<PAGE>

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the Quarterly Period Ended February 28, 2002

                                       OR

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

For the transition period from ____ to ___

                         Commission File Number 1-13436

                         TELETOUCH COMMUNICATIONS, INC.
                       (Name of registrant in its charter)

             DELAWARE                                    75-2556090
  (State or other jurisdiction of           (I.R.S. Employer Identification No.)
  Incorporation or Organization)

          110 N. College, Suite 200, Tyler, Texas 75702 (903) 595-8800
          (Address and telephone number of 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 [X] No [_]

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

     Common Stock, $.001 par value, 4,793,420 shares outstanding as of April 11,
2002


<PAGE>

                         TELETOUCH COMMUNICATIONS, INC.

                                    FORM 10-Q

                         QUARTER ENDED February 28, 2002

<TABLE>
<CAPTION>
                                                                                                                    Page No.
                                                                                                                    --------
<S>                                                                                                                 <C>
Part I.           Financial Information

   Item 1.        Consolidated Financial Statements - Teletouch Communications, Inc. (unaudited)

                  Condensed Consolidated Balance Sheets at February 28, 2002 and May 31, 2001                            1

                  Condensed Consolidated Statements of Operations - Three and Nine Months Ended February 28, 2002
                  and February 28, 2001                                                                                  2

                  Condensed Consolidated Statements of Cash Flows - Nine Months Ended February 28, 2002 and
                  February 28, 2001                                                                                      3

                  Notes to Condensed Consolidated Financial Statements                                                   4

   Item 2.        Management's Discussion and Analysis of Financial Condition and Results of Operations                  8

Part II.          Other Information

   Item 1.        Legal Proceedings                                                                                     14

   Item 5.        Other Information                                                                                     14

   Item 6.        Exhibits and Reports on Form 8-K                                                                      14

Signatures                                                                                                              15


</TABLE>

<PAGE>

                          Part I. Financial Information

<PAGE>

                 TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>
ASSETS                                                                                February 28, 2002   May 31, 2001
                                                                                      -----------------   ------------
                                                                                         (unaudited)
<S>                                                                                   <C>                 <C>
CURRENT ASSETS:
      Cash and cash equivalents                                                           $  8,547          $  3,999
      Accounts receivable, net of allowance of $237 in 2002 and $238 in 2001                 1,925             2,351
      Inventory                                                                              3,710             4,552
      Deferred income tax assets                                                                56                56
      Certificates of deposit, restricted as to use                                            102               101
      Prepaid expenses and other current assets                                                578               532
                                                                                          --------          --------
                                                                                            14,918            11,591

PROPERTY, PLANT AND EQUIPMENT, net of accumulated
   depreciation of $18,707 in 2002 and $16,591 in 2001                                      16,478            18,484

INTANGIBLES AND OTHER ASSETS:
   Subscriber bases                                                                             37                --
   Debt issue costs                                                                          4,100             4,100
   Accumulated amortization                                                                 (3,035)           (2,730)
                                                                                          --------          --------
                                                                                             1,102             1,370
                                                                                          --------          --------
                                                                                          $ 32,498          $ 31,445
                                                                                          ========          ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
      Accounts payable and accrued expenses                                               $  5,912          $  3,029
      Current portion of long-term debt                                                     19,028            12,196
      Long-term debt reclassified as current                                                62,461            66,935
      Current portion of unearned sale/leaseback profit                                        418               418
      Deferred revenue                                                                       1,141             1,312
                                                                                          --------          --------
                                                                                            88,960            83,890

UNEARNED SALE/LEASEBACK PROFIT, net of current portion                                       2,012             2,327

COMMITMENTS AND CONTINGENCIES                                                                   --                --
DEFERRED INCOME TAXES                                                                        1,042             1,042
SHAREHOLDERS' EQUITY (DEFICIT):
      Series A cumulative convertible preferred stock, $.001 par value, 15,000
        shares authorized, issued, and outstanding in 2002 and 2001                             --                --
      Series B convertible preferred stock, $.001 par value, 411,457 shares
        authorized, 86,025 shares issued and outstanding in 2002 and 2001                       --                --
      Common stock, $.001 par value, 25,000,000 shares authorized, 4,926,210
        shares issued in 2002 and 2001, respectively                                             5                 5
      Treasury stock, 132,790 shares                                                           (98)              (62)
      Additional paid-in capital                                                            26,394            26,363
      Accumulated deficit                                                                  (85,817)          (82,120)
                                                                                          --------          --------
                                                                                           (59,516)          (55,814)
                                                                                          --------          --------
                                                                                          $ 32,498          $ 31,445
                                                                                          ========          ========
</TABLE>

      See Accompanying Notes to Condensed Consolidated Financial Statements

                                        1

<PAGE>

                 TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except shares and per share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                             Three Months Ended              Nine Months Ended
                                                                February 28                     February 28
                                                        ----------------------------- -----------------------------
                                                            2002            2001          2002           2001
                                                        -------------- -------------- -------------- --------------
<S>                                                     <C>            <C>            <C>            <C>
Service, rent, and maintenance revenue..............    $     8,291    $    10,636    $    26,410    $    33,064
Product sales revenue ..............................          3,372          4,037          9,261         10,101
                                                        -----------    -----------    -----------    -----------
   Total revenues ..................................         11,663         14,673         35,671         43,165
Net book value of products sold ....................         (2,312)        (3,707)        (6,607)       (10,093)
                                                        -----------    -----------    -----------    -----------
                                                              9,351         10,966         29,064         33,072

Costs and expenses:
      Operating ....................................          3,441          4,389         10,656         12,297
      Selling ......................................          2,091          2,248          6,152          6,902
      General and administrative ...................          1,681          2,021          5,350          5,762
      Depreciation and amortization ................          1,568          2,626          4,767          7,618
                                                        -----------    -----------    -----------    -----------
Total costs and expenses ...........................          8,781         11,284         26,925         32,579
                                                        -----------    -----------    -----------    -----------

Operating income (loss) ............................            570           (318)         2,139            493

Gain (loss) on sale of assets ......................              5             --             (6)             5

Interest expense, net ..............................         (1,883)        (2,250)        (5,830)        (6,701)
                                                        -----------    -----------    -----------    -----------


Net loss ...........................................         (1,308)        (2,568)        (3,697)        (6,203)

Preferred stock dividends ..........................         (1,255)        (1,093)        (3,638)        (3,170)
                                                        -----------    -----------    -----------    -----------

Loss applicable to common stock ....................         (2,563)        (3,661)        (7,335)        (9,373)
                                                        ===========    ===========    ===========    ===========



Loss per share .....................................    $     (0.53)   $     (0.74)   $     (1.51)   $     (2.01)
                                                        ===========    ===========    ===========    ===========

Weighted average shares outstanding ................      4,811,345      4,922,490      4,846,583      4,667,441
                                                        ===========    ===========    ===========    ===========
</TABLE>

      See Accompanying Notes to Condensed Consolidated Financial Statements

                                       2

<PAGE>

                 TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                           Nine Months Ended
                                                                                              February 28
                                                                                   -------------------------------
                                                                                       2002               2001
                                                                                   ---------------   -------------
<S>                                                                                <C>               <C>
Operating Activities:
      Net loss .................................................................    $(3,697)           $(6,203)
      Adjustments to reconcile net loss to net cash provided by operating
      activities:
      Depreciation and amortization ............................................      4,767              7,618
      Non cash compensation expense ............................................         31                 --
      Non cash interest expense ................................................      2,927              2,637
      Provision for inventory impairment .......................................         --                 87
      Provision for losses on accounts receivable ..............................        695              1,305
      (Gain) loss on sale of assets ............................................          7                 (5)
      Amortization of unearned sale/leaseback profit ...........................       (315)              (315)
      Changes in operating assets and liabilities:
        Accounts receivable, net ...............................................       (269)            (1,401)
        Inventories ............................................................      1,245              1,034
        Prepaid expenses and other assets ......................................        (46)               379
        Accounts payable and accrued expenses ..................................      2,882             (1,516)
        Deferred  revenue ......................................................       (171)               (59)
                                                                                    -------            -------

Net cash provided by operating activities ......................................      8,056              3,561

Investing Activities:
      Capital expenditures, including pagers ...................................     (3,196)            (5,158)
      Redemption (Purchase) of certificates of deposit .........................         (1)               650
      Acquisitions, net of cash acquired .......................................        (36)              (104)
      Net proceeds from sale of assets .........................................         25                 54
                                                                                    -------            -------

Net cash used for investing activities .........................................     (3,208)            (4,558)

Financing Activities:
      Purchase of treasure stock ...............................................        (36)               (39)
      Payments on long-term debt ...............................................       (264)            (2,304)
                                                                                    -------            -------

Net cash used for financing activities .........................................       (300)            (2,343)

Net increase (decrease) in cash and cash equivalents ...........................      4,548             (3,340)
Cash and cash equivalents at beginning of period ...............................      3,999              6,828
                                                                                    -------            -------

Cash and cash equivalents at end of period .....................................    $ 8,547            $ 3,488
                                                                                    =======            =======

Supplemental disclosure of non cash activities:
-----------------------------------------------
      Issuance of common stock related to acquisition ..........................    $    --            $ 1,500
</TABLE>

      See Accompanying Notes to Condensed Consolidated Financial Statements

                                       3

<PAGE>

                         TELETOUCH COMMUNICATIONS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE A - SIGNIFICANT ACCOUNTING POLICIES

      The unaudited condensed consolidated financial statements of Teletouch
Communications, Inc., and its subsidiaries ("Teletouch" or the "Company") for
the respective periods ended February 28, 2002 and February 28, 2001 have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis. Significant accounting policies followed by the Company were
disclosed in the notes to the financial statements included in the Company's
Annual Report on Form 10-K for the year ended May 31, 2001. The balance sheet at
May 31, 2001 has been derived from the audited financial statements at that date
but does not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of the Company's management, the accompanying condensed consolidated financial
statements contain the material adjustments necessary to present fairly the
financial position of the Company and the results of its operations and cash
flows for the respective periods ended February 28, 2002 and February 28, 2001.
All such adjustments are of a normal recurring nature. Interim period results
are not necessarily indicative of the results to be achieved for the full year.

      Loss Per Share: Loss per share is computed using the weighted- average
number of common shares outstanding during the period.

      New Accounting Announcements: In October 2001, the Financial Accounting
Standards Board issued Statement on Financial Accounting Standards No. 144 -
Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No. 144).
SFAS No. 144 is effective for years beginning after December 15, 2001 and
supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of. SFAS No. 144 provides a single
accounting model for disposition of long-lived assets. Although retaining many
of the fundamental recognition and measurement provisions of Statement 121, the
new rules significantly change the criteria that would have to be met to
classify an asset as held for sale. The new rules also will supersede the
provisions of the Accounting Principles Board Opinion 30 with regard to
reporting the effects of a disposal of a segment of a business and will require
expected future operating losses from discontinued operations to be displayed in
discontinued operations in the period(s) in which the losses are incurred. In
addition, more dispositions will qualify for discontinued operations treatment
in the income statement. SFAS No. 144 is effective for years beginning after
December 15, 2001. The Company is currently analyzing the implementation
requirements and has not yet determined whether the adoption of SFAS No. 144
will have a material impact on the Company's consolidated balance sheets or its
statements of operations, shareholders' equity and cash flows.

                                       4

<PAGE>

                         TELETOUCH COMMUNICATIONS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE B - BASIS OF PRESENTATION

      The consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As discussed in Note D, the
Company's Credit Agreement with a group of lenders led by JP Morgan Chase Bank
(as successor-in-interest to The Chase Manhattan Bank) requires, among other
things, the maintenance of certain financial and operating covenants and
prohibits any payments on the Junior Subordinated Notes and the payment of
dividends. Although the Company is engaged in ongoing negotiations with its
lender to recapitalize its debt securities, as of February 28, 2002, the Company
was unable to amend or negotiate new terms under the Credit Agreement, which
would enable the Company to remain in compliance therewith and thereunder as of
February 28, 2002, and for subsequent periods. The Company's inability to comply
with the terms of the Credit Agreement resulted in the occurrence of an Event of
Default under the Credit Agreement which permits the lender to terminate the
commitment and to declare the borrowings totaling $57.1 million ($59.9 million
including accrued and unpaid interest) to be due and payable. Also, based on the
terms of the Junior Subordinated Note Agreement, if the lender declared the
Company not in compliance with the terms of the Credit Agreement, then by
definition it would not be in compliance with the terms of the Junior
Subordinated Note Agreement resulting in an additional $24.7 million (including
accrued and unpaid interest of $14.7 million) becoming due and payable. While
the Company continues to have discussions with the lenders, no assurances can be
given that the Company will be able to successfully negotiate satisfactory
terms. The respective defaults under the Credit Agreement and Junior
Subordinated Notes, the continued decline in cash flow from operations, and the
on-going operating difficulties faced by companies in the wireless
telecommunications services industry indicate that the Company may be unable to
continue as a going concern.


NOTE C - LONG-LIVED ASSETS

      The carrying amount of the long-lived assets is reviewed if facts and
circumstances suggest that they may be impaired. If the review indicates that
long-lived assets will not be recoverable, as determined by the undiscounted
cash flow method, the asset will be reduced to its estimated recoverable value
through a charge to operations.

      During the fourth quarter of 2001, because of the continued default under
the Credit Agreement (see Note D), the continued decline in cash flow and the
on-going financial and operating difficulties faced by companies in the wireless
telecommunications services industry, the Company determined that the remaining
net book value of its long-lived assets were substantially impaired and the
recovery of such amounts through future operations or disposition was unlikely.
Accordingly, management estimated the future undiscounted cash flows and
determined the goodwill and FCC licenses were significantly impaired and
therefore recorded a charge equal to remaining net book value of these assets of
$ 36.6 million. No events have occurred during the quarter ended February 28,
2002 that have caused the Company to change any of its estimates as to future
undiscounted cash flows, therefore, no additional impairment charges have been
recorded against any remaining long-lived assets which consists of property,
plant and equipment.

                                       5

<PAGE>

                         TELETOUCH COMMUNICATIONS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE D - LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

                                                February 28,         May 31,
                                                    2002               2001
                                                    ----               ----
Notes payable                                     $ 57,147           $ 57,322
Junior subordinated notes                           24,336             21,713
Other                                                    6                 96
                                                  --------           --------
                                                    81,489             79,131
Less current portion                                19,028             12,196
Less portion reclassified as current debt           62,461             66,935
                                                  --------           --------
                                                  $     --           $     --
                                                  ========           ========

      Notes Payable: The terms of the Credit Agreement provide for loans in an
amount not to exceed $70 million. As of February 28, 2002, $57.1 million of the
Credit Agreement was funded. Direct costs incurred in connection with obtaining
the Credit Agreement of approximately $4.1 million have been deferred and are
being amortized, using the effective interest rate method, over the term of the
existing loans.

      The Credit Agreement bears interest, at the Company's designation, at a
floating rate of the prime rate plus 1% to 2% or LIBOR plus 2% to 3%. These
rates vary depending on the leverage ratio of the Company. The Credit Agreement
is secured by substantially all of the assets of Teletouch and its subsidiaries.
Borrowings under the Credit Agreement require the principal be repaid in
escalating quarterly installments through November 2005.

      The Credit Agreement also requires the maintenance of specified financial
and operating covenants, and prohibits any payments on the Junior Subordinated
Notes and the payment of dividends. These covenants were amended as of the end
of each of the first three quarters of the fiscal year ended May 31, 2001,
enabling the Company to meet its financial covenant and principal repayment
terms at the end of each of the first three quarters of the prior fiscal year.
As of May 31, 2001 and through February 28, 2002, the Company has been engaged
in on-going negotiations with its lenders to negotiate new terms under the
Credit Agreement, which would allow the Company to remain in compliance with its
terms as of February 28, 2002, and for subsequent periods. Failure to comply
with the terms of the agreement results in an Event of Default under the Credit
Agreement which in turn allows the lender to terminate the commitment and to
declare the borrowings totaling $57.1 ($59.9 million including accrued and
unpaid interest) million to be due and payable. The Company is in default of its
payment obligations under the Credit Agreement as well as with various financial
covenants. The Lenders have refused to waive the Events of Default, and are in
the process of assessing their alternatives. In any event, no additional
borrowings will be available to the Company under the Credit Agreement.
Teletouch has classified amounts due under the Credit Agreement as a current
liability as of February 28, 2002.

                                       6

<PAGE>

                         TELETOUCH COMMUNICATIONS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

      Junior Subordinated Notes: In August 1995, Teletouch borrowed $10 million
from Continental Illinois Venture Corporation ("CIVC") and certain other parties
both related and unrelated to CIVC (together with CIVC, the "CIVC Investors") in
exchange for which Teletouch issued 14% Junior Subordinated Notes (the "Junior
Subordinated Notes") to the CIVC Investors. The Junior Subordinated Notes are
due in August 2003. The Junior Subordinated Notes were initially recorded, for
financial reporting purposes, at approximately $8 million. Included in the
Junior Subordinated Notes balance is accrued interest of $14.7 million and $12.3
million at February 28, 2002 and May 31, 2001, respectively.

      The terms of the Junior Subordinated Notes require the maintenance of
certain financial and operating covenants and restrict future acquisitions.
Pursuant to the terms of the Junior Subordinated Note Agreement, if the lender
declared the Company not in compliance with the terms of the Credit Agreement,
then the Company would not be in compliance with the terms of the Junior
Subordinated Note Agreement. The resulting inability to comply with the terms of
the Junior Subordinated Note Agreement would cause an additional $24.7 million,
as of February 28, 2002, to become due and payable; therefore, Teletouch has
classified the amount outstanding under the Subordinated Notes as a current
liability as of February 28, 2002.

      The Company is pursuing a recapitalization of its debt and certain equity
securities. Although the Company's management believes it will successfully
recapitalize the Company in a timely fashion, there can be no assurance that
payment under the Credit Agreement and Junior Subordinated Notes will not be
declared due and payable. In the event of such an occurrence, the Company may be
unable to meet the repayment obligations, causing the Company to seek protection
from creditors.


NOTE E - STOCK OPTIONS

      In December 1999, the Company reduced the exercise price of all
outstanding employee and director owned stock options to $0.87, which was equal
to the average of the closing price of the Company's common stock for the
20-trading days prior to December 1, 1999. In November 2001, the Company reduced
the exercise price of certain outstanding employee and director owned stock
options to $0.24. For the quarter ended February 28, 2002, based on the fair
market value of Teletouch's common stock and in accordance with the recently
issued Financial Accounting Standards Board Interpretation No. 44, "Accounting
for Certain Transactions Involving Stock Compensation" compensation expense of
approximately $23,000 was recorded. Additional compensation expenses may be
recorded in future periods based on fluctuations in the market value of the
Company's common stock.

                                       7

<PAGE>

                         TELETOUCH COMMUNICATIONS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

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

      Certain statements contained herein are not based on historical facts, but
are forward-looking statements that are based upon numerous assumptions about
future conditions that could prove not to be accurate. Actual events,
transactions and results may materially differ from the anticipated events,
transactions or results described in such statements. The Company's ability to
consummate such transactions and achieve such events or results is subject to
certain risks and uncertainties. Such risks and uncertainties include, but are
not limited to, the existence of demand for and acceptance of the Company's
products and services, regulatory approvals and developments, economic
conditions, the impact of competition and pricing, results of financing efforts
and other factors affecting the Company's business that are beyond the Company's
control. The Company undertakes no obligation and does not intend to update,
revise, or otherwise publicly release the results of any revisions to these
forward-looking statements that may be made to reflect future events or
circumstances.


OVERVIEW

      The following discussion and analysis of the results of operations and
financial condition of the Company should be read in conjunction with the
condensed consolidated financial statements and notes thereto included elsewhere
in this report.

      Teletouch is a leading provider of wireless telecommunications services,
primarily paging services, in non-major metropolitan areas and communities in
the southeast United States. As of February 28, 2002 the Company had
approximately 286,300 pagers in service. The Company derives the majority of its
revenues from fixed periodic fees, not dependent on usage, charged to
subscribers for paging services. As long as a subscriber remains on service,
operating results benefit from the recurring payments of the fixed periodic fees
without incurring additional selling expenses or other fixed costs. A high level
of customer attrition is common in the paging industry and Teletouch must be
able to replace terminating paging subscribers and attract additional wireless
subscribers to maintain operating margins. During recent months, customer
attrition ("churn") has remained relatively flat but continues to result in a
net decline in the number of pagers in service. Teletouch expects that net
paging subscriber deletions will continue in future quarters as the demand for
one-way paging continues to decline. Teletouch is implementing customer
retention programs and expanding its existing product lines to minimize the
impact of the level of customer attrition. The sales and marketing expenses and
other costs associated with attracting new subscribers are substantial and there
is no guarantee that our future efforts in this area will improve subscriber
growth and retention.

      In December 1998, Teletouch launched its own brand of prepaid cellular
telephone service, utilizing the resale of telecommunication service which it
buys at wholesale prices. The Company also offers cellular service as an agent
for other cellular PCS carriers, including AT&T Wireless Services Inc. and
Cingular Wireless in all of its markets. In May 2001, the Company decided to
discontinue sales of its own brand of prepaid cellular service and has
transitioned all customers to alternative cellular service under one of the
Company's existing agent agreements or has disconnected those prepaid customers
as of February 28, 2002. At February 28, 2002, the Company was offering some
type of cellular service in all of its sales offices. In April 2000, Teletouch
became an agent for Leap Wireless International Inc. ("Cricket Communications"),
a company that provides unlimited local wireless service for a flat monthly fee.
Cricket currently offers its service in several major metropolitan areas in
Tennessee, Arkansas and Oklahoma and plans to offer the service in other markets
in which Teletouch has retail locations. The Company is selling cellular/PCS
service under five major agreements with AT&T Wireless, Inc., Telecorp
Communications, Inc. (SunCom), Alltel Communications, Inc. (Alltel), Leap
Wireless, Inc. (Cricket) and Cingular Wireless (Cingular).

      In January 2002, Teletouch entered an agreement to provide telemetry
service with Numerex Corporation ("Numerex"). Currently, the Company offers two
telemetry solutions for its customers, marketed under the brand name of
"Tracker". One solution is for monitoring and controlling events at a remote
fixed location and the other solution is for monitoring mobile assets. Both
telemetry products rely on access to a network of cellular carriers to transmit
information to and from the device. The cellular network assembled by Numerex
covers approximately 98% of the geographic area of North America. The mobile
telemetry product utilizes an embedded Global Positioning Satellite (GPS) device
to provide information on the location of the asset it has been installed in.
These types of telemetry devices are relatively new and the new applications for
such devices are being developed constantly. Management believes these types of
products will be complementary to the products it currently sells and that the
comprehensive coverage of the cellular network will allow Teletouch to grow
revenue streams outside of its current geographic footprint.

                                       8

<PAGE>

RESULTS OF OPERATIONS

The following table presents certain items from the Company's condensed
consolidated statements of operations and certain other information for the
periods indicated.

<TABLE>
<CAPTION>
                                               Three Months Ended              Nine Months Ended
                                                   February 28                    February 28
                                                   -----------                    -----------
                                               2002           2001           2002            2001
                                               ----           ----           ----            ----

                              (in thousands, except pagers, ARPU and per share amounts)

<S>                                            <C>            <C>          <C>          <C>
Service, rent and maintenance revenue            $   8,291    $  10,636    $  26,410    $  33,064
Product sales revenue                                3,372        4,037        9,261       10,101
---------------------                            ----------   ----------   ----------   ----------

     Total revenues                                 11,663       14,673       35,671       43,165
Net book value of products sold                     (2,312)      (3,707)      (6,607)     (10,093)
-------------------------------                  ----------   ----------   ----------   ----------

                                                 $   9,351    $  10,966    $  29,064    $  33,072

Operating expenses                               $   8,781    $  11,284    $  26,925    $  32,579

Operating income                                 $     570    $    (318)   $   2,139    $     493

Net loss before preferred stock dividends        $  (1,308)   $  (2,568)   $  (3,697)   $  (6,203)

Net loss                                         $  (2,563)   $  (3,661)   $  (7,335)   $  (9,373)

Loss per share after preferred stock dividends   $   (0.53)   $   (0.74)   $   (1.51)   $   (2.01)

EBITDA (1) (2)                                   $   2,159    $   2,881    $   6,938    $   8,684

Pagers in service at end of period                 286,272      379,515      286,272      379,515

Average revenue per unit ("ARPU")                $    8.91    $    8.79    $    8.77    $    8.83
</TABLE>

________________

(1)  EBITDA represents earnings before interest, taxes, depreciation and
     amortization (and certain non-recurring income and expenses). EBITDA is a
     standard measure of financial performance in the paging industry. However,
     EBITDA is not a measure defined in generally accepted accounting principles
     ("GAAP") and should not be construed as an alternative to operating income
     or cash flows from operating activities as determined in accordance with
     GAAP. EBITDA is, however, one of the primary financial measures by which
     the Company's covenants are calculated under its debt agreements. The
     EBITDA shown above does not include gain/(loss) on the sale of assets or
     compensation expense associated with repriced stock options.

(2)  In January 2001, Teletouch restructured certain retail operations and
     product lines, resulting in non-recurring costs that have been included in
     operating expenses and net book value of products sold The EBITDA shown
     above for fiscal 2001 excludes the $573,000 of non-recurring costs
     associated with these activities, consisting primarily of severance
     expenses, lease payments for unoccupied space and impairment of cellular
     phone inventory.

                                       9

<PAGE>

Results of Operations for the Nine and Three Months ended February 28, 2002 and
2001

     Total revenue: Teletouch's total revenue decreased to $35.7 and $11.7
million for the nine months and three months ended February 28, 2002 from $43.2
and $14.7 million for the nine months and three months ended February 28, 2001,
respectively. This decline is due to losses in paging and messaging revenues
resulting from fewer pagers in service and lower demand for one-way paging which
are offset slightly by increases in cellular and two-way radio revenues. Pagers
in service decreased to approximately 286,300 at February 28, 2002 as compared
to 379,500 at February 28, 2001, due to a continuing decline in the demand for
one-way paging service.

     The negative impact on total revenue of the decrease in pagers in service
is compounded by a decrease in average revenue per unit ("ARPU"). ARPU for the
nine months ended February 28, 2002 was $8.77 as compared to $8.83 for the nine
months ended February 28, 2001. The decrease in ARPU is primarily due to
increased competitive intensity in the Company's markets from other paging
carriers as well as cellular and PCS providers. Declining pricing from the
cellular and PCS providers is continuing to translate into a decline in demand
for paging services. As competitors continue to pursue its customers in the
marketplace and as the paging industry fully matures, ARPU is expected to
continue to decline. Teletouch expects that the introduction of new products and
services will partially offset the decline in ARPU or paging subscribers and
will lessen the decrease in total revenue.

     Operating expenses, excluding depreciation and amortization: Operating
expenses, excluding depreciation and amortization, were $22.2 million, or 62% of
total revenue, for the first nine months of fiscal 2002 as compared to $25.0
million, or 58% of total revenue, for the first nine months of fiscal 2001; and
$7.2 million, or 62% of total revenue, for the quarter ended February 28, 2002
as compared to $8.7 million, or 59% of total revenue for the quarter ended
February 28, 2001. Costs have declined in fiscal 2002 primarily in the areas of
advertising, bad debts, and telephone service expenses due to direct efforts by
the Company to control these costs. As a percentage of gross revenues, costs
have increased from fiscal year 2001 due to the relatively fixed cost nature of
paging infrastructure that has been required to be maintained to service the
Company's existing paging subscribers.

     Depreciation and amortization: Depreciation and amortization expense
decreased to $4.8 and $1.6 million for the nine months and three months ended
February 28, 2002, from $7.6 and $2.6 million for the nine months and three
months ended February 28, 2001, respectively. The decrease is due primarily to
the write off of substantially all of the Company's intangible assets during the
fourth quarter of fiscal year 2001 due to impairment of such assets when
compared to estimated future cash flows (see Note C). This decline was partially
offset by an increase in depreciation related to assets used in new retail
stores.

     Interest expense: Net interest expense decreased to $5.8 and $1.9 million
for the nine months and three months ended February 28, 2002, from $6.7 and $2.3
million for the nine months and three months ended February 28, 2001,
respectively. Lower interest rates on the Company's variable-rate debt
obligations along with principal payments of $2.5 million made against the
Company's credit obligations during the last three quarters of fiscal 2001
resulted in the decline in interest expense.

                                       10

<PAGE>

     Income tax benefit: For fiscal year 2002, the Company estimates the
effective tax benefit rate will be 0%. A valuation allowance has been recorded
against deferred tax assets which are not likely to be realized. Specifically,
Teletouch's income tax carryforwards expire at specific future dates and
utilization of certain carryforwards is limited to specific amounts each year.
However, due to the uncertain nature of their ultimate realization, the Company
has established a valuation allowance against these carryforward benefits and
will recognize benefits only as reassessment demonstrates they are realizable.
Realization is entirely dependent upon future earnings in specific tax
jurisdictions. While the need for this valuation allowance is subject to
periodic review, if the allowance is reduced, the tax benefits of the
carryforwards will be recorded in future operations as a reduction of the
Company's income tax expense.

     EBITDA: EBITDA decreased to $6.9 million, or 19% of total revenue, for the
nine months ended February 28, 2002 from $8.7 million, or 20% of total revenue,
for the nine months ended February 28, 2001. EBITDA decreased to $2.2 million
(excluding the $22,800 compensation expense associated with the repriced
options), or 19% of total revenue, for the three months ended February 28, 2002
from $2.9 million, or 20% of total revenue, for the three months ended February
28, 2001. The decrease in EBITDA in total is due to the continuing decline in
ARPU and number of pagers in service partially offset by increases in cellular
phone margins.


FINANCIAL CONDITION

     Teletouch's cash balance was $8.5 million at February 28, 2002 as compared
to $4.0 million at May 31, 2001. Cash provided by operating activities increased
to $8.1 million for the nine months ended February 28, 2002 as compared to $3.6
million for the nine months ended February 28, 2001. The increase in cash is
primarily due the Company's ceasing of interest payments and paying less than
the scheduled principal payments on the Credit Agreement for the nine months
ended February 28, 2002 (see Note B). The Company has reduced inventory levels
over the quarter along with taking advantage of the full vendor terms available
on purchases in its efforts to maximize cash balances in preparation for the
anticipated debt restructuring. Additionally, the Company has continued to
reduce capital expenditures during fiscal 2002 by slowing its retail expansion
efforts. The Company expects that cash flow provided from operations will be
sufficient to fund its working capital needs in the near term, provided that the
Company is successful in reorganizing its debt obligations, which is discussed
in greater detail below. In the absence of such a reorganization and additional
financing, the Company may be forced to terminate its operations.

     The Company's credit agreement with a group of lenders, led by JP Morgan
Chase Bank (successor-in-interest to The Chase Manhattan Bank (the "Credit
Agreement") provides for loans in an amount not to exceed $70 million. As of
February 28, 2002, $57.1 million of the Credit Agreement was funded. Direct
costs incurred in connection with obtaining the Credit Agreement of
approximately $4.1 million have been deferred and are being amortized using the
effective interest rate method over the term of the existing loans.

     The Credit Agreement bears interest, at the Company's designation, at a
floating rate of the prime rate plus 1% to 2% or LIBOR plus 2% to 3%. These
rates vary depending on the leverage ratio of the Company. The Credit Agreement
is secured by substantially all of the assets of Teletouch and its subsidiaries.
Borrowings under the Credit Agreement require the principal be repaid in
escalating quarterly installments through November 2005.

                                       11

<PAGE>

     The Credit Agreement also requires the maintenance of specified financial
and operating covenants and prohibits any payments on the Junior Subordinated
Notes and the payment of dividends. These covenants were amended as of the end
of each of the first three quarters of the fiscal year ended May 31, 2001, which
allowed the Company to meet its financial covenant and principal repayment terms
at the end of each of the first three quarters of the prior fiscal year. As of
May 31, 2001 and through February 28, 2002, the Company has been unable to
negotiate new terms under the Credit Agreement, which would allow the Company to
remain in compliance with its terms as of February 28, 2002, and for subsequent
periods. Failure to comply with the terms of the agreement results in an Event
of Default under the Credit Agreement which in turn allows the lender to
terminate the commitment and to declare the borrowings totaling $57.1 million
($59.9 million including accrued and unpaid interest) to be due and payable. The
Company is in default of its payment obligations under the Credit Agreement as
well as with various financial covenants and has ceased making the required
monthly interest payments on the Credit Agreement after May 2001. The Company
has accrued $2.8 million for the unpaid interest on the Credit Agreement. The
Lenders have refused to waive these Events of Default, and are in the process of
assessing their alternatives. In any event, no additional borrowings will be
available to the Company under the Credit Agreement. Teletouch has classified
amounts due under the Credit Agreement as a current liability as of February 28,
2002.

     In August 1995, Teletouch borrowed $10 million from Continental Illinois
Venture Corporation ("CIVC") and certain other parties both related and
unrelated to CIVC (together with CIVC, the "CIVC Investors") in exchange for
which Teletouch issued 14% Junior Subordinated Notes to the CIVC Investors. The
Subordinated Notes are due in August 2003. The Subordinated Notes were initially
recorded, for financial reporting purposes, at approximately $8 million.
Included in the Subordinated Note balance was accrued interest of $14.7 million
and $12.3 million at February 28, 2002 and May 31, 2001 respectively.

     The terms of the Subordinated Notes require the maintenance of certain
financial and operating covenants and restrict future acquisitions. Pursuant to
the Junior Subordinated Note Agreement, if the lender declared the Company not
in compliance with the terms of the Credit Agreement, then the Company would not
be in compliance with the terms of the Junior Subordinated Note Agreement. The
resulting inability to comply with the terms of the Junior Subordinated Note
Agreement would cause an additional $24.7 million, as of February 28, 2002, to
become due and payable; therefore, Teletouch has classified the amount
outstanding under the Subordinated Notes as a current liability as of February
28, 2002.

     The Company is pursuing a recapitalization of its debt and certain equity
securities. Although the Company's management believes it will successfully
recapitalize the Company in a timely fashion, there can be no assurance that
payment under the Credit Agreement and Junior Subordinated Notes will not be
declared due and payable. In the event of such an occurrence, the Company may be
unable to meet the repayment obligations, causing the Company to seek protection
from creditors.

     Teletouch's operations require capital investment to purchase inventory for
lease to customers and to acquire paging infrastructure equipment to support the
Company's growth. Net capital expenditures, including pagers, amounted to $3.2
million and $5.2 million for the first nine months of fiscal years 2002 and
2001, respectively. Teletouch anticipates capital expenditures will decrease in
fiscal 2002 as compared to fiscal 2001 as the Company slows its retail expansion
and continues to purchase lower cost pager inventory for lease to its customers.
Teletouch expects to pay for these expenditures with cash generated from
operations.

     As of February 28, 2002, the Company had negative stockholders' equity of
$59.5 million. Although the Company has been unable to complete the
reorganization of its debt and improve its stockholders' equity as of February
28, 2002, the Company's management believes its debt reorganiztion efforts will
ultimately be successful. An updated plan of compliance outlining the Company's
recapitalization program was submitted to the American Stock Exchange ("Amex")
for review on April 12, 2002. Upon completion of its review, Amex will decide
whether the Company's plan to regain compliance by August 31, 2002 is feasible
and whether to continue the Company's listing. Failure to regain compliance
would result in the Company being delisted. In the event of delisting, the
Company's securities may still be traded on the Over-the-Counter Bulletin Board.

                                       12

<PAGE>

NEW ACCOUNTING ANNOUNCEMENTS

     In October 2001, the Financial Accounting Standards Board issued Statement
on Financial Accounting Standards No. 144 - Accounting for the Impairment or
Disposal of Long-Lived Assets (SFAS No. 144). SFAS No. 144 is effective for
years beginning after December 15, 2001 and supersedes SFAS No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of. SFAS No. 144 provides a single accounting model for disposition of
long-lived assets. Although retaining many of the fundamental recognition and
measurement provisions of Statement 121, the new rules significantly change the
criteria that would have to be met to classify an asset as held for sale. The
new rules also will supersede the provisions of the Accounting Principles Board
Opinion 30 with regard to reporting the effects of a disposal of a segment of a
business and will require expected future operating losses from discontinued
operations to be displayed in discontinued operations in the period(s) in which
the losses are incurred. In addition, more dispositions will qualify for
discontinued operations treatment in the income statement. SFAS No. 144 is
effective for years beginning after December 15, 2001. The Company is currently
analyzing the implementation requirements and has not yet determined whether the
adoption of SFAS No. 144 will have a material impact on the Company's
consolidated balance sheets or its statements of operations, shareholders'
equity and cash flows.

                                       13

<PAGE>

                           Part II. Other Information

Item 1. Legal Proceedings

     Teletouch is party to various legal proceedings arising in the ordinary
course of business. The Company believes there is no proceeding, either
threatened or pending, against it that could result in a material adverse effect
on its results of operations or financial condition.

Item 5. Other Information.

     On April 1, 2002, the Company entered into a three-year Employment
Agreement (the "Employment Agreement") with J. Kernan Crotty. Mr. Crotty will
serve as the Company's President, Chief Operating Officer and Chief Financial
Officer. The Employment Agreement may be renewed for one additional year if the
Company and Mr. Crotty so agree no later than thirty days before the expiration
of the initial term.

     As compensation Mr. Crotty shall be paid a base salary of $240,000 per
year. Subject to periodic review by the Board and based on the Company's
earnings performance or meritorious performance of his duties as an officer of
the Company his salary may be increased. In addition, he received a $38,000
signing bonus and will be entitled to receive yearly bonus payments (the "Annual
Bonus") after the issuance of final audited financial statements and no later
than 150 calendar days after the end of the Company's fiscal year in the target
range of $50,000-$100,000. The Compensation Committee will consider actual
operating performance compared to budgeted performance of the Company, EBITDA
less capital expenditures, and other traditional and subjective performance
criteria when determining the Annual Bonus.

     In addition to monetary compensation, Mr. Crotty's employment benefits
include disability, health and life insurance, sick leave, vacation and
participation in the Company's Section 401(k) retirement plan. On December 17,
2001, he was granted a ten-year non-qualified stock option to purchase 333,333
shares of the Company's common stock, par value $0.001 per share exercisable for
$0.282 per share, which price was the average closing price for the twenty days
preceding the date of grant. Vesting is pro rata daily over a three-year period
commencing December 17, 2001.

     On September 1, 2002, he will receive a non-qualified option to purchase
166,667 shares of the Company's common stock, the price of which will be
computed based on the average closing price for the twenty days preceding
September 1, 2002. Vesting will be pro rata daily over a two-year period
commencing September 1, 2002. In the event of a change of control (as defined)
or upon sale of substantially all of the assets of the Company or merger of the
Company out of existence, vesting shall accelerate.

     In the event the Company terminates his employment, upon written notice of
(1) death; (2) disability, if the disability continues for an aggregate period
exceeding 120 days in any year or 90 consecutive days; or (3) for cause such as
(without limitation) indictment for fraud or embezzlement, conviction of a
felony involving fraud, engaging in acts constituting gross negligence or
willful misconduct, breaching his duty of loyalty or fiduciary duty to the
Company, continued failure to perform his duties, or breaching the terms of the
Employment Agreement. The Company may also terminate Mr. Crotty's employment in
the absence of cause for any reason provided that it pay, as liquidated damages
or severance pay or both, his base salary in twenty-four monthly installments
and a minimum severance bonus of either $100,000 or the amount of the Annual
Bonus pro rated for the portion of the year employed prior to termination. The
Company has no obligation to pay a severance bonus if the Company's reported
EBITDA for the fiscal year is less than 75% of budgeted EBITDA for that fiscal
year.

     Mr. Crotty may voluntarily terminate his employment upon written notice of
a good reason arrived at in good faith, such as, without limitation, removal
from one of his positions, reduction of scope of responsibilities, breach of the
Employment Agreement by the Company or a change in control, sale of
substantially all of the assets of the Company or merger of the Company out of
existence. All unvested options granted under his Employment Agreement shall
immediately terminate and all vested options shall terminate in accordance with
their terms. In the event of voluntary termination of his employment, the
Company shall pay a severance package the same as provided for involuntary
termination without cause, with the same exceptions.

     In the event of termination by the Company for the reasons set forth above,
each of the Company and Mr. Crotty shall execute mutual releases of claims
against each other prior to Mr. Crotty receiving any post-termination payments.
In addition, Mr. Crotty may not compete with the Company in any state in which
it does business or within 100 miles of such states for three years after he
ceases to be employed by the Company. However, if the Company fails to make its
post-termination payments to him, the non-competition provisions will be
suspended for that period.

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits.

     Exhibit                                                           Page
     Number       Title of Exhibit                                     Number
     ------       -------------------------------------                ------

     10           J. Kernan Crotty Employment Agreement                16

(b)  Reports on Form 8-K.

     None.

                                       14

<PAGE>

                                   SIGNATURES

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

                                               TELETOUCH COMMUNICATIONS, INC.

                                            ____________________________________
                                                        (Registrant)

Date: April 22, 2002                               /s/ Robert M. McMurrey
                                            ------------------------------------
                                                     Robert M. McMurrey
                                                          Chairman

Date: April 22, 2002                                /s/ J. Kernan Crotty
                                            ------------------------------------
                                                      J. Kernan Crotty
                                                         President
                                                  Chief Financial Officer
                                               (Principal Accounting Officer)

                                       15