<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: June 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 June 30, 2000 there were 10,797,731 shares of the Corporation's Common
Stock, par value $.01 per share, outstanding.

Total number of pages in this report: 22
<PAGE>

                                  WAM!NET Inc.

                               INDEX TO FORM 10-Q


Part I--Financial Information
                                                                        Page No.
                                                                        --------
    Item 1--Financial Statements

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

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

       Consolidated Statements of Cash Flows for the three and six month
         periods ended June 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...................................... 10

    Item 3--Quantitative and Qualitative Disclosures About Market Risk..... 16

Part II--Other Information

    Item 2--Changes in Sercurities and Use of Proceeds..................... 17

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

Signature--................................................................ 18

Exhibit Index--............................................................ 19

                                      -2-
<PAGE>

                          Part I--FINANCIAL INFORMATION


Item 1--Financial Information


                                  WAM!NET Inc.

                           Consolidated Balance Sheets
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                June 30,  December 31,
                                                                                  2000       1999
                                                                                --------  ------------
                                                                              (Unaudited)
<S>                                                                             <C>        <C>
Assets
Current assets:
     Cash and cash equivalents ..............................................   $ 14,893   $ 27,180
     Investment .............................................................     36,295         --
     Accounts receivable, net of allowance of $1,203 and $1,570, respectively      4,281      3,982
     Inventory ..............................................................        874      1,254
     Prepaid expenses and other current assets ..............................      2,850      4,018
                                                                                --------   --------
Total current assets ........................................................     59,193     36,434

Property, plant, and equipment, net .........................................    363,917    358,336
Goodwill, net ...............................................................     18,716     21,421
Deferred financing charges, net .............................................     15,043     18,300
Other assets ................................................................      1,163        764
                                                                                --------   --------
Total assets ................................................................   $458,032   $435,255
                                                                                ========   ========
</TABLE>

                                      -3-
<PAGE>

                                  WAM!NET Inc.

                     Consolidated Balance Sheets (continued)
                             (Dollars in thousands)

                                                      June 30,    December 31,
                                                        2000         1999
                                                     ---------    ------------
                                                    (Unaudited)
Liabilities and shareholders' deficit
Current liabilities:
     Accounts payable ............................   $  11,651    $  13,739
     Accrued salaries and wages ..................       5,252        2,839
     Accrued expenses ............................      13,409        6,450
     Deferred Revenue ............................       2,533        2,500
     Current portion of long-term debt ...........      38,497       55,950
                                                     ---------    ---------
Total current liabilities ........................      71,342       81,478
Deferred Revenue .................................      10,000       10,000
Network Facilities Financing .....................     237,969      239,603
Long-term debt, less current portion .............     254,890      250,847
Class A Redeemable Preferred Stock ...............       1,259        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 .........          --           --
     Common Stock ................................         109           95
     Additional paid-in capital ..................     277,350      156,680
     Accumulated deficit .........................    (379,593)    (303,614)
     Accumulated other comprehensive income (loss)     (15,383)      (1,134)
                                                     ---------    ---------
Total shareholders' deficit ......................    (117,428)    (147,885)
                                                     ---------    ---------
Total liabilities and shareholders' deficit ......   $ 458,032    $ 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              Six months ended
                                                                      June 30,                        June 30,
                                                                      --------                        --------
                                                               2000            1999            2000            1999
                                                           ------------    ------------    ------------    ------------
                                                                                   (Unaudited)
<S>                                                         <C>             <C>            <C>              <C>
Revenues:
Net service revenue ....................................          7,274           3,947          13,457           7,075
Software and hardware sales ............................          1,741           1,882           3,453           3,592
                                                           ------------    ------------    ------------    ------------
Total revenue ..........................................          9,015           5,829          16,910          10,667

Operating expenses:
Network communications .................................          6,962           6,246          14,134          12,723
Cost of software and hardware ..........................            488             574           1,034           1,397
Network operations and development .....................          5,370           4,791          10,791          10,773
Selling, general and administrative ....................         13,422          10,971          25,039          21,273
Depreciation and amortization ..........................          9,811           7,851          18,464          16,057
                                                           ------------    ------------    ------------    ------------
                                                                 36,053          30,433          69,462          62,223
                                                           ------------    ------------    ------------    ------------
Loss from operations ...................................        (27,038)        (24,604)        (52,552)        (51,556)

Other income (expense):
     Interest income ...................................            419             229             625             429
     Interest (expense) ................................        (10,059)         (7,417)        (25,320)        (17,491)
     Other income ......................................            477             147           1,269             177
                                                           ------------    ------------    ------------    ------------
Net loss ...............................................   $    (36,201)   $    (31,645)   $    (75,978)   $    (68,441)
Less preferred dividends ...............................         (3,857)         (1,751)         (6,101)         (2,305)
                                                           ------------    ------------    ------------    ------------
Net loss applicable to common stock ....................   $    (40,058)   $    (33,396)   $    (82,079)   $    (70,746)
                                                           ============    ============    ============    ============

Net loss applicable per common share - basic and diluted   $      (3.94)   $      (3.59)   $      (8.33)   $      (7.61)
                                                           ============    ============    ============    ============

Weighted average number of common shares outstanding ...     10,176,625       9,295,786       9,852,136       9,295,786
                                                           ============    ============    ============    ============
</TABLE>

                             See accompanying notes.

                                      -5-
<PAGE>

                                  WAM!NET Inc.

                      Consolidated Statements of Cash Flows
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                 Six months ended
                                                                                     June 30,
                                                                              ----------------------
                                                                                 2000         1999
                                                                              ---------    ---------
                                                                                   (Unaudited)
<S>                                                                           <C>          <C>
Operating activities
Net loss ..................................................................   $ (75,978)   $ (68,441)
Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization ........................................      18,464       16,057
     Noncash interest expense, including related warrants values ..........      14,444       15,372
     Value of stock options issued to employees and consultants ...........         259          118
     Changes in operating assets and liabilities:
          Accounts receivable .............................................        (299)        (299)
          Prepaid expenses and other assets ...............................       1,124         (161)
          Accounts payable ................................................      (6,262)      (3,606)
          Accrued expenses ................................................       9,064          434
                                                                              ---------    ---------
Net cash used in operating activities .....................................     (39,184)     (40,526)

Investing activities
Purchases of property and equipment .......................................     (16,327)     (16,976)
Patent expenditures .......................................................          --          (34)
Business acquisitions (net of cash acquired) ..............................        (353)          --
                                                                              ---------    ---------
Net cash used in investing activities .....................................     (16,680)     (17,010)

Financing activities
Proceeds from sale of preferred stock .....................................      68,852       59,498
Proceeds from borrowings (net of financing expenses) ......................       1,068        4,102
Proceeds from exercise of stock options ...................................       1,154            2
Payments on borrowings ....................................................     (26,954)      (2,967)
                                                                              ---------    ---------
Net cash provided by financing activities .................................      44,120       60,635
Effect of foreign currencies on cash ......................................        (543)      (1,321)
                                                                              ---------    ---------
Net increase in cash and cash equivalents .................................     (12,287)       1,778
Cash and cash equivalents at beginning of period ..........................      27,180        6,272
                                                                              ---------    ---------
Cash and cash equivalents at end of period ................................   $  14,893    $   8,050
                                                                              =========    =========
</TABLE>


                             See accompanying notes.

                                      -6-
<PAGE>

                                  WAM!NET Inc.

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

<TABLE>
<CAPTION>
                                                                      Six months ended
                                                                           June 30,
                                                                     -----------------
                                                                       2000      1999
                                                                     -------   -------
                                                                         (Unaudited)
<S>                                                                  <C>       <C>
Supplemental schedule of noncash financing activities
     Issuance of convertible preferred stock in exchange for
        Winstar Communications, Inc. common stock.................    50,000        --
     Dividends declared but unpaid ...............................        40        23
     Issuance of common stock relating to acquisition ............       459        --
     Purchase of property, plant and equipment in accounts payable     4,174        --

Supplemental schedule of cash flow information
     Cash paid for interest ......................................   $10,123   $ 2,175

</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 June 30, 2000. The unrealized gains and losses are reflected
as a component of accumulated other comprehensive income (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 into 19,714,147 shares of common stock at an initial conversion rate
of $5.16 per share of common stock, subject to

                                      -8-
<PAGE>

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.


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 income for the three and six months in the period ended June 30,
2000 and 1999 was as follows:

<TABLE>
<CAPTION>
----------------------------- ------------------------------------------- --------------------------------------------
                                 For the three months ended June 30,           For the six months ended June 30,
----------------------------- ---------------------- -------------------- ---------------------- ---------------------
(Dollars in thousands)                2000                  1999                  2000                   1999
                                      ----                  ----                  ----                   ----
----------------------------- ---------------------- -------------------- ---------------------- ---------------------

----------------------------- ---------------------- -------------------- ---------------------- ---------------------
<S>                               <C>                   <C>                   <C>                   <C>
Net loss                            $(36,201)             $(31,645)             $(75,978)             $(68,440)
----------------------------- ---------------------- -------------------- ---------------------- ---------------------
Changes in cumulative
translation adjustments                 (186)                 (992)                 (544)               (1,310)
----------------------------- ---------------------- -------------------- ---------------------- ---------------------
Changes in unrealized
gain/loss on investments             (27,991)                                    (13,705)
                                    --------                                    --------
----------------------------- ---------------------- -------------------- ---------------------- ---------------------
Comprehensive loss                  $(64,378)             $(32,113)             $(90,227)             $(69,750)
----------------------------- ---------------------- -------------------- ---------------------- ---------------------
</TABLE>

                                      -9-
<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 business-to-business e-services for
Companies that produce and distribute media. We enable entertainment,
advertising, publishing, printing and related media businesses worldwide to
collaborate on-line within their workflow supply chains.

     We offer our customers a wide array of e-services that meet their need to
collaborate digitally with their workflow partners. Our services, applications
and infrastructure provide a common electronic workflow platform that enables
our customers to achieve measurable operating efficiencies, cost savings and
productivity growth.

     We have made substantial investments in building our global network and our
hosting and storage infrastructure. In addition, we have developed an array of
digital workflow services to meet the needs and demands of our broad-based
customer group. We have also invested in and developed a substantial and skilled
customer service group, which makes our services more valuable to existing
customers and more attractive to potential customers. Finally, we have made
substantial investments in recruiting, training and developing a skilled and
knowledgeable sales force, operations workforce and an application development
workforce. We use a consultative approach in our sales and marketing efforts to
identify and meet our customers' diverse needs. Our initial focus and investment
has been in building an installed base of influential customers. We seek to
increase the utilization of our service offerings among our existing customers,
as well as to broaden our market penetration through the addition of new
customers.

     In December 1997, we acquired Freemail Inc., a developer of file
transmission and job ticket technology, to support our business-to-business
e-services. In March 1998, we established our presence in Europe with the
acquisition of 4-Sight Limited, a developer and worldwide marketer of ISDN-based
digital data transmission applications. 4-Sight primarily sold software and
hardware supporting digital transmission of data to its customer base.

     We offer a wide array of e-services including: (1) managed data transport,
(2) media application hosting, (3) managed data storage, (4) computer animation
rendering and (5) Internet-based services. Our services and network
infrastructure provide businesses a common electronic platform to seamlessly
integrate their digital production processes and accelerate the adoption of
complete digital workflow. Access to these services is provided through our
Direct Service, ISDN Tracked Service and Internet Gateway Service. Our initial
focus through 1998 was our Direct Service. This is our fastest, most secure and
reliable media 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. We recently acquired a 20-year indefeasible right of use
for backbone capacity and purchased wireless local loop facilities in the United
States from Winstar. 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 ISDN Tracked Service offers
the security and predictability of dial-up connectivity to our network at a
slower transmission speed without the performance guarantee of Direct Service.
This service does

                                      -10-
<PAGE>

not require an on premise CPOP or leased line connectivity. We introduced our
Internet Gateway Service in the third quarter of 1999 that allows connection to
our network over the Internet. We also provide our customers hosted media
applications with our managed data transport service that further integrate our
services into our customers' digital workflow processes, including Transmission
Manager, Info Center, Electronic Job Tickets and Remote Proofing and our most
recently released ROD service, to manage their workflows, further integrating
our services into their workflow process. We commercially introduced our
WAM!BASE Data Archiving Service in the first quarter of 2000. Also in the first
quarter of 2000, we began to offer Render on Demand, a hosted service that
processes computer generated animation into high resolution motion images such
as motion picture special effects.

     At June 30, 2000, we had over 13,600 subscribers using our
business-to-business e-services. Subscribers are customer sites that access our
electronic business-to-business services through our Direct Service, ISDN
Tracked Service and 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 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 Render on Demand
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.

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 make a single up-front payment to purchase our software or 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

     Network communication expense represents the largest direct cost associated
with providing our 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 and the costs
of the high bandwidth backbone carrier services which 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

                                      -11-
<PAGE>

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, remote dial-up capabilities and DSL. 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 render on demand, 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 Data
Archiving Service, Remote Proofing, ISDN Tracked Service, Internet Gateway
Service and Render on Demand, 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 workflow 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

     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 turn-key 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.

                                      -12-
<PAGE>

Results of Operations

Three and Six Month Periods Ended June 30, 2000 Compared with Three and Six
Month Periods Ended June 30, 1999

Revenues

     Total revenue for the three months ended June 30, 2000 was $9.0 million
compared to $5.8 million for the three months ended June 30, 1999, an increase
of $3.2 million or 54.7%. Total revenue for the six months ended June 30, 2000
was $16.9 million compared to $10.7 million for the six months ended June 30,
1999, an increase of $6.2 million or 58.5%. This increase in revenues was due to
increased sales of services resulting from increased demand for managed data
services and the introduction of new services including Render on Demand hosted
services and WAM!BASE.

     Net service revenue was $7.3 million for the three months ended June 30,
2000 compared to $3.9 million for the three months ended June 30, 1999, an
increase of $3.4 million or 84.3%. Net service revenue was $13.5 million for the
six months ended June 30, 2000 compared to $7.1 million for the six months ended
June 30, 1999, an increase of $6.4 million or 90.2%. This increase in net
service revenue was primarily due to growth in the number of subscribers
purchasing our services, introductions of new services and increased utilization
by subscribers.

     Revenues from software and hardware sales for the three months ended June
30, 2000 and 1999 remained flat at $1.7 million and $1.9 million, respectively.
Revenues from software and hardware sales for the six months ended June 30, 2000
and 1999 remained flat at $3.5 million and $3.6 million, respectively. We expect
that software and hardware sales will continue at approximately this same level
for the last six months of the current fiscal year.

Operating Expenses

Network communication

     Network communication expense for the three months ended June 30, 2000 was
$7.0 million compared to $6.2 million for the three months ended June 30, 1999,
an increase of $0.8 million or 11.5%. Network communication expense for the six
months ended June 30, 2000 was $14.1 million compared to $12.7 million for the
six months ended June 30, 1999, an increase of $1.4 million or 11.1%. 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 a percentage of revenue to decline.

                                      -13-
<PAGE>

Software and hardware

     The cost of software and hardware for the three months ended June 30, 2000
was $0.5 million compared to $0.6 million for the three months ended June 30,
1999, a decrease of $0.1 million or 15.0%. The cost of software and hardware for
the six months ended June 30, 2000 was $1.0 million compared to $1.4 million for
the six months ended June 30, 1999, a decrease of $0.4 million or 26.0%. This
decrease reflects the mix of hardware and software sold as stand alone products
or in association with ISDN Tracked Service agreements and results from lower
sales.


Network operations and development

     Network operations and development expense for the three months ended June
30, 2000 was $5.4 million compared to $4.8 million for the three months ended
June 30, 1999, an increase of $0.6 million or 12.1%. In each of the six month
periods ended June 30, 2000 and 1999, network operations and development expense
was $10.8 million. The increase for the three months period ended June 30, 2000
compared to the same period in 1999 was primarily due to increased expenditures
for development of new service offerings, partially offset by a reduction in
operating costs resulting 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 June
30, 2000 was $13.4 million compared to $11.0 million, an increase of $2.4
million or 22.3%. Selling, general and administrative expense for the six months
ended June 30, 2000 was $25.0 million compared to $21.3 million, an increase of
$3.7 million or 17.7%. The increase reflects increased marketing expenses for
the introduction of new service and expanding our customer base. 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.

Depreciation and amortization

     Depreciation and amortization for the three months ended June 30, 2000 was
$9.8 million compared to $7.9 million for the three months ended June 30, 1999,
an increase of $1.9 million or 25.0%. Depreciation and amortization for the six
months ended June 30, 2000 was $18.5 million compared to $16.1 million for the
six months ended June 30, 1999, an increase of $2.4 million or 15.0% . 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 $3.5 million and $3.3 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.

Interest income

     Interest income for the three months ended June 30, 2000 was $0.4 million
compared to $0.2 million for the three months ended June 30, 1999. For the six
months ended June 30, 2000, interest income was $0.6 million compared to $0.4
million for the six months ended June 30, 1999. The increase in interest income
reflects the increase in our average monthly cash balance.

Interest expense

     Interest expense for the three months ended June 30, 2000 was $10.1 million
compared to $7.4 million for the three months ended June 30, 1999, an increase
of $2.7 million or 36.5%. Interest expense for the six months ended

                                      -14-
<PAGE>

June 30, 2000 was $25.3 million compared to $17.5 million for the six months
ended June 30, 1999, an increase of $7.8 million or 44.6%. The increase is
related to the increase in long-term debt incurred to fund operations. Included
in interest expense for the three months ended June 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 six months ended June 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 June 30, 2000 was $0.5 million
compared to $0.1 million for the three months ended June 30, 1999, an increase
of $0.4 million. Other income for the six months ended June 30, 2000 was $1.3
million compared to $0.2 million for the six months ended June 30, 1999, an
increase of $1.1 million. Other income primarily relates to additional minority
investments received in connection with 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 June 30, 2000, we had approximately $287.0 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 $384.4 million as of June 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 June 30, 2000, we have issued
equity and debt securities and incurred other borrowings resulting in cash
received by us of $432.0 million. We have used the majority of these proceeds to
expand our global network, to build our customer base and for geographic
expansion. In addition, we expanded our operations in Europe through the
acquisition of 4-Sight 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 to designate one director, and vote on an as-converted basis on all
matters submitted to the vote of common stockholders provided that 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) and provided further that, 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

                                      -15-
<PAGE>

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 $50,000,000 of gross proceeds.

     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 six months ended June 30, 2000, our revenue originating outside
the U.S. was 33.6% 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

                                      -16-
<PAGE>

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 six months ended June 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.




                           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 and Class
G 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

         None

                                      -17-
<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: August 9, 2000



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

                                      -18-
<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.
<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 Cerebrus 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.
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.
<PAGE>

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.
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.
----------------
<PAGE>

(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.