities,
and those that are not primarily financial in nature such as the development of
technology or the hiring of key employees. The Company has previously taken
impairment charges on certain of these investments when it has determined that
an "other than temporary" decline in the carrying value of the investment has
occurred. Many Internet based businesses have experienced difficulty in raising
additional capital necessary to fund operating losses and make continued
investments that their management teams believe are necessary to sustain
operations. Valuations of public companies operating in the Internet sector
declined significantly during 2000 and 2001. During the second quarter of 2001,
market conditions worsened for the non-public companies in the Ptek Ventures
portfolio. In the second quarter the financial performance and updated financial
forecasts for the near term of the portfolio along with the Company's decision
to exit funding the venture business portfolio has led management to the
conclusion that there is an "other than temporary" decline in the carrying value
of its non-public portfolio. Accordingly, the Company has recorded an impairment
charge of approximately $24.4 million for the remaining carrying value of its
non-public portfolio.


LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities totaled $30.2 million for the six
months ended June 30, 2001, compared to cash used in operations of $3.6 million
for the comparable 2000 period.  The improvement in cash provided by operating
activities can be attributed to reduced payments for income taxes, as well as
improvements in working capital changes in accounts receivable and accounts
payable.  Also contributing to the improvement were reduced payments associated
with restructuring, merger costs and other special charges.  Included in
operating cash flows for the six months ended June 30, 2001 and 2000 were semi-
annual interest payments of approximately $5.0 million on the Company's
convertible subordinated notes.

Investing activities used cash totaling $17.5 million for the six months ended
June 30, 2001, compared to cash provided by investing activities totaling $14.8
million for the same period in 2000.  The principal source of cash from
investing activities for the six months ended June 30, 2001 was the sale of
marketable securities.  The primary uses of cash for investing activities  for
the six months ended June 30, 2001 included capital expenditures, follow-on
investment activity in the PtekVentures investment portfolio, and payments made
for certain revenue generating business assets by the Xpedite operating segment.
Capital expenditures for the six months ended June 30, 2001 related primarily to
expansion of the capacity of Premiere Conferencing's conference calling network,
improvements and enhancements to Xpedite's fax delivery platform and its new
service offerings, messageREACH and voiceREACH, and expenditures relating to the
buildout of Voicecom's new voice messaging network.  The principal source of
cash from investing activities for the six months ended June 30, 2000 was the
sale of marketable securities. The primary uses of cash for investment
activities for the six months ended June 30, 2001 included capital expenditures
and investments into the PtekVentures portfolio.

Cash used in financing activities for the six months ended June 30, 2001 and
2000 totaled $2.8 million and $1.3 million, respectively.  The principal uses of
cash for financing activities for the six months ended June 30, 2001 were debt
repayments on capital lease obligations and the purchase of treasury stock.  The
primary uses of cash from financing activity for the six months ended June 30,
2001 were debt repayments associated with assumed obligations from prior year's
acquisitions.  The primary sources of cash from financing activities for the six
months ended June 30, 2000 were proceeds from employee stock option exercises.

At June 30, 2001, the Company's principal commitments involve minimum purchase
requirements under supply agreements with telecommunications providers,
severance payments under the Company's various restructuring plans, capital
lease obligations and semi-annual interest on the Company's convertible
subordinated notes.

Management believes that cash and equivalents, marketable securities available
for sale, and cash flows from operations should be sufficient to fund the
Company's capital expenditure requirements of its operating units.  At June 30,
2001, approximately $16.4 million of cash and equivalents resided outside of the
United States compared to $16.6 million at December 31, 2000.  The Company
routinely repatriates cash in excess of operating needs in certain countries
where the cost to repatriate does not exceed the economic benefits.
Intercompany loans with foreign subsidiaries generally are considered by
management to be permanently invested for the foreseeable future.  Therefore,
all foreign exchange gains and losses are recorded in the cumulative translation
adjustment account on the balance sheet. Based on potential cash positions of
PTEK and potential conditions in the capital markets, management could require
repayment of these loans despite the long-term intention to hold them as
permanent investments.  Foreign exchange gains or losses on intercompany loans
deemed temporary in nature are recorded in the determination of net income.
Management regularly reviews the Company's capital structure and evaluates
potential alternatives in light of current conditions in the capital markets.
Depending upon conditions in these markets, cash flows from the Company's

                                       17
<PAGE>

operating segments and other factors, PTEK may engage in other capital
transactions.  These capital transactions include but are not limited to debt or
equity issuances or credit facilities with banking institutions.


NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 141, "Accounting for Business Combinations,"
on June 30, 2001.  It requires that all business combinations initiated after
June 30, 2001, be accounted for using the purchase method.

The FASB issued SFAS No. 142, "Accounting for Goodwill and Other Intangible
Assets," on June 30, 2001.  It requires that goodwill and certain intangible
assets will no longer be subject to amortization but instead will be subject to
a periodic impairment assessment by applying a fair-value based test.  The
Company's required adoption date is January 1, 2002.  Adoption of SFAS No. 142
will have a material effect on the Company's results of operations due to the
cessation of goodwill amortization on January 1, 2002.  Goodwill amortization
for the three and six months ended June 30, 2001 was approximately $17.2 and
$34.4 million, respectively. Amortization of other intangible assets for the
three and six months ended June 30, 2001 was approximately $7.6 and $14.5
million, respectively. The Company is reviewing certain of these other
intangible assets to determine if they have indefinite lives, in which case they
will not be amortizable as of January 1, 2002.

The FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," in June 1998, SFAS No. 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of the FASB Statement
No. 133," in June 1999 and SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities - an amendment of FASB Statement No.
133," in June 2000.  SFAS No. 133 establishes accounting and reporting standards
for derivatives and hedging.  It requires that all derivatives be recognized as
either assets or liabilities at fair value and establishes specific criteria for
the use of hedge accounting. SFAS No. 137 defers the effective date of SFAS No.
133 by one year to fiscal years beginning after June 15, 2000.  SFAS No. 138
amends the accounting and reporting standards of SFAS No. 133 for certain
derivative instruments and certain hedging activities. The Company's required
adoption date was January 1, 2001.  The Company adopted these three statements
with no material impact to its results of operations or financial position.


FORWARD-LOOKING STATEMENTS

When used in this Form 10-Q and elsewhere by management or PTEK from time to
time, the words "believes," "anticipates," "expects," "will" "may" "should"
"intends" "plans" "estimates" "predicts" "potential" "continue" and similar
expressions are intended to identify forward-looking statements concerning our
operations, economic performance and financial condition.  These include, but
are not limited to, forward-looking statements about our business strategy and
means to implement the strategy, our objectives, the amount of future capital
expenditures, the likelihood of our success in developing and introducing new
products and services and expanding our business, and the timing of the
introduction of new and modified products and services.  For those statements,
we claim the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995. These
statements are based on a number of assumptions and estimates that are
inherently subject to significant risks and uncertainties, many of which are
beyond our control, and reflect future business decisions that are subject to
change. A variety of factors could cause actual results to differ materially
from those anticipated in our forward-looking statements, including the
following factors:

 .  Increased competitive pressures among communications and data services
   providers, including pricing pressures;

 .  Our ability to respond to rapid technological change, the development of
   alternatives to our products and services and risk of obsolescence of its
   products, services and technology;

 .  Market acceptance of new products and services;

 .  Strategic investments in early stage companies, which are subject to
   significant risks, may not be successful and returns on such strategic
   investments, if any, may not match historical levels;

 .  Fluctuations in the value of our business because the value of some of our
   strategic equity investments fluctuates;

 .  Our ability to manage our growth;

 .  Greater than expected costs or difficulties related to the integration of
   businesses and technologies, if any, acquired or that may be acquired by us;

 .  Expected cost savings from past or future mergers and acquisitions may not be
   fully realized or realized within the expected time frame;

                                       18
<PAGE>

 .  Lower than expected revenues following past or future mergers and
   acquisitions;

 .  Operating costs or customer loss and business disruption following past or
   future mergers and acquisitions may be greater than expected;

 .  We may not realize the full extent of the cost savings expected from
   announced workforce reductions;

 .  The success of our strategic relationships, including the amount of business
   generated and the viability of the strategic partners, may not meet
   expectations;

 .  Possible adverse results of pending or future litigation or adverse results
   of current or future infringement claims;

 .  Risks associated with interruption in our services due to the failure of the
   platforms and network infrastructure utilized in providing our services;

 .  Risks associated with expansion of our international operations;

 .  Possible downturn in general economic or business conditions,
   internationally, nationally or in the local jurisdictions in which we are
   doing business;

 .  Negative impact on our business resulting from legislative or regulatory
   changes;

 .  Negative impact on our business resulting from changes in the securities
   markets; and

 .  Factors described from time to time in the Company's press releases, reports
   and other filings made with the Securities and Exchange Commission.

PTEK cautions that these factors are not exclusive.  Consequently, all of the
forward-looking statements made in this Form 10-Q and in documents incorporated
in this Form 10-Q are qualified by these cautionary statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this Form 10-Q.  PTEK takes on no obligation to
publicly release the results of any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the date of
this Form 10-Q, or the date of the statement, if a different date.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is exposed to market risk from changes in interest rates and foreign
currency exchange rates.  The Company manages its exposure to these market risks
through its regular operating and financing activities.  Derivative instruments
are not currently used and, if utilized, are employed as risk management tools
and not for trading purposes.

At June 30, 2001, no derivative financial instruments were outstanding to hedge
interest rate risk.  A hypothetical immediate 10% increase in interest rates
would decrease the fair value of the Company's fixed rate convertible
subordinated notes outstanding at June 30, 2001, by approximately $6.7 million.

Approximately 26.6% of the Company's revenues and 19.6% of its operating costs
and expenses were transacted in foreign currencies for the six months ended June
30, 2001.  As a result, fluctuations in exchange rates impact the amount of the
Company's reported sales and operating income when translated into U.S. dollars.
A hypothetical positive or negative change of 10% in foreign currency exchange
rates would positively or negatively change revenue for the six months ended
June 30, 2001 by approximately $5.8 million and operating costs and expenses for
the six months ended June 30, 2001 by approximately $5.1 million.  The Company
has not used derivatives to manage foreign currency exchange translation risk
and no foreign currency exchange derivatives were outstanding at June 30, 2001.

                                       19
<PAGE>

                          PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

The Company has several litigation matters pending, as described below, which it
is defending vigorously.  Due to the inherent uncertainties of the litigation
process and the judicial system, the Company is unable to predict the outcome of
such litigation matters.  If the outcome of one or more of such matters is
adverse to the Company, it could have a material adverse effect on the Company's
business, financial condition and results of operations.

The Company and certain of its officers and directors have been named as
defendants in multiple shareholder class action lawsuits filed in the United
States District Court for the Northern District of Georgia.  Plaintiffs seek to
represent a class of individuals (including a subclass of former Voice-Tel
franchisees and a subclass of former Xpedite Systems, Inc. ("Xpedite")
shareholders) who purchased or otherwise acquired the Company's common stock
from as early as February 11, 1997 through June 10, 1998.  Plaintiffs allege the
Company admitted it had experienced difficulty in achieving its anticipated
revenue and earnings from voice messaging services due to difficulties in
consolidating and integrating its sales function.  Plaintiffs allege, among
other things, violation of Sections 10(b), 14(a) and 20(a) of the Securities
Exchange Act of 1934 and Sections 11, 12 and 15 of the Securities Act of 1933.
We filed a motion to dismiss this complaint on April 14, 1999.  On December 14,
1999, the court issued an order that dismissed the claims under Sections 10(b)
and 20 of the Exchange Act without prejudice, and dismissed the claims under
Section 12(a)(1) of the Securities Act with prejudice.  The effect of this order
was to dismiss from this lawsuit all open-market purchases by the plaintiffs.
The plaintiffs filed an amended complaint on February 29, 2000. The defendants
filed a motion to dismiss on April 14, 2000, which was granted in part and
denied in part on December 8, 2000.  The defendants filed an answer on January
8, 2001.

A lawsuit was filed on November 4, 1998 against the Company and certain of its
officers and directors in the Southern District of New York.  Plaintiffs are
shareholders of Xpedite who acquired common stock of the Company as a result of
the merger between the Company and Xpedite in February 1998.  Plaintiffs'
allegations are based on the representations and warranties made by the Company
in the prospectus and the registration statement related to the merger, the
merger agreement and other documents incorporated by reference, regarding the
Company's acquisitions of Voice-Tel and VoiceCom Systems, the Company's roll-out
of Orchestrate, the Company's relationship with customers Amway Corporation and
DigiTEC, 2000, and the Company's 800-based calling card service.  Plaintiffs
allege causes of action against the Company for breach of contract, against all
defendants for negligent misrepresentation, violations of Sections 11 and
12(a)(2) of the Securities Act of 1933 and against the individual defendants for
violation of Section 15 of the Securities Act.  Plaintiffs seek undisclosed
damages together with pre- and post-judgment interest, recission or recissory
damages as to violation of Section 12(a)(2) of the Securities Act, punitive
damages, costs and attorneys' fees.  The defendants' motion to transfer venue to
Georgia has been granted.  The defendants' motion to dismiss has been granted in
part and denied in part.  The defendants filed an answer on March 30, 2000.

On February 23, 1998, Rudolf R. Nobis and Constance Nobis filed a complaint in
the Superior Court of Union County, New Jersey against 15 named defendants
including Xpedite and certain of its alleged current and former officers,
directors, agents and representatives. The plaintiffs allege that the 15 named
defendants and certain unidentified "John Doe defendants" engaged in wrongful
activities in connection with the management of the plaintiffs' investments with
Equitable Life Assurance Society of the United States and/or Equico Securities,
Inc. (collectively "Equitable").  The complaint asserts wrongdoing in connection
with the plaintiffs' investment in securities of Xpedite and in unrelated
investments involving insurance-related products.  The defendants include
Equitable and certain of its current or former representatives.  The allegations
in the complaint against Xpedite are limited to plaintiffs' investment in
Xpedite.  The plaintiffs have alleged that two of the named defendants,
allegedly acting as officers, directors, agents or representatives of Xpedite,
induced the plaintiffs to make certain investments in Xpedite but that the
plaintiffs failed to receive the benefits that they were promised.  Plaintiffs
allege that Xpedite knew or should have known of alleged wrongdoing on the part
of other defendants.  Plaintiffs seek an accounting of the corporate stock in
Xpedite, compensatory damages of approximately $4.85 million, plus $200,000 in
"lost investments," interest and/or dividends that have accrued and have not
been paid, punitive damages in an unspecified amount, and for certain equitable
relief, including a request for Xpedite to issue 139,430 shares of common stock
in the plaintiffs' names, attorneys' fees and costs and such other and further
relief as the court deems just and equitable.  This case has been dismissed
without prejudice and compelled to NASD arbitration, which has commenced.  In
August 2000, the plaintiffs filed a statement of claim with the NASD against 12
named respondents, including Xpedite (the "Nobis Respondents").  The claimants
allege that the 12 named respondents engaged in wrongful activities in
connection with the management of the claimants' investments with Equitable.The
statement of claim asserts wrongdoing in connection with the claimants'
investment in securities of Xpedite and in unrelated investments involving
insurance-related products.  The allegations in the statement of claim against
Xpedite are limited to claimants' investment in Xpedite.  Claimants seek, among
other things, an accounting of the corporate stock in Xpedite, compensatory
damages of not less than $415,000, a fair conversion rate on stock options,
losses on the investments, plus interest and all dividends, attorneys' fees and
costs.  A hearing before the NASD panel is scheduled for September 12 - 14,
2001.

                                       20
<PAGE>

On September 3, 1999, Elizabeth Tendler filed a complaint in the Superior Court
of New Jersey Law Division, Union County, against 17 named defendants including
the company and Xpedite, and various alleged current and former officers,
directors, agents and representatives of Xpedite. Plaintiff alleges that the
defendants engaged in wrongful activities in connection with the management of
the plaintiff's investments, including investments in Xpedite.  The allegations
against Xpedite and the Company are limited to plaintiff's investment in
Xpedite. Plaintiff's claims against Xpedite and the Company include breach of
contract, breach of fiduciary duty, unjust enrichment, conversion, fraud,
interference with economic advantage, liability for ultra vires acts, violation
of the New Jersey Consumer Fraud Act and violation of New Jersey RICO.
Plaintiff seeks an accounting of the corporate stock of Xpedite, compensatory
damages of approximately $1.3 million, accrued interest and/or dividends, a
constructive trust on the proceeds of the sale of any Xpedite or PTEK stock,
shares of Xpedite and/or PTEK to satisfy defendants' obligations to plaintiff,
attorneys' fees and costs, punitive and exemplary damages in an unspecified
amount, and treble damages.  On February 25, 2000, Xpedite filed its answer, as
well as cross claims and third party claims.  This case has been dismissed
without prejudice and compelled to NASD arbitration, which has commenced.  In
August 2000, a statement of claim was also filed with the NASD against all but
one of the Nobis Respondents making virtually the same allegations on behalf of
claimant Elizabeth Tendler.  Claimant seeks an accounting of the corporate stock
in Xpedite, compensatory damages of not less than $265,000, a fair conversion
rate on stock options, losses on other investments, interest and/or unpaid
dividends, attorneys fees and costs. A hearing before the NASD panel is
scheduled for September 12-14, 2001.

In 1999, we received separate letters from Ronald A. Katz Technology Licensing,
L.P. ("Katz") and Aerotel Limited/Aerotel USA, Inc., and in 2000 from Nortel
Networks, Inc., informing us of the existence of their respective patents or
patent portfolios and the potential applicability of those patents on our
products and services. We are currently considering each of these matters.
However, we currently lack sufficient information to assess the potential
outcomes of these matters.  Due to the inherent uncertainties of litigation,
however, we are unable to predict the outcome of any potential litigation, and
any adverse outcome could have a material effect on our business, financial
condition and results of operations.  Even if we were to prevail in this type of
challenge, our business could be adversely affected by the diversion of
management attention and litigation costs.

Certain of our customers have alleged that we are obligated to indemnify them
against patent infringement claims made by Katz against said customers.  We do
not believe that we have an obligation to indemnify such customers; however, due
to the inherent uncertainties of litigation, we are unable to predict the
outcome of any potential litigation, and any adverse outcome could have a
material effect on our business, financial condition and results of operations.
Even if we were to prevail in this type of challenge, our business could be
adversely affected by the diversion of management attention and litigation
costs.

On or about May 19, 2000, the Company was served with a Complaint filed by
Robert Cowan in the Circuit Court of Jackson County, Missouri, alleging claims
for breach of contract, fraudulent misrepresentation, negligent
misrepresentation, breach of duty of good faith and fair dealings, unjust
enrichment, and violation of Georgia and Missouri blue sky laws.  Plaintiff's
claims arise out of the Company's acquisition of American Teleconferencing
Services, Ltd. ("ATS") in April 1998.  Plaintiff was a shareholder of ATS who
received shares of PTEK stock in the transaction.  The Company removed the case
to the United States District Court for the Western District of Missouri, and
filed a Motion to Compel Arbitration, or Alternatively to Transfer Venue, or
Alternatively to Dismiss the Complaint.  Plaintiff has filed a Motion to Remand
the case back to state court.  By order dated March 28, 2001, the court granted
plaintiff's Motion to Remand and dismissed as moot the Company's Motion to
Compel Arbitration, or Alternatively to Transfer Venue, or Alternatively to
Dismiss the Compliant.  By Order dated July 5, 2001, the state court has denied
the Company's Motion to Compel Arbitration, or Alternatively to Transfer Venue,
or Alternatively to Dismiss the Compliant.

On November 3, 2000, a complaint was filed by BGL Development, Inc. d/b/a The
Bristol Group in the United States District Court fo rthe Southern District of
New York.  Plaintiff alleges that it had a contract with Xpedite whereby Xpedite
would pay certain commissions for new customers that plaintiff brought Xpedite.
Plaintiff claims back commissions are due and that they have not been paid in
breach of the contract.  Plaintiff claims damages of not less than $185,000.  On
November 20, 2000, the Company filed its answer and affirmative defenses.

On May 14, 2001, Voice-Tel Enterprises, Inc. ("Voice-Tel") filed two complaints
against Quixtar, Inc. and Alticor, Inc., f/k/a Amway Corporation, and Amway
Corporation, in the State Court of Fulton County, Georgia, which were
subsequently removed to the U.S. District Court for the Northern District of
Georgia.  Voice-Tel alleged, among other things, fraud in the inducement of a
contract to market voice messaging services and sought a declaratory judgment
that contractual provisions which alleged trade secrets and restrictions on
competition were null and void.  In response to these lawsuits, Amway and
Quixtar asserted certain counterclaims for breach of contract and to enjoin
competitive behavior by PTEK and its affiliates.

The Company filed a complaint against Qwest Communications Corporation ("Qwest")
in the State Court of Fulton County, Georgia on June 1, 2001. The case was
subsequently removed to the U.S. District Court for the Northern District of
Georgia. This complaint alleges a breach of contract by Qwest to purchase voice
conferencing services. In response to PTEK's breach of contract claim, Qwest
asserted a counterclaim for alleged breach of a contract to purchase certain
software licenses.
                                       21
<PAGE>

The Company is also involved in various other legal proceedings which the
Company does not believe will have a material adverse effect upon the Company's
business, financial condition or results of operations, although no assurance
can be given as to the ultimate outcome of any such proceedings.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

None.


ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The annual meeting of the Company's shareholders was held on June 5, 2001.  At
the annual meeting, the following matters were voted on with the following
results:

1.   Election of directors.  The following directors were elected for a three-
     year term ending at the 2004 annual meeting of shareholders:


     Name of Director              Votes For   Votes Withheld  Abstentions
     ----------------              ---------   --------------  -----------
     Jeffrey A. Allred             40,650,478     4,866,748         0
     Hermann Buerger               40,806,676     4,710,550         0
     J. Walker Smith, Jr., Ph.D.   40,808,476     4,708,750         0

     The following persons continued as directors following the annual meeting:
     Raymond H. Pirtle, Jr., Jackie M. Ward, Jeffrey M. Cunningham, Boland T.
     Jones, George W. Baker, Sr., and Jeffrey T. Arnold.

2.   Approval of an amendment to the Company's Associate Stock Purchase Plan to
     increase the shares available for purchase by 750,000.  The shareholders
     approved the amendment to the Associate Stock Purchase Plan and the results
     of the voting were as follows:

     Votes For       Votes Against      Abstentions      Non Votes
     ---------       -------------      -----------      ---------
     42,745,818        2,717,856          53,552             0

3.   Approval of an amendment to the Company's 1995 Stock Plan to increase the
     shares available for awards by 1,650,000.  The shareholders approved the
     amendment to the 1995 Stock Plan and the results of the voting were as
     follows:

     Votes For       Votes Against      Abstentions      Non Votes
     ---------       -------------      -----------      ---------
     36,516,164        8,930,704          70,358             0


ITEM 5.   OTHER INFORMATION

On August 13, 2001, the Board of Directors of the Company adopted an amendment
to the Company's bylaws which requires a shareholder desiring to bring business
before an annual meeting of shareholders to deliver notice to the Company not
less than 120 nor more than 150 calender days prior to the first anniversary of
the date of the prior year's proxy statement.

The Company's Proxy Statement for the 2001 Annual Meeting of Shareholders states
that shareholders seeking to bring business before the 2002 Annual Meeting of
Shareholders must provide notice to the Company not later than April 6, 2002.
As a result of the amendment to the Company's bylaws, this date has been
changed. In order for a shareholder's proposal or director nomination to be
raised from the floor during the 2002 Annual Meeting of Shareholders, written
notice must now be received by the Company after November 28, 2001 but no later
than December 28, 2001.

                                       22
<PAGE>

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

Exhibit Number    Exhibit Description
--------------    -------------------

3.1               Amended and Restated Bylaws of the registrant, as amended.

(b)  Reports on Form 8-K:

None.

                                       23
<PAGE>

                                  SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


August 14, 2001             PTEK HOLDINGS, INC.
Date


                            /s/ Patrick G. Jones
                            ----------------------------------------------------
                            Patrick G. Jones
                            Executive Vice President and Chief Financial Officer
                            (principal Financial and Accounting Officer and
                            duly authorized signatory of the Registrant) and
                            Chief Legal Officer

                                       24
<PAGE>

                                 EXHIBIT INDEX


Exhibit Number      Exhibit Description
--------------      -------------------

    3.1             Amended and Restated Bylaws of the registrant, as amended.

                                       25