SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                               ------------------
                                    FORM 10-Q

(Mark  One)  [X]  Quarterly  report  pursuant  to  sections  13 of  15(d) of the
Securities Exchange Act of 1934

                  For the quarterly period ended March 31, 2001

                                       OR

[] Transition report pursuant to sections 13 of 15(d) of the Securities Exchange
Act of 1934 For the transition period from _________ to ___________

                        Commission file number 333-33639

                                  EVERCOM, INC.
             (Exact name of Registrant as specified in its charter)

                   Delaware                          75-2680266
        (State or other jurisdiction of            (I.R.S. Employer
          incorporation or organization)           Identification No.)
                                ------------------
                               8201 Tristar Drive
                               Irving, Texas 75063
                                 (972) 988-3737
(Address,  including zip code,  and telephone  number,  including  area code, of
Registrant's principal executive offices)
                               ------------------

     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 [ ] No [X]

     As of March 31,  2001,  16,033  shares of Class A common  stock,  par value
$0.01 per share,  and 400 shares of Class B common  stock,  par value  $0.01 per
share, were issued and outstanding.

<PAGE>



                       DOCUMENTS INCORPORATED BY REFERENCE

     Exhibits to the following documents filed with the Securities and Exchange
Commission have been incorporated by reference in Part II of this Quarterly
Report on Form 10-Q:

1.       Registration Statement on Form S-4 (File No. 333-33639);
2.       Quarterly Report on Form 10-Q, dated as of August 14, 1998; and
3.       Quarterly Report on Form 10-Q, dated as of May 12, 1999.




<PAGE>


                         EVERCOM, INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS


                                                                            PAGE
                         PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements..............................                   4
Item 2.   Management's Discussion and Analysis of Financial Condition and
            Results of Operations...........................                  12
Item 3.   Quantitative and Qualitative Disclosures about Market Risk.......   20


                           PART II - OTHER INFORMATION

Item 1.   Legal Proceedings.................................                  21
Item 2.   Changes in Securities and Use of Proceeds.........                  21
Item 3.   Defaults Upon Senior Securities...................                  21
Item 4.   Submission of Matters to a Vote of Stockholders...                  21
Item 5.   Other Information.................................                  21
Item 6.   Exhibits and Reports on Form 8-K..................                  22




<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

                         EVERCOM, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>


                                                                                    December 31,         March 31,
                                                                                        2000               2001
                                                                                    ------------       ------------
                                                                                                        (Unaudited)
<S>                                                                                  <C>                <C>
ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                                        $4,195,034         $6,349,804
     Accounts receivable, net                                                         38,302,469         40,179,249
     Refundable income taxes                                                             258,993            258,164
     Inventories                                                                       4,167,609          4,465,253
     Prepaid expenses and other current assets                                           668,623            850,130
     Deferred income tax asset                                                         1,802,826          1,798,092
                                                                                    ------------       ------------
          Total current assets                                                        49,395,554         53,900,692
PROPERTY AND EQUIPMENT, Net                                                           27,069,245         26,270,774
INTANGIBLE AND OTHER ASSETS, Net                                                      85,991,382         83,724,290
                                                                                    ------------       ------------
          TOTAL                                                                     $162,456,181       $163,895,756
                                                                                    ============       ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
     Accounts payable                                                                $21,122,288        $21,531,746
     Income taxes payable                                                                500,000            440,997
     Accrued expenses                                                                 20,430,296         21,517,439
     Current portion of long-term debt                                                13,776,766         13,760,853
                                                                                    ------------       ------------
          Total current liabilities                                                   55,829,350         57,251,035

LONG-TERM DEBT                                                                       152,750,000        152,312,500
OTHER LONG-TERM LIABLITIES                                                               100,000             33,334
DEFERRED INCOME TAXES                                                                  1,802,826          1,798,092
COMMITMENTS AND CONTINGENCIES (SEE NOTES)
STOCKHOLDERS' EQUITY (DEFICIT):
     Preferred stock, Senior and First Preferred Series A, $.01 par value;
          6,000 and 5,000 shares authorized, 5,925 and 5,000 shares issued
          and outstanding, respectively (cumulative liquidation value of
          $5,925,000 and $5,000,000 respectively) as of December 31, 2000
          and March 31, 2001.                                                                109                109
     Common stock, $.01 par value; 50,000 shares authorized, 16,433 shares
          issued and outstanding as of December 31, 2000 and March
          31, 2001, respectively                                                             164                164
     Additional paid-in capital                                                       25,206,414         24,987,914
     Accumulated deficit                                                             (73,232,682)       (72,487,392)
                                                                                    ------------       ------------
          Total stockholders' equity (deficit)                                       (48,025,995)       (47,499,205)
                                                                                    ------------       ------------
          TOTAL                                                                     $162,456,181       $163,895,756
                                                                                    ============       ============

</TABLE>


                 See notes to consolidated financial statements.


<PAGE>


                         EVERCOM, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                                               Three Month
                                                                                              Period Ended
                                                                                                March 31,
                                                                                        2000               2001
                                                                                    ------------       ------------

<S>                                                                                 <C>                <C>
OPERATING REVENUE                                                                   $59,385,419        $61,038,423
OPERATING EXPENSES:
     Telecommunication costs                                                         24,707,083         23,122,940
     Facility commissions                                                            18,777,906         19,637,137
     Field operations and maintenance                                                 1,731,145          1,827,166
     Selling, general and administrative                                              4,383,422          4,814,684
     Cost of equipment sales                                                            113,573          1,008,913
     Depreciation                                                                     1,966,394          2,047,224
     Amortization of intangibles                                                      4,473,958          2,928,705
                                                                                    ------------       ------------
          Total operating expense                                                    56,153,481         55,386,769
                                                                                    ------------       ------------
OPERATING INCOME                                                                      3,231,938          5,651,654
INTEREST EXPENSE, Net                                                                 4,897,288          4,758,201
                                                                                    ------------       ------------
INCOME (LOSS) BEFORE INCOME TAXES                                                    (1,665,350)           893,453
INCOME TAX EXPENSE                                                                       21,260            148,163
                                                                                    ------------       ------------
NET INCOME (LOSS)                                                                   ($1,686,610)          $745,290
PREFERRED STOCK DIVIDENDS AND ACCRETION OF DISCOUNT                                     367,654            373,533
                                                                                    ------------       ------------
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK                                        ($2,054,264)          $371,757
                                                                                    ============       ============


</TABLE>

                 See notes to consolidated financial statements.


<PAGE>


                         EVERCOM, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>


                                                                                              Three Months
                                                                                              Period Ended
                                                                                                March 31,
                                                                                        2000               2001
                                                                                    -----------        -----------
<S>                                                                                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net Income (Loss)                                                              ($1,686,610)          $745,290
     Adjustments to reconcile net income (loss) to net cash provided by
        operating activities
         Depreciation                                                                 1,966,394          2,047,224
         Amortization of intangible assets, including deferred financing
            costs and bond discount                                                   4,736,349          3,234,821
         Changes in operating assets and liabilities, net of effects of
            acquisitions:
             Accounts receivable                                                     (4,107,893)        (2,130,354)
             Inventories                                                                 91,823           (297,644)
             Prepaid expenses and other assets                                         (238,337)          (379,936)
             Accounts payable                                                         3,583,532            681,782
             Accrued expenses                                                         1,209,078          1,308,165
             Income taxes                                                               137,498            (58,174)
                                                                                    -----------        -----------
                  Net cash provided by operating activities                           5,691,834          5,151,174
                                                                                    -----------        -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Capital expenditures                                                            (2,632,269)        (2,318,053)
     Cash outflows for acquisitions                                                    (372,244)          (224,938)
                                                                                    -----------        -----------
                  Net cash used in investing activities                              (3,004,513)        (2,542,991)
                                                                                    -----------        -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from the issuance of debt                                                                  3,000,000
     Repayment of debt                                                               (4,108,012)        (3,453,413)
                                                                                    -----------        -----------
                  Net cash used in financing activities                              (4,108,012)          (453,413)
                                                                                    -----------        -----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     (1,420,691)         2,154,770
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                        1,987,732          4,195,034
                                                                                    -----------        -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                               $567,041         $6,349,804
                                                                                    ===========        ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid for interest                                                          $1,446,236         $1,596,614
                                                                                    ===========        ===========

     Cash paid for income taxes                                                        $116,235           $206,337
                                                                                    ===========        ===========

NONCASH TRANSACTIONS:
     Dividends payable                                                                 $218,500           $218,500
                                                                                    ===========        ===========


</TABLE>


                 See notes to consolidated financial statements.


<PAGE>


                         EVERCOM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  CONSOLIDATED FINANCIAL STATEMENTS

     The  consolidated  financial  statements  as of March 31,  2001 and for the
three-month  periods  ended  March 31, 2000 and 2001 of  Evercom,  Inc.  and its
subsidiaries (the "Company") have been prepared by the Company without audit.

     In the opinion of management, all necessary adjustments (which include only
normal recurring  adjustments) to present fairly, in all material respects,  the
consolidated financial position, results of operations, and cash flows as of and
for the respective  periods,  have been made.  Certain  information and footnote
disclosures  normally  included  in  annual  consolidated  financial  statements
prepared in accordance with generally accepted  accounting  principles have been
omitted  pursuant to the rules and  regulations  of the  Securities and Exchange
Commission.  These financial  statements  should be read in conjunction with the
Company's 2000 consolidated  financial  statements contained in its Form 10-K as
filed with the Securities and Exchange Commission on June 1, 2001.


     Comprehensive Income

     Statement of Financial  Accounting  Standards ("SFAS") No. 130,  "Reporting
Comprehensive  Income,"  became  effective as of the first quarter of 1999. This
statement requires companies to report and display  comprehensive income and its
components  (revenues,   expenses,  gains,  and  losses).  Comprehensive  income
includes  all changes in equity  during a period  except  those  resulting  from
investments   by  owners  and   distributions   to  owners.   For  the  Company,
comprehensive  income  is the same as net loss  reported  in the  statements  of
consolidated operations, since there were no other items of comprehensive income
for the periods presented.


     Derivative Instruments and Hedging Activities

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting  for Derivative  Instruments and Hedging  Activities."  SFAS No. 133
requires recognition of all derivative financial instruments as either assets or
liabilities  in  consolidated  balance  sheets at fair value and  determines the
method(s) of gain/loss  recognition.  SFAS No. 133 is effective for fiscal years
beginning  after  January 1, 2001.  The Company  adopted SFAS No. 133  effective
January 1, 2001. The adoption of SFAS 133 did not have a material  effect on the
company's financial position or results of operations.


     Reclassification

     Certain  reclassifications  have been made in the three  months ended March
31, 2000  consolidated  financial  statements to conform to the  classifications
used in the three months ended March 31, 2001.


<PAGE>


2.  ACCOUNTS RECEIVABLE

     Accounts receivable consist of the following:

<TABLE>
<CAPTION>


                                                                                    December 31,        March 31,
                                                                                       2000                2001
                                                                                    -----------        -----------
                                                                                                       (Unaudited)

<S>                                                                                 <C>                <C>
Trade accounts receivable, net of advance payments received of $289,385
    and $0 at December 31, 2000, and March 31, 2001, respectively                   $41,028,861        $41,692,423
Advance commissions receivable                                                        1,654,595          1,714,833
Recoverable Universal Service Fund fees                                                 235,817            192,969
Employees and other                                                                     453,704            192,121
                                                                                    -----------        -----------
                                                                                     43,372,977         43,792,346
Less allowance for unbillable and uncollectible chargebacks                          (5,070,508)        (3,613,097)
                                                                                    -----------        -----------
                                                                                    $38,302,469        $40,179,249
                                                                                    ===========        ===========
</TABLE>



     At December 31, 2000 and March 31, 2001, the Company had advanced
commissions to certain inmate facilities of $1,758,299 and $1,987,651
(unaudited), which are recoverable from such facilities as a reduction of earned
commissions at specified monthly amounts. Amounts included in accounts
receivable represent the estimated recoverable amounts during the next fiscal
year with the remaining balance recorded in other assets.


3.  PROPERTY AND EQUIPMENT

     Property and equipment consist of the following:

<TABLE>
<CAPTION>


                                                                                    December 31,        March 31,
                                                                                       2000                2001
                                                                                    -----------        -----------
                                                                                                       (Unaudited)

<S>                                                                                  <C>                <C>
Leasehold improvements                                                                 $944,292           $951,211
Telephone system equipment                                                           46,285,050         47,521,892
Vehicles                                                                                430,548            430,548
Office equipment                                                                      2,727,911          2,732,903
                                                                                    -----------        -----------
                                                                                     50,387,801         51,636,554
Less accumulated depreciation                                                       (23,318,556)       (25,365,780)
                                                                                    -----------        -----------
                                                                                    $27,069,245        $26,270,774
                                                                                    ===========        ===========

</TABLE>




<PAGE>


4.  INTANGIBLE AND OTHER ASSETS

     Intangible and other assets consist of the following:


<TABLE>
<CAPTION>

                                                                                    December 31,        March 31,
                                                                                       2000                2001
                                                                                    -----------        -----------
                                                                                                       (Unaudited)
<S>                                                                                 <C>                <C>
Intangible assets:
     Acquired telephone contracts                                                   $71,566,718        $72,336,018
     Noncompete agreements                                                              568,611            568,611
     Deferred loan costs                                                              9,042,247          9,042,247
     Goodwill                                                                        84,730,834         84,730,834
     Other intangibles                                                                  783,096            783,096
                                                                                    -----------        -----------
                                                                                    166,691,506        167,460,806
   Less accumulated amortization                                                    (81,221,978)       (84,456,799)
                                                                                    -----------        -----------
Total intangible assets                                                              85,469,528         83,004,007
Deposits and other                                                                      418,150            447,465
Noncurrent portion of commission advances to facilities                                 103,704            272,818
                                                                                    -----------        -----------
                                                                                    $85,991,382        $83,724,290
                                                                                    ===========        ===========
</TABLE>




5.  ACCRUED EXPENSES


     Accrued expenses consist of the following:

<TABLE>
<CAPTION>


                                                                                    December 31,         March 31,
                                                                                       2000                2001
                                                                                    -----------        -----------
                                                                                                       (Unaudited)

<S>                                                                                  <C>                <C>
Facility commission                                                                  $8,204,779         $7,586,889
Billing and collection fees                                                           1,988,157          2,429,976
Accrued acquisition and financing costs                                                 578,081            438,559
Accrued interest                                                                        541,530          3,397,001
Accrued excise taxes payable                                                          1,958,017          1,941,152
Accrued dividends on preferred stock                                                  2,142,434          2,360,934
Accrued payroll and bonuses                                                             812,898          1,409,588
Accrued payable to joint venture partner                                              1,136,916            526,017
Deferred revenue                                                                      1,076,425
Other                                                                                 1,991,059          1,427,323
                                                                                    -----------        -----------
                                                                                    $20,430,296        $21,517,439
                                                                                    ===========        ===========

</TABLE>




<PAGE>




6.  LONG-TERM DEBT

     The following is a summary of long-term debt:

<TABLE>
<CAPTION>

                                                                                    December 31,          March 31,
                                                                                       2000                2001
                                                                                    -----------        -----------
                                                                                                       (Unaudited)

<S>                                                                                <C>                <C>
Senior Notes                                                                       $115,000,000       $115,000,000
Senior Credit Facility:
     Revolving loan facility                                                         13,500,000         16,500,000
     Term loan acquisition facility                                                  27,500,000         24,062,500
     Additional term loan facility                                                    5,500,000          5,500,000
     Second additional term loan facility                                             5,000,000          5,000,000
Other                                                                                    26,766             10,853
                                                                                   ------------       ------------
                                                                                    166,526,766        166,073,353
Less current portion of long-term debt                                              (13,776,766)       (13,760,853)
                                                                                   ------------       ------------
                                                                                   $152,750,000       $152,312,500
                                                                                   ============       ============

</TABLE>


     Under the terms of the Senior Credit  Facility,  the term loan  acquisition
facility is due in  quarterly  installments  of  $3,437,500  with all  remaining
unpaid  balances under the Senior Credit Facility due on December 31, 2002. Both
the revolving and the term loan facilities are  collateralized  by substantially
all of the assets of the company.

     On June 30, 1998,  the Company  entered into an interest rate cap agreement
that has been designated as a hedge against the Company's variable interest rate
exposure  under the  Company's  revolving and term loan  agreement  (the "Senior
Credit  Facility").  At March 31, 2001,  the interest  rate cap has an aggregate
notional amount of $30.0 million,  which matures in June 2001, and caps interest
on the London Interbank  Offering Rate ("LIBOR") portion of the term loan, up to
the aggregate notional amount, at 7.5%, plus the applicable LIBOR margin.


7.       SUBSEQUENT EVENTS

Acquisition

     On  May  30,  2001,  the  Company  acquired  all of the  capital  stock  of
FortuneLinx,  Inc., for shares of the Company's  Class "A" Common stock equal to
approximately  6% of the Company's Common Stock on a fully diluted basis. Of the
6%, 3% was issued on May 30, 2001,  and the  remaining 3% will be issued  twelve
months  after  the  effective  date  of the  acquisition  if  certain  financial
performance  objectives are achieved.  Additionally,  options were issued to the
sellers  allowing  them to purchase up to 1% of the  Company's  Class "A" Common
Stock on a fully  diluted  basis at an  exercise  price of $2,000 per share.  In
conjunction with the closing, a note payable to a FortuneLinx shareholder in the
principal amount of $0.8 million was repaid plus accrued interest.


Equity Offering and Senior Credit Facility Amendment



     On April 10, 2001,  the  Company's  Board of  Directors  approved a plan to
offer to sell 12,000 shares of the Company's Class "A" Common stock for $750 per
share to the Company's existing

<PAGE>


shareholders.  The Company received $9 million of proceeds from this offering on
June 4, 2001. As part of this offer each subscribing  shareholder received their
pro-rata share of warrants  equal to 4.5% of the Company's  fully diluted common
stock.  The warrants expire on May 30, 2007 and are convertible to the Company's
Class "A" Common Stock at $750 per share.



     On May 30, 2001, and in conjunction  with the commitment  from its existing
shareholders  and other  investors to purchase  12,000  shares of the  Company's
Common  stock for $750 per share,  the  Company and its Senior  Credit  Facility
lenders amended the Company's Senior Credit Facility.  The amendment changed the
requirements and definitions of certain financial covenants through December 31,
2001  and  increased   the  Company's   ability  to  enter  into  capital  lease
arrangements from $2.5 million to $5 million. Additionally, the amendment waived
the Senior Credit Facility Lender's rights to the proceeds from the May 30, 2001
issuance of common stock and waived all  outstanding  defaults  under the Senior
Credit Facility. An amendment fee equal to 0.75% of outstanding commitments,  or
$0.4  million,  was paid to the Senior  Credit  Facility  lenders to effect this
amendment.  Additionally,  the amendment  increased all interest rates under the
Senior Credit Facility by 0.5% (50 basis points).


<PAGE>




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


     The following  discussion and analysis of the Company's financial condition
and  results of  operations  should be read in  conjunction  with the  financial
statements  and the notes thereto  contained  elsewhere in this report.  Certain
information  contained in the  discussion  and analysis set forth below includes
forward-looking  statements that involve risks and  uncertainties.  See "Special
Note regarding Forward-Looking Information".



Overview

     The Company is an  independent  provider  of collect  and  prepaid  calling
services to local,  county,  state, and private  correctional  facilities in the
U.S. The Company derives substantially all of its revenues from its operation of
inmate  telecommunications  systems  located in  correctional  facilities  in 43
states and the District of Columbia.

     The Company's  inmate  telecommunications  services  consist of collect and
prepaid  calling  services.   The  Company  enters  into  multi-year  agreements
(generally  three to five years) with the correctional  facilities,  pursuant to
which  the  Company  serves  as the  exclusive  provider  of  telecommunications
services to inmates within each facility.  In exchange for the exclusive service
rights,  the Company  pays a percentage  of its revenue  from each  correctional
facility as a commission to that facility.  Typically,  the Company installs and
retains   ownership  of  the  telephones  and  related  equipment  and  provides
additional  services  to  correctional  facilities  that  are  tailored  to  the
specialized  needs of the  corrections  industry and to the  requirements of the
individual  correctional  facility,  such as call  activity  reporting  and call
blocking.  The Company also generates  revenues from public pay telephones  that
are ancillary to its inmate telephone business.

     The Company  accumulates call activity data from its various  installations
and bills its revenues  related to this call  activity  through  local  exchange
carriers  ("LECs") or through  third-party  billing services.  In addition,  the
Company   accrues  the   related   telecommunications   costs  for   validating,
transmitting,  billing and collection, and allowances for uncollectible accounts
based on historical experience.

     The Company's  traditional  inmate business consists of collect and prepaid
services  provided to  correctional  facilities.  The Company also  provides its
Solutions  services,  representing  validation,  fraud  management  and  billing
services,  to third parties.  The Company  provides  Solutions  services for the
inmate  calls of a major  RBOC.  Under the terms of the  agreement,  the Company
acquires at a discount  the related  accounts  receivable  from the RBOC for the
calls that the  Company  processes.  When the  receivables  are  purchased,  the
Company accepts responsibility for all validation,  uncollectible  accounts, and
billing and collections costs, with no recourse to the RBOC. However,  under the
terms  of the  agreement,  all  purchased  receivables  must  be  processed  and
validated  through  the  Company's  call  management  and  billing  system.  The
Company's revenues from this service equal the difference between the face value
of the receivables  purchased and the amount it pays the RBOC for the discounted
accounts  receivable.  Because  the  Company's  revenues  associated  with  this
contract  represent  only a  percentage  of the face  value  of the  receivables
purchased,   the  associated  uncollectible  account  expense  and  billing  and
collection fees represent a much higher percentage of revenue as compared to the
Company's   traditional   inmate   business.    Consequently,    the   Company's
telecommunications  costs


<PAGE>


represent a higher percentage of revenue under this contract.  There are minimal
selling,  general,  and  administrative  ("SG&A")  costs  associated  with  this
contract.  The contract  term is through  January 31,  2003,  and has no minimum
volume  commitment.   The  Company  pays  no  facility  commissions  under  this
agreement.  In February 2001, the RBOC notified the Company of its plans to exit
the inmate market by the end of 2002 and  consequently,  the Company expects its
revenues to gradually  decline from this contract  over the next two years.  The
Company  believes it is  reasonable  to expect that some  portion of this RBOC's
customers  will be converted  to  Evercom's  traditional  inmate  business.  The
Company also  provides  Solutions  services to other  inmate  telecommunications
companies.

     The Company's principal operating expenses consist of (i) telecommunication
costs;  (ii)  commissions paid to correctional  facilities,  which are typically
expressed as a percentage of either gross or net revenues, fixed for the term of
the  agreements  with the  facilities,  and in some cases are subject to monthly
minimum  amounts;  (iii) field operations and maintenance  costs,  which consist
primarily of field service on the Company's installed base of inmate telephones;
and (iv) SG&A costs.

     Telecommunications  Costs.  The principal  components of  telecommunication
costs are long distance  transmission  costs,  local access  costs,  third party
billing costs, and costs of uncollectible accounts.  Historically, long distance
costs have consisted of charges for minutes of use purchased from  interexchange
carriers  ("IXCs").  The Company has also entered into agreements to lease lines
connecting urban areas and correctional facilities. Local access charges consist
of  monthly   line  and  usage   charges  paid  to  RBOCs  and  other  LECs  for
interconnection  to the local  network for local calls,  which are computed on a
flat monthly  charge plus,  for certain LECs, and on a per message or per minute
usage rate  based on the time and  duration  of the call.  Third  party  billing
charges  consist of payments to LECs and other  billing  service  providers  for
billing and collecting  revenues from called parties.  Expenses  associated with
uncollectible   accounts   are  a   significant   cost   in   providing   inmate
telecommunications services.

     Commissions.  The  Company  pays a  percentage  of its  revenue  from  each
facility to that facility as a commission. Commissions are generally set for the
duration of the Company's  multi-year  contract  with the  facility.  Commission
rates  are the  principal  basis of  competition  for  obtaining  and  retaining
contracts.  The Company's ability to offer  increasingly  attractive  commission
rates to facilities  depends on its ability to control its  operating  expenses.
Generally,  contracts for larger  facilities have higher  commission  rates, but
these higher  commission  rates are typically  offset by lower network  charges,
field maintenance,  and SG&A expenses as a percentage of revenue. The commission
rates paid by the Company in its  traditional  inmate business have increased in
each period,  from 35.8% in 2000 to 37.0% for the quarter  ended March 31, 2001.
This increase is due primarily to higher  facility  commissions  on renewals and
new  business.  Commission  rates  are  expected  to  gradually  increase  as  a
percentage of revenues in the future. The overall commission percentage to total
revenues of 32.2% for the quarter  ended March 31, 2001  includes  the effect of
the billing and collection  services provided under the Company's agreement with
a major RBOC, under which no commissions are paid.

     Field Operations and Maintenance.  Field operations and maintenance consist
of maintenance costs associated with inmate phones and related equipment.  These
costs are relatively small and more constant components of operating expenses.

     Selling,  General,  and Administrative.  SG&A expenses consist of corporate
overhead and selling  expenses.  These costs are also relatively  small and more
constant components of operating expenses.


<PAGE>



Results of Operations

     The following  table sets forth,  for the three months ended March 31, 2000
and 2001, respectively, the results of operations of the Company.

<TABLE>
<CAPTION>


                                                                  Three Month
                                                                  Period Ended
                                                                   March 31,
                                                       2000                          2001
                                           ----------------------------- -----------------------------
                                                             (Dollars in thousands)

<S>                                               <C>            <C>           <C>             <C>
Operating revenues                                $59,385        100.0%        $61,038         100.0%
Operating expenses:
     Telecommunication costs                       24,707         41.6%         23,123          37.9%
     Facility commissions                          18,778         31.6%         19,637          32.2%
     Field operations and maintenance               1,731          2.9%          1,827           3.0%
     Selling, general and administrative            4,384          7.4%          4,815           7.9%
     Cost of equipment sales                          113          0.2%          1,009           1.6%
     Depreciation                                   1,966          3.3%          2,047           3.3%
     Amortization of intangibles                    4,474          7.5%          2,929           4.8%
                                                  -------       -------        -------        -------
Total operating expenses                           56,153         94.5%         55,387          90.7%
                                                  -------       -------        -------        -------
Operating income                                    3,232          5.5%          5,651           9.3%
Interest expense, net                               4,897          8.3%          4,758           7.8%
                                                  -------       -------        -------        -------
Income (loss) before income taxes                  (1,665)        -2.8%            893           1.5%
Income tax expense                                     21                          148           0.3%
                                                  -------       -------        -------        -------
Net Income (Loss)                                  (1,686)        -2.8%            745           1.2%
                                                  =======       =======        =======        =======
EBITDA                                             $9,672         16.3%        $10,627          17.4%
                                                  =======       =======        =======        =======

</TABLE>



     Three Months Ended March 31, 2001  Compared to Three Months ended March 31,
2000

     Operating  Revenues.  The Company's  operating  revenues  increased by $1.6
million,  or 3.0%,  from $59.4 million for the three months ended March 31, 2000
to $61.0  million for the three  months  ended March 31,  2001.  The increase in
operating  revenues  was  primarily  due to  increased  sales  of  software  and
equipment. Operating revenues from the Company's traditional inmate business and
Solutions  business were consistent for each of the three months ended March 31,
2000 and 2001.

     Operating Expenses.  Total operating expenses decreased $0.7 million,  from
$56.1 million for the three months ended March 31, 2000 to $55.4 million for the
three  months  ended  March 31,  2001.  Operating  expenses as a  percentage  of
operating  revenues  decreased  3.8% from 94.5% for the three months ended March
31, 2000 to 90.7% for the three  months  ended March 31,  2001.  The decrease in
operating  expenses as a percentage  of revenues is primarily due to the factors
discussed below.

     Telecommunication  costs decreased by $1.6 million,  from $24.7 million for
the three  months  ended  March 31, 2000 to $23.1  million for the three  months
ended March 31, 2001.  Telecommunication  costs  represented  41.6% of operating
revenues  for the  three  months  ended  March 31,  2000 and 37.9% of  operating
revenues for the three  months  ended March 31,  2001,  a decrease of 3.7%.  The
percentage  decrease,  after  considering the effect on revenue of the increased
equipment  and software  sales during the three months ended March 31, 2001,  is
primarily due to savings generated from new long distance contracts.

<PAGE>



     Facility commissions  increased by $0.8 million, from $18.8 million for the
three  months  ended March 31, 2000 to $19.6  million for the three months ended
March 31, 2001. Facility commissions represented 31.6% of operating revenues for
the three months  ended March 31, 2000 and 32.2% of  operating  revenues for the
three months ended March 31, 2001, an increase of 0.4%.  Commission expense as a
percentage of revenue for the Company's  traditional  inmate business  increased
from 35.8% in the first  quarter of 2000 to 37.0% in the first  quarter of 2001.
This increase is due to  competition  for new business and increased  commission
rates on renewals.  Commission  rates are expected to gradually  increase in the
future.

     Field operations and maintenance costs increased by $0.1 million, from $1.7
million for the three  months ended March 31, 2000 to $1.8 million for the three
months ended March 31, 2001. Field operations and maintenance  costs represented
2.9% of operating revenues for the three months ended March 31, 2000 and 3.0% of
operating  revenues for the three  months  ended March 31, 2001,  an increase of
0.1%.  This  increase is primarily  due to higher field  equipment  replacements
during the three months ended March 31, 2001.

     Cost of equipment  sales  increased by $0.9 million,  from $0.1 million for
the three months ended March 31, 2000 to $1.0 million for the three months ended
March 31, 2001 due to increased sales of equipment.

     SG&A costs  increased  by $0.4  million,  from $4.4  million  for the three
months ended March 31, 2000 to $4.8 million for the three months ended March 31,
2001.  SG&A  represented  7.4% of operating  revenues for the three months ended
March 31, 2000 and 7.9% of  operating  revenues for the three months ended March
31,  2001,  an increase of 0.5%.  The  increase is  primarily  due to  increased
staffing to support  enhancements  to the Company's  information  systems and to
execute new sales initiatives.

     Depreciation  and amortization  costs decreased by $1.4 million,  from $6.4
million for the three  months ended March 31, 2000 to $5.0 million for the three
months ended March 31, 2001.  Depreciation  and amortization  costs  represented
10.8% of  operating  revenues for the three months ended March 31, 2000 and 8.1%
of  operating  revenues for the three months ended March 31, 2001, a decrease of
2.7%.  The decrease as a percentage  of operating  revenues is primarily  due to
amortization  expense  associated  with  the  acquisitions  of  inmate  facility
contracts  by the  Company.  The  Company  amortizes  acquired  inmate  facility
contracts over each contract's  remaining term at the  acquisition  date. As the
contract  terms expire,  the acquired  inmate  facility  contracts  become fully
amortized and amortization expense declines.

     Operating Income. The Company's operating income increased by $2.4 million,
from $3.2  million for the three months ended March 31, 2000 to $5.6 million for
the  three  months  ended  March  31,  2001,  substantially  due to the  factors
described above.  The Company's  operating income margin increased from 5.5% for
the three  months  ended March 31, 2000 to 9.3% for the three months ended March
31, 2001, primarily as a result of the factors described above.

     Interest  Expense,  Net.  Interest  expense,  net,  consisting  of interest
expense offset by interest  income,  decreased by $0.1 million from $4.9 million
for the three  months  ended March 31, 2000 to $4.8 million for the three months
ended March 31, 2001.

     Net Income  (Loss).  The  Company's  net income  (loss)  increased  by $2.4
million,  from a net loss of $1.7  million for the three  months ended March 31,
2000 to net income of $0.7  million for the three  months  ended March 31, 2001,
primarily as a result of the factors described above.

     EBITDA.  Earnings  before  interest,   income  taxes,   depreciation,   and
amortization  ("EBITDA")  increased  by $0.9  million  from $9.7 million for the
three  months  ended March 31, 2000 to $10.6  million for the three months ended
March  31,  2001,  representing  a 9.3%  increase.  EBITDA  as a  percentage  of



<PAGE>



operating  revenues  increased  from 16.3% for the three  months ended March 31,
2000 to 17.4% for the three months ended March 31,  2001,  primarily  due to the
factors  described  above.  Although  EBITDA  is not a  measure  of  performance
calculated in accordance  with generally  accepted  accounting  principles,  the
Company has included information  concerning EBITDA in this Form 10-Q because it
is commonly  used by certain  investors and analysts as a measure of a company's
ability to service its debt obligations and is a component of the Company's debt
compliance  ratios.  EBITDA  should  not be used  as an  alternative  to,  or be
considered more meaningful than,  operating income, net income, or cash flows as
an  indicator  of the  Company's  operating  income.  Several  of the  Company's
subsidiaries  are  subject to state  income  taxes.  Consequently,  the  Company
accrues income tax expense even in a loss period.


Liquidity and Capital Resources

     The Company  anticipates  that its principal  uses of liquidity  will be to
provide working capital, meet debt service requirements,  and to repay principal
under the Senior Credit Facility (as defined).  Regarding  working capital,  the
Company  received  notice  that  one of its  billing  agents  intends  to  begin
remitting funds to the Company in 44 days as compared to their historical 30 day
payment schedule.  This change would reduce the Company's end of month liquidity
by  approximately  $8 million.  The billing agent has informally and tentatively
agreed not to make this change  until,  at the earliest,  December of 2001.  The
Company  expects  that its  principal  sources  of funds  will be cash flow from
operations,  proceeds  from the new equity  issued on May 30,  2001,  as further
discussed herein,  and borrowings under the Senior Credit Facility.  The Company
anticipates  that its primary  capital  expenditures  will be for capital  items
required to implement  new contracts  entered into by the Company,  although the
Company  does  not have  any  material  commitments  for  capital  expenditures.
Management  believes  that cash flow from  operations,  borrowings on the Senior
Credit  Facility and proceeds from the new equity issued on May 30, 2001 will be
sufficient to fund the  requirements of the Company for at least the next twelve
months.

     On  May  30,  2001,  the  Company  acquired  all of the  capital  stock  of
FortuneLinx,  Inc. for shares of the  Company's  Class "A" Common stock equal to
approximately  6% of the Company's Common Stock on a fully diluted basis. Of the
6%, 3% was issued on May 30, 2001,  and the  remaining 3% will be issued  twelve
months  after  the  effective  date  of the  acquisition  if  certain  financial
performance  objectives are achieved.  Additionally,  options were issued to the
sellers  allowing  them to purchase up to 1% of the  Company's  Class "A" Common
Stock on a fully  diluted  basis at an  exercise  price of $2,000 per share.  In
conjunction with the closing, a note payable to a FortuneLinx shareholder in the
principal amount of $0.8 million was repaid plus accrued interest.



Equity Offering and Senior Credit Facility Amendment

     On April 10, 2001,  the  Company's  Board of  Directors  approved a plan to
offer to sell 12,000 shares of the Company's Class "A" Common stock for $750 per
share to the Company's existing shareholders. The Company received $9 million of
proceeds  from the issuance of this new equity on June 4, 2001.  As part of this
offer each  subscribing  shareholder  received  their pro-rata share of warrants
equal to 4.5% of the Company's  fully diluted common stock.  The warrants expire
on May 30, 2007 and are  convertible to the Company's  Class "A" Common Stock at
$750 per share.

     On May 30, 2001, and in conjunction  with the commitment  from its existing
shareholders  and other  investors to purchase  12,000  shares of the  Company's
Common  stock for $750 per share,  the  Company and its Senior  Credit  Facility
lenders amended the Company's Senior Credit Facility.  The amendment changed the
requirements and definitions of certain financial covenants through December

<PAGE>



31,  2001 and  increased  the  Company's  ability  to enter into  capital  lease
arrangements from $2.5 million to $5 million. Additionally, the amendment waived
the Senior Credit Facility Lender's rights to the proceeds from the May 30, 2001
issuance of common stock and waived all  outstanding  defaults  under the Senior
Credit Facility. An amendment fee equal to 0.75% of outstanding commitments,  or
$0.4  million,  was paid to the Senior  Credit  Facility  lenders to effect this
amendment.  Additionally,  the amendment  increased all interest rates under the
Senior Credit Facility by 0.5% (50 basis points).


     In March 1999,  the Company  raised $5 million of equity from its  existing
shareholders and warrant holders and/or their affiliates through the issuance of
5,000  investment units at a price of $1,000 per unit. Each unit consists of one
share of newly  authorized  First  Preferred  Series  "A" Stock and a warrant to
acquire  one share of Common  Stock for $1,000 per  share.  The First  Preferred
Series  "A" Stock is  entitled  to receive  dividends  at the  applicable  First
Preferred Series "A" Rate,  payable quarterly  commencing on April 1, 1999. Such
dividends are payable out of funds legally available therefore, are payable only
when,  as, and if declared by the Board of Directors,  are  cumulative,  and, if
undeclared or unpaid,  shall bear  interest at the  applicable  First  Preferred
Series "A" Rate until paid. The First  Preferred  Series "A" Rate will be 8% per
annum through March 31, 2001,  10% per annum from April 1, 2001 through June 30,
2001,  and  thereafter  will increase by 0.5% for each  additional  three months
period up to a maximum of 16% per annum.  The First  Preferred  Series "A" Stock
ranks  senior to all classes of the  Company's  common stock but ranks junior to
the Senior  Preferred Stock of the Company (the "Senior  Preferred  Stock") with
respect to dividend  rights and rights upon  liquidation.  The  warrants  have a
strike price of $1,000 per share and will expire,  if not sooner  exercised,  on
December 31, 2007. As a result of the issuance of the First Preferred Series "A"
Stock and warrants,  the Company was required to obtain a waiver from its Senior
Credit Facility group of lenders that waived the lenders' rights to the proceeds
raised by the Company from the issuance.

     In conjunction with the March 1999 equity offering,  the preferred dividend
rates on the  original  Senior  Preferred  Stock  were  modified  to mirror  the
preferred dividend rates on the First Preferred Series "A" Stock.

     Also in  March  1999 and in  conjunction  with the  issuance  of the  First
Preferred  Series "A" Stock and warrants,  the Company  amended and restated its
Senior Credit Facility. The amendment increased the Company's borrowing capacity
under the term loan  facility of the Senior  Credit  Facility  by $5.5  million,
which will bear interest at similar rates to the existing  borrowings  under the
Senior Credit  Facility.  The Company  borrowed the  additional  $5.5 million in
March 1999 and concurrently repaid $5 million under the revolving portion of the
Senior Credit Facility.

     Net cash  provided by operating  activities  decreased by $0.5 million from
$5.7 million for the three months ended March 31, 2000,  to $5.2 million for the
three months ended March 31, 2001.  Operating  income for the three months ended
March 31, 2001, before consideration of depreciation and amortization, increased
by $1.0 million over the three months ended March 31, 2000,  which was offset by
timing of certain  cash  receipts  and  disbursements  in the  normal  course of
business.

     Cash used in  investing  activities  was $2.5  million for the three months
ended  March 31, 2001 as compared  to $3.0  million for the three  months  ended
March 31, 2000,  consisting  primarily of both cash outflows for  investments in
new business and customer  contract  renewals and payments of acquisition  costs
relating to acquisitions made in prior years.

     Cash used in  financing  activities  was $0.5  million for the three months
ended  March 31, 2001 as compared  to $4.1  million for the three  months  ended
March 31, 2000,  consisting  primarily of principal  repayments under the Senior
Credit Facility, offset by new borrowings under the Senior Credit Facility.


<PAGE>



     The Senior  Credit  Facility,  as amended on May 30, 2001,  consists of (a)
$55.0 million term loan acquisition  facility all of which has been borrowed and
upon which $30.9  million of  scheduled  principal  payments had been made as of
March 31, 2001, (b) $10.5 million of additional term loan  facilities  which has
been borrowed as of December 31, 2000 (availability of a $2.5 million additional
term  loan  expired  because  the  Company  did not  achieve  certain  financial
performance  for the year ended  December  31,  2000),  and (c) a $25.0  million
revolving  loan  facility  (which  includes  a $10.0  million  letter  of credit
facility)  upon which  $16.5  million had been  borrowed  as of March 31,  2001.
Scheduled principal payments under the Senior Credit Facility bear interest,  at
the  option of the  Company,  at either (i) the Base Rate  (i.e.,  the higher of
Canadian  Imperial Bank of Commerce's  ("CIBC")  reference rate or the overnight
federal  funds rate plus 0.5%) plus a margin  that  varies from 150 to 350 basis
points, depending on the Company's Total Debt to EBITDA Ratio (as defined in the
Senior Credit Facility); or (ii) the LIBOR plus a margin that varies from 275 to
450 basis points, depending on the Company's Total Debt to EBITDA Ratio.

     The Senior Credit Facility requires  quarterly interest payments to be made
on base rate loans and periodic  interest-only  payments based on the applicable
interest period on LIBOR loans, at least quarterly, in each case until maturity.
In addition,  the Senior Credit Facility requires  mandatory  prepayments out of
the proceeds of certain equity or debt offerings, asset dispositions, receipt of
insurance  proceeds not applied as provided in the Senior Credit  Facility,  and
receipts of funds from certain escrow accounts.  Remaining  scheduled  principal
payments on the term loan facilities are  approximately  $10.3 million and $24.2
million during the years ended 2001,  and 2002,  respectively.  All  outstanding
principal  and  interest  under the Senior  Credit  Facility is due December 31,
2002. The Senior Credit Facility is secured by  substantially  all the assets of
the Company and its  subsidiaries.  The Senior Credit Facility also requires the
Company to meet certain  financial tests on a consolidated  basis, some of which
may be  more  restrictive  in  future  years.  Based  on the  Company's  current
forecast, certain of these financial tests are likely to not be met by March 31,
2002.  The  Company's  failure to comply with its  obligations  under the Senior
Credit  Facility,  or in  agreements  relating to  indebtedness  incurred in the
future,  could result in an event of default under such agreements,  which could
permit  acceleration  of the related debt and  acceleration  of debt under other
financing  arrangements  that may contain  cross-acceleration  or  cross-default
provisions.

     On June 30, 1998,  the Company  entered into an interest rate cap agreement
that has been designated as a hedge against the Company's variable interest rate
exposure under the Senior Credit Facility.  At March 31, 2001, the interest rate
cap has an aggregate  notional  amount of $30.0  million,  which matures in June
2001,  and caps  interest  on the  LIBOR  portion  of the term  loan,  up to the
aggregate notional amount, at 7.5%, plus the applicable LIBOR margin.

     As of May 30, 2001,  without  consideration  of the May 30, 2001 new equity
offering discussed herein,  the Company had $6.2 million of available  borrowing
capacity under the Senior Credit Facility.

     As of March 31,  2001 the  Company  had  approximately  $166.1  million  of
long-term  indebtedness  outstanding including the current portion, a deficit in
stockholders' equity of $47.5 million, and $6.3 million of cash.

     As of March 31, 2001,  the Company's  long-term  indebtedness  included (i)
$115.0 million of 11.0% Senior Notes due 2007 (the "Senior  Notes"),  (ii) $51.1
million of indebtedness  under the Senior Credit Facility,  and (iii) $10,853 of
other indebtedness.

     The Company intends to evaluate additional  acquisitions to expand its base
of installed  inmate  telephones  and value added  services and will continue to
evaluate possible acquisition opportunities.  There can be no assurance that the
Company  will  have  sufficient  available  capital  resources  to  realize  its


<PAGE>



acquisition strategy. Such future acquisitions,  depending on their size and the
form of consideration, may require the Company to seek additional debt or equity
financing.


Changes in Accounting Standards

     SFAS  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities," was issued in June 1998, and requires recognition of all derivative
financial  instruments as either assets or liabilities in  consolidated  balance
sheets at fair value and determines the method(s) of gain/loss recognition. SFAS
No. 133 is  effective  for fiscal years  beginning  after  January 1, 2001.  The
Company adopted SFAS No. 133 effective January 1, 2001. The adoption of SFAS 133
did not have a material effect on the Company's financial position or results of
operations.


Special Note Regarding Forward-Looking Information

     Certain   statements  in  this  Quarterly   Report  Form  10-Q   constitute
forward-looking statements.  These forward-looking statements are all statements
that are not statements of historical fact or that might otherwise be considered
opinion, belief, or projection.  These forward-looking  statements involve known
and unknown  risks,  uncertainties,  and other factors that may cause the actual
results,  levels of activity,  performance,  or achievements of the Company,  or
industry results, to be materially different from any future results,  levels of
activity,  performance,  or achievements.  The risks,  uncertainties,  and other
factors to which forward-looking  statements are subject include,  among others,
those set forth under the caption  "Risk  Factors"  in the  Company's  Form 10-K
filed on June 1, 2001, which is available from the Company,  from the Securities
and Exchange  Commission at prescribed  rates, and at the web site  www.sec.gov.
Such factors  include,  without  limitation,  the  following:  competitors  with
greater  resources;   risks  associated  with  uncollectible   accounts;   risks
associated  with  carrying a large  amount of debt;  risks  associated  with our
limited  operating history and accumulated  deficits;  risks associated with our
dependency on  facilities-based  carriers;  risks  associated with market growth
stagnating   or   declining;   lack  of  patents  and   possible   infringement;
technological  change  and new  services;  control  by  principal  shareholders;
changes in the telecommunications  industry;  availability of key personnel; and
changes  in or  the  failure  to  comply  with,  governmental  regulations.  All
subsequent  written  or  oral  forward-looking  statements  attributable  to the
company  or  persons  acting on its  behalf  are  expressly  qualified  in their
entirety by such factors.

     In some cases,  forward-looking statements can be identified by terminology
such as "may," "will," "should," "expects," "plans," "anticipates,"  "believes,"
"estimates,"  "predicts,"  "potential,"  or  "continue"  or the negative of such
terms or other  comparable  terminology.  Although the Company believes that the
assumptions and expectations  reflected in such  forward-looking  statements are
reasonable,  as a result of the foregoing and other factors, no assurance can be
given as to future results,  levels of activity,  performance,  or achievements,
and  neither the Company nor any other  person  assumes  responsibility  for the
accuracy   and   completeness   of   such   forward-looking    statements.   All
forward-looking  statements  included in the  Quarterly  Report on Form 10-Q are
based on  information  available  to the  Company  on the date  hereof,  and the
Company is under no duty to update any of the  forward-looking  statements after
the date hereof.



<PAGE>





ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     There were no material changes from the information reported in the
Company's Form 10-K.




<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS

     The Company is from time to time a party to legal proceedings that arise in
the ordinary course of business. Management does not believe that the resolution
of any  threatened or pending  legal  proceedings  will have a material  adverse
affect on the Company.

     None of the Company's internally  developed call processing  technology has
been patented.  Accordingly,  such technology and  intellectual  property rights
could  infringe  on other  parties'  intellectual  property  rights and could be
contested or challenged.  The Company has received  notice from two parties that
certain  features of the Company's call processing  technology may infringe upon
such  parties'  patents.  Should the  Company's  call  processor or any material
feature thereof be determined to violate applicable  patents,  the Company would
be required to cease using these features or to obtain appropriate  licenses for
the use of such technology.


ITEM 2.       CHANGES IN SECURITIES AND USE OF PROCEEDS

     This item is not applicable to the Registrant.

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

     None.

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS

     None.

ITEM 5.       OTHER INFORMATION

     None.


<PAGE>



ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

 Exhibit
   No.                               Description of Exhibit
----------           -------------------------------------------------------

3.1  Certificate  of  Incorporation  of the Company (filed as Exhibit 3.1 to the
     Company's  Registration  Statement No. 333-33639 and incorporated herein by
     reference).
3.2  Bylaws of the Company  (filed as Exhibit 3.2 to the Company's  Registration
     Statement No. 333-33639 and incorporated herein by reference).
3.3  Certificate of Amendment to Restated  Certificate of  Incorporation  of the
     Company,  dated as of July 23, 1998 (filed as Exhibit 3.3 to the  Company's
     Quarterly Report on Form 10-Q, dated as of August 14, 1998 and incorporated
     herein by reference).
3.4  Certificate of Amendment to Restated  Certificate of  Incorporation  of the
     Company, dated as February 11, 1999.
4.1  Indenture,  dated as of June 27, 1997,  between the Company and U.S.  Trust
     Company of Texas, N.A. (filed as Exhibit 4.1 to the Company's  Registration
     Statement No. 333-33639 and incorporated herein by reference).
4.2  Form of Note (filed as Exhibit 4.2 to the Company's  Registration Statement
     No. 333-33639 and incorporated herein by reference).
4.3  Form of Subsidiary Guaranty (contained in Indenture filed as Exhibit 4.3 to
     the Company's  Registration Statement No. 333-33639 and incorporated herein
     by reference).
4.4  Registration  Rights  Agreement,  dated as of June 27,  1997,  between  the
     Company and the Initial  Purchaser  (filed as Exhibit 4.4 to the  Company's
     Registration Statement No. 333-33639 and incorporated herein by reference).
4.5  Registration  Rights  Agreement dated as of December 27, 1996, by and among
     the Company and certain  Holders named therein (filed as Exhibit 4.5 to the
     Company's  Registration  Statement No. 333-33639 and incorporated herein by
     reference).
4.6  Shareholders  Agreement,  dated as of December 27,  1996,  by and among the
     Company  and certain  Persons  named  therein  (filed as Exhibit 4.6 to the
     Company's  Registration  Statement No. 333-33639 and incorporated herein by
     reference).
4.7  Warrant  Agreement,  dated as of December 27, 1996, between the Company and
     CIBC Wood  Gundy  Ventures,  Inc.  (filed as Exhibit  4.7 to the  Company's
     Registration Statement No. 333-33639 and incorporated herein by reference).
4.8  Warrant  Agreement,  dated as of December 27, 1996, between the Company and
     Gregg  L.  Engles  (filed  as  Exhibit  4.8 to the  Company's  Registration
     Statement No. 333-33639 and incorporated herein by reference).
4.9  Warrant  Agreement,  dated as of December 27, 1996, between the Company and
     Gregg  L.  Engles  (filed  as  Exhibit  4.9 to the  Company's  Registration
     Statement No. 333-33639 and incorporated herein by reference).
4.10 Warrant  Agreement,  dated as of December 27, 1996, between the Company and
     Gregg  L.  Engles  (filed  as  Exhibit  4.10o  the  Company's  Registration
     Statement No. 333-33639 and incorporated herein by reference).
4.11 Warrant  Agreement,  dated as of December 27, 1996, between the Company and
     Onyx  Talton  Partners,  L.P.  (filed  as  Exhibit  4.11  to the  Company's
     Registration Statement No. 333-33639 and incorporated herein by reference).
4.12 Warrant  Agreement,  dated as of December 27, 1996, between the Company and
     Onyx  Talton  Partners,  L.P.  (filed  as  Exhibit  4.12  to the  Company's
     Registration Statement No. 333-33639 and incorporated herein by reference).
4.13 Warrant  Agreement,  dated as of December 27, 1996, between the Company and
     Onyx  Talton  Partners,  L.P.  (filed  as  Exhibit  4.13  to the  Company's
     Registration Statement No. 333-33639 and incorporated herein by reference).
4.14 Warrant  Agreement,  dated as of December 27, 1996, between the Company and
     Joseph  P.  Urso  (filed  as  Exhibit  4.14 to the  Company's  Registration
     Statement No. 333-33639 and incorporated herein by reference).
4.15 Warrant  Agreement,  dated as of December 27, 1996, between the Company and
     Joseph  P.  Urso  (filed  as  Exhibit  4.15 to the  Company's  Registration
     Statement No. 333-33639 and incorporated herein by reference).
4.16 Warrant  Agreement,  dated as of December 27, 1996, between the Company and
     Joseph  P.  Urso  (filed  as  Exhibit  4.16 to the  Company's  Registration
     Statement No. 333-33639 and incorporated herein by reference).
4.17 Warrant  Agreement,  dated as of December 27, 1996, between the Company and
     Todd W.  Follmer  (filed  as  Exhibit  4.17 to the  Company's  Registration
     Statement No. 333-33639 and incorporated herein by reference).
4.18 Warrant  Agreement,  dated as of December 27, 1996, between the Company and
     Todd W.  Follmer  (filed  as  Exhibit  4.18 to the  Company's  Registration
     Statement No. 333-33639 and incorporated herein by reference).
4.19 Warrant  Agreement,  dated as of December 27, 1996, between the Company and
     Todd W.  Follmer  (filed  as  Exhibit  4.19 to the  Company's  Registration
     Statement No. 333-33639 and incorporated herein by reference).
4.20 Form of Warrant  Agreement,  dated as of March 12,  1999  (filed as Exhibit
     4.20 to the Company's  Quarterly  Report on Form 10-Q for the quarter ended
     March 31, 1999 and incorporated herein by reference).
4.21* Form of Warrant Agreement, dated as of May 30, 2001.
10.1*Amendment No. 5 to Second Amended and Restated Credit  Agreement,  dated as
     of May 30, 2001, among the Company,  and certain lenders named therein, and
     Canadian Imperial Bank of Commerce.

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

* Filed herewith.


(b) Reports on Form 8-K

No  reports  on Form 8-K have been  filed  during  the  period  subject  to this
Quarterly Report on Form 10-Q.



<PAGE>



                                   SIGNATURES

Pursuant  to the  requirement  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.

                                                   EVERCOM, INC.


                                                   By: /s/  RICHARD FALCONE
                                                      --------------------------
                                                       Richard Falcone
                                                       Chief Executive Officer


                                                   By: /s/  KEITH KELSON
                                                      --------------------------
                                                       Keith Kelson
                                                       Chief Financial Officer



Date:  June 7, 2001