##### 



SECURITIES AND EXCHANGE

COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

|                                                             |  |                                                                                           |  | 
|------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------- |  | 
|[X]                                                          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)OF THE
SECURITIES EXCHANGE ACT OF 1934   |  | 
|                                                            
|For the quarterly period ended June 29,

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
0-16453



HearUSA, Inc.Exact Name of Registrant as Specified in Its

Charter


|                                 |  |                    
|-------------------------------- |  | -------------------
|Delaware                         |  | 22-2748248         
|                                
|(State

of Other Jurisdiction of |  | (I.R.S. Employer   
|Incorporation or Organization)   |  | Identification No.)

|                                                   |  |           
|-------------------------------------------------- |  | ----------
|1250 Northpoint

Parkway, West Palm Beach, Florida |  | 33407     
|                                                  
|(Address of Principal

Executive Offices)          |  | (Zip Code)



|Registrants

Telephone Number, Including Area

Code          

     (561) 478-8770
|-----------------------------------------------------------------------------------

HEARx Ltd.

Former Name, Former Address and Former Fiscal

Year,
if Changed Since Last Report


Indicate by

check ü 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

   ü       No

On August 7, 2002, 21,271,117 shares

of the Registrants Common Stock were
outstanding.





---



##### 



INDEX

|                                                                     |                                                     |  | Page    
|-------------------------------------------------------------------- | --------------------------------------------------- |  | --------
|PART

I.                                                             | FINANCIAL INFORMATION                               |  |         
|                                                                    
|Item 1. Financial
Statements:                                        |                                                     |  |         
|                                                                    
|Consolidated Balance

Sheets                                         |                                                     |  | 3       
|                                                                     | June 29, 2002 and

December 29, 2001                |  |         
|                                                                    
|Consolidated Statements of

Operations                               |                                                     |  | 4       
|                                                                     | Six months ended June 29,

2002 and June 30, 2001   |  |         
|                                                                    
|Consolidated Statements of

Operations                               |                                                     |  | 5       
|                                                                     | Three months ended

June 29, 2002 and June 30, 2001 |  |         
|                                                                    
|Consolidated Statements of

Cash Flows                               |                                                     |  | 6       
|                                                                     | Six months ended June 29,

2002 and June 30, 2001   |  |         
|                                                                    
|Notes to Consolidated

Financial Statements                          |                                                     |  | 7 -

12 
|                                                                    
|Item 2. Managements

Discussion and Analysis of Financial Condition |                                                     |  | 13 -

19
|                                                                     | and Results of

Operations                          |  |         
|                                                                    
|Item 3. Quantitative and

Qualitative Disclosure about Market Risk   |                                                     |  | 20      



|PART

II. | OTHER

INFORMATION                                  |  | 
|--------- | --------------------------------------------------- |  | 
|         
|Item 2.   | Changes in Securities and Use of Proceeds           |  | 
|         
|Item 4.   | Submission of Matters to a Vote of Security Holders |  | 
|         
|Item 6.   | Exhibits and Reports on Form 8-K                    |  | 
|         
|          | Signatures                                          |  | 

2



---



##### 



HearUSA, Inc.
Consolidated Balance Sheets

ASSETS

|                                              |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |              |             |          |            | 
|--------------------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------- | ----------- | -------- | ---------- | ------------ | ----------- | -------- | ---------- | 
|                                              |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             | June 29, |            | December 29,
|                                              |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             | 2002     |            | 2001        
|                                              |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |             
|                                              |                                                                                               | (unaudited)                                                                                    |                                                                                                                                            | (audited)                                            
|Current
assets:                               |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |             
|                                              | Cash and cash
equivalents                                                                     |                                                                                                | $                                                                                                                                          | 3,545,962                                             |             |          | $          | 5,561,608    |            
|                                              | Investment

securities                                                                        |                                                                                                |                                                                                                                                            | 1,900,248                                             |             |          |            | 150,000      |            
|                                              | Accounts and notes receivable,

less allowance for
doubtful accounts of $195,213 and $185,814 |                                                                                                |                                                                                                                                            | 2,711,720                                             |             |          |            | 3,965,491    |            
|                                              | Inventories                                                                                   |                                                                                                |                                                                                                                                            | 424,409                                               |             |          |            | 504,762      |            
|                                              | Prepaid expenses and

other                                                                   |                                                                                                |                                                                                                                                            | 671,750                                               |             |          |            | 855,052      |            
|                                              |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |             
|                                              |                                                                                               |                                                                                                |                                                                                                                                            | Total current

assets                                 |             |          | 9,254,089  |              |             |          | 11,036,913 | 
|Property and equipment

 net                 |                                                                                               |                                                                                                | 6,143,779                                                                                                                                  |                                                       |             |          | 6,835,643  |             
|Investment in affiliated

company             |                                                                                               |                                                                                                | 2,581,845                                                                                                                                  |                                                       |             |          |           |             
|Note receivable (Notes 3

and 6)              |                                                                                               |                                                                                                | 9,418,838                                                                                                                                  |                                                       |             |          | 700,000    |             
|Deposits and

other                           |                                                                                               |                                                                                                | 3,571,319                                                                                                                                  |                                                       |             |          | 2,768,966  |             
|                                              |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |             
|                                              |                                                                                               | $                                                                                              | 30,969,870                                                                                                                                 |                                                       |             | $        | 21,341,522 |             
|                                              |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |             
|LIABILITIES AND STOCKHOLDERS EQUITY(DEFICIT)
|Current

liabilities:                         |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |             
|                                              |                                                                                               | Accounts payable and accrued

expenses                                                         |                                                                                                                                            | $                                                     | 6,886,757   |          |            | $            | 6,871,124   |         
|                                              |                                                                                               | Accrued salaries and other

compensation                                                       |                                                                                                                                            |                                                       | 869,640     |          |            |              | 890,985     |         
|                                              |                                                                                               | Current maturities of long

term debt                                                          |                                                                                                                                            |                                                       | 2,503,876   |          |            |              | 2,492,313   |         
|                                              |                                                                                               | Dividends

payable                                                                             |                                                                                                                                            |                                                       | 1,364,669   |          |            |              | 1,521,053   |         
|                                              |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |             
|                                              |                                                                                               |                                                                                                |                                                                                                                                            | Total current

liabilities                            |             |          | 11,624,942 |              |             |          | 11,775,475 | 
|                                              |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |             
|Long term debt, less

current maturities      |                                                                                               |                                                                                                | 19,682,343                                                                                                                                 |                                                       |             |          | 8,750,999  |             
|                                              |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |             
|Commitments and

contingencies                |                                                                                               |                                                                                                |                                                                                                                                           |                                                       |             |          |           |             
|Stockholders

equity(Deficit):               |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |             
|                                              | Preferred

stock:                                                                             |                                                                                                |                                                                                                                                            |                                                       |             |          |            |              |            
|                                              |                                                                                               |                                                                                                | (Aggregate liquidation

preference $5,861,311 and
$8,628,053) $1 par, 2,000,000 shares authorized
Series J (233 & 233 shares

outstanding) |                                                       |             | 233      |            |              |             | 233      |           
|                                              |                                                                                               |                                                                                                |                                                                                                                                            | Series H Junior

Participating (0 shares outstanding) |             |          |           |              |             |          |           | 
|                                              |                                                                                               |                                                                                                |                                                                                                                                            | 1998 Convertible (4,563 &

4,777 shares outstanding)  |             |          | 4,563      |              |             |          | 4,777      | 
|                                              |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |             
|                                              |                                                                                               |                                                                                                |                                                                                                                                            | Total preferred

stock                                |             |          | 4,796      |              |             |          | 5,010      | 
|                                              |                                                                                               | Common stock: $.10 par;

20,000,000 shares authorized;
16,059,403 and 14,559,403 shares issued |                                                                                                                                            |                                                       | 1,605,940   |          |            |              | 1,455,940   |         
|                                              |                                                                                               |                                                                                                | Stock

subscription                                                                                                                        |                                                       |             | (412,500 | )          |              |             | (412,500 | )         
|                                              |                                                                                               | Additional paid-in

capital                                                                    |                                                                                                                                            |                                                       | 92,564,939  |          |            |              | 91,438,475  |         
|                                              |                                                                                               | Accumulated

deficit                                                                           |                                                                                                                                            |                                                       | (91,587,414 | )        |            |              | (89,188,436 | )       
|                                              |                                                                                               | Accumulated other

comprehensive loss (Note 1)                                                 |                                                                                                                                            |                                                       | (29,735     | )        |            |              |            |         
|                                              |                                                                                               | Treasury stock, at

cost:518,660 & 518,660 common shares                                       |                                                                                                                                            |                                                       | (2,483,441  | )        |            |              | (2,483,441  | )       
|                                              |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |             
|                                              |                                                                                               |                                                                                                |                                                                                                                                            | Total stockholders

equity (deficit) (Note 7)        |             |          | (337,415   | )            |             |          | 815,048    | 
|                                              |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |             
|                                              |                                                                                               | $                                                                                              | 30,969,870                                                                                                                                 |                                                       |             | $        | 21,341,522 |             
|                                              |                                                                                               |                                                                                                |                                                                                                                                            |                                                       |             |          |            |             

See accompanying notes to the consolidated

financial statements

3



---



##### 



HearUSA, Inc.
Consolidated Statements of Operations
Six Months Ended June 29, 2002 and June 30, 2001

|                                                               |                                      |                                     |            |             |            |             |            |            |            | 
|-------------------------------------------------------------- | ------------------------------------ | ----------------------------------- | ---------- | ----------- | ---------- | ----------- | ---------- | ---------- | ---------- | 
|                                                               |                                      |                                     |            | June 29,    |            | June 30,   
|                                                               |                                      |                                     |            | 2002        |            | 2001       
|                                                               |                                      |                                     |            |             |            |            
|                                                               |                                      |                                     |            | (unaudited) |            | (unaudited)
|                                                               |                                      |                                     |            |             |            |            
|Net

Revenues                                                  |                                      | $                                   | 24,671,048 |             |            | $           | 23,829,378 |           
|                                                               |                                      |                                     |            |             |            |             |            |           
|Operating costs and

expenses:                                 |                                      |                                     |            |             |            |             |            |           
|                                                               | Cost of products

sold               |                                     |            | 6,690,569   |            |             |            | 7,853,360  |           
|                                                               | Center operating

expenses           |                                     |            | 13,543,870  |            |             |            | 15,187,862 |           
|                                                               | General and administrative

expenses |                                     |            | 4,864,854   |            |             |            | 5,169,047  |           
|                                                               | Depreciation and

amortization       |                                     |            | 1,040,735   |            |             |            | 1,263,981  |           
|                                                               |                                      |                                     |            |             |            |             |            |           
|                                                               |                                      | Total operating costs and

expenses |            |             | 26,140,028 |             |            |            | 29,474,250 | 
|                                                               |                                      |                                     |            |             |            |             |            |           
|Loss from

operations                                          |                                      |                                     | (1,468,980 | )           |            |             | (5,644,872 | )         
|Non-operating income

(expense):                               |                                      |                                     |            |             |            |             |            |           
|Interest

income                                               |                                      |                                     | 92,752     |             |            |             | 100,865    |           
|Interest

expense                                              |                                      |                                     | (623,625   | )           |            |             | (175,137   | )         
|                                                               |                                      |                                     |            |             |            |             |            |           
|Loss before equity in loss

of affiliated company              |                                      |                                     | (1,999,853 | )           |            |             | (5,719,144 | )         
|Equity in loss of

affiliated company                          |                                      |                                     | (88,420    | )           |            |             |           |           
|                                                               |                                      |                                     |            |             |            |             |            |           
|Net

loss                                                      |                                      |                                     | (2,088,273 | )           |            |             | (5,719,144 | )         
|Dividends on preferred

stock                                  |                                      |                                     | (310,705   | )           |            |             | (389,615   | )         
|                                                               |                                      |                                     |            |             |            |             |            |           
|Net loss applicable to

common stockholders                    |                                      | $                                   | (2,398,978 | )           |            | $           | (6,108,759 | )         
|                                                               |                                      |                                     |            |             |            |             |            |           
|Net loss per common share

  basic and
diluted                |                                      | $                                   | (0.16      | )           |            | $           | (0.48      | )         
|                                                               |                                      |                                     |            |             |            |             |            |           
|Weighted average number of

shares of
common stock outstanding |                                      |                                     | 14,799,001 |             |            |             | 12,802,285 |           
|                                                               |                                      |                                     |            |             |            |             |            |           

See accompanying notes to the consolidated

financial statements

4



---



##### 



HearUSA, Inc.
Consolidated Statements of Operations
Six Months Ended June 29, 2002 and June 30, 2001

|                                                               |                                      |                                     |            |             |            |             |            |           |            | 
|-------------------------------------------------------------- | ------------------------------------ | ----------------------------------- | ---------- | ----------- | ---------- | ----------- | ---------- | --------- | ---------- | 
|                                                               |                                      |                                     |            | June 29,    |            | June 30,   
|                                                               |                                      |                                     |            | 2002        |            | 2001       
|                                                               |                                      |                                     |            |             |            |            
|                                                               |                                      |                                     |            | (unaudited) |            | (unaudited)
|                                                               |                                      |                                     |            |             |            |            
|Net

Revenues                                                  |                                      | $                                   | 12,661,032 |             |            | $           | 11,341,188 |          
|                                                               |                                      |                                     |            |             |            |             |            |          
|Operating costs and

expenses:                                 |                                      |                                     |            |             |            |             |            |          
|                                                               | Cost of products

sold               |                                     |            | 3,285,471   |            |             |            | 3,586,782 |           
|                                                               | Center operating

expenses           |                                     |            | 6,783,935   |            |             |            | 7,225,350 |           
|                                                               | General and administrative

expenses |                                     |            | 2,478,302   |            |             |            | 2,603,345 |           
|                                                               | Depreciation and

amortization       |                                     |            | 517,137     |            |             |            | 621,938   |           
|                                                               |                                      |                                     |            |             |            |             |            |          
|                                                               |                                      | Total operating costs and

expenses |            |             | 13,064,845 |             |            |           | 14,307,415 | 
|                                                               |                                      |                                     |            |             |            |             |            |          
|Loss from

operations                                          |                                      |                                     | (403,813   | )           |            |             | (2,696,227 | )        
|Non-operating income

(expense):                               |                                      |                                     |            |             |            |             |            |          
|Interest

income                                               |                                      |                                     | 69,986     |             |            |             | 54,290     |          
|Interest

expense                                              |                                      |                                     | (342,696   | )           |            |             | (165,218   | )        
|                                                               |                                      |                                     |            |             |            |             |            |          
|Loss before equity in loss

of affiliated company              |                                      |                                     | (676,523   | )           |            |             | (2,807,154 | )        
|Equity in loss of

affiliated company                          |                                      |                                     | (27,015    | )           |            |             |           |          
|                                                               |                                      |                                     |            |             |            |             |            |          
|Net

loss                                                      |                                      |                                     | (703,538   | )           |            |             | (2,807,154 | )        
|Dividends on preferred

stock                                  |                                      |                                     | (142,636   | )           |            |             | (188,380   | )        
|                                                               |                                      |                                     |            |             |            |             |            |          
|Net loss applicable to

common stockholders                    |                                      | $                                   | (846,174   | )           |            | $           | (2,995,535 | )        
|                                                               |                                      |                                     |            |             |            |             |            |          
|Net loss per common share

  basic and
diluted                |                                      | $                                   | (0.05      | )           |            | $           | (0.23      | )        
|                                                               |                                      |                                     |            |             |            |             |            |          
|Weighted average number of

shares of
common stock outstanding |                                      |                                     | 15,540,743 |             |            |             | 13,102,402 |          
|                                                               |                                      |                                     |            |             |            |             |            |          

See accompanying notes to the consolidated

financial statements

5



---



##### 



HearUSA, Inc.
Consolidated Statements of Cash Flows
Six Months Ended June 29, 2002 and June 30, 2001

|                                                                                        |                                                      |                             |             |             |         |             |            |            |            |  
|--------------------------------------------------------------------------------------- | ---------------------------------------------------- | --------------------------- | ----------- | ----------- | ------- | ----------- | ---------- | ---------- | ---------- | -
|                                                                                        |                                                      |                             |             | 2002        |         | 2001       
|                                                                                        |                                                      |                             |             |             |         |            
|                                                                                        |                                                      |                             |             | (Unaudited) |         | (Unaudited)
|                                                                                        |                                                      |                             |             |             |         |            
|Cash flows from operating

activities:                                                  |                                                      |                             |             |             |         |             |            |           
|Net loss                                                                                |                                                      | $                           | (2,088,273  | )           |         | $           | (5,719,144 | )         
|Adjustments to reconcile net

loss to net cash
Provided/(used) by operating activities: |                                                      |                             |             |             |         |             |            |           
|                                                                                        | Depreciation and

amortization                       |                             |             | 1,040,735   |         |             |            | 1,263,981  |           
|                                                                                        | Provision for doubtful

accounts                     |                             |             | 79,500      |         |             |            | 154,397    |           
|                                                                                        | Loss on disposition of

equipment                    |                             |             | 44,154      |         |             |            | 90,673     |           
|                                                                                        | Equity in loss of affiliated

company                |                             |             | 88,420      |         |             |            |           |           
|                                                                                        | Compensation expense from

issuance of
capital stock |                             |             | 40,250      |         |             |            |           |           
|(Increase) decrease

in:                                                                |                                                      |                             |             |             |         |             |            |           
|                                                                                        | Accounts

receivable                                 |                             |             | 1,174,271   |         |             |            | 1,225,047  |           
|                                                                                        | Inventories                                          |                             |             | 80,353      |         |             |            | (18,880    | )         
|                                                                                        | Prepaid

expenses                                    |                             |             | 195,844     |         |             |            | (75,278    | )         
|Increase

(decrease) in:                                                                |                                                      |                             |             |             |         |             |            |           
|                                                                                        |                                                      | Accounts

payable           |             |             | 15,633  |             |            |            | (1,207,945 | )
|                                                                                        |                                                      | Accrued salaries and

other |             |             | (21,344 | )           |            |            | (327,284   | )
|                                                                                        |                                                      |                             |             |             |         |             |            |           
|Net cash provided/(used) in

operating activities                                       |                                                      |                             | 649,543     |             |         |             | (4,614,433 | )         
|                                                                                        |                                                      |                             |             |             |         |             |            |           
|Cash flows from investing

activities:                                                  |                                                      |                             |             |             |         |             |            |           
|                                                                                        | Purchase of property and

equipment                  |                             |             | (348,772    | )       |             |            | (1,347,408 | )         
|                                                                                        | Purchase of investment

securities                   |                             |             | (1,750,248  | )       |             |            |           |           
|                                                                                        | Issuance of note receivable to

affiliated
company   |                             |             | (9,418,838  | )       |             |            |           |           
|                                                                                        | Purchase of investment in

affiliated company        |                             |             | (2,000,000  | )       |             |            |           |           
|                                                                                        | Cost of business

combination                        |                             |             | (859,148    | )       |             |            |           |           
|                                                                                        |                                                      |                             |             |             |         |             |            |           
|Net cash used by investing

activities                                                  |                                                      |                             | (14,377,006 | )           |         |             | (1,347,408 | )         
|                                                                                        |                                                      |                             |             |             |         |             |            |           
|Cash flows from financing

activities:                                                  |                                                      |                             |             |             |         |             |            |           
|Proceeds from issuance of

long-term debt                                               |                                                      |                             | 13,069,006  |             |         |             | 7,752,014  |           
|Principal

payments:                                                                    |                                                      |                             |             |             |         |             |            |           
|                                                                                        | Long-term

debt                                      |                             |             | (2,126,099  | )       |             |            | (29,084    | )         
|Proceeds from the issuance of

common stock                                             |                                                      |                             | 1,500,000   |             |         |             |           |           
|Proceeds from the issuance of

employee stock options                                   |                                                      |                             |            |             |         |             | 67         |           
|Dividends paid on preferred

stock                                                      |                                                      |                             | (379,997    | )           |         |             |           |           
|Redemption of preferred

stock                                                          |                                                      |                             | (351,093    | )           |         |             |           |           
|Net cash provided by financing

activities                                              |                                                      |                             | 11,711,817  |             |         |             | 7,722,997  |           
|                                                                                        |                                                      |                             |             |             |         |             |            |           
|Net (decrease) increase

in cash and cash equivalents                                   |                                                      |                             | (2,015,646  | )           |         |             | 1,761,156  |           
|                                                                                        |                                                      |                             |             |             |         |             |            |           
|Cash and cash equivalents at

beginning of period                                       |                                                      |                             | 5,561,608   |             |         |             | 4,250,413  |           
|                                                                                        |                                                      |                             |             |             |         |             |            |           
|Cash and cash equivalents at

end of period                                             |                                                      | $                           | 3,545,962   |             |         | $           | 6,011,569  |           
|                                                                                        |                                                      |                             |             |             |         |             |            |           

See accompanying notes to the consolidated

financial statements

6



---



##### 



HearUSA, Inc
Notes to Consolidated Financial Statements
(unaudited)

The accompanying unaudited consolidated

financial statements have been
prepared in accordance with generally accepted accounting

principles for
interim financial information and with the instructions to

Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not

include all of the
information and footnotes required by generally accepted

accounting
principles for complete financial statements. In the opinion of
management, all adjustments, consisting of normal recurring

accruals,
considered necessary for a fair presentation have been included.
Operating results for the six month period ended June 29,

2002 are not
necessarily indicative of the results that may be expected for

the year
ending December 28, 2002. For further information, refer to

the audited
consolidated financial statements and footnotes thereto included

in the
Companys annual report on Form 10-K for the year

ended December 29, 2001.

1.     Summary of

Significant Accounting Policies

Helix Transaction

On July 27, 2001, HEARx Ltd. and Helix

Hearing Care of America Corp., a
Canadian corporation (Helix), signed a definitive

merger agreement,
which was subsequently amended and restated as of

November 6, 2001. Helix
owns or manages 128 hearing healthcare clinics located in

Massachusetts,
Pennsylvania, New York, Ohio, Michigan, Wisconsin, Minnesota,

Washington
and Missouri as well as in the Provinces of Ontario and Quebec.

The
transaction was approved by the stockholders of both HEARx and

Helix on
June 26, 2002 and by the Canadian courts on June 28,

2002. The
transaction closed on July 11, 2002. In connection with the

completion
of the business combination, on July 8, 2002 the Company

changed its name
from HEARx Ltd. to HearUSA, Inc and increased its authorized

capital. The
Companys common stock continues to trade on the American

Stock Exchange
under the symbol EAR. See Notes 3, 6 and 7 which

describe certain
significant transactions between the Company and Helix.

Investment in Affiliated Company

As of June 29, 2002, the Company owned

approximately 10.5 percent of the
common stock of Helix. The Company accounts for this investment

using the
equity method because it has the ability to exercise significant

influence
over the operational and financial policies of Helix as a result

of the
terms of the merger agreement with Helix and the use of certain

proceeds
of the Companys credit facility with Siemens Hearing

Instruments, Inc. to
repay certain debts of Helix (see Note 6 below). Under the

equity method,
the Company records its proportionate share of profits and

losses of the
affiliated company based on its percentage interest in the

affiliated
company. The Company reviews the carrying value of this

investment,
including the difference between the cost of the investment and

the amount
of the Companys. underlying equity in the net assets of

Helix, for
possible impairment due to other than temporary declines in

value, such as
the absence of ability to recover the carrying amount of the

investment,
or a current fair value of the investment that is less than its

carrying
amount.

Comprehensive Income

Comprehensive income is defined to include all

changes in equity except
those resulting from investments by owners and distributions to

owners.
The Companys other comprehensive income represents a

foreign currency
translation adjustment.

7



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##### 



HearUSA, Inc
Notes to Consolidated Financial Statements
(unaudited)

Comprehensive (loss) and the components

of other comprehensive income are
as follows:

|                                         |  |                  |            |                    |  |          |            |          |  |   |          |   |  |   |            |  
|---------------------------------------- |  | ---------------- | ---------- | ------------------ |  | -------- | ---------- | -------- |  | - | -------- | - |  | - | ---------- | -
|                                         |  | Six Months Ended |            | Three Months Ended
|                                         |  |                  |            |                   
|                                         |  | June 29,         |            | June 30,           |  | June 29, |            | June 30,
|                                         |  | 2002             |            | 2001               |  | 2002     |            | 2001    
|                                         |  |                  |            |                    |  |          |            |         
|Comprehensive

(loss):                   |  |                  |            |                    |  |          |            |          |  |   |          |   |  |   |            |  
|Net loss for

period                     |  | $                | (2,088,273 | )                  |  | $        | (5,719,144 | )        |  | $ | (703,538 | ) |  | $ | (2,807,154 | )
|Other comprehensive

(loss):             |  |                  |            |                    |  |          |            |          |  |   |          |   |  |   |            |  
|Foreign currency translation
adjustments |  |                  | (29,735    | )                  |  |          |           |          |  |   | (44,820  | ) |  |   |           |  
|                                         |  |                  |            |                    |  |          |            |          |  |   |          |   |  |   |            |  
|Comprehensive loss for the

period       |  | $                | (2,118,008 | )                  |  | $        | (5,719,144 | )        |  | $ | (748,358 | ) |  | $ | (2,807,154 | )
|                                         |  |                  |            |                    |  |          |            |          |  |   |          |   |  |   |            |  

Reclassifications

Certain amounts in the 2001 consolidated

financial statements have been
reclassified in order to conform to the 2002 presentation.

Segment

The Companys operations are organized by

centers into three geographic
regions, the Northeast, Florida and California. These regions

comprise
one operating segment. Net revenues and income (loss) from

operations at
center level by region are as follows:

|                                                     |  |           |           |         |  |            |           |           |  |       |           |  |  |  |            |   |  |   |            |  
|---------------------------------------------------- |  | --------- | --------- | ------- |  | ---------- | --------- | --------- |  | ----- | --------- |  |  |  | ---------- | - |  | - | ---------- | -
|                                                     |  | Northeast |           | Florida |  | California |           | Corporate |  | Total
|                                                     |  |           |           |         |  |            |           |           |  |      
|Net Revenues                                         |  |           |           |         |  |            |           |           |  |       |           |  |  |  |            |   |  |   |            |  
|6 months ended

6/29/02                              |  | $         | 6,725,000 |         |  | $          | 9,543,000 |           |  | $     | 8,403,000 |  |  |  |            |   |  | $ | 24,671,000 |  
|6 months ended

6/30/01                              |  |           | 5,394,000 |         |  |            | 9,691,000 |           |  |       | 8,744,000 |  |  |  |            |   |  |   | 23,829,000 |  
|Income (Loss) from Operations
6 months ended 6/29/02 |  |           | 1,439,000 |         |  |            | 2,139,000 |           |  |       | 858,000   |  |  |  | (5,905,000 | ) |  |   | (1,469,000 | )
|6 months ended

6/30/01                              |  |           | (962,000  | )       |  |            | 768,000   |           |  |       | 982,000   |  |  |  | (6,433,000 | ) |  |   | (5,645,000 | )

Income (loss) from operations at the

center level are computed before
general and administrative expenses and

depreciation/amortization. Center
operations depreciation amounted to $679,000 and $888,000

for the six
months ended June 2002 and 2001 respectively. Center

operations capital
expenditures amounted to $183,000 in the first six months of

2002 compared
to $765,000 in the first six months of 2001. Aggregate

identifiable assets
of center operations at June 29, 2002 and June 30,

2001 were $5,695,000
and $6,876,000, respectively.

2.     Stockholders

Equity

Conversion of Preferred Stock into shares

of Common Stock

During the six months ended June 29,

2002, 214 shares of the 1998
Convertible Preferred Stock plus accrued dividends of

approximately
$70,000 and an 8% premium of approximately $17,000 were redeemed

for cash
of approximately $351,000, including costs of $50,000.

8



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##### 



HearUSA, Inc
Notes to Consolidated Financial Statements
(unaudited)

Common Stock

During the six months ended June 29,

2002, no warrants or employee stock
options were exercised.

Private Placement

On March 29, 2002, the Company closed on

a private placement of 1.5
million shares of common stock and 1.5 million common stock

purchase stock
warrants for an aggregate sales price of $1.5 million. The

offers and
sales were made only to accredited investors as

defined in Rule 501(a)
of Regulation D and the Company relied on Regulation D

and Section 4(2) of
the Securities Act of 1933 to issue the securities without

registration.
The warrants may be exercised at any time until March 29,

2005 to purchase shares

of common stock for an exercise price of $1.15 per share. The
Company has undertaken to register the common stock for resale

later this
year.

All members of the board of directors of the

Company participated in the
private placement, purchasing 805,000 of the 1,500,000 shares of

common
stock. Because the shares were sold at a $0.05 per share

discount to the
quoted market price of $1.05 per share, additional compensation

expense of
approximately $40,000 was incurred for the quarter ended

March 30, 2002.
The fair value of the warrants was not significant.

3.     Investment

in Affiliated Company

On November 16, 2001, the Company loaned

$700,000 to Helix for use by
Helix as part of the $3.5 million acquisition of

substantially all of the
capital stock of Auxiliary Benefits Corporation, a Colorado

corporation
doing business as National Ear Care Plan (NECP). The

note was secured
by substantially all of the assets of NECP, bore interest at a

rate of
prime plus 1% (6% at December 29, 2001) per annum and

originally matured
on November 16, 2002. On January 10, 2002, the Company

loaned to Helix an
additional $2 million to complete the NECP transaction. On

January 14,
2002 the Company and Helix entered into a subscription agreement

pursuant
to which the Company purchased 4,853,932 common shares of Helix

for an
aggregate purchase price of $2.7 million. The purchase

price was paid
using the $2.7 million in loans to Helix. Upon consummation

of the
purchase of the 4,853,932 Helix common shares, the Company

became an
approximate 10.5 percent owner of Helix common shares. the

Company is
accounting for this investment using the equity method. At

June 29, 2002,
the carrying amount of the investment was approximately

$2,582,000. The
difference of approximately $1,273,000 between the carrying

amount of the
investment and the amount underlying the equity in Helixs

net assets is
accounted for as goodwill. Approximately $88,400 was recorded as

equity
in loss of affiliated company for the six months ended

June 29, 2002,
representing the Companys equity in the net loss of Helix

from the
January 14, 2002 acquisition date through May 31,

2002, the end of Helixs
second quarter. As of June 29, 2002, the aggregate value of

the
investment based on the quoted market price of Helixs

common stock was
approximately $1,300,000.

4.     Intangible

Assets

At both June 29, 2002 and

December 29, 2001, the gross carrying amount of
the Companys intangible assets subject to amortization,

which consist of
customer lists, was $1,443,000, and the accumulated amortization

was
approximately $552,000 and $508,000, respectively. For each six

month
period ended June 29, 2002 and June 30, 2001, the

aggregate amortization
expense for these assets was approximately $44,000. At

June 29, 2002, the
estimated amortization expense for the next five fiscal years is
approximately: 2002  $44,000, 2003  $86,000, 2004

 $86,000, 2005 -
$86,000, 2006  $86,000, and thereafter  $503,000.

9



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##### 



HearUSA, Inc
Notes to Consolidated Financial Statements
(unaudited)

5.     Recent

Accounting Pronouncements

In June 2001, the FASB finalized FASB

Statements No. 141, Business
Combinations(SFAS 141), and No. 142,

Goodwill and Other Intangible
Assets(SFAS 142). SFAS 141 requires the use of the

purchase method of
accounting and prohibits the use of the pooling-of-interest

method of
accounting for business combinations initiated after

June 30, 2001. SFAS
141 also requires that the Company recognize acquired intangible

assets
apart from goodwill if the acquired intangible assets meet

certain
criteria. SFAS 141 applies to all business combinations

initiated after
June 30, 2001 and for purchase business combinations

completed on or after
July 1, 2001. It also requires, upon adoption of SFAS 142,

that the
Company reclassify the carrying amounts of intangible assets and

goodwill
based on the criteria in SFAS 141.

SFAS 142 requires, among other things, that

companies no longer amortize
goodwill, but instead test goodwill for impairment at least

annually. In
addition, SFAS 142 requires that the Company identify reporting

units for
the purpose of assessing potential future impairments of

goodwill,
reassess the useful lives of other existing recognized

intangible assets,
and cease amortization of intangibles assets with an indefinite

useful
life. An intangible asset with an indefinite useful life should

be tested
for impairment in accordance with the guidance in SFAS 142. SFAS

142 is
required to be applied in fiscal years beginning after

December 15, 2001
to all goodwill and other intangible assets recognized at that

date,
regardless of when those assets were initially recognized. SFAS

142
requires the Company to complete a transitional goodwill

impairment test
six months from the date of adoption. The Company is also

required to
reassess the useful lives of other intangible assets within the

first
interim quarter after adoption of SFAS 142. The Companys

previous
business combinations were accounted for using the purchase

method. The
Company adopted SFAS 141 and 142 during the quarter ended

March 30, 2002,
which included reassessing the useful lives of other intangible

assets.
The impact of the adoption of SFAS 141 and SFAS 142 on the

Companys
financial position and results of operations was not material.

In October 2001, the FASB issued SFAS

No. 144 Accounting for the
Impairment or Disposal of Long-Lived Assetswhich

resolves significant
implementation issues related to FASB Statement No. 121,

Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to

be
Disposed Of,and supersedes the accounting and

reporting provisions of
APB Opinion No. 30, Reporting the Results of Operations

 Reporting the
Effects of Disposal of a Segment of a Business, and

Extraordinary, Unusual
and Infrequently Occurring Events and Transactions,for the

disposal of a
business segment. SFAS 144 is effective for fiscal years

beginning after
December 15, 2001, and interim periods within those fiscal

years, with
early application encouraged. The impact of adoption of SFAS 144

on the
Companys financial position and results of operations was

not material.

In April 2002, the FASB issued SFAS

No. 145 (SFAS 145), Rescission of SFAS
No.s 4, 44, and 64, Amendment of SFAS No. 13, and

Technical Corrections.
In addition to rescinding the aforementioned statements, SFAS

145 also
amends SFAS 13, Accounting for Leases, to eliminate an

inconsistency
between the required accounting for sale-leaseback transactions

and the
required accounting for certain lease modifications that have

economic
effects that are similar to sale-leaseback transactions. This

statement
also amends other existing authoritative pronouncements to make

various
technical corrections, clarify meanings, or describe their

applicability
under changed conditions. SFAS 145 is generally
effective for financial
statements issued on or after May 15, 2002. The impact of

adoption of
SFAS 145 on the Companys financial position and results of

operations was
not material.

10



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##### 



HearUSA, Inc
Notes to Consolidated Financial Statements
(unaudited)

6.     Note

Receivable

On April 30, 2002, the Company, Helix and

each of Helixs direct and
indirect subsidiaries entered into a credit agreement pursuant

to which
the Company agreed to extend to Helix up to $9.42 million

in senior
secured term loans. Borrowings under the credit facility are

secured by a
first priority security interest in substantially all of the

assets of
Helix and its direct and indirect subsidiaries. In addition,

Steve
Forget, President and Chief Executive Officer of Helix, has

pledged all of
his partnership interest in Cousineau, Doucet, Parent, Forget
Audioprothesistes s.e.n.c. to the Company as further security

for the
credit facility.

The outstanding balance under the credit

facility bears interest at a
rate per annum equal to the prime rate as announced from time to

time by
Citibank, N.A. plus one percent. At June 29, 2002 the

outstanding
principal was approximately $9,419,000 and bore interest at a

rate of
5.75%. The outstanding principal and interest is due and payable

on the
final maturity date of August 9, 2003. The facility may be

prepaid in
whole or in part at any time without penalty. Before

August 9, 2003, the
credit facility requires mandatory repayments in the amount of

25% of the
proceeds of a sale of assets or an issuance of equity

securities, and
annually in the amount of 20% of Helixs excess cash flow

(as defined).

The credit agreement contains loan covenants

customary for a credit
facility of this size and nature, including limitations on the

amount of
annual capital expenditures by Helix, the incurrence by Helix of
additional debt or the issuance by Helix of additional equity.

The credit
agreement provides for the suspension of access to further funds

and the
repayment of all then outstanding loans under the agreement in

the event
of a material adverse change in Helix or its subsidiaries, a

change in
control of Helix or a termination of the merger agreement with

the
Company. The Company funded the loans under the credit agreement

through
its previously announced credit facility with Siemens Hearing

Instruments,
Inc.

Helix used the funds available under the

credit facility to repay all of
Helixs existing convertible debt and portions of its

non-convertible
debt, to pay fees and transaction costs relating to the merger,

and for
working capital.

7.     Helix

Transaction

On July 11, 2002 the Company completed

its business combination with Helix
Hearing Care of America Corporation. As a result of the

combination,
management believes combining the two entities will result in a

stronger
and more competitive company capable of achieving greater

financial
strength, better access to capital markets and greater potential

than
either company would have on its own.

On July 27, 2001, the Company entered

into a definitive agreement to
acquire all of the issued and outstanding shares of the common

stock of
Helix in exchange for approximately 14,610,000 shares of the

Companys
common stock at a price of $1.72, the market price of the

Companys common
stock on the day preceding the public announcement of the

definitive
agreement. In addition, the Company has or will issue options

and
warrants to purchase approximately 2,234,000 shares of the

Companys
common stock to holders of Helix options and warrants. The fair

value of
the Companys options and warrants issued or to be issued

is estimated to
be approximately $1,600,000, using fair value assumptions of: no
dividends, expected volatility of approximately 95%, risk-free

interest
rate of approximately 5%, and expected lives ranging from 1 to

8 years.
Also, total costs incurred or estimated to be incurred by the

Company in
connection with the acquisition are approximately $2,500,000.

This
resulted in a total purchase price of approximately $29,229,000.

11



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HearUSA, Inc
Notes to Consolidated Financial Statements
(unaudited)

The following table summarizes the estimated

fair values of the Helixs
assets acquired and the liabilities assumed as of June 30,

2002, the
first day of the Companys third quarter,
which will be considered the effective date of the acquisition

for
financial reporting purposes. These estimates are based on

Helixs
preliminary balance sheet at June 30, 2002 under US GAAP

and translated
from Canadian dollars to US dollars at the rate of .6337. The

Company is
in the process of completing its valuation of certain intangible

assets
and refining estimates of certain liabilities of Helix,

therefore the
allocation of purchase price is subject to changes and

adjustments.

|                        |                            |   |             |             |  
|----------------------- | -------------------------- | - | ----------- | ----------- | -
|Current

assets         |                            | $ | 7,202,000   |            
|Property and

equipment |                            |   | 2,443,000   |            
|Deferred income

taxes  |                            |   | 1,405,000   |            
|Intangible

assets      |                            |   | 13,810,000  |            
|Goodwill                |                            |   | 25,102,000  |            
|                        |                            |   |             |            
|                        | Total assets

acquired     |   |             | 49,962,000  |  
|Current

liabilities    |                            |   | (6,255,000  | )          
|Long-term

debt         |                            |   | (14,478,000 | )          
|                        |                            |   |             |            
|                        | Total liabilities

assumed |   |             | (20,733,000 | )
|                        |                            |   |             |            
|Net assets

acquired    |                            | $ | 29,229,000  |            
|                        |                            |   |             |            

Of the $13,810,000 of estimated acquired

intangible assets, $6,035,000
was assigned to trademarks and trade names that are not subject

to
amortization, and $7,775,000 was assigned to patient files,

which have a
weighted average useful life of approximately 15 years.

In connection with this transaction, the Company is
in the process of analyzing segments, and will determine the
assignment of goodwill to the appropriate segments. The Company is
also in the process of analyzing the amount, if any, of the
$25,102,000 of goodwill which is expected to be deductible for tax
purposes. These analyses are expected to be completed by the end of
the third quarter of 2002.

Base upon the above preliminary purchase price

allocation, the Companys
total stockholders equity , on a pro forma basis assuming

the
transaction occurred on June 29, 2002 would be

approximately $23,000,000.

12



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##### 





|Item 2. |  | Managements

Discussion and Analysis of
Financial Condition and Results of Operation
|------- |  | -------------------------------------------------------------------------------------

GENERAL

The Companys strategy for continuing and

accelerating center sales growth
and market penetration includes both aggressively advertising to

the
non-insured self-pay or retail market and positioning the

Company as
the leading provider of hearing care to the benefited

populations covered
by managed care contracts.

The Company intends, as its long-term goal, to

establish a nationwide
network of hearing care centers, located in the metropolitan

areas or
regions with concentrations of elderly consumers who are more

likely to
need the Companys products and services. The Company plans

on expanding
its hearing care center network through the completion of the

Helix
transaction (described below) and the continuing expansion of

HEARx West
LLC, its joint venture.

On July 27, 2001 the Company and Helix

signed a definitive merger
agreement, which was subsequently amended and restated as of

November 6,
2001. Helix owns or manages 128 hearing healthcare clinics

located in
Massachusetts, Pennsylvania, New York, Ohio, Michigan,

Wisconsin,
Minnesota, Washington and Missouri as well as in the Provinces

of Ontario
and Quebec. The transaction was approved by the stockholders of

both the
Company and Helix on June 26, 2002 and by the Canadian

courts on June 28,
2002. The transaction closed on July 11, 2002.

CRITICAL ACCOUNTING POLICIES

Financial Reporting Release No. 60, which

was recently released by the
U.S. Securities and Exchange Commission, encourages all

companies to
include a discussion of critical accounting policies or methods

used in
the preparation of financial statements.

Management believes the following critical

accounting policies affect the
significant judgments and estimates used in the preparation of

the
financial statements:

Revenue Recognition

HearUSA recognizes revenues from the sale of

audiological products at the
time of delivery and revenues from hearing care services at the

time
those services are performed.

The Company has capitation contracts with

certain health care
organizations under which the Company is paid an amount for each

enrollee
of the health maintenance organization to provide to the

enrollee a once
every three years credit on certain hearing products and

services. The
amount paid to the Company by the healthcare organization is

calculated on
a per-capita basis and is referred to as capitation revenue. The

Company
defers recognition of capitation revenue until the earlier of

the actual
utilization by the member populations of the benefit, or the end

of the
contract term.

Sales returns

HearUSA provides all patients purchasing

hearing aids with a specific
return period of at least 30 days if the patient is

dissatisfied with the
product. The Company provides an allowance in accrued expenses

for
returns. The return period can be extended to 60 days if

the patient
attends the Companys H.E.L.P. program.

13



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##### 



Estimates

HearUSAs consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States. The preparation of these financial statements requires management
to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an ongoing basis, management
evaluates these estimates, including those related to allowances for
doubtful accounts receivable and sales returns. Management bases these
estimates on historical experience and on various other assumptions that
are believed to be reasonable under the circumstances. These estimates
form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.

RESULTS OF OPERATIONS

For the three months ended June 29, 2002 compared to the three months
ended June 30, 2001

Net revenues increased $1,319,844, or 11.6%, to $12,661,032 in the second
quarter of 2002 from $11,341,188 in the comparable quarter of 2001. The
increase in revenues resulted primarily from the increase in revenues from
the Companys Florida and Northeast centers, while California centers
net revenues remained relatively constant. The increase in revenues for
the second quarter of 2002 as compared with the second quarter of 2001 is
largely the result an increase in the average selling price of the
Companys products Management believes that continuing economic
uncertainties are causing the Companys primary market, the nations
elderly population, to reduce discretionary spending, which has had and
could have in the future an adverse effect on the Companys net revenues.

Cost of products sold decreased $301,311, or 8.4%, to $3,285,471 in the
second quarter of 2002 from $3,586,782 in the comparable quarter of
2001. The decrease in cost of goods sold is primarily the result of the
rebates received of approximately $829,000 from Siemens pursuant to the
supply agreement with the Company, which was partially offset by an
increase in the non-hearing aid cost of goods sold, such as repairs,
batteries, assistive listening devices. The cost of products sold as a
percent of net revenues, was 25.9% and 31.6% for the second quarter of
2002 and 2001, respectively.

Center operating expenses decreased $441,415, or 6.1%, to $6,783,935 in
the second quarter of 2002 from $7,225,350 in the comparable quarter of
2001. This decrease is attributable to the cost reduction program the
Company implemented commencing in May 2001. Regional office costs
decreased $133,175 to $436,074 for the second quarter of 2002 compared
with $569,249 in the comparable quarter of 2001. Also there was a $78,000
write off of leasehold improvements due to a center relocation which
occurred in the second quarter 2001.

General and administrative expenses decreased $125,043, or 4.8%, to
$2,478,302 in the second quarter of 2002 from $2,603,345 in the comparable
quarter of 2001. This decrease is attributable to the Companys cost
reduction program. The Company reduced its marketing programs, reducing
corporate advertising $123,214 to $85,052 in the second quarter of 2002
compared with $208,266 in the comparable quarter of 2001. Shareholder
relations expense decreased $123,464 or 63.5%, to $71,083 in the second
quarter of 2002 from $194,547 in the comparable quarter of 2001. This
decrease is primarily the result of

14



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##### 



the Companys retention of an
investment banking firm beginning in December 2000 to render services with
respect to financial consulting and public relations. No such fees were
incurred in 2002. This was offset by an increase of $110,370 in telephone
expense. The increase in telephone expense is a direct result of the
Companys full implementation of the national call center and the wide
area network in 2002.

Depreciation and amortization expense decreased $104,801, or 16.9%, to
$517,137 in the second quarter of 2002 from $621,938 in the comparable
period of 2001, which was primarily the result of certain equipment
becoming fully depreciated during 2001.

Interest income increased $15,696, or 28.9%, to $69,986 in the first
quarter of 2002 from $54,290 in the comparable quarter of 2001. This
increase is attributable to the interest income from the credit agreement
with Helix. Interest expense increased $177,478 to $342,696 in the second
quarter of 2002 from $165,218 in the comparable quarter of 2001. This
increase is attributable to the addition of interest on the line of credit
with Siemens, beginning in April 2001.

For the six months ended June 29, 2002 compared to June 30, 2001

Net revenues increased $841,670, or 3.5%, to $24,671,048 in the first six
months of 2002 from $23,829,378 in the comparable period of 2001. The
increase in revenues resulted primarily from the increase in revenues from
the Companys Northeast centers, which was offset by the decrease in
revenues from the Florida and California centers during the six months
ended June 29, 2002. Net revenues in the Northeast increased $1,331,000,
or 24.7% to $6,725,000 for the six months ended June 29, 2002 from
$5,394,000 for the comparable period of 2001, offset by the decrease in
the combined net revenues of Florida and California of $489,000 or 2.7% to
$17,946,000 for the six months ended June 29, 2002 from $18,435,000 for
the comparable period of 2001. The increase in revenues for the six months
ended June 29, 2002 as compared with the comparable period of 2001 is
the result of the increase in the average selling price of the Companys
products sold during this period. Management believes that continuing
economic uncertainties are causing the Companys primary market, the
nations elderly population, to reduce discretionary spending, which has
had and could have in the future an adverse effect on the Companys net
revenues.

Cost of products sold decreased $1,162,791, or 14.8%, to $6,690,569 in the
first six months of 2002 from $7,853,360 in the comparable period of 2001.
The decrease in cost of goods sold is primarily the result of the rebates
received of approximately $1,676,000 from Siemens pursuant to the supply
agreement with the Company, which is partially offset by the increase in
the non-hearing aid cost of goods sold, such as repairs, batteries and
assistive listening devices. The cost of products sold as a percent of net
revenues, was 27.1% and 33.0% for the six months ended June of 2002 and
2001, respectively.

Center operating expenses decreased $1,643,992, or 10.8%, to $13,543,870
in the six months ended June 29, 2002 from $15,187,862 in the comparable
period of 2001. This decrease is attributable to the cost reduction
program the Company first implemented in May 2001. The Company reduced
its marketing programs, reducing center advertising expense to $2,884,937,
or 11.7% of revenue, in the six months ended June 29, 2002 down from
$3,365,527, or 14.1% in the comparable period of 2001. In addition, Center
wages expense and regional office costs also decreased $328,488 or 4.8%,
and 237,042 or 20.9%, respectively, to $6,453,781 and $899,849,
respectively, in the six months ended June 29, 2002 from $6,782,268 and
$1,136,892, respectively in the comparable period of 2001. Lastly a
$78,000 write off of leasehold improvements due to a center relocation
occurred in the six months ended June 30, 2001.

15



---



##### 



General and administrative expenses decreased $304,193, or 5.9% to
$4,864,854 in the first six months of 2002 from $5,169,047 in the
comparable period of 2001. This decrease is attributable to the Companys
cost reduction program. The Company reduced its marketing programs,
reducing corporate advertising $188,875 to $211,414 in the six months
ended June 29, 2002 compared with $400,289 in the comparable period of
2001. Shareholder relations expense decreased $204,160 or 65.6%, to
$107,014 in the six months ended June 29, 2002 from $311,174 in the
comparable period of 2001. This decrease is primarily the result of the
Companys retention of an investment banking firm beginning in December
2000 to render services with respect to financial consulting and public
relations., no such fees were incurred in 2002. In addition, corporate
travel and professional service fees decreased $79,026 and $142,353,
respectively, which was offset by an increase of $264,426 in telephone
expense. The increase in telephone expense is a direct result of the
Companys full implementation of the national call center and the wide
area network.

Depreciation and amortization expense decreased $223,246, or 17.7%, to
$1,040,735 in the six months ended June 29, 2002 from $1,263,981 in the
comparable period of 2001, which was primarily the result of certain
equipment becoming fully depreciated during 2001.

Interest income decreased $8,113, or 8.0%, to $92,752 in the six month
ended June 29, 2002 from $100,865 in the comparable period of 2001. This
decrease is attributable to the decline in average interest rates earned
primarily on cash and cash equivalents and a reduction in the average
daily balance of the cash and cash equivalents, offset by the interest
income from the credit agreement with Helix. Interest expense increased
$448,488 to $623,625 in the six months ended June 29, 2002 from $175,137
in the comparable period of 2001. This increase is attributable to the
addition of interest on the line of credit with Siemens, beginning in
April 2001.

LIQUIDITY AND CAPITAL RESOURCES

Working capital decreased $1,632,291 to a negative $2,370,853 as of June
29, 2002 from a negative $738,562 as of December 29, 2001. The working
capital of negative $2,370,853 includes approximately $1.4 million of
dividends payable at June 29, 2002, which at the option of the Company may
be paid in shares of the Companys common stock rather than cash. It also
reflects the use of $2,000,000 in cash to purchase a the common shares
investment in Helix in January 2002. See Note 3 of the Notes to
Consolidated Financial Statements.

On December 7, 2001, the Company obtained a $51,875,000 secured credit
facility from Siemens Hearing Instruments, Inc. comprised of (a) a
$10,875,000 secured five-year term loan credit facility (the Tranche A
Loan); (b) a $25,000,000 secured five-year revolving loan credit facility
(the Tranche B Loan); (c) a $3,000,000 secured five-year term loan
facility (the Tranche C Loan); and (d) a $13,000,000 secured five-year
term loan credit facility (the Tranche D Loan). At June 29, 2002,
$9,293,748 and $12,625,000, representing the Tranche A and the Tranche D
Loans, respectively, was outstanding.

The Tranche A Loan proceeds were used as follows: (i) the repayment of
$6,875,000 owed at December 7, 2001 to Siemens by the Company under an
April 23, 2001 agreement (which included a $7.5 million line of credit)
(ii) a $2,000,000 loan from the Company to Helix to fund the NECP
acquisition (see Note 3 of the Notes to Consolidated Financial Statements)
and (iii) $2,000,000 for the exchange and redemption of all of the
outstanding Series I Convertible Preferred Stock. The Tranche D Loan
proceeds were used to repay all of Helixs existing convertible debt and
portions of its non-convertible debt. The Tranche B Loan may be used
only for future acquisitions by the Company subject to guidelines
established by the credit facility or otherwise agreed to by the Company
and Siemens. The parties intend that the Tranche C Loan will be used for
general working capital purposes.

16



---



##### 



The Siemens credit facility imposes
certain financial and other covenants on the Company which are customary
for loans of this size and nature. At June 29, 2002, the Company was in
compliance with all such covenants. If the Company cannot maintain
compliance with these covenants, Siemens may terminate future funding
under the credit facility and declare all then outstanding amounts under
the facility immediately due and payable.

The Tranche A, B and C Loans are payable quarterly over five years with
the remaining outstanding principal, and interest at 10%, due and payable
on the final maturity date. Principal and interest, at the prime rate (as
defined) plus 1%, on the Tranche D Loan is payable on the final maturity
date. Quarterly principal and interest payments on the Tranche A, B and C
Loans may be paid through rebates received from Siemens by HearUSA as long
as the Company purchases certain minimum percentages of its requirements
of hearing aids from Siemens.

To address a short term cash need, the Company closed on a $1.5 million
private placement of 1.5 million shares of its common stock and 1.5
million three-year common stock purchase warrants on March 29, 2002. All
members of the Companys board of directors participated in the private
placement purchasing 805,000 of the 1,500,000 shares of common stock. The
net proceeds of approximately $1.5 million were used for working capital.

The Company believes that funds available under the Siemens credit
facility, current cash, investment securities and revenues from operations
will be sufficient to support the Companys operational needs through the
next twelve months, although there can be no assurance that the Company
can maintain compliance with Siemens loan covenants, or that unexpected
capital needs will not arise for which the credit facility, cash,
investments and revenues from operations will be sufficient. In the event
the Company needs to raise additional money to fund unexpected cash needs
or otherwise to meet requirements, the Company may consider the issuance
of additional equity or debt securities. There can be no assurance,
however, that such financing would be available to the Company on
favorable terms or at all.

Below is a chart setting forth the Companys contractual cash payment
obligations for future fiscal years, which have been aggregated to
facilitate a basic understanding of the Companys liquidity as of June 29,
2002.

|                                   |  |       |            |      |  |                        |           |       |  |       |            |         |  |   |            |  |  |   |   | 
|---------------------------------- |  | ----- | ---------- | ---- |  | ---------------------- | --------- | ----- |  | ----- | ---------- | ------- |  | - | ---------- |  |  | - | - | 
|                                   |  |       |            |      |  | Payments Due by Period |           |       |  |       |            |         |  |  
|                                   |  |       |            |      |  | Less                   |           |       |  |       |            |         |  |   |            |  |  |  
|Contractual                        |  |       |            |      |  | than 1                 |           | 1  3 |  | 4  5 |            | After 5
|Obligations                        |  | Total |            | Year |  | Years                  |           | Years |  | Years
|                                   |  |       |            |      |  |                        |           |       |  |      
|Long-Term Debt                     |  | $     | 22,186,000 |      |  | $                      | 2,504,000 |       |  | $     | 4,664,000  |         |  | $ | 15,018,000 |  |  | $ |  | 
|Operating Leases                   |  |       | 13,288,000 |      |  |                        | 2,266,000 |       |  |       | 9,700,000  |         |  |   | 1,322,000  |  |  |   |  | 
|                                   |  |       |            |      |  |                        |           |       |  |       |            |         |  |   |            |  |  |   |   | 
|Total Contractual Cash
Obligations |  | $     | 35,474,000 |      |  | $                      | 4,770,000 |       |  | $     | 14,364,000 |         |  | $ | 16,340,000 |  |  | $ |  | 
|                                   |  |       |            |      |  |                        |           |       |  |       |            |         |  |   |            |  |  |   |   | 

Net cash used by operating activities decreased from $4,614,433 for the
six months ended June 30, 2001 to net cash provided by operations of
$649,544 for the six months ended June 29, 2002. The increase in net cash
provided from operating activities was primarily the result of the
decrease of net loss of approximately $3,600,000.

17



---



##### 



Net cash used by investing activities increased from $1,347,408 for the
six months ended June 30, 2001 to $14,377,006 for the six months ended
June 29, 2002. This increase is the result of a $2,000,000 note
receivable issued to the Company by Helix in January 2002 for the NECP
acquisition, $9.42 million credit agreement issued to the Company by Helix
in April 2002, approximately $860,000 of capitalized merger costs (related
to the Helix transaction) incurred during the six months ended June 29,
2002, and the purchase of approximately $1,750,000 of investment
securities in June 2002, offset by a decrease of approximately $1,000,000
in purchases of property and equipment.

Net cash provided by financing activities increased from $7,722,997 for
the six months ended June 30, 2001 to $11,711,817 for the six months ended
June 29, 2002. This increase is primarily the result of the net proceeds
of $12,625,000 Siemens Tranche D Loan and $1,500,000 from the 2002 private
placement of common stock, offset by, approximately $1,600,000 in
repayments under the Siemens Tranche A loan, approximately $351,000
redemption of 1998 Convertible Preferred Stock, and approximately $380,000
of preferred stock dividends paid in cash, compared to net proceeds of the
$7,500,000 Siemens Tranche A Loan.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the FASB finalized FASB Statements No. 141, Business
Combinations(SFAS 141), and No. 142, Goodwill and Other Intangible
Assets(SFAS 142). SFAS 141 requires the use of the purchase method of
accounting and prohibits the use of the pooling-of-interest method of
accounting for business combinations initiated after June 30, 2001. SFAS
141 also requires that the Company recognize acquired intangible assets
apart from goodwill if the acquired intangible assets meet certain
criteria. SFAS 141 applies to all business combinations initiated after
June 30, 2001 and for purchase business combinations completed on or after
July 1, 2001. It also requires, upon adoption of SFAS 142, that the
Company reclassify the carrying amounts of intangible assets and goodwill
based on the criteria in SFAS 141.

SFAS 142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually. In
addition, SFAS 142 requires that the Company identify reporting units for
the purpose of assessing potential future impairments of goodwill,
reassess the useful lives of other existing recognized intangible assets,
and cease amortization of intangible assets with an indefinite useful
life. An intangible asset with an indefinite useful life should be tested
for impairment in accordance with the guidance in SFAS 142. SFAS 142 is
required to be applied in fiscal years beginning after December 15, 2001
to all goodwill and other intangible assets recognized at that date,
regardless of when those assets were initially recognized. SFAS 142
requires the Company to complete transitional goodwill impairment test six
months from the date of adoption. The Company is also required to
reassess the useful lives of other intangible assets within the first
interim quarter after adoption of SFAS 142. The Companys previous
business combinations were accounted for using the purchase method. The
Company adopted SFAS 141 and 142 during the quarter ended March 30, 2002,
which included reassessing the useful lives of other intangible assets.
The impact of the adoption of SFAS 141 and SFAS 142 on the Companys
financial position and results of operations was not material.

In October 2001, the FASB issued SFAS No. 144 Accounting for the
Impairment or Disposal of Long-Lived Assetswhich resolves significant
implementation issues related to FASB Statement No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of,and supersedes the accounting and reporting provisions of
APB Opinion No. 30, Reporting the Results of Operations  Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions,for the disposal of a
business segment.

18



---



##### 



SFAS 144 is effective for fiscal years beginning after
December 15, 2001, and interim periods within those fiscal years, with
early application encouraged. The impact of adoption of SFAS 144 on the
Companys financial position and results of operations was not material.

In April 2002, the FASB issued SFAS No.145 (SFAS), Rescission of SFAS
No.s 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections.
In addition to rescinding the aforementioned statements, SFAS 145 also
amends SFAS 13, Accounting for Leases, to eliminate an inconsistency
between the required accounting for sale-leaseback transactions and the
required accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. This statement
also amends other existing authoritative pronouncements to make various
technical corrections, clarify meanings, or describe their applicability
under changed conditions. SFAS 145 is generally effective for financial
statements issued on or after May 15, 2002. The impact of adoption of
SFAS 145 on the Companys financial position and results of operations was
not material.

RECENT DEVELOPMENTS

On July 11, 2002 the Company completed its business combination with
Helix Hearing Care of America Corporation. In connection with the
completion of the business combination, on July 8, 2002 the Company
changed its name from HEARx Ltd. to HearUSA, Inc and increased its
authorized capital. The stock continues to trade on the American Stock
Exchange under the symbol EAR.

Under the terms of the agreement between the companies, Helix
shareholders have or will receive 0.3537 shares of HearUSA, Inc. common
stock or 0.3537 exchangeable shares of HEARx Canada, Inc., a newly formed
Canadian subsidiary, for each share of Helix stock. Each exchangeable
share is convertible into one share of HearUSA, Inc. common stock at the
election of the holder and is entitled to one vote per share on all
matters submitted to vote of HearUSA, Inc. common stockholders.



Except for historical information provided in this discussion and
analysis, the discussion includes forward looking statements, including
the Companys goal of establishing a nationwide center network;
expectation concerning the effect of cost control measures; funds
available under credit facility, current cash, investment securities and
revenues from operations sufficient to support the Companys operational
needs; the Companys belief concerning the effect on its financial
condition or operations of changes in benefits announced by some
insurance companies and the loss of any single contract. Such statements
involve certain risks and uncertainties that could cause actual results
to differ materially from those in the forward-looking statements.
Potential risks and uncertainties include industry and market conditions,
especially those affecting managed health care; unforeseen capital
requirements; trends in market sales; and the success of the HEARx West
joint venture with The Permanente Federation.

19



---



##### 



Item 3. Quantitative and Qualitative Disclosure About Market Risk



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company does not engage in derivative transactions or issue
variable rate debt. The Company does become exposed to foreign currencies
as a result of its investment in the common stock of Helix, however such
exposure in not significant. Differences in the fair value of investment
securities are not material, therefore the related market risk is not
significant. The Companys exposure to market risk for changes in
interest rates relates primarily to the Companys long-term debt. The
following table presents the Companys financial instruments for which
fair value and cash flows are subject to changing market interest rates:

|                                                              |                     |   |                |             |                |   |             |            |             |   |         |         |   |   |          |          |  
|------------------------------------------------------------- | ------------------- | - | -------------- | ----------- | -------------- | - | ----------- | ---------- | ----------- | - | ------- | ------- | - | - | -------- | -------- | -
|                                                              |                     |   | Long-Term Debt
|                                                              |                     |   |               
|                                                              |                     |   | Variable Rate  |             |                |   |             |            | Fixed Rate  |   |         |         |  
|                                                              |                     |   | Prime Rate     |             |                |   |             |            |             |   |         |         |  
|                                                              |                     |   | + 1% note      |             | 10.0% notes    |   | 8.75% note  |            | Other notes
|                                                              |                     |   | due April 27,  |             | due December 1 |   | due July 1, |            |            
|                                                              |                     |   | 2006           |             | 2006           |   | 2004        |            |             |   |        
|                                                              |                     |   |                |             |                |   |             |            |            
|As of June 29, 2002:                                          |                     |   |                |             |                |   |             |            |             |   |         |         |   |   |          |         
|Estimated cash inflow
(outflow) by year of
principal maturity |                     |   |                |             |                |   |             |            |             |   |         |         |   |   |          |         
|                                                              | 2002                |   | $              |            |                |   | $           | (2,300,000 | )           |   | $       | (81,000 | ) |   | $        | (123,000 | )
|                                                              | 2003                |   |                |            |                |   |             | (2,300,000 | )           |   |         |        |   |   |          | (64,000  | )
|                                                              | 2004                |   |                |            |                |   |             | (2,300,000 | )           |   |         |        |   |   |          |         |  
|                                                              | 2005                |   |                |            |                |   |             | (2,300,000 | )           |   |         |        |   |   |          |         |  
|                                                              | 2006 and thereafter |   |                | (12,625,000 | )              |   |             | (93,000    | )           |   |         |        |   |   |          |         |  
|                                                              | Total               |   | $              | (12,625,000 | )              |   | $           | (9,293,000 | )           |   | $       | (81,000 | ) |   | $        | (187,000 | )
|Estimated fair value                                          |                     | $ | (12,625,000    | )           |                | $ | (9,293,000  | )          |             | $ | (81,000 | )       |   | $ | (187,000 | )       
|Carrying value                                                |                     | $ | (12,625,000    | )           |                | $ | (9,293,000  | )          |             | $ | (81,000 | )       |   | $ | (187,000 | )       
|                                                              |                     |   |                |             |                |   |             |            |             |   |         |         |   |   |          |          |  

Part II   Other Information

Item 2. Changes in Securities and Use of Proceeds

None

Item 4. Submission of Matters to a Vote of Security Holders

The Company held its annual meeting of stockholders on June 25, 2002. At that
meeting, the stockholders were asked to consider and act on the election of
directors. The following persons were elected as directors for terms expiring
in 2003:

|                        |  |     |            |          |  |           |         |             |  |  |   |  |  |  |         | 
|----------------------- |  | --- | ---------- | -------- |  | --------- | ------- | ----------- |  |  | - |  |  |  | ------- | 
|                        |  |     |            |          |  | Against/  |         | Broker      |  |  |   | 
|Nominee                 |  | For |            | Withheld |  | Non-votes |         | Abstentions
|Paul A. Brown, M.D.     |  |     | 14,687,776 |          |  |           | 162,760 |             |  |  | 0 |  |  |  | 690,207 | 
|Stephen J. Hansbrough   |  |     | 14,687,776 |          |  |           | 162,760 |             |  |  | 0 |  |  |  | 690,207 | 
|Thomas W. Archibald     |  |     | 14,687,776 |          |  |           | 162,760 |             |  |  | 0 |  |  |  | 690,207 | 
|David J. McLachlan      |  |     | 14,687,776 |          |  |           | 162,760 |             |  |  | 0 |  |  |  | 690,207 | 
|Joseph L. Gitterman III |  |     | 14,687,776 |          |  |           | 162,760 |             |  |  | 0 |  |  |  | 690,207 | 

20



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##### 



The Company held a special meeting of stockholders on June 26, 2002. At that
meeting the stockholders were asked to consider and act on the following
matters:



| | 1. |  | To approve the issuance of HEARx common stock in connection
with the plan of agreement with Helix Hearing Care of America Corp.                                       
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | 8,558,260 For; 93,026 Against; 6,866,713 broker non-votes and
22,744 abstentions. The proposal was approved.                                                      
|
| | 2. |  | To approve an amendment to the Companys Amended and Restated
Certificate of Incorporation authorizing an increase in the
authorized Common Stock and Preferred Stock.
|
| |    |  | 8,435,750 For; 197,250 Against; 6,866,713 broker non-votes and
41,030 abstentions. The proposal was approved.                                                     
|
| | 3. |  | To approve an amendment to the Companys Amended and Restated
Certificate of Incorporation authorizing a change in our name to
HearUSA, Inc.                          
|
| |    |  | 8,570,503 For; 77,254 Against; 6,866,713 broker non-votes and
26,273 abstentions. The proposal was approved.                                                      
|
| | 4. |  | To approve the adoption of the HearUSA 2002 Flexible Stock
Plan.                                                                                                      
|
| |    |  | 8,361,823 For; 236,656 Against; 6,866,713 broker non-votes and
75,551 abstentions. The proposal was approved.                                                     

Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits:
| | --- |  | ---------

|
|
|
|
|
|
|

21



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##### 





| | 3.3  |  | Certificate of Designations, Preferences and Rights of the
Companys 1998 Convertible Preferred Stock. [3] Filed as an exhibit
to the Companys Current Report on Form 8-K, filed August 27, 1998,
as the exhibit number indicated in brackets, and incorporated herein
by reference.                                                                                                                      
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 3.4  |  | Amendment to Restated Certificate of Incorporation [3.1]
Filed as an exhibit to the Companys Current Report on Form 8-K,
filed July 19, 2002, as the exhibit number indicated in brackets,
and incorporated herein by reference.                                                                                                                                                                          
|
| | 3.5  |  | By-Laws of HEARx Ltd. [3.4]. Filed as an exhibit to the
Companys Annual Report on Form 10-K for the fiscal year ended
12/31/99 as the exhibit number indicated in brackets, and
incorporated herein by reference.                                                                                                                                                                                         
|
| | 3.6  |  | Certificate of Designations, Preferences and Rights of the
Companys 1999 Series H Junior Participating Preferred Stock. [4]
Filed as an exhibit to the Companys Current Report on Form 8-K,
filed December 17, 1999, as the exhibit number indicated in
brackets, and incorporated herein by reference.                                                                                                  
|
| | 3.7  |  | Amendment to Certificate of Designations, Preferences and
Rights of the Companys Series J Preferred Stock. [3.2] Filed as an
exhibit to the Companys Current Report on Form 8-K, July 19, 2002,
as the exhibit number indicated in brackets, and incorporated herein
by reference.                                                                                                                       
|
| | 3.8  |  | Certificate of Designations, Preferences and Rights of the
Companys Special Voting Preferred Stock. [3.2] Filed as an exhibit
to the Companys Current Report on Form 8-K, July 19, 2002, as the
exhibit number indicated in brackets, and incorporated herein by
reference.                                                                                                                              
|
| | 4.1  |  | Rights Agreement, dated December 14, 1999, between HEARx and
the Rights Agent, which includes the Certificate of Designations,
Preferences and Rights of the Companys 1999 Series H Junior
Participating Preferred Stock. [4] Filed as an exhibit to the
Companys Current Report on Form 8-K, dated December 17, 1999, as
the exhibit number indicated in brackets, and incorporated herein by
reference.
|
| | 4.2  |  | Amendment to Certificate of Designations of the Companys
Series H Junior Participating Preferred Stock. [3.3] Filed as an
exhibit to the Companys Current Report on Form 8-K, dated July
19,2002, as the exhibit number indicated in brackets, and
incorporated herein by reference.                                                                                                                     
|
| | 10.1 |  | Form of Stock Purchase Agreement dated March 29, 2002 by
and between HEARx Ltd and each purchaser named therein.                                                                                                                                                                                                                                                                                           
|
| | 10.2 |  | Form of Warrant to purchase Common Stock issued in
connection with March 29, 2002 private placement.                                                                                                                                                                                                                                                                                                       

(b)  Reports on Form 8-K:

None

22



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##### 



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.

HearUSA, Inc.
(Registrant)

|      |  |                 |  |     |  |                                                                                 
|----- |  | --------------- |  | --- |  | --------------------------------------------------------------------------------
|Date: |  | August 13, 2002 |  | By: |  | s/Stephen J. HansbroughStephen J. Hansbrough
Chief Executive Officer            
|     
|Date: |  | August 13, 2002 |  | By: |  | s/James W. PeklenkJames W. Peklenk
Vice President and
Co-Chief Financial Officer
|     
|Date: |  | August 13, 2002 |  | By: |  | s/Gino ChouinardGino Chouinard
Vice President and
Co-Chief Financial Officer    

23