<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

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

                                    FORM 10-Q

                                   (Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    For the quarterly period ended March 31, 2002
                                   --------------

OR

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    For the transition period from __________ to _______________

                        Commission file number: 000-28113

                                 TELEMONDE, INC.
                                 ---------------
             (Exact name of registrant as specified in its charter)

           Delaware                                             62-1795931
           --------                                             ----------
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                          Identification Number)

230 Park Avenue, 10th Floor, New York, New York                  10169
-----------------------------------------------                  -----
(Address of Principal Executive Offices)                       (Zip Code)

       Registrant's telephone number, including area code: (646) 435-5645
                                                           -----

         Indicate by check whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

         Yes  X   No___
             ---

         As of May 1, 2002, Telemonde, Inc. had issued and outstanding
123,626,118 shares of common stock, $.001 par value per share.

                                       1

<PAGE>

                                 TELEMONDE, INC.
                                 ---------------

                                      INDEX

<TABLE>
<CAPTION>
                                                                     Page Number

                                                                     -----------
<S>                                                                  <C>
                        PART I - FINANCIAL INFORMATION

           Independent Accountant's Report                                    3

Item 1.    Financial Statements

           Consolidated Financial Statements:

           Consolidated Balance Sheets -
               March 31, 2002 and December 31, 2001                           4

           Consolidated Statements of Income -
               Three months ended
               March 31, 2002 and 2001                                        5

           Consolidated Statements of Cash Flow -
               Three months ended
               March 31, 2002 and 2001                                        6

           Notes to Consolidated Financial Statements                         7

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                          9

           Forward-Looking statements                                         9
           Introduction                                                       9
           Strategy                                                           9
           Operating Risks                                                   10
           Results of Operations                                             10
           Liquidity and commitments                                         11

Item 3.    Quantitative and Qualitative Disclosures About Market Risk        13


                       PART II - OTHER INFORMATION

Item 1.    Legal Proceedings                                                 13

Item 5.    Other Information                                                 13

Item 6.    Exhibits and Reports on Form 8-K                                  13

Signatures                                                                   14

Exhibits index                                                               14
</TABLE>

                                       2

<PAGE>

INDEPENDENT ACCOUNTANT'S REPORT

To the Stockholders of
Telemonde Inc

We have reviewed the accompanying consolidated balance sheet of Telemonde, Inc.
and subsidiaries as of March 31, 2002, and the related consolidated statements
of income and cash flows for the three month periods ended March 31, 2002 and
2001. These financial statements are the responsibility of the Company's
management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States, the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with accounting principles generally accepted in the United States.

As discussed in note 1 to the financial statements, the Company has incurred
accumulated losses of $191.0 million and at March 31, 2002, total liabilities
exceeded total assets of $118.5 million. Management plans in this regard are
disclosed in note 2. There is substantial doubt about the ability of the Company
to continue as a going concern. Adjustments have been made to these consolidated
financial statements to reduce the carrying value of assets to estimated
recoverable amounts, and to reclassify liabilities, on the basis that the
Company may not be able to continue as a going concern.

We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet as of December 31,
2001 and the related consolidated statements of income, stockholders' equity and
cash flows for the year then ended, not presented herein, and in our report
dated April 11, 2002, we expressed an unqualified opinion with an explanatory
paragraph on those consolidated financial statements. We reported that there is
substantial doubt about the ability of the Company to continue as a going
concern. The financial statements include adjustments relating to the
recoverability of recorded assets, or the amounts of liabilities, that might be
necessary in the event that the Company cannot continue in existence. In our
opinion the information set forth in the accompanying consolidated balance sheet
as of December 31, 2001 is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.

                                                MOORE STEPHENS
                                                Chartered Accountants

St. Paul's House
London EC4P 4BN
May 10, 2002

                                       3

<PAGE>

PART I. - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                                 TELEMONDE, INC.

                           Consolidated Balance Sheets
                       (US Dollars expressed in thousands)

<TABLE>
<CAPTION>
                                                                  At 31 March          At 31 December
                                                                         2002                    2001
                                                                   (unaudited)            (unaudited)
<S>                                                               <C>                  <C>
Assets

Cash and cash Equivalents                                         $         70         $           26
Trade accounts receivable, net of allowance
   for doubtful debts of $50 in 2002 and $468 in 2001                      291                    861
Prepayments and other debtors                                              359                    801
                                                                  ------------         --------------
Total current assets                                                       720                  1,688
                                                                  ------------         --------------

Property, plant and equipment                                              144                    194
Investment in associated company                                            61                    180
                                                                  ------------         --------------

Total assets                                                      $        925         $        2,062
                                                                  ------------         --------------

Liabilities and stockholders' equity
Trade accounts payable                                                  72,886                 72,689
Other creditors and accrued expenses                                    28,617                 28,248
Deferred income                                                          5,198                  5,683
Short term notes                                                        12,749                 12,842
                                                                  ------------         --------------
Total current liabilities                                              119,450                119,462
                                                                  ------------         --------------

Stockholders' equity
Preferred stock                                                             50                     50
Common stock                                                               122                    122
Additional paid in capital                                              72,257                 72,257
Retained deficit                                                      (190,954)              (189,829)
                                                                  ------------         --------------
Total stockholders' deficit                                           (118,525)              (117,400)
                                                                  ------------         ---- ---------
Total liabilities and stockholders' equity                        $        925         $        2,062
                                                                  ============         ==============
</TABLE>

See accompanying notes and independent accountants' report

                                        4

<PAGE>

                                 TELEMONDE, INC.
                        Consolidated Statements of Income
                       (US Dollars expressed in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  Three months ended 31 March
                                                                  ---------------------------
                                                                        2002         2001
                                                                        ----         ----
<S>                                                              <C>              <C>
Revenues                                                         $        949     $  8,157

Cost of sales                                                             693        7,061
                                                                 ------------     --------
Gross margin                                                              256        1,096
                                                                 ------------     --------

Operating expenses
Selling, general and administrative expenses                            1,056        3,059
Amortization of goodwill                                                    -          879
Impairment of investments                                                 119            -
Bad and doubtful debts                                                    571          122
Contract terminations                                                    (928)           -
                                                                 ------------     --------
Operating expenses                                                        818        4,060
                                                                 ------------     --------
Operating loss                                                           (562)      (2,964)
                                                                 ------------     --------
Other income (expense)

Interest income                                                             -          112
Interest expense                                                         (871)        (502)
Foreign exchange gains                                                    308          507
                                                                 ------------     --------
Total other income (expense)                                             (563)         117
                                                                 ------------     --------
Loss for period from continuing
  operations                                                           (1,125)      (2,847)

Income from discontinued operations                                         -           30
                                                                 ------------     --------
Loss for the period                                                    (1,125)      (2,817)

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

Loss per share - basic and diluted

Continuing Operations                                            $      (0.01)    $  (0.03)

Income from discontinued operations                                         -         0.00
                                                                 ------------     --------
Loss for the period                                              $      (0.01)    $  (0.03)
                                                                 ============     ========
</TABLE>

See accompanying notes and independent accountants' report

                                       5

<PAGE>

                                 TELEMONDE, INC.
                      Consolidated Statements of Cash Flow
                       (US Dollars expressed in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                      Three months ended 31 March
                                                                                      ---------------------------
                                                                                             2002            2001
                                                                                             ----            ----
<S>                                                                                      <C>          <C>
Operating activities
       Loss                                                                              $ (1,125)    $    (2,817)

       Adjustments to reconcile loss to net cash provided by
       operating activities:
           Bad and doubtful debts                                                             571             122
           Amortization of goodwill                                                             -             879
           Depreciation                                                                        49             636
           Fees satisfied by issuance of stock                                                  -              70
           Fees satisfied by issuance of short term notes                                       -             935
           Unrealized gains on foreign currency transactions                                 (175)           (350)
           Decrease in investment in associated company                                       119               -
           (Increase) decrease in trade accounts receivable                                   520            (463)
           (Increase) decrease in prepayments and other debtors                                79             380
           Increase (decrease) in trade accounts payable                                      197            (826)
           Increase (decrease) in accrued expenses                                            369            1063
           Increase (decrease) in deferred income                                            (485)            125

                                                                                         --------     -----------
Net cash provided by (used in) operating activities                                           (38)           (246)
                                                                                         ---------    -----------

Investing activities
        Purchase of property, plant and equipment                                               -             (56)
                                                                                         --------     -----------
        Net cash used in investing activities                                                   -             (56)
                                                                                         --------     -----------

Financing activities

        Repayment of short term notes                                                           -            (196)
        Proceeds from short term notes                                                         82
                                                                                         --------     -----------
        Net cash provided by (used in) financing activities                                    82            (196)
                                                                                         --------     -----------

                                                                                         --------     -----------
Net cash provided by discontinued operations                                                    0             320
                                                                                         --------     -----------

Net increase (decrease) in cash and cash equivalents                                           44            (178)

Cash and cash equivalents beginning of period                                                  26           1,430
                                                                                         ========     ===========

Cash and cash equivalents end of period                                                  $     70     $     1,252
                                                                                         ========     ===========

Supplemental disclosure of cash flow information:

          Interest paid                                                                  $      -     $         5
</TABLE>

See accompanying notes and independent accountants' report

                                       6

<PAGE>

                                 TELEMONDE, INC.
                   Notes to Consolidated Financial Statements
                                 March 31, 2002

1. The financial statements have been prepared on the basis that it may not be
able to continue as a going concern. Adjustments have been made in these
Financial Statements to reduce the carrying value of assets to estimated
recoverable amounts, and to reclassify liabilities on this basis. As at March
31, 2002, we had a retained deficit of $191.0 million and an excess of
liabilities over assets of $118.5 million.

2. There is substantial doubt about our ability to continue as a going concern.
Management is addressing the ongoing solvency of the company including cutting
costs, seeking fresh financing and the focussing on the provision of high-margin
advisory services to the telecommunications sector. The Board has not taken the
decision to cease trading, as it believes that on balance, the stakeholders in
the business, including our creditors and shareholders, are likely to be better
served if we continue trading.

3. In 1998, Telemonde Bandwidth (Bermuda) Limited agreed to acquire 16 STM-1
transatlantic IRU telecommunications circuits for an agreed price of
approximately $64.8 million from Atlantic Crossing Limited (a Global Crossing
subsidiary). As of March 31, 2002, we owed Global Crossing $11.4 million for
circuits which we had been supplied with and related maintenance charges and had
a continuing obligation to draw-down 10 STM-1s for $42.9 million.

In December 2000, Global Crossing released us from our outstanding commitment to
purchase $42.9 million worth of transatlantic capacity. In addition, Global
Crossing agreed to reschedule our $11.9 million debt for services supplied but
not paid for. In exchange for this release, we have authorized and issued to
Global Crossing 5 million shares of Series A Convertible Preferred Stock, $.01
par value per share. These Preferred Shares are convertible into 23 million of
our Common Stock at an issue value of $4 million. We entered into a new
commitment to purchase $8 million of services from the Global Crossing portfolio
over the next five years at the market prices prevailing at the time of
purchase. We failed to make a payment due to Global Crossing under this
Standstill Agreement, causing the Agreement to terminate. Prior to this default,
we had already commenced renegotiations with Global Crossing. In November 2001,
a conditional Settlement Agreement was reached with Global Crossing. The
circuits with which we had been supplied were ceased and the contract with a
customer who had purchased an IRU from us was transferred to Global Crossing.
Global Crossing agreed that if we were able to pay or provide value in the
amount of (pound)1,050,000 by December 31, 2001, it would release us from all
our remaining liabilities. We had reached agreement in principle with a third
party to provide this value. For administrative reasons, this condition was not
fulfilled by December 31. Detailed negotiations concerning how the value would
be provided between the third party and Global Crossing were in progress when
Global Crossing sought Chapter 11 protection in the US Courts which meant that
Global Crossing was unable to conclude this transaction with the third party. We
anticipate that this transaction will be completed during Global Crossing's
administration or soon after it exits from it and Global Crossing will then
release us from our liabilities. Nevertheless, because of the uncertainty, we
have treated the standstill agreement as having terminated and written back the
original purchase commitment, including interest. No value has been attributed
to the issuance of the Preferred Shares. If the settlement is achieved, this
would reduce the total liabilities and total stockholder's liabilities by $62.3
million.

4. In December 1998 and March 1999 (through wholly-owned subsidiaries) we
entered into agreements for the purchase of five STM-1 transatlantic IRU
telecommunications circuits from WorldCom. We did not take delivery of four of
these circuits resulting in a default of $26.3 million. Since December 1999,
WorldCom has not taken proceedings in respect of the outstanding liability
pursuant to the terms of a standstill letter (as amended). Pursuant to the
standstill letter, in September 2000, WorldCom released us from $9 million of
our liability in exchange for 15,766,792 shares of our common stock. Our current
liability is $17.8 million. The standstill arrangements have expired. Management
intends to seek to renegotiate a standstill once the Global Crossing liability
has been settled. This remains management's intention.

                                       7

<PAGE>

5. We have a debt obligation under a Capacity Option Agreement with
Communications Collateral Limited (CCL) under which we have been unable to
complete an agreed repurchase of capacity. Under the terms of a Forbearance
Agreement entered into in February 2000, as at March 31, 2002 our outstanding
debt to CCL was $3.3 million. Interest is accruing on the outstanding amount at
the rate of 12.5% per annum. We have agreed to repay the outstanding balance at
a rate of $100,000 per month but in any event as quickly as practicable. Under a
Registration Rights Agreement dated September 1, 1999 and under the Forbearance
Agreement we have an obligation to issue CCL 8.2 million shares, which shares
relate to penalty obligations for failure to register CCL's shares for public
resale prior to February 15, 2000. There is also a penalty payment of $2 million
due for failure to issue these as free trading shares.

6. We have a debt obligation under a Capacity Purchase Agreement to Gemini. As
at March 31, 2002, the outstanding debt was $2.2 million. As at March 31, 2002,
we had paid Gemini $1.1 million, of which $0.6 million had reduced the original
principal sum. Interest is accruing at LIBOR plus 3%.

7. We have a debt liability to the Inland Revenue, the collector of payroll
taxes in the United Kingdom, in the amount of $2.3 million. Management is in
discussion with the Inland Revenue regarding the payment of this debt. The
Inland Revenue may take steps to recover this debt in the event that it is not
settled on mutually acceptable terms including petitioning to wind up one or
more of our UK subsidiaries.

8. Reference is made to the Notes to Consolidated Financial Statements contained
in our December 31, 2001 audited consolidated financial statements included in
our 2001 Annual Report on Form 10-K filed with the SEC on April 19, 2002. In the
opinion of management, the interim unaudited financial statements included
herein reflect all adjustments necessary, consisting of normal recurring
adjustments, for a fair presentation of such data on a basis consistent with
that of the audited data presented therein. The consolidated results of
operations for interim periods are not necessarily indicative of the results to
be expected for a full year.

9. At May 1, 2002, we had issued and outstanding 123,626,118 shares of common
stock and 5,000,000 shares of preferred stock designated as Series A Convertible
Preferred Stock ("Series A Preferred Stock"). This has not changed since
December 31, 2001. Each share of Series A Preferred Stock may be converted into
approximately 4.6 shares of our common stock and carries voting rights equal to
the voting rights and powers of the common stock. Holders of Series A Preferred
Stock are entitled to the number of votes equal to the number of shares of
common stock for which it is convertible. Additionally, certain corporate
actions require the affirmative vote of holders of at least 66 2/3% of the
Series A Preferred Stock. Holders of Preferred Stock are entitled to participate
in dividends and distributions and receive preference to any distributions in
the event of liquidation, dissolution or winding up.

10. The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standard ("SFAS") No. 128, "Basic and Diluted EPS." The
calculation of basic earnings per share in accordance with SFAS No. 128 is as
follows:

                                                   Three months ended March 31
                                                      2002            2001

Loss attributable to common stockholders         $ (1,125,000)  $ (2,817,000)

Average common shares issued and outstanding      123,626,118    109,454,769

Basic and diluted loss per share                 $      (0.01)  $      (0.03)


No adjustment to earnings per share arises on the issue of warrants or
conversion rights as the effect is antidilutive.

11. On March 29, 2001, we entered into an agreement with Home Run Limited to
extend the repayment period of the (pound)5.0 million ($7.4 million) facility
advanced by Home Run. The loan bears interest at LIBOR plus 2 per cent and was
repayable on April 26, 2002. Management is in discussion with Home Run Limited
regarding

                                       8

<PAGE>

the extension of this facility. The loan is convertible into shares of our
common stock at the option of Home Run, based on a conversion price of $0.16 per
share.

12. In December 2001, we sold 26% of our interest in Desert Telecommunications
Services LLC. Subsequently, we have reached a tentative agreement to sell the
remaining 49% interest. We have reduced the value of our investment therein to
the estimated net realizable value on sale. The operations of Desert
Telecommunications Services LLC have been reported separately as discontinued
operations in the accompanying financial statements.

13. In April 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of Statement No. 13, and Technical Corrections."
SFAS No. 145, rescinds SFAS No. 4, "Reporting Gains and Losses from
Extinguishment of Debt", and also rescinds an amendment of that Statement, SFAS
No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements".
This Statement also rescinds SFAS No. 44, "Accounting for Intangible Assets of
Motor Carriers", and amends SFAS No. 13, "Accounting for Leases", to eliminate
an inconsistency between the required accounting for sale-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. We do not believe the
adoption of SFAS 145 will have a material impact on the results of our
operations.

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes "forward-looking statements" within
the meaning of the federal securities laws. Forward-looking statements are any
statements other than those relating to historical information or current
condition, including without limitation, statements regarding future margin
performance, customer retention capabilities, future revenues, strategy, and
pricing of services. Forward-looking statements can often be identified by the
use of forward-looking words such as "believes," "estimates," "expects,"
"intends," "may," "will," should," or "anticipates". In addition, from time to
time, we or our representatives have made or may make forward-looking
statements, orally or in writing. Forward-looking statements also may be
included in various filings that we have made or may make with the Securities
and Exchange Commission, in press releases or in oral statements made by or with
the approval of one of our authorized executive officers. Although we believe
that our expectations are based on reasonable assumptions, we can give no
assurance that our expectations will be achieved. The important factors that
could cause actual results to differ materially from those in the
forward-looking statements herein include certain risks identified in this
Quarterly Report and other risks referenced from time to time in our filings
with the SEC, including our 2000 Annual Report on Form 10-K filed with the SEC
on April 19, 2002.

You should read the following discussion and analysis together with our
Financial Statements, including the notes, appearing elsewhere in this Quarterly
Report and in our Annual Report on Form 10-K.

Introduction

We are an international communications business that offers telecommunications
and related services.

Our principal areas of business are switched voice services--both wholesale
switching of international traffic and international route management-and
telecommunications advisory services. We continue to supply bandwidth under
existing contracts. Our customers include telecommunications carriers, telecoms
hotel developers and investors in telecommunication companies.

STRATEGY

Our strategy is to work with owners of and investors in telecommunication
companies particularly telecoms hotel developers and operators to assist them in
improving their efficiency, profitability and market positioning.

                                       9

<PAGE>

Operating Risks

During our limited operating history we have experienced operating losses,
negative cash flow from operations and net losses.

We were organized in March 1998. We have incurred operating losses and negative
cash flow since our inception. From the date of inception to March 31, 2002 we
have incurred losses of $118.5 million. We have incurred a deficit on total
stockholders' equity of $191.0 million for the period from March 10, 1998
through March 31, 2002. We may continue to incur losses and negative cash flow
in the foreseeable future.

The continuation and size of our operating losses and negative cash flows in the
future will be affected by a variety of factors, including:

  . The ability to put in place working capital facilities and to increase our
    capital base.

  . The rate at which we add new customers and the prices those customers pay
    for our services.

  . The ability to predict demand for our services.

  . The ability of our local relationships in emerging markets to support our
    customers and meet our obligations.

  . General economic, financial, competitive, legislative, regulatory,
    licensing, and other factors that are beyond our control.

We have financed, and expect to continue to finance, our net losses, debt
service, capital expenditures and other cash needs through flexible supplier
payments, the issuance of debt primarily by way of short-term financing and the
proceeds from sales of shares of common stock.

We have a substantial level of indebtedness.

We have incurred a high level of debt. As of March 31, 2002, we had a combined
total liability of $119.5 million, including: $17.3 million due to WorldCom;
$50.3 million due to Global Crossing and a loan from Home Run Limited of $7.1
million convertible into shares of Common Stock at their option. We are also
indebted to Communications Collateral Limited in the sum of $3.3 million, Gemini
in the sum of $2.2 million and the Inland Revenue in the sum of $2.3 million.

The amount of our debt could have important consequences for our future,
including, among other things:

  . Cash from operations may be insufficient to meet the principal and interest
    on our debts as they become due.

  . Payments of principal and interest on borrowings may leave us with
    insufficient cash resources for our operations.

  . Restrictive debt covenants may impair our ability to obtain additional
    financing.

We have been unable to generate sufficient cash flow to meet certain of our debt
service requirements, and have triggered events of default on those obligations.
Failure to generate sufficient sums to maintain debt repayments may impair our
ability to develop or continue our current business and may cause us to cease
trading. telemonde.net has been declared insolvent by a Swiss Court because of a
failure to provide it with further funds.

Results of Operations

For the three months ended March 31, 2002 compared with the three months ended
March 31, 2001.

Revenues for 2002 were $0.9 million compared with $8.2 million for 2001.
Bandwidth revenues from existing contracts were $0.6 million compared with $3.6
million for 2001. Voice services revenues fell to $0.3 million from $1.0
million. There were no advisory services revenues compared with $3.5 million in
2001.

                                       10

<PAGE>

Cost of sales for 2002 fell to $0.7 million compared with $7.1 million for 2001
largely as a result of the reduced revenue levels on bandwidth and voice
services.

Selling, general and administrative expenses were $1.1 million in 2002 compared
with $3.1 million in 2001. The decrease of $2.0 million consisted mainly of $1.1
million arising from lower staffing costs and $0.5 million lower professional
fees.

There was no charge for amortization of goodwill in 2002 compared with $0.9
million in 2001.

There was an impairment adjustment to investments of $0.1 million in 2002 with
no comparative in 2001.

There was an impairment adjustment to a prepayment in 2002 which resulted in an
increase in the bad and doubtful debt charge to $0.6 million compared with $0.1
million in 2001.

Gains arising from contract negotiations with customers were $0.9 million in
2002 with no comparative in 2001.

There was no interest income in 2002 compared with $0.1 million in 2001.

Interest expense increased to $0.9 million in 2002 compared with $0.5 million in
2001 due to accrual of interest on a supplier debt.

Foreign exchange gains were $0.3 million in 2002 compared with $0.5 million in
2001.

The loss for the three months ended March 31, 2002 was $1.1 million compared
with $2.8 million in 2001.

Liquidity and commitments

Our liquidity requirements arise from:

  . Net cash used in operating activities.

  . Interest and principal payments on outstanding indebtedness.

We have satisfied our liquidity requirements to date through operating cash
flows, short-term bridge financing, shareholder loans and equity subscriptions.
Our illiquidity remains a key challenge facing the business. The Board believes
that it is in the best interests of all stakeholders for us to continue to trade
in order to be able to repay debt. The Board has been meeting regularly to
review this position. We are in discussion with most creditors in an effort to
reduce the level of our indebtedness. Without the continued forbearance of its
creditors, one or more of the operating subsidiaries may be declared insolvent,
which ultimately may affect us. We believe that by being able to continue
trading, there is a greater likelihood of creditors receiving some payment. We
are actively working to ensure that no new debts are incurred.

Net cash used in operating activities was $38 thousand in the three months ended
March 31, 2002, compared with $246 thousand used in the three months ended
March, 31, 2001.

No cash was used in investing activities in 2002 compared with $56 thousand in
2001.

Net cash provided by financing activities was $82 thousand in 2002 compared with
$196 thousand used in 2001.

Since inception through March 31, 2002, we have had negative cash flow from
operating activities of $20.2 million.

Our independent auditors, Moore Stephens, have reported that there is
substantial doubt about our ability to continue as a going concern. Adjustments
have been made in the consolidated financial statements to reduce the carrying
value of assets to estimated recoverable amounts, and to reclassify liabilities,
on the basis that we may not be able to continue as a going concern.

                                       11

<PAGE>

The level of indebtedness remains at $119.5 million.

As a consequence of the significant fall of the market prices for bandwidth and
its impact on our operations and financial results in 2000 and 2001 and
continuing in 2002 and the failure to generate anticipated revenue from other
sources, we have been unable to generate sufficient cash flow to meet certain of
our debt service requirements. We are continuing to negotiate relief from our
creditors.

In 1998, Telemonde Bandwidth (Bermuda) Limited agreed to acquire 16 STM-1
transatlantic IRU telecommunications circuits for an agreed price of
approximately $64.8 million from Atlantic Crossing Limited (a Global Crossing
subsidiary). As of March 31, 2002, we owed Global Crossing $11.4 million for
circuits which we had been supplied with and related maintenance charges and had
a continuing obligation to draw-down 10 STM-1s for $42.9 million.

In December 2000, Global Crossing released us from our outstanding commitment to
purchase $42.9 million worth of transatlantic capacity. In addition, Global
Crossing agreed to reschedule our $11.9 million debt for services supplied but
not paid for. In exchange for this release, we have authorized and issued to
Global Crossing 5 million shares of Series A Convertible Preferred Stock, $.01
par value per share. These Preferred Shares are convertible into 23 million of
our Common Stock at an issue value of $4 million. We entered into a new
commitment to purchase $8 million of services from the Global Crossing portfolio
over the next five years at the market prices prevailing at the time of
purchase. We failed to make a payment due to Global Crossing under this
Standstill Agreement, causing the Agreement to terminate. Prior to this default,
we had already commenced renegotiations with Global Crossing. In November 2001,
a conditional Settlement Agreement was reached with Global Crossing. The
circuits with which we had been supplied were ceased and the contract with a
customer who had purchased an IRU from us was transferred to Global Crossing.
Global Crossing agreed that if we were able to pay or provide value in the
amount of (pound)1,050,000 by December 31, 2001, it would release us from all
our remaining liabilities. We had reached agreement in principle with a third
party to provide this value. For administrative reasons, this condition was not
fulfilled by December 31. Detailed negotiations concerning how the value would
be provided between the third party and Global Crossing were in progress when
Global Crossing sought Chapter 11 protection in the US Courts which meant that
Global Crossing was unable to conclude this transaction with the third party. We
anticipate that this transaction will be completed during Global Crossing's
administration or soon after it exits from it and Global Crossing will then
release us from our liabilities. Nevertheless, because of the uncertainty, we
have treated the standstill agreement as having terminated and written back the
original purchase commitment, including interest. No value has been attributed
to the issuance of the Preferred Shares. If the settlement is achieved, this
would reduce the total liabilities and total stockholder's liabilities by $62.3
million.

In December 1998 and March 1999 (through wholly-owned subsidiaries) we entered
into agreements for the purchase of five STM-1 transatlantic IRU
telecommunications circuits from WorldCom. We did not activate four of these
circuits resulting in a default of $26.3 million.

Since December 1999, WorldCom has not taken proceedings in respect of the
outstanding liability pursuant to the terms of a standstill letter (as amended).
Pursuant to the standstill letter, in September 2000, WorldCom released us from
$9 million of our liability in exchange for 15,766,792 shares of our common
stock. Our current liability is $17.8 million. The standstill arrangements have
expired. Management intends to seek to renegotiate a standstill once the Global
Crossing liability has been settled.

We have a debt obligation under a Capacity Option Agreement with Communications
Collateral Limited (CCL) under which we have been unable to complete an agreed
repurchase of capacity. Under the terms of a Forbearance Agreement entered into
in February 2000, as at March 31, 2002 our outstanding debt to CCL was $2.9
million. Interest is accruing on the outstanding amount at the rate of 12.5% per
annum. Under a Registration Rights Agreement dated September 1, 1999 and under
the Forbearance Agreement we have an obligation to issue CCL 8.2 million shares
which shares relate to penalty obligations for failure to register CCL's shares
for public resale prior to February 15, 2000. There is also a penalty payment
due of $2 million due for failure to issue these as free trading shares although
we are in discussions with CCL regarding the waiving of this penalty.

                                       12

<PAGE>

We have a debt obligation under a Capacity Purchase Agreement to Gemini. As at
March 31, 2002, the outstanding debt was $2.2 million. As at March 31, 2002, we
had paid Gemini $1.1 million, of which $0.6 million had reduced the original
principal sum. Interest is accruing at LIBOR plus 3%. Gemini have now ceased the
circuits supplied and taken them back.

We have a debt liability to the Inland Revenue, the collector of payroll taxes
in the United Kingdom in the amount of $2.3 million. Management is in discussion
with the Inland Revenue regarding this debt. The Inland Revenue may take steps
to recover this debt in the event that it is not settled or a settlement
reached, including steps to wind up one or more of our UK subsidiaries which
could materially affect our ability to continue to trade.

We entered into a convertible loan facility with Home Run Limited on April 27,
2000. Home Run provided us with a facility of $7.1 million. This sum was
repayable on April 27, 2001, however it may be converted at the option of Home
Run into shares of Common Stock on the basis of one share of Common Stock for
every $0.16 of loan value outstanding. We are discussing with Home Run the
extension of this facility and they have indicated that they are willing to
agree to such an extension.

At March 31, 2002 we had no material capital commitments.

We currently do not have the capital base or working capital facilities to meet
our projected commitments. We are currently seeking short-term debt finance.

The Board of Telemonde is concerned about our illiquidity and general financial
position. The Board is meeting regularly to keep the position under review. The
Board has not taken the decision to cease trading, as it believes that on
balance the stakeholders in the business, including our creditors and
shareholders, are likely to be better served if we continue trading.

There is substantial doubt about our ability to continue as a going concern.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary market risk exposures relate to changes in foreign currency rates.
We are exposed to the risk of fluctuations in foreign currency exchange rates
due to the international nature and scope of our operations. In the future, we
expect to continue to derive a significant portion of our net revenue and incur
a significant portion of our operating costs outside the United States, and
changes in foreign currency exchange rates may have a significant effect on our
results of operations. We historically have not engaged in hedging transactions
to mitigate foreign exchange risk.

Our main exchange risk currently arises from fluctuations between the US dollar
and pounds sterling because whilst most of our fees are earned in US dollars,
many of our sales, general and administrative expenses are incurred in London in
pounds sterling.

                          PART II. - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

From time to time, Telemonde is party to litigation or other legal proceedings
that each company considers to be a part of the ordinary course of its business.

Telemonde is not involved in any legal proceedings nor is it party to any
pending or threatening claims that could reasonably be expected to have a
material adverse effect on its financial condition or results of operations.

ITEM 5. OTHER INFORMATION.

On April 26, 2002 telemonde.net was declared insolvent by a Swiss Court because
of a failure by Telemonde Inc to provide it with any additional working capital.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits required by Item 601 of Regulation S-K are incorporated herein by
     reference and are listed on the attached Exhibit Index.

                                       13

<PAGE>

                                   SIGNATURES
                                 TELEMONDE, INC.

     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, thereto duly authorized.

                                 TELEMONDE, INC.


Date:  May 15, 2002                /s/ ADAM N. BISHOP
     ------------------            -------------------------------
                                   Adam N. Bishop, President and
                                   Chief Executive Officer


                                  EXHIBIT INDEX

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

 2.1*           Stock Purchase Agreement among Pac-Rim Consulting, Inc., Thomas
                Gelfand, Telemonde Investments Limited, and Rhone Financial
                Indemnity Re Limited, dated as of May 14, 1999.

 2.2*           Agreement Relating to the sale and Purchase of Shares in the
                Capital of EquiTel Communications Limited among (1) Telcoworld
                Limited and others, (2) Telemonde, Inc., and (3) Harry Pomeroy
                and Larry Trachtenberg, dated November 8, 1999.

 2.3*           Agreement and Plan of Merger of Telemonde, Inc., a Nevada
                corporation, into Telemonde, Inc., a Delaware corporation, dated
                October 29, 1999.

 2.4*           Share Purchase Agreement for the Sale and Purchase of all the
                issued share capital of TGA (UK) Limited, between the
                shareholders of TGA (UK) and Telemonde, Inc., dated August 9,
                1999.

 3.1(a)*        Certificate of Incorporation of Telemonde, Inc., filed June 29,
                1999.

 3.1(b)*        Certificate of Merger between Telemonde, Inc., a Nevada
                corporation, and Telemonde, Inc., a Delaware corporation.

 3.1(c)++       Certificate of Designation for Series A Convertible Preferred
                Stock, $.01 par value.

 3.2*           By-Laws of Telemonde, Inc.

 4.1*           Form of Common Stock Certificate.

 4.2*           Registration Rights Agreement between Telemonde, Inc. and
                Communications Collateral Limited, dated September 1, 1999.

 4.3++          Amended and Restated Registration Rights Agreement, dated as of
                December 14, 2000, among Telemonde, Inc., MCI WorldCom Global
                Networks U.S. Inc., MCI WorldCom Global Networks Limited, and
                Global Crossing Limited.

 10.1*          Warrant from Telemonde, Inc. to Communications Collateral
                Limited, dated September 1, 1999.

 10.2*          Consulting Agreement between Telemonde, Inc. and Gottfried von
                Bismarck, dated November 2, 1999 and effective as of July 1,
                1999.

 10.3*          Form of Employment Agreement between Executive Officers and
                Telemonde.

 10.3(a)*       Schedule of Employees covered by Form of Employment Agreement.

                                       14

<PAGE>

 10.4*          Capacity Sales Agreement between Gemini Submarine Cable System
                Limited and Telemonde International Bandwidth (Bermuda) Limited,
                April 3, 1998.

 10.4(a)*       Promissory Note from Telemonde, Inc. to Gemini Submarine Cable
                System Limited, dated August 27, 1999 for $1,300,000.

 10.4(b)*       Promissory Note from Telemonde, Inc. to Gemini Submarine Cable
                System Limited, dated August 27, 1999 for $1,400,000.

 10.4(c)+       Letter Agreement, dated October 27, 2000, from Gemini Submarine
                Cable System Limited to Telemonde International
                Bandwidth(Bermuda) Limited.

 10.5*          Capacity Purchase Agreement between Atlantic Crossing Ltd. and
                Telemonde Bandwidth (Bermuda) Limited, dated June 10, 1998.

 10.6*          Transmission Capacity Agreement among MCI WorldCom Global
                Networks U.S., Inc., and MFS Cableco (Bermuda) Limited, and,
                EquiTel Bandwidth Limited, dated December 1998.

 10.7*          Transmission Capacity Agreement among MCI WorldCom Global
                Networks U.S., Inc., and MCI Worldcom Global Networks Limited,
                and Telemonde International Bandwidth Limited, dated March 31,
                1999.

 10.7(a)**      MCI WorldCom Global Networks U.S., Inc. Standstill Letter to and
                accepted by Telemonde, Inc., Telemonde International Bandwidth
                Limited, Telemonde Networks Limited, Kevin Maxwell and Adam
                Bishop, dated December 31, 1999.

 10.7(b)**      MCI WorldCom Global Networks U.S., Inc. Capacity Swap Letter to
                and accepted by Telemonde International Bandwidth Limited, dated
                December 31, 1999.

 10.7(c)****    Amendment No. 1 to MCI WorldCom Global Networks U.S., Inc.
                Standstill Letter, dated May 11, 2000, to and accepted by
                Telemonde, Inc., Telemonde Networks Limited and Telemonde
                International Bandwidth Limited.

 10.7(d)****    Pledge Agreement, dated May 2, 2000, by and between Fastfirm
                Limited and MCI WorldCom Global Networks U.S., Inc. on behalf of
                itself and MCI WorldCom Global Network Limited.

 10.7(e)*****   Debt Conversion Agreement, dated July 25, 2000, by and among
                Telemonde, Inc., MCI WorldCom Global Networks U.S., Inc. and MCI
                WorldCom Global Networks Limited.

 10.7(f)*****   Amendment No. 2 to MCI WorldCom Global Networks U.S., Inc.
                Standstill Letter, dated July 25, 2000, to and accepted by
                Telemonde, Inc., Telemonde Networks Limited, Telemonde
                International Bandwidth Limited.

 10.7(g)*****   Amendment No. 3 to MCI WorldCom Global Networks US., Inc.
                Standstill Letter, dated September 19, 2000, to and accepted by
                Telemonde, Inc., Telemonde Networks Limited, Telemonde
                International Bandwidth Limited.

 10.7(h)+       Amendment No. 4 to MCI WorldCom Global Networks U.S., Inc.
                Standstill Letter, dated November 13, 2000, to and accepted by
                Telemonde, Inc., Telemonde Networks Limited and Telemonde
                International Bandwidth Limited.

 10.8*          Transmission Capacity Agreement between Telemonde International
                Bandwidth Limited and Communications Collateral Limited and
                Capacity Option Agreement between Telemonde Investments Limited
                and Communications Collateral Limited, both dated April 15,
                1999.

 10.9*          Composite Guarantee and Debenture, among (1) Telemonde
                Investments Limited, (2) Telemonde International Bandwidth
                (Bermuda) Limited, Telemonde Bandwidth (Bermuda) Limited,
                Telemonde International Bandwidth Limited, and (3)
                Communications Collateral Limited, dated April 5, 1999.

                                       15

<PAGE>

 10.10*         Loan Facility Agreement between Telemonde Investments Limited
                and Communications Collateral Limited, dated April 15, 1999.

 10.11**        Forbearance Agreement, dated 12 January 2000, entered into by
                and among Communications Collateral Limited, Telemonde
                Investments Limited, Telemonde International Bandwidth Limited,
                Telemonde, Inc. and Kevin Maxwell.

 10.12**        Advisor Agreement between Sand Brothers & Co., Ltd. and
                Telemonde, Inc., dated October 27, 1999, and Amendment No. 1 to
                Advisor Agreement, dated November 10, 1999.

 10.13***       Executive Services Agreement by and between Telemonde, Inc. and
                Paul E. Donofrio, dated February 22, 2000.

 10.14+         Termination of Executive Services Agreement by and between
                Telemonde, Inc. and Paul E. Donofrio, dated as of October 31,
                2000.

 10.15++        Standstill Agreement, dated November 30, 2000, by and among
                Telemonde, Inc., Telemonde Bandwidth (Bermuda) Ltd., Global
                Crossing USA Inc., GT U.K. Ltd, GT Landing Corp. and Atlantic
                Crossing Ltd.

 10.16++        Capacity Commitment Agreement, dated December 14, 2000, by and
                between Global Crossing Bandwidth Inc. and Telemonde Inc.

 *              Previously filed as an exhibit to the Registration Statement on
                Form 10, as filed with the SEC on November 15, 1999.

 **             Previously filed as an exhibit to the Registration Statement on
                Form 10/A-1, as filed with the SEC on March 3, 2000.

 ***            Previously filed as an exhibit to the Annual Report for the year
                ended December 31, 1999 on Form 10-K, as filed with the SEC on
                March 30, 2000.

 ****           Previously filed as an exhibit to the Company's Quarterly Report
                on Form 10-Q for the fiscal quarter ended June 30, as filed with
                the SEC on August 14, 2000.

 *****          Previously filed as an exhibit to the Company's Current Report
                on Form 8-K dated September 19, 2000, as filed with the SEC on
                September 21, 2000.

 +              Previously filed as an exhibit to the Company's Quarterly Report
                on Form 10-Q for the fiscal quarter ended September 29, 2000 as
                filed with the SEC on November 14, 2000

 ++             Previously filed as an exhibit to the Company's Current Report
                on Form 8-K dated December 29, 2000, as filed with the SEC on
                December 29, 2000.

                                       16