UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2001

                                       OR

       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                        (Commission File Number 1-11965)
                            ICG COMMUNICATIONS, INC.
                        (Commission File Number 1-11052)
                            ICG HOLDINGS (CANADA) CO.
                        (Commission File Number 33-96540)
                               ICG HOLDINGS, INC.
           (Exact names of registrants as specified in their charters)


--------------------------------------------------------------------------------
Delaware                                   84-1342022
Nova Scotia                                Not Applicable
Colorado                                   84-1158866
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)
--------------------------------------------------------------------------------
161 Inverness Drive West                   Not applicable
Englewood, Colorado 80112
161 Inverness Drive West                   c/o ICG Communications, Inc.
Englewood, Colorado 80112                  161 Inverness Drive West
                                           Englewood, Colorado 80112

161 Inverness Drive West                   Not applicable
Englewood, Colorado 80112
(Address of principal executive offices)   (Address of U.S. agent for service)
--------------------------------------------------------------------------------
Registrants' telephone numbers, including area codes: (888) 424-1144 or (303)
414-5000

     Indicate by check mark whether the  registrants  (1) have 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
registrants  were required to file such  reports),  and (2) have been subject to
such filing requirements for the past 90 days. Yes __  No |X]

     The number of outstanding common shares of ICG  Communications,  Inc. as of
December 31, 2001 was 52,045,443. ICG Canadian Acquisition, Inc., a wholly owned
subsidiary of ICG  Communications,  Inc., owns all of the issued and outstanding
common shares of ICG Holdings (Canada) Co. ICG Holdings (Canada) Co. owns all of
the issued and outstanding shares of ICG Holdings, Inc.


<PAGE>
                                TABLE OF CONTENTS




PART I ....................................................................... 3
      ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ................... 3
               Consolidated Balance Sheets as of December 31, 2000 and March
                31, 2001 (unaudited).......................................... 3
               Consolidated Statements of Operations for the Three Months
                Ended March 31, 2000 and 2001 (unaudited)..................... 5
               Consolidated Statements of Operations for the Three Months and
                Nine Months Ended September 30, 1999 and 2000 (unaudited)..
               Consolidated Statement of Stockholders' Deficit for the Three
                Months Ended March 31, 2001 (unaudited)....................... 6
               Consolidated Statements of Cash Flows for the Three Months
                Ended March 31, 2000 and 2001 (unaudited)..................... 7
               Notes to Consolidated Financial Statements (unaudited)......... 9
      ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
               AND RESULTS OF OPERATIONS .....................................18
      ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.....25

PART II ......................................................................26
      ITEM 1.   LEGAL PROCEEDINGS ............................................26
      ITEM 2.   CHANGES IN SECURITIES ........................................26
      ITEM 3.   DEFAULTS UPON SENIOR SECURITIES ..............................26
      ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS ........26
      ITEM 5.   OTHER INFORMATION ............................................26
      ITEM 6.   EXHIBITS AND REPORT ON FORM 8-K ..............................27
                Exhibits .....................................................27
                Reports on Form 8-K ..........................................27


                                       2


<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                December 31, 2000 and March 31, 2001 (Unaudited)

<TABLE>
<CAPTION>
                                                    December 31,   March 31,
                                                       2000         2001
                                                    ------------ ------------
                                                         (in thousands)
Assets
------

Current assets:
<S>                                                 <C>          <C>
  Cash and cash equivalents                         $   196,980  $   128,522
  Short-term investments available for sale              17,733       13,838
  Trade receivables, net of allowance of $94.3
    million and $95.6 million at December 31,
    2000 and March 31, 2001, respectively               132,095      151,294
  Other receivables                                         994          420
  Prepaid expenses and deposits                          13,234       14,008
                                                    ------------ ------------

    Total current assets                                361,036      308,082

Property and equipment, net (note 5)                    590,500      583,854

Restricted cash                                           9,278        9,357
Investments                                               1,650        1,650
Deferred financing costs, net of accumulated
  amortization of $1.2 million and $3.6 million          10,969        8,605
  at December 31, 2000 and March 31, 2001,
  respectively
Deposits                                                  7,019        8,311
                                                    ------------ ------------

Total Assets (note 1)                               $   980,452  $   919,859
                                                    ============ ============
                                                                  (continued)
</TABLE>
          See accompanying notes to consolidated financial statements.

                                        3


<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
               Consolidated Balance Sheets (Unaudited), Continued

<TABLE>
<CAPTION>
                                                         December 31,   March 31,
                                                            2000         2001
                                                         ------------ ------------
                                                              (in thousands)
Liabilities and Stockholders' Deficit
-------------------------------------

Current liabilities not subject to compromise:
<S>                                                      <C>          <C>
  Accounts payable                                       $     8,774  $     3,704
  Accrued liabilities                                         57,888       74,441
  Deferred revenue                                            14,840       12,156
  Current portion of long-term debt (note 6)                     796          796
                                                         ------------ ------------
    Total current liabilities not subject to compromise       82,298       91,097

Liabilities subject to compromise (notes 1 and 6)          2,784,627    2,768,592

Long-term liabilities not subject to compromise:
  Long-term debt, net of discount, less current
    portion (note 6)                                         117,784      117,784
  Other long-term liabilities                                  1,090        1,090
                                                         ------------ ------------

Total liabilities                                          2,985,799    2,978,563

Redeemable preferred stock of subsidiary (at                 449,056      449,056
  liquidation value)

Mandatorily redeemable preferred securities of ICG
  Funding (at liquidation value)                             132,251      132,251

8% Series A Convertible Preferred Stock (at
  liquidation value)                                         785,353      785,353

Stockholders' deficit:
  Common stock, $0.01 par value, 100,000,000 shares
    authorized; 52,045,443 shares issued and
    outstanding                                                  520          520
  Additional paid-in capital                                 882,142      882,142
  Accumulated deficit                                     (4,254,669)  (4,308,026)
                                                         ------------ ------------
Total stockholders' deficit                               (3,372,007)  (3,425,364)

Commitments and contingencies (note 7)
                                                         ------------ ------------

Total Liabilities and Stockholders' Deficit (note 1)     $   980,452  $   919,859
                                                         ============ ============
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       4


<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
             Three Months Ended March 31, 2000 and 2001 (Unaudited)

<TABLE>
<CAPTION>
                                                            Three months ended
                                                                March 31,
                                                         -------------------------
                                                            2000         2001
                                                         ------------ ------------
                                                          (in thousands, except
                                                             per share data)

<S>                                                      <C>          <C>
Revenue                                                  $   157,408  $   136,397

Operating costs and expenses:
  Operating costs                                             82,902      112,562
  Selling, general and administrative expenses                55,089       30,696
  Depreciation and amortization                               64,599       15,989
  Other, net                                                     432           71
                                                         ------------ ------------
    Total operating costs and expenses                       203,022      159,318
                                                         ------------ ------------

Operating loss                                               (45,614)     (22,921)

Other income (expense):
  Interest expense (contractual interest of $60.1
    million not recorded during the three months ended
    March 31, 2001)                                          (62,634)     (12,718)
  Interest income                                              3,277        2,628
  Other income (expense), net                                    158          (32)
                                                         ------------ ------------
    Total other expense, net                                 (59,199)     (10,122)
                                                         ------------ ------------

Loss before reorganization expenses, accretion and          (104,813)     (33,043)
  preferred dividends

  Reorganization expenses (note 4)                                 -      (20,314)
  Accretion and preferred dividends on preferred
    securities of subsidiaries                               (16,637)           -
                                                         ------------ ------------

Net loss                                                 $  (121,450) $   (53,357)
                                                         ============ ============

Other comprehensive income:
  Unrealized gain on available for sale securities             2,329            -
                                                         ------------ ------------
Comprehensive loss                                       $  (119,121) $   (53,357)
                                                         ============ ============

Net loss per share - basic and diluted                   $     (2.52) $     (1.03)
                                                         ============ ============

Weighted average number of shares outstanding - basic
and diluted                                                   48,189       52,045
                                                         ============ ============
</TABLE>
                                       5

          See accompanying notes to consolidated financial statements.



<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
                 Consolidated Statement of Stockholders' Deficit
                  Three Months Ended March 31, 2001 (Unaudited)
                                 (In Thousands)

<TABLE>
<CAPTION>
                              Common Stock     Additional                  Total
                            -----------------   paid-in    Accumulated  Stockholders'
                             Shares   Amount    capital      deficit      deficit
                            -------- --------- ----------  ------------ ------------

<S>                         <C>      <C>       <C>         <C>          <C>
Balances at January 1, 2001  52,045  $   520   $ 882,142   $(4,254,669) $(3,372,007)
Net loss                          -        -           -       (53,357)     (53,357)
                            -------- --------- ----------  ------------ ------------
Balances at March 31, 2001   52,045  $   520   $ 882,142   $(4,308,026) $(3,425,364)
                            ======== ========= ==========  ============ ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       6


<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
             Three Months Ended March 31, 2000 and 2001 (Unaudited)

<TABLE>
<CAPTION>
                                                               Three months ended
                                                                     March 31,
                                                            -------------------------
                                                               2000         2001
                                                            ------------ ------------
                                                                 (in thousands)

Cash flows from operating activities:
<S>                                                         <C>          <C>
  Net loss                                                  $  (121,450) $   (53,357)
  Adjustments to reconcile net loss to net cash used
    by operating activities:
      Recognition of deferred gain                               (6,239)           -
      Accretion and preferred dividends on preferred
        securities of subsidiaries                               16,637            -
      Depreciation and amortization                              64,599       15,989
      Provision for uncollectible accounts                        3,830        4,363
      Deferred compensation                                         432            -
      Net loss on disposal of long-lived assets                       -           71
      Interest expense deferred and included in
        long-term debt, net of amounts capitalized on
        assets under construction                                50,587         (400)
     Interest expense deferred and included in capital
       lease obligations                                          1,351            -
     Amortization of deferred financing costs included
       in interest expense                                          501        2,364
     Contribution to 401(k) plan through issuance of
       common stock                                               1,242            -
     Realized gain on sale of available for sale
       securities                                                  (481)           -
     Other                                                          301            -
     Change in operating assets and liabilities,
       excluding the effects of dispositions and
       noncash transactions:
         Receivables                                              8,390      (22,988)
         Prepaid expenses and deposits                            1,705         (774)
         Accounts payable and accrued liabilities               (20,095)       8,585
         Deferred revenue                                        21,821       (2,685)
                                                            ------------ ------------
    Net cash provided (used) by operating activities
      before reorganization items                                23,131      (48,832)
        Reorganization items:
          Change in restructuring accruals                            -        1,423
          Change in liabilities subject to compromise                 -      (14,235)
                                                            ------------ ------------
Net cash provided (used) by operating activities                 23,131      (61,644)

Cash flows from investing activities:
  Acquisition of property and equipment                        (142,998)      (7,898)
  Change in accounts payable and accrued liabilities
    for acquisition of property and equipment                   (30,365)         295
  Proceeds from disposition of property, equipment
    and other assets                                                  -           55
  Proceeds from sales of short-term investments
    available for sale                                           19,399        3,895
  Proceeds from sale of marketable securities                     2,201            -
  Decrease (increase) in restricted cash                          1,080          (79)
  Increase in long-term deposits                                      -       (1,279)
  Purchase of investments                                        (1,150)           -
                                                            ------------ ------------
Net cash used by investing activities                          (151,833)      (5,011)
                                                                          (continued)
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       7
<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
          Consolidated Statements of Cash Flows (Unaudited), Continued

<TABLE>
<CAPTION>
                                                            Three months ended
                                                                 March 31,
                                                         -------------------------
                                                            2000         2001
                                                         ------------ ------------
                                                              (in thousands)

Cash flows from financing activities:
<S>                                                      <C>          <C>
  Proceeds from issuance of common stock                 $    11,902  $         -
  Proceeds from issuance of long-term debt                    95,000            -
  Principal payments on capital lease obligations             (3,061)           -
  Payments on IRU agreement                                  (35,198)           -
  Principal payments on long-term debt                          (205)           -
  Payments of preferred dividends                             (2,231)           -
  Payments of debt issuance costs                                  -           (2)
  Reorganization items:
    Principal payments on capital lease obligations
      subject to compromise                                        -       (1,801)
                                                         ------------ ------------
Net cash provided (used) by financing activities              66,207       (1,803)
                                                         ------------ ------------

Net decrease in cash and cash equivalents                    (62,495)     (68,458)

  Net cash used by discontinued operations                       (94)           -
  Cash and cash equivalents, beginning of period             103,288      196,980
                                                         ------------ ------------
Cash and cash equivalents end of period                  $    40,699  $   128,522
                                                         ============ ============

Supplemental disclosure of cash flows information
  of continuing operations:
    Cash paid for interest                               $     7,132  $     4,022
                                                         ============ ============
    Cash paid for income taxes                           $       220  $         -
                                                         ============ ============

Supplemental schedule of noncash investing
  activities of continuing operations:
    Assets acquired pursuant to IRU agreement            $    57,494  $         -
    Assets acquired under capital leases                      14,415            -
                                                         ------------ ------------
Total                                                    $    71,909  $         -
                                                         ============ ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       8
<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (Unaudited)

(1)  Organization and Nature of Business

     (a)  Organization

          ICG  Communications,   Inc.,  a  Delaware   corporation  ("ICG"),  was
          incorporated on April 11, 1996 and is the publicly-traded  U.S. parent
          company  of ICG  Funding,  LLC,  a special  purpose  Delaware  limited
          liability  company and wholly owned subsidiary of ICG ("ICG Funding"),
          ICG Holdings  (Canada) Co., a Nova Scotia unlimited  liability company
          ("Holdings-Canada"),   ICG  Holdings,  Inc.,  a  Colorado  corporation
          ("Holdings"),  and ICG Services,  Inc., a Delaware  corporation  ("ICG
          Services")  and  their  subsidiaries.  ICG  and its  subsidiaries  are
          collectively referred to as the "Company".  The Company's common stock
          was traded on the NASDAQ  National Market  ("NASDAQ")  stock exchange.
          However,  due to the bankruptcy  filings  described  below, the NASDAQ
          halted trading of the Company's  common stock on November 14, 2000 and
          delisted the stock on November 18, 2000.

          The Company provides voice, data and Internet communication  services.
          Headquartered  in  Englewood,   Colorado,   the  Company  operates  an
          integrated  metropolitan and nationwide fiber optic  infrastructure to
          offer:

          o    Dial-Up  Services  including  primary rate  interface  and remote
               access  services/  managed modem services on a wholesale basis to
               national and regional Internet service providers ("ISP"s).

          o    Point-to-Point  Broadband Service providing  traditional  special
               access service to long-distance and long-haul carriers and medium
               to large sized corporate customers as well as switched access and
               SS7 services.

          o    Corporate  Services,  primarily retail voice and data services to
               businesses.

     (b)  Bankruptcy Proceedings

          On  November  14,  2000  (the  "Petition  Date"),  ICG and most of its
          subsidiaries,  except certain non-operating entities,  filed voluntary
          petitions  for  protection  under  Chapter  11 of  the  United  States
          Bankruptcy  Code in the  Federal  District  of  Delaware  in  order to
          facilitate the  restructuring of the Company's debt, trade liabilities
          and other obligations.  ICG and its bankruptcy filing subsidiaries are
          collectively  referred to as the "Debtors".  The Debtors are currently
          operating as debtors-in-possession under the supervision of the United
          States  District  Court for the District of Delaware (the  "Bankruptcy
          Court"). The bankruptcy petitions were filed in order to preserve cash
          and  to  give  the  Debtors  the  opportunity  to  restructure   their
          obligations.

          On  December   19,  2001  the  Debtors   filed  a  proposed   Plan  of
          Reorganization  (the  "Plan")  and a  Disclosure  Statement  with  the
          Bankruptcy   Court.   The  Plan  is   premised   on  the   substantive
          consolidation  of all of the  Debtors  for  purposes  of Plan  voting,
          confirmation and distribution of claim proceeds. The Plan contemplates
          the  conversion of the Debtors'  existing  unsecured  debt into common
          equity  in the  post-bankruptcy,  reorganized  company.  The Plan also
          contemplates  the  issuance  of new  secured  notes  to  the  Debtors'
          existing secured  lenders.  The Plan calls for the cancellation of all
          equity  securities  previously  issued by the Debtors,  including  all
          common stock, preferred stock, options and warrants. It is anticipated
          that a hearing on the  adequacy of the  Disclosure  Statement  will be
          held in the Bankruptcy Court on February 1, 2002.  Consummation of the
          Plan is contingent upon receiving  Bankruptcy Court approval,  as well
          as the  approval  of  certain  classes  of  creditors.  The  Plan  and
          Disclosure  Statement  were filed  with the  Securities  and  Exchange
          Commission on Form 8-K on December 19, 2001.

          The Company,  assisted by its investment banker,  Dresdner Kleinwort &
          Wasserstein,  Inc.,  evaluated the enterprise  value of the Company in
          connection  with the filing of its Plan and  Disclosure  Statement  on
          December  19,  2001.  The  enterprise  value of the Company on a going
          concern  basis was  estimated  to be  between  $350  million  and $500
          million.  This valuation of the Company  results in a valuation of the
          new  common  equity  to  be  issued  under  the  Plan  and  Disclosure
          Statement,  in the aggregate,  between  approximately $136 million and
          $287  million,  which is derived  by  subtracting  from the  Company's
          enterprise  value the  projected  funded debt on the pro forma balance
          sheet for the Company on the date of emergence  from  bankruptcy.  The

                                        9

<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements (Unaudited), Continued

          valuation  is based on numerous  assumptions,  including,  among other
          things, the achievement of certain operating results, market values of
          publicly-traded  securities of other relevant  companies,  and general
          economic and industry conditions.

          Under accounting guidelines commonly referred to as "Fresh Start", the
          fair  value of all  assets  of the  Company  will be  estimated  as it
          emerges  from  bankruptcy  in  conformity   with  generally   accepted
          accounting  principles ("GAAP"),  specifically  Statement of Financial
          Accounting  Standards ("SFAS") No. 141, "Business  Combinations".  The
          enterprise  value  range  in  the  Plan  implies  that  a  fair  value
          adjustment  of up to $200  million to reduce the value of property and
          equipment may be necessary.  However,  the Plan assumptions are likely
          to differ from the actual business conditions at the date of emergence
          from  bankruptcy.  Therefore,  the fair values assigned to assets upon
          emergence  from  bankruptcy  may also be  different.  The  fair  value
          adjustment  to property and  equipment,  if any, will be recorded upon
          emergence  from  bankruptcy  once  the  final   enterprise   value  is
          determined.

          Because of the ongoing nature of the reorganization cases, the outcome
          of which is not presently  determinable,  the  consolidated  financial
          statements contained herein are subject to material  uncertainties and
          may  not  be  indicative  of  the  results  of  the  Company's  future
          operations or financial  position.  No assurance can be given that the
          Company will be  successful  in  reorganizing  its affairs  within the
          Chapter 11 bankruptcy proceedings.

          As a result of the items discussed above,  there is substantial  doubt
          about the  Company's  ability  to  continue  as a going  concern.  The
          ability of the  Company to continue  as a going  concern is  dependent
          upon, but not limited to, the approval and  confirmation  of the Plan,
          adequate  sources of capital,  customer  and employee  retention,  the
          ability to provide  high  quality  services and the ability to sustain
          positive  results of operations and cash flows  sufficient to continue
          to operate.  The consolidated  financial statements do not include any
          adjustments  to the recorded  amounts or  classification  of assets or
          liabilities  or reflect any  amounts  that may  ultimately  be paid to
          settle  liabilities  and  contingencies  which may be  required in the
          Chapter 11 reorganization  or the effect of any changes,  which may be
          made in  connection  with the Company's  capitalization  or operations
          resulting from a plan of reorganization.

          These  consolidated   financial   statements  have  been  prepared  in
          accordance with AICPA Statement of Position 90-7, "Financial Reporting
          by Entities in Reorganization under the Bankruptcy Code" ("SOP 90-7").
          Pursuant to SOP 90-7, an objective of financial  statements  issued by
          an entity in Chapter 11 is to reflect its financial  evolution  during
          the proceeding. For that purpose, the financial statements for periods
          including  and  subsequent  to filing the Chapter 11  petition  should
          distinguish  transactions and events that are directly associated with
          the  reorganization  from  the  ongoing  operations  of the  business.
          Expenses  and other items not directly  related to ongoing  operations
          are reflected  separately in the consolidated  statement of operations
          as reorganization expenses (see note 4).

          The filing of the Chapter 11 cases by the  Debtors  (i)  automatically
          stayed  actions by creditors  and other parties in interest to recover
          any claim that arose prior to the  commencement of the cases, and (ii)
          served to  accelerate,  for purposes of  allowance,  all  pre-petition
          liabilities  of the  Company,  whether or not those  liabilities  were
          liquidated or contingent as of the Petition Date. The following  table
          sets forth the  liabilities of the Company subject to compromise as of
          December 31, 2000 and March 31, 2001:

                                       10

<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements (Unaudited), Continued

<TABLE>
<CAPTION>
                                                  December 31,   March 31,
                                                      2000         2001
                                                  ------------ ------------
                                                       (in thousands)

<S>                                               <C>          <C>
                  Unsecured long-term debt        $ 1,968,781  $ 1,968,781
                  Unsecured creditors                 583,749      580,994
                  Capital lease obligations           197,974      196,173
                  Priority creditors                   33,385       21,894
                  Other secured creditors                 738          750
                                                  ------------ ------------
                                                  $ 2,784,627  $ 2,768,592
                                                  ============ ============
</TABLE>

          Additionally,  pre-petition debt that is subject to compromise must be
          recorded at the allowed claim amount,  which generally  results in the
          write-off of any deferred  financing amounts associated with the debt.
          Interest  on  debt  subject  to  compromise   ceases  to  accrue  when
          bankruptcy is filed.

          Pre-petition  debt of the Debtors  that is not subject to  compromise,
          specifically the senior secured credit facility and the mortgage loans
          payable   with   balances   outstanding   as  of  March  31,  2001  of
          approximately $84.6 million and $34.0 million respectively,  continues
          to accrue interest. All principal and interest payments are negotiated
          by the  Company and the  specific  lenders and must be approved by the
          Bankruptcy Court.

          Under the  Bankruptcy  Code, the Company may elect to assume or reject
          real estate leases,  employment  contracts,  personal property leases,
          service  contracts,   and  other  unexpired   executory   pre-petition
          contracts,  subject to Bankruptcy  Court approval.  The Company cannot
          presently  determine with certainty the ultimate  aggregate  liability
          which will result from the filing of claims relating to such contracts
          which have been or may be rejected.

(2)  Significant Accounting Policies

     (a)  Basis of Presentation

          The Company's financial  statements should be read in conjunction with
          ICG's Annual Report on Form 10-K for the year ended December 31, 2000,
          as certain  information  and note  disclosures  normally  included  in
          financial  statements  prepared  in  accordance  with  GAAP  have been
          condensed  or omitted  pursuant  to the rules and  regulations  of the
          United  States  Securities  and  Exchange   Commission.   The  interim
          financial statements reflect all adjustments which are, in the opinion
          of  management,   necessary  for  a  fair  presentation  of  financial
          position,  results  of  operations  and  cash  flows as of and for the
          interim periods presented.  Such adjustments are of a normal recurring
          nature.  Operating  results for the three  months ended March 31, 2001
          are not necessarily indicative of the results that may be expected for
          the fiscal year ending December 31, 2001.

          All  significant  intercompany  accounts  and  transactions  have been
          eliminated in consolidation.

     (b)  Reclassifications

          Certain 2000 amounts have been  reclassified  to conform with the 2001
          presentation.

(3)  Provision for Impairment of Long-Lived Tangible and Intangible Assets

     The Company has provided for the impairment of long-lived assets, including
     goodwill,  pursuant  to SFAS No. 121,  "Accounting  for the  Impairment  of
     Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of." SFAS No.
     121 requires that long-lived  assets and certain  identifiable  intangibles
     held and used by an entity be reviewed for impairment  whenever  changes in
     circumstances  indicate  that the  carrying  value  of an asset  may not be
     recoverable.  Such events  include,  but are not limited to, a  significant
     decrease in the market value of an asset,  a significant  adverse change in
     the  business  climate that could affect the value of an asset or a current
     period  operating or cash flow loss combined with a history of operating or
     cash  flow  losses.   An  impairment  loss  is  recognized  when  estimated
     undiscounted future cash flows,  before interest,  expected to be generated
     by  the  asset  are  less  than  its  carrying  value.  Measurement  of the

                                       11

<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements (Unaudited), Continued

     impairment loss is based on the estimated fair value of the asset, which is
     generally  determined  using  valuation  techniques  such as the discounted
     present  value of expected  future cash flows,  appraisals or other pricing
     models.

(4)  Reorganization Expenses

     In October  2000,  the Company  initiated a cost  reduction  strategy  that
     focused  upon  reducing  operating  expenses and  returning  the Company to
     profitability.  This plan  included  the  filing on  November  14,  2000 of
     voluntary  petitions  under  Chapter  11 for ICG and  the  majority  of its
     subsidiaries.

     Under  bankruptcy  accounting,  the Company is required  to  segregate  and
     classify   certain   costs   as   reorganization   costs.   The   following
     reorganization  costs were incurred during the three months ended March 31,
     2001 (in thousands):

<TABLE>
<CAPTION>
<S>                                                       <C>
               Severance and employee retention costs     $    10,259
               Legal and professional fees                      6,318
               Switch site closure costs                        2,086
               Line cost termination expenses                     472
               Other                                            1,179
                                                          -------------
                  Total                                   $    20,314
                                                          =============
</TABLE>

(5)  Property and Equipment

     Property and  equipment,  including  assets held under capital  leases,  is
     comprised of the following:
<TABLE>
<CAPTION>
                                                     December 31,    March 31,
                                                         2000          2001
                                                     ------------  ------------
                                                           (in thousands)

<S>                                                  <C>           <C>
          Land                                       $     8,708   $     8,708
          Buildings and improvements                      36,307        36,307
          Furniture, fixtures and office equipment        11,799        14,842
          Machinery and equipment                          9,450         9,822
          Fiber optic equipment                          119,146       122,608
          Switch equipment                               104,947       107,607
          Fiber optic network                             56,242        56,807
          Site improvements                                    -           839
          Construction in progress                       205,881       203,106
          Assets held for sale                            40,500        40,444
                                                     ------------  ------------
                                                         592,980       601,090
          Less accumulated depreciation                   (2,480)      (17,236)
                                                     ------------  ------------
                                                     $   590,500   $   583,854
                                                     ============  ============
</TABLE>

     Property and  equipment  includes  approximately  $203 million of equipment
     that has not been placed in service at March 31, 2001, and accordingly,  is
     not  being  depreciated.   The  majority  of  this  amount  is  related  to
     uninstalled  transport and switch equipment,  software  development and new
     network construction.

(6)  Long-Term Debt

     As a result of the Company's bankruptcy  proceedings,  all contractual debt
     payments  are  suspended  and subject to revised  payment  terms during the
     bankruptcy  process on a specific case basis.  No changes have been made in
     the  accompanying  consolidated  balance  sheet as to amounts or terms as a
     result of the filing.  As of March 31, 2001, the Company is in default with

                                       12

<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements (Unaudited), Continued

     respect to all of its  pre-petition  long-term  debt,  which, by its terms,
     would  ordinarily  accelerate  upon the event of  default.  However,  under
     bankruptcy  accounting,  no  reclassifications  are made from  long-term to
     short-term  as a result of the  defaults.  Additionally,  debt  subject  to
     compromise should be recorded at the allowed amount of the claim.  Based on
     this, the Company  wrote-off all deferred  financing costs related to the 9
     7/8%,  10%,  11  5/8%,  12 1/2%  and 13 1/2%  Senior  discount  notes as of
     December 31, 2000. In addition,  the Company ceased accreting the discounts
     or accruing  interest on all debt amounts  subject to  compromise as of the
     Petition Date.

     Long-term debt,  including amounts subject to compromise,  is summarized as
     follows:
<TABLE>
<CAPTION>

                                                      December 31,   March 31,
                                                          2000         2001
                                                      ------------ ------------
                                                           (in thousands)
      Long-term debt not subject to compromise:
<S>                                                   <C>          <C>
        Credit Agreement (a)                          $         -  $         -
        Senior Facility                                    84,574       84,574
        Mortgage loan payable, secured by Company
          Headquarters (b)                                 33,077       33,077
        Mortgage loan payable, other                          929          929
                                                      ------------ ------------
                                                          118,580      118,580
      Long-term debt subject to compromise:
        Senior discount notes, net of discount          1,968,781    1,968,781
                                                      ------------ ------------
                                                        2,087,361    2,087,361
      Less current portion                                   (796)        (796)
                                                      ------------ ------------
                                                      $ 2,086,565  $ 2,086,565
                                                      ============ ============
</TABLE>

     (a)  Debtor-in-Possession Financing

          On December 4, 2000,  the Company  finalized its  Debtor-in-Possession
          Revolving  Credit  Agreement  (the  "Credit   Agreement")  with  Chase
          Manhattan Bank. The Credit  Agreement  provided for up to $350 million
          in  financing,   subject  to  certain  conditions.   This  amount  was
          subsequently  amended to $200  million.  Any  amounts  drawn under the
          Credit  Agreement  were to be first used for  repayment in full of the
          Senior  Facility.  The Company was required to pay monthly  commitment
          fees  at an  annual  rate  of 1  1/2%  on  the  average  daily  unused
          commitment,  which were expensed  monthly.  This  agreement  contained
          certain covenants  including capital expenditure  limitations,  EBITDA
          loss limitations,  indebtedness and dividend restrictions.  The Credit
          Agreement  required repayment in full on May 14, 2002. As of September
          30,  2001,  no amounts had been drawn under the Credit  Agreement.  On
          November 7, 2001 the Company terminated the Credit Agreement.

     (b)  Mortgage Payable

          In  June  2001,  the  original  seller  ("Seller")  of  the  Company's
          corporate headquarters building, land and improvements  (collectively,
          the "Company  Headquarters")  exercised  its right to  repurchase  the
          Company   Headquarters  from  the  Company.  In  connection  with  the
          repurchase,  the Seller agreed to assume from the Company the mortgage
          loan payable and other accrued  liabilities  related to completing the
          Company  Headquarters.  The Company  recognized a $7.6 million loss on
          the sale.  In  addition,  the  Company  agreed  to lease  the  Company
          Headquarters  back from the  Seller  under a capital  lease  agreement
          valued at $50.4 million.

(7)  Commitments and Contingencies

     As a  result  of  the  Company's  filing  for  bankruptcy  protection,  all
     commitments and  contingencies  could be substantially  modified during the
     Company's bankruptcy restructuring process.

     (a)  Network Capacity and Construction

          In  January  2000,  the  Company  signed  an  agreement  with a  major
          customer,  whereby the Company will provide,  for $126.5  million over
          the initial  six-year term of the  agreement,  exclusive  service over
          designated  portions of the Company's local fiber optic networks.  The
          Company will recognize revenue ratably over the term of the agreement,

                                       13

<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements (Unaudited), Continued

          as the network  capacity  is  available  for use.  The  agreement  was
          amended in March 2000 to include  additional  capacity for proceeds of
          $53.8  million.  The customer  may, at its option,  extend the initial
          term  of the  agreement  for an  additional  four-year  period  and an
          additional  ten-year  period for  incremental  payment at the time the
          option  exercises.  At March 31,  2001,  $175.6  million  of  deferred
          revenue related to this agreement is reflected in liabilities  subject
          to compromise. In July 2001, as part of a settlement agreement reached
          with the customer (see note 10), deferred revenue was reduced by $21.5
          million,  with a  corresponding  reduction in trade  receivables.  The
          customer has not yet ordered from the Company, and the Company has not
          yet  delivered,  certain  equipment  and  services  required  by  this
          agreement.  The Company is currently negotiating with this customer to
          resolve the issue of future services.

     (b)  Telecommunications and Line Purchase Commitments

          The Company had entered into two agreements with a major  interexhange
          carrier  (the  "Carrier")  that  required  the  Company to provide the
          Carrier with certain minimum monthly revenue,  which if not met, would
          require payment by the Company for the difference  between the minimum
          commitment and the actual monthly revenue.  Under a settlement reached
          with the Carrier,  effective  September 28, 2001,  the Company will no
          longer be liable for such underutilization charges.

     (c)  Other Commitments

          The Company has  entered  into  various  equipment  and line  purchase
          agreements with certain of its vendors. Under these agreements, if the
          Company does not meet a minimum  purchase level in any given year, the
          vendor may discontinue  certain  discounts,  allowances and incentives
          otherwise provided to the Company. In addition,  either the Company or
          the vendor, upon prior written notice, may terminate the agreements.

     (d)  Transport and Termination Charges

          The  Company  records  reciprocal  compensation  revenue  pursuant  to
          interconnection  agreements  with incumbent  local  exchange  carriers
          ("ILEC"s) for the transport and  termination of traffic  originated by
          ILEC customers,  including  Internet bound traffic.  Due to changes in
          the regulatory  environment  and as a means of gaining  certainty with
          respect  to  the  continued  collection  of  reciprocal   compensation
          revenue, the Company negotiated  voluntary settlement  agreements with
          certain  of its  ILEC  customers  that  provide  for  the  payment  of
          reciprocal compensation for terminating Internet bound traffic, but at
          rates lower than the Company had historically received.

          The  Company  has,  as of March 31,  2001,  a net  receivable  for the
          transport  and  termination  of  such  traffic  of  approximately  $32
          million. The Company received cash of approximately $14 million during
          the  three  months  ended  March  31,  2001  from  certain  ILECs  for
          terminating local and toll traffic.

          The  Company  has  recognized   reciprocal   compensation  revenue  of
          approximately  $41 million and $17 million in the three  months  ended
          March 31, 2000 and 2001, respectively.

     (e)  Litigation

          During the third and fourth  quarters of 2000,  the Company was served
          with fourteen  lawsuits filed by various  shareholders  in the Federal
          District Court for the District of Colorado.  All of the suits name as
          defendants the Company,  the Company's former CEO, J. Shelby Bryan and
          the Company's former President,  John Kane.  Additionally,  one of the
          complaints  names the Company's  former  President,  William S. Beans,
          Jr., as a defendant.  All of the complaints seek  unspecified  damages
          for  alleged  violations  of Rules  10(b) and 20(a) of the  Securities
          Exchange Act of 1934. The complaints  seek class action  certification
          for  similarly  situated  shareholders.  It is  anticipated  that  the
          lawsuits  will be  consolidated  and that the Court will choose a lead
          plaintiff's  counsel.  The  Company  has  retained  legal  counsel and
          intends to vigorously  defend against these lawsuits.  The Company has
          also tendered  these claims to the Company's  insurers.  At this time,

                                       14

<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements (Unaudited), Continued

          the claims  against  the  Company  have been  stayed  pursuant  to the
          Company's filing for bankruptcy.

          In January 2001,  certain  shareholders of ICG Funding, a wholly owned
          subsidiary  of the  Company,  filed an adversary  proceeding  with the
          Bankruptcy  Court (Case  number  00-04238  PJW  Jointly  Administered,
          Adversary  Proceeding  No.  01-000  PJW)  against  the Company and ICG
          Funding.  The  shareholders in this adversary action sought to recover
          approximately $2.3 million from an escrow account  established to fund
          certain  dividend  payments  to  holders of the  Funding  Exchangeable
          Preferred  Securities.   Because  of  ICG  Funding  having  filed  for
          bankruptcy  protection,  ICG Funding did not declare the last dividend
          that was to have been paid with the  remaining  proceeds of the escrow
          account.  In April  2001,  the  Company  and ICG  Funding  finalized a
          settlement  agreement with the shareholders  that has been approved by
          the  Bankruptcy  Court.  Under  the  terms  of  the  settlement,   the
          shareholders  received  approximately  two  thirds of the funds in the
          escrow account and the Company received the remaining one third of the
          escrowed funds, subject to certain contingencies and holdbacks related
          to shareholders that did not participate in the settlement.

          The Company is a party to certain other  litigation that has arisen in
          the ordinary  course of business.  In the opinion of  management,  the
          ultimate  resolution of these matters will not have a material adverse
          effect on the Company's financial condition,  results of operations or
          cash flows.

(8)  Summarized Financial Information of ICG Holdings, Inc.

     The 11 5/8% Senior  Discount Notes due 2007 issued by Holdings  during 1997
     are  guaranteed by ICG. The 12 1/2% Senior  Discount Notes due 2006 and the
     13 1/2% Senior  Discount Notes due 2005 issued by Holdings  during 1996 and
     1995, respectively, are guaranteed by ICG and Holdings-Canada.

     The  separate  complete  financial  statements  of  Holdings  have not been
     included herein because such disclosure is not considered to be material to
     the holders of the 11 5/8% Notes, the 12 1/2% Notes and the 13 1/2% Notes.

     However,  summarized  combined  financial  information for Holdings and its
     subsidiaries is as follows:

                Summarized Consolidated Balance Sheet Information

<TABLE>
<CAPTION>
                                                  December 31,  March 31,
                                                      2000        2001
                                                  ------------ ------------
                                                       (in thousands)

<S>                                               <C>          <C>
       Current assets                             $   325,851  $   270,645
       Property and equipment, net                    143,208      149,647
       Other non-current assets, net                   21,754       20,913
                                                  ------------ ------------
         Total assets                             $   490,813  $   441,205
                                                  ============ ============

       Current liabilities                        $   248,745  $   289,851
       Liabilities subject to compromise            2,508,080    2,494,139
       Long-term debt, less current portion               883          883
       Other long-term liabilities                      1,090        1,090
       Redeemable preferred stock                     449,057      449,057
       Stockholder's deficit                       (2,717,042)  (2,793,815)
                                                  ------------ ------------
         Total liabilities and stockholders'
           deficit                                $   490,813  $   441,205
                                                  ============ ============
</TABLE>

                                       15

<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements (Unaudited), Continued


           Summarized Consolidated Statement of Operations Information

<TABLE>
<CAPTION>
                                                     Three Months Ended
                                                         March 31,
                                                  -------------------------
                                                      2000         2001
                                                  ------------ ------------
                                                       (in thousands)

<S>                                               <C>          <C>
       Total revenue                              $   152,877  $   134,865
       Total operating costs and expenses             206,659      190,143
                                                  ------------ ------------
       Operating loss                             $   (53,782) $   (55,278)
                                                  ============ ============

       Loss from continuing operations            $  (119,744) $   (76,773)
                                                  ============ ============

       Net loss                                   $  (119,744) $   (76,773)
                                                  ============ ============
</TABLE>

     Condensed financial information for Holdings-Canada only is as follows:

                       Condensed Balance Sheet Information
<TABLE>
<CAPTION>
                                                 December 31,    March 31,
                                                     2000          2001
                                                 ------------  ------------
                                                      (in thousands)

<S>                                              <C>           <C>
      Current assets                             $        82   $        82
      Advances to subsidiaries                             -             -
                                                 ------------  ------------
        Total assets                             $        82   $        82
                                                 ============  ============

      Current liabilities                        $         -   $         -
      Liabilities subject to compromise              (11,474)      (11,474)
      Due to parent                                        -             -
      Share of losses of subsidiaries              2,717,042     2,793,815
      Shareholders' deficit                       (2,705,486)   (2,782,259)
                                                 ------------  ------------
        Total liabilities and shareholders'
          deficit                                $        82   $        82
                                                 ============  ============
</TABLE>

                  Condensed Statement of Operations Information
<TABLE>
<CAPTION>
                                                    Three Months Ended
                                                         March 31,
                                                 --------------------------
                                                    2000          2001
                                                 ------------  ------------
                                                      (in thousands)

<S>                                              <C>           <C>
      Total revenue                              $         -   $         -
      Total operating costs and expenses                   -             -
                                                 ------------  ------------
      Operating loss                                       -             -
      Losses of subsidiaries                        (119,744)      (76,773)
                                                 ------------  ------------
      Net loss attributable to common
        shareholders                             $  (119,744)  $   (76,773)
                                                 ============  ============
</TABLE>

(9)  Condensed  Financial  Information  of  ICG  Communications,  Inc.  ("Parent
     Company")

     The primary assets of ICG are its  investments in ICG Services,  ICG Tevis,
     ICG Funding and Holdings-Canada,  including advances to those subsidiaries.
     Certain  corporate  expenses of the Parent  Company  are  included in ICG's
     statement of operations and were  approximately  $0.5 million for the three
     months ended March 31, 2000, and were not  significant for the three months
     ended  March  31,  2001.  ICG has no  operations  other  than  those of ICG
     Services, ICG Funding and Holdings-Canada and their subsidiaries.

                                       16

<PAGE>
                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements (Unaudited), Continued


(10) Major Customer and Event Subsequent to March 31, 2001

     A  significant  amount of the Company's  revenue is derived from  long-term
     contracts  with  large   customers,   including  one  major  customer  (the
     "Customer").  For the three  months  ended  March 31,  2001,  the  Customer
     accounted  for  approximately  10%,  or $13.5  million,  of total  revenue.
     Revenue from the Customer  represented  less than 10% of total  revenue for
     the three months ended March 31, 2000.

     Prior to the bankruptcy  filing,  the Customer and the Company  developed a
     number of important and mutually valuable business relationships,  governed
     by a plethora of contracts  (collectively the  "Pre-petition  Agreements").
     During the  pendency  of the  Chapter 11 cases,  both the  Company  and the
     Customer  asserted  various breaches of, and claims under, the Pre-petition
     Agreements.  Following  lengthy  negotiations,  the parties agreed to enter
     into a  settlement  resolving  all of the  claims and  issues  between  the
     parties (the  "Settlement  Agreement")  in order to continue a cooperative,
     mutually   beneficial   relationship  and  to  avoid   potentially   costly
     litigation.  The Settlement  Agreement was approved by the Bankruptcy Court
     in June 2001.

     Under the  Settlement  Agreement,  the  Company  agreed  to assume  certain
     executory  contracts,  as amended to  mutually  benefit  both  parties.  In
     addition,  the Settlement Agreement resolved issues related to pre-petition
     setoffs.  The Company  received  significant  benefits from the  Settlement
     Agreement including (i) eliminating all pre-petition unsecured claims; (ii)
     receiving $10 million in cash;  (iii)  modifying its service  contract with
     the  Customer to  eliminate  the risk that  current  revenue  levels  could
     materially  decrease;  and (iv) increasing  monthly revenue received by the
     Company  from the Customer by over $1.4 million per month for 36 months and
     over $1 million per month for the following 24 months.

     Pursuant to the terms of the Settlement  Agreement,  the Company  settled a
     $54.8 million net receivable from the Customer for $10.0 million, and wrote
     off $60.5  million in accruals and  payables and $22.1  million in deferred
     revenue.  The remaining $149.6 million of deferred revenue at September 30,
     2001,  related to an  agreement  to provide  the  Customer  with  exclusive
     service  over  designated  portions  of the  Company's  local  fiber  optic
     networks  (see note 7 (a)) was not fully  settled and remains  reflected in
     liabilities  subject to  compromise.  Based on the terms of the  Settlement
     Agreement,  the Company recorded a gain of approximately $37.8 million. The
     gain may be adjusted if certain transactions contemplated by the Settlement
     Agreement  are  consummated.  It is not possible to determine the amount of
     the adjustments at this time.

(11) New Accounting Standards

     In June  2001,  the  FASB  issued  SFAS  No.  143,  "Accounting  for  Asset
     Retirement  Obligations."  This  statement  deals with the costs of closing
     facilities and removing  assets.  SFAS No. 143 requires  entities to record
     the fair value of a legal liability for an asset  retirement  obligation in
     the period it is incurred. This cost is initially capitalized and amortized
     over the remaining  life of the  underlying  asset.  Once the obligation is
     ultimately settled,  any difference between the final cost and the recorded
     liability is recognized as a gain or loss on  disposition.  SFAS No. 143 is
     effective starting in 2003. The Company is currently  evaluating the impact
     this pronouncement will have on future financial results.

     In  October  2001,  the FASB  issued  SFAS  No.  144,  "Accounting  for the
     Impairment or Disposal of Long-lived  Assets." SFAS No. 144 supersedes SFAS
     No. 121, "Accounting for the Impairment of Long-Lived Assets and for Assets
     to be Disposed of" and certain provisions of APB Opinion 30, "Reporting the
     Results of Operations - Reporting the Effects of Disposal of a Segment of a
     Business, and Extraordinary,  Unusual and Infrequently Occurring Events and
     Transactions."  SFAS No. 144 develops one  accounting  model for long-lived
     assets  that are to be  disposed  of by sale.  SFAS No. 144  requires  that
     long-lived  assets  that are to be  disposed  of by sale be measured at the
     lower of book value or fair value less cost to sell. Additionally, SFAS No.
     144 expands the scope of discontinued  operations to include all components
     of an entity with operations that (i) can be distinguished from the rest of
     the entity and (ii) will be eliminated  from the ongoing  operations of the
     entity in a disposal  transaction.  SFAS No. 144 is  effective  starting in
     2002.  The Company is currently  evaluating  the impact this  pronouncement
     will have on future financial results.

                                       17

<PAGE>

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

     The following  discussion includes certain  forward-looking  statements and
information  based on the beliefs of management as well as  assumptions  made by
management based on information currently available to the Company. When used in
this document,  the words "anticipate",  "believe",  "estimate" and "expect" and
similar  expressions,  as they  relate to the  Company  or its  management,  are
intended  to  identify   forward-looking   statements.   These   forward-looking
statements are intended to qualify as safe harbors from liability as established
by the Private Securities Litigation Reform Act of 1995. Such statements reflect
the current  views of the Company with respect to future  events and are subject
to certain risks,  uncertainties  and  assumptions.  Should one or more of these
risks or  uncertainties  materialize,  or should  underlying  assumptions  prove
incorrect,  actual  results may vary  materially  from those  described  in this
document.  These  forward-looking  statements are affected by important factors,
including, but not limited to, the following:

     o    The  uncertainty  of the  Company's  future as a result of filing  for
          protection under bankruptcy law;
     o    The   formulation,   approval   and   confirmation   of  a   plan   of
          reorganization;
     o    The significant amount of indebtedness incurred by the Company and the
          Company's ability to successfully restructure this indebtedness;
     o    The possibility of continued operating losses;
     o    The   Company's   ability   to   successfully    maintain   commercial
          relationships with its critical vendors and suppliers;
     o    The  Company's  ability to retain its major  customers  on  profitable
          terms;
     o    The extensive competition the Company will face;
     o    The Company's  ability to attract and retain qualified  management and
          employees;
     o    The Company's ability to access capital markets in a timely manner, at
          reasonable costs and on satisfactory terms and conditions; and
     o    Changes  in,  or the  Company's  inability  to comply  with,  existing
          government regulations.

     These  forward-looking  statements  speak  only  as of  the  date  of  this
Quarterly  Report.  The Company does not undertake  any  obligation to update or
revise  publicly  any  forward-looking  statements,  whether  as a result of new
information,  future events or otherwise. Although the Company believes that its
plans,   intentions   and   expectations   reflected  in  or  suggested  by  the
forward-looking  statements made in this Quarterly Report are reasonable,  there
is no assurance that such plans, intentions or expectations will be achieved.

     The results of  operations  for the three  months  ended March 31, 2000 and
2001  represent  the  consolidated  operating  results of the Company.  (See the
unaudited  consolidated financial statements of the Company for the three months
ended March 31, 2001 included  elsewhere herein.) The terms "fiscal" and "fiscal
year" refer to the Company's  fiscal year ending December 31. All dollar amounts
are in U.S. dollars.

COMPANY OVERVIEW

General

     ICG Communications,  Inc., a Delaware corporation ("ICG"), was incorporated
on April 11, 1996 and is the publicly-traded U.S. parent company of ICG Funding,
LLC, a special  purpose  Delaware  limited  liability  company and wholly  owned
subsidiary  of ICG ("ICG  Funding"),  ICG Holdings  (Canada)  Co., a Nova Scotia
unlimited liability company ("Holdings-Canada"),  ICG Holdings, Inc., a Colorado
corporation  ("Holdings"),  and ICG Services, Inc., a Delaware corporation ("ICG
Services") and their  subsidiaries.  ICG and its  subsidiaries  are collectively
referred  to as the  "Company."  The  Company's  common  stock was traded on the
NASDAQ National Market ("NASDAQ") stock exchange. However, due to the bankruptcy
filings described below, the NASDAQ halted trading of the Company's common stock
on November 14, 2000 and delisted the stock on November 18, 2000.

     The Company  provides  voice,  data and  Internet  communication  services.
Headquartered  in  Englewood,  Colorado,  the  Company  operates  an  integrated
metropolitan and nationwide fiber optic infrastructure to offer:

                                       18

<PAGE>

     o    Dial-Up Services  including  primary rate interface ("PRI") and remote
          access  services  ("RAS")  (sometimes  referred  to as  managed  modem
          services)  on a wholesale  basis to  national  and  regional  Internet
          service providers ("ISP"s).

     o    Point-to-Point  Broadband Service providing traditional special access
          service  to  long  distance  and  long-haul  carriers  and  medium  to
          large-sized  corporate  customers,  as well as switched access and SS7
          services.

     o    Corporate  Services,  primarily  retail  voice  and data  services  to
          businesses.

Bankruptcy Proceedings

     During the  second  half of 2000,  a series of  financial  and  operational
events materially  impacted ICG and its  subsidiaries.  These events reduced the
Company's  expected  revenue and cash flow  generation for the remainder of 2000
and 2001,  which in turn  jeopardized  the Company's  ability to comply with its
existing senior secured credit facility (the "Senior Facility").  As a result of
these and other events,  on November 14, 2000 (the "Petition Date") ICG and most
of its subsidiaries (except for certain non-operating entities), filed voluntary
petitions for protection  under Chapter 11 of the United States  Bankruptcy Code
in the Federal Court for the District of Delaware (the "Bankruptcy  Court"). The
filings were made in order to  facilitate  the  restructuring  of the  Company's
debt,  trade  liabilities  and other  obligations.  The  Company  and its filing
subsidiaries  are  currently  operating  as   debtors-in-possession   under  the
supervision of the Bankruptcy Court.

     Under the  Bankruptcy  Code,  the  rights  and  treatment  of  pre-petition
creditors and shareholders are expected to be substantially altered. As a result
of these  bankruptcy  proceedings,  virtually all  liabilities,  litigation  and
claims  against the Debtors that were in  existence as of the Petition  Date are
stayed  unless  the stay is  modified  or lifted or payment  has been  otherwise
authorized by the Bankruptcy  Court. At this time, it is not possible to predict
the outcome of the Chapter 11 cases in general, the effects of such cases on the
Company's   business,   or  the  effects  on  the  interests  of  creditors  and
shareholders.   Because  of  the  bankruptcy  filings,   all  of  the  Company's
liabilities incurred prior to the Petition Date, including certain secured debt,
are subject to compromise.

     Further,  due to the  bankruptcy  filing and  related  events,  there is no
assurance  that  the  carrying  amounts  of  assets  will  be  realized  or that
liabilities   will  be   liquidated   or  settled  for  the  amounts   recorded.
Consequently, there is substantial doubt about the Company's ability to continue
as a going concern. The ability of the Company to continue as a going concern is
dependent upon, but not limited to, formulation, approval, and confirmation of a
plan of  reorganization,  adequate  sources of capital,  customer  and  employee
retention,  the  ability to provide  high  quality  services  and the ability to
sustain  positive results of operations and cash flows sufficient to continue to
operate.  In September  2000,  the Company  initiated an internal  restructuring
process in order to conserve capital and address various  financial  issues.  To
lead the restructuring,  the Company hired Randall Curran as its Chief Executive
Officer.  The Company  also  retained  Zolfo  Cooper,  LLC as its  restructuring
advisor and Dresdner  Kleinwort &  Wasserstein,  Inc.  ("DrKW") as its financial
advisor.

     In  conjunction  with the  bankruptcy  filing,  the Company  entered into a
Debtor-in-Possession  Revolving Credit Agreement (the "Credit  Agreement") of up
to $350 million, which was subsequently amended to $200 million. As of September
30, 2001, no amounts had been drawn under the Credit  Agreement.  On November 7,
2001 the Company  terminated  the Credit  Agreement  because it expects that the
$144 million in cash and short-term investments as of September 30, 2001 will be
sufficient to fund operations during the bankruptcy process.

     ICG is  focusing  on  improving  its  overall  profitability  and  began  a
restructuring  process  in the  second  half  of 2000  that  has  resulted  in a
substantial  reduction in operating and capital  expenditures.  These reductions
include  reducing  the  full-time  employee  count  from 2,975 at the end of the
second  quarter of 2000 to 2,054 as of year-end  2000, and 1,389 as of September
30,  2001.  The  Company has met with  essential  vendors in an effort to ensure
continued  access to  required  equipment  and  services.  The  Company  is also
executing  a  customer   retention   campaign   designed  to  enhance   customer
relationships   throughout  the  restructuring   process  and  thereafter.   ICG
anticipates  these   restructuring   efforts  will  conserve  capital,   enhance
profitability and assist in retaining key customers.

     During the  pendancy of its Chapter 11 case,  the Company has  continued to
provide on-going services to its customers while implementing a revised strategy
intended to meet customer  commitments and maximize  short-term cash flow. Under
the revised  strategy,  the Company's  operations will focus on existing markets
where the Company has capacity thereby allowing the Company to add customers for
nominal  incremental  cost and earn a  better  return  on  existing  assets.  In
addition,  the Company  intends to focus on product sales that utilize  existing

                                       19
<PAGE>

infrastructure  to reduce capital  required in the short-term.  In general,  the
Company  will scale its  geographic  expansion  and  delivery of new products to
better  match  its  network   capacity,   technical   capabilities  and  capital
availability.  The Company's  22-city  expansion plan  originally  scheduled for
completion at year-end 2000 has been postponed indefinitely.

     On December 19, 2001 the Debtors  filed a proposed  Plan of  Reorganization
(the "Plan") and a Disclosure  Statement with the Bankruptcy  Court. The Plan is
premised on the substantive  consolidation of all of the Debtors for purposes of
Plan  voting,   confirmation  and  distribution  of  claim  proceeds.  The  Plan
contemplates the conversion of the Debtors' existing  unsecured debt into common
equity in the  post-bankruptcy,  reorganized company. The Plan also contemplates
the issuance of new secured notes to the Debtors' existing secured lenders.  The
Plan calls for the cancellation of all equity  securities issued by the Debtors,
including  all common  stock,  preferred  stock,  options  and  warrants.  It is
anticipated  that a hearing on the adequacy of the Disclosure  Statement will be
held in the Bankruptcy  Court on February 1, 2002.  Consummation  of the Plan is
contingent upon receiving Bankruptcy Court approval,  as well as the approval of
certain  classes of  creditors.  No assurance can be given that the Plan will be
approved or that the Company  will be  successful  in  reorganizing  its affairs
within the Chapter 11 proceedings.

     The  Company,  assisted  by its  investment  banker,  DrKW,  evaluated  the
enterprise  value of the Company in  connection  with the filing of its Plan and
Disclosure  Statement on December 19, 2001. The enterprise  value of the Company
on a going  concern  basis was  estimated  to be between  $350  million and $500
million.  This valuation of the Company results in a valuation of the new common
equity to be issued under the Plan and Disclosure  Statement,  in the aggregate,
between  approximately  $136  million  and $287  million,  which is  derived  by
subtracting from the Company's enterprise value the projected funded debt on the
pro  forma  balance  sheet  for  the  Company  on the  date  of  emergence  from
bankruptcy.  The valuation is based on numerous  assumptions,  including,  among
other things,  the achievement of certain  operating  results,  market values of
publicly-traded securities of other relevant companies, and general economic and
industry conditions.

     Under accounting guidelines commonly referred to as "Fresh Start", the fair
value  of all  assets  of the  Company  will be  estimated  as it  emerges  from
bankruptcy in conformity with generally accepted accounting principles ("GAAP"),
specifically  Statement  of  Financial  Accounting  Standards  ("SFAS") No. 141,
"Business  Combinations."  The enterprise value range in the Plan implies that a
fair value  adjustment of up to $200 million to reduce the value of property and
equipment may be necessary.  However,  the Plan assumptions are likely to differ
from the actual  business  conditions at the date of emergence from  bankruptcy.
Therefore, the fair values assigned to assets upon emergence from bankruptcy may
also be different.  The fair value adjustment to property and equipment, if any,
will be recorded upon emergence from bankruptcy once the final  enterprise value
is determined.

Asset Impairment

     The Company has provided for the impairment of long-lived assets, including
goodwill, pursuant to SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived  Assets to be Disposed of." SFAS No. 121 requires that
long-lived  assets  and  certain  identifiable  intangibles  held and used by an
entity be reviewed for impairment  whenever  changes in  circumstances  indicate
that the carrying value of an asset may not be recoverable. Such events include,
but are not limited to, a significant  decrease in the market value of an asset,
a significant adverse change in the business climate that could affect the value
of an asset or a current  period  operating  or cash flow loss  combined  with a
history of operating or cash flow losses.  An impairment loss is recognized when
estimated  undiscounted  future  cash  flows,  before  interest,  expected to be
generated  by the asset are less than its  carrying  value.  Measurement  of the
impairment  loss is based on the  estimated  fair value of the  asset,  which is
generally  determined using valuation  techniques such as the discounted present
value of expected future cash flows, appraisals or other pricing models.

                                       20
<PAGE>

RESULTS OF OPERATIONS

     The following  table provides a breakdown of revenue,  operating  costs and
selling,  general and  administrative  expenses  for the Company for the periods
indicated. The table also shows certain revenue,  expenses,  operating loss, and
EBITDA as a percentage of the Company's total revenue.

<TABLE>
<CAPTION>
                                                  Financial Data
                                           Three months ended March 31,
                                    ---------------------------------------
                                            2000                2001
                                    ------------------- -------------------
                                        $          %         $         %
                                    ---------- -------- ---------- --------
                                                     (unaudited)
                                               ($ values in thousands)
Statement of Operations Data:
<S>                                 <C>        <C>       <C>       <C>
Revenue                              157,408       100    136,397     100
Operating costs                       82,902        53    112,562      83
Selling, general and administrative   55,089        35     30,696      23
Depreciation and amortization         64,599        41     15,989      11
Other, net                               432         -         71       -
                                    ---------- --------  --------- --------
   Operating loss                    (45,614)      (29)   (22,921)    (17)

Other Data:
EBITDA (1)                            19,417        12     (6,861)     (5)
Net cash used by operating
  activities                          23,131              (61,644)
Net cash used by investing
  activities                        (151,833)              (5,011)
Net cash provided (used) by
  financing activities                66,207               (1,803)
Capital expenditures (2)             214,907                7,898
</TABLE>

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

<TABLE>
<CAPTION>
                                                          Statistical Data (unaudited) (3)


                                            March 31,   June 30,   September 30,  December 31,  March 31,
                                              2000        2000         2000           2000        2001
                                           ----------  ---------   -------------  ------------ -----------
<S>                                        <C>         <C>         <C>            <C>          <C>
Full time employees                           2,930       2,975        2,811          2,054        1,476
Access lines in service, in thousands (4)       905       1,113        1,074            950          778
Buildings connected:
  On-net                                      1,046         924          936            925          925
  Hybrid (5)                                  7,746       8,228        8,584          8,659        8,151
                                           ----------  ---------   -------------  ------------ -----------
    Total buildings connected                 8,792       9,152        9,520          9,584        9,076
Operational switches:
  Circuit                                        35          43           47             47           44
  ATM                                            24          24           24             26           26
  Frame Relay                                    16           -            -              -            -
                                           ----------  ---------   -------------  ------------ -----------
    Total operational switches                   75          67           71             73           70
Regional fiber route miles (6):
  Operational                                 4,807       4,767        4,816          5,577        5,577
  Under construction                              -         495          508              -            -
Regional fiber strand miles (7):
  Operational                               177,103     184,064      192,422        166,498      166,498
  Under construction                              -      12,254       14,891              -            -
Collocations with ILECs                         183         188          188            160          160
</TABLE>


(1)  EBITDA consists of loss from continuing operations before interest,  income
     taxes,  reorganization  expenses,  depreciation  and  amortization,   other
     expense,  net, accretion and preferred dividends on preferred securities of
     subsidiaries and certain  nonrecurring  charges such as the net loss (gain)
     on  disposal  of  long-lived  assets and  other,  net  operating  costs and
     expenses,  including deferred compensation.  EBITDA is presented to enhance
     an understanding of the Company's  operating results and is not intended to
     represent  cash flows or results of operations in accordance  with GAAP for
     the periods  indicated.  EBITDA is not a measurement  under GAAP and is not
     necessarily  comparable with similarly  titled measures of other companies.
     Net cash  flows from  operating,  investing  and  financing  activities  of
     continuing  operations as determined using GAAP are also presented in Other
     Data.

(2)  Capital  expenditures  include assets acquired with cash,  payables,  under
     capital leases, and pursuant to IRU agreements.

                                       21
<PAGE>

(3)  Amounts  presented are for  three-month  periods ended, or as of the end of
     the period presented.

(4)  Access  lines in  service  at March 31,  2001  includes  lines  provisioned
     through the Company's  switch and through resale and other  agreements with
     various local exchange carriers.  Beginning in the three months ended March
     31, 2001, access lines in service include only provisioned lines generating
     revenue.

(5)  Hybrid buildings  connected  represent buildings connected to the Company's
     network via another carrier's facilities.

(6)  Regional  fiber  route  miles  refers to the number of miles of fiber optic
     cable,  including  leased  fiber.  As of March 31,  2001,  the  Company had
     approximately 5,577 regional fiber route miles.  Regional fiber route miles
     under construction represents fiber under construction.

(7)  Regional  fiber strand  miles refers to the number of regional  fiber route
     miles,  including leased fiber, along a telecommunications  path multiplied
     by the number of fiber strands  along that path. As of March 31, 2001,  the
     Company had  approximately  166,498  regional fiber strand miles,  of which
     46,097  regional  fiber strand miles were leased  under  operating  leases.
     Regional  fiber  strand  miles under  construction  represents  fiber under
     construction.


THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

Revenue

<TABLE>
<CAPTION>
                                      Three Months Ended March 31,
                                 ---------------------------------------
                                       2000                 2001
                                 ------------------  -------------------
                                    $         %         $          %
                                 --------  --------  ---------   -------
                                        ($ values in thousands)
<S>                              <C>       <C>       <C>         <C>
Dial-Up                           34,359      22        46,593      34
Point-to-Point Broadband          50,345      32        41,065      30
Corporate Services                31,686      20        31,691      23
Reciprocal Compensation           41,018      26        17,048      13
                                 --------  --------  ---------   -------
  Total Revenue                  157,408     100       136,397     100
                                 ========  ========  =========   =======
</TABLE>

     Total revenue  decreased $21.0 million,  or 13%, for the three months ended
March 31, 2001  compared  with the same  period in 2000.  The  decrease  was due
primarily  to a $24.0  million,  or 58%,  decrease  in  Reciprocal  Compensation
revenue  and a $9.3  million,  or  18%,  decrease  in  Point-to-Point  Broadband
revenue.  Offsetting the decreases,  Dial-Up revenue increased $12.2 million, or
36%.

     Dial-Up  revenue  is earned by  providing  PRI ports  (one and two way) and
managed modem (IRAS) services to ISPs and other communication service companies.
The increase in Dial-Up  revenue was primarily due to a 49% increase in customer
access ports in service,  offset by a 9% decrease in the average monthly revenue
per port.  The  decrease  in revenue  per port was due to higher  service  level
credits issued in the first quarter of 2001 to settle customer  disputes related
to  network  performance  issues  associated  with  the  IRAS  product.  Dial-Up
revenue's  contribution  to total  revenue rose from 22% in the first quarter of
2000 to 34% in the first quarter of 2001.

     Point-to-Point  Broadband  revenue is generated  from  service  provided to
interexchange  carriers ("IXC"s) and end-user business  customers.  This service
provides dedicated  bandwidth and offers DS1 to OC-192 capacity to connect:  (i)
long-haul carriers to local markets, large companies and other long-haul carrier
facilities;  and (ii) large companies to their long distance carrier  facilities
and other  facilities.  The  decrease in  Point-to-Point  Broadband  revenue was
primarily due to $11.5 million in non-recurring revenue recognized in 2000 under
the Company's fiber optic lease agreement with a major carrier.  Special access,
switched  access and SS7  revenues  also  decreased  primarily  due to increased
customer churn levels.  Point-to-Point Broadband revenue's contribution to total
revenue  declined  from 32% in the  first  quarter  of 2000 to 30% in the  first
quarter of 2001.

     Corporate   Services  revenue  includes  local,  long  distance,   enhanced
telephony and data services to businesses over its fiber optic networks  located
in major  metropolitan  areas  in  California,  Colorado,  Ohio,  Texas  and the
Southeast.  Corporate Services revenue remained  consistent at approximately $32
million for both the three months ended March 31, 2001 and 2000. The billed line
count  increased 9% from the first quarter of 2000 to the first quarter of 2001,
while the average  monthly  revenue per line  decreased 8%.  Corporate  Services
revenue for the first  quarter of 2001  reflects a 26% decrease in long distance
revenue,  due to the  continued  attrition of resale  access lines that had high
long distance  service  penetration  rates. In addition,  carrier access billing
service revenue decreased 33% primarily due to revenue earned but not recognized

                                       22
<PAGE>

because of collection  concerns.  Corporate Services  revenue's  contribution to
total  revenue  rose from 20% in the first  quarter  of 2000 to 23% in the first
quarter of 2001.  The Company  entered  into an  agreement  to transfer its long
distance revenue stream in the fourth quarter of 2001. These customers generated
$3.4 million and $2.5 million in the three months ended March 31, 2000 and 2001,
respectively. The related margin was not significant.

     Reciprocal Compensation has historically constituted an important source of
revenue for the Company.  Reciprocal  Compensation  revenue is primarily  earned
pursuant to  interconnection  agreements with incumbent local exchange  carriers
("ILEC"s)  for  the  transport  and  termination  of  calls  originated  by ILEC
customers,  including  Internet  bound calls.  Due to changes in the  regulatory
environment  and as a means of gaining  certainty  with respect to the continued
collection of Reciprocal  Compensation revenue, the Company negotiated voluntary
settlement  agreements  with certain of its ILEC  customers in the first half of
2000 that provide for the payment of Reciprocal Compensation for terminating ISP
traffic,  but at rates lower than the Company had  historically  received.  As a
result, Reciprocal  Compensation's  contribution to total revenue decreased from
26% in 2000 to 13% in 2001.  The  decrease in  Reciprocal  Compensation  revenue
reflects  an 62%  decrease  in the  average  revenue  earned per  minutes of use
("MOU"s),  offset by an 8% increase in MOUs. The Company anticipates that due to
changes in the  regulatory  environment,  Reciprocal  Compensation  revenue will
continue to decline in the future.

     A  significant  amount of the Company's  revenue is derived from  long-term
contracts  with large  customers,  including one major  customer.  For the three
months ended March 31, 2001, this customer  accounted for approximately  10%, or
$13.5 million,  of total revenue.  Revenue from this customer  represented  less
than 10% of total revenue for the three months ended March 31, 2000. The loss of
this customer,  or other  significant  customers,  could have a material adverse
effect on the Company's financial condition and results of operations.

Operating costs

     Total operating costs increased from $83 million for the three months ended
March 31,  2000 to $113  million for the same  period in 2001,  a 36%  increase.
Operating costs consist primarily of payments to ILECs,  other competitive local
exchange carriers  ("CLEC"s),  and long distance carriers for the use of network
facilities  to  support  local,  special,  switched  access  services,  and long
distance services as well as internal network operating costs, right of way fees
and other operating costs.  Internal network operating costs include the cost of
engineering and operations personnel dedicated to the operations and maintenance
of the network.  The increase in operating costs is due to increased  leased PRI
and  backbone/backhaul  expenses  that  occurred  subsequent  to March 31, 2000.
Through the bankruptcy proceedings, the Company has significantly reduced excess
leased  capacity,  thereby  reducing  operating  costs.  However,  much of these
savings were not realized until after March 31, 2001.  Operating costs increased
as a percentage  of revenue from 53% for 2000 to 83% for 2001,  primarily due to
the decrease in reciprocal  compensation revenue, which generates  significantly
higher margins than the Company's other revenue sources.

Selling, general and administrative expenses

     Total selling,  general and administrative ("SG&A") expenses decreased from
$55  million  for the three  months  ended March 31, 2000 to $31 million for the
same period in 2001, a 44% decrease.  SG&A expenses decreased as a percentage of
revenue  from  35%  for  2000  to 23%  for  2001.  This  decrease  is  primarily
attributable to lower staff levels in 2001 than in 2000. The number of full time
employees decreased from 2,930 at March 31, 2000 to 1,476 at March 31, 2001. The
decrease is also due to lower facilities  costs as the Company  consolidates its
locations during the restructuring  process,  as well as lower training,  travel
and relocation costs associated with the lower headcount.

Depreciation and amortization

     Depreciation  and  amortization  decreased  from $65  million for the three
months  ended March 31,  2000 to $16  million  for the same period in 2001.  The
decrease  is due to the  reduced  asset  values as a result of the $1.7  billion
asset impairment recorded at December 31, 2000.

Interest expense

     Interest  expense  decreased  from $63 million for the three  months  ended
March 31,  2000 to $13  million  for the same  period in 2001.  Interest on debt
subject to  compromise  ceased to accrue as of the  Petition  Date.  Contractual
interest  that was not recorded due to the  bankruptcy  proceedings  totaled $60
million for the three months ended March 31, 2001.  Included in interest expense
for the three  months  ended  March  31,  2000 and 2001 was $52  million  and $2
million of noncash interest, respectively. Additionally, interest expense is net
of interest  capitalized  related to  construction in progress of $1 million and
$0.4   million   during  the  three  months  ended  March  31,  2000  and  2001,
respectively.

                                       23
<PAGE>

Reorganization expenses

     Reorganization expenses of $20 million for the three months ended March 31,
2001 consist of costs  associated with the bankruptcy  proceedings  that are not
directly  attributable  to the ongoing  operations  of the  Company.  Such costs
include $10 million for severance and employee  retention  costs,  $6 million in
professional  and legal  fees,  $2  million in costs  related to the  closing of
certain switch sites and $2 million of other costs.

Accretion and preferred dividends on preferred securities of subsidiaries

     Accretion  of costs and  preferred  dividends on  preferred  securities  of
subsidiaries  was $17 million for the three  months  ended March 31,  2000.  The
Company did not record any amounts  during the three months ended March 31, 2001
as all offering costs were written off and discounts accreted as of December 31,
2000.  Accretion and preferred dividends on preferred securities of subsidiaries
recorded during the three months ended March 31, 2000 consisted of the accretion
of  issuance  costs  and  the  accrual  of the  preferred  securities  dividends
associated with the 6 3/4%  Exchangeable  Limited  Liability  Company  Preferred
Securities  Mandatorily Redeemable 2009, the 14% Preferred Stock and the 14 1/4%
Preferred Stock.

LIQUIDITY AND CAPITAL RESOURCES

     The Company has incurred  significant  operating and net losses as a result
of the development  and operation of its networks.  The Company expects that its
operating  losses will  continue as it operates as a  debtor-in-possession  as a
result of its  Chapter 11  bankruptcy  filing.  Further,  due to the  bankruptcy
filing and related  events,  there is no assurance that the carrying  amounts of
assets will be realized or that  liabilities  will be  liquidated or settled for
the  amounts  recorded.  Consequently,  there is  substantial  doubt  about  the
Company's ability to continue as a going concern.

     At March 31,  2001,  the Company  had cash and  short-term  investments  of
approximately  $142  million.  On December 4, 2000,  the Company  finalized  its
Debtor-in-Possession  Revolving  Credit Agreement with Chase Manhattan Bank (the
"Credit  Agreement").  The Credit Agreement  originally  provided for up to $350
million in financing,  which was  subsequently  amended to $200  million.  As of
September  30, 2001,  the Company had cash and  short-term  investments  of $144
million,  with no amounts drawn under the Credit Agreement.  On November 7, 2001
the Company terminated the Credit Agreement.  Management  believes that cash and
short-term investments of approximately $151 million at November 30, 2001, along
with  protection  under  bankruptcy  law,  should  enable  the  Company  to fund
operations through the bankruptcy  restructuring process.  However, there can be
no  assurance  that  such  resources  will  be  sufficient  for  anticipated  or
unanticipated working capital and capital expenditure requirements,  or that the
Company will achieve or sustain profitability or positive EBITDA in the future.

     At  March  31,  2001,   the  Company  had  $2,769  million  of  liabilities
outstanding subject to compromise, including $1,969 million of indebtedness, and
$1,366 million of mandatorily redeemable preferred shares. As a result of filing
for protection  under bankruptcy law, the Company is not currently paying any of
the debt  service  or  preferred  stock  dividend  obligations  that  have  been
outstanding since November 14, 2000, except for certain  interest-only  payments
on some of the Company's secured debt. In addition,  future payment of principal
and  interest  on all of  the  outstanding  indebtedness  and  dividends  on the
preferred  shares is subject to court approval and may be discharged in whole or
in  part  in  bankruptcy   with  proceeds  from  the  court   approved  plan  of
reorganization  or  liquidation  of the Company.  At this time,  there can be no
assurance  as to the  amount  of  payment,  if any,  that  will be made to these
debtors and shareholders.

     The  Company's  Plan filed with the  Bankruptcy  Court on December 19, 2001
does not require any additional  debt or equity  financing.  No assurance can be
given that the Plan will be approved by the Bankruptcy Court or that the Company
will  be  successful  in   reorganizing   its  affairs  within  the  Chapter  11
proceedings.

Net Cash Provided (Used) By Operating Activities

     The  Company's  operating  activities  provided  $23  million  and used $62
million for the three  months ended March 31, 2000 and 2001,  respectively.  Net
cash  provided  (used) by operating  activities  is primarily due to losses from
continuing  operations,  changes in working capital items and  depreciation  and
amortization.  Net cash used in operating  activities for the three months ended
March 31, 2000 also  includes  approximately  $53  million of deferred  interest
expense,  which  interest  was not accrued or deferred in the three months ended
March 31, 2001 due to the Company's bankruptcy proceedings.

                                       24
<PAGE>

Net Cash Used By Investing Activities

     Investing  activities  used $152 million and $5 million in the three months
ended  March 31, 2000 and 2001,  respectively.  Net cash  provided by  investing
activities for the three months ended March 31, 2000 includes  proceeds from the
sales of short-term  investments available for sale and marketable securities of
$22 million, offset by cash expended for the acquisition of property,  equipment
and other assets of $173 million.  Net cash used by investing activities for the
three  months  ended March 31, 2001  primarily  includes  cash  expended for the
acquisition  of property,  equipment  and other assets of $8 million,  partially
offset by proceeds  from the sale of short-term  investments  available for sale
and marketable securities of $4 million.

Net Cash Provided By Financing Activities

     Financing  activities  provided $66 million in the three months ended March
31, 2000,  which includes  proceeds from the issuance of long-term debt and from
the  issuance of common  stock in  conjunction  with the exercise of options and
warrants and the Company's  employee stock  purchase  plan,  offset by principal
payments on IRU  agreement,  long-term  debt and capital  leases and payments of
preferred  dividends  on  preferred  securities  of  subsidiaries.  Cash used by
financing activities of $2 million for the three months ended March 31, 2001 was
primarily comprised of principal payments on capital lease obligations which are
subject to compromise.

     On August 12, 1999, ICG Equipment and NetAhead  entered into a $200 million
senior secured financing  facility (the "Senior  Facility")  consisting of a $75
million term loan, a $100 million term loan and a $25 million  revolving line of
credit.  As of March 31, 2001,  $85 million was  outstanding  under the loans at
interest  rates of the prime  rate plus  3.875%  and 4.25% for the three  months
ended March 31, 2001.

     As of March 31,  2001,  the  Company  had an  aggregate  accreted  value of
approximately $2 billion outstanding under the 13 1/2% Senior Discount Notes due
2005, the 12 1/2% Senior  Discount  Notes due 2006, the 11 5/8% Senior  Discount
Notes due 2007, the 10% Notes and the 9 7/8% Notes.

     As of March 31, 2001, an aggregate  amount of $1.4 billion was  outstanding
under the 6 3/4%  Preferred  Securities,  the 14% Preferred  Stock,  the 14 1/4%
Preferred Stock and the 8% Series A Convertible Preferred Stock.

Capital Expenditures

     The Company's  capital  expenditures,  including assets acquired with cash,
under  capital  leases and pursuant to IRU  agreements  were $245 million and $8
million for the three months ended March 31, 2000 and 2001, respectively.

     There is substantial  uncertainty  about the Company's  ability to complete
and place in service the Company's $203 million construction in progress balance
as of March 31, 2001.

Reciprocal Compensation

     ICG has, as of March 31, 2001, a net receivable for reciprocal compensation
due under  interconnection  agreements with ILECs of approximately  $32 million.
ICG received  cash of  approximately  $14 million  during the three months ended
March 31, 2001 from ILECs for terminating local traffic. The Company anticipates
that due to  changes  in the  regulatory  environment,  reciprocal  compensation
revenue will continue to decline in the future.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's financial position and cash flows are subject to a variety of
risks in the normal course of business,  which include  market risks  associated
with  movements  in interest  rates and equity  prices.  The  Company  routinely
assesses  these risks and has  established  policies and  business  practices to
protect against the adverse effects of these and other potential exposures.  The
Company does not, in the normal  course of business,  use  derivative  financial
instruments for trading or speculative purposes.

                                       25
<PAGE>
                                     PART II

ITEM 1.   LEGAL PROCEEDINGS

          During the third and fourth  quarters of 2000,  the Company was served
          with fourteen  lawsuits filed by various  shareholders  in the Federal
          District Court for the District of Colorado.  All of the suits name as
          defendants the Company,  the Company's former CEO, J. Shelby Bryan and
          the Company's former President,  John Kane.  Additionally,  one of the
          complaints  names the Company's  former  President,  William S. Beans,
          Jr., as a defendant.  All of the complaints seek  unspecified  damages
          for  alleged  violations  of Rules  10(b) and 20(a) of the  Securities
          Exchange Act of 1934. The complaints  seek class action  certification
          for  similarly  situated  shareholders.  It is  anticipated  that  the
          lawsuits  will be  consolidated  and that the Court will choose a lead
          plaintiff's  counsel.  The  Company  has  retained  legal  counsel and
          intends to vigorously  defend against these lawsuits.  The Company has
          also tendered  these claims to the Company's  insurers.  At this time,
          the claims  against  the  Company  have been  stayed  pursuant  to the
          Company's filing for bankruptcy.

          In January 2001,  certain  shareholders of ICG Funding, a wholly owned
          subsidiary  of the  Company,  filed  an  adversary  proceeding  in the
          Bankruptcy  Court (Case  number  00-04238  PJW  Jointly  Administered,
          Adversary  Proceeding  No.  01-000  PJW)  against  the Company and ICG
          Funding.  The  shareholders in this adversary action sought to recover
          approximately $2.3 million from an escrow account  established to fund
          certain  dividend  payments  to  holders of the  Funding  Exchangeable
          Preferred  Securities.   Because  of  ICG  Funding  having  filed  for
          bankruptcy  protection,  ICG Funding did not declare the last dividend
          that was to have been paid with the  remaining  proceeds of the escrow
          account.  In April  2001,  the  Company  and ICG  Funding  finalized a
          settlement  agreement with the shareholders which has been approved by
          the  Bankruptcy  Court.  Under  the  terms  of  the  settlement,   the
          shareholders  received  approximately  two  thirds of the funds in the
          escrow account and the Company received the remaining one third of the
          escrowed funds, subject to certain contingencies and holdbacks related
          to shareholders that did not participate in the settlement.

          The Company is a party to certain other  litigation that has arisen in
          the ordinary  course of business.  In the opinion of  management,  the
          ultimate  resolution of these matters will not have a material adverse
          effect on the Company's financial condition,  results of operations or
          cash flows.

ITEM 2.   CHANGES IN SECURITIES

          None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          Due to the bankruptcy proceedings discussed in note 1 to the Company's
          unaudited consolidated financial statements for the three months ended
          March 31, 2001, the Company is currently in default under the 13 1/2 %
          Notes, 12 1/2% Notes,  11 5/8% Notes,  10% Notes, 9 7/8% Notes and the
          Senior Facility.  In addition,  the Company is in default under the 14
          1/4% Preferred Stock, 14% Preferred Stock, 6 3/4% Preferred Securities
          and 8% Series A Convertible Preferred Stock.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

          None.

ITEM 5.   OTHER INFORMATION

          None.

                                       26
<PAGE>

ITEM 6.   EXHIBITS AND REPORT ON FORM 8-K

          (A) Exhibits.

              (2)  Plan   of    acquisition,    reorganization,    arrangement,
                   liquidation or succession

                   2.2   Joint  Plan of  Reorganization  of ICG  Communications,
                         Inc.  and  Its   Affiliated   Debtors  and  Debtors  in
                         Possession [Incorporated by reference to Exhibit 2.2 to
                         ICG  Communications,  Inc.'s Current Report on Form 8-K
                         dated December 19, 2001].

                   2.3   Disclosure  Statement  with  Respect  to Joint  Plan of
                         Reorganization  of ICG  Communications,  Inc.  and  Its
                         Affiliated    Debtors   and   Debtors   in   Possession
                         [Incorporated  by  reference  to  Exhibit  2.3  to  ICG
                         Communications, Inc.'s Current Report on Form 8-K dated
                         December 19, 2001].

              (10) Material Contracts.

                   10.84 Amended and Restated Employment  Agreement,  dated June
                         21, 2001, by and between ICG Communications,  Inc., ICG
                         Holdings, Inc., ICG Services, Inc., ICG Equipment Inc.,
                         and ICG Telecom, Inc., and Randall Curran.

          (B) Report on Form 8-K.

              The following  reports on Form 8-K were filed  by the  registrants
              during the three months ended March 31, 2001:

              None.

                                       27

<PAGE>
                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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, on January 9, 2001.



                                          ICG COMMUNICATIONS, INC.





Date:  January 9, 2001                  By: /s/ Richard E. Fish, Jr.
                                           -------------------------------------
                                           Richard E. Fish, Jr., Executive Vice
                                           President and Chief Financial Officer
                                           (Principal Financial Officer)





Date: January 9, 2001                   By: /s/ John V. Colgan
                                           -------------------------------------
                                           John V. Colgan, Senior Vice President
                                           and Controller (Principal Accounting
                                           Officer)



<PAGE>

                                   SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) 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, on January 9, 2001.



                                          ICG HOLDINGS (CANADA) CO.





Date:  January 9, 2001                  By: /s/ Richard E. Fish, Jr.
                                           -------------------------------------
                                           Richard E. Fish, Jr., Executive Vice
                                           President and Chief Financial Officer
                                           (Principal Financial Officer)





Date: January 9, 2001                   By: /s/ John V. Colgan
                                           -------------------------------------
                                           John V. Colgan, Senior Vice President
                                           and Controller (Principal Accounting
                                           Officer)



<PAGE>

                                   SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) 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, on January 9, 2001.



                                          ICG HOLDINGS, INC.





Date:  January 9, 2001                  By: /s/ Richard E. Fish, Jr.
                                           -------------------------------------
                                           Richard E. Fish, Jr., Executive Vice
                                           President and Chief Financial Officer
                                           (Principal Financial Officer)





Date: January 9, 2001                   By: /s/ John V. Colgan
                                           -------------------------------------
                                           John V. Colgan, Senior Vice President
                                           and Controller (Principal Accounting
                                           Officer)