SECURITIES & 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 March 31, 2001
                               --------------

                                       or

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

For the transition period from            to
                               ----------   ----------

Commission File No.     1-15097
                        -------


                          LYNCH INTERACTIVE CORPORATION
-------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)



     Delaware                                                     06-1458056
     --------                                                     ----------
State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                              Identification No.)


401 Theodore Fremd Avenue, Rye, New York                          10580
----------------------------------------                          -----
(Address of principal executive offices)                        (Zip Code)


                                 (914) 921-8821
                                 --------------
               Registrant's telephone number, including area code

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

Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock, as of the latest practical date.

         Class                                      Outstanding at May 1, 2001
         -----                                      --------------------------
Common Stock, $.0001 par value                              2,821,666



<PAGE>




                                      INDEX

                 LYNCH INTERACTIVE CORPORATION AND SUBSIDIARIES

PART I.     FINANCIAL INFORMATION


Item 1.  Financial Statements (Unaudited)

Condensed Balance Sheets
  -      March 31, 2001
  -      December 31, 2000

Condensed Statements of Operations:
  -      Three months ended March 31, 2001 and 2000

Condensed Statements of Cash Flows:
  -      Three months ended March 31, 2001 and 2000

Notes to Condensed Financial Statements


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

Item 3.  Quantitative and Qualitative Disclosure About Market Risk


PART II.    OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

SIGNATURE


<PAGE>

<TABLE>


PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements
                 LYNCH INTERACTIVE CORPORATION AND SUBSIDIAIRES
                            CONDENSED BALANCE SHEETS
                      (In thousands, except share amounts)
<CAPTION>
                                                                         March 31,    December 31,
                                                                           2001         2000
                                                                        -----------  -------------
    ASSETS                                                              (Unaudited)     (Note)
    CURRENT ASSETS:
<S>                                                                       <C>          <C>
    Cash and cash equivalents .........................................   $  35,695    $  26,926
    Marketable securities .............................................       2,492        2,066
    Receivables, less allowances of $324 and $403 .....................      14,517       15,147
    Other current assets ..............................................       7,456        7,562
                                                                          ---------    ---------
TOTAL CURRENT ASSETS ..................................................      60,160       51,701

PROPERTY, PLANT AND EQUIPMENT:
    Land ..............................................................       1,364        1,363
    Buildings and improvements ........................................      10,846       10,745
    Machinery and equipment ...........................................     156,219      153,915
                                                                          ---------    ---------
                                                                            168,429      166,023
    Accumulated Depreciation ..........................................     (69,800)     (66,766)
                                                                          ---------    ---------
                                                                             98,629       99,257

EXCESS OF COST OVER FAIR VALUE OF NET ASSETS
   ACQUIRED, NET ......................................................      58,243       58,949
INVESTMENTS IN AND ADVANCES TO AFFILIATED ENTITIES ....................      13,486       13,284
INVESTMENT IN SPINNAKER INDUSTRIES INC ................................       3,250        5,250
OTHER ASSETS ..........................................................      12,555       11,969
                                                                          ---------    ---------
TOTAL ASSETS ..........................................................   $ 246,323    $ 240,410
                                                                          =========    =========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
    Notes payable to banks ............................................   $   3,771    $   4,333
    Trade accounts payable ............................................       3,982        2,797
    Accrued interest payable ..........................................       1,728        2,504
    Accrued liabilities ...............................................      19,995       21,143
    Customer advances .................................................       1,314        1,540
    Current maturities of long-term debt ..............................      16,369       12,582
                                                                          ---------    ---------
TOTAL CURRENT LIABILITIES .............................................      47,159       44,899

LONG-TERM DEBT ........................................................     156,169      150,010
DEFERRED INCOME TAXES .................................................       6,850        7,746
OTHER LIABILITIES .....................................................       5,017        5,624
MINORITY INTERESTS ....................................................       8,660        8,732

SHAREHOLDERS' EQUITY
   COMMON STOCK, $0.0001 PAR VALUE-10,000,000 SHARES
   AUTHORIZED; 2,824,766 issued (at stated value) 2,821,666 Outstanding
   ADDITIONAL PAID - IN CAPITAL .......................................      21,404       21,404
   RETAINED EARNINGS ..................................................         961          652
   ACCUMULATED OTHER COMPREHENSIVE INCOME .............................         255        1,495
   TREASURY STOCK, 3,100 SHARES AT COST ...............................        (152)        (152)
                                                                          ---------    ---------
  TOTAL SHAREHOLDERS' EQUITY ..........................................      22,468       23,399
                                                                          ---------    ---------
 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ...........................   $ 246,323    $ 240,410
                                                                          =========    =========
<FN>

  Note: The balance sheet at December 31, 2000 has been derived from the audited
  financial statements at that date, but does not include all of the information
  and footnotes required by generally accepted accounting principles for
  complete financial statements.
</FN>
 See accompanying notes.
</TABLE>

<PAGE>
<TABLE>




                 LYNCH INTERACTIVE CORPORATION AND SUBSIDIARIES
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                    (In thousands, except per share amounts)

<CAPTION>
                                                           Three Months Ended
                                                                March 31,
                                                        --------------------------
                                                            2001         2000
                                                        -----------   ------------
SALES AND REVENUES                                                     (Restated)
<S>                                                     <C>            <C>
Multimedia ..........................................   $    17,209    $    15,571
Services ............................................        20,688         28,386
                                                        -----------    -----------
                                                        $    37,897    $    43,957
COSTS AND EXPENSES:
Multimedia ..........................................        12,748         11,192
Services ............................................        19,106         26,632
Selling and administrative ..........................         2,869          3,295
                                                        -----------    -----------
OPERATING PROFIT ....................................         3,174          2,838
Combined total

Other income (expense):
  Investment income .................................         1,254            504
  Interest expense ..................................        (3,517)        (3,641)
  Equity in earnings of affiliated companies ........           165            299
  Gain on redemption of East/West preferred stock ...          --            4,125
Total operating profit for reportable segments
                                                        -----------    -----------
                                                             (2,098)         1,287
                                                        -----------    -----------

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS ...         1,076          4,125
Provision for income taxes ..........................          (839)        (1,947)
Minority Interests ..................................            72            103
                                                        -----------    -----------
NET INCOME ..........................................   $       309    $     2,281
                                                        ===========    ===========

Basic and diluted weighted average shares outstanding     2,822,000      2,824,000

BASIC & DILUTED EARNINGS PER SHARE
NET INCOME ..........................................   $      0.11    $      0.81


See accompanying notes.
</TABLE>


<PAGE>
<TABLE>



                 LYNCH INTERACTIVE CORPORATION AND SUBSIDIARIES
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (In thousands)

<CAPTION>
                                                                        Three Months Ended
                                                                              March 31,
                                                                         2001         2000
                                                                       ---------   ---------
     OPERATING ACTIVITIES                                                         (Restated)
<S>                                                                    <C>         <C>
Net Income .........................................................   $    309    $  2,281
Adjustments to reconcile net income to net cash provided by, used in
   operating activities:
   Depreciation and amortization ...................................      4,323       4,108
   Net effect of purchases and sales of trading securities .........       (426)        163
   Share of operations of affiliated companies .....................       (165)       (299)
   Gain on redemption of East/West preferred stock .................       --        (4,125)
   Minority interests ..............................................        (72)       (103)
   Changes in operating assets and liabilities:
        Receivables ................................................        630         (90)
        Accounts payable and accrued liabilities ...................     (1,603)     (2,791)
        Other ......................................................        106        (473)
   Other ...........................................................       --           271
                                                                       --------    --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ................      3,102      (1,058)
                                                                      --------    --------
INVESTING ACTIVITIES
Capital expenditures ...............................................     (3,052)     (3,664)
Investment in and advances to affiliated entities ..................        (58)    (15,118)
Proceeds from redemption of East/West preferred stock ..............       --         8,712
Other ..............................................................       (607)        194
                                                                       --------    --------
NET CASH USED IN INVESTING ACTIVITIES ..............................     (3,717)     (9,876)
                                                                       --------    --------
FINANCING ACTIVITIES
Issuance of long term debt .........................................     27,098       1,175
Repayments of long term debt .......................................    (17,152)     (2,089)
Net repayments, borrowings, lines of credit ........................       (562)        661
Treasury stock transactions ........................................       --           (20)
Other ..............................................................       --           175
                                                                       --------    --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES ................      9,384         (98)
                                                                       --------    --------
Net increase (decrease) in cash and cash equivalents ...............      8,769     (11,032)
Cash and cash equivalents at beginning of period ...................     26,926      31,354
                                                                       --------    --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .........................   $ 35,695    $ 20,322
                                                                       ========    ========

See accompanying notes.
</TABLE>

<PAGE>


<TABLE>
<CAPTION>


                     NOTES TO CONDENSED FINANCIAL STATEMENTS

A.   Subsidiaries of the Registrant

As of March 31, 2001, the Subsidiaries of the Registrant are as follows:

Subsidiary                                                                              Owned by Lynch
----------                                                                              --------------
<S>                                                                                         <C>
Brighton Communications Corporation ...................................................     100.0%
  Lynch Telephone Corporation IV ......................................................     100.0%
    Bretton Woods Telephone Company ...................................................     100.0%
    World Surfer, Inc. ................................................................     100.0%
  Lynch Kansas Telephone Corporation ..................................................     100.0%
  Lynch Telephone Corporation VI ......................................................      98.0%
    JBN Telephone Company, Inc. .......................................................      98.0%
      JBN Finance Corporation .........................................................      98.0%
    Giant Communications, Inc. ........................................................     100.0%
    Lynch Telephone Corporation VII ...................................................     100.0%
      USTC Kansas, Inc. ...............................................................     100.0%
       Haviland Telephone Company, Inc. ...............................................     100.0%
        Haviland Finance Corporation ..................................................     100.0%
  DFT Communications Corporation ......................................................     100.0%
    Dunkirk & Fredonia Telephone Company ..............................................     100.0%
      Cassadaga Telephone Company .....................................................     100.0%
        Macom, Inc. ...................................................................     100.0%
      Comantel, Inc. ..................................................................     100.0%
        Erie Shore Communications, Inc. ...............................................     100.0%
        D&F Cellular Telephone, Inc. ..................................................     100.0%
    DFT Long Distance Corporation .....................................................     100.0%
    DFT Local Service Corporation .....................................................     100.0%
  LMT Holding Corporation .............................................................     100.0%
    Lynch Michigan Telephone Holding Corporation ......................................     100.0%
        Upper Peninsula Telephone Company .............................................     100.0%
        Alpha Enterprises Limited .....................................................     100.0%
          Upper Peninsula Cellular North, Inc. ........................................     100.0%
          Upper Peninsula Cellular South, Inc. ........................................     100.0%

  Lynch Telephone Corporation IX ......................................................     100.0%
    Central Scott Telephone Company ...................................................     100.0%
        CST Communications Inc. .......................................................     100.0%
  Lynch Telephone Corporation X .......................................................     100.0%
  Global Television, Inc. .............................................................     100.0%
  Inter-Community Acquisition Corporation .............................................     100.0%
  Home Transport Service, Inc. ........................................................     100.0%

  Lynch Entertainment, LLC ............................................................     100.0%
  Lynch Entertainment Corporation II ..................................................     100.0%

  Lynch Multimedia Corporation ........................................................     100.0%
    CLR Video, LLC ....................................................................      60.0%
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
Subsidiary                                                                              Owned by Lynch
----------                                                                              --------------

<S>                                                                                       <C>      <C>
The Morgan Group, Inc. ................................................................   70.0%(V)/55.4%(O)
Morgan Drive Away, Inc. ...............................................................   70.0%(V)/55.4%(O)
    Transport Services Unlimited, Inc. ................................................   70.0%(V)/55.4%(O)
  Interstate Indemnity Company ........................................................   70.0%(V)/55.4%(O)
  Morgan Finance, Inc. ................................................................   70.0%(V)/55.4%(O)
  TDI, Inc. ...........................................................................   70.0%(V)/55.4%(O)
    Home Transport Corporation ........................................................   70.0%(V)/55.4%(O)
    MDA Corporation ...................................................................   70.0%(V)/55.4%(O)

Lynch PCS Communications Corporation ..................................................     100.0%
  Lynch PCS Corporation A .............................................................     100.0%
  Lynch PCS Corporation F .............................................................     100.0%
  Lynch PCS Corporation G .............................................................     100.0%
  Lynch PCS Corporation H .............................................................     100.0%

  Lynch Paging Corporation ............................................................     100.0%
  Lynch Telephone Corporation .........................................................      83.1%
    Western New Mexico Telephone Company, Inc. ........................................      83.1%
    Interactive Networks Corporation ..................................................      83.1%
    WNM Communications Corporation ....................................................      83.1%
    Wescel Cellular, Inc. .............................................................      83.1%
      Wescel Cellular of New Mexico, L.P. .............................................      42.4%
    Wescel Cellular, Inc. II ..........................................................      83.1%
      Northwest New Mexico Cellular, Inc. .............................................      40.6%
      Northwest New Mexico Cellular of New Mexico, L.P. ...............................      20.7%
        Enchantment Cable Corporation .................................................      83.1%
Lynch Telephone II, LLC ...............................................................     100.0%
   Inter-Community Telephone Company, LLC .............................................     100.0%
     Inter-Community Telephone Company II, LLC ........................................     100.0%
   Valley Communications, Inc. ........................................................     100.0%
Lynch Telephone Corporation III .......................................................      81.0%
   Cuba City Telephone Exchange Company ...............................................      81.0%
   Belmont Telephone Company ..........................................................      81.0%
<FN>
 Notes: (V)=Percentage voting control; (O)=Percentage of equity ownership
</FN>
</TABLE>


<PAGE>



A.    Basis of Presentation

The  Company  consolidates  the  operating  results of its  telephone  and cable
television  subsidiaries (60-100% owned at March 31, 2001 and December 31, 2000)
and The Morgan Group, Inc. ("Morgan"),  in which, at March 31, 2001 and December
31,  2000,  the  Company  owned  70.2% of the  voting  power and 55.6% of common
equity.   All  material   intercompany   transactions  and  balances  have  been
eliminated.  Investments  in  affiliates  in which the  Company  does not have a
majority  voting control are accounted for in accordance with the equity method.
The Company accounts for the following  affiliated companies on the equity basis
of accounting:  Coronet  Communications Company (20% owned at March 31, 2001 and
December 31, 2000), Capital Communications Company, Inc. (49% owned at March 31,
2001 and  December  31, 2000) and the  cellular  partnership  operations  in New
Mexico (17% to 21% owned at March 31, 2001 and December 31, 2000).

The shares of Spinnaker Industries,  Inc., in which the company owns 2.5% of the
voting power and 13.6% of the common  equity,  are  accounted  for in accordance
with Statements of Financial  Accounting Standards (SFAS) No. 115 "Investment in
Debt and Equity Securities."

The accompanying  unaudited condensed financial statements have been prepared in
accordance with accounting  principles  generally  accepted in the United States
for interim  financial  information  and with the  instructions to Form 10-Q and
Articles 10 and 11 of Regulation  S-X.  Accordingly,  they do not include all of
the  information  and  footnotes  required by  accounting  principles  generally
accepted in the United States for complete financial statements.  In the opinion
of the management,  all adjustments  (consisting of normal  recurring  accruals)
considered  necessary  for a fair  presentation  have been  included.  Operating
results for the  three-month  period  ended  March 31, 2001 are not  necessarily
indicative of the results that may be expected for the year ending  December 31,
2001.

Certain 2000 amounts have been restated to conform to the 2001 presentation.

B.   Acquisitions

On October 15, 2000, the Registrant  signed an agreement to acquire Central Utah
Telephone, Inc. and subsidiaries,  a 4,100-access line telephone company located
in Utah. In April 2001,  Central Utah acquired certain telephone  exchanges from
Qwest  Communications  International Inc. involving  approximately  3,300 access
lines. The Registrant has also agreed to acquire Central Telcom Services, LLC, a
related  entity,  which has certain PCS and MMDS  interests and  Internet,  long
distance and telephone  equipment  businesses.  The aggregate  purchase  prices,
including debt assumed,  is roughly  comparable to the Registrant's  most recent
telephone  acquisitions  and is expected to be  financed  primarily  through the
issuance of additional debt with the remaining  coming from resources  currently
available.  The closing of the  transactions,  which are  expected in the second
quarter of 2001,  are  subject  to certain  conditions  including  approvals  by
certain regulatory authorities.

C.   Investment in and Advances to Affiliates Entities

During  the  first  quarter  of  2001,  a  subsidiary  of the  Registrant's  net
investment activity in two separate affiliated entities involved in auctions for
wireless spectrum is as follows:

In the Guard  Band  auction,  PTPMS II  Communications,  L.L.C.  acquired  three
licenses  at a net cost of $6.3  million;  Interactive  has loans to PTPMS II of
$6.1 million,  $5.0  million,  of which was funded in the first quarter of 2001,
and owns 49.9% of PTPMS II equity.

In the C&F  Block  PCS  reauction,  which  ended  on  January  26,  2001,  Theta
Communications,  LLC  acquired  one license at a net cost of $4.0  million.  The
license has not yet been awarded and as required  under  Federal  Communications
Commission  rules,  Theta has 20% of the cost of the license on deposit.  During
the first quarter of 2001, $5.0 million of loans from  Interactive to Theta were
returned.  Lynch  Interactive  owns 10% of  Theta  and has  committed  to fund a
portion of the  remaining  license cost.  An affiliate of  Interactive  also has
invested in Theta.
<PAGE>

D.   Spin-off of Sunshine PCS Corporation

A subsidiary of the Registrant had previously owned a 49.9% limited  partnership
interest in Fortunet Communications, L.P. ("Fortunet").

Fortunet was licensed for 15 MHz of spectrum in three Florida markets covering a
population  ("POP") of  approximately  785,000  (Based on 1999 census data).  In
February  2001,  Fortunet  converted  from a partnership  to a corporation  with
Interactive  receiving  49.9%  of  common  stock.  It also  changed  its name to
Sunshine PCS Corporation.  On February 14, 2001, Lynch Interactive  spun-off its
common  stock  of  Sunshine  to  its  shareholders.  Prior  to  the  conversion,
Interactive  contributed  a  portion  of the debt  owed to it by  Fortunet  as a
contribution  to capital and  restructured  the terms of the remaining debt. The
face value of the  restructured  debt is $16.1 million and the carrying value is
$3.4 million at December 31, 2000. In addition,  in exchange for a cash infusion
of $250,000,  Lynch Interactive acquired (1) 10,000 shares of preferred stock in
Sunshine  with a  liquidation  preference  of $10.0  million and (2) warrants to
purchase  4,300,000  shares of Sunshine Class A common stock at $0.75 per share.
At the time, Interactive's obligation to make further loans was terminated.

E.   Indebtedness

The parent  company of the  Registrant  maintains  a  short-term  line of credit
facility  totaling $10.0 million,  all of which was available at March 31, 2001.
The parent company facility will expire on August 31, 2001.

Morgan's Credit  Facility  matured on January 28, 2001, at which time Morgan had
no outstanding debt and $6.6 million outstanding  letters of credit.  Morgan was
in default of the  financial  covenants,  resulting in the bank failing to renew
the Credit  Facility.  As a result of the  Credit  Facility  not being  renewed,
Morgan has a payment  default  and the  financial  institution  has the right to
demand cash to meet outstanding obligations under the letter of credit. The bank
has  discretion as to whether to make any loans or issue  additional  letters of
credit for Morgan.

Morgan is actively seeking an alternative  financial  institution to replace the
existing credit facility and currently has received several commitment  letters.
Each of the commitment  letters is conditioned upon  satisfactory  completion of
due diligence  procedures as well as Morgan meeting various financial  covenants
and  requirements  prior to closing.  In connection  with the replacement of the
credit  facility,  the  Board of  Directors  of  Interactive  has  approved  the
acquisition  of 1.0 million shares of Morgan's Class B common stock at $2.00 per
share. The investment by Interactive would increase  Interactive's  ownership in
Morgan  from  55.6% to 68.5%.  The Board of  Directors  of Morgan  approved  the
issuance  of  additional  Class  'B'  stock,  but the sale is  subject  to final
negotiations with the potential lenders,  appropriate documentation and approval
of Morgan  shareholders.  The Morgan Board of Directors has also  authorized its
management  to  further  develop  plans to  provide  an  opportunity  for  other
shareholders to acquire additional equity investment in Morgan.

<TABLE>
<CAPTION>
                                                                                     March 31,
Lynch Interactive's long-term debt consists of:                                        2001      December 31,
                                                                                     Unaudited       2000
                                                                                         (In thousands)
                                                                                     ------------------------
<S>                                                                               <C>          <C>
Rural Electrification Administration (REA) and Rural Telephone Bank (RTB) notes
payable through 2027 at fixed interest rates ranging from 2% to 7.5% (4.8%
weighted average at March 31, 2001), secured by assets of the telephone
companies of $114.7 million ....................................................   $  51,552    $  52,188

Bank Credit facilities utilized by certain telephone and telephone holding
companies through 2013, $34.2 million at fixed interest rates averaging 7.9%
and $46.3 million at variable interest rates averaging 7.5%  ...................      80,490       54,799

Unsecured  notes issued in connection with  acquisitions  through 2006, at fixed
interest rates of 10.0% ........................................................      27,161       27,259

Convertible  subordinated  note due in December 2004 at a fixed interest rate
of 6%                                                                                 10,000       25,000

Other ..........................................................................       3,335        3,346
                                                                                   ---------    ---------
                                                                                     172,538      162,592
Current Maturities .............................................................     (16,369)     (12,582)
                                                                                   ---------    ---------
                                                                                     156,169    $ 150,010
                                                                                   =========    =========
</TABLE>


<PAGE>

On December  12,  1999,  Interactive  completed  the private  placement of a $25
million 6% five-year note,  convertible into Interactive  common stock at $42.50
per share (adjusted for subsequent 2 to 1 stock split).  At that time, to assist
the Company with the private  placement to Cascade  Investment LLC  ("Cascade"),
the Chairman and CEO of Interactive,  agreed to give the acquirer of the note, a
one-time option to sell the note to him at 105% of the principal amount thereof.
The exercise  period was from November 15, 2000 to December 1, 2000. This option
to sell  is  secured  by a bank  letter  of  credit,  which  is  secured  by the
Chairman's  escrow of  securities.  The Company agreed to reimburse the Chairman
for the cost of the letter of credit plus his counsel  fees in  connection  with
the option to sell agreement and obtaining the letter of credit.

On January 16, 2001, the option to sell agreement  between  Cascade  Investments
and the  Company's  Chairman was amended.  As amended,  Cascade had the right to
sell up to $15  million of the notes back to the  Chairman  at any time prior to
January  31,  2001 and the right to sell the  remaining  $10 million of the note
between  November  15 and  December  1,  2002.  The option to sell is at 105% of
principal  amount sold plus  accrued  and unpaid  interest.  As a  condition  to
modifying  and  extending  the  option  to sell,  the  Company  entered  into an
agreement  in  December  2000,  with its  Chairman  whereby  it will pay for and
acquire,  on the same  terms and  conditions,  any  portion  of the note sold by
Cascade under this option.  During January 2001,  Cascade  exercised this option
with  regard to the $15  million  of the notes and on  February  14,  2001,  the
Company  transferred  $15.9  million to Cascade,  including  the 5% premium plus
accrued and unpaid  interest in exchange  for $15.0  million of the note held by
Cascade.

The option to sell the  remaining  $10  million  is secured by a  collateralized
letter of credit in which the  collateral  is  provided by an  affiliate  of the
Chairman.  The Company  has agreed to pay all legal fees,  letter of credit fees
and a 10% per annum collateral fee on the amount of collateral  provided,  $10.5
million.  The Company can replace the  collateral at any time and the collateral
fee would be eliminated from thereafter.

In January 2001, a subsidiary of the Company  borrowed $27.0 million  secured by
the stock of Western New Mexico Telephone  Company.  The loan is to be repaid in
equal monthly  installments  over twelve years beginning in April 2001,  bearing
interest at either  bank's  prime rate or LIBOR plus 2.5%,  or at the  Company's
option, it can be fixed for its term. $15.9 million of the proceeds were used to
acquire the Convertible Note of the Company owned by Cascade  Investment  L.L.C.
The stock of Western New Mexico  Telephone  Company had previously  been used to
secure the acquisition facility,  the balance of which was $7.9 million prior to
repayment in December 2000.

F.       Default on Morgan Line of Credit

As noted above,  at March 31, 2001, The Morgan Group,  Inc. was in default under
its  Credit  Facility.  At  that  time,  Morgan  had no  borrowings  under  this
agreement,  but the Lender had issued $6.6  million of lines of credit  securing
certain  insurance  claims.  As of the date of these financial  statements,  the
default has not yet been cured.

Interactive  owns 55.6% of the  equity of Morgan and 70.2% of the vote.  For the
year  ended  December  31,  2000,  Morgan  represented  61.6%  of  Interactive's
consolidated  revenues and had an operating loss of $2.0 million, as compared to
Interactive's  consolidated  operating profits of $13.3 million. At December 31,
2000, Morgan represented 9.7% of Interactive's  total assets and Interactive has
a net $4.0 million investment in Morgan.  Morgan is actively seeking alternative
financial institutions to replace its existing credit facility and currently has
received  several  commitment  letters.   Each  of  the  commitment  letters  is
conditioned upon satisfactory  completion of due diligence procedures as well as
Morgan meeting various financial covenants and requirements prior to closing. In
connection with the replacement of the credit  facility,  the Board of Directors
of  Interactive  has approved the  acquisition of 1.0 million shares of Morgan's
Class B common stock at $2.00 per share.  The  investment by  Interactive  would
increase  Interactive's  ownership  in Morgan from 55.6% to 68.5%.  The Board of
Directors of Morgan approved the issuance of the additional Class 'B' stock, but
the  sale  is  subject  to  final   negotiations  with  the  potential  lenders,
appropriate documentation and approval of Morgan shareholders.  The Morgan Board
of Directors has also  authorized  its  management  to further  develop plans to
provide an  opportunity  for other  shareholders  to acquire  additional  equity
investment in Morgan.

Both  Morgan and  Interactive  management  believe  that an  alternative  credit
facility can be ultimately  obtained and the investment by  Interactive  will be
made.  Should  facility not be obtained,  Interactive's  investment in Morgan of
$3.7 million at March 31, 2001 may become impaired.

Interactive is currently  considering whether it should retain its investment in
Morgan  and  exploring  ways  on  how  to  appropriately  divest  itself  of its
investment if that decision is made.


<PAGE>

G.       Restatement of Prior Period Earnings

On December  12,  1999,  Interactive  completed  the private  placement of a $25
million 6% five-year unsecured convertible  subordinated note,  convertible into
Interactive common stock at $42.50 per share, (adjusted for the subsequent 2 for
1 stock split).  At that time, to assist the Company with the private  placement
to Cascade  Investment,  LLC  ("Cascade"),  the Chairman and CEO of the Company,
agreed to give the acquirer of the note,  a one-time  option to sell the note to
him at 105% of the  principal  amount  thereof.  The  exercise  period  was from
November 15, 2000 to December 1, 2000.  Under  accounting  principles  generally
accepted in the United States relating to significant shareholders,  the Company
was  required to reflect this  transaction  in its annual  report.  Accordingly,
quarterly  results of operations for the three months ended March 31, 2000, have
been restated to reflect the  recording of $1.25  million  (pre-tax) in interest
expense  associated with the 5% premium.  Therefore,  the net income was reduced
for the quarter ending March 31, 2000 by $271,000 or $0.09 per share.

H.       Comprehensive Income

Balances of accumulated other  comprehensive  income, net of tax, which consists
of unrealized  gains (losses) on available for sale of securities,  at March 31,
2001 and December 31, 2000 are as follows (in thousands):
<TABLE>
<CAPTION>
                                 Unrealized
                                 Gain(Loss)   Tax Effect   Net
                                 ----------   ----------   ---
<S>                                <C>        <C>        <C>
Balance at December 31, 2000 ...   $ 2,576    $(1,081)   $ 1,495
Current period unrealized losses    (2,138)       898     (1,240)
                                   -------    -------    -------
Balance at March 31, 2001 ......   $   438    $  (183)   $   255
                                   =======    =======    =======
</TABLE>

The comprehensive income (loss), for the three-month periods ending March 31,
2001 and 2000 are as follows (in thousands):
<TABLE>
<CAPTION>
                                                    Three Months Ended
                                                         March 31,
                                                     2001         2000
                                                    -------------------
<S>                                                 <C>        <C>
Net income for the period .......................   $   309    $ 2,281
Unrealized  gains  (losses) on available for sale
 securities - net of income tax .................    (1,240)    (1,205)
   benefit of $898 and $876, respectively           -------    -------
    Comprehensive income ........................   $  (931)   $ 1,076
                                                    =======    =======
</TABLE>

I.       Stock Split

A  two-for-one   stock  split,  was  affected  through  a  distribution  to  its
shareholders of one share of Registrant's  Common Stock for each share of Common
Stock owned. The record date was August 28, 2000, and the distribution  date was
September 11, 2000.

Share and per share data in the accompanying financial statements and notes have
been adjusted to reflect this change.

J.       Earnings per share

For the three ended March 31, 2001 and 2000, the following  table sets forth the
computation of pro forma basic and diluted earnings (loss) per share.
<PAGE>
<TABLE>
<CAPTION>
                                                         Three Months Ended
                                                              March 31,
                                                            2001        2000
                                                         ----------------------
Basic earnings per share
Numerators:
<S>                                                     <C>          <C>
      Net Income ....................................   $  309,000   $2,281,000
Denominator:
      Weighted average shares outstanding ...........    2,822,000    2,824,000
Earnings per share:
      Net income ....................................   $     0.11   $     0.81

Diluted earnings per share
Numerators:
     Net Income .....................................   $  309,000   $2,281,000
     Interest saved on assumed conversion of
        convertible  notes - net of tax .............         --           --
                                                        ----------   ----------
     Net Income .....................................   $  309,000   $2,281,000
                                                        ----------   ----------
Denominators:
      Weighted average shares outstanding ...........    2,822,000    2,824,000
      Shares issued on conversion of convertible note         --           --
                                                        ----------   ----------
      Weighted average share and share equivalents ..    2,822,000    2,824,000
                                                        ----------   ----------
Earnings per share:
      Net income ....................................   $     0.11   $     0.81
                                                        ==========   ==========
</TABLE>


<PAGE>

K.       Segment Information

The Company is  principally  engaged in two business  segments:  multimedia  and
services.  All  businesses  are  located  domestically,  and  substantially  all
revenues  are  domestic.   The  multimedia   segment  includes  local  telephone
companies,  a cable TV company, an investment in PCS entities and investments in
two  network-affiliated  television  stations.  The  services  segment  includes
transportation and related services.

EBITDA  (before  corporate  allocation)  for  operating  segments  is  equal  to
operating  profit  before  interest,  taxes,   depreciation,   amortization  and
allocated  corporate  expenses.  EBITDA  is  presented  because  it is a  widely
accepted  financial  indicator  of value and ability to incur and service  debt.
EBITDA is not a substitute  for  operating  income or cash flows from  operating
activities in accordance with generally accepted accounting principles.

Operating profit (loss) is equal to revenues less operating expenses,  excluding
unallocated  general  corporate   expenses,   interest  and  income  taxes.  The
Registrant  allocates  a  portion  of  its  general  corporate  expenses  to its
operating  segments.  Such  allocation  was  $326,000 and $317,000 for the three
months ended March 31, 2001 and 2000, respectively.
<TABLE>
<CAPTION>

                                                      Three Months Ended
                                                           March 31,
                                                       2001        2000
                                                     ---------------------
                                                    Unaudited
Revenues:                                              (In thousands)
<S>                                                  <C>         <C>
Multimedia .......................................   $ 17,209    $ 15,571
Services .........................................     20,688      28,386
                                                     --------    --------
Combined Total ...................................   $ 37,897    $ 43,957
                                                     ========    ========
EBITDA (before corporate allocation):
Multimedia .......................................   $  8,602    $  8,160
Services .........................................       (223)       (580)
Corporate expenses, gross ........................       (882)       (634)
                                                     --------    --------
Combined total ...................................   $  7,497    $  6,946
                                                     ========    ========
Operating profit:
Multimedia .......................................   $  4,169    $  4,025
Services .........................................       (475)       (898)
Unallocated corporate expense ....................       (520)       (289)
                                                     --------    --------
Combined Total ...................................   $  3,174    $  2,838
                                                     ========    ========

Operating profit .................................   $  3,174    $  2,838
Investment income ................................      1,254         504
Interest expense .................................     (3,517)     (3,641)
Equity in earnings of affiliated companies .......        165         299
Gain on redemption of East/West Preferred Stock ..         --       4,125
                                                     --------    --------
Income before income taxes, and minority interests   $  1,076    $  4,125
                                                     ========    ========
</TABLE>



<PAGE>



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

SALES AND REVENUES

Revenues for the three months ended March 31, 2001  decreased by $6.1 million to
$37.9  million from the first quarter of 2000.  Within the  operating  segments,
multimedia  revenues  increased by $1.6  million or 11%,  which were offset by a
$7.7  million  decrease  at The Morgan  Group Inc.  ("Morgan")  -  Interactive's
service subsidiary. The decrease at Morgan was primarily related to a decline in
revenues from its manufactured housing division of $6.8 million, or 37.6% in the
quarter.  Shipments for the  manufactured  housing industry as a whole were down
42% in January  and  February  of 2001  according  to the  Manufactured  Housing
Institute.  (March shipment data was not available).  The industry  continues to
operate  in a  two-year  slump  created  by  consumer  credit  issues and excess
inventory.   Multimedia  revenues  grew  in  both  regulated  telecommunications
services  and  the  provision  of  non-traditional  telephone  services  such as
Internet.

Shipments of  manufactured  homes tend to decline in the winter  months in areas
where poor weather conditions inhibit transport.  This usually reduces operating
revenues  in the first and  fourth  quarters  of the  year.  Morgan's  operating
revenues, therefore, tend to be stronger in the second and third quarters.

Operating  profit for the three  months  ended March 31, 2001  increased by $0.3
million to $3.2 million  from the first  quarter of 2000.  Within the  operating
segments,   multimedia's  operating  profit  increased  $0.2  million,  Morgan's
operating  loss  decreased  from $0.9  million  to $0.5  million  and  corporate
expenses increased by $0.2 million. The improvement,  on lower volume,  reflects
Morgan's  cost-reduction efforts over the past 12 months. As a result,  Morgan's
operating  results  improved in the first quarter  despite the revenue  decline.
Operating profit in the multimedia  segment  increased $0.3 million as increased
revenues  were  offset  by the  additional  start-up  costs  in  developing  new
communications services.

Investment income for the quarter ended March 31, 2001 increased by $0.8 million
primarily  due  to  higher   realized  on  and  unrealized   gains  on  "trading
securities."

Interest  expense  decreased  from the  prior  year  period by $0.1  million  as
increased  level of borrowings  were offset by the absence of  amortization of a
put premium  associated with the Company's  convertible  note issued on December
12, 1999. This premium was fully amortized at the end of 2000.

The Company owns 1,000,000 shares of Spinnaker Industries, Inc. common stock. As
described in the Notes to the  accompanying  financial  statements,  the Company
accounts  for this  investment  under the  provision  of  Statement of Financial
Accounting  Standards No. 115 "Investment and Debt and Equity Securities." Under
the  provision of this  standard,  the Company  records this  investment  at its
publicly  traded market value at the end of each  accounting  period and records
the change in unrealized gain (loss) in that period's  comprehensive income. The
basis of these shares is $3.2  million,  or $3.17 per share.  At March 31, 2001,
the market price of these shares was $3.25 per share, in trading on the American
Stock Exchange. Subsequent to March 31, 2001, Spinnaker's Class A common shares,
also in trading on the American  Stock  Exchange,  began trading below the $3.25
market  price per share,  to a low of $0.70 per share on May 1,  2001.  The only
difference between Spinnaker common and Class A shares is that the common shares
are  entitled to 1/10 vote per share and the Class A shares are  entitled to one
vote per share. In addition,  during the year ended December 31, 2000, Spinnaker
recorded a loss from continuing  operations before  discontinued  operations and
extraordinary  gain of $17.7  million.  Losses of $5.2  million and $2.8 million
were recorded for the years ended December 31, 1999 and 1998, respectively.  The
Company's  Management will continue to monitor the market value of its Spinnaker
holdings  and should the market  value of the common  shares fall below the $3.2
million  basis,  management  is  required to consider if the decline in value is
other than temporary,  and if so, a write-down would be recorded in its reported
financial results.


<PAGE>

On  February  25,  2000,  Omnipoint  acquired  through  a  merger,  all  of  the
outstanding shares of East/West Communications,  Inc. At the time of the merger,
Interactive held redeemable  preferred stock of East/West  Communications,  Inc.
with a liquidation value of $8.7 million, including payment in kind of dividends
to date. In accordance  with its terms,  the preferred stock was redeemed at its
liquidation  value and as a result,  the  Registrant  recorded a pre-tax gain of
$4.1 million in the three months ended March 31, 2000.

The income tax provision includes federal, as well as state and local taxes. The
tax  provision  for the three months  ended March 31,  2001 and  2000, represent
effective tax rates of 78% and 47.2%, respectively. The causes of the difference
from the  federal  statutory  rate are  principally  the effect of state  income
taxes,  including  the effect of earnings and losses  attributable  to different
state  jurisdictions,  and  the  amortization  of  non-deductible  goodwill.  In
addition,  during the three months ended March 31, 2001, no tax benefit has been
recorded for losses of Morgan of $0.5 million.

Minority interest  increased  earnings by $0.1 million for both the three months
ended March 31, 2001 and 2000.

Net income for the three  months  ended March 31, 2001 was $0.3 million or $0.11
per share  (basic and  diluted) as compared  to net income of $2.3  million,  or
$0.81 per share (basic and diluted),  in the previous years three-month  period.
The most  significant  item  affecting the swing in earnings was the gain on the
redemption  of  East/West  preferred  stock  ($2.5  million,  net of income  tax
provision) in 2000.

FINANCIAL CONDITION

Liquidity/ Capital Resources

As of March 31,  2001,  the  Company  had  current  assets of $60.2  million and
current  liabilities  of $47.1  million.  Working  capital was  therefore  $13.1
million as compared to $6.8 million at December 31, 2000. The debt restructuring
discussed below was the primary cause of the increased working capital.

For the first three months,  capital  expenditures were $3.0 million in 2001 and
$3.7 million in 2000.

At March 31, 2001, total debt was $176.3 million,  which was $9.4 million higher
than the $166.9 million at the end of 2000. At March 31, 2001,  there was $126.3
million  of fixed  interest  rate debt  averaging  6.88% and  $50.0  million  of
variable  interest  rate debt  averaging  7.5%.  Debt at year-end  2000 included
$142.9 million of fixed interest rate debt, at an average interest rate of 6.79%
and $23.9 million of variable  interest rate debt at an average interest rate of
8.49%.

On December  12,  1999,  Interactive  completed  the private  placement of a $25
million 6% five-year note,  convertible into Interactive  common stock at $42.50
per share (adjusted for subsequent 2 to 1 stock split).  At that time, to assist
the Company with the private  placement to Cascade  Investment LLC  ("Cascade"),
the Chairman and CEO of Interactive,  agreed to give the acquirer of the note, a
one-time option to sell the note to him at 105% of the principal amount thereof.
The exercise  period was from November 15, 2000 to December 1, 2000. This option
to sell  is  secured  by a bank  letter  of  credit,  which  is  secured  by the
Chairman's  escrow of  securities.  The Company agreed to reimburse the Chairman
for the cost of the letter of credit plus his counsel  fees in  connection  with
the option to sell agreement and obtaining the letter of credit.


<PAGE>

The option to sell the  remaining  $10  million  is secured by a  collateralized
letter of credit in which the  collateral  is  provided by an  affiliate  of the
Chairman.  The Company  has agreed to pay all legal fees,  letter of credit fees
and a 10% per annum collateral fee on the amount of collateral  provided,  $10.5
million.  The Company can replace the  collateral at any time and the collateral
fee would be eliminated from thereafter.

On January 16, 2001, the above option to sell agreement was amended. As amended,
Cascade  had the  right  to  sell up to $15  million  of the  notes  back to the
Chairman  at any  time  prior to  January  31,  2001  and the  right to sell the
remaining $10 million of the note between  November 15 and December 1, 2002. The
option to sell is at 105% of  principal  amount  sold plus  accrued  and  unpaid
interest.  As a condition to modifying  and  extending  the option to sell,  the
Company entered into an agreement in December 2000, with its Chairman whereby it
will pay for and acquire,  on the same terms and conditions,  any portion of the
note sold by Cascade under this option.  During January 2001,  Cascade exercised
this option  with  regard to the $15  million of the notes and on  February  14,
2001, the Company transferred $15.9 million to Cascade, including the 5% premium
plus accrued and unpaid  interest in exchange for $15.0 million of the note held
by Cascade.

In January 2001, a subsidiary of the Company  borrowed $27.0 million  secured by
the stock of Western New Mexico Telephone Company. $15.9 million of the proceeds
were used to  acquire  the  Convertible  Note of the  Company  owned by  Cascade
Investment  L.L.C.  The  stock of  Western  New  Mexico  Telephone  Company  had
previously  been used to secure the acquisition  facility,  the balance of which
was $7.9 million prior to repayment in December 2000.

As of March 31,  2001,  Interactive,  the  parent  company,  had  $10.0  million
available  under a short-term line of credit  facility,  which expires on August
31, 2001.

Interactive  owns 55.6% of the  equity of Morgan and 70.2% of the vote.  For the
year  ended  December  31,  2000,  Morgan  represented  61.6%  of  Interactive's
consolidated  revenues and had an operating loss of $2.0 million, as compared to
Interactive's  consolidated  operating profits of $13.3 million. At December 31,
2000, Morgan represented 9.7% of Interactive's  total assets and Interactive has
a net $4.0 million investment in Morgan.  Morgan is actively seeking alternative
financial institutions to replace its existing credit facility and currently has
received  several  commitment  letters.   Each  of  the  commitment  letters  is
conditioned upon satisfactory  completion of due diligence procedures as well as
Morgan meeting various financial covenants and requirements prior to closing. In
connection with the replacement of the credit  facility,  the Board of Directors
of  Interactive  has approved the  acquisition  of 1.0 million  Class 'B' common
shares of Morgan  at $2.00  per  share.  The  investment  by  Interactive  would
increase  Interactive's  ownership  in Morgan from 55.6% to 68.5%.  The Board of
Directors of Morgan approved the issuance of additional Class 'B' stock, but the
sale  will  be  subject  to  final  negotiations  with  the  potential  lenders,
appropriate documentation and approval of Morgan shareholders.  The Morgan Board
of Directors has also  authorized  its  management  to further  develop plans to
provide an  opportunity  for other  shareholders  to acquire  additional  equity
investment in Morgan.


<PAGE>

Both  Morgan and  Interactive  management  believe  that an  alternative  credit
facility can be ultimately  obtained and the investment by  Interactive  will be
made.  Should  facility not be obtained,  Interactive's  investment in Morgan of
$3.7 million at March 31, 2001 may become impaired.

Interactive is currently  considering whether it should retain its investment in
Morgan and exploring ways to appropriately divest itself of its investment.

Lynch  has  not  paid  any  cash  dividends  on its  Common  Stock  since  1989.
Interactive  does not expect to pay cash  dividends  on its Common  Stock in the
foreseeable  future.  Interactive  currently intends to retain its earnings,  if
any,  for use in its  business.  Future  financings  may limit or  prohibit  the
payment of dividends.

Interactive has a high degree of financial  leverage.  As of March 31, 2001, the
ratio of total debt to equity was 7.8 to 1. Certain  subsidiaries also have high
debt to equity ratios. In addition,  the debt at subsidiary  companies  contains
restrictions on the amount of readily available funds that can be transferred to
the respective parent of the subsidiaries.

The Company has a need for resources  primarily to fund future  long-term growth
objectives.   Interactive  considers  various  alternative  long-term  financing
sources:  debt, equity, or sale of an investment asset. While management expects
to obtain  adequate  financing  resources  to  enable  the  Company  to meet its
obligations,  there is no  assurance  that such can be  readily  obtained  or at
reasonable costs.

On October 15, 2000, the Registrant  signed an agreement to acquire Central Utah
Telephone, Inc. and subsidiaries,  a 4,100-access line telephone company located
in Utah. In April 2001,  Central Utah acquired certain telephone  exchanges from
Qwest  Communications  International Inc. involving  approximately  3,300 access
lines. The Registrant has also agreed to acquire Central Telcom Services, LLC, a
related  entity,  which has certain PCS and MMDS  interests and  Internet,  long
distant and  telephone  equipment  businesses.  The aggregate  purchase  prices,
including debt assumed,  is roughly  comparable to the Registrant's  most recent
telephone  acquisitions  and is expected to be  financed  primarily  through the
issuance of additional  debt and the remaining  coming from resources  currently
available.  The closing of the  transactions,  which are  expected by the second
quarter of 2001,  are  subject  to certain  conditions  including  approvals  by
certain regulatory authorities.


<PAGE>

The  Registrant  has  initiated  an effort to  monetize  certain of its  assets,
including  selling a portion  or all of  certain  investments  in certain of its
operating  entities.  These may include minority interest in network  affiliated
television  stations and certain  telephone  operations where  competitive local
exchange  carrier  opportunities  are not  readily  apparent.  The  Registrant's
approximately 13.6% ownership interest in Spinnaker Industries,  Inc. (AMEX:SKK)
may  also be sold in  order  to fund  future  growth  initiatives.  There  is no
assurance  that all or any part of this program can be effectuated on acceptable
terms.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

The Company is exposed to market risk  relating to changes in the general  level
of U.S. interest rates. Changes in interest rates affect the amounts of interest
earned on the Company's cash, cash equivalents and marketable  securities ($38.2
million at March 31, 2001 and $29.0 million at December 31, 2000).

The Company generally  finances the debt portion of the acquisition of long-term
assets with fixed rate,  long-term  debt.  The Company  generally  maintains the
majority  of its debt as fixed  rate in nature  either by  borrowing  on a fixed
long-term  basis  or, on a  limited  basis,  entering  into  interest  rate swap
agreements.  The  Company  does not use  derivative  financial  instruments  for
trading or speculative  purposes.  Management  does not foresee any  significant
changes in the strategies  used to manage interest rate risk in the near future,
although the strategies may be reevaluated as market conditions dictate.

At March  31,  2001,  approximately  $50.0  million,  or 28.4% of the  Company's
long-term debt and notes payable bears interest at variable rates.  Accordingly,
the Company's earnings and cash flows are affected by changes in interest rates.
Assuming the current level of  borrowings  for variable rate debt and assuming a
one  percentage  point  change in the 2001  average  interest  rate under  these
borrowings, it is estimated that the Company's 2001 three-month interest expense
would have changed by less than $0.1 million.  In the event of an adverse change
in interest rates,  management would likely take actions to further mitigate its
exposure. However, due to the uncertainty of the actions that would be taken and
their  possible  effects,  the analysis  assumes no such actions.  Further,  the
analysis  does not  consider  the  effects of the change in the level of overall
economic activity that could exist in such an environment.

<PAGE>

                           FORWARD LOOKING INFORMATION

Included in this Management  Discussion and Analysis of Financial  Condition and
Results  of  Operations  are  certain  forward   looking   financial  and  other
information,  including potential  write-down of its investment in Spinnaker and
Morgan,  the  ability  of  Morgan  to  obtain  a  replacement  credit  facility,
Interactive's  potential  divesture of its  investment in Morgan,  Interactive's
additional investment in Morgan,  possible  acquisitions  including Central Utah
Telephone,  Central Telecom  Services,  Registrant's  effort to monetize certain
assets,  and Market Risk.  It should be  recognized  that such  information  are
projections,  estimates or  forecasts  based on various  assumptions,  including
without  limitation,   meeting  its  assumptions  regarding  expected  operating
performance  and other matters  specifically  set forth, as well as the expected
performance of the economy as it impacts the Registrant's businesses, government
and  regulatory  actions and  approvals,  and tax  consequences  and  cautionary
statements set forth in documents  filed by Registrant and The Morgan Group with
the Securities and Exchange Commission. As a result, such information is subject
to uncertainties, risks and inaccuracies, which could be material.


<PAGE>




PART II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K
         ---------------------------------
                  None

                                    SIGNATURE


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.

                                      LYNCH INTERACTIVE CORPORATION
                                      (Registrant)

                                      By: s/Robert E. Dolan
                                      ----------------------------------------
                                            Robert E. Dolan
                                            Chief Financial Officer
May 15, 2001