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, 2002
                               --------------

                                       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, 2002
            -----                               --------------------------
Common Stock, $.0001 par value                            2,811,651



<PAGE>




                                      INDEX

                 LYNCH INTERACTIVE CORPORATION AND SUBSIDIARIES

PART I.     FINANCIAL INFORMATION


Item 1.  Financial Statements (Unaudited)
         -------------------------------

Condensed Consolidated Balance Sheets
  -      March 31, 2002
  -      December 31, 2001

Condensed Consolidated Statements of Operations:
  -      Three months ended March 31, 2002 and 2001

Condensed Consolidated Statements of Cash Flows:
  -      Three months ended March 31, 2002 and 2001

Notes to Condensed Consolidated 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





SIGNATURE


<PAGE>
<TABLE>



PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements
                 LYNCH INTERACTIVE CORPORATION AND SUBSIDIAIRES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      (In thousands, except share amounts)
<CAPTION>
                                                                                 March 31,    December 31,
                                                                                   2002           2001
                                                                                ----------    ------------
                                                                                (Unaudited)      (Note)
ASSETS
CURRENT ASSETS:
  <S>                                                                              <C>          <C>
  Cash and cash equivalents ..................................................   $  35,337    $  31,233
  Receivables, less allowances of $483 and
    $424, respectively .......................................................       9,767        9,963
  Material and supplies ......................................................       3,453        3,373
  Prepaid expenses and other current assets ..................................       2,406        1,757
  Current assets of Morgan Group Holding Co. .................................
      distributed to shareholders ............................................        --         12,757
                                                                                 ---------    ---------
TOTAL CURRENT ASSETS .........................................................      50,963       59,083

PROPERTY, PLANT AND EQUIPMENT:
  Land .......................................................................         840          840
  Buildings and improvements .................................................      10,858       10,858
  Machinery and equipment ....................................................     184,401      182,109
                                                                                 ---------    ---------
                                                                                   196,099      193,807
  Accumulated Depreciation ...................................................     (78,434)     (74,530)
                                                                                 ---------    ---------
                                                                                   117,665      119,277

GOODWILL .....................................................................      61,566       61,566
OTHER INTANGIBLE ASSETS ......................................................       2,281        2,370
INVESTMENTS IN AND ADVANCES TO AFFILIATED ENTITIES ...........................      13,785       14,277
OTHER ASSETS .................................................................      11,814       12,534
NON CURRENT ASSETS OF MORGAN GROUP HOLDING CO ................................
   DISTRIBUTED TO SHAREHOLDERS ...............................................        --         10,241
                                                                                 ---------    ---------
TOTAL ASSETS .................................................................   $ 258,074    $ 279,348
                                                                                 =========    =========

IABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Notes payable to banks .....................................................   $   9,804    $  10,336
  Trade accounts payable .....................................................         480          921
  Accrued interest payable ...................................................       1,690        1,579
  Accrued liabilities ........................................................      19,007       15,700
  Current maturities of long-term debt .......................................      21,154       28,126
  Current liabilities of Morgan Group Holding Co. ............................
       distributed to shareholders ...........................................        --         11,281
                                                                                 ---------    ---------
     TOTAL CURRENT LIABILITIES ...............................................      52,135       67,943

LONG-TERM DEBT ...............................................................     167,638      165,076
DEFERRED INCOME TAXES ........................................................       8,117        8,515
OTHER LIABILITIES ............................................................         843          887
MINORITY INTEREST ............................................................       6,752        6,120
NON CURRENT LIABILITIES AND MINORITY
  INTERESTS OF MORGAN GROUP HOLDING CO .......................................
  DISTRIBUTED TO SHAREHOLDERS ................................................        --          6,290

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
  COMMON STOCK, $0.0001 PAR VALUE-10,000,000
     SHARES AUTHORIZED; 2,824,766 ISSUED; 2,814,151
     and 2,820,051 outstanding ...............................................        --           --
  ADDITIONAL PAID-IN CAPITAL .................................................      21,406       21,406
  RETAINED EARNINGS ..........................................................         720        1,800
  ACCUMULATED OTHER COMPREHENSIVE INCOME .....................................         946        1,542
  TREASURY STOCK, 10,615 and 4,715 shares, at cost ...........................        (483)        (231)
                                                                                 ---------    ---------
                                                                                    22,589       24,517
                                                                                 ---------    ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ...................................   $ 258,074    $ 279,348
                                                                                 =========    =========
<FN>

Note: The balance sheet at December 31, 2001 has been derived from the audited
financial statements at that date, but does not include all of the information
and footnotes required by accounting principles generally accepted in the Untied
States for complete financial statements.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>



                 LYNCH INTERACTIVE CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
               (In thousands, except per share and share amounts)
<CAPTION>

                                                         Three Months Ended
                                                              March 31,
                                                        2002         2001
                                                      --------     --------
<S>                                              <C>            <C>

SALES AND REVENUES ...........................   $    20,974    $    17,209


COSTS AND EXPENSES:
Multimedia ...................................        15,038         12,748
Selling and administrative ...................           692            812
                                                 -----------    -----------
OPERATING PROFIT .............................         5,244          3,649

Other income (expense):
   Gain on sale of cellular partnership ......         4,965           --
   Investment income .........................           997          1,218
   Interest expense ..........................        (3,373)        (3,415)
   Equity in earnings of affiliated companies            204            165
                                                 -----------    -----------
                                                       2,793         (2,032)
                                                 -----------    -----------

INCOME BEFORE INCOME TAXES, MINORITY
  INTERESTS AND OPERATIONS OF MORGAN .........         8,037          1,617
Provision for income taxes ...................        (3,132)          (839)
Minority Interests ...........................          (632)          (168)
                                                 -----------    -----------
INCOME FROM CONTINUING OPERATIONS ............         4,273            610

INCOME (LOSS) FROM OPERATIONS OF MORGAN
   GROUP HOLDING CO. DISTRIBUTED TO
   SHAREHOLDERS NET OF INCOME TAXES $0 and $0,
   RESPECTIVELY AND MINORITY INTERESTS $868
   AND $240, RESPECTIVELY ....................      (1,888)          (301)
                                                 -----------    -----------

NET INCOME ...................................   $     2,385    $       309
                                                 ===========    ===========

Basic weighted average shares outstanding ....     2,818,000      2,822,000
Diluted weighted average shares outstanding ..     3,053,000      2,822,000

BASIC EARNINGS PER SHARE
INCOME FROM CONTINUING OPERATIONS ............   $      1.52    $      0.22
INCOME (LOSS) FROM OPERATIONS OF MORGAN GROUP
  HOLDING CO. DISTRIBUTED TO SHAREHOLDERS ....         (0.67)         (0.11)
                                                 -----------    -----------
NET INCOME ...................................   $      0.85    $      0.11
                                                 ===========    ===========


DILUTED EARNINGS PER SHARE
INCOME FROM CONTINUING OPERATIONS ............   $      1.45    $      0.22
INCOME (LOSS) FROM OPERATIONS OF MORGAN GROUP
  HOLDING CO. DISTRIBUTED TO SHAREHOLDERS ....         (0.62)         (0.11)
                                                 -----------    -----------
NET INCOME ...................................   $      0.83    $      0.11
                                                 ===========    ===========

See accompanying notes
</TABLE>



<PAGE>

<TABLE>


                 LYNCH INTERACTIVE CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (In thousands)
<CAPTION>


                                                                     Three Months Ended
                                                                          March 31,
                                                                      2002         2001
                                                                    ----------  ---------
OPERATING ACTIVITIES
<S>                                                                 <C>         <C>
Net Income ......................................................   $  2,385    $    309
Adjustments to reconcile net income to net cash provided by
   operating activities:
   Depreciation and amortization ................................      4,811       4,096
   Net effect of purchases and sales of trading securities ......       --          (426)
   Equity in earnings of affiliated companies ...................       (204)       (165)
   Minority interests ...........................................        632         168
   Gain on sale of cellular partnership .........................     (4,965)       --
   Non-cash items and changes in operating assets and liabilities
     from operations of Morgan Group Holding Co. ................
     distributed to shareholders ................................      1,888         430
   Changes in operating assets and liabilities:
        Receivables .............................................        270         706
        Accounts payable and accrued liabilities ................      2,911      (1,198)
        Other ...................................................       (752)        (97)
                                                                    --------    --------
NET CASH PROVIDED BY OPERATING ACTIVITIES .......................      6,976       3,823
                                                                    --------    --------

INVESTING ACTIVITIES
Capital expenditures ............................................     (3,371)     (2,975)
Investment in and advances to affiliated entities ...............       (476)        (58)
Proceeds from sale of available for sale securities .............        345        --
Proceeds from sale of cellular partnership ......................      5,570        --
Investing activities of operations of Morgan Group
  Holding Co. distributed to shareholders .......................       --           (87)
Other ...........................................................        254        (597)
                                                                    --------    --------
NET CASH USED IN INVESTING ACTIVITIES ...........................      2,322      (3,717)
                                                                    --------    --------

FINANCING ACTIVITIES
Issuance of long term debt ......................................        603      27,098
Repayments of long term debt ....................................     (5,035)    (17,110)
Net repayments (borrowings) lines of credit .....................       (532)       (562)
Treasury stock transactions .....................................       (252)       --
Financing activities of operations of Morgan Group Holding
  Co. distributed to shareholders ...............................       --           (42)
Other ...........................................................         22        --
                                                                    --------    --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES .............     (5,194)      9,384
                                                                    --------    --------

Net increase in cash and cash equivalents .......................      4,104       9,490
Cash and cash equivalents at beginning of period ................     31,233      24,834
                                                                    --------    --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ......................   $ 35,337    $ 34,324
                                                                    ========    ========

See accompanying notes.
</TABLE>

<PAGE>




                  LYNCH INTERACTIVE CORPORATION & SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A.   Subsidiaries of the Registrant

As of March 31, 2002, the Subsidiaries of the Registrant are as follows:
<TABLE>
<CAPTION>

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%
      CLR Video, L.L.C .........................      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%
     DFT Telephone Holding Company, L.L.C ......     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%
    DFT Security Services, Inc. ................     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%
  Global Television, Inc. ......................     100.0%
  Inter-Community Acquisition Corporation ......     100.0%

  Lynch Telephone Corporation X ................     100.0%
     Central Utah Telephone, Inc. ..............     100.0%
     Central Telecom Services, LLC .............     100.0%
        Cache Valley Wireless, LC ..............     100.0%
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

Subsidiary                                    Owned by Lynch
----------                                    --------------
<S>                                               <C>
  Lynch Entertainment, LLC ..................     100.0%
  Lynch Entertainment Corporation II ........     100.0%

  Lynch Multimedia Corporation ..............     100.0%

  Lynch Paging Corporation ..................     100.0%

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 Telephone Corporation .................      83.1%
  Western New Mexico Telephone Company, Inc.       83.1%
  Interactive Networks Corporation ..........      83.1%
  WNM Communications Corporation ............      83.1%
  WMN Interactive, L.L.C ....................      83.1%
  Wescel Cellular, Inc. .....................      83.1%
    Wescel Cellular of New Mexico, L.P. .....      42.4%
  Wescel Cellular, Inc. II ..................      83.1%
      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%
</TABLE>







<PAGE>

B.    Basis of Presentation
--    ---------------------

The  Company  consolidates  the  operating  results of its  telephone  and cable
television subsidiaries (81-100% owned at March 31, 2002 and December 31, 2001).
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,  2002 and
December 31, 2001), Capital Communications Company, Inc. (49% owned at March 31,
2002 and  December  31, 2001) and the  cellular  partnership  operations  in New
Mexico (17% to 21% owned at March 31, 2002 and December 31, 2001).

The shares of Spinnaker  Industries,  Inc.  ("Spinnaker"),  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."  During 2001, the Company  recorded
impairment  charges  relating to its  investment in Spinnaker that resulted in a
write-down of the carrying amount to $0.

On January 24, 2002, Interactive spun off its interest in The Morgan Group, Inc.
("Morgan"),  its  only  services  subsidiary,  via a  tax-free  dividend  to its
shareholders  of the stock of Morgan Group Holding Co., a  corporation  that was
formed to serve as a holding company for Interactive's  controlling  interest in
Morgan.  Morgan  Group  Holding Co. is now a public  company.  Accordingly,  the
amounts for Morgan are reflected on a one-line basis in the condensed  financial
statements as of December 31, 2001 and for the three months ended March 31, 2002
and 2001, as amounts "distributed to shareholders."

The accompanying unaudited condensed consolidated 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,  2002 are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 2002.  The  preparation  of  consolidated  financial  statements in
conformity with accounting  principles  generally  accepted in the United States
requires  management to make estimates and  assumptions  that effect the amounts
reported in the financial  statements  and  accompanying  notes.  Actual results
could differ from those estimates.

Certain 2001 amounts have been restated to conform to the 2002 presentation.

C.   Recent Accounting Pronouncements
--   --------------------------------

In June 2001,  the Financial  Accounting  Standards  Board issued  Statements of
Financial  Accounting  Standards No. 141,  Business  Combinations,  and No. 142,
Goodwill and Other Intangible  Assets effective for fiscal years beginning after
December 15, 2001. Statement 141 required that the purchase method of accounting
be used for all business  combinations  initiated after June 30, 2001. Statement
141 also  includes  guidance  on the  initial  recognition  and  measurement  of
goodwill  and  other  intangible  assets  arising  from  business   combinations
completed  after June 30, 2001.  Statement  142 prohibits  the  amortization  of
goodwill and assets with  indefinite  lives.  Statement  142 requires that these
assets be reviewed for  impairment  at least  annually.  Intangible  assets with
finite lives will continue to be amortized over their estimated useful lives.

The  Company  will test  goodwill  for  impairment  using the  two-step  process
prescribed  in  Statement  142.  The  first  step  is  a  screen  for  potential
impairment, while the second step measures the amount of impairment, if any. The
Company  expects  to  perform  the  first of the  required  impairment  tests of
goodwill and  indefinite  lived  intangible  assets as of January 1, 2002 in the
second quarter of 2002. Any impairment charge resulting from these  transitional
impairment  tests  will be  reflected  as the  cumulative  effect of a change in
accounting principle in the second quarter of 2002, as of the first quarter. The
Company  has not yet  determined  what the effect of these  tests will be on the
earnings and financial position of the Company.

The  application  of the  non-amortization  provisions  of Statement No. 142 has
increased net income in the first quarter of 2002 by approximately  $0.7 million
($0.24 per basic share) whereas the similar  amortization charge for the quarter
in 2001 was approximately $0.5 million ($0.18 per basic share).
<PAGE>

The  following  table  discloses  what the  effects of the  non-amortization  of
goodwill  and  indefinite  lived  intangible  assets would be for income and per
share amounts for the periods displayed:
<TABLE>
<CAPTION>

                                               Three Months Ended
                                                    March 31,
                                                2002       2001
                                             ---------  ---------
As reported: ..............................         (000s)
<S>                                           <C>        <C>
    Income from continuing operations .....   $ 4,273    $   610
    Income (loss) from operations of Morgan    (1,888)      (301)
                                              -------    -------
    Net Income ............................     2,385    $   309
                                              =======    =======

Adjustment from non-amortization
    Continuing operations net of minority
       interest $16 and income taxes $74 ..      --      $   516
    Operations of Morgan net of minority
       interest and income taxes ..........      --           79

As adjusted:
    Income from continuing operations .....   $ 4,273    $ 1,126
    Income (loss) from operations of Morgan    (1,888)      (222)
                                              -------    -------
    Net income ............................   $ 2,385    $   904
                                              =======    =======

Basic earnings per share
    Income from continuing operations .....   $  1.52    $  0.40
    Income (loss) from operations of Morgan     (0.67)     (0.08)
                                              -------    -------
    Net income ............................   $  0.85    $  0.32
                                              =======    =======
</TABLE>

The following tables display the details of goodwill and intangible assets as of
the dates shown.
<TABLE>
<CAPTION>


                                            (000s)
                            March 31, 2002          December 31, 2001
                          --------------------------------------------
Intangible assets subject          Accumulated            Accumulated
 to amortization:         Assets   Amortization   Assets  Amortization
                          --------------------------------------------

<S>                       <C>      <C>            <C>      <C>
Subscriber lists ......   $3,195   $  961         $3,195   $  875
Other intangible assets      105       58            105       55
                          ------   ------         ------   ------
  Total ...............   $3,300   $1,019         $3,300   $  930
                          ======   ======         ======   ======

</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                       2002  2001
                                       ----  ----

<S>                                    <C>    <C>
Total amortization expense for
  the three months ended March 31      $ 89   $752
                                       ====   ====
</TABLE>

<TABLE>
<CAPTION>

                                   2003  2004    2005   2006   2007
                                   --------------------------------
<S>                                <C>    <C>    <C>    <C>    <C>
Estimated aggregate amortization
expense by year ................   $332   $332   $332   $330   $320
</TABLE>
<TABLE>
<CAPTION>

                                                 March 31    December 31
                                                   2002         2001
                                                 ---------------------
<S>                                              <C>         <C>
Intangible assets not subject to amortization:
    Goodwill - net ...........................   $61,566     $61,566
</TABLE>
<PAGE>

In October 2001, the FASB issued Statement of Financial  Accounting Standard No.
144,  Accounting for Impairment or Disposal of Long-Lived Assets,  effective for
fiscal years  beginning  after  December 15, 2001. The FASB's new rules on asset
impairment  supersede FASB  Statement No. 121,  Accounting for the Impairment of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed  of, and provide a
single  accounting  model for  long-lived  assets to be  disposed  of.  Although
retaining many of the fundamental recognition and measurement provisions of FASB
Statement  No. 121, the new rules  significantly  change the criteria that would
have to be met to  classify an asset as  held-for-sale.  The new rules also will
supersede the  provisions of APB Opinion 30 with regard to reporting the effects
of a disposal  of a segment  of a  business  and will  require  expected  future
operating  losses from  discontinued  operations to be displayed in discontinued
operations  in the periods in which the losses are  incurred  (rather than as of
the  measurement  date as  presently  required  by APB 30).  In  addition,  more
dispositions  will qualify for discontinued  operations  treatment in the income
statement.  The Company has determined that there is no effect of FASB Statement
No. 144 on the earnings and financial position of the Company.

D.   Acquisitions and Dispositions

On June 22, 2001,  Lynch  Telephone  Corporation X, a subsidiary of Interactive,
acquired Central Utah Telephone, Inc. and its subsidiaries,  and Central Telecom
Services,  LLC, a related entity,  for  approximately  $15.6 million in cash and
notes. The Company has recorded approximately $11.7 million in goodwill.

The above  acquisition  was accounted for as a purchase,  and  accordingly,  the
assets  acquired and  liabilities  assumed were recorded at their estimated fair
market values on the date of acquisition.

The operating  results of the acquired  companies are included in the Statements
of Operations from their  acquisition  dates. The following  unaudited pro forma
information  shows  the  results  of the  Company's  operations  as  though  the
acquisition of Central Utah and related  entities and the distribution of Morgan
were made at the beginning of 2001.  The unaudited pro forma  information is not
necessarily indicative of the results of operations that would have occurred had
the  transaction  been made at this  date nor is it  necessarily  indicative  of
future results of operations. (In thousands of dollars, except per share data).


<PAGE>
<TABLE>
<CAPTION>

                                      Three Months Ended
                                           March 31,
                                             2001
                                      -------------------
<S>                                    <C>
Sales and revenues ..............      $   18,545
Income from continuing operations             638
Basic earnings per share ........            0.23
Diluted earnings per share ......      $     0.23
</TABLE>


In March 2002,  the Company sold its 20.8%  interest in the New Mexico  cellular
partnership,  RSA #1B, to Verizon  Wireless for $5.6 million ($5 million pre-tax
gain) and repaid $2.6 million of outstanding indebtedness to Verizon.

E.   Spin-off of Morgan

On January 24,  2002,  Interactive  spun off its  interest in The Morgan  Group,
Inc., its only services subsidiary,  via a tax-free dividend to its shareholders
of the stock of Morgan Group Holding Co., a corporation that was formed to serve
as a holding company for Interactive's controlling interest in The Morgan Group,
Inc.  Morgan Group Holding Co. is now a public company.  Morgan's  revenues were
$16.3  million  ($5.4  million to date of spin-off) in the first quarter of 2002
and  $23.7  million  in the  first  quarter  of 2001.  The net  assets of Morgan
distributed at the spin-off were approximately $3.5 million.

Accordingly, prior period financial statements have been restated to reflect the
amounts for Morgan on a one-line basis as "distributed to shareholders."

The report of Ernst & Young LLP, Morgan's independent auditors,  with respect to
its financial  statements as of December 31, 2001 and 2000,  and for each of the
three years in the period  ended  December  31, 2001  contained  an  explanatory
paragraph which expresses  substantial  doubt as to Morgan's ability to continue
as a going concern.

F.   Indebtedness

The parent company maintains a short-term line of credit facility totaling $10.0
million.  Borrowings  under this  facility were $7.4 million and $7.6 million at
March 31, 2002 and December 31, 2001, respectively. This facility will expire on
August 31, 2002, unless extended. Long-term debt consists of (all interest rates
are at March 31, 2002):
<TABLE>
<CAPTION>

                                                                                    March 31,
                                                                                      2002       December 31,
                                                                                   (Unaudited)      2001
                                                                                --------------   ------------
                                                                                         (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% (4.9%
weighted average at March 31, 2002), secured by assets of the telephone
companies of $149.5 million ....................................................   $  55,305    $  55,499

Bank Credit facilities utilized by certain telephone and telephone holding
companies through 2016, $32.7 million at fixed interest rates averaging 7.9%
and $52.9 million at variable interest rates averaging 4.8%  ...................      85,667       87,127

Unsecured  notes issued in connection with  acquisitions  through 2006, at fixed
interest rates of 10.0% ........................................................      34,454       34,512

Convertible  subordinated  note due in December 2004 at a fixed interest rate of
6%..............................................................................      10,000       10,000
Other ..........................................................................       3,366        6,064
                                                                                   ---------    ---------
                                                                                     188,792      193,202
Current maturities .............................................................     (21,154)     (28,126)
                                                                                   ---------    ---------
                                                                                   $ 167,638    $ 165,076
                                                                                   =========    =========
</TABLE>

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,  which
at March 31, 2002 was $0 and was $3.0 million at December 31, 2001.

The  Company  can  replace  the  collateral  at any time  and the fees  would be
eliminated thereafter. As of March 31, 2002, the Company has replaced all of the
$10.5 million of escrow collateral  securing the above noted letter of credit by
segregating  $10.5 million of U.S. Treasury Bills (which are classified as "cash
and cash  equivalents")  in a separate  account and pledging this account to the
issuers of the letter of credit.  The  balance of the  convertible  subordinated
note is  classified  as current at March 31, 2002 and  December  31, 2001 as the
holder has the ability to demand  payment of such amount,  plus the $0.5 million
premium,  prior to  December  31,  2002.  Management  is  currently  unaware  of
Cascade's  intention  with regard to their  potential  exercise of the option to
sell the $10 million note back to the Company.

G.       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,
2002 and December 31, 2001 are as follows (in thousands):
<TABLE>
<CAPTION>

                                   Unrealized
                                     Gain
                                    (Loss)    Tax Effect    Net
<S>                                <C>        <C>           <C>
Balance at December 31, 2001 ...   $ 2,599    $(1,057)      $ 1,542
Reclassification adjustment ....      (322)       126          (196)
Current period unrealized losses      (672)       272          (400)
                                   -------    -------       -------
Balance at March 31, 2002 ......   $ 1,605    $  (659)      $   946
                                   =======    =======       =======
</TABLE>

The comprehensive  income (loss),  for the three-month  periods ending March 31,
2002 and 2001 are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                            Three Months Ended
                                                                               March 31,
                                                                              2002      2001
                                                                           ------------------
<S>                                                                        <C>        <C>
Net income for the period ..............................................   $ 4,678    $   309
Reclassification adjustment-net of income tax benefit of $126...........      (196)      --
Unrealized (losses) on available for sale securities - net of income tax
   benefit of $272 and $898, respectively ..............................      (400)    (1,240)

                                                                           -------    -------
Comprehensive income (loss) ............................................   $ 4,082    $  (931)
                                                                           =======    =======
</TABLE>

H.       Earnings per share

The following table set forth the computation of basic and diluted  earnings per
share for the periods  indicated:  During the three months ended March 31, 2002,
the Company purchased 5,900 shares of its common stock for treasury.  Subsequent
to March 31, 2002, the Company  purchased an additional 3,000 shares of Treasury
stock.
<TABLE>
<CAPTION>

                                                                  Three Months Ended
                                                                      March 31,
                                                                   2002         2001
                                                               ------------------------
<S>                                                             <C>          <C>
Basic earnings per share
Numerator:
      Net Income ............................................   $2,385,000   $  309,000
Denominator:
      Weighted average shares outstanding ...................    2,818,000    2,822,000
Earnings per share:
      Net income ............................................   $     0.85   $     0.11
                                                                ==========   ==========

Diluted earnings per share
Numerator:
     Net Income .............................................   $2,385,000   $  309,000
     Interest saved on assumed conversion of
        convertible  notes - net of tax .....................      161,000         --
                                                                ----------   ----------

     Net Income .............................................   $2,546,000   $  309,000
                                                                ----------   ----------

Denominator:
      Weighted average shares outstanding ...................    2,818,000    2,822,000
      Shares issued on assumed conversion of convertible note      235,000         --
                                                                ----------   ----------
      Weighted average shares and share equivalents .........    3,053,000    2,822,000
                                                                ----------   ----------

Earnings per share:
      Net income ............................................   $     0.83   $     0.11
                                                                ==========   ==========
</TABLE>

The effect of assumed conversion of the convertible note in the first quarter of
2001 was anti-dilutive.

I.       Segment Information

As a result of the decision to spin-off its  investment  in Morgan (see Note E),
the Company is engaged in one business segment:  multimedia.  All businesses are
located domestically, and substantially all revenues are domestic. The Company's
operations include local telephone companies, a cable TV company,  investment in
PCS entities and investment in two  network-affiliated  television stations. The
Company's  primary  operations  are  located  in the  states  of  Iowa,  Kansas,
Michigan, New Hampshire, New Mexico, New York, North Dakota, Utah and Wisconsin.
75%  of  the  Company's  telephone  customers  are  residential.  The  remaining
customers are businesses.

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,  including
unallocated general corporate expenses and excluding, interest and income taxes.
The  Registrant  allocates  a portion of its general  corporate  expenses to its
operating  segment.  Such  allocation  was  $327,000  and $338,000 for the three
months ended March 31, 2002 and 2001, respectively.
<TABLE>
<CAPTION>
                                                                                   Three Months Ended
                                                                                        March 31,
                                                                                   2002        2001
                                                                                ----------------------
                                                                                Unaudited     Restated
                                                                                      In thousands)
<S>                                                                              <C>         <C>
Sales and revenues: ..........................................................   $ 20,974    $ 17,209
                                                                                 ========    ========

EBITDA (before corporate allocation):
  Operations .................................................................   $ 10,743    $  8,602
  Corporate expenses, gross ..................................................       (687)       (857)
                                                                                 --------    --------
  Combined total .............................................................   $ 10,056    $  7,745
                                                                                 ========    ========

Operating profit:
  Operations .................................................................   $  5,609    $  4,169
  Corporate expenses, net ....................................................       (365)       (520)
                                                                                 --------    --------
  Combined total .............................................................   $  5,244    $  3,649
                                                                                 ========    ========

Operating profit .............................................................   $  5,244    $  3,649
Other income (expense):
  Investment income ..........................................................      5,962       1,218
  Interest expense ...........................................................     (3,373)     (3,415)
  Equity in earnings of affiliated companies .................................        204         165
                                                                                 --------    --------
Income before income taxes,  minority interests and operations of Morgan Group
Holding Co. distributed to shareholders ......................................   $  8,037    $  1,617
                                                                                 ========    ========
</TABLE>
<PAGE>



J.       Recent Events

Sunshine Rights  Offering.  In February 2002,  Sunshine PCS  Corporation  issued
rights to its  shareholders  to purchase up to  1,531,593  shares of its Class A
Common Stock at a price of $1.00 per share.  On May 3, 2002, the rights offering
expired and on May 7, 2002,  Sunshine  announced  that the rights  offering  was
oversubscribed.  As the  holder  of  235,294  shares  of  Sunshine,  Interactive
exercised its rights (but did not  oversubscribe)  to purchase  58,824 shares of
Class A Common Stock in the rights offering.

Taylor  Litigation.  Interactive and several other parties,  including our Chief
Executive  Officer,  and Fortunet  Communications,  L.P., which was Sunshine PCS
Corporation's  predecessor-in-interest,  have  been  named  as  defendants  in a
lawsuit  brought under the so-called  "qui tam"  provisions of the federal False
Claims Act in the United States District Court for the District of Columbia. The
complaint  was filed  under seal with the court on  February  14,  2001.  At the
initiative  of one of the  defendants,  the seal was lifted on January 11, 2002.
Under the False Claims Act, a private plaintiff,  termed a "relator," may file a
civil action on the U.S. government's behalf against another party for violation
of the  statute.  In return,  the relator  receives a statutory  bounty from the
government's litigation proceeds if he is successful.

The relator is this lawsuit is R.C.  Taylor III. The main allegation in the case
is that the defendants  participated in the creation of "sham" bidding  entities
that allegedly  defrauded the federal  Treasury by improperly  participating  in
certain Federal Communications  Commission spectrum auctions restricted to small
businesses,  as well as obtaining  bidding  credits in other  spectrum  auctions
allocated to "small" and "very small"  businesses.  The lawsuit seeks to recover
an unspecified  amount of damages,  which would be subject to mandatory trebling
under the statute.

Interactive strongly believes that this lawsuit is completely without merit, and
intends to defend  the suit  vigorously.  The U.S.  Department  of  Justice  has
notified the court that it has declined to intervene in the case.  Nevertheless,
we cannot predict the ultimate outcome of the litigation, nor can we predict the
effect  that the  lawsuit or its  outcome  will have on our  business or plan of
operation.

The defendants have yet to be formally served with the complaint.

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

Overview

On January 24, 2002,  Interactive  spun off its  investment in The Morgan Group,
Inc.  ("Morgan"),  its only services  subsidiary via a tax-free  dividend to its
shareholders  of the stock of Morgan Group Holding Co., a  corporation  that was
formed to serve as a holding company for Interactive's  controlling  interest in
Morgan.  Morgan  Group  Holding Co. is now a public  company.  Accordingly,  the
amounts for Morgan are reflected on a one-line basis in the condensed  financial
statements  as of December 31, 2001,  and for the quarters  ended March 31, 2002
and 2001as "distributed to shareholders."

Sales And Revenues

Revenues for the three months ended March 31, 2002  increased by $3.8 million to
$21.0  million from the first quarter of 2001.  Revenues  grew  primarily due to
acquisitions.   The  acquisition  of  Central  Utah  Telephone,   Inc.  and  its
subsidiaries, and Central Telecom Services, L.L.C., a related entity, which were
acquired on June 22, 2001, contributed $2.6 million to the increase. The balance
of the  increased  revenues can be  attributed  to the growth in both  regulated
telco services and the provision of non-traditional  telephone services such as:
Internet,  long  distance  service and local  exchange  carrier  service and the
acquisition of American Alarm ($0.7 million) on November 30, 2001.

Operating Profit

Operating  profit for the three  months  ended March 31, 2002  increased by $1.6
million to $5.3 million from the first quarter of 2001,  primarily the result of
increased operations in the Company's regulated  telecommunications  operations.
The  acquisition  of Central Utah added $0.8 million to operating  profit during
the quarter. The absence of $0.6 million of amortization of expenses a result of
implementing of SFAS 142, also improved the quarter results.

Other Income (Expense)

Investment income for the quarter ended March 31, 2002 decreased by $0.2 million
primarily due to lower gains on marketable securities.  In addition,  during the
quarter, the Company sold its Company's interest in a cellular partnership,  RSA
#1B in New Mexico for $5.6 million resulting in a pre-tax gain of $5.0 million.

Interest  expense is  approximately  the same as the prior  year  period at $3.4
million as increased levels of borrowing were offset by lower rates.

Income Tax Provision

The income tax provision includes federal, as well as state and local taxes. The
tax  provision  for the three  months  ended March 31, 2002 and 2001,  represent
effective  tax  rates  of 39.0%  and  51.9%,  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 2001.

Minority interest  decreased earnings by $0.6 million for the three months ended
March 31, 2002 versus $0.2 million a year  earlier due to the minority  interest
associated with the gain from the sale of RSA #1B in New Mexico.

Net Income

Income from continuing  operations was $4.3 million,  $1.52 per basic share, for
the first quarter of 2002 compared to income from continuing  operations in 2001
of $0.6 million, or $0.22 per basic share.

Factors contributing to this increase were: the gain from the sale of RSA #1B in
New  Mexico,  the  acquisitions  previously  mentioned  ($0.3  million)  and the
cessation of the amortization of goodwill ($0.5 million).

Net income for the three  months  ended March 31, 2002 was $2.4 million or $0.85
per basic share ($0.83  diluted) as compared to net income of $0.3  million,  or
$0.11 per share (basic and diluted), in the previous years' three-month period.

In  addition  to the factors  influencing  the change in income from  continuing
operations,  the spin-off of Morgan ($1.9  million loss in 2002 and $0.3 million
loss in 2001  first  quarter)  contributed  to the  change in net income for the
periods.

FINANCIAL CONDITION

Liquidity/ Capital Resources

As of March 31,  2002,  the  Company  had  current  assets of $51.0  million and
current  liabilities of $52.1 million.  Working capital deficiency was therefore
$1.1  million as  compared to $10.3  million at December  31, 2001 net of Morgan
amounts.

For the first three months,  capital  expenditures were $3.4 million in 2002 and
$3.0 million in 2001.

At March 31, 2002,  total debt was $198.6 million,  which was $4.9 million lower
than the $203.5 million at the end of 2001. At March 31, 2002,  there was $133.6
million of fixed interest rate debt averaging 7.0% and $65.0 million of variable
interest rate debt averaging 4.6%. Debt at year-end 2001 included $137.1 million
of fixed  interest  rate  debt,  at an average  interest  rate of 7.0% and $66.4
million of variable interest rate debt at an average interest rate of 4.8%.

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 legal  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,  which
at March 31, 2002 was $0 and was $3.0 million at December 31, 2001.

The  Company  can  replace  the  collateral  at any time  and the fees  would be
eliminated thereafter. As of March 31, 2002, the Company has replaced all of the
$10.5 million of escrow collateral  securing the above noted letter of credit by
segregating  $10.5  million of U.S.  Treasury  Bills in a separate  account  and
pledging this account to the issuers of the letter of credit. The balance of the
convertible  subordinated  note is  classified  as current at March 31, 2002 and
December  31,  2001 as the  holder  has the  ability  to demand  payment of such
amount, plus the $0.5 million premium, prior to December 31, 2002. Management is
currently unaware of Cascade's intention with regard to their potential exercise
of the option to sell the $10 million note back to the Company.

As of March  31,  2002,  Interactive,  the  parent  company,  had  $2.6  million
available under a $10 million short-term line of credit facility,  which expires
on August 31, 2002.

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, 2002, the
ratio of total debt to equity was 8.8 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.

The Company is obligated under long-term debt provisions and lease agreements to
make certain cash payments over the term of the agreements.  The following table
summarizes these contractual obligations for the period shown:
<TABLE>
<CAPTION>

                                                  Payments Due by Period
                                                   (In thousands)
                                                            Less than
                                     Total      1 year     1 - 3 years 4 - 5 years After 5 years
                                     -----------------------------------------------------------

<S>                                  <C>        <C>        <C>         <C>          <C>
Long-term Debt (a) ...............   $188,792   $ 21,154   $ 43,664    $ 44,903     $ 79,071

Operating Leases .................        969        326        400        243         --
                                     --------   --------   --------    --------      -------
Total Contractual Cash Obligations   $189,761   $ 21,480   $ 44,064    $ 45,146     $ 79,071
                                     ========   ========   ========    ========     ========
</TABLE>

(a)  Does not include interest payments on debt
(b)  Contains $10 million of  convertible  subordinated  debt due in 2004,
     that has a put option that if exercised, would accelerate the debt to
     the last quarter of 2002.

The company has certain  financing  commitments  from banks and other  financial
institutions  that  provide  liquidity.   The  following  table  summarizes  the
expiration of these commitments for the periods shown:
<TABLE>
<CAPTION>

                                                     Amount of Commitment Expiration
                                                              Per Period
                                                            (In thousands)
                                  Total
                                 Amounts
                                 Committed  Less than
Other Commercial Commitments                 1 year   1 - 3 years  4 - 5 years   Over 5 years
                                 ------------------------------------------------------------

<S>                              <C>        <C>       <C>          <C>          <C>
Lines of Credit ..............   $14,336    $14,336        -           -             --

Standby Letter of Credit .....    10,500     10,500        -           -             --

Guarantees

Standby Repurchase Obligations

Other Commercial Commitments
                                      -          -         -           -             --
                                 -------   -------    --------      ---------    ---------
Total Commercial Commitments .   $24,836   $24,836         -           -             --
                                 =======   =======    =========     =========    =========
</TABLE>

The Company has initiated an effort to monetize certain of its assets, including
selling a portion  or all of  certain in  vestment  in certain of its  operating
entities.  These may include minority interest in network affiliated  television
stations and certain  telephone  operations where growth  opportunities  are not
readily apparent. There is no assurance that all or any part of this program can
be  effectuated on acceptable  terms.  In March 2002, the Company sold its 20.8%
interest in the New Mexico cellular  property,  RSA #1B, to Verizon Wireless for
$5.6 million and repaid certain outstanding indebtedness to Verizon.

Critical Accounting Policies and Estimates

General

Interactive's  discussion and analysis of its financial condition and results of
operations are based upon its consolidated financial statements, which have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States.   The  preparation  of  these  financial   statements   requires
Interactive to make estimates and judgments that affect the reported  amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets  and  liabilities.   On  an  ongoing  basis,  Interactive  evaluates  its
estimates, including those related to revenue recognition, carrying value of its
investments  in the spectrum  entities and  long-lived  assets,  purchase  price
allocations,  and contingencies and litigation.  Interactive bases its estimates
on historical  experience and on various other  assumptions that are believed to
be reasonable under the  circumstances,  the results of which form the basis for
making  judgments about the carrying  values of assets and liabilities  that are
not readily  apparent from other  sources.  Actual results may differ from these
estimates under different assumptions or conditions.

Interactive  believes the following critical accounting policies affect its more
significant  judgments and estimates used in the preparation of its consolidated
financial statements.

Revenue Recognition

The  principal  business  of  Interactive's  telephone  companies  is to provide
telecommunications  services.  These  services fall into four major  categories:
local  network,   network   access,   long  distance  and  other   non-regulated
telecommunications  services. Toll service to areas outside franchised telephone
service territory is furnished  through switched and special access  connections
with intrastate and interstate long distance networks.

Local  service  revenues are derived from  providing  local  telephone  exchange
services.  Local  service  revenues are based on rates filed with various  state
telephone regulatory bodies.

Revenues from long distance network services are derived from providing  certain
long distance  services to the Company's local exchange  customers and are based
on rates filed with various state regulatory bodies.

Revenue from intrastate  access is generally  billed monthly in arrears based on
intrastate access rates filed with various state regulatory bodies.  Interactive
recognizes  revenue from  intrastate  access service based on an estimate of the
amounts  billed to  interexchange  carriers in the subsequent  month.  Estimated
revenues are adjusted monthly as actual revenues become known.

Revenue from  interstate  access is derived from  settlements  with the National
Exchange Carrier Association ("NECA"). NECA was created by the FCC to administer
interstate  access rates and revenue  pooling on behalf of small local  exchange
carriers  who  elect  to  participate  in  a  pooling  environment.   Interstate
settlements are determined based on the various  subsidiaries' cost of providing
interstate  telecommunications service. Interactive recognizes interstate access
revenue  based on an  estimate of the current  year cost of  providing  service.
Estimated  revenue is adjusted to actual upon the  completion of cost studies in
the subsequent period.

Other ancillary revenues derived from the provision of directory advertising and
billing  and  collection  services  are  billed  monthly  based on  rates  under
contract.

Purchase Price Allocation

Interactive's business development strategy is to expand its existing operations
through internal growth and acquisition. From 1989 through 2001, the Company has
acquired twelve  telephone  companies.  Significant  judgments and estimates are
required to allocate the  purchase  price of  acquisitions  to the fair value of
tangible  assets  acquired and  identifiable  intangible  assets and liabilities
assumed.  Any excess  purchase  price over the above fair values is allocated to
goodwill.  Additional  judgments  and  estimates  are  required to  determine if
identified intangible assets have finite or indefinite lives.

Depreciation and Amortization

The  calculation  of  depreciation  and  amortization  expense  is  based on the
estimated economic useful lives of the underlying property,  plant and equipment
and intangible  assets.  Although  Interactive  believes it is unlikely that any
significant  changes to the useful  lives of its tangible or  intangible  assets
will occur in the near term, rapid changes in technology,  the discontinuance of
accounting under SFAS No. 71 by the Company's wireline subsidiaries,  or changes
in market  conditions  could result in revisions  to such  estimates  that could
materially  affect the carrying  value of these assets and the Company's  future
consolidated operating results.

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 and cash  equivalents  ($35.3 million at March 31,
2002 and $31.2 million at December 31, 2001).

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,  2002,  approximately  $65.0  million,  or 33%  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 2002  average  interest  rate under  these
borrowings, it is estimated that the Company's 2002 three-month interest expense
would have changed by less than $0.2 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.


                           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  without  limitation,  the Company's  effort to monetize
certain  assets,  Liquidity and Capital  Resources and Market Risk. It should be
recognized  that such  information are estimates or forecasts based upon various
assumptions, including the matters, risks, and cautionary statements referred to
therein, as well as meeting the Registrant's  internal  performance  assumptions
regarding  expected  operating  performance and the expected  performance of the
economy  and  financial  markets as it  impacts  Registrant's  businesses.  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, 2002