Filed pursuant to Rule 424(b)(3)
                           Registration No. 333-82402


                           PROSPECTUS SUPPLEMENT NO. 8
                       (TO PROSPECTUS DATED JULY 1, 2002)

                            ATX COMMUNICATIONS, INC.
                            -------------------------
                             SHARES OF COMMON STOCK
                            -------------------------


     This Prospectus Supplement No. 8 supplements and amends the Prospectus
 dated July 1, 2002, and amended on July 2, 2002, July 16, 2002, August 2, 2002,
     August15, 2002, August 16, 2002, November 14, 2002 and April 11, 2003,
          relating to the shares of common stock, par value $ 0.01 per
                share, of ATX Communications, Inc., including the
 associated rights to purchase Series A Junior Participating Preferred Stock of
                            ATX Communications, Inc.

             The purpose of this Prospectus Supplement is to provide
               supplemental information that was contained in ATX
                   Communications, Inc.'s quarterly report on
             Form 10-Q for the fiscal quarter ended March 31, 2003.

              The Prospectus, together with all of the supplements
           filed to date (including this supplement), constitutes the
                       prospectus required to be delivered
 by Section 5(b) of the Securities Act of 1933, with respect to offers and sales
                              of the Common Stock.

             Prospective investors should carefully consider matters
             discussed under the caption "RISK FACTORS" beginning on
                            page 9 of the prospectus.

          THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
      SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
     NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
     COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
              REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

          The date of this Prospectus Supplement No. 8 is May 16, 2003.


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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










                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

           [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 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


Commission File No.                      000-49899
                   -------------------------------------------------------------


                            ATX COMMUNICATIONS, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

        Delaware                                             13-4078506
--------------------------------------------------------------------------------
(State or other jurisdiction of incorporation            (I.R.S. Employer
or organization)                                        Identification No.)


50 Monument Road, Bala Cynwyd, Pennsylvania                    19004
--------------------------------------------------------------------------------
(Address of principal executive offices)                    (Zip Code)


                                 (610) 668-3000
--------------------------------------------------------------------------------
              (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  by check mark  whether  the  registrant  is an  accelerated  filer (As
defined in Rule 12b-2 of the Exchange Act). Yes___ No X

The number of shares  outstanding  of the issuer's  common stock as of March 31,
2003 was 30,000,054.








                                            ATX Communications, Inc.


                                                     Index

                                                                                                      
PART I. FINANCIAL INFORMATION
                                                                                                           Page

Item 1.      Financial Statements
             Condensed Consolidated Balance Sheets -
                March 31, 2003 (Unaudited) and December 31, 2002 ........................................    2
             Condensed Consolidated Statements of Operations -
                Three months ended March 31, 2003 and 2002 (Unaudited) ..................................    3
             Condensed Consolidated Statement of Shareholders' Deficiency -
                Three months ended March 31, 2003 (Unaudited) ...........................................    4
             Condensed Consolidated Statements of Cash Flows -
                Three months ended March 31, 2003 and 2002 (Unaudited) ..................................    5
             Notes to the Condensed Consolidated Financial Statements (Unaudited) .......................    6

Item 2.      Management's Discussion and Analysis of Results of
                 Operations and Financial Condition .....................................................   21

Item 3.      Quantitative and Qualitative Disclosures about Market Risk .................................   30

Item 4.      Controls and Procedures.....................................................................   31

PART II. OTHER INFORMATION

Item 1.      Legal Proceedings...........................................................................   32

Item 5.      Other Information ..........................................................................   38

Item 6.      Exhibits and Reports on Form 8-K ...........................................................   39

SIGNATURES ..............................................................................................   40

CERTIFICATIONS ..........................................................................................   41




                                                       1



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


                                             Condensed Consolidated Balance Sheets

                                                                                       March 31, 2003        December 31, 2002
                                                                               -----------------------------------------------

(Unaudited) (See Note)

                                                                                                             
Assets
Current assets:
  Cash and cash equivalents                                                             $   9,815,000            $   9,959,000
  Accounts receivable-trade, less allowance for doubtful
     accounts of  $8,579,000 (2003) and $8,755,000 (2002)                                  33,833,000               35,150,000
  Due from NTL Incorporated                                                                 1,688,000                1,120,000
  Other                                                                                     4,843,000                4,845,000
                                                                               -----------------------------------------------
Total current assets                                                                       50,179,000               51,074,000

Fixed assets, net                                                                          35,643,000               37,861,000
Goodwill                                                                                   79,558,000               79,558,000
Other, net of accumulated amortization of
     $2,081,000 (2003) and $1,871,000 (2002)                                               10,699,000               10,570,000
                                                                               -----------------------------------------------
                                                                                        $ 176,079,000            $ 179,063,000
                                                                               ===============================================

Liabilities and shareholders' deficiency Current liabilities:
  Accounts payable                                                                      $  62,329,000            $  65,799,000
  Accrued expenses                                                                         58,356,000               53,060,000
  Current portion of long-term debt, less unamortized discount                              5,906,000                1,512,000
  Current portion of capital lease obligations                                              9,031,000                9,534,000
  Deferred revenue                                                                         21,211,000               21,928,000
                                                                               -----------------------------------------------
Total current liabilities                                                                 156,833,000              151,833,000

Long-term debt, less unamortized discount                                                 142,292,000              145,809,000
Notes payable to NTL Incorporated, less unamortized discount                               18,114,000               17,632,000

Commitments and contingent liabilities

Shareholders' deficiency:
Preferred stock-- $.01 par value, authorized
     10,000,000 shares; issued and outstanding none                                                --                       --
Common stock-- $.01 par value, authorized 250,000,000
     shares; issued and outstanding 30,000,000 shares                                         300,000                  300,000
Additional paid-in capital                                                              1,030,613,000            1,030,613,000
Deficit                                                                                (1,171,338,000)          (1,166,389,000)
                                                                               -----------------------------------------------
                                                                                         (140,425,000)           (135,476,000)
Treasury stock at cost, 333,000                                                              (735,000)               (735,000)
                                                                               -----------------------------------------------
                                                                                         (141,160,000)            (136,211,000)
                                                                               -----------------------------------------------
                                                                                        $ 176,079,000            $ 179,063,000
                                                                               ===============================================

          Note: The balance sheet at December 31, 2002 has been derived from the audited balance sheet at that date.


                                                    See accompanying notes.

                                                               2



                                Condensed Consolidated Statements of Operations
                                                  (Unaudited)





                                                                              Three Months Ended March 31,
                                                                               2003                   2002
                                                                  --------------------------------------------
                                                                                          
Revenues                                                                   $ 70,959,000         $  74,311,000

Costs and expenses
Operating                                                                    45,960,000            48,038,000
Selling, general and administrative                                          19,575,000            22,313,000
Corporate                                                                     2,097,000             1,698,000
Recapitalization costs                                                               --             1,182,000
Depreciation                                                                  3,765,000             8,881,000
Amortization                                                                         --                84,000
                                                                  --------------------------------------------
                                                                             71,397,000            82,196,000
                                                                  --------------------------------------------
Operating loss                                                                 (438,000)           (7,885,000)

Other income (expense)
Interest expense and other, net                                              (4,511,000)           (3,769,000)
                                                                  --------------------------------------------
Net loss                                                                   $ (4,949,000)        $ (11,654,000)
                                                                  ============================================

Basic and diluted net loss per common share                                $      (0.17)        $       (0.39)
                                                                  ============================================

Weighted average number of shares                                            29,667,000            30,000,000
                                                                  ============================================



                                            See accompanying notes.

                                                       3





                                  Condensed Consolidated Statement of Shareholders' Deficiency
                                                           (Unaudited)



                                    Common Stock             Additional                                 Treasury Stock
                             ---------------------------                                         ------------------------------
                               Shares          Par        Paid-In Capital         Deficit            Shares         Amount
                             ------------ -------------- ------------------- ------------------- --------------- --------------
                                                                                                
Balance, December 31, 2002     30,000,000    $   300,000   $   1,030,613,000   $ (1,166,389,000)         333,000   $  (735,000)

Net loss                               --             --                  --         (4,949,000)              --            --
                             ------------ -------------- ------------------- ------------------- --------------- --------------
Balance, March 31, 2003        30,000,000    $   300,000   $   1,030,613,000   $ (1,171,338,000)         333,000   $  (735,000)
                             ============ ============== =================== =================== =============== ==============






                                                     See accompanying notes.





                                                               4





                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)

                                                                                   Three Months Ended March 31,
                                                                                    2003                  2002
                                                                            ------------------------------------------
                                                                                                   
Net cash provided by operating activities                                           $  1,530,000         $  4,544,000

Investing activities
Purchase of fixed assets                                                              (1,377,000)          (2,405,000)
                                                                            ------------------------------------------
Net cash used in investing activities                                                 (1,377,000)          (2,405,000)

Financing activities
Principal payments of capital lease obligations                                         (297,000)            (264,000)
                                                                            ------------------------------------------
Net cash used in financing activities                                                   (297,000)            (264,000)
                                                                            ------------------------------------------
Increase (decrease) in cash and cash equivalents                                        (144,000)           1,875,000
Cash and cash equivalents at beginning of period                                       9,959,000           24,966,000
                                                                            ------------------------------------------
Cash and cash equivalents at end of period                                          $  9,815,000         $ 26,841,000
                                                                            ==========================================

Supplemental disclosure of cash flow information
  Cash paid for interest                                                            $  1,700,000         $  2,727,000
                                                                            ==========================================

Supplemental schedule of non-cash investing activities
  Liabilities incurred to acquire fixed assets                                      $    170,000         $     93,000
                                                                            ==========================================



                                                See accompanying notes.


                                                           5







                            ATX Communications, Inc.

            Notes to the Condensed Consolidated Financial Statements
                                   (Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  pursuant to the rules and  regulations of the Securities
and Exchange Commission, known as the SEC. Accordingly,  they do not include all
of the  information  and  footnotes  required by generally  accepted  accounting
principles for complete financial statements. In the opinion of management,  all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair  presentation  have been included.  Operating  results for the three months
ended March 31, 2003 are not  necessarily  indicative of the results that may be
expected for the year ending December 31, 2003. For further  information,  refer
to the consolidated  financial statements and footnotes thereto included in Item
8 of ATX  Communications,  Inc.'s  annual report on Form 10-K for the year ended
December 31, 2002.

Certain amounts have been reclassified to conform to the 2003 presentation.

Note 2. ATX Recapitalization

In July  2002,  ATX  Communications,  Inc.,  referred  to  herein  as ATX or the
Company, completed a recapitalization, which began in December 2001. Pursuant to
the terms of the  recapitalization,  the Company  eliminated  approximately $600
million  of debt  and  preferred  stock  and more  than  $100  million  of other
liabilities and future obligations.  The Company incurred costs, which consisted
primarily  of legal,  accounting  and  printing  fees,  in  connection  with the
recapitalization of $1,182,000 during the three months ended March 31, 2002.

Note 3. Significant Accounting Policies

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Such estimates and assumptions impact,  among others, the following:  the amount
of uncollectible accounts receivable, the amount to be paid to terminate certain
agreements  included in  reorganization  costs,  the amount to be paid to settle
certain toll and interconnection  liabilities, the amount to be paid as a result
of certain sales and use tax audits,  potential  liabilities  arising from other
sales tax  matters  and  estimates  related to the value of  long-lived  assets,
goodwill and other  intangible  assets.  Actual  results could differ from those
estimates.

Principles of Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its   wholly-owned   subsidiaries.   Significant   intercompany   accounts   and
transactions have been eliminated in consolidation.


                                        6



                            ATX Communications, Inc.

      Notes to the Condensed Consolidated Financial Statements (continued)
                                   (Unaudited)

Note 3. Significant Accounting Policies (continued)

Contingent Liabilities

The Company's  determination of the treatment of contingent liabilities is based
on a view of the expected outcome of the applicable  contingency.  The Company's
legal counsel is consulted on matters related to litigation. Experts both within
and outside the Company are  consulted  with respect to other matters that arise
in the  ordinary  course of  business.  Examples  of  matters  that are based on
assumptions, judgments and estimates are the amount to be paid to terminate some
agreements  included in  reorganization  costs, the amounts to be paid to settle
some toll and interconnection  liabilities, the amount to be paid as a result of
some sales and use tax audits and potential liabilities arising from other sales
tax matters.  A liability is accrued if the likelihood of an adverse  outcome is
probable of occurrence and the amount is estimable.

Net Loss Per Share

The Company  reports its basic and diluted net loss per share in accordance with
Financial  Accounting  Standards  Board,  referred  to  as  FASB,  Statement  of
Financial  Accounting  Standards,  referred to as SFAS,  No. 128,  "Earnings Per
Share." The  weighted  average  shares used in the  computation  of net loss per
share reflects the stock split in 2001 on a retroactive basis.

Revenue Recognition and Certain Cost Classifications

Revenues are  recognized  at the time the service is rendered to the customer or
the performance of the service has been completed. Charges for services that are
billed in advance are deferred and recognized when earned.

Operating costs includes direct costs of sales and network costs. Direct cost of
sales   includes   the   costs   directly   incurred    primarily   with   other
telecommunications  carriers in order to render  services to customers.  Network
costs  include the costs of fiber and access,  points of  presence,  repairs and
maintenance,  rent, utilities and property taxes of the telephone,  Internet and
data network, as well as salaries and related expenses of network personnel.


                                       7


                            ATX Communications, Inc.

      Notes to the Condensed Consolidated Financial Statements (continued)
                                   (Unaudited)


Note 3. Significant Accounting Policies (continued)

Stock-Based Compensation

The Company's  employees  participate  in the ATX stock option plan. ATX applies
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees",  known  herein as APB Opinion  No. 25, and related  interpretations.
When applying APB Opinion No. 25, compensation expense for compensatory plans is
measured based on "intrinsic value" (i.e., the excess of the market price of the
stock over the exercise  price on the  measurement  date).  Under the  intrinsic
value method,  compensation is determined on the measurement  date; that is, the
first  date on which  both the  number of shares the  employee  is  entitled  to
receive and the exercise price, if any, are known. Compensation expense, if any,
generally is recognized  over the equity award's  vesting  period.  Compensation
expense  associated  with awards that  immediately are vested or attributable to
past services is recognized when granted.

The following table provides pro forma information  regarding net loss as if the
Company had accounted for its employee stock options under the fair value method
pursuant to SFAS No. 123 "Accounting for Stock Based Compensation."



                                                             Three Months Ended March 31,
                                                  ---------------------------------------------
                                                           2003                     2002
                                                  ---------------------------------------------
                                                                        
Net loss - as reported                              $   (4,949,000)           $   (11,654,000)
Stock based compensation expenses
  Under SFAS No. 123                                      (901,000)                  (895,000)
                                                  ---------------------------------------------
Pro forma net loss                                  $   (5,850,000)           $   (12,549,000)
                                                  =============================================

Basic and diluted per share information:
Net loss - as reported                              $        (0.17)           $         (0.39)
Stock based compensation expense
   Under SFAS No. 123                                        (0.03)                     (0.03)
                                                  ---------------------------------------------
Pro forma net loss per share                        $        (0.20)           $         (0.42)
                                                  =============================================




                                       8

                            ATX Communications, Inc.

      Notes to the Condensed Consolidated Financial Statements (continued)
                                   (Unaudited)


Note 4. Recent Accounting Pronouncements

In July 2002,  the FASB issued  Statement  of  Financial  Accounting  Standards,
referred  to as SFAS No.  146,  "Accounting  for Costs  Associated  with Exit or
Disposal  Activities,"  effective  for the Company on January 1, 2003.  SFAS 146
addresses  the  accounting  and  reporting  for  costs  associated  with exit or
disposal  activities.  The  adoption  of  this  new  standard  did  not  have  a
significant effect on the Company's results of operations,  financial  condition
or cash flows.

In June 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations,"  effective  for the  Company on January  1, 2003.  This  Statement
addresses financial accounting and reporting for obligations associated with the
retirement of tangible fixed assets and the associated asset  retirement  costs.
The  adoption  of this new  standard  did not have a  significant  effect on the
results of operations, financial condition or cash flows of the Company.

Note 5. Revenues



                                                                      Three Months Ended March 31,
                                                                --------------------------------------
                                                                       2003                   2002
                                                                --------------------------------------
                                                                                     
   Local Exchange Services...............................              $24,069,000         $26,272,000
   Internet, Data and Web-related Services...............               20,962,000          23,444,000
   Toll-related Telephony Services.......................               18,031,000          17,689,000
   Other (a).............................................                7,897,000           6,906,000
                                                                --------------------------------------
                                                                       $70,959,000         $74,311,000
                                                                =======================================

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

(a)  Other includes carrier access billing,  reciprocal compensation,  wireless,
     paging and information services.




Note 6. Fixed Assets

Fixed assets consist of:



                                                                                  March 31,          December 31,
                                                                         -----------------------------------------
                                                                                    2003                 2002
                                                                         -----------------------------------------
                                                                                                
   Operating equipment.....................................................      $30,641,000          $30,204,000
   Computer hardware and software..........................................        7,579,000            6,929,000
   Other equipment.........................................................        5,659,000            5,634,000
   Construction-in-progress................................................          772,000              337,000
                                                                         -----------------------------------------
                                                                                  44,651,000           43,104,000
                                                                         -----------------------------------------
   Accumulated depreciation................................................       (9,008,000)          (5,243,000)
                                                                         -----------------------------------------
                                                                                 $35,643,000          $37,861,000
                                                                         =========================================




                                       9

                            ATX Communications, Inc.

      Notes to the Condensed Consolidated Financial Statements (continued)
                                   (Unaudited)


Note 7.           Accrued Expenses

Accrued expenses consist of:



                                                                              March 31,           December 31,
                                                                         -------------------- ---------------------
                                                                                2003                  2002
                                                                         -------------------- ---------------------
                                                                                                 
Toll and interconnect......................................................      $26,475,000           $23,016,000
Taxes, including income taxes..............................................       11,128,000            11,473,000
Other......................................................................        7,361,000             6,255,000
Payroll and related........................................................        6,399,000             5,792,000
Reorganization costs.......................................................        4,165,000             4,542,000
Accrued interest...........................................................        1,911,000               797,000
Professional fees..........................................................          917,000             1,185,000
                                                                         -------------------- ---------------------
                                                                                 $58,356,000           $53,060,000
                                                                         ==================== =====================


Note 8. Long-Term Debt

Long-term debt consists of:



                                                                                   March 31,          December 31,
                                                                         ------------------------------------------
                                                                                     2003                 2002
                                                                         ------------------------------------------
                                                                                                  
Senior  secured  credit   facility,   less   unamortized   discount  of
  $9,908,000  (2003) and $10,291,000 (2002)................................       $146,192,000        $145,809,000
6% Convertible  Notes,  less unamortized  discount of $2,352,000 (2003)
  $2,846,000 (2002)........................................................          2,006,000           1,512,000
                                                                         ------------------------------------------
                                                                                   148,198,000         147,321,000
   Less current portion....................................................         (5,906,000)         (1,512,000)
                                                                         ------------------------------------------
                                                                                  $142,292,000        $145,809,000
                                                                         ==========================================


The Company's consolidated balance sheet includes $4,358,000 aggregate principal
amount of CCL Historical,  Inc.'s 6% Convertible  Subordinated Notes, which were
included upon the completion of the merger of CCL Historical,  Inc., referred to
herein as CCL, on July 1, 2002.  The  Company  recorded  the notes at  $219,000,
their  fair  value  as of  the  acquisition  date.  The  resulting  discount  of
$4,139,000 is being amortized to interest expense over the remaining life of the
notes,  which are due October 1, 2006. The  semi-annual  interest  payments that
were due under the outstanding  notes since April 1, 2002 have not been made and
CCL is in default under these notes. As such, the notes and the accrued interest
thereon are currently due and payable in full.  These notes are  obligations  of
CCL and do not represent obligations of the Company.


                                       10

                            ATX Communications, Inc.

      Notes to the Condensed Consolidated Financial Statements (continued)
                                   (Unaudited)


Note 8. Long-Term Debt (continued)

On March 31, 2003,  the Company  entered into an amendment to its senior secured
credit facility.  Under this amendment, the lenders under the facility agreed to
defer interest  payments on the  outstanding  loans during the period  beginning
March 12, 2003, and ending on February 2, 2004, during which time the loans will
accrue  interest  at a rate of 5.5% per annum plus the base  rate,  which is the
higher of the  prime  rate or the  federal  funds  effective  rate plus 0.5% per
annum.  As of March 31, 2003,  this rate was 9.75%.  In  addition,  the required
principal payments originally scheduled for 2003, which totaled $1,950,000, were
deferred to February 2, 2004. The lenders have also agreed to waive and/or amend
certain financial  covenants set forth in the credit agreement until January 31,
2004,  and added  other  financial  covenants,  in order to better  reflect  the
Company's current  operations.  The Company incurred deferred financing costs of
$557,000,  which consist  primarily of legal and consulting  fees, in connection
with this amendment. These deferred financing costs will be amortized during the
effective term of this amendment. The current portion of long-term debt includes
principal payments due under the senior secured credit facility within one year.

Note 9. Related Party Transactions

Notes payable to related parties consists of:



                                                                                  March 31,         December 31,
                                                                              ------------------ -------------------
                                                                                    2003                2002
                                                                              ------------------ -------------------
                                                                                                
10.75%  Unsecured  Convertible  PIK  Notes  Due  April  2011,  plus  accrued
  interest,  less  unamortized  discount  of  $317,000  (2003) and  $327,000
  (2002).............................................................               $18,114,000       $17,632,000
                                                                              ================== ===================


Some of the  directors  of the Company  were or are officers or directors of NTL
Incorporated,  referred to herein as NTL. In April 2001,  CCL and the Company as
co-obligors  issued  to NTL $15  million  aggregate  principal  amount of 10.75%
Unsecured  Convertible PIK Notes Due April 2011. In addition, in April 2001, CCL
issued  warrants  to NTL,  and CCL and the  Company  entered  into a network and
software agreement with NTL. The estimated value of the warrants of $397,000 was
recorded as a debt discount in April 2001.

Until 2002,  NTL  provided  the Company with  management,  financial,  legal and
technical  services,  access to office space and  equipment and use of supplies.
Amounts  charged to the  Company by NTL  consist of  salaries  and direct  costs
allocated to the Company where identifiable,  and a percentage of the portion of
NTL's  corporate  overhead,  which could not be  specifically  allocated to NTL.
Effective January 1, 2001, the percentage used to allocate  estimated  corporate
overhead was reduced.  It is not  practicable  to determine the amounts of these
expenses  that  would  have  been  incurred  had  the  Company  operated  as  an
unaffiliated  entity. For the three months ended March 31, 2002, NTL charged the
Company $84,000, which is included in corporate expenses.


                                       11

                            ATX Communications, Inc.

      Notes to the Condensed Consolidated Financial Statements (continued)
                                   (Unaudited)


Note 9. Related Party Transactions (continued)

A subsidiary of the Company provides billing and software  development  services
to  subsidiaries  of NTL.  During the third  quarter of 2002,  the Company began
recording  the  billings  for these  services as revenue.  The Company  recorded
revenues for these billings, totaling $731,000, for the three months ended March
31, 2003.  The Company  historically  recorded  these billings as a reduction of
selling,   general   and   administrative   expenses.   Selling,   general   and
administrative  expenses  were  reduced by $312,000  for the three  months ended
March 31, 2002 for these billings.

In 2001,  the Company and NTL entered into a license  agreement  whereby NTL was
granted an  exclusive,  irrevocable,  perpetual  license to use certain  billing
software  developed  by the Company for  telephony  rating,  digital  television
events rating,  fraud management and other tasks. The Company recorded the $12.8
million  received as deferred  revenue to be  recognized  over a period of three
years,  which was the estimated  amount of time the Company  expected to provide
services  under this  arrangement.  The Company  recognized  $1,068,000  of this
revenue during each of the three months ended March 31, 2003 and 2002.

The Company leases office space and a network facility from entities  controlled
by an individual who owns 34% of the outstanding  shares of the Company's common
stock.  Rent  expense for these  leases for each of the three months ended March
31, 2003 and 2002 was approximately $450,000.

The Company engaged B/G Enterprises,  LLC, a company  affiliated with a director
of the Company,  to provide travel related services.  The cost of these services
totaled $81,000 during the three months ended March 31, 2003.

Notes 10. Reorganization Costs

The Company  recorded no  reorganization  costs in the first quarter of 2003. In
2001, the Company  announced  that it was taking actions to reorganize,  re-size
and reduce operating costs and create greater operating efficiencies.  The major
actions  involved in the 2001  reorganization  included:  (1)  consolidation  of
functions  such  as  network  operations,  customer  service  and  finance,  (2)
initiatives to increase gross margins and (3) agreements  with vendors to reduce
or eliminate purchase commitments. Charges for these actions included lease exit
costs and agreement  termination  charges.  All of these actions were  completed
during 2002 and the remaining liability is expected to be paid through 2005.


                                       12


                            ATX Communications, Inc.

      Notes to the Condensed Consolidated Financial Statements (continued)
                                   (Unaudited)


Notes 10. Reorganization Costs (continued)

The following table summarizes the reorganization  charges incurred and utilized
during the three months ended March 31, 2003:




                                            Lease
                                             Exit          Agreement
                                            Costs         Terminations        Total
                                        ------------------------------------------------
                                                (in thousands)
                                        ------------------------------------------------
                                                                         
Balance, December 31, 2002.......       $        1,384           $ 3,158       $ 4,542
Utilized.........................                 (349)              (28)         (377)
                                        ------------------------------------------------
Balance, March 31, 2003..........       $        1,035           $ 3,130       $ 4,165
                                        ================================================



Note 11. Commitments and Contingent Liabilities

As of March 31, 2003,  the Company had  purchase  commitments  of  approximately
$2,058,000  outstanding,  of which all are due during  2003.  Additionally,  the
Company had standby letters of credit of approximately $3,696,000 outstanding as
of March 31, 2003, which are fully collateralized by certificates of deposit.

The Company is involved in various  disputes,  arising in the ordinary course of
its  business,  which may result in pending or  threatened  litigation.  None of
these  matters are expected to have a material  adverse  effect on the Company's
financial position, results of operations or cash flows. Some of these disputes,
regardless of their merit,  could subject the Company to costly  litigation  and
the diversion of technical and/or management personnel.  Additionally,  in light
of the Company's ongoing litigation with the local exchange  carriers,  on which
the Company depends for certain services, from time to time, those carriers have
and will likely continue to threaten service  disruptions or  terminations.  Any
service  disruptions  or  terminations,  if actually  implemented,  could have a
material adverse effect on the Company's business.

Currently,  the Company has the following outstanding matters, which if resolved
unfavorably, could have a material adverse effect on the Company:

o    On August  12,  2002,  Verizon  Communications,  Inc.  and  several  of its
     subsidiaries  filed a complaint in the United States District Court for the
     District  of Delaware  against  the  Company  and  several of its  indirect
     wholly-owned  subsidiaries,  referred to herein as the defendants,  seeking
     payment of  approximately  $37  million  allegedly  owed to  Verizon  under
     various  contracts and state and federal law.  Verizon also asked the Court
     to issue a declaratory ruling that it has not violated the antitrust laws.


                                       13

                            ATX Communications, Inc.

      Notes to the Condensed Consolidated Financial Statements (continued)
                                   (Unaudited)


Note 11. Commitments and Contingent Liabilities (continued)


     The  defendants  believe  that  they  have  meritorious   defenses  to  the
     complaint,  and further,  that the amounts owed are substantially less than
     the amounts  claimed by Verizon.  For example,  the defendants  believe the
     figure specified in the complaint  includes payments that have been made by
     the  defendants  to Verizon  (including  in excess of $14 million paid soon
     after the filing of the complaint),  credits that Verizon has issued to the
     defendants since the filing of the complaint,  and additional  disputes for
     which Verizon owes credits to the defendants.  The defendants have filed an
     answer to Verizon's  complaint  denying Verizon's claims, in part, and have
     asserted various  counterclaims  against Verizon,  including claims seeking
     damages  for  breach of  contract  and treble  damages  for  violating  the
     antitrust laws. The defendants have also moved to dismiss Verizon's request
     for a  declaratory  ruling  on the  antitrust  claims,  which  Verizon  has
     opposed.

     On  November  18,  2002,  Verizon  filed a motion  to  dismiss  defendants'
     antitrust counterclaims, relying heavily on a decision by the United States
     Court of Appeals for the 7th Circuit in Goldwasser v. Ameritech  Corp., 222
     F.3d 390 (7th Cir. 2000) dismissing antitrust claims brought on behalf of a
     class of consumers who had purchased  services from  Ameritech in Illinois.
     On January 9, 2003,  the  defendants  filed their  opposition  to Verizon's
     motion,  noting not only that the Goldwasser case is  distinguishable  from
     the  defendants'  antitrust  claims,  but also that the  appellate  court's
     rationale in Goldwasser  had been  effectively  repudiated by the appellate
     courts of the 2nd and 11th circuits, as well as by a federal trial court in
     the  antitrust  claim raised by the Company  against  SBC/Ameritech  in the
     United States District Court for the Northern District of Ohio.

     On March  20,  2003,  the  Court  issued  an  order  denying  the  parties'
     respective  motions without  prejudice to renew,  pending a decision by the
     United States Supreme Court in Verizon Communications,  Inc. vs. Law Office
     of Curtis Trinko, LLP, Supreme Court Docket No. 02-682 (cert. granted March
     10, 2002).  By order of the Court issued May 6, 2003, the parties have been
     directed  to proceed  with  discovery  on all  issues.  The Company and its
     subsidiaries  intend to pursue all available remedies and counterclaims and
     defend themselves  vigorously;  however, they cannot be certain how or when
     these matters will be resolved or the outcome of the litigation.


                                       14

                            ATX Communications, Inc.

      Notes to the Condensed Consolidated Financial Statements (continued)
                                   (Unaudited)


Note 11. Commitments and Contingent Liabilities (continued)

o    On March 7, 2002, CoreComm  Massachusetts,  Inc., an indirect  wholly-owned
     subsidiary of the Company, initiated litigation against Verizon New England
     d/b/a Verizon  Massachusetts in the Suffolk Superior Court,  Massachusetts,
     alleging  breach of  contract  and seeking a  temporary  restraining  order
     against  Verizon  Massachusetts.  Verizon  has filed its answer to CoreComm
     Massachusetts'   complaint  and  filed  counterclaims  seeking  payment  of
     approximately $1.2 million allegedly owed by CoreComm  Massachusetts  under
     the parties'  interconnection  agreement and Verizon's tariffs.  During the
     course of  discovery,  Verizon  conceded that it had  over-billed  CoreComm
     Massachusetts   by   approximately   $800,000.   As  a   result,   CoreComm
     Massachusetts  amended its complaint to include claims against  Verizon for
     unfair and deceptive acts or practices in violation of Massachusetts'  fair
     trade practice laws. Verizon  subsequently amended its complaint to specify
     a revised claim of $1.1 million.  CoreComm  Massachusetts  ceased  offering
     local telephone services in Massachusetts in December 2002 and is presently
     withdrawing  from  the  market.  CoreComm  Massachusetts'  withdrawal  from
     providing  telephone  services in  Massachusetts  has not had any  material
     adverse affect on the Company's consolidated business.

o    By letter dated April 4, 2003,  the Company  received a notice from Verizon
     claiming  that  Verizon is owed  approximately  $8.4  million by one of its
     subsidiaries,  CoreComm New York, Inc., for services allegedly purchased in
     the state of New York, including approximately $5.1 million of charges that
     Verizon  contends were mistakenly  credited to the accounts of CoreComm New
     York,  Inc. in connection with the acquisition out of bankruptcy of certain
     assets of USN Communications,  Inc. in May 1999. In response,  CoreComm New
     York,  Inc.  has  challenged  the  accuracy  of  Verizon's  figures and has
     provided  formal  written  notice that it is disputing  Verizon's  right to
     payment of the amounts specified in Verizon's April 4 letter.  CoreComm New
     York  has  identified  a  number  of  gaps  and  errors  in the  accounting
     information  provided by Verizon,  many of which Verizon has  acknowledged.
     Although CoreComm New York, Inc. intends to defend itself vigorously and to
     pursue all available  counterclaims and remedies,  it is not presently able
     to determine what amount, if any, is properly owed to Verizon or to predict
     how these  matters will be resolved.  The  operations of CoreComm New York,
     Inc.  do not  represent  a material  component  of the  Company's  revenue,
     profits or operations.


                                       15


                            ATX Communications, Inc.

      Notes to the Condensed Consolidated Financial Statements (continued)
                                   (Unaudited)


Note 11. Commitments and Contingent Liabilities (continued)

o    The Company and CoreComm Newco, Inc., an indirect,  wholly-owned subsidiary
     of the Company, are currently in litigation with SBC Corp.,  Ameritech Ohio
     and other SBC  subsidiaries  over various billing and  performance  issues,
     including  SBC/Ameritech's  alleged violation of the antitrust laws and the
     adequacy  of  SBC/Ameritech's  performance  under a 1998  contract  between
     CoreComm Newco and Ameritech Ohio. This litigation  began in June 2001 when
     Ameritech  threatened  to stop  processing  new orders  following  CoreComm
     Newco's  exercise of its right under the contract to withhold  payments for
     Ameritech's  performance  failures.  On October 9, 2001, Ameritech filed an
     amended complaint in the United States District Court, Northern District of
     Ohio seeking a total of approximately  $14.4 million in alleged outstanding
     charges.

     On  December  26,  2001,  CoreComm  Newco  filed its answer to  Ameritech's
     amended complaint and simultaneously filed three counterclaims  against SBC
     Corp.,  Ameritech  Ohio and certain of their  respective  subsidiaries  and
     affiliates,   alleging  breach  of  contract,   antitrust  violations,  and
     fraudulent or negligent  misrepresentation  claims.  On July 25, 2002,  the
     Court  issued a decision  denying a motion to dismiss  from  Ameritech  and
     upholding  CoreComm Newco's right to proceed with its antitrust,  breach of
     contract and misrepresentation  claims against all  counter-defendants.  On
     January 21,  2003,  CoreComm  Newco  amended its  complaint  to include the
     Company and other affiliates as additional  claimants and to add additional
     allegations supporting its claims, and on February 17, 2003,  SBC/Ameritech
     filed its answer to the amended complaint.

     The  Company  believes  that  CoreComm  Newco has  meritorious  defenses to
     Ameritech's  amended  complaint  that could reduce the amount  currently in
     dispute. For example, the figure specified in Ameritech's complaint may not
     account for various  amounts that have been  properly  disputed by CoreComm
     Newco as a result of billing  errors and other  improper  charges,  various
     refunds that Ameritech contends it has already credited to CoreComm Newco's
     accounts since the filing of the complaint,  and payments that were made by
     CoreComm  Newco  in the  ordinary  course  after  the  time of  Ameritech's
     submission.  However,  the Company cannot be certain how or when the matter
     will be resolved.  The Company also believes that, to the extent  Ameritech
     prevails with respect to any of its claims, Ameritech's award may be offset
     in whole or in part by amounts  that the  Company  and  CoreComm  Newco are
     seeking to obtain from SBC/Ameritech under their counterclaims. The Company
     and CoreComm  Newco intend to pursue all  available  remedies and to defend
     themselves  vigorously.  However,  it is impossible at this time to predict
     the outcome of the litigation.


                                       16



Note 11. Commitments and Contingent Liabilities (continued)

o    On April 16, 2003,  SBC Ohio (formerly  known as SBC Ameritech  Ohio) filed
     with the Public  Utilities  Commission of Ohio,  known as the PUCO, a third
     supplement  to its  application  for  review of an order  entered by a PUCO
     Hearing  Examiner  barring  SBC Ohio from  refusing  to process new service
     orders from  CoreComm  Newco  pending  the  resolution  of various  billing
     disputes at issue  between the parties.  Among other  things,  the April 16
     supplement  contends that the Hearing  Examiner's  entry provided  CoreComm
     Newco with a  competitive  advantage by allowing it to withhold  payment on
     approximately  $8.7  million of alleged  undisputed  charges  for local and
     collocation services in Ohio as of March 31, 2003. On May 2, 2003, CoreComm
     Newco submitted a reply to the April 16 supplement in which it disputed the
     accuracy of SBC Ohio's claims and explained that the outstanding balance of
     approximately  $1.9 million is consistent with common practice  considering
     SBC Ohio's  billing  problems  and the  numerous  payment  cycles at issue.
     CoreComm Newco has already  identified and lodged millions of dollars worth
     of billing and performance  disputes and is continuing to identify  charges
     that it believes are not properly owed to SBC Ohio.  CoreComm Newco intends
     to defend  itself  vigorously  and to pursue  all  available  remedies  and
     counterclaims.  However,  it is not possible to predict the outcome of this
     matter at this time.

o    By letters dated April 23, 2003, and April 25, 2003,  SBC/Midwest  demanded
     payment from certain of the Company's  subsidiaries of  approximately  $9.5
     million of alleged  undisputed,  past due  charges for  wholesale  services
     allegedly  provided to its operating  subsidiaries  in Illinois,  Michigan,
     Indiana  and  Wisconsin,   and  threatened  to  pursue  further  collection
     activities  against  those  entities.  The letters  regarding  Michigan and
     Wisconsin  requested that the recipients pay into escrow an unspecified sum
     for Michigan and  approximately  $135,240 for Wisconsin in connection  with
     charges that SBC Midwest contends the Company's  subsidiaries have disputed
     in those states.  In response the Company's  subsidiaries have notified SBC
     Midwest  that they are  disputing  the accuracy of the figures set forth in
     its  letters  as well as its right to  request  an escrow  deposit to cover
     disputed  charges,  and  that  they  are  prepared  to  engage  in  further
     discussions   regarding  the  various  amounts  at  issue.   The  Company's
     subsidiaries  intend to  contest  any  charges  that they  believe  are not
     properly  owed and to  vigorously  pursue all claims and defend  themselves
     against any collections action.  However, the Company is not currently able
     to predict how or when these  matters will be resolved or what  amount,  if
     any, will need to be paid at the time of resolution.

o    On December 3, 2001,  General Electric Capital Corp.,  referred to as GECC,
     filed a civil lawsuit in the Circuit Court of Cook County, Illinois against
     CCL and  MegsINet,  Inc., an indirect  subsidiary  of the Company,  seeking
     approximately  $8 million in  allegedly  past due amounts and the return of
     equipment  under a capital  equipment  lease  agreement  between Ascend and
     MegsINet.  Thereafter, on May 1, 2002, the complaint was amended to add the
     Company as an additional  defendant.  Although  neither CCL nor the Company
     are parties to the agreement  between  Ascend and  MegsINet,  the complaint
     contends  that CCL  and/or  the  Company  should  be held  responsible  for
     MegsINet's  obligations  under an "alter ego" theory of liability.  CCL and
     the  Company  are  contesting  this  claim  and do  not  believe  that  the
     obligations of MegsINet are obligations of CCL or the Company.


                                       17




Note 11. Commitments and Contingent Liabilities (continued)

     Subsequent  to  filing  of its  initial  complaint,  GECC  filed  a  second
     complaint in the Circuit Court of Cook County,  Illinois against  MegsINet,
     CCL and the Company seeking a court order allowing it to take  repossession
     of its alleged equipment.  On September 24, 2002, the Court issued an order
     granting  GECC's request for  repossession  of the equipment.  MegsINet has
     allowed GECC to take  possession  of the  equipment,  which has not had any
     material impact on the Company's business or operations. On April 23, 2003,
     GECC filed a motion for  summary  judgment  asking the Court to rule in its
     favor,  without  the need for trial,  that  MegsINet,  CCL and the  Company
     breached  their alleged  contractual  obligations  to make  required  lease
     payments to GECC and awarding GECC damages in the amount of $9,100,053 plus
     attorneys' fees and interest.  MegsINet, CCL and the Company do not believe
     that it would be  appropriate  for the  Court to  resolve  this  litigation
     through  summary  judgment as  requested  by GECC and they intend to defend
     themselves  vigorously  and to pursue all  available  claims and  defenses.
     However,  it is  impossible  at this time to  predict  the  outcome  of the
     litigation.  MegsINet  does  not  represent  a  material  component  of the
     Company's revenue, profits or operations.  All of the assets of the Company
     and its subsidiaries,  including those of MegsINet,  are subject to a first
     priority  security  interest in favor of the senior  lenders under the $156
     million senior credit facility.

o    On May 25, 2001, KMC Telecom,  Inc. and some of its operating  subsidiaries
     filed an  action  in the  Supreme  Court  of New  York for New York  County
     against CCL,  Cellular  Communications  of Puerto Rico, Inc.,  CoreComm New
     York,  Inc. and  MegsINet.  KMC contends that it is owed  approximately  $2
     million,  primarily in respect of alleged  early  termination  liabilities,
     under a services agreement and a co-location  agreement with MegsINet.  The
     defendants have denied KMC's claims and have asserted that the contracts at
     issue were signed without proper authorization,  that KMC failed to perform
     under the alleged  contracts,  and that the  termination  penalties are not
     enforceable.  On  March  27,  2002,  certain  of the  defendants  initiated
     litigation   against   several  former   principals  of  MegsINet   seeking
     indemnification and contribution against KMC's claims for breach of various
     representations  and warranties made under the merger agreement pursuant to
     which  MegsINet  became a subsidiary of the Company.  Defendants  have also
     initiated  coverage under an insurance  policy  designed to protect against
     such claims;  the insurance carrier has initially  declined coverage and it
     may be necessary to pursue  litigation to obtain coverage in the event of a
     loss under the policy.



                                       18



Note 11. Commitments and Contingent Liabilities (continued)

o    On September 24, 2002, GATX Technologies, Inc., known herein as GATX, filed
     an  action  in  the  Thirteenth   Judicial   Circuit  in  Florida   against
     CoreComm-Voyager, Inc., an indirect wholly-owned subsidiary of the Company,
     seeking  recovery  of  amounts  allegedly  owed  under an  equipment  lease
     totaling  approximately  $150,000.  On October 21,  2002,  CoreComm-Voyager
     moved to dismiss GATX's action for lack of jurisdiction.  The motion is now
     pending with the Court.  On October 28, 2002,  3Com  Corporation,  known as
     3Com,  filed an action  against the  Company in the Court of Common  Pleas,
     Montgomery County,  Pennsylvania seeking payment of approximately  $900,000
     under an  equipment  lease.  Should  either  action  proceed  further,  the
     defendants  will  defend  themselves  vigorously  and pursue all  available
     claims.  However,  it is not  possible  at this time to predict how or when
     either of these matters will be resolved.

o    On March 1, 2002, Easton Telecom Services,  LLC initiated litigation in the
     Northern  District of Ohio against  CoreComm  Internet Group,  Inc. seeking
     payment of  approximately  $4.9  million,  primarily  in respect of alleged
     early termination  penalties for  telecommunications  services  purportedly
     provided under alleged  contracts.  On August 23, 2002, the Court issued an
     order  dismissing  approximately  $4 million of Easton's claims as invalid.
     Upon the conclusion of a jury trial that ended on November 8, 2002,  Easton
     obtained  a  judgment  against  CoreComm  Internet  Group,   Inc.,  Voyager
     Information Networks,  Inc. and MegsINet in the total amount of $1,085,000.
     On February 4, 2003, the defendants filed an appeal in this matter with the
     United States Court of Appeals for the Sixth Circuit, and the plaintiff has
     filed a cross-appeal.  Plaintiff is currently  pursuing discovery in aid of
     execution  on its  judgment  against  defendants.  All of the assets of the
     Company  and its  subsidiaries,  including  those  of the  defendants,  are
     subject  to a first  priority  security  interest  in favor  of the  senior
     lenders under the $156 million senior credit facility.

o    On June 7, 2002,  the Board of Revenue and Finance of the  Commonwealth  of
     Pennsylvania  issued  an  order  granting  in part  and  denying  in part a
     petition  for  review of a  decision  by a lower  administrative  authority
     relating to the Company's  alleged  liability for sales and use tax for the
     period  September 1, 1997  through  July 31,  2000.  Pursuant to the June 7
     order,  the Company has been  assessed  sales and use tax for the period at
     issue in the amount of $631,429,  which has been  accrued in the  Company's
     consolidated  financial  statements.  On July 8, 2002,  the Company filed a
     petition  for  review of the  board's  order in the  Commonwealth  Court of
     Pennsylvania  seeking a further  reduction of the  assessment.  The Company
     believes that it has meritorious defenses and that the assessment should be
     reduced;  however it is not  possible  to predict  how this  matter will be
     resolved.


                                       19



Note 11. Commitments and Contingent Liabilities (continued)

o    On January 3, 2003,  the Company  and its  indirect  subsidiary,  MegsINet,
     Inc., filed a complaint  against  Broadwing in the U.S.  District Court for
     the Eastern  District of Pennsylvania  seeking the return of  approximately
     $700,000 in taxes billed by  Broadwing  in alleged  violation of two Master
     Service Agreements.  On February 24, 2003, Broadwing filed a motion to stay
     the action  pending  their  request  to  arbitrate  the  matter  before the
     American  Arbitration  Association.  The matter is still pending before the
     Court, and plaintiffs intend to pursue their claims vigorously.

o    On  February  28,  2003,  Focal  Communications  Corp.  and  certain of its
     subsidiaries  initiated adversarial  proceedings in Focal's Chapter 11 case
     under the U.S.  Bankruptcy  laws  against  the  Company  and certain of its
     subsidiaries  seeking  payment of  approximately  $802,687  in charges  for
     interstate and intrastate  switched access services  allegedly  provided by
     Focal's subsidiaries in Illinois, Pennsylvania,  Delaware and New York. The
     defendants  are  currently  reviewing  Focal's  claims and intend to defend
     themselves  vigorously  and pursue all available  counterclaims,  including
     claims for any amounts owed by Focal to any of the defendants.  However, it
     is not  possible  at this time to predict  how or when this  matter will be
     resolved.


                                       20





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

Results of Operations

Until  December  2001,  we  were  a  direct,   wholly-owned  subsidiary  of  CCL
Historical,  Inc.  (formerly named CoreComm Limited,  known herein as CCL). As a
result of the  recapitalization  transactions  completed in December 2001 and on
July 1, 2002,  CCL has been  merged into one of our  wholly-owned  subsidiaries.
Prior  to our  recapitalization,  CCL  operated  the  same  businesses  that  we
currently operate.

In  2001,  we  significantly  revised  our  business  plan to  focus on our most
profitable businesses and geographic areas, and reduce our operational costs and
need for capital.  In 2001 and 2002, we streamlined  our strategy and operations
to focus on our two most successful and promising  lines of business.  The first
is integrated communications products and other high bandwidth/data/web-oriented
services for the business  market.  The second is bundled  local  telephony  and
Internet  products for the  residential  market,  with a focus on using Internet
interfaces,  as well as our call centers,  to  efficiently  sell and install our
products and service our  customers.  As a result of these  changes,  we are now
focused primarily in the Mid-Atlantic and Mid-West regions of the U.S.

We have implemented cost savings through a variety of means,  including facility
consolidation,    efficiency   improvements,   vendor   negotiations,    network
optimization and headcount reduction.  We have improved our operating efficiency
through improved pricing terms and the elimination of duplicative or unnecessary
network facilities.  We have also reduced network costs and capital expenditures
by  converting  many of our  local  access  lines to more  profitable  Unbundled
Network  Element - Platform  pricing from Total Service  Resale  pricing,  which
provides higher margins.  In addition,  we were able to reduce the number of our
facilities without substantially  affecting our service area by leasing enhanced
extended local loops from the incumbent local exchange carriers.

Three Months Ended March 31, 2003 and 2002

The  decrease  in  revenues  to  $70,959,000   from  $74,311,000  was  primarily
attributable to a decrease in local exchange revenues and Internet, data and web
related  services offset by an increase in toll-related  telephony  services and
other revenue.

Operating  costs  include  direct cost of sales,  network costs and salaries and
related expenses of network personnel.  Operating costs decreased to $45,960,000
from  $48,038,000  due to a decrease in costs as a result of optimization of our
network and facilities and reduced headcount.

Selling,  general and  administrative  expenses  decreased to  $19,575,000  from
$22,313,000  due to a  decrease  in  costs  as a result  of  reduced  headcount,
reduction of our facilities and a revision in our marketing strategies.

Corporate  expenses  include the costs of our officers and  headquarters  staff,
operating  our  headquarters  and costs  incurred  for  strategic  planning  and
evaluation of business opportunities. Corporate expenses increased to $2,097,000
from $1,698,000 due to increased costs incurred for strategic planning and other
corporate activities.


                                       21



In connection  with our  recapitalization,  we incurred  costs,  which consisted
primarily of legal, accounting and printing fees, of $1,182,000 during the three
months ended March 31, 2002.

Depreciation  expense  decreased to $3,765,000  from  $8,881,000  primarily as a
result of the  reduction  in the carrying  value of our fixed assets  during the
fourth  quarter of 2002 as  determined  by a fair value  analysis  performed  in
accordance  with SFAS No. 144,  "Accounting  for the  Impairment  or Disposal of
Long-Lived Assets.

Amortization  expense has been  eliminated  due to the reduction in the carrying
value of our intangible assets as determined by a fair value analysis  performed
on October 1, 2002 in accordance with SFAS No. 144.

Interest expense and other increased to $4,511,000 from $3,769,000 primarily due
to the net effect of an increase in the  effective  interest  rate on our senior
secured credit facility and the  amortization  of debt discount  associated with
CCL's 6%  Convertible  Subordinated  Notes.  The effective  interest rate on our
senior secured credit  facility during the three months ended March 31, 2003 and
2002 was 7.01% and 6.86%, respectively.

Recent Accounting Pronouncements

In July 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal Activities." Effective for us on January 1, 2003, SFAS 146
addresses  the  accounting  and  reporting  for  costs  associated  with exit or
disposal  activities.  The  adoption  of  this  new  standard  did  not  have  a
significant  effect on our results of  operations,  financial  condition or cash
flows.

In June 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations"  effective for us on January 1, 2003. SFAS 143 addresses  financial
accounting  and  reporting for  obligations  associated  with the  retirement of
tangible fixed assets and the associated asset retirement costs. The adoption of
this  new  standard  did  not  have  a  significant  effect  on our  results  of
operations, financial condition or cash flows.




                                       22



Liquidity and Capital Resources

Based on our current  business plan, we anticipate  that we will have sufficient
cash and cash equivalents on hand to fund our operations,  capital  expenditures
and debt service in 2003. Our ability to raise additional  capital in the future
will be dependent on a number of factors, such as our results of operations, the
amount of our  indebtedness,  and also general  economic and market  conditions,
which are beyond our control. If we are unable to obtain additional financing or
to obtain it on  favorable  terms,  we may be  required  to  further  reduce our
operations,  forgo business  opportunities  or take other  actions,  which could
adversely affect our business, results of operations and financial condition. In
addition,  we are also involved in litigation,  which if resolved unfavorably to
us, could have a material  adverse effect on our business,  financial  condition
and results of operations, including our ability to fund our operations.

As of March 31, 2003, we had long-term debt, which consisted of a $156.1 million
senior secured credit facility,  approximately $18.4 million in principal amount
of  10.75%  Unsecured  Convertible  PIK Notes  due 2011 and  approximately  $9.0
million of capital  leases.  In  addition,  as of March 31,  2003,  CCL had $4.4
million of 6% Convertible Subordinated Notes outstanding.

On March 31, 2003,  we entered into an  amendment to our senior  secured  credit
facility.  Under this amendment,  the lenders under the facility agreed to defer
interest payments on the outstanding loans during the period beginning March 12,
2003 and ending on February 2, 2004,  during  which time the loans are  accruing
interest at prime plus 5.5% (9.75% at March 31, 2003). In addition, the required
principal payments  originally  scheduled for 2003, which totaled $1.95 million,
were  deferred  until  February 2, 2004.  The lenders  have also agreed to waive
and/or amend certain financial covenants set forth in the credit agreement until
February 2, 2004, and also added other financial and operating  covenants during
2003, in order to better reflect our current  operations.  As of March 31, 2003,
we are in compliance with all of the required ratios and covenants  contained in
our  agreement.  We intend to utilize the  increased  liquidity  afforded by the
amendment to invest in several areas of our core operations. In addition, during
this period, we intend to seek and consider  strategic  alternatives in order to
reduce our overall  indebtedness,  including  amounts  under the senior  secured
credit facility.  Such strategic  alternatives may include,  among other things,
debt or equity  financings or refinancings,  recapitalizations,  restructurings,
mergers and  acquisitions or other  transactions.  It is likely that any of such
transactions,  if  implemented,  would  result in  material  dilution  to common
stockholders.

Although the amendment has been designed to provide us with  significant  relief
from cash obligations under the senior secured credit facility until February 2,
2004, there can be no assurance that the financial and other covenants under the
facility will continue to be met or that we will be successful in identifying or
implementing one or more strategic  alternatives to reduce our indebtedness.  In
addition, based on our current business plan, we do not expect that we will have
the cash available to fund the required deferred interest and principal payments
on or before  February  2, 2004,  the date on which such  payments  become  due.
Accordingly,  there  can be no  assurance  that  there  will  not be an event of
default under the credit facility at that time, or that we will be able to enter
into additional amendments to the senior secured credit facility by that time.


                                       23



Taking the  amendment  into effect,  debt service on the senior  secured  credit
facility includes approximately $1.7 million in cash interest expense paid or to
be paid in 2003,  $23.0  million due in 2004 and $8.6 million due in 2005, on an
annualized  basis,  based  on  current  interest  rates,  as well  as  quarterly
amortization  and principal  reductions which total $0 in 2003, $11.7 million in
2004, and $25.4 million in 2005. The 10.75% Unsecured  Convertible PIK Notes due
2011 have no cash interest payments, and are not due until 2011. As of March 31,
2003, our current  liabilities  exceed our current assets by approximately  $107
million.

Under our current business plan,  capital  expenditures have been  significantly
reduced from prior  levels.  Total  actual  capital  expenditures  for the three
months ended March 31, 2003,  described as cash used to purchase fixed assets in
our cash flow  statement,  were  approximately  $1.4  million.  According to our
current  plans,  capital  expenditures  are  expected to be  approximately  $7.5
million during the remainder of 2003, $8.9 million in 2004, and $10.2 million in
2005.  These  future  capital  expenditures  will  depend on a number of factors
relating to our business,  in particular the growth level,  geographic  location
and  services  provided to new  customers  added  during  these  years.  Capital
expenditures in future years will also depend on the availability of capital and
the  amount of cash,  if any,  generated  by  operations,  which may  impact our
capital  decisions  relating  to  initiatives  such  as,  for  example,  network
expansion  and  the  implementation  of  upgrades  to our  information  services
platforms.

For the  first  three  months  of 2003,  net cash  provided  by  operations  was
approximately  $1.5 million.  If we are unable to continue to generate cash from
operations and/or raise additional financing,  it may affect our ability to meet
our cash  requirements,  which may have an adverse affect on us, and potentially
our viability as an ongoing business.

Our capital  requirements  in 2003 and thereafter  will depend on the success of
the continued execution of our business plan, and the amount of capital required
to fund future capital  expenditures and other working capital requirements that
exceed net cash provided by operating activities. We anticipate that we will not
generate  sufficient  cash flow from  operations to repay at maturity the entire
principal  amount of our  outstanding  indebtedness.  In addition,  based on our
current  business plan, we do not expect that we will have the cash available to
fund the required deferred interest and principal payments on or before February
2, 2004, the date on which such payments become due. In addition,  we anticipate
that we may be  required to raise  additional  capital in the future in order to
fund the capital expenditures and other working capital requirements that exceed
net cash provided by operating activities.


                                       24



Accordingly, we may be required to consider a number of measures, including: (1)
seeking  modifications  or  waivers to  certain  provisions  of the terms of our
indebtedness,  (2) refinancing all or a portion of our indebtedness, (3) seeking
additional debt financing,  which may be subject to obtaining  necessary  lender
consents,   (4)  seeking   additional   equity   financing,   (5)  completing  a
recapitalization  or  restructuring  of our indebtedness or (6) a combination of
the foregoing.  The  consideration,  timing and  implementation of such measures
will depend upon the success of the execution of our business  plan,  the amount
of capital  required to fund our  operations  in the future and the terms of any
financings or other transactions that we may consider.

     In addition, we cannot assure you that:

     (a)  actual  costs will not exceed the amounts  estimated  in our  business
          plan or that additional funding will not be required;

     (b)  we will  prevail in our  material  litigation  matters as described in
          Note 11 to the financial statements;

     (c)  we and our subsidiaries will be able to generate  sufficient cash from
          operations  to meet  capital  requirements,  debt  service  and  other
          obligations when required;

     (d)  we will be able to  continue  to be in  compliance  with all  required
          ratios and covenants contained in agreements governing our outstanding
          indebtedness  or that we will be able to modify  the  requirements  or
          terms of such indebtedness;

     (e)  we will be able to refinance our indebtedness as it comes due;

     (f)  we will be able to sell our  assets or  businesses  (the net  proceeds
          from a sale may be required to be used to repay certain indebtedness);

     (g)  we will not be adversely affected by interest rate fluctuations; or

     (h)  we will be able to access the cash flow of our subsidiaries.


                                       25



The  following  table shows our aggregate  cash  interest  expense and principal
payments  on  our  existing  long-term  debt,   anticipated   estimated  capital
expenditures,  payments on capital leases and other debt, as well as the sources
of funds that we expect to use to meet these cash requirements through 2005.




                                 Nine Months Ended   For the Year Ended
                                   December 31,         December 31,
                                 ----------------------------------------
                                       2003          2004       2005                    Source of Funds
                                 --------------------------------------------------------------------------------------
                                              (in millions)
                                                                  
Cash   interest    expense   on        $ 0.5         $ 23.3  $       8.9  For 2003: cash and cash  equivalents on hand
  existing long-term debt (1)                                             and  cash  from  operations;  for  2004  and
                                                                          2005:  cash  and cash  equivalents  on hand,
                                                                          cash  from   operations  and,  if  required,
                                                                          refinancing  or other  sources of  financing
                                                                          (4)

Estimated  capital                      7.5             8.9         10.2  Cash and cash  equivalents  on hand and cash
  expenditures (2)                                                        from operations

Principal payments on existing            -                         25.4  Cash and  cash  equivalents  on  hand,  cash
  long-term debt (3)                                   11.7               from    operations    and,   if    required,
                                                                          refinancing  or other  sources of  financing
                                                                                                                    (4)

Payments on Capital Leases              9.0               -            -  Approximately  $8.1 million of these capital
                                                                          leases  are  obligations  of our  subsidiary
                                                                          MegsINet  Internet,  Inc.  and  are  not our
                                                                          obligations.  The  source  of funds  for the
                                                                          remaining    amounts:    cash    and    cash
                                                                          equivalents    on   hand   and   cash   from
                                                                          operations (5)
                                 ----------------------------------------
                                      $ 17.0         $ 43.9       $ 44.5
                                 ========================================

(1)  During the remainder of 2003,  the only  long-term  debt that requires cash
     interest expense is CCL's $4.4 million 6% Convertible Subordinated Notes.

(2)  Future capital  expenditures will depend on a number of factors relating to
     our business,  in  particular  the growth  level,  geographic  location and
     services provided to new customers during these years.

(3)  Principal  payments  indicated  are principal  reductions  under our senior
     secured credit  facility.  The 2003 amount  excludes the  outstanding  $4.4
     million  6%  Convertible  Subordinated  Notes  due  2006 of CCL.  CCL is in
     default on these notes.

(4)  Refinancing  sources may include,  for example, a new bank facility used to
     repay these amounts;  other sources of financing may include capital raised
     through  new debt or  equity  financing  or asset  sales.  There  can be no
     assurance that we will be able to refinance our  indebtedness  or raise the
     required funds.

(5)  Approximately  $8.1 million of the capital lease and other debt obligations
     of  MegsINet  Internet,  Inc.  are the  subject of current  litigation,  as
     described in Part II, Item I of this Quarterly Report on Form 10-Q entitled
     "Legal Proceedings."






                                       26



Although we believe that our plans,  intentions and expectations as reflected in
or suggested by these  forward-looking  statements are reasonable as of the date
of this quarterly  report,  we can give no assurance that our plans,  intentions
and expectations will be achieved in a timely manner if at all.

In addition, we are a holding company with no significant assets other than cash
and securities and  investments in, and advances to, our  subsidiaries.  We are,
therefore, likely to be dependent upon receipt of funds from our subsidiaries to
meet our own obligations. However, our subsidiaries' debt agreements prevent the
payment of  dividends,  loans or other  distributions  to us,  except in limited
circumstances.  However,  the limited  permitted  circumstances of distributions
from our subsidiaries  may be sufficient for our operations,  because nearly all
of the uses of funds described above are cash requirements of our subsidiaries.

Contractual Obligations and Commercial Commitments

Our contractual obligations and commercial commitments are summarized below, and
are  fully  disclosed  in the  Notes  to the  Condensed  Consolidated  Financial
Statements.

The  following  table  includes  aggregate  information  about  our  contractual
obligations as of March 31, 2003 and the periods in which payments are due:



                                                                         Payments Due by Period
                                                     -----------------------------------------------------------------
                                                                    Less than      1-3          4-5        After 5
Contractual Obligations                                 Total        1 Year       Years        Years        Years
---------------------------------------------------- -----------------------------------------------------------------
                                                                              (in thousands)
                                                                                              
Long-Term Debt (1)                                   $    178,889    $   8,258    $ 46,800     $ 85,800      $ 38,031
Capital Lease Obligations                                   9,031        9,031           -            -             -
Operating Lease Obligations                                25,549        7,246       8,845        6,114         3,344
Unconditional Purchase Obligations                              -            -           -            -             -
Other Long-Term Obligations....                                 -            -           -            -             -
                                                     ------------- ------------ ----------- ------------ -------------
Total Contractual Cash Obligations                      $ 213,469     $ 24,535  $   55,645     $ 91,914      $ 41,375
                                                     ============= ============ =========== ============ =============


(1)  Long-term debt includes the senior secured credit facility of $156,100,000,
     10.75%  Unsecured  Convertible  PIK Notes due  April  2011 of  $18,431,000,
     including accrued PIK interest, and CCL's 6% Convertible Subordinated Notes
     due 2006 of  $4,358,000.  The  Convertible  Subordinated  Notes due 2006 of
     $4,358,000  have been reflected as due in less than one year because CCL is
     currently in default of this obligation.








                                       27


The  following  table  includes  aggregate   information  about  our  commercial
commitments  as of March 31,  2003 and the  periods in which  payments  are due.
Commercial  commitments  are  items  that we  could be  obligated  to pay in the
future. They are not required to be included in the consolidated balance sheet.



                                                                  Amount of Commitment Expiration Per Period
                                                      ----------------------------------------------------------------
                                                                     Less than      1 - 3       4 - 5       Over 5
Other Commercial Commitments                             Total        1 Year        Years       Years        Years
----------------------------------------------------- ----------------------------------------------------------------
                                                                              (in thousands)
                                                                                                   
Guarantees                                                     $ -          $ -          $ -         $ -          $ -
Lines of Credit                                                  -            -            -           -            -
Standby Letters of Credit                                    3,696        3,696            -           -            -
Standby Repurchase Obligations                                   -            -            -           -            -
Other Commercial Commitments                                 2,058        2,058            -           -            -
                                                      ------------- ------------ ------------ ----------- ------------
Total Commercial Commitments                               $ 5,754      $ 5,754          $ -         $ -          $ -
                                                      ============= ============ ============ =========== ============



Consolidated Statement of Cash Flows

For the three months ended March 31, 2003, cash provided by operating activities
was  $1,530,000  in  comparison  to cash  provided by  operating  activities  of
$4,544,000  for the three  months  ended  March  31,  2002.  The  change in cash
provided by operating  activities  is primarily  due to changes in our operating
assets and liabilities.

For the three months ended March 31,  2003,  cash used to purchase  fixed assets
decreased to  $1,377,000  from  $2,405,000  for the three months ended March 31,
2002, reflecting decreased purchases of operating equipment.


                                       28




Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Certain statements  contained herein,  specifically  excluding references to the
exchange offers, constitute "forward-looking statements" as that term is defined
under the Private  Securities  Litigation  Reform Act of 1995. When used herein,
the words,  "believe,"  "anticipate,"  "plan," "will,"  "expects,"  "estimates,"
"projects,"  "positioned,"  "strategy,"  and similar  expressions  identify such
forward-looking  statements.  All  references  in this Safe Harbor legend to the
Company shall be deemed to include ATX Communications, Inc. and its subsidiaries
and  affiliates.  These  forward-looking  statements  involve  known and unknown
risks,  uncertainties  and other  factors  that may cause  the  actual  results,
performance  or  achievements  of  the  Company,  or  industry  results,  to  be
materially different from those contemplated,  projected,  forecasted, estimated
or budgeted, whether expressed or implied, by these forward-looking  statements.
These  factors  include the  following:  the  Company's  ability to obtain trade
credit,  shipments  and terms with  vendors  and service  providers  for current
orders;  the Company's  ability to maintain  contracts  that are critical to its
operations;  potential  adverse  developments  with  respect  to  the  Company's
liquidity or results of operations;  adverse developments in commercial disputes
or legal  proceedings,  including  the  pending  or any future  litigation  with
Verizon  and  SBC/Ameritech;  the  Company's  ability  to fund and  execute  its
business  plan;  the Company's  ability to attract,  retain and  compensate  key
executives and employees; the Company's ability to attract and retain customers;
general  economic  and  business  conditions;   industry  trends;  technological
developments; the Company's ability to continue to design and build its network,
install facilities,  obtain and maintain any required  governmental  licenses or
approvals and finance  construction and development,  all in a timely manner, at
reasonable  costs and on satisfactory  terms and conditions;  assumptions  about
customer  acceptance,  churn rates,  overall market  penetration and competition
from  providers  of  alternative  services;  the  impact  of  restructuring  and
integration  actions;  the  impact  of  new  business  opportunities   requiring
significant up-front investment;  interest rate fluctuations;  and availability,
terms and deployment of capital. The Company assumes no obligation to update the
forward-looking  statements contained herein to reflect actual results,  changes
in assumptions or changes in factors affecting such statements.

We  encourage  you to review the risk  factors  relating to our business and our
industry  set  forth in Item 1 of our  Annual  Report  on Form 10-K for the year
ended December 31, 2002.



                                       29



ITEM 3. Quantitative and Qualitative Disclosure About Market Risk

The SEC's rule relating to market risk disclosure  requires that we describe and
quantify  our   potential   losses  from  market  risk   sensitive   instruments
attributable  to  reasonably  possible  market  changes.  Market risk  sensitive
instruments  include all financial or commodity  instruments and other financial
instruments,  such as investments and debt, that are sensitive to future changes
in interest rates,  currency  exchange rates,  commodity  prices or other market
factors.  We are not exposed to market  risks from  changes in foreign  currency
exchange  rates  or  commodity  prices.  We do  not  hold  derivative  financial
instruments nor do we hold securities for trading or speculative purposes. Under
our current  policies,  we do not use interest rate  derivative  instruments  to
manage our exposure to interest rate changes.

The fair  market  value of  long-term  fixed  interest  rate debt is  subject to
interest rate risk. Generally, the fair market value of fixed interest rate debt
will increase as interest  rates fall and decrease as interest  rates rise.  The
carrying amount of the variable rate senior secured credit facility approximates
the fair value.  The fair value of our other notes payable are  estimated  using
discounted cash flow analyses,  based on our current incremental borrowing rates
for similar types of borrowing arrangements.



                                                Interest Rate Sensitivity
                                                  As of March 31, 2003

                                          Principal Amount by Expected Maturity
                                                  Average Interest Rate



                         April 1, 2003
                               to
                          December 31,       For the Years Ending December 31,
                         -----------------------------------------------------------                            Fair
                               2003         2004       2005       2006       2007    Thereafter     Total      Value
                          ---------------------------------------------------------------------------------------------
                                                                                       
 Long-term debt,
  including current
  portion:
 Fixed rate               $   4,358           $--        $--        $--        $--     $47,525(a)  $51,883     $20,437
 Average interest rate        6.00%                                                      10.75%
 Variable rate                  $--       $11,700    $25,350    $50,700       $39,000   $29,350    $156,100    $156,100

 Average interest rate
                          Base rate      Libor +    Libor +    Libor +    Libor +    Libor +
                          + 5.5%(b)      4.5% or    4.5% or    4.5% or    4.5% or    4.5% or
                                         base rate  base rate  base rate  Base rate  base rate
                                         + 3.5%(b)  + 3.5%     + 3.5%     + 3.5%     + 3.5%


(a)  Represents the value at maturity of 10.75% Unsecured  Convertible PIK Notes
     due April 2011.

(b)  On March 31,  2003,  we entered  into an  amendment  to our senior  secured
     credit  facility.  Under this  amendment,  the lenders  under the  facility
     agreed to defer  interest  payments  on the  outstanding  loans  during the
     period  beginning  March 12, 2003 and ending on  February  2, 2004,  during
     which time the loans will accrue interest at the base rate plus 5.5%.



                                       30




ITEM 4. CONTROLS AND PROCEDURES

(a)  Evaluation of Disclosure  Controls and  Procedures - Under the  supervision
     and with the  participation  of our  management,  including  our  principal
     executive officer and principal  financial  officer,  we have evaluated the
     effectiveness of the Company's  disclosure controls and procedures (as such
     term is defined  in Rules  13a-14(c)  and  15d-14(c)  under the  Securities
     Exchange Act of 1934, as amended (the "Exchange  Act")) as of a date within
     90 days prior to the filing date of this quarterly  report (the "Evaluation
     Date"). Based on such evaluation,  such officers have concluded that, as of
     the Evaluation Date, the Company's  disclosure  controls and procedures are
     effective  in  alerting  them on a  timely  basis to  material  information
     relating to the Company (including its consolidated  subsidiaries) required
     to be  included  in the  Company's  reports  filed or  submitted  under the
     Exchange Act.

(b)  Changes in Internal  Controls - Since the Evaluation  Date,  there have not
     been any significant changes in the Company's internal controls or in other
     factors that could significantly affect such controls.














                                       31



PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Through our various operating subsidiaries,  we purchase goods and services from
a wide  variety  of  vendors  under  contractual  and  other  arrangements  that
sometimes  give rise to  litigation  in the  ordinary  course of  business.  Our
subsidiaries  also provide goods and services to a wide range of customers under
arrangements that sometimes lead to disputes over payment, performance and other
obligations. Some of these disputes, regardless of their merit, could subject us
to costly litigation and the diversion of technical and/or management personnel.
Additionally,  in light  of our  ongoing  litigation  with  the  local  exchange
carriers,  on which we depend for  certain  services,  from time to time,  those
carriers  have and will  likely  continue  to threaten  service  disruptions  or
terminations.  Any service disruptions or terminations, if actually implemented,
could have a material adverse effect on our business. Additionally,  liabilities
from  litigation  that are not covered by insurance or that exceed such coverage
could have a material adverse effect on our business, financial condition and/or
operating results.

Currently,  we  have  the  following  outstanding  matters,  which  if  resolved
unfavorably to us, could have a material adverse effect on us:

o    On August  12,  2002,  Verizon  Communications,  Inc.  and  several  of its
     subsidiaries  filed a complaint in the United States District Court for the
     District of Delaware  against us and several of our  indirect  wholly-owned
     subsidiaries,  referred  to herein as the  defendants,  seeking  payment of
     approximately $37 million allegedly owed to Verizon under various contracts
     and  state  and  federal  law.  Verizon  also  asked  the  Court to issue a
     declaratory ruling that it has not violated the antitrust laws.

     The  defendants  believe  that  they  have  meritorious   defenses  to  the
     complaint,  and further,  that the amounts owed are substantially less than
     the amounts  claimed by Verizon.  For example,  the defendants  believe the
     figure specified in the complaint  includes payments that have been made by
     the  defendants  to Verizon  (including  in excess of $14 million paid soon
     after the filing of the complaint),  credits that Verizon has issued to the
     defendants since the filing of the complaint,  and additional  disputes for
     which Verizon owes credits to the defendants.  The defendants have filed an
     answer to Verizon's  complaint  denying Verizon's claims, in part, and have
     asserted various  counterclaims  against Verizon,  including claims seeking
     damages  for  breach of  contract  and treble  damages  for  violating  the
     antitrust laws. The defendants have also moved to dismiss Verizon's request
     for a  declaratory  ruling  on the  antitrust  claims,  which  Verizon  has
     opposed.




                                       32



     On  November  18,  2002,  Verizon  filed a motion  to  dismiss  defendants'
     antitrust counterclaims, relying heavily on a decision by the United States
     Court of Appeals for the 7th Circuit in Goldwasser v. Ameritech  Corp., 222
     F.3d 390 (7th Cir. 2000) dismissing antitrust claims brought on behalf of a
     class of consumers who had purchased  services from  Ameritech in Illinois.
     On January 9, 2003,  the  defendants  filed their  opposition  to Verizon's
     motion,  noting not only that the Goldwasser case is  distinguishable  from
     the  defendants'  antitrust  claims,  but also that the  appellate  court's
     rationale in Goldwasser  had been  effectively  repudiated by the appellate
     courts of the 2nd and 11th circuits, as well as by a federal trial court in
     the antitrust claim raised by us against SBC/Ameritech in the United States
     District Court for the Northern District of Ohio.

     On March  20,  2003,  the  Court  issued  an  order  denying  the  parties'
     respective  motions without  prejudice to renew,  pending a decision by the
     United States Supreme Court in Verizon Communications,  Inc. vs. Law Office
     of Curtis Trinko, LLP, Supreme Court Docket No. 02-682 (cert. granted March
     10, 2002).  By order of the Court issued May 6, 2003, the parties have been
     directed to proceed with discovery on all issues.  We and our  subsidiaries
     intend to pursue  all  available  remedies  and  counterclaims  and  defend
     ourselves  vigorously;  however,  we and our subsidiaries cannot be certain
     how  or  when  these  matters  will  be  resolved  or  the  outcome  of the
     litigation.

o    On March 7, 2002, CoreComm  Massachusetts,  Inc., an indirect  wholly-owned
     subsidiary of ours,  initiated litigation against Verizon New England d/b/a
     Verizon  Massachusetts  in  the  Suffolk  Superior  Court,   Massachusetts,
     alleging  breach of  contract  and seeking a  temporary  restraining  order
     against  Verizon  Massachusetts.  Verizon  has filed its answer to CoreComm
     Massachusetts'   complaint  and  filed  counterclaims  seeking  payment  of
     approximately $1.2 million allegedly owed by CoreComm  Massachusetts  under
     the parties'  interconnection  agreement and Verizon's tariffs.  During the
     course of  discovery,  Verizon  conceded that it had  over-billed  CoreComm
     Massachusetts   by   approximately   $800,000.   As  a   result,   CoreComm
     Massachusetts  amended its complaint to include claims against  Verizon for
     unfair and deceptive acts or practices in violation of Massachusetts'  fair
     trade practice laws. Verizon  subsequently amended its complaint to specify
     a revised claim of $1.1 million.  CoreComm  Massachusetts  ceased  offering
     local telephone services in Massachusetts in December 2002 and is presently
     withdrawing  from  the  market.  CoreComm  Massachusetts'  withdrawal  from
     providing  telephone  services in  Massachusetts  has not had any  material
     adverse affect on our consolidated business.

                                       33




o    By letter dated April 4, 2003,  we received a notice from Verizon  claiming
     that Verizon is owed approximately $8.4 million by one of our subsidiaries,
     CoreComm New York, Inc., for services  allegedly  purchased in the state of
     New York,  including  approximately  $5.1  million of charges  that Verizon
     contends  were  mistakenly  credited to the  accounts of CoreComm New York,
     Inc. in connection with the acquisition out of bankruptcy of certain assets
     of USN  Communications,  Inc. in May 1999. In response,  CoreComm New York,
     Inc. has  challenged  the  accuracy of  Verizon's  figures and has provided
     formal  written notice that it is disputing  Verizon's  right to payment of
     the amounts  specified in Verizon's  April 4 letter.  CoreComm New York has
     identified  a  number  of gaps and  errors  in the  accounting  information
     provided  by Verizon,  many of which  Verizon  has  acknowledged.  Although
     CoreComm New York, Inc.  intends to defend itself  vigorously and to pursue
     all  available  counterclaims  and remedies,  it is not  presently  able to
     determine  what amount,  if any, is properly  owed to Verizon or to predict
     how these  matters will be resolved.  The  operations of CoreComm New York,
     Inc.  do not  represent a material  component  of our  revenue,  profits or
     operations.

o    We and CoreComm Newco, Inc., an indirect,  wholly-owned subsidiary of ours,
     are currently in litigation  with SBC Corp.,  Ameritech  Ohio and other SBC
     subsidiaries  over  various  billing  and  performance  issues,   including
     SBC/Ameritech's alleged violation of the antitrust laws and the adequacy of
     SBC/Ameritech's  performance  under a 1998 contract  between CoreComm Newco
     and  Ameritech  Ohio.  This  litigation  began in June 2001 when  Ameritech
     threatened  to  stop  processing  new  orders  following  CoreComm  Newco's
     exercise  of  its  right  under  the  contract  to  withhold  payments  for
     Ameritech's  performance  failures.  On October 9, 2001, Ameritech filed an
     amended complaint in the United States District Court, Northern District of
     Ohio seeking a total of approximately  $14.4 million in alleged outstanding
     charges.

     On  December  26,  2001,  CoreComm  Newco  filed its answer to  Ameritech's
     amended complaint and simultaneously filed three counterclaims  against SBC
     Corp.,  Ameritech  Ohio and certain of their  respective  subsidiaries  and
     affiliates,   alleging  breach  of  contract,   antitrust  violations,  and
     fraudulent or negligent  misrepresentation  claims.  On July 25, 2002,  the
     district Court issued a decision denying a motion to dismiss from Ameritech
     and upholding CoreComm Newco's right to proceed with its antitrust,  breach
     of contract and misrepresentation claims against all counter-defendants. On
     January 21,  2003,  CoreComm  Newco  amended its  complaint  to include the
     Company and other affiliates as additional  claimants and to add additional
     allegations supporting its claims, and on February 17, 2003,  SBC/Ameritech
     filed its answer to the amended complaint.


                                       34



     We believe that  CoreComm  Newco has  meritorious  defenses to  Ameritech's
     amended  complaint that could reduce the amount  currently in dispute.  For
     example, the figure specified in Ameritech's  complaint may not account for
     various  amounts that have been  properly  disputed by CoreComm  Newco as a
     result of billing errors and other improper  charges,  various refunds that
     Ameritech  contends it has already  credited to CoreComm  Newco's  accounts
     since the filing of the complaint,  and payments that were made by CoreComm
     Newco in the  ordinary  course  after the time of  Ameritech's  submission.
     However,  we cannot be certain how or when the matter will be resolved.  We
     also believes that, to the extent Ameritech prevails with respect to any of
     its claims,  Ameritech's award may be offset in whole or in part by amounts
     that CoreComm Newco and we are seeking to obtain from  SBC/Ameritech  under
     their  counterclaims.  CoreComm Newco and we intend to pursue all available
     remedies and to defend themselves vigorously.  However, it is impossible at
     this time to predict the outcome of the litigation.

o    On April 16, 2003,  SBC Ohio (formerly  known as SBC Ameritech  Ohio) filed
     with the Public  Utilities  Commission of Ohio,  known as the PUCO, a third
     supplement  to its  application  for  review of an order  entered by a PUCO
     Hearing  Examiner  barring  SBC Ohio from  refusing  to process new service
     orders from  CoreComm  Newco  pending  the  resolution  of various  billing
     disputes at issue  between the parties.  Among other  things,  the April 16
     supplement  contends that the Hearing  Examiner's  entry provided  CoreComm
     Newco with a  competitive  advantage by allowing it to withhold  payment on
     approximately  $8.7  million of alleged  undisputed  charges  for local and
     collocation services in Ohio as of March 31, 2003. On May 2, 2003, CoreComm
     Newco submitted a reply to the April 16 supplement in which it disputed the
     accuracy of SBC Ohio's claims and explained that the outstanding balance of
     approximately  $1.9 million is consistent with common practice  considering
     SBC Ohio's  billing  problems  and the  numerous  payment  cycles at issue.
     CoreComm Newco has already  identified and lodged millions of dollars worth
     of billing and performance  disputes and is continuing to identify  charges
     that it believes are not properly owed to SBC Ohio.  CoreComm Newco intends
     to defend  itself  vigorously  and to pursue  all  available  remedies  and
     counterclaims.  However,  it is not possible to predict the outcome of this
     matter at this time.

                                       35




     By letters dated April 23, 2003, and April 25, 2003,  SBC/Midwest  demanded
     payment  from  certain of the  Company's  subsidiaries  approximately  $9.5
     million of alleged  undisputed,  past due  charges for  wholesale  services
     allegedly  provided to our operating  subsidiaries  in Illinois,  Michigan,
     Indiana  and  Wisconsin,   and  threatened  to  pursue  further  collection
     activities  against  those  entities.  The letters  regarding  Michigan and
     Wisconsin  requested that the recipients pay into escrow an unspecified sum
     for Michigan and  approximately  $135,240 for Wisconsin in connection  with
     charges that SBC Midwest contends our  subsidiaries  have disputed in those
     states.  In response,  our subsidiaries  notified SBC Midwest that they are
     disputing  the  accuracy of the figures set forth in its letters as well as
     its right to request an escrow deposit to cover disputed charges,  and that
     they are prepared to engage in further  discussions  regarding  the various
     amounts at issue. Our subsidiaries  intend to contest any charges that they
     believe  are not  properly  owed and to  vigorously  pursue  all claims and
     defend  themselves  against any  collections  action.  However,  we are not
     currently  able to predict  how or when these  matters  will be resolved or
     what amount, if any, will need to be paid at the time of resolution.

o    On December 3, 2001,  General Electric Capital Corp.,  referred to as GECC,
     filed a civil lawsuit in the Circuit Court of Cook County, Illinois against
     CCL  and  MegsINet,   Inc.,  an  indirect   subsidiary  of  ours,   seeking
     approximately  $8 million in  allegedly  past due amounts and the return of
     equipment  under a capital  equipment  lease  agreement  between Ascend and
     MegsINet.  Thereafter,  on May 1, 2002, the complaint was amended to add us
     as an additional defendant.  Although neither CCL nor we are parties to the
     agreement  between  Ascend and MegsINet,  the  complaint  contends that CCL
     and/or we should be held  responsible for MegsINet's  obligations  under an
     "alter ego" theory of liability.  CCL and we are contesting  this claim and
     do not believe that the  obligations of MegsINet are  obligations of CCL or
     us.

     Subsequent  to the  filing of its  initial  complaint,  GECC filed a second
     complaint in the Circuit Court of Cook County,  Illinois against  MegsINet,
     CCL and us seeking a court order  allowing it to take  repossession  of its
     alleged  equipment.  On  September  24,  2002,  the  Court  issued an order
     granting  GECC's request for  repossession  of the equipment.  MegsINet has
     allowed GECC to take  possession  of the  equipment,  which has not had any
     material  impact on our business or  operations.  On April 23,  2003,  GECC
     filed a motion for summary  judgment asking the Court to rule in its favor,
     without  the need for trial,  that  MegsINet,  CCL and ATX  breached  their
     alleged contractual obligations to make required lease payments to GECC and
     awarding GECC damages in the amount of $9,100,053  plus attorneys' fees and
     interest.  MegsINet, CCL and us do not believe that it would be appropriate
     for the court to  resolve  this  litigation  through  summary  judgment  as
     requested by GECC and they intend to defend  themselves  vigorously  and to
     pursue all available claims and defenses. However, it is impossible at this
     time to predict the outcome of the litigation.  MegsINet does not represent
     a material  component of our  revenue,  profits or  operations.  All of our
     assets and those of our  subsidiaries,  including  those of  MegsINet,  are
     subject to a first priority  security  interest in favor the senior lenders
     under the $156 million Senior Credit Facility.



                                       36




o    On May 25, 2001, KMC Telecom,  Inc. and some of our operating  subsidiaries
     filed an  action  in the  Supreme  Court  of New  York for New York  County
     against CCL,  Cellular  Communications  of Puerto Rico, Inc.,  CoreComm New
     York,  Inc. and  MegsINet.  KMC contends that it is owed  approximately  $2
     million,  primarily in respect of alleged  early  termination  liabilities,
     under a services agreement and a co-location  agreement with MegsINet.  The
     defendants have denied KMC's claims and have asserted that the contracts at
     issue were signed without proper authorization,  that KMC failed to perform
     under the alleged  contracts,  and that the  termination  penalties are not
     enforceable.  On  March  27,  2002,  certain  of the  defendants  initiated
     litigation   against   several  former   principals  of  MegsINet   seeking
     indemnification and contribution against KMC's claims for breach of various
     representations  and warranties made under the merger agreement pursuant to
     which MegsINet became a subsidiary of ours.  Defendants have also initiated
     coverage under an insurance policy designed to protect against such claims;
     the  insurance  carrier  has  initially  declined  coverage  and  it may be
     necessary to pursue  litigation  to obtain  coverage in the event of a loss
     under the policy.

o    On September 24, 2002, GATX Technologies, Inc., known herein as GATX, filed
     an  action  in  the  Thirteenth   Judicial   Circuit  in  Florida   against
     CoreComm-Voyager,  Inc.,  an  indirect  wholly-owned  subsidiary  of  ours,
     seeking  recovery  of  amounts  allegedly  owed  under an  equipment  lease
     totaling  approximately  $150,000.  On October 21,  2002,  CoreComm-Voyager
     moved to dismiss GATX's action for lack of jurisdiction.  The motion is now
     pending with the Court.  On October 28, 2002,  3Com  Corporation,  known as
     3Com,  filed an action  against the  Company in the Court of Common  Pleas,
     Montgomery County,  Pennsylvania seeking payment of approximately  $900,000
     under an  equipment  lease.  Should  either  action  proceed  further,  the
     defendants  will  defend  themselves  vigorously  and pursue all  available
     claims.  However,  it is not  possible  at this time to predict how or when
     either of these matters will be resolved.

o    On March 1, 2002, Easton Telecom Services,  LLC initiated litigation in the
     Northern  District of Ohio against  CoreComm  Internet Group,  Inc. seeking
     payment of  approximately  $4.9  million,  primarily  in respect of alleged
     early termination  penalties for  telecommunications  services  purportedly
     provided under alleged  contracts.  On August 23, 2002, the Court issued an
     order  dismissing  approximately  $4 million of Easton's claims as invalid.
     Upon the conclusion of a jury trial that ended on November 8, 2002,  Easton
     obtained  a  judgment  against  CoreComm  Internet  Group,   Inc.,  Voyager
     Information Networks,  Inc. and MegsINet in the total amount of $1,085,000.
     On February 4, 2003, the defendants filed an appeal in this matter with the
     United States Court of Appeals for the Sixth Circuit, and the plaintiff has
     filed a cross-appeal.  Plaintiff is currently  pursuing discovery in aid of
     execution on its judgment against  defendants.  All of our assets and those
     of our  subsidiaries,  including those of the defendants,  are subject to a
     first priority  security  interest in favor of the senior lenders under the
     $156 million senior credit facility.

                                       37




o    On June 7, 2002,  the Board of Revenue and Finance of the  Commonwealth  of
     Pennsylvania  issued  an  order  granting  in part  and  denying  in part a
     petition  for  review of a  decision  by a lower  administrative  authority
     relating  to our  alleged  liability  for sales and use tax for the  period
     September 1, 1997 through July 31, 2000.  Pursuant to the June 7 order,  we
     have been assessed  sales and use tax for the period at issue in the amount
     of  $631,429,   which  has  been  accrued  in  our  consolidated  financial
     statements.  On July 8, 2002, we filed a petition for review of the board's
     order in the Commonwealth Court of Pennsylvania seeking a further reduction
     of the assessment.  We believe that we have  meritorious  defenses and that
     the assessment should be reduced; however it is not possible to predict how
     this matter will be resolved

o    On January 3, 2003, we and our indirect subsidiary, MegsINet, Inc., filed a
     complaint  against  Broadwing  in the U.S.  District  Court for the Eastern
     District of Pennsylvania  seeking the return of  approximately  $700,000 in
     taxes  billed by  Broadwing  in alleged  violation  of two  Master  Service
     Agreements.  On February  24,  2003,  Broadwing  filed a motion to stay the
     action  pending  their  request to arbitrate the matter before the American
     Arbitration Association.  The matter is still pending before the Court, and
     plaintiffs intend to pursue their claims vigorously.

o    On  February  28,  2003,  Focal  Communications  Corp.  and  certain of its
     subsidiaries  initiated adversarial  proceedings in Focal's Chapter 11 case
     under the U.S.  Bankruptcy laws against us and certain of our  subsidiaries
     seeking  payment of  approximately  $802,687 in charges for  interstate and
     intrastate   switched  access  services   allegedly   provided  by  Focal's
     subsidiaries  in  Illinois,  Pennsylvania,   Delaware  and  New  York.  The
     defendants  are  currently  reviewing  Focal's  claims and intend to defend
     themselves  vigorously  and pursue all available  counterclaims,  including
     claims for any amounts owed by Focal to any of the defendants.  However, it
     is not  possible  at this time to predict  how or when this  matter will be
     resolved.

ITEM 5. OTHER INFORMATION

On May 13, 2003, the Board of Directors approved an Amended and Restated Charter
of the Audit  Committee  of the Board of Directors  which is attached  hereto as
Exhibit 99.2.



                                       38





ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

     99.1 Certification dated May 13, 2003 pursuant to 18 U.S.C. Section 1350 of
          CEO and CFO pursuant to 18 U.S.C.  Section 1350 as adopted pursuant to
          Section 906 of the  Sarbanes-Oxley  Act of 2002 by Thomas J.  Gravina,
          Chief  Executive  Officer,  and Michael A.  Peterson,  Executive  Vice
          President, Chief Operating Officer and Chief Financial Officer

     99.2 Amended and Restated Charter of the Audit Committee

(b) Reports on Form 8-K.

     During the  quarter  ended March 31,  2003,  ATX  Communications  filed the
     following reports on Form 8-K:

          (i)  Report  dated  March 14,  2003,  reporting  under  Item 5,  Other
               Events, that ATX  Communications,  Inc. and the lenders under ATX
               Communications,  Inc.'s senior  credit  facility are currently in
               discussions regarding modifications to the senior credit facility
               that would provide ATX  Communications,  Inc. increased liquidity
               to invest in its operations.

          (ii) Report  dated  March 31,  2003,  reporting  under  Item 5,  Other
               Events,  that  ATX  Communications,  Inc.  and  its  subsidiaries
               entered  into  a  Fourth  Amendment  and  Waiver  to  its  Credit
               Agreement dated as of September 28, 2000, as amended and restated
               as of April 11, 2001, and amended by the First Amendment dated as
               of October 31, 2001,  the Second  Amendment  dated as of December
               14,  2001 and the Third  Amendment  dated as of March  29,  2002,
               among CCL Historical,  Inc., formerly named CoreComm Limited, ATX
               Communications,  Inc. CoreComm Communications,  Inc., the lenders
               party thereto and the  administrative  agent and collateral agent
               party thereto.

     No financial statements were filed with these reports.




                                       39




                                   SIGNATURES



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




ATX COMMUNICATIONS, INC.


Date: May 13, 2003        By: /s/ Michael A. Peterson
                              -----------------------------------

                              Michael A. Peterson
                              Executive Vice President -
                              Chief Operating Officer and
                              Chief Financial Officer








Date: May 13, 2003        By: /s/ Neil Peritz
                              -----------------------------

                              Neil Peritz
                              Senior Vice President - Controller and Treasurer
                              (Principal Accounting Officer)







                                       40




 Certification of Principal Executive Officer required by SEC Rule 13a-14
             (17 CFR 240.13a-14) or Rule 15d-14 (17 CFR 240.15d-14)

I, Thomas J. Gravina, certify that:

     1.   I  have   reviewed  this   quarterly   report  on  Form  10-Q  of  ATX
          Communications, Inc.;

     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


                                       41





     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.



Date: May 13, 2003                    By:   /s/ Thomas J. Gravina
                                            -----------------------------

                                            Thomas J. Gravina
                                            President - Chief Executive Officer






                                       42





    Certification of Principal Financial Officer required by SEC Rule 13a-14
             (17 CFR 240.13a-14) or Rule 15d-14 (17 CFR 240.15d-14)


I, Michael A. Peterson, certify that:

     1.   I  have   reviewed  this   quarterly   report  on  Form  10-Q  of  ATX
          Communications, Inc.;

     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


                                       43





     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.



Date: May 13, 2003                          By:   /s/ Michael A. Peterson
                                                  ------------------------------

                                                  Michael A. Peterson
                                                  Executive Vice President -
                                                  Chief Operating Officer and
                                                  Chief Financial Officer







                                       44