##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005
 OR
 o
    
    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: 000-28467
 TRINSIC, INC.
  DELAWARE
    
    59-3501119(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)
 601 SOUTH HARBOUR ISLAND BOULEVARD, SUITE 220
TAMPA, FLORIDA 33602
 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
 SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, PAR VALUE $.01 PER
SHARE, PREFERRED STOCK PURCHASE RIGHTS
  þ o
  o þ
  o þ




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##### Table of Contents



PART IItem 1. Financial StatementsConsolidated Balance Sheets at September 30, 2005 (unaudited) and December 31, 2004
    
    
    3Consolidated Statements of Operations (unaudited) for the three and nine months
ended September 30, 2005 and 2004
    
    
    4Consolidated Statements of Cash Flows (unaudited) for the nine months ended
September 30, 2005 and 2004
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    24PART IIItem 1. Legal Proceedings
    
    
    25Item 4. Submission of Matters to a Vote of Security Holders
    
    
    26Signatures
    
    
    29EX-31.1: Section 302 Certification of CEOEX-31.2: Section 302 Certification of CFOEX-32.1: Section 906 Certification of CEOEX-32.2: Section 906 Certification of CFO
 2




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##### Table of Contents



TRINSIC, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
  (Unaudited)September 30,
    
    
    December 31,2005
    
    
    2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    200
    
    
    $
    1,363Accounts receivable, net of allowance for doubtful
accounts of $11,883 and $10,967
    
    
    24,924
    
    
    
    27,242Prepaid expenses and other current assets
    
    
    2,391
    
    
    
    836Total current assets
    
    
    27,515
    
    
    
    29,441Property and equipment, net
    
    
    20,587
    
    
    
    27,829Intangible assets, net
    
    
    
    
    
    
    457Other assets
    
    
    5,295
    
    
    
    3,609Total assets
    
    $
    53,397
    
    
    $
    61,336Liabilities and Stockholders DeficitCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    48,147
    
    
    $
    55,605Deferred revenue
    
    
    6,244
    
    
    
    6,264Current portion of long-term debt and capital lease obligations
    
    
    401
    
    
    
    7,536Asset based loan
    
    
    
    
    
    
    12,934Total current liabilities
    
    
    54,792
    
    
    
    82,339Long-term deferred revenue
    
    
    
    
    
    
    46Long-term debt and capital lease obligations
    
    
    
    
    
    
    33Total liabilities
    
    
    54,792
    
    
    
    82,418Commitments and contingencies (Notes 8 and 11)Stockholders deficit:Common stock, $0.01 par value; 150,000,000
shares authorized; 17,756,994 and 5,525,361 shares issued;
17,525,058 and 5,518,530 shares outstanding
    
    
    175
    
    
    
    553Notes receivable from stockholders
    
    
    (870
    )
    
    
    (3,685
    )Unearned stock compensation
    
    
    (435
    )
    
    
    (466
    )Additional paid-in capital
    
    
    417,005
    
    
    
    392,488Accumulated deficit
    
    
    (417,264
    )
    
    
    (409,894
    )Treasury stock, 231,936 shares at cost
    
    
    (6
    )
    
    
    (78
    )Total stockholders deficit
    
    
    (1,395
    )
    
    
    (21,082
    )Total liabilities and stockholders deficit
    
    $
    53,397
    
    
    $
    61,336
  3




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##### Table of Contents



TRINSIC, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
  For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenues
    
    $
    44,030
    
    
    $
    60,912
    
    
    $
    151,958
    
    
    $
    193,176Operating expenses:Network operations, exclusive of depreciation
and amortization shown below
    
    
    23,864
    
    
    
    30,427
    
    
    
    80,697
    
    
    
    95,693Sales and marketing
    
    
    2,596
    
    
    
    4,788
    
    
    
    11,508
    
    
    
    14,803General and administrative
    
    
    17,014
    
    
    
    27,175
    
    
    
    58,100
    
    
    
    92,297Restructuring charge
    
    
    
    
    
    
    3,223
    
    
    
    451
    
    
    
    4,030Depreciation and amortization
    
    
    2,398
    
    
    
    5,032
    
    
    
    9,531
    
    
    
    15,452Total operating expenses
    
    
    45,872
    
    
    
    70,645
    
    
    
    160,287
    
    
    
    222,275Operating loss
    
    
    (1,842
    )
    
    
    (9,733
    )
    
    
    (8,329
    )
    
    
    (29,099
    )Nonoperating income (expense):Interest and other income
    
    
    806
    
    
    
    712
    
    
    
    8,100
    
    
    
    1,993Interest and other expense
    
    
    (3,514
    )
    
    
    (1,321
    )
    
    
    (7,140
    )
    
    
    (4,729
    )Total nonoperating income (expense)
    
    
    (2,708
    )
    
    
    (609
    )
    
    
    960
    
    
    
    (2,736
    )Net loss
    
    
    (4,550
    )
    
    
    (10,342
    )
    
    
    (7,369
    )
    
    
    (31,835
    )Less mandatorily redeemable convertible
preferred stock dividends and accretion
    
    
    
    
    
    
    (5,198
    )
    
    
    
    
    
    
    (13,189
    )Less deemed dividend related to beneficial
conversion feature
    
    
    
    
    
    
    (90
    )
    
    
    
    
    
    
    (183
    )Net loss attributable to common stockholders
    
    $
    (4,550
    )
    
    $
    (15,630
    )
    
    $
    (7,369
    )
    
    $
    (45,207
    )Weighted average common shares outstanding
    
    
    5,520,137
    
    
    
    753,005
    
    
    
    5,493,993
    
    
    
    735,570Basic and diluted net loss per common share
    
    $
    (0.82
    )
    
    $
    (20.76
    )
    
    $
    (1.34
    )
    
    $
    (61.46
    )
  4




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TRINSIC, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
  Nine Months EndedSeptember 30,2005
    
    
    2004Cash flows from operating activities:Net loss
    
    $
    (7,369
    )
    
    $
    (31,835
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    9,531
    
    
    
    15,452Provision for bad debts
    
    
    9,306
    
    
    
    5,017Expense charged for granting of stock options
    
    
    157
    
    
    
    1,255Change in operating assets and liabilities:Increase in accounts receivable
    
    
    (4,423
    )
    
    
    (4,549
    )(Increase) decrease in prepaid expenses
    
    
    (1,555
    )
    
    
    5,059Increase in other assets
    
    
    (1,686
    )
    
    
    (167
    )Decrease in accounts payable and accrued liabilities
    
    
    (5,977
    )
    
    
    (1,925
    )Decrease in deferred revenue
    
    
    (66
    )
    
    
    (3,546
    )Total adjustments
    
    
    5,287
    
    
    
    16,596Net cash used in operating activities
    
    
    (2,082
    )
    
    
    (15,239
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (2,206
    )
    
    
    (6,258
    )Principal repayments received on notes receivable
    
    
    
    
    
    
    40Net cash used in investing activities
    
    
    (2,206
    )
    
    
    (6,218
    )Cash flows from financing activities:Payments on long-term debt and capital lease obligations
    
    
    (668
    )
    
    
    (4,047
    )Principal repayments received on notes receivable issued for stock
    
    
    250
    
    
    
    191Payment of preferred stock dividends
    
    
    
    
    
    
    (3
    )Proceeds from (payoff of) asset based loan
    
    
    (12,934
    )
    
    
    12,539Proceeds from stand by credit facility
    
    
    13,977
    
    
    
    5,000Proceeds
from issuance of preferred stock
    
    
    2,500
    
    
    
    Proceeds from exercise of stock options and warrants
    
    
    
    
    
    
    503Net cash provided by financing activities
    
    
    3,125
    
    
    
    14,183Net decrease in cash and cash equivalents
    
    
    (1,163
    )
    
    
    (7,274
    )Cash and cash equivalents, beginning of period
    
    
    1,363
    
    
    
    12,013Cash and cash equivalents, end of period
    
    $
    200
    
    
    $
    4,739Non-cash financing activities:Conversion of stand by credit facility and accrued interest into preferred stock
    
    $
    21,585
    
    
    $
    Conversion of preferred stock into common stock
    
    $
    24,085
    
    
    $
    
  5




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TRINSIC, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
   DESCRIPTION OF BUSINESS
   LIQUIDITY AND CAPITAL RESOURCES
         6




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##### Table of Contents



Notes Receivable
    
    
    Unearned
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    TotalCommon Stock
    
    
    from
    
    
    Stock
    
    
    Paid-In
    
    
    Accumulated
    
    
    Treasury
    
    
    StockholdersShares
    
    
    Par Value
    
    
    Stockholders
    
    
    Compensation
    
    
    Capital
    
    
    Deficit
    
    
    Stock
    
    
    DeficitBalance, December 31, 2004
    
    
    5,518,530
    
    
    $
    55
    
    
    $
    (3,685
    )
    
    $
    (466
    )
    
    $
    392,488
    
    
    $
    (409,895
    )
    
    $
    (78
    )
    
    $
    (21,581
    )Reverse stock split
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    427
    
    
    
    
    
    
    
    
    
    
    $
    427Forfeiture of stock options
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    54
    
    
    
    (68
    )
    
    
    
    
    
    
    70
    
    
    $
    54Cash received for notes receivable
    
    
    
    
    
    
    
    
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    250Impairment on note receivable
    
    
    (225,000
    )
    
    
    
    
    
    
    2,565
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    $
    2,567Restricted Stock Awards
    
    
    189,144
    
    
    
    2
    
    
    
    
    
    
    
    (23
    )
    
    
    194
    
    
    
    
    
    
    
    
    
    
    $
    173Conversion of Preferred Stock
to Common
    
    
    12,042,384
    
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    23,964
    
    
    
    
    
    
    
    
    
    
    $
    24,084Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,369
    )
    
    
    
    
    
    $
    (7,369
    )Balance, September 30, 2005
    
    
    17,525,058
    
    
    $
    175
    
    
    $
    (870
    )
    
    $
    (435
    )
    
    $
    417,005
    
    
    $
    (417,264
    )
    
    $
    (6
    )
    
    $
    (1,395
    )
      RECLASSIFICATION
   7




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##### Table of Contents



(a) Significant Accounting Policies
    (b) Recent Accounting Pronouncements
        8




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##### Table of Contents



Employee
    
    
    LeaseTermination
    
    
    Abandonment
    
    
    AssetBenefits
    
    
    Costs
    
    
    Retirement
    
    
    TotalBalance at December 31, 2002
    
    $
    
    
    
    $
    551
    
    
    $
    
    
    
    $
    551Cash paid
    
    
    
    
    
    
    (200
    )
    
    
    
    
    
    
    (200
    )Balance at December 31, 2003
    
    
    
    
    
    
    351
    
    
    
    
    
    
    
    351Plan Charges
    
    
    4,527
    
    
    
    234
    
    
    
    40
    
    
    
    4,801Cash paid
    
    
    (3,646
    )
    
    
    (262
    )
    
    
    
    
    
    
    (3,908
    )Asset disposal
    
    
    
    
    
    
    
    
    
    
    (40
    )
    
    
    (40
    )Converted to note payable
    
    
    
    
    
    
    (40
    )
    
    
    
    
    
    
    (40
    )Lease termination settlement reversal
    
    
    
    
    
    
    (210
    )
    
    
    
    
    
    
    (210
    )Balance at December 31, 2004
    
    
    881
    
    
    
    73
    
    
    
    
    
    
    
    954Plan Charges
    
    
    451
    
    
    
    
    
    
    
    
    
    
    
    451Vacation Accrual
    
    
    91
    
    
    
    
    
    
    
    
    
    
    
    91Cash paid
    
    
    (1,423
    )
    
    
    (73
    )
    
    
    
    
    
    
    (1,496
    )Balance at September 30, 2005
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    9




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##### Table of Contents



For the three months ended
    
    
    For the nine months endedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss attributable to common stockholders, as reported
    
    $
    (4,550
    )
    
    $
    (15,630
    )
    
    $
    (7,369
    )
    
    $
    (45,207
    )Add: Stock based compensation included in net loss
    
    
    64
    
    
    
    367
    
    
    
    157
    
    
    
    1,255Deduct: Total stock based employee compensation determined
under the fair value based method for all awards
    
    
    (577
    )
    
    
    (744
    )
    
    
    (1,856
    )
    
    
    (2,543
    )Net loss attributable to common stockholders, pro forma
    
    $
    (5,063
    )
    
    $
    (16,007
    )
    
    $
    (9,068
    )
    
    $
    (46,495
    )Basic and Diluted Net Loss per Common ShareAs reported
    
    $
    (0.82
    )
    
    $
    (20.76
    )
    
    $
    (1.34
    )
    
    $
    (61.46
    )Pro forma
    
    $
    (0.92
    )
    
    $
    (21.26
    )
    
    $
    (1.65
    )
    
    $
    (63.21
    )
  For the three months ended
    
    For the nine months endedSeptember 30,
    
    September 30,2005
    
    2004
    
    2005
    
    2004Discount Rate
    
    
    4.0
    %
    
    
    N/A
    
    
    
    4.0
    %
    
    
    3.1
    %Volatility
    
    
    99.1
    %
    
    
    N/A
    
    
    
    99.1
    %
    
    
    98.3
    %Average Option Expected Life
    
    5 years
    
    5 years
    
    5 years
    
    5 years
        10




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##### Table of Contents



Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Basic and diluted net loss per share:Net loss
    
    $
    (4,550
    )
    
    $
    (10,342
    )
    
    $
    (7,369
    )
    
    $
    (31,835
    )Less mandatorily redeemable convertible preferred
stock dividends and accretion
    
    
    
    
    
    
    (5,198
    )
    
    
    
    
    
    
    (13,189
    )Less deemed dividend related to beneficial conversion feature
    
    
    
    
    
    
    (90
    )
    
    
    
    
    
    
    (183
    )Net loss attributable to common stockholders
    
    $
    (4,550
    )
    
    $
    (15,630
    )
    
    $
    (7,369
    )
    
    $
    (45,207
    )Weighted average common shares outstanding
    
    
    5,520,137
    
    
    
    753,005
    
    
    
    5,493,993
    
    
    
    735,570Basic and diluted net loss per share
    
    $
    (0.82
    )
    
    $
    (20.76
    )
    
    $
    (1.34
    )
    
    $
    (61.46
    )
  Nine Months Ended September 30,2005
    
    2004Unexercised stock options
    
    
    102,808
    
    
    
    232,677Unexercised warrants
    
    
    107,878
    
    
    
    197,426Mandatorily redeemable preferred stock
convertible into common shares
    
    
    
    
    
    
    725,525Total potentially dilutive shares of common
stock equivalents
    
    
    210,686
    
    
    
    1,155,628
    11




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12




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##### Table of Contents



Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Retail Services
    
    2005
    
    2004
    
    2005
    
    2004Revenues
    
    $
    34,045
    
    
    $
    41,229
    
    
    $
    118,378
    
    
    $
    129,347Depreciation and amortization
    
    $
    2,374
    
    
    $
    4,994
    
    
    $
    9,423
    
    
    $
    14,744Segment results
    
    $
    (2,873
    )
    
    $
    (9,337
    )
    
    $
    (9,045
    )
    
    $
    (27,468
    )Capital expenditures
    
    $
    573
    
    
    $
    1,567
    
    
    $
    2,206
    
    
    $
    6,218Identifiable assets
    
    
    
    
    
    
    
    
    
    $
    47,675
    
    
    $
    51,420
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Wholesale Services
    
    2005
    
    2004
    
    2005
    
    2004Revenues
    
    $
    9,984
    
    
    $
    19,683
    
    
    $
    33,580
    
    
    $
    63,829Depreciation and amortization
    
    $
    24
    
    
    $
    38
    
    
    $
    108
    
    
    $
    708Segment results
    
    $
    3,428
    
    
    $
    4,636
    
    
    $
    10,247
    
    
    $
    13,822Capital expenditures
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    40Identifiable Assets
    
    
    
    
    
    
    
    
    
    $
    5,722
    
    
    $
    13,225
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Segment results:Total segment results
    
    $
    556
    
    
    $
    (4,701
    )
    
    $
    1,202
    
    
    $
    (13,647
    )Depreciation and amortization
    
    
    (2,398
    )
    
    
    (5,032
    )
    
    
    (9,531
    )
    
    
    (15,452
    )Total consolidated operating loss
    
    $
    (1,842
    )
    
    $
    (9,733
    )
    
    $
    (8,329
    )
    
    $
    (29,099
    )
     13




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
  OVERVIEW
    RESULTS OF OPERATIONS
  14




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Revenues
 For the three monthsended September 30,
    
    
    Percentage of RevenuesTotal revenues by segment (inmillions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Retail Segment
    
    $
    34.0
    
    
    $
    41.2
    
    
    
    77.3
    %
    
    
    67.7
    %Wholesale segment
    
    
    10.0
    
    
    
    19.7
    
    
    
    22.7
    %
    
    
    32.3
    %Total Revenues
    
    $
    44.0
    
    
    $
    60.9
    
    
    
    100.0
    %
    
    
    100.0
    %
 For the nine monthsended September 30,
    
    
    Percentage of RevenuesTotal revenues by segment (inmillions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Retail Segment
    
    $
    118.4
    
    
    $
    129.3
    
    
    
    77.9
    %
    
    
    67.0
    %Wholesale segment
    
    
    33.6
    
    
    
    63.8
    
    
    
    22.1
    %
    
    
    33.0
    %Total Revenues
    
    $
    152.0
    
    
    $
    193.2
    
    
    
    100.0
    %
    
    
    100.0
    %
  Average lines in service
    
    Average lines in servicefor the three months ended
    
    for the nine months endedSeptember 30,
    
    September 30,Type of Service
    
    2005
    
    2004
    
    2005
    
    2004Bundled residential services
    
    
    132,436
    
    
    
    172,197
    
    
    
    154,453
    
    
    
    183,904Bundled business services
    
    
    44,121
    
    
    
    46,869
    
    
    
    45,259
    
    
    
    34,4091+ long distance services
    
    
    34,509
    
    
    
    46,826
    
    
    
    36,742
    
    
    
    59,310Wholesale services
    
    
    192,942
    
    
    
    346,165
    
    
    
    236,552
    
    
    
    316,621VoIP
    
    
    5,288
    
    
    
    
    
    
    
    3,457
    
    
    
    Total lines under management
    
    
    409,294
    
    
    
    612,057
    
    
    
    476,461
    
    
    
    594,244
 Ending lines in serviceas ofSeptember 30,Type of Service
    
    2005
    
    2004Bundled residential services
    
    
    120,262
    
    
    
    163,050Bundled business services
    
    
    43,218
    
    
    
    47,2241+ long distance services
    
    
    33,090
    
    
    
    44,200Wholesale services
    
    
    173,460
    
    
    
    336,418VoIP
    
    
    5,357
    
    
    
    Total lines under management
    
    
    375,387
    
    
    
    590,892
  15




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##### Table of Contents



For the three months
    
    For the nine monthsended September 30,
    
    ended September 30,Average revenue per unit inservice
    
    2005
    
    2004
    
    2005
    
    2004Bundled residential services
    
    $
    70.67
    
    
    $
    66.42
    
    
    $
    71.62
    
    
    $
    66.68Bundled business services
    
    $
    35.10
    
    
    $
    36.52
    
    
    $
    36.05
    
    
    $
    42.841+ long distance services
    
    $
    12.76
    
    
    $
    12.70
    
    
    $
    12.52
    
    
    $
    10.72
  Retail Segment
 For the three monthsended September 30,
    
    
    Percentage of RevenuesRetail segment revenues by type(in millions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Bundled residential services
    
    $
    28.1
    
    
    $
    34.3
    
    
    
    82.5
    %
    
    
    83.2
    %Bundled business services
    
    
    4.6
    
    
    
    5.1
    
    
    
    13.6
    %
    
    
    12.5
    %1+ long-distance services
    
    
    1.3
    
    
    
    1.8
    
    
    
    3.9
    %
    
    
    4.3
    %Total Revenues
    
    $
    34.0
    
    
    $
    41.2
    
    
    
    100.0
    %
    
    
    100.0
    %
 For the nine monthsended September 30,
    
    
    Percentage of RevenuesRetail segment revenues by type(in millions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Bundled residential services
    
    $
    99.6
    
    
    $
    110.4
    
    
    
    84.1
    %
    
    
    85.3
    %Bundled business services
    
    
    14.7
    
    
    
    13.3
    
    
    
    12.4
    %
    
    
    10.3
    %1+ long-distance services
    
    
    4.1
    
    
    
    5.7
    
    
    
    3.5
    %
    
    
    4.4
    %Total Revenues
    
    $
    118.4
    
    
    $
    129.3
    
    
    
    100.0
    %
    
    
    100.0
    %
 
    
    During the three and nine months ended September 30, 2005, the decrease in retail
revenue as compared to the same periods in 2004 was primarily the result of the decline in
residential UNE-P lines and 1+ long distance lines.
 16




---



##### Table of Contents



Wholesale Segment
 For the three monthsended September 30,
    
    
    Percentage of RevenuesWholesale segment revenues bytype (in millions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Sprint
    
    $
    10.0
    
    
    $
    18.8
    
    
    
    100.0
    %
    
    
    95.4
    %MCI
    
    
    
    
    
    
    0.1
    
    
    
    0.0
    %
    
    
    0.5
    %Other
    
    
    
    
    
    
    0.8
    
    
    
    0.0
    %
    
    
    4.2
    %Total Revenues
    
    $
    10.0
    
    
    $
    19.7
    
    
    
    100.0
    %
    
    
    100.0
    %
 For the nine monthsended September 30,
    
    
    Percentage of RevenuesWholesale segment revenues bytype (in millions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Sprint
    
    $
    33.6
    
    
    $
    62.3
    
    
    
    99.9
    %
    
    
    97.6
    %MCI
    
    
    0.0
    
    
    
    0.2
    
    
    
    0.1
    %
    
    
    0.4
    %Other
    
    
    
    
    
    
    1.3
    
    
    
    0.0
    %
    
    
    2.0
    %Total Revenues
    
    $
    33.6
    
    
    $
    63.8
    
    
    
    100.0
    %
    
    
    100.0
    %
 
    
    Sprint lines have decreased significantly from September 30, 2004 to 2005, resulting in
a decline in wholesale revenue.
    17




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##### Table of Contents



Network Operations
  For the three months
    
    
    Percentage ofended September 30,
    
    
    Segment RevenuesNetwork operations expense, exclusive ofdepreciation and amortization expense, bysegment (in millions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Retail Segment
    
    $
    18.7
    
    
    $
    21.5
    
    
    
    54.9
    %
    
    
    52.2
    %Wholesale Segment
    
    
    5.2
    
    
    
    8.9
    
    
    
    51.7
    %
    
    
    45.2
    %Total Network Operations Expense
    
    $
    23.9
    
    
    $
    30.4
    
    
    
    54.2
    %
    
    
    50.0
    %
 For the nine months
    
    
    Percentage ofended September 30,
    
    
    Segment RevenuesNetwork operations expense, exclusive ofdepreciation and amortization expense, bysegment (in millions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Retail Segment
    
    $
    63.0
    
    
    $
    65.8
    
    
    
    53.3
    %
    
    
    50.9
    %Wholesale Segment
    
    
    17.7
    
    
    
    29.9
    
    
    
    52.6
    %
    
    
    46.8
    %Total Network Operations Expense
    
    $
    80.7
    
    
    $
    95.7
    
    
    
    53.1
    %
    
    
    49.5
    %
  For the three months
    
    
    Percentage ofended September 30,
    
    
    Network OperationsNetwork operations expense, exclusive ofdepreciation and amortization, by type (inmillions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Bundled residential services
    
    $
    15.2
    
    
    $
    18.1
    
    
    
    63.8
    %
    
    
    59.5
    %Bundled business services
    
    
    3.3
    
    
    
    3.1
    
    
    
    13.7
    %
    
    
    10.2
    %1+ long distance services
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.9
    %
    
    
    1.0
    %Wholesale services
    
    
    5.2
    
    
    
    8.9
    
    
    
    21.7
    %
    
    
    29.3
    %Total
    
    $
    23.9
    
    
    $
    30.4
    
    
    
    100
    %
    
    
    100
    %
 For the nine months
    
    
    Percentage ofended September 30,
    
    
    Network OperationsNetwork operations expense, exclusive ofdepreciation and amortization, by type (inmillions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Bundled residential services
    
    $
    52.1
    
    
    $
    57.8
    
    
    
    64.6
    %
    
    
    60.5
    %Bundled business services
    
    
    10.2
    
    
    
    6.9
    
    
    
    12.7
    %
    
    
    7.2
    %1+ long distance services
    
    
    0.7
    
    
    
    1.1
    
    
    
    0.8
    %
    
    
    1.1
    %Wholesale services
    
    
    17.7
    
    
    
    29.9
    
    
    
    21.9
    %
    
    
    31.2
    %Total
    
    $
    80.7
    
    
    $
    95.7
    
    
    
    100
    %
    
    
    100
    %
 18




---



##### Table of Contents




    
    During the three and nine months ended September 30, 2005, network operations expense
decreased as compared to the same periods in 2004 for residential, 1+ long distance
services and wholesale services primarily because lines in service have also decreased.
Network operations expense increased for bundled business services during the three and
nine months ended September 30, 2005 as compared to the same periods in 2004 due to
increases in ILEC fees.
  For the three months
    
    For the nine monthsended September 30,
    
    ended September 30,Average network operations expense perunit
    
    2005
    
    2004
    
    2005
    
    2004Bundled residential services
    
    $
    38.32
    
    
    $
    34.99
    
    
    $
    37.51
    
    
    $
    34.95Bundled business services
    
    $
    24.64
    
    
    $
    22.11
    
    
    $
    25.12
    
    
    $
    22.241+ long distance services
    
    $
    2.04
    
    
    $
    2.25
    
    
    $
    2.04
    
    
    $
    1.99
    Retail Segment
  For the three months
    
    For the nine monthsended September 30,
    
    ended September 30,Network operations expense as apercentage of revenues
    
    2005
    
    2004
    
    2005
    
    2004Bundled residential services
    
    
    54.2
    %
    
    
    52.7
    %
    
    
    52.4
    %
    
    
    52.4
    %Bundled business services
    
    
    70.2
    %
    
    
    60.5
    %
    
    
    69.7
    %
    
    
    51.9
    %1+ long distance services
    
    
    16.0
    %
    
    
    17.7
    %
    
    
    16.3
    %
    
    
    18.6
    %
 
    
    During the three and nine months ended September 30, 2005, network operations expense
related to bundled residential and bundled business services increased as a percentage of
revenues as compared to the same prior year periods due to increased usage, increased ILEC
rates, changes in geographic distribution of our customer base and
incremental fixed cost structures associated with roll out of our
VOIP offering. 1+ long distance
services decreased as a percentage of revenues primarily as a result of our auditing and
analysis of network operations.
 19




---



##### Table of Contents



Wholesale Segment
 
    
    Network operations expense from the wholesale segment decreased for the three and nine
months ended September 30, 2005 as compared to the same periods in 2004. Sprint elected to
become the customer of record for billing purposes from the ILECs for a significant portion
of their total wholesale lines in service. This caused a decrease in network operations
expense which was further reduced by the drop in wholesale lines in service for the three
and nine months ended September 30, 2005 as compared to the same periods in 2004.
 Sales and Marketing
  For the three months
    
    
    Percentage ofended September 30,
    
    
    Segment RevenuesSales & marketing expense by segment (inmillions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Retail Segment
    
    $
    2.6
    
    
    $
    4.8
    
    
    
    7.6
    %
    
    
    11.5
    %Wholesale segment
    
    
    
    
    
    
    0.0
    
    
    
    0.0
    %
    
    
    0.2
    %Total Sales & Marketing Expense
    
    $
    2.6
    
    
    $
    4.8
    
    
    
    5.9
    %
    
    
    7.9
    %
 For the nine months
    
    
    Percentage ofended September 30,
    
    
    Segment RevenuesSales & marketing expense by segment (inmillions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Retail Segment
    
    $
    11.5
    
    
    $
    14.6
    
    
    
    9.7
    %
    
    
    11.3
    %Wholesale segment
    
    
    
    
    
    
    0.2
    
    
    
    0.0
    %
    
    
    0.3
    %Total Sales & Marketing Expense
    
    $
    11.5
    
    
    $
    14.8
    
    
    
    7.6
    %
    
    
    7.7
    %
 Retail Segment
 
    
    The decrease in sales and marketing expense during the three months and nine months
ended September 30, 2005 as compared to the same periods in 2004 was primarily due to
commissions paid to independent sales representatives. A portion of the commission
payments is directly related to the number of new lines brought in by the sales
representatives. Since line counts have decreased, the corresponding commission payments
have decreased as well.
 Wholesale Segment
  20




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##### Table of Contents



General and Administrative
  For the three months
    
    
    Percentage ofended September 30,
    
    
    Segment RevenuesGeneral & administrative expense bysegment (in millions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Retail Segment
    
    $
    15.6
    
    
    $
    21.1
    
    
    
    45.9
    %
    
    
    51.1
    %Wholesale segment
    
    
    1.4
    
    
    
    6.1
    
    
    
    13.9
    %
    
    
    31.1
    %Total General & Administrative Expense
    
    $
    17.0
    
    
    $
    27.2
    
    
    
    38.6
    %
    
    
    44.6
    %
 For the nine months
    
    
    Percentage ofended September 30,
    
    
    Segment RevenuesGeneral & administrative expense bysegment (in millions)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Retail Segment
    
    $
    52.4
    
    
    $
    72.3
    
    
    
    44.3
    %
    
    
    55.9
    %Wholesale segment
    
    
    5.7
    
    
    
    20.0
    
    
    
    16.9
    %
    
    
    31.3
    %Total General & Administrative Expense
    
    $
    58.1
    
    
    $
    92.3
    
    
    
    38.2
    %
    
    
    47.8
    %
 
    
    The decrease in general and administrative expenses during the three and nine months
ended September 30, 2005 as compared to the same periods in 2004 is explained by decreases
in payroll and payroll related expenses, contract development, legal expenses, billing,
collections, professional and consulting fees and ILEC setup fees to establish service for
new customers. These decreases were slightly offset by increases in bad debt expense and
ILEC performance credits.
  Retail Segment
 
    
    General and administrative expense decreased $5.5 million and $19.9 million for the
three and nine months ended September 30, 2005, respectively, as compared to the same
periods in the prior year. The largest decreases occurred in payroll and payroll related
expenses, legal expenses, billing expenses and contract development expenses.
    
    These decreases were slightly offset by an increase in ILEC performance credits for
failure to meet certain service levels and an increase in bad debt expense due to the $2.5
million reserve that we booked against the SipStorm note, as mentioned in footnote 9 in the
Notes to Consolidated Financial Statements Related Party Transactions.
  Wholesale Segment
 
    
    The decrease in general and administrative expense for the three and nine months ended
September 30, 2005 as compared to the same periods in 2004 is a direct result of decreased
wholesale lines in service. The expense line items that decreased most significantly are
payroll and payroll related expenses, billing expenses, outsourced collection expenses and
ILEC setup fees to establish service for new customers.
  21




---



##### Table of Contents



Depreciation and Amortization
 
    
    Depreciation and amortization expense decreased $2.6 million and $5.9 million for the
three and nine months ended September 30, 2005, respectively, as compared to the same
periods in the prior year. The decrease was the result of decreased capital spending, asset
disposals and an increase in the number of assets which became fully depreciated during the
later part of 2004 and the first nine months of 2005.
 Interest and Other Income
 
    
    Interest and other income primarily consists of interest charged to our bundled
residential and business customers for not paying their bills on time and income from
interest earned on our cash balances.
    
    During the nine months ended September 30, 2005, interest and other income also includes
$6 million of lawsuit proceeds from our settlement with SBC Communications, Inc. and
several of its subsidiaries, as described in the Notes to Consolidated Financial Statements
in our Annual Report on Form 10-K for the year ended December 31, 2004.
 Interest and Other Expense
  
    
    The increase in interest and other expense during the three and nine months ended
September 30, 2005 as compared to the same periods in 2004 was primarily attributable to
the discount fees paid to Thermo, increase in balance of standby credit facility and
increase in late fees for vendor payments during 2005.
 Net Loss Attributable to Common Stockholders
 
    
    Net loss attributable to common stockholders decreased by $11.1 million and $37.8
million during the three and nine months ended September 30, 2005, respectively, as
compared to the same periods in 2004. In addition to the decreases in our operating losses
and the income from the legal settlement discussed above, an additional $5.3 million and
$13.4 million for the three and nine months, respectively, was attributable to the
preferred stock conversion that occurred at the end of 2004.
 LIQUIDITY AND CAPITAL RESOURCES
       22




---



##### Table of Contents



DEBT INSTRUMENTS
 Working Capital Financing
   ILEC, IXC AND RELATED DISPUTED CHARGES
  23




---



##### Table of Contents



Outstanding Disputesat September 30, 2005(in millions)Alternatively billed services
    
    $
    6.0Late fees for non-payment of disputed charges
    
    
    5.8Billing errors
    
    
    4.8All others
    
    
    1.8$
    18.4
    RELATED PARTY TRANSACTIONS
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  24




---



##### Table of Contents



Part II
 
 ITEM 1. LEGAL PROCEEDINGS
 1.
    
    Master File Number 21 MC 92; In re Initial Public Offering Securities
Litigation., in the United States District Court for the Southern
District of New York (filed June 7, 2001)
     2.
    
    C.A. No. 04CH07882, Susan Schad, on behalf of herself and all others
similarly situated, v. Z-Tel Communications, Inc., In the Circuit
Court of Cook County, Illinois, Illinois County Department, Chancery
Division, filed May 13, 2004;
  25




---



##### Table of Contents



3.
    
    Case. No. 0410453, Wilder Corporation of Delaware, Inc. v. Trinsic
Communications, Inc., In the Circuit Court of the Thirteenth Judicial
Circuit in and for Hillsborough County, Florida, Civil Division,
Division G, filed November 19, 2004
  4.
    
    Case. No. 0410441, Beneficial Management Corporation of America. v.
Trinsic Communications, Inc., In the Circuit Court of the Thirteenth
Judicial Circuit in and for Hillsborough County, Florida, Civil
Division, Division F, filed November 19, 2004
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Number of SharesNominee
    
    For
    
    WithheldAndrew C. Cowen
    
    
    42,725,167
    
    
    
    54,374Raymond L. Golden
    
    
    42,724,352
    
    
    
    55,189
  
       For
    
    Against
    
    Abstention34,946,454
    
    890,643
    
    78,391
  For
    
    Against
    
    Abstention34,926,806
    
    977,194
    
    11,488
 26




---



##### Table of Contents



ITEM 6. EXHIBITS
 (a) The following exhibits are filed as part of this report:
 EXHIBITNUMBER
    
    DESCRIPTION3.1
    
    Amended and Restated Certificate of Incorporation of Trinsic, Inc. as
amended. Incorporated by reference to the correspondingly numbered exhibit
to our Annual Report on Form 10-K for the year ended December 31, 2004 filed
April 15, 2005.3.2
    
    Amended and Restated Bylaws of Trinsic, as amended. Incorporated by
reference to the correspondingly numbered exhibit to our Quarterly report on
Form 10-Q for the quarter ended September 30, 2004 filed November 15, 2004.3.3
    
    Certificate of Amendment to the Amended and Restated Certificate of
Incorporation of Trinsic, Inc. Incorporated by reference to Exhibit 3.3 to
our Form 8-K filed September 28, 2005.4.1
    
    Form of Common Stock Certificate. Incorporated by reference to the
correspondingly numbered exhibit to our Annual Report on Form 10-K for the
year ended December 31, 2004 filed April 15, 2005.4.2
    
    See Exhibits 3.1, 3.2 and 3.3. of this report for provisions of the Amended
and Restated Certificate of Incorporation, as amended, and our Bylaws, as
amended, defining rights of security holders.4.6
    
    Form of Warrant for the purchase of shares of our common stock by each of
the purchasers of our Series D Convertible Preferred Stock. Incorporated by
reference to the correspondingly numbered exhibit to our Quarterly Report on
Form 10-Q for the quarter ended June 30, 2000, filed on August 14, 2000.4.7
    
    Stock and Warrant Purchase Agreement, dated October 19, 2000, by and among
us and The 1818 Fund III, L.P. Incorporated by reference to the
correspondingly numbered exhibit to our Quarterly Report on Form 10-Q for
the quarter ended September 30, 2000, filed on November 14, 2000.4.9
    
    Registration Rights Agreement between and among us and The 1818 Fund III,
L.P. Incorporated by reference to the correspondingly numbered exhibit to
our Quarterly Report on Form 10-Q for the quarter ended September 30, 2000,
filed on November 14, 2000.4.10
    
    Warrant issued to The 1818 Fund III, L.P. for the purchase of shares of our
common stock. Incorporated by reference to the correspondingly numbered
exhibit to our Quarterly Report on Form 10-Q for the quarter ended September
30, 2000, filed on November 14, 2000.4.11
    
    Certificate of Designation of Series F Junior Participating Preferred Stock.
Incorporated by reference to the correspondingly numbered exhibit to our
Annual Report on Form 10-K for the year ended December 31, 2000, filed on
March 30, 2001.4.12
    
    Rights Agreement dated as of February 19, 2001 between Z-Tel Technologies,
Inc. and American Stock Transfer & Trust Company, as Rights Agent, as
amended July 2, 2001. Incorporated be reference to the correspondingly
numbered exhibit to our quarterly report on Form 10-Q for the quarter ended
June 30, 20014.13
    
    Amendment No. 1 to Rights Agreement dated as of November 19, 2004 between
Z-Tel Technologies, Inc. and American Stock Transfer & Trust Company, as
Rights Agent. Incorporated by reference to Exhibit 4.1 to our registration
statement on form 8-A/A filed on December 6, 2004.
 27




---



##### Table of Contents



EXHIBITNUMBER
    
    DESCRIPTION4.14
    
    Amendment No. 2 to Rights Agreement dated as of July 19, 2005, between
Trinsic, Inc. and American Stock Transfer & Trust Company, as Rights Agent.
Incorporated by reference to Exhibit 4.1 to our registration statement on
form 8-A/A filed on July 21, 2005.4.15
    
    Stock and Warrant Purchase Agreement, dated as of July 2, 2001, by and
between us, D. Gregory Smith, and others. Incorporated by reference to
Exhibit 1 to Amendment No. 1 of the Schedule 13D filed July 12, 2001 with
respect to our common stock by, among other persons, The 1818 Fund III, L.P.4.16
    
    Warrant for the Purchase of Shares of Common Stock of Trinsic, dated as of
July 2, 2001. Incorporated by reference to Exhibit 2 to Amendment No. 1 of
the Schedule 13D filed July 12, 2001 with respect to our common stock by,
among other persons, The 1818 Fund III, L.P.4.17
    
    Backup Purchase Agreement, dated as of July 2, 2001, by and among Z-Tel
Communications, Inc., a Delaware corporation and our wholly owned
subsidiary, Touch 1 Communications, Inc., an Alabama corporation and our
wholly owned subsidiary, D. Gregory Smith and others. Incorporated by
reference to Exhibit 4 to Amendment No. 1 of the Schedule 13D filed July 12,
2001 with respect to our common stock by, among other persons, The 1818 Fund
III, L.P.4.18
    
    Additional Investor Registration Rights Agreement, dated as of July 2, 2001,
between Z-Tel, D. Gregory Smith and others. Incorporated by reference to
Exhibit 5 to the Schedule 13D filed July 24, 2001 with respect to our common
stock by, among other persons, D. Gregory Smith.4.19
    
    Voting Agreement, dated as of June 29, 2001, between us and certain of our
stockholders. Incorporated by reference to Exhibit 5 to Amendment No. 1 of
the Schedule 13D filed July 12, 2001 with respect to our common stock by,
among other persons, The 1818 Fund III, L.P.4.20
    
    Exchange and Purchase Agreement dated July 15, 2005 between Trinsic, Inc.
and The 1818 Fund III, L.P. Incorporated by reference to Exhibit A to our
Form 8-K filed July 20, 2005.4.21
    
    Certificate of Designation of Convertible Preferred Stock, Series H.
Incorporated by reference to Exhibit B to our Form 8-K filed July 20, 2005.4.22
    
    Voting Agreement, dated August 31, 2005, between us and The 1818 Fund III,
L.P. Incorporated by reference to Exhibit B to our Form 8-K filed September
7, 2005.10.1.1
    
    Standby Credit Facility Agreement, dated August 24, 2004, by and among
Trinsic, Inc. and The 1818 Fund III, L.P. Incorporated by reference to Form
8-K filed on August 26, 200410.1.2
    
    Amendment No. 1, dated May 24, 2005, to Standby Credit Facility Agreement,
dated August 24, 2004 by and between Trinsic, Inc. and The 1818 Fund III,
L.P.10.1.3
    
    Amended and Restated Senior Unsecured Promissory Note dated August 24, 2004
from Trinsic, Inc. to The 1818 Fund III, L.P.10.2.1
    
    1998 Equity Participation Plan. Incorporated by reference to the
correspondingly numbered exhibit to our Registration Statement on Form S-1
(File No. 333-89063), originally filed October 14, 1999, as amended and as
effective December 14, 1999.10.2.2
    
    2000 Equity Participation Plan, as amended. Incorporated by reference to the
correspondingly numbered exhibit to our Annual Report on Form 10-K for the
year ended December 31, 2004 filed April 15, 2005.10.2.3
    
    2004 Stock Incentive Plan. Incorporated by reference to Exhibit 4.1 to our
Registration Statement on Form S-8 filed May 8, 2005.10.3
    
    Loan and Security Agreement, dated April 22, 2004, by and between Textron
Financial Corporation and Z-Tel. Incorporated by reference to Exhibit 10.2
of our Registration Statement on Form S-3 (File No. 333-116747), originally
filed June 22, 2004, as amended and as effective July 15, 2004.10.4
    
    Receivables Sales Agreement dated as of July 27, 2000 by and between Z-Tel
Communications, Inc., as seller and subservicer, Touch 1 Communications,
Inc., as seller and subservicer, and RFC Capital Corporation, as purchaser.
Incorporated by reference to the correspondingly numbered exhibit to our
Quarterly Report on Form 10- Q for the quarter ended June 30, 2000, filed on
August 14, 2000, with an amendment extending the agreement until July 27,
2004.
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##### Table of Contents



EXHIBITNUMBER
    
    DESCRIPTION10.5
    
    Form of Indemnification Agreement for our executive officers and directors.
Incorporated by reference to the correspondingly numbered exhibit to our
Annual Report on Form 10-K for the year ended December 31, 2000, filed on
March 30, 2001.10.6
    
    Employment Agreement of Horace J. Trey Davis III, dated August 14, 2002.
Incorporated by reference to the correspondingly numbered exhibit to our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, filed on
May 17, 2004. By amendment dated October 5, 2004, the annual salary was
increased to $300,000. The amendment is incorporated by reference to Exhibit
99.1 to Form 8-K filed October 12, 2004.10.7
    
    Modification and Termination Agreement dated January 27, 2005 with Textron
Financial Corporation modifying our Loan and Security Agreement dated April
22, 2004. Incorporated by reference to Exhibit 10.4 to Form 8-K filed
February 2, 2005.10.8
    
    Asset Sale and Purchase Agreement dated September 29, 2004, between and
among Sipstorm, Inc. and us. Incorporated by reference to Exhibit 99.1 to
October 6, 2004.10.11
    
    Promissory Note, dated September 10, 1999, from Touch 1 Communications, Inc.
to William F. Corman (First Revocable Trust). Incorporated by reference to
the correspondingly numbered exhibits to our Annual Report on Form 10-K for
the year ended December 31, 2000, filed on March 30, 2001.10.12
    
    Promissory Note, dated September 10, 1999, from Touch 1 Communications, Inc.
to James F. Corman. Incorporated by reference to the correspondingly
numbered exhibits to our Annual Report on Form 10-K for the year ended
December 31, 2000, filed on March 30, 2001.10.13
    
    Agreement for Resale of Local Wireline Telecommunications Services and
Provision of Ancillary Services, dated February 4, 2003, between Z-Tel
Communications Inc. and Sprint Communications L.P. Incorporated by reference
to Exhibit 10.14 of our Annual Report on Form 10-K for the year ended
December 31, 2003, filed March 30, 2004. Portions of this exhibit have been
omitted pursuant to a request for confidential treatment10.14
    
    Receivables Sales Agreement, dated as of March 28, 2005, by and between
Trinsic Communications Inc. and Touch 1 Communications s Inc., collectively
as Seller and Subservicer, and Thermo Credit, LLC, as Purchaser and Master
Servicer. Incorporated by reference to Exhibit 10.1 to our o Form 8-K filed
i April 5, 2005.31.1
    
    Certification , of the Chief Executive Officer31.2
    
    Certification of the Chief Financial Officer32.1
    
    Written Statement of the Chief Executive Officer Pursuant to 18 U.S.C.ss.135032.2
    
    Written Statement of the Chief Financial Officer Pursuant to 18 U.S.C.ss.1350
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##### Table of Contents



SIGNATURES
  TRINSIC, INC.
 By:
    
    /s/ HORACE J. DAVIS, IIIHorace J. Davis, IIIChief Executive OfficerBy:
    
    /s/ J. MICHAEL MORGANJ. Michael MorganActing Chief Financial Officer
  30