================================================================================
                                 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 September 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
      incorporation or organization)                Number)


     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 November 13, 2001, the  Registrant had 38,087,252  shares of Common Stock,
par value $0.0001, outstanding.


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

<PAGE>




                         WORLDPORT COMMUNICATIONS, INC.
                                TABLE OF CONTENTS



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

     Item 1. Financial Statements

             Condensed Consolidated Balance Sheets as of
             September 30, 2001 (unaudited) and December 31, 2000............  3

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

             Condensed Consolidated Statements of Cash Flows for the
             Three and Nine Months Ended September 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................... 12

     Item 3. Quantitative and Qualitative Disclosures About Market Risk...... 21

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

     Item 1. Legal Proceedings............................................... 22

     Item 2. Changes in Securities........................................... 22

     Item 6. Exhibits and Reports on Form 8-K................................ 22

SIGNATURE.................................................................... 23

                                       2



<PAGE>

<TABLE>

                         PART I - FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS
                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>

                                                                                                  SEPTEMBER 30,     DECEMBER 31,
                                                                                                      2001              2000
                                                                                                      ----              ----
                                          ASSETS                                                   (UNAUDITED)
<S>                                                                                                     <C>               <C>
CURRENT ASSETS:
    Cash and cash equivalents............................................................               $ 72,395          $132,396
    Marketable securities................................................................                 10,866                --
    Accounts receivable, net of allowance for doubtful accounts of $166 and $21,                           1,611             1,220
       respectively......................................................................
    VAT receivable.......................................................................                  2,103             8,092
    Other current assets.................................................................                  9,893             8,296
    Net assets held for sale.............................................................                  1,350             1,350
                                                                                                        --------          --------
                  Total current assets...................................................                 98,218           151,354

    PROPERTY AND EQUIPMENT, net..........................................................                 99,143            62,361
    GOODWILL, net of accumulated amortization of $1,060 at December 31, 2000..                                --            17,114
    OTHER ASSETS.........................................................................                  2,727             1,088
                                                                                                        --------          --------
                       TOTAL ASSETS......................................................              $ 200,088          $231,917
                                                                                                       =========          ========

                           LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable....................................................................               $ 12,897          $  7,779
     Accrued expenses....................................................................                 12,623             7,898
     Current portion of obligations under capital leases ................................                  4,915             3,812
     Other current liabilities...........................................................                  4,645             6,200
                                                                                                        --------          --------
                    Total current liabilities............................................                 35,080            25,689

     Long-term portion of obligations under capital leases...............................                  4,180                --
     Other long-term liabilities.........................................................                     --                46
                                                                                                        --------          --------
                    Total liabilities....................................................                 39,260            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, 956,417 and 965,642 shares issued and outstanding, 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 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).......................................                (2,140)             2,050
     Retained earnings (deficit).........................................................               (26,860)            25,779
                                                                                                        --------          --------
                    Total stockholders' equity ..........................................                160,828           206,182
                                                                                                        --------          --------
                   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY...........................               $ 200,088          $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         Nine Months Ended
                                                                              September 30,             September 30,
                                                                              -------------             -------------
                                                                           2001          2000         2001          2000
                                                                           -----         ----         ----          ----
                                                                        (unaudited)  (unaudited)  (unaudited)  (unaudited)
<S>                                                                      <C>          <C>          <C>          <C>
REVENUES:
     Managed hosting .................................................   $     984    $    --      $   1,873    $    --
     Professional services ...........................................         701          186        3,306          186
     Carrier operations ..............................................       1,471        1,179        3,819        7,316
                                                                         ---------    ---------    ---------    ---------
           Total revenue .............................................       3,156        1,365        8,998        7,502

COST OF SERVICES:
     Managed hosting .................................................       7,406         --         15,502         --
     Professional services ...........................................         810          110        2,366          110
     Carrier operations ..............................................         886          896        2,419        4,739
                                                                         ---------    ---------    ---------    ---------
           Total cost of services ....................................       9,102        1,006       20,287        4,849
                                                                         ---------    ---------    ---------    ---------

     Gross margin ....................................................      (5,946)         359      (11,289)       2,653
                                                                         ---------    ---------    ---------    ---------

OPERATING EXPENSES:
     Selling, general and administrative expenses ....................       9,836        5,241       25,837       16,797
     Asset impairment loss ...........................................      13,201         --         13,201         --
     Depreciation and amortization ...................................       4,253          697       10,698        1,600
                                                                         ---------    ---------    ---------    ---------


           Operating loss ............................................     (33,236)      (5,579)     (61,025)     (15,744)
                                                                         ---------    ---------    ---------    ---------

OTHER INCOME (EXPENSE):
     Interest income .................................................         984        3,390        4,190       11,610
     Interest expense ................................................        (158)         (91)        (373)      (1,910)
     Gain (loss) on sale of assets ...................................         (25)      (6,162)        (314)     346,933
     Other income, net ...............................................         215         --             99        2,639
                                                                         ---------    ---------    ---------    ---------

INCOME (LOSS) BEFORE INCOME TAXES ....................................     (32,220)      (8,442)     (57,423)     343,528

INCOME TAX PROVISION (BENEFIT) .......................................      (4,640)      (2,400)      (4,784)      82,600
                                                                         ---------    ---------    ---------    ---------

NET INCOME (LOSS) ....................................................   $ (27,580)   $  (6,042)   $ (52,639)   $ 260,928
                                                                         =========    =========    =========    =========

NET INCOME (LOSS) PER SHARE:
   BASIC....................................................              $  (0.71)   $   (0.20)   $   (1.43)   $    8.80
                                                                         =========    =========    =========    =========
   DILUTED..................................................              $  (0.71)   $   (0.20)   $   (1.43)   $    4.76
                                                                         =========    =========    =========    =========
SHARES USED IN NET INCOME (LOSS) PER SHARE
  CALCULATION:
    BASIC...................................................                39,062       30,857       36,794       29,657
    CONVERTIBLE PREFERRED STOCK.............................                    --           --           --       21,315
    WARRANTS................................................                    --           --           --        2,305
    OPTIONS.................................................                    --           --           --        1,594
                                                                          ---------    ---------    ---------    ---------
    DILUTED.................................................                 39,062       30,857       36,794       54,871
                                                                          =========    =========    =========    =========

         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        Nine Months Ended
                                                                                       September 30,            September 30,
                                                                                       ------------             -------------
                                                                                    2001           2000       2001          2000
                                                                                    ----           ----       ----          ----
                                                                                 (unaudited)   (unaudited) (unaudited)  (unaudited)

<S>                                                                              <C>          <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .............................................................. $ (27,580)   $  (6,042)   $ (52,639)   $ 260,928
Adjustments to reconcile net income (loss) to net cash flows from operating
activities:
          Depreciation and amortization ........................................     4,946          549       11,941        1,452
          Amortization of goodwill .............................................       796          148        2,533          148
          (Gain) loss on sale of assets ........................................        25        6,162          314     (346,933)
          Asset impairment .....................................................    13,201         --         13,201         --
          Non-cash interest expense ............................................      --           --           --          1,229
          Non-cash compensation expense ........................................      --            120         --            120
          Changes in assets and liabilities:
             Accounts receivable, net ..........................................     1,165         (185)        (476)         941
             VAT receivable ....................................................       975       (4,460)      11,084       (4,460)
             Prepaid expenses and other assets .................................      (583)      (1,284)      (1,235)      (1,714)
             Accounts payable, accrued expenses and other liabilities ..........    (9,226)      16,639      (13,279)       5,948
             Income taxes ......................................................    (4,641)     (14,900)      (4,785)      28,500
                                                                                 ---------    ---------    ---------    ---------
                    Net cash flows from operating activities ...................   (20,922)      (3,253)     (33,341)     (53,841)

CASH FLOWS FROM INVESTING ACTIVITIES:
         Purchase of marketable securities .....................................   (11,000)        --        (11,000)        --
         Capital expenditures ..................................................    (3,441)     (39,652)     (21,288)     (44,414)
         Cash acquired through purchase of subsidiaries ........................      --           --          7,194         --
         Sale of assets ........................................................      --         (6,162)       1,311      453,243
         Purchase of subsidiaries ..............................................      --        (17,735)         --       (17,735)
                                                                                 ---------    ---------    ---------    ---------
                    Net cash flows from investing activities ...................   (14,441)     (63,549)     (23,783)     391,094

CASH FLOWS FROM FINANCING ACTIVITIES:
         Principal payments on obligations under capital leases ................    (1,046)        (288)      (2,692)        (813)
         Repayment of Interim Loan Facility ....................................      --           --           --       (147,541)
         Repayment on note payable - related party .............................      --           --           --        (10,981)
         Repayment of notes payable ............................................      --           (404)        --           (404)
         Proceeds of notes payable .............................................      --            387         --            387
         Exercise of stock options and warrants.................................      --            283         --            489
                                                                                 ---------    ---------    ---------    ---------
                   Net cash flows from by financing activities ................     (1,046)         (22)      (2,692)    (158,863)

Effect of exchange rate changes on cash and cash equivalents ...................       501         (885)        (185)        (888)
                                                                                 ---------    ---------    ---------    ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ...........................   (35,908)     (67,709)     (60,001)     177,502

CASH AND CASH EQUIVALENTS, beginning of the period .............................   108,303      246,360      132,396        1,149
                                                                                 ---------    ---------    ---------    ---------

CASH AND CASH EQUIVALENTS, end of the period ................................... $  72,395    $ 178,651    $  72,395    $ 178,651
                                                                                 =========    =========    =========    =========

CASH PAID DURING THE PERIOD FOR INTEREST ....................................... $     158    $      92    $     402    $     668
                                                                                 =========    =========    =========    =========

CASH PAID DURING THE PERIOD FOR INCOME TAXES ................................... $    --      $  12,500    $    --      $  54,100
                                                                                 =========    =========    =========    =========

SUPPLEMENTAL SCHEDULE OF NON-CASH
  INVESTING AND FINANCING ACTIVITIES:

      Acquisition of hostmark through the issuance of common stock ............. $    --      $    --      $  11,975    $      --
                                                                                 =========    =========    =========    =========
      Acquisition of property and equipment under capital lease ................ $    --      $    --      $   7,875    $      --
                                                                                 =========    =========    =========    =========
      Conversion of related party note payable to 1,000 shares of Series G
          Preferred Stock ...................................................... $    --      $   2,000    $    --      $   2,000
                                                                                 =========    =========    =========    =========
      Exercise of warrants for common stock .................................... $    --      $  (2,664)   $    --      $ (13,144)
                                                                                 =========    =========    =========    =========



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

         Cash and Cash Equivalents
         -------------------------

                Cash and cash  equivalents  include  cash on hand and all liquid
         investments with an original maturity of three months or less.

         Marketable Securities
         ---------------------

                The Company  classifies its existing  marketable debt securities
         as available-for-sale in accordance with the provisions of Statement of
         Financial   Accounting  Standards  No.  115,  "Accounting  for  Certain
         Investments  in Debt  and  Equity  Securities."  These  securities  are
         carried at fair market value, with unrealized gains and losses reported
         in stockholders'  equity as a component of other  comprehensive  income
         (loss).  Gains or losses on  securities  sold are based on the specific
         identification method.

                                       6
<PAGE>

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

                Accounts  receivable  includes  unbilled amounts of $0.1 million
         and  $0.3  million  at  September  30,  2001  and  December  31,  2000,
         respectively.  This  amount  primarily  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.

         Asset Impairment
         ----------------

                In accordance with Statement of Financial  Accounting  Standards
         ("SFAS") No. 121,  "Accounting for the Impairment of Long-Lived  Assets
         and for Long-Lived Assets to be Disposed Of," the Company  periodically
         reviews its long-lived assets to determine if they have been other than
         temporarily impaired by comparing the carrying value of the assets with
         their  estimated  future  undiscounted  cash flows. If it is determined
         that an impairment loss has occurred, the loss is recognized during the
         period  incurred.  An impairment  loss is calculated as the  difference
         between  the  carrying  value of the  assets and the  present  value of
         estimated  future net cash flows or comparable  market  values,  giving
         consideration to recent operating performance.

                As described in Note 4, as a result of this  periodic  review in
         the third  quarter of 2001,  the  Company  recorded  a  non-cash  asset
         impairment charge of approximately $13.2 million in connection with the
         VIS-able acquisition. Following this write down of goodwill, management
         believes  its  long-lived  assets  are  appropriately   valued  in  the
         accompanying financial statements.

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

                Substantially all of the Company's operations are in Europe. The
         assets and  liabilities  of the  Company's  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 were gains of $0.2
         million  and  $0.1  million  for the  quarter  and  nine  months  ended
         September 30, 2001, respectively,  and $2.6 million for the nine months
         ended  September  30,  2000.  There were no foreign  exchange  gains or
         losses included in income for the third quarter of 2000.

                The Company  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 September  30,
         2001, there were no foreign currency hedge contracts outstanding.

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

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

         Recent Accounting Pronouncements
         --------------------------------

                In June 2000, the Financial  Accounting Standards Board ("FASB")
         issued 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.

                         In June 2001, the Financial  Accounting Standards Board
         issued  SFAS No.  141,  "Business


                                       7
<PAGE>

         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 nine months ended  September 30, 2001, the
         Company  recorded $2.5 million of goodwill  amortization.  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 will
         adopt this  standard at the  beginning of its 2002 fiscal  year.  It is
         expected  that  adoption of this  statement  will have 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
         will adopt SFAS No. 144 at the  beginning of its 2002 fiscal year.  The
         Company is currently evaluating the impact this new accounting standard
         may have on its financial position or results of operations.


(2)      COMPREHENSIVE INCOME

                Total comprehensive  income (loss) for the three and nine months
         ended September 30, 2001 and 2000 was as follows:

<TABLE>

                                         Three Months Ended           Nine Months Ended
                                           September 30,                September 30,
                                           -------------                -------------
                                          2001        2000            2001          2000
                                          ----        ----            ----          ----
    <S>                                <C>          <C>            <C>          <C>
    Net income (loss)                  $ (27,580)   $ (6,042)      $ (52,639)   $ 260,928
    Foreign currency translation            5,662     (2,508)         (4,056)       5,431
    Unrealized holding gain (loss)          (134)          --           (134)          --
                                        ---------   ---------      ----------   ---------
    Total comprehensive income (loss)  $ (22,052)   $ (8,550)      $ (56,829)   $ 266,359
                                       ==========   =========      ==========   =========

</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.  In the third quarter of
         2000,  the net proceeds and gain decreased to $453.2 million and $346.9
         million,  respectively,  primarily as a result of a $6.0 million refund
         of the purchase price made to Energis in November 2000 upon  resolution
         of certain sale contingencies.

                 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.  Subsequent  to  September  30,  2001,  the Company
         completed  the sale of its  remaining  carrier  business,  Telenational
         Communications, Inc. ("TNC").



(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.

                                       8
<PAGE>

                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. Subsequent to September 30, 2001,
         $2.0  million of this amount was paid to the former  shareholders.  The
         remaining  $0.7  million has been  retained by the Company  pending the
         resolution  of  certain  claims  made by the  Company  pursuant  to the
         representations   and  warranties   contained  in  the  Stock  Purchase
         Agreement.

                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 was 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  represented the excess
         of the cost of the  acquired  businesses  over the fair market value of
         their net assets and was being amortized on a straight-line  basis over
         five years.

                In the third quarter of 2001, the Company  compared the carrying
         value of the VIS-able  long-lived  assets with their  estimated  future
         undiscounted  cash flows and  determined  that an  impairment  loss had
         occurred.  The carrying value was then compared to the estimated future
         discounted  cash flows and the excess  carrying  value of $13.2 million
         was recorded as a non-cash asset impairment charge.


         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 $62.0  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      (61,976)
               Current liabilities                                    (18,880)
                                                                      --------
               Purchase price                                          $11,975
                                                                       =======

                In connection with the acquisition of hostmark,  the Company has
         recorded accruals  primarily related to employee  termination costs and
         lease  disposition  costs.  The activity  relating to these accruals is
         summarized below (in thousands):

                                       9

<PAGE>

                                 Accruals       Expenses      Accrual Balance At
                                Established       Paid        September 30, 2001
                                -----------       ----        ------------------
    Employee severance            $ 2,055         $ 1,570             $ 485
    Lease disposition costs         1,209             747               462
                                  -------         -------             -----
         Total                    $ 3,264         $ 2,317             $ 947
                                  =======         =======             =====

                The   severance   relates   to  the   planned   termination   of
         approximately  55 hostmark  employees,  substantially  all of which had
         been  terminated  as of September  30,  2001.  All  remaining  employee
         severance  costs are expected to be paid in the fourth quarter of 2001.
         The Company will  continue to make lease  payments  through the term of
         the lease, which expires in the third quarter of 2002.

                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        Nine Months Ended
                                                                 September 30,             September 30,
                                                                 --------------            -------------
                                                               2001         2000         2001         2000
                                                               ----         ----         ----         ----
       <S>                                                    <C>           <C>         <C>           <C>
       Revenues                                               $   3,156     $  1,365    $   9,034     $  7,502
                                                              =========     ========    =========     ========
       Net income (loss)                                      $(27,580)     $(9,832)    $(70,677)     $253,449
                                                              =========     ========    =========     ========
       Earnings (loss) per share:
            Basic                                             $  (0.71)     $ (0.27)    $  (1.81)     $   7.29
                                                              =========     ========    =========     ========
            Diluted                                           $  (0.71)     $ (0.27)    $  (1.81)     $   4.23
                                                              =========     ========    =========     ========
       Shares used in pro forma per share calculation:
            Basic                                                39,062       35,957       39,054       34,757
                                                              =========     ========    =========     ========
            Diluted                                              39,062       35,957       39,054       59,971
                                                              =========     ========    =========     ========

</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)      CHANGES IN EQUITY


                    In  August  2001,  holders  of  9,225  shares  of  Series  B
         Preferred  Stock  converted  their  shares  into  36,900  shares of the
         Company's  common  stock in  accordance  with the terms of the Series B
         Preferred Stock agreement.


(6)      SEGMENT REPORTING


                During the third  quarter  of 2001,  the  Company  adopted a new
         management  reporting  structure  as the  Company's  business  plan has
         evolved,  which  changed  the manner in which the  Company  reports its
         operating segments. The information for 2000 has been restated from the
         prior  year  presentation  in order  to  conform  to the new  operating
         segment presentation.

                The  Company has three  reportable  segments:  Managed  Hosting,
         Professional  Services and Carrier Operations.  As discussed in Note 3,
         the Company  sold the majority of its carrier  operations  in the first
         quarter  of 2000 and began  pursuing  a new  business  strategy  in the
         Managed  Hosting  business in the second  quarter of 2000. In September
         2000, the Company acquired its Professional  Services  business through
         the  acquisition  of  VIS-able.  Only the TNC  operation  held for sale
         remained in the Carrier  Operations  segment at September  30, 2001 and
         December  31, 2000.  Subsequent  to  September  30,  2001,  the Company
         completed  the  sale of TNC,  and  accordingly,  will  have no  carrier
         operations  remaining after the date of sale.  Company management views
         the three distinct business  strategies as different  business segments
         when  making  operating  and  investment  decisions  and for  assessing
         performance.

                The Managed Hosting segment derives revenues  primarily from the
         delivery of services

                                       10

<PAGE>

         including Internet networking,  applications and value-added  services,
         infrastructure,  and systems support. The Professional Services segment
         derives 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. There were no intersegment revenues in 2001
         or 2000.

                Financial  information for the Company's  reportable segments is
         as follows:
<TABLE>

                                                   Three Months Ended                  Nine Months Ended
                                                      September 30,                      September 30,
                                                      -------------                      -------------
                                                     2001          2000            2001            2000
                                                     ----          ----            ----            ----

         <S>                                       <C>             <C>          <C>            <C>
         REVENUES:
              Managed Hosting...............       $     984       $     --     $    1,873     $     --
              Professional Services.........             701            186          3,306           186
              Carrier Operations............           1,471          1,179          3,819         7,316
                                                   ---------       --------     ----------     ---------
                    Total revenue...........       $   3,156       $  1,365     $    8,998     $   7,502
                                                   =========       ========     ==========     =========

         NET INCOME (LOSS):
              Managed Hosting...............       $(15,260)       $(1,791)     $ (38,076)     $   3,091
              Professional Services.........        (12,320)          (154)       (14,563)         (154)
              Carrier Operations............              --        (4,097)            --        257,991
                                                   ---------       --------     ----------     ---------
                     Total net income (loss).      $(27,580)       $(6,042)     $ (52,639)     $ 260,928
                                                   =========       ========     ==========     =========

                                                  September 30,  December 31,
         TOTAL ASSETS:                             2001             2000
                                                   ----             ----
              Managed Hosting...............       $ 197,188       $215,376
              Professional Services.........           1,550         15,191
              Carrier Operations............           1,350          1,350
                                                   ---------       --------
                    Total assets............       $ 200,088       $231,917
                                                   =========       ========
</TABLE>

                Included  in the results  above are  non-cash  asset  impairment
         charges of $2.5  million and $10.7  million in the Managed  Hosting and
         Professional Services segments,  respectively, for the third quarter of
         2001.


(7)      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  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.  There  can be no
         assurance  that an appeal  will not be taken or that  there will not be
         additional  claims  asserted  by  class  members  who  opt  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  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.

                                       11
<PAGE>


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 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.  Currently,  medium
         enterprises represent 58% of the Company's installed customer base.

                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

                                       12
<PAGE>

              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  Hosting  business in
         early  2000.  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 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 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.
         However,  the  acquisition  of hostmark did bring a sales  pipeline,  a
         direct  sales  force and sales  channels to  Worldport.  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.  Hostmark was integrated with Worldport's financial
         systems in July 2001 and we plan to have all business  support  systems
         integration work completed by year-end.

                At the  time  of  the  acquisition,  the  addition  of  hostmark
         increased the Company's  monthly cash operating costs from $2.5 to $5.0
         million  and  had   increased   the  total   number  of   employees  to
         approximately  350. In response to this,  following the  acquisition of
         hostmark,  Worldport  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.  By
         the end of the third quarter of 2001,  approximately  120 employees had
         been made  redundant  and  eliminated  as a result of this  integration
         program.  Additionally, the Company shut down the unprofitable U.S. and
         U.K.  professional  services  operations  and took steps toward further
         cost alignment in its Swedish  professional  services  operation.  As a
         result,   Worldport  currently  employs  approximately  205  employees,
         consisting  of 34  people  in  sales  and  marketing,  100  in  hosting
         operations and customer support, 45 people in our professional services
         business  and  the  remainder  supporting  general  and  administrative
         functions.

                The Company's  statement of operations  for the third quarter of
         2001  includes $1.3 million of expenses  related to employee  severance
         costs,  termination  penalties for excess bandwidth contracts and lease
         disposition  costs  associated  with the  current  quarter  integration
         activity  to  streamline  the  combined  business.  The  goal  of  this
         integration  program was to reduce the monthly cash operating losses to
         approximately  $2.9  million  by the  end  of  September  2001.  We are
         currently very close to that target and the monthly cash operating loss
         will  continue to decrease as we add new  customers  and  increase  our
         monthly revenue while continuing our focus on expense reduction.

                                       13

<PAGE>

         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 to implement  the range of  applications  available to
         them.

              The Yankee Group estimates the global managed services market will
         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 Web hosting 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 and
         medium  enterprises  that  operate 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 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 significant capital investment.


         WORLDPORT'S PRODUCT PORTFOLIO

         -----------------------------------------------------------------------
         Managed        Worldport's  Managed  Hosting  products are  principally
         Hosting        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
         -----------------------------------------------------------------------



                                       14
<PAGE>
         -----------------------------------------------------------------------
                        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;  daily,
         Services       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  (EMC)
                        provides  customers with 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-based applications,  systems
         Services       development, and content management support.
         -----------------------------------------------------------------------
         Connectivity   Worldport offers customers  connectivity  with burstable
         to Internet    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.
         -----------------------------------------------------------------------


         WORLDPORT'S CAPABILITY AND DIFFERENTIATION

                The  Managed  Hosting  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  $16
         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 the end of 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  Hosting  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 provide  competitive  services  on a cost
         efficient basis.

                                       15
<PAGE>


         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 and hostmark was re-branded  under
         the Worldport name during the third quarter of 2001.

                In  the  third  quarter  of  2001,  we  re-energized  our  sales
         organization  and recruited new,  experienced  sales people and channel
         partners to sell our full compliment of managed hosting services.

                As a result of these  efforts,  we added 13 new customers to the
         Managed  Hosting  business in the third  quarter  2001,  including  the
         largest  single  order in the history of the Company at over $1 million
         in  annualized  revenue.  We also sold 10 new contracts to our existing
         customer base,  resulting in a 12% upselling success rate at an average
         of $36,000 per new contract.

                Currently,  the  average  monthly  revenue  per  server  for the
         Company's  Managed  Hosting  business  is  above  $4,500.  The  average
         annualized  contract  value is  approximately  $80,000  and the average
         contract life is  approximately  18.6 months.  Managed  service revenue
         represents 76% of the Managed Hosting business and collocation  service
         revenue represents the remaining 24%.


         WORLDPORT'S OUTLOOK

                The  economic  downturn  of 2001 and the  September  11th,  2001
         events in New York and  Washington  D.C.  have had an impact on Europe,
         causing  corporations  to defer IT  spending  into the  future.  We are
         seeing a  lengthening  in  companies'  decision  processes,  which  has
         increased the sales cycle in our Managed Hosting business. In addition,
         our  professional  services  business  in Sweden is seeing a decline in
         revenue as there is excess capacity in the Swedish  consulting  market,
         major pricing  pressures,  and slower customer decisions related to new
         IT projects.

                The  Company  believes  that  these  conditions,  as well as the
         increasing  level  of  competition  in the  Web  hosting  and  Internet
         infrastructure  markets,  have had an  adverse  effect  on  Worldport's
         ability to achieve near term revenue momentum and, if it continues, may
         threaten to erode the  financial  resources of the Company more rapidly
         than planned.

                Therefore,  the Company is reviewing various alternatives to its
         existing  business  plan.  As part  of this  review,  the  Company  may
         consider,  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.  The Company has engaged  Schroder
         Salomon  Smith  Barney to assist the  Company in its efforts to explore
         and evaluate various strategic and financial alternatives.  The Company
         paid significant U.S. taxes in 2000 as a result of the gain on the sale
         of its EnerTel  subsidiary,  therefore the realization of a loss on the
         sale or closing of any of the Company's facilities could give rise to a
         tax refund.



         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,


                                       16
<PAGE>

         respectively).

                Revenues  for the quarter and nine months  ended  September  30,
         2001 and 2000,  respectively,  consisted of revenue from the  following
         sources:

                                  Three Months Ended         Nine Months Ended
                                     September 30,              September 30,
                                     -------------              -------------
                                      2001      2000         2001        2000
                                      ----      ----         ----        ----
         Managed Hosting             $ 984     $  --      $ 1,873       $  --
         Professional Services         701       186        3,306         186
         Carrier Operations          1,471     1,179        3,819       7,316
                                   -------   -------      -------     -------
                Total revenue      $ 3,156   $ 1,365      $ 8,998     $ 7,502
                                   =======   =======      =======     =======

                Revenue by quarter for 2001 was as follows:

                                    First     Second     Third      Year-
                                   Quarter    Quarter   Quarter    To-Date
                                   -------    -------   -------    -------
         Managed Hosting             $ 302      $ 587     $ 984    $ 1,873
         Professional Services       1,099      1,506       701      3,306
         Carrier Operations          1,081      1,267     1,471      3,819
                                   -------    -------   -------    -------
                Total revenue      $ 2,482    $ 3,360   $ 3,156    $ 8,998
                                   =======    =======   =======    =======


                Managed  Hosting  revenue  consists of monthly  fees on services
         including Internet networking,  applications and value-added  services,
         infrastructure  and systems support.  The Company generally enters into
         contracts with its customers to provide these services. These contracts
         range in term  from  one to three  years  and  generally  have no early
         termination provisions. Managed Hosting revenue for the current quarter
         was $1.0  million,  a 67%  increase  from the  second  quarter of 2001,
         reflecting the continued  addition of new customers and the addition of
         new services to existing customers. The Company did not start providing
         Managed Hosting services until October 2000,  therefore Managed Hosting
         revenue was zero for the quarter and nine months  ending  September 30,
         2000.

                Professional  Services revenue consists  primarily of consulting
         services related to Internet-based  applications,  systems development,
         and  content  management  support.  The Company  generally  sells these
         services on a short-term project basis.  Professional  services revenue
         for the  current  quarter  was $0.7  million and was 53% lower than the
         second quarter of 2001. As discussed earlier, the Company shut down the
         unprofitable  U.S. and U.K.  professional  services  operations  in the
         third quarter.  Additionally,  our  professional  services  business in
         Sweden is seeing a decline in revenue  as there is excess  capacity  in
         the Swedish  consulting  market,  major pricing  pressures,  and slower
         customer  decisions related to new IT projects.  Professional  services
         revenue for both the quarter and nine months ending  September 30, 2000
         represents  only 15 days  of  activity,  as the  Company  acquired  its
         professional services provider, VIS-able, on September 15, 2000.

                Carrier  Operations   revenue  consists  of   telecommunications
         services  provided by the Company's sold and held for sale  operations.
         The Company sold its Netherlands carrier business,  EnerTel, in January
         2000,  and just completed the sale of its remaining  carrier  business,
         TNC, in October  2001.  TNC  generated  $1.5  million of revenue in the
         current quarter.

                Cost of services for the three and nine months  ended  September
         30, 2001 was as follows:

                                          Three Months Ended   Nine Months Ended
                                              September 30,       September 30,
                                          -----------------     ---------------
                                             2001     2000      2001      2000
                                             ----     ----      ----      ----
         Managed Hosting                    $7,406   $ --      $15,502      $ --
         Professional Services                 810      110      2,366       110
         Carrier Operations                    886      896      2,419     4,739
                                            ------   ------    -------    ------
               Total cost of services       $9,102   $1,006    $20,287    $4,849
                                            ======   ======    =======    ======

                Cost of services for Managed Hosting consists primarily of:

                                       17
<PAGE>

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

                Cost of services for Managed Hosting  currently  exceeds revenue
         as a result of excess  capacity in the Company's  ISC's. As this excess
         capacity  is  utilized,  revenues  are  expected  to increase at a much
         faster pace than costs.  Cost of services for Managed Hosting  includes
         an accrual  of $0.5  million  in the third  quarter of 2001  related to
         estimated   termination   penalties  for  excess  bandwidth   contracts
         associated with current quarter integration  activity to streamline the
         combined business. Excluding this nonrecurring charge, cost of services
         for Managed  Hosting  increased 34% from the second quarter of 2001 due
         primarily  to a full  quarter  of costs from the  hostmark  operations,
         which  were  acquired  at the end of April  2001,  and an  increase  in
         bandwidth costs as we increased our available capacity in Europe. There
         were no cost of services  for Managed  Hosting for the quarter and nine
         months ended  September  30,  2000,  as the  hostmark  operations  were
         acquired in April 2001 and the Dublin SuperCentre was opened in October
         2000.

                Cost of services for Professional Services consists primarily of
         salaries and benefits for in-house  consultants as well as fees paid to
         third party  consulting  firms for out-sourced  professionals.  Cost of
         services for Professional  Services for the nine months ended September
         30, 2001 was $2.4 million,  representing a year-to-date gross margin of
         28%. Third quarter 2001 cost of services for  Professional  Services of
         $0.8 million exceeded third quarter revenue,  as revenue was lower than
         expected resulting in excess capacity with our in-house consultants. By
         the end of the third quarter,  the Company had taken steps to shut down
         its unprofitable  U.S. and U.K.  professional  services  operations and
         further align costs in its Swedish  professional  services operation in
         recognition  of  the  lower  revenue  levels.   Cost  of  services  for
         Professional  Services for the quarter and nine months ended  September
         30,  2000,  of $0.1  million  only  included  15 days of  activity  for
         VIS-able (acquired in September 2000).

                Selling,  general and  administrative  ("SG&A") expenses for the
         quarter  ended  September  30, 2001 and 2000 were $9.8 million and $5.2
         million, respectively. These costs primarily represented:

               o    salaries  and  benefits  for  marketing,  sales and  support
                    personnel,
               o    facility costs for offices other than the ISC's, and
               o    professional  services  associated with the execution of the
                    current business plan.

                The third quarter of 2001  represents  the first full quarter of
         costs from the hostmark  operations,  which were acquired at the end of
         April 2001.  Current quarter  expenses  include $0.8 million related to
         employee  severance costs and lease  disposition  costs associated with
         current  quarter  activity to  streamline  the combined  Worldport  and
         hostmark  businesses.  Excluding this nonrecurring charge, SG&A expense
         for the third quarter of 2001 was 72% higher than SG&A expenses for the
         prior  year third  quarter.  SG&A  expense  for the nine  months  ended
         September  30,  2001 and 2000 were  $25.8  million  and $16.8  million,
         respectively.  Of the year to date  2000  results,  approximately  $9.0
         million  was  primarily  related  to  the  wind  down  of  the  carrier
         operations.  The  increase  over last year in SG&A  expense in both the
         three  and  nine  month   periods  was  primarily  the  result  of  the
         acquisition  of  VIS-able  in  September  2000 and the  acquisition  of
         hostmark in April 2001.

                In the third quarter of 2001, the Company  compared the carrying
         value of the VIS-able  long-lived  assets with their  estimated  future
         undiscounted  cash flows and  determined  that an  impairment  loss had
         occurred.  The carrying value was then compared to the estimated future
         discounted  cash flows and the excess  carrying  value of $13.2 million
         was recorded as a non-cash asset impairment charge.

                Depreciation and amortization expense was $4.3 million and $10.7
         million  for the  quarter and nine months  ended  September  30,  2001,
         respectively.  Current year results primarily consisted of depreciation
         expense on  non-revenue  generating  assets in the Company's  ISC's and
         goodwill  amortization expense from the acquisition of VIS-able of $0.8
         million and $2.5 million for the three and nine months ended  September
         30, 2001,  respectively.  Goodwill is being amortizing over a five-year
         period.  Depreciation and amortization expense of $0.7 million and $1.6
         million  for the  quarter and nine months  ended  September  30,  2000,
         respectively,  was significantly  lower than current year


                                       18
<PAGE>

         levels as the Dublin  SuperCentre  did not open until  October 2000 and
         VIS-able and hostmark were not acquired  until mid-  September 2000 and
         April 2001, respectively.

                Other  income  and  expense  consists  of  interest  income  and
         expense, gains and losses on the sale of assets and other non-operating
         items,  including  realized  foreign  exchange  gains and  losses.  The
         Company earned interest income of $1.0 million and $4.2 million for the
         quarter and nine months ended  September  30, 2001,  respectively,  and
         $3.4  million and $11.6  million  for the three and nine  months  ended
         September 30, 2000, respectively. This interest income was attributable
         to the Company's cash and cash  equivalents  remaining from the January
         2000 sale of EnerTel and has steadily decreased as the Company has used
         that cash to fund  operations  and  capital  expenditures.  The  $353.1
         million  gain on sale of  EnerTel  in the  first  quarter  of 2000  was
         reduced in the third  quarter of 2000  primarily  to  recognize  a $6.0
         million  refund of the purchase  price made to Energis in November 2000
         upon the resolution of certain sale contingencies. Other income of $2.6
         million  for  the  nine  months  ended  September  30,  2000  primarily
         represented foreign exchange gains and losses incurred by EnerTel prior
         to its sale.

                A $4.8  million tax benefit has been  recorded in the first nine
         months of 2001 to recognize current year U.S. tax losses,  which can be
         carried back against 2000 taxable income for a refund,  and the release
         of a  valuation  allowance  on a  deferred  tax asset that has now been
         deemed  realizable.  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.  This amount was  subsequently
         reduced by $2.4 million in the third  quarter of 2000 due  primarily to
         the tax  impact  of the $6.0  million  reduction  in the sale  price of
         EnerTel discussed above.

                As a result,  the  Company  had net losses of $27.6  million and
         $52.6 million in the quarter and nine months ending September 30, 2001,
         respectively.  In 2000, the Company incurred a net loss of $6.0 million
         in the third  quarter and had net income of $260.9  million in the nine
         months ending September 30, 2000.


         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 and marketable
         securities  held-for-sale  of $83.3  million  and $132.4  million,  and
         working capital of $63.1 million and $125.7  million,  at September 30,
         2001 and December 31, 2000, respectively.

                Operations  used $20.9  million and $33.3 million in the quarter
         and nine months ended September 30, 2001,  respectively,  due primarily
         to operating losses and changes in working capital,  which included the
         third quarter settlement of approximately  $15.8 million of liabilities
         assumed in the hostmark acquisition.  A VAT refund of 9.1 million Euros
         (approximately $7.8 million) was received in the second quarter of 2001
         from the Irish revenue agency.  Operating  activities used $3.3 million
         and $53.8  million in the quarter and nine months ended  September  30,
         2000,  respectively,  due primarily to operating  losses and the second
         quarter  payment of income  taxes  attributable  to the gain on sale of
         EnerTel in 2000.

                Investing activities used $14.4 million during the third quarter
         of  2001  for  the  purchase  of  marketable   securities  and  capital
         expenditures related primarily to the Company's BOSS systems. Investing
         activities  used $23.8 million  during the nine months ended  September
         30, 2001. Year-to-date capital expenditures of $21.3 million, primarily
         for customer  equipment and the Company's  ISC's and BOSS systems,  and
         the $11.0 million  purchase of  marketable  securities  were  partially
         offset  by the  cash  acquired  in the  hostmark  acquisition  and  the
         proceeds from the sale of certain  assets.  Investing  activities  used
         $63.5 million in last year's third  quarter,  which  consisted of $39.7
         million of  construction  costs  associated  with the  build-out of the
         Dublin SuperCentre,  $17.7 million for the acquisition of VIS-able, and
         the $6.0 million  refund of the purchase price made to Energis upon the
         resolution of certain sale contingencies.  Investing activities for the
         nine months ended September 30, 2000 provided $391.1 million, primarily
         consisting of the proceeds from the EnerTel sale  transaction of $453.2
         million, offset partially by year-to-date capital expenditures of $44.4
         million  and  the

                                       19
<PAGE>

         acquisition  of  VIS-able  for $17.7  million.  The  Company's  capital
         spending  levels are not expected to continue at historical  levels now
         that the ISC buildouts are substantially complete.

                Financing  activities  used $1.0 million and $2.7 million during
         the three and nine months ended September 30, 2001,  respectively,  for
         principal payments on capital leases.  Financing activities used $158.9
         million in the first nine 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 fees and expenses.  The historical
         cost of the net  assets  acquired  ($74.0  million)  was  significantly
         higher than the purchase price.  Accordingly,  the $62.0 million excess
         was  allocated  to   proportionately   reduce  the  value  assigned  to
         non-current  assets acquired.  In connection with the acquisition,  the
         Company  recorded  accruals of $2.1  million for  employee  termination
         costs and $1.2 million for estimated lease disposition costs.

                At the end of  October  2001,  Worldport's  cash and  marketable
         securities held-for-sale were approximately $77.5 million, which at the
         current  revenue  and  expense  run rates  should  allow the Company to
         operate into 2003.  However,  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.


         RECENT ACCOUNTING PRONOUNCEMENTS
         --------------------------------

                 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.

                 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 nine
         months ended  September 30, 2001, the Company  recorded $2.5 million of
         goodwill  amortization.  SFAS No. 142 also requires an initial goodwill
         impairment assessment in the year of adoption and an impairment test on
         an annual basis or earlier if an event occurs or  circumstances  change
         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 will adopt this standard at the beginning of its
         2002 fiscal year. It is expected that adoption of this  statement  will
         have 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
         will adopt SFAS No. 144 at the  beginning of its 2002 fiscal year.  The
         Company is currently evaluating the impact this new


                                       20

<PAGE>

         accounting standard may have on its financial position or results of
         operations.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                Substantially all of the Company's operations are 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  uses
         derivative instruments to hedge its foreign currency exposure only on a
         limited basis, and had no foreign currency hedge contracts  outstanding
         at  September  30, 2001.  As a result,  the Company may incur gains and
         losses on foreign currency  fluctuations.  Other foreign exchange gains
         and  losses  recorded  in income  were gains of $0.2  million  and $0.1
         million  for the  quarter and nine months  ended  September  30,  2001,
         respectively,  and $2.6 million for the nine months ended September 30,
         2000. There were no foreign exchange gains or losses included in income
         for the third quarter of 2000.


                                       21
<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.  There  can be no
         assurance  that an appeal  will not be taken or that  there will not be
         additional  claims  asserted  by  class  members  who  opt  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  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/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  pro  forma
              financial statements.

                                       22
<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:    November 14, 2001            by:       /s/ John T. Hanson
                                                       -------------------------
                                                       John T. Hanson
                                                       Chief Financial Officer