Delaware (State or other jurisdiction of incorporation or organization)

91-1859172 (I.R.S. Employer Identification No.)

		Page
PART I    FINANCIAL INFORMATION
Item 1.     Financial Statements.		3
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.		10
Item 3.     Quantitative and Qualitative Disclosures about Market Risk.		27
PART II.     OTHER INFORMATION		28
Item 1.     Legal Proceedings.		28
Item 2.     Changes in Securities and Use of Proceeds.		28
Item 3.     Defaults Upon Senior Securities.		28
Item 4.     Submission of Matters to a Vote of Security Holders.		28
Item 5.     Other Information.		29
Item 6.     Exhibits and Reports on Form 8-K.		29
SIGNATURES		30

		June 30, 2002				December 31, 2001
		(Unaudited)
		(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	42,756			$	81,990
Accounts receivable, net			282				274
Prepaid expenses and other current assets			1,807				4,737
Total current assets			44,845				87,001
PROPERTY AND EQUIPMENT, NET			5,188				7,236
OTHER ASSETS, NET			3,976				4,674
GOODWILL, NET							16,468
TOTAL ASSETS		$	54,009			$	115,379
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	656			$	942
Accrued expenses			1,763				3,280
Accrued restructuring			3,697				5,676
Unearned revenue			2,765				2,413
Current portion of long-term debt			273				2,034
Total current liabilities			9,154				14,345
LONG-TERM DEBT, less current portion							950
LONG-TERM ACCRUED RESTRUCTURING			1,479				3,065
Total liabilities			10,633				18,360
STOCKHOLDERS’ EQUITY:
Common stock and additional paid in capital			347,246				378,203
Unearned stock compensation			(961	)			(1,793	)
Accumulated deficit			(302,909	)			(279,391	)
Total stockholders’ equity			43,376				97,019
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	54,009			$	115,379

		Three Months Ended June 30,								Six Months Ended June 30,
		2002				2001				2002				2001
		(Unaudited)								(Unaudited)
		(000's, except per share data)								(000's, except per share data)
Revenue
Government network		$	1,702			$	670			$	3,269			$	952
Business exchange and other							1,456								4,578
Product															8,448
Total revenue			1,702				2,126				3,269				13,978
Cost of revenue
Government network			419				220				794				231
Business exchange and other							28								414
Product															9,555
Total cost of revenue			419				248				794				10,200
Gross margin			1,283				1,878				2,475				3,778
Operating expenses:
Sales and marketing (including noncash stock-based compensation of $173 and $384 in 2002 and $404 and $1,059 in 2001)			2,625				7,576				4,847				16,479
Technology and development (including noncash stock-based compensation of $147 and $326 in 2002 and $342 and $897 in 2001)			1,424				3,973				3,011				9,226
General and administrative (including noncash stock-based compensation of $55 and $122 in 2002 and $132 and $345 in 2001)			1,229				2,338				2,477				4,980
Amortization of goodwill							3,864								7,596
Restructuring charge (including reversal of noncash stock-based compensation of $0 and $221 in 2002 and 2001)															24,329
Firstsource charge															2,854
Total operating expenses			5,278				17,751				10,335				65,464
Loss from operations			(3,995	)			(15,873	)			(7,860	)			(61,686	)
Other income, net			405				1,334				810				3,172
Net loss before cumulative effect of change in accounting principle			(3,590	)			(14,539	)			(7,050	)			(58,514	)
Cumulative effect of change in accounting principle											(16,468	)
Net loss		$	(3,590	)		$	(14,539	)		$	(23,518	)		$	(58,514	)
Basic and diluted net loss per common share
Net loss before cumulative effect of change in accounting principle		$	(0.47	)		$	(1.70	)		$	(0.92	)		$	(6.88	)
Cumulative effect of change in accounting principle		$	—			$	—			$	(2.14	)		$	—
Basic and diluted net loss per common share		$	(0.47	)		$	(1.70	)		$	(3.05	)		$	(6.88	)
Basic and diluted weighted average shares outstanding			7,655				8,543				7,702				8,501

		Six Months Ended June 30,
		2002				2001
		(Unaudited)
		(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss			(23,518	)			(58,514	)
Adjustments to reconcile net loss to net cash used in operating activities:
Cumulative effect of change in accounting principle			16,468
Depreciation and amortization			2,165				3,595
Impairment of assets							7,264
Impairment of goodwill							14,130
Loss on sale of property and equipment							460
Amortization of goodwill							7,596
Firstsource charge							2,854
Noncash stock-based compensation			832				2,080
Amortization of debt discount			10				173
Change in certain assets and liabilities, net of effects from purchase transactions:
Accounts receivable			(66	)			5,005
Inventory							4,087
Prepaid expenses and other current assets			(838	)			(296	)
Other assets			696				(332	)
Accounts payable			(286	)			(21,800	)
Accrued expenses and restructuring			(5,079	)			(4,477