<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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 MARCH 31, 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 NO. 0-21107

                           TELESPECTRUM WORLDWIDE INC.
             (Exact name of registrant as specified in its charter)


 DELAWARE                                                            23-2845501
 (State or other jurisdiction of                                  (IRS Employer
 incorporation or organization)                          Identification Number)

 443 SOUTH GULPH ROAD
 KING OF PRUSSIA, PENNSYLVANIA                                            19406
 (Address of principal executive offices)                            (ZIP Code)


                                  610-878-7400
              (Registrant's telephone number, including area code)


Indicate by check mark whether the Registrant (1) has filed all reports to be
filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

                                        Yes   X    No
                                             ---       ---

The number of outstanding shares of the Registrant's Common Stock, par value
$.01 per share, on May 14, 2002 was 192,067,847.
<PAGE>
                                Table of Contents

<TABLE>
<CAPTION>
                                                                                             Page
                                                                                             ----
<S>                                                                                        <C>
                     PART I -- FINANCIAL INFORMATION

            Item 1.  Financial Statements (unaudited):

                     Condensed Consolidated Balance Sheets as of                                3
                      March 31, 2002 and December 31, 2001

                     Condensed Consolidated Statements of Operations                            4
                      For the Three Months Ended March 31, 2002 and 2001

                     Condensed Consolidated Statements of Cash Flows                            5
                      For the Three Months Ended March 31, 2002 and  2001

                     Notes to Condensed Consolidated Financial Statements                    6-12

            Item 2.  Management's Discussion and Analysis of Results of Operations
                      and Financial Condition                                               13-18


                     PART II - OTHER INFORMATION

            Items 1 to 5                                                                       19

            Item 6.  Exhibits and Reports on Form 8-K                                          19
</TABLE>

                                       2
<PAGE>
                  TeleSpectrum Worldwide Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheets
                                   (unaudited)
                    (In Thousands - Except Per Share Amounts)


<TABLE>
<CAPTION>
                                                                     March 31,   December 31,
                                                                       2002         2001
                                                                    ---------     ---------

<S>                                                                 <C>           <C>
                     ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                                        $   4,900     $   6,391
   Accounts receivable, net                                            28,193        33,333
   Prepaid expenses and other                                           1,740         2,067
                                                                    ---------     ---------
            Total current assets                                       34,833        41,791

PROPERTY AND EQUIPMENT, net                                            10,872        11,478

INTANGIBLES, net                                                        2,151         2,347

OTHER NONCURRENT ASSETS                                                 1,683         1,043
                                                                    ---------     ---------
            Total assets                                            $  49,539     $  56,659
                                                                    =========     =========

                     LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
   Current maturities of long-term debt                             $   3,501     $   3,608
   Accounts payable                                                     5,726         5,435
   Accrued expenses and other current liabilities                      29,881        27,118
                                                                    ---------     ---------
         Total current liabilities                                     39,108        36,161
                                                                    ---------     ---------

LONG-TERM DEBT (See Footnote 1)                                       169,225       166,588
                                                                    ---------     ---------

OTHER NONCURRENT LIABILITIES                                              475           615
                                                                    ---------     ---------

STOCKHOLDERS' DEFICIT:  (See Footnote 1)
   Preferred stock, $.01 par value, 5,000,000 shares authorized,           --            --
      no shares issued or outstanding
   Common stock, $.01 par value, 200,000,000 shares                       400           400
      authorized, 40,022,656 shares issued and 32,737,815
      shares outstanding at March 31, 2002 and December 31, 2001
Additional paid-in capital                                            339,113       339,113
Common stock purchase warrants                                          7,840         7,840
Treasury stock, 7,284,841 shares at cost                              (48,810)      (48,810)
Accumulated deficit                                                  (456,250)     (443,686)
Cumulative currency translation adjustment                             (1,562)       (1,562)
                                                                    ---------     ---------
   Total stockholders' deficit                                       (159,269)     (146,705)
                                                                    ---------     ---------
   Total liabilities and stockholders' deficit                      $  49,539     $  56,659
                                                                    =========     =========
</TABLE>

                                       3
<PAGE>
                  TeleSpectrum Worldwide Inc. and Subsidiaries
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)
                    (In Thousands - Except Per Share Amounts)


<TABLE>
<CAPTION>
                                                   Three Months Ended
                                                 -----------------------
                                                 March 31,     March 31,
                                                   2002         2001
                                                 --------     --------

<S>                                              <C>          <C>
REVENUES                                         $ 36,725     $ 62,818
                                                 --------     --------

OPERATING EXPENSES:
   Cost of services                                31,094       48,320
   Selling, general and administrative              7,400       14,761
   Restructuring charge and other                   7,741        3,350
                                                 --------     --------

          Total operating expenses                 46,235       66,431
                                                 --------     --------

          Operating loss                           (9,510)      (3,613)

INTEREST EXPENSE, net                              (3,054)      (6,473)
                                                 --------     --------

LOSS BEFORE INCOME TAXES                          (12,564)     (10,086)

INCOME TAXES                                           --           --
                                                 --------     --------

NET LOSS                                         $(12,564)    $(10,086)
                                                 ========     ========

BASIC LOSS PER SHARE                             $  (0.38)    $  (0.32)
                                                 ========     ========
DILUTED LOSS PER SHARE                           $  (0.38)    $  (0.32)
                                                 ========     ========

WEIGHTED-AVERAGE SHARES OUTSTANDING - BASIC        32,738       31,795
                                                 ========     ========
WEIGHTED-AVERAGE SHARES OUTSTANDING - DILUTED      32,738       31,795
                                                 ========     ========
</TABLE>


            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                        4
<PAGE>
                  TeleSpectrum Worldwide Inc. and Subsidiaries
                 Condensed Consolidated Statement of Cash Flows
                                   (Unaudited)
                   (In Thousands - Except Per Share Amounts)

<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                                             -----------------------
                                                                              March 31,    March 31,
                                                                                2002        2001
                                                                             --------     --------

<S>                                                                          <C>          <C>
Cash Flows From Operating Activities:
   Net loss                                                                  $(12,564)    $(10,086)
   Adjustments to reconcile net loss to net cash
      flows from operating activities:
         Depreciation and amortization                                          1,057        4,319
         Provision for bad debts                                                  120          707
         Restructuring charge and other                                         7,741        3,117
         Changes in operating assets and liabilities net of acquisitions:
            Accounts receivable                                                 5,020        3,706
            Prepaid expenses and other                                           (313)       1,050
            Accounts payable                                                      291       (1,079)
            Accrued and other liabilities                                      (2,359)      (2,687)
                                                                             --------     --------

                     Net cash used in operating activities                     (1,007)        (953)
                                                                             --------     --------

Cash Flows From Investing Activities:
   Purchases of property and equipment                                           (255)        (301)
                                                                             --------     --------

                     Net cash used in investing activities                       (255)        (301)
                                                                             --------     --------

Cash Flows From Financing Activities:
   Borrowings on long-term debt                                                    --        8,854
   Payments on long-term debt                                                    (114)      (9,006)
   Net payments of capital lease obligations                                     (115)        (234)
                                                                             --------     --------

                     Net cash (used in) provided by financing activities         (229)        (386)
                                                                             --------     --------

Net decrease in cash and cash equivalents                                      (1,491)      (1,640)
Cash and cash equivalents, beginning of period                                  6,391        5,258
                                                                             --------     --------

Cash and cash equivalents, end of period                                     $  4,900     $  3,618
                                                                             ========     ========

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid during the period                                              $     31     $  3,563
                                                                             ========     ========
Income taxes paid during the period                                          $     --     $     --
                                                                             ========     ========
</TABLE>

            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                       5
<PAGE>
                  TELESPECTRUM WORLDWIDE INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. BASIS OF PRESENTATION:

The Consolidated Financial Statements of TeleSpectrum Worldwide Inc. and
subsidiaries ("TeleSpectrum" or the "Company") have been prepared on the basis
of accounting principles applicable to a going concern, which contemplate the
realization of assets and the satisfaction of liabilities in the normal course
of business.

On April 29, 2002, the Company entered into an agreement with its bank lenders
that resulted in a recapitalization of its balance sheet and a reduction of its
debt. As a result of the recapitalization, the amounts due under its existing
credit facilities totaling approximately $161 million at the time of
recapitalization, which consisted of outstanding debt, accrued interest and
fees, were converted into (a) a three-year term facility of $25 million under an
amended and restated credit agreement, (b) $40 million of the Company's Series A
Preferred Stock, and (c) shares of the Company's Series B Convertible Preferred
stock which will convert into common stock representing 95% of the Company's
common outstanding after such conversion. The three year term facility is
secured by, among other things, our assets and outstanding trade receivables,
bears interest at a base rate as defined in the agreement plus 400 basis points,
and matures in May 2005. Under the terms of the Agreement, the Company is
required to meet certain financial covenants, including a fixed charge coverage
ratio and EBITDA targets. The Series A Preferred Stock has a 10% annual dividend
rate, which accrues and is payable either in cash or in additional shares of
Series A Preferred Stock. A portion of the Series B Convertible Preferred Stock
was converted into shares of the Company's common stock immediately after the
closing of the recapitalization, and the remainder will convert into shares of
common stock as soon as the Company amends its Certificate of Incorporation to
increase the authorized number of shares of common stock. Such amendment will
require the approval of the Company's shareholders.

After the recapitalization, the Company's Board of Directors is to be comprised
of three designees of the bank lenders and two designees of management.

In addition to entering into the amended credit agreement and completing the
recapitalization with its bank lenders, on April 29, 2002, other debt balances
outstanding to unsecured creditors were restructured from $15.3 million to
approximately $0.7 million, with cash payments of $1.5 million. Certain
commercial liabilities, primarily accounts payable, which had a carrying value
of $3.5 million as of March 31, 2002, were also settled through cash payments of
$0.9 million and notes payable of $0.3 million. Additional settlements were
reached with certain of the Company's landlords that will result in a reduction
of $3.4 million of future lease commitments through cash payments of $0.4
million and notes payable of $0.2 million. As part of the debt restructuring,
the Company divested itself of its ownership interest in eSatisfy.com.

                                       6
<PAGE>
                  TELESPECTRUM WORLDWIDE INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table represents a proforma estimate of our March 31, 2002 balance
sheet as if the recapitalization had occurred at that time:


                           CONSOLIDATED BALANCE SHEETS
                            RECAPITALIZATION ANALYSIS
                                 MARCH 31, 2002

<TABLE>
<CAPTION>
                                                        (unaudited)
                                                 EFFECT OF RECAPITALIZATION
                                                 --------------------------
                                     ACTUAL        ESTIMATED      PROFORMA
                                     3/31/02        CHANGE        3/31/02
                                    ---------     ---------     ---------
<S>                                 <C>           <C>           <C>
ASSETS:

Cash                                $   4,900     $  (1,685)    $   3,215
Other current assets                   29,933        (1,171)       28,762
                                    ---------     ---------     ---------
Total current assets                   34,833        (2,856)       31,977

Total non current assets               14,706          (495)       14,211
                                    ---------     ---------     ---------

Total assets                        $  49,539     $  (3,351)    $  46,188
                                    =========     =========     =========

LIABILITIES:

Current liabilities                    39,108       (13,535)       25,573

Senior debt                           161,822      (136,822)       25,000
Non current liabilities                 7,878        (5,793)        2,085
                                    ---------     ---------     ---------
Total non current liabilities         169,700      (142,615)       27,085

Total liabilities                     208,808      (156,150)       52,658
                                    ---------     ---------     ---------

Stockholder's equity/(deficit)       (159,269)      152,799        (6,470)
                                    ---------     ---------     ---------

Total liabilities and
  stockholders' equity/(deficit)    $  49,539     $  (3,351)    $  46,188
                                    =========     =========     =========
</TABLE>

At March 31, 2002, the Company had a stockholders' deficit of $159.3 million,
and incurred a net loss of approximately $12.6 million during the first three of
months of 2002.

Management believes that the restructuring of its bank debt and other
liabilities that occurred on April 29, 2002, together with existing working
capital and projected results for 2002, should enable the Company to generate
sufficient cash flow to meet its operating cash needs, fund required capital
expenditures, and satisfy its debt service and other financing requirements. As
a result of continuing customer losses and a declining revenue base, the Company
implemented a significant cost reduction plan in January 2002. This plan
included the reduction of corporate overhead and the closure of five additional
contact centers. For 2002, we estimate that we will save over $15 million in
connection with this plan. On an annualized basis, this plan will reduce fixed
expenses by approximately $19 million. The initial impact of these reductions
was first realized in March 2002. Subsequent to the January plan, the Company
instituted additional cost reductions in March to include the reduction of
additional corporate overhead and the closure of one

                                       7
<PAGE>
                  TELESPECTRUM WORLDWIDE INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

additional contact center. We estimate these savings will total $1.5 million in
2002 and $2.5 million annually thereafter. The impact of these reductions will
first be realized in June 2002. The Company does not have a line of credit or
other short-term borrowing facility available. In addition, covenants in its
amended credit agreement restrict the Company's ability to pledge assets as
collateral for other borrowings.

The Company's 2002 operating plan assumes a stabilization of the Company's
revenue base and an improvement in operating profit margins from historical
levels. The Company's ability to meet its obligations in the ordinary course of
business is dependent upon successful implementation of its operating plan and
stabilization of its operations. Uncertainties exist with respect to
management's plans, because events and circumstances frequently do not occur as
expected, and those differences may be material. These uncertainties raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.

2. NEW ACCOUNTING PRONOUNCEMENTS:

In June 2001, Statement of Financial Accounting Standards No. 141, "Business
Combinations" (SFAS No. 141), and Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142), were issued.
These standards change the accounting principles governing business
combinations, goodwill and other intangible assets by, among other things,
requiring the use of the purchase method in accounting for business combinations
and eliminating the requirement to amortize goodwill. Instead, SFAS No. 142
establishes a method to test for impairment of goodwill on at least an annual
basis. These standards became effective for the Company beginning in the first
quarter of 2002. The effect of adopting SFAS 142 was not material to the
Company's financial statements.

3. LOSS PER SHARE:

Basic loss per share assumes no dilution and is computed by dividing net loss by
the weighted average number of shares of common stock outstanding for the
period. Diluted loss per share reflects the effects of common shares issuable
upon the exercise of stock options and warrants, but only if the effect is
dilutive.


                                      8
<PAGE>
                  TELESPECTRUM WORLDWIDE INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. RESTRUCTURING CHARGES AND OTHER:

As part of its continuing analysis of the Company's operational strategies, the
Board of Directors of the Company approved a restructuring plan designed to
streamline operations, enhance results of operations and improve cash flow by
closing underutilized customer contact centers and reducing overhead costs. As a
result, the Company recorded pre-tax charges totaling $17.8 million through
December 31, 2001 for costs associated with exiting certain facilities,
terminating employees and recognizing related asset impairments. During the
first quarter of 2002, the Company expanded the restructuring to include the
closure or consolidation of additional facilities and identification of
additional workforce reductions. As a result, the Company recorded a pre-tax
charge of $7.7 million during the period. The following summarizes the costs and
liabilities associated with the Company's restructuring plan through March 31,
2002 (in thousands):

<TABLE>
<CAPTION>
                                        Balance as of                                      Balance as of
                                         December 31,    Additional                          March 31,
                                            2001           Charge          Payments            2002
                                          -------         -------          -------           -------
<S>                                      <C>              <C>              <C>               <C>
Obligations assumed on
    closed leased facilities, net        $ 5,514          $ 6,280          $  (499)          $11,295

Severance and employee
    related costs                            479              962             (884)              557

Other                                        518              500             (167)              851
                                         -------          -------          -------           -------

Total Restructuring Accrual              $ 6,511          $ 7,742          $(1,550)          $12,703
                                         =======          =======          =======           =======
</TABLE>


Accrued liabilities for closed facilities of $11.3 million as of March 31, 2002
relate to leased customer contact center locations that have been or will be
closed in connection with the Company's restructuring plan. The amount is
computed as the remaining contractual obligations in each closed center, net of
estimated income from subletting. Subsequent to year end and as part of the
restructuring of the debt, the Company further reduced the $11.3 million
obligation by $5.0 million through negotiated settlements with certain
landlords.

Employee separation costs relate to both administrative personnel at the closed
customer contact centers and corporate personnel, affecting all functional
areas. The accrual of $0.6 million as of March 31, 2002 relates to ongoing
severance payments in accordance with the severance obligations for these
employees.

                                       9
<PAGE>
                  TELESPECTRUM WORLDWIDE INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. COMPREHENSIVE LOSS:

The Company's comprehensive loss includes net loss and unrealized losses from
foreign currency translation. Total comprehensive loss for the three months
ended March 31, 2002 and 2001 was $(12.5) million and $(10.3) million,
respectively.

6. SEGMENTS:

The Company redefined its segments during the second quarter 2001, and restated
all prior periods to conform with the current presentation.

During 2001, the Company classified its operations into two segments:
Teleservices and eSatisfy. These two operating segments were managed separately
because each operating segment represented a strategic business unit that
offered different services. The business segments are described in further
detail below. Segment assets include amounts specifically with the Teleservices
and eSatisfy segments. Corporate assets consist primarily of property and
equipment.

The Teleservices segment provides business-to-consumer and business-to-business
telemarketing services, which are primarily direct sales initiated by the
Company on behalf of its clients, as well as customer service expertise to
clients. The Company's customer service expertise includes the more traditional
inbound services of customer care support, typically through toll-free numbers,
for activities such as responses to clients' customer service inquires,
catalogue sales and electronic order processing and consulting services to a
wide range of clients.

The eSatisfy segment performs baseline and tracking customer satisfaction
surveys for both Internet and traditional companies. As part of the debt
restructuring, the Company divested itself of its ownership interest in
eSatisfy.com and accordingly will not be reporting this segment in the future.


Corporate operations include the selling, general and administrative functions
of the Company.

                                       10
<PAGE>
                  TELESPECTRUM WORLDWIDE INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Business segment information is as follows (in thousands):


<TABLE>
<CAPTION>
                                  Three Months Ended
                                     March 31,
                              -----------------------
                                2002           2001
                              --------       --------
<S>                           <C>            <C>
Revenues:
   Teleservices               $ 35,660       $ 61,207
   e-Satisfy                     1,065          1,611
                              --------       --------

          Total               $ 36,725       $ 62,818
                              ========       ========

Operating income (loss):
   Teleservices               $  4,972       $ 10,676
   e-Satisfy                       (12)         1,132
   Corporate                   (17,524)       (15,421)
                              --------       --------

          Total               $(12,564)      $ (3,613)
                              ========       ========
</TABLE>






<TABLE>
<CAPTION>
                             March 31,     December 31,
                                2002         2001
                             --------      --------
<S>                         <C>           <C>
Total assets:
   Teleservices               $ 38,034     $ 95,696
   e-Satisfy                     1,710        4,011
   Corporate                     9,795       12,851
                              --------     --------

          Total               $ 49,539     $112,558
                              ========     ========
</TABLE>

Information About Major Customers

The following table summarizes those customers with revenues in excess of 10% of
total revenue for the three months ended March 31, 2002 and 2001:

<TABLE>
<CAPTION>
                                              Three Months Ended March 31,
                                              ----------------------------
                                                  2002            2001
                                              -----------     ------------
<S>                                               <C>            <C>
                          Customer 1              26.9%          13.1%
                          Customer 2              12.6%            -%
                          Customer 3               -%            10.0%
</TABLE>

                                       11
<PAGE>
                  TELESPECTRUM WORLDWIDE INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. SUBSEQUENT EVENT:

On April 29, 2002, the Company signed an amended and restated credit agreement
with its bank group, which matures on May 2005 and replaces the former
agreement, dated April 16, 2001.

On May 2, 2002, J. Peter Pierce announced his resignation from the Company's
Board of Directors and as Chief Executive Officer of the Company and is in the
process of transitioning his responsibilities to the new board members. On May
15, 2002, Christopher Williams, the Company's Chief Operating Officer, announced
his resignation from the Company's Board of Directors.

                                       12
<PAGE>
                  TELESPECTRUM WORLDWIDE INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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


We have made forward-looking statements in this Form 10-Q including the
information concerning possible or assumed future results of our operations, and
such statements include those preceded by, followed by or that include words
such as "anticipates," "believes," "expects," "intends" or similar expressions.
For those forward-looking statements, we claim the protection of the safe harbor
contained in the Private Securities Litigation Reform Act of 1995. You should
understand that the following important factors, in addition to those discussed
elsewhere in this document could affect our future results and could cause those
results to differ materially from those expressed in our forward-looking
statements:

-        our overall financial condition, which has made it difficult for us to
         retain clients;

-        the effects of the change of control as a result of the
         recapitalization described herein;

-        our need to obtain additional financing to pursue our business
         objectives;

-        our results of operations being dependent on one or more significant
         clients;

-        adverse effects on results of operations if we do not maintain
         sufficient capacity utilization;

-        adverse effects on our Company if we do not obtain and implement new or
         enhanced technology;

-        adverse effects on our results of operations if we do not avoid high
         personnel turnover;

-        our reliance on telecommunications companies;

-        changes in laws regulating our industry;

-        fluctuations in quarterly operating results causing our stock price to
         change; and

-        events directly or indirectly relating to our Company causing our stock
         price to be volatile.


Basis of Presentation

The Consolidated Financial Statements of TeleSpectrum Worldwide Inc. and
subsidiaries have been prepared on the basis of accounting principles applicable
to a going concern, which contemplate the realization of assets and the
satisfaction of liabilities in the normal course of business.

On April 29, 2002, the Company entered into an agreement with its bank lenders
that resulted in a recapitalization of its balance sheet and a reduction of its
debt. As a result of the recapitalization, the amounts due under its existing
credit facilities totaling approximately $161 million at the time of
recapitalization, which consisted of outstanding debt, accrued interest and
fees, were converted into (a) a three-year term facility of $25 million under an
amended and restated credit agreement, (b) $40 million of the Company's Series A
Preferred Stock, and (c) shares of the Company's Series B Convertible Preferred
stock which will convert into common stock representing 95% of the Company's
common outstanding after such conversion. The three year term facility is
secured by, among other things, our assets and outstanding trade receivables,
bears interest at a base rate as defined in the agreement plus 400 basis points,
and matures in May 2005. Under the terms of the Agreement, the Company is
required to meet certain financial covenants, including a fixed charge coverage
ratio and EBITDA targets. The Series A Preferred Stock has a 10% annual dividend
rate, which accrues and is payable either in cash or in additional shares of
Series A Preferred Stock. A portion of the Series B Convertible Preferred Stock
was converted into shares of the Company's common stock immediately after the
closing of the recapitalization, and the remainder will convert into shares of
common stock as soon as the Company amends its Certificate of Incorporation to
increase the authorized number of shares of common stock. Such amendment will
require the approval of the Company's shareholders.

                                       13
<PAGE>
                  TELESPECTRUM WORLDWIDE INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

After the recapitalization, the Company's Board of Directors is to be comprised
of three designees of the bank lenders and two designees of management.

In addition to entering into the amended credit agreement and completing the
recapitalization with its bank lenders, on April 29, 2002 other debt balances
outstanding to unsecured creditors were restructured from $15.3 million to
approximately $0.7 million, with cash payments of $1.5 million. Certain
commercial liabilities, primarily accounts payable, which had a carrying value
of $3.5 million as of March 31, 2002, were also settled through cash payments of
$0.9 million and notes payable of $0.3 million. Additional settlements were
reached with certain of the Company's landlords that will result in a reduction
of $3.4 million of future lease commitments through cash payments of $0.4
million and notes payable of $0.2 million. As part of the debt restructuring,
the Company divested itself of its ownership interest in eSatisfy.com.

At March 31, 2002, the Company had a stockholders' deficit of $159.3 million,
and incurred a net loss of approximately $12.6 million during the first three of
months of 2002.

Management believes that the restructuring of its bank debt and other
liabilities that occurred on April 29, 2002, together with existing working
capital and projected results for 2002, should enable the Company to generate
sufficient cash flow to meet its operating cash needs, fund required capital
expenditures, and satisfy its debt service and other financing requirements. As
a result of continuing customer losses and a declining revenue base, the Company
implemented a significant cost reduction plan in January 2002. This plan
included the reduction of corporate overhead and the closure of five additional
contact centers. For 2002, we estimate that we will save over $15 million in
connection with this plan. On an annualized basis, this plan will reduce fixed
expenses by approximately $19 million. The initial impact of these reductions
was first realized in March 2002. Subsequent to the January plan, the Company
instituted additional cost reductions in March to include the reduction of
additional corporate overhead and the closure of one additional contact center.
We estimate these savings will total $1.5 million in 2002 and $2.5 million
annually thereafter. The impact of these reductions will first be realized in
June 2002. The Company does not have a line of credit or other short-term
borrowing facility available. In addition, covenants in its amended credit
agreement restrict the Company's ability to pledge assets as collateral for
other borrowings.

The Company's 2002 operating plan assumes a stabilization of the Company's
revenue base and an improvement in operating profit margins from historical
levels. The Company's ability to meet its obligations in the ordinary course of
business is dependent upon successful implementation of its operating plan and
stabilization of its operations. Uncertainties exist with respect to
management's plans, because events and circumstances frequently do not occur as
expected, and those differences may be material. These uncertainties raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.

                                       14
<PAGE>
                  TELESPECTRUM WORLDWIDE INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Results of Operations

The following discussions should be read in connection with the Condensed
Consolidated Financial Statements contained elsewhere within this report A
comparison of the results of operations for the three months ended March 31,
2002 to the three months ended March 31, 2001 follows:

<TABLE>
<CAPTION>
                                                          Results of Operations
                                                          (Dollars in Millions)
                                        ------------------------------------------------------------------

                                         Three Months         As a           Three Months          As a
                                            Ended          Percentage          Ended            Percentage
                                           March 31,          of              March 31,            of
                                            2002            Revenues            2001             Revenues
                                         ------------      ----------        ------------       ----------
<S>                                      <C>               <C>             <C>                  <C>
Revenues:
   Teleservices                          $  35.7             97.3 %        $    61.2             97.5 %
   e-Satisfy.com                             1.0              2.7 %              1.6              2.5 %
                                         -------            -----          ---------            -----
Total revenue                               36.7            100.0 %             62.8            100.0 %

Cost of services:
   Teleservices                             30.7             86.0 %             47.8             78.1 %
   e-Satisfy.com                             0.4             40.0 %              0.5             31.3 %
                                         -------            -----          ---------            -----
Total cost of services                      31.1             84.7 %             48.3             76.9 %

Selling, general and administrative          7.4             20.2 %             14.7             23.4 %
Restructuring charge                         7.7             21.0 %              3.4              5.4 %
                                         -------            -----          ---------            -----
Total operating expenses                    46.2            125.9 %             66.4            105.7 %
                                         -------            -----          ---------            -----

Operating loss                              (9.5)           (25.8)%             (3.6)            (5.7)%

Interest expense                            (3.0)            (8.4)%             (6.5)           (10.4)%
                                         -------            -----          ---------            -----
Loss before taxes                          (12.5)           (34.0)%           (10.1)            (16.1)%
                                         -------            -----          --------             -----

Income taxes                                --                0.0 %             --                0.0 %
                                         -------            -----          --------             -----
Net loss                                 $ (12.5)           (34.0)%        $  (10.1)            (16.1)%
                                         =======            =====          =========            =====
</TABLE>

                                       15
<PAGE>
                  TELESPECTRUM WORLDWIDE INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

REVENUES

Total revenues for the three months ended March 31, 2002 were $36.7 million,
representing a $26.1 million or 41.5% decline in comparison to the prior year
total of $62.8 million. The decrease resulted from the economic environment in
2001 and 2002 and customer attrition as a result of the Company's financial
condition.

Teleservices Segment

Teleservices revenues for the three months ended March 31, 2002 were $35.7
million, representing a $25.5 million or 41.6% decline in comparison to the
prior year total of $61.2 million The decrease resulted from the economic
environment in 2001 and 2002 and customer attrition as a result of the Company's
financial condition.

e-Satisfy Segment

e-Satisfy revenues for the three months ended March 31, 2002 were $1.0 million,
representing a $0.6 million or 37.5% decline in comparison to the prior year
total of $1.6 million. The decrease resulted from the economic environment in
2001 and 2002 and customer attrition as a result of the Company's financial
condition.


COST OF SERVICES

Cost of services for the three months ended March 31, 2002 were $31.1 million,
representing a $17.2 million or 35.6% decline in comparison to the prior year
total of $48.3 million. As a percentage of total revenues, cost of services
increased to 84.7% during the first quarter of 2002 from 76.9% during the first
quarter of 2001. The increase in cost of services as a percentage of revenue can
be attributed to lower revenue per hour due to competitive pricing pressures and
lower utilization of call center capacity.

Teleservices Segment

Teleservices cost of services for the three months ended March 31, 2002 were
$30.7 million, representing a $17.1 million or 35.7% decline in comparison to
the prior year total of $47.8 million. As a percentage of total teleservices
revenues, cost of services increased to 86.0% during the first quarter of 2002
from 78.1% during the first quarter of 2001. The increase in cost of services as
a percentage of revenue can be attributed to lower revenue per hour due to
competitive pricing pressures and lower utilization of call center capacity.

e-Satisfy Segment

e-Satisfy cost of services for the three months ended March 31, 2002 were $0.4
million representing a $0.1 million decrease over the $0.5 million recorded
during the same period in the prior year. This reduction reflects the initial
effects of the Company's cost savings plans.

                                       16
<PAGE>
Selling, General and Administrative

Selling, general and administrative expenses were $7.4 million for the three
months ended March 31, 2002, representing a $7.3 million or 50% decrease from
the $14.7 million total recorded during the same period last year. While a
portion of the decline is attributed to the drop in sales volumes, resulting in
lower commission expense, the majority of the reduction reflects the initial
effects of the Company's cost savings plans.

Restructuring Charge

During the three months ended March 31, 2002, the Company expanded the
restructuring program initiated during 2001 to include the closure or
consolidation of additional facilities and identification of additional
employees for separation. As a result, the Company recorded a pre-tax charge of
$7.7 million during the first quarter. (See Note 4 to the Condensed Consolidated
Financial Statements included elsewhere in this report.)

Interest Expense, net

The Company incurred net interest expense of $3.0 million for the three months
ended March 31, 2002, a decrease of $3.5 million in comparison to interest
expense during the same period last year. Interest in the prior period was
significantly higher due to the fees incurred as a result of the Company's
default on its credit agreement.

Liquidity and Capital Resources

Cash flows provided by (used in) (dollars in thousands):

<TABLE>
<CAPTION>
                                             Three Months Ended
                                                   March 31,
                                          --------------------------
                                              2002            2001
                                          ------------     ---------

<S>                                       <C>             <C>
       Operating activities               $     (1,007)   $     (953)
       Investing activities               $       (255)   $     (301)
       Financing activities               $       (229)   $     (386)
</TABLE>

Three Months Ended March 31, 2002

The Company's cash flows from operations resulted in a $1.0 million use of cash,
reflecting a $12.6 million loss for the period before $11.6 million in non-cash
charges for depreciation, amortization, restructuring charge and accrued
interest.

The Company's cash flows from investing activities resulted in $0.3 million of
capital expenditures for property and equipment, primarily technology related.

The Company's cash flow from financing activities resulted in a use of $0.2
million payment of capital leases and other debt.

Three Months Ended March 31, 2001

The Company's cash flows from operations resulted in a $1.0 million use of cash,
reflecting a $2.0 million loss for the period before $8.1 million in non-cash
charges for depreciation and amortization, the

                                       17
<PAGE>
                  TELESPECTRUM WORLDWIDE INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

restructuring charge, and the provision for bad debts. Working capital during
the period remained fairly constant, resulting in a $1.0 million reduction
representing the net effect of the changes in current assets and liabilities.

Cash used in investing activities reflects capital expenditures for property and
equipment, primarily technology related.

Cash used in financing activities reflects the Company's net borrowings under
its credit facilities, used to fund operations and capital expenditures.

In addition to completing the restructuring and recapitalization transactions
described above, management has also developed and has begun to implement a plan
to improve the Company's operating margins, cash flows from operations and
liquidity position. Management's plan includes the following steps, among
others:

-        Develop account management and business development initiatives in
         order to improve retention rates for existing customers and generate
         new revenue sources;

-        Develop incentive compensation plans to provide incentives to key
         employees;

-        Increase emphasis on winning and retaining higher-margin inbound
         contracts;

-        Reduce the number of the Company's call centers; and

-        Reduce expenses through employee attrition, planned headcount
         reductions and other non-salary cost reduction programs.

The Company believes that all of the above changes, together with existing
working capital and projected results for 2002, should enable it to generate
sufficient cash flow to meet its operating cash needs, fund required capital
expenditures and satisfy its debt service and other financing requirements.
However, the Company does not have a line of credit or other short-term
borrowing facility available. In addition, covenants in its amended credit
agreement restrict its ability to pledge assets as collateral for other
borrowings. The Company's 2002 operating plan assumes a stabilization of its
revenue base and an improvement in operating profit margins from historical
levels. The Company's ability to meet its obligations in the ordinary course of
business is dependent upon successful implementation of its operating plan and
stabilization of its operations. Uncertainties exist with respect to
management's plans because events and circumstances frequently do not occur as
expected, and those differences may be material. These uncertainties raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.

                                       18
<PAGE>
PART II - OTHER INFORMATION

         ITEM 1. LEGAL PROCEEDINGS

                 None

         ITEM 2. CHANGES IN SECURITIES

                 None

         ITEM 3. DEFAULTS UPON SENIOR SECURITIES

                 See Management's Discussion and Analysis of the Condensed
                 Consolidated Financial Statements included elsewhere in this
                 report.

         ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                 See Note 7 of the Condensed Consolidated Financial Statements
                 included elsewhere in this report.

         ITEM 5. OTHER INFORMATION

                 None

         ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

                 (a) EXHIBITS

                 None

                 (b) FORM 8-K

                 None

                                       19
<PAGE>
                                   SIGNATURES

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


                                           TeleSpectrum Worldwide Inc.
                                           --------------------------
                                                  (Registrant)

         Date:  May 20, 2002                /s/  Christopher Williams
                                            -------------------------
                                                 Christopher Williams
                                                 TeleSpectrum Worldwide Inc.
                                                 Chief Operating Officer


         Date: May 20, 2002                 /s/  Kurt Dinkelacker
                                            -------------------------
                                                 Kurt Dinkelacker
                                                 TeleSpectrum Worldwide Inc.
                                                 Chief Financial Officer



                                       20