##### 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 JUNE 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




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##### Table of Contents



PART IItem 1. Financial StatementsConsolidated Balance Sheets at June 30, 2005 (unaudited) and December 31, 2004
    
    
    3Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2005 and 2004
    
    
    4Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2005 and 2004
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    23PART IIItem 1. Legal Proceedings
    
    
    23Signatures
    
    
    27Ex-10.1.2 Amendment to Credit FacilityEx-10.1.3 Amended Promissory NoteEx-31.1 Section 302 CEO CertificationEx-31.2 Section 302 CFO CertificationEx-32.1 Section 906 CEO CertificationEx-32.2 Section 906 CFO Certification
 2




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##### Table of Contents



TRINSIC, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
  (Unaudited)
    
    (Audited)June 30,
    
    December 31,2005
    
    2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    536
    
    
    $
    1,363Accounts receivable, net of allowance for doubtful
accounts of $9,214 and $10,967
    
    
    25,936
    
    
    
    27,242Prepaid expenses and other current assets
    
    
    2,856
    
    
    
    836Total current assets
    
    
    29,328
    
    
    
    29,441Property and equipment, net
    
    
    22,411
    
    
    
    27,829Intangible assets, net
    
    
    
    
    
    
    457Other assets
    
    
    4,238
    
    
    
    3,609Total assets
    
    $
    55,977
    
    
    $
    61,336Liabilities and Stockholders DeficitCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    49,879
    
    
    $
    55,605Deferred revenue
    
    
    6,536
    
    
    
    6,264Current portion of long-term debt and capital lease obligations
    
    
    20,501
    
    
    
    7,536Asset based loan
    
    
    
    
    
    
    12,934Total current liabilities
    
    
    76,916
    
    
    
    82,339Long-term deferred revenue
    
    
    18
    
    
    
    46Long-term debt and capital lease obligations
    
    
    34
    
    
    
    33Total liabilities
    
    
    76,968
    
    
    
    82,418Commitments and contingencies (Notes 7 and 10)Stockholders deficit:Common stock, $0.01 par value; 150,000,000
shares authorized; 55,973,912 and 55,253,612 shares issued;
55,905,602 and 55,185,302 shares outstanding
    
    
    552
    
    
    
    553Notes receivable from stockholders
    
    
    (870
    )
    
    
    (3,685
    )Unearned stock compensation
    
    
    (314
    )
    
    
    (466
    )Additional paid-in capital
    
    
    392,430
    
    
    
    392,488Accumulated deficit
    
    
    (412,711
    )
    
    
    (409,894
    )Treasury stock, 68,310 shares at cost
    
    
    (78
    )
    
    
    (78
    )Total stockholders deficit
    
    
    (20,991
    )
    
    
    (21,082
    )Total liabilities and stockholders deficit
    
    $
    55,977
    
    
    $
    61,336
  3




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TRINSIC, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
  For the Three Months Ended
    
    For the Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Revenues
    
    $
    50,797
    
    
    $
    63,797
    
    
    $
    107,928
    
    
    $
    132,264Operating expenses:Network operations, exclusive of depreciation
and amortization shown below
    
    
    26,999
    
    
    
    31,232
    
    
    
    56,833
    
    
    
    65,266Sales and marketing
    
    
    3,692
    
    
    
    4,937
    
    
    
    8,911
    
    
    
    10,014General and administrative
    
    
    18,574
    
    
    
    31,125
    
    
    
    41,084
    
    
    
    65,125Restructuring charge
    
    
    451
    
    
    
    807
    
    
    
    451
    
    
    
    807Depreciation and amortization
    
    
    2,955
    
    
    
    5,109
    
    
    
    7,134
    
    
    
    10,420Total operating expenses
    
    
    52,671
    
    
    
    73,210
    
    
    
    114,413
    
    
    
    151,632Operating loss
    
    
    (1,874
    )
    
    
    (9,413
    )
    
    
    (6,485
    )
    
    
    (19,368
    )Nonoperating income (expense):Interest and other income
    
    
    490
    
    
    
    440
    
    
    
    7,293
    
    
    
    1,282Interest and other expense
    
    
    (1,873
    )
    
    
    (2,138
    )
    
    
    (3,626
    )
    
    
    (3,408
    )Total nonoperating income (expense)
    
    
    (1,383
    )
    
    
    (1,698
    )
    
    
    3,667
    
    
    
    (2,126
    )Net loss
    
    
    (3,257
    )
    
    
    (11,111
    )
    
    
    (2,818
    )
    
    
    (21,494
    )Less mandatorily redeemable convertible
preferred stock dividends and accretion
    
    
    
    
    
    
    (3,626
    )
    
    
    
    
    
    
    (7,991
    )Less deemed dividend related to beneficial
conversion feature
    
    
    
    
    
    
    (47
    )
    
    
    
    
    
    
    (93
    )Net loss attributable to common stockholders
    
    $
    (3,257
    )
    
    $
    (14,784
    )
    
    $
    (2,818
    )
    
    $
    (29,578
    )Weighted average common shares outstanding
    
    
    55,335,635
    
    
    
    7,321,741
    
    
    
    55,260,884
    
    
    
    7,267,561Basic and diluted net loss per common share
    
    $
    (0.06
    )
    
    $
    (2.02
    )
    
    $
    (0.05
    )
    
    $
    (4.07
    )
  4




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TRINSIC, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
  Six Months EndedJune 30,2005
    
    2004Cash flows from operating activities:Net loss
    
    $
    (2,818
    )
    
    $
    (21,494
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    7,134
    
    
    
    10,420Provision for bad debts
    
    
    6,384
    
    
    
    3,017Expense charged for granting of stock options
    
    
    93
    
    
    
    888Change in operating assets and liabilities:Increase in accounts receivable
    
    
    (2,513
    )
    
    
    (7,089
    )(Increase) decrease in prepaid expenses
    
    
    (2,020
    )
    
    
    2,860(Increase) decrease in other assets
    
    
    (628
    )
    
    
    551Increase (decrease) in accounts payable and accrued liabilities
    
    
    (5,352
    )
    
    
    4,515Increase (decrease) in deferred revenue
    
    
    244
    
    
    
    (2,851
    )Total adjustments
    
    
    3,342
    
    
    
    12,311Net cash provided by (used in) operating activities
    
    
    524
    
    
    
    (9,183
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (1,633
    )
    
    
    (4,732
    )Principal repayments received on notes receivable
    
    
    
    
    
    
    40Net cash used in investing activities
    
    
    (1,633
    )
    
    
    (4,692
    )Cash flows from financing activities:Payments on long-term debt and capital lease obligations
    
    
    (534
    )
    
    
    (3,248
    )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
    )
    
    
    12,619Proceeds from stand by credit facility
    
    
    13,500
    
    
    
    Proceeds from exercise of stock options and warrants
    
    
    
    
    
    
    499Net cash provided by financing activities
    
    
    282
    
    
    
    10,058Net decrease in cash and cash equivalents
    
    
    (827
    )
    
    
    (3,817
    )Cash and cash equivalents, beginning of period
    
    
    1,363
    
    
    
    12,013Cash and cash equivalents, end of period
    
    $
    536
    
    
    $
    8,196
  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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RECLASSIFICATION
   (a) Significant Accounting Policies
   (b) Recent Accounting Pronouncements
   7




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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
    
    
    (1,062
    )
    
    
    (73
    )
    
    
    
    
    
    
    (1,135
    )Balance at June 30, 2005
    
    $
    361
    
    
    $
    
    
    
    $
    
    
    
    $
    361
   8




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For the three months ended
    
    For the six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Net loss attributable to common stockholders, as reported
    
    $
    (3,257
    )
    
    $
    (14,784
    )
    
    $
    (2,818
    )
    
    $
    (29,578
    )Add: Stock based compensation included in net loss
    
    
    52
    
    
    
    888
    
    
    
    93
    
    
    
    888Deduct: Total stock based employee compensation determined
under the fair value based method for all awards
    
    
    (637
    )
    
    
    (1,043
    )
    
    
    (1,279
    )
    
    
    (1,799
    )Net loss attributable to common stockholders, pro forma
    
    $
    (3,842
    )
    
    $
    (14,939
    )
    
    $
    (4,004
    )
    
    $
    (30,489
    )Basic and Diluted Net Loss per Common ShareAs reported
    
    $
    (0.06
    )
    
    $
    (2.02
    )
    
    $
    (0.05
    )
    
    $
    (4.07
    )Pro forma
    
    $
    (0.07
    )
    
    $
    (2.04
    )
    
    $
    (0.07
    )
    
    $
    (4.20
    )
  For the three months ended
    
    For the six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Discount Rate
    
    
    4.3
    %
    
    
    3.4
    %
    
    
    4.3
    %
    
    
    3.1
    %Volatility
    
    
    102.7
    %
    
    
    98.4
    %
    
    
    102.7
    %
    
    
    100.1
    %Average Option Expected Life
    
    5 years
    
    5 years
    
    5 years
    
    5 years
      9




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##### Table of Contents



Three Months Ended June 30,
    
    Six Months Ended June 30,2005
    
    2004
    
    2005
    
    2004Basic and diluted net loss per share:Net loss
    
    $
    (3,257
    )
    
    $
    (11,111
    )
    
    $
    (2,818
    )
    
    $
    (21,494
    )Less mandatorily redeemable convertible preferred
stock dividends and accretion
    
    
    
    
    
    
    (3,626
    )
    
    
    
    
    
    
    (7,991
    )Less deemed dividend related to beneficial conversion feature
    
    
    
    
    
    
    (47
    )
    
    
    
    
    
    
    (93
    )Net loss attributable to common stockholders
    
    $
    (3,257
    )
    
    $
    (14,784
    )
    
    $
    (2,818
    )
    
    $
    (29,578
    )Weighted average common shares outstanding
    
    
    55,335,635
    
    
    
    7,321,741
    
    
    
    55,260,884
    
    
    
    7,267,561Basic and diluted net loss per share
    
    $
    (0.06
    )
    
    $
    (2.02
    )
    
    $
    (0.05
    )
    
    $
    (4.07
    )
  Six Months Ended June 30,2005
    
    2004Unexercised stock options
    
    
    1,209,081
    
    
    
    2,843,917Unexercised warrants
    
    
    1,078,781
    
    
    
    2,168,298Mandatorily redeemable preferred stock
convertible into common shares
    
    
    
    
    
    
    7,140,562Total potentially dilutive shares of common
stock equivalents
    
    
    2,287,862
    
    
    
    12,152,777~~~~~~a
   10




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11




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Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Retail ServicesRevenues
    
    $
    40,308
    
    
    $
    42,814
    
    
    $
    84,333
    
    
    $
    88,118Depreciation and amortization
    
    $
    2,907
    
    
    $
    5,073
    
    
    $
    7,050
    
    
    $
    9,750Segment results
    
    $
    (1,913
    )
    
    $
    (8,805
    )
    
    $
    (6,170
    )
    
    $
    (18,135
    )Capital expenditures
    
    $
    401
    
    
    $
    2,311
    
    
    $
    1,633
    
    
    $
    4,691Identifiable assets
    
    
    
    
    
    
    
    
    
    $
    50,315
    
    
    $
    67,344
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Wholesale ServicesRevenues
    
    $
    10,489
    
    
    $
    20,983
    
    
    $
    23,595
    
    
    $
    44,146Depreciation and amortization
    
    $
    48
    
    
    $
    36
    
    
    $
    84
    
    
    $
    670Segment results
    
    $
    2,993
    
    
    $
    4,501
    
    
    $
    6,819
    
    
    $
    9,187Capital expenditures
    
    $
    
    
    
    $
    12
    
    
    $
    
    
    
    $
    41Identifiable Assets
    
    
    
    
    
    
    
    
    
    $
    5,662
    
    
    $
    13,225
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    

    2005
    

    2004Segment results:Total segment results
    
    $
    1,081
    
    
    $
    (4,304
    )
    
    $
    649
    
    
    $
    (8,948
    )Depreciation and amortization
    
    
    (2,955
    )
    
    
    (5,109
    )
    
    
    (7,134
    )
    
    
    (10,420
    )Total consolidated operating loss
    
    $
    (1,874
    )
    
    $
    (9,413
    )
    
    $
    (6,485
    )
    
    $
    (19,368
    )
    
    
    the historical financial information derived from our audited consolidated financial statements
for the year ended December 31, 2004, and from our unaudited consolidated financial statements for
the six months ended June 30, 2005.
    
    adjustments to give effect to our July 15, 2005 Exchange and Purchase Agreement with the 1818
Fund III, L.P.
 12




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##### Table of Contents




    
    our pro forma, as adjusted unaudited financial information as of June 30, 2005, and the pro
forma, as adjusted, unaudited financial information related to our operations for the six months ended June
30, 2005, and for the year ended December 31, 2004, as adjusted to give effect to the Exchange and
Purchase Agreement with the 1818 Fund III, L.P. As of June 30, 2005
 Pro FormaHistorical
    
    
    Adjustments
    
    
    Pro FormaCash and cash equivalents
    
    $
    536
    
    
    $
    2,500
    (1)
    
    $
    3,036Accounts payable and accrued liabilities
    
    $
    49,879
    
    
    $
    (1,107
    )(1)
    
    $
    48,772Current portion of LT debt
    
    $
    20,501
    
    
    $
    (20,477
    )(1)
    
    $
    24Preferred stock
    
    $
    
    
    
    $
    24,084
    (2)
    
    $
    24,084Total stockholders equity (deficit)
    
    $
    (20,991
    )
    
    $
    24,084
    
    
    $
    3,093
 For the six months ended June 30, 2005
 Pro FormaHistorical
    
    
    Adjustments
    
    
    Pro FormaInterest and other expense
    
    $
    3,626
    
    
    $
    (1,124
    )(3)
    
    $
    2,502Net loss attributable to common stockholders
    
    $
    2,818
    
    
    $
    (1,124
    )(3)
    
    $
    1,694Basic net loss per common share
    
    $
    0.05
    
    
    $
    0.02
    (3)
    
    $
    0.03Diluted net loss per common share
    
    $
    0.05
    
    
    $
    0.04
    (3)
    
    $
    0.01Weighted
average common shares outstanding- basic
    
    
    55,260,884
    
    
    
    
    
    
    
    55,260,884Weighted
average common shares outstanding- diluted
    
    
    55,260,884
    
    
    
    120,423,845
    (4)
    
    
    175,684,729
 For the year ended December 31, 2004
 Pro FormaHistorical
    
    
    Adjustments
    
    
    Pro FormaInterest and other expense
    
    $
    6,111
    
    
    $
    (249
    )(3)
    
    $
    5,862Net loss attributable to common stockholders
    
    $
    106,523
    
    
    $
    (249
    )(3)
    
    $
    106,274Basic net loss per common share
    
    $
    9.12
    
    
    $
    0.02
    (3)
    
    $
    9.10Diluted net loss per common share
    
    $
    9.12
    
    
    $
    8.32
    (3)
    
    $
    0.80Weighted
average common shares outstanding- basic
    
    
    11,676,783
    
    
    
    
    
    
    
    11,676,783Weighted
average common shares outstanding- diluted
    
    
    11,676,783
    
    
    
    120,423,845
    (4)
    
    
    132,100,628
 (1)
    
    Includes effects of removing outstanding indebtedness owed to the Fund and $2.5 million in cash
that were exchanged for preferred stock in the Exchange and Purchase
Agreement. Also includes the effects of removing $0.4 million of debt premium and $0.08 million of interest
expense, both of which were incurred upon consummation of the transaction in the month of July.(2)
    
    Includes 24,084.769 shares of preferred stock issued to the Fund as part of the Exchange and
Purchase Agreement.(3)
    
    Includes effects of removing interest expense and amortized
debt premium incurred on
indebtedness owed to the Fund. For the six months ended June 30, 2005, the interest expense was $0.7 million and the amortized
debt premium was $0.4 million. For the twelve months ended December 31, 2004, the interest expense
was $0.2 million and the amortized debt premium was $0.05 million. As of January 1, 2005, the
unamortized debt premium was $0.2 million.(4)
    
    Assumes conversion of Series H Convertible Preferred Stock at
a conversion price of $0.20 per share, thereby increasing the
weighted average common shares outstanding-diluted by 120,423,845
shares.
  
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
  OVERVIEW
   RESULTS OF OPERATIONS
 13




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Revenues
 For the three monthsended June 30,
    
    Percentage of RevenuesTotal revenues by segment (in millions)
    
    2005
    
    2004
    
    2005
    
    2004Retail Segment
    
    $
    40.3
    
    
    $
    42.8
    
    
    
    79.4
    %
    
    
    67.1
    %Wholesale segment
    
    
    10.5
    
    
    
    21.0
    
    
    
    20.6
    %
    
    
    32.9
    %Total Revenues
    
    $
    50.8
    
    
    $
    63.8
    
    
    
    100.0
    %
    
    
    100.0
    %
 For the six monthsended June 30,
    
    Percentage of RevenuesTotal revenues by segment (in millions)
    
    2005
    
    2004
    
    2005
    
    2004Retail Segment
    
    $
    84.3
    
    
    $
    88.1
    
    
    
    78.1
    %
    
    
    66.6
    %Wholesale segment
    
    
    23.6
    
    
    
    44.2
    
    
    
    21.9
    %
    
    
    33.4
    %Total Revenues
    
    $
    107.9
    
    
    $
    132.3
    
    
    
    100.0
    %
    
    
    100.0
    %
  Average lines in service
    
    Average lines in servicefor the three months ended
    
    for the six months endedJune 30,
    
    June 30,Type of Service
    
    2005
    
    2004
    
    2005
    
    2004Bundled residential services
    
    
    164,124
    
    
    
    185,631
    
    
    
    177,560
    
    
    
    193,051Bundled business services
    
    
    45,957
    
    
    
    39,554
    
    
    
    46,705
    
    
    
    34,0541+ long distance services
    
    
    34,386
    
    
    
    55,737
    
    
    
    36,151
    
    
    
    61,935Wholesale services
    
    
    232,640
    
    
    
    347,821
    
    
    
    255,426
    
    
    
    326,368VoIP
    
    
    4,366
    
    
    
    
    
    
    
    3,425
    
    
    
    Total lines under management
    
    
    481,473
    
    
    
    628,743
    
    
    
    519,267
    
    
    
    615,408
 Ending lines in serviceas ofJune 30,Type of Service
    
    2005
    
    2004Bundled residential services
    
    
    144,609
    
    
    
    181,344Bundled business services
    
    
    45,023
    
    
    
    46,5141+ long distance services
    
    
    35,927
    
    
    
    49,451Wholesale services
    
    
    212,423
    
    
    
    355,912VoIP
    
    
    5,218
    
    
    
    Total lines under management
    
    
    443,200
    
    
    
    633,221
  14




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##### Table of Contents



For the three months
    
    For the six monthsended June 30,
    
    ended June 30,Average revenue per unit in service
    
    2005
    
    2004
    
    2005
    
    2004Bundled residential services
    
    $
    69.28
    
    
    $
    64.82
    
    
    $
    67.09
    
    
    $
    65.66Bundled business services
    
    $
    34.99
    
    
    $
    41.06
    
    
    $
    35.83
    
    
    $
    39.801+ long distance services
    
    $
    13.32
    
    
    $
    11.03
    
    
    $
    13.00
    
    
    $
    10.59
  Retail Segment
 For the three monthsended June 30,
    
    Percentage of RevenuesRetail segment revenues by type (in millions)
    
    2005
    
    2004
    
    2005
    
    2004Bundled residential services
    
    $
    34.1
    
    
    $
    36.1
    
    
    
    84.6
    %
    
    
    84.3
    %Bundled business services
    
    
    4.8
    
    
    
    4.9
    
    
    
    12.0
    %
    
    
    11.4
    %1+ long-distance services
    
    
    1.4
    
    
    
    1.8
    
    
    
    3.4
    %
    
    
    4.3
    %Total Revenues
    
    $
    40.3
    
    
    $
    42.8
    
    
    
    100.0
    %
    
    
    100.0
    %
 For the six monthsended June 30,
    
    Percentage of RevenuesRetail segment revenues by type (in millions)
    
    2005
    
    2004
    
    2005
    
    2004Bundled residential services
    
    $
    71.5
    
    
    $
    76.0
    
    
    
    84.8
    %
    
    
    86.3
    %Bundled business services
    
    
    10.0
    
    
    
    8.1
    
    
    
    11.9
    %
    
    
    9.2
    %1+ long-distance services
    
    
    2.8
    
    
    
    3.9
    
    
    
    3.3
    %
    
    
    4.5
    %Total Revenues
    
    $
    84.3
    
    
    $
    88.1
    
    
    
    100.0
    %
    
    
    100.0
    %
 
    
    During the three and six months ended June 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. These decreases were partially
mitigated by increases in bundled business revenue which was directly attributable to line
growth.
 Wholesale Segment
 15




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##### Table of Contents



For the three monthsended June 30,
    
    Percentage of RevenuesWholesale segment revenues by type (in millions)
    
    2005
    
    2004
    
    2005
    
    2004Sprint
    
    $
    10.5
    
    
    $
    20.5
    
    
    
    100.0
    %
    
    
    98.0
    %MCI
    
    
    
    
    
    
    0.0
    
    
    
    0.0
    %
    
    
    0.1
    %Other
    
    
    
    
    
    
    0.4
    
    
    
    0.0
    %
    
    
    1.9
    %Total Revenues
    
    $
    10.5
    
    
    $
    21.0
    
    
    
    100.0
    %
    
    
    100.0
    %
 For the six monthsended June 30,
    
    Percentage of RevenuesWholesale segment revenues by type (in millions)
    
    2005
    
    2004
    
    2005
    
    2004Sprint
    
    $
    23.6
    
    
    $
    43.6
    
    
    
    99.9
    %
    
    
    98.7
    %MCI
    
    
    0.0
    
    
    
    0.2
    
    
    
    0.1
    %
    
    
    0.4
    %Other
    
    
    
    
    
    
    0.4
    
    
    
    0.0
    %
    
    
    1.0
    %Total Revenues
    
    $
    23.6
    
    
    $
    44.1
    
    
    
    100.0
    %
    
    
    100.0
    %
 
    
    Sprint lines have decreased significantly from June 30, 2004 to 2005, resulting in a decline in
wholesale revenue.
    Network Operations
  16




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##### Table of Contents



For the three months
    
    Percentage ofended June 30,
    
    Segment RevenuesNetwork operations expense, exclusive of depreciation and amortization expense, by segment (in millions)
    
    2005
    
    2004
    
    2005
    
    2004Retail Segment
    
    $
    21.4
    
    
    $
    21.7
    
    
    
    53.1
    %
    
    
    50.6
    %Wholesale Segment
    
    
    5.6
    
    
    
    9.6
    
    
    
    53.3
    %
    
    
    45.6
    %Total Network Operations Expense
    
    $
    27.0
    
    
    $
    31.2
    
    
    
    53.2
    %
    
    
    49.0
    %
 For the six months
    
    Percentage ofended June 30,
    
    Segment RevenuesNetwork operations expense, exclusive of depreciation and amortization expense, by segment (in millions)
    
    2005
    
    2004
    
    2005
    
    2004Retail Segment
    
    $
    44.3
    
    
    $
    44.3
    
    
    
    52.6
    %
    
    
    50.3
    %Wholesale Segment
    
    
    12.5
    
    
    
    21.0
    
    
    
    52.9
    %
    
    
    47.5
    %Total Network Operations Expense
    
    $
    56.8
    
    
    $
    65.3
    
    
    
    52.7
    %
    
    
    49.3
    %
  For the three months
    
    Percentage ofended June 30,
    
    Network OperationsNetwork operations expense, exclusive of depreciation and amortization, by type (in millions)
    
    2005
    
    2004
    
    2005
    
    2004Bundled residential services
    
    $
    17.8
    
    
    $
    18.7
    
    
    
    65.9
    %
    
    
    60.0
    %Bundled business services
    
    
    3.4
    
    
    
    2.6
    
    
    
    12.5
    %
    
    
    8.4
    %1+ long distance services
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.8
    %
    
    
    1.0
    %Wholesale services
    
    
    5.6
    
    
    
    9.6
    
    
    
    20.7
    %
    
    
    30.7
    %Total
    
    $
    27.0
    
    
    $
    31.2
    
    
    
    100
    %
    
    
    100
    %
 For the six months
    
    Percentage ofended June 30,
    
    Network OperationsNetwork operations expense, exclusive of depreciation and amortization, by type (in millions)
    
    2005
    
    2004
    
    2005
    
    2004Bundled residential services
    
    $
    36.9
    
    
    $
    39.7
    
    
    
    64.9
    %
    
    
    60.8
    %Bundled business services
    
    
    7.0
    
    
    
    3.8
    
    
    
    12.3
    %
    
    
    5.8
    %1+ long distance services
    
    
    0.5
    
    
    
    0.8
    
    
    
    0.8
    %
    
    
    1.2
    %Wholesale services
    
    
    12.5
    
    

    
    21.0
    
    
    
    22.0
    %
    
    
    32.1
    %Total
    
    $
    56.8
    
    
    $
    65.3
    
    
    
    100
    %
    
    
    100
    %
 
    
    During the three and six months ended June 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
six months ended June 30, 2005 as compared to the same periods in 2004 due to the line
growth experienced.
  17




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##### Table of Contents



For the three months
    
    For the six monthsended June 30,
    
    ended June 30,Average network operations expense per unit
    
    2005
    
    2004
    
    2005
    
    2004Bundled residential services
    
    $
    36.16
    
    
    $
    33.55
    
    
    $
    34.65
    
    
    $
    34.29Bundled business services
    
    $
    24.57
    
    
    $
    22.02
    
    
    $
    24.87
    
    
    $
    18.491+ long distance services
    
    $
    2.11
    
    
    $
    1.79
    
    
    $
    2.13
    
    
    $
    2.15
    Retail Segment
  For the three months
    
    For the six monthsended June 30,
    
    ended June 30,Network operations expense as a percentage of revenues
    
    2005
    
    2004
    
    2005
    
    2004Bundled residential services
    
    
    52.2
    %
    
    
    51.8
    %
    
    
    51.6
    %
    
    
    52.2
    %Bundled business services
    
    
    70.2
    %
    
    
    53.6
    %
    
    
    69.4
    %
    
    
    46.5
    %1+ long distance services
    
    
    15.9
    %
    
    
    16.3
    %
    
    
    16.4
    %
    
    
    20.3
    %
 .
    
    During the three and six months ended June 30, 2005, network operations expense related to bundled
business services increased as a percentage of revenues as compared to the same prior year
periods due to increased usage, increased ILEC rates and changes in geographic distribution
of our customer base. 1+ long distance services decreased as a percentage of revenues
primarily as a result of our auditing and analysis of network operations..
    
    During the three months ended June 30, 2005, network operations expense increased as a percentage
of revenues as compared to the three months ended June 30, 2004 mostly due to increased ILEC
rates. For the six months ended June 30, 2005 as compared to the same period in 2004, network
operations expense decreased as a percentage of revenues because the increase in ILEC rates
was offset by reductions to network operations as a result of improved internal operations
and processes intended to minimize our network operations costs.
 Wholesale Segment
 .
    
    Network operations expense from the wholesale segment decreased for the three and six months ended
June 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
 18




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##### Table of Contents



was further reduced by the drop in wholesale lines in service for the three and six months ended
June 30, 2005 as compared to the same periods in 2004.
 Sales and Marketing
  For the three months
    
    Percentage ofended June 30,
    
    Segment RevenuesSales & marketing expense by segment (in millions)
    
    2005
    
    2004
    
    2005
    
    2004Retail Segment
    
    $
    3.7
    
    
    $
    4.9
    
    
    
    9.2
    %
    
    
    11.4
    %Wholesale segment
    
    
    
    
    
    
    0.1
    
    
    
    0.0
    %
    
    
    0.3
    %Total Sales & Marketing Expense
    
    $
    3.7
    
    
    $
    4.9
    
    
    
    7.3
    %
    
    
    7.7
    %
 For the six months
    
    Percentage ofended June 30,
    
    Segment RevenuesSales & marketing expense by segment (in millions)
    
    2005
    
    2004
    
    2005
    
    2004Retail Segment
    
    $
    8.9
    
    
    $
    9.9
    
    
    
    10.6
    %
    
    
    11.2
    %Wholesale segment
    
    
    
    
    
    
    0.1
    
    
    
    0.0
    %
    
    
    0.3
    %Total Sales & Marketing Expense
    
    $
    8.9
    
    
    $
    10.0
    
    
    
    8.3
    %
    
    
    7.6
    %
 Retail Segment
 .
    
    The decrease in sales and marketing expense during the three months and six months ended June
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
  General and Administrative
  19




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##### Table of Contents



For the three months
    
    Percentage ofended June 30,
    
    Segment RevenuesGeneral & administrative expense by segment (in millions)
    
    2005
    
    2004
    
    2005
    
    2004Retail Segment
    
    $
    16.7
    
    
    $
    24.3
    
    
    
    41.3
    %
    
    
    56.7
    %Wholesale segment
    
    
    1.9
    
    
    
    6.8
    
    
    
    18.2
    %
    
    
    32.6
    %Total General & Administrative Expense
    
    $
    18.6
    
    
    $
    31.1
    
    
    
    36.6
    %
    
    
    48.8
    %
 For the six months
    
    Percentage ofended June 30,
    
    Segment RevenuesGeneral & administrative expense by segment (in millions)
    
    2005
    
    2004
    
    2005
    
    2004Retail Segment
    
    $
    36.8
    
    
    $
    51.3
    
    
    
    43.6
    %
    
    
    58.2
    %Wholesale segment
    
    
    4.3
    
    
    
    13.8
    
    
    
    18.2
    %
    
    
    31.3
    %Total General & Administrative Expense
    
    $
    41.1
    
    
    $
    65.1
    
    
    
    38.1
    %
    
    
    49.2
    %
 .
    
    The decrease in general and administrative expenses during the three and six months ended June
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 $7.6 million and $14.5 million for the three and six
months ended June 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 8 in the Notes to
Consolidated Financial Statements Related Party Transactions.
  Wholesale Segment
 .
    
    The decrease in general and administrative expense for the three and six months ended June 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.
  Depreciation and Amortization
 20




---



##### Table of Contents



.
    
    Depreciation and amortization expense decreased $2.1 million and $3.3 million for the three and
six months ended June 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 six 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 six months ended June 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 decrease in interest and other expense during the three months ended June 30, 2005 as
compared to the same period in 2004 was primarily attributable to the termination of our
asset based loan with Textron on May 6, 2005..
    
    During the six months ended June 30, 2005, our interest and other expense increased as compared to
the same period in 2004. This was primarily attributable to our standby credit facility and
an increase in late fees for vendor payments.
 Net Loss Attributable to Common Stockholders
 .
    
    Net loss attributable to common stockholders decreased by $11.5 million and $26.8 million
during the three and six months ended June 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 $3.7 million and $8.1 million for the three
and six months, respectively, was attributable to the preferred stock conversion that
occurred at the end of 2004.
 LIQUIDITY AND CAPITAL RESOURCES
        21




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##### Table of Contents



DEBT INSTRUMENTS
 Working Capital Financing
  ILEC, IXC AND RELATED DISPUTED
CHARGES
  Outstanding Disputesat June 30, 2005(in millions)Alternatively billed services
    
    $
    6.0Late fees for non-payment of disputed charges
    
    
    5.3Billing errors
    
    
    4.8All others
    
    
    1.8$
    17.8
  22




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##### Table of Contents



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
  
 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)
  23




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##### Table of Contents



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;
  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
  5.
    
    Case. No. 05-3845, Trinsic Marketing International, Inc. v. Trinsic Communications, Inc., In the Circuit Court in and for
Hillsborough County, Florida, Civil Division, Division K, filed April 28, 2005
 24




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##### 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, 2004.4.1
    
    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 and 3.2 of this Form 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, 2004.4.14
    
    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,
 25




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##### Table of Contents



EXHIBITNUMBER
    
    DESCRIPTIONamong
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, 20054.21
    
    Certificate of Designation of Convertible Preferred Stock,
Series H.  Incorporated by reference to Exhibit B to our Form
8-K filed July 20, 2005.10.1.1
    
    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, 2004.10.5
    
    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
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##### Table of Contents



EXHIBITNUMBER
    
    DESCRIPTIONFebruary 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
 
 SIGNATURES
  TRINSIC, INC.
 By:
    

/s/ HORACE J. DAVIS, IIIHorace J. Davis, IIIChief Executive OfficerBy:
    

/s/ J. MICHAEL MORGANJ. Michael MorganActing Chief Financial Officer
  27