SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 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, 1998

                                       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 333-50049

                               DTI Holdings, Inc.
             (Exact name of registrant as specified in its charter)

               Missouri                               43-1674259
    (State or other jurisdiction of     (I.R.S. Employer Identification Number)
    incorporation or organization)

          11111 Dorsett Road
          St. Louis, Missouri                            63043
(Address of principal executive office)               (Zip Code)

Registrant's telephone number, including area code:  (314) 253-6600

Check here whether the issuer (1) has filed all reports  required to be filed by
Sections 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  [_]                     No  [X]

As of May 14, 1998, the following shares of the  Registrant's  common stock were
issued and outstanding:

Common Stock ($.01 par value)                                        30,000,000


<PAGE>


                               DTI HOLDINGS, INC.

                                    FORM 10-Q

                                 MARCH 31, 1998

                                TABLE OF CONTENTS

                                                                            Page

PART I     FINANCIAL INFORMATION

Item 1.    Financial Statements

     Consolidated Balance Sheets at March 31, 1998 (Unaudited) and June 30, 1997
                                                                               1

     Consolidated  Statements of Operations  for the Three and Nine Months Ended
          March 31, 1998 and 1997 (Unaudited)                                  2

     Consolidated  Statement  of  Stockholders'  Equity  (Deficit)  for the Nine
          Months Ended March 31, 1998 (Unaudited)                              3

     Consolidated  Statements  of Cash Flows for the Nine Months Ended March 31,
          1998 and 1997 (Unaudited)                                            4

     Notes to Unaudited Consolidated Financial Statements                    5-7

Item 2.    Management's Discussion and Analysis of Financial Condition and
             Results of Operations                                          8-12

Item 3:    Quantitative and Qualitative Disclosures About Market Risk         12


PART II    OTHER INFORMATION

Item 1.    Legal Proceedings                                                  13

Item 2.    Changes in Securities and Use of Proceeds                          13

Item 3.    Defaults Upon Senior Securities                                    14

Item 4.    Submission of Matters to a Vote of Security Holders                14

Item 5.    Other Information                                                  14

Item 6.    Exhibits and Reports on Form 8-K                                   14



<PAGE>


                         PART I - FINANCIAL INFORMATION
                 ITEM 1. FINANCIAL STATEMENTSDTI HOLDINGS, INC.
DTI HOLDINGS, INC.
<TABLE>

CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 (UNAUDITED) AND JUNE 30, 1997
----------------------------------------------------------------------------------------------------
<CAPTION>
                                                                   March 31, 1998          June 30,
ASSETS                                                             (Unaudited)                1997

<S>                                                                <C>                 <C>         
CURRENT ASSETS:
  Cash and cash equivalents                                        $263,231,384        $  4,366,906
  Accounts receivable, less allowance for doubtful accounts
    of $167,000 and $48,000                                             708,477             159,268
  Prepaid and other current assets                                       34,767              23,764
                                                                         ------              ------
          Total current assets                                      263,974,628           4,549,938
                                                                  
NETWORK AND EQUIPMENT - At cost less accumulated
  depreciation of $2,620,640 and $1,235,640                          60,824,950          34,000,634

DEFERRED FINANCING COSTS - Net of amortization of $106,110           10,390,287                 -

DEFERRED TAX ASSET                                                    3,234,331           1,214,331

OTHER ASSETS                                                             43,665              84,233
                                                                         ------              ------

TOTAL                                                              $338,467,861        $ 39,849,136
                                                                   ============        ============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
  Accounts payable                                                 $  4,555,642        $  5,086,830
  Deferred revenues - current portion                                   366,000             259,680
  Taxes payable (other than income taxes)                             2,115,358             923,104
                                                                      ---------             -------
          Total current liabilities                                   7,037,000           6,269,614

DEFERRED REVENUES                                                    14,037,528           9,420,224

SENIOR DISCOUNT NOTES - Net                                         268,856,985                 -
                                                                    -----------         -----------          
          Total liabilities                                         289,931,513          15,689,838
                                                                    -----------          ----------

 COMMITMENTS AND CONTINGENCIES                                                -                 -

REDEEMABLE CONVERTIBLE SERIES A PREFERRED
  STOCK - Preferred stock, $.01 par value, 30,000 shares
  authorized, -0- and 18,500 shares issued and outstanding                    -          28,889,165

STOCKHOLDERS'EQUITY (DEFICIT):
  Preferred stock, $.01 par value, 20,000 shares authorized,
    no shares issued and outstanding                                          -                 -
  Convertible series A preferred stock, $.01 par value,
    30,000 shares authorized, 30,000 and -0- issued and
     outstanding                                                            300                 -


                                      -1-
<PAGE>

  Common stock, $.01 par value, 100,000,000 shares authorized,
    30,000,000 shares issued and outstanding                            300,000             300,000
  Additional paid-in capital                                         44,013,063                 -
  Common stock warrants                                              10,421,336             450,000
  Accumulated deficit                                                (6,198,351)         (5,479,867)
                                                                     ----------          ---------- 
          Total stockholders'equity (deficit)                       48,536,348          (4,729,867)
                                                                     ----------          ---------- 

TOTAL                                                              $338,467,861        $ 39,849,136
                                                                   ============        ============
</TABLE>

See notes to unaudited consolidated financial statements.
































                                      -2-
<PAGE>

DTI HOLDINGS, INC.
<TABLE>

CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------


<CAPTION>
                                           Three Months Ended                     Nine Months Ended
                                                 March 31,                           March 31,
                                            1998             1997                  1998          1997
                                            ----             ----                  ----          ----

<S>                                   <C>                <C>                 <C>             <C>
TELECOMMUNICATION
  SERVICES REVENUES:
    Carrier services                     $963,729         $236,397            $1,707,914      $488,931
     End user services                    140,314          130,184               414,660       380,914
                                          -------          -------               -------       -------

           Total revenues               1,104,043          366,581             2,122,574       869,845
                                        ---------          -------             ---------       -------

OPERATING EXPENSES:
  Telecommunication services              460,206          268,513             1,024,578       563,791
  Selling, general and
   administrative                         994,689          378,193             2,437,825       845,684
  Depreciation and amortization           555,050          207,989             1,385,750       521,049
                                          -------          -------             ---------       -------

           Total operating expenses     2,009,945          854,695             4,848,153     1,930,524
                                        ---------          -------             ---------     ---------

           Loss from operations          (905,902)        (488,114)           (2,725,579)   (1,060,679)

OTHER INCOME (EXPENSES):
  Interest income                       1,438,751           25,226             1,558,898        58,403
  Interest expense                     (3,547,605)         (56,208)           (3,697,605)     (152,937)
  Loan commitment fees                   (150,000)             -                     -        (784,500)
  Equity in earnings of joint venture         -             16,796                   -          37,436
                                          -------           ------               ------         ------

           Loss before provision for
             income tax benefit        (3,164,756)        (502,300)           (4,864,286)   (1,902,277)

INCOME TAX BENEFIT                      1,340,000          124,000             2,020,000     1,042,000
                                        ---------          -------             ---------     ---------

NET LOSS                              ($1,824,756)       ($378,300)          ($2,844,286)    ($860,277)
                                      ===========        =========           ===========     ========= 
</TABLE>


See notes to unaudited consolidated financial statements.


                                      -3-
<PAGE>

<TABLE>

DTI HOLDINGS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
NINE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------

DTI HOLDINGS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
NINE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)



<CAPTION>

                                    Convertible                 Additional     Common                      Total
                                    Preferred    Common          Paid-In        Stock     Accumulated    Stockholders'
                                    Stock        Stock           Capital       Warrants     Deficit    Equity (Deficit)

<S>           <C>                     <C>        <C>        <C>             <C>          <C>            <C>         
BALANCE, JULY 1, 1997                 $   -      $300,000   $       -          $450,000  ($5,479,867)   ($4,729,867)

Accretion of redeemable
  convertible preferred stock
  to redemption price                     -          -              -               -     (4,985,442)    (4,985,442)

Reclassification of redeemable
  convertible series A preferred
  stock to convertible series A
  preferred stock and reversal of
  related accretion                      300         -        44,283,033            -      6,841,274     51,124,607

Reclassification to additional
  paid-in capital of charge to
  accumulated deficit to effect the
  1,000 for 1 stock split                 -          -          (269,970)           -        269,970            -

Allocation of proceeds from
  senior discount notes offering
  to the related warrants                 -          -              -         9,971,336          -        9,971,336

Net loss                                  -          -              -               -     (2,844,286)    (2,844,286)
                                        ------   --------     ---------      ---------    ---------     ---------- 
                                   
BALANCE, MARCH 31, 1998               $   300    $300,000    $44,013,063    $10,421,336  ($6,198,351)   $48,536,348
                                         ====    ========    ===========    ===========  ===========    ===========
</TABLE>


See notes to unaudited consolidated financial statements.

                                      -4-
<PAGE>



<TABLE>

DTI HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
--------------------------------------------------------------------------------------
<CAPTION>


                                                                                 1998               1997
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                      <C>                 <C>       
  Net loss                                                                ($2,844,286)         ($860,277)
  Adjustments to reconcile net loss to cash provided 
   by operating activities:
      Depreciation and amortization                                         1,491,860            521,049
      Accretion of discount on senior discount notes                        3,604,801                -
      Deferred income taxes                                                (2,020,000)        (1,042,000)
      Loan commitment fees related to common stock warrants                       -              450,000
      Changes in assets and liabilities:                                               
        Accounts receivable                                                  (549,209)        (1,491,397)
        Prepaid and other current assets                                      (11,003)           543,300
        Other assets                                                           40,568            (36,945)
        Accounts payable                                                     (531,188)         1,872,548
        Other liabilities                                                                        606,178
        Taxes payable (other than income taxes)                             1,192,254            543,000
        Deferred revenues                                                   4,723,624          3,589,343
                                                                            ---------          ---------

          Net cash flows provided by operating activities                   5,097,421          4,694,799
                                                                            ---------          ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Increase in network and equipment                                       (28,210,066)       (10,518,316)
  Change in restricted cash                                                       -              459,522
                                                                              -------            -------

           Net cash used in investing activities                          (28,210,066)       (10,058,794)
                                                                          -----------        ----------- 

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of senior discount notes
    and attached warrants                                                 275,223,520           -
  Proceeds from issuance of redeemable convertible
    preferred stock including cash from
    contributed joint venture of $-0- and $2,253,045                       17,250,000          5,464,313
  Repurchase of common stock warrants granted to a customer                 -                 (2,700,000)
  Deferred financing costs                                                (10,496,397)          -
  Proceeds from notes payable                                               -                  8,000,000
  Payment of notes payable                                                  -                   (450,000)
  Proceeds from credit facility                                             3,000,000           -
  Principal payments on credit facility                                    (3,000,000)          -
                                                                           ----------         ----------

           Net cash provided by financing activities                      281,977,123         10,314,313
                                                                          -----------         ----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                 258,864,478          4,950,318

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                              4,366,906            817,391
                                                                            ---------            -------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                 $263,231,384         $5,767,709
                                                                         ============         ==========

                                      -5-
<PAGE>

SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT NON-CASH ACTIVITIES:
  Consideration for issuance of redeemable
    convertible preferred stock:
    Outstanding principal of KLT Loan                              $              -          $14,000,000
    Accrued interest payable on KLT Loan                                          -              794,062
    Assets of contributed joint venture                                           -            1,816,043
    Liabilities assumed of contributed joint venture                              -               69,088


 </TABLE>


See notes to unaudited consolidated financial statements.
























                                      -6-
<PAGE>

DTI HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


 1.   PRESENTATION

      The accompanying  unaudited  consolidated  financial  statements have been
      prepared in accordance with generally accepted  accounting  principles for
      interim  financial  information and with the instructions of Article 10 of
      Regulation S-X. Accordingly they do not include all of the information and
      footnotes  required  by  generally  accepted  accounting   principles  for
      complete financial statements.

      In the opinion of the management of DTI Holdings, Inc. and subsidiary (the
      "Company"  or "DTI") the  accompanying  unaudited  consolidated  financial
      statements  contain  all  adjustments   (consisting  of  normal  recurring
      adjustments)   necessary  to  present   fairly  the  Company's   financial
      information  for the interim  periods  presented and have been prepared in
      accordance  with generally  accepted  accounting  principles.  The interim
      results of operations are not  necessarily  indicative of results that may
      be expected for any other interim period or for the full year.

      The financial  statements  should be read in conjunction  with the audited
      consolidated  financial  statements  and notes  thereto for the year ended
      June 30, 1997 included in the Company's Form S-4  Registration  Statement,
      as amended,  originally filed with the Securities and Exchange  Commission
      on April 14, 1998 (see Note 6).  Accordingly,  footnote  disclosures which
      would  substantially  duplicate the  disclosures in the audited  financial
      statements have been omitted.

 2.   CONTINGENCIES

      Litigation - On June 20, 1995, the Company and its President were named as
      defendants  in a suit which the  plaintiff  alleges that (i) the plaintiff
      entered into an oral  contract with the  defendants  pursuant to which the
      plaintiff was to receive a percentage of the Company's common stock,  (ii)
      the plaintiff provided services to the Company for which the plaintiff was
      not and should be  compensated,  and (iii) the  defendants  misrepresented
      certain  facts to the  plaintiff  in order to induce him to loan money and
      provide  services  to the  defendants.  Based  on these  allegations,  the
      plaintiff is suing for breach of contract and fraud and is seeking  actual
      monetary damages, punitive damages and a percentage of the common stock of
      the Company.  Management believes the plaintiff's claims are without merit
      and  intends  to  vigorously  defend the  claims.  It is not  possible  to
      determine what impact,  if any, the outcome of this litigation  might have
      on the  financial  condition,  results of  operations or cash flows of the
      Company at this time. The President has agreed personally to indemnify the
      Company against any and all losses resulting from any judgments and awards
      rendered against the Company in this litigation. However, no guarantee can
      be made as to the ability to satisfy all such  amounts.  The President has
      also agreed to indemnify  the holder of redeemable  convertible  preferred
      stock from such losses, and has pledged his stock ownership in the Company
      to secure such obligations to the Company and such holder.

      The Company is involved in a dispute with a customer  related to delays in
      providing telecommunication services to the customer.  Management contends
      that the delays  resulted from the customer's  inability to provide access
      and does not believe that ultimate  settlement of this dispute will have a
      material effect on the Company's financial position, results of operations
      or cash flows.

                                      -7-
<PAGE>

      Construction Agreements - DTI's construction agreements are with its major
      network  construction  contractor and equipment supplier.  DTI's remaining
      aggregate commitment for construction and equipment under these agreements
      at March 31, 1998 is approximately $20,085,000.

 3.   NETWORK AND EQUIPMENT

      Network and equipment consists of the following:

                                            March 31,           June 30,
                                              1998               1997

Fiber optic cable plant                   $  49,141,905      $  28,498,465
Fiber optic terminal equipment               11,646,390          5,757,270
Fiber optic network buildings                 2,050,973            757,680
Leasehold improvements                          292,951            131,611
Furniture, office equipment and other           313,371             91,248
                                                --------            ------
                                             63,445,590         35,236,274

Less - accumulated depreciation               2,620,640          1,235,640
                                         ---------------- ----------------

                                          $  60,824,950      $  34,000,634
                                          ===============    =============

      At March 31, 1998 and June 30, 1997, fiber optic cable plant,  fiber optic
      terminal  equipment and fiber optic network buildings include  $19,581,920
      and $19,027,585 of construction in progress, respectively, that was not in
      service and, accordingly, has not been depreciated.  Also, during the nine
      months ended March 31, 1998 and the year ended June 30, 1997, $182,000 and
      $562,750, respectively, of interest costs were capitalized.

 4.   FINANCING ARRANGEMENTS

      Credit  Facility - In January 1998,  DTI entered into a $30.0 million bank
      credit facility (the "Credit  Facility") with certain  commercial  lending
      institutions and Toronto Dominion ("Texas'), Inc., as administrative agent
      for the lenders ("TD ("Texas")"), to fund its working capital requirements
      until  completion  of the  Company's  offering  of senior  discount  notes
      discussed below. In January 1998,  Digital Teleport had drawn $3.0 million
      principal  amount under the Credit  Facility which was repaid with the net
      proceeds of the  issuance  and sale by the Company of its senior  discount
      notes  and  warrants   discussed  below.  The  credit  facility  was  then
      cancelled.

      Senior  Discount Notes - On February 23, 1998,  the Company  completed the
      issuance and sale of 506,000 units  consisting  of $506 million  aggregate
      principal  amount at maturity of 12 1/2%  Senior  Discount  Notes due 2008
      (the "Notes") and warrants to purchase  3,926,560  shares of common stock,
      for which the Company received proceeds, net of underwriting discounts and
      expenses,  of approximately  $264.8 million.  No cash payments of interest
      are required  under the Notes prior to September  1, 2003.  Commencing  at
      such time,  the  Company  will be required  to make  semi-annual  interest
      payments on the Notes.

 5.   EQUITY TRANSACTIONS

      Stock Split - On February 17,  1998,  the Company  approved a  1,000-for-1
      stock split in the form of a stock  dividend of 999 shares of common stock


                                      -8-
<PAGE>

      for each one share of common  stock  outstanding.  Effective  February 18,
      1998, the Company's Articles of Incorporation were amended to increase the
      number of authorized  shares of common stock to 100,000,000  and the stock
      dividend  was  issued to the  Company's  stockholders.  All  common  share
      information  included in the  accompanying  financial  statements has been
      retroactively  adjusted  to give  effect to the stock  split.  In order to
      effect the  1,000-for-1  stock split on February  17,  1998,  $269,970 was
      initially charged to accumulated deficit. The Company recorded an entry in
      the  third  quarter  of  fiscal  1998  to  reclassify   this  amount  from
      accumulated  deficit to additional paid-in capital recorded in conjunction
      with the  reclassification  of Series A Preferred  Stock on  February  13,
      1998, as discussed below.

      Preferred  Stock - On February 13, 1998, the Company  amended its Articles
      of  Incorporation  amending the terms of the Series A Preferred Stock such
      that the Series A  Preferred  Stock is no longer  mandatorily  redeemable.
      Accordingly,  the  Series A  Preferred  Stock  has been  reclassified  and
      reported within stockholders' equity.

 6.   SUBSEQUENT EVENTS

      The Company  filed a  Registration  Statement  on Form S-4  relating to an
      offer to  exchange  the  $506  million  privately  placed  12 1/2%  Senior
      Discount Notes due 2008. The  Registration  Statement was originally filed
      on April 14, 1998 but has not yet been declared effective.

                                   * * * * * *






















                                      -9-
<PAGE>


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


GENERAL

Management's  discussion  and  analysis of  financial  condition  and results of
operations is intended to assist in  understanding  the financial  condition and
results of operations of the Company. The information  contained in this section
should be read in conjunction  with the  consolidated  financial  statements and
accompanying notes thereto.


OVERVIEW

DTI Holdings, Inc. ("DTI") is a facilities-based provider of long-haul and local
telecommunications  services  primarily to inter-exchange  carriers ("IXCs") and
other  communications  entities  on a  wholesale  basis,  as well as directly to
business and governmental end users. DTI intends to expand its network (the "DTI
network")  outward from  Missouri  into an  additional  13 states in the Midwest
region.  The Company is  preparing  to offer local  switched  services  and data
transmission  services to targeted  end-user  customers in Missouri in mid-1998.
DTI intends to provide local switched service capacity to its carrier's  carrier
customers  on a  wholesale  basis as it  deploys  its  switches  throughout  its
network.


RESULTS OF OPERATIONS


Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997

REVENUE

Total revenue  increased  201.2%,  from $367,000 in 1997 to $1.1 million in 1998
due to increased revenue from carriers' carrier and end-user  services.  Revenue
from  carrier's  carrier  services  increased  307.7%  from  $236,000 in 1997 to
$964,000 in 1998.  This increase  resulted  principally  from the  completion of
additional  network segments,  as well as from adding additional  traffic on the
existing DTI network. End user revenues increased 7.8%, from $130,000 in 1997 to
$140,000  in  1998.  This  increase  was  attributable  to  the  completion  and
activation of additional sites under a deferred revenue  contract,  which caused
additional deferred revenues to be recognized.


OPERATING EXPENSES

Operating  expenses  increased 135.2%,  from $855,000 in 1997 to $2.0 million in
1998  due  primarily  to  increases  in  telecommunications  services  expenses,
selling,  general and administrative expenses and depreciation and amortization.
Telecommunications  services  expenses  increased 71.4% from $268,000 in 1997 to
$460,000 in 1998 due to increased  personnel  costs to support the  expansion of
the DTI network,  as well as increased costs related to property taxes and other
costs in connection with leasing capacity to support  customers in areas not yet
reached  by the  DTI  network.  Selling,  general  and  administrative  expenses
increased  163.0% from $378,000 in 1997 to $995,000 in 1998, due  principally to
an increase in administrative and sales personnel and the expenses of supporting
these personnel.  Depreciation and amortization  increased 166.9%, from $208,000


                                      -10-
<PAGE>

in 1997 to $555,000 in 1998 due to higher  amounts of plant and equipment  being
in service in 1998 versus 1997. The Company expects that significant  additional
amounts of plant and equipment will be placed in service  throughout the balance
of fiscal 1998 and fiscal 1999. As a result,  depreciation  and  amortization is
expected to increase significantly in the future.


INTEREST AND OTHER INCOME (EXPENSE)

Net interest and other income (expense) increased from net expense of $14,000 in
1997 to net expense of $2.3  million in 1998.  Interest  income  increased  from
$25,000 in 1997 to $1.4  million in 1998 due to the  investment  of the proceeds
from the Senior  Discount  Notes.  Similarly,  as a result of the debt offering,
interest expense increased from $56,000 in 1997 to $3.7 million in 1998.


INCOME TAXES

An income tax benefit of $1.3  million and  $124,000  was  recorded in the three
month  periods  ended  March 31,  1998 and  1997,  respectively,  as  management
believes  it is more  likely  than  not  that it will  generate  taxable  income
sufficient  to  realize  the  tax  benefit  associated  with  future  deductible
temporary  differences  and net  operating  loss  carryforwards  prior  to their
expiration.


NET LOSS

Net loss for the three months ended March 31, 1998 was $1.8 million  compared to
$378,000 for the three months ended March 31, 1997.


Nine Months Ended March 31, 1998 Compared to Nine Months Ended March 31, 1997

REVENUE

Total revenue increased 144.0% from $870,000 in 1997 to $2.1 million in 1998 due
to increased revenue from carrier's carrier and end-user services.  Revenue from
carrier's  carrier  services  increased  249.3%,  from  $489,000 in 1997 to $1.7
million in 1998.  This  increase  resulted  principally  from the  completion of
additional network segments,  as well as from adding traffic on the existing DTI
network.  End-user revenues  increased 8.9% from $381,000 in 1997 to $415,000 in
1998.  This  increase was  attributable  to the  completion  and  activation  of
additional  sites under a deferred  revenue  contract,  which caused  additional
deferred revenues to be recognized.


OPERATING EXPENSES

Operating expenses increased 151.1% from $1.9 million in 1997 to $4.8 million in
1998,  due  primarily  to  increases in  telecommunications  services,  selling,
general  and   administrative   expenses  and  depreciation  and   amortization.
Telecommunication  services  expenses  increased  81.7% from $564,000 in 1997 to
$1.0 million in 1998 due to increased  personnel to support the expansion of the
DTI network,  as well as  increased  costs  related to property  taxes and other
costs in connection with leasing capacity to support  customers in areas not yet
reached  by the  DTI  network.  Selling,  general  and  administrative  expenses
increased  188.3%,  from  $846,000 in 1997 to $2.4 million in 1998,  in order to
support  the  expansion  of the DTI  network,  which  includes  an  increase  in
administrative  and sales personnel and the related expenses of supporting these
personnel,  as well as  increased  legal  fees.  Depreciation  and  amortization
increased  166.0%,  from  $521,000 in 1997 to $1.4 million in 1998 due to higher
amounts of plant and equipment being in service in 1998 versus 1997. The Company


                                      -11-
<PAGE>

expects  that  significant  additional  amounts of plant and  equipment  will be
placed  in  service  throughout  fiscal  1998  and  fiscal  1999.  As a  result,
depreciation and amortization is expected to increase significantly.


INTEREST AND OTHER INCOME (EXPENSE)

Net interest and other income (expense) increased from a net expense of $842,000
in 1997 to net expense of $2.1 million in 1998.  Interest income  increased from
$58,000 in 1997 to $1.6  million in 1998 due to the  investment  of the proceeds
from the Senior  Discount  Notes.  Similarly,  as a result of the debt offering,
interest  expense  increased from $153,000 in 1997 to $3.7 million in 1998. Loan
commitment  fees  decreased  from  $785,000 in 1997 to $-0- in 1998.  These fees
represented a one-time charge for a loan commitment which was not used.


INCOME TAXES

An income tax benefit of  $2,020,000  and  $1,042,000  was  recorded in the nine
month  periods  ended  March 31,  1998 and  1997,  respectively,  as  management
believes  it is more  likely  than  not  that it will  generate  taxable  income
sufficient  to  realize  the  tax  benefit  associated  with  future  deductible
temporary  differences  and net  operating  loss  carryforwards  prior  to their
expiration.


NET LOSS

Net loss for the nine months ended March 31, 1998 was $2.8  million  compared to
$860,000 for the nine months ended March 31, 1997.


LIQUIDITY AND CAPITAL RESOURCES

As of  March  31,  1998,  the  Company  had  $263.2  million  of cash  and  cash
equivalents.  This balance was provided  primarily through the issuance and sale
of 506,000 units  consisting of $506.0  million  aggregate  principal  amount at
maturity of 12 1/2% Senior Discount Notes due 2008 (the "Notes") and warrants to
purchase  3,926,560  shares of common  stock,  for  which the  Company  received
proceeds,  net of underwriting  discounts and expenses,  of approximately $264.8
million.

The net cash  provided by operating  activities  for the nine months ended March
31, 1997 and 1998 totaled $4.7 million and $5.1  million,  respectively.  During
the nine months ended March 31, 1997, cash provided by operating activities came
principally  from  increases  in  accounts  payable  of $1.2  million,  deferred
revenues  of $3.6  million  and  taxes  payable  (other  than  income  taxes) of
$606,000.  The increase in accounts payable in fiscal 1997 reflects the increase
in liabilities  under DTI's supply  contracts in connection with the buildout of
the DTI network.  Deferred  revenues in fiscal 1997 principally  reflect advance
payments  received from carrier customers under agreements for the lease of both
dark fiber and wholesale  network  capacity.  During the nine months ended March
31, 1998, net cash provided by operating activities resulted principally from an
increase  in taxes  payable  (other than  income  taxes) of $1.9  million and an
increase in deferred  revenues of $4.7  million  relating to an advance  payment
received under wholesale network capacity agreements and end-user agreements. As
of March 31, 1998,  advance payments of approximately  $20.2 million will become
due over the next five  years  under  existing  agreements  with  certain  major
customers upon DTI's meeting its  obligations  under certain  agreements,  which
require  the  Company  to  provide  telecommunications  services  or dark  fiber
capacity.



                                      -12-
<PAGE>

The  Company's  investing  activities  used cash of $10.1  million  for the nine
months  ended March 31, 1997 and $28.2  million for the nine months  ended March
31,  1998.  During the nine months ended March 31,  1997,  the Company  invested
$10.5 million in network and equipment and reduced  restricted  cash by $460,000
to repay borrowings  under DTI's former credit facility.  During the nine months
ended  March 31,  1998,  the  Company  invested  $28.2  million in  network  and
equipment.

Cash  provided by  financing  activities  was $10.3  million for the nine months
ended  March 31, 1997 and $282.0  million  for the nine  months  ended March 31,
1998.  During the nine months ended March 31, 1997,  the Company  borrowed  $8.0
million under a loan agreement with the holder of its preferred stock,  bringing
the  total  borrowings  under  that  agreement  to $14.0  million.  These  total
borrowings  were converted into Series A Preferred  Stock,  and additional  cash
proceeds  in the  amount  of $5.0  million  were  received  pursuant  to a stock
subscription agreement.  Cash was used to make principal payments on a bank loan
of $450,000 and to repurchase common stock warrants granted to a customer in the
amount of $2.7 million. During the nine months ended March 31, 1998, the Company
received $17.3 million in proceeds from the issuance of Series A Preferred Stock
and $275.2  million from the  issuance of the Notes.  Deferred  financing  costs
related to the debt offering totaled $10.5 million.  Prior to the Notes offering
the Company  executed a credit  facility  under which the Company  borrowed $3.0
million.  A portion of the proceeds of the Notes offering were used to repay the
principal balance on the credit facility.

The  proceeds  from the  Notes  offering  are  expected  to  provide  sufficient
liquidity  to meet the  Company's  operating  and capital  requirements  through
approximately  the next twelve  months.  Subsequent to such date,  the Company's
operating and capital requirements are expected to be funded, in large part, out
of advance  payments  under dark fiber  leases and  wholesale  network  capacity
agreements,  borrowings under bank credit facilities,  additional debt or equity
financings,  and available cash flow from operations.  The Company is in various
stages of  discussions  with  potential  customers  for leases of dark fiber and
wholesale network capacity agreements. There can be no assurance,  however, that
the Company will continue to obtain  advance  payments from  customers  prior to
commencing  construction,  that it will be able to  obtain  financing  under any
credit  facility or that other  sources of capital will be available on a timely
basis or on terms that are acceptable to the Company and within the restrictions
under the Company's existing financing  arrangements,  or at all. If the Company
fails to obtain the capital required to complete the DTI network build-out,  the
Company  could modify,  defer or abandon  building  certain  portions of the DTI
network.  The failure of the  Company,  however,  to raise  substantial  capital
required to complete the DTI network  construction could have a material adverse
effect  on  the  Company.   The  actual  amount  and  timing  of  DTI's  capital
requirements may differ materially from those estimates  depending on demand for
the  Company's  services,  and the  Company's  ability to implement  its current
business  strategy  as a result of  regulatory,  technological  and  competitive
developments  (including  market  developments  and  new  opportunities)  in the
telecommunications industry.

The Company estimates that total capital expenditures,  including the total cost
to construct and activate the DTI network will be approximately  $526.4 million.
Of this amount, the Company has already expended  approximately $63.3 million as
of March 31,  1998.  The  Company  anticipates  total  capital  expenditures  of
approximately  $30.0  million  in the fourth  quarter of fiscal  1998 and $210.0
million in fiscal 1999.

The Notes  contain  financial and operating  covenants and  restrictions  on the
ability of the Company to incur indebtedness,  make investments and take certain
other corporate actions.

                                      -13-
<PAGE>


INFLATION

The Company does not believe that inflation has had a significant  impact on the
Company's consolidated results of operations.


YEAR 2000

While the Company believes that its existing software applications are year 2000
compliant,  there  can be no  assurance  until  the  year  2000  that all of the
Company's  systems  then in place will  function  adequately  . Further,  if the
software  applications  of others on whose services the Company  depends are not
year 2000  compliant,  any loss of such services  could have a material  adverse
effect on the Company's business, financial condition and results of operations.


FORWARD LOOKING STATEMENTS

Certain statements throughout  Management's Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this  quarterly  report are
"forward  looking  statements"  within  the  meaning of the  Private  Securities
Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties
and other factors that may cause actual  events or results to differ  materially
from those expressed or implied by the forward looking statements.  Factors that
could cause such materially  different  events or results  include,  but are not
limited to, the Company's  failure to obtain  substantial  amounts of additional
capital  and  financing  at  reasonable  costs  and on  satisfactory  terms  and
conditions,  the Company's inability to manage effectively and  cost-efficiently
the  construction  and  expansion  of the DTI network or to achieve  substantial
traffic  volumes on the DTI network,  a continued  increase in  competition  and
changes in general economic conditions.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.




















                                      -14-
<PAGE>

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings:

      On June 20, 1995,  the Company and its President  were named as defendants
      in a suit which the plaintiff  alleges that (i) the plaintiff entered into
      an oral contract with the  defendants  pursuant to which the plaintiff was
      to receive a percentage of the Company's common stock,  (ii) the plaintiff
      provided  services  to the  Company  for which the  plaintiff  was not and
      should be  compensated,  and (iii) the defendants  misrepresented  certain
      facts to the  plaintiff  in order to induce him to loan money and  provide
      services to the defendants.  Based on these allegations,  the plaintiff is
      suing for  breach of  contract  and fraud and is seeking  actual  monetary
      damages,  punitive  damages and a  percentage  of the common  stock of the
      Company.  Management believes the plaintiff's claims are without merit and
      intends to vigorously  defend the claims.  It is not possible to determine
      what  impact,  if any,  the outcome of this  litigation  might have on the
      financial condition, results of operations or cash flows of the Company at
      this time.  The President  has agreed  personally to indemnify the Company
      against  any and all  losses  resulting  from  any  judgments  and  awards
      rendered against the Company in this litigation. However, no guarantee can
      be made as to the ability to satisfy all such  amounts.  The President has
      also agreed to indemnify  the holder of redeemable  convertible  preferred
      stock from such losses, and has pledged his stock ownership in the Company
      to secure such obligations to the Company and such holder.

Item 2.  Changes in Securities and Use of Proceeds:

      On February 23, 1998, the Company issued and sold 506,000 units consisting
      of $506 million  aggregate  principal amount at maturity of 12 1/2% Senior
      Discount Notes due 2008 and warrants to purchase an aggregate of 3,926,560
      shares  of  Common  Stock  to  Merrill  Lynch,  Pierce,   Fenner  &  Smith
      Incorporated ("Merrill Lynch") and TD Securities (USA) Inc. (together, the
      "Initial Purchasers"). The units were sold by the Company in reliance upon
      the exemption from registration provided by Section 4(2) of the Securities
      Act of 1933, as amended (the  "Securities  Act"). The units were resold by
      the Initial  Purchasers to certain  "qualified  institutional  buyers" (as
      such term is  defined  under Rule 144A  under the  Securities  Act) and to
      certain  purchasers under Regulation S. The Company received net proceeds,
      after deducting the Initial Purchasers' discount and offering expenses, of
      approximately  $264.8  million.  Each unit  includes a warrant to purchase
      1.552  shares of Common  Stock at an exercise  price of $0.01 per share of
      Common Stock  issuable upon  exercise of the warrant.  Each warrant may be
      exercised  on or after the first  day  after the  "Separability  Date" (as
      defined  below) that any of the following has  occurred:  (i)  immediately
      prior to a Change of Control  (as such term is  defined  in the  Indenture
      pursuant to which the Notes were issued  (the  "Indenture"));  (ii)(a) the
      180th day (or such earlier date as  determined  by the Company in its sole
      discretion)  following  the  consummation  of  an  Initial  Public  Equity
      Offering  (as  such  term is  defined  in the  Indenture)  or (b) upon the
      consummation of an Initial Public Equity Offering,  but only in respect of
      warrants,  if any,  required to be exercised to permit the holders thereof
      to sell the  underlying  warrant  shares  pursuant  to their  registration
      rights  pertaining to such shares;  (iii) a class of equity  securities of
      the Company is listed on a national  securities exchange or authorized for
      quotation  on the  Nasdaq  National  Market  or is  otherwise  subject  to
      registration  under the  Securities  Exchange Act of 1934, as amended;  or
      (iv) September 1, 1999. As used herein, the term "Separability Date" means
      the earliest of the  following to occur:  (1)  September 1, 1998;  (2) the
      date on  which a  registration  statement  with  respect  to a  registered
      exchange  offer for the Notes is declared  effective  under the Securities
      Act;  (3) the  occurrence  of any of the events  described  in clauses (i)
      through  (iv) above;  (4) the  occurrence  of an Event of Default (as such
      term is defined in the Indenture);  or (5) such earlier date as determined
      by Merrill Lynch in its sole discretion.

                                      -15-
<PAGE>

Item 3.  Defaults Upon Senior Securities:  Not applicable

Item 4.  Submission of Matters to a Vote of Security-Holders:  Not applicable

Item 5.  Other Information:  Not applicable

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

      (a)  Exhibits

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

     3.1  Second Restated Articles of Incorporation of the Registrant.

     3.2  Second Restated Bylaws of the Registrant.

     4.1  Indenture by and between the  Registrant  and The Bank of New York, as
          Trustee,  for the  Registrant's 12 1/2% Senior Discount Note due 2008,
          dated  February  23,  1998 (the  "Indenture")  (including  form of the
          Company's 12 1/2% Senior  Discount  Note due 2008 and 12 1/2% Series B
          Senior  Discount  Note due 2008)  incorporated  herein by reference to
          Exhibit 4.1 to the Company's  Registration Statement on Form S-4 (File
          No. 333-50049) (the "Form S-4").

     4.2  Note Registration Rights Agreement by and among the Registrant and the
          Initial  Purchasers  named  therein,  dated as of  February  23,  1998
          incorporated herein by reference to Exhibit 4.2 to the Form S-4.

     4.3  Warrant  Agreement by and between the  Registrant  and The Bank of New
          York, as Warrant Agent, dated February 23, 1998 incorporated herein by
          reference to Exhibit 4.3 to the Form S-4.

     4.4  Warrant  Registration Rights Agreement by and among the Registrant and
          the  Initial   Purchases  named  therein,   dated  February  23,  1998
          incorporated herein by reference to Exhibit 4.4 to the Form S-4.

     4.5  Digital  Teleport,  Inc.  Shareholders'  Agreement  between Richard D.
          Weinstein  and KLT Telecom,  Inc.,  dated March 12, 1997  incorporated
          herein by reference to Exhibit 4.5 to the Form S-4.

     4.6  Amendment No. 1 to the Digital Teleport, Inc. Shareholders' Agreement,
          dated November 7, 1997 incorporated herein by reference to Exhibit 4.6
          to the Form S-4.

     4.7  Amendment No. 2 to the Digital Teleport, Inc. Shareholders' Agreement,
          dated  December 18, 1997  incorporated  herein by reference to Exhibit
          4.7 to the Form S-4.

     4.8  Amendment No. 3 to the Digital Teleport, Inc. Shareholders' Agreement,
          dated  February 12, 1998  incorporated  herein by reference to Exhibit
          4.8 to the Form S-4.



                                      -16-
<PAGE>

     4.9  Stock Pledge  Agreement  between Richard D. Weinstein and KLT Telecom,
          Inc.,  dated  March 12,  1997,  securing  the  performance  of Digital
          Teleport,   Inc.'s  obligations  under  that  certain  Stock  Purchase
          Agreement  dated as of  December  31,  1996,  as amended  incorporated
          herein by reference to Exhibit 4.9 to the Form S-4.

     4.10 Amendment No. 1 to Stock Pledge Agreement between Richard D. Weinstein
          and KLT Telecom,  Inc., dated December 18, 1997 incorporated herein by
          reference to Exhibit 4.10 to the Form S-4.

     4.11 Amendment No. 2 to Stock Pledge Agreement between Richard D. Weinstein
          and KLT Telecom,  Inc., dated February 12, 1998 incorporated herein by
          reference to Exhibit 4.11 to the Form S-4.

     4.12 Subordination   Agreement,  by  and  among  the  Registrant,   Digital
          Teleport,  Inc.,  KLT Telecom,  Inc. and Richard D.  Weinstein,  dated
          February 12, 1998 incorporated  herein by reference to Exhibit 4.12 to
          the Form S-4.

     10.1 Employment  Agreement  between Digital  Teleport,  Inc. and Richard D.
          Weinstein, dated December 31, 1996 incorporated herein by reference to
          Exhibit 10.1 to the Form S-4.

     10.2 Director Indemnification  Agreement between the Registrant and Richard
          D. Weinstein, dated December 23, 1997 incorporated herein by reference
          to Exhibit 10.2 to the Form S-4.

     10.3 Director  Indemnification  Agreement between the Registrant and Jerome
          W. Sheehy, dated December 23, 1997 incorporated herein by reference to
          Exhibit 10.3 to the Form S-4.

     10.4 Director Indemnification  Agreement between the Registrant and Bernard
          J. Beaudoin,  dated December 23, 1997 incorporated herein by reference
          to Exhibit 10.4 to the Form S-4.

     10.5 Director  Indemnification  Agreement between the Registrant and Ronald
          G. Wasson, dated December 23, 1997 incorporated herein by reference to
          Exhibit 10.5 to the Form S-4.

     10.6 Director Indemnification Agreement between the Registrant and James V.
          O'Donnell, dated December 23, 1997 incorporated herein by reference to
          Exhibit 10.6 to the Form S-4.

     10.7 Director Indemnification  Agreement between the Registrant and Kenneth
          V. Hager, dated December 18, 1997 incorporated  herein by reference to
          Exhibit 10.7 to the Form S-4.

     10.8 1997 Long-Term  Incentive  Award Plan of the  Registrant  incorporated
          herein by reference to Exhibit 10.8 to the Form S-4.



                                      -17-
<PAGE>

     10.9 Employment  Agreement  between  Digital  Teleport,  Inc. and Robert F.
          McCormick, dated September 9, 1997 incorporated herein by reference to
          Exhibit 10.9 to the Form S-4.

     10.10Amendment No. 1 to the Employment  Agreement between Digital Teleport,
          Inc.  and Robert F.  McCormick,  dated  January 28, 1998  incorporated
          herein by reference to Exhibit 10.10 to the Form S-4.

     10.11Amendment No. 2 to the Employment  Agreement between Digital Teleport,
          Inc.  and Robert F.  McCormick,  dated  January 28, 1998  incorporated
          herein by reference to Exhibit 10.11 to the Form S-4.

     10.12(++) Product  Attachment - Carrier Networks Products Agreement between
          Digital Teleport,  Inc. and Northern Telecom,  Inc., effective October
          23, 1997 incorporated herein by reference to Exhibit 10.12 to the Form
          S-4.

     10.13Agreement  re: Fiber Optic Cable on Freeways in Missouri,  between the
          Missouri Highway and  Transportation  Commission and Digital Teleport,
          Inc.,  effective  July 29, 1994  incorporated  herein by  reference to
          Exhibit 10.13 to the Form S-4.

     10.14First  Amendment  to  agreement  re:  Fiber Optic Cable on Freeways in
          Missouri,  between the Missouri Highway and Transportation  Commission
          and Digital Teleport,  Inc., effective September 24, 1994 incorporated
          herein by reference to Exhibit 10.14 to the Form S-4.

     10.15Second  Amendment  to  Agreement  re: Fiber Optic Cable on Freeways in
          Missouri,  between the Missouri Highway and Transportation  Commission
          and Digital  Teleport,  Inc.,  effective  November 7, 1994 incorporate
          herein by reference to Exhibit 10.15 to Form S-4.

     10.16Third  Amendment  to  Agreement  re:  Fiber Optic Cable on Freeways in
          Missouri,  between the Missouri Highway and Transportation  Commission
          and Digital  Teleport,  Inc.,  effective  October 9, 1996 incorporated
          herein by reference to Exhibit 10.16 to the Form S-4.

     10.17Contract  Extension to Agreement  re: Fiber Optic Cable on Freeways in
          Missouri,  between  the  Missouri  Department  of  Transportation  (as
          successor to the Missouri Highway and  Transportation  Commission) and
          Digital Teleport,  Inc., dated February 7, 1997 incorporated herein by
          reference to Exhibit 10.17 to the Form S-4.

     10.18Fiber Optic Cable  Agreement,  between the Arkansas  State Highway and
          Transportation  Department  and Digital  Teleport,  Inc. dated May 12,
          1997  incorporated  herein by reference  to Exhibit  10.18 to the Form
          S-4.

     10.19Commercial  Lease between  Richard D. Weinstein and Digital  Teleport,
          Inc.,  dated  December  31, 1996  incorporated  herein by reference to
          Exhibit 10.27 to the Form S-4.



                                      -18-
<PAGE>

     10.20Commercial Lease Extension  Agreement between Richard D. Weinstein and
          Digital Teleport, Inc., dated December 31, 1997 incorporated herein by
          reference to Exhibit 10.28 to the Form S-4.

     10.21Purchasing  Agreement  by and between the  Registrant  and the Initial
          Purchasers named therein,  dated as of February 13, 1998  incorporated
          herein by reference to Exhibit 10.29 to the Form S-4.

     27.1 * Financial Data Schedule.


     (++) Confidential  treatment  has been  requested  with  respect to certain
          portions of this Exhibit.

     *    To be filed by amendment















                                      -19-
<PAGE>


                                   SIGNATURES

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



                                           DTI HOLDINGS, INC.


Date:            May 14 , 1998             /S/Richard D. Weinstein
         -----------------------------     -----------------------
                                           Richard D. Weinstein
                                           President and Chief 
                                             Executive Officer and Secretary



Date:            May 14 , 1998             /S/Robert F. McCormick
         -----------------------------     ----------------------
                                           Robert F. McCormick
                                           Chief Financial Officer