================================================================================

                                 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, 2002.

                                       or

[ ]      Transition Report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the transition period from _____ to _______

         Commission File Number 000-25015


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

         Delaware                                             84-1127336
(State or other jurisdiction of                         (IRS Employer ID Number)
 incorporation or organization)

                           975 Weiland Road, Ste. 160
                          Buffalo Grove, Illinois 60089
                          -----------------------------
                    (Address of principal executive offices)

                                 (847) 229-8200
                                 --------------
              (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 [ ]



As of May 13, 2002, the Registrant  had 39,087,252  shares of Common Stock,  par
value $0.0001, outstanding.


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                                       1
<PAGE>




                         WORLDPORT COMMUNICATIONS, INC.
                                TABLE OF CONTENTS


                                                                            Page

PART I - FINANCIAL INFORMATION
------------------------------

       Item 1.    Financial Statements

                  Condensed Consolidated Balance Sheets as of
                  March 31, 2002 (unaudited) and December 31, 2001...........  3

                  Condensed Consolidated Statements of Operations
                  for the Three Months Ended March 31, 2002
                  (unaudited) and 2001 (unaudited)...........................  4

                  Condensed Consolidated Statements of Cash Flows for the
                  Three Months Ended March 31, 2002 (unaudited)
                  and 2001 (unaudited).......................................  5

                  Notes to Condensed Consolidated Financial
                  Statements (unaudited).....................................  6

       Item 2.    Management's Discussion and Analysis of
                  Financial Condition and Results of Operations.............. 14

       Item 3.    Quantitative and Qualitative Disclosures About
                  Market Risk................................................ 19

PART II - OTHER INFORMATION
---------------------------

       Item 1.    Legal Proceedings.......................................... 20

       Item 2.    Changes in Securities...................................... 21

       Item 6.    Exhibits and Reports on Form 8-K........................... 21


SIGNATURE.................................................................... 22



                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

<TABLE>

                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)
<CAPTION>

                                                                                      March 31,        December 31,
                                                                                         2002              2001
                                                                                         ----              ----
                                         ASSETS                                      (unaudited)
<S>                                                                                     <C>              <C>
 CURRENT ASSETS:
   Cash and cash equivalents...................................................         $  54,905        $  61,475
    Marketable securities.......................................................           10,870           10,759
    Income tax receivable.......................................................           57,561           51,964
    Other current assets........................................................            1,668            3,230
                                                                                        ---------        ---------
                  Total current assets..........................................          125,004          127,428
    PROPERTY AND EQUIPMENT, net.................................................            4,291            5,666
    OTHER ASSETS................................................................              676            1,722
                                                                                        ---------        ---------
                       TOTAL ASSETS.............................................        $ 129,971        $ 134,816
                                                                                        =========        =========


                          LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable...........................................................         $  5,159         $  9,938
     Accrued expenses...........................................................           25,265           21,264
     Net liabilities subject to compromise......................................            6,301            1,277
     Current portion of obligations under capital leases .......................            3,706            4,335
     Other current liabilities..................................................            2,399            2,543
                                                                                        ---------        ---------
                    Total current liabilities...................................           42,830           39,357

      Long-term obligations under capital leases, net of current portion........            2,710            3,433
                                                                                        ---------        ---------
                    Total liabilities...........................................           45,540           42,790

STOCKHOLDERS' EQUITY:
     Undesignated preferred stock, $0.0001 par value, 4,004,000 shares
        authorized, no shares issued and outstanding............................               --               --
     Series A convertible preferred stock, $0.0001 par value, 750,000 shares
        authorized, no shares issued and outstanding............................               --               --
     Series B convertible preferred stock, $0.0001 par value, 3,000,000 shares
        authorized, 956,417 and 965,642 shares issued and outstanding in 2002                  --               --
        and 2001, respectively..................................................
     Series C convertible preferred stock, $0.0001 par value, 1,450,000 shares
        authorized, 1,416,030 shares issued and outstanding.....................               --               --
     Series D convertible preferred stock, $0.0001 par value, 650,000 shares
        authorized, 316,921 shares issued and outstanding.......................               --               --
     Series E convertible preferred stock, $0.0001 par value, 145,000 shares
        authorized, 141,603 shares issued and outstanding.......................               --               --
     Series G convertible preferred stock, $0.0001 par value, 1,000 shares
        authorized, 1,000 shares issued and outstanding.........................               --               --
     Common stock, $0.0001 par value, 200,000,000 shares authorized, 38,087,252
        shares issued and outstanding...........................................                4                4
     Warrants...................................................................            2,611            2,611
     Additional paid-in capital.................................................          187,213          187,213
     Accumulated other comprehensive loss.......................................          (1,434)          (1,938)
     Accumulated deficit........................................................        (103,963)         (95,864)
                                                                                        ---------        ---------
                    Total stockholders' equity .................................           84,431           92,026
                                                                                        ---------        ---------
                    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................        $ 129,971        $ 134,816
                                                                                        =========        =========

              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

</TABLE>

                                       3
<PAGE>

                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)

                                                           Three Months Ended
                                                                March 31,
                                                        ------------------------
                                                           2002           2001
                                                           ----           ----
                                                        (unaudited)  (unaudited)
                                                        -----------  -----------

REVENUES..............................................      $   --        $   --

COST OF SERVICES......................................          --            --
                                                           -------       -------
     Gross profit.....................................          --            --

OPERATING EXPENSES:
     Selling, general and administrative expenses.....         930         1,923
     Depreciation and amortization....................          39            40
                                                           -------       -------
          Operating loss..............................       (969)       (1,963)

OTHER INCOME (EXPENSE):
     Interest income..................................         304         1,829
     Interest expense.................................       (111)          (67)
     Other income (expense)...........................         (4)            28
                                                           -------       -------

LOSS BEFORE INCOME TAXES..............................       (780)         (173)

INCOME TAX BENEFIT....................................          --            --
                                                           -------       -------

NET LOSS FROM CONTINUING OPERATIONS...................       (780)         (173)

LOSS FROM DISCONTINUED OPERATIONS, net of tax.........     (7,319)       (8,564)
                                                           -------       -------

NET LOSS..............................................    $(8,099)      $(8,737)
                                                          ========      ========

NET LOSS PER SHARE FROM CONTINUING OPERATIONS:
   BASIC..............................................    $ (0.02)      $ (0.01)
                                                          ========      ========
   DILUTED............................................    $ (0.02)      $ (0.01)
                                                          ========      ========

NET LOSS PER SHARE:
   BASIC..............................................    $ (0.21)      $ (0.26)
                                                          ========      ========
   DILUTED............................................    $ (0.21)      $ (0.26)
                                                          ========      ========

SHARES USED IN NET LOSS PER SHARE CALCULATION:
    BASIC.............................................      38,087        33,950
     CONVERTIBLE PREFERRED STOCK......................          --            --
     WARRANTS.........................................          --            --
     OPTIONS..........................................          --            --
                                                           -------       -------
     DILUTED..........................................      38,087        33,950
                                                          ========      ========

              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

                                       4
<PAGE>

<TABLE>

                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<CAPTION>


                                                                                              Three Months Ended
                                                                                                   March 31,
                                                                                                   ---------
                                                                                            2002               2001
                                                                                            ----               ----
                                                                                        (unaudited)       (unaudited)
                                                                                        -----------       -----------
<S>                                                                                       <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................................................      $ (8,099)        $ (8,737)
Adjustments to reconcile net loss to net cash flows from operating activities:
          Loss on discontinued operations...........................................          7,319            8,564
          Depreciation and amortization.............................................             39               40
          Loss on disposal of assets................................................              3               --
          Change in other current and noncurrent assets.............................            827            (208)
          Change in accounts payable, accrued expenses and other current
               liabilities..........................................................        (1,276)            1,029
                                                                                          ---------        ---------

                    Net cash flows from operating activities........................        (1,187)              688

CASH FLOWS FROM INVESTING ACTIVITIES:
          Capital expenditures......................................................             --             (20)
                                                                                          ---------        ---------

                    Net cash flows from investing activities........................             --             (20)

CASH FLOWS FROM FINANCING ACTIVITIES:
      Principal payments on obligations under capital leases........................        (1,229)            (405)
                                                                                          ---------        ---------

                    Net cash flows from financing activities........................        (1,229)            (405)


Net cash flows from discontinued operations.........................................        (4,154)         (17,076)
                                                                                          ---------        ---------

NET DECREASE IN CASH AND CASH EQUIVALENTS...........................................        (6,570)         (16,813)

CASH AND CASH EQUIVALENTS, beginning of the period..................................         61,475          132,396
                                                                                          ---------        ---------

CASH AND CASH EQUIVALENTS, end of the period........................................      $  54,905        $ 115,583
                                                                                          =========        =========

CASH PAID DURING THE PERIOD FOR INTEREST............................................      $     111        $      72
                                                                                          =========        =========

CASH PAID DURING THE PERIOD FOR INCOME TAXES........................................      $      --        $      --
                                                                                          =========        =========





              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.


</TABLE>

                                       5

<PAGE>


                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



(1)      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Organization
         ------------

               Worldport Communications,  Inc., a Delaware corporation (together
         with its subsidiaries,  the "Company"),  was originally  organized as a
         Colorado  corporation  under the name Sage  Resources,  Inc. in January
         1989.  Worldport  remained  inactive  until  1996  when  the  Company's
         domicile  was changed to Delaware and the name was changed to Worldport
         Communications, Inc.

               From 1997 to 1999,  the  Company  was a  facilities-based  global
         telecommunications    carrier   offering   voice,    data   and   other
         telecommunications  services to carriers,  Internet service  providers,
         medium and large corporations and distributors and resellers  operating
         in Europe and the United States.

               In the first quarter of 2000, the Company sold  substantially all
         of its material assets. During 2000 and 2001, the Company pursued a new
         business  strategy,  focused on the  delivery of Internet  solutions to
         global companies doing business in the European marketplace.

               As a result of the fourth  quarter  2001 and first  quarter  2002
         transactions  described  in Note 3, we no longer have  active  business
         operations.   Accordingly,   results  of  these  operations  have  been
         classified as discontinued  under  Accounting  Principles Board ("APB")
         Opinion  No.  30,  and prior  periods  have been  restated  in order to
         conform to the new presentation.

               After completing the shutdown of our  subsidiaries,  we expect to
         continue to have  significant cash resources.  We currently  anticipate
         that  after  we  complete  the  activities  related  to  exiting  these
         businesses,  we will operate with a minimal headquarters staff while we
         determine how to use these cash resources.

               We intend to consider  potential  acquisition  opportunities.  We
         also intend to analyze a potential  liquidation  of the Company and its
         effects  on  the   Company's   stockholders.   Upon  any   liquidation,
         dissolution  or  winding  up  of  the  Company,   the  holders  of  our
         outstanding  preferred stock would be entitled to receive approximately
         $68  million  prior to any  distribution  to the  holders of our common
         stock. Although we may consider acquisition opportunities,  we have not
         identified a specific  industry on which we intend to  initially  focus
         and have no present plans,  proposals,  arrangements or  understandings
         with respect to the acquisition of any specific business.  We will have
         broad  discretion in determining how to use these cash resources and in
         identifying and selecting acquisition opportunities.

         Basis of Presentation
         ---------------------

               The accompanying condensed consolidated financial statements have
         been prepared by the Company  without  audit  pursuant to the rules and
         regulations  of  the  Securities  and  Exchange   Commission.   Certain
         information  and footnote  disclosures  normally  included in financial
         statements  prepared in accordance with generally  accepted  accounting
         principles have been condensed or omitted in this Form 10-Q pursuant to
         such  rules and  regulations;  however,  management  believes  that the
         disclosures  herein are adequate to make the information  presented not
         misleading. The financial statements and notes thereto included in this
         Form 10-Q should be read in conjunction  with the financial  statements
         and notes thereto  included in the Company's Annual Report on Form 10-K
         for the year ended December 31, 2001.

                                       6

<PAGE>

               In the  opinion of the  Company's  management,  the  accompanying
         condensed  consolidated  financial  statements  contain all adjustments
         necessary  to present  fairly the  Company's  financial  position as of
         March 31, 2002,  and the results of  operations  and cash flows for the
         three months ended March 31, 2002 and 2001.  The results of  operations
         for the  three  months  ended  March  31,  2002,  are  not  necessarily
         indicative of the operating results for the full year.

         Consolidation
         -------------

               The accompanying  consolidated  financial  statements include the
         accounts  of  the  Company  and  its  wholly-owned  subsidiaries.   All
         significant   intercompany   accounts   and   transactions   have  been
         eliminated.

         Use of Estimates
         ----------------

               The  Company's  financial  statements  are prepared in accordance
         with  accounting  principles  generally  accepted in the United  States
         ("GAAP"). Financial statements prepared in accordance with GAAP require
         the  use of  management  estimates  and  assumptions  that  affect  the
         reported  amounts  of  assets  and   liabilities,   the  disclosure  of
         contingent  assets  and  liabilities  at  the  date  of  the  financial
         statements,  and the reported  amounts of revenues and expenses  during
         the reporting period. Actual results could differ from those estimates.

         Foreign Currency
         ----------------

               Prior to the transactions  described in Note 3, substantially all
         of the Company's  operations were in Europe. The assets and liabilities
         of non-U.S. subsidiaries are translated at month-end rates of exchange,
         and  income  statement  items  are  translated  at  the  average  rates
         prevailing during the period. The resulting  translation  adjustment is
         recorded as a component of  stockholders'  equity.  Exchange  gains and
         losses on intercompany  balances of a long-term  investment  nature are
         also  recorded as a component of  stockholders'  equity.  Other foreign
         exchange gains and losses are recorded in income on a current basis and
         have been included in Loss from  Discontinued  Operations.  These other
         foreign exchange gains and losses and were minimal for the three months
         ended March 31, 2002 and 2001, respectively.

         Derivatives
         -----------

               The Company has used derivative  instruments to hedge its foreign
         currency exposure only on a limited basis. Accordingly,  the Company is
         not subject to any additional  significant foreign currency market risk
         other than normal fluctuations in exchange rates.

               In June 2000, the Financial  Accounting  Standards Board ("FASB")
         issued Statement of Financial  Accounting  Standards  ("SFAS") No. 138,
         "Accounting  for Certain  Derivative  Instruments  and Certain  Hedging
         Activities--an Amendment of FASB Statement No. 133," which is effective
         for  fiscal  years   beginning  after  June  15,  2000.  SFAS  No.  133
         establishes   accounting   and  reporting   standards  for   derivative
         instruments and transactions  involving hedge  accounting.  The Company
         adopted  SFAS No.  133, as  amended,  on January 1, 2001,  which had no
         impact on the consolidated financial statements.

               At March 31, 2002 there were no foreign  currency hedge contracts
         outstanding.

         Earnings (Loss) per Share
         -------------------------

               The Company has applied the provisions of SFAS No. 128, "Earnings
         Per Share",  which  establishes  standards for computing and presenting
         earnings  per share.  Basic  earnings per share is computed by dividing
         income available to common  stockholders by the weighted average number
         of common shares outstanding for the period. The calculation of diluted
         earnings  per share  includes  the

                                       7

<PAGE>

         effect of dilutive common stock  equivalents.  In 2002 and 2001,  basic
         and diluted loss per share is the same because all dilutive  securities
         had an antidilutive effect on loss per share.

         New Accounting Pronouncements
         -----------------------------

               In June 2001,  the Financial  Accounting  Standards  Board issued
         SFAS No. 141, "Business  Combinations," and SFAS No. 142, "Goodwill and
         Other  Intangible  Assets."  SFAS No. 141  prospectively  prohibits the
         pooling of interests  method of  accounting  for business  combinations
         initiated   after  June  30,  2001.   Under  SFAS  No.  142,   goodwill
         amortization  ceases when the new  standard  is  adopted.  In the three
         months  ended March 31,  2001,  the Company  recorded  $0.9  million of
         goodwill  amortization.  No goodwill amortization was recorded in 2002.
         SFAS No. 142 also requires an initial goodwill impairment assessment in
         the year of adoption and an impairment test both on an annual basis and
         upon the occurrence of any event or change in circumstances  that would
         reduce the fair value of a  reporting  unit below its  carrying  value.
         SFAS No.  142 also  requires  the  Company to  complete a  transitional
         goodwill  impairment  test six months  from the date of  adoption.  The
         Company adopted this standard at the beginning of its 2002 fiscal year.
         As the Company had no goodwill or intangibles at December 31, 2001, the
         adoption of this statement had no impact on the Company's  consolidated
         financial statements.

               In August 2001, the FASB issued SFAS No. 144, "Accounting for the
         Impairment or Disposal of Long-Lived  Assets" which supersedes SFAS No.
         121,  "Accounting  for the  Impairment  of  Long-Lived  Assets  and for
         Long-Lived  Assets to be Disposed Of." The statement  provides a single
         accounting  model for long-lived  assets to be disposed of. The Company
         adopted  SFAS No. 144 at the  beginning  of its 2002 fiscal  year.  The
         adoption of this statement had no impact on the Company's  consolidated
         financial statements.

         Certain Reclassifications
         -------------------------

               Certain  reclassifications  have been made to amounts  previously
         reported to conform to current period presentation.


(2)      COMPREHENSIVE INCOME (LOSS)

               Total  comprehensive  income  (loss) for the three  months  ended
         March 31, 2002 and 2001 was as follows:

                                                             Three Months Ended
                                                                 March 31,
                                                                2002      2001
                                                                ----      ----
                 Net loss                                   $ (8,099) $  (8,737)
                 Foreign currency translation adjustments        393     (5,432)
                 Unrealized gains on marketable
                    securities held-for-sale                     111        --
                                                            --------- ----------
                 Total comprehensive loss                   $ (7,595) $ (14,169)
                                                            ========= ==========

(3)      DISCONTINUED OPERATIONS

               After the  completion of the Hostmark  acquisition in April 2001,
         the Company did not achieve its expected  revenue growth in its Managed
         Hosting  business.  The  general  economic  downturn,  the  slowdown in
         technology  spending and the lengthening in the sales cycle for Managed
         Hosting services all contributed to these revenue  shortfalls.  Company
         management  believed that these  conditions,  as well as the increasing
         level of competition and  consolidation in the Web hosting and Internet
         infrastructure markets, would continue to have an adverse effect on the
         Company's  ability to achieve  near term  revenue  targets and, if they
         continued,  could erode the  financial  resources  of the Company  more
         rapidly than planned.


                                       8

<PAGE>

               Following   the   exploration   and   review  of  the   strategic
         alternatives,  the Company determined that it was necessary to take the
         following  actions  to  dramatically  reduce  the  rate  at  which  its
         operations  were using cash and to minimize the  Company's  exposure in
         markets  that were  experiencing  significantly  slower  than  expected
         market growth.

               *    In November 2001, we announced that our Irish subsidiary was
                    ceasing  operations  at its  Dublin,  Ireland  facility.  An
                    orderly  shutdown of the Ireland  operations  was commenced,
                    and was substantially completed by December 31, 2001.

               *    In December 2001, we sold the assets and certain liabilities
                    of  our  Managed  Services   business  in  Stockholm  to  OM
                    Technology AB for $0.9 million, subject to the resolution of
                    a final working capital adjustment. OM also agreed to assume
                    the ownership of Worldport's  Stockholm  Internet  solutions
                    center and the operations at that center, and all customers'
                    contracts.

               *    In  December  2001,  we also sold our  Swedish  Professional
                    Services business (formerly known as VIS-able  International
                    AB)  to  its  employees  in a  management  buyout  for  $0.9
                    million, the majority of which is in the form of a note.

               *    In December 2001, we placed our German subsidiary,  Hostmark
                    GmbH,  into  receivership  under  German law. The assets and
                    liabilities of Hostmark GmbH held in receivership  have been
                    netted  in  the  Company's  financial   statements  and  are
                    reflected in Net  Liabilities  Subject to  Compromise on the
                    Company's  balance sheet as a net liability of approximately
                    $1.3 million.

               *    In March  2002,  we made  the  decision  to make no  further
                    investment in our U.K. Managed Hosting  operation.  On March
                    26, 2002, our U.K. subsidiaries,  Hostmark World Limited and
                    Hostmark U.K. Limited,  filed a petition for  Administration
                    under the United Kingdom  Insolvency  Act. An  administrator
                    has  been  appointed  for  these   subsidiaries  and  it  is
                    anticipated that he will seek to either reorganize, find new
                    investors,  sell or liquidate  the U.K.  businesses  for the
                    benefit of its creditors.  The assets and liabilities of the
                    U.K.  subsidiaries in Administration have been netted in the
                    Company's  financial  statements  and are  reflected  in Net
                    Liabilities  Subject to Compromise on the Company's  balance
                    sheet as a net liability of approximately $5.0 million.

               In  addition,  we  completed  the sale of our  remaining  carrier
         business, Telenational Communications, Inc. ("TNC") in October 2001 for
         $0.4 million.

                As a result of these  transactions,  the  Company has exited all
         three of its  operating  segments as of March 31, 2002 and is currently
         operating with only a minimal headquarters staff. Accordingly,  results
         of these  operations  have been  classified as  discontinued  under APB
         Opinion  No.  30,  and prior  periods  have been  restated  in order to
         conform to the new presentation.

               The operating results of discontinued operations were as follows:

                                                             Three Months Ended
                                                                  March 31,
                                                                  ---------
                                                               2002       2001
                                                               ----       ----
                  Net revenue                                $    291   $ 2,481
                  Restructuring costs (see Note 4)           $ 10,000   $   --
                  Loss before income taxes                   $(12,916)  $(8,685)
                  Income tax benefit                         $  5,597   $   120
                  Net loss from discontinued operations      $ (7,319)  $(8,564)


                                       9

<PAGE>

               Assets and liabilities related to the discontinued  operations as
         of March 31, 2002 and December 31, 2001 consist of the following:

                                                         March 31,  December 31,
                                                           2002        2001
                                                           ----        ----
             Current assets                              $  1,600    $ 3,733
             Noncurrent assets                              3,982      6,347
             Current liabilities                          (35,681)   (30,313)
             Long-term liabilities                         (2,710)    (3,433)
                                                         ---------  ---------
             Net liabilities of discontinued operations  $(32,809)  $(23,666)
                                                         =========  =========


(4)      RESTRUCTURING ACTIVITIES

               In the fourth  quarter  ended  December 31, 2001 and in the first
         quarter  ended  March 31,  2002,  the  Company  recorded  restructuring
         charges of $101.5 million and $10.0 million,  respectively  relating to
         the actions described in Note 3. These restructuring  charges primarily
         include severance,  facility exit costs, bandwidth contract termination
         costs,  and the write down of assets to their  expected net  realizable
         value.

               The Company compared the carrying value of the long-lived  assets
         located  primarily  in  Ireland,  Germany  and the U.K.  to fair values
         determined  substantially through independent  appraisals and estimated
         future  discounted  cash  flows.  The  excess  carrying  value of $84.8
         million  was  recorded  as a non-cash  asset  impairment  charge in the
         fourth quarter of 2001.

               Facility  exit  costs  of $9.3  million  and  $7.9  million  were
         recorded in the fourth  quarter of 2001 and the first  quarter of 2002,
         respectively.  These  facility exit costs  represent  rent payments the
         Company is  contractually  obligated  to pay on its U.K.,  Ireland  and
         German facilities, net of certain estimated sublease recoveries.

               Bandwidth  contract  termination  costs of $4.7  million and $0.4
         million  were  recorded  in the  fourth  quarter  of 2001 and the first
         quarter of 2002, respectively.  These costs represent early termination
         penalties incurred by the Company to cancel certain bandwidth contracts
         related to its ceased  Managed  Hosting  operations  in Ireland and the
         U.K.

               Severance of $1.3  million was recorded in the fourth  quarter of
         2001 and  substantially  all severance  payments were made by March 31,
         2002. The headcount reduction affected approximately 100 employees, who
         were  primarily   located  in  Ireland.   Substantially  all  employees
         terminated under this plan were released by December 31, 2001, with the
         few remaining employees terminated in the first quarter of 2002.

               Other costs of $1.3 million and $1.6 million were recorded in the
         fourth quarter of 2001 and the first quarter of 2002, respectively, and
         include estimated legal expenses,  costs to settle outstanding purchase
         commitments, and other shutdown related expenses.

               The following table summarizes the significant  components of the
         restructuring  reserve  included in Accrued  Expenses at March 31, 2002
         (in thousands):

<TABLE>

                                           Balance At   First Qtr                               Balance At
                                            December      2002        Cash        Non-cash        March
                                            31, 2001     Charge      Payments     Adjustments    31, 2002
                                            --------     ------      --------     -----------    --------
       <S>                                   <C>        <C>         <C>           <C>            <C>
       Facility exit costs                   $ 9,213    $ 7,936     $  (201)      $ (2,232)      $14,716
       Bandwidth contract termination          4,329        418           --          (802)        3,945
       Severance                                 761         --        (737)            --            24
       Other costs                             1,257      1,646        (189)        (1,983)          731
       Total                                 $15,560    $10,000     $(1,127)      $ (5,017)      $19,416

</TABLE>


                                       10

<PAGE>

               The non-cash adjustments consist primarily of liabilities related
         to the U.K. and German operations that, along with the other assets and
         liabilities of the U.K. and German operations, are under Administration
         proceedings  and have been  presented  in a  separate  line item on the
         Company's balance sheet (see Note 5).

               The  Company's  management is currently  evaluating  the possible
         sale or  disposition  of the remaining  assets,  including  potentially
         subleasing the facilities  remaining under operating lease  agreements.
         All  restructuring  costs are due to be paid by December 31, 2015, with
         $6.3 million due in 2002,  $1.3 million in 2003,  $1.3 million in 2004,
         $1.3 million in 2005, $1.3 million in 2006 and $7.9 million thereafter.

               The  Company  used  estimates  to  calculate  the   restructuring
         charges,  including  the  ability and timing of the Company to sublease
         space and the net realizable value of remaining assets. These estimates
         are subject to change based on the sale of the  remaining  assets along
         with the sublease or settlement of future rent obligations.


(5)      NET LIABILITIES SUBJECT TO COMPROMISE

               As described in Note 3, we placed our German subsidiary, Hostmark
         GmbH, into receivership under German law in December 2001, and our U.K.
         subsidiaries, Hostmark World Limited and Hostmark U.K. Limited, filed a
         petition for Administration  under the United Kingdom Insolvency Act in
         March 2002. An administrator in the U.K. and a receiver in Germany have
         been appointed for these subsidiaries.

               The assets and  liabilities of these entities have been netted in
         the Company's March 31, 2002 financial  statements and are reflected as
         Net Liabilities Subject to Compromise of $6.3 million.  Net Liabilities
         Subject  to  Compromise  do not  include  obligations  that the  parent
         company,   Worldport  Communications,   Inc.  ("Worldport  Inc."),  has
         guaranteed or incurred directly. Only those liabilities which Worldport
         Inc.  believes it will not be required to pay have been included in Net
         Liabilities Subject to Compromise.  However,  there can be no assurance
         that these  creditors will not make claims  against  Worldport Inc. for
         these obligations.

               The Company  used  estimates  to  calculate  the Net  Liabilities
         Subject to Compromise,  including the ability and timing of the Company
         to sublease  space and the net  realizable  value of remaining  assets.
         These  estimates  are  subject  to  change  based  on the  sale  of the
         remaining  assets along with the sublease or  settlement of future rent
         obligations. If any of these liabilities are extinguished through these
         proceedings,  the  Company  may  recognize  income  as a result  of the
         forgiveness of such obligations.


(6)      SUBSEQUENT EVENTS

               In  April  2002,  one of the  Company's  subsidiaries,  Worldport
         Ireland  Limited,  was given  notice that a petition for winding up was
         filed  and would be  presented  to the  Irish  High  Court on behalf of
         Global Crossing  Ireland  Limited.  The petition was heard by the Irish
         High Court on May 13,  2002 and a  liquidator  was  appointed  for this
         subsidiary  to act on  behalf  of the  creditors.  As a result  of this
         action, the liquidator has control over this subsidiary's assets.

               The assets and  liabilities of the Irish  subsidiary at March 31,
         2002 were as follows:



                                       11

<PAGE>


                                                                 March 31,
                                                                   2002
                                                                   ----
                Current assets                                 $      528
                Fixed assets, net                                   2,493
                Noncurrent assets                                     500
                Current liabilities                               (13,612)
                Net liabilities of Irish entity                $  (10,091)

               Included  in the table  above are only those  liabilities  of the
         Irish subsidiary  which we believe  Worldport Inc. will not be required
         to pay.  However,  there can be no assurance that these  creditors will
         not make claims against Worldport Inc. for these  obligations.  We have
         not  included  in  this  table  obligations  that  Worldport  Inc.  has
         guaranteed or incurred directly.

               Excluding  the   liabilities  of  the  U.K.,   German  and  Irish
         subsidiaries  discussed  above and in Note 5,  there are  approximately
         $25.6 million of liabilities reflected on the Company's March 31, 2002,
         balance  sheet   attributable  to  Worldport  Inc.  and  the  remaining
         subsidiaries  not in  Administration,  receivership or liquidation.  We
         have assumed,  for purposes of calculating these  liabilities,  that we
         will  not be able  to  mitigate  these  liabilities,  however,  Company
         management is currently  seeking  opportunities for subleasing its data
         center facilities and further reducing its other liabilities related to
         the exited businesses.  There can be no assurance that the Company will
         be  successful  in its efforts to mitigate  these  liabilities  or that
         additional claims will not be asserted against Worldport Inc.


               In May 2002,  the  Company  issued 1.0  million  shares of common
         stock pursuant to the terms of the purchase  agreement  entered into by
         the Company in April 2001 in connection with the Hostmark  acquisition.
         These  shares  represented  the balance of the  purchase  price for the
         Hostmark companies.


(7)      SEGMENT REPORTING

               SFAS No. 131,  "Disclosures  about  Segments of an Enterprise and
         Related  Information",  requires  the  reporting  of  profit  and loss,
         specific revenue and expense items and assets for reportable  segments.
         It also requires the  reconciliation of total segment  revenues,  total
         segment  profit  or loss,  total  segment  assets,  and  other  amounts
         disclosed  for  segments  to the  corresponding  amounts in the general
         purpose financial statements.

               The  Company  had three  reportable  segments:  Managed  Hosting,
         Professional  Services  and Carrier  Operations.  The  Managed  Hosting
         segment  derived  revenues  primarily  from the  delivery  of  services
         including Internet networking,  applications and value-added  services,
         infrastructure,  and systems support. The Professional Services segment
         derived revenues primarily from  Internet-based  applications,  systems
         development,  and content  management  support.  The Carrier Operations
         segment  derived  revenues   primarily  from  voice,   data  and  other
         telecommunication   services.   Company  management  viewed  the  three
         distinct business strategies as different business segments when making
         operating and investment decisions and for assessing performance.

               As a result of the transactions  discussed in Note 3, the Company
         has exited all three of its operating segments as of March 31, 2002.


(8)      CONTINGENCIES

               Since July 14, 1999, Worldport and certain of its former officers
         have been named as  defendants  in multiple  shareholder  class  action
         lawsuits  filed in the United  States  District  Court for the Northern
         District  of  Georgia.  On or about  March  21,  2000,  a  Consolidated
         Complaint was filed which adds The Heico Companies,  LLC and Michael E.
         Heisley,  Sr. as  defendants.  The plaintiffs in these lawsuits seek to
         represent a class of  individuals  who purchased or otherwise  acquired
         the Company's  common

                                       12

<PAGE>


         stock from January 4, 1999 through June 28, 1999.  Among other  things,
         the plaintiffs  allege that the defendants  spoke  positively about the
         Heico financing without  disclosing the risk that  non-compliance  with
         certain  Nasdaq  rules in  connection  with the  financing  might cause
         Worldport to be delisted from Nasdaq. The plaintiffs further allege the
         subsequent  disclosure  that  Worldport  might be delisted  from Nasdaq
         adversely  affected  the  value  of the  Company's  common  stock.  The
         plaintiffs  allege  violations  of  Sections  10(b)  and  20(a)  of the
         Securities  Exchange  Act of 1934  and  seek  unspecified  compensatory
         damages, interest,  attorneys' fees and costs of litigation. A proposed
         settlement  was  reached  by  the  parties  on  terms  reflected  in  a
         Stipulation  of Compromise  and  Settlement  dated July 20, 2001.  This
         settlement  was  approved by the Court on October 19, 2001 and has been
         entirely funded by insurance.  No appeal was taken, but there can be no
         assurance  that  additional  claims  will not be  asserted by any class
         member who opted out of the  settlement.  However,  the outcome of this
         matter  is not  expected  to  have a  material  adverse  effect  on the
         consolidated  financial  position  or  results  of  operations  of  the
         Company.

               In March 2002,  Sturm Group  Inc.,  Donald L. Sturm and  Hostmark
         World  Holdings,  LLC,  filed a  complaint  against the Company and its
         wholly owned  subsidiary,  Worldport  Holding Inc. in the Circuit Court
         For the Nineteenth  Judicial Circuit,  Lake County,  Illinois -Chancery
         Division.  This  claim  relates to the April  2001  acquisition  of the
         Company's  Hostmark  subsidiaries  (the "Hostmark  Subsidiaries").  The
         Hostmark Subsidiaries were acquired by Worldport Holdings from Hostmark
         World  Holdings,  LLC  pursuant  to  a  Stock  Purchase  Agreement.  In
         connection  with  these  transactions,  the  Company  agreed to use its
         reasonable efforts to obtain the release of the plaintiffs from certain
         guarantees  that the  plaintiffs  had  entered  into on  behalf  of the
         Hostmark Subsidiaries prior to the acquisition.  The reasonable efforts
         of the Company were to include,  if required,  the Company providing to
         the landlord of the property  located in Slough,  U.K. a rent indemnity
         and keeping such rent  indemnity in place until  November 20, 2008.  If
         required in order to obtain such rent indemnity,  the Company agreed to
         deposit funds with a commercial bank (or provide such other  collateral
         or security  required by the bank).  If required by the  landlord,  the
         reasonable  efforts of the  Company  were also to include  providing  a
         one-year rent indemnity  after November 2008 until the lease expires in
         November 2015. In this action, the plaintiffs are seeking an injunction
         ordering the Company to comply with the terms of these agreements.  The
         plaintiffs are also seeking damages for the defendants'  alleged breach
         of  these  agreements.  The  Company  has  not  yet  responded  to this
         complaint, but does not expect to pay material damages in this suit.

               One of the Company's subsidiaries, Hostmark World Limited, is the
         subject of court action by WSP Communications  ("WSP") in the Companies
         Court of the  Chancery  Division of the High Court in the U.K.  for the
         payment of  approximately  $0.5 million.  In addition,  WSP has alleged
         that a total of  approximately  $3  million  is owed to it by  Hostmark
         World  Limited.  WSP  alleges  that  these  amounts  are  owed for work
         completed on Internet solution centers in Germany,  Sweden and the U.K.
         This action has been stayed by the appointment of an Administrator  for
         Hostmark World, as described below.

               In the fourth quarter of 2001, the SuperCentre in Dublin, Ireland
         operated  by our  Irish  subsidiary,  Worldport  Ireland  Limited,  was
         closed;  substantially  all of the  assets of our  Swedish  subsidiary,
         Hostmark   AB,  were  sold  and  that   subsidiary   retained   certain
         liabilities; and our German subsidiary,  Hostmark GmBh, was placed into
         preliminary   receivership  under  German  law  by  the  order  of  the
         Bankruptcy  Court in Darmstadt.  In addition,  we ceased funding of our
         U.K.  subsidiaries,  Hostmark  World and  Hostmark  U.K.,  in the first
         quarter of 2002. On March 28, 2002, an Administrator  was appointed for
         the U.K.  subsidiaries  by an order of the  Companies  Court,  Chancery
         Division  of High Court  under the United  Kingdom  Insolvency  Act. In
         April 2002, the Irish subsidiary,  Worldport Ireland Limited, was given
         notice that a petition  for winding up was filed and would be presented
         to the Irish High Court on behalf of Global Crossing  Ireland  Limited.
         The  petition  was heard by the Irish High Court on May 13,  2002 and a
         liquidator  was appointed  for this  subsidiary to act on behalf of the
         creditors.  As a result of this action, the liquidator has control over
         this subsidiary's  assets.  We believe that each of these  subsidiaries
         has potential liabilities which exceed the value of its assets. Certain
         creditors  of these  subsidiaries  have made  claims  directly  against
         Worldport  Inc.  for  liabilities  related  to the  operation  of these
         subsidiaries  and additional  creditors  could assert  similar


                                       13

<PAGE>

         claims.  There  can  be  no  assurance  that  Worldport  Inc.  will  be
         successful in defending  these claims and in limiting its liability for
         the obligations of its subsidiaries.

               In addition to the aforementioned claims, the Company is involved
         in various lawsuits or claims arising in the normal course of business.
         In the  opinion of  management,  none of these  lawsuits or claims will
         have a material adverse effect on the consolidated  financial  position
         or results of operations of the Company.




ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

         Note on "Forward-Looking" Statements
         ------------------------------------

               The information set forth in Management's Discussion and Analysis
         of Financial  Condition  and Results of  Operations  ("MD&A")  contains
         certain "forward-looking  statements" within the meaning of Section 27A
         of the  Securities  Act of 1933,  as  amended,  and  Section 21E of the
         Securities Exchange Act of 1934, as amended,  including,  among others,
         (i) expected changes in the Company's revenues and profitability,  (ii)
         prospective business opportunities and (iii) the Company's strategy for
         redirecting and financing its business;  as further explained in Item 1
         of the Company's Annual Report on Form 10-K for the year ended December
         31,  2001.   Forward-looking   statements  are  statements  other  than
         historical  information  or  statements  of  current  condition.   Some
         forward-looking  statements  may be  identified by use of terms such as
         "believes",    "anticipates",    "intends"    or    "expects".    These
         forward-looking   statements  relate  to  the  plans,   objectives  and
         expectations of the Company for future operations. Although the Company
         believes  that its  expectations  with  respect to the  forward-looking
         statements are based upon reasonable  assumptions  within the bounds of
         its knowledge of its business and operations, in light of the risks and
         uncertainties  inherent in all future  projections,  the  inclusion  of
         forward-looking  statements  in this report should not be regarded as a
         representation  by the Company or any other person that the  objectives
         or plans of the Company will be achieved.

               During 2001, we acquired and sold numerous  operating  companies,
         which   significantly   affects  the  comparability  of  the  following
         information.  In addition,  in the fourth quarter of 2001 and the first
         quarter  of  2002,  we  either  sold  or  ceased  operating  all of our
         operating  businesses.  Therefore,  our historical  results will not be
         indicative of future performance.  The Company undertakes no obligation
         to release  publicly the results of any future revisions it may make to
         forward-looking statements to reflect events or circumstances after the
         date hereof or to reflect the occurrence of unanticipated events.

               The following  discussion  should be read in conjunction with the
         Condensed  Consolidated Financial Statements and Notes thereto included
         under Item 1 of this Form 10-Q. In addition,  the Financial  Statements
         and Notes thereto and related  Management's  Discussion and Analysis of
         Financial Condition and Results of Operations included in the Company's
         Annual Report on Form 10-K for the year ended  December 31, 2001 should
         be read in conjunction with this Form 10-Q.


         Overview
         --------

               From  1997  to  1999,  Worldport  was a  facilities-based  global
         telecommunications    carrier   offering   voice,    data   and   other
         telecommunications  services to carriers,  Internet service  providers,
         medium and large corporations and distributors and resellers  operating
         in Europe and the United States. To finance certain  acquisitions,  the
         Company  borrowed  $120  million  in June 1998  under an  interim  loan
         facility  ("Interim Loan  Facility").  In order to meet its obligations
         under its Interim Loan Facility,  the Company sold substantially all of
         its material assets during the first quarter of 2000.

                                       14

<PAGE>

               In November  1999,  we entered into a series of  agreements  with
         Energis to sell our 85% stake in the issued and  outstanding  shares of
         EnerTel.  The sale was  consummated  on  January  14,  2000 for  $453.2
         million,  net of certain  transaction  expenses.  The Company applied a
         portion of the net proceeds  realized  from the sale to repay  existing
         debt,  including debt incurred  under the Interim Loan Facility,  trade
         credit and other liabilities, and paid U.S. federal income taxes on the
         gain of approximately $57 million.  Additionally, the Company completed
         the sale of IIC in March 2000.

               In the  second  quarter  of  2000  we  announced  a new  business
         strategy,  focused on the  delivery  of  Internet  solutions  to global
         companies doing business in the European marketplace.  Pursuant to this
         strategy,  we  invested  over $40 million to  construct a new  Internet
         solutions SuperCentre in Dublin,  Ireland,  which became operational in
         October  2000.  In September  2000,  we purchased  VIS-able,  a Swedish
         professional  services firm specializing in complex systems development
         and consulting,  for  approximately  $17.7 million.  Finally,  in April
         2001,  we acquired  hostmark  entities in the U.K.,  Sweden and Germany
         ("hostmark"),  including the assumption of approximately $22 million in
         liabilities, for 5.1 million shares of common stock. The acquisition of
         hostmark provided Worldport with Internet solution centers ("ISC's") in
         London,  Stockholm and  Frankfurt.  The hostmark  companies had minimal
         revenues when we completed the  transaction,  and only one ISC was open
         for business.

               Following the acquisition of hostmark, we initiated an aggressive
         integration  program to rapidly identify and eliminate  operational and
         system  redundancies in the two companies and to further streamline the
         combined business. Additionally, we shut down the unprofitable U.S. and
         U.K.  professional  services  operations  and took steps toward further
         cost alignment in our Swedish Professional  Services operation.  By the
         end of the third quarter of 2001, we had reduced our total workforce by
         approximately 41 percent and reduced total monthly  operations  expense
         by over 50 percent.  Our statement of operations  for the third quarter
         of 2001 included $1.3 million of expenses related to employee severance
         costs,  termination  penalties for excess bandwidth contracts and lease
         disposition   costs  associated  with  this  integration   activity  to
         streamline the combined business.

               After the  completion  of the  Hostmark  acquisition,  we did not
         achieve the revenue growth in our Managed Hosting  business that we had
         anticipated.  We also  experienced  a decline in revenue in our Swedish
         Professional  Services  business.  The general economic  downturn,  the
         slowdown in technology  spending and the lengthening in the sales cycle
         for  Managed   Hosting   services  all  contributed  to  these  revenue
         shortfalls. In addition, our Swedish Professional Services business was
         negatively  effected  by  excess  capacity  in the  Swedish  consulting
         market, major pricing pressures,  and slower customer decisions related
         to new IT projects for those services.  The Company believed that these
         conditions,  as  well  as  the  increasing  level  of  competition  and
         consolidation in the Web hosting and Internet  infrastructure  markets,
         would  continue  to have an adverse  effect on  Worldport's  ability to
         achieve near term revenue targets and, if they  continued,  could erode
         the financial resources of the Company more rapidly than planned.

               Therefore,  the Company began a review of various alternatives to
         its  existing  business  plan.  As  part of this  review,  the  Company
         considered,  among  other  alternatives,  partnering  with a  strategic
         investor,   taking   additional   actions  to  reduce   its   operating
         expenditures,  closing one or more facilities or selling all or part of
         the  Company's  assets or  operations.  At the  beginning  of the third
         quarter of 2001, the Company engaged  Schroder  Salomon Smith Barney to
         assist the  Company in its  efforts to  explore  and  evaluate  various
         strategic and financial  alternatives.  Following the  exploration  and
         review  of  the  strategic  alternatives,  we  determined  that  it was
         necessary to dramatically  reduce the rate at which our operations were
         using  cash  and  to  minimize   our  exposure  in  markets  that  were
         experiencing  significantly  slower than expected  market growth.  As a
         result,  the  Company  made a decision  to take  further  restructuring
         actions and to divest itself of certain  assets.  Accordingly,  we took
         the following actions in the fourth quarter of 2001:

               *    In November 2001, we announced that our Irish subsidiary was
                    ceasing  operations  at its  Dublin,  Ireland  facility.  An
                    orderly  shutdown of the Ireland  operations  was commenced,
                    and was substantially completed by December 31, 2001.


                                       15

<PAGE>

               *  In  December 2001,  we sold the assets and certain liabilities
                  of our Managed Services business in Stockholm to OM Technology
                  AB for $0.9  million,  subject  to the  resolution  of a final
                  working  capital  adjustment.  OM also  agreed to  assume  the
                  ownership of Worldport's  Stockholm  Internet  solution center
                  and  the  operations  at  that  center,   and  all  customers'
                  contracts.

               *    In  December  2001,  we also sold our  Swedish  Professional
                    Services business (formerly known as VIS-able  International
                    AB)  to  its  employees  in a  management  buyout  for  $0.9
                    million, the majority of which is in the form of a note.

               *    In December 2001, we placed our German subsidiary,  Hostmark
                    GmbH, into receivership under Germany law.

               *    We also  took  steps to  reduce  corporate  expenses  at our
                    Buffalo Grove,  Illinois,  headquarters  in connection  with
                    these transactions.

               In  addition,  we  completed  the sale of our  remaining  carrier
         business, Telenational Communications, Inc. ("TNC") in October 2001 for
         $0.4 million.

               After completing these fourth quarter activities, we continued to
         operate our Managed  Hosting center in the U.K.,  where we believed the
         greatest opportunities for the European Managed Hosting market existed.
         However,  during the first quarter of 2002,  the U.K.  Managed  Hosting
         market continued to develop at a much slower rate than anticipated.  In
         addition,   increasing  industry  consolidations  and  the  closure  or
         bankruptcy of competitors in the industry led us to believe that market
         conditions  would not improve in the near  future,  bringing  increased
         risk to the financial  requirements  for this business.  Therefore,  in
         March 2002, the Company's  board of directors made the decision to make
         no further investment in its U.K. Managed Hosting  operation.  On March
         26, 2002,  our U.K.  subsidiaries,  Hostmark World Limited and Hostmark
         U.K.  Limited,  filed a petition  for  Administration  under the United
         Kingdom  Insolvency Act. An administrator  has been appointed for these
         subsidiaries  and  it is  anticipated  that  he  will  seek  to  either
         reorganize,  find new investors,  sell or liquidate the U.K. businesses
         for the benefit of its creditors.

               As a result of the  transactions  described  above,  we no longer
         have active business operations. Accordingly, the historical results of
         operations  for prior periods are not  comparable to the current period
         and are not representative of what future results will be.


         Results of Operations
         ---------------------

               As  described  above,  the  Company  has  exited all three of its
         operating segments as of March 31, 2002. Accordingly,  results of these
         operations  have  been  classified  as  discontinued  under  Accounting
         Principles  Board  ("APB")  Opinion No. 30, and prior periods have been
         restated in order to conform to the new presentation.

               There  were  no  revenues  or cost of  services  from  continuing
         operations in the first quarter of 2002 and 2001.

               Selling,  general and administrative  ("SG&A") expenses were $0.9
         million  and $1.9  million  for the  quarters  ended March 31, 2002 and
         2001,  respectively  and  primarily  consisted of  corporate  salaries,
         professional fees and corporate governance costs. The decrease from the
         prior year first quarter is primarily  attributable  to the steps taken
         in the  fourth  quarter  of 2001 to reduce  corporate  expenses  at our
         Buffalo  Grove,   Illinois,   headquarters   in  connection   with  the
         transactions described above.

                                       16

<PAGE>

               Depreciation and amortization  expense was less than $0.1 million
         for the first quarter of 2002 and 2001 and represented  depreciation on
         the corporate office and related computer hardware and software.

               Interest  income  was  $0.3  million  and  $1.8  million  for the
         quarters  ended  March  31,  2002  and  2001,   respectively,   and  is
         attributable  to the Company's cash and cash  equivalents.  The Company
         incurred interest expense of $0.1 million in the current and prior year
         first quarters  primarily  related to equipment  financed under capital
         leases.

               Net loss from  continuing  operations  was $0.8  million and $0.2
         million in the quarters ended March 31, 2002 and 2001, respectively.

               The  Company  had losses  from  discontinued  operations  of $7.3
         million and $8.6 million in the quarters ended March 31, 2002 and 2001,
         respectively,  as a result of the transactions described above. Revenue
         from discontinued operations were $0.3 million and $2.5 million for the
         first  quarter of 2002 and 2001,  respectively.  Included in the losses
         from  discontinued  operations in the first quarter of 2002 was a $10.0
         million  restructuring  charge  relating  to the  actions  taken in the
         current  quarter  regarding the U.K.  Managed  Hosting  operation.  The
         restructuring charge primarily consisted of:

               *    facility exit costs of $8.0 million for the U.K. data center
                    and administrative offices,
               *    bandwidth   contract   termination  costs  of  $0.5  million
                    associated with our U.K. operations, and
               *    other related costs of $1.5 million.

               Also included in the losses from  discontinued  operations in the
         first  quarter  of  2002  was a  $5.6  million  tax  benefit  that  was
         recognized in the current quarter as a result of a new U.S. federal tax
         law that was  enacted  in March  2002,  which  allowed  the  Company to
         carryback  a $5.6  million  AMT tax credit  from 2001  against  taxable
         income in 2000.

               As a result,  the Company  had a net loss of $8.1  million in the
         first  quarter of 2002,  compared  to net loss of $8.7  million for the
         same period in 2001.


         Liquidity and Capital Resources
         -------------------------------

               Operations used $1.2 million during the first quarter of 2002 due
         primarily to  salaries,  legal fees and other  expenses  related to the
         Company's  minimal corporate  operations  remaining after the shut down
         and sale transactions described above. Operations provided $0.7 million
         during the three months ended March 31,  2001,  due  primarily to first
         quarter operating losses being offset by changes in working capital.

               The Company had no cash flows from  investing  activities  during
         the first  quarter of 2002 and used less than $0.1  million  during the
         three months ended March 31, 2001 for capital expenditures.

               Financing  activities  used $1.2 million and $0.4 million  during
         the three  months  ended  March 31,  2002 and 2001,  respectively,  for
         principal payments on capital leases.


               As a result of the transactions in the fourth quarter of 2001 and
         the  first  quarter  of  2002,  we  no  longer  have  active   business
         operations.

               In April 2002,  we received our $57.6  million  income tax refund
         which had been  reflected as a receivable  on the  Company's  March 31,
         2002 balance  sheet.  Receipt of this refund does not indicate that the
         Internal Revenue Service agrees with the positions taken by the Company
         in its tax  returns.  The  refund  is still  subject  to  review by the
         Internal Revenue Service of the Company's 2001 tax return. The Internal
         Revenue Service could require the Company to return all or a portion of
         this refund.


                                       17
<PAGE>

               After  receipt of the tax  refund,  we had  approximately  $110.2
         million in cash and cash  equivalents  and $10.9  million in marketable
         securities as of May 8, 2002. Our cash equivalents currently consist of
         highly  rated  short-term  commercial  paper,  money  market  funds and
         government securities.

               Our March 31, 2002  consolidated  balance sheet  reflected  total
         liabilities of approximately $45.5 million. Included in this amount are
         $6.3 million of net liabilities  subject to compromise for the U.K. and
         German  subsidiaries  (see Note 5) and  $13.6  million  of  liabilities
         attributable  to our  Irish  subsidiary  that was put into  liquidation
         proceedings  subsequent  to March 31, 2002 (see Note 6). We believe the
         parent company, Worldport Communications, Inc. ("Worldport Inc."), will
         not be  required  to pay these  liabilities.  However,  there can be no
         assurance that these  creditors will not make claims against  Worldport
         Inc. for these  obligations.  The Company  used  estimates to calculate
         these net liabilities,  including the ability and timing of the Company
         to sublease  space and the net  realizable  value of remaining  assets.
         These  estimates  are  subject  to  change  based  on the  sale  of the
         remaining  assets along with the sublease or  settlement of future rent
         obligations.

               Excluding  the   liabilities  of  the  U.K.,   German  and  Irish
         subsidiaries  discussed above, there are approximately $25.6 million of
         liabilities  reflected on the Company's  March 31, 2002,  balance sheet
         attributable  to Worldport Inc. and the remaining  subsidiaries  not in
         Administration,  receivership  or  liquidation.  Included  in the $25.6
         million is $4.7 million of future rent  payments and early  termination
         penalties on the Dublin,  Ireland,  data center lease, which expires in
         2010,  and $7.7  million of future rent  payments on the Slough,  U.K.,
         data center lease,  which expires in 2015.  Worldport  Inc. is directly
         liable  for the  Dublin  lease and has  directly  agreed  to  indemnify
         certain persons in connection  with the Slough lease.  Also included in
         the  $25.6  million  of  liabilities  are  $2.7  million  of  long-term
         obligations  under  capital  leases,  which  expire  in  2004.  We have
         assumed,  for purposes of calculating these  liabilities,  that we will
         not be able to mitigate these liabilities,  however, Company management
         is  currently  seeking  opportunities  for  subleasing  its data center
         facilities and further  reducing its other  liabilities  related to the
         exited  businesses.  There can be no assurance that the Company will be
         successful  in its  efforts  to  mitigate  these  liabilities  or  that
         additional claims will not be asserted against Worldport Inc.

               In March 2002,  Sturm Group  Inc.,  Donald L. Sturm and  Hostmark
         World  Holdings,  LLC,  filed a  complaint  against the Company and its
         wholly owned  subsidiary,  Worldport  Holding Inc. in the Circuit Court
         For the Nineteenth  Judicial Circuit,  Lake County,  Illinois -Chancery
         Division.  This  claim  relates to the April  2001  acquisition  of the
         Company's  Hostmark  subsidiaries  (the "Hostmark  Subsidiaries").  The
         Hostmark Subsidiaries were acquired by Worldport Holdings from Hostmark
         World  Holdings,  LLC  pursuant  to  a  Stock  Purchase  Agreement.  In
         connection  with  these  transactions,  the  Company  agreed to use its
         reasonable efforts to obtain the release of the plaintiffs from certain
         guarantees  that the  plaintiffs  had  entered  into on  behalf  of the
         Hostmark Subsidiaries prior to the acquisition.  The reasonable efforts
         of the Company were to include,  if required,  the Company providing to
         the landlord of the property located in Slough,  U.K., a rent indemnity
         and keeping such rent  indemnity in place until  November 20, 2008.  If
         required in order to obtain such rent indemnity,  the Company agreed to
         deposit funds with a commercial bank (or provide such other  collateral
         or security  required by the bank).  If required by the  landlord,  the
         reasonable  efforts of the  Company  were also to include  providing  a
         one-year rent indemnity  after November 2008 until the lease expires in
         November 2015. In this action, the plaintiffs are seeking an injunction
         ordering the Company to comply with the terms of these agreements.  The
         plaintiffs are also seeking damages for the defendants'  alleged breach
         of  these  agreements.  The  Company  has  not  yet  responded  to this
         complaint, but does not expect to pay material damages in this suit.

               After completing the shutdown of our Irish,  Swedish,  German and
         U.K. subsidiaries and satisfying the related liabilities,  we expect to
         continue to have  significant cash resources.  We currently  anticipate
         that  after  we  complete  the  activities  related  to  exiting  these
         businesses,  we will operate with a minimal headquarters staff while we
         determine  how to use these  cash  resources.  We  intend  to  consider
         acquisition  opportunities.  We also  intend  to  analyze  a  potential
         liquidation   of  the  Company   and  its  effects  on  the   Company's
         stockholders.  Upon any  liquidation,  dissolution or winding up of the
         Company,  the  holders  of our  outstanding  preferred  stock  would be
         entitled to receive approximately


                                       18

<PAGE>


         $68  million  prior to any  distribution  to the  holders of our common
         stock. Although we may consider acquisition opportunities,  we have not
         identified a specific  industry on which we intend to  initially  focus
         and have no present plans,  proposals,  arrangements or  understandings
         with respect to the acquisition of any specific business.  We will have
         broad  discretion in determining how to use these cash resources and in
         identifying and selecting acquisition opportunities.


         New Accounting Pronouncements
         -----------------------------

               In June 2001, the Financial  Accounting  Standards Board ("FASB")
         issued Statement of Financial  Accounting  Standards  ("SFAS") No. 141,
         "Business   Combinations,"  and  SFAS  No.  142,  "Goodwill  and  Other
         Intangible Assets." SFAS No. 141 prospectively prohibits the pooling of
         interests  method of  accounting  for business  combinations  initiated
         after June 30, 2001. Under SFAS No. 142, goodwill  amortization  ceases
         when the new  standard is adopted.  In the three months ended March 31,
         2001, the Company  recorded $0.9 million of goodwill  amortization.  No
         goodwill  amortization was recorded in 2002. SFAS No. 142 also requires
         an initial goodwill  impairment  assessment in the year of adoption and
         an impairment  test both on an annual basis and upon the  occurrence of
         any event or change in  circumstances  that would reduce the fair value
         of a  reporting  unit  below  its  carrying  value.  SFAS No.  142 also
         requires  the Company to complete a  transitional  goodwill  impairment
         test six months from the date of  adoption.  The Company  adopted  this
         standard at the  beginning of its 2002 fiscal year.  As the Company had
         no goodwill or  intangibles  at December 31, 2001, the adoption of this
         statement  had  no  impact  on  the  Company's  consolidated  financial
         statements.

               In August 2001, the FASB issued SFAS No. 144, "Accounting for the
         Impairment or Disposal of Long-Lived  Assets" which supersedes SFAS No.
         121,  "Accounting  for the  Impairment  of  Long-Lived  Assets  and for
         Long-Lived  Assets to be Disposed Of." The statement  provides a single
         accounting  model for long-lived  assets to be disposed of. The Company
         adopted  SFAS No. 144 at the  beginning  of its 2002 fiscal  year.  The
         adoption of this statement had no impact on the Company's  consolidated
         financial statements.




ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

               The majority of the Company's  operations were in Europe, and the
         revenue  and  expenses of those  operations  are  denominated  in local
         currencies.  Due to the volatility of currency  exchange  rates,  among
         other   factors,   we  cannot  predict  the  effect  of  exchange  rate
         fluctuations  on our future  operating  results.  The  Company has used
         derivative instruments to hedge its foreign currency exposure only on a
         limited basis, and had no foreign currency hedge contracts  outstanding
         at March 31, 2002. As a result,  the Company may incur gains and losses
         on foreign  currency  fluctuations.  Other foreign  exchange  gains and
         losses recorded in income were minimal for the three months ended March
         31, 2002 and 2001, respectively.


                                       19
<PAGE>


                           PART II. OTHER INFORMATION



ITEM 1.  LEGAL PROCEEDINGS


               Since July 14, 1999, Worldport and certain of its former officers
         have been named as  defendants  in multiple  shareholder  class  action
         lawsuits  filed in the United  States  District  Court for the Northern
         District  of  Georgia.  On or about  March  21,  2000,  a  Consolidated
         Complaint was filed which adds The Heico Companies,  LLC and Michael E.
         Heisley,  Sr. as  defendants.  The plaintiffs in these lawsuits seek to
         represent a class of  individuals  who purchased or otherwise  acquired
         the Company's  common stock from January 4, 1999 through June 28, 1999.
         Among other things,  the plaintiffs  allege that the  defendants  spoke
         positively about the Heico financing  without  disclosing the risk that
         non-compliance  with  certain  Nasdaq  rules  in  connection  with  the
         financing  might  cause  Worldport  to be  delisted  from  Nasdaq.  The
         plaintiffs  further  allege the  subsequent  disclosure  that Worldport
         might be  delisted  from  Nasdaq  adversely  affected  the value of the
         Company's  common stock. The plaintiffs  allege  violations of Sections
         10(b)  and  20(a)  of the  Securities  Exchange  Act of 1934  and  seek
         unspecified compensatory damages,  interest,  attorneys' fees and costs
         of  litigation.  A proposed  settlement  was  reached by the parties on
         terms  reflected in a Stipulation of Compromise  and  Settlement  dated
         July 20, 2001. This settlement was approved by the Court on October 19,
         2001 and has been entirely  funded by  insurance.  No appeal was taken,
         but  there  can be no  assurance  that  additional  claims  will not be
         asserted by any class member who opted out of the settlement.  However,
         the outcome of this matter is not  expected to have a material  adverse
         effect on the consolidated  financial position or results of operations
         of the Company.


               In March 2002,  Sturm Group  Inc.,  Donald L. Sturm and  Hostmark
         World  Holdings,  LLC,  filed a  complaint  against the Company and its
         wholly owned  subsidiary,  Worldport  Holding Inc. in the Circuit Court
         For the Nineteenth  Judicial Circuit,  Lake County,  Illinois -Chancery
         Division.  This  claim  relates to the April  2001  acquisition  of the
         Company's  Hostmark  subsidiaries  (the "Hostmark  Subsidiaries").  The
         Hostmark Subsidiaries were acquired by Worldport Holdings from Hostmark
         World  Holdings,  LLC  pursuant  to  a  Stock  Purchase  Agreement.  In
         connection  with  these  transactions,  the  Company  agreed to use its
         reasonable efforts to obtain the release of the plaintiffs from certain
         guarantees  that the  plaintiffs  had  entered  into on  behalf  of the
         Hostmark Subsidiaries prior to the acquisition.  The reasonable efforts
         of the Company were to include,  if required,  the Company providing to
         the landlord of the property located in Slough,  U.K., a rent indemnity
         and keeping such rent  indemnity in place until  November 20, 2008.  If
         required in order to obtain such rent indemnity,  the Company agreed to
         deposit funds with a commercial bank (or provide such other  collateral
         or security  required by the bank).  If required by the  landlord,  the
         reasonable  efforts of the  Company  were also to include  providing  a
         one-year rent indemnity  after November 2008 until the lease expires in
         November 2015. In this action, the plaintiffs are seeking an injunction
         ordering the Company to comply with the terms of these agreements.  The
         plaintiffs are also seeking damages for the defendants'  alleged breach
         of  these  agreements.  The  Company  has  not  yet  responded  to this
         complaint, but does not expect to pay material damages in this suit.

               One of the Company's subsidiaries, Hostmark World Limited, is the
         subject of court action by WSP Communications  ("WSP") in the Companies
         Court of the  Chancery  Division of the High Court in the U.K.  for the
         payment of  approximately  $0.5 million.  In addition,  WSP has alleged
         that a total of  approximately  $3  million  is owed to it by  Hostmark
         World  Limited.  WSP  alleges  that  these  amounts  are  owed for work
         completed on Internet solution centers in Germany,  Sweden and the U.K.
         This action has been stayed by the appointment of an Administrator  for
         Hostmark World, as described below.

               In the fourth  quarter of 2001,  the  Managed  Hosting  center in
         Dublin,  Ireland operated by our Irish  subsidiary,  Worldport  Ireland
         Limited,  was  closed;  substantially  all of the assets of our Swedish

                                       20

<PAGE>


         subsidiary, Hostmark AB, were sold and that subsidiary retained certain
         liabilities; and our German subsidiary,  Hostmark GmBh, was placed into
         preliminary   receivership  under  German  law  by  the  order  of  the
         Bankruptcy  Court in Darmstadt.  In addition,  we ceased funding of our
         U.K.  subsidiaries,  Hostmark  World and  Hostmark  U.K.,  in the first
         quarter of 2002. On March 28, 2002, an Administrator  was appointed for
         the U.K.  subsidiaries  by an order of the  Companies  Court,  Chancery
         Division  of High Court  under the United  Kingdom  Insolvency  Act. In
         April 2002, the Irish subsidiary,  Worldport Ireland Limited, was given
         notice that a petition  for winding up was filed and would be presented
         to the Irish High Court on behalf of Global Crossing  Ireland  Limited.
         The petition  wasbe heard by the Irish High Court on May 13, 2002 and a
         liquidator  was appointed  for this  subsidiary to act on behalf of the
         credits.  As a result of this action,  the  liquidator has control over
         this subsidiary's  assets.  We believe that each of these  subsidiaries
         has potential liabilities which exceed the value of its assets. Certain
         creditors of these  subsidiaries  have made claims directly against the
         parent company, Worldport Communications,  Inc. ("Worldport Inc."), for
         liabilities   related  to  the  operation  of  these  subsidiaries  and
         additional  creditors  could  assert  similar  claims.  There can be no
         assurance  that  Worldport  Inc. will be successful in defending  these
         claims  and in  limiting  its  liability  for  the  obligations  of its
         subsidiaries.  See  "Managements  Discussion  and Analysis of Financial
         Condition and Results of Operation - Liquidity  and Capital  Resources"
         for a more detailed  discussion of the liabilities of our  subsidiaries
         and how we have  accounted for those  liabilities  on our  consolidated
         financial statements.

               In addition to the aforementioned claims, the Company is involved
         in various lawsuits or claims arising in the normal course of business.
         In the  opinion of  management,  none of these  lawsuits or claims will
         have a material adverse effect on the consolidated  financial  position
         or results of operations of the Company.




ITEM 2.  CHANGES IN SECURITIES

               None.




ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)   Exhibits

               None.

         (b)   Reports on Form 8-K


               The Company filed a Current Report on Form 8-K on March 26, 2002.
         The Form 8-K was dated March 26, 2002, and reported  information  under
         Item 5 related to the Company's announcement that it was ceasing future
         investment in the  operations of its U.K.  subsidiaries  and that those
         subsidiaries  intended to petition for Administration  under the United
         Kingdom Insolvency Act.

               The Company filed a Current Report on Form 8-K on April 10, 2002.
         The Form 8-K was dated March 26, 2002, and reported  information  under
         Item 2 and pro forma financial  statements  under Item 7 related to the
         Company's  announcement  that it was ceasing  future  investment in the
         operations  of  its  U.K.  subsidiaries  and  that  those  subsidiaries
         intended  to  petition  for  Administration  under the  United  Kingdom
         Insolvency Act.


                                       21

<PAGE>



                                    SIGNATURE


         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.



                                             WORLDPORT COMMUNICATIONS, INC.


         Date:    May 15, 2002               By: /s/ Kathleen A. Cote
                                                 --------------------------
                                                 Kathleen A. Cote
                                                 Chief Executive Officer



                                       22