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, 2003
                               --------------

                                       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 14, 2003
       -----                                     ---------------------------
Common Stock, $.0001 par value                           2,787,551

<PAGE>


                                      INDEX

                 LYNCH INTERACTIVE CORPORATION AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION


Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets:
  -      March 31, 2003
  -      December 31, 2002
  -      March 31, 2002

Condensed Consolidated Statements of Operations:
  -      Three months ended March 31, 2003 and 2002

Condensed Consolidated Statements of Cash Flows:
  -      Three months ended March 31, 2003 and 2002

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

Item 4. Controls and Procedures

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 6. Exhibits and Reports on Form 8-K



SIGNATURE

CERTIFICATIONS

















                                        i
<PAGE>


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
<TABLE>

                 LYNCH INTERACTIVE CORPORATION AND SUBSIDIAIRES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      (In thousands, except share amounts)
<CAPTION>
                                                               March 31,  December 31,   March 31,
                                                                  2003       2002          2002
                                                             -----------  ------------  ----------
                                                             (Unaudited)    (Note)      (Unaudited)
<S>                                                           <C>          <C>          <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents ...............................   $  25,744    $  23,356    $  35,337
  Receivables, less allowances of $303,
    $316 and $483, respectively ...........................       8,700        8,916        9,767
  Material and supplies ...................................       3,470        3,351        3,453
  Prepaid expenses and other current assets ...............       1,583        1,451        2,406
                                                              ---------    ---------    ---------
TOTAL CURRENT ASSETS ......................................      39,497       37,074       50,963

PROPERTY, PLANT AND EQUIPMENT:
  Land ....................................................         833          807          840
  Buildings and improvements ..............................      12,908       12,741       10,858
  Machinery and equipment .................................     198,772      195,015      184,401
                                                              ---------    ---------    ---------
                                                                212,513      208,563      196,099
  Accumulated Depreciation ................................     (92,744)     (88,201)     (78,434)
                                                              ---------    ---------    ---------
                                                                119,769      120,362      117,665
GOODWILL, NET .............................................      60,884       60,884       61,566
INVESTMENTS IN AND ADVANCES TO AFFILIATED ENTITIES ........       9,491        9,343       13,785
OTHER ASSETS ..............................................      18,579       17,684       14,095
                                                              ---------    ---------    ---------
TOTAL ASSETS ..............................................   $ 248,220    $ 245,347    $ 258,074
                                                              =========    =========    =========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Notes payable to banks ..................................   $  10,639    $  12,882    $   9,804
  Trade accounts payable ..................................       3,462        1,638          480
  Accrued interest payable ................................         362          384        1,690
  Accrued liabilities .....................................      13,917       16,682       19,007
 Current maturities of long-term debt .....................      18,474       18,272       21,154
                                                              ---------    ---------    ---------
 TOTAL CURRENT LIABILITIES ..............................        46,854       49,858       52,135
   LONG-TERM DEBT .........................................     162,898      158,349      167,638
   DEFERRED INCOME TAXES ..................................       6,573        6,621        8,117
   OTHER LIABILITIES ......................................         690          736          843
   MINORITY INTERESTS .....................................       7,228        7,151        6,752

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
  COMMON STOCK, $0.0001 PAR VALUE-10,000,000
     SHARES AUTHORIZED; 2,824,766 ISSUED; 2,790,651,
     2,792,651 and 2,814,151 outstanding ..................        --           --           --
  ADDITIONAL PAID-IN CAPITAL ..............................      21,456       21,406       21,406
  RETAINED EARNINGS .......................................       3,292        1,879          720
  ACCUMULATED OTHER COMPREHENSIVE INCOME ..................         467          534          946
  TREASURY STOCK, 34,115, 32,115 and 10,615 shares, at cost      (1,238)      (1,187)        (483)
                                                              ---------    ---------    ---------
TOTAL SHAREHOLDER'S EQUITY ..............................        23,977       22,632       22,589
                                                              ---------    ---------    ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ..............     $ 248,220    $ 245,347    $ 258,074
                                                              =========    =========    =========
<FN>

Note: The balance sheet at December 31, 2002 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.
</FN>
</TABLE>

See accompanying notes.

                                       1
<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,
                                                                                           ------------------------
                                                                                               2003         2002
                                                                                           ------------------------
<S>                                                                                      <C>            <C>
SALES AND REVENUES ...................................................................   $    21,303    $    20,974

COSTS AND EXPENSES:
Operations, exclusive of depreciation and amortization ...............................        10,844         10,227
Depreciation and amortization ........................................................         4,915          4,811
Selling and administrative ...........................................................           770            692
                                                                                         -----------    -----------
OPERATING PROFIT .....................................................................         4,774          5,244
Combined total                                                                           -----------    -----------

Other income (expense):
   Investment income .................................................................           558            997
   Interest expense ..................................................................        (3,026)        (3,373)
   Equity in earnings of affiliated companies ........................................           260            204
   Gains on sales of subsidiary stock ................................................          --            4,965
                                                                                          -----------   -----------
                                                                                              (2,208)         2,793
                                                                                          -----------   -----------
INCOME BEFORE INCOME TAXES, MINORITY INTERESTS AND OPERATIONS
OF MORGAN GROUP HOLDING CO. DISTRIBUTED TO SHAREHOLDERS
                                                                                               2,566          8,037
Provision for income taxes ...........................................................        (1,076)        (3,132)
Minority Interests ...................................................................           (77)          (632)
                                                                                          -----------   -----------
INCOME  FROM CONTINUING OPERATIONS ...................................................         1,413          4,273

Loss from operations of Morgan Group Holding Co. distributed
to shareholders, net of income taxes of $-, and minority
interests of $868 ....................................................................          --           (1,888)
                                                                                          -----------   -----------
NET INCOME ...........................................................................   $     1,413    $     2,385
                                                                                          ===========   ===========

Basic weighted average shares outstanding ............................................     2,791,000      2,818,000
Diluted weighted average shares outstanding ..........................................     2,791,000      3,053,000
BASIC EARNINGS PER SHARE
INCOME  FROM CONTINUING OPERATIONS ...................................................   $      0.51    $      1.52
Loss from operations of Morgan Group Holding Co. .....................................
  distributed to shareholders ........................................................            --          (0.67)
                                                                                          -----------   -----------
NET INCOME ...........................................................................    $      0.51   $      0.85
                                                                                           ==========   ===========

DILUTED EARNINGS PER SHARE
INCOME FROM CONTINUING OPERATIONS ....................................................    $      0.51   $      1.45
Loss from operations of Morgan Group Holding Co. distributed
to shareholders.......................................................................             --         (0.62)
                                                                                          ------------  -----------
NET INCOME ...........................................................................    $      0.51   $      0.83
                                                                                          ===========   ===========
</TABLE>
See accompanying notes.

                                       2
<PAGE>

<TABLE>


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

                                                                  Three Months Ended
                                                                       March 31,
                                                                 ---------   --------
                                                                    2003         2002
                                                                 ---------   --------
OPERATING ACTIVITIES
<S>                                                              <C>         <C>
Net Income ...................................................   $  1,413    $  2,385
Adjustments  to reconcile  net income to net cash  provided by
operating activities:
   Depreciation and amortization .............................      4,915       4,811
   Equity in earnings of affiliated companies ................       (260)       (204)
   Minority interests ........................................         77         632
   Stock option expense ......................................         50        --
   Gain on sale of cellular partnership ......................       --        (4,965)
   Non-cash items  and  assets  and  operating liabilities....
     from operations of Morgan Group Holding Co. .............       --         1,888
     distributed to shareholders
   Changes in operating assets and liabilities:
        Receivables ..........................................        216         270
        Accounts payable and accrued liabilities .............     (1,039)      2,911
        Other ................................................       (251)       (752)
                                                                 --------    --------
NET CASH PROVIDED BY OPERATING ACTIVITIES ....................      5,121       6,976
                                                                 --------    --------

INVESTING ACTIVITIES
Capital expenditures .........................................     (4,229)     (3,371)
Investment in and advances to affiliated entities ............        (34)       (476)
Proceeds from sale of available for sale securities ..........       --           345
Proceeds from sale of cellular partnership ...................       --         5,570
Other ........................................................       (927)        254
                                                                 --------    --------
NET CASH PROVIDED BY  (USED IN)
INVESTING ACTIVITIES .........................................     (5,190)      2,322
                                                                 --------    --------

FINANCING ACTIVITIES
Issuance of long term debt ...................................      7,773         603
Repayments of long term debt .................................     (3,022)     (5,035)
Net repayments on lines of credit ............................     (2,243)       (532)
Treasury stock transactions ..................................        (51)       (252)
Other ........................................................       --            22
                                                                 --------    --------
NET CASH PROVIDED BY (USED IN) ...............................      2,457      (5,194)
 FINANCING ACTIVITIES
                                                                 --------    --------
Net increase in cash and cash equivalents ....................      2,388       4,104
Cash and cash equivalents at beginning of period .............     23,356      31,233
                                                                 --------    --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ...................   $ 25,744    $ 35,337
                                                                 ========    ========
</TABLE>
                                       3
See accompanying notes.

<PAGE>

                  LYNCH INTERACTIVE CORPORATION & SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A.   Subsidiaries of the Registrant

As of March 31, 2003, 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 Broadband 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>
                                       4
<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 3G Communications 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%
  WNM 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%
  Valley Communications, Inc. ..............     100.0%
Lynch Telephone Corporation III ............      81.0%
  Cuba City Telephone Exchange Company .....      81.0%
  Belmont Telephone Company ................      81.0%
</TABLE>







                                       5
<PAGE>

B.   Basis of Presentation

The  Company  consolidates  the  operating  results of its  telephone  and cable
television  subsidiaries (81-100% owned at March 31, 2003, December 31, 2002 and
March 31, 2002). 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, 2003 and
December 31, 2002), Capital Communications Company, Inc. (49% owned at March 31,
2003,  December  31,  2002 and March  31,  2002)  and the  cellular  partnership
operations in New Mexico (17% to 21% owned at March 31, 2003,  December 31, 2002
and March 31, 2002).

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
consolidated  financial statements for the three months ended March 31, 2002, 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  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,  2003 are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 2003.  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.

As noted,  in footnote H, in the first quarter of 2003, the Company issued stock
options to its President and Chief Operating Officer. The Company has elected to
account  for these  options  under the  provisions  of FASB  Statement  No.  123
"Accounting and Disclosure of Stock-Based  Compensation"  and FASB Statement No.
148  "Accounting for  Stock-Based  Compensation - Transition and Disclosure,  an
amendment  of FASB  Statement  No.  123."  Under  the  provisions  of these  two
statements  stock  options are valued at fair value on the date of the grant and
such amount is amortized as an expense over the vesting period.

In June 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
obligations." This standard provides  accounting  guidance for legal obligations
associated  with the  retirement  of  long-lived  assets  that  result  from the
acquisition,  construction  or  development  and (or) normal  operation  of that
asset.  According  to the  standard,  the  fair  value  of an  asset  retirement
obligation  (ARO  liability)  should be  recognized in the period in which (1) a
legal  obligation to retire a long-lived  asset exists and (2) the fair value of
the  obligation  based on  retirement  cost and  settlement  date is  reasonably
estimable.  Upon initial  recognition  of the ARO  liability,  the related asset
retirement  cost should be capitalized by increasing the carrying  amount of the
related  long-lived  asset. The Company adopted SFAS No. 143 on January 1, 2003.
Although the Company  generally has had no legal  obligation  to remove  assets,
depreciation rates of certain assets  established by regulatory  authorities for
the  Company's  telephone  operations  subject to SFAS No. 71 have  historically
included  a  component  for  removal  costs in excess of the  related  estimated
salvage  value.  Under SFAS No. 71 the Company is not  permitted  to remove this
accumulated  liability  for removal costs in excess of salvage value even though
there is no legal obligation to remove the assets. For the Company's  operations
not  subject  to SFAS  No.  71 the  Company  has not  accrued  a  liability  for
anticipated  removal costs in the past and will continue to expense the costs of
removal as incurred  since there is no legal  obligation  to remove such assets.
Accordingly,  the  adoption  of SFAS  No.  143 had no  impact  on the  Company's
financial statements.

                                       6
<page>
Certain 2002 amounts have been reclassified to conform to the 2003 presentation.

C.   Intangibles

The  application  of the  non-amortization  provisions  of  Statement  No.  142,
Goodwill and Other  Intangible  Assets,  has  increased  net income in the first
quarter of 2003 by  approximately  $0.6 million  ($0.22 per basic share) and the
first quarter of 2002 by $0.7 million ($0.24 per basic share).

The following tables display the details of goodwill and intangible assets as of
the dates shown.


<TABLE>
<CAPTION>

                                                 March 31,   December 31,  March 31,
                                                   2003         2002         2002
                                                ----------   ------------  ---------
                                                Unaudited                  Unaudited
                                                ----------   ------------  ---------
                                                               (000s)
<S>                                              <C>            <C>        <C>
Intangible assets subject to amortization:
  Subscriber lists ...........................   $     7,777    $  7,284   $  3,195
  Accumulated amortization ...................        (2,642)     (2,370)      (961)
                                                    --------    --------    --------
                                                 $     5,135    $  4,914   $  2,234
                                                    ========    ========    ========

Amortization expense for three months ended ..   $       148    $    406

Intangible assets not subject for amortization
  Goodwill ...................................   $    60,884    $ 60,884    $ 59,916
  Cellular Licenses ..........................         1,650       1,650       1,650
</TABLE>

Estimated aggregate amortization expense by year for Intangible assets subject
to amortization:
<TABLE>
<CAPTION>

                                (000's)
                                -------

                        <S>      <C>
                        2003     $552
                        2004     $552
                        2005     $547
                        2006     $547
                        2007     $547
</TABLE>

D.   Acquisitions and Dispositions

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.

                                       7

<PAGE>

F.   Investments in Affiliated Companies

Interactive has equity investments in both broadcasting and telecommunications
companies.

Summarized  financial  information  for  companies  accounted  for by the equity
method as of and for the three  months  ended  March 31, 2003 and 2002 and as of
December 31, 2002 is as follows:
<TABLE>
<CAPTION>

                                                    Broadcasting Combined Information
                                                   March 31,    December 31,  March 31,
                                                   ---------    ------------  ---------
                                                      2003          2002          2002
                                                   ---------    ------------  ---------

<S>                                                <C>           <C>           <C>
Current assets .................................   $  5,666      $  6,181      $  5,424
Property, plant & equipment, intangibles & other     10,514        11,260        13,339
                                                   --------      --------      --------
Total assets ...................................   $ 16,180      $ 17,441      $ 18,763
                                                   ========      ========      ========

Current liabilities ............................   $  3,356      $  3,790      $  4,367
Long term liabilities ..........................     17,456        18,069        19,826
Equity .........................................     (4,632)       (4,418)       (5,430)
                                                   --------      --------      --------
Total liabilities & equity .....................   $ 16,180      $ 17,441      $ 18,763
                                                   ========      ========      ========

Three months ended

Revenues .......................................   $  2,838                    $  2,623
Gross profit ...................................        673                         683
Net loss .......................................       (205)                       (224)
</TABLE>

At March 31, 2003 and December 31, 2002,  the  Company's  investment  in Coronet
Communications  Company  ("Coronet")  was carried at a negative  $821,000  and a
negative $791,000,  respectively, due to the Company's guarantee of $3.8 million
of Coronet's  third party debt.  Long-term  debt of Coronet,  at March 31, 2003,
totaled $10.5 million due to a third party lender which is due quarterly through
December 31, 2005.
<TABLE>
<CAPTION>

                                                  Telecommunications Combined Information
                                                   March 31,   December 31,   March 31,
                                                   ---------   ------------   ---------
                                                     2003         2002         2002
                                                   ---------   ------------  ----------

<S>                                                <C>           <C>         <C>
Current assets .................................   $ 9,194       $14,102     $12,888
Property, plant & equipment, intangibles & other    28,501        27,849      25,894
                                                   -------       -------     -------
Total assets ...................................   $37,695       $41,951     $38,782
                                                   =======       =======     =======

Current liabilities ............................   $ 5,556       $ 9,211     $ 8,661
Long term liabilities ..........................    12,089        11,869      15,838
Equity .........................................    20,050        20,871      14,283
                                                   -------       -------     -------
Total liabilities & equity .....................   $37,695       $41,951     $38,782
                                                   =======       =======     =======

Three months ended

Revenues .......................................   $10,411                   $ 9,833
Gross profit ...................................     3,428                     2,559
Net income .....................................     2,501                     1,914
</TABLE>
                                       8
<page>
G.   Indebtedness

The parent company maintains a short-term line of credit facility totaling $10.0
million.  Borrowings  under this facility were $7.5 million and $10.0 million at
March 31, 2003 and December 31, 2002, respectively. This facility will expire on
August 31, 2003. Long-term debt consists of (all interest rates are at March 31,
2003):


<TABLE>
<CAPTION>

                                                                  March 31,                        March 31,
                                                                    2003          December 31,       2002
                                                                 (Unaudited)          2002        (Unaudited)
                                                              --------------     -------------    -----------
                                                                                 (In thousands)
<S>                                                            <C>               <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%. (5% weighted average,  secured  by
assets of the  telephone  companies  of $152.8 million)....... $  58,800         $  58,119         $  55,305


Bank Credit facilities utilized by certain telephone and
telephone holding companies through 2016, $29.7 million at
fixed interest rates averaging 7.9% and $54.9 million at
variable interest rates averaging 4.3%  .......................   84,556            80,166            85,667

Unsecured  notes  issued  in  connection  with acquisitions
through 2006, at fixed interest rates of 10.0% ................   34,690            34,749            34,454

Convertible  note due in  December  2007 at a fixed  interest
rate of 10% ...................................................       --                --            10,000

Other .........................................................    3,326             3,587             3,366
                                                                ---------         --------          --------
                                                                 181,372           176,621           188,792
Current maturities ............................................  (18,474)          (18,272)          (21,154)
                                                                ---------         --------          --------
                                                               $ 162,898         $ 158,349         $ 167,638
                                                               =========         =========         =========
</TABLE>
H.   Stock Options

The Company has a stock option plan which calls for 83,000 options to be issued,
a maximum  option term of ten years and vesting at the  discretion of the Option
Committee.

On February  10,  2003,  the  Company  issued  stock  options to its newly hired
President and Chief  Operating  Officer,  covering  55,000 shares.  The exercise
prices are as follows:  20,000 at $26.06 (market price at date of grant), 20,000
at $36.06 and 15,000 at $46.06.  These options vest at one year, three years and
four years from February 10, 2003 and expire on February 10, 2008. The estimated
fair  value  of these  options  at the date of grant  was  $650,000,  using  the
Black-Scholes  Option  Pricing model with the following  assumptions:  risk free
interest rate of 3%, dividend yield of 0% and volatility factor of the estimated
market price of the  Company's  common stock of .582 and an expected life of the
options of five years. $50,000 of expense was recognized in the first quarter of
2003 for these  options - $30,000  net of tax.  No  options  were  exercised  or
forfeited during the quarter.


                                       9
<PAGE>



I.   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,
2003, December 31, 2002 and March 31, 2002 are as follows (in thousands):
<TABLE>
<CAPTION>

                                   Unrealized
                                   Gain (Loss)   Tax Effect    Net

<S>                                <C>           <C>        <C>
Balance at December 31, 2002 ...   $   915       $  (381)   $   534
Current period unrealized losses      (115)           48        (67)
                                   -------       -------    -------
  Balance at March 31, 2003 ....   $   800       $  (333)   $   467
                                   =======       =======    =======
  Balance at March 31, 2002 ....     1,605          (659)       946
</TABLE>

Comprehensive  income, for the three month periods ended March 31, 2003 and 2002
are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                              Three Months Ended
                                                                                  March 31,
                                                                        ---------------------------------
                                                                           2003        2002
                                                                        ---------------------------------

<S>                                                                      <C>        <C>
Net income for the period ............................................   $ 1,413    $ 2,385
Reclassification adjustment-net of income tax benefit of $-- and $126       --         (196)
Unrealized losses on available for sale securities - net of income tax
benefit as of $48 and $272 respectively ..............................       (67)      (400)
                                                                         -------    -------
  Comprehensive income ...............................................   $ 1,346    $ 1,789
                                                                         =======    =======
</TABLE>


J.   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, 2003,
the Company purchased 2,000 shares of its common stock for treasury.  Subsequent
to March 31, 2003, the Company acquired an additional 1,000 shares at an average
cost of $20.43 per share.  Stock  options  outstanding  have  excluded  from the
earnings  per  share  computation   because  their  inclusion  would  have  been
anti-dilutive.











                                       10
<PAGE>
<TABLE>
<CAPTION>

                                                  Three Months Ended
                                                        March 31,
                                                   2003        2002
                                               ----------   ----------
<S>                                            <C>          <C>
Basic earnings per share
Numerator:
      Net Income ...........................   $1,413,000   $2,385,000
Denominator:
      Weighted average shares outstanding ..    2,791,000    2,818,000
                                               ----------   ----------
Earnings per share:
      Net income ...........................   $     0.51   $     0.85
                                               ==========   ==========

Diluted earnings per share
Numerator:
     Net Income ............................   $1,413,000   $2,385,000
     Interest saved on assumed conversion of
        convertible  notes - net of tax ....         --        161,000
                                               ----------   ----------

     Net Income ............................   $1,413,000   $2,546,000
                                               ----------   ----------

Denominator:
      Weighted average shares outstanding ..    2,791,000    2,818,000
      Shares issued on assumed conversion of
         convertible note ..................         --        235,000
                                               ----------   ----------
      Weighted average shares and share
         Equivalents .......................    2,791,000    3,053,000
                                               ----------   ----------

Earnings per share:
      Net Income ...........................   $     0.51   $     0.83
</TABLE>
                                               ==========   ==========

K.   Segment Information

The Company is engaged in one business segment:  multimedia. All operating units
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.
Management  uses EBITDA to evaluate the operating  performance  of the Company's
operations.  EBITDA is not a substitute for operating  income or cash flows from
operating activities in accordance with accounting principles generally accepted
in the United States.

Operating  profit  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  $333,000  and $327,000 for the three
months ended March 31, 2003 and 2002, respectively.



                                       11
<PAGE>
<TABLE>

                                                                                Three Months Ended
                                                                                      March 31,
                                                                                  2003        2002
                                                                                --------    --------
<S>                                                                             <C>         <C>
Sales and revenues: .........................................................   $ 21,303    $ 20,974
                                                                                ========    ========
EBITDA (before corporate allocation):
  Operations ................................................................   $ 10,457    $ 10,743
  Corporate expenses, gross .................................................       (768)       (687)
                                                                                --------    --------
   Combined total ...........................................................   $  9,689    $ 10,056
                                                                                ========    ========

Operating profit:
  Operations ................................................................   $  5,211    $  5,609
  Corporate expenses, net ...................................................       (437)       (365)
                                                                                --------    --------
   Combined total ...........................................................   $  4,774    $  5,244
                                                                                ========    ========

Operating profit ............................................................   $  4,774    $  5,244
  Other income (expense):
  Gain on sale of cellular partnership ......................................       --         4,965
  Investment income .........................................................        558         997
  Interest expense ..........................................................     (3,026)     (3,373)
  Equity in earnings of affiliated companies ................................        260         204
                                                                                --------    --------
Income before income taxes, minority interests and operations of Morgan Group
Holding Co. .................................................................
distributed to shareholders .................................................   $  2,566    $  8,037
                                                                                ========    ========
</TABLE>

L.   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 in this lawsuit is R.C.  Taylor III, an individual  who, to the best
of our knowledge, has no relationship to any of the entities and affiliates that
have been named parties in this  litigation.  Indeed at the time of his filings,
and to the best of our knowledge,  Mr. Taylor was a lawyer at Gardner,  Carton &
Douglas.  Thereafter,  we believe he was a lawyer with a Washington,  D.C.,  law
firm. We do not know his current status.  We issued a press release dealing with
this litigation on January 16, 2002.

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.

                                       12
<page>
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.

Interactive  was  formally  served  with  the  complaint  on July 10,  2002.  On
September  19,  2002,  Interactive  filed two  motions  with the  United  States
District Court for the District of Columbia: a motion to dismiss the lawsuit and
a motion  to  transfer  the  action to the  Southern  District  of New York.  On
November  25,  2002,  the  relator  filed an  opposition  reply to our motion to
dismiss  and on December  5, 2002,  Interactive  filed a reply in support of its
motion to dismiss.

In addition to the litigation described above, Interactive is a party to routine
litigation incidental to its business. Based on information currently available,
Interactive  believes  that none of this  ordinary  routine  litigation,  either
individually  or in the aggregate,  will have a material effect on its financial
condition and results of operations.

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, 2003  increased by $0.3 million to
$21.3 million from the first quarter of 2002.  Increases in the current  quarter
are the  result of  additional  deregulated  revenues  and  increased  regulated
telephone revenues from one of the Company's telephone operations that is in the
process of a significant  capital upgrade program.  Notwithstanding  the overall
increase in revenues for the period,  lower intrastate revenues were recorded by
certain operations during the first quarter of 2003.

Operating Profit

Operating  profit for the three  months  ended March 31, 2003  decreased by $0.5
million to $4.8  million  from the first  quarter of 2002  reflecting  the above
noted lower intrastate  revenues,  higher  depreciation  associated with capital
spending programs,  and increased expenses as compared to the previous year. The
Company's  security  operation in upstate New York  recorded  less  amortization
expense  during the first  quarter of 2003 as compared  to the first  quarter of
2002 as it changed the  amortization  period of customer lists from three to ten
years in the fourth quarter of 2002.

Other Income (Expense)

For the three  months  ended March 31, 2003  investment  income was down by $0.4
million from the same period in the prior year due to lower investment  balances
and lower dividends from bank stocks.

During the first  quarter of 2002,  the Company  sold its interest in a cellular
partnership in New Mexico (RSA 1 (North) for $5.6 million resulting in a pre-tax
gain of $5.0 million.

Interest expense decreased by $0.3 million in the first quarter due primarily to
lower variable interest 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, 2003 and 2002,  represent
effective tax rates of 41.9% and 38.9%,  respectively.  The  difference  between
these effective rates and the federal statutory rate is principally due to state
income  taxes,  including  the effect of  earnings  and losses  attributable  to
different state jurisdictions.

                                       13
<page>
Minority Interests

Minority  interests  decreased  earnings by $77,000 for the three  months  ended
March 31, 2003 as compared to $632,000 for the three months ended March 31, 2002
primarily  due to  minority  interest  recorded on the gain from the sale of the
cellular minority interest.

Net Income (Loss)

The Company  recorded  income from  continuing  operations  for the three months
ended March 31, 2003 of $1.4  million,  or $0.51 per share (basic and  diluted),
compared to income from  continuing  operations for the same period last year of
$4.3  million,  or $1.52 per basic share and $1.45 per diluted  share.  The gain
from the sale of the cellular  property of $2.5 million or $0.89 per basic share
after tax and minority interest effects was the primary cause for the difference
in income from continuing operations for these periods

Net income for the three months ended March 31, 2003 was $1.4 million,  or $0.51
per share (basic and diluted share),  as compared to net income of $2.4 million,
or $0.85 per basic  share (and $0.83  diluted  share),  in the same  period last
year.  Operating losses of Morgan of $1.9 million,  or $0.67 per basic share, in
the first  quarter  of 2002  offset the $2.5  million  gain from the sale of the
cellular property.

FINANCIAL CONDITION

Liquidity/ Capital Resources

As of March 31,  2003,  the  Company  had  current  assets of $39.5  million and
current  liabilities of $46.9 million.  Working capital deficiency was therefore
$7.4 million as compared to $12.8 million at December 31, 2002.  The addition of
$7.7 million of long-term debt was the primary cause of the decrease.

For the three  months  ended  March 31,  2003,  capital  expenditures  were $4.2
million versus $3.4 million for the same period last year.

At March 31, 2003, total debt was $192.0 million,  which was $2.5 million higher
than the $189.5 million at the end of 2002. At March 31, 2003,  there was $124.4
million of fixed interest rate debt averaging 7.0% and $67.6 million of variable
interest rate debt averaging 4.4%. Debt at year-end 2002 included $124.7 million
of fixed  interest  rate debt, at an average  interest  rate of 7.1%,  and $64.8
million of variable interest rate debt, at an average interest rate of 4.4%.

As of March  31,  2003,  Interactive,  the  parent  company,  had  $2.5  million
available under a $10 million short-term line of credit facility,  which expires
on  August  31,  2003.  Management  currently  expects  that this line of credit
facility will be renewed but there is no assurance it will be.

Interactive and its  predecessor  have 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, 2003, the
ratio of total debt to equity was 8.0 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 parent company.

                                       14
<page>
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  to enable the  Company to meet its  obligations,
there is no assurance that such financing will be readily obtained at reasonable
costs.

The Company is  obligated  under  long-term  debt 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 (b)  2 - 3 years 4 - 5 years After 5 years
                                     --------    ----------  ----------- ----------- -------------

<S>                                  <C>         <C>         <C>         <C>         <C>
Long-term Debt (a) ...............   $181,372    $ 18,474    $ 39,342    $ 48,358    $ 75,198

Operating Leases .................      1,306         321         564        321          100
                                     --------    --------    --------    --------    --------

Total Contractual Cash Obligations   $182,678    $ 18,795    $ 39,906    $ 48,679    $ 75,298
                                     ========    ========    ========    ========    ========
</TABLE>

(a)  Does not include interest payments on debt

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 ............   $10,639    $10,639          --            --             --

Guarantees .................     3,750      3,750          --            --             --

                               -------    -------   -----------   -----------   ------------

Total Commercial Commitments   $14,389    $14,389          --            --             --
                               =======    =======   ===========   ===========   ============
</TABLE>

The Company has initiated an effort to monetize certain of its assets, including
selling a portion or all of certain  investments and/or 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 1 (North), to Verizon Wireless
for $5.6 million and repaid certain outstanding indebtedness to Verizon.

Critical Accounting Policies and Estimates

In the first quarter of 2003,  the Company issued stock options to its President
and Chief  Operating  Officer.  The  Company  has  elected to account  for these
options  under  the  provisions  of  FASB  Statement  No.  123  "Accounting  and
Disclosure of Stock-Based  Compensation"  and FASB Statement No. 148 "Accounting
for Stock-Based  Compensation - Transition and Disclosure,  an amendment of FASB
Statement No. 123." Under the provisions of these two  statements  stock options
are valued at fair value on the date of the grant and such  amount is  amortized
as an expense over the vesting period.

                                       15
<page>
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.

                                     16
<page>
Purchase Price Allocation

Interactive's business development strategy is to expand its existing operations
through internal growth and acquisition. From 1989 through 2002, the Company has
acquired fourteen 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 and the period of
their 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.

Annually,  the Company tests goodwill for impairment  using the two-step process
prescribed in SFAS No. 142. The first step is a screen for potential impairment,
while the second step  measures  the amount of  impairment,  if any. The Company
performed  the first of its  required  annual  impairment  tests of goodwill and
other indefinite lived intangible assets.

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  ($25.7 million at March 31,
2003 and $23.4 million at December 31, 2002).

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,  2003,  approximately  $67.6  million,  or 35%,  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 2003  average  interest  rate under  these
borrowings, it is estimated that the Company's 2003 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.

                                       17
<page>
Item 4. Controls and Procedures

(a)  Evaluation of disclosure controls and procedures.

               Our chief  executive  officer and chief  financial  officer  have
               evaluated the effectiveness of the Company's  disclosure controls
               and  procedures  (as defined in Rules  13a-14(c) and 15d-14(c) of
               the  Securities  Exchange  Act of 1934 (the  "Act")) as of a date
               within  90 days of the  filing  date  of  this  quarterly  report
               (Evaluation Date). They have concluded that, as of the Evaluation
               Date,  the  Company's  disclosure  controls and  procedures  were
               adequate and effective to ensure that information  required to be
               disclosed  by the Company in the reports that if files or submits
               under the Act is recorded,  processed,  summarized  and reported,
               within the time  periods  specified in the rules and forms of the
               Securities and Exchange Commission.

(b)  Changes in internal controls.

               There  were no  significant  changes  in the  Company's  internal
               controls  or in other  factors  that could  significantly  affect
               these controls  subsequent to the Evaluation Date, nor were there
               any  significant  deficiencies  or material  weaknesses  in these
               controls requiring corrective actions.




















                                       18
<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  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.





















                                       19

<PAGE>



PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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 in this lawsuit is R.C.  Taylor III, an individual  who, to the best
of our knowledge, has no relationship to any of the entities and affiliates that
have been named parties in this  litigation.  Indeed at the time of his filings,
and to the best of our knowledge,  Mr. Taylor was a lawyer at Gardner,  Carton &
Douglas.  Thereafter,  we believe he was a lawyer with a Washington,  D.C.,  law
firm. We do not know his current status.  We issued a press release dealing with
this litigation on January 16, 2002.

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.

Interactive  was  formally  served  with  the  complaint  on July 10,  2002.  On
September  19,  2002,  Interactive  filed two  motions  with the  United  States
District Court for the District of Columbia: a motion to dismiss the lawsuit and
a motion  to  transfer  the  action to the  Southern  District  of New York.  On
November  25,  2002,  the  relator  filed an  opposition  reply to our motion to
dismiss  and on December  5, 2002,  Interactive  filed a reply in support of its
motion to dismiss.

In addition to the litigation described above, Interactive is a party to routine
litigation incidental to its business. Based on information currently available,
Interactive  believes  that none of this  ordinary  routine  litigation,  either
individually  or in the aggregate,  will have a material effect on its financial
condition and results of operations.

Item 6. Exhibits and Reports on Form 8-K

          (a)  Exhibit 99.1 - Chief Executive Officer Section 906 Certification.
               Exhibit 99.2 - Chief Financial Officer Section 906 Certification.

          (b)  Current  Report  on Form 8-K filed on March  26,  2003  reporting
               rights offering under consideration.


                                       20

<PAGE>



                                    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 13, 2003

























                                       21
<PAGE>

                                 CERTIFICATIONS

I, Mario J. Gabelli,  the Chief  Executive  Officer of the  Registrant,  certify
that:

1.   I have reviewed  this  quarterly  report on Form 10-Q of Lynch  Interactive
     Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  Registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  Registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)   designed such  disclosure  controls and  procedures to ensure that material
     information   relating  to  the  Registrant,   including  its  consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the period in which  this  quarterly  report is being
     prepared;

b)   evaluated the  effectiveness  of the Registrant's  disclosure  controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     quarterly report (the "Evaluation Date"); and

c)   presented in this quarterly report our conclusions  about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5.   The Registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  Registrant's  auditors  and the audit
     committee of  Registrant's  board of directors (or persons  performing  the
     equivalent function):

a)   all  significant  deficiencies  in the  design  or  operation  of  internal
     controls which could adversely affect the  Registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     Registrant's auditors any material weaknesses in internal controls; and

b)   any fraud,  whether or not  material,  that  involves  management  or other
     employees  who  have  a  significant  role  in  the  Registrant's  internal
     controls; and

6.   The  Registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

                                       /s/ Mario J. Gabelli
                                       Mario J. Gabelli
                                       Chief Executive Officer of
                                       Lynch Interactive Corporation

May 13, 2003
                                       22
<PAGE>

I, Robert E. Dolan, the Chief Financial Officer of the Registrant, certify that:

1.   I have reviewed  this  quarterly  report on Form 10-Q of Lynch  Interactive
     Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  Registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  Registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

a)   designed such  disclosure  controls and  procedures to ensure that material
     information   relating  to  the  Registrant,   including  its  consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the period in which  this  quarterly  report is being
     prepared;

b)   evaluated the  effectiveness  of the Registrant's  disclosure  controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     quarterly report (the "Evaluation Date"); and

c)   presented in this quarterly report our conclusions  about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5.   The Registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  Registrant's  auditors  and the audit
     committee of  Registrant's  board of directors (or persons  performing  the
     equivalent function):

a)   all  significant  deficiencies  in the  design  or  operation  of  internal
     controls which could adversely affect the  Registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     Registrant's auditors any material weaknesses in internal controls; and

b)   any fraud,  whether or not  material,  that  involves  management  or other
     employees  who  have  a  significant  role  in  the  Registrant's  internal
     controls; and

6.   The  Registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

                                  /s/ Robert E. Dolan
                                  Robert E. Dolan
                                  Chief Financial Officer of
                                  Lynch Interactive Corporation

May 13, 2003


                                       23