# SECURITIES
AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

---

# FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 333-41040

# NUVOX, INC.

(Exact name of registrant as specified in its charter)

|DELAWARE                                                      | 43-1820855                          
|------------------------------------------------------------- | ------------------------------------
|(State or Other Jurisdiction ofIncorporation or Organization) | (I.R.S. Employer Identification No.)

|16090 Swingley Ridge Road, Suite 500, Chesterfield, Missouri | 63017     
|------------------------------------------------------------ | ----------
|(Address of Principal Executive Offices)                     | (Zip Code)

Registrants telephone number, including area code:(636) 537-5700

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

At July 31,2002, 5,222,209 shares of the registrant's common stock were outstanding.

##### NUVOX, INC.AND SUBSIDIARIES

##### QUARTERLY REPORT ON FORM 10-Q

##### TABLE OF CONTENTS

|                                                                                                                           | Page No.
|-------------------------------------------------------------------------------------------------------------------------- | --------
|Part I   Financial Information                                                                                             | 1       
|Item 1.   Financial Statements                                                                                             | 1       
|Condensed Consolidated Balance Sheets As of June 30, 2002 (Unaudited) and December 31, 2001                                |         
|Condensed Consolidated Statements of Operations for The Three and Six Months ended June 30,
     2002 and 2001 (Unaudited) | 3       
|Condensed Consolidated Statements of Cash Flows for The Six Months ended June 30, 2002 and
     2001 (Unaudited)           | 4       
|Notes to Condensed Consolidated Financial Statements                                                                       | 5       
|Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations                           | 19      
|Item 3.    Quantitative and Qualitative Disclosures About Market Risk                                                      | 29      
|Part II   Other Information                                                                                                | 30      
|Item 2.   Changes In Securities and Use of Proceeds                                                                        | 30      
|Item 6.   Exhibits and Reports On Form 8-K                                                                                 | 31      
|Signatures                                                                                                                 | 32      
|Index to Exhibits                                                                                                          | 33      

##### NUVOX, INC.AND SUBSIDIARIES

##### PART IFINANCIAL INFORMATION

Item 1.          Financial Statements.

1

##### NUVOX, INC.AND SUBSIDIARIES

Condensed Consolidated Balance Sheets(in thousands, except share data)

|                                                                   |   | June 30,    |  | December 31, |          
|------------------------------------------------------------------ | - | ----------- |  | ------------ | ---------
|                                                                   |   | 2002        |  | 2001         |          
|                                                                   |   |             |  |              |          
|Assets                                                             |   | (unaudited) |  |              |          
|Current Assets:                                                    |   |             |  |              |          
|Cash and cash equivalents                                          | $ | 10,146      |  | $            | 46,973   
|Accounts receivable, net of allowance for doubtful accounts        |   |             |  |              |          
|of $3,490 and $2,680 in 2002 and 2001, respectively                |   | 20,197      |  |              | 17,993   
|Prepaid expenses and other current assets                          |   | 11,440      |  |              | 9,021    
|                                                                   |   |             |  |              |          
|Total current assets                                               |   | 41,783      |  |              | 73,987   
|                                                                   |   |             |  |              |          
|Property and equipment, net                                        |   | 238,999     |  |              | 256,167  
|                                                                   |   |             |  |              |          
|Other noncurrent assets:                                           |   |             |  |              |          
|Goodwill, net                                                      |   | 45,960      |  |              | 225,960  
|Other intangible assets, net                                       |   | 11,367      |  |              | 7,597    
|Other assets                                                       |   | 4,419       |  |              | 4,725    
|                                                                   |   |             |  |              |          
|Total other noncurrent assets                                      |   | 61,746      |  |              | 238,282  
|                                                                   |   |             |  |              |          
|Total assets                                                       | $ | 342,528     |  | $            | 568,436  
|                                                                   |   |             |  |              |          
|Liabilities and Stockholders' Equity                               |   |             |  |              |          
|Current Liabilities:                                               |   |             |  |              |          
|Accounts payable                                                   | $ | 11,489      |  | $            | 15,344   
|Accrued expenses and other current liabilities                     |   | 28,313      |  |              | 27,125   
|                                                                   |   |             |  |              |          
|Total current liabilities                                          |   | 39,802      |  |              | 42,469   
|                                                                   |   |             |  |              |          
|Deferred hedge liability                                           |   | 10,504      |  |              | 9,303    
|Long-term debt                                                     |   | 186,605     |  |              | 163,804  
|Other long-term liabilities                                        |   | 672         |  |              | 936      
|                                                                   |   |             |  |              |          
|Total long-term liabilities                                        |   | 197,781     |  |              | 174,043  
|                                                                   |   |             |  |              |          
|Total liabilities                                                  |   | 237,583     |  |              | 216,512  
|                                                                   |   |             |  |              |          
|Minority interest                                                  |   | 1,069       |  |              | 1,214    
|                                                                   |   |             |  |              |          
|Stockholders' equity:                                              |   |             |  |              |          
|Preferred stock - Series A through F, $0.01 par value, 800,000,000 |   |             |  |              |          
|shares authorized; 511,239,885 and 212,779,300 issued and          |   |             |  |              |          
|outstanding in 2002 and 2001, respectively; liquidation preference |   |             |  |              |          
|of $765,484 and $687,024 in 2002 and 2001, respectively            |   | 5,112       |  |              | 2,128    
|Common stock, $0.01 par value, 900,000,000 shares authorized;      |   |             |  |              |          
|1,005,434 and 12,423,242 issued in 2002 and 2001, respectively     |   | 10          |  |              | 124      
|Additional paid-in capital                                         |   | 618,615     |  |              | 621,346  
|Receivables from shareholders                                      |   | (3,466)     |  |              | (3,482)  
|Unearned stock-based compensation                                  |   | (962)       |  |              | (1,508)  
|Accumulated deficit                                                |   | (515,433)   |  |              | (267,898)
|                                                                   |   |             |  |              |          
|Total stockholders' equity                                         |   | 103,876     |  |              | 350,710  
|                                                                   |   |             |  |              |          
|Total liabilities and stockholders' equity                         | $ | 342,528     |  | $            | 568,436  
|                                                                   |   |             |  |              |          

See accompanying notes to condensed consolidated financial statements.

2

##### NUVOX, INC.AND SUBSIDIARIES

Condensed Consolidated Statements of Operations(in thousands, except share and per share data)(unaudited)

|                                          | Three Months Ended June 30, |           |  | Six Months Ended June 30, |           
|----------------------------------------- | --------------------------- | --------- |  | ------------------------- | ----------
|                                          |                             |           |  |                           |           
|                                          |                             | 2002      |  |                           | 2001      
|                                          |                             |           |  |                           |           
|Revenue                                   | $                           | 33,838    |  | $                         | 19,108    
|Operating expenses:                       |                             |           |  |                           |           
|Cost of communication services (exclusive |                             |           |  |                           |           
|of depreciation and amortization shown    |                             |           |  |                           |           
|separately below)                         |                             | 19,762    |  |                           | 15,590    
|Selling, general and administrative       |                             | 26,143    |  |                           | 25,766    
|Stock-based compensation expense          |                             | 264       |  |                           | 645       
|Depreciation and amortization             |                             | 16,960    |  |                           | 15,811    
|                                          |                             |           |  |                           |           
|Total operating expenses                  |                             | 63,129    |  |                           | 57,812    
|                                          |                             |           |  |                           |           
|Loss from operations                      |                             | (29,291)  |  |                           | (38,704)  
|                                          |                             |           |  |                           |           
|Other income (expense):                   |                             |           |  |                           |           
|Interest income                           |                             | 48        |  |                           | 341       
|Interest expense                          |                             | (4,083)   |  |                           | (2,820)   
|Unrealized gain (loss) on hedge liability |                             | (2,770)   |  |                           | 1,206     
|Loss on write-off of investments          |                             | -         |  |                           | (5,013)   
|Equity in loss of affiliate               |                             | -         |  |                           | -         
|                                          |                             |           |  |                           |           
|Total other income (expense)              |                             | (6,805)   |  |                           | (6,286)   
|                                          |                             |           |  |                           |           
|Net loss before minority interest         |                             |           |  |                           |           
|and cumulative effect of change           |                             |           |  |                           |           
|in accounting principles                  |                             | (36,096)  |  |                           | (44,990)  
|Minority interest                         |                             | 88        |  |                           | 62        
|                                          |                             |           |  |                           |           
|Net loss before cumulative effect         |                             |           |  |                           |           
|of change in accounting principles        |                             | (36,008)  |  |                           | (44,928)  
|Cumulative effect of change in accounting |                             |           |  |                           |           
|principles:                               |                             |           |  |                           |           
|Accounting for goodwill                   |                             |          |  |                           |          
|Accounting for derivative instruments     |                             |          |  |                           |          
|                                          |                             |           |  |                           |           
|Net loss                                  | $                           | (36,008)  |  | $                         | (44,928)  
|                                          |                             |           |  |                           |           
|                                          |                             |           |  |                           |           
|Net loss per share, basic and diluted:    |                             |           |  |                           |           
|Net loss before cumulative effect         |                             |           |  |                           |           
|of change in accounting principles        | $                           | (35.81)   |  | $                         | (2.26)    
|Cumulative effect of change in accounting |                             |           |  |                           |           
|principles                                |                             |          |  |                           |          
|                                          |                             |           |  |                           |           
|Net loss per share                        | $                           | (35.81)   |  | $                         | (2.26)    
|                                          |                             |           |  |                           |           
|Weighted average number of shares         |                             |           |  |                           |           
|outstanding, basic and diluted            |                             | 1,005,434 |  |                           | 19,887,356
|                                          |                             |           |  |                           |           

See accompanying notes to condensed consolidated financial statements.

3

##### NUVOX, INC.AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows(in thousands)(unaudited)

|                                                    |   | Six Months Ended June 30, | 
|--------------------------------------------------- | - | ------------------------- | 
|                                                    |   |                           | 
|                                                    |   | 2002                      | 
|                                                    |   |                           | 
|Cash flows from operating activities:               |   |                           | 
|Net loss                                            | $ | (247,534)                 | 
|Adjustments to reconcile net loss to net cash used  |   |                           | 
|in operating activities:                            |   |                           | 
|Depreciation and amortization                       |   | 32,928                    | 
|Minority interest                                   |   | (146)                     | 
|Equity in loss of affiliate                         |   |                          | 
|Provision for doubtful accounts                     |   | 3,181                     | 
|Stock-based compensation expense                    |   | 534                       | 
|Unrealized loss on derivative instrument            |   | 1,201                     | 
|Loss on write-off of investments                    |   |                          | 
|Cumulative effect of change in accounting principle |   | 180,000                   | 
|Changes in assets and liabilities:                  |   |                           | 
|Increase in accounts receivable                     |   | (5,385)                   | 
|Increase in prepaid expenses and other assets       |   | (2,314)                   | 
|Increase (decrease) in accounts payable             |   | (3,855)                   | 
|Increase (decrease) in accrued expenses and         |   |                           | 
|other current liabilities                           |   | 365                       | 
|                                                    |   |                           | 
|Net cash used in operating activities               |   | (41,025)                  | 
|                                                    |   |                           | 
|                                                    |   |                           | 
|Cash flows from investing activities:               |   |                           | 
|Purchase of property and equipment                  |   | (13,637)                  | 
|Payments related to acquisitions                    |   | (4,631)                   | 
|Proceeds from liquidated affiliate                  |   |                          | 
|Purchase of investments                             |   |                          | 
|                                                    |   |                           | 
|Net cash used in investing activities               |   | (18,268)                  | 
|                                                    |   |                           | 
|                                                    |   |                           | 
|Cash flows from financing activities:               |   |                           | 
|Proceeds from long-term debt                        |   | 22,846                    | 
|Proceeds from issuance of stock                     |   |                          | 
|Other                                               |   | (380)                     | 
|                                                    |   |                           | 
|Net cash provided by financing activities           |   | 22,466                    | 
|                                                    |   |                           | 
|Net decrease in cash                                |   | (36,827)                  | 
|                                                    |   |                           | 
|Cash, beginning of period                           |   | 46,973                    | 
|                                                    |   |                           | 
|Cash, end of period                                 | $ | 10,146                    | 
|                                                    |   |                           | 
|                                                    |   |                           | 
|Supplemental disclosures of cash flow information:  |   |                           | 
|Cash paid for interest                              | $ | 4,607                     | 
|                                                    |   |                           | 

See accompanying notes to condensed consolidated financial statements.

4

##### NUVOX, INC.AND SUBSIDIARIES

##### Notes to Condensed Consolidated Financial Statements

## (1)     General

NuVox, Inc. (NuVox or the Company) was incorporated as a Delaware corporation in June 1998 for the
purpose of being a facilities-based provider of integrated voice, data and Internet telecommunications services
in selected markets in the United States.  As of June 30, 2002 and 2001, NuVox was operational in 30 markets
throughout the midwestern and southeastern United States.

NuVox has incurred substantial operating losses and capital expenditures, resulting in negative cash
flow since its inception, and expects to continue to experience operating losses and negative cash flow as it
expands its operations and grows its customer base.  NuVox intends to fund the negative operating cash flows
through its debt and equity capital.

## (2)     Basis of
Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange Commission.  The preparation of
financial statements requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported period.  Actual results could
differ from those estimates.  The interim consolidated financial statements include the consolidated accounts of
NuVox, Inc., its wholly-owned subsidiaries and affiliated companies in which NuVox has a controlling interest
(collectively, "NuVox").  Until April 30, 2001, NuVox had a fifty percent interest in a joint venture, which was
accounted for under the equity method.  On April 30, 2001 the joint venture was liquidated.  All significant
intercompany balances and transactions have been eliminated.

In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered necessary for a fair presentation of the interim
information have been included.  Certain footnote disclosures normally included in financial statements prepared
in accordance with accounting principles generally accepted in the United States of America have been condensed
or omitted pursuant to such SEC rules and regulations.  These financial statements should be read in conjunction
with NuVox's audited consolidated financial statements as of and for the year ended December 31, 2001 which are
included in NuVox's 2001 Form 10-K (Commission File No. 333-41040).  Certain amounts in the prior period's
condensed consolidated financial statements have been reclassified to conform with the current period
presentation.  The results of operations for the interim periods are not necessarily indicative of the results to
be expected for the full year.   The Company's comprehensive loss is equal to the reported net loss for the six
months ended June 30, 2002 and 2001.

## (3)      Adoption of
Accounting Standards

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and Other Intangible Assets.   Under SFAS 142, goodwill and acquired
intangible assets with indefinite lives are no longer amortized.  This standard also requires that goodwill and
acquired intangible assets with indefinite lives be subject to at least an annual assessment for impairment
through the application of a fair value-based test.  As of December 31, 2001, the Company had unamortized
goodwill of $226 million, which was subject to the provisions of SFAS No. 142.    On January 1, 2002, the Company
adopted SFAS 142.  Based upon a fair value analysis, utilizing comparable public company and discounted cash flow
valuations, the Company recorded a goodwill impairment of $180 million as a cumulative effect of change in
accounting principle.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets.  This standard addresses financial accounting and reporting for the impairment or disposal of long-lived
assets.  This standard supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of.   The adoption of this standard on January 1, 2002 did not have a material
impact on the Company's consolidated financial position or results of operations.

5

##### NUVOX, INC.AND SUBSIDIARIES

##### Notes to Condensed Consolidated Financial Statements

On January 1, 2001, the Company implemented SFAS 133, as amended.   The implementation of SFAS 133, as
amended, resulted in a cumulative loss due to the change in accounting principle of approximately $2.5 million.
The Company's interest rate hedging instruments do not qualify under SFAS 133 for hedge accounting.  Thus, the
changes in the fair market value of the instruments, which reflects market prices and volatility at the balance
sheet date, are recorded to the statement of operations.

##### (4)     Acquisitions & Divestitures

Acquisitions

In January 2002, NuVox purchased certain assets from MDM i NET LLC (d/b/a US Net).  Under terms of the
agreement, NuVox paid $4.5 million in cash which was allocated based upon the fair value of the assets acquired
and the liabilities assumed as follows (in thousands):

| | Property and equipment               | $ | 765   | 
| | ------------------------------------ | - | ----- | 
| | Customer contracts and relationships |   | 4,537 | 
| | Liabilities assumed                  |   | (768) | 
| |                                      |   |       | 
| |                                      | $ | 4,534 | 

In April 2002, NuVox purchased certain assets from Edge Connections, Inc. for 158,394 Series D
Preferred Stock units, with each unit consisting of one share of the Company's Series D Preferred Stock and
warrants expiring September 30, 2006 to purchase two additional shares of Series D Preferred Stock at an average
price of $0.755 per share.  The cost of the acquisition was allocated based upon the fair value of the assets
acquired and the liabilities assumed as follows (in thousands):

| | Property and equipment               | $ | 144  | 
| | ------------------------------------ | - | ---- | 
| | Customer contracts and relationships |   | 246  | 
| | Liabilities assumed                  |   | (55) | 
| |                                      |   |      | 
| |                                      | $ | 335  | 
| |                                      |   |      | 

These acquisitions have been accounted for using the purchase method of accounting.  Accordingly, the
results of operations associated with the acquired assets are included in NuVox's results of operations
subsequent to the date of the purchase.  The allocated value of customer lists is being amortized over a period
of two to five years based upon the assumed attrition rate of such customers.

Divestitures

In April 2002, NuVox entered into an agreement to sell all of its residential resale telecommunications
customers to an independent party.  The proceeds from this sale and the loss of the residential resale customer
base are not expected to have a material impact on the financial position or results of operation of NuVox.

During the three months ended June 30, 2001, NuVox wrote off its investments in WebBizApps, L.L.C. and
Tachion Networks, Inc. resulting in a combined loss on write-off of investments of $5.0 million which is included
in other income (expense) in the accompanying condensed consolidated statements of operations.

6

##### NUVOX, INC.AND SUBSIDIARIES

##### Notes to Condensed Consolidated Financial Statements

## (5)      Property and Equipment

Property and equipment consist of the following (in thousands):

|                                               |   | June 30, |  |   | December 31, | 
|---------------------------------------------- | - | -------- |  | - | ------------ | 
|                                               |   | 2002     |  |   | 2001         | 
|                                               |   |          |  |   |              | 
|                                               |   |          |  |   |              | 
|Network equipment                              | $ | 246,020  |  | $ | 237,234      | 
|Computer hardware and software                 |   | 47,995   |  |   | 37,514       | 
|Leasehold improvements                         |   | 14,376   |  |   | 14,178       | 
|Transportation equipment                       |   | 7,650    |  |   | 7,836        | 
|Furniture and office equipment                 |   | 6,659    |  |   | 6,647        | 
|Other                                          |   | 1,477    |  |   | 1,141        | 
|                                               |   |          |  |   |              | 
|Property and equipment, in service             |   | 324,177  |  |   | 304,550      | 
|Less accumulated depreciation and amortization |   | 95,177   |  |   | 65,625       | 
|                                               |   |          |  |   |              | 
|Property and equipment, in service, net        |   | 229,000  |  |   | 238,925      | 
|Construction-in-progress                       |   | 9,999    |  |   | 17,242       | 
|                                               |   |          |  |   |              | 
|Property and equipment, net                    | $ | 238,999  |  | $ | 256,167      | 
|                                               |   |          |  |   |              | 

During the six months ended June 30, 2002 and 2001, depreciation expense was $31.7 million and $21.9
million, respectively.

## (6)      Goodwill

The changes in the carrying amount of goodwill for the six months ended June 30, 2002 are as follows (in
thousands):

| | Balance as of January 1, 2002       | $ | 225,960   | 
| | ----------------------------------- | - | --------- | 
| | Goodwill acquired during the period |   |          | 
| | Impairment loss                     |   | (180,000) | 
| |                                     |   |           | 
| |                                     | $ | 45,960    | 
| |                                     |   |           | 

The following table adjusts on a pro forma basis reported results to exclude goodwill amortization
during the three and six months ended June 30, 2001(in thousands):

|                                              | Three Months Ended June 30, |          |  | Six Months Ended June 30, |         
|--------------------------------------------- | --------------------------- | -------- |  | ------------------------- | --------
|                                              |                             |          |  |                           |         
|                                              |                             | 2002     |  |                           | 2001    
|                                              |                             |          |  |                           |         
|Reported net loss                             | $                           | (36,008) |  | $                         | (44,928)
|Add back goodwill amortization                |                             |         |  |                           | 3,995   
|                                              |                             |          |  |                           |         
|Adjusted net loss                             | $                           | (36,008) |  | $                         | (40,933)
|                                              |                             |          |  |                           |         
|                                              |                             |          |  |                           |         
|Reported net loss per share (basic & diluted) | $                           | (35.81)  |  | $                         | (2.26)  
|Add back goodwill amortization                |                             |         |  |                           | 0.67    
|                                              |                             |          |  |                           |         
|Adjusted net loss per share (basic & diluted) | $                           | (35.81)  |  | $                         | (1.59)  
|                                              |                             |          |  |                           |         

7

##### NUVOX, INC.AND SUBSIDIARIES

##### Notes to Condensed Consolidated Financial Statements

##### (7)     Other Intangible Assets

Other intangible assets consist of the following (in thousands):

| |                                      |   | June 30, |  |   | December 31, | 
| | ------------------------------------ | - | -------- |  | - | ------------ | 
| |                                      |   | 2002     |  |   | 2001         | 
| |                                      |   |          |  |   |              | 
| | Deferred financing costs             | $ | 8,512    |  | $ | 8,328        | 
| | Customer contracts and relationships |   | 4,801    |  |   |             | 
| | Gross carrying cost                  |   | 13,313   |  |   | 8,328        | 
| | Less accumulated amortization        |   | 1,946    |  |   | 731          | 
| | Other intangible assets, net         | $ | 11,367   |  | $ | 7,597        | 
| |                                      |   |          |  |   |              | 

During the six months ended June 30, 2002 and 2001, amortization expense associated with the other
intangible assets was $1.2 million and $0.3 million, respectively.

Estimated future amortization expense of other intangible assets is as follows (in thousands):

| | For the six months ended December 31, 2002 | $ | 1,359  | 
| | ------------------------------------------ | - | ------ | 
| | For the year ended December 31, 2003       |   | 2,718  | 
| | For the year ended December 31, 2004       |   | 2,614  | 
| | For the year ended December 31, 2005       |   | 2,580  | 
| | For the year ended December 31, 2006       |   | 2,096  | 
| |                                            |   |        | 
| |                                            | $ | 11,367 | 

##### (8)     Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

| |                                         |   | June 30, |  |   | December 31, | 
| | --------------------------------------- | - | -------- |  | - | ------------ | 
| |                                         |   | 2002     |  |   | 2001         | 
| |                                         |   |          |  |   |              | 
| | Accrued taxes                           | $ | 7,385    |  | $ | 4,956        | 
| | Acquisition liabilities                 |   | 3,963    |  |   | 6,092        | 
| | Accrued interest                        |   | 3,921    |  |   | 641          | 
| | Accrued employee expenses               |   | 3,313    |  |   | 4,563        | 
| | Accrued costs of communication services |   | 3,099    |  |   | 1,844        | 
| | Deferred revenue                        |   | 3,622    |  |   | 2,440        | 
| | Other                                   |   | 3,010    |  |   | 6,589        | 
| |                                         |   |          |  |   |              | 
| |                                         | $ | 28,313   |  | $ | 27,125       | 
| |                                         |   |          |  |   |              | 

8

##### NUVOX, INC.AND SUBSIDIARIES

##### Notes to Condensed Consolidated Financial Statements

## (9)      Long-Term Debt

On November 1, 2000, Gabriel Communications Finance Company, an indirectly wholly-owned subsidiary of
the Company (the Borrower), entered into a $225 million senior secured credit facility ("Credit Facility").  An
aggregate of $98.2 million was drawn at that date to repay previous secured credit facilities and pay certain
other expenses.  This credit facility has been replaced by an amended and restated credit facility dated as of August 14, 2002
(see Note (14) Subsequent Events - Amended and Restated Credit Agreement).

The $225 million credit facility consists of a $40 million term loan facility, a $60 million revolving
credit facility, and $125 million in two-year delayed draw term loan facilities, including a $45 million facility
provided by Nortel Networks, Inc. to provide financing for the purchase of equipment and services from Nortel
Networks.  The credit facility was available, subject to satisfaction of certain terms and conditions, primarily
to provide financing for capital expenditures and working capital.  Pursuant to an amendment effective September
21, 2001, borrowings were limited to no more than $200 million prior to June 30, 2002 and $225 million
thereafter.  Interest on outstanding borrowings varied
based on the Borrower's leverage ratio and during the three months ended June 30, 2002, was at
the London Interbank Offer Rate (LIBOR) plus 4.50% (at June 30, 2002, 6.5%).
The initial commitment fee on the unused portion of the credit
facility was 1.50% per annum, paid quarterly, and was reduced based upon usage (the applicable commitment fee
percentage at June 30, 2002 was 0.75%).  Obligations under the credit facility were guaranteed by NuVox, its
direct wholly-owned subsidiary, Gabriel Communications Properties, Inc., and all of the existing and subsequently
acquired subsidiaries of the Borrower.  The credit facility was secured by a pledge of all of the capital stock of
Gabriel Communications Properties, Inc., the Borrower and each of the Borrower's subsidiaries and a security
interest in the assets of Gabriel Communications Properties, Inc. (other than its unrestricted subsidiaries), the
Borrower and each of the Borrower's subsidiaries.

The credit facility contained restrictive covenants that, among other things, imposed limitations on
indebtedness, liens, investments, capital expenditures, dividends and other specified transactions and payments.
The restrictive covenants effectively prohibited NuVox from paying any cash dividends on its common stock and
preferred stock.  The credit facility also required the Borrower and NuVox to maintain
certain operating and financial performance measures at the end of each calendar quarter, including not exceeding
specified levels of adjusted EBITDA loss (loss before interest, taxes, depreciation and amortization, adjusted to
exclude the effects of other non-cash items), achieving specified minimum levels of adjusted revenues (gross
revenues less resale, carrier access and reciprocal compensation revenues), access lines and gross profit and
maintaining specified levels of minimum available cash (which, for purposes of the covenants, meant the sum of
the unused commitments under the credit facility plus cash and cash equivalents).

Indebtedness under the credit facility totaled $185.0 million at June 30, 2002 (including $31.2
million of outstanding borrowings from Nortel Networks and a $1.0 million letter of credit) at an interest rate
of 6.5%.

On September 14, 2001, GCI Transportation Company, L.L.C. ("GCI"), an affiliate which is 70% owned by
the Company, obtained a $2.76 million secured credit facility primarily to finance working capital of GCI.  The
aggregate $2.76 million was drawn at that date.  Monthly repayments of the outstanding borrowings commenced on
November 1, 2001 and continue through October 1, 2019.  Interest on the outstanding borrowings is variable at
LIBOR plus 2.95%.  At June 30, 2002, $2.7 million remained outstanding under this facility at an interest rate of
5.5%.

9

##### NUVOX, INC.AND SUBSIDIARIES

##### Notes to Condensed Consolidated Financial Statements

Principal maturities of long-term debt at June 30, 2002 are as follows (in thousands):

| | 2002       | $ | 94      | 
| | ---------- | - | ------- | 
| | 2003       |   | 4,127   | 
| | 2004       |   | 18,234  | 
| | 2005       |   | 26,297  | 
| | 2006       |   | 135,747 | 
| | Thereafter |   | 2,110   | 
| |            |   |         | 
| | Total      | $ | 186,699 | 

As of June 30, 2002, the Company had in place  interest rate hedging agreements.
These agreements limited the Company's exposure to and benefits from interest rate fluctuations
on its variable rate debt to within a certain range of rates.  At June 30, 2002, the fair value of these agreements  was
$(10.5) million.  The fair value of these agreements is estimated based on quotes from brokers and
represented the estimated amount that the Company would expect to pay to terminate the agreements at June 30, 2002.

##### (10)     Loss Per Share

A reconciliation of the number of shares used in the calculation of basic and diluted loss per share
follows:

|                                              | Three Months Ended June 30, |  | Six Months Ended June 30, | 
|--------------------------------------------- | --------------------------- |  | ------------------------- | 
|                                              |                             |  |                           | 
|                                              | 2002                        |  | 2001                      | 
|                                              |                             |  |                           | 
|Shares outstanding, beginning of period       | 1,005,434                   |  | 19,821,848                | 
|Weighted average number of common             |                             |  |                           | 
|shares issued                                 |                            |  | 65,508                    | 
|Weighted average number of common             |                             |  |                           | 
|shares converted                              |                            |  |                          | 
|                                              |                             |  |                           | 
|Weighted average number of common             |                             |  |                           | 
|shares outstanding, end of period             | 1,005,434                   |  | 19,887,356                | 
|Dilutive effect of preferred stock conversion |                             |  |                           | 
|and employee stock options and warrants       |                            |  |                          | 
|                                              |                             |  |                           | 
|Diluted shared outstanding                    | 1,005,434                   |  | 19,887,356                | 
|                                              |                             |  |                           | 

In calculating diluted loss per share for the periods ended June 30, 2002 and June 30, 2001, employee
stock options and warrants to purchase 45,236,209 and 30,678,171 shares of stock, respectively, and preferred
stock convertible into common shares of 511,239,885 and 99,302,505, respectively, were outstanding but were not
included in the computation of diluted loss per share due to their antidilutive effect.

## (11)      Stock Based Compensation

Pursuant to the Company's 1998 and 2001 Stock Incentive Plans, the Company has granted non-qualified
stock options and warrants to employees.  The Company has authorized the issuance of 32,681,552 shares of Series
F Convertible Preferred Stock under the 2001 Stock Incentive Plan.  The Company does not plan to grant any
additional options under the 1998 Stock Incentive Plan.  Each outstanding option and warrant enables the employee
to purchase one share of stock at the exercise price, subject to applicable vesting provisions.  The nonqualified
stock options and warrants have terms of 10 years from the dates of the grant.  One-third of the nonqualified
common stock options vest upon completion of each of the first, second and third full year of service after the
dates of grant.  The warrants are fully vested on the date of issuance.  The nonqualified preferred stock options
vest one-third upon completion of one full year of service after the date of grant and an additional 1/36 upon
completion of each full month of continuous service thereafter.

10

##### NUVOX, INC.AND SUBSIDIARIES

##### Notes to Condensed Consolidated Financial Statements

The following is a summary of activity with respect to common stock options and warrants under the 1998
Stock Incentive Plan.

|                                         |  | Shares Subject toOptions & Warrants |  |  | Price |  | Weighted AverageExercise Price | 
|---------------------------------------- |  | ----------------------------------- |  |  | ----- |  | ------------------------------ | 
|                                         |  |                                     |  |  |       |  |                                | 
|Options and warrants outstanding at      |  |                                     |  |  |       |  |                                | 
|December 31, 2000                        |  | 5,943,577                           |  |  |       |  |                                | 
|Granted                                  |  | 1,090,263                           |  |  |       |  | $4.00 - $8.00                  | 
|Anti-dilution adjustment *               |  | 1,262,692                           |  |  |       |  | $1.04                          | 
|Canceled                                 |  | (857,005)                           |  |  |       |  | $2.40 - $5.60                  | 
|Exercised                                |  | (2,833)                             |  |  |       |  | $2.40                          | 
|                                         |  |                                     |  |  |       |  |                                | 
|Options and warrants outstanding at      |  |                                     |  |  |       |  |                                | 
|December 31, 2001                        |  | 7,436,694                           |  |  |       |  | $1.04 - $8.00                  | 
|Canceled                                 |  | (347,447)                           |  |  |       |  | $2.40 - $8.00                  | 
|Exercised                                |  |                                    |  |  |       |  |                               | 
|                                         |  |                                     |  |  |       |  |                                | 
|Options and warrants outstanding at June |  |                                     |  |  |       |  |                                | 
|30, 2002                                 |  | 7,089,247                           |  |  |       |  | $1.04 - $8.00                  | 
|                                         |  |                                     |  |  |       |  |                                | 

---

|* | Warrants to purchase 670,000 shares at $3.00 per share were adjusted to 1,932,692 shares at $1.04 per share
     as a result of the placement of 59,903,994 Series D units at $1.50 per unit on September 20, 2001.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Exercisable options and warrants under the 1998 Stock Incentive Plan totalled 4,547,607 and 4,149,612,
at June 30, 2002 and December 31, 2001, respectively.  The weighted average exercise price per share of the
exercisable options was $2.27 and $2.34, respectively.

Pursuant to the terms of a merger agreement, NuVox assumed and adopted, at November 1, 2000, the plan
under which the acquired company had granted common stock options to its employees.  The following is a summary
of activity with respect to NuVox stock options issued in substitution for options outstanding immediately prior
to the effective time of the merger under this plan.

|                                         |  | Shares Subject toOptions |  |  | Price |  | Weighted AverageExercise Price | 
|---------------------------------------- |  | ------------------------ |  |  | ----- |  | ------------------------------ | 
|                                         |  |                          |  |  |       |  |                                | 
|Options outstanding at December 31, 2000 |  | 10,890,799               |  |  |       |  |                                | 
|Canceled                                 |  | (1,318,157)              |  |  |       |  | $2.03 - $5.56                  | 
|Exercised                                |  | (206,563)                |  |  |       |  | $1.36 - $3.84                  | 
|                                         |  |                          |  |  |       |  |                                | 
|Options outstanding at December 31, 2001 |  | 9,366,079                |  |  |       |  | $1.36 - $5.56                  | 
|Canceled                                 |  | (121,115)                |  |  |       |  | $2.03 - $5.56                  | 
|Exercised                                |  |                         |  |  |       |  |                               | 
|                                         |  |                          |  |  |       |  |                                | 
|Options outstanding at June 30, 2002     |  | 9,244,964                |  |  |       |  | $1.36 - $5.56                  | 
|                                         |  |                          |  |  |       |  |                                | 

Exercisable options under this plan totalled 7,450,833 and 6,203,431 at June 30, 2002 and December 31,
2001, respectively.  The weighted average exercisable price per share of the exercisable options was $3.74 and
$3.27, respectively.

11

##### NUVOX, INC.AND SUBSIDIARIES

##### Notes to Condensed Consolidated Financial Statements

Effective September 20, 2001, NuVox adopted the 2001 Stock Incentive Plan.  The following is a summary
of activity with respect to Series F-1 preferred stock options under this plan:

|                                         |  | Shares Subject toOptions |  |  | Price |  | Weighted AverageExercise Price | 
|---------------------------------------- |  | ------------------------ |  |  | ----- |  | ------------------------------ | 
|                                         |  |                          |  |  |       |  |                                | 
|Options issued at October 16, 2001       |  | 17,909,000               |  |  |       |  | $0.59                          | 
|Canceled                                 |  | (488,000)                |  |  |       |  | $0.59                          | 
|                                         |  |                          |  |  |       |  |                                | 
|Options outstanding at December 31, 2001 |  | 17,421,000               |  |  |       |  | $0.59                          | 
|Granted                                  |  | 1,039,000                |  |  |       |  | $0.59                          | 
|Canceled                                 |  | (1,231,000)              |  |  |       |  | $0.59                          | 
|                                         |  |                          |  |  |       |  |                                | 
|Options outstanding at June 30, 2002     |  | 17,229,000               |  |  |       |  | $0.59                          | 
|                                         |  |                          |  |  |       |  |                                | 

There were no exercisable options under the 2001 Stock Incentive Plan at June 30, 2002.

## (12)        
Stockholders Equity

NuVox's authorized common stock consists of 900,000,000 shares, of which 1,005,434 shares and 12,423,242
shares were issued and outstanding as of June 30, 2002 and December 31, 2001, respectively.  The Company's
authorized preferred stock consists of 800,000,000 shares.  On September 20, 2001, NuVox closed a private
placement of shares of Series D Convertible Preferred Stock pursuant to which proceeds from the sale of
59,903,994 shares of Series D Convertible Preferred Stock at $1.50 per share, or $89.8 million, were received, of
which  $87.1 million was paid in cash and $2.7 million was paid in five year notes.  The various series of Series
E Preferred Stock have been issued pursuant to Series E warrants which were issued together with the Series D
Convertible Preferred Stock.  During the three months ended December 31, 2001, an aggregate of 64,313,398 shares
of Series E Preferred Stock were issued in exchange for 10,740,598 shares of Series A-C Preferred Stock and
7,355,392 shares of Common Stock.  During the three months ended March 31, 2002, an aggregate of 382,208,567
shares of Series E Preferred Stock were issued in exchange for 83,906,376 shares of Series A-C Preferred Stock
and 11,417,808 shares of Common Stock.

12

##### NUVOX, INC.AND SUBSIDIARIES

##### Notes to Condensed Consolidated Financial Statements

Set forth below are the shares authorized, liquidation preferences, conversion prices, and shares issued
and outstanding for each series of NuVox preferred stock as of December 31, 2001 and June 30, 2002:

|                               |             |  |                    |         |            |  |          |       | Shares Issued & Outstanding | 
|------------------------------ | ----------- |  | ------------------ | ------- | ---------- |  | -------- | ----- | --------------------------- | 
|                               |             |  |                    |         |            |  |          | As of |                            
|                               |             |  |                    |         |            |  |          |       |                            
|                               | Shares      |  | InitialLiquidation |         | Conversion |  | June 30, |       | December 31,                | 
|Series of Preferred Stock      | Authorized  |  | Preference         |         | Price      |  | 2002     |       | 2001                        | 
|                               |             |  |                    |         |            |  |          |       |                             | 
|                               |             |  |                    |         |            |  |          |       |                             | 
|Series A Preferred Stock       | 26,850,000  |  |                    | $3.00   |            |  | $1.04    |       |                            | 
|Series A-1 Preferred Stock     | 3,125,000   |  |                    | $4.00   |            |  | $1.29    |       |                            | 
|Series B Preferred Stock       | 30,430,612  |  |                    | $7.00   |            |  | $2.05    |       | 1,222,077                   | 
|Series C-1 Preferred Stock     | 5,374,481   |  |                    | $2.17   |            |  | $0.84    |       | 51,197                      | 
|Series C-2 Preferred Stock     | 15,786,710  |  |                    | $3.39   |            |  | $1.14    |       | 654,534                     | 
|Series C-3 Preferred Stock     | 17,735,703  |  |                    | $3.84   |            |  | $1.25    |       | 2,727,724                   | 
|Series D Preferred Stock(1)    | 155,000,000 |  |                    | $3.00   |            |  | $1.50    |       | 60,062,388                  | 
|Series E-1 Preferred Stock(2)  | 80,550,000  |  |                    | $1.18   |            |  | $1.00    |       | 80,550,000                  | 
|Series E-2 Preferred Stock(2)  | 12,500,000  |  |                    | $1.14   |            |  | $1.00    |       | 12,500,000                  | 
|Series E-3 Preferred Stock(2)  | 133,284,618 |  |                    | $1.08   |            |  | $1.00    |       | 120,480,209                 | 
|Series E-4 Preferred Stock(2)  | 16,486,756  |  |                    | $1.00   |            |  | $1.00    |       | 15,354,458                  | 
|Series E-5 Preferred Stock(2)  | 281,415     |  |                    | $0.92   |            |  | $0.92    |       |                            | 
|Series E-6 Preferred Stock(2)  | 681,793     |  |                    | $0.90   |            |  | $0.90    |       | 677,369                     | 
|Series E-7 Preferred Stock(2)  | 5,180,000   |  |                    | $0.50   |            |  | $0.50    |       | 5,060,000                   | 
|Series E-8 Preferred Stock(2)  | 663,599     |  |                    | $0.30   |            |  | $0.30    |       | 663,599                     | 
|Series E-9 Preferred Stock(2)  | 1,388,154   |  |                    | $0.13   |            |  | $0.13    |       | 1,388,154                   | 
|Series E-10 Preferred Stock(2) | 5,202,623   |  |                    | $0.11   |            |  | $0.11    |       | 5,179,397                   | 
|Series E-11 Preferred Stock(2) | 221,200     |  |                    | $0.0045 |            |  | $0.0045  |       | 209,034                     | 
|Series E-12 Preferred Stock(2) | 213,014,284 |  |                    | $1.08   |            |  | $1.00    |       | 204,459,745                 | 
|Series F-1 Preferred Stock(3)  | 24,000,000  |  |                    | $0.59   |            |  | $0.59    |       |                            | 
|Undesignated                   | 52,243,052  |  |                    |        |            |  |         |       |                            | 
|                               |             |  |                    |         |            |  |          |       |                             | 
|                               | 800,000,000 |  |                    |         |            |  |          |       | 511,239,885                 | 
|                               |             |  |                    |         |            |  |          |       |                             | 

---

|(1) | Ranks prior to common stock and all other series of preferred stock as to liquidation preference and
      preferred return.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | Ranks prior to common stock and Series A, A-1, B, C-1, C-2 and C-3 preferred stock, junior to Series D
      preferred stock and pari passu with any series of the Series F preferred stock and all other series of
      Series E preferred stock as to liquidation preference and preferred return.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Series F-1 preferred stock has been authorized for issuance under NuVox's 2001 Stock Option Program.
      Under this program, stock options to purchase up to 32,681,552 shares of Series F preferred stock
      (including 24,000,000 shares of Series F-1 preferred stock) may be issued to employees of NuVox.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

These liquidation preference amounts per share will be adjusted for any stock dividends, combinations or
splits with respect to NuVox's capital stock.  In the event of any liquidation, dissolution or winding up of the
Company (which includes an acquisition of the Company or any sale or other disposition of all or substantially
all of its assets or stock), the holders of these series of preferred stock will be entitled to the greater of

- an amount equal to the sum of the applicable liquidation preference amount plus a preferred return on
           the respective initial liquidation preference amount of 8% per annum, with such return to begin
           accruing as of the original issue dates of the Series B and Series D preferred stock, as of September
           1, 2000 for the Series C-1, Series C-2 and Series C-3 preferred stock, and as of September 1, 2001 for
           the various series of Series E preferred stock, or

13

##### NUVOX, INC.AND SUBSIDIARIES

##### Notes to Condensed Consolidated Financial Statements

- the amount such holders would have received if they had converted their preferred stock into common
           stock immediately prior to the liquidation event;

thereafter, the holders of the preferred stock would have no right or claim to the remaining assets and funds of
NuVox, if any.

Holders of shares of the preferred stock are not entitled to receive cash dividends.  No cash dividends
may be declared and paid to holders of shares of the common stock so long as any shares of the preferred stock
are outstanding.

Holders of shares of the preferred stock are entitled to cast one vote per share of common into which
their shares of preferred stock are convertible.  The holders of the Series B, Series C-1, Series C-2, Series
C-3, Series D and each of the series of Series E preferred stock and common stock will vote together as a single
class on all matters as to which such holders are entitled to vote, except when voting separately by class is
required by Delaware law.  Each holder of shares of any series of Series E preferred stock has agreed, when and
as requested by NuVox in connection with any proposed amendment to its charter, to vote, or cause to be voted,
all shares of any series of Series E preferred stock which such stockholder owns from time to time in favor of
any amendment to the charter provided that (i) at least a majority of the shares of all of the series of Series E
preferred stock, voting as a single class, have agreed to vote in favor of such amendment, and (ii) to the extent
that such amendment would affect the powers, preferences or special rights of the holders of the various series
of Series E preferred stock, it would affect the holders of all of the series of Series E preferred stock in an
equivalent or proportionate manner.

##### (13)     Recent Accounting Pronouncements

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations.  NuVox will
adopt this standard on January 1, 2003.  This standard applies to legal obligations associated with the
retirement of tangible long-lived assets that result from acquisitions, construction, or development or the
normal operation of long-lived assets.  The adoption of this standard is not expected to have a material impact
on NuVox's consolidated financial position or results of operations.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment
of FASB Statement No. 13, and Technical Corrections.  SFAS No. 145 provides for the rescission of several
previously issued accounting standards, new accounting guidance for the accounting for certain lease
modifications and various technical corrections that are not substantive in nature to existing pronouncements.
NuVox will adopt SFAS No. 145 beginning January 1, 2003, except for the provisions relating to the amendment of
SFAS No. 13, which NuVox will adopt for transactions occurring subsequent to May 15, 2002.  The adoption of this
standard is not expected to have a material impact on NuVox's consolidated financial position or results of
operations.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities.  SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or
disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, Liability recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring).  SFAS No. 146 requires that a liability for costs associated with an exit or disposal activity be
recognized when the liability is incurred rather than when a company commits to such an activity, and also
establishes that fair value be the objective for initial measurement of the liability.  NuVox will adopt this
standard on January 1, 2003.  The adoption of this standard is not expected to have a material impact on NuVox's
consolidated financial position or results of operations.

14

##### NUVOX, INC.AND SUBSIDIARIES

##### Notes to Condensed Consolidated Financial Statements

##### (14)     Subsequent Events

Plan of Recapitalization

Following approval by the holders of more than 66 2/3% of NuVox's outstanding common and preferred
stock, voting together on an as converted basis as a single class, and more than 66 2/3% of all series of NuVox's
outstanding preferred stock, voting together on an as converted basis as a single class, a plan of
recapitalization of NuVox was effected on July 9, 2002 in which each then outstanding share of NuVox common stock
was converted into the right to receive 1/100 of a share of common stock and the then outstanding shares of NuVox
preferred stock were converted into shares of NuVox common stock at their then existing conversion ratios, taking
into account the 1 - for  - 100 conversion ratio applicable to of the common stock.  Accordingly, the then
outstanding shares of NuVox common and preferred stock have been converted into shares of NuVox common stock as
follows:

|                | Outstanding |  | Conversion |  | As Converted  Pre- |  | As Converted  Post- |          
|--------------- | ----------- |  | ---------- |  | ------------------- |  | -------------------- | ---------
|Class of Shares | Shares      |  | Ratio      |  | Recapitalization    |  | Recapitalization     |          
|                |             |  |            |  |                     |  |                      |          
|Common Stock    | 1,005,434   |  |            |  | 1,005,434           |  |                      | 10,054   
|Series B        | 1,222,077   |  | 3.41       |  | 4,172,946           |  |                      | 41,729   
|Series C-1      | 51,197      |  | 2.58       |  | 132,259             |  |                      | 1,323    
|Series C-2      | 654,534     |  | 2.97       |  | 1,946,377           |  |                      | 19,464   
|Series C-3      | 2,727,724   |  | 3.07       |  | 8,379,568           |  |                      | 83,796   
|Series D        | 60,062,388  |  | 1.00       |  | 60,062,388          |  |                      | 600,624  
|Series E-1      | 80,550,000  |  | 1.00       |  | 80,550,000          |  |                      | 805,500  
|Series E-2      | 12,500,000  |  | 1.00       |  | 12,500,000          |  |                      | 125,000  
|Series E-3      | 120,480,209 |  | 1.00       |  | 120,480,209         |  |                      | 1,204,802
|Series E-4      | 15,354,458  |  | 1.00       |  | 15,354,458          |  |                      | 153,545  
|Series E-5      | 0           |  | 1.00       |  | 0                   |  |                      | 0        
|Series E-6      | 677,369     |  | 1.00       |  | 677,369             |  |                      | 6,774    
|Series E-7      | 5,060,000   |  | 1.00       |  | 5,060,000           |  |                      | 50,600   
|Series E-8      | 663,599     |  | 1.00       |  | 663,599             |  |                      | 6,636    
|Series E-9      | 1,388,154   |  | 1.00       |  | 1,388,154           |  |                      | 13,882   
|Series E-10     | 5,179,397   |  | 1.00       |  | 5,179,397           |  |                      | 51,794   
|Series E-11     | 209,034     |  | 1.00       |  | 209,034             |  |                      | 2,090    
|Series E-12     | 204,459,745 |  | 1.00       |  | 204,459,745         |  |                      | 2,044,597
|                |             |  |            |  |                     |  |                      |          
|Total           | 512,245,319 |  |            |  | 522,220,937         |  |                      | 5,222,209
|                |             |  |            |  |                     |  |                      |          

Each outstanding option to
acquire preferred stock of NuVox was effectively converted into an option to
acquire the shares of common stock into which such shares of preferred stock
would have been convertible, adjusted to reflect the 1 for  100
conversion ratio of the common stock, and each outstanding option and warrant to
acquire common stock of NuVox was adjusted to reflect the 1 for  100
conversion ratio.

NuVox's Amended and Restated Certificate of Incorporation was amended on July 9, 2002 as part of the
plan of recapitalization.  NuVox's Amended Certificate of Incorporation provides that NuVox's authorized capital
stock consists of (i) 500,000,000 shares of common stock, of which 5,222,209 shares were issued and outstanding
following effectiveness of the plan of recapitalization, and (ii) 400,000,000 shares of preferred stock, of which
100,000,000 shares were designated as Series A Convertible Preferred Stock.

In connection with the plan of recapitalization, NuVox has received demands for appraisal under the
General Corporation Law of the State of Delaware from a total of 39 stockholders who held an aggregate of
approximately 4.8 million shares of Series D preferred stock, approximately 42.2 million shares of various series
of Series E preferred stock and 1,700 shares of common stock.  These shares represent in the aggregate
approximately 9.0% of the outstanding shares of NuVox capital stock on an as converted basis prior to
effectiveness of the plan of recapitalization.  To the extent that those stockholders perfect their appraisal rights and receive payment for their shares in
accordance with Delaware law, the shares they would otherwise have received will become authorized but unissued
shares of our common stock.

15

##### NUVOX, INC.AND SUBSIDIARIES

##### Notes to Condensed Consolidated Financial Statements

Sales of Series A Preferred Stock

Pursuant to a Securities Purchase Agreement dated as of July 9, 2002 among NuVox and the Purchasers
named therein, NuVox has issued and sold an aggregate of approximately 44 million shares of Series A Convertible Preferred
stock at a cash purchase price of $1.50 per share, for aggregate cash proceeds of approximately $66 million.  The shares of Series A preferred stock were issued and sold to existing holders of NuVox preferred
stock in two tranches:

- on July 9, 2002, NuVox issued and sold an aggregate of 9,900,477 shares of
Series A preferred stock for an aggregate cash purchase price of approximately
$14.9 million, and
- on August 14, 2002, NuVox issued and sold an aggregate of 34,087,965 additional shares of Series A preferred stock for an aggregate cash purchase
price of approximately $51.1 million.

Each share of Series A preferred stock is initially convertible at any time at the option of the holder
into 1.3172 shares of common stock at an initial conversion price of $1.1387 per share, subject to adjustment in
the event of any issuance of shares of common stock or any securities convertible into common stock without
consideration or for a consideration per share less than the then existing conversion price of the Series A
preferred stock.  Each holder of Series A preferred stock may require that one-third of such holder's shares be
redeemed on September 30 in each of 2009, 2010 and 2011 at a redemption price of $1.50 per share (appropriately
adjusted for any stock dividends, combinations, splits, reverse stock splits or recapitalizations) plus a return
on such amount of 8% per annum from the date of original issue of such shares.

Amended and Restated Credit Agreement

NuVox has entered into an Amended and Restated Credit and Guaranty Agreement dated as of August 14, 2002
with General Electric Capital Corporation ("GECC") and CIT Lending Services Corporation ("CIT"), as lenders,
which amends, modifies and restates the terms of NuVox's existing senior secured credit facility and provides for
the restructuring of the outstanding indebtedness and obligations under the existing credit facility as follows:

- NuVox has paid to the lenders under the existing credit facility who desired to be relieved of their
contractual
funding commitments $0.135 per $1.00 of their $133.1 million of outstanding
loans (approximately $18.0 million) plus $1.6 million, or approximately $19.6
million in total, plus fees and expenses of such lenders counsel and
financial advisor totalling approximately $725,000;
- NuVox has paid Wachovia Bank NA $0.135 per $1.00 of NuVoxs approximately
$12.0 million liability outstanding, inclusive of approximately $1.0 million
accrued but unpaid interest, under its interest rate hedging agreement with
Wachovia (approximately $1.6 million);
- GECC and CIT have loaned an additional $10.0 million and $2.5 million,
respectively, to NuVox, which loans are evidenced by senior secured notes due
September 30, 2006 (Senior Secured Notes), with interest thereon
through June 30, 2004 payable at the same rate as is provided for under the existing
credit facility through the issuance of additional Senior Secured Notes
and interest thereafter payable in cash quarterly in arrears at LIBOR plus
4.25%, and with principal payable in consecutive quarterly installments
totalling 30% of the total principal amount during the period from June 30, 2004
through June 30, 2006 and 70% on September 30, 2006;

16

##### NUVOX, INC.AND SUBSIDIARIES

##### Notes to Condensed Consolidated Financial Statements

- GECC has exchanged its $25.5 million  principal amount of indebtedness under the existing credit
              facility for
      $10.0 million principal amount of Senior Secured Notes, and
      4,833,333 shares of Series A preferred stock; and

- CIT has exchanged its $25.5 million principal amount of indebtedness under the existing credit facility
              for
      $3.8 million principal amount of Senior Secured Notes, and
      non-interest bearing junior unsecured discount note due September 30, 2008  with an initial
        accreted value of approximately $10.3 million and an accreted value at maturity of $21.7
        million (Junior Unsecured Note).

After giving effect to the
$12.5 million of additional loans under the amended and restated credit facility
and the elimination of approximately $160.5 million of obligations under the
existing credit facility, as of August 14, 2002, NuVoxs outstanding long-
term debt was approximately $50.7 million as follows (in thousands):

| | Senior Secured Notes  | $        26,300 | 
| | --------------------- | --------------- | 
| | Junior Unsecured Note | 21,700          | 
| | Other long-term debt  | 2,700           | 
| |                       |                 | 
| |                       | $        50,700 | 

As of August 14, 2002, the accreted value of the
$21.7 million Junior Unsecured Note was approximately $10.3 million at the agreed upon 12.0% discount rate.

As adjusted to give effect
to the sales of Series A preferred stock and debt restructuring described above
as if they had occurred on June 30, 2002, as of that date NuVox's cash and cash
equivalents would have totalled approximately $65 million. The amended and restated credit facility contains a restrictive covenant
that effectively prohibits NuVox from paying any cash dividends on its common and preferred stock for the foreseeable future.

The following table adjusts, on a pro forma basis, reported cash, liability and equity balances to show the
effect of the plan of recapitalization, Series A preferred stock offering, and debt restructuring as if they
occurred as of June 30, 2002 (in thousands):

|                                               |   |               |  |   | Pro forma   |       |   | Pro forma     | 
|---------------------------------------------- | - | ------------- |  | - | ----------- | ----- | - | ------------- | 
|                                               |   | June 30, 2002 |  |   | Adjustments |       |   | June 30, 2002 | 
|                                               |   |               |  |   |             |       |   |               | 
|                                               |   |               |  |   |             |       |   |               | 
|Cash and cash equivalents                      | $ | 10,146        |  | $ | 55,319      | 1     | $ | 65,465        | 
|Accrued expenses and other current liabilities |   | 28,313        |  |   | (3,921)     | 2     |   | 24,392        | 
|Deferred hedge liability                       |   | 10,504        |  |   | (10,504)    | 3     |   |              | 
|Senior bank debt                               |   | 184,000       |  |   | (157,700)   | 3     |   | 26,300        | 
|Junior unsecured note                          |   |              |  |   | 21,700      | 3     |   | 21,700        | 
|Other long-term debt                           |   | 2,700         |  |   |            |       |   | 2,700         | 
|Preferred stock                                |   | 5,112         |  |   | (4,624)     | 1     |   | 488           | 
|Common stock                                   |   | 10            |  |   | 42          | 1     |   | 52            | 
|Additional paid-in capital                     |   | 618,615       |  |   | 76,831      | 1     |   | 695,446       | 
|Accumulated deficit                            |   | (515,433)     |  |   | 133,519     | 1,2,3 |   | (381,914)     | 

---

|1 | Reflects the proceeds of approximately  $66.0 million from the sale of Series A preferred stock, $12.5
     million proceeds of new debt, less cash paid to banks and transaction fees totalling approximately $23.2
     million; also reflects effectiveness of plan of recapitalization.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | Reflects release of approximately $3.9 million of accrued and unpaid interest under senior credit
     facility.
|- | ----------------------------------------------------------------------------------------------------------------

|3 | Reflects net impact of the adjustments outlined above under the section Amended and Restated Credit
     Agreement.
|- | ---------------------------------------------------------------------------------------------------------------------

17

##### NUVOX, INC.AND SUBSIDIARIES

##### Notes to Condensed Consolidated Financial Statements

Restructuring Charges

As part of its refinancing plan, NuVox has adopted revisions to its business plan which include planned
reductions in operating and capital costs and reduce the amount the amount of cash NuVox estimates will be
required to fund its operations to positive free cash flow.  Key elements of NuVox's revised business plan
include a planned reductions in force, consolidation of network management, network operations and service
delivery centers, and discontinuation of non-core businesses.  NuVox expects to record charges associated with
these restructuring activities in the third quarter of 2002.

Goodwill and Long-lived assets

The events and circumstances surrounding the refinancing plan will result in a reassessment of the
carrying value of NuVox's goodwill and long-lived assets.  This reassessment is anticipated to result in
the recording of additional impairment losses in the third quarter of 2002.

18

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

References in this Form 10-Q to "we," "us," "our," the "Company" and "NuVox" mean NuVox, Inc., a
Delaware corporation, and our subsidiaries and predecessors, unless the context suggests otherwise.  Some of the
statements contained in this Form 10-Q discuss our business plans or future prospects or state other
forward-looking information.  These statements are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and are subject to known and unknown risks, uncertainties and other factors that
could cause the actual results to differ materially from those contemplated by these statements.  These
forward-looking statements are based on various factors and have been derived using numerous assumptions.  In
some cases, you can identify these "forward-looking statements" by words like "may," "will," "should," "expect,"
"plan," "anticipate," "believe, "estimate," "predict," "project," "intend" or "potential" or the negative of those
words and other similar expressions.  You should be aware that those statements only reflect our predictions,
assumptions and estimates regarding future events and circumstances.  Actual events or results may differ
substantially as a result of risks and uncertainties facing us, including risks and uncertainties regarding the
continued development of our business and the markets for our services and products, the negative impacts of the
downturn in the economy and the continued availability and sufficiency of our capital.  Important factors that
could cause our actual results to be materially different from those forward-looking statements are set forth
below under the heading "Liquidity and Capital Resources" and in Item 1 of our Report on Form 10-K for the year
ended December 31, 2001 under the heading "Business - Risk Factors Relating to our Business and Operations" and
elsewhere in this Report on Form 10-Q.

## Company
Overview

NuVox, Inc. is a rapidly growing, facilities-based, integrated communications provider.  We position
ourselves as the integrated communications provider of choice, delivering superior broadband services and
customer care in 30 markets in 13 contiguous Midwestern and southeastern states.  We offer a wide array of
broadband products and services primarily to small and medium-sized businesses in second and third tier markets.
We compete with incumbent telephone companies and other providers by providing high quality, integrated voice and
data services, excellent service and prices below those charged by the incumbent telephone companies.

The principal elements of our business strategy include targeting end users with a wide range of
innovative products and services that provide comprehensive business solutions for all of their communications
requirements; focusing primarily on small to medium-sized businesses in second and third tier markets; providing
superior customer service through local sales forces and customer support personnel; deploying data-centric
network platforms in a capital efficient manner; leveraging our experienced management team; and pursuing
acquisitions and strategic alliances to expand and complement our business.  We have been providing these
products and services since we commenced commercial operations in June 1999.  As of June 30, 2002, NuVox was
providing services to approximately 14,500 on-net customers with approximately 201,000 on-net access lines in
service.

In contrast to carriers that construct their own fiber optic transmission facilities to reach customers,
we have not built our own network connections to each individual customer.  Instead, as part of our "smart build"
network construction strategy, we have installed our own voice and data switches and have leased transmission
facilities from incumbent telephone companies and other providers within a local market area.  We have also
installed and connected our own access equipment in collocation sites that we lease in the central offices of the
incumbent telephone companies in our markets, a process which is commonly referred to in the telecommunications
industry as "collocation."  This network construction strategy enables us to reach the entire targeted customer
base in each market without having to build our own fiber optic transmission facilities in order to establish
network connections to each customer.  Initially, capital expenditures were primarily for the build out of our
network and operations support systems infrastructure.  Currently, our incremental network infrastructure costs
are substantially lower and more directly related to demand driven capital expenditures associated with the
installation of new revenue producing services.

We believe that our smart-build construction strategy offers a number of advantages over the network
build-out strategy of the fiber-based competitive local telephone companies by allowing us to

- improve our return on capital by generating revenue with a smaller capital investment,
- defer capital expenditures for additional network assets until the time when revenue generated by
               customer demand justifies such expenditures, and

19

- address business customers throughout our markets and not just in those areas
accessible from owned fiber transmission facilities.

The development of our business requires significant expenditures before the time when our operations
can generate consolidated positive free cash flows.  We have had negative cash flow from our inception through
June 30, 2002 totaling $485.5 million.  We expect to continue to incur consolidated negative cash flow for a
period of time as we continue to grow our customer base in each of our markets.

## Recent
acquisitions and divestitures

In January 2002, NuVox purchased certain assets from MDM i NET LLC (d/b/a US Net).  Under terms of the
agreement, NuVox paid $4.5 million in cash which was allocated based upon the fair value of the assets acquired
and the liabilities assumed as follows (in thousands):

| | Property and equipment               | $        765   | 
| | ------------------------------------ | -------------- | 
| | Customer contracts and relationships | 4,537          | 
| | Liabilities                          | (768)          | 
| |                                      |                | 
| |                                      | $        4,534 | 

In April 2002, NuVox purchased certain assets from Edge Connections, Inc. for 158,394 Series D
Preferred Stock units, with each unit consisting of one share of the Company's Series D Preferred Stock and
warrants expiring September 30, 2006 to purchase two additional shares of Series D Preferred Stock at an average
price of $0.755 per share.  The cost of the acquisition was allocated based upon the fair value of the assets
acquired and the liabilities assumed as follows (in thousands):

| | Property and equipment               | $        144 | 
| | ------------------------------------ | ------------ | 
| | Customer contracts and relationships | 246          | 
| | Liabilities                          | (55)         | 
| |                                      |              | 
| |                                      | $        335 | 

These acquisitions have been accounted for using the purchase method of accounting.  Accordingly, the
results of operations associated with the acquired assets are included in NuVox's results of operations
subsequent to the date of the purchase.  The allocated value of customer lists is being amortized over a period
of two to five years based upon the assumed attrition rate of such customers.

In April 2002, NuVox entered into an agreement to sell all of its residential resale telecommunications
customers to an independent party.  The proceeds from this sale and the loss of the residential resale customer
base are not expected to have a material impact on the financial position or results of operation of NuVox.

During the three months ended June 30, 2001, NuVox wrote off its investments in WebBizApps, L.L.C. and
Tachion Networks, Inc. resulting in a combined loss on write-off of investments of $5.0 million which is included
in other income (expense) in the accompanying condensed consolidated statements of operations.

## Current
Telecommunications Industry Environment

There are a number of significant uncertainties facing NuVox and the telecommunications industry during
2002 including the negative impacts of the slowing economy, continuing efforts by bank lenders to reduce their
telecommunications exposures (which limit the options for emerging telecommunications companies such as NuVox to
obtain additional financing), and regulatory uncertainties inherent in legislative and regulatory initiatives
currently underway.

Since March 2000, there has been a prolonged and continuing downturn in telecommunications capital
markets, particularly for emerging telecommunications companies.  This has made incremental capital available to
only a select few best-managed companies with sound business plans.  In addition, the downturn in the economy,
which began in 2001 and accelerated following the events of September 11, 2001, has lessened telecommunications
demand and curtailed growth rates.  All of this has led a number of emerging providers to shift business focus,
abandon markets, curtail operations, re-capitalize and seek reorganization under the bankruptcy laws.  It has
also caused end users to reconsider the advisability of obtaining their communications services from alternative
providers.

20

In addition, the telecommunications sector is faced with significant regulatory uncertainties during
2002.  The regional Bell companies are pursuing legislative initiatives designed to reverse the pro-competitive
provisions of the landmark 1996 Telecommunications Act.  At the same time, the FCC has commenced rulemaking
proceedings which could result in regulatory relief for the regional Bell companies from some of their existing
obligations to make network components available to competitors at cost-based prices.  The robust local
telecommunications competition envisioned when the 1996 Telecommunications Act was passed has been painstakingly
slow to develop due, in large measure, to the anti-competitive practices of the incumbent carriers.  The emerging
telecommunications industry is dependent on aggressive regulatory enforcement to ensure the pro-competitive goals
of the 1996 Act are realized.

While there are many uncertainties facing NuVox and our industry during 2002, we believe that the
additional debt and equity financings and the debt restructuring we completed on August 14, 2002 have
significantly enhanced NuVox's ability to survive the current sector shake out.  We expect that the companies
that do survive will ultimately benefit from diminished competition as other companies disappear through
bankruptcy and acquisition.  This should enable the survivors to acquire customers and assets on advantageous
terms, accelerate market penetration and achieve higher margins.

## Operating
Statistics

The following table provides selected operational data:

|                                       |  | As of June 30, |     
|-------------------------------------- |  | -------------- | ----
|                                       |  | 2002           |     
|                                       |  |                |     
|Markets in operation                   |  |                | 30  
|Total access lines in service(1)       |  | 206,279        |     
|On-net access lines in service(2)      |  | 201,355        |     
|Total customers served                 |  | 39,562         |     
|Customers served, on-net               |  | 14,471         |     
|Annualized June revenues               |  | $138,687,000   |     
|On-net June revenues per customer      |  |                | $676
|June Gross margin (%)                  |  | 43.7%          |     
|Voice switches installed               |  |                | 14  
|ATM switches installed                 |  |                | 30  
|Central office collocations in service |  |                | 211 
|Sales employees                        |  |                | 281 
|Total employees                        |  | 1,051          |     

---

|(1) | Includes 4,924 and 22,601 resale lines at June 30, 2002 and 2001, respectively.  NuVox agreed in April, 2002
     to divest its remaining residential resale business and management expects that the number of commercial
     resale lines will continue to decrease as NuVox continues to pursue its business strategy of providing
     services primarily to business customers over its own network platforms.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | On-net customers are those to which we provide broadband services over our own network platforms.  All
     customers have signed either one, two or three year contracts.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

21

## Results of
Operations

Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001

REVENUE

Our revenues increased 77.1 percent to $33.8 million for the three months ended June 30, 2002 from $19.1
million for the three months ended June 30, 2001 and an 11.5 percent sequential increase over first quarter 2002
revenues of $30.4 million.  Revenues attributable to core broadband products grew 120 percent to $29.3 million
from $13.3 million during the second quarter of 2001 and 17.7 percent above the $24.9 million reported in the
first quarter of 2002.  Core broadband revenues include revenues from NuVox's bundled local, long distance,
Internet and broadband data communications services.

NuVox generates revenues from:

- local calling services, including basic voice calling services and advanced
local features such as call waiting and call forwarding,
- long distance services, which include a full range of domestic, international and toll-free long
              distance services,
- dedicated, high speed Internet access services,
- website design and development, web page hosting and domain name services, audio conferencing, remote
              access service,
- advanced data services, such as high speed data transmission and unified voice
mail, e-mail and fax messaging services, local and wide area network management
and virtual private networks,
- access charges, which we earn by connecting our customers to their selected long
distance carrier for outbound calls or by delivering inbound long distance
traffic to the local service customers of long distance carriers,
- reciprocal compensation, which entitles us to compensation for terminating local calls made by customers
              of other carriers to our customers, and
- network design and installation services and telecommunications equipment sales.

We price our local calling services competitively with those of the incumbent telephone companies and
offer our customers combined service discounts designed to give them incentives to purchase bundled local, long
distance and data services under one, two and three year commitments.

Local voice service revenues for the three months ended June 30, 2002 and 2001 were $16.5 million and
$11.3 million, respectively (of which $15.1 million and $8.4 million, respectively, were derived from services
provided on-net).  Local voice service revenues include the monthly recurring charges for basic service, charges
for advanced local features and reciprocal compensation.  Long distance service revenues for the three months
ended June 30, 2002 and 2001 were $4.8 million and $2.7 million, respectively.  Revenues generated from Internet
access, web, data and other services and products for the three months ended June 30, 2002 and 2001 were $12.5
million and $5.1 million, respectively.

Annualized revenues increased 69.3 percent to $138.7 million based on June 2002 revenues from $81.9
million based on June 2001 revenues.  We continue to grow our revenue base as evidenced by the total number of
access lines in service increasing 93.5 percent to 206,279 at June 30, 2002, of which 201,355 were on-net, as
compared to 106,610 total access lines in service at June 30, 2001, of which 84,004 were on-net.  Total monthly
access line churn decreased to 1.4 percent in the second quarter of 2002 from 1.5 percent in the first quarter of
2002.  As of June 30, 2002, we served 39,562 total customers, of which 14,471 were served on-net, as compared
with 31,533 total customers, of which 6,286 were served on-net, at June 30, 2001.

22

COST AND EXPENSES

Our cost of communication services amounted to $19.7 million for the three months ended June 30, 2002
compared to $15.6 million for the same period in 2001.  The increase in cost of communication services resulted
from the growth in access lines in service, and correlates to the increase in revenue between the three-month
period ended June 30, 2002 and the same period from the prior year.  Gross margin increased to 41.6% of revenue
for the three months ended June 30, 2002 as compared with a gross margin of 18.4% in the three-month period ended
June 30, 2001 and 39.0% in the three months ended March 31, 2002.  The improvement reflects the revenue and
access line growth,  more efficient utilization of our network facilities, and rate reductions related to certain
network elements.  Our cost of communication services includes recurring costs associated with

- leasing the high capacity transport facilities that connect our switching
equipment to our equipment located in incumbent telephone companies
central offices,
- leasing the T-1 access, unbundled local loop lines and other customer access facilities that connect our
             customers to our networks,
- leasing space used to collocate our customer access equipment in incumbent telephone companies' central
             offices,
- leasing and obtaining electrical power for our collocation facilities,
- purchasing long distance services for resale to our customers, and
- providing Internet access to our customers.

We have interconnection agreements with Southwestern Bell, Ameritech, BellSouth, GTE/Verizon, Cincinnati
Bell and Sprint/United for network and collocation facilities.  The costs to lease the local loop lines and
high-capacity digital transport facilities from incumbent telephone companies vary by company and are regulated
by state authorities.  We believe that there are multiple vendors of high-speed transport facilities in each of
our markets in addition to the incumbent telephone company.  These vendors are an alternate source for transport
facilities and generally provide these facilities at lower costs than those charged by the incumbent telephone
companies.  We expect that the total cost of leasing communications services will increase with the volume of
customers, and expect these costs to be a significant part of ongoing costs of services.

We have agreements with WorldCom, Inc., Qwest Communications and Global Crossing to provide us with long
distance transmission services.  These agreements provide for the resale of long distance services on a
per-minute basis and the Global Crossing agreement has a minimum usage requirement.  We expect to exceed this
minimum usage requirement over the life of the agreement.  We also expect that our total costs for transmission
capacity will increase as our customers' long distance calling volume increases, and that these costs will be a
significant portion of the costs we incur to provide long distance services.

The primary expenses associated with providing Internet access to customers are the cost of
interconnecting our network with national Internet service providers and the cost of hosting or paying for the
hosting of web services.

Our selling, general and administrative expenses totaled $26.1 million, or 77 percent of revenues, for
the three months ended June 30, 2002 compared to $25.8 million, or 135 percent of revenues, for the same period
in 2001, and $25.0 million, or 82 percent of revenues, in the first quarter of 2002.  The relatively stable
dollar amount of selling, general and administrative expenses reflects the success of our cost containment
efforts and continued focus on administrative efficiencies.  Bad debt expense totaled $2.0 million for the three
months ended June 30, 2002 compared to $0.7 million for the same period in 2001, and $1.2 million for the first
quarter of 2002.  The $1.3 million increase over the second quarter of last year results from a combination of
increased customer volume and a general decline in the overall economic environment.  The $0.7 million increase
from the first quarter of 2002 primarily reflects our need to increase our provision for doubtful accounts for
exposures to WorldCom, Inc. and other financially troubled carriers and customers.  Our total number of employees
was 1,051 at both June 30, 2002 and 2001; however, the mix of employees has shifted significantly over the
twelve-month period.  We had 281 sales employees at June 30, 2002 compared to only 194 sales employees at June
30, 2001.

Our selling, general and administrative expenses include salaries and related personnel costs,
facilities expenses, sales and marketing expenses, information systems costs, education and training costs, and
professional services and consulting fees.  We employ a direct local sales force in each of our markets.  We use
quota-based commission plans and incentive programs to compensate our sales personnel.  We supplement our direct
sales force through the use of agents such as value-added resellers and system integrators, who are compensated
on a commission basis.  We also use print and other media advertising campaigns to a limited extent to create
product and brand awareness.

23

A portion of the purchase price for our acquisition of TriVergent Communications on November 1, 2000 was
allocated to the intrinsic value of the unvested portion of NuVox options issued to TriVergent employees.  This
amount totaled $6 million, and was recorded as unearned stock-based compensation and included in stockholders'
equity in accounting for the transaction as of November 1, 2000.  This intrinsic value of the unearned
stock-based compensation is being amortized over the remaining vesting period of the related options through
2003.  Accordingly, $0.3 million and $0.6 million was recorded as amortization of stock-based compensation in the
three months ended June 30, 2002 and 2001, respectively.

Depreciation expense increased to $16.3 million for the three months ended June 30, 2002 from $11.7
million for the same period in 2001.  This reflects the installation of additional network equipment and computer
hardware and software as a result of the expansion of services in the 30 markets in which we operate.  Goodwill
amortization expense decreased to zero for the three months ended June 30, 2002 from $4.0 million for the same
period in 2001 due a change in the method of accounting for goodwill as a result of adopting a new accounting
standard on January 1, 2002.  Amortization expense of other intangible assets increased to $0.7 million for the
three months ended June 30, 2002 from $0.2 million for the same period in 2001.

Interest expense for the three months ended June 30, 2002 was $4.1 million as compared to interest
expense of $2.8 in the same period in 2001.  The increase in interest expense is due to the increase in
borrowings under our senior secured credit facility.

Interest income is earned on the short-term investment of available cash.  Interest income decreased
from $0.3 million for the three months ended June 30, 2001 to less then $0.1 million in the same period in 2002,
due to decreases in our average cash balances.

The unrealized gain/loss on derivative instrument is attributable to changes in the fair value of our
interest rate swaption agreement and interest rate cap and floor agreement.

We had an operating loss of $29.3 million and negative adjusted EBITDA of $12.1 million for the three
months ended June 30, 2002, compared to an operating loss of $38.7 million and negative adjusted EBITDA of $22.2
million for the three months ended June 30, 2001.  The quarter ended June 30, 2002 was our fifth consecutive
quarter of declining operating loss and negative adjusted EBITDA.  We expect to continue to experience decreasing
operating losses and negative adjusted EBITDA as we continue to grow the customer base in each of our markets.
EBITDA consists of earnings (loss) before net interest, income taxes, depreciation and amortization.  Amounts
reported as adjusted EBITDA have been adjusted to exclude the cumulative effect of change in accounting
principle, unrealized loss on derivative instrument, minority interests, equity in loss of affiliate and
stock-based compensation expense.  Management believes EBITDA is a measure commonly used in the
telecommunications industry in assessing companies' operating performance, leverage and ability to incur and
service debt.  Adjusted EBITDA is presented to enhance an understanding of NuVox's operating results and is not
intended to represent cash flow or results of operation in accordance with accounting principles generally
accepted in the United States.  NuVox's senior secured credit facility contains covenants based on EBITDA that
require the borrower to maintain interest coverage and leverage ratios.  EBITDA is not a measure of financial
performance under accounting principles generally accepted in the United States of America and should not be
considered an alternative to earnings (loss) from operations and net income (loss) as a measure of performance or
an alternative to cash flow as a measure of liquidity.  Neither EBITDA nor adjusted EBITDA is necessarily
comparable to similarly titled measures of other companies.  Each is thus susceptible to varying calculations.

Our net loss was $36.0 million for the three months ended June 30, 2002, a 20 percent improvement when
compared to our net loss of $44.9 million for the three months ended June 30, 2001.

24

Six Months Ended June 30, 2002 Compared to Six months ended June 30, 2001

Our revenues increased 91 percent to $64.2 million for the six months ended June 30, 2002 from $33.6
million for the six months ended June 30, 2001.  The substantial increase in revenue reflects the favorable impact
of our continued development activities.

Local voice service revenues for the six months ended June 30, 2002 and 2001 were $31.9 million and
$19.6 million, respectively (of which $28.7 million and $13.9 million, respectively, were derived from services
provided on-net).  Local voice service revenues include the monthly recurring charges for basic service, charges
for advanced local features and reciprocal compensation.  Long distance service revenues for the six months ended
June 30, 2002 and 2001 were $9.0 million and $5.2 million, respectively.  Revenues generated from Internet
access, web, data and other services and products for the three months ended June 30, 2002 and 2001 were $23.2
million and $8.8 million, respectively.

Our cost of communication services amounted to $38.3 million for the six months ended June 30, 2002
compared to $29.0 million for the same period in 2001.  The increase in cost of communication services resulted
from the growth in access lines in service, and correlates to the increase in revenue between the six-month
period ended June 30, 2002 and the same period from the prior year.  Gross margin increased to 40.4% of revenue
for the six months ended June 30, 2002 as compared with a gross margin of 13.7% in the three-month period ended
June 30, 2001.  The improvement reflects the revenue and access line growth, and more efficient utilization of
our network facilities.

Our selling, general and administrative expenses totaled $51.2 million, or 80 percent of revenues, for
the six months ended June 30, 2002 compared to $49.8 million, or 148 percent of revenues, for the same period in
2001. The relatively stable dollar amount of selling, general and administrative expenses reflects the success of
our cost containment efforts and continued focus on administrative efficiencies.

Depreciation expense increased to $31.7 million for the six months ended June 30, 2002 from $21.9
million for the same period in 2001.  This reflects the installation of additional network equipment and computer
hardware and software as a result of the expansion of services in the 30 markets in which we operate.  Goodwill
amortization expense decreased to zero for the six months ended June 30, 2002 from $8.0 million for the same
period in 2001 due a change in the method of accounting for goodwill as a result of adopting a new accounting
standard on January 1, 2002.  Amortization expense of other intangible assets increased to $1.2 million for the
six months ended June 30, 2002 from $0.3 million for the same period in 2001.

Interest expense for the six months ended June 30, 2002 was $7.9 million as compared to interest expense
of $5.6 million in the same period in 2001.  The increase in interest expense is due to the increase in
borrowings under our senior secured credit facility.

Interest income is earned on the short-term investment of available cash.  Interest income decreased
from $1.5 million for the six months ended June 30, 2001 to $0.1 million in the same period in 2002, due to
decreases in our average cash balances.

The unrealized gain/loss on derivative instrument is attributable to changes in the fair value of our
interest rate swaption agreement and interest rate cap and floor agreement.

We had an operating loss of $58.7 million and negative adjusted EBITDA of $25.2 million for the six
months ended June 30, 2002, compared to an operating loss of $76.8 million and negative adjusted EBITDA of $45.2
million for the six months ended June 30, 2001.

Our net loss before change in accounting principles was $67.5 million for the six months ended June 30,
2002, a 23 percent improvement when compared to our net loss before change in accounting principles of $87.4
million for the six months ended June 30, 2001.

The implementation of Statement of Financial Accounting Standard (SFAS) No. 142, Goodwill and Other
Intangible Assets, on January 1, 2002 resulted in a $180 million cumulative loss due to change in accounting
principle recorded during the six months ended June 30, 2002.  The implementation of SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, on January 1, 2001 resulted in a $2.5 million cumulative loss due
to change in accounting principle recorded during the six months ended June 30, 2001.

Our net loss for the six months ended June 30, 2002 was $247.5 million, compared to $89.9 million for
the six months ended June 30, 2001.

25

## Liquidity and
Capital Resources

Actions taken during the second quarter of 2002 by certain of our lenders led us to conclude that those
lenders desired to be relieved of their contractual obligations to fund their remaining unfunded commitments
under our $225 million senior secured credit facility. As a result, we determined that it would be prudent to
take steps to conserve cash and evaluate our financial alternatives. Following lengthy discussions and
negotiations, we have reached agreements with our lenders and equity investors for additional debt and equity
financing and a restructuring of our existing indebtedness and we have adopted revisions to our business plan
which include additional planned reductions in our operating and capital costs and reduce the amount of cash we
estimate will be required to fund our operations to positive free cash flow.  Key elements of the revised business plan
include planned reductions in force, consolidation of network management, network operations and service delivery centers,
and discontinuance of non-core businesses.

In accordance with our revised financial plan, we have

- effected a plan of recapitalization on July 9, 2002 pursuant to which each then outstanding share of
              NuVox common stock was converted into the right to receive 1/100 of a share of common stock and the
              then outstanding shares of NuVox preferred stock were converted into shares of NuVox common stock
              at their then existing conversion ratios, taking into account the 1- for - 100 conversion ratio of
              the common stock,
- amended our Certificate of Incorporation to provide for authorized capital stock consisting of (i) 500
              million shares of common stock, of which 5.2 million shares were issued and outstanding following
              effectiveness of the plan of recapitalization, and (ii) 400 million shares of preferred stock, of
              which 100 million shares have been designated as Series A Convertible Preferred Stock,
- completed a rights offering to existing stockholders pursuant to which we have issued and sold on July
              9, 2002 and August 14, 2002 an aggregate of approximately 44 million shares of Series A preferred stock for cash
              proceeds of approximately $66 million, and
- entered into an amendment and restatement of our senior secured credit facility on August 14, 2002,
              pursuant to which our debt has been restructured as follows:

(1)     we have paid to the lenders who desired to be relieved of their contractual funding commitments
         under our previous credit facility $0.135 per $1.00 of their $133.1 million of outstanding loans
         (approximately $18.0 million) plus $1.6 million, or approximately $19.6 million in total,
                    plus
         fees and expenses of such lenders' counsel and financial advisor totalling approximately
                    $725,000;
(2)     we have paid Wachovia Bank NA $0.135 per $1.00 of our outstanding $12.0 million liability
         under our interest rate hedging agreement with Wachovia (approximately $1.6 million);
(3)     the continuing lenders, General Electric Capital Corporation and CIT Lending Services
         Corporation, have loaned us an additional $10.0 million and $2.5 million, respectively, which
         loans are evidenced by our senior secured notes due September 30, 2006 ("Senior Secured
         Notes"), with interest thereon through June 30, 2004 payable at the same rate as was provided for under
         the previous credit facility through the issuance of additional Senior Secured Notes and
         interest thereafter payable in cash quarterly in arrears at LIBOR plus 4.25%, and with
                    principal
         payable in consecutive quarterly installments totalling 30% of the total principal
                    amount during
         the period from June 30, 2004 through June 30, 2006 and 70% on September 30,
                    2006;

(4)     General Electric Capital Corporation has exchanged its $25.5 million principal amount of
         indebtedness under the previous credit facility for

              $10.0 million principal amount of Senior Secured Notes, and
              4,833,333 shares of Series A preferred stock; and
(5)     CIT Lending Services Corporation has exchanged its $25.5 million principal amount of indebtedness under
                    the previous credit facility for

              $3.8 million principal amount of Senior Secured Notes, and
              junior unsecured discount note due September 30, 2008 with an initial
                                 accreted value of approximately $10.3
                 million and an accreted value at maturity of $21.7 million.

26

After giving effect to the $12.5 million of additional loans under the amended and restated credit
facility and the elimination of approximately $160.5 million of obligations under the existing credit facility,
as of August 14, 2002, NuVox's outstanding long- term debt was approximately $50.7 million as follows (in
thousands):

| | Senior Secured Notes           | $        26,300 | 
| | ------------------------------ | --------------- | 
| | Junior Unsecured Discount Note | 21,700          | 
| | Other long-term debt           | 2,700           | 
| |                                |                 | 
| |                                | $        50,700 | 

As of August 14, 2002, the
accreted value of the $21.7 million junior unsecured discount note was approximately $10.3 million at the agreed upon 12.0% discount rate.

As adjusted to give effect to the foregoing additional loans, sales of Series A preferred stock and debt
restructuring, as of June 30, 2002 our cash and cash equivalents would have totalled approximately $65.5 million.
  Based upon our revised business plan, we believe this will fully fund our operations
to positive free cash flow. However, our revised business plan is based upon
numerous assumptions and estimates regarding our future performance and results
and our actual performance and results may differ substantially from those
contemplated by our revised business plan.

Our capital spending for the six months ended June 30, 2002 totaled $13.6 million or 77 percent below
the $59.1 million invested during the six months ended June 30, 2001.  Our planned capital expenditures for the
balance of 2002, primarily for demand-driven capital spending, total approximately $19 million.

The actual amount and timing of our future capital requirements may differ materially from our estimates
as a result of, among other things

- changes in or inaccuracy of our development plans or projections,
- changes in our working capital requirements,
- the demand for our services,
- availability of attractive additional market opportunities, and
- acquisitions.

Our revenues and our costs of operating our business will depend on a variety of factors, including

- the number of our customers and the services for which they subscribe, the time required to provision
              those customers and the level of service terminations,
- our ability to implement additional cost containment measures and decreases in selling, general and
              administrative expenses,
- the expenses required to continue the development and integration of our operations support systems,
- the extent of price and service competition for telecommunications services in our markets, and
- the impact of changes in technology and telecommunications regulations.

Actual costs and revenues may vary from expected amounts, possibly to a material degree, and these
variations may affect our future capital requirements.

## Effect of
Recent Accounting Pronouncements

In June 2001, the FASB issued SFAS No., 143, Accounting for Asset Retirement Obligations.  We will adopt
this standard on January 1, 2003.  This standard applies to legal obligations associated with the retirement of
tangible long-lived assets that result from acquisitions, construction, or development or the normal operation of
long-lived assets.  We believe that the adoption of this standard will not have a material impact on our
consolidated financial position or results of operations.

27

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment
of FASB Statement No. 13, and Technical Corrections."  SFAS No. 145 provides for the rescission of several
previously issued accounting standards, new accounting guidance for the accounting for certain lease
modifications and various technical corrections that are not substantive in nature to existing pronouncements.
We will adopt SFAS No. 145 beginning January 1, 2003, except for the provisions relating to the amendment of SFAS
No. 13, which we will adopt for transactions occurring subsequent to May 15, 2002.  We believe that the adoption
of this standard will not have a material impact on our consolidated financial position or results of operations.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities."  SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or
disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, "Liability recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)."  SFAS146 requires that a liability for costs associated with an exit or disposal activity be
recognized when the liability is incurred rather than when a company commits to such an activity, and also
establishes that fair value be the objective for initial measurement of the liability.  We will adopt this
standard on January 1, 2003.  We believe that the adoption of this standard will not have a material impact on
our consolidated financial position or results of operations.

28

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

At June 30, 2002 and December 31, 2001, the carrying value of our debt obligations was $186.7 million
and $163.9 million, respectively, and the weighted average interest rate on our debt obligations was 6.5%.
Because the interest rates on our senior secured credit facility are at floating rates, we are exposed to
interest rate risks.  If market interest rates had been 1% higher, our interest expense for the six months ended
June 30, 2002 and 2001 would have been increased by $0.4 million and $0.2 million, respectively.

The terms of our previous senior secured credit facility required us to maintain agreements to hedge
against such interest rate risks with an aggregate notional principal amount of not less than 50% of the
aggregate principal amount of the outstanding indebtedness thereunder.  Accordingly, we maintained a derivative
financial agreement which included an interest rate swaption agreement and interest rate cap and floor
agreements.  These agreements limited our exposure to and benefits from interest rate fluctuations on our
variable rate debt within a certain range of rates.  At June 30, 2002 and December 31, 2001, the fair value of
this interest rate collar agreement was a liability of $10.5 million and $9.3 million, respectively.  The fair
value of this interest rate collar agreement is estimated based on quotes from brokers and represents the
estimated amount we would expect to pay to terminate the agreement on June 30, 2002 or December 31, 2001.  During
the six months ended June 30, 2002, we recorded a $1.2 million unrealized loss on derivative instrument.  During
the six months ended June 30, 2001, we recorded a $1.3 million unrealized loss on derivative instrument and a
$2.5 million cumulative loss due to change in accounting principle.  These gains or losses are attributable to
changes in the fair value of this interest rate collar agreement.  The terms of our amended and restated senior
secured credit facility do not require us to maintain any hedge against interest rate risks and, on August 14,
2002, we paid approximately $1.6 million in final settlement of our $12.0 million liability to terminate the
hedging arrangements required under our previous credit facility.

As we expand our operations, we may begin to use various other financial instruments, including
derivative financial instruments, in the ordinary course of business, for purposes other than trading.  These
instruments could include letters of credit, guarantees of debt and interest rate swap agreements.  We do not
intend to use derivative financial instruments for speculative purposes.  Interest rate swap agreements could be
used to reduce our exposure to risks associated with interest rate fluctuations.  By their nature, these
instruments involve risk, including the risk of nonperformance by counterparties, and our maximum potential loss
may exceed the amount recognized in our balance sheet.

29

# PART II

# OTHER INFORMATION

## Item 2.           Changes
in Securities and Use of Proceeds.

(a)        
Pursuant to a plan of recapitalization of NuVox effected on July 9, 2002, (1) each then
outstanding share of NuVox common stock, $0.01 par value per share, was converted into the right to receive 1/100
of a share of NuVox common stock, (2) the then outstanding shares of NuVox Series B, C-1, C-2, C-3, D, E-1, E-2,
E-4, E-6, E-7, E-8, E-9, E-10, E-11 and E-12 preferred stock, $0.01 par value per share, were converted into
shares of NuVox common stock at their then existing conversion ratios, taking into account the 1 - for - 100
conversion ratio of the common stock,  and (3) the Amended Certificate of Incorporation filed as Exhibit 3.1
hereto and incorporated herein by reference, which sets forth the rights of holders of shares of NuVox common
stock and NuVox Series A Convertible Preferred Stock, was adopted.

(c)        
Pursuant to an Amended and Restated Asset Purchase Agreement dated April 22, 2002 by and among
NuVox Communications, Inc., NuVox, Inc. and Edge Connections, Inc., NuVox acquired certain assets from Edge
Connections, Inc. in consideration for the issuance and delivery to Edge Connections, Inc. of 158,394 Series D
Units, with each Unit consisting of one share of NuVox Series D Convertible Preferred Stock, par value $0.01 per
share, one warrant expiring September 30, 2006 to purchase one share of Series D preferred stock for $1.50 per
share and one warrant expiring September 30, 2006 to purchase one share of Series D preferred stock for $0.01 per
share. The issuance of such Units was made in reliance upon the exemption from registration provided by Section
4(2) of the Securities Act of 1933 for transactions by an issuer not involving a public offering. Edge
Connections, Inc. represented its intention to acquire such Units for investment purposes only and not with a
view to or for distribution in connection with such transaction. Edge Connections, Inc. had adequate access to
information about NuVox through information that NuVox made available to it. Edge Connections, Inc. was made a
party to a stockholders' agreement that restricts its ability to transfer any of the securities comprising such
Units and the stock and warrant certificates contain appropriate legends setting forth and describing such
restrictions.  As a result of the plan of recapitalization referred to in Item 2(a) above, the Series D preferred
stock and warrants to purchase shares of Series D preferred stock have been converted into 1,583 shares of
common stock and warrants to purchase an additional 1,583 shares of common stock.

30

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

(a)        
Exhibits filed with (or incorporated by reference into) this report:

| | Exhibit No. | Description                                                                  | 
| | ----------- | ---------------------------------------------------------------------------- | 
| | 3.1         | Amended Certificate of Incorporation effective July 9, 2002, filed herewith. | 
| | 3.2         | By-laws, as amended as of July 9, 2002, filed herewith.                      | 

(b)        
Reports on Form 8-K:

No reports on Form 8-K were filed by NuVox during the quarter ended June 30, 2002.

31

# SIGNATURES

Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,  the  registrant has duly caused this
report to be signed on its behalf by the undersigned  thereunto duly authorized and each of the undersigned  hereby
certifies,  pursuant to 18 U.S.C. §1350,  as adopted  pursuant to §906 of the  Sarbanes-Oxley  Act of 2002, to the
best of his knowledge,  that (1) this report  complies with the  requirements  of Section 13(a) or Section 15(d) of
the  Securities  Exchange Act of 1934 and (2) the  information  contained in this report  fairly  presents,  in all
material respects, the financial condition and results of operations of the registrant.

|                | NUVOX, INC.
|--------------- | -----------
|August 14, 2002 | By:        
|                |            
|August 14, 2002 | By:        
|                |            

32

# INDEX TO
EXHIBITS

| | Exhibit No. | Description                                                                  | 
| | ----------- | ---------------------------------------------------------------------------- | 
| | 3.1         | Amended Certificate of Incorporation effective July 9, 2002, filed herewith. | 
| | 3.2         | By-laws, as amended as of July 9, 2002, filed herewith.                      | 

33