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

                                 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 June 30, 2001.

                                       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 August 9, 2001, the Registrant had 38,050,352  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
                    June 30, 2001 (unaudited) and December 31, 2000.........   3

                    Condensed Consolidated Statements of Operations
                    for the Three and Six Months Ended June 30, 2001
                    (unaudited) and 2000 (unaudited)........................   4

                    Condensed Consolidated Statements of Cash Flows for the
                    Three and Six Months Ended June 30, 2001 (unaudited)
                    and 2000 (unaudited)....................................   5

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

       Item 2.      Management's Discussion and Analysis of
                    Financial Condition and Results of Operations...........  10

       Item 3.      Quantitative and Qualitative Disclosures About
                    Market Risk.............................................  17

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

       Item 1.      Legal Proceedings.......................................  18

       Item 2.      Changes in Securities...................................  18

       Item 6.      Exhibits and Reports on Form 8-K........................  19


SIGNATURE...................................................................  20

                                       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>

                                                                                              JUNE 30,       DECEMBER 31,
                                                                                                2001             2000
                                                                                                ----             ----
                                         ASSETS                                             (UNAUDITED)
<S>                                                                                          <C>               <C>
CURRENT ASSETS:
    Cash and cash equivalents...................................................             $ 108,303         $132,396
    Accounts receivable, net of allowance for doubtful accounts
         of  $114 and $21, respectively.........................................                 2,698            1,220
    VAT receivable..............................................................                 4,587            8,092
    Other current assets........................................................                 7,965            8,296
    Net assets held for sale....................................................                 1,350            1,350
                                                                                             ---------          -------
                  Total current assets..........................................               124,903          151,354

    PROPERTY AND EQUIPMENT, net.................................................                94,464           62,361
    GOODWILL, net of accumulated amortization of $2,564 and $1,060, respectively.               13,628           17,114
    OTHER ASSETS................................................................                 2,475            1,088
                                                                                             ---------         --------
                       TOTAL ASSETS.............................................              $235,470         $231,917
                                                                                              ========         ========

                          LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable...........................................................              $ 17,799           $7,779
     Accrued expenses...........................................................                18,726            7,898
     VAT payable................................................................                 1,648               --
     Current portion of obligations under capital leases .......................                 5,134            3,812
     Other current liabilities..................................................                 4,776            6,200
                                                                                             ---------          -------
                    Total current liabilities...................................                48,083           25,689

      Long-term portion of obligations under capital leases.....................                 4,507               --
      Other long-term liabilities...............................................                    --               46
                                                                                             ---------          --------
                    Total liabilities...........................................                52,590           25,735

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, 965,642 shares issued and outstanding.......................                    --               --
     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, 38,050,352 and
        33,950,352 shares issued and outstanding, respectively..................                     4                3
     Warrants...................................................................                 2,611            2,611
     Additional paid-in capital.................................................               187,213          175,739
     Accumulated other comprehensive income (loss)..............................               (7,668)            2,050
     Retained earnings..........................................................                   720           25,779
                                                                                             ----------        ---------
                    Total stockholders' equity .................................               182,880          206,182
                                                                                             ---------         --------
                    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................              $235,470         $231,917
                                                                                              ========         ========
         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.


</TABLE>
                                       3

<PAGE>

<TABLE>

                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>



                                                                       Three Months Ended             Six Months Ended
                                                                           June 30,                        June 30,
                                                                           --------                        --------
                                                                     2001            2000             2001              2000
                                                                     ----            ----             ----              ----
                                                                 (unaudited)     (unaudited)        (unaudited)     (unaudited)

<S>                                                                 <C>              <C>              <C>               <C>
REVENUES:
     Managed Service solutions............................          $ 2,093          $   --           $ 3,494           $   --
     Carrier operations...................................            1,267           1,044             2,348            6,137
                                                                    -------          ------           -------           ------
            Total revenue.................................            3,360           1,044             5,842            6,137

COST OF SERVICES:
     Managed Service solutions............................            6,414              --             9,652               --
     Carrier operations...................................              801             782             1,533            3,843
                                                                    -------          ------           -------           ------
            Total cost of services........................            7,215             782            11,185            3,843
                                                                    -------          ------           -------           ------

     Gross margin.........................................          (3,855)             262          ( 5,343)            2,294
                                                                    -------          ------           -------           ------

OPERATING EXPENSES:
     Selling, general and administrative expenses.........            9,512           3,338            16,001           11,556
     Depreciation and amortization........................            3,793             454             6,445              903
                                                                    -------          ------           -------           ------
            Operating loss................................         (17,160)         (3,530)          (27,789)         (10,165)
                                                                    -------          ------           -------           ------

OTHER INCOME (EXPENSE):
     Interest income  ....................................            1,368           3,330             3,206            8,220
     Interest expense.....................................            (134)         (1,395)             (215)          (1,819)
     Gain (loss) on sale of assets........................            (289)              --             (289)          353,095
          Other income (expense), net.....................            (131)              --             (116)            2,639
                                                                    -------          ------           -------           ------

INCOME (LOSS) BEFORE INCOME TAXES.........................         (16,346)         (1,595)          (25,203)          351,970

INCOME TAX PROVISION (BENEFIT)............................             (24)              --             (144)           85,000
                                                                    -------          ------           -------           ------

NET INCOME (LOSS).........................................       $ (16,322)        $(1,595)         $(25,059)         $266,970
                                                                 =========         ========          ========         ========

NET INCOME (LOSS) PER SHARE:
   BASIC..................................................         $ (0.44)        $ (0.05)          $ (0.70)          $ 9.20
                                                                 =========         ========          ========          =======
   DILUTED................................................         $ (0.44)        $ (0.05)          $ (0.70)          $ 5.07
                                                                 =========         ========          ========          =======

SHARES USED IN NET INCOME (LOSS) PER SHARE
  CALCULATION:
    BASIC.................................................           37,313          29,582            35,641           29,016
    CONVERTIBLE PREFERRED STOCK...........................               --              --                --           21,103
    OPTIONS...............................................               --              --                --            2,295
    DILUTED...............................................               --              --                --              282
                                                                    -------          ------           -------           ------
                                                                    37,313           29,582            35,641           52,696
                                                                  ========         ========          ========          =======



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

</TABLE>

                                       4

<PAGE>

<TABLE>

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


                                                                                  Three Months Ended            Six Months Ended
                                                                                        June 30,                       June 30,
                                                                                        --------                       --------
                                                                                   2001          2000            2001        2000
                                                                                   -----         -----
                                                                                (unaudited)   (unaudited)    (unaudited) (unaudited)
<S>                                                                               <C>            <C>          <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)..............................................................   $ (16,322)     $ (1,595)    $(25,059)     $266,970
Adjustments to reconcile net income (loss) to net cash flows from operating
activities:
          Depreciation and amortization........................................        4,551           454        6,995          903
          Amortization of goodwill.............................................          841            --        1,737           --
          Gain (loss) on sale of assets........................................          289            --          289    (353,095)
          Non-cash interest expense............................................           --         1,229           --        1,229
          Change in accounts receivable, net...................................      (1,071)            --      (1,641)        1,126
          Change in VAT receivable.............................................       11,178            --       10,109           --
          Change in prepaid expenses and other assets..........................        (598)          (44)        (652)        (430)
          Change in accounts payable, accrued expenses and other liabilities...     (11,369)       (1,539)      (4,053)     (10,691)
          Change in income taxes payable.......................................         (24)      (41,600)        (144)       43,400
                                                                                  ----------      --------     --------     --------

                    Net cash flows from operating activities...................     (12,525)      (43,095)     (12,419)     (50,588)

CASH FLOWS FROM INVESTING ACTIVITIES:
          Capital expenditures.................................................      (1,260)       (4,747)     (17,847)      (4,762)
          Cash acquired through purchase of subsidiaries.......................        7,194            --        7,194           --
          Sale of assets.......................................................        1,311            --        1,311      459,405
                                                                                   ---------      --------     --------     --------

                    Net cash flows from investing activities...................        7,245       (4,747)      (9,342)      454,643

CASH FLOWS FROM FINANCING ACTIVITIES:
          Principal payments on obligations under capital leases...............      (1,241)         (391)      (1,646)        (525)
          Repayment of Interim Loan Facility...................................           --            --           --    (147,541)
          Repayment on note payable - related party............................           --            --           --     (10,981)
          Exercise of stock options and warrants...............................           --           119           --          206
                                                                                   ---------      --------     --------     --------

                    Net cash flows from by financing activities................      (1,241)         (272)      (1,646)    (158,841)

Effect of exchange rate changes on cash and cash equivalents...................        (759)            --        (686)          (3)
                                                                                   ---------      --------     --------     --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...........................      (7,280)      (48,114)     (24,093)      245,211

CASH AND CASH EQUIVALENTS, beginning of the period.............................      115,583       294,474      132,396        1,149
                                                                                   ---------      --------     --------     --------

CASH AND CASH EQUIVALENTS, end of the period...................................    $ 108,303      $246,360    $ 108,303     $246,360
                                                                                ============   ===========   ==========     ========

CASH PAID DURING THE PERIOD FOR INTEREST.......................................    $     172       $   166    $     244     $    576
                                                                                ============   ===========   ==========     ========

CASH PAID DURING THE PERIOD FOR INCOME TAXES...................................    $      --      $ 41,600    $  --         $ 41,600
                                                                                ============   ===========   ==========     ========

SUPPLEMENTAL SCHEDULE OF NON-CASH
  INVESTING AND FINANCING ACTIVITIES:

       Acquisition of hostmark through the issuance of common stock............ $     11,975   $    --       $   11,975     $     --
                                                                                ============   ===========   ==========     ========
       Acquisition of property and equipment under capital lease............... $      7,875   $    --       $    7,875     $     --
                                                                                ============   ===========   ==========     ========



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

                WorldportCommunications,  Inc., a Delaware corporation (together
         with its subsidiaries, the "Company"), is pursuing a plan to become the
         premier high-end Managed Service  solutions  provider offering Internet
         networking,  applications and consulting  services,  infrastructure and
         systems  support  to medium  and  large-sized  corporate  customers  in
         Europe.  Until consummation of the sale transactions  described in Note
         3,  the  Company  was  a  facilities-based  global   telecommunications
         carrier.

         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, 2000.

                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 June
         30, 2001,  and the results of  operations  and cash flows for the three
         and six months ended June 30, 2001 and 2000.  The results of operations
         for the three and six months ended June 30, 2001,  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.

         Revenue Recognition
         -------------------

                The  Company  recognizes  revenues  as  services  are  provided.
         Amounts billed in advance of services provided are recorded as deferred
         revenues until such related  services are provided.  Installation  fees
         are amortized over the life of the relevant  contract,  which generally
         ranges from one to three years.

         Accounts Receivable
         -------------------

                Accounts  receivable  includes  unbilled amounts of $0.5 million
         and $0.3 million at June 30, 2001 and  December  31, 2000.  This amount
         represents  hours  incurred  by  professional   services  employees  on
         consulting  engagements  that have not yet been  invoiced to customers.
         The timing of invoicing is  dependent on the  contractual  arrangements
         made with the respective customers.

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

                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

                                       6

<PAGE>

         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. All other exchange gains and losses
         are recorded in income on a current basis.

                The Company  currently uses 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. At June
         30, 2001, there were foreign  currency hedge contracts  outstanding for
         8.0 million British Sterling, which resulted in a foreign currency gain
         of less than $0.1 million in the second quarter of 2001.

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

                The treasury  stock  method was used to  calculate  the weighted
         average shares  outstanding for warrants and options for the six months
         ended June 30,  2000.  For 2001 and for the three months ended June 30,
         2000,  basic  and  diluted  loss per  share  are the same  because  all
         dilutive securities had an antidilutive effect on loss per share.

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

                In June 1999, the Financial  Accounting Standards Board ("FASB")
         issued Statement of Financial  Accounting  Standards  ("SAFS") No. 137,
         "Accounting for Derivative Instruments and Hedging Activities--Deferral
         of the Effective Date of FASB  Statement No. 133".  SFAS No. 137 defers
         the  effective  date  of  SFAS  No.  133,  "Accounting  for  Derivative
         Instruments  and Hedging  Activities",  to 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 on January 1, 2001, which
         had no impact on the consolidated financial statements.


(2)      COMPREHENSIVE INCOME

                Total  comprehensive  income (loss) for the three and six months
         ended June 30, 2001 and 2000 was as follows:
<TABLE>

                                             Three Months Ended           Six Months Ended
                                                  June 30,                    June 30,
                                                  --------                    --------
                                             2001          2000           2001          2000
                                             ----          ----           ----          ----
     <S>                                     <C>          <C>          <C>         <C>
     Net earnings (loss)                     $(16,322)    $(1,595)     $ (25,059)  $ 266,970
     Foreign currency translation              (4,286)         --         (9,718)      7,939
                                             --------     -------      ---------   ---------
     Total comprehensive income (loss)       $(20,608)    $(1,595)     $ (34,777)   $274,909
                                             ========     =======      =========    ========


</TABLE>


(3)      DISPOSITIONS

                On  November  11,  1999,  the Company  entered  into a series of
         definitive agreements with Energis for the sale of its 85% shareholding
         in  Worldport  Communications  Europe  Holdings,  B.V.,  the  parent of
         EnerTel  N.V.,  and  associated  assets   ("EnerTel").   The  sale  was
         consummated  on January  14,  2000 for $459.4  million,  net of certain
         transaction  expenses.  The  Company  recorded a gain of  approximately
         $353.1 million in the first quarter of 2000.

                On  February   29,   2000,   the  Company   sold   International
         Interconnect,  Inc. ("IIC") for $0.3 million, a portion of which was in
         the form of a note.  The Company is nearing  completion  of the sale of
         its  remaining  carrier  business,  Telenational  Communications,  Inc.
         ("TNC").  Accordingly,  the net assets of TNC remain as net assets held
         for sale as of June 30, 2001.


                                       7
<PAGE>

(4)      ACQUISITIONS

         VIS-able
         --------

                On September  15, 2000,  the Company  acquired all of the common
         stock of Sweden  based  VIS-able  International  AB and its  affiliates
         ("VIS-able"),  pursuant to a Stock Purchase  Agreement  dated September
         15, 2000, for approximately  $17.7 million,  net of liabilities assumed
         and including the payment of certain fees and expenses.  The payment of
         $2.7  million of the  purchase  price was deferred for one year pending
         any claims against the representations and warranties made in the Stock
         Purchase  Agreement.  This amount is recorded on the Company's  balance
         sheet in Accrued Expenses and is  collateralized by a Letter of Credit,
         which expires one year from the acquisition date.

                The  acquisition  was  recorded  under  the  purchase  method of
         accounting, and accordingly, the results of operations of VIS-Able have
         been included in the consolidated  financial  statements since the date
         of acquisition.  The purchase price has been preliminarily allocated to
         assets  acquired  and  liabilities  assumed  based on their fair market
         value  at  the  date  of  the  acquisition  as  summarized   below  (in
         thousands):

                    Current assets                            $  754
                    Long-term assets                             387
                    Goodwill                                  17,792
                    Current liabilities                      (1,079)
                    Long-term liabilities                      (119)
                                                            --------
                    Purchase price                          $ 17,735
                                                            ========

                Goodwill of approximately $17.8 million represents the excess of
         the cost of the acquired businesses over the fair market value of their
         net assets and is being  amortized on a  straight-line  basis over five
         years.

         hostmark
         --------

                On April 26, 2001, the Company  acquired all of the  outstanding
         stock of hostmark entities in the U.K., Sweden and Germany ("hostmark")
         in exchange for up to 5.1 million shares of the Company's common stock.
         Of this amount,  4.1 million  shares were issued at the closing and the
         remaining  1.0  million  shares  will  be  issued  one  year  from  the
         acquisition date,  pursuant to certain  representations and warranties.
         The purchase  price of $12.0 million was based on the fair market value
         of the common stock on the date of acquisition plus certain transaction
         fees and expenses.

                The  acquisition  was  recorded  under  the  purchase  method of
         accounting, and accordingly, the results of operations of hostmark have
         been included in the consolidated  financial  statements since the date
         of acquisition.

                The fair value of the net assets received  exceeded the purchase
         price by $61.8  million.  Accordingly,  this  excess was  allocated  to
         proportionately   reduce  the  value  assigned  to  non-current  assets
         acquired. The purchase price has been preliminarily allocated to assets
         acquired and liabilities assumed as summarized below (in thousands):

                    Current assets (including cash of $7,194)             $7,865
                    Historical cost of non-current assets                 84,966
                    Reduction in value assigned to non-current assets   (61,767)
                    Current liabilities                                 (19,089)
                                                                        --------
                    Purchase Price                                      $11,975
                                                                         =======

                The liabilities assumed included estimated employee  termination
         costs for  hostmark  employees  of $2.0  million  and  estimated  lease
         disposition  costs of $0.7 million.  By June 30, 2001,  the Company had
         given notice to terminate 28 of the  approximate 55 hostmark  employees
         to be terminated,  however


                                       8
<PAGE>

         no  severance  payments  had  yet  been made. The severance  and  lease
         disposition  costs are expected to be paid out by the end of 2001.

                The  following  pro  forma   information  gives  effect  to  the
         acquisition of hostmark as if the  transaction had been completed as of
         the beginning of the periods presented (in thousands):
<TABLE>

                                                               Three Months Ended         Six Months Ended
                                                                   June 30,                   June 30,
                                                                   ---------                  --------
                                                               2001         2000         2001         2000
                                                               ----         ----         ----         ----
       <S>                                                    <C>            <C>          <C>        <C>
       Revenues                                               $   3,466      $ 1,044      $ 5,965    $   6,137
                                                              =========    =========    =========    =========
       Net income (loss)                                      $(25,140)    $ (3,992)    $(48,546)    $ 263,281
                                                              =========    =========    =========    =========
       Earnings (loss) per share:
            Basic                                             $  (0.59)     $ (0.12)     $ (1.19)      $  7.72
                                                               ========     ========     ========      =======
            Diluted                                           $  (0.59)     $ (0.12)     $ (1.19)      $  4.56
                                                               ========     ========     ========      =======
       Shares used in pro forma per share calculation:
            Basic                                                42,413       34,682       40,741       34,116
                                                               ========     ========     ========      =======
            Diluted                                              42,413       34,682       40,741       57,796
                                                               ========     ========     ========      =======
</TABLE>

                The pro forma information provided should not be construed to be
         indicative of the Company's  results of operations had the  acquisition
         been  consummated on the date assumed,  and are not intended to project
         the Company's results of operations for any future period.


(5)      SEGMENT REPORTING

                The Company has two reportable  segments:  the Managed  Services
         group and the Carrier  Operations  group.  As  discussed in Note 3, the
         Company  sold the  majority  of its  carrier  operations  in the  first
         quarter of 2000 and  announced a new  business  strategy in the Managed
         Services  business in the second  quarter of 2000.  Company  management
         views  the two  distinct  business  strategies  as  different  business
         segments  when  making  operating  and  investment  decisions  and  for
         assessing performance.


                The Managed Services segment derives revenues primarily from the
         delivery of services  including Internet  networking,  applications and
         consulting  services,  infrastructure and systems support.  The Carrier
         Operations  segment  derives  revenues  primarily from voice,  data and
         other telecommunication  services. Only the TNC operation held for sale
         remains in the Carrier Operations segment at June 30, 2001 and December
         31,  2000.  There  were no  intersegment  revenues  in  2001  or  2000.
         Financial  information  for the  Company's  reportable  segments  is as
         follows:
<TABLE>

                                                   Three Months Ended                 Six Months Ended
                                                        June 30,                          June 30,
                                                        --------                          --------
                                                        2001          2000       2001           2000
                                                        ----          ----       ----           ----
         <S>                                         <C>              <C>           <C>         <C>
         REVENUES:
              Managed Service solutions.....        $  2,093         $   --        $ 3,494     $    --
              Carrier operations............           1,267          1,044          2,348       6,137
                    Total revenue...........        $  3,360        $ 1,044        $ 5,842     $ 6,137
                                                    ========        =======        =======     =======

         NET INCOME (LOSS):
              Managed Service solutions.....      $ (16,322)         $  155     $ (25,059)     $ 4,882
              Carrier operations............              --        (1,750)            --      262,088
                                                  ----------       --------     ----------   ---------
                    Total net income (loss).      $ (16,322)       $(1,595)     $ (25,059)   $ 266,970
                                                  ==========       ========     ==========   =========

                                                 June 30,     December 31,
         TOTAL ASSETS:                             2001           2000
                                                   ----           ----
              Managed Service solutions.....       $ 234,120      $ 230,567
              Carrier operations............           1,350          1,350
                                                   ---------      ---------
                    Total assets............       $ 235,470      $ 231,917
                                                   =========      =========
</TABLE>

                                       9
<PAGE>

(6)      CONTINGENCIES

                The Company was a defendant in litigation  filed in the District
         Court of The Hague, The  Netherlands.  The case, filed in February 1999
         by  Mr.  Bahman  Zolfagharpour,   alleged  that  the  Company  breached
         agreements  with Mr.  Zolfagharpour  in connection with its purchase of
         MathComp B.V. from Mr. Zolfagharpour.  The litigation sought damages in
         an amount  exceeding  $20 million and the award of 2,350,000  shares of
         the Company's common stock to Mr.  Zolfagharpour.  The case was settled
         in the second  quarter of 2001 for $0.1  million and the  parties  have
         agreed to dismiss the litigation.

                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.  These cases are currently  pending on defendants'
         motions to dismiss. A proposed settlement was reached by the parties on
         terms  reflected in a Stipulation of Compromise  and  Settlement  dated
         July 20, 2001. The proposed  settlement amount has been entirely funded
         by insurance  into an escrow  account.  The Court  granted  preliminary
         approval  of the  proposed  settlement  on  August  3, 2001 and a final
         hearing to approve the  settlement  is scheduled  for October 19, 2001.
         There is no assurance that this proposed  settlement  will become final
         or that there will not be additional  claims  asserted by class members
         who opt out of the  settlement.  The  outcome  of  this  matter  is not
         expected  to  have  a  material  adverse  effect  on  the  consolidated
         financial position or results of operation of the Company.

                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, 2000.  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

                                       10

<PAGE>

         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.  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,  reference  should be made
         to 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, 2000.


         OVERVIEW
         --------

         WORLDPORT'S STRATEGY

                Worldport's   vision  is  to  be  the   partner   of  choice  in
         accelerating its customers' eBusiness strategies through their adoption
         of Intranets and the Internet to enhance,  streamline  and extend their
         business  processes.  Worldport  offers a broad  portfolio  of services
         including Internet  networking,  applications and consulting  services,
         infrastructure  and  systems  support.  We  plan to  achieve  preferred
         partner  status by  delivering a portfolio of managed  services,  which
         leverages our managed hosting platform, including our highly secure and
         resilient Internet infrastructure,  our proprietary business management
         systems  and  processes,  and our world  class  consulting  and support
         teams.


                The Company's target customers are large  corporations  (greater
         than  500  employees)  and  medium  enterprises  (between  50  and  500
         employees).  Medium enterprises  account for 32% of the market and this
         target  market is expected to grow the  fastest.  Worldport  is focused
         primarily on the following vertical markets:

                    o        Media/Information Technology
                    o        Retail Business Services
                    o        Financial Services
                    o        Government/Utilities
                    o        Healthcare/Pharmaceuticals
                    o        Telecommunications

              The Company has customers in all of these vertical  markets today,
         and  plans to  leverage  its  knowledge  of these  markets  to grow its
         business.


         WORLDPORT'S DEVELOPMENT

                The  Company  started  building  its Managed  Services  business
         fourteen  months ago.  Since this time,  significant  progress has been
         made in building and  developing  this business.  Today,  Worldport has
         built  a  proprietary   managed  service  software   platform  and  has
         operational  Internet solution centers ("ISC's") in London,  Stockholm,
         Frankfurt and the SuperCentre in Dublin,  Ireland capable of delivering
         a full portfolio of managed service solutions. In addition, the Company
         has  professional  service  resources in Sweden  providing  application
         design and development for customers on a pan-European basis. Worldport
         planned to establish  between three and five ISC's in Europe by the end
         of 2001. It has achieved this goal six months in advance of its plan.

                Worldport  started the business in April 2000 by breaking ground
         for the construction of the SuperCentre in Dublin,  Ireland. This state
         of the art  purpose-built  ISC was created to deliver  complex  managed
         service  solutions  to  pan-European  customers  and provide  technical
         support to all Worldport

                                       11

<PAGE>

         ISC's.  Following  completion  of  the  SuperCentre  in  October  2000,
         Worldport   focused  on   technical   support   staffing   and  product
         development.

                In September 2000, Worldport purchased VIS-able International AB
         and its affiliates  ("Vis-able"),  a Swedish professional services firm
         consisting  of five offices  across  Sweden and a small shared  managed
         service  operation   branded  Ballou  primarily  serving  Sweden.   The
         acquisition  of  VIS-able   provides   Worldport  with  the  consulting
         resources  to deliver  application  design and  development.  Since the
         acquisition,  this business has been re-branded Worldport  professional
         services and the company has been integrated into Worldport's  business
         support systems.

              In April 2001,  Worldport  acquired hostmark entities in the U.K.,
         Sweden and Germany ("hostmark") for 5.1 million shares of common stock.
         The  acquisition of hostmark  provided  Worldport with ISC's in London,
         Stockholm and Frankfurt. The hostmark company completed construction of
         the London ISC in January  2001,  the Stockholm ISC in May 2001 and the
         Frankfurt  ISC in June 2001.  The company had minimal  revenues when we
         completed  the  transaction,  as only one ISC was  open  for  business.
         Hostmark  did  bring a sales  pipeline;  direct  sales  force and sales
         channels to Worldport.  These operations receive technical support from
         the  SuperCentre and are currently  being  integrated with  Worldport's
         standard  operational  and  business  support  systems.  All ISC's will
         operate on a common  systems  platform with the  SuperCentre  improving
         efficiency  and  providing a higher  level of support to customers on a
         pan-European basis.

                Following the  acquisition of hostmark,  Worldport  initiated an
         aggressive  integration  program  to  rapidly  identify  and  eliminate
         operational and system redundancies in the two companies. By the end of
         September  2001,  approximately  120  employees  will  have  been  made
         redundant and eliminated as a result of this  integration  plan and the
         further streamlining of the combined business.  Hostmark was integrated
         with Worldport's  financial systems in July and hostmark operations are
         in the  process  of being  re-branded  under the  Worldport  name.  The
         Company expects to have all business  support systems  integration work
         completed by year-end.


         THE MARKET

                The European  market is being driven by a shift in  corporations
         to Internet  protocols  ("IP") and  Web-based  applications  to improve
         customer service and improve internal business processes that result in
         lower  costs.  Corporations  appear  to  have  accepted  that  IP-based
         business  solutions  can provide a  competitive  advantage  and are now
         considering how they implement the range of  applications  available to
         them.

              The Yankee Group  estimates the global managed  services market to
         grow from $3.2 billion today to $27.5 billion by 2005. The European Web
         hosting market is projected to grow  significantly  and is estimated to
         grow into a $5 billion to $15 billion  market by 2004 according to IDC.
         The  European  market is  estimated  to be  approximately  $500 million
         today.  Worldport's  current  strategy  is to  focus  on  four  markets
         (Ireland,  Sweden,  U.K. and Germany) and multinational  companies that
         are operating in those  countries.  This market is estimated to be $320
         million  today,  growing to between  $2.2  billion and $7.8  billion by
         2004, according to IDC and Schroder Salomon Smith Barney.

              The European  Internet  service  solutions market is evolving from
         basic colocation to managed services. Basic colocation services are the
         provision of racks or cabinets,  power and bandwidth to companies  that
         generally  own their own servers.  In some  instances,  the  colocation
         company will  provide  basic  hardware  and  software  support to their
         customer.  Basic  colocation is becoming a commodity due to the absence
         of  value-added  services  and over  supply of  colocation  facilities.
         Worldport  has not been  focused on  building  or selling a  colocation
         offering.  As  medium  and large  enterprises  shift  mission  critical
         business  processes to the Web,  they require  additional  hardware and
         technical   staffs   to   support   complex   hardware   and   software
         configurations.   In  addition,  these  customers  need  assistance  in
         developing and managing WAN/LAN networks to support their systems.  The
         shift of business  processes to the Web requires  capital and technical
         resources to be successful.  The cost of managing  mission critical Web
         applications internally is significant and medium and large enterprises
         have  discovered  that  they can  reduce  the  costs of their  internal
         information  technology ("IT") organizations by out-sourcing to


                                       12

<PAGE>

         managed  service  companies.  Out-sourcing  could reduce IT costs by as
         much as 90%,  according to Morgan Stanley Dean Witter,  "How to Buy Web
         Infrastructure" June 2001. Most medium to large enterprises do not have
         the scale to provision  these services  efficiently,  creating the cost
         savings  opportunity  through  out-sourcing.  The trend in the U.S. has
         been for medium to large enterprises to out-source  Internet operations
         to managed service providers and we see this trend in Europe. The shift
         to fully managed  out-sourced  Internet operations has created the need
         for  managed  services  companies  that  can  deliver  a  comprehensive
         portfolio  of  managed  services  in  a  highly  secure  and  resilient
         environment. The physical service center infrastructure requirements to
         support managed  services exceed the  infrastructure  requirements  for
         colocation.  As a result,  colocation  providers  could be  required to
         reinvest in their  facilities or even build new  facilities in order to
         provide managed services.

                The Worldport strategy has been, since its inception, to build a
         pan-European  Managed Service solutions business and the investments in
         facilities  have been  constructed  with this  intention.  As a result,
         Worldport has the team and facilities in place today to support current
         and  projected  managed  services  requirements  without  the  need for
         additional capital investment.


         WORLDPORT'S PRODUCT PORTFOLIO


         Managed Hosting       Worldport's   Managed   Services   products   are
                               principally  provided  on  the  following  system
                               configurations:  Microsoft Windows NT and 2000 on
                               Compaq  hardware,  Solaris  on Sun  hardware  and
                               Linux  Red  Hat on  Dell  hardware.  The  modular
                               managed  hosting  product   includes   redundant,
                               diversely routed,  tiered or burstable bandwidth,
                               multiple  levels of  connectivity,  24x7  network
                               security,  RAID disk array,  daily data  backups,
                               off-site  vault data  storage,  24x7  network and
                               server monitoring, 24x7 technical support, server
                               capacity  monitoring and reporting including CPU,
                               disk   capacity  and  memory   utilization,   and
                               graphical  advanced reports with visitor analysis
                               data.

                               Worldport also provides a flexible environment to
                               support   the    software    and    sophisticated
                               application   hosting   requirements   of  larger
                               configurations.  It is  able to  provide  Virtual
                               Local   Area   Network    configurations,    high
                               availability database solutions, complex database
                               management,  and specifically  assigned technical
                               account managers.


         Value-Added           Worldport is  able  to  provide  load  balancing;
         Services              daily, weekly,  monthly and annual server traffic
                               reports; managed firewall and security services.

                               In  addition,   the  Company's   managed  storage
                               service  provides a highly  scalable and flexible
                               solution   for  the   centralized   storage   and
                               management of large amounts of customer data. The
                               Worldport  storage  solution used (EMC)  provides
                               customers with anything up to multiple  Terabytes
                               of data and offers  the  ability to store data in
                               on-line,  near-line  or off-line  configurations.
                               Instant copies and snapshots of customer data can
                               be generated as required  without any impact upon
                               performance   and  all   customer   devices   are
                               connected  using  high-speed  optical  networking
                               technology.


         Professional          Worldport    provides    Internet     management,
         Services              application  and  systems  development,   content
                               management, CRM and business consulting services.


         Connectivity to       Worldport  offers  customers   connectivity  with
         Internet              burstable  bandwidth  available on a tiered basis
                               from 256kbps to 100Mbps.


         Custom  Suites        Dedicated,  private and secure  hosting  rooms of
                               approximately 1,000 square feet.


         Colocation            Secure  cabinets  or  fixed  shelves,  leveraging
                               Worldport's ISC infrastructure.


                                       13


<PAGE>

         WORLDPORT'S CAPABILITY AND DIFFERENTIATION

                The  managed  services  business  requires  operational  support
         systems capable of monitoring individual servers, software applications
         and  telecommunication  network activity.  Today, there are a number of
         software  applications  that have  different  functionality  from basic
         alarm  and  activity   monitoring  to  comprehensive  fault  and  alarm
         detection   and   reporting.   Medium   and  large   enterprises   need
         comprehensive  monitoring  and  management  of hardware and software to
         ensure that critical Web  applications  are available  100% of the time
         and these  customers  are  looking  for managed  service  providers  to
         provide service level  agreements  ("SLA") that ensure  availability of
         systems.  SLA's are  commitments  for the  delivery of minimum  service
         levels.  These  service  commitments  relate  to the  availability  and
         performance  of both hardware and software.  Comprehensive  systems are
         required to deliver customized and complex SLA's.

                Worldport  designed and  developed  its  business and  operating
         support  systems  ("BOSS") to address this customer need and intends to
         lead the industry in terms of SLA management. BOSS consists of the most
         comprehensive  systems  available for the managed service business from
         CRM to  accounting.  BOSS has  integrated  the  Company's  key business
         processes  with  middleware to improve the  efficiency of these systems
         and  provide  a  scalable  platform.  The BOSS  system  automates  work
         activities  and event  management,  allowing  the business to scale and
         reducing the need for headcount.

                The  development  of  BOSS  began  in  September  2000  and  was
         completed in June 2001.  To date we have invested  approximately  $19.0
         million on the development of the BOSS system. All Worldport operations
         will use the BOSS system and the Company is currently in the process of
         converting  the hostmark  operations  to this  platform.  We expect all
         operations to be on BOSS by year-end 2001.

                The   implementation  of  a  common  systems  platform  provides
         Worldport the  opportunity  to have all  customers on a common  systems
         platform  and  will  lower  future   systems  costs  and  allow  us  to
         consistently  provision managed services to customers on a pan-European
         basis.  We believe that BOSS will force our  competitors in the managed
         service  business  to invest in  systems  and add or  convert  existing
         systems in order to provision competitive services against Worldport.


         WORLDPORT'S SALES AND MARKETING

                We were focused on building our  facilities,  product  portfolio
         and technical support  resources  through the end of 2000.  Starting in
         2001, we were able to proactively sell our managed service offerings in
         Ireland through a direct sales force.

                The  hostmark   acquisition  expanded  the  pan-European  market
         opportunity,  the direct sales staff and sales channels in the U.K. and
         Sweden. The hostmark sales force and channels have been integrated with
         Worldport.  Nicholas  Jeffery,  formally of  hostmark,  has assumed the
         position of Vice  President,  Sales and  Marketing  for  Worldport.  He
         replaces Frazer Hamilton, VP Sales, who left the business in July.

              In the second  quarter,  we added 22 new  customers to the Managed
         Service  business,  bringing  the total number of customers to 149. The
         annualized  recurring  contract  revenue  value for these  customers is
         approximately  $4.5 million.  It is anticipated  that the current sales
         pipeline will increase annualized recurring contract revenue to between
         $7-$10  million by year end.  Additionally,  we sold 32 new  consulting
         contracts in the second quarter.

              Managed  Services  revenue  totaled  $2.1 million for the quarter.
         Recurring  contract  revenue  represented $.6 million and  professional
         services  contributed  $1.5 million.  For the year 2001, it is expected
         that  Managed  Services  revenues  will be $9.0 million  ($4.0  million
         recurring contract revenue and $5.0 million for professional services).

                                       14

<PAGE>


         WORLDPORT'S OUTLOOK

                The hostmark acquisition  increased monthly cash operating costs
         from $2.5 to $5.0 million.  The integration program initiated following
         completion of the  acquisition  will reduce this monthly cash operating
         cost to approximately $2.9 million by the end of September 2001.

                Worldport will have  approximately  240 employees  following the
         integration  program,  with 36 people in sales  and  marketing,  173 in
         customer delivery and support and the remainder  supporting general and
         administrative functions.

                The U.S.  economic  downturn has had an impact on Europe causing
         corporations  to defer IT spending  into the future.  IP VPN  ("virtual
         private network") and Internet application  development continues to be
         a high priority for European  corporations,  however  spending is being
         cautiously  evaluated as  corporations  proactively  manage cash.  This
         deferral of spending  will impact the speed of the  development  of the
         business.

                The  Company had  previously  projected  this  business to be on
         annualized  revenue  run rate of $35  million  at the end of 2001.  The
         slower  than  expected  development  of the managed  service  market in
         Europe  will  impact our  development  and we now  expect  the  Managed
         Services  business  to be on a  $16  million  annualized  run  rate  at
         year-end  2001.  In  response to the revised  revenue  projection,  the
         Company has adjusted hiring and capital spending to minimize the impact
         on the business.

                Worldport's  plan is to be EBITDA  positive in the third quarter
         of 2003,  which  represents  a  three-quarter  delay  from our  earlier
         projection.

                The Company, however, realizes that because of the economic slow
         down,  the cut backs in IT  spending  and the  dynamics  of the market,
         there may be an adverse effect in achieving near term revenue  momentum
         and this will erode the Company's financial resources more rapidly than
         the current plan.  Therefore,  the Company  believes that aligning with
         the right strategic partner would allow it to more effectively maximize
         its  investments,  more rapidly scale the business and  strengthen  its
         financial position for the long term.

                Worldport  has  determined  that it is  appropriate  to evaluate
         alternatives for strategic partnering and has retained Schroder Salomon
         Smith  Barney to assist the  Company in  exploring  possible  strategic
         relationships and directions.


         RESULTS OF OPERATIONS
         ---------------------

                During the first  quarter of 2000,  the  Company  completed  the
         disposition of  substantially  all of its operating  assets,  and began
         execution  of the  Company's  new  business  plan to become the premier
         Managed  Service  solutions  provider  in  Europe.  As part of that new
         business plan, the Company acquired  VIS-able in September 2000, opened
         the Dublin  SuperCentre in October 2000 and acquired  hostmark entities
         in the U.K.,  Sweden,  and  Germany  in April  2001.  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. The results of  operations  for  EnerTel and IIC are  included
         through  their dates of sale  (January  14, 2000 and February 29, 2000,
         respectively)  and the results of operations  for VIS-able and hostmark
         are included from their dates of  acquisition  (September  15, 2000 and
         April 26, 2001, respectively).

                Revenues  for the quarter and six months  ended June 30, 2001 of
         $3.4 million and $5.8 million  consisted of revenue from the  following
         sources:
                                                         2nd Quarter  Six Months
                                                         -----------  ----------
                    Managed Service solutions:
                       Recurring contract revenue             $ 587        $ 889
                       Professional services                  1,506        2,605
                    Carrier operations - held for sale        1,267        2,348
                                                             ------       ------
                           Total revenue                     $3,360       $5,842
                                                             ======       ======


                                       15

<PAGE>

         Revenues  for the three and six months  ended  June 30,  2000 were $1.0
         million and $6.1 million, respectively, and consisted solely of revenue
         from the Company's sold and held for sale operations.

                Cost of sales for the three and six months  ended June 30,  2001
         was $7.2 million and $11.2 million, respectively, and consist primarily
         of:

               o    salaries  and  benefits  on Managed  Services  direct  labor
                    employees,
               o    depreciation  expense  on  revenue-generating  assets at the
                    Company's ISCs, and
               o    facility and bandwidth costs for the ISCs.

         Cost of sales currently  exceeds revenue as a result of excess capacity
         in the Company's  ISCs. As this excess  capacity is utilized,  revenues
         are  expected to  increase  at a much  faster pace than costs.  Cost of
         sales for the three and six months ended June 30, 2000 was $0.8 million
         and $3.8 million,  respectively,  and consisted  solely of revenue from
         the Company's sold and held for sale operations.

                Selling,  general and  administrative  ("SG&A") expenses for the
         quarter and six months  ended June 30, 2001 were $9.5 million and $16.0
         million,   respectively,   which  primarily  represented  salaries  and
         benefits,  facility  costs  (for  offices  other  than  the  ISCs)  and
         professional  services  associated  with the  execution  of the current
         business plan.  SG&A expenses for the quarter and six months ended June
         30, 2000 of were $3.3 million and $11.6 million,  respectively.  Of the
         year to date 2000  results,  approximately  $8.2 million was  primarily
         related to the wind down of the carrier operations.

                Depreciation and amortization  expense was $3.8 million and $6.4
         million  for  the  quarter  and  six  months   ended  June  30,   2001,
         respectively.  Current year results primarily consisted of depreciation
         expense on  non-revenue  generating  assets in the  Company's  ISCs and
         goodwill  amortization expense from the acquisition of VIS-able of $0.9
         million and $1.7  million  for the three and six months  ended June 30,
         2001,  respectively.  Goodwill  is being  amortizing  over a  five-year
         period.

                The  Company  earned  interest  income of $1.4  million and $3.2
         million  for  the  quarter  and  six  months   ended  June  30,   2001,
         respectively,  and $3.3  million and $8.2 million for the three and six
         months  ended June 30, 2000,  respectively.  This  interest  income was
         attributable to the Company's cash and cash equivalents  remaining from
         the January 2000 sale of EnerTel.  The gain on sale of assets of $353.1
         million in the six months  ended June 30, 2000  represents  the gain on
         the sale of EnerTel in January  2000.  Other income of $2.6 million for
         the six  months  ended  June 30,  2000  primarily  represented  foreign
         exchange gains and losses incurred by EnerTel prior to its sale.

                An $85.0 million tax provision was recorded in the first quarter
         of 2000 based on a  preliminary  estimate of the tax due on the sale of
         EnerTel,  offset  partially by the  realization  of the  Company's  net
         operating  loss carry  forwards from  previous  years that had not been
         benefited  for tax  purposes.  A $0.1  million  tax  benefit  has  been
         recorded in the first six months of 2001 to recognize current year U.S.
         tax losses, which can be carried back against 2000 taxable income for a
         refund.

                As a result, the Company had net loss of $16.3 million and $25.1
         in the  first  three  and six  months  of 2001.  In 2000,  the  Company
         incurred a net loss of $1.6  million in the second  quarter and had net
         income of $267.0 million in the first six months of that year.

         LIQUIDITY AND CAPITAL RESOURCES
         -------------------------------

                The Company's current  operations have been financed by the cash
         received  from the sale of  Enertel.  The  Company  had cash of  $108.3
         million and $132.4  million,  and working  capital of $76.8 million and
         $125.7 million, at June 30, 2001 and December 31, 2000, respectively.

                Operations  used $12.5  million  and $12.4  million in the first
         three and six months ended June 30, 2001,  respectively,  due primarily
         to operating losses and changes in working capital. A VAT refund of 9.1
         million Euros  (approximately $7.8 million) was received in the current
         quarter from the Irish revenue agency.  Operating activities used $43.1
         million and $50.6 million in the second quarter and

                                       16

<PAGE>

         first six months of 2000, respectively, due primarily to the payment of
         income taxes attributable to the gain on sale of EnerTel in 2000.

                Investing  activities  generated  $7.2 million during the second
         quarter of 2001,  primarily  from the cash  acquired as a result of the
         hostmark acquisition. Investing activities used $9.3 million during the
         six months ended June 30, 2001. Capital  expenditures of $17.8 million,
         primarily for customer  equipment and the Company's  operating  systems
         and ISCs,  was  partially  offset by the cash  acquired in the hostmark
         acquisition and the proceeds from the sale of certain assets. Investing
         activities  used $4.7 million in last year's second quarter for capital
         expenditures on the Dublin SuperCentre build out. Investing  activities
         for the six  months  ended  June  30,  2000  provided  $454.6  million,
         primarily consisting of the proceeds from the EnerTel sale transaction.

                Financing  activities  used $1.2 million and $1.6 million during
         the  three  and six  months  ended  June 30,  2001,  respectively,  for
         principal payments on capital leases.  Financing activities used $158.8
         million  in the first six months of 2000 and  primarily  related to the
         repayment of the Interim Loan Facility and a related party note payable
         from the proceeds of the EnerTel sale transaction.

                As  described  above,  the  Company  acquired  hostmark  for 5.1
         million  shares of the Company's  common stock.  The purchase  price of
         $12.0 million was based on the value of the common stock on the date of
         acquisition plus certain transaction and fees expenses.  The historical
         cost of the net  assets  acquired  ($73.7  million)  was  significantly
         higher than the purchase price.  Accordingly,  the $61.8 million excess
         was  allocated  to   proportionately   reduce  the  value  assigned  to
         non-current  assets acquired.  Included in the liabilities  assumed are
         $2.0 million of estimated  employee  termination costs and $0.7 million
         of  estimated  lease  disposition  costs.  These  costs  are less  than
         previously  estimated in the  Company's  Form 8-K/A-1 filed on July 10,
         2001.

                At the end of July 2001,  Worldport's  cash and cash equivalents
         were approximately $100 million with approximately $13 million of trade
         payables  related to the  hostmark  liabilities  assumed by  Worldport,
         which at the current  revenue and  expense run rates  should  allow the
         Company to operate into 2003. The Company  believes its rate of revenue
         generation has been, and may continue to be, adversely  impacted by the
         economic  slowdown and the decrease in spending on IT services.  Unless
         the Company's rate of revenue generation  significantly  increases, the
         Company's  cash resources may not allow it to reach a point of positive
         cash flow before its cash balances are exhausted.

                The Company intends to fund potential  future  operating  losses
         and capital  expenditures  required to pursue its current business plan
         out of its existing cash balance. Additional requirements,  if any, may
         be  funded  through  debt  facilities  and  equity  financings  not yet
         arranged.  However, there can be no assurance that sufficient financing
         will be available on terms acceptable to the Company. If such financing
         is not available, the Company will have to curtail or alter its current
         business plan and/or seek alternative financing.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                Management  believes that the Company's  exposure to market rate
         fluctuations on its investments is nominal due to the short-term nature
         of those investments.

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<PAGE>


                           PART II. OTHER INFORMATION



ITEM 1.  LEGAL PROCEEDINGS

                The Company was a defendant in litigation  filed in the District
         Court of The Hague, The  Netherlands.  The case, filed in February 1999
         by  Mr.  Bahman  Zolfagharpour,   alleged  that  the  Company  breached
         agreements  with Mr.  Zolfagharpour  in connection with its purchase of
         MathComp B.V. from Mr. Zolfagharpour.  The litigation sought damages in
         an amount  exceeding  $20 million and the award of 2,350,000  shares of
         the Company's common stock to Mr.  Zolfagharpour.  The case was settled
         in the second  quarter of 2001 for $0.1  million and the  parties  have
         agreed to dismiss the litigation.

                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.  These cases are currently  pending on defendants'
         motions to dismiss. A proposed settlement was reached by the parties on
         terms  reflected in a Stipulation of Compromise  and  Settlement  dated
         July 20, 2001. The proposed  settlement amount has been entirely funded
         by insurance  into an escrow  account.  The Court  granted  preliminary
         approval  of the  proposed  settlement  on  August  3, 2001 and a final
         hearing to approve the  settlement  is scheduled  for October 19, 2001.
         There is no assurance that this proposed  settlement  will become final
         or that there will not be additional  claims  asserted by class members
         who opt out of the  settlement.  The  outcome  of  this  matter  is not
         expected  to  have  a  material  adverse  effect  on  the  consolidated
         financial position or results of operation of the Company.

                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

                During the quarter ended June 30, 2001,  4,100,000 shares of the
         Company's  common stock were issued in connection  with the acquisition
         of hostmark entities in the U.K.,  Sweden and Germany.  The issuance of
         these shares was exempt from the  registration  under  Section 4 (2) of
         the Securities  Act of 1933, as amended,  as a transaction by an issuer
         not involving any public offering.



                                       18

<PAGE>





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 April 26, 2001
              to  publicly  file a press  release  issued on April  26,  2001 to
              announce the acquisition of hostmark  entities in the U.K., Sweden
              and Germany.

              The Company filed a Current  Report on Form 8-K on May 10, 2001 to
              announce  the  acquisition  of all of the common stock of Hostmark
              World Limited, Hostmark AB and Hostmark GmbH.

              The Company filed a Current  Report on Form 8-K on June 4, 2001 to
              publicly file a press  release  issued on May 24, 2001 to announce
              that Kathleen Cote had been appointed as Chief Executive Officer.

              The  Company  filed a Current  Report on Form  8-K/A-1 on July 10,
              2001 to  amend  the May  10,  2001  Form  8-K to  include  audited
              financial   statements  of  the  acquired  business  and  proforma
              financial statements.



                                       19

<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:    August 14, 2001               By:       /s/ John T. Hanson
                                                        ------------------------
                                                        John T. Hanson
                                                        Chief Financial Officer




                                       20