U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           -----------------------------------

                                   FORM 10-QSB

      [ X ] QUARTERLY  REPORT  UNDER  SECTION  13  OR  15(d) OF  THE  SECURITIES
            EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997.

      [   ] TRANSITION  REPORT  UNDER  SECTION  13  OR 15(d)  OF THE  SECURITIES
            EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO
            ______________.

      Commission File Number  33-32341-D
                              ----------

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


                    Delaware                                 84-1127336
        ---------------------------------          -----------------------------
          (State or other jurisdiction             (I. R. S. Employer ID Number)
        of incorporation or organization)                             

  9601 Katy Freeway, Suite 200, Houston, Texas                 77024
  --------------------------------------------                 -----
    (Address of principal executive offices)                 (Zip Code)

                    Issuer's telephone number: (713) 461-4999

                                      None
                                      ----
         (Former name, former address and former fiscal year, if changed
                               since last report.)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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.

                                [ X ] Yes [   ] No

Applicable  only to  issuers  involved  in  bankruptcy  proceedings  during  the
preceding five years

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court.

                                   [   ] Yes    [   ] No

Applicable only to corporate issuers

As of August 14, 1997, the Registrant had 16,033,333  shares of Common Stock par
value $0.0001 outstanding.

Transitional Small Business Disclosure Format (Check one):

[   ] Yes    [ X ] No

                                       1
<PAGE>



                           WORLDPORT COMMUNICATIONS, INC.

                                 TABLE OF CONTENTS


                                                                            Page
                                                                            ----
PART I - FINANCIAL INFORMATION

    Item 1.  Financial Statements
      

             Condensed Consolidated Balance Sheets as of
             June 30, 1997 and  December  31, 1996 . . . . . . . . . . . . .  3

             Condensed Consolidated Statements of Operations
             for the Three and Six Months Ended June 30,
             1997  and  1996 . . . . . . . . . . . . . . . . . . . . . . . .  4

             Condensed Consolidated Statements of Cash Flows
             For the Six Months  Ended June 30,  1997 and 1996 . . . . . . .  5

             Notes to Condensed  Consolidated Financial Statements . . . . .  6

    Item 2.  Management's Discussion and Analysis of
             Financial  Condition  and Results of Operations . . . . . . . . 12


PART II - OTHER INFORMATION

    Item 1.  Legal  Proceedings  . . . . . . . . . . . . . . . . . . . . . . 16

    Item 6.  Exhibits  and Reports on Form 8-K . . . . . . . . . . . . . . . 17


SIGNATURE                                                                    18



                                       2
<PAGE>



                           PART I - FINANCIAL INFORMATON


ITEM 1.  FINANCIAL STATEMENTS

                  WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
                       CONDENSED CONSOLIDATED BALANCE SHEETS

                                       ASSETS
<TABLE>
<CAPTION>

                                                            June 30,     December 31,
                                                              1997           1996
                                                         -------------  -------------
                                                           (Unaudited)
CURRENT ASSETS:
<S>                                                      <C>             <C>        
     Cash                                                $    404,695    $ 1,552,829
     Accounts receivable                                      652,257              -
     Note receivable, including accrued interest              293,611        806,329
     Prepaid expenses  and other current assets               199,402              -
                                                         -------------  -------------
                    Total current assets                    1,549,965      2,359,158

PROPERTY AND EQUIPMENT, net of accumulated depreciation
  and amortization                                          1,175,952              -

OTHER ASSETS
     Goodwill, net of accumulated amortization              5,726,081              -
     Note receivable, including accrued interest                    -        527,806
     Other                                                     74,290          2,068
                                                         -------------  -------------

                    TOTAL ASSETS                          $ 8,526,288    $ 2,889,032
                                                         =============  =============

                        LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Short-term debt                                     $    800,000    $         -
     Current portion of capital lease obligations             144,076              -
     Accounts payable and accrued expenses                  2,186,115         99,742
     Other current liabilities                                111,728              -
                                                         -------------  -------------
          Total current liabilities                         3,241,919         99,742

NOTE PAYABLE                                                        -        420,000

LONG-TERM OBLIGATIONS UNDER CAPITAL LEASES,
     net of current portion                                   309,916              -

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
     Preferred stock, $0.0001 par value, 10,000,000 shares          
        authorized, no shares outstanding                           -              -
     Common stock, $0.0001 par value, 65,000,000 shares
        authorized, 14,633,333 and 9,053,667 shares issued         
        and outstanding, respectively                           1,463            905
     Additional paid-in capital                             5,906,416      2,664,291
     Retained deficit                                        (933,426)      (295,906)
                                                         -------------  -------------
          Total stockholders' equity                        4,974,453      2,369,290
                                                         -------------  -------------

          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $ 8,526,288    $ 2,889,032
                                                         =============  =============

</TABLE>

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

                                       3
<PAGE>






                  WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                    (Unaudited)


<TABLE>
<CAPTION>


                                      Three Months Ended       Six Months Ended
                                             June 30                June 30
                                     --------------------    -------------------
                                       1997         1996       1997        1996
                                     --------     -------    --------   ---------
<S>                                  <C>        <C>          <C>        <C>      
REVENUES                             $ 188,549  $       -    $ 188,549  $       -

COST OF SERVICES                       194,412          -      194,412          -
                                     ---------  ---------    ---------  ---------                                      
     Gross margin                       (5,863)         -       (5,863)         -
                          
OPERATING EXPENSES:
     Selling, general and
        administrative expenses        363,679    115,385      652,648    120,296
     Depreciation and amortization      29,770          -       29,770          -
                                     ---------  ---------    ---------  ---------
     Operating loss                   (399,312)  (115,385)    (688,281)  (120,296)
                                     ---------  ---------    ---------  ---------

OTHER INCOME (EXPENSE)
     Interest income                    29,827          -       59,786        126
                                                          
     Interest (expense)                 (5,741)         -       (9,025)         -
                                     ---------  ---------    ---------  ---------
                                        24,086          -       50,761          -
                                     ---------  ---------    ---------  ---------

LOSS BEFORE PROVISION
     FOR INCOME TAXES                 (375,226)  (115,385)    (637,520)  (120,170)

PROVISION FOR INCOME TAXES                   -          -            -          -
                                     ---------  ---------    ---------  ---------
NET LOSS                             $(375,226) $(115,385)   $(637,520) $(120,170)
                                     =========  =========    =========  =========
NET LOSS PER SHARE                   $   (0.03) $   (0.49)   $   (0.06) $   (0.81)
                                     =========  =========    =========  =========
WEIGHTED AVERAGE
     SHARES OUTSTANDING             11,185,532    235,824   10,377,763    148,398
                                    ==========  =========   ==========  =========
</TABLE>



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

                                       4
<PAGE>






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


                                                                          Six Months Ended
                                                                               June 30
                                                                      --------------------------
                                                                         1997            1996
                                                                      -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                   <C>             <C>       
Net loss                                                              $ (637,520)     $(120,170)
                                                            
Adjustments to reconcile net loss to net cash
     used by operating activities -
          Depreciation and amortization                                   29,770              -
          (Increase) decrease in accounts receivable                     (21,577)          (160)
          (Increase) decrease in accrued interest receivable              32,191              -
          (Increase) decrease in prepaid expenses and other assets       (84,480)             -
           Increase (decrease) in accounts payable and accrued
               expenses and other liabilities                             21,797            895
                                                                      -----------    ----------- 
                    Net cash used by operating activities               (659,819)      (119,435)

CASH FLOWS FROM INVESTING ACTIVITIES:
          Advances related to acquisitions                            (1,178,000)             -
          Issuance of notes receivable                                  (100,000)             -
          Collection of notes receivable                               1,108,333              -
          Capital expenditures                                           (68,620)             -
                                                                      -----------    -----------
                    Net cash used by investing activities               (238,287)             -

CASH FLOWS FROM FINANCING ACTIVITIES:
          Principal payments on short-term debt                         (262,278)             -
          Proceeds from issuance of common stock,
              net of offering expenses                                    12,250        114,400
                                                                      -----------    ----------
                    Net cash provided (used) by financing activities    (250,028)       114,400
                                                                      -----------    -----------

NET DECREASE IN CASH                                                  (1,148,134)        (5,035)

CASH, beginning of the period                                          1,552,829         14,539
                                                                      -----------    -----------

CASH, end of the period                                               $  404,695     $    9,504
                                                                      ===========    ===========

CASH PAID DURING THE PERIOD FOR INTEREST                              $   26,989     $        -
                                                                      ===========    ===========
                                                                          
CASH PAID DURING THE PERIOD FOR TAXES                                 $        -     $        -
                                                                      ===========    ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:

          Cancellation of note payable for 1,680,000 shares
              of common stock                                         $  420,000     $        -
                                                                      ===========    ===========
</TABLE>


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

                                       5
<PAGE>



               WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES


             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)


(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Basis of Presentation
      ---------------------
      WorldPort Communications,  Inc. and its subsidiaries,  ("WorldPort" or the
      "Company"), a Delaware corporation, is a facilities-based network provider
      of enhanced  international and domestic  telecommunication  services.  The
      Company  operates  telecommunications  switches  and an operator  services
      platform in Omaha, Nebraska from which it provides enhanced services, such
      as  global  calling  cards  and  international   prepaid  debit  cards  to
      individuals,  small businesses and large corporate  customers primarily in
      the United States, Western Europe and Latin America.

      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-QSB  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-QSB should be read
      in conjunction with the financial statements and notes thereto included in
      the Company's  Annual Report on Form 10-KSB/A for the year ended  December
      31, 1996.

      In the opinion of the Company's  management,  the  accompanying  condensed
      consolidated  financial statements contain all adjustments  (consisting of
      only  normal  recurring  adjustments)  necessary  to  present  fairly  the
      Company's  financial  position  as of June 30,  1997,  and the  results of
      operations  for the three and six months  ended June 30, 1997 and 1996 and
      cash flows for the six months ended June 30, 1997 and 1996. The results of
      operations  for the three and six months  ended June 30, 1997 and 1996 are
      not necessarily indicative of the operating results for the full years.

      Prior to the closing of the  acquisitions of  Telenational  Communications
      Limited  Partnership  ("TNC")  (see Note 2) and The Wallace  Wade  Company
      ("WWC") (see Note 8), the Company was a development  stage  enterprise and
      devoted  substantially  all of its efforts to  identifying  and  acquiring
      businesses,  developing a public market for its stock and raising capital.
      With the closing of the  acquisitions  of TNC and WWC, the Company now has
      operating  assets and continuing  operations.  Accordingly,  the financial
      statement  presentation  and disclosures  required for  development  stage
      enterprises have been omitted.

      Principles of Consolidation
      ---------------------------
      The accompanying  condensed  consolidated financial statements include the
      accounts of WorldPort and its wholly-owned  subsidiaries after elimination
      of all significant intercompany accounts and transactions.

                                       6

<PAGE>

      Property and Equipment
      ----------------------
      Property and equipment are carried at cost.  Expenditures  for  additions,
      improvements  and  renewals  which add  significant  value to the asset or
      extend the life of the asset are capitalized. Expenditures for maintenance
      and repairs are charged to expense as incurred.  The Company  provides for
      depreciation  of property and  equipment  using the  straight-line  method
      based on the estimated useful lives of the assets ranging from three to 15
      years.

      Goodwill
      --------
      The  excess  purchase  price  over  fair  value  of  net  assets  acquired
      ("goodwill") is amortized using the straight-line method over 10 years.

      The Company  periodically  evaluates  the  recoverability  of goodwill and
      measures the amount of impairment, if any, by assessing current and future
      levels of income and cash flows as well as other factors, such as business
      trends and prospects and market and economic conditions.

      Revenue Recognition
      -------------------
      The Company  recognizes  revenue from its  telecommunications  services as
      such services are provided to its customers.

      Risk Factors
      ------------
      The Company is subject to various risks in  connection  with the operation
      of its  business  including,  among  other  things,  changes  in  external
      competitive market factors,  changes in the Company's business strategy or
      an inability to execute its strategy due to  unanticipated  changes in the
      market,  the  Company's  lack  of  liquidity  and  operating  history  and
      anticipated  working  capital or other  cash  requirements  including  the
      Company's  current  working capital deficit and dependence upon additional
      capital investment.

      Funding of the  Company's  working  capital  deficit,  current  and future
      operating  losses and  expansion of the Company  will require  substantial
      continuing  capital  investment.  The Company's  strategy is to fund these
      cash requirements  through debt facilities or additional equity financing.
      Although  the Company has been able to arrange debt  facilities  or equity
      financing  to date,  there can be no  assurance  that  sufficient  debt or
      equity  financing  will  continue to be available in the future or that it
      will be available on terms  acceptable  to the Company.  Failure to obtain
      sufficient  capital could materially affect the Company's  acquisition and
      operating  strategies.  The Company  expects  that future  financing  will
      include  equity  placements;  however,  no assurance can be given that the
      Company will be able to obtain  additional  financing on reasonable terms,
      if at all (see Note 6).

      Pending Accounting Pronouncement
      --------------------------------
      In March 1997, the Financial  Accounting  Standards Board issued Statement
      of Financial  Accounting  Standard No. 128,  Earnings Per Share ("SFAS No.
      128").  SFAS No. 128  replaces  Accounting  Principles  Board  Opinion 15,
      Earnings Per Share,  and simplifies the computation of earnings (loss) per
      share ("EPS") by replacing the presentation of primary EPS with basic EPS,
      which is computed by dividing income  available to common  stockholders by
      the  weighted-average  number of common shares outstanding for the period.
      SFAS No. 128 also requires dual  presentation  of basic and diluted EPS on
      the  face of the  income  statement  for  entities  with  complex  capital
      structures,  and a reconciliation of the numerator and denominator used in
      the basic EPS computation to the diluted EPS  computation's  numerator and
      denominator. SFAS No. 128 is effective for financial statements issued for
      periods ending after December 15, 1997, including interim periods. Earlier

                                       7

<PAGE>

      application is not permitted.  Restatement of all prior period EPS data is
      required. Management of the Company believes that the adoption of SFAS No.
      128 will not have a material effect on previously reported EPS.

      Certain Reclassifications
      -------------------------
      Certain reclassifications have been made to amounts previously reported to
      conform to current year presentation.

(2)   TNC ACQUISITION
      ---------------
      On June 20, 1997, the Company  completed the acquisition of  substantially
      all of the  telecommunications  assets  and  operations  of TNC (the  "TNC
      Acquisition")  pursuant to that certain  Asset  Purchase  Agreement  dated
      April 23,  1997 (as  amended  by  Amendment  No. 1 to the  Asset  Purchase
      Agreement   dated  June  20,  1997,   collectively   the  "Asset  Purchase
      Agreement").  The  results  of  operations  of  TNC  are  included  in the
      financial statements of the Company from the date of acquisition, June 20,
      1997.

      The  assets and  operations  of TNC were  purchased  in  exchange  for (i)
      3,750,000  shares of the Company's Common Stock (of which 1,000,000 shares
      are being held  pursuant to an escrow  agreement for a period of 18 months
      following  the  closing  subject to  certain  purchase  price  adjustments
      described  below)  and (ii)  the  assumption  by the  Company  of  certain
      indebtedness of TNC up to a maximum of $4.6 million.  The purchased assets
      include telecommunications switches and other network equipment,  customer
      and vendor  contracts,  an FCC  section  214 common  carrier  license,  an
      operator  services  center and other  assets  sufficient  to continue  the
      ongoing  business of TNC. The FCC section 214 common carrier license gives
      the  Company  the  authority  to resell both  international  switched  and
      private line services of authorized carriers.  The final purchase price is
      subject to  adjustment  if (i)  liabilities  in excess of $4.6 million are
      assumed,  (ii) the Company is required to invoke certain  indemnifications
      by TNC,  (iii)  there are  certain  expense  overruns,  or (iv)  there are
      certain rejected contracts. In addition, certain creditors of TNC have the
      option to  convert  all or a  portion  of their  debt  into  shares of the
      Company's  Common  Stock.  In  connection  with the TNC  Acquisition,  the
      Company incurred  approximately  $254,000 of transaction  costs which were
      capitalized  as part of the purchase  price.  Of this amount,  $150,000 is
      payable  to Maroon  Bells  Capital  Partners  ("MBCP")  as a  mergers  and
      acquisitions success fee ("M&A Success Fee") (see Note 7).

      The TNC  Acquisition  was  accounted  for  using  the  purchase  method of
      accounting  and is  subject  to  certain  purchase  price  adjustments  as
      discussed  above.  The allocation of purchase price to the assets acquired
      and liabilities assumed in the transaction has been initially assigned and
      recorded based on  preliminary  estimates of fair value and may be revised
      as  additional  information  concerning  the  valuation of such assets and
      liabilities becomes available.

      The fair value of assets  acquired and  liabilities  assumed in connection
      with the TNC Acquisition is summarized as follows (in thousands):

             Current assets                                      $   804
             Property and equipment                                1,121
             Goodwill                                              5,742
                                                                   -----
             Assets acquired, net of cash                          7,667

             Less: Assumed liabilities and transaction costs       4,854
                   Common Stock issued                             2,813
                                                                   -----
             Cash paid                                           $     -
                                                                   =====
                                       8

<PAGE>

      Prior to the closing of the TNC Acquisition, the Company loaned $1,178,000
      to TNC to provide  TNC with  working  capital.  This amount was assumed in
      connection with the acquisition.

      Set forth below are unaudited pro forma combined  results of operations of
      the Company and TNC for the six months  ended June 30, 1997 and 1996.  The
      unaudited  pro  forma  data  is  presented  on  the  basis  that  the  TNC
      Acquisition  took place at the  beginning  of each of the  fiscal  periods
      ended June 30, 1997 and 1996 (in thousands, except per share amounts):

                                                              1997     1996
                                                              ----     ----
             Revenues                                       $ 3,766  $ 5,703
                                                            =======  =======

             Net loss from continuing operations            $(2,785) $(1,272)
                                                            =======  =======

             Net loss per share from continuing operations  $ (0.21) $ (0.26)
                                                            =======  =======

      Pro forma  adjustments  included in the amounts above primarily relate to:
      (i) adjustment for pro forma goodwill amortization expense using a 10-year
      estimated life and (ii) adjustment for non-recurring  management fees paid
      to the General Partner of TNC.

      The  summarized  pro forma  information  is based on estimates,  available
      information  and  certain  assumptions  and may be revised  as  additional
      information  becomes available.  The pro forma financial  information does
      not purport to represent  what the Company's  results of operations  would
      have been if the TNC Acquisition had occurred on the date assumed or to be
      representative of the results of operations for any future period. Neither
      the expected  benefits or cost  reductions  anticipated by the Company nor
      the future corporate  overhead costs of the Company have been reflected in
      the above pro forma information.

(3)   PROPERTY AND EQUIPMENT
      ----------------------
      Major categories of property and equipment at June 30, 1997 are summarized
      below:

             Switch and peripheral equipment                     $  763,135
             Computer equipment and software                        146,096
             Leasehold improvements                                 252,055
             Furniture and fixtures                                  28,486
                                                                 ----------    
                                                                  1,189,772
             Less:  Accumulated depreciation and amortization       (13,820)
                                                                 ----------
                                                                 $1,175,952
                                                                 ==========

(4)   DEBT AND CAPITAL LEASE OBLIGATIONS
      ----------------------------------
      Debt
      ----
      The Company's debt at June 30, 1997 consists of the following:

             Value Partners, Ltd.                   $  500,000
             Various demand notes                      300,000
                                                    ----------
                                                    $  800,000
                                                    ==========
                                       9

<PAGE>

      In  connection  with the TNC  Acquisition,  the Company  assumed a secured
      promissory  note  payable to Value  Partners,  Ltd. The note is payable in
      installments of $100,000 per month plus accrued  interest at a rate of 14%
      per annum  beginning  September 1, 1997. The note is secured by all of the
      assets acquired by the Company in connection with the TNC Acquisition.

      The Company also assumed  $300,000 of unsecured  notes  payable to certain
      individuals  in  connection  with the TNC  Acquisition.  These  notes  are
      payable  on demand  and bear  interest  at rates  ranging  from 12% - 15%.
      Holders  of certain  of these  notes have the option to convert  them into
      shares of the Company's Common Stock (see Note 2).

      Capital Lease Obligations
      -------------------------
      In  connection  with the TNC  Acquisition,  the  Company  assumed  certain
      capital lease obligations.  The carrying value of the assets under capital
      lease is as follows:

             Property and equipment                 $ 440,737
             Less:  Accumulated amortization           (3,930)
                                                   -----------
             Net leased property and equipment      $ 436,807
                                                   ===========
         
      At June 30, 1997,  minimum lease  payments under this capital lease are as
      follows:

             1997                                           $  97,356
             1998                                             194,711
             1999                                             194,711
             2000                                              57,194
                                                            ----------
                                                              543,972
             Less:  Amount representing interest               89,980
                                                            ----------
                  Present value of minimum lease payments     453,992
             Less:  Current maturities                        144,076
                                                            ----------
                  Long-term capital lease obligation        $ 309,916
                                                            ==========


(5)   COMMITMENTS AND CONTINGENCIES
      -----------------------------
      From time to time,  the Company is involved in various  lawsuits or claims
      arising from the normal course of business.  In the opinion of management,
      none of these  lawsuits or claims will have a material  adverse  effect on
      the financial statements or results of operations of the Company.

(6)   SERIES A PREFERRED STOCK OFFERING
      ---------------------------------
      On May 8, 1997, the Company initiated a Private Placement  Offering of the
      Company's  Series A  Preferred  Stock for $3.00 per share  pursuant  to an
      Offering  Memorandum  (the "Series A Preferred Stock  Offering").  On July
      25,  1997,  the  offering  price was reduced to $2.25 per share. There can
      be no assurance  that the Company will be successful  in  completing  this
      offering.

                                       10

<PAGE>

(7)   RELATED PARTY TRANSACTIONS
      --------------------------
      Pursuant to an Advisory Agreement between MBCP and the Company dated March
      7, 1997, MBCP earns an M&A Success Fee in connection with all acquisitions
      identified by MBCP which are consummated by the Company.  The fee includes
      a base plus an additional amount based on a percentage of the value of the
      transaction.  In connection with the TNC  Acquisition,  MBCP earned an M&A
      Success Fee of approximately  $275,000.  In consideration of the Company's
      development  stage,  MBCP has agreed to reduce its M&A Success Fee related
      to the TNC Acquisition to $150,000.

      MBCP is a shareholder of the Company and certain  members of the Company's
      Board of Directors are principals or employees of MBCP.

(8)   SUBSEQUENT EVENTS
      -----------------
      WWC Acquisition
      ---------------
      On  July  3,  1997,  the  Company,  through  its  wholly-owned  subsidiary
      WorldPort  Acquisitions,  Inc., ("WAI") completed a merger of WWC into WAI
      pursuant to that certain Agreement and Plan of Merger dated April 20, 1997
      (the "WWC Acquisition"). WWC was a telecommunications marketing consulting
      firm which  produced  and  implemented  marketing  strategies  for clients
      ranging from small companies to large corporate clients.  Mr. John Dalton,
      the  Company's  President  and  Chief  Executive  Officer,  was  the  sole
      shareholder of WWC.

      In  connection  with the WWC  Acquisition,  the Company  delivered  to Mr.
      Dalton  (i)  1,400,000  shares of the  Company's  Common  Stock,  of which
      500,000  shares are being held  pursuant  to an escrow  agreement  pending
      delivery to the Company of certain audited Financial Statements of WWC and
      900,000 shares are being held pursuant to the escrow agreement  subject to
      certain  adjustments to the purchase  price based on the Company  entering
      into business  agreements that WWC had  negotiated;  (ii) $75,000 cash, of
      which  $37,500  was  advanced  to  Mr.  Dalton  on  June  6, 1997 with the
      remaining $37,500 being deferred at Mr. Dalton's election until  September
      15, 1997; and (iii) a Promissory Note in the amount of $175,000 payable as
      follows:  one  payment  of $50,000  payable  on  October 1, 1997,  and two
      payments of $62,500 payable on February 1, 1998 and July 1, 1998.


                                       11

<PAGE>



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

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  ("MD&A")  contains  many  "forward-looking  statements"  within  the
meaning of the  Private  Securities  Litigation  Reform Act of 1995,  including,
among  others  (i)  results of  operations  (including  expected  changes in the
Company's revenues and strategy) and (ii) the Series A Preferred Stock Offering.

These  forward-looking  statements  are based largely on the  Company's  current
expectations  and are  subject  to a number of risks and  uncertainties.  Actual
results could differ materially from these forward-looking statements. Important
factors to consider in evaluating such  forward-looking  statements  include (i)
the  changes  in  external  competitive  market  factors;  (ii)  changes  in the
Company's  internal budgeting process which might impact trends in the Company's
results  of  operations;   (iii)  anticipated  working  capital  or  other  cash
requirements; (iv) changes in the Company's business strategy or an inability to
execute its strategy  due to  unanticipated  changes in the market;  (v) various
competitive factors that may prevent the Company from competing  successfully in
the market  place;  (vi) the Company's  lack of  liquidity;  (vii) the lack of a
public market for the Company's Series A Preferred  Stock;  (viii) the Company's
lack of operating history;  and (ix) the Company's ability to attract and retain
key personnel with the skills and expertise  necessary to manage its growth.  In
light of these  risks  and  uncertainties,  there can be no  assurance  that the
events  contemplated by the  forward-looking  statements  contained in this Form
10-QSB will in fact occur.

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-QSB.  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-KSB/A for the year ended December 31, 1996.

General
-------
WorldPort is a facilities-based  network provider of enhanced  international and
domestic  telecommunication  services.  The Company operates  telecommunications
switches  and an operator  services  platform in Omaha,  Nebraska  from which it
provides  enhanced  services,  such as global  calling  cards and  international
prepaid  debit  cards to  individuals,  small  businesses  and  large  corporate
customers primarily in the United States,  Western Europe and Latin America. The
Company's  strategy is to expand its  business  through both  internal  business
development  and  the  strategic  acquisitions  of  telecommunication   services
companies, such as TNC and WWC. See "TNC Acquisition" and "Subsequent Events".

Results of Operations
---------------------
Prior to its  acquisition  of the assets and  on-going  operations  of TNC,  the
Company was a development  stage company that had not generated  revenues  other
than interest income since inception. During the three and six months ended June
30,  1997,  the  Company   incurred   losses  of  $(375,226)   and   $(637,520),
respectively,  compared to $(115,385) and $(120,170)  during the same periods in
1996. Included in the losses incurred during the three and six months ended June
30, 1997 are the operating  results of TNC  subsequent to the closing of the TNC
Acquisition.  Prior to the TNC  Acquisition,  TNC had  experienced  a history of
operating  losses and cash flow  deficiencies.  The Company is  currently in the
process of evaluating the assets, operations,  vendor and customer relationships
of TNC in order to refocus the sales and marketing of the Company's  products to
coincide  with  new   distribution  and  carrier   agreements   currently  under
negotiation  by the  Company.  While the  Company  is now  implementing  certain
revenue enhancement and cost reduction initiatives, the Company anticipates that
it will continue to incur operating  losses and cash flow  deficiencies  for the
foreseeable future. See "Liquidity and Capital Resources".

Revenues
--------
Revenues  for the  three and six  months  ended  June 30,  1997,  were  $188,549
compared to $0 for the three and six month ended June 30, 1996.  The increase in

                                       12

<PAGE>

revenues  was  solely  due to the  inclusion  of the  operating  results  of TNC
subsequent to the closing of the TNC Acquisition on June 20, 1997.

Gross Margin
------------
Gross  margin for the three and six months  ended June 30,  1997,  was  $(5,863)
compared to $0 for the three and six months ended June 30, 1996. The decrease in
gross  margin was solely due to the  inclusion of the  operating  results of TNC
subsequent to the closing of the TNC Acquisition on June 20, 1997.

Selling, General and Administrative Expenses
--------------------------------------------
Selling, general and administrative expenses increased to $363,679 from $115,385
and to $652,648  from  $120,296 for the three and six months ended June 30, 1997
and  1996,  respectively.  The  increase  was  due  to  (i)  increased  business
development and acquisition activity, (ii) the establishment and staffing of the
Company's corporate offices and (iii) the inclusion of the selling,  general and
administrative  expenses of TNC subsequent to the closing of the TNC Acquisition
on June 20, 1997.

Interest Income (Expense)
-------------------------
Interest  income  increased  to $29,827 from $0 and to $59,786 from $126 for the
three and six months  ended June 30, 1997 and 1996,  respectively.  The increase
was  due  to  the  interest  from  (i)  a  note   receivable  from  Global  Star
International,  Inc.  (the "GSI Note")  which was paid in full on March 6, 1997,
(ii) the note receivable from Com Tech  International  Corporation  ("Com Tech")
and (iii) the note  receivable  from TNC prior to the Company's  acquisition  of
TNC. See "Liquidity and Capital Resources".

Pro Forma Results (See Note 2 to the Condensed Consolidated Financial
Statements)
---------------------------------------------------------------------

Pro forma  revenues  for the six months  ended June 30, 1997 were  approximately
$3,766,000  compared to  approximately  $5,703,000 for the six months ended June
30, 1996. The decrease in revenues was due primarily to the  restructuring  of a
contract  effective  January 1, 1997,  with a  distributor  who is a significant
customer of TNC.  Prior to January 1, 1997,  the  contract was  structured  as a
retail contract  whereby TNC billed the distributor on a retail basis and paid a
commission to the distributor based on the retail billings. Effective January 1,
1997,  the  contract was changed to a wholesale  contract  whereby TNC bills the
distributor on a wholesale basis and pays no commissions to the distributor.

Through  its  renegotiation  of the  distribution  agreement,  the  Company  has
terminated  the exclusive  distribution  provisions  of the prior  agreement and
gained the ability to directly market its calling cards and pre-paid phone cards
in the  market  served  by  the  distributor.  This  contract  renegotiation  is
consistent with the Company's  strategy to develop new  distribution  agreements
consistent  with  new  carrier  agreements  under  development  by  the  Company
worldwide.

Pro forma loss from continuing operations for the six months ended June 30, 1997
was approximately  $(2,785,000)  compared to approximately  $(1,272,000) for the
six months ended June 30, 1996. The increase in loss from continuing  operations
was due primarily to (i)  increased  network  costs  associated  with changes in
TNC's vendor  contracts  (ii) the  write-off of a receivable  from a significant
customer  and  (iii)  increased  selling,   general  and  administrative   costs
associated   with  the  closing  of  the  TNC  Acquisition  and  the  subsequent
implementation of new operating and  administrative  procedures,  as well as the
Company's  increased  business  development  and  acquisition  activity  and the
establishment and staffing of the Company's  corporate offices.  These increases
were  partially  offset by decreased  commission  expenses  associated  with the
restructuring of the contract discussed above.

Liquidity and Capital Resources
-------------------------------
The Company has a working  capital  deficit of  $1,691,954  as of June 30, 1997,
compared to a working  capital  surplus of $2,259,416 at December 31, 1996.  The
working  capital  deficit is due to the assumption of liabilities in conjunction
with  the TNC  Acquisition,  the  majority  of which  were  trade  payables  and
short-term debt obligations. Trade receivables increased to $652,257 at June 30,
1997, from $0 at December 31, 1996 due to the TNC Acquisition.


Operations used $659,819 during the six months ended June 30, 1997,  compared to
$119,435  for  the  six  months ended June 30, 1996.  Investing  activities used

                                       13

<PAGE>

$238,287  during the six months ended June 30, 1997,  compared to $0 for the six
months  ended  June  30,  1996.  Investing  activities  consisted  primarily  of
collection  of the GSI Note and a portion  of the Com Tech  Note  offset by cash
advances  to TNC to  fund  working  capital  prior  to the  closing  of the  TNC
Acquisition. Financing activities used $250,028 during the six months ended June
30,  1997,  while  generating  $114,400  for the six months ended June 30, 1996.
Financing activities for the six months ended June 30, 1997, consisted primarily
of payments on short-term  debt  obligations  assumed in connection with the TNC
Acquisition.  Financing  activities  for the six  months  ended  June  30,  1996
consisted of proceeds from the issuance of Common Stock.

In addition to trade payables and vendor obligations  assumed in connection with
the TNC  Acquisition,  the Company assumed a secured  promissory note payable to
Value Partners, Ltd. which is payable in installments of $100,000 per month plus
accrued  interest at a rate of 14% per annum  beginning  September 1, 1997.  The
note is secured by all of the assets  acquired by the Company in connection with
the TNC  Acquisition.  The Company  also  assumed  $300,000 of  unsecured  notes
payable  to  certain  individuals.  These  notes are  payable on demand and bear
interest at rates ranging from 12% - 15%. Holders of certain of these notes have
the option to convert them into shares of the Company's Common Stock.

Funding of the working capital deficit,  current and future operating losses and
expansion of the Company will require substantial continuing capital investment.
The  Company's  strategy  is  to  fund  these  cash  requirements  through  debt
facilities or additional equity financing. Although the Company has been able to
arrange debt facilities or equity  financing to date,  there can be no assurance
that  sufficient  debt or equity  financing will continue to be available in the
future  or that it  will  be  available  on  terms  acceptable  to the  Company.
Substantial additional debt or equity financing may be needed for the Company to
achieve its  short-term  and long-term  business  objectives.  Failure to obtain
sufficient  capital  could  materially  affect  the  Company's  acquisition  and
operating  strategies.  The Company  expects that future  financing will include
equity placements;  however,  no assurance can be given that the Company will be
able to obtain additional  financing on reasonable terms, if at all. See "Series
A Preferred Stock Offering" and "Subsequent Events".

Effective  April 14, 1997, the Company and Com Tech entered into an agreement to
settle any and all  claims  that have been or could  have been  asserted  in the
lawsuit  entitled  WorldPort  Communications,   Inc.,  formerly  known  as  Sage
Resources,  Inc., a Delaware  corporation,  plaintiff v. Com Tech  International
Corporation,  a Washington  corporation,  defendant,  Case No.  C96-4055SBA (the
"Settlement  Agreement").  Pursuant to the Settlement Agreement, Com Tech agreed
to pay the Company all  amounts due under a $500,000  promissory  note (the "Com
Tech  Note").  Com Tech agreed to pay $150,000  plus accrued  interest on May 1,
1997. Com Tech also agreed to make six payments to the Company, on or before the
10th day of each month,  beginning  June 10, 1997 through  November  1997.  Each
payment  consists of (i) $58,333.33 of principal,  (ii) accrued  interest on the
outstanding  balance at twelve  percent  (12%) per annum,  and (iii)  $6,089.03,
which  represents  one-sixth of the total costs of litigation and other expenses
owing.  As of August 14,  1997,  Com Tech has paid the Company  $401,489,  which
represents   $325,000  of  principal   and  $76,489  of  accrued   interest  and
reimbursement of litigation expenses and is current on its obligations under the
Settlement Agreement.

On May 8, 1997,  the Company  initiated a Private  Placement  Offering for up to
$5,000,000 under Regulation D of 1,666,667 shares of Series A Preferred Stock at
$3.00  per  share  pursuant  to an  Offering  Memorandum  dated May 8, 1997 (the
"Series A Preferred Stock  Offering").  Holders of Series A Preferred Stock will
be entitled to receive annual cumulative  dividends of 8%, payable in cash or in
shares of Common Stock of the Company, at the Company's option, as and when such
dividends  are declared by the Company's  Board of  Directors.  No public market
exists  for the  Company's  Series A  Preferred  Stock and none is  expected  to
develop as a result of the Series A Preferred Stock Offering. The offer and sale
of the Series A Preferred Stock is not being registered under the Securities Act
of 1933, as amended, under U.S. or state securities laws or under the securities
laws of any other  jurisdictions,  and the Company's Series A Preferred Stock or
the Common  Stock into which it is  convertible  may not be resold or  otherwise
transferred unless it is subsequently registered or an exemption from applicable
registration requirements is available.

                                       14

<PAGE>

On July 25,  1997, the  offering  price  was  reduced to $2.25 per share.  There
can be no assurance that the Company will be successful in completing the Series
A Preferred  Stock  Offering.

TNC Acquisition
---------------
On June 20, 1997, the Company  completed the acquisition of substantially all of
the  telecommunications  assets  and  operations  of TNC  in  exchange  for  (i)
3,750,000  shares of the Company's  Common Stock (of which 1,000,000  shares are
being held pursuant to an escrow  agreement for a period of 18 months  following
the closing subject to certain purchase price  adjustments  described below) and
(ii) the  assumption  by the  Company  of  certain  indebtedness  of TNC up to a
maximum  of  $4.6  million.  The  purchased  assets  include  telecommunications
switches and other  network  equipment,  customer and vendor  contracts,  an FCC
section 214 common carrier license, an operator services center and other assets
sufficient  to continue the ongoing  business of TNC. The FCC section 214 common
carrier  license  gives the Company the  authority to resell both  international
switched and private line services of authorized  carriers.  The final  purchase
price is subject to adjustment if (i)  liabilities in excess of $4.6 million are
assumed, (ii) the Company is required to invoke certain indemnifications by TNC,
(iii) there are certain  expense  overruns,  or (iv) there are certain  rejected
contracts. In addition,  certain creditors of TNC have the option to convert all
or a portion of their debt into shares of the Company's  Common Stock.  Prior to
closing the TNC Acquisition, the Company loaned $1,178,000 to TNC to provide TNC
with working capital.  This amount was assumed by the Company in connection with
the acquisition. See "Liquidity and Capital Resources".

On April 29,  1997,  the  Company  and TNC entered  into a  Management  Services
Agreement,  wherein the Company provided to TNC day-to-day  executive management
services. The Management Services Agreement provides certain indemnifications to
WorldPort as well as a covenant not to sue or assert any claim or action against
the Company  arising from the services  provided by the Company  pursuant to the
Management Services Agreement. The Management Services Agreement terminated with
the closing of the TNC Acquisition on June 20, 1997.

The  acquired  telecommunications  switches and  operator  services  platform in
Omaha,  Nebraska  provide  enhanced  services,  such as global calling cards and
international  prepaid debit cards to  individuals,  small  businesses and large
corporate  customers  primarily in the United  States,  Western Europe and Latin
America.  Through the acquired  operator  services center,  the Company provides
multilingual  customer support.  The U.S. switching and operator services center
enables  customers in foreign  countries to take advantage of lower cost routing
and higher transmission  quality for international calls. The Company's services
are  currently  marketed  through  various  distribution  channels in the United
States, Western Europe and Latin America.

In conjunction  with the TNC  Acquisition,  the Company  entered into a two-year
employment  agreement with Mr. Bruce Burton to serve as the Company's  Executive
Vice  President and Chief  Operating  Officer.  Mr. Burton was the President and
Chief  Operating  Officer of TNC. The Company also entered into an eighteen (18)
month  consulting  agreement  with Mr.  Edmund  Blankenau,  the chief  executive
officer of the General Partner of TNC. Pursuant to his consulting agreement, Mr.
Blankenau  will earn a consulting fee of $7,000 per month during the term of his
agreement as well as being entitled to earn  additional  incentive  compensation
for  completed  acquisitions  and new  business  opportunities  based on certain
established criteria.

On July  28,  1997,  the  Company  and Mr.  Burton  agreed  to  terminate  his
employment  agreement and negotiate a consulting  agreement  acceptable to Mr.
Burton and the Company.  The terms of the  consulting  agreement  have not yet
been finalized between the Company and Mr. Burton.

On July 1, 1997, the Company  entered into a four-year  lease with a partnership
of which  Mr.  Blankenau  is a  partner,  for its  operating  center  in  Omaha,
Nebraska.  The Company's lease payment for the operating center,  which includes
basic  utilities,  is $8,992  per month for the first  three  months  subject to
quarterly operating expense adjustments beginning on October 1, 1997 through the
term of the lease.

                                       15

<PAGE>

Related Party Transactions

Pursuant to an Advisory  Agreement  between MBCP and the Company  dated March 7,
1997,  MBCP  earns  an M&A  Success  Fee in  connection  with  all  acquisitions
identified by MBCP which are consummated by the Company. The fee includes a base
plus an additional amount based on a percentage of the value of the transaction.
In  connection  with the TNC  Acquisition,  MBCP  earned an M&A  Success  Fee of
approximately  $275,000.  In consideration of the Company's  development  stage,
MBCP has agreed to reduce its M&A Success Fee related to the TNC  Acquisition to
$150,000.

Subsequent Events

WWC Acquisition
---------------
On July 3, 1997, the Company, through its wholly-owned subsidiary WAI, completed
a merger of WWC into WAI. WWC was a telecommunications marketing consulting firm
which produced and  implemented  marketing  strategies for clients  ranging from
small  companies to large  corporate  clients.  Mr. John Dalton,  the  Company's
President and Chief Executive Officer, was the sole shareholder of WWC.

In connection with the WWC Acquisition,  the Company delivered to Mr. Dalton (i)
1,400,000  shares of the  Company's  Common Stock,  of which 500,000  shares are
being held pursuant to an escrow  agreement  pending  delivery to the Company of
certain  audited  Financial  Statements of WWC and 900,000 shares are being held
pursuant to the escrow agreement subject to certain  adjustments to the purchase
price  based on the  Company  entering  into  business  agreements  that WWC had
negotiated;  (ii) $75,000  cash,  of which $37,500 was advanced to Mr. Dalton on
June 6, 1997 with the remaining  $37,500 being deferred at Mr. Dalton's election
until  September 15, 1997; and (iii) a Promissory Note in the amount of $175,000
payable as follows:  one payment of $50,000  payable on October 1, 1997, and two
payments of $62,500 payable on February 1, 1998 and July 1, 1998.

Board of Directors
------------------
In conjunction with the closing of the WWC  Acquisition,  Mr. Dalton agreed to
join the Board of  Directors of the Company.  In addition to Mr.  Dalton,  Mr.
Peter A.  Howley has  agreed to join the Board of  Directors  of the  Company.
Mr.  Howley is an  experienced  executive in the  telecommunications  industry
having served as the Chief Executive  Officer of Centex  Telemanagement,  Inc.
from 1985  until  1994.  Mr.  Howley  currently  serves on the boards of other
telecommunications  companies  and  was  previously  a  member  of the  NASDAQ
Corporate Advisory Board and the American Business Conference.

On August 7, 1997,  Messrs.  Dalton and Howley  were  appointed  to the Board of
Directors of the Company.



                          PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS


On November 8, 1996, the Company filed a lawsuit  against Com Tech in the United
States  District  Court  in  the  Northern  District  of  California  (Case  No.
C-96-4055).  The Company filed the lawsuit to collect $500,000 plus interest and
attorney's  fees for amounts that Com Tech borrowed from the Company that is now
due, owing and unpaid.  On April 14, 1997, the Company and Com Tech entered into
the Settlement Agreement.  Pursuant to the Settlement Agreement, Com Tech agreed
to pay the Company all amounts due under the Com Tech Note.
See "Liquidity and Capital Resources".

                                       16

<PAGE>

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

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibits
--------
             Exhibit No.                     Description
             -----------                     

                10.1        First Amended Loan Modification  Agreement by
                            and   between   the   Company,   Telenational
                            Communications,       Inc.,      Telenational
                            Communications  Limited Partnership and Value
                            Partners, Ltd. dated June 20, 1997.

                10.2        Second  Amended and Restated  Senior  Secured
                            Promissory  Note by and between the  Company,
                            Telenational  Communications,  Inc. and Value
                            Partners, Ltd. Dated June 20, 1997.

                10.3        First Amended  Pledge and Security  Agreement
                            by and between  Telenational  Communications,
                            Inc. and Value Partners,  Ltd. dated June 20,
                            1997.

                10.4        Notice   and   Certification   of   No   Oral
                            Agreements   by  and  between  the   Company,
                            Telenational      Communications,       Inc.,
                            Telenational      Communications      Limited
                            Partnership  and Value  Partners,  Ltd. dated
                            June 20, 1997.

                10.5        Consulting  Agreement  by and between  Edmund
                            Blankenau  and the  Company  dated  June  20,
                            1997.

                10.6        Employment  Agreement  by and  between  Bruce
                            Burton and the Company dated June 20, 1997.

                10.7        Lease    by    and    between    Telenational
                            Communications,   Inc.  and  7300   Woolworth
                            Partnership dated July 1, 1997.

                 27         Financial Data Schedule



Reports on Form 8-K
-------------------
Form 8-K filed with the Securities and Exchange Commission on July 7, 1997.

                                       17
<PAGE>



                                   SIGNATURES



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


                                   WORLDPORT COMMUNICATIONS, INC.
                                   ------------------------------



Date:  August 19, 1997            By: /s/ W.Dean Spies
                                     ----------------------------
                                      W. Dean Spies
                                      Chief Financial Officer and Treasurer







                                       18