<PAGE>

                            UNITED STATES SECURITIES
                             AND EXCHANGE COMMISSION

                                    FORM 10-Q

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

For the quarterly period ended: September 30, 2000

                                       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: 333-53841


                                  WAM!NET Inc.
             (Exact name of registrant as specified in its charter)

           Minnesota                                    41-1795247
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)


                                 655 Lone Oak Dr
                             Eagan, Minnesota 55121
                    (Address of principal executive offices)
                                   (Zip Code)


                                 (651) 256-5100
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or 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 October 31, 2000 there were 11,103,771 shares of the Corporation's Common
Stock, par value $.01 per share, outstanding.

Total number of pages in this report: 24
<PAGE>

                                  WAM!NET Inc.

                               INDEX TO FORM 10-Q

<TABLE>
<CAPTION>
                                                                                                        Page No.
                                                                                                        --------
<S>                                                                                                     <C>
Part I--Financial Information

          Item 1--Financial Statements

                 Consolidated Balance Sheets as of September 30, 2000 (unaudited) and December 31,
                   1999...............................................................................     3

                 Consolidated Statements of Operations for the three and nine month periods
                   ended September 30, 2000 and 1999 (unaudited)......................................     5

                 Consolidated Statements of Cash Flows for the three and nine month periods
                   ended September 30, 2000 and 1999 (unaudited)......................................     6

                 Notes to Consolidated Financial Statements (unaudited)...............................     8

          Item 2--Management's Discussion and Analysis of Financial Condition
                   and Results of Operations..........................................................     11

          Item 3--Quantitative and Qualitative Disclosures About Market Risk..........................     18

Part II--Other Information

          Item 2--Changes in Sercurities and Use of Proceeds...........................................    19

          Item 6--Exhibits and Reports on Form 8-K.....................................................    19

Signature--        ....................................................................................    20

Exhibit Index--    ....................................................................................    21
</TABLE>

                                      -2-
<PAGE>

                          Part I--FINANCIAL INFORMATION


Item 1--Financial Information


                                  WAM!NET Inc.

                           Consolidated Balance Sheets
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                              September 30,  December 31,
                                                                                  2000           1999
                                                                              ------------   ------------
                                                                                      (Unaudited)
<S>                                                                           <C>            <C>
Assets
Current assets:
     Cash and cash equivalents ............................................      $  7,987      $ 27,180
     Investment ...........................................................         4,982            --
     Accounts receivable, net of allowance of $647 and $1,570, respectively         4,581         3,982
     Inventory ............................................................           569         1,254
     Prepaid expenses and other current assets ............................         4,309         4,018
                                                                                 --------      --------
Total current assets ......................................................        22,428        36,434

Property, plant, and equipment, net .......................................       365,193       358,336
Goodwill, net .............................................................        17,315        21,421
Deferred financing charges, net ...........................................        13,542        18,300
Other assets ..............................................................         1,127           764
                                                                                 --------      --------
Total assets ..............................................................      $419,605      $435,255
                                                                                 ========      ========
</TABLE>

                                      -3-
<PAGE>

                                  WAM!NET Inc.


                     Consolidated Balance Sheets (continued)
                             (Dollars in thousands)


                                                    September 30,   December 31,
                                                         2000           1999
                                                     ------------   -----------
                                                     (Unaudited)
Liabilities and shareholders' deficit
Current liabilities:
     Accounts payable .........................      $  14,505       $  13,739
     Accrued salaries and wages ...............          4,450           2,839
     Accrued expenses .........................         13,949           6,450
     Deferred revenue .........................          2,520           2,500
     Current portion of long-term debt ........         38,076          55,950
                                                     ---------       ---------
Total current liabilities .....................         73,500          81,478
Deferred revenue ..............................         10,000          10,000
Network Facilities Financing ..................        236,962         239,603
Long-term debt, less current portion ..........        259,869         250,847
Class A Redeemable Preferred Stock ............          1,279           1,212
Shareholders' deficit:
     Class B Convertible Preferred Stock ......             57              57
     Class C Convertible Preferred Stock ......              9               9
     Class D Convertible Preferred Stock ......             22              22
     Class E Convertible Preferred Stock ......              1              --
     Class F Convertible Preferred Stock ......             --              --
     Class G Convertible Preferred Stock ......             --              --
     Class H Convertible Preferred Stock ......             --              --
     Common Stock .............................            111              95
     Additional paid-in capital ...............        282,933         156,680
     Accumulated deficit ......................       (432,803)       (303,614)
     Accumulated other comprehensive loss .....        (12,335)         (1,134)
                                                     ---------       ---------
Total shareholders' deficit ...................       (162,005)       (147,885)
                                                     ---------       ---------
Total liabilities and shareholders' deficit ...      $ 419,605       $ 435,255
                                                     =========       =========



                             See accompanying notes.

                                      -4-
<PAGE>

                                  WAM!NET Inc.

                      Consolidated Statements of Operations
             (Dollars in thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                    Three months ended              Nine months ended
                                                                       September 30,                  September 30,
                                                                       -------------                  -------------
                                                                    2000           1999            2000           1999
                                                                    ----           ----            ----           ----
                                                                                        (Unaudited)
<S>                                                            <C>             <C>             <C>             <C>
Revenues:
Net service revenue ........................................   $      8,813    $      4,787    $     22,270    $     11,861
Software and hardware sales ................................          1,522           2,029           4,975           5,622
                                                               ------------    ------------    ------------    ------------
Total revenue ..............................................         10,335           6,816          27,245          17,483

Operating expenses:
Network communications .....................................          7,096           6,767          21,230          19,489
Cost of software and hardware ..............................            614             823           1,648           2,220
Network operations and development .........................          5,825           6,447          16,616          17,222
Selling, general and administrative ........................         13,336           9,281          38,375          30,552
Restructuring charge .......................................          1,657              --           1,657              --
Depreciation and amortization ..............................         10,831           8,850          29,295          24,908
                                                               ------------    ------------    ------------    ------------
                                                                     39,359          32,168         108,821          94,391
                                                               ------------    ------------    ------------    ------------
Loss from operations .......................................        (29,024)        (25,352)        (81,576)        (76,908)

Other income (expense):
     Loss on investment ....................................        (14,697)             --         (14,697)             --
     Interest income .......................................             90              90             715             520
     Interest expense ......................................        (10,145)         (7,988)        (35,465)        (25,479)
     Other income ..........................................            565             208           1,834             383
                                                               ------------    ------------    ------------    ------------
Net loss ...................................................   $    (53,211)   $    (33,042)   $   (129,189)   $   (101,484)
Less preferred dividends ...................................         (3,974)         (1,800)        (10,075)         (4,105)
                                                               ------------    ------------    ------------    ------------
Net loss applicable to common stock ........................   $    (57,185)   $    (34,842)   $   (139,264)   $   (105,589)
                                                               ============    ============    ============    ============

Net loss applicable per common share - basic and diluted....   $      (5.28)   $      (3.75)   $     (13.66)   $     (11.36)
                                                               ============    ============    ============    ============

Weighted average number of common shares outstanding .......     10,833,879       9,296,339      10,198,006       9,296,339
                                                               ============    ============    ============    ============
</TABLE>


                             See accompanying notes.

                                      -5-
<PAGE>

                                  WAM!NET Inc.

                      Consolidated Statements of Cash Flows
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                Nine months ended
                                                                                  September 30,
                                                                                2000         1999
                                                                              ---------    ---------
                                                                                   (Unaudited)
<S>                                                                           <C>          <C>
Operating activities
Net loss ..................................................................   $(129,189)   $(101,484)
Adjustments to reconcile net loss to net cash used in operating activities:
     Loss on sale of investment ...........................................      14,697           --
     Depreciation and amortization ........................................      29,295       24,908
     Minority Interest share of net loss ..................................        (939)          --
     Noncash interest expense, including related warrants values ..........      22,872       21,864
     Loss on disposal of property and equipment ...........................          --        1,354
     Value of stock options issued to employees and consultants ...........         358          145
     Changes in operating assets and liabilities:
          Accounts receivable .............................................        (698)      (1,671)
          Prepaid expenses and other assets ...............................           6         (806)
          Accounts payable ................................................      (3,025)      (3,151)
          Accrued expenses ................................................       8,789          646
                                                                              ---------    ---------
Net cash used in operating activities .....................................     (57,834)     (58,195)


Investing activities
Purchases of property and equipment .......................................     (26,871)     (18,846)
Proceeds from sale of Winstar common stock ................................      20,303           --
Business acquisitions (net of cash acquired) ..............................        (353)        (250)
                                                                              ---------    ---------
Net cash used in investing activities .....................................      (6,921)     (19,096)


Financing activities
Proceeds from sale of preferred stock .....................................      73,685       59,498
Proceeds from borrowings (net of financing costs) .........................          --       58,509
Proceeds from exercise of stock options ...................................       1,380            5
Proceeds from investment in Joint Venture .................................       1,285           --
Payments on borrowings ....................................................     (29,605)     (14,756)
                                                                              ---------    ---------
Net cash provided by financing activities .................................      46,745      103,256
Effect of foreign currencies on cash ......................................      (1,183)        (318)
                                                                              ---------    ---------
Net increase in cash and cash equivalents .................................     (19,193)      25,647
Cash and cash equivalents at beginning of period ..........................      27,180        6,272
                                                                              ---------    ---------
Cash and cash equivalents at end of period ................................   $   7,987    $  31,919
                                                                              =========    =========
</TABLE>


                             See accompanying notes.

                                      -6-
<PAGE>

                                  WAM!NET Inc.

                Consolidated Statements of Cash Flows (continued)
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                 Nine months ended
                                                                                   September 30,
                                                                                 2000        1999
                                                                                -------     -------
                                                                                    (Unaudited)
<S>                                                                             <C>         <C>
Supplemental schedule of noncash financing activities
     Conversion of accrued dividends to preferred stock ...................          --         152
     Issuance of convertible preferred stock in exchange for land, building          --
        and furniture & fixtures ..........................................                  40,000
     Issuance of convertible preferred stock in exchange for Winstar ......      50,000          --
        Communications, Inc. common stock
     Value of interest cost assigned to warrants ..........................          --       4,297
        Dividends declared but unpaid .....................................          60          47
     Issuance of common stock relating to acquisition .....................         908          --
     Purchase of property, plant and equipment in accounts payable ........       3,791       3,763

Supplemental schedule of cash flow information
     Cash paid for interest ...............................................     $17,505     $ 3,230
</TABLE>


                             See accompanying notes.

                                      -7-
<PAGE>

                                  WAM!NET INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (Amounts in thousands, except share and per share data)

1.   Consolidated Financial Statements

     The accompanying consolidated financial statements have been prepared by
WAM!NET Inc. (the "Company") without audit and reflect all adjustments
(consisting only of normal and recurring adjustments and accruals) which are, in
the opinion of management, necessary to present a fair statement of the results
for the interim periods presented. The statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of regulation
S-X, but omit certain information and footnote disclosures necessary to present
the statements in accordance with generally accepted accounting principles. The
results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the full fiscal year. These
financial statements should be read in conjunction with the Company's audited
Consolidated Financial Statements for the year ended December 31, 1999. The
December 31, 1999 balance sheet was derived from audited financial statements,
but does not include all disclosures required by generally accepted accounting
principles. Certain amounts for the prior year have been reclassified to conform
to current year presentation.


2.   Consolidation Policy and Foreign Currency Translations

     The consolidated financial statements include the accounts of the Company,
its wholly-owned subsidiaries and its 60% owned joint venture. All significant
intercompany accounts and transactions have been eliminated in consolidation.
All assets and liabilities are translated to U.S. dollars at period-end exchange
rates, while elements of the income statement are translated at average exchange
rates in effect during the period. The functional currencies of the Company's
foreign subsidiaries are considered to be the respective subsidiary's local
currency. All translation gains and losses resulting from fluctuations in
currency exchange rates of these subsidiaries are recorded in equity as a
component of accumulated other comprehensive loss.


3.   Short-Term Investments

     The short-term investment consists of Winstar Communications, Inc. common
stock which we received as proceeds from the sale of preferred stock. This
investment is classified as an available-for -sale security and is recorded at
its fair value at September 30, 2000. The unrealized gains and losses are
reflected as a component of accumulated other comprehensive loss.


4.   Preferred Stock

In March, 2000, the Company entered into a transaction whereby Winstar
Communications, Inc. purchased a total of 85,000 shares of Class E convertible
preferred stock for $85,000, of which $35,000 was paid in cash and $50,000 was
paid in the form of 1,071,429 shares of Winstar common stock valued at $46.66
per share (as adjusted for the 3-for-2 Winstar stock split declared in February
2000). Other investors purchased 16,725 shares of Class E convertible preferred
stock for an aggregate $16,725 in cash. The Class E convertible preferred stock
accumulates dividends at an annual rate of 7%, which are added monthly to the
accreted liquidation value of the stock. Each of the two largest purchasers of
Class E convertible preferred stock has the right to elect one director, and
vote on an as-converted basis, not to exceed 17.5% of the total voting power, on
all matters submitted to the vote of common stock holders, including the
election of directors. The Class E convertible preferred stock is currently
convertible

                                      -8-
<PAGE>

into 19,714,147 shares of common stock at an initial conversion rate of $5.16
per share of common stock, subject to anti-dilution provisions. Holders of Class
E convertible preferred stock may convert their shares into common stock at any
time, and are required to convert their shares into common stock (beginning
after the later to occur of (i) the closing of an underwritten public offering
of common stock raising at least $50,000 of gross proceeds or (ii) the third
anniversary of the date of issuance of the Class E convertible preferred stock)
at the then applicable conversion rate, subject to adjustment for certain
anti-dilution provisions, on the last trading day of the first period of 20
consecutive trading days during which the average (weighted by trading volume)
closing price per share of common stock during such 20 consecutive trading day
period is at least 155% of the then applicable conversion price.

     In February 2000, SGI purchased 10,000 shares of Class F convertible
preferred stock for $10,000 in cash. The rights and preferences of the Class F
convertible preferred stock, including its conversion provisions, are
substantially the same as the rights and preferences of the Class E convertible
preferred stock, except that the holders of Class F preferred stock do not have
the right to separately elect directors and there is no cap on the voting power
of that class. The Class F convertible preferred stock is initially convertible
into a total of 1,937,984 shares of common stock, at an initial conversion rate
of $5.16 per share, subject to anti-dilution provisions.

     In February 2000, the Company sold to Sumitomo and certain other investors
10,000 shares of Class G convertible preferred stock for an aggregate of $10,000
in cash. Holders of Class G convertible preferred stock have the right to vote,
on an as-converted basis, with holders of common stock on all matters submitted
to a vote of common stockholders. The Class G convertible preferred stock is
initially convertible into 1,937,984 shares of common stock, at an initial
conversion rate of $5.16 per share, subject to anti-dilution provisions. The
shares of Class G convertible preferred stock will mandatorily convert into
shares of common stock upon completion of an initial public offering.

     In September 2000, the Company and Winstar entered into a Securities
Purchase Agreement (the "Agreement"), pursuant to which the Company has the
right to sell to Winstar up to 60,000 shares of Class H Convertible Preferred
Stock, par value $.01 per share, at a purchase price of $1,000 per share, at the
Company's discretion, upon certain dates and in certain amounts pursuant to the
terms of the Agreement, which right shall terminate on January 3, 2001. In
connection with the execution of the Agreement, the Company issued a warrant to
Winstar to purchase up to 3,000,000 shares of common stock of the Company at a
price of $.01 per share, which warrant shall expire on December 31, 2005. The
right to purchase 500,000 shares of Common Stock pursuant to the warrant became
exercisable upon execution of the Agreement, and the right to purchase the
remainder of the Common Stock shall become exercisable as the Company sells the
Shares to Winstar pursuant to a schedule set forth in the Agreement. The rights
and preferences of the Class H convertible preferred stock, including its
conversion provisions, are substantially the same as the rights and preferences
of the Class E convertible preferred stock. The Class H convertible preferred
stock is convertible into shares of common stock at an initial conversion rate
of $5.16 per share, subject to anti-dilution provisions. As of November 13,
2000, the Company sold 25,000 shares of Class H convertible preferred stock for
an aggregate of $25 million in cash and the right to purchase 950,000 shares of
common stock at $.01 per share is currently exercisable pursuant to the warrant.

                                      -9-
<PAGE>

5.   Comprehensive Income

     Comprehensive income for the Company includes net loss, the effects of
currency translation which are charged or credited to the cumulative translation
adjustment account within stockholders' equity, and the unrealized gain/loss on
investments available for sale which is recorded within stockholders equity.
Comprehensive loss for the three and nine months in the period ended September
30, 2000 and 1999 was as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                For the three months ended September 30,      For the nine months ended September 30,
----------------------------- -------------------------------------------- --------------------------------------------
(Dollars in thousands)                2000                   1999                  2000                  1999
                                      ----                   ----                  ----                  ----
<S>                           <C>                    <C>                   <C>                   <C>
----------------------------- ---------------------- --------------------- --------------------- ----------------------

----------------------------- ---------------------- --------------------- --------------------- ----------------------
Net loss                            $(53,211)             $(33,042)             $(129,189)            $(101,484)
----------------------------- ---------------------- --------------------- --------------------- ----------------------
Changes in cumulative                   (640)                  993                 (1,183)                 (619)
translation adjustments
----------------------------- ---------------------- --------------------- --------------------- ----------------------
Change in unrealized                    3,687                --                   (10,018)                --
gain/loss on investments                -----                --                   --------                --
----------------------------- ---------------------- --------------------- --------------------- ----------------------
Comprehensive loss                  $(50,164)             $(32,049)             $(140,390)            $(102,103)
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -10-
<PAGE>

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


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

     The following discussion and analysis is based on the historical results of
WAM!NET Inc. (the "Company") and should be read in conjunction with the
Company's Financial Statements included herein. The following discussion
contains forward-looking statements that reflect our plans, estimates and
beliefs. Our actual results could differ materially from those discussed in the
forward-looking statements.

OVERVIEW

     WAM!NET is a leading global provider of information technology services (IT
services). Our services are sold on an outsourced transactional basis to
businesses and government and enable organizations to convert to more efficient
and cost-effective digital business processes. In the commercial arena we focus
on companies that produce and distribute media-rich content including broadcast,
film and other entertainment companies, as well as corporations that promote
brands, advertising agencies, publishers and related businesses. Our services
allow these firms to collaborate online with their supply chain partners to
improve the process of creating and distributing media-rich content.

     We recently began offering services to departments and agencies of the
United States Government that can be accessed under a General Services
Administration contract. In addition, on Oct. 6, 2000, the Company was a member
of a team, led by EDS, that was awarded the Navy Marine Corps Intranet (NMCI)
Contract. The NMCI Contract is for delivery of comprehensive, end-to-end
information services through a common computing and communications environment,
for Navy and Marine Corps installations throughout the continental United States
and other selected installations. The contract is an indefinite- quantity
contract, with guaranteed minimum quantities. WAM!NET is a first tier
subcontractor to EDS and was identified as the source for infrastructure and
network management services, excluding desktop equipment, security systems and
long-haul circuits. The NMCI Contract is in the start-up phase and WAM!NET and
EDS are currently negotiating the terms of WAM!NET's subcontract.

     We own and operate a private, Internet Protocol (IP) based global network,
hosting and storage infrastructure that we have integrated with the public
Internet.

     We offer a wide array of IT services including: (1) managed data transport,
(2) application hosting, (3) managed data storage, (4) computer animation
rendering, (5) Internet-based services and (6) professional consulting services.
Our services and network infrastructure provide businesses a common electronic
platform to seamlessly integrate their digital business processes, accelerate
the adoption of wholly digital workflow, and achieve measurable operating
efficiencies, cost savings and productivity gains.

     Customers can access our network and services through our Direct Service,
ISDN Tracked Service or Internet Gateway Service. We first launched the Direct
service, our fastest, most secure and reliable digital transport service,
providing direct, guaranteed access and transport over our managed network. To
provide this service we install a Customer Point of Presence (CPOP) device on
our customers' premises. Through the CPOP the customer has a direct connection
to our network with a dedicated leased high-speed connection.

     In December 1999, we acquired a 20-year indefeasible right of use for
backbone capacity and purchased wireless local loop facilities in the United
States from Winstar Communications, Inc. We expect these facilities will allow
us to offer our Direct Service customers greater bandwidth capacity and
eliminate the need for a leased line to a customer's premise.

    In the first quarter of 1999 we began to provide access to our network
through our ISDN Tracked Service. Our

                                      -11-
<PAGE>

ISDN Tracked Service offers the security and predictability of dial-up
connectivity to our network at a slower transmission speed. This service does
not require an on-premise CPOP or WAM!NET-provided leased line connection.

     In the third quarter of 1999, we introduced our Internet Gateway Service,
which allows connection to our network over the Internet. We provide our
customers hosted applications that integrate our service into the customers'
digital workflow processes. These services include Transmission Manager, Info
Center, Electronic Job Tickets, Remote Proofing and our most recently released
Rendering On Demand (ROD) service. We commercially introduced our WAM!BASE
Digital Storage Services in the first quarter of 2000. Also in the first quarter
of 2000, we began to offer ROD, a hosted service that processes computer-
generated animation into high resolution motion images such as motion picture
special effects and broadcast advertisements.

     In the third quarter of 2000, we introduced WAM!NET Workspace, an online
storage service that augments WAM!NET Digital Storage services. Workspace
targets work-in-progress applications, while WAM!BASE is geared toward
long-term storage of completed digitral assets for re-use and re-purposing.

         At September 30, 2000, we had over 15,500 commercial subscribers using
our network and services. Subscribers are customer sites that access our
electronic business-to-business services through our Direct Service, ISDN
Tracked Service or Internet Gateway Service.

REVENUES

Service revenue

     Our service revenue is directly related to the number of customers, type of
service, and volume of data moved, stored or processed. Service revenue is
derived primarily from annual or multi-year service contracts, many of which
have automatic renewal or extension provisions. These contracts generally
include a minimum monthly fee and additional charges for usage that exceed a
minimum monthly service level. We currently offer our transport services at
scaled minimum usage fees on our network that typically range from $650 per
month to $4,000 per month for Direct Service, and from $45 per month to $360 per
month for ISDN Tracked Service. We record monthly service revenue for Direct
Service and ISDN Tracked Service based upon contracts signed with customers,
following installation of equipment and commencement of service at a customer's
premise. Our Internet Gateway Service is priced primarily on a per-megabyte
basis and is recognized as revenue in the month the service is provided. Our ROD
service is billed per CPU hour and revenues are recognized as the service is
provided to the customer. We began to earn service revenue from ISDN Tracked
Service and Internet Gateway Service in March and September 1999, respectively,
and from Render On Demand services in January 2000. Our WAM!BASE Archive Service
is priced on the basis of megabytes stored per month. We began earning service
revenue from WAM!BASE in the first quarter of 2000. Professional Services is
priced by flat daily rates and on hourly rates determined by the specialized
experts requested for the consulting engagement. WAM!NET began earning
professional services revenue in the third quarter of 2000.

Software and hardware sales

     Revenue from software and hardware sales has resulted primarily from the
sale of 4-Sight ISDN Manager software and ISDN cards. Our ISDN Tracked Service
customers may choose to make a single up-front payment to purchase our software
or to pay a monthly service fee. In both cases these purchases appear as
software and hardware revenue. We are in the process of shifting 4-Sight from a
product sales focus to a service model. As a result, we expect software and
hardware sales to decline in the future.

OPERATING EXPENSES

Network communication
---------------------

                                      -12-
<PAGE>

     Network communication expense represents the largest direct cost associated
with providing our Managed Transport Service. Network communication expense
includes the costs of providing local loop telephone circuits connecting our
network access devices at a customer's premises to the nearest distribution hub
as well as the costs of the high bandwidth backbone carrier services that
connect the distribution hubs with our network operation, hosting and data
storage centers.

     Local telephone circuit connections provided by local exchange carriers to
deliver Direct Service account for the substantial majority of these charges.
National and international service carrier charges account for the balance of
these charges. Network communication expense is generally a fixed monthly cost
per circuit. We believe that growing competition among telephony and
communications providers may reduce the future costs of local telephone circuit
and backbone connections. We actively seek to obtain and deploy technologies
that will reduce the costs of local telephone circuit connections, such as
wireless technologies and remote dial-up capabilities. We also intend to use our
network management tools to optimize the use of existing and planned network
capacity as volume increases and traffic patterns emerge.

     In December 1999, we purchased a 20-year indefeasible right of use for
backbone capacity and purchased wireless local loop facilities from Winstar.
When Winstar's wireless technology is deployed it will allow us to deliver
increased bandwidth, at speeds ranging from 1.5mb to 155mb per second, to
customers in most of the major U.S. metro areas, eliminating the need for leased
local circuit connections. This increased bandwidth capability will also allow
us to offer bandwidth-intensive services, such as ROD service, to new and
existing customers.

Software and hardware
---------------------

     Software and hardware expense reflects the costs of software and hardware
sold.

Network operations and development
----------------------------------

     Network operations and development expense represents costs directly
associated with developing, maintaining, managing and servicing our global
private network and expanding our service offerings. These costs include direct
labor, vendor service fees, point-of-presence charges and research and
development charges, which are often incurred in advance of receiving revenue.
Our currently installed network operation centers account for the substantial
majority of these direct labor and operating costs. Most of the costs associated
with the development of new services and applications, such as WAM!BASE Digital
Storage Service, Remote Proofing, ISDN Tracked Service, Internet Gateway Service
and ROD, are accounted for as network operations expenses and are incurred in
advance of receiving revenue.

Selling, general and administrative
-----------------------------------

     Our selling expense consists primarily of the salaries and commissions of
our direct sales force and our global marketing groups, commissions for channel
partners, and the costs of ongoing marketing activities such as promotions and
channel development. Our sales and marketing efforts are focused on expanding
our customer base and increasing utilization on our network. Accordingly, we
offer new and existing services and develop new channels to sell and support our
services. We also seek to increase the utilization of our network with the
assistance of our influential customers who encourage their supply chain
partners to use our services.

     Our general and administrative expense includes administrative salaries,
related overhead and professional service fees. These costs reflect expenditures
related to the rapid growth and expansion of our administrative infrastructure
necessary to manage our globally expanding operations, and professional service
fees incurred in connection with financing activities, contract negotiations and
business acquisitions.

Depreciation and amortization
-----------------------------

                                      -13-
<PAGE>

     We generally retain ownership of the equipment located on customer premises
and most of the hardware and software necessary for our customers to use our
services on a turnkey basis. Depreciation and amortization expense includes
depreciation of this hardware and software, as well as the equipment located in
our distribution hubs and network operation, hosting and data storage centers.
We also amortize certain costs relating to the acquisitions of 4-Sight and
Freemail, which we acquired using the purchase method of accounting. We
anticipate additional capital investments in our network, hosting and storage
infrastructure commensurate with customer demand and market opportunity.


RESULTS OF OPERATIONS

Three and Nine Month Periods Ended September 30, 2000 Compared with Three and
Nine Month Periods Ended September 30, 1999

REVENUES

     Total revenue for the three months ended September 30, 2000 was $10.3
million compared to $6.8 million for the three months ended September 30, 1999,
an increase of $3.5 million or 51.5%. Total revenue for the nine months ended
September 30, 2000 was $27.2 million compared to $17.5 million for the nine
months ended September 30, 1999, an increase of $9.7 million or 55.4%. This
increase in revenues was due to growth in the number of subscribers purchasing
our services and from increased utilization of and demand for managed data
services and for new services introduced during the current fiscal year,
including ROD hosted services, WAM!BASE and professional consulting services.

     Net service revenue was $8.8 million for the three months ended September
30, 2000 compared to $4.8 million for the three months ended September 30, 1999,
an increase of $4.0 million or 83.3%. Net service revenue was $22.3 million for
the nine months ended September 30, 2000 compared to $11.9 million for the nine
months ended September 30, 1999, an increase of $10.4 million or 87.4%. This
increase in net service revenue resulted from the factors described above.

     Revenues from software and hardware sales were $1.5 million for the three
months ended September 30, 2000 compared to $2.0 million for the three months
ended September 30, 1999, a decrease of $0.5 million or 25.0%. Revenues from
software and hardware sales were $5.0 million for the nine months ended
September 30, 2000 compared to $5.6 million for the nine months ended September
30. 1999, a decrease of $0.6 million or 10.7%. The decrease in software and
hardware sales is the direct result of our shifting from sales of 4-Sight
software and hardware as stand-alone products to sales of service contracts,
partially offset by software purchases associated with ISDN Tracked Service
agreements. We expect that software and hardware sales will continue at
approximately this same level for the foreseeable future.

OPERATING EXPENSES

Network Communication
---------------------

     Network communication expense for the three months ended September 30, 2000
was $7.1 million compared to $6.8 million for the three months ended September
30, 1999, an increase of $0.3 million or 4.4%. Network communication expense for
the nine months ended September 30, 2000 was $21.2 million compared to $19.5
million for the nine months ended September 30, 1999, an increase of $1.7
million or 8.7%. Network communication expenses increased as a result of
increased local loop connections directly related to growth in the number of our
Direct Service customers, and from expenses incurred as a result of expanding
our domestic and foreign network operations through the installation of
additional hubs. Average monthly communication expense per Direct Service
customer has declined, and is expected to continue to decline, as a result of
increased customer utilization of our backbone capacity and declining costs of
North American local loop connections. These trends were partially offset by
growth in our Direct Service customer base in Europe, where local loop costs are
generally higher than in North America. We continue to incur substantial network
communication expense as we deploy our network and related services and
applications globally; however, we expect the network communications expense as

                                      -14-
<PAGE>

a percentage of revenue to decline.

Software and Hardware
---------------------

     The cost of software and hardware for the three months ended September 30,
2000 was $0.6 million compared to $0.8 million for the three months ended
September 30, 1999, a decrease of $0.2 million or 25.0%. The cost of software
and hardware for the nine months ended September 30, 2000 was $1.6 million
compared to $2.2 million for the nine months ended September 30, 1999, a
decrease of $0.6 million or 27.3%. This decrease reflects the decline in
software and hardware sales as described above.


Network Operations and Development
----------------------------------

     Network operations and development expense for the three months ended
September 30, 2000 was $5.8 million compared to $6.4 million for the three
months ended September 30, 1999, a decrease of $0.6 million or 9.4%. Network
operations and development expense for the nine months ended September 30, 2000
was $16.6 million compared to $17.2 million for the nine months ended September
30, 1999, a decrease of $0.6 million or 3.5%. The decrease for the three months
period ended September 30, 2000 compared to the same period in 1999 was
primarily due to completion of development activities for new service offerings
and from cost containment measures. We expect that network operations costs will
increase as our network expands; however, the cost of network operations as a
percentage of revenue is expected to decline.

Selling, General and Administrative
-----------------------------------

     Selling, general and administrative expense for the three months ended
September 30, 2000 was $13.3 million compared to $9.3 million, an increase of
$4.0 million or 43.0%. Selling, general and administrative expense for the nine
months ended September 30, 2000 was $38.4 million compared to $30.5 million, an
increase of $7.9 million or 25.9%. The increase reflects increased marketing
expenses for the introduction of new services and for expansion of our customer
base, as well as expenses associated with government service offerings. We
expect to continue to incur significant selling, general and administrative
expenses as we continue to increase market penetration and network utilization
among existing customers. We expect selling, general and administrative expenses
will continue to decline as a percentage of revenue.

Restructuring Charge
--------------------

     Restructuring charge reflects a one-time charge of approximately $1.7
million in September 2000 for severance payable for the termination of certain
executives and employees in connection with a reorganization of our operations
in Europe. The Company expects to pay out approximately $.8 million of this
severance in the 4th quarter of 2000 and the remainder over 24 months.

Depreciation and Amortization
-----------------------------

     Depreciation and amortization for the three months ended September 30, 2000
was $10.8 million compared to $8.9 million for the three months ended September
30, 1999, an increase of $1.9 million or 21.3%. Depreciation and amortization
for the nine months ended September 30, 2000 was $29.3 million compared to $24.9
million for the nine months ended September 30, 1999, an increase of $4.4
million or 17.7% . This increase was primarily due to depreciation of additional
network and related equipment purchased for network expansion. Included in these
totals for 2000 and 1999 was $5.4 million and $4.9 million of amortization
expense relating to the goodwill recorded in connection with the 4-Sight and
Freemail acquisitions, respectively. We anticipate that depreciation and
amortization expense will increase in future periods as we continue to purchase
equipment and expand operations and as we begin to depreciate the wireless
network facilities purchased from Winstar.

                                      -15-
<PAGE>

Loss on Investment
------------------

     The Company sold a portion of the investment in Winstar common stock and
realized a loss of $14.7 million for the three and nine-month periods ended
September 30, 2000.

Interest Expense
----------------

     Interest expense for the three months ended September 30, 2000 was $10.1
million compared to $8.0 million for the three months ended September 30, 1999,
an increase of $2.1 million or 26.3%. Interest expense for the nine months ended
September 30, 2000 was $35.5 million compared to $25.5 million for the nine
months ended September 30, 1999, an increase of $10.0 million or 39.2%.The
increase is related to the increase in long-term debt incurred to fund
operations. Included in interest expense for the three months ended September
30, 2000 and 1999, are non-cash charges of $7.6 million and $6.8 million, and
$15.2 million and $15.4 million for the nine months ended September 30, 2000 and
1999 related to the amortization of deferred financing charges and the value of
warrants issued in connection with debt financing transactions.

Other Income
------------

     Other income for the three months ended September 30, 2000 was $0.6 million
compared to $0.2 million for the three months ended September 30, 1999, an
increase of $0.4 million. Other income for the nine months ended September 30,
2000 was $1.8 million compared to $0.4 million for the nine months ended
September 30, 1999, an increase of $1.4 million. Other income primarily relates
to minority interest in losses of our joint venture in Japan and rental income
received from SGI in connection with leasing a portion of our corporate campus
facility in Eagan.

Income Taxes and Net Loss
-------------------------

     At September 30, 2000, we had approximately $317.9 million of net operating
loss carryforwards. These carryforwards are available to offset future taxable
income through the year 2020 and are subject to the limitations of Section 382
of the Internal Revenue Code of 1986. These limitations may result in the
expiration of net operating loss carryforwards before they can be utilized.


LIQUIDITY AND CAPITAL RESOURCES

     Since inception, we have incurred net losses and experienced negative cash
flow from operating activities. Net losses since inception have resulted in an
accumulated deficit of $432.8 million as of September 30, 2000. We expect to
continue to operate at a net loss and experience negative cash flow from
operating activities for the foreseeable future. Through September 30, 2000, we
have issued equity and debt securities and incurred other borrowings resulting
in cash received by us of $437.0 million. We have used the majority of these
proceeds to expand our global network, to build our customer base and to expand
globally in new geographic markets. In addition, we expanded our operations in
Europe through the acquisition of 4-Sight in 1998 for $16.4 million in cash and
the issuance of equity securities. Our ability to achieve profitability and
positive cash flow from operations will be dependent on substantially growing
our revenues and realizing increased operating efficiencies.

     In March, 2000, the Company entered into a transaction whereby Winstar
Communications, Inc. purchased a total of 85,000 shares of Class E convertible
preferred stock for $85 million, of which $35 million was paid in cash and $50
million was paid in the form of 1,071,429 shares of Winstar common stock valued
at $46.66 per share as adjusted for the Winstar 3-for-2 stock split declared in
February 2000. Also in this transaction, other investors purchased 16,725 shares
of Class E convertible preferred stock for an aggregate $16.7 million in cash.
The Class E convertible preferred stock accumulates dividends at an annual rate
of 7%, which are added monthly to the accreted liquidation value of the stock.
Each of the two largest purchasers of Class E convertible preferred stock has
the right

                                      -16-
<PAGE>

to designate one director, and vote on an as-converted basis on all matters
submitted to the vote of common stockholders. However, no holder (based solely
on its ownership of Class E convertible preferred stock) shall be entitled to
more than the number of votes equal to 17.5% of the voting power outstanding on
the record date for the vote being taken (and therefore to the extent that its
ownership of Class E convertible preferred stock would entitle it to voting
power in excess of 17.5%, the voting power shall be reduced to that percentage).
Also, with respect to any holder of fewer than 50,000 shares of Class E
convertible preferred stock, the maximum voting percentage any such holder may
have is equal to 17.5% multiplied by a ratio, the numerator of which is the
number of shares of Class E convertible preferred stock held by such stockholder
and the denominator of which is 50,000 on all matters submitted to the vote of
common stock holders, including the election of directors. The Class E
convertible preferred stock is initially convertible into 19,714,147 shares of
common stock at an initial conversion rate of $5.16 per share, subject to
anti-dilution provisions. Holders of Class E convertible preferred shares may
convert their shares into common stock at any time, and are required to convert
their shares into common stock on the last trading day of the first 20
consecutive trading days during which the weighted average closing price
(weighted by daily trading volume) of the common stock is at least $8.00 per
share.

     In February 2000, SGI purchased 10,000 shares of our Class F convertible
preferred stock from us for $10 million in cash. The rights and preferences of
the Class F convertible preferred stock, including its conversion provisions,
are substantially the same as the rights and preferences of our Class E
convertible preferred stock, except that the holders of Class F convertible
preferred stock do not have the right to separately elect directors and there is
no cap on the voting power of that class. The Class F convertible preferred
stock is initially convertible into a total of 1,937,984 shares of common stock
at an initial conversion rate of $5.16 per share, subject to anti-dilution
provisions. The shares of Class F convertible preferred stock will mandatorily
convert into shares of common stock upon completion of an underwritten public
offering of our common stock raising at least $50,000,000 of gross proceeds.

     In February and March 2000, we sold to Sumitomo and other investors 10,000
shares of our Class G convertible preferred stock for $10 million in cash.
Holders of Class G convertible preferred stock have the right to vote, on an
as-converted basis, on all matters submitted to a vote of the common
stockholders. The Class G convertible preferred stock is initially convertible
into 1,937,984 shares of common stock at an initial conversion rate of $5.16 per
share, subject to anti-dilution provisions. The shares of Class G convertible
preferred stock will mandatorily convert into shares of common stock upon
completion of an underwritten initial public offering of our common stock
raising at least $50,000 million of gross proceeds.

     In September 2000, the Company and Winstar entered into a Securities
Purchase Agreement (the "Class H Preferred Stock Agreement"), pursuant to which
the Company has the right to sell to Winstar up to 60,000 shares of Class H
Convertible Preferred Stock, par value $.01 per share, at a purchase price of
$1,000 per share, at the Company's discretion, upon certain dates and in certain
amounts pursuant to the terms of the Class H Preferred Stock Agreement, which
right shall terminate on January 3, 2001. In connection with the execution of
the Class H Preferred Stock Agreement, the Company issued a warrant to Winstar
to purchase up to 3,000,000 shares of common stock of the Company at a price of
$.01 per share, which warrant shall expire on December 31, 2005. The right to
purchase 500,000 shares of Common Stock became exercisable upon execution of the
Class H Preferred Stock Agreement, and the right to purchase the remainder of
the Common Stock shall become exercisable as the Company sells the Shares to
Winstar pursuant to a schedule set forth in the Class H Preferred Stock
Agreement. As of September 30, 2000, the Company sold 5,000 shares of Class H
convertible preferred stock for an aggregate of $5 million in cash. In
connection with the sale of the shares, 50,000 shares became exercisable
pursuant to the warrant. The rights and preferences of the Class H convertible
preferred stock, including its conversion provisions, are substantially the same
as the rights and preferences of the Class E convertible preferred stock. The
Class H convertible preferred stock is convertible into shares of common stock
at an initial conversion rate of $5.16 per share, subject to anti-dilution
provisions. As of November 13, 2000, the Company sold 25,000 shares of Class H
convertible preferred stock and 950,000 shares of common stock are exercisable
pursuant to the warrant.

                                      -17-
<PAGE>

     We recently began offering services to departments and agencies of the
United States Government that can be accessed under a General Services
Administration contract. In addition, on Oct. 6, 2000, the Company was a member
of a team, led by EDS, that was awarded the Navy Marine Corps Intranet (NMCI)
Contract. The NMCI Contract is for delivery of comprehensive, end-to-end
information services through a common computing and communications environment,
for Navy and Marine Corps installations throughout the continental United States
and other selected installations. The contract is an indefinite- quantity
contract, with guaranteed minimum quantities. WAM!NET is a first tier
subcontractor to EDS and was identified as the source for infrastructure and
network management services, excluding desktop equipment, security systems and
long-haul circuits. The NMCI Contract is in the start-up phase and WAM!NET and
EDS are currently negotiating the terms of WAM!NET's subcontract. It is expected
that the Company's provision of services under the NMCI contract will
significantly impact both revenues and certain expense items, particularly
selling, general and administrative and network operations in future periods.

     We believe the capital resources obtained from the foregoing transactions,
together with other financing resources available to the Company, will be
sufficient to fund our business plan through the end of the current fiscal year.


Item 3--Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Rates
-------------------------------

     During the nine months ended September 30, 2000, our revenue originating
outside the U.S. was 31.2% of total revenue, substantially all of which was
denominated in the local functional currency. Currently, we do not employ
currency hedging strategies to reduce the risks associated with the fluctuation
of foreign currency exchange rates.

     Our international operations are subject to risks typical of an
international business, including, but not limited to: differing economic
conditions, changes in political climate, differing tax structures, foreign
regulations and restrictions, and foreign exchange rate volatility. Accordingly,
our future results could be materially adversely impacted by changes in these or
other factors.

Interest Rates
--------------

     We invest cash in a variety of financial instruments, including bank time
deposits and fixed rate obligations of governmental entities and agencies. These
investments are denominated in U.S. dollars. Cash balances in foreign currencies
overseas are operating balances and are invested in short-term deposits of the
local operating bank.

     Investments in fixed rate interest earning instruments carry a degree of
interest rate risk. Fixed rate securities may have their fair market value
adversely impacted due to a rise in interest rates. Due in part to these
factors, our future investment income may fall short of expectations due to
changes in interest rates, or we may suffer losses in principal if we sell
securities that have seen a decline in market value due to changes in interest
rates. Our investment securities are held for purposes other than trading.

     We are exposed to market risk from changes in the interest rates on certain
of our outstanding debt. The outstanding loan balance under our $25 million
revolving credit facility bears interest at a variable rate based on prevailing
short-term interest rates in the U.S. and Europe. Based on the average
outstanding bank debt for the nine months ended September 30, 2000, a 100 basis
point change in interest rates would not change interest expense by a material
amount. For fixed rate debt such as our 13.25% senior discount notes, interest
rate changes affect its fair market value, but do not impact earnings or cash
flows.

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

     We account for cash equivalents and our investment in accordance with
Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Cash equivalents are
short-term, highly liquid investments with original maturity dates of three
months or less. Cash equivalents are carried at cost, which approximates fair
market value. Our investment is classified as available-for-sale and is recorded
at fair value with any unrealized gain or loss recorded as an element of
stockholders' equity. The Company

                                      -18-
<PAGE>

sold a portion of the investment in Winstar common stock and realized a loss of
$14.7 million for the three and nine month period ended September 30, 2000.





                           Part II--OTHER INFORMATION


Item 2 - Changes in Securities and Use of Proceeds

         (c) The information required by this Item 2 of Part II has been
previously reported in Item 2 of Part I of this Form 10-Q, and is incorporated
herein by reference. For a complete discussion of the transactions involving
recent sales of unregistered securities of the Company please see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

         The sale of the Class E Preferred Stock, Class F Preferred Stock, Class
G Preferred Stock and Class H Preferred Stock were exempt from the registration
requirements of Section 5 of the Securities Act of 1933 (the "Securities Act")
pursuant to the provisions of Section 4(2) of the Securities Act.


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

(a)  Exhibits

See Exhibit Index

(b) Reports on Form 8-K

No reports on Form 8-K were filed on behalf of the Company during the three
months period ending September 30, 2000.

                                      -19-
<PAGE>

                                    SIGNATURE

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


                                              WAM!NET Inc.

Date: November 14, 2000



                                              By: /s/ Terri F. Zimmerman
                                                 ------------------------
                                                  Terri F. Zimmerman
                                                  Chief Financial Officer

                                      -20-
<PAGE>

                                  EXHIBIT INDEX

Item
Number                   Description
------                   -----------

2.1     (1)    Agreement for the Sale and Purchase of the entire issued share
               capital of WAM!NET U.K. Limited dated February 11, 1998, among
               the Company, WAM!NET (UK) Limited and the Selling Shareholders
               listed therein.
2.2     (1)    Agreement and Plan of Reorganization dated December 17, 1997 by
               and among NetCo Communications Corporation, NetCo Acquiring
               Corporation, FreeMail, Inc. and the shareholders listed therein.
2.3     (4)    June 1, 1999 Amendment to the Agreement and Plan of
               Reorganization, dated December 17, 1997, by and among the
               Company, NetCo Acquisition Corporation, FreeMail, Inc. and the
               shareholders listed therin.
3.1     (7)    Amended and Restated Articles of Incorporation of the Company.
3.2     (1)    By-Laws of the Company.
4.1     (1)    Indenture dated as of March 5, 1998, between the Company, as
               Issuer, and First Trust National Association, as Trustee.
4.2a    (1)    Certificate for the Rule 144A Original Notes ($200.0 million).
4.2b    (1)    Certificate for the Rule 144A Original Notes ($8.0 million).
4.3     (1)    Certificate for the Regulation S Original Notes.
4.4     (1)    Certificate for the Rule 144A Warrants.
4.5     (1)    Certificate for the Regulation S Warrants.
4.6a    (1)    Rule 144A Unit Certificate. (200,000 Units)
4.6b    (1)    Rule 144A Unit Certificate. (8,030 Units)
4.7     (1)    Certificate for the Regulation S Units.
4.8     (1)    Form of Certificate for the Exchange Notes (incorporated herein
               by reference and included in Exhibit 4.1 to the Company's
               Registration Statement on Form S-4 filed with Securities and
               Exchange Commission on May 28, 1998).
4.9     (1)    Common Stock Certificate.
4.10    (1)    Registration Rights Agreement, dated March 5, 1998, among the
               Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
               Credit Suisse First Boston Corporation and First Chicago Capital
               Markets, Inc.
4.11    (1)    Common Stock Registration Rights Agreement, dated as of March 5,
               1998, among the Company, MCI WorldCom, Inc., Merrill Lynch,
               Pierce, Fenner & Smith Incorporated, Credit Suisse First Boston
               Corporation and First Chicago Capital Markets, Inc.
4.12    (1)    Warrant Agreement, dated as of March 5, 1998, by and between the
               Company and First Trust National Association, as Warrant Agent,
               to purchase Common Stock of the Company.
4.13           Intentionally omitted.
4.14    (2)    Warrants to purchase 4,157,500 Shares of Common Stock of the
               Company exercisable on or before December 31, 2000, issued to MCI
               WorldCom, Inc. on December 16, 1996 (Incorporated herein by
               reference to exhibit 10.6 of the Company's Registration Statement
               on Form S-4 (File No. 333-53841) filed with the Securities and
               Exchange Commission on May 28, 1998).
4.15    (2)    Certificate for 13.25% Subordinated Unsecured Convertible Note
               due August 28, 2005, ($25.0 million Note) issued to MCI WorldCom,
               Inc. on January 13, 1999.
4.16    (2)    Certificate for 1,679,234 Class A Warrants and 2,840,967 Class B
               Warrants to purchase Common Stock of the Company, issued to MCI
               WorldCom Inc. on September 26, 1997 (Incorporated herein by
               reference to Exhibit 10.9 of the Company's Registration Statement
               on Form S-4 (File No. 333-53841) filed with the Securities and
               Exchange Commission on May 28, 1998).
4.17    (2)    Subordinate Unsecured Convertible Note and Warrant Purchase
               Agreement between the Company and MCI WorldCom, Inc. dated
               January 13, 1999.

                                      -21-
<PAGE>

4.18    (2)    Preferred Stock Purchase Agreement by and between the Company and
               Silicon Graphics, Inc. dated as of March 3, 1999.
4.19    (2)    Certificate for 150,000 Warrants to purchase shares of Common
               Stock for the purchase price of $.01 per share dated January 13,
               1999.
4.20    (2)    Certificate of Designation of Rights and Preferences of Class A
               Preferred Stock of the Company filed with the Secretary of State
               of the State of Minnesota on March 4, 1999, as corrected and
               filed with the Secretary of State of the State of Minnesota on
               March 5, 1999.
4.21    (2)    Certificate of Designation of Rights and Preferences of Class B
               Convertible Preferred Stock of the Company filed with the
               Secretary of State of the State of Minnesota on March 4, 1999.
4.22    (2)    Certificate of Designation of Rights and Preferences of Class C
               Convertible Preferred Stock of the Company filed with the
               Secretary of State of the State of Minnesota on March 4, 1999.
4.23    (2)    Certificate of Designation of Rights and Preferences of Class D
               Convertible Preferred Stock of the Company filed with the
               Secretary of State of the State of Minnesota on March 4, 1999.
4.24    (2)    Certificate representing 115,206 shares of Class A Preferred
               Stock of the Company issued to MCI WorldCom. Inc. on March 4,
               1999.
4.25    (2)    Certificate representing 5,710,425 shares of Class B Convertible
               Preferred Stock of the Company issued to Silicon Graphics, Inc.
               on March 4, 1999.
4.26    (2)    Certificate representing 878,527 shares of Class C Convertible
               Preferred Stock of the Company issued to Silicon Graphics, Inc.
               on March 4, 1999.
4.27    (2)    Certificate representing 2,196,317 shares of Class D Convertible
               Preferred Stock of the Company issued to MCI WorldCom. Inc. on
               March 4, 1999.
4.28    (2)    Stockholders Agreement by and among the Company, Silicon
               Graphics, Inc. and MCI WorldCom, Inc. dated as of March 4, 1999.
4.29    (2)    Class A Preferred Stock Exchange Agreement by and between the
               Company and MCI WorldCom, Inc. dated as of March 4, 1999.
4.30    (2)    Class D Preferred Stock Conversion Agreement by and between the
               Company and MCI WorldCom, Inc. dated as of March 4, 1999.
4.31    (6)    Certificate of Designation of Rights and Preferences of Class E
               Convertible Preferred Stock of the Company filed with tSecretary
               of State of the State of Minnesota on February 16, 2000, as
               corrected and filed with the Secretary of State of the State of
               Minnesota on March 1 and March 8, 2000.
4.32    (6)    Certificate of Designation of Rights and Preferences of Class F
               Convertible Preferred Stock of the Company filed with the
               Secretary of State of the State of Minnesota on February 11,
               2000, as corrected and filed with the Secretary of State of the
               State of Minnesota on March 1 and March 9, 2000.
4.33    (6)    Certificates of Designation of Rights and Preferences of Class G
               Convertible Preferred Stock of the Company filed with the
               Secretary of State of the State of Minnesota on February 6, 2000.
4.34    (6)    Securities Purchase Agreement, dated as of December 31, 1999, by
               and between the Company and Winstar Communications, Inc.
4.35    (6)    Securities Purchase Agreement, dated as March 14, 2000, by and
               between the Company and Cerberus Partners, L.P.
4.36    (6)    Securities Purchase Agreement, dated February 3, 2000, by and
               between the Company and Silicon Graphics, Inc.
4.37    (6)    Preferred Stock Purchase Agreement, dated as of February 18,
               2000, by and between the Company and the buyers listed on
               Schedule 1.1 thereto.
4.38    (6)    Form of Certificate for Shares of Class E Convertible Preferred
               Stock of the Company.
4.39    (6)    Form of Certificate for shares of Class F Convertible Preferred
               Stock of the Company.
4.40    (6)    Form of Certificate for shares of Class G Convertible Preferred
               Stock of the Company.
4.41    (6)    Certificate for 200,000 Warrants to purchase shares of Common
               Stock for the purchase price of $.01 per share issued to MCI
               WorldCom, Inc. in connection with the 13.25% subordinated
               unsecured convertible Note, dated January 13, 1999.
4.42     *     Securities Purchase Agreement, dated as of March 14, 2000, by and
               between the Company and the buyers listed on Schedule 1.1
               thereto.

                                      -22-
<PAGE>

4.43     *     Securities Purchase Agreement, dated as of September 29, 2000, by
               and between the Company, Winstar Communications, Inc. and Winstar
               Credit Corp.
4.44     *     Certificate for 3,000,000 Warrants to purchase shares of Common
               Stock for the purchase price of $.01 per share issued to Winstar
               Communications, Inc. in connection with the Securities Purchase
               Agreement, dated September 29, 2000.
4.45     *     Certificate of Designation of Rights and Preferences of Class H
               Convertible Preferred Stock of the Company filed with the
               Secretary of State of the State of Minnesota on October 3, 2000.
4.46     *     Form of Certificate for shares of Class H Convertible Preferred
               Stock of the Company.
10.1    (1)    Credit Agreement among the Company, the Lending Institutions
               party thereto, as Lenders, The First National Bank of Chicago, as
               Agent, dated as of September 26, 1997.
10.2    (1)    Ten Percent Convertible Note Purchase Agreement between the
               Company and MCI WorldCom, Inc., dated September 12, 1996 ($5.o
               million Note).
10.3    (1)    Preferred Stock, Subordinated Note and Warrant Purchase Agreement
               between the Company and MCI WorldCom, Inc., dated November 14,
               1996.
10.4    (1)    $28.5 millioin Seven Percent Subordinated Note due December 31,
               2003, payable to MCI WorldCom, Inc.
10.5           Intentionally omitted.
10.6           Intentionally omitted.
10.7    (1)    Right of Refusal Agreement Among WorldCom Inc., Edward Driscoll
               III and Alan L. Witters dated December 16, 1996.
10.8    (1)    Guaranty Agreement dated September 26, 1997, by and between the
               Company and MCI WorldCom, Inc.
10.9           Intentionally omitted.
10.10   (1)    Sublease dated September 24, 1997 between the Company and 1250895
               Ontario Limited, relating to the property located at 6100 110th
               Street West, Bloomington, Minnesota.
10.11   (1)    Service Provision Agreement dated as of July 18, 1997, by and
               between the Company and Time Inc.
10.12   (1)    Standby Agreement dated as of July 19, 1997 by and between MCI
               WorldCom, Inc. and Time Inc.
10.13          Intentionally omitted.
10.14          Intentionally omitted.
10.15          Intentionally omitted.
10.16          Intentionally omitted.
10.17   (1)    Agreement dated February 11, 1998 between the Company and MCI
               WorldCom, Inc. modifying certain terms of the (i) 10% Convertible
               Subordinated Note, due September 30, 1999, (ii) 7% Subordinated
               Note, due December 31, 2003, and (iii) 100,000 shares of Series A
               Preferred Stock, all of which are held by MCI WorldCom, Inc.
               (incorporated herein by reference to exhibit No. 4.17 to the
               Company's Registration Statement on Form S-4 (File No. 333-53841)
               filed with the Securities and Exchange Commission on May 28,
               1998)
10.18   (1)    1994 Stock Option Plan
10.19   (1)    Amended and Restated 1994 Stock Option Plan
10.20   (1)    1998 Combined Stock Option Plan.
10.21   (1)    Agreement dated June 5, 1997 between the Company and WorldCom,
               Inc. regarding data services provided by MCI WorldCom, Inc. to
               the Company.
10.22   (3)    Preferred Provider Agreement by and between the Company and
               Silicon Graphics, Inc., dated as of March 4, 1999 (portions of
               this exhibit have been ommitted pursuant to a request for
               confidential treatment and have been filed with the Securities
               Commission under separate cover).
10.23   (2)    Sale and Purchase Agreement by and between Silicon Graphics,
               Inc., on behalf of itself and its wholly-owned subsidiary, Cray
               Research, L.L.C., and the Company dated as of March 4, 1999.
10.24   (2)    Lease by and between the Company and Silicon Graphics, Inc. on
               behalf of itself and its wholly-owned subsidiary, Cray Research,
               L.L.C., with respect to the Company's corporate campus facility
               located in Eagan, Minnesota dated as of March 4, 1999.
10.25          Intentionally omitted.
10.26          Intentionally omitted.

                                      -23-
<PAGE>

10.27   (4)    Loan and Security Agreement, dated July 16, 199, by and between
               Foothill Capital Corporation and the Company.
10.28   (5)    Purchase and Sale Agreement and Escrow Instreuctins, dated
               September 30, 1999, between the Company and CCPRE-Eagan, LLC.
10.29   (5)    Amendment No. 1 to the Purchase and Sale Agreement and Escrow
               Instructions, dated September 30, 1999 between the Company and
               CCPRE-Eagan, LLC.
10.30   (5)    Net Lease, dated September 30, 1999 between the Company and
               CCPRE-Eagan, LLC.
10.31   (6)    Master Agrement by and between Winstar Wireless, Inc. and the
               Company, dated December 31, 1999.
27.1     *     Financial Data Schedule.

----------------
(1)      Incorporated herein by reference to our Registration Statement on Form
         S-4 (File No. 333-53841), filed with the SEC on May 28, 1998.
(2)      Incorporated herein by reference to our Annual Report on Form 10-K,
         filed with the SEC on March 31, 1999.
(3)      Incorporated herin by reference to our Quarterly Report on Form 10-Q,
         filed with the SEC on May 17, 1999.
(4)      Incorporated herin by reference to our Quarterly Report on Form 10-Q,
         filed with the SEC on August 4, 1999.
(5)      Incorporated herin by reference to our Quarterly Report on Form 10-Q,
         filed with the SEC on November 12, 1999.
(6)      Incorporated herin by reference to our Annual Report on Form 10-K,
         filed with the SEC on March 15, 2000.
(7)      Incorporated herin by reference to our Quarterly Report on Form 10-Q,
         filed with the SEC on May 15, 2000.
 *       Filed herin.

                                      -24-